HC Deb 18 January 1979 vol 960 cc2011-94

Order for Second Reading read.

6.6 p.m.

Mr. Nick Budgen (Wolverhampton, South-West)

On a point of order, Mr. Speaker. May I point out that there will be about two hours available for those who are not members of either Front Bench—at most? I am trying to put the case against myself at its strongest. I am sure, Mr. Speaker, that you hope that a Member of the Welsh National Party will catch your eye, as will a Member of the SNP and a Member of the Liberal Party. But it is almost certain that nobody from the Back Benches proper will be able to catch your eye, particularly if a Privy Councillor happens to catch your eye.

These are important issues. It is true, as the Lord President said, that we do not wish the Bill to pass. This measure goes to the root of the dispute between the Tory Party and the Labour Party. The Government believe that State power should be extended, and we have a right to be heard on this important matter. The high-handed action of the Lord President is preventing us from representing our constituents in this House.

It is ridiculous to pretend that this matter is urgent. In the recently published Government White Paper on public expenditure there was no proposal for increased expenditure by the NEB in the next two or three years. This is an important partisan matter, but in terms of the practical running of the Government or of the NEB the Bill is unnecessary. A week's delay will do no harm to the Government or to the NEB, but it will allow us, on behalf of our constituents, to make proper representations in this House.

The Lord President used to be a great supporter of Back Bench rights. It used to be said that, above all, he loved this House and believed that it was vital that every Back Bencher had an opportunity to represent his constituents. His behaviour tonight is a denial of everything that he has stood for in the past.

Mr. Speaker

Order. Hon. Members must confine themselves to points of order which I can answer. I cannot answer the point of order which has just been raised.

Mr. Robert Rhodes James (Cambridge)

On a point of order, Mr. Speaker. It is clear that the House and you yourself are in a considerable difficulty. I wonder whether you would entertain a motion "That this House do now adjourn". If you were prepared to entertain that motion, I should be honoured to move it.

Hon. Members: Hear, hear.

Mr. Speaker

I am afraid that hon. Members have misunderstood the conversation that was under way at the Table. The advice that I was getting was not very encouraging to the hon. Gentleman as to my powers on this matter.

Mr. Rhodes James

Further to that point of order, Mr. Speaker. The motion for the Second Reading of the Bill has not yet been moved. I am asking whether you would entertain a motion, which I shall now move, "That this House do now adjourn".

The basis of that motion is that there are now fewer than four hours left in which to debate this extremely important Bill which affects a considerable number of hon. Members and their constituencies. I suggest that, in these circumstances, the most appropriate action for the House to take would be to move to adjourn and for the Leader of the House to find an alternative date next week or the week after. This matter could then be dealt with in a proper manner, which would enable hon. Members to deploy their arguments in full and to justify their constituents' interests in the Bill.

Mr. Speaker

Standing Order No. 1 makes it clear that no Member other than a Minister of the Crown"— and no Minister looks as though he intends to do so— may make such a motion on any day before the orders of the day or notices of motions shall have been entered upon".

Mr. William Clark (Croydon, South)

On a point of order, Mr. Speaker. I cannot understand the technicalities of this matter, and I seek your guidance. Many points of order were curtailed and the Orders of the Day were called. I understand that we are now in the technical position that only a Minister can move the Adjournment of the House. Many Opposition Members still wish to raise points of order. I am asking why it was necessary to call the Orders of the Day before those points of order were dealt with.

Mr. Speaker

Because I wanted to call them and to get on. I was not trying any quick trick on the House. That is neither my way nor my custom. I thought that I was helping the House. But we have not yet proceeded with the motion that is before the House. We have not embarked upon it.

Mr. William Clark

Further to that point of order, Mr. Speaker. You have ruled that, the Orders of the Day having been called, only a Minister of the Crown may move the Adjournment of the House. [HON. MEMBERS: "No. It is the other way round."] My hon. Friend the Member for Cambridge (Mr. Rhodes James) moved the Adjournment of the House and I thought you said that that could not be allowed because a Minister of the Crown had not called for the Adjournment of the House.

Mr. Speaker

I am sorry that I did not make the position clear. I said that no Member other than a Minister of the Crown may make such a motion on any day before the orders of the day or notices of motions shall have been entered upon". We have not entered upon the notices of motions.

Mr. Kenneth Clarke (Rushcliffe)

Further to that point of order, Mr. Speaker. It seems to me that we have entered upon the Orders of the Day. You called upon the Clerk to read the Orders of the Day, and we have now reached the stage where they have been entered upon. If that is not the case, could you indicate for the convenience of the House what steps have to be taken before the Orders of the Day are entered upon so that we know at what stage my hon. Friend the Member for Cambridge (Mr. Rhodes James) may rise to move such a motion?

Mr. Speaker

When the motion has has been made for the Bill to be read a Second time, we shall have entered upon the business. No Question has yet been proposed by the Chair on that issue.

Mr. Kenneth Clarke

Will you clarify my mind and the minds of other hon. Members on this matter? Is it the case that so soon as the Clerk of the House has risen to read the Order for the Second Reading, then, immediately before any speeches have begun, my hon. Friend the Member for Cambridge may rise to move his motion?

Mr. Speaker

No. That may happen only after I have proposed the Question from the Chair. When I have proposed the Question, "That the Bill be now read a Second time", the dilatory motion, the moving of the Adjournment, would be in order.

Mr. Rhodes James

With great respect, Mr. Speaker, it is not possible for the House to have two motions before it at the same time. The point of the procedure under Standing Order No. 1 is that after the House has entered upon the Orders of the Day and after the Clerk at the Table has read the title of the business, a motion for the Adjournment can be moved. It happens frequently in foreign affairs debates and on other occasions. It is not possible to move a motion for the Adjournment of the House immediately after you have proposed the motion that the Bill be read a Second time. The House cannot have two motions before it. I urge that the House should now be debating the motion which I ventured to propose, namely, "That this House do now adjourn".

Mr. Speaker

With every respect to the hon. Gentleman, he seems to have forgotten that when, from time to time, the motion is moved "That this House do now adjourn" before we enter on business, it is always moved by a Minister of the Crown. That is the case without exception, and that is what the hon. Gentleman has overlooked.

Mr. Alexander Fletcher (Edinburgh, North)

On a point of order, Mr. Speaker. It might help the House to consider the matter if the Lord President will elaborate a remark that he made a few moments ago. He said that it was important for the Bill to reach the statute book by Easter. If he will explain why that is the case, hon. Members might be able to consider the position more effectively.

Mr. Michael Jopling (Westmorland)

On a point of order, Mr. Speaker. I think that there is a way in which you could help the Government and the House in general on this difficult matter. It seems clear that when we reach the end of this important debate the closure will have to be moved. "Erskine May" says on page 449 that the question must be put forthwith, without amendment or debate, unless it appears to the Chair that the motion is an abuse of the rules of the House or an infringement of the rights of the minority. In view of what has been said in points of order, it seems clear that there is a great likelihood—in fact a certainty—that the rights of the minority are likely to be abused very much indeed if this debate is held straightaway. You can help the House, Mr. Speaker, by indicating that you believe that if a vote were taken or asked for at 10 o'clock it would be an abuse of the rights of the minorities in this House. If you were to give that ruling or indication now, it may be that the Lord President of the Council would have the wisdom to decide to put off this debate.

The Lord President of the Council and Leader of the House of Commons (Mr. Michael Foot)

Further to that point of order, Mr. Speaker. The hon. Member for Westmorland (Mr. Jopling) is perfectly right in his assessment of the position, as I understand it. I was urging that the House should embark upon the debate. I believe that is still the right course. Indeed, I think that it would have been wise if we had done that 20 minutes ago [Interruption.] I am just as much entitled to give my view to the House as hon. Members. I believe that it would have been better to have émbarked upon the debate.

At 10 o'clock you will have to decide the matter. I presume, that you would not give a hypothetical ruling at this stage. I suggest that the House should start the debate, and at 10 o'clock you will be able to make up your mind about the submission that has been made to you. I suggest that to ask you to give a hypothetical ruling at this stage would be contrary to normal procedure. I suggest that we should start the debate. When we reach 10 o'clock you, in your wisdom, will give your judgment on what is put to you at that time.

Mr. Hal Miller (Bromsgrove and Redditch)

Further to that point of order, Mr. Speaker. I wish that the Lord President would reconsider the urgency of the matter. It is now appreciated that the larger part of the NEB funds would be required for British Leyland. We were informed at Question Time earlier this week that the report of the NEB will not be available in the Library until next month. Therefore, it is not easy to understand why the debate has to be started tonight.

As my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) has pointed out, the Committee of Selection will not have met and Members will not have had enough information about British Leyland in particular, which, whatever view one takes, must account for the lion's share of the funds which are said to be required. Therefore, there seems to be every reason for postponing the debate.

Finally, on that point of order, I should wish to take part in the debate because I have an extremely strong constituency and industry interest.

Several Hon. Members rose

Mr. Speaker

Order. I request that any hon. Members I now call submit points of order that I can answer rather than further argument against proceeding with the Bill tonight. That is not a matter for me. That is out of my hands.

Mr. Churchill (Stretford)

Further to that part of order, Mr. Speaker. Would it be possible for the Lord President to assist you and the House in its difficulties by undertaking that, in the light of the lack of time left in which to debate this important matter, the Government will not tonight move the closure at 10 o'clock and the debate will be continued on Monday and the vote taken at 7 p.m.? That would leave time for a Standing Order No. 9 debate.

Mr. Patrick Cormack (Staffordshire, South-West)

Would it not be helpful for the House to be suspended for half an hour, so that the usual channels can get to work?

Mr. Budgen

Further to the point of order raised by the Lord President, Mr. Speaker. I respectfully suggest that you, from your great store of wisdom and knowledge of our proceedings, offer some advice to the Lord President. It would seem to be a most unsatisfactory procedure to start the debate and to break it off in order to conclude it at some time in future.

In the old days, when the Lord President was true to himself, he used to demonstrate that the most important feature of a debate was that one hon. Member replied to the views of another, so that there was a genuine debate. If we start this debate today and attempt to conclude it, for instance, in 10 days' time, there will be no debate. There may be some reading of prepared statements, but the whole intimacy, the sense of giving and taking of ideas, will be gone. There will be no debate. It will, once again, be a denial of everything for which the Lord President used to stand.

Mr. Robert Kilroy-Silk (Ormskirk)

It will be within your recollection, Mr. Speaker, that on many previous occasions when frivolous and irrelevant points of order have been raised, you have risen in your place and said that you will take no further points of order and that we shall begin the serious business of the House. Every point of order tonight has been frivolous. There is a clearly organised conspiracy to filibuster these proceedings. I ask you, Mr. Speaker, to stand up and ensure that we have no more frivolous points of order but begin the serious debate in the House.

Mr. Speaker

I should tell the hon. Gentleman that I do not welcome such remarks. I do not expect the hon. Gentleman to apologise, but I do expect him to know that I shall choose the moment. Much as he might regret it, I do not need his assistance. I shall manage without it.

Mr. Peter Ros (Derbyshire, South-East)

It would be helpful, Mr. Speaker, if you could give some guidance to the House and to the Leader of the House along the lines that you would not be likely to consent to the closure being put at 10 o'clock, in view of the fact that a large number of Members will not have had an opportunity to speak in the debate. Using precedents which obviously exist for such guidance—that not enough time is likely to be available—we should then know where we stand and the Leader of the House would be less likely to delay matters even further by trying to get the debate started.

Mr. Speaker

I had that put to me earlier. Obviously, I cannot anticipate what will happen at 10 o'clock. I do not think that we can hold up a Bill by points of order which are simply delaying us.

Sir Keith Joseph (Leeds, North-East)

Will die Lord President take into account that even if points of order had not been raised, after an opening speech from the Secretary of State, the response from the Opposition and the two winding-up speeches, there would have been left only 30 minutes each for the interests of Scotland and Wales and for the views of any other parties in the House. Surely, that cannot be justified for a Bill involving public spending on this scale.

There is no suggestion of any defeat for the Government. We are only asking the Lord President to do his duty to all interests in the House, including those below the Gangway on the Government side. He should ensure that we have sufficient time in which to debate this important Bill. That would not lose any time, assuming that the Bill is given a Second Reading, before it goes to Committee.

Mr. Foot

I suggest to the House that the best way to proceed is as I suggested. If my suggestion had been adopted we should already have embarked upon the debate on this important Bill and a considerable amount of time could have been devoted to it. At 10 o'clock the question of how much time has been devoted to the Bill will have to be taken into account by you, Mr. Speaker, and, before then. it may be taken into account by the usual channels.

I suggested how we might take that into account. I believe that the proper way is by discussion in the usual channels. I urge the House to embark upon the debate which has been put down for today. In addition to those who have raised points of order, many other hon. Members have interests in this matter. Some hon. Members are very eager that the Bill should get on to the statute book. I know that some hon. Members, including the right hon. Lady the Leader of the Opposition, do not want it on the statute book at all. They are perfectly entitled to take such precautions as they can.

I suggest that the right course is to follow the procedures which have been announced upon the Order Paper. We should start upon the debate and see how matters proceed. In the meantime, I am prepared to have discussions through the usual channels, without any commitment about what we might propose at 10 o'clock.

I believe that the best suggestion was the one that I made about three-quarters of an hour ago. We can discuss these matters through the usual channels. If hon. Members insist on raising points of order for another half an hour or so, they will merely waste the time of the House of Commons.

Mr. Norman Lamont (Kingston upon Thames)

I should point out to the Lord President that although this is an extremely important Bill, it is also extremely short. The idea that there will be a prolonged Committee stage and that there is any real danger of the Government not getting the Bill before Easter is totally unreal, as the right hon. Gentleman must know. The Committee stage, by the very nature of this brief Bill, cannot be very long. Therefore, the right hon. Gentleman's fears and reasons for not having the debate on another day are totally groundless.

Mr. Peter Hordern (Horsham and Crawley)

On a point of order, Mr. Speaker. Will you advise us on how the interests of Back Benchers can be protected in this situation? The Leader of the House said that he was not prepared to give any undertaking now whether the debate would be extended. He prefers to do that through the usual channels. How can the interests of Back Benchers be properly protected?

The Bill concerns not only the total sum to be advanced to the National Enterprise Board but the interests of Scotland, Wales and England and, not least, the Treasury. As one of my hon. Friends pointed out, whereas the Bill provides that the NEB is to be authorised to spend £4,500 million, the public expenditure White Paper allows no more than about £270 million for each of the next four years. Therefore, the least that the House should expect is the pres- ence of the Chancellor of the Exchequer or the Chief Secretary, but neither of those two right hon. Gentlemen is here. As time draws on, the possibility of any of these arguments being advanced dwindles into nothing. Therefore, will you advise the House how, in your opinion the interests of Back Benchers can be protected in this situation?

Mr. Speaker

There is no means open to the House to stop the order of business on the Order Paper.

Mr. Peter Bottomley (Woolwich, West)


Mr. Speaker

Order. I believe that I have called everyone except the hon. Member for Woolwich, West (Mr. Bottomley). I shall take his point of order and then call on the Minister. [Interruption.] Order. I do not propose to stay here until 8 o'clock taking points of order because hon. Members do not want the Bill to be proceeded with. That is not my function. I cannot be expected to do that. I have been here since 2.30 p.m. as it is.

Mr. Peter Bottomley

On a point of order, Mr. Speaker. I shall try to keep to my point of order rather than go into points which might be made in the debate on the Bill, if and when it comes.

I understand that the Lord President, in his last point of order, made one suggestion and one recommendation which he put as a suggestion to the House. In his first suggestion he said that there should be discussions between the usual channels. It is quite plain that you alone, Mr. Speaker, have discretion to suspend the sitting so that those discussions can take place.

The second suggestion made by the Lord President was that the House should continue to consider the Bill. He is far more expert than I am on these matters. I do not believe that he would have put that forward as a suggestion for the House to accept if it were not in some way possible for the House not to accept it.

When you were ruling on the point of order raised by my hon. Friend the Member for Cambridge (Mr. Rhodes James) you kindly read part of Standing Order No. 1. You said that, in certain circumstances, it was not possible for any Member other than a Minister of the Crown to move the Adjournment of the House. Notwithstanding the difficulties which you expressed just now of having been here since half-past two, this seems to be a serious point. If there are circumstances in which the Chair may accept the motion for the Adjournment of the House proposed by my hon. Friend the Member for Cambridge, we need to be clear about the circumstances in which the restriction to a Minister of the Crown applies. I should be grateful if you could give us the information on that matter as well as dealing with the point made by the Lord President that he was making a suggestion on which, in one way or another, the House could find the opportunity to decide.

Mr. Speaker

If the hon. Gentleman, when he has an opportunity, will look at page 354 of "Erskine May" he will find in the last paragraph the knowledge for which he has been searching.

Mr. Bottomley

Further to that point of order, Mr. Speaker. The point that I was making related to Standing Order No. 1, of which you were kind enough to read all or part. That suggested that there certain circumstances when only a Minister of the Crown was able to move a motion for the Adjournment of the House. Is it possible that we are now in a different circumstance which is not covered by the provision that you read at that time?

Mr. Speaker

The reference in "Erskine May" to which I directed the hon. Gentleman's attention was dealing with Standing Order No.1.

Several Hon. Members rose

Mr. Speaker

I shall take one more point of order, and then I intend to call the Minister.

Sir Keith Joseph

A number of constructive suggestions have been made. I wonder whether through you, Mr. Speaker, I may again draw to the attention of the Lord President the fact that because of the possibility that you will decide to devote the last three hours of Monday's business to a debate under Standing Order No. 9, that will leave a slot in the earlier part of the day when this debate could be continued. We would then, in effect, have a full day's debate, though spread over two days.

I think that that suggestion would meet the convenience of the House more than any attempt to rely upon the uncertain chance of the Government not trying to move the closure and your inevitably uncertain response—we cannot know what you would decide at that stage—of trying to cram important matters of principle and of finance into so short a time today.

No Opposition Member is seeking by any improper means to gainsay the Government's right to have the Bill considered. What is at stake is a matter of a couple of days if we adopt the proposal which has been put forward. That will not even delay the entering of the Bill into Committee, should it receive a Second Reading.

Mr. Foot

On a point of order, Mr. Speaker. If the House will proceed on the lines that I have suggested, I believe that the whole matter can be perfectly well accommodated. If the right hon. Member for Leeds, North-East (Sir K. Joseph) had acceded to what I suggested earlier, it could have been dealt with.

I suggest that we should start upon the debate now. I wish that it could have been done earlier. We can then have discussions through the usual channels—[HON. MEMBERS: "They have had them."]—and reach the same conclusion as I suggested to the House earlier. I believe that that is a reasonable way in which to proceed. How we proceed to continue the debate at a later stage is, I suggest, a suitable matter for discussion through the usual channels. I suggest that we can deal with that matter at 10 o'clock and in a further announcement in the House tomorrow. The whole matter can be dealt with satisfactorily. I suggest that the best course would have been for the House to have listened to me in the first place.

Several Hon. Members rose

Mr. Speaker

Order. The House should be aware that discussions through the usual channels seem to have borne fruit.

In my own interests, I shall suspend the House for 10 minutes.

6.30 p.m.

Sitting suspended.

On resuming

6.40 p.m.

Mr. Foot

May I suggest that the best way in which the House should proceed is to start upon the debate now but not to seek to reach a conclusion on the Second Reading at 10 o'clock. We shall make an announcement at the beginning of business tomorrow as to how we shall proceed with the Bill again at the beginning of next week.

I hope that that will satisfy the requirements of the Government in wishing to proceed with the Bill but also satisfy the requirement of the House to have time to discuss it.

Mr. Speaker

It seems that the suspension of the House was good for all.

Sir Keith Joseph

I thank the right hon. Gentleman for what he has said, and I hope that Opposition Members will regard what he has suggested as a satisfactory method of carrying on with the debate.

6.41 p.m.

The Secretary of State for Industry (Mr. Eric G. Varley)

I beg to move, That the Bill be now read a Second time. The purpose of the Bill is to raise the financial limits of the National Enterprise Board, the Scottish Development Agency and the Welsh Development Agency, and to amend the Acts governing them so that all the borrowings of their subsidiaries count against their financial limits.

My right hon. Friend the Secretary of State for Northern Ireland intends to introduce an order increasing the statutory financial limit of the Northern Ireland Development Agency. This order, too, will require that borrowings by the Agency's subsidiaries should be charged against its financial limit. Because of the arrangements for legislation relating specifically to Northern Ireland, this order will be dealt with separately.

The NEB is by any objective assessment one of the great success stories of British industry. It was a central feature of the industrial policies put forward in the Labour Party's manifestos in 1974. The legislation setting it up was carried as a matter of priority in the first Session of this Parliament. It has now been in operation for a little over three years, and it is already impossible to imagine the British industrial scene without it.

Nine months ago I asked the House to approve an increase in the financial limit of the NEB in the manner provided under section 8 of the Industry Act 1975. We had a very full debate then, covering the whole range of the NEB's activities, at the end of which the House approved an increase in the limit from £700 million to £1,000 million. Now we must now look ahead to the time when the NEB has reached that limit.

The charges that at present lie against the NEB's financial limits include issues of public dividend capital to the NEB, borrowings made and guaranteed by the NEB; and commercial borrowings by the NEB's wholly-owned subsidiaries whilst in the NEB's ownership. At 31st December last the NEB had drawn £439 million in public dividend capital; borrowed £160 million from the National Loans Fund; and guaranteed loans amounting to £5 million. At the same date its wholly-owned subsidiaries had borrowed £56 million.

The total currently charged against the NEB's limit stands at £660 million. This figure is the charge that the law requires should be made against the NEB's financial limit. But the NEB is continually entering into firm forward commitments, to its subsidiaries and associates, which will present charges against the limit in due course. The total of these commitments varies widely over time, but at 31st December it stood at £170 million, excluding provision for British Leyland and Rolls-Royce.

The total of firm commitments and actual charges now already amounts to £830 million, plus whatever is required for BL and Rolls-Royce. The latest corporate plans of these companies will not be endorsed for some time yet, but there is every reason to think that substantial investment will be required in the course of the coming months, and although some of this may be met by private sector borrowing and internally generated funds, a major part will be the responsibility of the NEB to provide.

Mr. Kilroy-Silk

Can my right hon. Friend tell me why we should tonight support an additional grant of funds to the NEB, given its very shoddy performance in the North-West and on Merseyside, its persistent refusal to support the Kirkby co-operative, the fact that it is almost totally unaccountable to Parliament and the fact that the Secretary of State consistently refuses to give it directions? It has such a total disregard for the high unemployment in the regions that it can locate the headquarters and research and development facilities of INMOS outside an intermediate area. Given all the kind of things—

Mr. Deputy Speaker(Mr. Bryant Godman Irvine)

If the hon. Gentleman is making an intervention, it should be brief.

Mr. Kilroy-Silk

May I ask my right hon. Friend to take some time to explain to his colleagues on the Labour Benches why we should support an enterprise which is becoming increasingly like a commercial bank?

Mr. Varley

If my hon. Friend had been able to contain himself for 10 minutes or so, I should have into some of the areas that he has covered. He is factually wrong on a number of the points that he has raised, but I can understand his frustration and anger at not yet having been able to make his speech. I am not sure that I can take up his points now, because so many of them are wrong.

Perhaps the best thing for my hon. Friend to do would be to try to catch the eye of the Chair and make his speech rather than make these wild assertions. I am sorry that I must say that to my hon. Friend. I am about five minutes into my speech, and he says that I have not explained everything. I object to that kind of intervention.

The NEB's present financial limit is likely to be reached within a fairly short time of the Bill's becoming law. The Bill makes provision for a total increase of £3,500 million. If the Bill is carried, the borrowing limit will include all the borrowings of the NEB's subsidiaries, and we envisage that these might amount to perhaps £1,500 million over the next five years. After taking account of that, the Bill provides for an additional £2,000 million to enable the NEB to pursue its statutory purposes of promoting the effic- iency and competitiveness of United Kingdom industry, and so generating increased employment.

We have taken account of the fact that over a period of five years the NEB's present annual public expenditure provision of £275 million would require £1,375 million. We also have regard to the desirability of no longer augmenting NEB funding of BL from funds provided under section 8 of the Industry Act 1972. and to the contingencies of many sorts which could present themselves for the NEB. I know that the hon. Member for Colne Valley (Mr. Wainwright) was very interested that we should go to the NEB for the funding of organisations such as BL rather than rely overmuch on the Industry Act 1972. We therefore concluded that it would be sensible to envisage a provision of £2,000 million for the purposes I have described. This sum, as I have said, when added to the £1,500 million for subsidiaries' borrowings, points to this increase of £3,500 million in the NEB's financial limit, for which this Bill provides.

However, as is usual, the Bill provides that this increase should be approved by the House in stages, and therefore the limit initially is set at £3,000 million, an increase of £2,000 million, with further increases subject to affirmative order within the ultimate limit of £4.500 million. These increases in the financial limits of the NEB will not of themselves add a penny to public expenditure. What they will do is to enable the NEB to continue entering into financial commitments. Fly no means all the commitments involve public expenditure. We believe that between one-third and a half of the increases that we are seeking in the NEB's limit will be drawn from private sources of finance.

Now I come to the borrowings of the NEB subsidiaries, which are specifically mentioned in the Bill. The secondary purpose of the Bill is to amend the Industry Act and the Scottish and Welsh Development Agencies Acts so that the borrowings of all their subsidiaries are charged against their financial limits.

In the case of the NEB, under section 8 of the Industry Act 1975 the charges against the NEB's financial limit include the borrowings of its wholly-owned subsidiaries and loans of any sort which are guaranteed by the NEB. There are similar provisions in the Agencies' Acts.

In March 1977 BL's auditors sought an assurance from the directors that BL's accounts could be prepared on a going-concern basis.

The directors in turn sought assurances from the NEB. In reply, with the Government's approval, the NEB drew attention to the provision in the NEB guideline that in deciding on their practice in relation to the debts of their subsidiaries the NEB shall have regard to the practice of companies in the private sector and went on to say that, in the judgment of the NEB, in the private sector, a company whose relationship with BL was the same as that of the NEB, by virtue both of the size of its shareholding and the closeness of its involvement in the affairs of BL, could not allow BL to be left in a position where it would not be able to meet its obligations. That assurance was made public when I reported it to the House, as hon. Members will recall, on 26th May 1977.

We were advised that the assurance, which covered all BL's obligations, was not a guarantee in law, and so there was no question of BL's borrowings being charged against the NEB's financial limit on that account. Nor is BL a wholly owned subsidiary of the NEB, which would also require its borrowings to be charged against the limit. But we recognise that the assurance has a degree of force which makes it difficult to distinguish, for all practical purposes, from a guarantee, and we thought it right, therefore, to take the first legislative opportunity to charge BL's borrowings against the NEB's financial limit.

Because the same principles apply to all NEB subsidiaries, it was appropriate to provide that all their borrowings should be included within the limit in future. In reaching that view we were fortified by recent views expressed by the Public Accounts Committee about financial limits.

This has meant that we have to seek a much higher limit than would otherwise have been necessary, and the Government think that it would be right to extend the provisions to which I have referred to the Scottish Development Agency and the Welsh Development Agency, because their industrial investment tasks are essentially the same as those of the NEB. Subsections (5) and (7) of clause 1 have that effect.

Mr. Hal Miller

Does that mean that creditors of BL are now in receipt of a Government guarantee? Has the principle been extended to that degree, or is the right hon. Gentleman referring only to the later borrowings of the company?

Mr. Varley

The principle has not been extended. That is why I took a great deal of care over the words that I used, and I ask the hon. Gentleman and those who have an interest in these matters—companies, suppliers and the rest—to take careful note of what I have said. I have no doubt that this matter will be gone into much more thoroughly in Committee.

Mr. Michael Grylls (Surrey, North-West)

May I ask for clarification? The Secretary of State has given a figure for the borrowings against the NEB on the present system under the 1975 Industry Act of the wholly-owned subsidiaries. Can he give us a new figure on the new accounting practice as if the Bill had received the Royal Assent today? Can he give us the figure which would be the equivalent of the £660 million which he is giving us now?

Mr. Varley

The hon. Gentleman will, I am sure, recognise, that it is extremely difficult to do so. It is difficult, even if one knows exactly what the borrowings are, to give a figure, but, as he knows, and as the House knows, these figures are changing all the time, and we cannot give an accurate estimate at this stage. It may well be that in Committee something can be done—perhaps the Committee can be given a snapshot of the situation at that time—but I am not prepared to give that figure today. I understand the hon. Gentleman's point, but I hope he will understand the relevance of what we are doing and the explanation that I have given.

I should like to come to the NEB's record. It is, of course, dominated by BL and Rolls-Royce, and really those two companies take up a great deal of the NEB's responsibility and time.

BL is the NEB's largest subsidiary, and the Government's position on future funding remains exactly as I told the House when we debated the 1978 injection of equity funds in April last.

Of the £1,000 million of public funds which the Ryder report recommended should be made available to BL between 1976 and 1981, £400 million remains to be provided. As I told the House last year, the Government are willing in principle to release sums up to this amount in total between now and 1981 if BL's performance and prospects remain in line with its corporate plan.

No one concerned with BL's future—whether part of management or the work force or simply a taxpayer—should be under any illusion that the Bill implies an additional commitment on the Government's part to convey yet more funds to BL beyond the £1,000 million. But I must make clear to the House that unless this Bill is carried the NEB will not he able to fulfil the existing commitment. Failure to carry the Bill will throw the whole future of BL into jeopardy.

The objective of the Government, the NEB and BL management continues to be to restore BL as a major commercially viable motor manufacturer. I want to make it clear to all concerned that the investment funds which an international motor manufacturer needs year by year to keep up with its competitors are on a scale well beyond what could possibly be spared out of public funds. BL will have to provide funds out of its generated profits, and certainly there will have to be borrowings from the private market. So, to survive into the 1980s, BL mast achieve a commercially acceptable level of profitability so that it can draw investment funds both from its own resources and from finance attracted from the private sector.

Mr. Hal Miller

I am sorry to interrupt the right hon. Gentleman again, but can he tell us whether BL is still required to match on a 50-50 basis, or is he referring to some level of profitability? Is the original requirement to match over the period to 1981 still in existence?

Mr. Varley

As the hon. Gentleman knows, we missed that objective some time ago owing to the troubles that we had, which we explained at the time during the toolmakers' dispute. I want to emphasise however—[interruption.] Of course I said it, and at that time it was utterly realistic to say it. There were internal difficulties in British Leyland at that time, which I need not go into now. But I assume that all hon. Members want British Leyland to be a success. I shall come in a moment or two to say exactly what success it has had over the last few weeks. I want to be as precise as I can. The original Ryder commitment was for £1,000 million of public funds, and we are ready to provide the other £400 million that remains out of that over a period to 1981, provided we are satisfied with the performance of the rest of it.

Mr. Hordern

The right hon. Gentleman will recognise that the Public Accounts Committee considered BL's borrowing and the letters of comfort. It is plain that BL will have further recourse to letters of comfort. I think the right hon. Gentleman recognises that in the last resort the Government will be expected to stand behind BL. I believe that those are the words that he used. My recollection is that that was the recommendation of the PAC. That being so, is it not clear that that constitutes an addition to the central borrowing requirement? I understand that it need not come through from direct public dividend capital in grants toward BL or the NEB, but does it not follow from the letter of comfort that if the Government are standing behind the company that should constitute part of the general borrowing requirement? If so, where is that part of the general borrowing requirement expressed in the public expenditure White Paper?

Mr. Varley

I am tempted to go into a long explanation. As the hon. Gentleman realises, that section of the NEB's responsibility to BL is a matter of much commercial sensitivity. Any words of mine in the House must be carefully weighed. At this stage I do not want to add to the words that I have used in clear and precise terms, which will be considered closely outside the House.

The PAC's views were taken into account in drafting the Bill and in my speech. I shall return to accountability and the views of the PAC. It is not the Government who are standing behind BL but the NEB. I refer the hon. Gentleman to the guidelines. The NEB will treat BL as any other major holding company would treat one of its subsidiaries. The hon. Gentleman has raised an important matter and I do not want to say or imply that we are doing something that we are not.

I have said that the funds remaining under the original Ryder proposals amount to about £400 million. Provided that in terms of the corporate plan BL makes satisfactory progress towards the target set by the BL board and approved by the NEB and the Government, we are prepared to make that money available.

Mr. Michael Edwardes, BL's chairman, put the matter of further Government funding plainly enough last February in his speech to management and employees. I agree entirely with what he said: There is no way that the Government can provide the funds we need"— those are the funds that it needs— unless it is clear we are working as a team and towards the common objective of restoring BL to health and success. To operate profitably in fiercely competitive world markets BL needs to achieve sustained production, which in turn depends very largely on the avoidance of constant unofficial disputes.

I am sure that the vast majority of the BL workforce want the company to succeed. Before Christmas we saw some encouraging signs. There was the two to one majority by which the BL work force accepted the management's pay and productivity package. That was an encouraging sign. BL's car business was turned from loss to profit in the first half of 1978. The new Rover saloons were successfully launched in Europe, with production at Solihull roughly doubling over the past 12 months. New engines were introduced into several of the company's vehicles.

As I said at Question Time on Monday, decisions about public funding for 1979 must await the NEB's report on BL's 1979 corporate plan. I expect to receive the plan shortly. When we have studied it, I shall put the Government's conclusions before the House. This debate will not deprive the House of the opportunity to study and discuss funding arrangements for BL on a later occasion. I told the House on Monday that I wanted to provide additional information so that the House would have as much information as practicable.

I must stress that the Bill is not a blank cheque for assistance to the company. The survival of the company and of the hundreds of thousands of jobs dependent upon it can be achieved only by the efforts of management and the work force. The only valid guarantee of their future is to maintain their competitiveness.

If 1978 was a turnabout year for BL—I think it was—it may equally have been a commercial turning point for Rolls-Royce. In March it received an order for its RB211 engines to power the Lockheed TriStars for Pan-Am in the face of fierce competition from American engine manufacturers, especially General Electric. That was a vital deal for the company. It ensured that Rolls-Royce retained its position as the only engine supplier for the TriStar. It broke new ground with one of the world's major airlines.

Since then, the RB211–535 engine has been chosen as the launch engine for Boeing's new 757 aircraft, which has been ordered by British Airways and Eastern Airlines. The Government have approved the launch of that engine, which will also be suitable for other aircraft in the new generation of civil airliners. The development will secure many jobs not only in Rolls-Royce's own factories but among the company's many suppliers throughout the country. It will preserve Britain's position in this high technology industry.

The company has done well in other areas. The RB211 has been chosen to power the Boeing 747s used by both Cathay Pacific and Qantas. The company's other engines continue to sell well, and the Spey deal with Romania will help to ensure the continued production of the engine over the next few years. I must make it clear that the development of the 535 engine and the further improvements to the basic design of the RB211 will involve substantial expenditure over the next few years—expenditure which is vital if the company is to remain in the big league of world aeroengine manufacturers. Let the House be in no doubt that the passage of the Bill is essential for the continued prosperity of Rolls-Royce.

Mr. Ian Lloyd (Havant and Waterloo)

Will the right hon. Gentleman inform the House whether the scale of the research and development commitment for the new mark 211 engine is at the same level of magnitude as for the original 211 engine?

Mr. Varley

Frankly, I do not know. I do not know whether the scale is the same. I assume—if this were not so I should not have had the recommendation that I received—that the scale of R & D and other resources devoted to it is adequate. I do not know whether it is on the same scale. I should think that it is not, given that perhaps there is some carry-over of transfer technology taking place from the original 211 engine to the 535. That is a, matter of interest to me. It is a matter on which I should obtain more information, and I shall write to the hon. Gentleman about it.

BL and Rolls-Royce are the NEB's major commitments. However, it has important and profitable investments in other significant companies. Ferranti is a great success story. The NEB increased its shareholding in ICL last week and is now the principal single shareholder. Substantial profits are expected for 1978 from Fairey. Then there are the small companies for which the NEB is a crucial new source of capital.

Mr. Frank Hooley (Sheffield, Heeley)

Has any directive been given to the NEB, or is it operating on any understanding, about the activities in South Africa of the companies for which it is the holding agency? It is known that British Leyland has important and expanding activities in South Africa. We know that ICL is indulging in the supply of computers to the South African police and armed forces. That supply has political implications, apart from economic ones. Has the NEB received any directives on this matter from the Government? If not, is it intended to give it any such directives?

Mr. Varley

I should have anticipated my hon. Friend's question. I know that he takes a great interest in these matters. We have had correspondence on them. British investment in South Africa is something to which the Government have given some attention recently. My right hon. Friend the Minister of State has had discussions with ICL on that very issue. We shall have to ascertain the result of the discussions with ICL. When that has been done, and if it becomes necessary, we shall make suitable arrangements to inform the House.

The NEB is an important instrument in the action in relation to the Government's industrial strategy. A notable success is the role that it is playing in computers, computer software and micro- electronics. The actions of the NEB in these sectors have helped. A major impetus has been given to the ability of the United Kingdom to compete in what promises to be a major new development between now and the end of the century.

Another area of crucial importance is the development of the NEB's regional boards. I want to see the Board's interest increase. It has a statutory responsibility to promote productive employment throughout the United Kingdom. That is its primary responsibility. But sometimes the impression is given that it has little employment interest in the regions. That is not true. There is not a region in the United Kingdom in which the NEB does not have an interest. For example, it has a stake in companies in the North-West region, which are employing more than 25,000 people.

I am sorry that I was rude to my hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk) but he should realise that the NEB has a stake in the North-West. There are 25,000 jobs dependent upon the NEB. It ought to do better and I agree with him on that. It has to do more in the regions. There is no limit in the NEB's total budget to the funds available for regional purposes.

Mr. Kilroy-Silk

I am grateful to my right hon. Friend for giving way, but he said that everything I had said was wrong. I hope that he will now contradict me and say that I am wrong when I say that the NEB will not help the Kirkby co-operative as a fall-back position and that the INMOS headquarters research and development facility will not be located in Bristol.

Mr. Varley

With regard to Kirkby, my hon. Friend knows that that was not a recommendation of the working party. The working party on Kirkby was set up at the request of the workers' cooperative. We agreed to it and they agreed to abide by the findings. We now know they are not doing so, and there is an application by Kirkby before the Department. We are statutorily required to consider that under the terms of the Industry Act 1972 and we shall do so. Kirkby has been closed for the past two weeks, not by any action by the Government but by industrial action. I cannot understand why the Transport and General Workers' Union, by primary or secondary picketing, should want to close that co-operative. I hope my hon. Friend is using his influence to ensure that it gets the necessary supplies. It will not serve any purpose to keep that cooperative closed.

With regard to INMOS, the headquarters has not been located in Bristol. The decision has been taken to locate the technology centre in Bristol but not the headquarters. I hope that the INMOS project will be a success. Even that must be put in perspective. About 90 per cent. of the expenditure and 90 per cent. of the jobs will be in the assisted areas. Everyone is expecting me to give the NEB some direction. At some stage one must follow the judgment of those with the responsibility.

Some Conservative Members may say that the NEB should not be in microelectronics at all. I must rely on the judgment of the Board. Provided that it acts within the statute—and it does act within it— there is no reason for me to put my judgment over that of the Board. I should have been delighted if the technology centre had been located in Manchester or somewhere else in the North-West. I could not say to the National Enterprise Board and people with greater knowledge of microelectronics than mine that their judgment was wrong.

With regard to general financial duty, on each investment that it undertakes on its own account the NEB is required to seek an adequate return within a reasonable period, not losing sight of profitability. On these investments the NEB is under a financial duty to earn a return on capital employed of 15 per cent. to 20 per cent. by end-1981, and to make steady progress towards that rate in the meantime. It is not essential that each and every investment should secure this rate, but the NEB's investments as a whole, other than in BL and Rolls-Royce, must do so.

So the NEB has clear responsibilities in relation to financial performance. The duty is an essential discipline, and one to which the Government attach great importance, since it is the only satisfactory way of appraising the NEB's success. This was of great significance in the difficult issue of the NEB's accountability to Parliament.

Mr. Michael Marshall (Arundel)

The House is grateful to the Secretary of State for giving way a number of times. The last unaudited accounts that we have were received some time ago. Will he give us the latest figures for return on capital as at 31st December on unaudited accounts?

Mr. Varley

I cannot give that information, but steady progress is being made on these investments to meet that target of 15 per cent. to 20 per cent. by the end of 1981. It is significant and I do not want to play it down. I want to give the House as much information as I can about the National Enterprise Board, its targets and its performance. It is an organisation that is well worth supporting. I hope that Conservative Members will not in subsequent speeches stick to their original hostility or pursue a vendetta against the NEB.

On the question of accountability, the Public Accounts Committee has urged that the Comptroller and Auditor General should have access to the NEB's books in order that the Committee may be advised in detail of the way in which the NEB has made its investment decisions. I know that this is a matter on which the Committee has the support of many hon. Members. The Government, for reasons which the Committee presented very fairly in its reports, has taken a different view.

There are, however, some points that I should like to make briefly. It would be wrong to imagine that the NEB is somehow escaping parliamentary control. The NEB is accountable to Parliament and there is no doubt about that. My Department has clear arrangements for monitoring the NEB's activities, for examining its plans and for authorising major new investments and financial commitments. All my Department's records are accessible to the Comptroller and Auditor General. The Public Accounts Committee has every opportunity of examining the Department and the NEB about any aspect of the NEB's affairs. I am answerable to Parliament for the NEB's overall performance, within the well-established limits and procedure of parliamentary practice, as explained by my right hon. Friend the Leader of the House on 18th December 1975.

But these matters need to be considered in the wider context of the Comptroller and Auditor General. My right hon. Friend the Minister of State, Civil Service Department, told the House on Monday that the Government had taken careful note of the views of the Expenditure Committee, the Public Accounts Committee and the Procedure Committee on this matter. In particular, the Expenditure Committee has made various recommendations concerning public audit arrangements, including the suggestion that the Exchequer and Audit Departments Acts need revision.

The Government have been considering this carefully, together with the recommendation by the PAC that the Comptroller and Auditor General should have access to the books of the National Enterprise Board and the British National Oil Corporation. I hope the House will accept that our response should be made within the framework of a considered response and a proper look at this, rather than a piecemeal response.

This would probably be done best by fresh legislation defining more directly and explicitly the responsibilities of the Comptroller and Auditor General in modern conditions. The Government have noted that the Comptroller and Auditor General has himself expressed support for this view. Accordingly, the Government have decided to put in hand a study of the Comptroller and Auditor General's present-day role and the corresponding new legislation that would be necessary, with a view to considering the introduction of a Bill in the next Parliament.

We have noted that the Public Accounts Committee will conduct a further inquiry into its own possible developments in the role of the Comptroller and Auditor General. The Government will wish to consider any further proposals which may result and will, in any event, arrange for the appropriate parliamentary Committees to have the opportunity to express views in due course on the Government's specific proposals.

Mr. Michael English (Nottingham, West)

I thank my right hon. Friend.

Mr. John Garrett (Norwich, South)

What kind of study is this? My right hon. Friend seems to have announced a major constitutional reform in the course of a debate where such an announcement would not be expected. Is this study to be a parliamentary one? Will a Com- mittee of the House carry it out? Also, what will be its relationship with the studies that have already been undertaken?

Mr. Varley

It will be held in connection with studies which have already been carried out. The Procedure Committee had a good deal to say about this. My right hon. Friend the Chief Secretary to the Treasury will be in charge of this aspect, because it spans several Departments and organisations. He will fill out the details at an appropriate time.

Mr. Hordern

The Secretary of State has made an important announcement. The powers of the Comptroller and Auditor General are very old and very important. Will he assure us that there will be no diminution of the responsibilities and powers of the Comptroller and Auditor General?

Mr. Varley

It is certainly not in our mind to have any diminution in the powers. That has not been considered by the Government at all. I can give that assurance.

Mr. Edward du Cann (Taunton)

The proposal that there should be an examination by Government of the function of the Comptroller and Auditor General and the Exchequer and Audit Department is to be welcomed. So is the rapid timetable that the Secretary of State has suggested in that regard. However, the rest of the statement is far from satisfactory. The suggestion that the Comptroller and Auditor General cannot have access to the books of the National Enterprise Board or the British National Oil Corporation is not acceptable. A Select Committee of this House has twice recommended—the first occasion 18 months ago —that a different situation should obtain, and the Secretary of State has a duty to accept that recommendation. There is no logic in the proposal that this should not be allowed.

On Monday it was agreed that the Comptroller and Auditor General should have access to the books of the national Housing Corporation, and there can be no sense in denying him the opportunity to see the books of the NEB if he is allowed full access to the books of the Scottish Development Agency. I hope the Secretary of State will reconsider this.

Mr. Varley

I stand by what I have said tonight. We shall have to see how the review takes place. I am not yet persuaded to go as far as the right hon. Member for Taunton (Mr. du Cann) has suggested, for the reasons that we have made plain on previous occasions. The Government's views have been conveyed to the PAC.

An impression has been given that, by some means or another, the Government are evading their responsibilities under the 1975 Act. That is not true. The right hon. Gentleman and some of his hon. Friends say that this is inadequate, and that is a defensible point of view. Probably it is inadequate in their eyes, but we think it is satisfactory at present and that there is adequate scrutiny by Parliament of the NEB.

At the end of the day the PAC has the power of all Select Committees and can send for persons, papers and records. It can hand those papers over to the Comptroller and Auditor General who can then decide, report and advise the Committee. I do not think that we shall persuade one another. As a Government we have gone a long way to meet the points that have been made.

Mr. Budgen rose

Mr. Varley

No, I really must get on. I have already given way a great deal. I am not being discourteous to the hon. Member.

I move on to the Scottish Development Agency and the Welsh Development Agency. Like the NEB, they have an important role as a source of investment finance for industry. The SDA and the WDA have powers that parallel very closely those of the NEB. But, in addition, the Agencies have powers and duties to undertake environmental improvement schemes, to build factories, to clear derelict land, to engage in industrial promotion and to provide loans and advisory services to small firms. My right hon. and learned Friend the Secretary of State for Wales and my right hon. Friend the Secretary of State for Scotland have asked me to pay a special tribute today to the imaginative and effective way in which their respective Agencies tackle their formidable and challenging tasks—[HON. MEMBERS: "Where are the Secretaries of State?"] I cannot understand the sudden enthusiasm of the Tories, because they voted against both these Agencies coming into being.

The Scottish Development Agency has firmly established itself in the industrial scene and has gained widespread and genuine acceptance and support from the Scottish banks and industry and commerce generally. The SDA has built up equity investments in 35 companies throughout Scottish industry, amounting in total value to £20 million. That is in addition to its loan investments and the special help that it gives to small firms. Upwards of 35,000 jobs already depend directly or indirectly on the SDA's work. It has built and converted factories to the extent of 1.5 million sq. ft. It has taken a leading part in the special environmental and industrial renewal projects in the east end of Glasgow, and it is responsible for other major environmental schemes on Clydeside. It has approved £60 million worth of schemes for the clearance of derelict land in Scotland and developed a steadily expanding effort in industrial promotion both at home and overseas.

The Welsh Development Agency has comparable achievements to its credit. In addition to its important role as a source of investment finance for Welsh industry, it is responsible for an ambitious and successful programme of factory building and for forming a "land bank"—

Mr. Dafydd Wigley (Caernarvon)

The Secretary of State mentioned the number of equity holdings of the SDA in Scotland. How many equity holdings does the WDA have in Wales? Can he confirm that these are substantially fewer and that if £250 million is going to the WDA there is a strong case for more work in this direction?

Mr. Varley

I do not think that I have the information with me, but when my right hon. Friend winds up this debate, whenever that may be, he will try to give that information. If the hon. Gentleman is saying that the Agencies must do even more—and he is one of the first to pay credit to their efforts so far—I agree with him.

The hon. Gentleman knows that the WDA provides new sites for industry, housing and schools, especially in the South Wales valleys where industrial land is scarce. The WDA is responsible for a growing programme of environmental improvement which is important in the older industrial areas. Through its small business unit, the WDA provides loans and advisory services to many small businesses which are such a significant source of employment in the Principality. It is doing an outstanding job in promoting the attraction of Wales as a location for industrial development. In the three years since its establishment, the Agency has worked to support the Government's strategy in creating a diversified, modern industrial base in Wales. Its philosophy has been that of the industrial strategy. The key to better employment prospects lies in the creation of efficient, internationally competitive industries.

The Agency's role as an instrument of economic development is widely accepted by both sides of industry in the Principality. I am sure that the House will recall the opposition of the Conservative Members to the Welsh Development Agency Bill—they voted against the Second Reading—although I understand that they have since had a change of heart. I hope that that is so and that the Scottish Tories have had a similar change of heart about the Scottish Development Agency. I hope that the English Members will also have a change of heart about the NEB at some stage.

Mr. Wyn Roberts (Conway)

In November we were told in the Welsh Grand Committee that the Welsh Development Agency had spent just under half of the £100 million that it was allowed to spend under the Welsh Development Agency Act 1975. The Government could, of course, have followed that up by coming hack to the House for an extra £50 million some time in the next financial year. Can the Secretary of State explain why there is this hurry to increase the money available to the Welsh Development Agency at this time when no increase in the rate of spending is anticipated?

Mr. Varley

I do not want to avoid that question, but, as the hon. Gentleman knows, the WDA has the same powers of investment as the NEB. Even though Conservative Members opposite voted against the Agency, I expect, as does the Secretary of State for Wales, that the resources to be allotted to it will be needed over this period. I shall come to that in a moment. I think that the hon. Member for Pembroke (Mr. Edwards), who speaks on Welsh matters for the Opposition, will be the first to acknowledge that, far from being seen as some sort of menace to industry in Wales, the WDA is now very welcome and is encouraged—and I am sure the hon. Gentleman is encouraged—by the support that it gets from industry and the banks.

Mr. Nicholas Edwards (Pembroke)

The right hon. Gentleman has not so far given us a single figure about the Welsh Development Agency. Can he, therefore, give us the aggregate amount outstanding against the present limit and tell us how much of that aggregate amount outstanding relates to the general external borrowing of subsidiaries which is being brought in, we understand, for the first time?

Mr. Varley

I am coming to those figures, but I am saying to the hon. Gentleman that I think he now realises that the Agency has an important role to play. He did not actually say so when he intervened, but I take it for granted that the Scottish and Welsh Tories have now repented on these matters and that they really do support the Agencies. The Agencies support the economies of Wales and Scotland and the Bill will give them the financial security to plan ahead. The point on which the two hon. Members from Wales who have just intervened ought to focus their minds is whether the Agecies will have the financial security to plan ahead. They need to know exactly what they have spent and that is the question to which I am coming now.

The initial limit of the SDA is increased from £200 million to £500 million, which may be raised by an affirmative order to £800 million. In total, the limit is raised by £500 million, and this represents, as far as we can estimate, about five years of further activity for the Agency.

Nobody can be absolutely precise about this matter. It may be that the spending will be higher, and in that case, with the encouragement of the House, we should have to come back and look at that. That is the plan at the moment. So far the Agency has spent, or committed, about £170 million against its financial limit, and my right hon. Friend the Secretary of State for Scotland thinks it right to take this opportunity to seek to raise the limits as a reflection of the Government's confidence in the Agency's work and of their determination, often stated in the House, that the Agency should not be hampered in discharging its vital task because of uncertainty about its finances.

For the same reasons, the Bill provides for the raising of the Welsh Development Agency's financial limit to £250 million in the first instance, and to £400 million subject to affirmative order. The total increase envisaged is £250 million, which represents about five years' activity for the Agency.

Mr. Richard Wainwright (Colne Valley)

Before the right hon. Gentleman leaves the two Agencies, will he be good enough to explain to the House—because he has already explained the many similarities between the Agencies and the National Enterprise Board, and has also explained his concern that the Agencies should not in any way be hampered—in what way the Agencies have suffered from the inspection of the Comptroller and Auditor General which they have to bear, while the National Enterprise Board has not?

Mr. Varley

I understood the point made by the right hon. Member for Taunton although I did not take it up. I think that I can give the House the explanation. I am an honest fellow, as the hon. Gentleman knows and if I do not know all the answers I am prepared to come to the Dispatch Box and say so. But the significant difference is that the Agencies have environmental responsibilities. They have additional responsibilities over and above those of the NEB. We know that the Agencies, both in size and in their resources, are different. They have taken over some of the responsibilities that are currently borne by some local authorities. That is one explanation and I hope that the hon. Gentleman will consider that and take it into account.

Mr. Douglas Henderson (Aberdeenshire, East)

Can the right hon. Gentleman tell us, concerning the figures put forward for the Scottish Development Agency in particular, whether any percentage of the National Enterprise Board's money has been invested in Scotland over and above the figures he has given to us, and if so how much?

Mr. Varley

I cannot give the actual figures of the amounts which have been invested, but Rolls-Royce has operations in Scotland, as does British Leyland and other organisations. For example, when I referred to a point made by my hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk), I said that the National Enterprise Board had a presence in every region and country within the United Kingdom. The interests of the NEB in Scotland are significant. During the debate on the NEB (Financial Limit) Order last April we had a lot of talk from the Opposition—and I dare say that we shall have a lot of double-talk today—about their hostility to the National Enterprise Board. They are changing their attitude somewhat from total hostility, so that we no longer have the kind of speeches from the right hon. Member for Leeds. North-East (Sir K. Joseph) that we used to have from the hon. Member for Henley (Mr. Heseltine) when he was the Opposition's industry spokesman. The right hon. Gentleman is not quite as hostile to the concept of the National Enterprise Board as was the hon. Member for Henley.

However, I hope that the Opposition do not try to pretend, as their reasoned amendment suggests, that they can vote against the Bill without inflicting damage on the vital work being carried out by the Scottish and Welsh Development Agencies. The defeat of the Bill would be a serious blow to confidence in Scotland and in Wales, and I hope that they will not pretend that they can vote against the Bill without doing harm to British Leyland and to Rolls-Royce. The defeat of the Bill would inflict irrevocable harm on those companies. British Leyland and Rolls-Royce and other subsidiaries of the NEB must continue, and I do not think that the Opposition can cancel out their votes by saying that they would create some other methods of dealing with the Agencies, with BL or with Rolls-Royce. They cannot do that. They can be sincere when they say that they want to support Rolls-Royce and British Leyland only by re-thinking their opinions.

We shall be voting for the continuation and progress of the good work of the Agencies and the National Enterprise Board, and that is why I confidently ask the House to give the Bill a Second Reading.

Mr. Deputy Speaker

I should inform the House that Mr. Speaker has selected the amendment in the name of the right hon. Lady the Leader of the Opposition.

7.40 p.m.

Sir Keith Joseph (Leeds, North-East)

I beg to move, to leave out from "That" to the end of the Question and to add instead thereof: this House, while accepting the usefulness of a significant part of the work of the Scottish and Welsh Development Agencies, declines to give a Second Reading to a Bill which is based on totally inadequate documentary evidence of the performance and prospects of the National Enterprise Board. The House will have seen from our amendment that we distinguish between the work of the Scottish and Welsh Development Agencies and that of the National Enterprise Board. My hon. Friends the Members for Pembroke (Mr. Edwards) and Glasgow, Cathcart (Mr. Taylor) and other hon. Friends from Scottish and Welsh constituencies tell me that much of the work of the Agencies, which have functions over and above those of the NEB, is valued in Scotland and Wales. That is particularly true of the functions of the Agencies that are not connected with industrial investment and, subject to watching the powers and the spending of the Agencies, we intend when we are returned to office to leave them in operation.

We have noted the work done by the Agencies. It is particularly interesting to us that in its investment activities the SDA has taken care to go into partnership with private enterprise on a number of occasions rather than embarking on ventures on its own. The main point for the debate is that there is no need for the Agencies to appear in the Bill. The Secretary of State tried to give the impression that the Bill is vital to the work of the Agencies. He knows that that is rubbish. They have packets of head room within their present spending powers. However fast they go, it is inconceivable that they could use the money available to them within the next significant parliamentary period. We have the impression that the Agencies feature in the Bill and are given huge increases in their borrowing powers simply in order to demonstrate to the Scottish and Welsh nationalists how much the Government love them.

It is necessary to point out to any who may be gulled by this apparent affection that, while the Government have proposed in the Bill to increase the borrowing powers of the Agencies, no provision appears to have been made in the public expenditure White Paper published yesterday for any extra spending power for either of the Agencies or for the NEB. The Bill is strictly a cosmetic operation, and I am sure that constituents in Scotland and Wales will see it for what it is.

Mr. Ted Leadbitter (Hartlepool)

I want not to change the right hon. Gentleman's chain of thought but to follow it through. He made abundantly clear that a future Conservative Government would leave the SDA and WDA alone, but he omitted to say what was the intention of the Conservatives in regard to the NEB.

Sir K. Joseph

I have nothing new to say about our intentions in relation to the NEB. We have explained them a number of times. We shall keep the Board to run its existing fortfollo, with the instruction that it should, with due care for the public interest, sell its assets when it can, which will, no doubt, mean that it will retain British Leyland and, perhaps, Rolls-Royce for a little longer than it will retain a number of its other assets.

I am coming now to discuss the NEB because we regard it as a symptom of a deep Labour misunderstanding of the national economic position and need. I shall be saying some critical things about the function of the Board, but it is not my purpose to say anything critical about the members of the Board or the NEB staff. I have a respect for those whom I know. They are hard-working, diligent, well-intentioned, public-spirited figures and nothing that I say is meant to be critical of them. In fact, every time that the hon. Member for Ormskirk (Mr. Kilroy-Silk) attacks the NEB for what he regards as its disgraceful prudence, the Board members go up in my estimation. Indeed, I shall add to their reputation for prudence by mentioning that the Board has sold three companies, two at a profit and one at a loss. We should like to see the NEB release its assets to the private investor as frequently and as fast as possible.

I must tell the House that one group of business men who had had dealings with the Board took the trouble to come to see me, entirely spontaneously, to say that they had found the staff of the NEB extremely effective and courteous in their negotiations. I say nothing critical about the Board members or the staff.

Indeed, I must recognise that industry's own attitude to the Board is ambivalent. On the one hand, industry welcomes, in the dangerous world that Governments, particularly Labour Governments, have created for business people in this country, another possible source of help, particularly if that help can be obtained at slightly below the going rate. I am not suggesting that it is always obtained below the going rate, but can one blame business men for being glad that there is another possible source of help?

On the other hand, the same people and some other business men resent the Board because it provides yet another unpredictable factor in an already excessively unpredictable economic world. Which business man can be sure, as he assesses the competition and risks faced by his venture, when or whether the NEB will plunge in with what is, in effect, subsidised, unbankruptable competition?

I shall not try to assess the performance of the NEB because my hon. Friend the Member for Surrey, North-West (Mr. Grylls) and other hon. Friends will have a number of valid points to make in that regard. As we emphasise in our amendment, the House is being asked to approve a massive increase in the authorised funds of the three Agencies with disgracefully minimal information, reports and prospects before us.

On two essential pieces of information, the Government are behind their own timetable. I think that we have a right to expect that by now the target rate of return for Rolls-Royce should have been announced and I am sure that we have a right to expect that the promised review of British Leyland, which was intended to start in November, should have begun. I gather that it has not yet even started.

The Secretary of State said that I must deal with the charge that, in voting against the Bill, we shall be jeopardising the immediate future of British Leyland and Rolls-Royce. That is rubbish. The NEB has, on the Secretary of State's own admission, a total of £170 million head room under its present authorised capital. In addition, it could sell some of its assets, and if there remained a gap and a sum necessary to deal with the immediate needs of Rolls-Royce and British Leyland—and the Opposition have much confidence in Michael Edwardes and his colleagues being able to judge when, and how much of, the promised help to British Leyland should be released—the Government have the power to vote money, the same money that they are proposing to make available through the Bill, by other means. There is no validity in any charge that we are endangering the next stages of development of British Leyland or Rolls-Royce.

We are grateful to the Secretary of State for not skimping on the time he devoted to the Bill, though we still feel that he has not given us nearly enough information on which to make judgments on these important matters. I do not propose to emulate the length of the Secretary of State's speech, much of which was taken up by answering questions. I intend to go to the nub of our objections to the concept of the National Enterprise Board. It exists. For the moment it has the function of looking after Rolls-Royce and British Leyland. We intend to keep it for that purpose for the time being.

Our objection to the Board starts from the grandiose and pretentious claims that accompanied its birth and which still reverberate in the mouths of Labour Ministers and Back Benchers. I have a series of quotations from the right hon. Member for Bristol, South-East (Mr. Benn). I shall not weary the House with the bombast of their claims. But even in recent publications the Scottish Development Agency has been spoken of as being likely to promote the regeneration of Scottish industries. The Secretary of State did not insult us by saying that the Board will regenerate British industry, but he said that it will promote "national competitiveness and efficiency". We regard such claims as grossly unjustified and overrated. We believe that words such as "regeneration" associated with one body, however well-meaning, reveal a lack of understanding of our economic plight which makes this Government a danger to the nation.

Labour's attitude to private enterprise has been hostile since the birth of the Labour Party. I have a personal regard for the Secretary of State, and Ministers have learned in a hard school. They have learned that it is not easy to make business decisions as one hurtles from one nationalised industry crisis to another, under-briefed, under-slept, under-informed and under-educated about the risks and the options of a bitterly difficult and competitive economic world.

I can sum up what the Labour Party, in its no doubt sincere attitude to industry, has taught its supporters. First, it has taught that there is a conflict of interest between workers, managers and owners, and that that conflict should lead to obstruction rather than co-operation on the shop floor. That has been Labour's preaching in recent generations. Alas, it has been emulated in many of the trade unions.

The second lesson which the movement taught was that people matter more as producers than as consumers. But it is consumers, at home and abroad—and only consumers—who are the real employers of producers.

The third thesis which the Labour Party has taught is that profits, even when earned in competition and subject to the law, are evil and involve exploitation.

I do not accuse present Ministers of saying that now. I am explaining the teaching of the Labour Party over the generations. I can provide innumerable examples of that teaching. Only too often has the Labour Party given the impression that wealth comes from Governments and that jobs can be created by Governments. The plight of our economy today —partially de-industrialised, competitive only thanks to low rates of pay and low rates of profit—is the result largely but not entirely, because the Conservative Party has played its part in not managing the economy brilliantly, of decades of discouragement by Labour preaching of enterprise, co-operation on the shop floor and economic success.

Let us examine the results. The principal feature of our economy is control. We have exchange controls, pay controls, price controls, dividend controls and rent controls. We have a more controlled economy than any other free society. Our economy is dominated by high personal taxation at a vicious level which is resented by those earning at all levels of income, earned and unearned. Our economy is dominated by an anti-enterprise spirit. It is an economy with a large element of nationalisation with the immunity from bankruptcy that breeds indifference to the consumer interest.

Mr. Varley

The right hon. Member says that this Administration have learned some lessons over the years. Perhaps he would like to tell us about the lessons he learned between 1972 and 1974. As a senior Minister in a Conservative Government the right hon. Member put on the statute book the Industry Act 1972, which gave all the powers which we now use.

The right hon. Member was a member of a Government with a statutory incomes policy. That Government had price controls and dividend controls. He was a member of a Government which falsified all the accounts of the nationalised industries and by their counter-inflation policy plunged each of them into huge deficits. If he talks of lessons, he must tell us the lessons that the Conservative Party has learned.

Sir K. Joseph

I do not deny that we have learned lessons. The country would be more comforted if the present Government accepted the mistakes that they have made. I shall not be diverted from this brief catalogue of the real problems of the economy. I have already referred to nationalisation. On top of all these evils there is high Government spending, borrowing and printing which leads to high interest rates and the crowding out of private enterprise.

The Minister of State, Department of Industry (Mr. Gerald Kaufman)

The Conservatives were the greatest printers of money of all time.

Sir K. Joseph

Should not the Minister of State avoid the mistakes that the Government blame upon others? They are not avoiding them. On top of the other evils is pervasive Luddism sanctioned by the strike threat. All those evids will remain, alas, when present miseries have disappeared.

This unique combination of disincentives, disadvantages, discouragement and controls has weakened British business. This is the evil that results largely from Labour attitudes. This is what must be corrected.

Against that background the National Enterprise Board and the Bill are not only irrelevant but misleading. So long as these major evils go uncorrected—and Ministers tend to make them worse rather than better—what is the point of fiddling around with the National Enterprise Board?

I have searched my memory of school days to find a phrase which summarises the situation of the NEB in this context. It is ignis fatuus—a will-o'-the-wisp. That is a natural phenomenon which leads people into quagmires, swamps and away from safety.

The NEB, because it symbolises the Labour Party's belief that the economy can be saved by intervention which distracts it from putting right the economic evils, operates as a will-o'-the-wisp. The Board is a token of the Socialist illusion that one can bash and bash private enterprise but that it will still deliver the goods to support the endless public spending promises which Socialists make.

But, as we see, private enterprise will not be able to go on delivering the goods. That is not because of an inherent weakness or managerial inefficiency. It is not because of a weak capital market but because of the conditions that successive Governments—particularly Labour Governments and more particularly this Labour Government—have created. Against that background, the NEB is a distraction down a blind alley. It has some uses, as I have explained, in connection particularly with British Leyland and Rolls-Royce. A prospering economy could afford it and would not want it. A weakened economy, such as ours, does not want to see its role magnified in the way that the Bill proposes.

What can it usefully do? It can manage a portfolio of assets. Some of those assets and some of those investments will be successes. Some will be failures. I am not suggesting that it would be more successful if it managed more, but, if it is suggested that we have to have a National Enterprise Board to buy into British equities because the British capital market is not strong enough, let us see what is reducing the strength of the British capital market. Let us at least wait to see what the Wilson committee finds. But in the light of the enormous success of the British capital market in financing North Sea oil, I do not see that there is much evidence of weakness other than caused by the high taxation, the high inflation and the crowding out to which I have referred.

The Secretary of State suggested that the NEB is needed for innovation and spoke of microprocessors. It is true that the NEB has awakened the media to the drama inherent in microprocessors, but are we in this House really to be asked to believe that until the NEB came along the great firms in this country and abroad, the General Electric Company, Racal, Plessey, Texas Instruments and all the others—I do not wish to insult any of them by leaving them out—were not watching closely and with passionate interest the fate and prospects of different developments of the microprocess world? After all, recent industrial history is littered with the corpses of firms which embarked too soon or in the wrong way on microprocess developments.

I do not believe that the NEB can justify itself by what it has done by awakening media interest in microprocessors. Are we to believe that the NEB is to be justified by some venture—if it ever embarks on such a thing—into restructuring British industry? I have no evidence of such an intention, but how could we tell, even if it were to propose some great restructuring, that the project would turn out to be a GEC rather than a British Leyland? Initiatives taken in the past by agencies such as the NEB have often made things worse and not better.

I shall try now to sum up our case. Britain does not need Enterprise with a capital "E" enthroned in the midst of an over-manned, over-taxed and over-regulated economy. What Britain needs is enterprise with a small "e" in hundreds of thousands of firms, resulting from an encouraging economic climate. We do not think that it makes sense to seek salvation by the route of Enterprise with a capital "E" while ignoring completely the need to create an encouraging economic climate for enterprise with a small "e".

The NEB is a sort of Janus, a two-faced totem of Socialism. The recommendation of the Select Committee that private borrowings should be counted into the authorised capital of the NEB is no doubt an honourable one, but it is also very convenient for the Government, because it allows them, at no cost in public spending, to dress up a massive figure of public finance authorised for the three agencies. The result is that the Bill contains figures which no doubt Labour Ministers will peddle round the country as demonstrating their powerful support for interventionist Socialism, while at the same time they are stressing to the City and to the financial press that no extra public spending is involved.

The Bill fosters further the illusion and error that salvation can come from intervention, and further indifference to and incomprehension of the real problems. The Government and the Bill focus on a fraction of the economy instead of on the economic climate as a whole. The Bill is a token of a wrong diagnosis and a wrong prescription. That is why I shall ask my right hon. and hon. Friends to vote for the amendment and against the Bill.

8.5 p.m.

Mr. David Watkins (Consett)

The right hon. Member for Leeds, North-East (Sir K. Joseph) really let the cat out of the bag in relation to his party's policy towards the NEB when he indicated that that policy would be to use the NEB with the public resources at its disposal to spend public money to rescue failures, and that as soon as they had been made profitable at the public expense they should be handed over to private interests. That, combined with the vast cuts in public expenditure which his party is also proposing—in order to give large tax relief to the very private interests to which he proposes to hand over industries which have been made profitable at the public expense—would give the country a singularly unattractive and disastrous bargain.

When my right hon. Friend the Secretary of State made his telling intervention about the Tory Government's record and about the Industry Act 1972, he could also have added that that Act had to be introduced by that Government be- cause of their doctrinaire and disastrous sweeping away of the apparatus for regional development which had been set up by the previous Labour Government. The right hon. Gentleman talked about a wrong diagnosis of the national position but his own diagnosis and his own party's record in office, and currently in opposition, lay his own and his party's diagnosis very much open to question.

I want to deal particularly with the provisions of the Bill which relate to the NEB. As my right hon. Friend said in opening the debate, the NEB clearly needs more money for its requirements in order to fulfil its existing obligations, and he listed BL and Rolls-Royce among those cases where that applied. I suggest to him that it also needs a much more dynamic approach to the use of the resources allocated to it than has been seen hitherto. The NEB has played relatively little part in regional policy or in the development of industrial democracy, and the main theme of my remarks is that the NEB should certainly receive the increased finances proposed in the Bill but that it should be accompanied by Government directives for a more dynamic approach in those two directions.

As my right hon. Friend said, the NEB has some regional dimension, but it is really a sadly inadequate regional dimension. The scope of its activities, for example, within the assisted areas, in the more needy regions of England, is nothing like that of the Scottish Development Agency or the Welsh Development Agency. That, I emphasise to the Government, is a matter of very considerable concern in many regions of the country.

The NEB has a regional presence in the Northern region but it has a disappointing record in industrial development there. Such efforts as have been made in the region have been small-scale rescue operations necessitated by entrepreneurial failures and they have been no more than mini-replicas of what it has done on a vastly bigger scale when it had to intervene in BL and in Rolls-Royce, for example.

There has been in the Northern region —and, I think, in others of the most needy regions of England—no drive to establish new publicly-owned industries, which those of us who supported the idea from the start always thought would be one of the main features and policy operation of the NEB.

In areas such as my constituency, over the years, where there has been an almost total rundown of the whole mining industry, and now a very severely contracting steel industry, not more than one job in four which has been lost has been replaced, notwithstanding that this is a special development area where the maximum subsidies and incentives exist in order to attract new industry. That is true not only of my constituency but of the West Durham area, the Northern region and other black spots of that region, as well as other regions in the country.

Mr. T. W. Urwin (Houghton-le-Spring)

I am sure that my hon. Friend has not overlooked the intensity of the problems throughout the Northern region. He is quite justified in his remarks about his own constituency and similarly about others, but the general situation is applicable to virtually the whole of the Northern region.

Mr. Watkins

I entirely agree with what my right hon. Friend has said. If I may hark back to the disastrous record of the previous Tory Government, one of the things that they did was to cut down the incentives as between the black spots and the lesser black spots and correspondingly worsen the whole situation. My right hon. Friend is absolutely right. I have obviously selected a certain area of the Northern region. He is quite right in saying that the Northern region as a whole is certainly in that category which I have already described in my earlier remarks as being among the needy regions of the country.

I am well aware that the contractions in the coal and steel industries of which I have spoken arise from technological change and changing demands and that the creation of new employment opportunities, furthermore, is seriously hindered by the continuing world slump. But the NEB was created to provide an alternative system to counter that situation, not to go along with it, which is very largely what it has, in practice, done.

In the Northern region there is too much Civil Service and academic thinking that is prepared to write off areas, such as West Durham which I have mentioned, as no-growth areas of declining population where new developments are no longer to be encouraged. I completely reject that attitude and I think that my right hon. and hon. Friends who are here from our region would similarly completely reject such an attitude.

If the NEB is to receive the increased finances proposed in the Bill, it must use them much more dynamically and positively to establish new industries and new employment opportunities in areas such as the Northern region and other hard-hit regions of England.

Unlike Scotland and Wales, the Northern region has no development agency. Until such time as that deficiency is rectified—and I choose my words very carefully—the NEB must have a much stronger regional role and its increased finance must be accompanied by clear Government commitment that it will have it.

Mr. Leadbitter

This brings us to a point for my hon. Friend to underpin. The right hon. Member for Leeds, North-East (Sir K. Joseph) made abundantly clear what the objective of his party was regarding the NEB. He described the NEB as ambivalent, and said that there was a degree of opposition to it in the private sector and that he could not find much support for it anywhere. In underpinning his point, will my hon. Friend make it clear to the House that in the Northern region we find no evidence of that? The position is to the contrary. We want more intervention by the NEB, which could work in a complementary role with the private sector and with the public sector. With the contraction of the two main industries that my hon. Friend has mentioned, private enterprise and entrepreneurial decisions alone will not suffice.

Mr. Watkins

My hon. Friend is, of course, entirely right, and I agree with what he has said. The remarks of the right hon. Member for Leeds, North-East (Sir K. Joseph) and the ambivalent nature of his own and his party's approach to the NEB and the economy in general is another demonstration of the schizophrenic splits which obviously exist in their thinking, which, if matters were under their control, would only result in an industrial wasteland in areas such as the Northern region.

The reason why the geographically remoter regions of England did not get the development which they could have had previously was said to be the application of so-called market forces. In fact, powerful forces in the so-called market were just not interested in development in the Northern region and were in a position to rig the market to the disadvantage of that region and other regions similarly situated.

Turning to the second part of my remarks, I shall refer to the NEB's involvement in industrial democracy. This is something which is at the heart and core of whether we as a nation shall be able to create the wealth which is absolutely necessary for us on a vaster scale than has been so previously. In the creation of wealth we continue to fall more and more behind other countries, and we have done so since well before the First World War. It is something that has not happened, as Opposition Members are so fond of saying, only within the last few years. Our economy, relatively, has been in a state of decline compared with those of other countries since well before the First World War. One reason the situation continues is the general failure to infuse people with a general sense of involvement in the enterprises, whether they are large or small, within which they work.

It is for that reason that I stress that the NEB's role, as I see it, is that it should have some involvement in industrial democracy. The advancement of industrial democracy is nominally among the objectives of the Board, but in practice, in all of the NEB companies, from the giants such as BL or Rolls-Royce to the small ones, where the NEB has either complete ownership or major ownership and intervention it continued on an entirely conventional and—I put it in inverted commas—"two sides of industry" basis.

Incidentally, if I may insert a parenthesis, we have talked a great deal about "BL", but I have always been at a loss to understand why the name was changed from British Leyland to BL. It seems to me to be one of the dafter episodes to take place during what I would call the "Edwardes regime". I am entirely at a loss to understand what is supposed to have been the advantage accruing from that change.

These industries, although owned by the public through the National Enterprise Board, have no provision for the members of the public who work in them to exercise control except the established management. The NEB rightly requires all its companies to draw up detailed development plans. With the added finances which are proposed in the Bill, I would submit that the Government should issue a directive to the Board that the production of a democratic structure should be included in those company development plans, that financial support for companies will be conditional upon the adoption of a democratic structure and that each company—because it is each company's and each concern's own business—should be required to produce its own agreed proposals to meet its needs for industrial democracy within a given period of, say, six months.

I remind the House that in the case of small firms we have legislation on the statute book which meets exactly the bill. I refer to the Industrial Common Ownership Act 1976 which—[HON. MEMBERS: "Hear, hear".] I am grateful for the cheers of my hon. Friends. They will be aware that I am referring to a specific legal definition of democratic ownership of enterprises which is contained within a Bill which I had the privilege of introducing and piloting through this House. I remind the House that I had the privilege of piloting it through the House with a strong measure of support from both sides of the House. Indeed, it could not have been put through the House if that had not been the case.

The NEB's problem in the past has been that it has tried to operate too much within a conventional capitalist framework. It is rather interesting that we have not as yet in this debate heard the phrase "creeping Socialism" which hon. Gentlemen opposite are so often fond of using to describe the National Enterprise Board. But, far from being anything of the sort, it has been a pillar of State capitalism. The whole approach of that sort is no use in a country whose fundamental problem is a dying capitalist system, a system which uses every device of mass advertising to encourage people to expect ever-rising living standards but which has totally failed to produce the wealth to provide those standards.

In many ways that is, perhaps, the crux of the whole argument in which we are indulging in this debate—the different analysis which the right hon. Member for Leeds, North-East put upon the approach to that, and that which we on the Labour Benches put upon it.

If the NEB is to be an effective force in grappling with this fundamental national problem, it must have the additional finances proposed in the Bill, but it must also use its resources much more dynamically and more positively than it has done in the past.

8.20 p.m.

Mr. Michael Marshall (Arundel)

It is always a pleasure to be called to speak following the hon. Member for Consett (Mr. Watkins). He made a thoughtful speech, upon which it is worth pondering. I certainly recognise the work which he did in the Industrial Common Ownership Bill, which, as he said, carried support in all parts of the House.

The reason why I particularly welcome the opportunity to speak in this debate tonight is that I think it comes directly into the Secretary of State's orbit. I am glad that he is present in the Chamber. I think that he would be the first to concede that this week he has had full warning of what was expected of him. At Question Time on Monday it was made abundantly plain that we required detailed documentation and, indeed, that we wanted to know precisely what the picture was in looking at the NEB. In his speech tonight the Secretary of State has helped us in a number of directions, but it would be disguising my criticisms right at the beginning if I implied that he had done anything other than a superficial job.

The Secretary of State is an agreeable and elegant figure in his own right, but he reminded me of nothing so much as a grasshopper in a minefield. He skipped and he hopped, and he touched on a number of issues, but we got absolutely no depth. I intend to devote some attention to what the right hon. Gentleman said and to the omissions in his speech. I do that with no disrespect to the right hon. Gentleman. I hope that his right hon. Friend the Minister of State will pick up some of these points in his winding-up speech, because I genuinely want this information.

However, I could not help feeling that the right hon. Gentleman was anxious, looking with one eye over his shoulder towards Ormskirk, and with the other eye looking over his other shoulder at the industrial chaos in the country behind him, and he has my sympathy. However, he must accept that what he gave tonight was a very cursory examination indeed.

I put it in this context. The right hon. Gentleman rightly emphasised that much of the NEB's work is pre-empted by Rolls-Royce and British Leyland. I think that £400 million is intended for British Leyland, and £200 million or £300 million for Rolls-Royce. I take the view that that is the inheritance which has been put upon the NEB. In many ways, in trying to evaluate its performance and its prospects, one ought, therefore, to consider much more carefully the 45 investments that the NEB currently holds, I believe, which go much beyond those two inheritances—a very difficult inheritance in the case of British Leyland.

In an intervention, the Secretary of State made clear that he does not have any overall trading results as at 31st December. That adds to our difficulties. I hope that the Minister of State will make clear at what point in Committee he hopes to let us have at least unaudited accounts for the year ended 31st December 1978. Otherwise, all that we have is the annual report and accounts for 1977. That is the only full document that we have. It is dated April 1978.

Mr. Urwin

Having regard to the hon. Member's remarks a few seconds ago about not having enough information about the NEB's accounts from the end of December—only a few days ago—I wonder whether, during his peroration, he could give us some information about any private company which has a so highly advanced degree of accountability as to be able to provide such information.

Mr. Marshall

Yes, I can. I think that the right hon. Gentleman is making a very fair point. We are now talking about an increase in borrowing of up to £4½ billion. If the right hon. Gentleman, a company or I wanted to go out and get that kind of money, we should have to justify our recent earning potential. We might have to show figures up to the end of October or November, or the latest figures that we could give. To leave us with the only up-to-date trading results which we have, which now go back to the half-year results as at 30th June, is going back a very long way. I hope that the Minister of State will make clear what more up-to-date figures will be made available to hon. Members in Committee.

A whole range of other matters are part of the stautory obligations of the NEB, but the Secretary of State made no attempt to discuss them. The first and, perhaps, the most startling omission was that he told us nothing about the annual planning cycle, the corporate plan of the NEB. We know that this is something that must be looked at annually. We must carefully balance the needs of the major concerns, such as British Leyland and Rolls-Royce, against acquisitions, joint ventures and assistance operations. According to the NEB draft guidelines of 1976, those three categories of NEB work are examined annually. Between the Board and the Government there must be an annual discussion of the balance struck in those three areas. We heard nothing from the Secretary of State about that aspect of the matter. For example, where is the corporate plan, what is the latest assessment, and what confidence has the Secretary of State in its relevance?

As for the statutory objectives required of the NEB, we heard nothing from the right hon. Gentleman about industrial efficiency and international competitiveness. He told the House nothing about the effect of various investments in companies in improving areas, other than to make in blanket passing reference to the fact that the Board would regenerate national competitiveness and efficiency. Surely we should have been given some case histories.

On the subject of productive employment in areas of high unemployment, the right hon. Gentleman gave a figure of 25,000 in the North-West and instanced other figures. But as for the encouragement of exports, import substitution and the connection between service industry and manufacturing industry, in which investment has a vital link, we heard nothing. These are part of the detailed statutory objectives of the NEB. I am glad to see the Minister of State back in the Chamber. If he has a chance to catch up on my speech, he will see that I have dealt with a number of major omissions in the Secretary of State's speech.

Mr. Kaufman

I am intervening not on the substance of the hon. Gentleman's remarks but to tell him that because of the rearrangement of this debate I shall have the advantage of reading the full text of his speech.

Mr. Marshall

Then I shall have the advantage of a full answer—which will be something of a change for us both.

This has been a good-humoured debate, but this is a serious and important matter. It goes much wider than the Secretary of State's view that if we do not pass the Bill British Leyland, the Scottish Development Agency and many other bodies will be in danger. This matter has already been argued. There are ample facilities for both the Scottish and Welsh Development Agencies. There are other ways in which British Leyland's financing can be carried out. Therefore, we must examine the Bill in totality and in a fair amount of detail.

I wish to strike my own balance sheet, and I shall be as fair as possible. In considering what the NEB has been up to in the last year, it is unfortunate that we have been given no overall trading results, beyond the half-year figures to June 1978. I hope that the Minister of State will bear that factor in mind.

The NEB can claim for companies such as Monotype that a good relationship with the bank has enabled it to convert the debt to Barclays Bank into an equity stake of £3.5 million. That is a significant achievement and is what my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) regards as good merchant banking practice. The Fairey acquisition, which was made after the receiver was appointed, involved the NEB in a pragmatic piece of good sense. The Board picked up the company after the receiver came in, because that was a better way to get the company back on to its feet. I believe that that was a reasonable argument.

On the other hand, in that context we should bear in mind Early-Day Motion No. 149. Many hon. Members feel somewhat aggrieved about the way in which that acquisition was carried out, particularly from the point of view of the selling off of prime site marinas on the Hamble river without giving British tenderers a proper opportuity to bid. It was insensitive if, as is claimed in the Early-Day Motion, the chairman was unwilling to see hon. Members of this House.

Certainly, on the INMOS computer chip development the NEB can claim some pace-setting work. As my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) said, one cannot imagine major companies in this area sitting on their hands betimes. I believe that the NEB can point to a certain pacesetting role in this merchant banking concept.

It is ironical, but clear, that for carrying out that kind of investment the proposed amounts are minute in relation to the total national need. In addition, the difficulties involved in carrying out the INMOS investment have been heightened by the Government's own taxation policies which have driven many managers in this area to work in the Santa Clara Valley in California. We are now having the devil's own job to get them back. This is directly relevant to what my right hon. Friend was arguing—that the Government should be examining these matters, even if they are trying to help the NEB, let alone the rest of British industry.

On the question of disposals made by the NEB, as my right hon. Friend said, three companies have been disposed of in this period—two at a profit and one at a loss. I do not believe that there is any need to run through the list in detail. Looking at previous disposals—the trading losses and closure costs of Fairey of £2.2 million and the £1.4 million loss provision for British Tanners—one can say that, in a commercial banking context, in simple terms the NEB can claim to have won a few, lost a few, but on balance is ahead. In the trading figures provided—I am taking on trust figures since 30th June—the NEB can show that its return on capital moving up to 10 per cent., leaving out British Leyland and Rolls-Royce, is moving in the right direction.

I hope that I have shown to the House that I am trying to be fair in assessing the overall activities of the NEB. If the House is being asked to consider helping the NEB over the coming years, it has to ask itself: in what way is the NEB carrying out work which could not be carried out elsewhere?

This is my first basic objection. I have described the activities of commercial banking. On balance, I am not convinced that this could not have been mopped up within the commercial banking system. However, I am not doctrinaire on the matter. I recognise that the NEB will be with us for a number of years. Therefore, I would not automatically say that the opportunity for this kind of flexibility should be ruled out.

The speech made by my right hon. Friend was one which we should study. I believe that he is absolutely right. He put the essential differences between two major parties in clear form. He pointed to the whole paraphernalia of control, the whole notion of interventionism, which in so many ways I believe the Government are overstating in the case of the NEB. It simply cannot achieve all that is claimed for it by the architects on the other side. From our standpoint, it is a form of window dressing, a diversion away from tackling the necessary matters which have to be faced, such as high taxation.

Mr. Leadbitter

The hon. Gentleman has approached this problem in a flexible manner in order not to emphasise too much the basic objections of his own party to the NEB. To that extent, there is some merit in his approach. Does he agree that without the NEB's proposals for INMOS and the silicon chip there would not be a pacesetting element in this direction? This is imperative, because hitherto competition has not come from private enterprise to meet the Japanese and the American rivals. Therefore, the complaint should be not that the NEB has intervened and is a pace-setter but that there should be a greater allocation of funding because it is imperative that we in England should get into the work on the silicon chip.

Mr. Marshall

The hon. Gentleman has not quite taken on board what I said. I accepted that there was a certain pacesetting element in the NEB's approach to that subject. But I went on to say that what it was doing in relation to the massive need here was a drop in the ocean.

There is no way that the NEB, with the assistance of the House, could begin to get into that sphere on the kind of scale to which the hon. Gentleman pointed. It is to the GEC-Fairchild mergers and the massive extension of commercial operations that we must look in this sphere. I believe that I fairly accepted the argument initially put forward by the hon. Gentleman.

In view of the ruin of the Government's pay policy and the fact that we face industrial disputes, furthered by the Government's legislation, in overall terms the NEB has a limited part to play in industrial regeneration. Because of the numbers involved, it cannot begin to tackle the problems about which my right hon. Friend the Member for Leeds, North-East spoke earlier. In a philosophical sense this diversion—this window dressing element—is in governmental terms misleading and positively dangerous.

I should like to voice my appreciation of those who work for the NEB. They are people of ability. They have worked hard and come forward in the national interest. But so would any similar group of people for any democratically elected Government. That is not the argument at stake here tonight. It is not an argument whether British Leyland or Rolls-Royce will be in difficulty. That has already been disposed of. In view of the way that subsidiary company borrowings have been handled, it is a way of artificially inflating figures. We are talking about figures on paper for the Scottish and Welsh Development Agencies which seem to have little relation to their take-up.

Because of those areas of vagueness, the specific areas of missing information which I have instanced, and the fact that the Secretary of State is, in effect, trying to put through yet another piece of unquantified, wasteful and unjustified legislation—indeed, it is an exercise in public relations—I shall certainly have no hesitation in voting for our reasoned amendment.

8.37 p.m.

Mr. John Sever (Birmingham, Ladywood)

I should like, first, to refer to some of the comments made by the right hon. Member for Leeds, North-East (Sir K. Joseph). I feel sure that hon. Members and, indeed, people throughout the coun- try will be somewhat startled at hearing the right hon. Gentleman on at least two occasions refer to British Leyland and Rolls-Royce being retained by any incoming Conservative Administration for the time being.

It is interesting to try to understand the philosophy which prompts an Opposition Front Bench spokesman on industry, speaking for a party which believes itself to be capable of government, to argue in that flippant fashion that it will have to look to two of the largest employer companies within the framework of the National Enterprise Board being retained. That will be disappointing to many people who look to those two companies for their livelihoods, and it will be worrying in the extreme to those areas in this country which look to those companies as being fundamental to the growth of their regions.

Those of us who came into Socialist political activities in the 1960s were fired with an imagination which expected movements, however slight and exploratory, by future Labour Governments towards public participation and even control of the "commanding heights of the economy".

My hon. Friend the Member for Consett (Mr. Watkins) referred to Conservative Members not having mentioned the Labour Party and Labour Government going headlong into Socialism. But some of us would like us to move gradually and more enthusiastically along certain avenues towards what we consider to be a Socialist environment. Some of us were a little disappointed at the slow rate of progress along those roads. None the less, today, 15 years on, we can see definite progress. The commanding heights may not yet have been scaled in these sectors from which the taxpayer, as a shareholder in a State enterprise, might expect a profit, though large dividends are paid in the form of public service provisions. We can, at least, see Government participating in supporting industry and commerce in sectors vital to the national economy and fundamental to the provision of employment opportunities for hundreds of thousands of householders, none more clearly than in BL.

BL is a source of income, directly and indirectly, for the largest single group of workers in the greater Birmingham area.

The major plant at Longbridge and ancillary and dependent companies in the West Midlands are of paramount importance to the economic well-being of the region. We on this side of the House recognise the value and the wisdom of the interventionist policies of the Labour Government at a time when the future of the West Midlands region was in great jeopardy.

I welcome the additional support for the National Enterprise Board provided in the Bill. I am confident that these measures will confirm and stimulate the growth of support from inside and outside BL and its associated companies that is now beginning to show. There is evidence of a build-up in confidence. Only this week, the company secured an order for £12 million worth of vehicles, won in competition. The order is for representative models across the company's product range.

There is an increased product demand generally, encouraged by the spendid motor show presented at Birmingham's national exhibition center, to which, I hope, the show will return for several years to come. A most important ingredient for success at BL seems to have been the recent agreement on parity payments—a matter which had for so long bedevilled that company—which will, we hope, bring a degree of stability to BL wage bargaining in the future.

In addition to continuing to support its existing commitments, I should like the Minister who responds to the debate to indicate whether the NEB can look more closely into the possibility of providing funds from these additional resources towards the establishment and development of new industry and new technology in Birmingham and the West Midlands. Our region has traditionally led the country in the progress of scientific and technical innovation, particularly in its commercial exploitation. The men and women who work in our large industrial complexes and in small engineering shops such as those in Ladywood will produce the goods. Those people need the encouragement that this Bill, as part of Labour's industrial strategy, can give, especially when we reflect upon the lack of investment from capitalists who seem shy of pushing forward West Midlands industry.

Let us ask, then, with full justification, that the National Enterprise Board give a lead in this direction. No longer should it be assumed that the West Midlands can be left alone and forgotten. We demand and we have the right to expect additional Government support. We have been at the back of the queue in Britain's industrial development in the last few years. That is too long. We demand our place again in the economic development of the country. I am sure that the Minister will indicate how the West Midlands can benefit from policies now being pursued.

8.44 p.m.

Mr. Wyn Roberts (Conway)

I shall not take up directly the remarks made by the hon. Member for Birmingham, Lady-wood (Mr. Sever), but he was surely wrong in his interpretation of what my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) said about an incoming Conservative Government's treatment of British Leyland and Rolls-Royce. I advise the hon. Gentleman to look in the Official Report at what my right hon. Friend really said.

As you may have guessed, Mr. Deputy Speaker, I wish to speak briefly about the Welsh Development Agency. Our amendment makes clear that we accept the Agency and the value of its work in Wales. My hon. Friend the Member for Pembroke (Mr. Edwards) said so at the last Welsh Grand Committee meeting on 29th November last year. He said: As for the Welsh Development Agency and the Development Board for Rural Wales, we shall keep them and support their work in stimulating and assisting commercial enterprise … although, certainly, as we have always indicated, we would wish to see safeguards over their powers to buy into profitable firms and ensure that they do not hold equity shareholdings in industrial firms on a permanent basis."—[Official Report, Welsh Grand Committee, 29th November 1979; c. 17.] My hon. Friend's view was amply confirmed by my right hon. Friend the Member for Leeds, North-East. Therefore, there is no dispute between us and the Government on this score so far.

As matters stand, the Agency's financial limit is £100 million, which can be increased with parliamentary approval to £150 million. The Bill proposes to change. those limits to £250 million and £400 million respectively. The subject was raised in the Welsh Grand Committee in November. Perhaps that is why we did not have many figures and details from the Secretary of State for Industry when he opened today's debate. He still should have given details of the Agency's expenditure now that he is asking for more money for the Agency. The case must be made out and the request for more money justified.

The outcome of our discussion in the Committee was the Government's explanation that, although the Agency had so far incurred a charge of £45.7 million against the statutory financial limit, less than half the amount allowed, The Agency is likely to exceed its current limit of £100 million in the next financial year. In that last sentence I was quoting the Under-Secretary of State for Wales, the hon. Member for Rhondda (Mr. Jones), who, alas, is not here but was present earlier. He added: The increase by order to the maximum possible, £150 million, would prolong its life only by a further year or so. Therefore, under the present limits, the Government would have to come to the House some time in the next financial year to seek approval for the upper limit of £150 million. The House would then have an opportunity to consider the Agency's activities and the way in which its affairs were being conducted, because the increase of moneys available is subject to parliamentary approval.

Assuming that the Agency is using up its allocation at the rate of about £50 million a year—an assumption clearly justified by the Under-Secretary's remarks in the Welsh Grand Committee and by the fact that there is no increase in the White Paper in the moneys to be made available to the Agency—if the Bill is passed, it will be by my calculation 1982–83 before the Government have to ask the House for approval for the new upper limit of £400 million.

The Secretary of State confirmed that it was expected that the Agency would spend about £250 million over five years. So it would then be about 1982 to 1983 before the Government had to ask the House for an increase of the borrowing limit to £400 million.

While I am referring to the lack of figures given by the Secretary of State, I must refer also to the fact that he seemed to fail totally to reply to the question of my hon. Friend the Member for Pembroke about the meaning of the change in terminology from "wholly-owned subsidiaries" to "subsidiaries" in general.

This delay of five years before the Government come to the House to obtain the upper limit of £400 million seems to me to be postponing discussion for a considerable time, and the Welsh Office is laying itself open to the charge that it is seeking to avoid such discussions. The Government currently make much of the point that they wish to bring government closer to the people, yet it is noticeable that when there are opportunities for discussing the financial operations of governmental organisations and quasi-Government organisations the Government avoid those opportunities like the plague.

Mr. Nicholas Edwards

Is not the truth summed up by what my hon. Friend is saying, that the Government, as is made clear in the White Paper on public expenditure, are not increasing the funds available to the Agency but simply removing any parliamentary control over that expenditure or over the work of the Agency?

Mr. Roberts

My hon. Friend is absolutely correct. They are doing simply that; they are removing parliamentary control, and certainly postponing the day when the Government will have to ask us for approval of the higher limit.

Of course, we appreciate the Welsh Office's point of view, which was well expressed by the Under-Secretary of State in the Welsh Grand Committee debate: We are taking the opportunity of a Bill, which in any case would have to come to the House to deal with the funds of the National Enterprise Board, to ensure the continuation of the Agency's work and to enable it to plan ahead on a firm basis … it is absolutely essential that the Agency knows in advance what moneys are to be available so that it can plan ahead."—[Official Report, Welsh Grand Committee, 29th November 1978; c. 85–6.] I do not think that the Under-Secretary is as ingenuous as his explanation made him sound in the Welsh Grand Committee. He knows as well as I do that plans for public spending of this sort can be changed in any financial year and that this Bill does not give the Agency an absolute assurance that certain sums will be available to it. Many factors can affect the situation, and we were warned only yesterday by the Chief Secretary to the Treasury that public expenditure this coming financial year may be drastically altered if pay settlements in the pubic sector are higher than expected.

I am therefore tempted to think that these higher limits are a bit of political window dressing—and we have heard that phrase before from these Benches. The proposed changes, of course, read well in the Queen's Speech at the beginning of the Session and no doubt impressed certain Members below the Gangway on both sides of the House, and helped to secure the support of some Labour Members below the Gangway, who, alas, are not with us this evening.

Our vote against the Second Reading of this Bill will no doubt be interpreted to the Welsh electorate by the Secretary of State as opposition once again to the Agency and to increased finance for it, but I shall hope against hope that he will not mislead the electorate in that way. It would be very improper for him to do so in view of our amendment, which specifically accepts the usefulness of a significant part of the work of the Welsh and Scottish Development Agencies.

By the Government's own admission the higher limits are not yet necessary. Even the higher limit under the 1975 Act is not necessary until later this year. Why not leave the matter until then? The real answer is that Welsh Office Ministers need a pre-election boost. However, that will not boost them back into office.

The Government's industrial record in Wales has been deplorable. It is getting worse daily as a result of current industrial actions that are bringing work to a halt. Tomorrow will be a black Friday for many who are laid off in Wales. There may be more black Fridays to come.

My right hon. Friend the Member for Leeds, North-East was right in his criticism of the principles behind the NEB. The same is true, to some extent, of the Welsh Development Agency. The same principles apply. However, we commend the Agency's activity because our worst fears have not been realised. It has operated on lines of which we approve. I am bound to say that it is the Government's one and only bright start in what is otherwise an abyss of governmental ineptitude.

When all the praise has been given to the Agency, let us be clear that it will never be the salvation of the Welsh economy.

8.57 p.m.

Mr. Ivor Clemitson (Luton, East)

I hope that the hon. Member for Conway (Mr. Roberts) will forgive me if I do not take up his line of thought. The hon. Gentleman was naturally and properly concerned with the Welsh dimension of the Bill. Although I have a Welsh name, I have no other connection with the Principality. I shall devote my remarks to the broad context in which I think the Bill should be considered.

There is little argument between the parties in the House that more investment is needed in British industry. That is common ground. We may disagree in our analysis of why investment in British industry has been too low. We may also disagree about what should be done. We have heard yet again the analysis of the right hon. Member for Leeds, North-East (Sir K. Joseph). The right hon. Gentleman proved again what I have always suspected, namely, that he was born 100 years too late. I preferred the analysis offered by my right hon. Friend the Secretary of State.

By and large, there is agreement about the need for investment. However, we pay far too little attention to the consequences of investment and where we should direct our investment. The result of paying insufficient attention to such matters is that we are in danger of assuming that merely by increasing investment we shall consequently and dramatically solve our other economic problems, especially the problem of unemployment. It seems that we look to investment in itself as a panacea.

The thesis that I wish briefly to argue is that other policies are needed to deal with the consequences of the investment that we make. Indeed, they are needed if investment is to take place at all, and certainly if we are to reap from the investments that we make the returns for which we hope. Our problem has been that, by and large, we have had too little investment. In addition, we have failed to make the fullest use of the investment that we have had. The evidence that we have and the demands of logic indicate that the overall—note the adjectives—long-term effect of investment is to reduce the demand for labour, certainly in manufacturing industry and probably in the economy as a whole. Some of us have argued this for years. It is now common coinage and everybody seems to be saying the same. I welcome recent converts to this point of view. But we have yet to realise the consequences of adopting it or to devise adequate policies to deal with it.

I want to rehearse one or two points of my argument to justify that proposition. First, there is abundant evidence that where large investment has taken place and large growth has been achieved—for example, in the chemical industry, oil refining, gas and electricity supply—the number of people employed has fallen, often substantially.

Secondly, if we are to be competitive with other countries, logic demands that we should move increasingly either into new industries that are technologically advanced—I welcome the moves that the NEB has made in this area and believe that this should be the major thrust of the NEB's future activities—or we radically alter the production methods in existing industries. Both options mean a move to a less labour-intensive situation. The corollary is that certain older industries will and should die, or at least become less important in the economy. Those industries are of necessity labour-intensive.

Thirdly, while certain other countries, such as Germany, Japan and France—they are always the three countries instanced—may have increased employment in manufacturing for a time, this was short-lived and it is now in decline. OECD reports confirm that that is mainly because of technological advances and investments that have been made over the past few years.

Furthermore, no country has expanded employment in the manufacturing sector at the expense of the service sector. It is absurd to take the experience in other countries 15 or 20 years ago and assume that we should follow the same path in employment if we were to adopt a high investment strategy. This totally ignores the advance of technology in that period and the advancing pace of technological development over the coming years.

I am not arguing against the necessity for investment or for growth in the economy. I am pointing out the obvious consequences. In passing, I should say that not all investment is desirable, nor is all growth. Cancer, after all, is a form of growth. We must be selective in our investment and in the areas in which we grow. One of the major arguments for funding investment through public agencies is that they can, in a better way than private investors, invest in a desirably selective fashion.

Given that investment will increasingly have negative employment consequences, what do we do? First, we must regard it as an opportunity and not as a potential disaster. We must devise a policy of alternatives—note the plural—to unemployment. While, clearly, employment is one alternative to unemployment, it is not the only one. In any case, the only area in which I foresee increasing job opportunities in the longer run is in the public service sector. I am not talking about bureaucrats; I am talking about people in face-to-face service jobs.

The other alternatives are shortening the working week or the working life, whether it be through early retirement or sabbatical leaves or whatever, and increasing the opportunities for such non-work alternatives to unemployment as increased educational opportunities.

These things must be seen as an advance of human welfare and not just as a juggling of statistics from one column to another. We must work out a coherent and consistent package of such measures, and we must do it now.

Unless we develop such policies at the same time as we increase investment, we shall not have the right climate for investment to take place, nor shall we reap the full benefits of that investment. We shall be faced inevitably and understandably with resistance to change because of fear of loss of jobs.

We need also to advance towards greater industrial democracy, a point that my hon. Friend the Member for Consett (Mr. Watkins) stressed strongly earlier today. This will take different forms in different industries and companies. Of course, legislation in this area has its limits, though that does not mean that it is not important. Unless decisions about investment become more truly shared, too many arguments will be conducted in basically negative terms.

We need to develop an incomes policy which is aimed primarily at getting people into a fair and agreed relationship with one another. The trouble with incomes policies up to now is that they have been primarily directed at restraining the growth of incomes. We can never satisfactorily, for longer than a couple of years, agree to reasonable restraint unless people feel that there is a basic fairness in the beginning. That basic fairness is lacking. Of course, what I am suggesting is incredibly difficult, but we must make an attempt. If we do not, there will be serious consequences for the size and success of investment.

We need investment, and we need it in the right places. To channel that investment through public agencies is right, but wherever the investment comes from, public or private agencies, must must at the same time—note I say "at the same time"—as we invest provide the framework within which the investment is encouraged and is able to pay off.

This can be done only if we deal with the consequences of investment in terms of a lower demand for labour. We must have a strategy of alternatives to unemployment and we must make a rapid advance in industrial democracy. We must also devise more rational and fairer pay structures.

I welcome the Bill, but I fear that its intentions may be frustrated if these other policies are not pursued at the same time.

9.10 p.m.

Mr. Douglas Henderson (Aberdeenshire, East)

We have heard a very interesting contribution from the hon. Member for Luton, East (Mr. Clemitson) —one of a type which we rarely hear. Very often what we hear from the Government Front Bench is the claim that their Bill is the best thing since sliced bread, while from the Opposition Front Bench we hear that the Bill is the most terrible thing that the House has ever had to consider.

One of the difficulties about the Bill was expressed by the hon. Member for Luton, East and can be seen only in terms of the total concept of where we are going. The Bill is only a small piece in a very big jigsaw, which represents the sort of world into which we are moving. I very much agreed with the hon. Gentleman's analysis that we face a situation where the demand for manufacturing will be satisfied more and more by investment in equipment and technology and less and less by the hands and brains of human beings. That is inevitable.

There have been forecasts that by 1990 the entire manufacturing output of the world will be carried out by about 10 per cent. of the employed population. One cannot tell how accurate or sensitive that forecast is, but certainly that is the direction in which we are moving. The fact that we are seeing the export of almost entire industries to the countries of the Third World is a factor which will affect us most seriously. We are also seeing—and we have seen it with the oil producers—that countries which supply primary commodities—and let us be fair about the fact that we have had them in the past at very advantageous rates—are now demanding what they regard as a fairer price for their products, which are about all they have to sell. The advanced and industrial countries of the Western world will have to face these prices in the future.

When we look at a Bill of this kind and other measures it is useful to relate them to a conceptual framework. I am sorry to say that, in that framework, the Bill is only a very small part of the jigsaw. I cannot understand the display of great indignation and anger against what is contained in the Bill.

Naturally, I am concerned about the situation in Scotland, just as the hon. Member for Conway (Mr. Roberts) was concerned for the situation in Wales, and I shall not deal with the affairs of the National Enterprise Board but will stick to the Scottish Development Agency and its effect on the Scottish economy. I am amazed at the way in which the Conservative Party has completely turned its coat since 1975 when the Scottish Development Agency Bill came before the House.

The Secretary of State for Industry said, in his usual kindly way, that he thought the Conservatives had had a change of heart. I should have thought that perhaps a change of head might have been more useful to them than a change of heart, but if they have had such a change and have abandoned some of their earlier reservations—and I can remember some of the wild comments that were made when the Bill was introduced—that is to be welcomed. It would be very useful to the development of the work of the Scottish Development Agency if there were a general measure of all-party support for its work.

I am not saying that the Agency should be above criticism or that it should escape scrutiny, but I think that there should be a general all-party appreciation of the work that it is doing when such appreciation is justified. It is right to pay tribute to the board of the Agency, and to its staff, with whom many of us come into contact. We have found them to be interested, sympathetic, ready to listen to problems, and ready to deal with the problems of our constituents.

The question that we have to ask in looking at the Bill is: to what extent will it affect the Scottish economy, and to what extent will it be an influence for good in the years ahead? The position in Scotland is that there are some features which have been good and some which are extremely black. Scottish exports have been a very bright feature. They were up by 24 per cent. in volume between 1974 and 1977, compared with a 14 per cent. volume increase in the United Kingdom as a whole. It speaks very well for the workers and managers in Scottish industry that they have produced such an increase right across the board, in chemicals, mechanical engineering and in every aspect of the Scottish economy in that period. Our growth rate between 1971 and 1976, mainly as a result of an increase in exports, has been above that of the United Kingdom by 2 per cent. per annum.

The undoubted black spot of the Scottish economy is unemployment. When the former Secretary of State for Scotland, the right hon. Member for Kilmarnock (Mr. Ross), introduced the Scottish Development Agency Bill in 1975 he described the economic scene in Scotland as "sombre" because unemployment had risen to 4.7 per cent. I am sorry that the right hon. Gentleman is not in the Chamber because we always welcome his robust contributions to any debate on Scottish unemployment, and I am sure that he welcomes the robust answers that he gets from other people on the same subject. I do not know what he would say now that the Scottish unemployment rate is 7.8 per cent.

We also have the depressing spectacle of a large number of redundancies that will come into effect in the next few months, having been notified to the Department of Employment. Redundancies are proposed at Massey-Ferguson in Kilmarnock, at Dunlop at Inchinnan and at Singer's at Clydebank. There is also the unknown factor, of which the Secretary of State may be able to tell us more, of what is to happen at British Shipbuilders in Scotland.

I remember the Secretary of State wisely declining to give the guarantees about future employment in the shipbuilding industry for which we asked when the nationalisation Bill was before the House. It looks as though the chickens are coming home to roost in that sector of the economy.

One of the incredible aspects of the Scottish economy is the shortage of skilled labour in many key areas. I have had reports that there are shortages of millers, turners, grinders and fitters which are holding up development in many Scottish companies. Of course, when that skilled labour shortage cannot be satisfied, opportunities do not exist for the semiskilled and unskilled jobs that come in the wake of the creation of skilled jobs. What are the Government doing about that?

The Financial Times carries a report today published by estate agents Kenneth Ryden and Partners and written by Professor Donald MacKay of Heriot-Watt university. He predicts that manufacturing investment in Scotland will continue to rise in the first half of this year but will drop sharply in the remaining part of the year. He gives as the reason the fact that private investment has been squeezed out and says that the higher the rate of wage and salary settlements this year, the more private investment will be crowded out". Professor MacKay makes an important point which is relevant to our discussion of the SDA. The report says: the activities of the Scottish Development Agency would not be sufficient to make up the deficiency. So far the agency had been spending only about £24 million a year on industrial projects. This had been more than offset by a substantial fall in the level of government expenditure on regional industrial aid to Scotland. The regional employment premium. which was worth £70 million a year to Scotland, has been withdrawn, and when one looks at the amount spent by the SDA one realises that it is totally inadequate to make up that shortfall. We have to ask whether the amount proposed in the Bill is anywhere near enough to cope with the problems of the Scottish economy.

The right hon. Member for Kilmarnock said that the Scottish Development Agency Bill was one of "historic significance." He said on Second Reading that the prime purpose of the Agency would be the provision, maintainance and safeguarding of employment. There is a danger that the Government may have oversold the benefit of the SDA to the Scottish community by letting people believe that it can do far more than it can. The Government will have much more credit and respect if they make clear that the Agency can, at best, make only a marginal contribution to the Scottish economy.

A total of £19 million or 25 per cent. of the Agency's total budget spent on jobs is not likely to create much. It is inadequate when compared to the spending of the Northern Ireland Development Agency. A report in the Financial Times refers to figures released this month which show that it approved over 30,000 new jobs in industry in 1978. If the Minister responsible for the Scottish Development Agency could say that that Agency has been responsible for providing over 30,000 jobs in Scotland, many of us would feel that that was an outstanding result and that it was the type of job that the SDA should be doing. One wonders to what extent the Government are relying on cosmetics. One wonders to what extent the figures meet the needs of the Scottish economy.

Perhaps the Minister should examine the matter referred to by the hon. Member for Luton, East of the contraction in manufacturing industry and the growth in service industry As I see the SDA portfolio, little is done for service industry. When I saw the chairman and chief executive of the Agency, I asked if there was any inhibition to invest in the service industries. In all countries that is the growth sector. I was told that there was no inhibition. I hope that the Minister will bring home to the chairman that manufacturing industry, in terms of job creation, is declining but that service industry has a great potential and a great future in terms of the Scottish economy.

The money involved is peanuts compared to the Scottish oil revenue which is preserving the United Kingdom's balance of payments. The oil revenue will be worth about £3 billion in the coming year. A few extra hundred million pounds is only a small slice of what the people of Scotland would have if they had control of the revenues, as they will decide to have shortly.

We shall support the Bill. The Government are right to introduce it. But the sum involved is totally inadequate. We expect to hear more about additional remedies.

9.23 p.m.

Mr. Richard Page (Workington)

I shall deal only with the part of the measure which involves the National Enterprise Board. I shall leave to other hon. Members who are more directly concerned with the Development Agencies matters which involve Scotland and Wales.

The NEB was unaware that such a large sum was to be proposed and I understand that it has no immediate plans for the utilisation of anything more than a part of the sum involved for British Leyland and Rolls-Royce. I regret that I do not take a charitable view of this Bill. The sheer amount of the sums involved points to the conclusion that it is simply a straight political measure which is way and above the future requirements of British Leyland and Rolls-Royce. In this I declare an interest, and I believe that the requirements of Rolls-Royce and British Leyland should be honoured. Nevertheless, these requirements could be part funded by the disposal of other NEB assets.

My hon. Friend the Member for Arundel (Mr. Marshall) asked some searching questions. Perhaps the most important one was "Where is the Board's corporate plan?" He asked where else in any financial institution one could propose such a vast sum of money without providing a full prospectus. We do not have such a prospectus tonight.

The hon. Member for Consett (Mr. Watkins) said that he had not heard any cries about creeping Socialism. I wish that he were here because I am about to cry that the Bill is not creeping Socialism but galloping Socialism. The Bill is designed, in a devious way, to satisfy the appetite for nationalisation of the Left wing of the Labour Party. The amount involved is equivalent to taking £140 out of the pockets of every working man and woman in the country. It could be the oblique instrument for achieving the manifesto of the home affairs committee of the NEC which was published just before Christmas by courtesy of that organ of democratic thought, the Morning Star.

Despite the NEB's wish to have independence of thought, word and deed, it must be accepted that these amounts could so easily be used as a back-door method for State control. It is a very short step from the close relationship at the moment between the regional sector working parties and the NEB to further future directives from the Minister.

It will not be surprising to find that, as time ticks by, the NEB receives greater and greater pressure from the working parties. From that base in each sector I can see the tentacles of State control wriggling their way in and expanding. This huge sum of money to be taken from the taxpayers' pocket has raised quite a lot of comment and remarks, but it is a typical example of what happens when the electors place rabbits in Government in charge of the lettuce patch. We must not be surprised when they start eating the lettuce, and the more they eat the bigger they grow.

Mr. Henderson

It is the breeding.

Mr. Page

I do not want to get on to the subject of the Government's breeding. The more they eat, the bigger they grow, and the bigger they grow the more they want. What I know for certain is that the British taxpayer is getting sick and tired of providing the lettuce.

I should not mind any investment that was successful. With my industrial background, having worked on the shop floor, I have a fairly pragmatic approach to investment and to the utilisation of finance, provided that one criterion is achieved, and that is the criterion of success. During the last Session I pointed out to the Minister, at one Department of Industry Question Time, the concern that we are already heading down the road taken by the Italian equivalent of the NEB. I hope that the House will forgive me if I do not try to pronounce the name of the Italian equivalent. That organisation, six months ago, had debts of £11 billion, and it urgently needed then an injection of new funds of over £1,000 million to complete its investment programme. Does not that have a familiar ring about it? In addition, there was a figure of £2,000 million to cover the accumulated losses of certain of its investments.

When we look at the record of the NEB, we have an awful feeling that the story is to be repeated, as more and more companies add their names to the list of the NEB.

Mr. Kaufman

The hon. Gentleman talks about more and more companies adding their names to the list of the NEB. Why did he write to me asking for INMOS to be sited in his area?

Mr. Page

I have two comments to make on the Minister's intervention. First, I did not say "my area". I mentioned the Northern region, and I particularly referred to the university advantages, not in my area but in the Northern region. Second, it is the duty of any Member of Parliament, while this Government are throwing money around, to grab as much for his constituency as possible. That is the truth.

Mr. Kaufman

The letter reads: Whilst I fully recognise that the west coast of Cumbria is most unlikely to be chosen for this new technology, I do feel that the Northern region as a whole does have an extremely strong claim. Naturally, I hope there will be a spin-off in the whole of the region which will benefit industry which is located on the west coast.

Mr. Page

Is not that what I said? There are now over 40 companies in the NEB, and it is only right that we should carry out some comparison between the NEB and other industrial companies to measure the success of the NEB operation. There are, of course, the straight accounting difficulties of drawing direct comparisons, and my hon. Friend the Member for Arundel pointed out the difficulty of doing any form of comparison with some unaudited sixmonths-old figures. In this case I shall take those first six months' figures of 1978 because they appear to be marginally better than before. However, I suppose that if one were to take into account inflation accounting, one would find that in real terms the situation had regressed.

Nevertheless, from its own figures, the NEB, without British Leyland and Rolls-Royce, has made a profit of £5.6 million on a turnover of £153 million. If we include Rolls-Royce and British Leyland, the NEB shows a profit of £18.5 million on a turnover of just over £2,000 million. If we compare other industrial companies, we find that on a similar turnover GEC made a profit of £325 million. If we were to look at ICI in 1977—and I take the Minister's point about the difficulty in preparing annual accounts so quickly, so the ICI figures are for 1977—its profit, on just over a double turnover, was £483 million. If we equate it back to the same turnover as that for the NEB, it is a profit of £210 million. Again, one can carry these examples on and cite Trafalgar House, with its profit of £60.6 million on a turnover of £825 million.

All those organisations show between 10 and 20 times more profit on turnover than the NEB and they can generate their own investment from their earnings. Obviously, the NEB cannot do so from its profits.

Mr. George Rodgers (Chorley)

Does not the hon. Gentleman think that it would be more reasonable at least to compare like with like? Would he not accept that the National Enterprise Board rescued many industries which were previously in the hands of private enterprise? Would it not be common sense and common fairness to strike a comparison along those lines rather than to pretend that there is a comparison between what private enterprise is currently doing and what the National Enterprise Board is doing?

Mr. Page

I take the hon. Gentleman's point. I believe that this is one of the problems with the NEB, that it is trying to be several things it should not be, and I should like to come on to the point of what I see as the real role of the NEB in our economy later.

The NEB, of course, cannot provide the investment required from this sort of profitability. As I have already said, parallels with the Italian equivalent of the NEB become even more obvious. I am aware that I have taken companies which are market leaders, but in comparison the NEB regrettably lags behind. It must be only too obvious that, whilst this funding operation might seem desirable in theory, it is almost certainly bound to end in disaster, possibly because the percentage of companies that come to the NEB for help, particularly in the early days, are those that have been rejected by the usual financial institutions for aid without severe financial and managerial changes which have been too painful for them to accept—changes which, in some cases, the NEB did not initially find necessary.

I regret that I cannot accept that this organisation can continue to operate effectively in this way, to watch over, as we have now, investments of £1,000 million, with a full-time staff of about 100 people, let alone increasing it to £4,500 million. The amounts become so large that they are almost unbelievable.

I proposed to move on from this point to the question of non-accountability, but in view of the Minister's statement I should prefer to leave that well alone and leave it to my right hon. Friend the Member for Taunton (Mr. du Cann). No doubt my hon. Friend the Member for Surrey, North-West (Mr. Grylls) will also wish to say a few words on this matter. The only thing that I shall say about it is that paragraph 21 of the NEB's guidelines, drawn up by the Department of Industry, states: It follows that the appropriate accounting officers will be answerable to the Public Accounts Committee for having satisfied themselves that the NEB has adequate arrangements for monitoring the financial assistance provided for companies. I could go on and on about that point, but shall make one generalised comment on financial controls in our public industries. It seems to me that the controls that this House should have do not exist. They seem to have slipped from our fingers. Sadly, Parliament today is a political law-making sausage machine without the power or the time to monitor the activities of the very children that it has created.

Finally, I comment on what I see as the future role of the NEB under a Conservative Government after the next election. Whilst I appreciate that the NEB wishes to establish itself as an independent body, in its enthusiasm to do so it has rushed many of its investment decisions. I do not see it as a vast State holding company. If it were that, it would inevitably multiply the errors already made and would require vast armies of staff and investigating bodies to investigate companies in which it had invested. From then on, it is but a short step to direct State control.

I see the NEB far more in the role of a State doctor. Taking companies of national and strategic importance, we can say that Rolls-Royce and British Leyland fall very firmly into that category. I see it taking companies of importance which are in economic trouble and sending in teams of skilled, highly knowledgeable people to provide the expertise to repair those companies and bring them back to profitable operation. Then, when they are profitable, they can be put back on to the open market. I see the NEB as a casualty clearing station—not the present tendency towards a geriatric ward—a role of vital importance within the framework of our democratic society.

9.38 p.m.

Mr. Donald Dewar (Glasgow, Garscadden)

I do not intend to follow the hon. Member for Workington (Mr. Page) in his dissertation on the dietary habits of rabbits. However, I noted his remarks about the splendid profit performance of some parts of British industry. The hon. Gentleman concedes to some extent that there is room for increased industrial costs to be met without added impact on the consumer. That is an argument about which we shall hear more in the next few weeks when the Price Commission Bill comes before the House.

I suppose that we are all parochial in our interests. I want to look at the problems of Scotland and the Scottish Development Agency. I agree with the hon. Member for Aberdeenshire, East (Mr. Henderson) that unemployment is one of the dominating and difficult issues which all parties will have to face in Scotland over the next year or so, irrespective of whether they are in Government or in opposition.

At my by-election the view was taken by some before it started that one could afford to be cynical, at least in electoral terms, about unemployment. The theory was that the only people who worried about unemployment were those actually unemployed and that, as something that cost one votes, it was comparatively unimportant. Certainly, from talking to electors at the time, and since, I have found that large numbers of people are properly alarmed about what is happening in the Scottish economy at present, not only in the immediate short-term but in terms of the obvious structural difficulties that we shall face on a continuing basis over a considerable time.

The hon. Member for Aberdeenshire, East mentioned, in particular, the shipbuilding industry. Of course, I share his anxieties about that. The Garscadden constituency is firmly based on shipbuilding. A number of shipyards are either in or on the edge of my constituency, and they are major employers. None of us is looking forward to the difficult period which undoubtedly will mean contraction in terms of the labour force over the coming months. I hope that in Scotland there will be a certain amount of unanimity in seeking to minimise these difficulties and in seeking to persuade the Government, shipbuilders and ship owners to preserve a viable industry in order to cope with the hoped-for upturn in the market in the mid-1980s.

I have one reservation about the speech of the hon. Member for Aberdeenshire, East. He spoke of certain matters coming home to roost, as though suggesting that these difficulties were avoidable or had been lightly discounted by my Front Bench colleagues.

Mr. Henderson

The hon. Gentleman was not in the House at the time when the shipbuilding industry legislation went through. It was our bitter experience that, although the Government pretended that nationalisation would be a panacea and would protect employment, it did not happen.

Mr. Dewar

I was not in the House at that time, but I was an interested spectator. I have been fairly closely in touch with opinion in the industry since. At no time was the Bill held out to be a panacea. It was understandably seen as a necessary defensive measure to try to make nationalisation more effective and humane and to ensure that resources of capital development were available.

People who work in the industry whose jobs are directly at risk are anxious to obtain all that they can out of British Shipbuilders. However, it is wrong to suggest that nationalisation was put for-ward as an easy option. My right hon. Friend the Minister of State did not suggest that no hard bargaining took place, or that there were no redundancies in prospect as a result of nationalisation.

Mr. Kaufman

I have made it clear, not only in the House but on visits to many shipyards in England and Scotland—including a visit to Govan in April last year, and also in a meeting with the Scottish TUC in Glasgow two yearsago—that nationalisation would not guarantee one job in industry. I have said that to every group of shop stewards since the shipbuilding legislation went through the House.


My right hon. Friend's visit in April last year was most welcome. I accept that a great deal of tough, realistic talking has taken place, and will take place in the months ahead, in the shipbuilding industry.

We must face these problems. The activities of the Scottish Development Agency must be seen in that context. I agree with the hon. Member for Aberdeenshire, East that there is always a danger of overselling an agency. If one has to defend such a body against ignorant and prejudiced attacks from the Scottish Conservative Party, one may push the boat out too far and back a prospectus which the Agency cannot live up to. I am very much aware of that danger. However, the Opposition parties tend to take that view also. That is clear from the extravagance of their attack.

The hon. Member for Aberdeenshire, East said that the SDA was not getting enough money to cope with the problems of the Scottish economy. However, he cast the Agency in far too ambitious a role. There is no way in which the SDA can cope in global terms with the problems of the Scottish economy. The Agency was designed to make a valuable and useful contribution in providing risk capital, in preserving and creating jobs, and in assuming the role of an industrial catalyst. That applies particularly to areas such as west-central Scotland, in which there are many structural problems and the looming threat of unemployment.

Mr. Gordon Wilson (Dundee, East)

Does the hon. Gentleman appreciate that the Scottish Development Agency has spent under £380,000 in risk capital or equity investment in the city of Dundee, which he will agree is an insufficient amount? There are whole areas of the country which are not covered by the Agency.

Mr. Dewar

The hon. Gentleman says "not covered by the SDA". The SDA is an organisation which must consider where its money can most usefully be used, where there are opportunities to invest sensibly and to create jobs and thereby help the Scottish economy. I do not know enough about the situation in Dundee to say whether opportunities there have been passed up. I agree that there are problems in Dundee. I hope that the SDA will find opportunities to help Dundee at some date. However, I am not prepared to accept the implied criticism that in some way Dundee has in the past been neglected by the Scottish Development Agency—if that is what the hon. Gentleman was endeavouring to suggest.

We all have reservations about the policy. I think that sometimes we spend too much of the SDA's money on environmental improvement and that we could do more in terms of industrial investment. That is a matter of argument. Environmental improvement work has been valuable. There is no doubt that the SDA has made a valuable contribution. I have seen evidence of that in my constituency. Such evidence has under-lined the worth of the organisation. For example, the SDA provided £50,000—not a large sum, but an amount which was vital in my area—to the Singer Sewing Machine Company. The SDA, with encouragement from Ministers, for which I was grateful, put up the necessary £50,000 to get the consultants' report off the ground to produce an alter-native strategy because 4,800 jobs were to be cut to 2,000. That may not sound overdramatic, but it was a severe blow not only in absolute terms but in morale terms in an area which could ill stand that kind of punishment.

With the help of some able, imaginative shop stewards, we worked out a compromise solution with management which the work force accepted. That will save another 500 jobs, and that is important. I know that there is an enormous amount to be done and that there is along and no doubt at times rocky road still to travel, but if we can make that plant viable and establish it on a long-term platform for future development, in cost-effectiveness terms that £50,000 will have been extremely well spent. One can go to many parts of Scotland and find plants in strategic positions which owe their existence and continued prosperity to the SDA having been prepared to invest.

Of course, there have been failures and mistakes. But if there had not been failures and mistakes we might today be complaining about the timidity and conservatism of the Scottish Development Agency. I am prepared to see it lose money on occasions if there have been honest attempts to preserve platforms for future prosperity in areas where they are very much needed.

I make the obvious point that the SDA, in addition to its environmental improvement and industrial investment aspect, has played a central role in the restructuring of some of the difficult city areas in west-central Scotland. It has played a key part in the "GEAR" project for the rejuvenation and reconstruction of the east end of Glasgow.

I suggest that we have to look not only at the SDA but at the NEB and its contribution. We in Scotland are some-times very parochial. We see the SDA only in terms of a specific Scottish institution. The very word "Scottish" receives almost exclusive attention, and that is not a healthy or necessarily accurate picture.

The Albion works in my constituency remind me of the enormous contribution that the NEB has made to British Leyland. I appreciate that this is criticised particularly by many Opposition Members, but I believe that a viable car industry is an important aim and objective in this country. The intervention of the NEB, despite all the troubles and difficulties at British Leyland, has been extremely helpful and valuable. The NEB has made a real contribution to Bathgate and to the Albion works in my part of Glasgow.

About 24,000 jobs in firms in Scotland are supported by NEB money. Frankly, at the end of the day, however much people may carp and see the NEB as offensive to the pure doctrine of the free market economy, those 24,000 jobs are very important in Scotland. Therefore, I should support any organisation, such as the NEB, which did something constructive and important in an effort to preserve those jobs. It underlines the point that the Scottish economy is not a self-contained unit that can be lifted out of the British context and left to flourish. We shall always have close connections with the market south of the border, which will remain our main market, and the public sector ordering power of the British Government will be the foundation of the prosperity of a large part of Scottish industry. The self-evident sense of that proposition has coloured a lot of the political attitudes over the last few months in Scotland.

It has contributed—if I may say so without rubbing salt into the wounds of the Scottish National Party—to the dramatic decline in the fortunes of that party and the popular support which it temporarily enjoyed. I believe that the Labour Party in Scotland can look for-ward to an election, whenever it happens, with considerably more confidence—it is a qualified boast—than the Scottish National Party.

We are seen as an integrated economy. It makes no sense to cast ourselves off and to see ourselves as some sort of self-contained economic unit, removed politically and, in a sense, economically from our main markets.

Another reason for our confidence stems from the attacks by, and the prejudiced, bigoted and almost instinctive reaction of, the Scottish Conservative Party to any suggestion that we should intervene and extend the public sector. We should use agencies such as the Scottish Development Agency to prime the pump, to put in risk capital and to try to ameliorate the difficulties of a free market economy in an area that is particularly vulnerable to swings and to recession. So long as hon. Members on the Conservative Benches take the narrow view, their approach will have no relevance to the problems of the economy of Scotland and to the future of Scotland. That is why the Conservative Party will continue to be a rump in Scottish politics—a party which has to look south of the border in the hope that something will happen to sweep that miserable minority to a position of some transitory power in Scotland.

No one is suggesting that the Scottish Development Agency has not made mistakes. I agree with the hon. Member for Aberdeenshire, East. I should like to see it pay more attention to the service sector. That is an important and relevant point. Its investment policy has probably been too narrowly based, and attention should be paid to the service sector which will expand and make a considerable contribution on the East and West coasts of Scotland.

I am certain that the Scottish economic future and prospects would be distinctly impoverished if we did not have the SDA, and adequate funds for the SDA. It would come as a great shock to a large number of people who are perhaps tempted occasionally to look with a benign glance at the Conservative Party if they realised the opposition to this kind of development that, on occasion, is mouthed by representative and import-ant figures in the Scottish Conservative Party. I believe that people in Scotland appreciate what the SDA has done and see that its contribution, although limited, is valuable. I hope that the Bill will receive a resounding Second Reading.

9.54 p.m.

Mr. Richard Wainwright (Colne Valley)

Had the Government treated the House in a civilised and reasonable way and brought first before the House a separate Bill devoted just to the two Agencies, even the extravagant sermonisings of the hon. Member for Glasgow, Garscadden (Mr. Dewar) would not have deterred my hon. Friends and myself from following him into the Lobby in support of some extra borrowing powers for the two Agencies. But the Government, carried away by the superficial success of their atrocious combination of shipbuilding and aerospace in one Bill, have chosen —as some of us warned at the time—totreat the House in an appalling way by serving up three separate bodies for almost astronomical sums belonging to two quite disparate orders of statutory organisation.

The NEB has virtually nothing in common in its structure with the two Agencies which are so badly coupled with it in the Bill. It is asking far too much to expect the House—in the ragged way in which we must debate the matter, with a weekend for reflection in between, and goodness knows what that may pro-duce—to have to discuss the three bodies all in one debate.

As regards the NEB, we consider that the debate is ill timed in addition to being ill structured. To produce this demand for extraordinary increases in borrowing powers just a few weeks, presumably, before at any rate the unaudited accounts for 1978 become available is very little short of sharp practice. It has already put the House into a very difficult position when trying to assess the NEB's record.

We have also had the usual sad illustration, which causes so much despair throughout industry, of the real curse of British industry, which is the zigzag of British politics. Tonight, for example, we first had a gross over-selling of the NEB which was, to put it kindly, premature. Even if some people have golden hopes of that organisation, no one can say that they have been realised in the latest accounts that we have before us, those for1977. The uninistructed among us do not know what the 1978 accounts have in store.

On the other side, we have the most remarkable scenario. First, we have an extraordinary example of the way in which the powerful intervention of a thirdparty—in this case the Scottish nationa-lists—can induce the Tory Party to turn the most inelegant of somersaults. Agencies which were gall and wormwood only a few years ago and which have attracted, even to my anglicised know-ledge, some appalling attacks from the hon. Member for Glasgow, Cathcart (Mr.Taylor) now receive encomiums of praise in an amendment on the Order Paper. That is undoubtedly because the Tory Party is only just convalescent in Scot-land at present and needs to nurse its wounded voting figures with every possible care, even to the sacrifice of consistency.

As for the major matter, the NEB, we were treated to an extravaganza by the right hon. Member for Leeds, North-East(Sir K. Joseph) which left me in a state of shuddering astonishment at the thought of what might happen were he ever en-trusted with the Department of Industry or an allied Department in a future Government. His caricature of British industry as the most controlled in any free society seems to me absurd when one recollects that for the past four years British industry, almost alone in the free world, has enjoyed the extraordinary benefit of scarcely having to pay any company tax whatever if it looked after its stock figures on only one day of the year.

Any Front Bench politician who ignores the fantastic benefits of stock relief—I am sure not actually intended by the Government when it slipped through—benefits which have absolved British companies very largely from corporate taxation during recent years, must be deliberately caricaturing the position when he says that British industry is suffering from an excess of control.

Mr. Hordern

Will the hon. Gentle-man name any other country in which industry has to contend with borrowing rates of not less than 15 per cent., with the possible exception of Italy?

Mr. Wainwright

The hon. Gentleman cannot have it both ways. If he wants a strict monetary policy, and if he wants spending to be carefully organised, he cannot object to a certain amount of discipline being imposed.

Mr. Budgen

Would the hon. Gentle-man agree that industry does not exist by itself—it is composed of people? What the Tory Party is complaining about most of all is high rates of tax on individuals, because it is by their motivation that they make industry and companies.

Mr. Wainwright

I can see that there is something in that, but what I was objecting to was the wholly one-sided aspect of the zig-zag, in which all the admittedly distressing features are heavily underlined and no allowance is made for some of the brighter things on the horizon. It has not all been bad for British industry during the last few years, and some of the crashing mistakes—

It being Ten o'clock, the debate stood adjourned.

Debate to be resumed tomorrow.