INDUSTRY BILL

HC Deb 23 January 1979 vol 961 cc230-87

Order read for resuming adjourned debate on amendment to Question [18th January], That the Bill be now read a Second time.

Which amendment was, 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.

Question again proposed, That the amendment be made.

4.35 p.m.

Mr. Richard Wainwright (Colne Valley)

The five depressing days that have passed since this debate was adjourned have done nothing to make less miserable the unhappy political plight of the National Enterprise Board, which is caught in the fatal zigzag of British politics. Last week we heard the Government's attempts to make the NEB play a grotesque charade, pretending to be the embodiment of the Labour Party's 1974 manifesto. Plainly, part of this transparent ploy is that Socialist zealots for the 1974 manifesto and its original grotesque concept of the NEB will be appeased by Labour Members flourishing this Bill and its provision for £4½ billion.

That essentially moderate man the Secretary of State for Industry has no time for the original pretentious role of the NEB, but he is resorting to this ploy, much to the disadvantage of the admirably managed NEB. In response to his gross exaggeration, which amounts to a hoax, the official Opposition say that qualified euthanasia should be practised in relation to the Board. They say that it should continue with its rather depressing inherited assignments until they can be cast off. That will be the end of the Board.

A great disservice is being done to those who are doing admirable work on the Board and who do not have a pretentious attitude towards their activities. They must be embarrassed by the inclusion in the Bill of the horrific figure of £4½ billion.

It is well known that the Liberal Party has a considerable regard for the concept of the NEB—but on certain conditions. There must be a reasonable amount of recycling. We feel that the NEB should not be run down but that there should be recycling of money as the Board restores important companies to health and vigour. Unfortunately, there is no sign that any recycling is embodied in the calculations of this Bill. There is not even a token or a gesture of money being obtained by the return of companies to private enterprise after some years in the care of the NEB. That is one of the reasons for the stupendous sums in the Bill.

The second condition on which we, as democratic parliamentarians, feel bound to insist is that Parliament must find ways, and, in the meantime, must use the ways open to it, to establish direct accountability of the NEB to this House. I am the first to concede that this is a difficult operation in which to achieve anything like perfection. It will take time to adapt the role of the Comptroller and Auditor General, which is wrapped in history, to a new concept like the NEB. We had a welcome announcement from the Secretary of State in the first part of the debate last week on the Comptroller and Auditor General's role, but while that is being worked out the mechanism on which we must insist to keep some kind of parliamentary control is what I would describe as a version of the mechanism of supply.

For the NEB to be assured of its continuance, the Secretary of State must ask this House at fairly frequent intervals for a further ration of capital. The Board should certainly not be given five, six or seven years' ration all in one go so that, after one fairly major debate, parliamentary control can be abdicated for an appallingly long period, apart from brief late-night debates.

Mr. Michael Marshall (Arundel)

Does the hon. Gentleman agree, touching on a theme earlier in his speech, that an essential part of the Secretary of State's coming to the House should be to give up-to-date operating accounts overall? We had no overall results from the Secretary of State. I hope that the Minister of State will bring us up to date.

Mr. Wainwright

I expressed that hope last Thursday in the overture to our debate and I am glad to repeat it now. It would be intolerably wet of this House even to consider passing this Bill without a great deal more up-to-date information both on profit and loss and on balance sheet items of the National Enterprise Board. Unless the Government produce that information tonight, before the matter is put to the vote, they will be open, as I hinted last Thursday, to a charge of sharp practice in bringing this Bill forward when it can only be a matter of weeks before some unaudited figures are freely available from the National Enterprise Board.

We on this Bench have no desire to starve out the NEB or to deny it and its very important subsidiaries the funds which they need to keep the operations going and to maintain the skill and enterprise that the NEB has gathered around it. If the Government would present the House with a more modest and reasonable Bill, scaling down its requirements in line with the Government White Paper on public expenditure, which gives the show away and indicates exactly what the Government expect the NEB to need over the next few years, we would give that sort of legislation a fair wind and, indeed, our full support. But we are not prepared to abdicate parliamentary control by voting tonight such a vast increase in borrowing powers that there will not be any need or any real chance of major debates on the NEB for a very long time to come.

I remind the House, although it will already be present in many hon. Members' minds, that since the establishment of the NEB we have had only two major debates on this subject, one in April 1978, when there was an important motion to extend the financial limits on an order, and again in December, when there was a big debate on the Public Accounts Committee requirement. Otherwise there have been two other brief debates initiated by Bank Benchers. That is all.

In my view and that of my colleagues, that does not amount to adequate parliamentary scrutiny and, if necessary, control of a body with such wide-ranging operations and using so much of public credit and public money. I repeat the offer that if the Government will come forward with realistic legislation embodying sums that bear some relation to what can be required in the next 12 months or so, we shall be willing to support it. But a measure that is grotesquely designed for propaganda purposes and which, if taken seriously, means that the NEB is not to do any serious recycling of its funds but is to grow bigger and bigger, with the abdication of parliamentary control, requires that I shall recommend my right hon. and hon. Friends to support the Opposition amendment.

4.45 p.m.

Mr. Peter Hordern (Horsham and Crawley)

I was glad to hear what the hon. Member for Colne Valley (Mr. Wainwright) said about the Liberal Party's attitude towards this Bill. His speech was a cogent argument against a Second Reading of the Bill being given by the House, for we are asked in the Bill to provide another £3,500 million to the National Enterprise Board on grounds that the Secretary of State himself described last week. He said: The NEB is by any objective assessment one of the great success stories of British industry. I think that the objective assessment that he described was founded on the fact that, as he said, It was an essential feature of industrial policies put forward for the Labour Party's manifestos in 1974."—[Official Report, 18th January 1979; Vol. 960, c. 2022.] Using perhaps rather different assessments from those employed by the Secretary of State, I would only say that so far as the accounts show, and what the taxpayer has had to bear, the National Enterprise Board has a ragbag of investments that have run at a sustained and continuing loss ever since it was founded. I see the Minister of State shaking his head. Clearly, he takes into account the figures produced by National Enterprise Board reports. During my remarks, I shall show why the Minister of State is wrong and why the report and accounts of the National Enterprise Board are grossly misleading.

I must recognise, of course, that the National Enterprise Board has been bequeathed a number of problems which it did not seek. I refer to British Leyland, Rolls-Royce and Alfred Herbert. These are the giants of the motor industry, the aircraft engine industry and the machine-tool industry. It is a deplorable commentary on the state of industry in our country that those important elements should be in the hands of the National Enterprise Board and causing such grave problems for it.

We know from the last report of the National Enterprise Board that the problem companies of the NEB, namely British Leyland and Rolls-Royce, are required to obtain a return of 10 per cent. by 1981. If the Government were so confident that this would be done, I do not see why the House is expected to provide so much money as it is. It must follow that if 10 per cent. can be achieved by 1981, the cash flow from these companies will enable these businesses to be run very effectively without too much recourse to these funds.

There is no attempt whatever to justify this enormous sum of money. When the Secretary of State said that it had very little effect on the level of public expenditure, it is true that there is little relationship between £3,500 million set out in this Bill and the £270 million annually for the next four years in the public expenditure White Paper. What the Secretary of State did not say is that every penny borrowed by the National Enterprise Board is borrowed from the capital market, and that is every penny less available for the productive industry of our country.

These are enormous sums of money. They are not mere trifles. It is no good saying, as the Government do, that the Bill will have no impact on public expenditure. What about the impact of the debt interest? That would be very considerable. It would be a good idea for the Secretary of State for Industry to get in touch with the Chief Secretary to the Treasury to tell him what he is doing and then tell the House what are his proposals for this enormous sum of money.

The problem stems from the fact that the Government are not clear, even now, about the proper role of the NEB. We have been told that one of its roles is to provide, maintain or safeguard productive employment. It stands to reason that if the Board runs at a loss, it can provide employment only at the expense of productive employment in the private sector.

If the Government are serious about controlling the money supply, the money that they borrow must be in competition with private industrial borrowing, and the weight of Government borrowing is so huge that they cannot borrow at an interest rate of less than 14 per cent. Profitable companies in the private sector are deterred from expansion because interest rates are at a level that allows the Government to lend money to the NEB in order to get a pre-interest return of 10 per cent. from British Leyland and Rolls-Royce and of 11 per cent. from its other investments. Even the figure of 11 per cent. falls well short of the Government's cost of borrowing.

The Minister of State does not agree that the NEB is running at a loss. The objectives of the Board are plainly set out in the report and accounts. They include the achievement of a pre-interest return of 15 per cent. I do not know many companies that are asked to get a pre-interest return. If we take interest charges into account, the profit is reduced by a substantial margin.

In addition, the public dividend capital on which the NEB largely rests does not entail any interest charges, and it is time that the House realised the taxpayer's true penalties for this system. The same applies to nationalised industries. Neither the NEB nor nationalised industries can have public dividend capital unless that money is borrowed from the taxpayer. What is really important is the cost to the taxpayer. Since he now has to pay 14 per cent. on the sum that the Government borrow, the whole of the public dividend capital should bear a proper interest charge of 14 per cent. The crucial test should be the profit, post-interest, allowing for a proper level of interest to be charged on the public dividend capital.

These matters have been discussed in the Public Accounts Committee and are on the record. It is unwise for the House to continue to swallow the concept of public dividend capital which increases yearly and shows precious little return for the taxpayer. That is why I reject the view of the Secretary of State and the Minister of State that the NEB runs at a profit. It runs at a significant loss.

It is beyond argument that employment, health, education and all our social services can be provided only by profitable industry and business. Many people say that they believe in a mixed economy. Sir Leslie Murphy says so in the NEB's latest annual report. We certainly have a mixed economy—a mixture of a profitable private sector, though it is declining in profitability, and a loss-making public sector.

It is not widely recognised that the national income accounts apparently do not show the full scale of loss-making among the public corporations. Unlike the private sector, the public corporations have no deduction for capital consumption from their trading profits. If that were done, it would be sufficient to remove the entire reported surplus in most of the past 10 years.

Since the NEB makes a true post-interest loss on its capital, it seems sheer folly to increase the scale of its operations by £3,500 million. That money could be employed and borrowed by profitable private industry. In his last report, Sir Leslie Murphy said: We have evolved a satisfactory method of dealing with the companies in which we invest. We will not involve ourselves in day-to-day management. Our concern is with the quality of the management. That is our concern as well. The quality was certainly not very good under Lord Ryder, and although it is too early to pass judgment on the management ability of Sir Leslie, I do not think that he can altogether escape responsibility for some of the real stumers that the NEB has perpetrated. I refer particularly to British Tanners Products, Hivent and Thwaites and Reed as glaring examples. If the new as opposed to the inherited investments are taken into account, the losses greatly exceed the profits on the NEB's investments.

In an important passage in his speech last week, the Secretary of State discussed the role of the Comptroller and Auditor General. That is another matter that the Public Accounts Committee has examined at length, and that all-party Committee has made clear its view that the Comptroller and Auditor General should be allowed access to the books of the NEB.

I am sure that there is no question of the Comptroller and Auditor General interfering with the commercial freedom of the Board. It is important that he should be able to make the House, through the PAC, aware of anything that seems, on the face of it, to be going wrong, so that an early inquiry may be carried out. If that had been done, some of the stumers to which I referred may have been avoided.

It is not satisfactory that the Government should carry out an inquiry into the role of the Comptroller and Auditor General and the Exchequer and Audit Department. It is rather like a judge acting also as a jury. I hope that the inquiry will be sufficiently wide-ranging and that the committee will be composed of people other than those in the public service so that it can make an up-to-date survey of what the Exchequer and Audit Department is doing, and what it ought to do.

There is no case for the extra funds provided for in the Bill and the Secretary of State has not attempted to make out a case for them. He is interested in extending his empire, and that ought not to be the interest of the House. While that attitude and this Government remain, we are, it seems, condemned to high interest rates and high personal taxation. It is a fitting tribute to the work of the NEB and the state of our industry under a Labour Government that their cheap troubleshooter, Sir Michael Edwardes, should have said in his latest reported statement that if the level of taxation is not substantially reduced in three years' time, he will leave his country.

4.58 p.m.

Mr. Ted Leadbitter (Hartlepool)

There was a notable contrast between what the hon. Member for Colne Valley (Mr. Wainwright) said and the pronouncements of the hon. Member for Horsham and Crawley (Mr. Hordern) and it concerned the question of support, or lack of support, for the National Enterprise Board. It is well known that the hon. Member for Horsham and Crawley is opposed to the NEB, and he is therefore inclined to produce arguments against it anyway. That is why he was not constructive and why he spoke without evidence. There was a contradiction in his complaining that he did not have sufficient information yet claiming to have an abundance of evidence for condemning the NEB.

I am sure that the Government will accept that when the House is asked to agree a substantial increase of moneys for the development agencies and the NEB, we should have a great deal of information available to us. In addition, there is a contradiction in treatment if the development agencies are subject to the scrutiny of the Public Accounts Committee and the NEB is not.

It may well be that the Government approach on this matter is correct, but I hope it will be agreeable, in view of the comments made by the Public Accounts Committee, the Expenditure Committee and the Procedure Committee, that the argument may continue in the House in order that we can see for ourselves where the strength of argument lies concerning the future treatment of the NEB.

It is quite clear to me that the Secretary of State for Industry rightly claimed, on 18 January, at the beginning of the debate, that the SDA, the WDA and the NEB have been success stories in industry. In order that I may not excite the hon. Member for Horsham and Crawley too much, I place emphasis on the word "success". I do not want to get into an argument about profitability. We are dealing, in historical terms, with a very new venture, and it would be wrong to presume too much, or to expect a great deal of profitability at this stage. There have been several teething troubles which I am sure have been overcome, and we should not condemn it on the rather questionable arguments put forward by the hon. Gentleman.

The House is aware that the Conservative Party voted against the establishment of the development agencies, as the right hon. Member for Leeds, North-East (Sir K. Joseph) confirmed last week, following an intervention from me. He said: 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"— that is, the NEB— to run its existing portfolio, with the instruction that it should, with due care for the public interst, 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 the other assets."—[Official Report, 18 January 1979; Vol. 960, c. 2046.] That really means the strangulation of the enterprise upon which many thousands of jobs and valuable industries have depended.

It is not without significance that the right hon. Gentleman, in addition, began his speech last week by stating that his Conservative colleagues the hon. Members for Pembroke (Mr. Edwards) and for Glasgow, Cathcart (Mr. Taylor) and others of his hon. Friends had told him that the work of the Scottish Development Agency and the Welsh Development Agency was very much appreciated in those parts of the United Kingdom. As that came from members of a party which was opposed initially to these agencies, one can only presume that its conversion has taken the form of a convulsion brought about by an unwillingness to learn and a readiness to avoid the embarrassment of denying the success of these agencies. The right hon. Gentleman reserves his condemnation, therefore, to the NEB. He was rather mealy-mouthed about the agencies, but at the behest of his hon. Friends he gave them some qualified support.

Having regard to the right hon. Gentleman's opposition to the NEB, I wonder whether he will take note that the 1977 annual report on the company shareholdings, involving 12 subsidiaries and 16 associated companies, with 287,292 jobs—and by December 1978 more than 40 companies and an estimate of well over 300,000 jobs—is of significant importance to this House and to the country.

Can anyone deny that, between 1977 and December 1978, the support for Rolls-Royce, British Leyland, Ferranti and ICL, to mention only a few companies, provided for them a long-awaited turning point and, indeed, considerable success? These are companies which are of signal importance to the United Kingdom economy, and no responsible Member of the House of Commons can deny that. The House of Commons could not, in any case, having regard to the recent history of those companies, stand aside and let them fall. Whether the Conservative Party likes it or not, these companies know the wisdom of the NEB being established in this country by my party.

Looking at the 300,000-plus jobs over the total range of the NEB holdings, and considering the dependence of other occupations—this is another important factor—as a result of which many hundreds of thousands of jobs have been protected by NEB activity, it is clear that we have already a considerable work force protection which has come from the work of the Board. Where we have companies such as Rolls-Royce and the need to maintain a very substantial car manufacture in this country—and also ICL and Ferranti in computers and engineering—it is important to understand that, if these areas of the economy were not protected, hundreds of thousands more jobs would be placed in jeopardy.

We can reasonably conclude that the Scottish Development Agency and the Welsh Development Agency, and the record of the NEB, have been justifiably praised by the Secretary of State. But the Bill seeks to raise the limits substantially—the SDA to a maximum of £800 million, the WDA to a maximum of £400 million, and the NEB to £4,500 million. These figures may well be justified, but here I come nearer to the position of the hon. Member for Horsham and Crawley. At this stage, bearing in mind that we shall be dealing with some of these matters in Committee, it is not for me to question the word of my right hon. Friend. I take it for granted that he has discussed with the NEB the full financial limit implications of the proposals.

To that extent, I accept that this illustrates the need, at this stage anyway, to support the Bill in the vote to be taken later today, but it also illustrates another matter. There is, in my view, an imbalance of treatment which can be seen, in relation to the Northern region in particular, if the present trend of the NEB investment continues. Here we have an indication that the Northern region has suffered a lack of investment support. For instance, by April of last year, only five Northern companies and three subsidiaries attracted NEB investment, involving 1,679 jobs. In the North-West region, as the Secretary of State mentioned last week, there were 35,000 jobs involved. But, with NEB investment at the level of which we are now aware, there was a total job involvement of 287,292 jobs at the relevant date. Quite clearly, in the North-West region and the Northern region, as compared with Scotland and Wales, we are certainly in the less favoured position. If I may say so, the Northern region is at the bottom of this league.

If the NEB strategy in the regions is to help medium sized and smaller firms, as was claimed in the annual report of 1977, why is there this disappointing level of investment in the Northern region? As I understand it, the purpose of the Board is to promote industrial efficiency and market competitiveness and provide, maintain, and safeguard productive employment. Why is there such little impact in the Northern region where for decades there have been intolerable levels of unemployment and an outstanding potential for development of new skills? There is also a high level of regional activity to attract new industries and the advantages of improving communications and port facilities which are ideal for home and international trading.

Assistance to the Northern region up to the third quarter of last year by regional development grants and payments under sections 7 and 8 of the Industry Act 1972 amounted to £143 million. For the financial year 1977–78 Northern region it was £145 million. The NEB is not matching by any investment activity the level of aid to the region. It is suggested that the NEB has taken the view—and I hope that it is wrong—that the North is largely made up of what are described as slave companies, which have their parent companies outside the region. Consequently, when the economic winds blow cold the first action of the people at head offices is to cut their losses and run. In Hartlepool we have a great experience of that. Such a move was announced just a few days ago. There may be an element of truth in the suggestion.

Is it not time that large inputs of finance to induce companies to settle in this region had a more active response from the NEB to provide the confidence which the parent companies apparently lack? Especially with this new input of financial limits, the NEB now has an opportunity to correct this regional imbalance of investment.

I understand that the location of INMOS, the micro-electronics company associated with what is popularly known as the silicone chip production proposals, backed by the National Enterprise Board, has not yet been decided. I am informed that the Government have granted an industrial development certificate to INMOS for its United Kingdom technology centre at Bristol. This move is to accommodate some 50 design and development personnel, but a report in the press suggests that the force will be built up by the early 1980s to between 400 and 500.

On 13 December my hon. Friend the Member for Easington (Mr. Dormand) and my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cowans), on behalf of the Northern group of Labour MPs who have been diligently working on this matter and preparing as usual a constructive and formidable case for the Secretary of State to consider, made representations to him. They learned that no decision had been taken on the matters referred to in press reports. They were also informed that a certain advertisement was unauthorised. I make no further comment because, as I appreciate the position, the chairman of the NEB has courteously taken the initiative to put that matter right.

There has clearly been a decision regarding the technology centre. There was a later press report on 5 January of this year following a meeting of my hon. Friends. It adds that the Government have also granted—I hope the Under-Secretary of State will listen carefully to what I say—an industrial development certificate in Bristol for 100,000 sq. ft. for a manufacturing centre. Will the Secretary of State clarify the position? He stated last week in the House: About 90 per cent. of the expenditure and 90 per cent. of the jobs in the manufacturing side—and I believe he may well have included the head-quarters— will be in the assisted areas."—[Official Report, 18 January 1979; Vol. 960, c. 2035.] I am aware that the consultant managers who are engaged on this matter are studying sites. Indeed, on 13 December 1978 the Secretary of State informed the Northern group of MPs' officials that 90 per cent. of the jobs and 90 per cent. of the capital investment would be in the assisted areas. His statement last week confirmed that. Clarification is needed in the light of the Bristol IDC press report of 5 January.

The Secretary of State will understand that on a number of other industrial development matters in the past Governments have expressed confidence that the claims of the Northern region would be carefuly considered. I am sure that he has expressed a similar view. But since we are dealing with the proposals for four manufacturing units involved in the INMOS plan, employing 1,000 people in each unit, and a substantial administrative centre in a new headquarters, the North regional claim requires a confirmation that INMOS will be establishing the manufacturing units and the headquarters in assisted areas. There should be a rebuttal of any press statements suggesting otherwise.

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

I wish to make this matter absolutely clear. It is true that the INMOS technology centre will be located in Bristol. Nobody in this House regrets that more than I do. I had hoped that it would be located somewhere nearer my constituency. But I wish to make it perfectly clear that the NEB have announced that INMOS has engaged a firm of management consultants to conduct a detailed study with the intention of locating the INMOS factories in assisted areas. It is expected that the headquarters will be alongside one of these factories in an assisted area.

Mr. Leadbitter

On this reasonably satisfying note, I draw to a conclusion merely by giving a warning and at the same time expressing my thanks for my right hon. Friend's remarks. The North-West region, the Northern region and, indeed, England, are not making a plea that we are envious of the impact of the development agencies in Wales and Scotland. Quite the contrary; we understand their problems. But there does not appear to be the same impact in areas inside England, such as my region, which has many decades of experience of high levels of unemployment. On many occasions we have made representations to Ministers where the industrial power structure has been such that in the end they have had their own way. It is no consolidation to have had the encouragement of the backing of a Government Department—in this case the Department of Industry—yet subsequently to find that the preconceived notions of those in industry influence them to go elsewhere.

Tonight the House of Commons is passing a Bill involving substantial additions to the financial limits of the National Enterprise Board. I am conscious of the fact that the chairman of that Board is jealously guarding his entrepreneurial rights, and I have the right to say to him that he must bear in mind that the NEB also carries a responsibility to this House which gave him the organisation that he now heads. He must be answerable to Parliament—to all Members of this House who have a stake in this undertaking, whether they oppose the NEB or not.

It is imperative in the functioning of our economy that the chairman must understand that the good will of the House and the support of its Members depend on his recognition that his entrepreneurial instincts must carry a responsibility to carry out the statutory powers that have been vested in the NEB. He must see that the regions get a fair crack of the whip in terms of investment and that the NEB will match the substantial amounts of money that the Government give under sections 7 and 8 of the Industry Act 1972.

There is no point in attracting industry to the regions if a powerful body like the NEB will not confirm the foundations of investment there. The absence of NEB activity in the regions indicates to parent companies outside those regions that the NEB has no confidence in them. If that is the case, why should the parent companies have confidence in the regions? I hope that this debate will convey our attitude to the chairman and that he will realise that our support for him depends on the fact that there are social, economic and regional judgments which he in turn must support and on which he must soon make some pronouncements.

5.22 p.m.

Mr. Alexander Fletcher (Edinburgh, North)

I was interested to hear from the remarks of the hon. Member for Hartlepool (Mr. Leadbitter) that he was not at all jealous of the Scottish and Welsh Development Agencies, even though he represents a constituency in the North-East. That is a measure of his sound judgment. However, I did think earlier that he had swallowed the Government's propaganda about those agencies rather too literally. Also, in the earlier part of his speech he made some play about the Conservative Party's attitude to the agencies. I hope that he will realise that there is a reason for the distinction that we draw between the SDA and the WDA on the one hand and the NEB on the other.

My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) was absolutely right to say that the Secretary of State was talking rubbish when he suggested that the Bill was vital to the SDA and WDA. The fact is that the existing financial limits for these agencies have not been stretched. For example, in the case of the SDA, which has spent or committed £170 million, the Bill provides a new financial limit of £800 million. This can only be described as a piece of political gimmickry and a commitment that could be put into effect only by a new Government and a new Parliament in the future.

In fact, the Bill is very much in line with the exaggerated claims that Ministers make in relation to the NEB and the two agencies. Of course Ministers have to find something to boast about in these rather gloomy days, but the suggestion that this Bill will provide a massive transfer of funds to development areas is totally illusory, and the Secretary of State must know that.

The amendment tabled by my right hon. Friend helps to put the SDA into perspective by distinguishing between its inherited functions and its new functions. There is no substantial disagreement across the Floor of the House about the importance of the inherited functions of the SDA. These include industrial estates management, advance factories, environmental improvement, the attraction of industry, and help for small businesses—in fact 90 per cent. of the agency's functions.

The management of industrial estates and the attraction of industry were previously carried out by the Scottish Industrial Estates Corporation and the Scottish Council (Development and Industry). Tribute is due to both these organisations for the tremendous contribution that they have made over the years to the Scottish economy on a very modest budget.

The difference today is not simply that these functions have been transferred to the SDA; it is that the agency is presented to the public as some kind of miracle machine—a new miracle cure for all of Scotland's economic problems. Ministers stoke up great expectations for the NEB and for the agencies just as, over the years, they have stoked up great expectations about the benefits of nationalisation, only to find that the extension of public ownership and Government intervention has stifled economic growth and left Britain lagging behind nearly all her international competitors.

In his opening speech the Secretary of State said: 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."—[Official Report, 18th January 1979; Vol. 960, c. 2040.] But, as my right hon. Friend the Member for Leeds, North-East indicated in his contribution, industry's attitude is ambivalent, particularly in the present state of the British economy. Industry welcomes another source of funds which may be obtained below the going rate—it would be foolish not to do so—but few business men can be sure that tomorrow they will not be competing against the NEB or one of the agencies. Of course, industry very much resents the tendency of the NEB and the development agencies to invest in one particular company in a declining market.

Mr. George Robertson (Hamilton)

Can the hon. Member give chapter and verse either of the institutions in Scotland or the industrial organisations in that country which have been specifically critical about the role of the SDA? Will he bear in mind the fact that in their evidence to the Wilson committee on the financial institutions, the Scottish clearing banks indicated that the SDA filled a noticeable gap in the equity market for small and medium-size companies?

Mr. Fletcher

I have already referred to that point. I said that business takes an ambivalent attitude to the SDA—and why should it not do so? I am sure that if the hon. Member were a banker he would understand that if he could reduce his own risk with a company and get a Government agency to put in some extra money he would do so. As long as the agency exists it will be a temptation for bankers and business men of all kinds to take advantage of it.

Of course, the agencies are under great pressure to spend money, and that is not a good discipline for any kind of Government body. There is pressure from Ministers and from trade unions every time a business runs into any kind of difficulty. Economic forces which should be disciplining a market economy are plagued by the belief that the Government or their agencies can always be relied upon to save the day whatever the problem and whatever the cost.

This pressure for Government intervention becomes more and more persistent with every extra £1 million that is made available to the NEB and its agencies.

The SDA denies that it is a rescue operation for sick companies. In its 1978 report it says that it aims to support companies showing long-term prospects of viability and profitability. It all depends on what is meant by "long-term."

In view of the amount of funds already available from other sources for profitable investment in Scotland and elsewhere in the United Kingdom, it is not surprising that the SDA investments are more related to high-risk rescue operations than to viable and profitable concerns. That is a fact of life when considering the investments of the SDA to date. This is why Ministers, the NEB and the agencies need to be reminded of the excellent advice given to them by the Financial Times—a newspaper that knows something about these matters—on 25 April 1978. The leading article of that day said: The Government agencies ought to be guarding against two dangers—being used as a 'soft touch' by companies which are perfectly capable of raising money from market sources, and being used as a lender of last resort by companies whose future is so uncertain that no private sector institution will help them. If they turn away both these sorts of business, there will be very little for them to do and that will be all to the good. What worries me is that this good advice is wasted as long as Ministers revel in using the NEB and the agencies as political tools with which to distort the market economy—a situation that must make life impossible for the executives and staff of the agencies as they try to follow the guidelines laid down by the Government.

That is why, therefore, in the case of the SDA in particular, a Conservative Government would introduce new guidelines. We want to ensure that economic realism and financial discipline are linked to the incentive to work, so that economic growth may be achieved and sustained. It is badly needed, for it is the only cure for our economic ills. That is why we must end the pretence that the NEB and the SDA can produce an economic miracle and work wonders for the Scottish economy.

Labour Members, in this House and in Scotland, are continually raising great expectations, the kind of miracle cures that the SDA will be able to achieve. That is completely false. What must be learned is that economic success cannot be based on more and more public expenditure. That has been tried time and time again and has failed miserably, and it accounts, to a very large extent, for the economic problems that face us today.

Mr. Douglas Henderson (Aberdeenshire, East)

I am grateful to the hon. Gentleman for his reference to my party. I think that he might have read the remarks that I made when this debate began, when I said: 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."—[Official Report, 18 January 1979; Vol. 960, c. 2079.]

Mr. Fletcher

I am glad to notice from what the hon. Member said that he had read Professor Donald Mackay's report, which underlined that point very strongly—a report, indeed, which he quoted. Of course, the SNP cannot get enough agencies of this kind, and its manifesto is filled with agencies, Government funds, investment funds and everything else, which all support the kind of ideas which the Labour Party puts forward.

The hon. Gentleman referred to Professor Donald Mackay, of Heriot Watt university when he spoke last Thursday. It is quite true that the £24 million per year which the SDA is spending on industrial projects has been more than offset by a substantial fall in Government expenditure on industrial regional aid in Scotland. Therefore, again we can see that the Bill, to a very great extent, is a sham.

We should also reconsider the wisdom of combining financial aid to small businesses—which is essentially the investment function of the SDA—and the industrial and environmental functions into one single agency. It would certainly be worth while considering the effect of operating this investment function separately, as was the case for small businesses before the SDA was formed.

I think that we should re-examine the SDA's environmental functions with a view to introducing more privately funded investment, particularly for housing. It can be no coincidence that Scotland, with more council housing than any other country in Western Europe, still has some of the worst housing in Western Europe.

The Minister of State, Scottish Office (Mr. Gregor MacKenzie)

I was less than clear how the hon. Gentleman envisaged the SDA's role vis-à-vis the smaller companies. The SDA currently makes loans to a substantial number of companies. In the Lothian region, in which the hon. Gentleman is interested, about 25 companies have benefited to the extent of rather more than £250,000. I am not quite sure what the hon. Gentleman is proposing should now happen to assist these small companies either in the way of finance or of guidance and advice, such as the small firms sector of the SDA does at present.

Mr. Fletcher

What I am suggesting, and what I shall repeat, is that it might be worth reconsidering whether the investment function, the small business function, should remain with everything else that the SDA does. It might be worth while putting the investment and small business function into some other kind of Government-sponsored agency. The Minister will remember that the Small Business Council did this work before the SDA was dreamed of, and did it rather well. It may be that we could go back to that kind of arrangement.

Before the Minister intervened, I was referring to the question of housing and the environmental functions of the SDA. The fact that Scotland has some of the worst housing in Western Europe suggests that the remedy must be to increase the number of owner-occupiers. It may be that the SDA could help in this respect. That is the way in which I believe we should look at the SDA and its functions generally. I believe that we should do this with realism and common sense, to make sure that the Scottish people get value for money. This Bill is clearly an attempt to prolong the myth that Government spending and Government intervention can create prosperity when in fact the opposite is the case. That is why I shall vote against the Bill this evening.

5.37 p.m.

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

My contribution will be relatively brief, if only because I am aware that several of my colleagues wish to participate before the Minister of State winds up this debate.

I listened with great interest on Thursday to the opening speeches of my right hon. Friend the Secretary of State and the right hon. Member for Leeds, North-East (Sir K. Joseph), leading for the Opposition. My comments about those speeches are as follows. I thought that my right hon. Friend was unnecessarily muted and by no means willing—apparently unwilling—to take advantage of the opportunity of describing what to me amounts to a remarkable success story of the activities of the National Enterprise Board since its inception. I think that my right hon. Friend could have said a great deal more about the achievements to date of the NEB.

The right hon. Member for Leeds, North-East, in his own inimical style, with sheer political dogma, poured scorn on the whole idea of State intervention in industry. His attitude was somewhat reminiscent of the attitude of Selsdon man in 1970 towards the IRC, which was dismantled by the right hon. Gentleman's Government but which was already proving that it was having an impact on industrial development in this country.

The indecision for several months after the election in June 1970 of the right hon. Gentleman and his right hon. Friends led to a crisis of confidence in industry in relation to investment grants. I trust—indeed, it is my fervent hope—that when the electorate of this country record their vote at the polls in a few months' time they will remember the outrageously inefficient policies of the previous Conservative Government in relation to industrial development.

There are fundamental factors in the development areas in relation to unemployment and the allied subject of industrial development which demand that there should be a continuation of an agency such as the National Enterprise Board. Together with masses of my constituents and friends and colleagues in the Northern region, I deplore the right hon. Gentleman's attitude when he says, in deprecatory terms, as he did last Thursday, that the NEB will be allowed to continue with British Leyland and, perhaps, with Rolls-Royce. The right hon. Gentleman has not yet learned the lesson which I and my hon. Friends have been learning for years and years while representing the people who have elected us to the House of Commons. I am referring to the measures which are necessary to create new employment to provide job opportunities for countless thousands of people who are denied the right and privilege of working and earning a living.

Mr. Leadbitter

My right hon. Friend has not gone quite as far as he ought to have done. The right hon. Member for Leeds, North-East (Sir K. Joseph) said that instructions would be given to sell the assets and that perhaps Rolls-Royce and British Leyland would last a little longer. What confidence can that give to those two large companies?

Mr. Urwin

I am grateful to my hon. Friend for reminding me about that. I did not wish to be too devastating in my comments. I am sure that my hon. Friends have a full understanding of the points that I have already made.

It is in this context that I suggest to the right hon. Member and to the hon. Member for Edinburgh, North (Mr. Fletcher), with as much emphasis as I can, that when reference is made to the existing limits of the development agencies not being stretched, the unemployment situation in the development areas demands the allocation of financial resources that are as great as can be made available by the Government. I am sure that my Government are fully seized of their responsibilities in that regard.

It was a little unfortunate that in our debate on Thursday—apart from the presentation by my right hon. Friend the Secretary of State and the contribution made by my hon. Friend the Member for Consett (Mr. Watkins) — insufficient emphasis was placed on the regional dimension of the NEB. In the short time available to me I want to place even more emphasis on the regional aspects of the situation than my hon. Friend the Member for Hartlepool (Mr. Leadbitter) placed upon them.

I must point out to the right hon. Member for Leeds, North-East that the northern group of Labour Members loses no opportunity to meet organisations in the Northern region and to have discus- sions with their representatives. We do this almost every weekend when away from the House, when we discuss the very difficult and almost intractable problems of unemployment which affect the Northern region. On Saturday morning last, in a very prolonged discussion with representatives of the Confederation of Shipbuilding and Engineering Unions, we had a remarkably lucid exposition, from the essentially moderate trade union leaders present, of the real problems affecting the Northern region which can be influenced by the NEB, especially since the inception of its regional arms in the North and North-West.

My trade union colleagues in the Northern region quite properly claim that private industry is failing the region—as it is, indeed, failing other parts of the country. It is a national as well as a regional disease, but it is one which bears more heavily on the development areas. I cannot refute their arguments when they tell me, for example, that the Northern region is rapidly losing its place in the manufacturing section of heavy engineering. Only a few days ago Vickers announced the closure of its works in the Tyneside area, demonstrating, I am told, a nineteenth century attitude owards the problems of its particular section of industry and, more especially, in regard to its failure to inform the unions and employees of the closure plans.

I am told—again I have no reason to refute the arguments; indeed, I accept them in their entirety—that the machine tool industry has always been inadequately represented in the Northern region, be it on the Tyne, the Wear or the Tees. The British machine tool industry cannot meet the demands which are placed upon it.

There is a role here for the NEB. I want the NEB to seek, at least, to adopt—this is not permissible under the present rules, as I understand it—an innovatory role, instead of going to the rescue of companies that might be on the verge of failure. Private investment in the Northern region has completely failed us. We are almost entirely dependent upon the activities of the Government, the investment prescribed by the Government through investment grants and the other methods that are available through legislation, especially that of the present Government.

I repeatedly remind myself of the brave words of my right hon. Friend the Member for Huyton (Sir H. Wilson) a few years ago when he talked about the white heat of the technological revolution and said that where private industry was seen to be failing the Government would intervene and set up new industries. We are still awaiting the redemption of that promise and the assurance that at some time or another the Government will grasp this nettle and say "Fair enough. We have the NEB and we shall seek to ensure that it does its best, at least, to contribute towards resolving these particular problems."

On Thursday my right hon. Friend the Secretary of State referred to micro-chips, as did my hon. Friend the Member for Hartlepool today. Already there is a Government investment of £100 million in this exciting new development. Even though I accept in its entirety the assurance given a few minutes ago by my right hon. Friend the Minister of State regarding the manufacturing arms of this organisation, one cannot emphasise too heavily the vital importance of these manufacturing arms coming into the development areas.

I conclude with a brief comment on the development agencies as compared with the NEB. So deeply concerned are we in the Northern region about the continuing high and totally unacceptable levels of unemployment that we are driven, almost in desperation, to find new solutions, to find anything that will help to resolve the desperately difficult situation.

For some time now, we in the Northern region have been saying that we are afraid of the repercussive effects of devolution to Scotland and Wales. In our view, there is nothing conciliatory about events as they have developed over the last year or so. Our fears, and the fears of many people in places of responsibility in the region, are sharpened because of the establishment of the Scottish and Welsh Development Agencies.

It should be borne in mind that the NEB is a far-flung empire which is not restricted to the development areas of England alone but operates equally in Scotland and Wales. However, while I am convinced that the Government will do, and are doing, everything in their power to ensure that there is equality of treatment and equal allocation of resources, none the less the suspicion remains in the minds of many people in the development areas—especially in the the Northern region—that we are disadvantaged because there are development agencies in Scotland and Wales and not in the Northern region.

I sincerely trust that at some time in the future the Northern region will be placed at least on an equal footing with the other underdeveloped areas, such as Scotland and Wales. I hope that we shall be able to say to our friends and colleagues in the Northern region "Well, there we are, we now have everything that they have." We ought to be able to say in the future that everything else is equal.

With those remarks I firmly and warmly support the content of the Bill, which seeks to extend the amount of money available to the NEB, in the firm belief that the Northern region will benefit substantially from the advantages which that money should bestow on the development areas.

5.51 p.m.

Mr. Michael Grylls (Surrey, North-West)

I believe that the right hon. Member for Houghton-le-Spring (Mr. Urwin) has unfairly and inaccurately reflected the comments of my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) on the question of British Leyland and Rolls-Royce. Conservative Members have repeatedly made it clear that we back Mr. Edwardes in the decisions that he has taken in British Leyland. We shall go on backing him. We support the activities of Sir Kenneth Keith in Rolls-Royce and are delighted that that company is doing better. It does not help if the right hon. Gentleman takes that sort of attitude. It may be useful and effective in electoral terms, but it does not assist the debate.

When the Secretary of State for Industry opened the debate last week, some of us who admired his sincerity as a man realised that we did not know him as a humorist. However, when I heard his speech I thought that he had commissioned a speech-writer from Private Eye, because when he described the NEB as "one of the great success stories of British industry" he was at least modestly over-egging the pudding.

The right hon. Gentleman went on to say that it is impossible to imagine the British industrial scene without the NEB. I am not sure whether most of British industry today, as it is struggling to keep its head above water with the strike and lack of supplies, in addition to declining profitability and high taxation, would agree with the right hon. Gentleman's view. Of course, that was absurd hyperbole, and he cannot have meant it seriously.

My hon. Friend the Member for Horsham and Crawley (Mr. Hordern) dealt effectively with the classic question of the profitability of the NEB. I say no more about that. I thought that he dealt effectively with the public dividend capital of £439 million, on which no return has been made. I hope that the Minister will tell us when it is expected the NEB will be making a return on this money, because that is important.

When the Bill first appeared and saw the light of day, it must have been a shock to the NEB itself, and to almost everybody in the House, to see this gargantuan sum of £4,500 million. This seems to me to support what my hon. Friend the Member for Henley (Mr. Heseltine) said on Second Reading, that the first £1,000 million would not be the end of the story, that that would go, and that another £1,000 million would follow. My hon. Friend was guilty of an underestimate. It is not £3,000 million, but £4,500 million, but how right he was in the general direction of what was likely to happen. He merely underestimated the NEB's appetite for money.

When one casts one's mind back to that Second Reading debate and the sort of comment being thrown around at that time, one recalls an amusing article in The Observer, which stated: Now the mountain of British industry is to be forced to walk hand-in-hand with Mahomet, in what Mr. Benn describes, without a trace of self-consciousness, as a 'genuine tripartite exercise of power-sharing—the biggest innovation in industrial policy since the Second World War'. That was perhaps the hope of certain Labour Members at the time when the NEB came into existence.

What was the NEB supposed to do? It was said that it would reverse the long decline in British manufacturing industry. I wonder how many people think that it has achieved that. Indeed, was it fair to expect the NEB to achieve that? Of course not. It is absurd. Its other objectives were to inject the national and regional interest, to take working people into strategic decisions made by important firms and to extend industrial democracy.

We should be pleased that very few of those objectives have been achieved. Looking back on them now, they seem almost like chapter headings in a Fabian leaflet rather than reality. None has been achieved. In many ways, perhaps this is to the credit of the NEB. Some of them have not even been attempted, and we should be grateful for that.

As my hon. Friend the Member for Horsham and Crawley rightly said, the truth is that in those cases where the NEB made its own decision—I do not mean the inherited companies; I am thinking of, for example, British Tanneries which was set up to support all the ailing tanneries that Barrow Hepburn was praying to get rid of—it took over concerns which gave rise to trouble. Thwaites and Reed, that tiny minnow on the South Coast, which had never been successful, and never could be successful, had to be disposed of.

Cambridge Instruments is almost a classic case of interventionism. That case goes back 11 years, to 1968, when it cost the IRC about £2 million and was disposed of to the NEB for £1.25 million. Altogether £10 million has been put into this company, and still it is a disaster story. It has had 11 years of support from taxpayers' money, yet it is still doing badly.

I hope that INMOS will succeed. We all hope that, because taxpayers' money is involved. I do not have enough time to quote the comments of those in the industry who know a lot about micro-processing. All I say is that I am doubful about its future. If I am proved wrong, I shall be the first to admit it.

Are all these companies, the ones that we know have already gone wrong and the ones that look very unhopeful for the future, really the "commanding heights" which the right hon. Member for Bristol, South-East (Mr. Benn) described as the biggest innovation in industrial policy since the Second World War"? When Ministers talk about the NEB, they talk about ICL and Ferranti. If they were really honest and accurate, they would say that ICL's entry into the public sector was nothing to do with the NEB. They would say that Ferranti was nothing to do with the NEB. The fact that at least half of the shares in Ferranti have been returned to the market again is no thanks to the NEB but thanks to the agreement that Ferranti entered into with the Government, with the blessing of Lord Goodman. I believe that the NEB would wish to be judged on those decisions that it has taken on its own initiative. Those decisions do not look very hopeful.

But what happens now? The 1976 Labour Party manifesto promised not only more money for the NEB but more NEBs. The Labour Party is not satisfied with only one but is proposing that there should be more NEBs. All I would say is "Heaven help the poor taxpayer".

The question of accountability was mentioned by the Secretary of State in his opening speech. It is common knowledge on both sides of the House that the lack of accountability of the NEB is something that worries hon. Members. The hon. Member for Ormskirk (Mr. Kilroy-Silk) wanted the NEB to do all sorts of other things, but he was very critical of its lack of accountability. The hon. Member for Gloucestershire, West (Mr. Watkinson), who is a member of the Public Accounts Committee, said that it should be more accountable to Parliament. I myself have asked about 250 questions about the NEB, only a small proportion of which have been properly answered. Some have not been answered at all. That is wrong, and it is something on which the House should insist.

The Public Accounts Committee, which is made up of hon. Members from all parts of the House, has clearly stated that the Comptroller and Auditor General should be allowed to look at the books and the papers of the NEB so that he can report to the PAC. There is no reason why that should not be done in confidence in those cases which are commercially sensitive or over which there are difficulties.

The NEB is not a private sector company responsible only to a set of shareholders. It is responsible to every citizen of this country, and through the House of Commons we must be able to demand more information. It is quite astounding that it should ask for this huge amount of money with no prospectus whatever for the future. Is it really conceivable that any other company in any other country in the free world could do that? It is not. Indeed, every commentator, whatever his political colour, has said that this is grotesque.

It should be understood that the powers of the Secretary of State under the 1975 Industry Act are very wide indeed with regard to the Board. They verge on dictatorial. They affect Board appointments, financial objectives, directions under section 3 and specific directions to take over particular companies. Those are very wide measures. For example, not only can the NEB get the £4,500 million under this Bill but, under a section 3 directive, the Secretary of State can also move about £1,600 million out of 1972 Industry Act money into the NEB. These are terrific dictatorial powers, yet the House cannot control them.

When introducing the 1975 Industry Act, the right hon. Member for Bristol, South-East said that it would provide powers to extend public ownership. That was true. But he said that this would be done through the full parliamentary process. But four years later we have yet to discover what the full parliamentary process is. Ministers can, as it were, come along to the House and in a one-and-a-half hour debate can extend, first from £700 million to £1,000 million, and now from £3,000 million to £4,500 million, the amount of money to be allocated to the NEB. Is that a full parliamentary process?

Of course, in a sense the process is an enabling Act, because it enables a Labour Government to pick off any company they choose if they want. The NEB has not yet been able to do a lot of nationalisation, but given this huge amount of money it could do almost whatever it wants. If the House approves this enormous amount of money, a £4,500 million blank cheque will be put into the hands of the NEB, without any control. That will fuel the engine of future nationalisation, with no parliamentary brake or check on the Board's actions or performance. It makes a mockery of any pretence that Parliament can have control over taxpayers' money.

In considering the Bill the House must ask itself several questions. Is this huge sum needed? Has the case been made out in detail? If we do not get answers tonight, I am certain that we shall pursue them in Committee, because the £2,000 million blank cheque on top of what the Secretary of State described last week has not been explained away.

Could not the money be found from the NEB's own resources? Which companies could be returned to the market so that a profit could be chalked up for the taxpayer and, if necessary, that money used for something else? My right hon. Friend the Member for Leeds, South-East made this perfectly clear, and he should not be derided for insisting that the NEB's money should be turned over more frequently. What it should not be able to do is to whistle up more money as one would whistle up a taxi outside the House of Commons.

I have already mentioned accountability. If the House doe not get satisfactory answers to all these questions, I believe that it should vote against the Bill. If it does not suceed in voting against it tonight, we should give the Minister a very tough time in Committee in order to try to protect and safeguard the taxpayer against the excesses of the NEB.

6.6 p.m.

Mr. Norman Lamont (Kingston upon Thames)

This has been an unsatisfactory debate, and not just because it has been like a five-day test match split in two over the weekend, with the hon. Member for Colne Valley (Mr. Wainwright) playing the role of night watchman. It is also unsatisfactory because, under one Bill, we have had to consider three very different institutions. They are different animals which stem from different legislation, and there is no reason at all why they should have been taken under this one Bill.

As my hon. Friend the Member for Edinburgh, North (Mr. Fletcher) pointed out, one difference between the SDA and the NEB is that only 20 per cent. of its activities are actually industrial investment. The rest comprises advance factory building, environmental programmes and programmes such as the rehabilitation of the east end of Glasgow. Of course, we regard those programmes as extremely important and ones of which we wholly approve.

Even in terms of industrial activities there is a difference between the development agencies and the NEB. Not only are the development agencies' activities on a smaller scale, but they are also usually undertaken in conjunction with private enterprise. For example, SDA projects usually have private capital outweighing public capital in the ratio of three to one. The vital test of the market is still there and there is, therefore, less of a reason why the development agencies could be regarded as instruments for the extension of State ownership.

As my hon. Friend the Member for Conway (Mr. Roberts) pointed out, our criticisms of the development agencies are somewhat more muted than our criticisms of the NEB. We shall retain the agencies, give them different guidelines, discourage them from rescuing lame ducks and encourage them to turn over their investments. Indeed, I agree with what the hon. Member for Colne Valley said about this. Why should anyone object to that? That merely takes the development agencies at their own valuation. If they believe that there is some function which they can do profitably, and which ought to be done, they ought to be quite willing to finance some of their future investments out of the profits which they are so confident that they will make on their present investments. We are only taking them at their own word.

Of course, not everything that the development agencies have done is marvellous. There have been some failures. As my hon. Friend the Member for Edinburgh, North said, there have been some cases of companies complaining about SDA-backed companies taking away skilled labour, and there have been other examples of companies complaining of unfair competition from SDA-backed companies. That is always a danger whenever the State intervenes to support, just as there is also a danger that this sort of intervention will lead to the politicisation of industry—an ugly word for an ugly thing. There is always the temptation for jobs and investment to be allocated by some trade union or bureaucratic committee.

I know that the Minister of State is fond of quoting my hon. Friends who write and ask him for Government aid for particular projects. Before he stands up tonight to rebuke my hon. Friends yet again, let me do it for him. Alas, we are mortal men and all of us wish to do our best for our constituencies. However, as long as we continue to put political and social objectives before commercial interests in this country we will not get the industrial recovery that the country needs.

Our main criticism of the development agencies is that the money allocated to them under this Bill is too much. Perhaps I ought to say, as my hon. Friend the Member for Edinburgh. North pointed out, that it would be too much if one could be sure that the agencies were in fact going to get the money. There remains the suspicion that all the Government are doing is writing some meaningless figures on a picee of paper in a rather grubby attempt to rustle up some votes from the Scottish nationalists. Either way, real or pretend, we are against it.

Our main concern in this debate centres on the increased finance for the NEB. A number of hon. Members have laid emphasis on the size of the NEB—it is now the sixth largest group in the country—but when they emphasise the size of the NEB and the employment involved I wish they would also emphasise that size brings dangers. Size brings the tremendous prospective financial burden on the Exchequer and the borrowing requirement if and when the NEB goes wrong.

My hon. Friend the Member for Workington (Mr. Page) said that hon. Members opposite used to contrast the NEB with the Italian State company IRI. We hear much less of that kind of comparison now. Is it any wonder? The debts of the IRI have grown and grown. It became involved in the political process, and its debts at one time were threatening to match those of the Italian Government. I was amused to read in The Times the views of the Italian Communist Party on State holding companies. To judge by what it says, it understands the market economy somewhat better than the so-called British Liberal Party. One of the Italian Communist Party's spokesmen, a Professor Mangetti, gave an interview to The Times about State holding companies in which he warned of the dangers of growing indebtedness, the threat of surreptitious nationalisation, and the desirability of selling off those investments which could be sold. Above all, he said that it was much more important, from the point of view of industry, to encourage entrepreneurs than to create new agencies. When I look at the Tribune group opposite or listen to their views, I wish that we could exchange them for some of the Gucci comrades.

Much of this debate has been taken up with Rolls-Royce and British Leyland. A number of hon. Members have referred to Rolls-Royce as a success. We hope that they are right, but on reading the report of the NEB one can see the concern over the profitability and productivity of Rolls-Royce. The accounts portray a cash-hungry company making very marginal profits.

At the same time, hardly a week goes by without Rolls-Royce announcing some tremendous new contract. That is very good as far as it goes, but let us remember that 10 years ago Rolls-Royce announced that it had won the contract of the century. The trouble was that the terms were ruinous. The flow of orders Rolls-Royce is now getting makes it all the more important that there should be a decent return. Contracts that do not offer sufficient profit or which cannot finance investment and pay dividends are no less ruinous just because the name in the shareholders' register is the magic initials NEB. It is just as bad for the country as a whole, and that is why we are extremely disappointed that the Secretary of State has not announced, as he said he would, any target rate of return for Rolls-Royce.

After two and a half years of the NEB we still do not know what rate of return Rolls-Royce is meant to be earning. How can one be confident, therefore, that this State-backed company has any discipline imposed on it whatever?

The Secretary of State said that this Bill was essential for the future of British Leyland. I do not believe that, and my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) explained why that statement was rubbish. However, if that were true it would mean that the Secretary of State was treating this House with very great arrogance and contempt. It would mean that he was saying that the House had no option but to grant this money to the Government because it was essential for British Leyland. At the same time, as my hon. Friend the Member for Arundel (Mr. Marshall) pointed out, the Secretary of State gave us not a single piece of worthwhile information about British Leyland.

He promised us, in April, when he introduced the last NEB Bill that there would be a review last November and every November subsequently. What happened to that review? We do not know how much of the money that Parliament voted has gone on wages and how much has gone on investment. When the Secretary of State was asked that last April, he did not know then, and he still does not know today.

We do not know whether British Leyland has met its productivity targets. What we know from the newspapers is that it has not succeeded in getting its target market share, nor has it succeeded in reducing overmanning, as it had planned. It therefore seems unlikely that it has generated the funds for investment from its own sources. We should not have to guess these things; it is for the Secretary of State to tell us.

But perhaps I am doing the Secretary of State an injustice. He is not keeping us in the dark. The truth is that he is in the dark too. All the evidence shows that he has not got very much control over British Leyland. Earlier this year in a written answer it was announced that £275 mill ion was being loaned to British Leyland. When the Department of Industry was asked by the PAC whether the House of Commons ought not to have been given more time to consider this, we were told that the Department did not know that so many short-term bank loans were maturing. But it coughed up the £275 million all the same.

It is because of incidents such as this that the question of accountability is, as my hon. Friend the Member for Arundel has said, a deeply serious one.

If the NEB chairman, Sir Leslie Murphy, had known of the lack of information in the Secretary of State's speech he really could not have argued, as he did before the PAC, that responsibility to the Secretary of State is the same as responsibility to the House of Commons. Nobody is suggesting that the day-to-day activities of the NEB should be interfered with, but it is anomalous, surely, that the SDA can be investigated by the PAC and the NEB cannot. Some of the reasons advanced by Sir Leslie were all too reminiscent of the arguments advanced against the investigation of the Crown Agents by the PAC. When Sir Leslie pleads the example of the nationalised industries, I think that he ought to remember that the nationalised industries have a very close relationship with some of the Committees of this House. We do not have such a relationship with the NEB at the moment and the present situation is not satisfactory. There must be greater accountability.

I turn now to the investments of the NEB, and before I look at them as a whole perhaps I could make a comment on two points. The first concerns the involvement of the NEB in microelectronics. A number of hon. Members have talked about that as though the very fact that the NEB is involved in microelectronics is by itself a sufficient justification for the NEB's existence. We are deeply sceptical of what the NEB is doing on microelectronics, but we should like more details from the Minister of State. I hope that when he winds up the debate he will give us some details.

For example, will he tell us about the taxation arrangements for the Anglo-American entrepreneurs who will be working for INMOS? If even half of what has been written in the newspapers is true, that goes a long way to justify what we on the Conservative Benches have always held, that under Britain's present tax regime it is not possible to found new industries in this country.

Secondly, will the Minister tell us how much of INMOS's activities is to be carried out overseas? I gather from some newspapers that it will manufacture not only in America but possibly in the Far East. Whilst I have no objection to companies manufacturing overseas, I merely observe that those on the Labour Benches who are the first to argue that the NEB is filling a gap in our industrial process are the very people who are the first to criticise any British company whenever it chooses, for the best of commercial reasons, to invest overseas.

We remain highly sceptical of what the NEB is doing in this field. It will face great competition both from British companies and international companies. I know that ITT is already a bogy name to some Labour Members. Perhaps it will be even more of a bogy name when they discover what competition it will provide for INMOS. Already, ITT is producing the 64K chip that INMOS has been set up specifically to produce. It is producing those chips in this country, at its worldwide micro-chip headquarters in Sidcup, at the rate of 600,000 chips a month.

We hope that our scepticism will be confounded, but we fear that, like many other Government ventures into high technology, this will be another headlong rush down a cul-de-sac.

One aspect of the NEB's investment policy that we wholly approve of is the decision to sell off some investments. We welcome the fact that Sir Leslie Murphy has taken a less doctrinaire view and that, with an eye on the next Conservative Government, has already started implementing ow policies. As my hon. Friend the Member for Surrey, North-West (Mr. Grylls) said, there are many things in the NEB's portfolio that could be sold off. We shall encourage the NEB to do that.

My hon. Friend the Member for Horsham and Crawley (Mr. Hordern) quoted the astonishing statement made by the Secretary of State last week. I could hardly believe it when I heard it, but one of the advantages of this split debate is that one can look in Hansard and discover whether the things that one could not believe were said were actually said. The Secretary of State said: The NEB is by any objective assessment one of the great success stories of British industry."—[Official Report, 18 January 1979; Vol. 960, c. 2023.] He did not say "one of the great political successes of the Labour Government in getting it set up". He said "one of the great industrial successes". I wonder what he was thinking of. Was he thinking of the miserable profits the NEB has earned on its turnover? Is he seriously arguing that the future of British Leyland has just been assured because of the NEB? Or was he, as my hon. Friend said, thinking of the rate of return it has earned on its investments?

The rate of return is lower this year than last year. Even excluding British Leyland and Rolls-Royce, it is 11.7 per cent., which compares with 18 per cent. earned in a private sector conglomerate, such as Thomas Tilling. It is well below the average for British industry and well below the 15 per cent. to 20 per cent. target that the NEB has set itself for only two years' time.

There is a curious thing about the 15 per cent. to 20 per cent. target. When Sir Peter Carey appeared before the Public Accounts Committee he admitted that the reason 15 per cent. to 20 per cent. had been chosen as a target was that that was expected to be the rate that British industry would be earning in 1981. Labour Members must forgive our puzzlement. I had always thought that the object of the NEB was to improve our industrial performance, and that one of the things that was wrong with us was that our rate of return was so low. But apparently we should now use taxpayers' money simply to achieve what we are already not doing very well in this country.

We are very puzzled, because we hear bright-eyed executives from the NEB talking about how they will knock hell out of private enterprise, how they will found new industries. Why is it that these latter-day Rockefellers and Carnegies are so modest when it comes to measuring their own performance?

Perhaps the reason is that, as my hon. Friend the Member for Chertsey and Walton (Mr. Pattie) pointed out, so many of the investments have begun to go wrong: Power Dynamics, receiver appointed; Hyvent, insolvent; Thwaites and Reed, down the spout—an investment of which Lord Ryder said, when asked by my hon. Friend the Member for Croydon, North-West (Mr. Taylor) why the NEB had invested in it, "Because the opportunity is so breathtaking." Now it has gone. The losses at Barrow Hepburn may eventually top £4 million. Alfred Herbert has consumed £10 million in six months and is still making losses.

But whenever one mentions any of those points the Minister of State has the same reply: "You can't win 'em all." Of course, "You can't win 'em all" when every company that has been turned down by its bank manager is knocking at your door. But the question is, is the NEB even winning most of them?

I looked at the details about the companies that are consolidated in the NEB's last accounts. There are 17 which the NEB did not inherit from the Department of Industry and which it was not compelled to take. Nine of them are making losses and eight are making profits. The losses outweigh the profits by three or four to one. Labour Members may say "It will take time and it is difficult." But it is difficult to believe that when so many investments have already gone wrong the NEB will lead to the regeneration of British industry. It is difficult to believe that those struggling tiddlers will make any difference to Britain's overall industrial performance.

Nor will some of the other activities, such as the NEB's punting on the Stock Exchange with taxpayers' money. I am amazed that Labour Members do not ask questions about that. The NEB buys shares in companies such as Brown Boveri on the stock market. Why? The reason is obvious: it buys them in order to buy the profit figures to consolidate them in its accounts. Again, Labour Members must forgive our being amazed. We listened year after year to speeches by the right hon. Member for Huyton (Sir H. Wilson) telling us how the NEB would alter things in the real world—and the real world was where people made things, not where pieces of paper chased pieces of paper and people made money out of money. Apparently, all that has now gone, and in next year's NEB annual report we can confidently expect to see that the NEB has invested in bottles of port and Tiepolos. That would make no less difference to British industry than its activities in the stock market.

Some Labour Members cling to the belief that in the longer term the NEB will achieve the impossible and make an impact on our industrial performance. We believe that that is an illusion and that the NEB will almost inevitably be tempted to do things that it should not do.

Why should one believe that the NEB will be able to overcome the problems of the hostile environment to business in this country any better than the private sector? Why should one believe that there is a pool of talent available to the NEB that is not available to private industry in general? Why should one believe that managers in the NEB will see opportunities that those in British industry cannot already see?

One answer may be provided in the planning booklet that the NEB gives to its subsidiary and associate companies. It is full of profound advice for drawing up a five-year plan: Analyse/assess the company's strength and weaknesses Identify key problems and opportunities". Over the page there is even a diagram, no doubt drawn by a highly-paid management consultant. Under the heading "Problem: Low productivity" is an arrow leading to the solution "Modernise plant". We also read "Problem": "High risk" followed by another arrow leading to the solution "Invest to maintain technical lead."

The significant thing about this pamphlet is not the banality of it, because no company that needs advice is going to be saved by getting such advice. What is significant is what it does not say. It does not say "Low productivity—look at the problems of over-manning." It does not say that, because it dare not say that, and it dare not say that because the NEB operates within a political framework. It operates within the framework laid down in its guidelines, which give it incompatible objectives. In addition to achieving a second Industrial Revolution, the NEB is also to promote regional policy, promote consumer interests and promote industrial democracy. That cannot all be done together; it cannot be done and reconciled with the Prime Minister's declaration that the object of industrial policy must be to put industrial objectives before social objectives.

The whole thinking behind the NEB is wrong. Our problem in this country is not lack of investment. Even the Chancellor of the Exchequer now understands that. He said in one of his Mansion House speeches that Our problem is not a lack of investment; it is getting a decent return out of the investment we have got already. Our problem in this country is our lack of competitiveness. It is a problem that has existed for many years, but this Government have achieved something astonishing; they have managed to make it even worse by a deliberate policy of subsidising uncompetitiveness. Week after week Ministers stand at the Dispatch Box boasting of their addiction to failed capitalists, of how they are handing out money to private industry, of how they are making plans to strengthen private enterprise. It sounds wonderful, these endless sums of money, as long as one does not look at one thing, and that is the result. The result has been that our productivity is now almost the worst in the whole OECD area. Our productivity has sunk because the Government cannot make up their mind whether they want to have productive industry or indoor welfare—a twentieth century version of the workhouse.

The Minister of State will no doubt make his usual speech about the Tories wanting to destroy jobs. It is good stuff, and the delivery gets better each time he makes it. But he never addresses himself to the argument that higher living standards and better social services in fact come from the destruction of bad, unsound, unprofitable jobs and their replacement by sound jobs. It is the unique achievement of this Government to prop up bad jobs and to do everything possible to prevent the appearance of good, profitable jobs.

Real job creation is the task of management, choosing the projects which stand a chance of success, and the present Government, alas, have done everything possible to undermine the morale and authority of management. They listen only to the voice of the unions, which have been allowed to veto the elimination of bad jobs. If we want rising living standards in this country, we shall have to remove the trade union veto.

The NEB is irrelevant to the wider tasks that need to be done. If this Government really wanted to reverse our industrial decline they would start today cutting public spending, cutting taxes and reforming the trade unions. They will not do it, they cannot do it, but the next Government can do it and will do it.

I urge my hon. Friends both to vote against the Bill and to vote for our amendment.

6.35 p.m.

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

It was instructive to listen to the call for the destruction of bad, unsound jobs and an end to subsidies from the spokesman of the party that nationalised Upper Clyde Shipbuilders, and nationalised Rolls-Royce in 17 hours—a record nationalisation in the history of this House. The Tory Party is, of course, ambivalent, and must be, in view of its record, in view of its industrial history and in view of its legislation dealing with aid. And it must be, and is, ambivalent concerning the National Enterprise Board.

It is clear from the debate and from the ambivalent contributions, the differing contributions, the contributions which have disagreed with each other, from hon. Gentlemen opposite, that they are very bothered indeed by the whole concept of the NEB and what to do about it.

My hon. Friends on this side have made it perfectly clear in this debate that they are firmly in favour of the National Enterprise Board. They may have criticisms of what it does or, more frequently, of what it does not do that they think it should. My right hon. Friend the Member for Houghton-le-Spring (Mr. Urwin) and my hon. Friends the Members for Consett (Mr. Watkins) and Hartlepool (Mr. Leadbitter) understandably advocated greater activity in the Northern region, and my hon. Friend the Member for Consett put forward a programme for advancing industrial democracy. My hon. Friend the Member for Birmingham, Ladywood (Mr. Sever) spoke up for the West Midlands, and he will certainly be glad to know that more workers are employed by NEB companies in the West Midlands than in any other part of the country.

However they may differ in viewing the work of the National Enterprise Board as incomplete, my hon. Friends welcome the approach of the NEB and value its existence. But it is clear from this debate that the Tories are perplexed by the NEB. They do not know what to think about it and they do not know what to do about it, and the reason is clear. The National Enterprise Board is a new idea, and a new idea is something that always troubles the Tory mind.

What is more, it is a new idea that is working, a new concept that is accepted—accepted simultaneously by Tribune and the Financial Times accepted simultaneously by shop stewards and the Confederation of British Industry, whose deputy director only recently made a speech firmly opposing the abolition of the NEB, the Scottish Development Agency and the Welsh Development Agency, which he said would be a blow to stability and consistency". The fact is that only three years after it came into being, and despite the unsupported jibes of hon. Members opposite, the National Enterprise Board is so integral a part of Britain's industrial life that it is impossible to imagine how we would get on without it. Whenever a difficult situation arises, whenever an industrial problem is highlighted, someone—whether a trade unionist, a banker, an industrialist or, as often happens, a Conservative Member of Parliament—is likely to come to us and ask us to send for the NEB. Indeed, one of the greatest challenges facing the National Enterprise Board today is that so much—maybe, as the hon. Member for Colne Valley (Mr. Wainwright) warned, too much—is expected of it.

To recall some of the statements made less than four years ago by hon. Members opposite during the Committee stage of the 1975 Industry Bill, to which we have had reference today from the Opposition, is to peer back into political pre-history. The hon. Member for Cirencester and Tewkesbury (Mr. Ridley), whom we miss from this debate, prophesied that the NEB would be a dismal failure.

The hon. Member for Henley (Mr. Heseltine), whom we very much miss from the Front Bench opposite on these matters, gave us the characteristically utter certainty which we can always expect from him when he said: We simply do not believe that the National Enterprise Board will earn an adequate return".—[Official Report, Standing Committee E, 13 March 1975; c. 184.] And we recall the lame attempt at humour by the hon. Member for Mid-Sussex (Mr. Renton), whom we are glad to welcome to the debate, when he said: The name will be changed to the National Disaster Board or the National Disintegration Company."—[Official Report, Standing Committee E, 4 March 1975; c. 46.]

Mr. Tim Renton (Mid-Sussex)

I must thank the Minister for sending me another of his billets-doux saying that he was intending to make reference to me during his winding-up speech tonight. When I first started receiving these letters from the right hon. Gentleman they used to strike terror into my heart, but I am now making a collection of them to frame and hang in my loo.

May I just suggest to the Minister that, rather than waste the time of the House on those smears and personal innuendos at which he is a past master, he spends some time telling the House about the developments in INMOS and answering the questions concerning microelectronics that my hon. Friend the Member for Kingston upon Thames (Mr. Lamont) asked him? In particular, will be answer the question that I would have asked him if I had caught your eye, Mr. Deputy Speaker? Is it not a fact that the NEB, in the field of microelectronics, has backed the most risky side of all, the manufacture of integrated circuits, when it would have done far better to go for consideration of applications, and that this would have employed many more people in the United Kingdom than what the NEB has chosen?

Mr. Kaufman

I sympathise with the hon. Gentleman for calling it a smear when I quote him directly. Far from the NEB being a dismal failure, as the hon. Member for Cirencester and Tewkesbury warned, the NEB, despite the logic chopping of the hon. Member for Horsham and Crawley (Mr. Hordern), is earning a profit on its own investments. Far from failing to earn an adequate return, as the hon. Member for Henley prophesied, it is making satisfactory if not undeviating progress towards achieving its required rate of return. Even the hon. Member for Arundel (Mr. Marshall) admitted that it was moving in the right direction as regards rate of return. Far from being associated with disaster or disintegration, as the hon. Member for Mid-Sussex advised us would happen, it is increasingly linked with innovation. It is linked, for example, with the INMOS project—

Several Hon. Membersrose—

Mr. Kaufman

I shall give way to the hon. Member for Horsham and Crawley because I referred to him, but before doing so I shall finish my sentence. The NEB has taken an important initiative in launching British industry into the silicon chip revolution. The hon. Member for Arundel has praised it for its pacesetting work on silicon chips.

Mr. Hordern

As the right hon. Gentleman knows, the Secretary of State said that the public dividend capital that has been taken up so far by the NEB amounts to £439 million. Where does he suppose that that money is coming from? Does he not recognise that it comes from the taxpayer, and cannot be borrowed at the moment at less than 14 per cent.? The interest on the sum must amount to at least £60 million a year—far exceeding any possible profit that the NEB is showing or can show.

Mr. Kaufman

The hon. Gentleman knows that that has to be remunerated in the normal way.

In their amendment the Tories claim that the House is not being given sufficient—

Sir Keith Joseph (Leeds, North-East)

Will the right hon. Gentleman explain what he means by has to be remunerated in the normal way"? What did he mean by that?

Mr. Kaufanm

I refer the right hon. Gentleman to the Act. I refer him to the statements that we made in the White Paper on nationalised industries about our attitude to the remuneration of public dividend capital. If he wishes to refer to those statements, we may refer to the issue in Committee.

Sir K. Joseph

Does the right hon. Gentleman mean that it is not remunerated?

Mr. Kaufman

Public dividend capital is required to be remunerated. I refer the right hon. Gentleman, for example, to British Aerospace and its remuneration of public dividend capital.

In their amendment the Tories claim that the House is not being given sufficient information about the activities and plans of the NEB to justify their voting the money. In their amendment they complain about what they describe as totally inadequate documentary evidence". However, the Government and the NEB have gone considerably further in providing information than the Tories did in a similar situation. Last autumn the NEB issued an interim statement for the first half of 1978. The Board is required to issue six-monthly accounts under schedule 2 to the Industry Act 1975. Regular accountability to Parliament was imposed on the Board by the Government. I am open to correction, but I have been unable to discover any Tory legislation that imposed similar parliamentary accountability on any comparable body.

It is interesting to remember what happened when the borrowing limits of public sector bodies were increased during the period in office of the Tory Government. The Electricity Bill 1972 raised the borrowing limits of the Electricity Council and boards in England and Wales and of the two Scottish boards. Yes, England, Scotland and Wales—separate bodies—were lumped together in one Bill. However, the Opposition have the cheek to argue that it is improper for us to do the same thing in the Bill. The increases in the Tory Bill raised the limits from £5,200 million to a whopping £7,700 million. The increases were brought before Parliament on the strength of pamphlets issued by the organisations concerned. All that the Tory Government provided to inform Parliament was a completely uninformative eight-paragraph memorandum.

When, also in 1972, the borrowing powers of the Post Office were increased from £2,800 million to £4,800 million, the Post Office issued a glossy brochure consisting predominantly of pretty coloured photographs. The Tory Government put no special documentary evidence before the House at all. However, the Tories have the nerve to attack us for providing inadequate documentary evidence.

As the NEB becomes more and more securely established and more and more readily accepted, the Tory Party becomes more and more uncertain about how to approach it. Atavistic instinct says "Club it to death". Cautious self-interest warns "Come to terms with it".

An instructive illustration is the Tory attitude to the NEB's project for manufacturing standard silicon chips—the INMOS project. The Tory Party's public posture, reiterated by the hon. Member for Kingston upon Thames (Mr. Lamont), has been to pour scorn on INMOS as a hare-brained device for squandering taxpayers' money. The hon. Gentleman asked about the possibility of offshore activity by INMOS. It would be better to have an indigenous industry with offshore work added than to settle for being an offshore offshoot of America and Japan, as the right hon. Member for Leeds, North-East (Sir K. Joseph) advocates.

The Tories pour scorn on the INMOS project but at the same time I receive letters from Tory Members putting in a claim for the project for their own areas. The letters have been pouring in. I have a sheaf of these letters in my hand. They make moving reading.

The hon. Member for City of Chester (Mr. Morrison) requested: I would be grateful to know what are the chances of all or part of this new industry being located in the North-West. The hon. Member for Lancaster (Mrs. Kellett-Bowman) was rather more precise in her solicitations. She wrote: I very much hope you will insist that the NEB should establish it in the North-West—preferably at another site at Heysham or White Lund.

Mrs. Elaine Kellett-Bowman (Lancaster)

As the right hon. Gentleman's Government have always clobbered, and continue to clobber, the North-West, especially Lancaster, by giving it less for education and less for health, and since unemployment in the area is infinitely higher—in Lancaster it is now 7.9 per cent.—if there is anything by which the Government are to improve employment prospects it is my duty to get the improvement. However, the Government should give us a fairer deal in all the other respects.

Mr. Kaufman

I took the trouble to compile for one of my constituents, who lives in the Levenshulme district of Manchester, a complete account of what the Government have done for the North-West. It is an exceptionally impressive document and I shall send a copy of it to the hon. Lady tomorrow.

The hon. Lady pleaded for Heysham or White Lund, but her hon. Friend the Member for Wallasey (Mrs. Chalker) had different ideas. She wrote: I write to urge you to ensure that all or part of the new industry will be located on Merseyside. But she was very much at odds with her hon. Friend the Member for Gloucestershire, South (Mr. Cope). He wrote: I hope you will be able to confirm to me that your Department will be at least neutral on the choice, so that Avon can be considered by the company".

Mrs. Lynda Chalker (Wallasey)

rose—

Mr. Kaufman

I shall give way to the hon. Lady in a moment. That would not be universally popular, because the hon. Member for Tynemouth (Mr. Trotter) wrote—[Interruption.] The line stretches out to the crack of doom, but when I have completed it I shall gladly give way. The hon. Member for Tynemouth wrote: I am writing to urge you to decide in favour of Tyne and Wear". But none was equal to the eloquence of the hon. and learned Member for Colchester (Mr. Buck), who wrote: If all the relevant factors are considered, Colchester is from every point of view an ideal location.

Mr. Antony Buck (Colchester)

I am most grateful to the Minister for giving way and also for his courtesy in sending me a letter which ended in the way that my hon. Friend indicated and no doubt will help the interior decor in my house. It was courteous of the Minister to write to me in the way that he did. If these funds are to be made available, the right hon. Gentleman is merely showing what conscientious Conservative Members of Parliament are doing to ensure that their constituents get their proper share and due. I hope the right hon. Gentleman will quote from what has been said by some of his hon. Friends, which shows that they, too, have been assiduous in speaking for their own constituencies.

Mr. Kaufman

Conscientious they certainly are, but they are desperately at odds with each other, as the hon. Lady will now make clear in her intervention.

Mrs. Chalker

The hon. Gentleman is well aware that under his Government Merseyside suffers from the highest unemployment anywhere in this country. If there is a new development from which young people—and on Merseyside we have double the southern average of young people unemployed—may benefit, then to my dying day, even against a few of my colleagues in my party, I shall fight for Merseyside.

Mr. Gryllsrose—

Mr. Kaufman

I shall not give way to the hon. Gentleman.

Mr. Deputy Speaker (Sir Myer Galpern)

Order. I hope the Minister is not going to read a succession of these letters, otherwise we shall be here till midnight with all these interventions.

Mr. Grylls rose—

Mr. Kaufman

The hon. Gentleman did not ask for it. Instead, he has work from British Aerospace for his constituency. I am being selective here, Mr. Deputy Speaker, and will not stretch these out, but this goes on, from Cumbria, from where we had a passionate plea for his area from the hon. Member for Workington (Mr. Page)—who in this very debate denounced this Bill as galloping Socialism—all the way to Cornwall. All of these hon. Members who wrote to us, all the hon. Members who have intervened during my speech this evening who were bitterly vying wth each other to win the project for their area, are united in one thing; the votes they will cast in the Division Lobby this evening to ensure that the project does not go ahead at all.

It is fascinating to trace the evolution of Tory policy towards the NEB. At first there was no doubt about it at all. Perorating grandiloquently at the end of his speech on the Second Reading of the Industry Bill, the hon. Member for Henley proclaimed in February 1975: It will destroy, not create jobs. It will divide management and unions, not bring them together ߪ I tell the House, on behalf of the Conservative Party, that we shall repeal this Bill."—[Official Report, 17 February 1975; Vol. 886, c. 965.] Uncompromising words, apparently endorsed in the statement of aims published by the hon. Gentleman's party the following year, in 1976. That invaluable document "The Right Approach" declared: The National Enterprise Board must be abolished. But a shadow of doubt seemed to have crept in. "The Right Approach" continued: though we shall have to retain some sort of administrative mechanism for selling off NEB shareholdings where this is possible, and for administering those which cannot be sold off immediately.

Mr. Nick Budgen (Wolverhampton, South West)

Quite right.

Mr. Kaufman

The hon. Member for Wolverhampton, South-West (Mr. Budgen) says "Quite right" and his hon. Friend the Member for Kingston upon Thames was perfectly certain about it. Speaking from the Front Bench opposite in January 1977, he declared that they had made clear that they would get rid of the NEB and said that in that way the policy had not changed one iota or scintilla.

Later that year the iotas and scintillas were infiltrating subversively, as they have a way of doing when the right hon. Member for Lowestoft (Mr. Prior) interprets his party's policy. He told the readers of the Birmingham Post in August 1977: It is rubbish to suggest that we would immediately cut the lifeline of State-assisted firms such as Leyland. They need help to get back on their feet. … We are committed to holding the firms now owned by the NEB until any hope of recovery is abandoned.

Mr. Norman Lamont rose—

Mr. Kaufman

I will give way to the hon. Gentleman in a moment. What Lowestoft reinterprets today Leeds reassesses tomorrow, and to a somewhat more specialised audience—the readers of Computer Weekly—the right hon. Member for Leeds, North-East confided in April 1978 that the only role he saw for the NEB was as A financial standby of last resort and a casualty clearing station. We do not intend to leave it with scope for acquisition into the private sector and no money will be made available to acquire companies or parts of companies. Even that statement, however, was not the final word in this evolving approach.

The hon. Member for Rushcliffe (Mr. Clarke), whom this Conservative Central Office handout identifies as "an Opposition spokesman on industry", told Huddersfield business men on 4 January last: A Conservative Government will only make slow and cautious changes in industrial policy. … The National Enterprise Board will carry on but we will want safeguards on its ability to buy into profitable companies. So in less than four years the Conservatives have come round from insisting on the complete abolition of the NEB to accepting its role of buying into profitable companies—with suitable safeguards.

Mr. Norman Lamont

The Minister started his speech by saying that the NEB was accountable to Parliament. Is he, therefore, going to answer a single question that has been raised today? Will he, for example, when we are told that the Bill is essential for British Leyland, tell us why the review which the Secretary of State said would take place this November and every November has not been mentioned so far?

Mr. Kaufman

I am responding directly to the amendment which the Opposition have tabled. I am quoting directly and responding to it, but hon. Gentlemen opposite apparently do not like their amendment being debated.

Mr. Teddy Taylor (Glasgow, Cathcart)

What about Scotland?

Mr. Kaufman

I am coming to the Scotland Bill.

Meanwhile, the hon. Gentleman has to reconcile that the National Enterprise Board must be abolished in October 1976 with the assertion that the NEB will carry on in December 1978. While the policy of hon. Gentlemen opposite changes, their votes stay the same. They voted to prevent the birth of the NEB, and the Scottish and Welsh Development Agencies. They will be voting tonight to extinguish them all, for that would be the inevitable effect of their votes tonight if they are successful, and the impact throughout the United Kingdom would be catastrophic. Scotland and Wales would suffer if the work of their development agencies were brought to an end.

In Wales, over 3,000 jobs have been created and many more have been safeguarded by the Welsh Development Agency. In Scotland, 35,000 workers depend upon the Scottish Development Agency. That brings us, as the hon. Member for Glasgow, Cathcart (Mr. Taylor) has requested, to the extraordinary terms of the amendment: while accepting the usefulness of a significant part of the work of the Scottish and Welsh Development Agencies", and so on. We have heard of the curious incident of the dog that did not bark in the night time, but on this occasion the Tory corgis and Scottish terriers have been tremulously wagging their tails and they have their tongues out ready for a cautious lick.

In his speech on Thursday last, the right hon. Member for Leeds, North-East brought us the startling news: Much of the work of the agencies … is valued in Scotland and Wales."—[Official Report, 18 January 1979; Vol. 960, c. 2045.] But it just will not do. The Tories cannot live down their past. When it really mattered, when the House was considering the Bills setting up those valued Scottish and Welsh agencies, the Tories both barked and bit. Opposing the Second Reading of the Welsh Bill, the Tory spokesman on Wales declared that they believed that the agency as constituted would encourage a misdirection of resources, both human and financial, in a series of dubious ventures.

On the Second Reading of the Scottish Bill, their spokesman said that the Tories had many objections to it, that the agency was unnecessary and, for good measure, that it was not needed. They voted against the Second Reading of both Bills, and they voted against them 47 more times in succeeding stages. But they now have the sauce to talk about their usefulness.

Mr. Teddy Taylor

Will the Minister accept that what makes an enormous difference is that 90 per cent. of the work carried out by the Scottish Development Agency was being carried out by other Government bodies beforehand and, under Conservative Governments, extremely well?

Mr. Kaufman

But the hon. Gentleman said—indeed, I quoted his remarks—that the agency was not necessary and was subject to many objections. Now, in the Tory amendment, he seeks to praise it.

It is not only by preventing money going to the agencies that the Tories seek to damage Scotland and Wales tonight. As my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) said, they do so as well by their attack on the NEB. In addition to the agencies, NEB companies are established at 12 locations in Scotland and in five locations in Wales. There are six in the Eastern region of England, 42 in the South-East, seven in the East Midlands, five in Yorkshire and Humberside, 16 in the West Midlands, seven in the South-West, 11 in the Northern region, and 20 in the North-West. There is not a country or region in the United Kingdom that would not be damaged if this Bill did not go through, for the NEB is now firmly established throughout the country as a valued and needed industrial instrument.

In 1977 its subsidiaries exported well over £1,000 million worth of goods. A total of 330,000 workers are employed directly by NEB companies, and hundreds of thousands more work for supplying companies. All their jobs will be threatened if this Bill is not carried tonight.

Of course, for the Tories a vote to maim or cripple the NEB, the SDA and the WDA, or to wipe them out entirely, is completely in character. For five years now they have remorselessly voted against every measure by this Government to

Division No. 46]	AYES	[7.02 p.m.
Adley, Robert	Dykes, Hugh	Howell, David (Guildford)
Aitken, Jonathan	Eden, Rt Hon Sir John	Howells, Geraint (Cardigan)
Alison, Michael	Edwards, Nicholas (Pembroke)	Hunt, David (Wirral)
Amery, Rt Hon Julian	Elliott, Sir William	Hunt, John (Ravensbourne)
Arnold, Tom	Emery, Peter	Hurd, Douglas
Atkins, Rt Hon H. (Spelthorne)	Eyre, Reginald	Hutchison, Michael Clark
Atkinson, David (B'mouth, East)	Fairbairn, Nicholas	Irving, Charles (Cheltenham)
Awdry, Daniel	Fairgrieve, Russell	James, David
Baker, Kenneth	Farr, John	Jenkin, Rt Hon P. (Wanst'd&W'df'd)
Banks, Robert	Fell, Anthony	Jessel, Toby
Beith, A. J.	Finsberg, Geoffrey	Johnson Smith, G. (E Grinstead)
Bell, Ronald	Fisher, Sir Nigel	Jones, Arthur (Daventry)
Bendall, Vivian	Fletcher, Alex (Edinburgh N)	Jopling, Michael
Bennett, Dr Reginald (Fareham)	Fookes, Miss Janet	Joseph, Rt Hon Sir Keith
Benyon, W.	Forman, Nigel	Kaberry, Sir Donald
Berry, Hon Anthony	Fowler, Norman (Sutton C'f'd)	Kellett-Bowman, Mrs Elaine
Biffen, John	Fox, Marcus	Kershaw, Anthony
Biggs-Davison, John	Fraser, Rt Hon H. (Stafford & St)	Kimball, Marcus
Blaker, Peter	Freud, Clement	King, Evelyn (South Dorset)
Body, Richard	Fry, Peter	King, Tom (Bridgwater)
Boscawen, Hon Robert	Galbraith, Hon T. G. D.	Kitson, Sir Timothy
Bottomley, Peter	Gardiner, George (Reigate)	Knight, Mrs Jill
Bowden, A. (Brighton, Kemptown)	Gardner, Edward (S Fylde)	Knox, David
Boyson, Dr Rhodes (Brent)	Gilmour, Rt Hon Sir Ian (Chesham)	Lamont, Norman
Braine, Sir Bernard	Gilmour, Sir John (East Fife)	Langford-Holt, Sir John
Brittan, Leon	Glyn, Dr Alan	Latham, Michael (Melton)
Brocklebank-Fowler, C.	Godber, Rt Hon Joseph	Lawrence, Ivan
Brooke, Hon Peter	Goodhart, Philip	Lawson, Nigel
Brotherton, Michael	Goodhew, Victor	Lester, Jim (Beeston)
Brown, Sir Edward (Bath)	Goodlad, Alastair	Lewis, Kenneth (Rutland)
Bryan, Sir Paul	Gorst, John	Lloyd, Ian
Buchanan-Smith, Alick	Gow, Ian (Eastbourne)	Loveridge, John
Buck, Antony	Gower, Sir Raymond (Barry)	Luce, Richard
Budgen, Nick	Grant, Anthony (Harrow C)	McAdden, Sir Stephen
Bulmer, Esmond	Gray, Hamish	McCrindle, Robert
Burden, F. A.	Grieve, Percy	Macfarlane, Neil
Butler, Adam (Bosworth)	Griffiths, Eldon	MacGregor, John
Carlisle, Mark	Grimond, Rt Hon J.	MacKay, Andrew (Stechford)
Chalker, Mrs Lynda	Grist, Ian	Macmillan, Rt Hon M. (Farnham)
Channon, Paul	Grylis, Michael	McNair-Wilson, M. (Newbury)
Churchill, W. S.	Hall-Davis, A. G. F.	McNair-Wilson, P. (New Forest)
Clark, Alan (Plymouth, Sutton)	Hamilton, Archibald (Epsom & Ewell)	Madel, David
Clark, William (Croydon S)	Hamilton, Michael (Salisbury)	Marshall, Michael (Arundel)
Clarke, Kenneth (Rushcliffe)	Hampson, Dr Keith	Marten, Neil
Clegg, Walter	Hannam, John	Mates, Michael
Cockcroft, John	Harrison, Col Sir Harwood (Eye)	Mather, Carol
Cooke, Robert (Bristol W)	Harvie Anderson, Rt Hon Miss	Maude, Angus
Cope, John	Haselhurst, Alan	Mawby, Ray
Cormack, Patrick	Hastings, Stephen	Maxwell-Hyslop, Robin
Corrie, John	Havers, Rt Hon Sir Michael	Mayhew, Patrick
Costain, A. P.	Hawkins, Paul	Meyer, Sir Anthony
Critchley, Julian	Hayhoe, Barney	Miller, Hal (Bromsgrove)
Crouch, David	Heath, Rt Hon Edward	Mills, Peter
Crowder, F. P.	Heseltine, Michael	Miscampbell, Norman
Dean, Paul (N Somerset)	Hicks, Robert	Mitchell, David (Basingstoke)
Dodsworth, Geoffrey	Higgins, Terence L.	Moate, Roger
Douglas-Hamilton, Lord James	Hodgson, Robin	Molyneaux, James
Drayson, Burnaby	Holland, Philip	Monro, Hector
du Cann, Rt Hon Edward	Hordern, Peter	Montgomery, Fergus
Durant, Tony	Howe, Rt Hon Sir Geoffrey	Moore, John(Croydon C)

preserve or create employment. From Leyland to Herbert's, from the Polish shipbuilding deal to the Lindsey oil refinery, they have cast their votes in favour of the dole queue. But the NEB, the SDA and the WDA have proved their worth, and this Bill will give them a chance to build on what they have already achieved. I call on the House to vote for the Second Reading.

Question put, That the amendment be made:—

The House divided: Ayes 276, Noes 295.

More, Jasper (Ludlow)	Renton, Tim (Mid-Sussex)	Stewart, Ian (Hitchin)
Morgan, Geraint	Rhodes James, R.	Stokes, John
Morgan-Giles, Rear-Admiral	Ridley, Hon Nicholas	Stradling Thomas, J.
Morris, Michael (Northampton S)	Ridsdale, Julian	Tapsell, Peter
Morrison, Hon Charles (Devizes)	Rifkind, Malcolm	Taylor, R. (Croydon NW)
Morrison, Hon Peter (Chester)	Roberts, Wyn (Conway)	Taylor, Teddy (Cathcart)
Mudd, David	Rodgers, Sir John (Sevenoaks)	Tebbit, Norman
Neave, Airey	Ross, Stephen (Isle of Wight)	Temple-Morris, Peter
Nelson, Anthony	Rossi, Hugh (Hornsey)	Thatcher, Rt Hon Margaret
Neubert, Michael	Rost, Peter (SE Derbyshire)	Townsend, Cyril D.
Newton, Tony	Royle, Sir Anthony	Trotter, Neville
Nott, John	Sainsbury, Tim	van Straubenzee, W. R.
Onslow, Cranley	St. John-Stevas, Norman	Vaughan, Dr Gerard
Oppenheim, Mrs Sally	Scott, Nicholas	Viggers, Peter
Osborn, John	Shaw, Michael (Scarborough)	Wainwright, Richard (Colne V)
Page, John (Harrow West)	Shelton, William (Streatham)	Wakeham, John
Page, Rt Hon R. Graham (Crosby)	Shepherd, Colin	Walker, Rt Hon P. (Worcester)
Page, Richard (Workington)	Shersby, Michael	Walker-Smith, Rt Hon Sir Derek
Pardoe, John	Silvester, Fred	Wall, Patrick
Parkinson, Cecil	Sims, Roger	Walters, Dennis
Pattie, Geoffrey	Sinclair, Sir George	Warren, Kenneth
Penhaligon, David	Skeet, T. H. H.	Weatherill, Bernard
Percival, Ian	Smith, Dudley (Warwick)	Wells, John
Peyton, Rt Hon John	Smith, Timothy John (Ashfield)	Whitelaw, Rt Hon William
Pink. R. Bonner	Speed, Keith	Whitney, Raymond
Powell, Rt Hon J. Enoch	Spence, John	Wiggin, Jerry
Prentice, Rt Hon Reg	Spicer, Michael (S Worcester)	Winterton, Nicholas
Price, David (Eastleigh)	Sproat, Iain	Wood, Rt Hon Richard
Prior, Rt Hon James	Stainton, Keith	Young, Sir G. (Ealing, Acton)
Raison, Timothy	Stanbrook, Ivor
Rathbone, Tim	Stanley, John	TELLERS FOR THE AYES:
Rees, Peter (Dover & Deal)	Steel, Rt Hon David	Mr. Spencer Le Merchant and
Rees-Davies, W. R.	Steen, Anthony (Wavertree)	Mr. Michael Roberts.
Renton, Rt Hon Sir D. (Hunts)

NOES
Abse, Leo	Corbett, Robin	George, Bruce
Allaun, Frank	Cowans, Harry	Gilbert, Rt Hon Dr John
Anderson, Donald	Cox, Thomas (Tooting)	Ginsburg, David
Archer, Rt Hon Peter	Craigen, Jim (Maryhill)	Gould, Bryan
Armstrong, Ernest	Crawshaw, Richard	Gourlay, Harry
Ashton, Joe	Cronin, John	Grant, George (Morpeth)
Atkins, Ronald (Preston N)	Crowther, Stan (Rotherham)	Grant, John (Islington C)
Atkinson, Norman (H'gey, Tott'ham)	Cryer, Bob	Grocott, Bruce
Bagier, Gordon A. T.	Cunningham, Dr J. (Whiteh)	Hamilton, W. W. (Central Fife)
Barnett, Guy (Greenwich)	Davidson, Arthur	Hardy, Peter
Barnett, Rt Hon Joel (Heywood)	Davies, Bryan (Enfield N)	Harrison, Rt Hon Walter
Bates, Alf	Davies, Rt Hon Denzil	Hattersley, Rt Hon Roy
Bean, R. E.	Davies, Ifor (Gower)	Hayman, Mrs Helene
Benn, Rt Hon Anthony Wedgwood	Davis, Clinton (Hackney C)	Healey, Rt Hon Denis
Bennett, Andrew (Stockport N)	Deakins, Eric	Heffer, Eric S.
Bidwell, Sydney	Dean, Joseph (Leeds West)	Henderson, Douglas
Bishop, Rt Hon Edward	de Freitas, Rt Hon Sir Geoffrey	Home Robertson, John
Blenkinsop, Arthur	Dell, Rt Hon Edmund	Hooley, Frank
Boardman, H.	Dempsey, James	Horam, John
Booth, Rt Hon Albert	Dewar, Donald	Howell, Rt Hon Denis (B'ham, Sm H)
Boothroyd, Miss Betty	Doig, Peter	Hoyle, Doug (Nelson)
Bottomley, Rt Hon Arthur	Dormand, J. D.	Huckfield, Les
Boyden, James (Bish Auck)	Douglas-Mann, Bruce	Hughes, Rt Hon C. (Anglesey)
Bradley, Tom	Duffy, A. E. P.	Hughes, Mark (Durham)
Bray, Dr Jeremy	Dunn, James A.	Hughes, Robert (Aberdeen N)
Brown, Hugh D. (Provan)	Dunnett, Jack	Hughes, Roy (Newport)
Brown, Robert C. (Newcastle W)	Eadie, Alex	Hunter, Adam
Brown, Ronald (Hackney S)	Edge, Geoff	Irving, Rt Hon S. (Dartford)
Buchan, Norman	Ellis, John (Brigg & Scun)	Jackson, Colin (Brighouse)
Buchanan, Richard	English, Michael	Jackson, Miss Margaret (Lincoln)
Butler, Mrs Joyce (Wood Green)	Ennals, Rt Hon David	Janner, Greville
Callaghan, Rt Hon J. (Cardiff SE)	Evans, Fred (Caerphilly)	Jay, Rt Hon Douglas
Callaghan, Jim (Middleton & P)	Evans, Gwynfor (Carmarthen)	Jeger, Mrs Lena
Campbell, Ian	Evans, Ioan (Aberdare)	Jenkins, Hugh (Putney)
Canavan, Dennis	Evans, John (Newton)	John, Brynmor
Cant, R. B.	Ewing, Harry (Stirling)	Johnson, James (Hull West)
Carmichael, Neil	Faulds, Andrew	Johnson, Walter (Derby S)
Carter, Ray	Fernyhough, Rt Hon E.	Jones, Alec (Rhondda)
Carter-Jones, Lewis	Flannery, Martin	Jones, Barry (East Flint)
Cartwright, John	Fletcher, Ted (Darlington)	Jones, Dan (Burnley)
Clemitson, Ivor	Foot, Rt Hon Michael	Judd, Frank
Cocks, Rt Hon Michael (Bristol S)	Ford, Ben	Kaufman, Rt Hon Gerald
Cohen, Stanley	Forrester, John	Kelley, Richard
Coleman, Donald	Fowler, Gerald (The Wrekin)	Kerr, Russell
Colquhoun, Ms Maureen	Fraser, John (Lambeth, N'w'd)	Kilroy-Silk, Robert
Concannon, Rt Hon John	Freeson, Rt Hon Reginald	Kinnock, Neil
Conlan, Bernard	Garrett, John (Norwich S)	Lambie, David
Cook, Robin F. (Edin C)	Garrett, W. E. (Wallsend)	Lamborn, Harry

Lamond, James	Oakes, Gordon	Strang, Gavin
Latham, Arthur (Paddington)	Ogden, Eric	Strauss, Rt Hon G. R.
Leadbitter, Ted	O'Halloran, Michael	Swain, Thomas
Lee, John	Orbach, Maurice	Taylor, Mrs Ann (Bolton W)
Lestor, Miss Joan (Eton & Slough)	Orme, Rt Hon Stanley	Thomas, Dafydd (Merioneth)
Lever, Rt Hon Harold	Ovenden, John	Thomas, Jeffrey (Abertillery)
Lewis, Arthur (Newham N)	Owen, Rt Hon Dr David	Thomas, Mike (Newcastle E)
Lewis, Ron (Carlisle)	Padley, Walter	Thomas, Ron (Bristol NW)
Litterick, Tom	Palmer, Arthur	Thompson, George
Lofthouse, Geoffrey	Park, George	Thorne, Stan (Preston South)
Lomas, Kenneth	Parker, John	Tierney, Sydney
Loyden, Eddie	Parry, Robert	Tilley, John
Luard, Evan	Pavitt, Laurie	Tinn, James
Lyon, Alexander (York)	Pendry, Tom	Tomlinson, John
Lyons, Edward (Bradford W)	Perry, Ernest	Torney, Tom
Mabon, Rt Hon Dr J. Dickson	Phipps, Dr Colin	Tuck, Raphael
McCartney, Hugh	Price, C. (Lewisham W)	Urwin, T. W.
MacCormick, Iain	Price, William (Rugby)	Varley, Rt Hon Eric G.
McDonald, Dr Oonagh	Radice, Giles	Wainwright, Edwin (Dearne V)
McElhone, Frank	Reid, George	Walker, Harold (Doncaster)
MacFarquhar, Roderick	Richardson, Miss Jo	Walker, Terry (Kingswood)
McGuire, Michael (Ince)	Roberts, Albert (Normanton)	Ward, Michael
McKay, Allen (Penistone)	Roberts, Gwilym (Cannock)	Watkins, David
MacKenzie, Rt Hon Gregor	Robertson, George (Hamilton)	Watkinson, John
Maclennan, Robert	Robinson, Geoffrey	Watt, Hamish
McMillan, Tom (Glasgow C)	Roderick, Caerwyn	Weetch, Ken
McNamara, Kevin	Rodgers, George (Chorley)	Weitzman David
Madden, Max	Rodgers, Rt Hon William (Stockton)	Wellbeloved, James
Magee, Bryan	Rooker, J. W.	Welsh, Andrew
Mahon, Simon	Roper, John	White, Frank R. (Bury)
Mallalieu, J. P. W.	Ross, Rt Hon W. (Kilmarnock)	White, James (Pollok)
Marks, Kenneth	Rowlands, Ted	Whitehead, Phillip
Marshall, Dr Edmund (Goole)	Ryman, John	Whitlock, William
Marshall, Jim (Leicester S)	Sedgemore, Brian	Wigley, Dafydd
Maynard, Miss Joan	Selby, Harry	Willey, Rt Hon Frederick
Meacher, Michael	Sever, John	Williams, Rt Hon Alan (Swansea W)
Mellish, Rt Hon Robert	Shaw, Arnold (Ilford South)	Williams, Alan Lee (Hornch'ch)
Mikardo, Ian	Sheldon, Rt Hon Robert	Williams, Rt Hon Shirley (Hertford)
Millan, Rt Hon Bruce	Shore, Rt Hon Peter	Williams, Sir Thomas (Warrington)
Miller, Dr M. S. (E Kilbride)	Silkin, Rt Hon John (Deptford)	Wilson, Gordon (Dundee E)
Mitchell, Austin (Grimsby)	Silkin, Rt Hon S. C. (Dulwich)	Wilson, Rt Hon Sir Harold (Huyton)
Molloy, William	Silverman, Julius	Wilson, William (Coventry SE)
Moonman, Eric	Skinner, Dennis	Wise, Mrs Audrey
Morris, Alfred (Wythenshawe)	Smith, Rt Hon John (N Lanarkshire)	Woodall, Alec
Morris, Rt Hon Charles R.	Snape, Peter	Woof, Robert
Morris, Rt Hon J. (Aberavon)	Spearing, Nigel	Wrigglesworth, Ian
Morton, George	Spriggs, Leslie	Young, David (Bolton E)
Moyle, Rt Hon Roland	Stallard, A. W.
Mulley, Rt Hon Frederick	Stewart, Rt Hon Donald	TELLERS FOR THE NOES:
Murray, Rt Hon Ronald King	Stewart, Rt Hon M. (Fulham)	Mr. James Hamilton and
Newens, Stanley	Stoddart, David	Mr. Ted Graham.
Noble, Mike	Stott, Roger

Question accordingly negatived.

Main Question put forthwith pursuant to Standing Order No. 39 (Amendment on Second or Third Reading):—

The House divided: Ayes 294, Noes 275.

Dewar, Donald	Lamborn, Harry	Robertson, George (Hamilton)
Doig, Peter	Lamond, James	Robinson, Geoffrey
Dormand, J. D.	Latham, Arthur (Paddington)	Roderick, Caerwyn
Douglas-Mann, Bruce	Leadbitter, Ted	Rodgers, George (Chorley)
Duffy, A. E. P.	Lee, John	Rodgers, Rt Hon William (Stockton)
Dunn, James A.	Lestor, Miss Joan (Eton & Slough)	Rooker, J. W.
Dunnett, Jack	Lever, Rt Hon Harold	Roper, John
Eadie, Alex	Lewis, Arthur (Newham N)	Ross, Rt Hon W. (Kilmarnock)
Edge, Geoff	Lewis, Ron (Carlisle)	Rowlands, Ted
Ellis, John (Brigg & Scun)	Litterick, Tom	Ryman, John
English, Michael	Lofthouse, Geoffrey	Sedgemore, Brian
Ennals, Rt Hon David	Lomas, Kenneth	Selby, Harry
Evans, Fred (Caerphilly)	Loyden, Eddie	Sever, John
Evans, Gwynfor (Carmarthen)	Luard, Evan	Shaw, Arnold (Ilford South)
Evans, Ioan (Aberdare)	Lyon, Alexander (York)	Sheldon, Rt Hon Robert
Ewing, Harry (Stirling)	Lyons, Edward (Bradford W)	Shore, Rt Hon Peter
Faulds, Andrew	Mabon, Rt Hon Dr J. Dickson	Silkin, Rt Hon S. C. (Dulwich)
Fernyhough, Rt Hon E.	McCartney, Hugh	Silverman, Julius
Flannery, Martin	MacCormick, Iain	Skinner, Dennis
Fletcher, Ted (Darlington)	McDonald, Dr Oonagh	Smith, Rt Hon John (N Lanarkshire)
Foot, Rt Hon Michael	McElhone, Frank	Snape, Peter
Ford, Ben	MacFarquhar, Roderick	Spearing, Nigel
Forrester, John	McGuire, Michael (Ince)	Spriggs, Leslie
Fowler, Gerald (The Wrekin)	McKay, Allen (Penistone)	Stallard, A. W.
Fraser, John (Lambeth, N'w'd)	MacKenzie, Rt Hon Gregor	Stewart, Rt Hon Donald
Freeson, Rt Hon Reginald	Maclennan, Robert	Stewart, Rt Hon M. (Fulham)
Garrett, John (Norwich S)	McMillan, Tom (Glasgow C)	Stoddart, David
Garrett, W. E. (Wallsend)	McNamara, Kevin	Stott, Roger
George, Bruce	Madden, Max	Strang, Gavin
Gilbert, Rt Hon Dr John	Magee, Bryan	Strauss, Rt Hon G. R.
Ginsburg, David	Mahon, Simon	Swain, Thomas
Gould, Bryan	Mallalieu, J. P. W.	Taylor, Mrs Ann (Bolton W)
Gourlay, Harry	Marks, Kenneth	Thomas, Dafydd (Merioneth)
Graham, Ted	Marshall, Dr Edmund (Goole)	Thomas, Jeffrey (Abertillery)
Grant, George (Morpeth)	Marshall, Jim (Leicester S)	Thomas, Mike (Newcastle E)
Grant, John (Islington C)	Maynard, Miss Joan	Thomas, Ron (Eristol NW)
Grocott, Bruce	Meacher, Michael	Thompson, George
Hamilton, James (Bothwell)	Mellish, Rt Hon Robert	Thorne, Stan (Preston South)
Hamilton, W. W. (Central Fife)	Mikardo, Ian	Tierney, Sydney
Hardy, Peter	Millan, Rt Hon Bruce	Tilley, John
Harrison, Rt Hon Walter	Miller, Dr M. S. (E Kilbride)	Tinn, James
Hattersley, Rt Hon Roy	Mitchell, Austin (Grimsby)	Tomlinson, John
Hayman, Mrs Helene	Molloy, William	Tuck, Raphael
Healey, Rt Hon Denis	Moonman, Eric	Urwin, T, W.
Heffer, Eric S.	Morris, Alfred (Wythenshawe)	Varley, Rt Hon Eric G.
Henderson, Douglas	Morris, Rt Hon Charles R.	Wainwright, Edwin (Dearne V)
Home Robertson, John	Morris, Rt Hon J. (Aberavon)	Walker, Harold (Doncaster)
Hooley, Frank	Morton, George	Walker, Terry (Kingswood)
Horam, John	Moyle, Rt Hon Roland	Ward, Michael
Howell, Rt Hon Denis (B'ham, Sm H)	Mulley, Rt Hon Frederick	Watkins, David
Hoyle, Doug (Nelson)	Murray, Rt Hon Ronald King	Watkinson, John
Huckfield, Les	Newens, Stanley	Watt, Hamish
Hughes, Rt Hon C. (Anglesey)	Noble, Mike	Weetch, Ken
Hughes, Mark (Durham)	Oakes, Gordon	Weitzman, David
Hughes, Robert (Aberdeen N)	Ogden, Eric	Wellbeloved, James
Hughes, Roy (Newport)	O'Halloran, Michael	Welsh, Andrew
Hunter, Adam	Orbach, Maurice	White, Frank R. (Bury)
Irving, Rt Hon S. (Dartford)	Orme, Rt Hon Stanley	White, James (Pollok)
Jackson, Colin (Brighouse)	Ovenden, John	Whitehead, Phillip
Jackson, Miss Margaret (Lincoln)	Owen, Rt Hon Dr David	Whitlock, William
Janner, Greville	Padley, Walter	Wigley, Dafydd
Jay, Rt Hon Douglas	Palmer, Arthur	Willey, Rt Hon Frederick
Jeger, Mrs Lena	Park, George	Williams, Rt Hon Alan (Swansea W)
Jenkins, Hugh (Putney)	Parker, John	Williams, Alan Lee (Hornch'ch)
John, Brynmor	Parry, Robert	Williams, Sir Thomas (Warrington)
Johnson, James (Hull West)	Pavitt, Laurie	Wilson, Gordon (Dundee E)
Johnson, Walter (Derby S)	Pendry, Tom	Wilson, Rt Hon Sir Harold (Huyton)
Jones, Alec (Rhondda)	Perry, Ernest	Wilson, William (Coventry SE)
Jones, Barry (East Flint)	Phipps, Dr Colin	Wise, Mrs Audrey
Jones, Dan (Burnley)	Price, C. (Lewisham W)	Woodall, Alec
Judd, Frank	Price, William (Rugby)	Woof, Robert
Kaufman, Rt Hon Gerald	Radice, Giles	Wrigglesworth, Ian
Kelley, Richard	Rees, Rt Hon Merlyn (Leeds S)	Young, David (Bolton E)
Kerr, Russell	Reid, George
Kilroy-Silk, Robert	Richardson, Miss Jo	TELLERS FOR THE AYES:
Kinnock, Neil	Roberts, Albert (Normanton)	Mr. John Evans and
Lambie, David	Roberts, Gwilym (Cannock)	Mr. Joseph Dean.

NOES
Adley, Robert	Atkins, Rt Hon H. (Spelthorne)	Beith, A. J.
Aitken, Jonathan	Atkinson, David (B'mouth, East)	Bell, Ronald
Alison, Michael	Awdry, Daniel	Bendall, Vivian
Amery, Rt Hon Julian	Baker, Kenneth	Bennett, Dr Reginald (Fareham)
Arnold, Tom	Banks, Robert	Benyon, W.

Berry, Hon Anthony	Hall-Davis, A. G. F.	Morrison, Hon Charles (Devizes)
Biffen, John	Hamilton, Archibald (Epsom & Ewell)	Morrison, Hon Peter (Chester)
Biggs-Davison, John	Hamilton, Michael (Salisbury)	Mudd, David
Blaker, Peter	Hampson, Dr Keith	Neave, Airey
Body, Richard	Hannam, John	Nelson, Anthony
Boscawen, Hon Robert	Harrison, Col Sir Harwood (Eye)	Neubert, Michael
Bottomley, Peter	Harvie Anderson, Rt Hon Miss	Newton, Tony
Bowden, A. (Brighton, Kemptown)	Haselhurst, Alan	Nott, John
Boyson, Dr Rhodes (Brent)	Hastings, Stephen	Onslow, Cranley
Braine, Sir Bernard	Havers, Rt Hon Sir Michael	Oppenheim, Mrs Sally
Brittan, Leon	Hawkins, Paul	Osborn, John
Brocklebank-Fowler, C.	Hayhoe, Barney	Page, John (Harrow West)
Brooke, Hon Peter	Heath, Rt Hon Edward	Page, Rt Hon R. Graham (Crosby)
Brotherton, Michael	Heseltine, Michael	Page, Richard (Workington)
Brown, Sir Edward (Bath)	Hicks, Robert	Pardoe, John
Bryan, Sir Paul	Higgins, Terence L.	Parkinson, Cecil
Buchanan-Smith, Alick	Hodgson, Robin	Pattie, Geoffrey
Buck, Antony	Holland, Philip	Penhaligon, David
Budgen, Nick	Hordern, Peter	Percival, Ian
Bulmer, Esmond	Howe, Rt Hon Sir Geoffrey	Pink, R. Bonner
Burden, F. A.	Howell, David (Guildford)	Powell, Rt Hon J. Enoch
Butler, Adam (Bosworth)	Howells, Geraint (Cardigan)	Prentice, Rt Hon Reg
Carlisle, Mark	Hunt, David (Wirral)	Price, David (Eastleigh)
Chalker, Mrs Lynda	Hunt, John (Ravensbourne)	Prior, Rt Hon James
Channon, Paul	Hurd, Douglas	Raison, Timothy
Churchill, W. S.	Hutchison, Michael Clark	Rathbone, Tim
Clark, Alan (Plymouth, Sutton)	Irving, Charles (Cheltenham)	Rees, Peter (Dover & Deal)
Clark, William (Croydon S)	James, David	Rees-Davies, W. R.
Clarke, Kenneth (Rushcliffe)	Jenkin, Rt Hon P. (Wanst'd & W'df'd)	Renton, Rt Hon Sir D. (Hunts)
Clegg, Walter	Jessel, Toby	Renton, Tim (Mid-Sussex)
Cockcroft, John	Johnson Smith, G. (E Grinstead)	Rhodes James, R.
Cooke, Robert (Bristol W)	Jones, Arthur (Daventry)	Ridley, Hon Nicholas
Cope, John	Jopling, Michael	Ridsdale, Julian
Cormack, Patrick	Joseph, Rt Hon Sir Keith	Rifkind, Malcolm
Corrie, John	Kaberry, Sir Donald	Roberts, Wyn (Conway)
Costain, A. P.	Kellett-Bowman, Mrs Elaine	Rodgers, Sir John (Sevenoaks)
Critchley, Julian	Kershaw, Anthony	Ross, Stephen (Isle of Wight)
Crouch, David	Kimball, Marcus	Rossi, Hugh (Hornsey)
Crowder, F. P.	King, Evelyn (South Dorset)	Rost, Peter (SE Derbyshire)
Dean, Paul (N Somerset)	King, Tom (Bridgwater)	Royle, Sir Anthony
Dodsworth, Geoffrey	Kitson, Sir Timothy	Sainsbury, Tim
Douglas-Hamilton, Lord James	Knight, Mrs Jill	St. John-Stevas, Norman
Drayson, Burnaby	Knox, David	Scott, Nicholas
du Cann, Rt Hon Edward	Lamont, Norman	Shaw, Michael (Scarborough)
Durant, Tony	Langford-Holt, Sir John	Shelton, William (Streatham)
Dykes, Hugh	Latham, Michael (Melton)	Shepherd, Colin
Eden, Rt Hon Sir John	Lawrence, Ivan	Shersby, Michael
Edwards, Nicholas (Pembroke)	Lawson, Nigel	Silvester, Fred
Elliott, Sir William	Lester, Jim (Beeston)	Sims, Roger
Emery, Peter		Sinclair, Sir George
Eyre, Reginald	Lewis, Kenneth (Rutland)	Skeet, T. H. H.
Fairbairn, Nicholas	Lloyd, Ian	Smith, Dudley (Warwick)
Fairgrieve, Russell	Loveridge, John	Smith, Timothy John (Ashfield)
Farr, John	Luce, Richard	Speed, Keith
Fell, Anthony	McAdden, Sir Stephen	Spence, John
Finsberg, Geoffrey	McCrindle, Robert	Spicer, Michael (S Worcester)
Fisher, Sir Nigel	Macfarlane, Neil	Sproat, Iain
Fletcher, Alex (Edinburgh N)	MacGregor, John	Stainton, Keith
Fookes, Miss Janet	MacKay, Andrew (Stechford)	Stanbrook, Ivor
Forman, Nigel	Macmillan, Rt Hon M. (Farnham)	Stanley, John
Fowler, Norman (Sutton C'f'd)	McNair-Wilson, M. (Newbury)	Steel, Rt Hon David
Fox, Marcus	McNair-Wilson, P. (New Forest)	Steen, Anthony (Wavertree)
Fraser, Rt Hon H. (Stafford & St)	Madel, David	Stewart, Ian (Hitchin)
Freud, Clement	Marshall, Michael (Arundel)	Stokes, John
Fry, Peter	Marten, Neil	Stradling Thomas, J.
Galbraith, Hon T. G. D.	Mates, Michael	Tapsell, Peter
Gardiner, George (Reigate)	Mather, Carol	Taylor, R. (Croydon NW)
Gardner, Edward (S Fylde)	Maude, Angus	Taylor, Teddy (Cathcart)
Gilmour, Rt Hon Sir Ian (Chesham)	Mawby, Ray	Tebbit, Norman
Gilmour, Sir John (East Fife)	Maxwell-Hyslop, Robin	Temple-Morris, Peter
Glyn, Dr Alan	Mayhew, Patrick	Thatcher, Rt Hon Margaret
Godber, Rt Hon Joseph	Meyer, Sir Anthony	Townsend, Cyril D.
Goodhart, Philip	Miller, Hal (Bromsgrove)	Trotter, Neville
Goodhew, Victor	Mills, Peter	van Straubenzee, W. R.
Goodlad, Alastair	Miscampbell, Norman	Vaughan, Dr Gerard
Gorst, John	Mitchell, David (Basingstoke)	Viggers, Peter
Gow, Ian (Eastbourne)	Moate, Roger	Wainwright, Richard (Colne V)
Gower, Sir Raymond (Barry)	Molyneaux, James	Wakeham, John
Grant, Anthony (Harrow C)	Monro, Hector	Walker, Rt Hon P. (Worcester)
Gray, Hamish	Montgomery, Fergus	Walker-Smith, Rt Hon Sir Derek
Grieve, Percy	Moore, John (Croydon C)	Wall, Patrick
Griffiths, Eldon	More, Jasper (Ludlow)	Walters, Denis
Grimond, Rt Hon J.	Morgan, Geraint	Warren, Kenneth
Grist, Ian	Morgan-Giles, Rear-Admiral	Weatherill, Bernard
Grylls, Michael	Morris, Michael (Northampton S)	Wells, John

Whitelaw, Rt Hon William	Winterton, Nicholas	TELLERS FOR THE NOES:
Whitney, Raymond	Wood, Rt Hon Richard	Mr. Spencer Le Marchant and
Wiggin, Jerry	Young, Sir G. (Ealing, Acton)	Mr. Michael Roberts.

Question accordingly agreed to.

Bill read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).