INDUSTRY BILL

HC Deb 06 November 1979 vol 973 cc240-363

Order for Second Reading read.

4.8 pm

The Secretary of State for Industry (Sir Keith Joseph)

I beg to move, That the Bill be now read a Second time.

The main purposes of the Bill are to modify the functions and powers of the National Enterprise Board and the Scottish and Welsh Development Agencies, and to make various other amendments to the Acts governing them; to make further provision relating to the disposal of property by the English Industrial Estates Corporation and enabling the Corporation to make use of private finance in the Government's factory programme; to give statutory recognition to reductions in the regional development grants scheme; to permit the provision of Government guarantees in foreign currencies under section 8 of the Industrial Act 1972; and to repeal the planning agreement and compulsory information powers conveyed by the Industry Act 1975.

Thus the Bill gives effect to our manifesto undertakings, and in particular contributes to our policy of reducing public expenditure and reducing the size of the public sector.

I need hardly remind the House of our opposition to the basis on which the National Enterprise Board was established in 1975, and our continuing opposition to the way in which it has been encouraged to operate. In our view, it is not sensible to maltreat savings and capital, blame them, as a result, for failing to do all that they could be expected to do and then set up a public agency to fill the gaps. There should be no need for public sector investment finance in manufacturing industry provided that savings and enterprise are sensibly treated.

The taxpayer contributes heavily to industry by way of relief for investment and against the effects of inflation on stocks. The NEB was set up to operate, and has tried to operate as far as possible, as if it were a commercial holding company. However, its immunity from insolvency insulates it from commercial disciplines. Moreover, the emphasis laid upon the NEB inevitably distracts attention from the need to create encouraging conditions for savings and investment, and feeds fantasies about short cuts to prosperity.

It was not sensible to overspend, overtax and overborrow; it was not sensible to penalise savings; it was not sensible to be hostile to profits earned in competition; it was not sensible to tilt the risk/reward ratio against risk; and it was not sensible to be hostile to the private sector, on which jobs, prosperity and social and public services all depend. But the NEB exists—

Mr. Eric S. Heffer (Liverpool, Walton)

Surely the right hon. Gentleman must agree that the National Enterprise Board was not dreamed up out of the air. As a result of years of Conservative government and of declining industry, the NEB was an absolute necessity that was forced upon us, apart from any political dogma, to enable us to deal with our problems.

Sir K. Joseph

The hon. Gentleman and his colleagues evidently excluded from consideration, as the relevant policy, the creation of conditions that would have encouraged risk and enterprise investment. They used the creation of the NEB as a sort of all-purpose magic wand which would, in their view, have allowed them to continue maltreating enterprise and risk-taking, all in the hope that the panacea, as they saw it, of the NEB would solve all the economic problems of the nation.

The NEB exists and has tasks in hand. I have always paid tribute to the public spirit and good intentions of the chairman and the board and the efforts of the staff. At least for a time the NEB can perform a useful function by looking after certain major shareholdings in a very few companies of national importance which have to be given the chance of becoming viable and attractive again to investors, pension funds and individuals.

While that remains so, we have been prepared to allow the NEB to maintain a limited involvement in two other roles. One is to assist in the development of certain companies in some areas of advanced technology where the hostile climate towards risk, which I briefly described, discouraged private investment. In a few cases the NEB can act as a catalyst in some aspects of some new technologies.

The other limited role we propose for the NEB—again, only in so far as the private sector cannot immediately meet the need—is to provide investment in firms, particularly small firms, in certain areas of high unemployment, principally the English assisted areas, where there is a need to strengthen a weak industrial structure. A similar task in relation to Scotland and Wales falls to the Scottish and Welsh Development Agencies.

Although I can accept that the NEB should have, for the time being, the roles I have mentioned, I cannot accept, as I told the House on 19 July, that the NEB should act as a kind of public sector, general purpose merchant bank. There is no lack of facilities of this type in the City and they are capable of providing all the opportunities that a sound company needs for securing venture capital.

Mr. Stephen Ross (Isle of Wight)

If capital is so readily available, will the right hon. Gentleman tell me why the only finance available to the last remaining small light aircraft company—BrittenNorman in my constituency, which has twice been put into liquidation, first by Barclays Bank and then by the National Westminster Bank—came from Switzerland via Germany? Why is it that when I appealed to the City to put money into the British aircraft industry nothing was forthcoming?

Sir K. Joseph

Does not the hon. Gentleman realise that he is making the very case that I am trying to make? Capital institutions abroad sometimes see opportunities in this country which our own capital institutions do not, just as our capital institutions often see opportunities abroad which foreign domestic institutions have missed. There is a reciprocity of the mobility of capital which is greatly in the interests of all the countries concerned.

We intend that the NEB's involvement in companies, under each of the roles that I have mentioned, should always be temporary. In each case the objective must be to do no more than is necessary for no longer than is necessary to bring the company to a condition in which the free capital markets can again take over. We expect the need for NEB involvement, in its advanced technology and regional roles, to decline in future, although I would not want to set a fixed term for it. We shall naturally keep the position under review

Mr. Tom McNally (Stockport, South)

Is there not something self-defeating in what the Secretary of State is saying? The purpose of NEB involvement in many firms was to rescue firms at a time when private capital had had all the assistance about which the right hon. Gentleman is boasting from the Administration of the right hon. Member for Sidcup (Mr. Heath). At a time when those same firms have come through their problems, the right hon. Gentleman's policy will cause new uncertainties. As he said, the NEB exists and has done a good job for certain firms. Why bring this new uncertainty and doubt into the situation? Why not let the NEB get on with the job?

Sir K. Joseph

It is for the NEB to judge, in the interests of the taxpayer and the individual companies, the right time to put them on the market. After all, as the hon. Member for Stockport, South (Mr. McNally) implies, the NEB has had some successes and some failures. Some companies in which the NEB has invested have been put into receivership by the NEB itself. It is not possible to insulate companies from risk and uncertainty in an intensely competitive world market. Ownership by the NEB, as the experience of some individual NEB companies manifests—I make no criticism—is no permanent guarantee to any trading activity in a highly competitive world.

We have decided to incorporate some of the changes that I have described in the revised NEB guidelines rather than in the Industry Bill. This will provide a measure of flexibility in accommodating economic developments and adapting the scope of the NEB to the merits of particular cases. A draft of the guidelines will be laid before the House in the near future, and I intend to issue a direction putting the final version into effect as soon as this Bill has become law.

Before we can do that, we need to amend existing legislation governing the NEB—the Industry Acts of 1975 and 1979—in a number of important ways. We thought it right, at the same time, to make parallel changes to all the important points in the Scottish and Welsh Development Agencies legislation, the pro- visions of which relating to the industrial development functions of the Agencies are similar to those in the Industry Act 1975. It may be helpful, therefore, to take the House through clauses 1 to 8, which deal with these matters, before going on to the remaining provisions and the reasons for including them in the Bill.

Mr. Michael Grylls (Surrey, North-West)

When my right hon. Friend describes the new limited role of the NEB—which I certainly appreciate—does he not, in his heart of hearts, still believe what he said previously in the House, that it is wrong to pump taxpayers' money into the NEB? The fact that it has made glaring mistakes and lost a lot of money is an example of this point. Will my right hon. Friend also tell us whether he intends to arrange that the Comptroller and Auditor General should be allowed to look at the books of the NEB so that he can report properly to the Public Accounts Committee, as the all-party Public Accounts Committee frequently recommended during the period in office of the previous Government?

Sir K. Joseph

On the first point, some of the NEB's investments are not ripe for sale to the private sector. They are very new investments by the NEB and it will ill serve the companies concerned and the taxpayer if we do not allow the NEB to gestate them—I do not think that that is a totally unsuitable word—until they are considerably riper.

As the NEB must carry out some such function and has responsibilities for some other companies, we thought it made sense to give it two other roles for a limited period. There will be very limited finance, and I think that that is in the public interest.

My hon. Friend will know that the Government are inquiring into the role and functions of the Comptroller and Auditor General, and we propose to wait for the result of that review before making a decision.

Mr. Nick Budgen (Wolverhampton, South-West)

Can my right hon. Friend explain why it is necessary for the NEB to have a role in respect of advanced technology when it seems that any amount of capital will be available for exploiting the North Sea? It is difficult to understand why it is necessary to support that role.

Sir K. Joseph

My hon. Friend makes a very plausible, almost valid, point. Private enterprise money has been available in abundance for a very risky operation in the North Sea. But it so happens, because of events in the late 1960s particularly, that private money has been rather frightened off some of the smaller possibilities in some high technologies. Because of that experience, it seemed sensible to let the NEB, for a short while, act as a catalyst.

My hon. Friend will be quick to realise that the experience of investors affects their judgments for a while, maybe longer than is justified by increasing knowledge and a changing market. However, I accept that my hon. Friend has a valid point of view which we had to take into account before making a decision.

Mr. Tony Benn (Bristol, South-East)

Will the right hon. Gentleman be a little more candid with the House? Is it not the case that there would not be a single nuclear power station built in Western Europe, the United States or probably anywhere else if the private market had been called upon to fund it? Is it not a well-established fact, in every country in the world, that advanced technology has required sometimes up to 100 per cent, funding over a long period? Is not the right hon. Gentleman's argument so theoretical as to be virtually meaningless?

Sir K. Joseph

Perhaps I have misunderstood the right hon. Gentleman's intervention, but surely he is not right. After all, one has to distinguish between the functions of the public sector as client and as supplier. But, even distinguishing those two functions, in America the private sector, as client, has ordered nuclear power stations from the private sector as supplier—subject, it is true, to safety regulations laid down by the public sector; and quite right, too. The right hon. Gentleman's intervention was invalid.

Clause 1 gives the NEB—

Mr. George Park (Coventry, North-East)

On clause 1. I see that the NEB is to cease to have the function—

Sir K. Joseph

I have not got there yet. Perhaps the hon. Gentleman will let me come to clause 1.

Clause 1 gives the NEB and the Agencies a new function of promoting the private ownership of interests in industrial undertakings by the disposal of securities and other property held by them. This reflects our policy that the size of the public sector should be reduced. But I cannot say when particular holdings are likely to find buyers. That responsibility lies with the NEB. Some of the companies in which it has holdings are already mature enough to stand on their own feet; others will take more time before they are ready for disposal. [Interruption.]

I am taking the House through the Bill. Inevitably, in going through the clauses, I am repeating one or two of the points I have made in reply to questions. If the hon. Member for Bolsover (Mr. Skinner) would prefer me not to answer questions, that is another alternative; but, so far as is compatible with the time available, I prefer to answer as many questions as possible.

Subject, however, to the interests of the individual company and of the taxpayer whose money has been invested, we can expect to see disposals by the NEB as a natural part of its activities. [Interruption.] Does the hon. Member for Bolsover want to intervene? Obviously not.

Clause 1 also abolishes the NEB's statutory function of extending public ownership into profitable areas of manufacturing industry, a function which neither of the Agencies has ever had, and for the NEB and the Agencies it abolishes the functions of promoting industrial reorganisation and of promoting industrial democracy in their subsidiaries. The former, the promotion of industrial reorganisation, is altogether incompatible with the present Government's industrial attitude.

I do not know what my predecessor had in view about the promotion of industrial democracy. I recall that the Government of which he was a member found it difficult to make up their minds on the matter. It is clearly sensible that industrial relations be good, but that is a matter for companies, not for the NEB.

The qualification in clause 17(2) makes it clear that this new function does not require the NEB to sell any of its holdings immediately, although all of them will be sold as soon as practicable.

Clause 1 also modifies the functions of the Agencies so as to make it clear that the promotion of employment should be undertaken with an eye to economic development in Scotland and Wales and not as an end in itself, which may be self-defeating.

Clause 2 provides two powers. It enables the NEB—

Mr. Park

On clause I, where it provides that the NEB shall cease to have the function of extending public ownership, I want to be clear about what the Secretary of State is saying. Is he saying that if no private capital is available, either at home or abroad, for a particular company or industry which by general agreement is essential in the national interest, the Secretary of State, notwithstanding that, is content to see that company or industry go to the wall rather than allow the NEB to intervene? Secondly, on the selling off of assets, is the right hon. Gentleman saying that where the NEB has intervened successfully and has brought a company back into viability, instead of the profits then coming to the advantage of the general Exchequer, they should go to the few people who may be able to hold shares?

Sir K. Joseph

On the first part of the hon. Gentleman's question, in the unlikely hypothesis that he postulates, the answer is "Yes". [HON. MEMBERS: "Oh".] Yes, because the hon. Gentleman is postulating a situation in which something that is widely accepted to be in the national interest and is profitable enough for the NEB to invest in—under the previous Government, the NEB had guidelines requiring it, overall, to make profits—such an investment, in the national interest and potentially profitable, would not find private investors.

Secondly, the hon. Member should realise that, in the disposal, the assets disposed of will be paid for. The income to the NEB so received from the buyers will go back to the taxpayer, and thus directly the taxpayer benefits from the sale of the company.

Mr. Stuart Holland (Vauxhall)

In relation to the first point, is not the right hon. Gentleman aware that it is not hypothetical but very much concerns British Leyland? The right hon. Gentleman claimed that the first point was hypothetical—that a company of major interest might not be able to get funds from private enterprise. Is not he aware that one of the reasons why the NEB had to intervene in British Leyland was the divorce between finance capital and industrial capital in Britain, leading to the point at which Lord Stokes complained that the whole of British Leyland, in his time, was valued by the City of London as virtually no more than the value of one empty office block?

Sir K. Joseph

Surely, however, the hon. Gentleman will accept that there can be two opinions about any particular situation. For instance, there were plainly two opinions about the rescue by the Government—or was it the NEB at the wish of the Government? I cannot remember at present—of the Chrysler operation. There there was a split camp, we are told, with the right hon. Member for Chesterfield (Mr. Varley), my predecessor—a sincere man—taking one view and his Cabinet colleagues taking another. Surely Opposition Members will recognise that there can easily be two views about what is in the public interest.

Mr. Charles R. Morris (Manchester, Openshaw)

Will the right hon. Gentleman give way?

Sir K. Joseph

I really have given way enough.

Clause 2 provides two powers. It enables the NEB and the Agencies to transfer securities to the Secretary of State, and it enables him to direct the NEB and the Agencies to make such a transfer and to prescribe its terms. Under the law as it stands, transfers can be only one way—to the NEB. We want to make two-way movement possible. Even if the NEB wished to secure such a change, I am advised that it could not do so under the present law.

Clause 3 enables payments to be made in reduction of the public dividend capital of the NEB and the Agencies. There is no existing power to reduce it. This provision is now needed to enable the NEB and the Agencies to surrender to the Consolidated Fund the receipts from the sale of shareholdings which were purchased by means of public dividend capital. The provision also has the effect of enabling appropriate accounting adjustments to be made. Similar adjustments would be needed if shareholdings were transferred to the Secretary of State. The Secretary of State is given the power to determine the amount of the reduction in each case, subject to Treasury approval.

In general, I expect the reduction to be equal to the amount received from the sale or to the value of holdings transferred to me. But in certain cases—the advanced technology disposals—the NEB will be allowed to retain a proportion of the proceeds to finance any further investments of the same type that may be justified. The Bill provides for this.

Clause 4 deals with the financial limits of the NEB and the Agencies. The limits are to remain at their present level—£3,000 million for the NEB, £500 million for the Scottish Development Agency and £250 million for the Welsh Development Agency. The power to increase these amounts by order is to be abolished.

Earlier this year we opposed the provision in the Industry Act 1979 enabling the Secretary of State to raise the NEB limit to £4,500 million. In practice, it was probably unnecessary even then, and now that we intend to reduce the scope of the NEB that measure is entirely inappropriate.

Clause 5 reduces the financial powers of the NEB and the Agencies. In the case of the NEB, the power to acquire shares in any company, without the consent of the Secretary of State, is to be reduced from £10 million to £5 million and from £2 million to £1 million for the Agencies. This change is in line with the Government's intention to tighten control over the use of public funds for industrial investment. More generally it reflects our intention to save public expenditure by reducing the availability of funds to these bodies.

Clause 6 reduces the maximum number of NEB board members from 16 to 12. The NEB has never had even as many as 12 members and there seems to be no reason why it should do so in future. This clause also removes the requirement to maintain a register of board members' financial interests. The register, which has to be published by the NEB in its annual report, has always been of doubtful value since the Secretary of State is required to satisfy himself, before he appoints a board member and from time to time thereafter, that the person concerned has no conflict of interest. The inquiries made for this purpose are more searching than those required for the register. The NEB board is also required, quite separately, to satisfy itself about conflicts of interest. I propose, therefore, to abandon the register and to take the opportunity to do the same in respect of British Shipbuilders, which is covered by clause 16.

Clause 6 also empowers the Secretary of State to nominate persons to be appointed as chief executives of the NEB and the Agencies. This is appropriate in view of the importance of such appointments if, as has been the case with the Agencies, the chief executive is the only fulltime member of the board.

Clause 7 abolishes the powers of the Secretary of State to direct the NEB and the Agencies to use his powers under sections 7 and 8 of the Industry Act 1972 to give selective financial assistance. This is unnecessary since other powers exist for the same purpose. The powers in respect of the Agencies have never been used, and the NEB has used its powers only to provide additional funds to British Leyland on terms identical to the NEB's own direct investment. We therefore intend to abolish these powers.

Clause 8 abolishes the power in section 4 of the Industry Act 1975 which enables the NEB to furnish technical assistance overseas together with the parallel provisions relating to the Agencies. These powers have never been used by the NEB or the Agencies.

I now cone to that part of the Bill which deals with the English Industrial Estates Corporation. Three corporations—for Scotland, Wales and England—were set up in 1960, although they had existed in a different form for many years. In 1975 the Welsh and Scottish Development Agencies took over the functions of the Welsh and Scottish Corporations while acquiring much wider powers in relation to factory building than had been enjoyed by their predecessors. However, no corresponding change was made to the powers of the English Industrial Estate, Corporation.

The consequences of this are that the English Industrial Estates Corporation has no power to invite or encourage private sector support for, or participation in, its activities. It has no power to help or encourage its tenants to buy their factories, except for the purpose of providing accommodation for its tenants. It has no power to give loans, mortgages or guarantees for the purposes of disposing of factories and estates. All these are activities which we are anxious to promote so that we can pursue the policy that I have already announced of seeking to secure more private sector involvement in the Government's advance factory programme and introduce a degree of self-financing by selling factories wherever possible. We are also taking the opportunity to tidy up various other aspects of legislation under which the Corporation operates.

Clause 9 gives the Corporation the same industrial estate functions as the Scottish and Welsh Development Agencies. It makes it clear that the Corporation's job is to provide industrial or commercial premises and such ancillary facilities as may be needed. It also makes it clear that the Corporation has the power to dispose of anything that it owns for any purposes—in particular, to transfer to private ownership some of its immense industrial estate. Clause 9(2) states what the Corporation can do in order to discharge its functions. We have modelled the powers on those of the Welsh and Scottish Development Agencies. Under this clause the Corporation is empowered to acquire land and other property. At present the Secretary of State has to acquire the land and then lease it to the Corporation. This means double conveyancing whenever freehold land is bought or sold and the keeping of two sets of records of land held in both the Department and the Corporation. This duplication is pointless and wasteful.

The functions of the Corporation under clauses 9(1) and 9(2) apply anywhere in England. However, I have no plans at present to permit the Corporation to act outside the assisted areas other than as may be necessary to meet its obligations for the completion or management of existing factory estates.

Mr. Eldon Griffiths (Bury St. Edmunds)

Now that my right hon. Friend has almost completed his explanation of the clauses concerning the powers in the Bill, I wish to ask a question arising from those clauses. Is he conscious of the fact that in taking powers away from the NEB—a measure which I completely support—he is giving great power to his own Department? By reducing the powers of the NEB—which I want to see—will the Secretary of State not be increasing the powers of his own civil servants? I am not entirely happy about that.

Sir K. Joseph

I am aware of only one increase of power. My hon. Friend may have others in mind. This Bill is not intended to increase the activities of Government or civil servants. The only power that is being given to me and my civil servants will enable us the more effectively, if a case arises, to dispose of assets held by the public sector to the private sector. If my hon. Friend has a particular point, perhaps he will write to me so that I can take it into account before the Committee stage.

I still have several clauses to deal with and I believe that the House would like an introduction to them. In clause 9(3), I appear to be running straight into something which slightly contradicts what I have just said. Clause 9(3) places the Corporation under my direction, though only to accompany the fact that the Bill gives a great deal more power to the Corporation to enable it to dispose of what are now public sector assets, merely leaving a supervisory role to the Secretary of State.

In practice, I intend to reduce day-to-day intervention in the Corporation's affairs and substitute a framework of broad guidelines and financial duties.

When the Welsh and Scottish Estates Corporations were subsumed in the Agencies, they ceased to enjoy Crown status. There seems to be no argument for treating the English Corporation any differently, and provisions corresponding to those in the Agencies' Acts have been introduced in clauses 9(4) and 9(5). This means that from a certain date the English Industrial Estates Corporation will cease to have automatic planning permission for its projects. Clause 9(5) will have the protective effect of conferring planning permission on developments initiated before the end of March 1981. This is a transitional arrangement. Without it there could be serious disruption of the existing programme which was planned and budgeted for over two years ago and will still be in progress next year.

The corresponding provision in both the Scottish and Welsh Development Agencies Acts confers planning permission only in respect of developments initiated before the commencement of the Acts. There was some feeling at the time that the key phrase "developments initiated" meant cases for which plans had been prepared. More recent advice suggests that the phrase could be restricted to cases where work has been started on the site. Given that the English programme is so much bigger and the time that elapses between planning and construction, we feel that the later date of March 1981 is reasonable. I assure the House that the Corporation will not ride roughshod over the normal requirements of consultation with the planning authorities. I shall require this to continue.

Clause 10 hands over to the Corporation the freehold of all the land that it now leases from me. My own powers remain unchanged.

Clause 11 enables me to increase the membership of the Corporation beyond the maximum of four.

Clause 12 makes a minor technical change.

I now turn to the subject of regional development grants. In my statement of 17 July on changes in regional industrial policy I announced the withdrawal of regional development grants in the intermediate areas and indicated that the Industry Act 1972 would be amended accordingly as soon as possible. Clause 13 has that purpose. It amends the table in section 1 of the 1972 Act to give effect to the new policy.

The opportunity has also been taken to give statutory recognition to the changes effected administratively in the regional development grant scheme. This follows the exclusion of mining works and construction equipment by the Labour Government, as part of the 1976 public expenditure cuts. It removes the provision for derelict land clearance areas which are now spent. The clause consolidates the provisions of the Regional Development Grants (Variation of Prescribed Percentages) Order 1979 which reduced the rate of grant payable in the development areas from 20 per cent, to 15 per cent. It also provides for the continuance of the transitional provisions effecting all the changes.

Clause 14 and schedule 1 amend section 8 of the Industry Act 1972. The amendment is largely technical. It is designed to overcome the difficulty that the sterling limits on commitments in section 8 in practice make it all but impossible to undertake liabilities denominated in foreign currency. No such difficulty exists in the case of assistance under section 7. The exchange risk cover scheme for loans by the European Investment Bank and the European Coal and Steel Community in the assisted areas is mounted under section 7.

The amendment will enable the Secretary of State to give foreign currency guarantees without a sterling limit. In order to retain the present parliamentary control over sterling commitments and to introduce similar control over the aggregate of foreign currency commitments, clause 14 and schedule 1 exclude commitments for foreign currency guarantees from the existing section 8 limits and establish a separate overall limit on commitments for foreign currency guarantees. This limit is specified in special drawing rights, as these tend to be rather more stable than any single currency, and are roughly equivalent in magnitude to the existing sterling limits in section 8.

I emphasise that these are enabling powers. We expect primarily to use them to support overseas projects for the exploration and development of new sources of raw materials to improve our security of supply. The opening and development of a new mine is a costly business these days, and it often takes place in developing countries. The finance required is often of a nature or term which is beyond the resources or capability of an individual company or the market. In such cases it may be right for the Government to underwrite some of the risks—as ECGD already does when certain political risks are involved.

Each case will be considered on its merits, in the light of the likely economic benefits and the need for Government support. In general we shall seek to charge premiums at an appropriate level.

Mr. John Bruce-Gardyne (Knutsford)

I am anxious to take up my right hon. Friend's argument about the preservation of parliamentary scrutiny and control. Does my right hon. Friend accept that so long as the Government choose to interpret section 8 of the principal Act in such a way as to make during the recess massive grants—far beyond the limits which Parliament set in 1972—without reference to Parliament, it is a mockery to talk of parliamentary control?

Sir K. Joseph

My hon. and much respected Friend will realise that it is a little unfair for him to talk of the Government choosing to interpret section 8 of the main Act in the way that I have done in the case of Dow Corning. Section 8(8) of the main Act specifically provides that where an urgent decision has to be made when Parliament is in recess it is appropriate for the Government to give the House of Commons information through the usual procedure. If that happens, the opportunity for debate in time to influence the decision is lost.

I am at ease in my conscience that that provision was suitably applied in the case of Dow Corning. One could have a different view about the decision but because of the delays caused to Dow Corning after the negotiation by the previous Government, which was followed by the election and a change in regional planning policy, a decision had to be made urgently. I made that decision and announced it to the House. My hon. Friend must recognise that that contingency is provided for in section 8(8) of the main Act. Public expenditure commitments will not allow it to happen often.

Schedule 1, which is linked to clause 14, falls into two parts. Paragraphs 1 to 4 establish separate ceilings for existing sterling commitments and commitments for new foreign currency guarantees. Paragraphs 5 and 6 are technical. They set out the detailed mechanics of valuing foreign currency commitments and the circumstances under which the SDR ceiling can be exceeded because of exchange rate fluctuations. These are on parallel lines to similar provisions in the Export Gua- rantees and Overseas Investment Act 1978.

The remaining provisions of the Bill are of a miscellaneous nature. Clause 15 is brief. Its purpose is to sweep away the paraphernalia of planning agreements and disclosure of information by companies, which occupy no fewer than 12 pages of the Industry Act 1975.

Planning agreements and compulsory disclosure of information were dead letters from the start. There were only two planning agreements—one with a company which was being rescued by the Government and the other with a nationalised industry. Both agreements have lapsed and will not be renewed. The disclosure of information provisions have never been used.

We are much in favour of co-operation among industry, trade unions and Government in its proper sphere. The National Economic Development Council and the resources of its participants are available for this purpose. Certainly we are not opposed to the disclosure of information by companies so long as that is entirely voluntary.

Mr. William Waldegrave (Bristol, West)

Does my right hon. Friend admit that there was at least a grain of sense in what his predecessors were trying to do in one area of planning agreements? Does he accept that where the Government or nationalised industries are the sole buyers of a product from an industry it is to the advantage of industry to be able to plan formally the development of its business over the medium term? I declare an interest since the company for which I work is in that position in some of its divisions.

Sir K. Joseph

I am sure that that is greatly in the interests of the industries and firms involved. But I am not sure that a planning agreement is the right method of seeking to solve the problem of fluctuating market conditions. I acknowledge the importance of the subject where there is a single buyer.

Mr. Stuart Holland

We face an interesting situation. In a previous statement to the House on regional development incentives the Secretary of State said that he was rolling them back because he was not persuaded of their effectiveness. The Labour Government's policy for the regions involved direct intervention by the National Enterprise Board and indirect intervention through planning agreements backed by regional aid, If the Secretary of State is to limit the role of the NEB and scrap the planning agreement formula, and if he does not really believe in regional incentives, how will he provide jobs for the regions?

Sir K. Joseph

It is an illusion to assume that jobs respond only to grants from the taxpayer. They respond to market opportunities, the reputation of the work force and the drive of local entrepreneurs and those from outside. In the months and years ahead we shall see that those forces, even with a lower contribution from the taxpayer, will provide more benefit. We apply the principle of disclosure of information ourselves. When in Opposition, we voted for what is now section 27 of the Industry Act 1975, which provides for the public use of the Treasury's economic model. That provision is being retained. I wish everyone well with it.

Clause 16 deals with the register of financial interests for members of British Shipbuilders for reasons I have already covered in respect of the NEB. Clauses 17 and 18 deal with technical matters.

I commend the Bill to the House.

4.50 pm

Mr. John Silkin (Deptford)

The Secretary of State has underlined and reinforced his view of Conservative philosophy which he gave on 24 July 1979 in the debate on regional policy when he said: The Conservative Party does not presume to think that it can run industry. Our job is to create the conditions in which industry runs itself."—Official Report, 24 July 1979; Vol. 971, c. 378.] The House will be aware that only yesterday, speaking at Droitwich, the director general of the National Economic Development Office, Mr. Geoffrey Chandler, with the independence and authority of his office, said: Industry's failings need very much more to remedy them than an appropriate environment alone. Industrial policy should involve all parts of society, including the Government, since it is to Government that the country is entitled to look for leadership. What we are getting with regard to one section of industry is not leadership but anarchy.

Looking at the words closely, let us see again what the Secretary of State said: The Conservative Party does not presume to think that it can run industry. That may be true of private industry. Is it true of public industry? When we come to that, we see that the right hon. Gentleman's attitude towards public industry, whether the Post Office, shipbuilding, steel or the National Enterprise Board, is very different. There he presumes to think that he can run it, management included, and I shall prove it to the right hon. Gentleman. I speak primarily in connection with the National Enterprise Board, but I hope and know that those of my hon. Friends from Scotland and Wales will talk about the Scottish Development Agency and the Welsh Development Agency.

It is true that the Secretary of State has trivially divested himself of one or two powers. They are not important. They are particularly the shipbuilding and NEB registers. But the hon. Member for Bury St. Edmunds (Mr. Griffiths) made a significant point. I am about to give him a short dictation on what he might put in that letter which his right hon. Friend suggested that he should write, but he is probably ahead of me on it.

Let us see what the Bill amounts to, because apparently the Secretary of State does not know what powers he is taking. Clause 2 extends his powers of direction to enable him to require the NEB and the Agencies to transfer their assets to him. That is a formidable power. Clause 3 gives him power to force the NEB and the Agencies to make payments in reduction of their public dividend capital—another formidable power. Clause 6 is the power to nominate the chief executives, who must come from the Board. That power is akin to the kind of power that the right hon. Gentleman took when he was reorganising the National Health Service. I said at the time that it had more than a squint towards monarchy—and there is an authoritarian streak in the right hon. Gentleman which I greatly deplore. The idea of his appointing what will be a kind of Secretary of State's supergrass to the Board will not increase the morale of the NEB.

The right hon. Gentleman said that there was one power that he might have taken, but he was not certain about it, and he stopped dead at clause 9(3). He really should not have stopped there. That concerns the general or specific directions of the right hon. Gentleman with which the English Industrial Estates Corporation must comply. These are formidable powers. I shall come to others later.

It is perfectly true—and the Secretary of State with great candour admitted it—that the Conservative Party when in Opposition wanted to kill the NEB stone dead. The Conservative Opposition found they were unable to do it, so they left it with four essential functions—mutilated perhaps, but preserved. The first three were support for small firms; support for firms in assisted regions, particularly in the North and North-West; and support for high technology. That was the form of adult education that the right hon. Gentleman thought private industry needed in high technology. It did not have the education to go in for the risk itself, so in the meantime the NEB would do it.

The fourth function left to the NEB was that of assisting companies which had been in difficulties. The NEB will still be backing Rolls-Royce. It will be interesting to know whether it will be backing BL. Perhaps the right hon. Gentleman or his hon. Friend when he replies to the debate will tell us what is in prospect there.

There is a future problem. The Secretary of State, not today but on an earlier occasion, said that he would allow the NEB to provide temporary support for companies which got into difficulty only in exceptional circumstances. Under the Tory Government there will be many such companies—so many that it would be of advantage if we were to learn what the Government's policy will be towards the ducks that they will be laming during the course of their industrial policy.

I promised to go a little further into the interference with management and the powers that the Secretary of State is to give himself relating to the NEB. First, he has told the NEB that it must sell £100 million worth of assets to raise cash this year, but the choice is up to the Board. If the choice were up to the Board, it would not do it in that way at all. If it has to raise this sum—I do not think that it is necessary, but this is a matter across the Floor of the House—there are many ways in which it can be done other than getting rid of assets. Such a way and such a basis is bound to lead to enormous uncertainty and loss of morale not only in the NEB—I was glad that the Secretary of State paid tribute to the staff and their capability—but among those who work in the vulnerable industries such as Fairey Engineering, Ferranti, ICL or BBK. The Board knows that taxpayers' money has gone into saving these industries, and it is told that the moment those industries are saved they will be "flogged" to any private individual who cares to make his bid. The reward will go not to the taxpayer but to those who had no confidence in those industries and did nothing whatever to help them.

Sir K. Joseph

Will the right hon. Gentleman explain what he means by that? The proceeds of sale will go back to the benefit of the taxpayer via the processes outlined in the Bill.

Mr. Silkin

Perhaps I had better explain it, because clearly the Secretary of State does not understand. Assets are sold at a time when they are rewarding and profitable. Who has made that profit? It is the people of this country by their efforts and their money who have made it possible. The assets will be sold off—the Secretary of State knows this perfectly well—in a bargain basement sale and those who were unwilling, unable and incompetent to make those industries successful will reap the benefit.

Mr. Budgen

Will the right hon. Gentleman give way?

Mr. Silkin

The Secretary of State is more qualified than the hon. Gentleman to deal with me, but I willingly give way.

Mr. Budgen

I am very grateful to the right hon. Gentleman for being so kind as to allow me to put a question to him. Perhaps he will humbly allow me to ask him why these assets will be sold only at bargain basement prices.

Mr. Silkin

In many cases they are minority holdings, and the hon. Gentleman knows as well as I do that that is frequently a factor in sales of companies which makes a difference to the price.

Dr. Jeremy Bray (Motherwell and Wishaw)

Surely there is clear support for my right hon. Friend's contention in the enormous demand for BP shares, which the Government have grossly underpriced.

Mr. Silkin

That is perfectly true. I am glad that I was able to reply to the hon. Member for Wolverhampton, South-West (Mr. Budgen), but perhaps the Secretary of State should have tackled that point himself.

I said that I would further detail the functions and powers that the Secretary of State is taking for himself. He is removing the statutory function of the NEB to promote industrial democracy. He did not appear to think that that was a great step, but he does not propose to put anything in its place. He talked of his brief in good industrial relations. He can talk as much as he likes, but it would have been a good idea to place such plans in the Bill. He may say that they will be in the draft guidelines, but that is not important. They should be in the Bill.

Clause 5 of the Bill diminishes the NEB's delegated powers by reducing its commercial judgments to transactions of £5 million from a figure of £10 million. I wonder whether the hon. Member for Bury St. Edmunds is still in agreement with me now I have reached this point. The Secretary of State is cutting the amount of the NEB's commercial judgment by £5 million. The right hon. Gentleman, who does not want to interfere in industry, will exercise that judgment. Whose commercial judgment will it be on a project of £6 million? The House should be well aware that it is the Secretary of State, his Department and his civil servants who will be making that commercial judgment and not the NEB.

Clauses 1 and 2 cripple the role of the NEB even further. Through his power of direction, the Secretary of State seeks to intervene and force private sector partners to take different and perhaps unacceptable partners in the future. That is the power which he is giving himself. I do not believe that there is a single precedent for that power in any legislation. If there is, perhaps the right hon. Gentleman will tell us. It is giving enormous power to one man and his Department, but it will also deter private sector companies from entering into arrangements with the NEB which would be of considerable benefit to them.

We are left in no doubt as to the right hon. Gentleman's real intentions for the NEB. Has he been converted, however temporarily, to the existence of the National Enterprise Board in a somewhat limited field, or is he deliberately but slowly, like the Chinese water torture, destroying it? It cannot be disputed that he is intensely damaging morale.

Let me remind the Secretary of State what the previous Conservative Government of which he was such a distinguished member did. When they came to office in 1970, the first thing that they did was to destroy the IRC. Two years later they set up the Industrial Development Executive to do almost exactly the same job. In the meantime, apart from the waste of time, morale in industry had totally disappeared.

I do not know whether the Secretary of State intends finally to destroy the NEB but he is effectively destroying its morale. I believe that last year the NEB had a profit of over 11 per cent., increasing to 15 per cent. or 20 per cent., but it will now be an eternal loss-making organisation. Nothing could be more damaging to morale.

Mr. Eldon Griffiths

I was obliged to the right hon. Gentleman for helping with the first half of the letter that I was beginning to compose to my right hon. Friend. He and I have much common ground in this matter. He appears to be saying essentially that the NEB has a good deal to fear from my right hon. Friend's Department, and I agree with him that if there is one thing worse than the NEB it is the Civil Service. His speech is powerful and interesting. Would he agree on behalf of the Labour Party that the only thing that is worse than keeping the assets in the hands of the NEB is to transfer them to the effective power of the Civil Service?

Mr. Silkin

I might agree that the worst possible fate for the assets is for them to be transferred to the effective control of the Secretary of State. There are two things that the right hon. Gentleman should not be doing with the NEB. He should not be selling off profitable companies such as Ferranti, which is doing well. The taxpayers should not have to pay the bill for something which the right hon. Gentleman has created.

Under the Bill the NEB's total borrowing power is put at £3 billion. I believe that under the Industry Act 1979, although it may have been earlier, the sum, which was then £4½ billion included private borrowings. With private borrowings of a large company, the new figure of £3 billion will soon hit the ceiling. The right hon. Gentleman will have to come back to the House over and over again to ask for new Bills, which will have to go through all their stages. His right hon. Friend the Leader of the House will be very displeased with him. Those are the things that he ought not to be doing.

What should the right hon. Gentleman be doing? I should like to quote further from the speech of Mr. Geoffrey Chandler: The role of organisations like the National Enterprise Board should be recognised in stimulating investments in new technology and new industries. The Secretary of State was half-hearted about that, but I shall give him some examples.

By the Secretary of State's decree, the National Enterprise Board is to have a £20 million involvement in titanium. That is a clear example of where private financial aid is not available for something that is vital for the country. If we did not purchase titanium here, we should probably have to buy it from Russia. Its use is in defence, and the Prime Minister must have been in a quandary as to which of her two ruling but conflicting prejudices should operate.

There are about 18 examples of high technology where the NEB is doing a joint deal, and such explorations would not have been undertaken unless it had come in.

Mr. Les Huckfield (Nuneaton)

The Secretary of State is not listening.

Mr. Silkin

The right hon. Gentleman is listening. He always closes his eyes when I speak.

I should like to know from the Minister in replying, what is happening to the next instalment of the £25 million for Inmos. Without it, the first £25 million will go down the drain.

I have given examples of where the NEB has proved its enormous value for the future of our country. I turn to the report of the advisory council on applied research and development, which states that there are 6,000 to 7,000 industrial robots in the world and that our share is 60 to 70. The report outlines the various fractions owned by other countries. For example, the United States has half the total amount and Japan has a large portion also. The report states that the Government should give companies several million pounds a year as an incentive. We are dealing with something of enormous benefit in which we should have a British stake. However, the National Enterprise Board approved the allocation of £318,000 to a firm in the North-West to develop robots, which anticipated the report's recommendation. The NEB has shown that it is capable of dealing with such matters with imagination and speed.

The House has rightly complained about the length of Front Bench speeches. Therefore, I shall deal with the broad picture in about four or five minutes.

What sort of a country will the Labour Government—there will be a Labour Government—inherit at the next election? They will inherit a country, if the Financial Times leak is correct, in which the engineering industry will have contracted by 20 per cent. by the beginning of 1983. It will be a country in which the twin evils of Tory policies and import penetration will have created a desert. To expect a Labour Government to respond to that by easy nostrums is to ask the impossible. However, we can begin to establish the important tools of the trade with which we might rescue the country. We require a reinforced National Enterprise Board with greater powers and more money. We shall need that after the devastation that will be created by the Secretary of State and his colleagues.

I agree with the right hon. Gentleman that there have been few planning agreements. However, he did not point out that the planning agreement itself is becoming more and more used throughout Europe and the world as well as in this country. In France, the development contract, which is the broad equivalent to the planning agreement, is being extended in its powers. The industrial desert that we take over will require us to give statutory powers to planning agreements.

The right hon. Gentleman laughed at—indeed he is abolishing them—the provisions about disclosure of information. He believes that there is enough disclosure and that we need no more. I shall quote from Mr. Chandler again.

The Parliamentary Secretary to the Treasury (Mr. Michael Jopling)

Oh, no.

Mr. Silkin

The Director General of NEDC is more independent and authoritative than is the right hon. Member for Westmorland (Mr. Jopling). The Director General said: The market mechanism should be improved by the production of better and more independent disclosure about company performance. That is exactly the purpose of the disclosure sections of the Industry Act 1975.

Those are the sort of matters that we shall have to undertake. By the time the Secretary of State and his colleagues have succeeded in bringing the country to that desert, the topical question will be whether to restrain the growth of manufactured imports by import penetration ceilings. We shall have to restore better and improved regional aids. We have seen how those aids link up with shipbuilding, which we debated last Thursday, with the NEB, which we are debating today, and with steel, which we shall debate to-morrow, and how they are part and parcel of the hope for the industrial recovery of the country. We reject the industrial policy of the Government and the Bill which gives it life.

5.15 pm

Sir William Elliott (Newcastle upon Tyne, North)

I am pleased to follow the right hon. Member for Deptford (Mr. Silkin). In the name of the brevity which is now the vogue, I propose to make a short speech. First, however, I should like to make a few comments on the right hon. Gentleman's speech.

The right hon. Gentleman suggested that a Labour Government would inherit an industrial desert. I doubt very much whether there will be a Labour Government after the next general election. The North-East is an industrial desert in terms of unemployment. We inherited that position from the previous Government, of which the right hon. Gentleman was a member.

The right hon. Gentleman referred to the state in which the engineering industry would be when a Labour Government came into office. I should like to refer to the engineering industry's difficulties in the North-East. The present high rate of unemployment in that area is in no industry more heavily subscribed to than in engineering and its associated industries. Those industries are undergoing a massive struggle, in the aftermath of the enormous industrial dispute.

There can be no better indication of the difference in ideologies between the two sides of the House than the remarks of the right hon. Gentleman about proceeds and profits in connection with cutting down the role of the National Enterprise Board. My right hon. Friend the Secretary of State pointed out in an intervention that the proceeds of sales would benefit the taxpayer.

That will not be the only benefit to the taxpayer. Once those holdings are sold, the discipline of the money market and open competition will ensure that they positively thrive. That is the profit that will come to the taxpayer, part of which will go to the Exchequer for the benefit of the weakest in our society.

I shall leave my comments on the right hon. Gentleman's remarks at that. However, I take up his closing statement that he rejects completely the industry policy as expressed in the Bill. I welcome the Bill and the industrial strategy of the Government which the Bill outlines and illustrates.

Mr. John Evans (Newton)

They will not like the Bill on Tyneside.

Sir W. Elliott

I believe that they will.

Mr. Don Dixon (Jarrow)

The hon. Gentleman and I represent areas of high unemployment. Will he explain to the House how the Government's regional policy will help our areas? The Government intend to rejuvenate British industry by supporting the small businesses and, at the same time, take away IDCs for factories of less than 50,000 sq. ft. in area, which will hit areas like ours.

Sir W. Elliott

The hon. Member for Jarrow (Mr. Dixon) should wait until I come to my remarks on the part of the Bill which deals with the matter to which he has referred.

I wish to refer to clauses 9 to 12. They propose wider powers for the English Industrial Estates Corporation. They give the Corporation a greater economic role and, much more important, a greater promotion role. I know the Corporation well. I pass its headquarters in the North-East on my journeys to and from the House. It is situated in the middle of the Team Valley trading estate, which is one of the most successful and oldest trading estates in the country. It was established by a Conservative Government before the war.

These proposed new powers for the Corporation are wholly desirable. Having known the Corporation well, and talked often to its officials and successive chairmen, it is my opinion that, unfettered, the English Industrial Estates Corporation can play a distinct and significant role not only in the economic recovery of the North-East but in the economic recovery of the country as a whole.

The North-East has been far too dependent in the past few years on the service sector, predominantly the public services, for economic growth. There is a strong possibility at present—I speak advisedly—of potential manufacturing growth through the trading estates of the country as a whole, particularly through the trading estates of the region that I know well. A recent report brought some light to our gloom by highlighting the fact that there has been considerable success in the trading estates of Peterlee and Washington in County Durham. At present there is considerable interest by the private sector in trading estates in the North-East. In fact, an official of the Corporation to whom I talked recently said "Developers are now looking at the North of England, whereas previously they have never looked further north than Watford".

I welcome the extended powers of the Corporation because I believe that they will contribute greatly to our industrial recovery. As my right hon. Friend said, until now the Corporation could indicate but could not persuade. In my opinion, that has always been ridiculous. It is my belief that in its headquarters in the Team Valley there is greater knowledge, experience and expertise in respect of regional development than there is anywhere else.

Today at Question Time there was again a call from Labour Members for a development agency for the North. I wish to speak against such a body and, indeed, against any other bodies. We have enough of them. We have had enough subsidy. Let us have practical application towards creating real employment and new jobs. I believe that this can be done through the trading estates.

Mr. Heffer

I am absolutely intrigued. I should like to know what has been happening with private enterprise over the years. Why has it not solved all these problems and built the new factories? Why have the industries not gone to the North? Why is it that successive Governments, including Tory Governments, have had to create regional policies and so on? What have the Conservatives been doing?

Sir W. Elliott

It is more a question of what the previous Labour Government have done in recent years. There is certainly an indication at the present time that the private sector wishes to develop.

Mr. Heffer

Rubbish.

Sir W. Elliott

In laying down the broad guidelines for the Corporation, I hope that my right hon. Friend will consider the following points. First, will he recognise the present and, I hope, increasing demand for smaller factories? In the North of England there is a distinct interest in factory space between 1,500 sq ft and 5,000 sq ft. The hon. Member for Liverpool, Walton (Mr. Heffer) asked what we have been doing. I believe that here lies the key to our industrial recovery—the encouragement of the small and medium-sized business. Such businesses wish to come to the trading estates in the North-East. Thank goodness for those trading estates, and thank goodness for the establishment of the Team Valley in the 1930s. I can assure the hon. Gentleman, who comes from an area similar to my own, that but for the trading estates we would now be in a sorry plight indeed. I believe the further development and encouragement of those estates to be extremely important, and I see the Bill as providing that encouragement.

Secondly, under clause 11, will my right hon. Friend seek to appoint extra members of the Corporation who will be representatives of the assisted areas? Thirdly, will he consider the possibility of proceeds from any sales made by the Corporation being retained in the area of sale? That is perhaps a little optimistic, but in respect of the North-East I hope that any proceeds from sales might be circulated in the region.

Above all, will my right hon. Friend recognise—I am sure that he does—that developers and entrepreneurs exist? I talk to them with some regularity. They are anxious to develop and to provide new employment, but the incidence of capital taxation is a massive deterrent to their doing so. I hope that it will be accepted that there is a natural desire on the part of small business men to build capital which their children and their children's children can inherit. The small business man wishes to establish a business that his children and children's children can take over. I therefore hope that the Government will continue on the path of reducing taxation, particularly capital taxation.

Dr. Oonagh McDonald (Thurrock)

Does the hon. Gentleman recall that a recent survey of small businesses showed that the motive which he has attributed to small businesses is entirely absent? Business men find that their children are not particularly interested in taking over the business, as a result of which entrepreneurial activity seems to be exhausted with the originator of the small business in question.

Sir W. Elliott

I am grateful to the hon. Lady. She allows me to express a point of view that I have heard business men express several times. I have heard industrialists deplore the fact that their sons are not interested in going into business, as the hon. Lady has suggested. Why? It is because of the enormous amount of Government interference in private business—[HON. MEMBERS: "No."] Oh, yes—that has come with successive Labour Governments. Another reason is the penal taxation to which I have referred, which has been applied to private business by Socialist Administrations.

I feel that I have spoken long enough—I am sure that there is agreement on that. I believe that the country needs a new industrial revolution. My part of the world played a great part in the last one. The new industrial revolution must provide encouragement to the new creators of wealth. I repeat that they are there if they get the right encouragement.

I welcome the Bill. When it reaches the statute book, I believe that it will make a major contribution to our industrial recovery.

5.27 pm

Mr. Tony Benn (Bristol, South-East)

The Secretary of State for Industry treated us to another of his lectures on economic theory, and described how the disengagement of Government from the economy was to be achieved. However, at no stage did he relate the Bill to what he knows to be the reality of the economy of the Western world and of Britain. One could have listened from the beginning to the end of his speech without getting any sense of his awareness of the fact that the United States is on the brink of a further decline into recession and that Germany is faced with major unemployment. Indeed, Germany has followed quite different policies from those that have been widely criticised here and has exported its unemployed as its guest workers have been sent back to Greece, Turkey and Yugoslavia.

The right hon. Gentleman is responsible for industrial policy in a country where there are now millions of people desperately frightened about their future, yet he simply gives us another version of his Adam Smith-Milton Friedman lessons and tells us that the market will settle it for us. The reality is that the industrial desert to which my right hon. Friend the Member for Deptford (Mr. Silkin) referred has been progressively developing under all Governments since the war.

The right hon. Gentleman was right to say that we need changes in policy. I cite shipbuilding as an example. Thirty years ago, 48 per cent. of the world's ships were launched in British yards. Now, the percentage is not statistically significant. The same can be said about motor bikes. Twenty years ago, we produced the best in the world, but a big growth market was virtually wiped out by the way in which our economic system worked with regard to motor vehicles and engineering. Even Ferranti Electronics and Alfred Herbert had to come to the Government to keep themselves going.

We are now faced with an accelerating decline of our own industrial system. The right hon. Gentleman should do more than address the House of Commons. He should have addressed some of his comments to the shipyard workers of Govan who have no ships to replace their existing order, which has now been launched for fitting out. He should have addressed the people of British Leyland, faced with the closure of 13 plants. He should have addressed those at Corby, where male unemployment will rise to 30 per cent., and those in the mining industry confronted by imports of coking coal. If people imagine that that is done on market forces, I recall that on the last occasion when the previous Conservative Prime Minister got the generating board to import coking coal, by the time it arrived it was more expensive than British coal. It was then sold by the generating board, at a loss, to the French power industry.

The right hon. Gentleman should address his mind to those people in this country who actually create the wealth by working in industry and should not solely address the interests of the financial bodies which supported his Government and for whom he has a prime concern. I must say to the right hon. Gentleman—I follow the newspaper reports containing comments by those who would like to support him—that there is no real confidence that the policy upon which he has embarked will achieve any of the objectives which he believes and claims it will achieve. There is no forecast that investment will increase, no forecast that growth will increase. With rising unemployment, there is no forecast that productivity will increase. What is forecast is higher interest rates, which will depress the economy still further. The lifting of exchange control will permit an accelerated export of profits. No one should suppose that while there are countries in the world where trade unions are illegal, as there are, it will not be more attractive to export profit to those countries to produce goods with sweated wages and bring them back to this country, rather than to set up businesses in the constituencies of the North-East and the North-West.

Under arrangements which the Government are encouraging, we are using oil revenues to fund imports. Zero growth and real cuts in public expenditure will mean higher unemployment and will be followed by an inexorable move towards chronic unemployment, to the point where—even if there was a world recovery and this country was to have a short, fevered boom—it would lead to so many imports to re-equip our industry that when the rest of the world was taking off the British economy would fall flat on its face and would be subject to another stop-go period.

I must also say to the right hon. Gentleman—it has to be said soon, although I hinted at it in the summer—that if industrial policy follows this course the next instrument of the Cabinet will be the Special Patrol Group as the problems created by deindustrialisation come to be presented to the public in terms of law and order. There was great resentment in Corby last week—when the steel demonstration took place—at police helicopters circling overhead and riot police out with shields. Yet it is happening all over the country. The right hon. Gentleman may not be told this as he goes around. If, however, one goes to Merseyside, where chronic male unemployment has been a curse over a long period and where in some areas, I was told in Liverpool on Sunday, there is 50 per cent. youth unemployment, it will be seen that the way that the detention centres for short sharp sentences are interpreted by young people is that they are a way of frightening them off from causing trouble during a prolonged period of mass unemployment.

I warn the right hon. Gentleman that if the industrial policy he follows leads to this type of social tension the Special Patrol Group will not be a substitute for the National Enterprise Board as a way of dealing with it. This policy will lead to an inevitable attack on our democratic freedoms.

I want to be brief so that the 10-minute rule for speeches can perhaps apply even before 7 pm. The Bill will be effective in one sense. I believe that when history comes to be written the right hon. Gentleman will be credited with having killed once and for all the consensus politics of post-war years. It will not be possible, after four years of his policy, to go back to slightly strengthened planning agreements or a little bit more for the NEB. We shall inherit from him an economy so desperately damaged that there will be a demand for certain clear policies.

I want to deal briefly with those policies. There will be a demand for new policies because the right. hon. Gentleman's policy is not to transfer power back to the citizen. It is to transfer power from this House—where people are elected to discharge their responsibilities—not to the British entrepreneur but to the international speculator, who will play with our currency to suit his short-term advantage. If the right hon. Gentleman loses the confidence of British business and has no exchange control to protect him, the pound may plunge when he is in power and he will learn how necessary are some defences.

I want briefly to touch upon one of the policies that I believe will be demanded.

Sir Keith Joseph

It is hard to choose at which point to intervene, such, with respect, is the nonsense being talked. Does not the right hon. Gentleman recognise that when the full panoply of exchange control was in action, when his Government were in office, the pound plunged by nearly 40 per cent.? Exchange control does not prevent buyers and sellers of currency all over the world, who represent the pensioners and workers of other countries, operating through their employers, reacting to supply and demand.

Mr. Benn

If the right hon. Gentleman really believes that world pensioners gather together and move their savings from capital—[HON. MEMBERS: "Oh."] That does not happen. The right hon. Gentleman knows very well that the pressure upon currencies is politically motivated. If he will listen, I shall give him an example. I sat in the Cabinet in 1976 when the IMF ordered the Cabinet to cut £4,000 million off public expenditure or else it would destroy the stability of our currency. No one will persuade me that that was the magic hand of the market reaching an independent assessment—

Sir K. Joseph

rose—

Mr. Benn

The right hon. Gentleman must let me finish. No one will persuade me that there were a lot of magic hands reaching a consensus that the pound should not be supported. As any observer knew, the inflow of currency from oil was about to make the pound very strong. That was a deliberate political attack by the world bankers on the public expenditure policy of an elected Labour Government. The right hon. Gentleman can argue until he is blue in the face. I shall give one further example. I remember, as the right hon. Gentleman will remember, that in the Cabinet in March we were told that the gilt-edged market required an increase of 1 per cent. if the bonds were to be off-loaded. The interest rate was raised by 1 per cent. The following day the financial newspapers reported a £200 million windfall profit in the City in a single day as a result of that pressure. That same week, I was negotiating with the miners for a wage increase in the whole year worth £75 million for 250,000 miners. Is anyone going to persuade me that the City of London, by pressure brought to bear on a Labour Cabinet, was entitled to get for its own speculators three times as much as the miners got in a whole year for digging coal, which is a vital energy source?

The right hon. Gentleman lives in a dream world if he thinks these are market forces. They are political pressures to which he is deliberately subordinating the interests of the people he was elected to represent.

Sir K. Joseph

The right hon. Gentleman should know that the leads and lags in our overseas trade can move hundreds of millions of pounds a day in and out of a currency because of the judgments of the treasurers of employers and the investors of pension funds all over the industrialised world in the probable movement of different currencies. That is the reality to which the performance of elected Governments has to respond. That is why, long before the IMF came on the scene, the pound plunged. It was caused by a lack of confidence in the economic policies of the Government of which the right hon. Gentleman was a member.

Mr. Benn

The more that the right hon. Gentleman speaks, the more his total disconnection from reality becomes apparent. Let me give him an example. At one stage during the French election campaign two and a half years ago, it was thought that the Left might win. By the magic hand of the market people moved their money from Paris to London—just in case. The pound was riding high. When the French Left lost, the money was moved back to Paris and we had pressure for cuts in public expenditure because the pound was weak again.

The right hon. Gentleman is like "Alice in Wonderland", living in a jungle. The reality is that he is transferring power over the jobs, prospects, living standards and public services of our nation to those who do not for one moment share the interest that every hon. Member ought to share for the welfare of our fellow citizens.

There was a time when the Tory Party claimed to be patriotic—whatever Tories thought that to mean. They are now more interested in the success of international capital in disciplining this country than in jobs, growth, hospitals, schools and old people's homes in this country. There is no future for this country until we elect a Government who make full employment a prime objective of public policy.

There should be an Industry Act—I need not go into the details—to give an elected Government power to invest in our skills and industry to secure sufficient production to meet our needs and to fill the gap left by capital that is exported. There must be 100 per cent. ownership of our oil to finance those developments.

Any OPEC Minister would tell the Secretary of State, if he bothered to listen, that they have the same objective. They want to invest their oil revenues in manufacturing industry so that when their oil runs out they can sustain their living standards. At the present rate of de-industrialisation, we shall find when our oil runs out that we shall be re-entering the world oil market at 80 dollars a barrel without the manufacturing industry to secure it. There will be chronic unem- ployment and emigration of our skilled people within half a decade from now.

We must control imports. I regret having to say that, but I have been driven to the conclusion that such action is necessary in order to give ourselves a breathing space. Hon. Members should not think that we do not have import control now. Let them ask an unemployed worker on Merseyside whether his unemployment is not an import control on him, to prevent his buying a Japanese television set, French shoes or American tobacco. Unemployment is the form of import control in which the Government believe. But the country wants a planned trade balance so that we cannot be destroyed before we have re-equipped.

We must amend section 2 of the European Communities Act. Nothing that I have described or that the Labour Party has adopted as policy can be carried through while section 2 of that Act transfers effective powers to the Commission to operate under the Treaty of Rome.

We must also secure a greater role for the trade union movement. Declaring war on those who represent the workers who create the wealth in industry is an act of supreme folly of which the previous Conservative Cabinet, in which the Secretary of State served, was also guilty.

I regret the right hon. Gentleman's speech, not for what he said—I have read his books and pamphlets and it is all there—but because he proved in a single speech, at a critical moment of our industrial history, that what he believes, thinks and wants to do has nothing to do with the interests of those whom he was elected to represent.

5.45 pm

Mr. Kenneth Baker (St. Marylebone)

It is a pleasure to follow the right hon. Member for Bristol, South-East (Mr. Benn). He has made clear throughout his political career, both as a Minister and a Back Bencher, that he believes that the capitalist system has failed and will continue to fail and that the only hope for this country is more intervention.

The right hon. Gentleman has been in office in high positions for a total of about 10 years, during which time he had responsibility for discharging many of the matters of which he has spoken today. His theories would gain greater acceptance if he could point to some successes in his record.

What would the right hon Gentleman like to be remembered by—the interventions of the Industrial Reorganisation Corporation, his intervention in the co-operatives, or the massive increase in unemployment under the Government of which he was a distinguished member?

Mr. Benn

If the hon. Gentleman cares to invite the Library to do what was done for me and to look at the interventions in which I was involved, he will find that there are 500,000 jobs in existence in firms into which I put public money, involving £5 billion of production and £2 billion of exports annually. Although I would like to have gone further, that in itself is a record of which I am intensely proud.

Mr. Baker

During the period in which the right hon. Gentleman held office, our industrial production fell substantially and unemployment rose significantly.

The right hon. Gentleman said that as a result of the Government's policies the Special Patrol Group and the riot police might be needed to control violence on the streets or at factory gates. For a senior politician to speak in those terms is exceedingly irresponsible and inflammatory. It may encourage certain people to take such action, and we can be sure that if that does happen the right hon. Gentleman will be like Pontius Pilate, washing his hands of it and saying "This has nothing to do with me, but I forecast it all some months ago."

What has struck me most about the debate, apart from the right hon. Gentleman's intervention, has been the stark contrast between the atmosphere in the House today and yesterday's atmosphere in the Chamber. Yesterday there was passion and anger over the Education (No. 2) Bill. Today speakers have been heard in almost complete silence. I detect from the Labour Benches, and especially from the right hon. Member for Deptford (Mr. Silkin), a sense of frustration that my right hon. Friend the Secretary of State has not lived up to the ogreish and sinister reputation that he is supposed to have.

Instead of abolishing the NEB in the Bill, my right hon. Friend has trimmed its powers. Instead of abolishing regional aid, my right hon. Friend has trimmed it. Clearly, such pragmatism sticks in the craw of the Labour dogmatists.

I welcome the trimming of the areas that benefit from regional aid. In the past 15 or 20 years, we have seen on the map of England, Scotland and Wales a slow growth of the areas that benefit from regional aid. The impact of regional aid in stimulating development in some of those areas has been blunted. It is a sensible policy to concentrate aid in those areas where the need is greatest. After all, if all areas get regional aid, no area gets regional aid.

I accept that there are pockets, including Tyneside and Merseyside in particular, with deep intractable industrial problems that need assistance from the State. I shall argue for that in a moment.

Recent policies on regional aid have discriminated against parts of the South-East, particularly London. I remind hon. Members representing constituencies far from London that there are many depressed parts of the capital. In East and South-East London, unemployment is as high as in parts of Tyneside, Merseyside and Clydeside.

In the 1960s, successive Governments used regional policies to drive jobs and businesses away from London. Indeed, one perceives a decline in London's economic activity. As I represent a London constituency, that concerns me greatly. One of the inhibiting factors of that was the policy whereby firms applied for IDCs and office development permits. I welcome the action taken by the Government to abolish office development permits and to raise the level to £50,000 for industrial development certificates.

Mr. Dafydd Wigley (Caernarvon)

In accepting the severe problems experienced by many London areas, especially the problems of urban renewal, does the hon. Gentleman accent that the unemployment problem in London may be located in certain areas? It is implied only that there is a greater distance to be travelled—perhaps 10 or 20 miles—to a job. Unemployment at equal and higher levels, not only in Wales but in North-East England and Scotland, may mean travelling 50 or 100 miles to look for a job, uprooting a family and moving away from the area.

Mr. Baker

I accept what the hon. Gentleman said about problems in Scotland. However, he underestimates the London problem if he thinks that it is a question of commuting, as it were, from the suburbs into the East End. The regeneration of the East End of London is an infinitely more complicated and profound problem, arising from the decline of the upper dock area.

Mr. John Evans

Does the hon. Gentleman appreciate that the decline of London's docklands has to do with technological change and absolutely nothing to do with any Government's regional policy?

Mr. Baker

The root cause was the containerisation revolution. The restrictions that existed as a result of our planning laws upon many parts of the East End of London—this is generally recognised between the two parties now—was one of the factors that prevented large parts of the East End of London from responding to that change in a creative way. It is depressing to go from this Chamber only three or four miles to the east to see the industrial desert which the right hon. Member for Bristol, South-East described.

I come now to the role of the National Enterprise Board. I welcome the fact that the Government have not abolished the NEB. For some years I have advised several computer and high technology companies, in one of which the NEB recently acquired a stake. I have seen how this industry developed. There is a role for the NEB in providing capital for some of these industries which, to my certain knowledge, have had difficulty in finding capital, for historic reasons.

Mr. Budgen

rose—

Mr. Baker

I shall give way to my hon. Friend later. I am aware that an interesting debate is taking place on the Government Benches. However, allow me to develop my argument before I give way to my hon.—and old—Friend.

I detect three roles for the NEB, but they are roles to which the Government have agreed.

Mr. Budgen

Surely my hon. Friend agrees that there is always capital available, at a price. If the market takes the view that the companies with which he is associated are high-risk concerns, unhappily they must pay higher interest rates for money. That is all there is to it.

Mr. Baker

I should be only too pleased to invite my hon. Friend to a course on the problems of higher technology. The capital flow into that industry—this is accepted by hon. Members on both sides of the House—was exceedingly sluggish. Therefore, I detect three roles for the NEB. The first is to act basically as a catalyst.

Here we part company totally with the Opposition. They do not want the NEB to be a catalyst—something which promotes change but which remains unchanged in itself. They want a much more interventionist role. This is where I do not agree with them. I do not want the NEB to become a huge holding company, for two reasons. First, there is little record of any huge holding company in any other Western industrialised country that has been a success. Our short record in this matter does not point to its being a success. However, it would be successful in acting in a catalytic role in bringing about change.

Mr. Dennis Skinner (Bolsover)

Yes.

Mr. Baker

I am glad that the hon. Gentleman understands this matter. I do not underestimate the hon. Gentleman's intelligence.

I come now to general industrial assistance. This is no area for the naive and unworldly. Every Government in the world in one way or another assists industry, covertly or overtly. The classic case is that of the American economy. The United States computer industry could not have been built up without the assistance of the Government and substantial public procurement. We live in a world where many other Governments give assistance to some of their industries. Therefore, I welcome the Government's approach—Which is not to say that there should be no assistance to industry. If they were not assisting industry, they would be playing the game according to rules which do not exist internationally. However, I am against the continuous and fretful interference—which is favoured by the Opposition and personified by the right hon. Member for Bristol, SouthEast—in British industry and many companies where there is no justification for intervention. Such assistance as is given should be selective and pragmatic. That is the policy of the Government.

It is fashionable to say that British industry is in a state of irreversible and total decline and that we are washed up as an industrial country. I profoundly disagree with that. That is defeatist talk. I know of some good companies in a variety of industries that are doing well. I strongly resist the belief and suggestion that we are finished. It is depressing that when we debate industrial matters we usually talk about the declining industries or those that are contracting. Tomorrow it will be the turn of the steel industry. I know that hon. Members feel strongly about this matter. Indeed, for some constituencies it is an important matter. In the past 15 years we have had many debates on the steel, car and shipbuilding industries. We inherited those industries from Victorian and Edwardian days and they are now in a state of cyclical decline. I wish that the House would debate the industries of the future which will create the jobs in the next 10 or 20 years.

As Members of Parliament we should be more preoccupied with examining the forces that promote growth rather than presiding over the post mortem examinations of decline. I wish that the House would be a little more preoccupied with the problems of the future rather than those of the past.

5.58 pm

Mr. Lawrence Cunliffe (Leigh)

Like all new Members of Parliament, may I start, as my first duty, by placing on record my appreciation and gratitude for the help, advice and kindness which is usually shown to us by established Members of Parliament.

I should like to mention my predecessor, Harold Boardman, who served this House for 34 years. He had a reputation as a quiet, efficient and methodical constituency Member of Parliament, who did not hit the sensational press headlines. Nevertheless, he was highly respected for doing a thorough job as a constituency Member of Parliament, first and foremost. I recognise that fact, and I am sure that some long-standing right hon. and hon. Members recognise it also.

I am only the third Labour Member of Parliament to be elected in the last 54 years of unbroken Labour rule—if I may call it that—to represent this mining constituency and cotton producing area. Like the legendary Joe Tinker—who was the predecessor of Harold Boardman—I also hope to stay here for a long time and to give the same stalwart service as they gave to this House and to the nation.

Leigh is an industrial town. It owes its prosperity to many different kinds of industry, mainly textile manufacture, coal mining, electrical cable manufacture, plastics and the production of many electrical accessories.

Recently the Prime Minister visited the constituency to see for herself the first new spinning mill to be built in Lancashire for 50 years. Unlike many towns in the industrial North-West of England, Leigh is extremely adaptable and has diversified rapidly. Like its people, who are endearing, brave and resilient, Leigh has met the challenge of change with courage and tenacity over 100 years.

I have commented previously on the entrepreneurs for whom we are looking on the horizon of our industrial framework. Unless there is some positive encouragement, we may not find the people, as we have done previously in this historic part of Lancashire, to produce British goods of top quality for export.

A feeling of pessimism has taken over since the Secretary of State announced the measure to change the area status grant. I make no apology for restating again and again the points I made as a member of the delegation of North-West Members of Parliament when we met recently to talk about the devastating effects that the change in the area status grant will have in this part of the country. Measures of this kind, as we have said before and reiterate now, will force firms to reconsider their future investment plans, and in all probability they will be reluctant to embark on expansion programmes because of the cut. The cut will have a serious effect on industry in my area. The 12 textile mills within my constituency are operating with exceptionally tight profit margins. The difference in the amount of the grant means that there is a high risk that the mills will become uncompetitive and unable to meet the challenge of foreign competition, which has always been on the horizon. It is already affecting the viability and effectiveness of the firms to compete in world markets, and will certainly do so in the future.

In some cases it is now being said that many firms will be forced to cut back on jobs and eventually close. I have given only a few illustrations of firms which have already made open announcements on what they feel will happen to their future investment programmes.

The arguments put to the Secretary of State were well-researched and rational. They were not from supporters of my party. They were from men of long experience in industry, many of them consultants, giving their appreciation of what they felt was bound to happen in the long term to the kinds of industries they represented. They said that Leigh will become a dying town. Some firms have threatened to leave the area immediately.

One example is that of a very famous international firm with a great reputation in the export market. It has been responsible for medical centres in Nigeria, time-cabins for the winter Olympic Games in Switzerland, and various other prestige export orders. I put this case to the Secretary of State for his comments. It was pointed out to him that here was a firm which had doubled its work force and trebled its capital expenditure. It had been developing a £l½ million project, exactly like the £6 million textile mill created by the Carrington Viyella group. The capital turnover of this firm had expanded by three times in a period of four years, and its labour force was rapidly increasing.

Now that Leigh has become a degraded area, that firm can move seven-eighths of a mile up the road to an area with full development status, because Wigan has been promoted. I acclaim the increase in status given to Wigan. The ironic part about it is that my constituency is an integral part of the Wigan metropolitan authority, and an arbitrary line has been drawn through the middle of it. This is completely discriminatory in its effect. I mentioned to the Secretary of State the high unemployment in the Wigan sector as against my own constituency. My hon. Friend the Member for Newton (Mr. Evans) also has an interest in this matter. We pointed out that obviously the decision was a suicidal one. We said that there would be a mass exodus of these small firms which were developing large expansion programmes.

The director of the firm that I mentioned states: We have a modern purpose-built factory and have built a trading estate that has created even more jobs for Leigh people. It really would be a temptation to move to a special development. There are four of our competitors in Wigan who are going to benefit. What is to happen to firms of this character? Who is to come to their assistance in this area? I make no apologies, Mr. Deputy Speaker, for quoting my own constituency problems. The Leigh area, along with the rest of the North-West, will become the industrial backwater of Great Britain if we are not very careful.

I put it to the Secretary of State again this evening that we are likely to lose firms which have shown great initiative, enterprise and entrepreneurial ability. What is to happen to them when they have exhausted their self-help? It cannot be denied that many of their foreign competitors are directly subsidised by their own Governments, not only in money but also in materials. Sonic of our great fastener industries have evidence that a foreign competitor received a 100 per cent. grant towards the cost of materials alone.

This is a standing disgrace, when we are trying to fight by the Queensberry rules and the Government talk about keeping our chins high. I can assure the House that there is nothing more depressing and distressing than this and that nothing acts as a greater deterrent to many of our people, both employers and employees. With the best will in the world, and with all their drive and stimulus, they cannot compete with market forces of this kind. The position is quite ridiculous, and it can be put right only by means of intervention. There are greater problems in the North-West with many questions left unanswered.

I respect the Secretary of State for listening attentively to the views of Members. However, there are issues on which we part company for obvious reasons. The right hon. Gentleman said that if an area was downgraded it was a sign of hope. I understand that "hope springs eternal". With his usual vision, he explained that the areas would restimulate themselves. As someone who has worked in semi-darkness all his life as a mining engineer, I must tell him that sight is a special blessing. However, there are times and places when it is far more blessed not to see. The Government's industrial strategy is an example of the blind leading the blind.

I turn to the question of derelict land grants. For forward planning and investment reasons, it is imperative that we have a clear and understandable answer to the question whether the grants will be retained. We must try to do away with the ugly urban sprawl that blights the Greater Manchester area.

6.12 pm

Mr. James Hill (Southampton, Test)

It is a privilege to follow the hon. Member for Leigh (Mr. Cunliffe). It was a speech of some power, full of compassion for his constituents. With his practical experience in mining, he will prove a valuable asset to his party. No doubt in future we shall hear many such speeches from him, which will add to the wealth of knowledge of the House. I congratulate him.

Unfortunately, I cannot congratulate the right hon. Member for Bristol, South-East (Mr. Benn), who has left the Chamber. The National Enterprise Board was the right hon. Gentleman's brainchild. He said at Brighton in 1971: We want industry to be in the public sector to change the power structure of our society". His speech showed that he has not changed his views. The principal aim of the right hon. Gentleman's NEB was to promote social and political policies. Secondary aims were economic viability and profitability. That is where his structures fell in the past.

The NEB's record of intervention has been not quite as disastrous as has been suggested by some of my extreme hon. Friends. However, it has not led to the regeneration of British industry, which was the misnamed title of the White Paper that first foreshadowed the NEB.

I am at a loss to understand the statement of the Opposition spokesman, the right hon. Member for Deptford (Mr. Silkin), that the NEB is coming into a profitability figure of between 11 and 15 per cent. and that any criticism of the NEB destroys the morale of the staff. We all know that the moneys loaned by the NEB—for example, to British Leyland and Rolls-Royce—are not included in its portfolio. It produces its profit figures before interest and taxation. The NEB figures for last year showed an 8.6 per cent. return on the capital involved, but that does not compare with the way that private enterprise has to operate.

Already this year five of the companies sponsored by the NEB have gone into bankruptcy. The latest is the Hartlepool-based Technical Resources (Equipment) that went into receivership on 24 October. It received backing in September 1978 from not only the NEB but the British Steel Corporation. The NEB invested £100,000 in loans.

There were other companies. In November 1978, Power Dynamics collapsed, having received £180,000 from the NEB. As was mentioned earlier in the debate, British Tanners cost the NEB about £5 million. Those amounts may seem insignificant, but if merchant banks had been involved there would have been several changes of chairman and directors.

The Secretary of State for Industry explained that he is not closing down the NEB but merely reducing its ability to finance without reference to the Department. He is leaving £3,000 million with the NEB. That may be criticised by hon. Members on both sides of the House as either too much or too little. That £3,000 million is there to deal with the eventualities of the next 12 months and the commitments that may have to be made. It is not by any means an over-large sum.

The Scottish Development Agency will receive £500 million, and £250 million will go to the Welsh Development Agency. That is in keeping with my right hon. Friend's thoughts on how the NEB should slowly but surely devolve itself of its responsibilities

There has been criticism this afternoon of the abolition of exchange controls and forecasts of how that will affect capital. It has been suggested that there will be no private investors willing to invest or take up where the NEB finishes. We have been told that capital may flow out of Britain to be used for sweated labour to produce goods that will be returned to us, so creating another balance of payments problem. That is scaremongering almost to the nth degree.

As was so adequately explained by the Secretary of State, the money market is not there to represent the views of any particular Government body. It will move freely within its market. I am sure that my right hon. Friend has it in mind never to interfere through any financing process with the money markets.

One of the commitments in the Conservative manifesto was that we should dispose of certain assets. The Bill will make it possible to dispose of assets that I believe are nominal. We are speaking of between £100 million and £150 million.

One of the main objectives of my right hon. Friend is to support microchip high technology of the future. As has been said so often, there has been little enough private investment in that area of technology. I speak on behalf of Mullard, a company that has a magnificent factory in my area. It has been in micro-chip processing high technology for over 10 years. It has catalysed the input of capital into high technology. It has gone far beyond anything that the NEB or any other Government body has done. It is possible to get private enterprise involved. We must beware of the NEB supporting companies such as Inmos, which may be having a retrograde effect on those who have already invested in the micro-chip revolution.

I hope that a careful eye is kept on companies outside the United Kingdom that the NEB is financing. I say that for obvious reasons. I am concerned that we remain one of the foremost researchers in micro-chip technology. It would be wrong if such companies were to compete against industry and high technology that have been financed by private investment. As for the selling off of land from holding bodies to be used by my right hon. Friend the Secretary of State, there is nothing wrong in that. It is happening throughout the Government's policy structure. If it creates a small factory unit more rapidly and if it creates more job opportunities, the quicker it happens the better.

The Bill is largely confined to the NEB. We may talk of many things, such as regional development grants, but when everything is boiled down the Bill is concerned with the NEB. It stems from a commitment in the Conservative Party manifesto. It is a measure that has to be enacted because the Government's philosophy is so far apart from that of the previous Administration. We must allow private enterprise to have its share of the market. We do not want another superior merchant bank lending money at levels that no one else can match. We do not want to fail by not releasing the NEB and some of its excellent staff to function in more productive areas.

6.23 pm

Mr. Gregor MacKenzie (Rutherglen)

My right hon. Friend the Member for Deptford (Mr. Silkin) indicated that he would seek in the main to discuss the NEB. He said that he hoped that one or two of his hon. Friends from Scottish and Welsh constituencies would choose to refer to the work of the Scottish Development Agency or the Welsh Development Agency, and I intend to do that.

Before I direct my remarks to the work of the Scottish Development Agency, may I say, on behalf of all my colleagues, how honoured we were to hear the speech of my hon. Friend the Member for Leigh (Mr. Cunliffe). It was a good speech. It was a wise speech. I agree with a great deal of what my hon. Friend said. He talked about regional policy, a topic with which I propose to deal.

I was pleased to hear the tribute that my hon. Friend paid to his predecessor, Mr. Harold Boardman, a man well respected in the House. As my hon. Friend said, Harold Boardman did not choose to shout his philosophy from the rooftop of the House. He was not the noisiest of hon. Members. I always think of him as one of the wisest of my colleagues, and one to whom I could go for advice and guidance, which he freely and willingly gave. When my hon. Friend next sees him, I hope that he will pass on our sincere good wishes. I hope that we shall hear from my hon. Friend frequently in future.

The debate is taking place against a background of massive industrial problems in Scotland. There are massive unemployment problems. Not a week passes without our hearing of a firm closing down. There was a time when we were worried when we heard of a closure involving 20 employees or 100 employees. The closures that are now taking place result in thousands of employees losing their jobs. We have seen that happen at Singer, Massey-Ferguson and Monsanto, firms that have been established in Scotland for many years.

The closures are causing us immense worry. Naturally we are worried about the closures of private enterprise companies in Scotland, but also we want an assurance from the Government about the future of the shipbuilding and steelmaking industries in Scotland. When we were in Government we faced many of the problems that now face the present Government. We had the problems of closures. I think that my right hon. Friend the Member for Glasgow. Craigton (Mr. Millan) dealt with the closures sympathetically by a flexible use of selective financial assistance.

In the area that I represent, and in the area represented by my hon. Friend the Member for Central Ayrshire (Mr. Lambie), there have been steel closures. Before we had closures of the sort that are now taking place, we laid plans in co-operation with the British Steel Corporation and the Scottish Development Agency. As my right hon. Friend the Member for Bristol. South-East (Mr. Benn) said, many of us are worried about the announcements that the Government are making. If we are to have announcements concerning the shipbuilding and steel industries in Scotland that compare with the announcement made recently about Corby, I fear that we are in for a great deal of industrial difficulty.

I read in yesterday's edition of The Guardian that the Secretary of State for Scotland is greatly concerned about the future of industry in Scotland. I was delighted to read that. I was pleased to read that he was especially concerned about the future of Clydeside. I say to the Under-Secretary of State for Scotland that it is no use reverting to that which cook place in 1970. The then Government decided that they would rely entirely on a few tax concessions. They said that from those concessions investment would grow. They talked about individual freedom for firms. Against that background there were pious hopes that we would create many more jobs. That policy did not work in 1970. We all know that there had to be a change in 1972. We hope that there will be a change in the Government's attitude in the near future.

If the Secretary of State for Scotland is to succeed in his task of regenerating Scottish industry, he will need not fewer but additional aids. I have been worried, as I know my right hon. and hon. Friends have been, about the fact that in the past few months a number of measures have been introduced that have adversely affected Scottish industry. We have seen an increased rate of VAT. That did not help. We have had cuts in local authority expenditure. Those cuts will not help since it is tremendously important in Scotland to improve the environment in which we live so that we may attract industry to the more difficult areas.

We have had cuts in regional aid. I read in the press that the cuts were not as bad as they might have been. I read that the Secretary of State for Scotland did an enormously good job in preventing more severe cuts. If the Secretary of State for Industry had had his way, we would have no aid at all.

We now have the Bill. I believe that it will make it more difficult for the Scottish Development Agency to fulfil one of its main functions, that of industrial development. It will create for the Agency a great deal of uncertainty.

When I was Minister of State, the present Under-Secretary used to twit me about the Scottish Development Agency. He said that I believed that it was some kind of magic wand that would solve all Scotland's problems. I have never believed that. I have always believed that it is the role of the Secretary of State to lead in the task of regenerating Scottish industry. I also believe that this is a role for the Scottish Economic Planning Department—one of the best Departments in Government. But I believe that, if it is given the freedom and allowed to get on with the job, the SDA can make a tremendous contribution to the economy of Scotland.

My right hon. and noble Friend Lord Ross and my right hon. Friend the Member for Craigton set up the SDA in order to give us an executive arm to improve the environment in which we live, to build our factories and above all to create more jobs by bringing more investment into Scotland. There was simply not enough local investment; and there still is not enough. This is something that the SDA has done very effectively in the few years that it has been in being.

We have all tried one way or another to create more jobs in Scotland. I have been to America, as have my right hon. Friend the Member for Craigton and the Under-Secretary. I am delighted when I read in the newspapers about American companies either setting up or expanding in Scotland. However, we really must try to help ourselves. It is our own business to create jobs in Scotland. That is why my right hon. Friend the Member for Craigton, when he piloted the Scottish Development Agency Bill through the House of Commons, stressed that it was one of the main functions of the Agency to help Scotland to get on its feet, without depending constantly on inward investment, welcome though that is.

During the Estimates debate I listened very carefully to the speech of the Secretary of State, who said that the Agency was absolutely crucial to Scotland's recovery."—[Official Report, Scottish Grand Committee, 17 July, 1979; c.15] He used the words "absolutely crucial", yet now he is creating a great deal of uncertainty in the minds of many people in Scotland. Although the Secretary of State describes the SDA's work as absolutely crucial, I am not sure that he absolutely believes in it. I am quite sure that the Tory Party in Scotland does not absolutely believe in it. If that party had its way, we would not be considering this Bill today. We would be considering a Bill to abolish the Scottish Development Agency. Scottish Tories have never liked that organisation and during its existence they have constantly carped and criticised the Agency in the silliest way.

The Under-Secretary of State for Scotland (Mr. Alexander Fletcher)

I assure the right hon. Member that my right hon. Friend and I hold the SDA in the same high esteem as he does.

Mr. MacKenzie

I am glad to hear that. However, the hon. Member knows as well as I do that there are many Conservative Members who constantly criticise, in the stupidest possible way, anything that is done by the SDA. Even when the chairman had a sink put in his office, parliamentary questions were asked about it. They have carped and carped all the time, and that has done nothing for the morale of the Agency.

Mr. Harry Ewing (Stirling, Falkirk and Grangemouth)

Will my right hon. Friend accept my congratulations on educating the Under-Secretary? He spent a long time in the last Parliament voting line by line against the SDA, but now he says that he holds it in high esteem. I can only assume that this is a result of my right hon. Friend's efforts to educate him.

Mr. MacKenzie

I listened to the hon. Member during the course of the proceedings on the previous Industry Bill, and I got the firm impression that he was not at all interested in the SDA. Perhaps his ministerial experience has changed that.

Mr. Alexander Fletcher

I assure the right hon. Gentleman that our criticism of the Labour Government's Industry Bill was that it did nothing to help the SDA. The Bill that we are are debating today will enable the Agency to operate much more effectively.

Mr. MacKenzie

That is not the view of any of us who have tried carefully to read this Bill. The ridiculous criticism of the organisation and investment plans of the SDA had an exceptionally bad effect on its morale. I had only one criticism of the Agency, and that was that, because of the criticism to which it was subjected, particularly from the Under-Secretary and his former hon. Friend the then Member for Glasgow, Cathcart, Mr. Edward Taylor, it became far too cautious in its approach to industrial development and in its work for service industries.

There have been difficulties and investment failures, but this week we have all received the annual report of the SDA. It is an encouraging document. It allows hon. Members to look at the positive side of the Agency's work. If it had not been for the Agency's investments—some 36 all told—we could have lost more than 10,000 jobs in Scotland—jobs that we can ill afford to lose.

I have two questions for the Government. What role do the Government envisage for the SDA in electronics? There has been a great deal of talk about this recently, and special studies have been made. Do the Government now intend to give the Agency special powers in this matter?

On the issue of small firms, the SDA is entitled to be congratulated by every hon. Member. As a result of the work it does for small firms, some 4,000 such firms in Scotland have benefited in some way, either through direct financial support or through the counselling services of the Agency. On Second Reading of the Industry Bill on 23 January, the present Under-Secretary said this: 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."—[Official Report, 23 January, 1979; Vol. 961, c. 249.] I want an assurance from the Minister that the Agency will continue to work for small firms.

My last word to the Government is that I recall the criticisms that were made some years ago of the Highlands and Islands Development Board. Those criticisms were made in very much the same spirit as the criticisms we hear of the Scottish Development Agency. But now the Highlands and Islands Development Board is a highly respected organisation. The same applies to the SDA. It is a young organisation and it has had its teething troubles. But no one can deny that at present everyone has difficulties. I repeat what the Secretary of State said in the Estimates debate— Far too much was expected of the Agency far too quickly."—[Official Report, Scottish Grand Committee, 17 July 1979; c. 16.] Those are the words of the Secretary of State, not mine.

I believe that a young organisation such as this can be a great power for good in Scotland. I hope that the Government will give it a chance to get on with the job and prove itself before we are asked to pass a Bill such as this.

6.40 pm

Mr. John Bruce-Gardyne (Knutsford)

I have always had the greatest respect for the right hon. Member for Rutherglen (Mr. MacKenzie), though I do not always agree with his views. When he recounted the grim condition, as he described it, of industry in West Scotland, I could not help but be reminded that we have had regional development policies of one sort or another for 20 years now, and they do not seem to have done us much good. I do not find that particularly surprising. The right hon. Member for Rutherglen said that the attitude of my hon. Friends towards the SDA had made it cautious. From what I have read in some of the press accounts of the SDA's latest report, not all its investment could enjoy that epithet over the last year or so.

Turning to one or two other aspects of the measure before us, I confess that my attitude towards Industry Bills is rather like George I's legendary attitude to "Boets and Bainters"—I hate them. A number of my right hon. Friends, including the present Chief Secretary, some of my hon. Friends and myself kept the House sitting until 10.30 on a Friday night during the debate on the Industry Bill in 1972, for, I believe the first time since the Agadir crisis of 1913. If I had been present when the Industry Bill of 1975 was presented, I should have joined with my right hon. and hon. Friends in voting against it with great enthusiasm.

I accept that the present Bill is the best of the bunch, though I confess that do not think it is entirely without flaws. I cannot pretend to be a great devotee of the NEB. It has sometimes seemed to adopt a posture reminiscent of Mr. Lytton Strachey's explanation of his intentions when he appeared before the conscientious objectors' board during the First World War. He said that he would endeavour to interpose himself between British maidenhood and lusting German soldiers. Sometimes the apparent role of the NEB is to interpose itself between the Department of Industry and its clients. Whether that is a profitable and worthwhile purpose is open to question. But if one has a dog, there is not much point in barking oneself. If we determine to retain the services of this body, for better or worse, I see some strength in the arguments advanced by the right hon. Member for Deptford (Mr. Silkin) about the additional powers to control the Board which my right hon. Friend will acquire in the Bill.

I am concerned about the discretionary powers of civil servants. Indeed, it is precisely for that reason that I remain deeply doubtful, to put it mildly, about the wisdom of supporting the Bill in the Lobby tonight.

I referred just now to the Industry Act 1972, which is, in a sense, the principal Act to which the Bill provides a number of amendments.

Mr. John Silkin

A good Act.

Mr. Bruce-Gardyne

The right hon. Gentleman says that it was a good Act. As he knows, I never took that view, and I have not changed my view.

There is one section in that Act which caused many of us grave concern, and that is section 8. It was drawn so widely that it allowed Ministers and civil servants almost unlimited discretion to act in what was described as the national interest. So great was the concern in 1972 that my predecessor in my present constituency, John Davies, and Christopher Chataway were finally induced, late at night, to insert into the then clause 8 a provision which required the Government to come before Parliament to seek approval in any case where a grant of more than £5 million of taxpayers' money was made to one project under the terms of that clause. My understanding—and this causes me great concern—is that the Department of Industry is in breach of this legislation, and I shall explain why.

In September my right hon. Friend announced the provision of a grant, amounting to almost £35 million, to an American concern called Dow Corning to enable it to extend its silicone plant in South Wales. That will create, so we are told, an additional 125 jobs. That works out at a subsidy of £276,000 of taxpayers' money per job created, which I suspect is a record. I find it hard to believe that we ever managed to go higher than that.

Not only that, but the purpose of this provision was to enable Dow Corning to set up or expand in South Wales a factory which would ultimately produce almost half the world demand for silicon, a product which I understand is at present in substantial surplus. Dow Corning expects that that demand will grow. Let us hope that the company is right, because of all the major companies in this business the smallest, and therefore the most vulnerable, is not very far away—it is ICI. I wait to hear from my right hon. and hon. Friends that under section 8 of the Industry Act 1972 ICI is coming back for a countervailing subsidy.

What is more weird is that the grant to Dow Corning was originally a regional development grant, for which provision is made in clause 13 of the Bill. But, because those grants have just been reduced, the Government invoked a selective investment scheme which had already been terminated in order to top up the sums required to persuade Dow Corning to embark upon this remarkable investment. Therefore, first the Department cut the level of the grant and then it compensated for that by invoking a scheme which had already terminated.

In itself, that seems to me to be weird. But I assumed that under section 8 of the Industry Act 1972 Parliament would, in due course, have an opportunity to discuss these matters and hear from my right hon. and hon. Friends of the circumstances that led them to make what seems to me to be a remarkable offer to this giant American company.

One can imagine, therefore, that I was more than a little surprised to learn, when I questioned my right hon. and hon. Friends on this matter, that they had no such intention and that my right hon. Friend had placed a statement in the Library of what he had done, which was to be the end of it. My hon. Friend the Member for Basingstoke (Mr. Mitchell), who is Under-Secretary of State for Industry, wrote to me telling me that a debate would be a matter for the Table Office and the Government's business managers.

I do not believe that my right hon. Friend the Chief Secretary and many of my hon. Friends stayed up on that Friday night seven years ago, and argued with great conviction and determination to secure the concessions which the then Government gave, only to discover that such a massive grant would escape totally all forms of parliamentary scrutiny and ministerial explanation.

My right hon. and hon. Friends point to the fact that a proviso was included at the time to the effect that, if the House was in recess and there was an urgency about any matter, the Government could proceed. However, I must remind my right hon. and hon. Friends that the then Minister responsible, Christopher Chat-away, said that under Clause 8 the Government shall have to come to the House to secure an Affirmative Resolution in the case of any project which exceeds £5 million."—[Official Report, 31 July 1972; Vol. 842, c. 257.] It was not "may" but "shall". This provision, I believe, has been ignored and flouted today.

It may be that there are good and sufficient reasons for the action that the Government took in the summer. I can well believe that this was one of the skeletons that right hon. Members opposite left in the cupboard when they departed, and that my right hon. and hon. Friends found themselves almost committed to this bizarre investment. But at least the House should hear about this and have this explanation. Then, if my right hon. and hon. Friends can satisfy us, good and well. We may not like it, but we may accept it. But I do not accept that it is sufficient that we in this House who went to the lengths that we did to impose in the 1972 legislation that objection for parliamentary scrutiny should today find that it is being so roughly ignored.

My right hon. Friend tells me that there are precedents. Apparently this happened in the previous Parliament in the case of Mobil Oil and in the case of Roche Chemicals. All that I can say is that had I been present I should have taken the same attitude then as I take today. Parliament made these stipulations. It is not good enough for Parliament's decision and will in this matter to be circumvented in this way.

For those reasons, I find it impossible to give my support in the Lobby tonight to a Bill which makes no provision—as I believe we should make—to ensure that this sort of evasion of the obligation of parliamentary accountability is ignored in the future.

The Minister of State, Department of Industry (Mr. Adam Butler)

I thought that it might be appropriate for me to deal with this point now. That is why I have waited until my hon. Friend has come nearly to the end of his remarks to answer the particular point that he made and the serious charge, which was that the Government had been acting ultra vires in this matter. It is something that I wish to deny absolutely and only to confirm what my hon. Friend himself then supplied in the way of evidence—that, of course, as part of the Industry Act 1972, in clause 8(8), there is that proviso to which he drew the attention of the House.

Therefore, whatever the merits of the case in question—Dow Corning—and whatever the merits of my hon. Friend's argument in regard to parliamentary scrutiny, I remind him that, however long ago it was—say, seven years ago—I was very fully in support of him at the time to reduce the figure below the £10 million that was in the then Bill. It was because of pressures which I added to those which he and other colleagues were applying at the time that we reduced that figure. I should like to take a little credit for that. As far as I am aware—he must correct me if I am wrong—my hon. Friend supported that proviso in subsection (8), which is part of the Industry Act 1972.

Mr. Cyril Smith (Rochdale)

Speech.

Mr. Butler

I am answering the point raised by my hon. Friend, which is a serious one because it is a charge that the Government are acting ultra vires. Therefore, all I would say to my hon. Friend is that as the Industry Act 1972 and that section and subsection are still applying, there can be no question of acting ultra vires in this matter.

Mr. Bruce-Gardyne

All I must say to my hon. Friend, having listened very carefully to what he said, is that I was hoping that he would give me the assurance that, in view of the absolutely specific and categorical undertakings of the then Minister who held his office in 1972, the Government would be making arrangements to bring this proposition before the House and to explain what they have done and to explain the justifications for it. That they did not do. In those circumstances, I am bound to say that my opinion is unchanged. It is that we are in this instance acting at least in a condition of avoidance of the responsibilities of parliamentary control and, I would be inclined to say, in evasion of them.

6.55 pm

Mr. John Evans (Newton)

The hon. Member for Knutsford (Mr. Bruce-Gardyne) has obviously struck a very powerful blow in that he has drawn the Minister of State to his feet to give him some private winding-up comments on his own speech.

Although I totally disagree with the hon. Member for Knutsford on most issues to which he addresses himself, particularly economic issues, I fully support the stand that he has taken tonight. I agree that it is absolutely essential that this House has the power of scrutiny over the Executive and over the other various bodies which successive Governments set up from time to time. Indeed, it is a criticism which crosses party lines that Governments and Whitehall have a tendency to set up various extra-parliamentary bodies and then, when we seek to pursue their activities, we are told that the Minister has no responsibility and that it is a matter for the board, whatever the board may be.

It was a pleasure to listen to my hon. Friend the Member for Leigh (Mr. Cunliffe), who made such a powerful maiden speech. I am a neighbour of his and I know the tremendous work that he has already done in the constituency since he was elected to this place. He will prove to be a tremendous Member of Parliament for that constituency, like his two distinguished predecessors who represented it for over 50 years.

This is the second appalling Bill that the House has had to debate this week. Like the Education (No. 2) Bill that we debated yesterday, this one is ideologically motivated. Again like the Education (No. 2) Bill, which will do nothing for our education system and will, indeed, damage it, this Bill will wreak havoc with much of what is left of Britain's industry, particularly the industry that is left in the assisted areas.

I should like to mention briefly the NEB's role. I am not a particular supporter of the NEB. I think that over the next four or five years in Opposition the Labour Party will have to think through its policy in relation to the NEB and publicly owned industries. I make no apology for my view that if we are to have industries taken into public ownership, that should be done through a Bill and we should set up properly established publicly owned industries with a considerable degree of worker participation in the management of those industries written into the Bill, and we should not write loose clauses in an Industry Bill which suggest that the NEB should do something about promoting industrial democracy.

I regard the treatment that the NEB and Inmos have dished out to the North-West as appalling. I also charge them with misleading us at the time of the suggestion that we would be entering the microprocessor industry when they stated that there would be four plants, all situated in assisted areas, each employing 1,000 people. Now we are told that two sites will be chosen, each with two plants employing 1,000 people each or one plant employing 2,000 people. There is some doubt as to precisely how that will work out. We still await the announcement.

I also believe that the two plants will be situated in the South-West of England and in South Wales. The reason for that is that it will be argued then that they are in close proximity to the headquarters in Bristol—which, frankly, should never have been placed there in the first instance. As I and some of my hon. Friends, and some Conservative Members, argued during the decision-making process on the Inmos microprocessor production units, the research and development centre particularly should have been placed in an assisted area. I believe that we were right in that argument.

I have no quarrel with South Wales receiving fair treatment in this respect, but I do not believe that the decision to place these units in the South-West will have anything to do with assisted areas. The argument will be that it makes economic sense because they will be located close to the Inmos headquarters

I concentrate on clauses 13 and 14, which give effect to the Secretary of State's announcement on 17 July that he intends to slash the amount of regional industrial aid available to assisted areas. That announcement came as no surprise to those of us who have long been concerned with regional industrial strategy. We have recognised for a long time that few London-based Tories comprehend the value of regional industrial assistance, let alone its sheer necessity and economic good sense.

If this so-called review of regional aids was aimed at improving the quality of regional policy, I should be the last person to dissent from the necessity of it. I was critical on many occasions of my own Government's regional policy. I could never fathom why oil companies received such enormous grants to prospect for oil which they knew was in the North Sea. I cannot imagine any oil company in the world spending money if it thought that there was no oil to find.

It is significant, despite past criticism, that the Secretary of State makes no policy change in that area. The oil companies will still receive massive handouts from the taxpayer to look for oil in the North Sea and around our shores. For any regional policy to make sense, we should not tolerate that situation.

A more important feature of regional policy is that it should be based on the creation of jobs. Far too much Government aid has been given to capital-intensive firms which employ only few people. Certain aspects of regional policy must be carefully thought out by the Labour Party before it next takes office.

Mr. John Patten (Oxford)

Did not investment in capital-intensive industry characterise the Labour Government's industrial aid development policies over the last two decades?

Mr. Evans

It characterised the policies of successive Governments over the past two decades. We have not had a Labour Government continuously over the past 20 years. I was critical of my own Ministers on that aspect and I shall continue to criticise until we have a reasonable regional policy. We will not have a review of regional policy. What is proposed demonstrates a cynical determination by the Government to transfer resources and wealth from the poor to the rich, from the impoverished regions to the more prosperous areas. We have two nations—the impoverished North of Britain and the wealthy South of England. This is a frightening feature of the Government's policies. The evidence is there to be seen.

It is appalling that the Secretary of State treats us with such contempt in suggesting that his exercise will lead to a more efficient and more cost-effective regional strategy. Out of this vicious exercise has come the transfer of £230 million from the "have nots", through regional assistance, to the pockets of the wealthy by way of income tax cuts. If anyone disputes that, let him ask himself a simple question. How much more financial assistance has been given to areas with the greatest problems, the special development areas? The answer is, not a penny.

How can those special development areas be more successful under this policy than they were under past policies? They have not been given more money or power. The argument used to be that, because many of the assisted areas lost their status, firms would troop into the special development areas. It is not so. In no way will the special development areas be more successful now than they were in the past. I hope that the Minister will deal with that point.

We must come to terms with the question of the necessity for a regional strategy. I do not doubt that the Tory monetarists and the believers in the infallibility of market forces will object strongly to the concept of financial assistance from the taxpayer; but that is what Government financial assistance is about, no matter what may be the problems of an area. That view fails signally to take into account the fact that market forces created the problems in those areas in the first place. That is the dilemma facing those who argue in favour of market forces. They fail to accept that market forces in areas with declining industries created the initial problems.

The main cause of regional poverty and decline is the inevitable rundown of basic industries. It is important to remember that those industries once produced Britain's wealth from steel, textiles, shipbuilding, coal and heavy engineering. They were the wealth producers which gave us so much to be proud of in the past. Invariably their decline is coupled with a poor communications network and poor or marginal agricultural land.

In the majority of those areas extensive industrial dereliction creates an unpleasant environment. Inevitably, because of the lack of employment opportunities and the poor environment, young skilled workers emigrate to more prosperous areas leaving behind the elderly, the unskilled and the unfit.

A particularly depressing effect of the vicious declining spiral that affects those areas is the lack of opportunities for young people. As more textile mills, steelworks, engineering plants, shipyards and other industrial projects continue to decline, fewer apprenticeships are available, resulting in an increase in the pool of unskilled labour. Against this background the fight to create jobs in a depressed area must be seen; against this background must the cuts proposed by this Government be judged.

When one seeks to persuade employers to establish themselves in assisted areas, they see only deprived communities with a shortage of skilled labour and an unpleasant environment. How much easier it is for a potential employer to set up his shop in a pleasant town within easy reach of London. That is what happens on too many occasions. Against that background must the Government's abolition of assisted area status for vast areas of North-West England, Yorkshire and the Northern region be judged.

If these areas had difficulty in attracting industry, with financial assistance from the Government, how will they succeed without it, particularly as the Government have relaxed the necessity for industrial development certificates in the non-assisted areas? The IDC policy increased the prosperity of the region that I have the privilege to represent. The relaxation of that policy with nothing worthwhile replacing it only adds to our problems. I suspect that next year the Government will decide to abolish the IDC policy.

My constituency, which has special geographical problems, is a microcosm of the disastrous situation created in the North-West by the Government's attempt to abolish a worthwhile regional policy in that area. When one examines the Secretary of State's list of downgradings, one is struck that the North-West, which is declining faster than any other region, has been savaged most severely. One is also struck by a curious anomaly in the list for the North-West. Although the list of downgradings from intermediate area to non-assisted area status covers two pages in the Secretary of State's report, it omits the Blackpool travel-to-work area, the Lancaster travel-to-work area and the Southport employment office area. Each of those areas is left with intermediate area status. These are Tory seaside resorts, and I suggest that that has more to do with their being left out than the magnitude of their problems.

The problems of those areas are nothing compared with the problems of Newton-le-Willows, Haydock, Leigh and Golborne, in my constituency. One can only regard the Secretary of State's decision with curiosity. I accept that the intermediate areas have problems, but they pale into insignificance compared with the problems in certain areas in my constituency.

Irlam has a terrible problem. It is a small town which earlier this year faced the closure of its wonderful steelworks. Despite poor communications—Irlam desperately needs a link to the M62—Salford city council and the British Steel Corporation struggled desperately to bring new employment to the town. They have achieved only small success. The removal of assisted area status from Irlam creates a serious problem. Since Irlam has suffered a steelworks closure, it is entitled to assistance from the European Coal and Steel Community and the benefits of cheap loans in order to create employment for redundant steel workers. The town is in danger of losing that facility. I believe that Irlam is entitled to that financial assistance.

Newton-le-Willows is part of the St. Helens metropolitan area and is in Merseyside. However, Newton-le-Willows is included in the Warrington-Cheshire travel-to-work area. Warrington-Cheshire and Newton-le-Willows lose their independent area status whereas St. Helens retains its development area status. Newton-le-Willows was forced into St. Helens during local government reorganisation. I have asked, pleaded, begged and demanded that Newton-le-Willows be transferred to the St. Helens travel-to-work area and employment office area, but I have been told that it cannot be done. That is in direct contradiction with the argument put forward during local government reorganisation. I hope that the Government will reconsider the matter.

About two-fifths of my constituency is in the Warrington borough council area and part of it is in Warrington new town. Warrington new town has been successful in attracting industry. Indeed, it is one of the fastest growing areas in the North-West. It has attracted firms from the United States, Japan and Europe. Both the new towns philosophy and Government regional aids have been successful there. Warrington has tremendous advantages with its first-class communications network. It is of real benefit to the North-West because of its growth potential. When its success is beginning to come through, the Government's assistance is cut off.

Any sensible regional strategy would assist areas of natural growth. We should encourage them through Government assistance. When Warrington was starting to take off, the Government cut off its assistance. The future is bleak.

In 1976 the European Commission calculated that the wealthier regions of the EEC compared with the poor regions improved from a ratio of five to one in 1972 to six to one in 1975 and that the gap was widening. The Commission emphasised that that widening gap was a threat to the stability of the Common Market. I suspect that the ratio is now about seven to one. All member countries accepted that and established the regional fund to help individual countries' regional policies.

Irrespective of the Government in power, each member country accepted the principle that the free play of market forces could not be allowed to devastate large areas of the Community because of the obvious problems. This Government have turned their back on that principle. Every citizen should recognise that this reactionary Tory Government are prepared to sit back and allow large tracts of the United Kingdom to become industrial wastelands. I do not believe that the British public voted for that. I shall fight this evil policy line by line in Standing Committee.

Mr. Deputy Speaker (Mr. Bernard Weatherill)

I must tell the House that Mr. Speaker did not announce the operation of the 10-minute limit on speeches between 7 pm and 8.50 pm. However, if hon. Members voluntarily limit their speeches to 10 minutes, I shall be able to call all those who wish to speak.

7.18 pm

Mr. Kenneth Carlisle (Lincoln)

It is clear that the House disagrees about much but it is widely accepted that no Act of Parliament has real authority unless it conforms closely to the wishes of the majority of British citizens. One of the recurrent themes in my general election campaign was the distrust of nationalisation and nationalised industries felt by my constituents. That was a genuine feeling not only among those who voted for me but among those who voted against me.

That view is held partly because of people's experience of nationalised industries. Customer dissatisfaction always seems greatest with monopolies and nationalised industries. The view is also held partly because of a fear of the power of these industries and a distrust of their size, and partly because people believe that, in general, the Government have no business to run industries. History has shown that Governments run businesses badly.

This Bill has authority because it reflects the wishes of so many people. It is a sensible Bill. It restricts the power of the NEB to extend public ownership. It is right to remove a potential threat from large sections of profitable industry while, at the same time, saving unnecessary Government expenditure.

An uncertain political future has always hampered investment. The Bill does something at least to remove that uncertainty. The public will welcome retention of the NEB as an occasional nursing home for sick businesses and an occasional nursery for new ones.

It is unrealistic to say that Governments should never interfere in the private sector. The new role for the NEB keeps open that option. In the past the NEB's record of investment and help has been less than brilliant. In future it must exercise its function less frequently and with greater skill. It is not just bad luck that five NEB-backed companies have gone into receivership this year with a consequent loss of taxpayers' money.

As soon as the NEB companies become profitable, they should return to the private sector. The NEB must work with and complement the private sector, not compete against it. The NEB, far from being an agent of nationalisation and promoter of Government expenditure, will become an added buttress to the private sector. One of the more wishful aims of the NEB has been to promote industrial democracy in its undertakings. Industrial democracy means that people should feel involved in the business in which they work. Paradoxically, it is always those who work for Government-controlled institutions who feel least involved. The ultimate decision over their lives rests with a bureaucracy that is too remote and they do not feel that their opinions really count. The efforts of the NEB have suffered from that flaw.

Involvement of a work force succeeds best in small units within the private sector. In those small units people can affect their destiny. It is in small businesses that people can most easily share the profits through one of the many schemes available and so learn the economic realities of their business. It is in the private sector that profits are made.

However well-meaning the original intention of the NEB, it can best foster profits and a sense of involvement by curtailing its own activities. In the annual report for 1978, the chairman of the NEB saw it as forming a bridge between nationalised industries and private enterprise. The tenor of the report envisaged a growing one-way traffic across that bridge—from the private sector towards that side controlled by the Government. That bridge is too dangerous to be left untouched. In other circumstances the traffic could become far too heavy for the foundations of the bridge.

Our aim, in tune with the wishes of the electorate, is to reduce that bridge to a footbridge, with a flow of traffic in both directions. Such a modest footbridge could be of real assistance to British industry. In contrast, the NEB bridge, which was built by the Socialists, has the same drawbacks as the Humber bridge today.

7.23 pm

Mr. Stuart Holland (Vauxhall)

Although the speech by the hon. Member for Lincoln (Mr. Carlisle) was not a maiden speech, I congratulate him on the metaphor of a footbridge between the public and private sectors.

The Bill will reduce British industry to a walking pace, if not to its knees. As my right hon. Friend the Member for Deptford (Mr. Silkin) pointed out, the Secretary of State has presented a document expressing an economic philosophy that is scarcely relevant to the industrial needs of Britain in this half of the century.

Several of the points made by the Secretary of State demand rebuttal. The right hon. Gentleman argued that the National Enterprise Board distracts attention from the need for savings, as if we were short of savings rather than investment. The Wilson committee on financial institutions demonstrates that it is the lack not of cash but of the means and capacity to embody those savings and investment from which Britain suffers.

The Secretary of State said that it was not sensible to overspend, overtax and overborrow. However, private business is underspending, is undertaxed and under-investing. With the introduction of tax relief on stock appreciation, effective corporation tax has been virtually reduced to zero. That was a policy introduced by the previous Labour Government, whom I criticised then as now. The policy showed too great a faith in the capacity of the private sector to go out and make profits when by the same policy those profits were subsidised by tax relief. The Government would be well advised to change that policy by introducing an effective corporation tax on those large businesses which now are making large profits. Some of that money could then be used for public spending in the regeneration of British industry.

The Secretary of State argued that the NEB had reduced risk in the economy. My right hon. Friend the Member for Deptford demonstrated that in practice the sale of assets held by the NEB would enable those who gained those assets to do so without having taken any risk during the period in which the NEB was restructuring those activities. That is the brunt of our criticisms of the proposed sale of NEB assets.

The Secretary of State is in a Lewis Carroll world, as my right hon. Friend the Member for Bristol, South-East (Mr. Benn) pointed out, when he talks about too much public spending. Is he not aware that on the basis of the latest comparative data given to me by the Government in a parliamentary answer between, for example, West Germany—so much admired by this Government—and the United Kingdom, public spending in West Germany is higher than in the United Kingdom? In the latest figures, public spending represents 44.4 per cent. in West Germany as against 44.3 per cent. in the United Kingdom. That may be a difference of only 1 percentage point, but that exactly supports my argument.

The United Kingdom is not out of line, but is almost in parallel with the one economy that is held up as the embodiment of the market mechanism. The West German economy along with that of the United States is taken by the Government as an embodiment of the entrepreneurial spirit and risk-taking initiative. In their anxiety to cut public spending, the Government have failed to recognise the extent to which public enterprise is not a drag on the economy. Britain has brought into public ownership the same sectors of basic industries, such as gas, electricity, power supply, water and transport, as every other Western European Government.

The predominantly Tory press has perpetrated the myth that Labour Governments have leapt ahead with nationalisation. In reality, on the latest available figures on the contribution of State enterprise to value added in the mid-1970s, West Germany had more public enterprise as a percentage of output than the United Kingdom. How can the Government talk about the need to reduce the stake of the public sector on economic grounds, or on grounds of being out of line, when that is refuted by the figures?

The Government are closing their eyes—in their approach to the NEB—to new forms of intervention adopted by Governments in Western Europe, particularly since the early 1960s. The extension of public ownership is not in itself Socialist. The Government have yet to learn that. The extension of public enterprise has been undertaken as ardently—if not more ardently—by Governments of the Right and Centre in other European countries. They have a clearer grasp of the internal logic of capital and its workings within the market mechanism. They have a clearer understanding that the competitive process is inherently unequal between different social groups, different sectors of industry, different regions and different urban areas.

The evidence on this matter was well taken by the Expenditure Committee in the early 1970s—a Committee of which the Minister of State, the hon. Member for Bosworth (Mr. Butler), was a member and to which I was an adviser. The report of the Sub-Committee surveyed the evidence on new public enterprise agencies—the Industrial Reconstruction Institute in Italy, the Industrial Development Institute in France introduced in the 1960s, the re-organisation of Germany's United Industry Company, VIAG, Belgium's introduction in the late 1960s and development in the early 1970s of the National Investment Corporation, and Sweden's introduction at that time of the Statsföretag or State Holding Company, apart from the introduction in the last decade of a Canadian Development Corporation and an Australian Industries Development Corporation.

Those are Governments of different political complexions reacting to the realities, and the realities are the failure of private enterprise to invest both in high-risk advanced technology sectors and in basic sectors of industry where the scale of investment and the long period of the pay-off for profitability, frequently now from 10 to 20 years, is too much for any private contractors to undertake unless, in lieu of public enterprise, there is a guarantee of public spending. In the United States, this guarantee of public spending has come indirectly through the NASA programme and military spending.

In these respects, not only in the scale of its attack on the public sector but in the Secretary of State's determination and enthusiasm for rolling back the frontiers of the State, the Bill puts the Government in a class of their own among the Euro-Conservatives. Alone among those Governments they are enthusiastically dismantling the means of intervention in what remains of a fundamentally unreconstructed class and capitalist system. I repeat, State intervention is not in itself Socialist or a model of the Left. The Government have opted for laissez-faire versus State capitalist intervention. They will regret that act.

For example, the Secretary of State talked of the NEB as a panacea to solve all our industrial problems. As one of the co-authors of the proposals for the National Enterprise Board, I assure him that not even the authors of that concept or of that holding company would claim so much. The NEB was forwarded originally in the Labour Party as a public agency which should have been backed by planning agreements, with new powers to reveal information and to negotiate change in big business in our economic system. In this respect, too, the Government's policy is unsoundly based.

When I asked the Secretary of State for Trade to let me have up-to-date information on the ratio of foreign production by British businesses abroad relative to exports from this country, the answer was that the Government had no information on that question. I suggest that, when the Government have a chance to amend the Industry Bill, they should look up the facts and figures. I also suggest that they ask the civil servant who felt that there was no information on the issue to look at the United Nations reports on multinational companies and to work out from company data the ratio of foreign production by these businesses.

One of the main problems in our economy and one of the main weaknesses of British industry is that, relative to our leading competitors, we have too much foreign investment. For example, relative to West Germany and Japan, whose business outside those countries amounts to less than 40 per cent. of their visible export trade, Britain's business abroad produces goods the value of which is more than double our total visible trade. We are in this sense five times more multinational than Germany and Japan. It is one of the fundamental causes of our industrial decline and one of the reasons—developed and reinforced by the press—behind what now amounts to a national psychosis of failure in this country.

We are not industrially incompetent. We are among the most competent industrial nations of the Western world. But we are putting our investment, talent, skills, know-how and organisation mainly into foreign activity rather than into domestic enterprise. That major problem will be massively aggravated by the ending of exchange controls and the liberalisation of foreign investment under this Government.

One argument used by the Treasury to date is that a high proportion of the foreign investment by British business abroad is financed from savings abroad. Hitherto, where exchange controls have acted, that has by and large been the position. But now, for the first time, under this Government's policy, we have a formula for a massive outflow—a haemorrhage—of capital from industry which urgently requires regeneration and restructuring.

In this context, the Labour Party's policy for planning agreements was a crucial complement to the extension of public enterprise. The disclosure of information on what big business is doing is a crucial complement to any kind of industrial planning.

I refer back on the disclosure of information point to the Secretary of State for Trade's admission that he had no information on the scale of our business abroad. If we cannot know what industry is doing when and where abroad, why and in what way, how can we expect trade unionists to negotiate or even see the point in discussion with management on the terms on which they would undertake the retention of that industry in this country?

Frankly, I am highly critical of the attitude of my right hon. Friend the Member for Huyton (Sir H. Wilson) towards the planning agreements policy. In the latest volume of his memoirs he has, in effect, cited the planning agreements policy and revealed why he was not persuaded of its efficacy. While this was not simply the personal decision of one Minister, it is criticism of the then Government that I bluntly make. The readiness of that Government to withdraw the reserve right to oblige management to reveal certain key information in a company to those who work within that company is one fundamental reason why the class war at board room and shop floor level is so acerbic and sharp.

It is important to realise, against the propaganda of the press in this country or, to put it charitably, against the arguments of those who do not know, that planning agreements were not conceived as an act to be brought down from the mountain, as was the Ryder plan for British Leyland, and imposed on a take-it-or-leave-it basis on the shop floor. The concept behind planning agreements was one of negotiation. The obligation was to sit around a table and negotiate the future of leading companies and industries on the basis of real information. But this Government, by dismantling means of intervention in the economy, are effectively accelerating into an economic nightmare in the dark on sidelights. Unless they adopt powers for disclosure of information and inform themselves, whether or not they inform the trade unions, we shall all be in considerable trouble. I regret the watering down of the Industry Act in that respect.

As regards regional and urban policy, it was clear to many people in the Labour Party in the early 1970s that industrial incentives were not biting in the manner in which they could bite in the immediate post-war period. It was also clear that industrial development certificates or controls over location were being undermined by the flight of new multinational capital to areas such as Hong Kong, Taiwan, the Philippines, Mexico or Brazil, where the cost of labour was one-quarter or less than that in Britain and where, in effect, there were no basic trade union rights, press freedoms or civil liberties.

We reasoned that, because of this and because of the new evidence on the concentration of British industry, in a situation where literally less than 100 firms account for half the output and employment, the visible export trade and the pricing decisions in the economy, it was crucial in the regional and urban context to know where these firms were to locate their activities. They accounted for more than half the employment creation in the economy. Again, the policy was not supposed to be simply one of NEB intervention or regional development incentives but of planning negotiation, whereby, if we had published where leading enterprises were planned to be located, many investment decisions could have been negotiated by the trade unions, which could welcome rather than oppose them.

In practice, the CBI launched a hysteria campaign based on the argument of commercial secrecy. In the Continental evidence on planning agreements—planning agreements introduced in Belgium, France or Italy—there was never any question of those concerned discussing the design pro- file of a car or the compound formula of a drug. What the Government and the unions have a right to know is the overall shape and future direction of the companies' activities. Without that, the trade unions could not be responsible to their members or the Government to the electorate.

In that context, I certainly regret the watering down of the Industry Act in the previous Labour Government's industrial policy. However, in contrast to that Act, which was judiciously used in many circumstances, this laissez-faire Bill is literally turning its back on the reality of industrial intervention in the second half of this century. It is a formula for industrial failure and a signpost for industrial slump. In that sense it should certainly be rejected by the House.

7.42 pm

Mr. John Patten (Oxford)

I am sure that the House is grateful to the hon. Member for Vauxhall (Mr. Holland) for his interesting description of State intervention around the world. If nothing else, it proves that there is some use for his old university lecture notes.

An important point slipped out from what the hon. Gentleman said, which was missed by his right hon. Friend the Member for Bristol, South-East (Mr. Benn) in his check list of what the next Labour Administration under Left-wing control would promise industry in this country—and I am grateful to the right hon. Gentleman for remaining in the Chamber. Those promises ranged from import controls to compulsory planning agreements. The one point that he did not mention and which the hon. Member for Vauxhall included was the promise that under such measures we should return to high levels of corporate taxation from which to pay for the so-called industrial regeneration. I wonder what the CBI and many intelligent and far-sighted trade union leaders like Frank Chapple will make out of that kind of comment.

There are three points about the Bill which interest me. First, there is its relation to regional policy. Secondly, there is the comparison that can be made with the Labour Government's legislation of 1975, in which the right hon. Member for Bristol, South-East was much involved. I wish to go into the relationship between fact and fantasy that is evident in a comparison between the 1975 Bill and the 1979 Act.

Finally, I should like to look at the National Enterprise Board in its new role as envisaged by my right hon. Friend the Secretary of State. He has so rightly seen that it has some residual role to play, for which it may be suited, but it has no genuine entrepreneurial role to play, for which it has been proved to be totally unsuited.

In his statement on regional policy on 24 July, my right hon. Friend said: The main purpose of the policy is to encourage investment where it makes sense to the investors to go … redistributing the taxpayers' money will not suffice in itself to eliminate the gap between the assisted and non-assisted areas."—[Official Report, 24 July 1975; Vol. 971, c. 365–73.] I say "Hear, hear" to that. As a rider, one could add that redistributing taxpayers' money will not narrow the gap between profitable and non-profitable industries. That is absolutely clear.

There is a world of difference between the ideological drive of many Labour hon. Members, who see redistribution of earnings as a part of their industrial policy, and the much more sensible and pragmatic approach that is characteristic of the 1979 Bill, of which we are having the Second Reading today.

With the provisions for regional policy, particularly in clause 13, it is quite clear that the Bill immeasurably strengthens the help that individual assisted areas can hope to receive from the Government resources and funds that are available. Clause 13 relates the limited resources to the crying needs in the most industrially disadvantaged areas, which is a needs-oriented policy of extreme common sense.

That strand of common sense has run through all that my right hon. Friend has said in this debate, which makes for interesting comparison with what was said by many Labour Members who were in Government and spoke in the debates that followed the publication of the Industry Bill 1975.

I am sorry to see that the hon. Member for Liverpool, Walton (Mr. Heffer) is not in the Chamber. He was enthusiastic about planning agreements. I should like to quote what he said about those aspects of the 1975 Bill, which he thought was critically important: through Planning Agreements we shall seek to encourage companies to seize the opportunities open to them in some English regions … the Planning Agreement arrangements will provide a unique opportunity".—[Official Report, 18 February 1975; Vol. 886, c. 1241.] It nearly was a unique opportunity. Only two companies entered into these planning agreements—the National Coal Board and Chrysler.

Fantasy surrounded these provisions in the Bill, page after page, clause after clause. There were provisions about planning agreements and the disclosure of information, none of which was enacted. When we realise who piloted that Bill through the Commons, that is not surprising. It was the right hon. Member for Bristol, South-East, who, despite my attempts to lure him to stay in the Chamber, has left. The statements that he made during the debate on that Bill are extraordinary. He proved himself to be, as he did this afternoon, the Peter Pan of post-industrial society. He is endlessly trying to slip a last chapter into the history book of the Industrial Revolution. We are now a post-industrial society, and that book is complete. The endless business about the regeneration of traditional industries through new forms of activity is in the realms of fantasy. The points raised by the right hon. Gentleman in the debate in 1975 make one wonder. I respect the right hon. Gentleman's intelligence and sincerity, but I doubt his grip on industrial reality. In his speech about the disclosure of information he said: the power of the ideas that have already gone into this policy … excites the imagination of people". How they must have danced in the works canteens and the pithead bars when they read that the 1975 Act would include provisions on disclosure of information. How heartbroken they must have been when those provisions were never enacted.

Mr. Stuart Holland

It is clear that the hon. Gentleman speaks with no personal experience in these matters.

Mr. Budgen

Tell us about the toil.

Mr. Deputy Speaker

Do not tempt the hon. Member—he has already made one speech.

Mr. Holland

I take your point, Mr. Deputy Speaker. As a result of the debate on the Industry Bill and how it was grasped in the North-East, the trade unions which represent 25 of the largest companies in the North-East met to negotiate, on an inter-union basis, how to cope with the planning agreements formula. Four years later, because we did not have planning agreement powers, the trade unions had to get together to face the closure of plants at Vickers Scotswood with no alternative because of the lack of powers. In that respect, they regretted the passing of the Act.

Mr. Patten

I am grateful to the hon. Gentleman for his remarks, although I am not sure what to make of them.

I shall pick a further example of rhetoric from the right hon. Member for Bristol, South-East. Having painted the rosy picture of the workers of the country dancing with delight at the introduction of the provisions for disclosure, he boasted: these provisions for greater disclosure will go a long way towards bringing about industrial democracy". He ended triumphantly: We have come to the end of a chapter in our industrial history."—[Official Report, 17 February 1975; Vol. 886, c. 939–46.] Indeed, today we have come to the end of the chapter in our industrial history that was written between 1974 and 1979 under the previous Labour Administration. That history is nothing of which Labour Members can be proud. They cannot afford to be proud of bringing the whole legislative process into disrepute by introducing Industry Acts containing many provisions that they had no intention of enacting.

Lastly—[Interruption.] I have to get some sort of reaction from Labour Members below the Gangway.

Mr. Norman Buchan (Renfrewshire, West)

The hon. Gentleman has been complaining about the need for dissemination of information. Why should the Bill prevent the disclosure of interest of those involved in industry, for example, shipbuilders? Do the Conservatives believe that it is pointless? Or are they ashamed of interests that might be held by their number?

Mr. Patten

Doubtless the hon. Gentleman's question will be answered fully by the Minister of State. As far as I know, the provisions about disclosure of interest of the members of the NEB and British Shipbuilders are being removed. My right hon. Friend the Secretary of State made that clear this afternoon. They served no useful purpose, and it is because of the need to remove from legislation or orders matters which serve no purpose that they will be got rid of.

The Under-Secretary of State for Industry (Mr. Michael Marshall)

The hon. Member for Renfrewshire, West (Mr. Buchan) obviously did not hear what my right hon. Friend the Secretary of State said this afternoon. Members of the NEB, British Aerospace or British Shipbuilders have to make their interests known at the time of their appointment. Under existing statute, they have to make the updating of those interests known to the Secretary of State. Therefore, the matter is already covered and the provisions become redundant. They were also discriminatory because they did not apply to British Gas or British Steel and others.

Mr. Buchan

I sought the answer of the hon. Member for Oxford (Mr. Patten) and not of the Under-Secretary of State. It was the hon. Gentleman who was looking for a reaction. The point is that the initial disclosure of information is insufficient and not made public enough. The hon. Gentleman was implying that it was unnecessary. However, the Under-Secretary has said that it is needed. Does the hon. Gentleman agree with that or does he believe that all members of all institutions should have private political interests unknown to the community at large?

Mr. Patten

During my speech I have referred to the disclosure of information, as was put forward in the 1975 Act. That was the disclosure of information under planning agreement frameworks to the lower echelons of management and trade unions. I was not referring to the disclosure of members' interests. I am grateful to my hon. Friend the Under-Secretary for helping me out on the matter. [Interruption.] As a new Member, I make no apology for being unable to take the hon. Member for Renfrewshire, West (Mr. Buchan) through every clause and subsection of the Bill. Indeed, it would be unreasonable to expect many hon. Members with greater experience than mine to deal with such points.

What is revealed by comparing the speech of the right hon. Member for Bristol, South-East in 1975 and his speech this afternoon is that he has not learnt any lessons. He promises more of the same. In a speech in Manchester on Saturday he promised more planning agreements, more import controls, more of the same sort of issues which were debated endlessly in 1975.

I watched the faces of many of his right hon. and hon. Friends when a glazed expression came over the right hon. Gentleman's face as he went through a check list of the things the next Left-wing Socialist Government, if they were elected, would do. The right hon. Member for Deptford (Mr. Silkin) gazed blankly at the end of the Mace, the hon. Member for Bolsover (Mr. Skinner) looked blankly at the toecaps of the shoes worn by the hon. Member for Keighley (Mr. Cryer). Nothing exposed the divisions in the Labour ranks so much this afternoon as the differences in the speeches between the right hon. Member for Deptford and the right hon. Member for Bristol, South-East.

The NEB has been given a residual role by the Bill. It is a role that it is well fitted to carry out. I hope that all my right hon. and hon. Friends will recognise that the Bill is framed in a non-ideological context. It is highly pragmatic and related to needs and the relationship of needs to resources. I am sure that neither I nor my right hon. Friend the Secretary of State believes that pragmatism is the lowest common denominator in all legislation and Government policy. However, in my right hon. Friend's attitude towards the NEB there is a clear indication of the sense of realism that has been shown by the Government towards industrial policy. That realism contrasts sharply with the sense of fantasy which ran through the debate in 1975 and which we have heard from Labour Members during this debate.

7.59 pm

Mr. Cyril Smith (Rochdale)

I am grateful to you, Mr. Deputy Speaker. I am sure that, like me, the hon. Member for Caernarvon (Mr. Wigley) had begun to wonder whether minority party Members would have an opportunity to speak. I am grateful to Mr. Speaker for not imposing the 10-minute rule after 7 o'clock. Had he done so, it would have allowed me to prove to my hon. Friends who voted for it that they were idiots, because it is just another infringement on the rights of minority parties in this House.

I am pleased to follow the hon. Member for Oxford (Mr. Patten), whose speech would have done credit to the Young Conservative conference. He fell into the trap which he accused the right hon. Member for Bristol, South-East (Mr. Benn) of falling into. That is what has been going on throughout the debate since 4 o'clock, and with the exception of about three minutes I have heard every minute of it.

The hon. Gentleman criticised the right hon. Member for Bristol, South-East for indulging in a party political, see-saw battle based on party ideology. The country is sick of that battle, and it does industry no good at all. Indeed, it does little credit to this House. What we have heard today is the attitude "It is my bat and ball, and if I cannot bat I am going home". That is what it is all about. The debate has been a classic example of that.

When the Labour Government introduced their Industry Bill in 1975, Opposition Members voted against it. As soon as they came into power, they said "We shall change all this. We shall throw it out because it is not part of our ideology." As the right hon. Member for Bristol, South-East said, if Labour ever get back in power they will alter it yet again. All this is supposed to be for the benefit of British industry. Speaking as someone with a small business, I can think of nothing that does industry greater harm, and upsets our reputation abroad more, than the constant battle of see-saw politics from one Government to another.

With few exceptions, the vast majority of hon. Members accept the need for a mixed economy. That means that the vast majority of hon. Members agree that there is a role for both private and public enterprise. For God's sake let us sit down and agree what the mix should be, so that these constant battles cease, thus enabling us to get on with the job of ensuring that the ingredients in the mix represent the best deal possible, be it a deal assisted by Government or one assisted by private capital.

One thing should be quite clear, because I believe it to be a fact. Basically, the National Enterprise Board has done a good, useful and necessary job. In passing, I must point out that I have criticised it, and continue to criticise it, for its ill-founded decision to develop and encourage the microchip industry in the North of England. I believe that the Manchester area, with its high technical skill and historical links with the very foundation of the computer industry—

Mr. Michael Marshall

Rochdale.

Mr. Smith

No, not Rochdale. I said that the Manchester area was an obvious place for the microchip industry to be developed. With the history of universities such as Manchester and Salford in regard to technology in general and computers in particular, that was an obvious place to locate that industry. As a northern Member, I should like to pay tribute to the hon. Member for Newton (Mr. Evans) for his great fight in trying to get that industry located in the Manchester area of the Northern region. I am only sorry that his efforts were not more successful.

The NEB has done a good job. There is clearly a need for some kind of vehicle which allows Government investment, occasionally even Government takeover and often simply Government aid. The NEB is, and has proved itself to be, such a vehicle. Why, then, do the Government seek so drastically to reduce its power in this Industry Bill? Indeed, why make the Board virtually ineffective, even to the point, in clause 6, of allowing the Secretary of State to impose executives on the Board? Presumably that will reduce the NEB's chairman and Board to nothing more than paper-weight people, because the chief executives will now be appointed by the Secretary of State.

The Government should beware, because the Conservative Party will not be the only party that will exercise this power. In years to come the Tory Party may find that by that clause it has created a rod for its own back. Of course, the Government have introduced this because it is party political doctrine. They argue that it was in their manifesto and that they have a mandate to do it. They do not have a mandate to do anything, because 58 people out of every 100 who voted at the general election did not vote for the Government's manifesto but for someone else's. I do not take the view that the Government have a mandate to do anything. What they have is a majority of hon. Members of Parliament through a system which cheats the electorate of this country. At any rate, they have a majority and they will push the Bill through because that is what party doctrine and the party system demand. That is what party politics in this House is all about.

However, there is one thing that worries me a great deal, and my colleagues will confirm this from private discussions that I have had with them. I appreciate the danger of creating a machine that is too easy for the Socialist State to take over. That is what worries me about the NEB. Even if the NEB was destroyed by this Bill, if the electorate in its non-wisdom decided that it wanted a Socialist State—I mean a Socialist State as opposed to a social democratic State—it would elect one, and that State would have the power to reintroduce the NEB. Therefore, that is not a good reason for demolishing the NEB now.

Rather than destroy the NEB, the Government should be altering the purpose of its existence. What is more, they should ensure that over the years it does not build up huge companies or take over huge companies. The Government could do that by requiring the Board to sell off such companies after a period of years, when it was not financially objectionable to do so, or socially objectionable on the basis that the company in question manufactured a basic essential commodity such as steel. If the Board simply existed to help companies that were in difficulty, to get them on their feet and to sell them off within a given period, always provided that at the time of selling off it was not an economically unwise time to sell them—in other words, provided that the taxpayer got a fair return for his investment, which is what selling shares is all about—there would then be some merit in the Government taking action about the NEB in some Bill or other.

What we now have is a Bill that is designed to create party ideology on the one hand and to destroy it on the other. That will do nothing whatever to help industry and enterprise in this country. Therefore, the view of my party is that the NEB should be retained. But it should not enable the State to gobble up private industry through an investment policy. It should be compelled to sell off companies within a given period.

There is a need for a vehicle to facilitate State help, not only to the regions but to industries that need help. Saving industries means that jobs are saved and that people who would be put on the dole are prevented from going on the dole. I have never seen the equation worked out, but it is possible that if the Government invested in industry they would save public funds by virtue of the number of people who were prevented from going on the unemployment register and living on State funds. Cases have been cited today. It was said, I think, that six companies backed by the NEB have gone bankrupt or are in the receiver's hands.

An example was given where £100,000 had been invested. I wonder how many people have been kept off the dole for how long as a consequence of that £100,000 investment. It is possible that the cost to the State would have been a lot more than £100,000 had that investment not been made and people simply been placed on the dole. I am not saying that this was the case. I do not know the company. I do not know the statistics. But it is a possibility. It is part of the equation and part of the mathematical calculation that needs to be taken into account.

It will not surprise the House that my colleagues and I are disappointed to find that section 2(2) (d) of the 1975 Industry Act is to be dismantled. This section relates to the need to promote industrial democracy. It is time that the Government started giving attention to the promotion of industrial democracy. I do not expect the Government to listen to anyone from a minority party but they might at least listen to the next president of the CBI, the deputy chairman of ICI. Yesterday, in a speech to the CBI conference, he made a slighting reference, in my opinion, to the views of the Secretary of State for Industry. I think his words were that the views of the Secretary of State were "not enough". He then went on to say that he believed that those views may come home to roost in the winter ahead.

These are the words of the next president of the CBI, the deputy chairman of ICI. I was watching him on television. I say that because, strangely enough, most of the newspapers have not reported the remarks. I hunted through newspapers like the Daily Telegraph and the Daily Mail—all those papers that express opinions freely in an unbiased manner for the benefit of the British public. I found parts of his speech that praised the Government but I could not find any reference to his concern about what would happen this winter as a consequence of the monetarist policy outlined by the Secretary of State for Industry. On the television news, he said that he believed that greater worker parfticipation, greater communication between workers and management and greater involvement of workers in industry were vital to the future of industry. I am not saying that those were his exact words, but I agree entirely with the views he was expressing.

We may have differences of opinion about what form that worker participation should take. But, at the present time, the argument is dead. I know of no discussion that is going on at Government level about worker participation in industry. The Bullock report has been ditched. Thank God for that. But the whole principle of worker participation in industry appears to have been ditched with it. If the Government do not reassess their attitude to worker participation and if they do not start the dialogue between workers in industry and between the trade unions—I differentiate between the two—and between the CBI, the chambers of commerce and all those concerned with industry and commerce, they will pay the price in the long term, if not in the short term.

My colleagues and I consider that this Bill is a piece of party political, doctrinaire propaganda introduced by a Government elected on a minority vote whose only excuse for doing anything these days seems to be "It was in our manifesto". We would welcome an Industry Bill which amended the reasons for the existence and the powers of the National Enterprise Board. But a Bill that merely seeks political confrontation, as this Bill does, is to be condemned. It is for that reason that we shall vote against the Bill tonight.

8.15 pm

Mr. Nick Budgen (Wolverhampton, South-West)

This Bill has been much attacked by right hon. and hon. Members on the Opposition Benches on the ground that it is a doctrinaire Bill that entirely carries out the promises that the Tory Party made at the last general election. That is not so. This Bill is a compromise. It is, I hope, only a first step, but it is certainly a compromise. At the last general election, our position was considerably modified from the position that we held in 1975.

Mr. Eric G. Varley (Chesterfield)

indicated assent.

Mr. Budgen

I see that the right hon. Member for Chesterfield (Mr. Varley) nods in agreement. Our first position was that we would entirely abolish the National Enterprise Board. The second compromise position, which I support, in the manifesto, was: We shall therefore amend the 1975 Industry Act and restrict the powers of the National Enterprise Board solely to the administration of the Government's temporary shareholdings, to be sold off as circumstances permit. This Bill is a further compromise on that position. No secret is involved. My right hon. Friend the Secretary of State for Industry said, in opening the debate, that he had added to the powers of the National Enterprise Board a responsibility for advanced technology. He has also given the Board a requirement to provide investment in areas of high unemployment, particularly for the benefit of small firms. I am an enthusiastic, perhaps overenthusiastic, supporter of my right hon. Friend. I support what he says as a compromise and a first step.

Why do I support the Bill as a compromise when it goes much against the principles that I supported in Opposition? I suppose that I mainly support it because of the argument put forward by the hon. Member for Rochdale (Mr. Smith). I agree with him. There must be, in a democracy, an element of continuity in Government policy. Even for those of us who feel passionately as ideologues, there cannot be a sense in which every policy is immediately changed as soon as a dif- ferent Government comes to power. There must be a sense of proceeding slowly and carrying the country with us.

I also take the point that was fairly made by the right hon. Member for Bristol, South-East (Mr. Benn). It is true that the British business community is ambivalent in its attitude towards freedom. I know what is happening on the Stock Market. That is happening not only because a fairly substantial recession is anticipated but because the business community is adjusting, with difficulty, to a new political climate. I understand that situation. I understand that in many instances business men do not approve of any particular political philosophy. I do not attack them for taking that attitude. It is their job to make profits, no matter what Government are in power, and to adapt to varying and different political philosophies. It is plain, from statements made at the CBI conference in Birmingham, where there was a pretty substantial vote in favour of protectionism, that business men are, as yet, ill adjusted to the freedom that the Tory party offers them. I accept that and I accept that we have to move slowly.

My right hon. Friend the Secretary of State has been the most significant advocate of the new Tory philosophy. I thank him for converting the Tory Party to monetarism and for persuading us to accept that cash limits and declining monetary targets are right for this country, in spite of the certainty that it will cause considerable hardship as we squeeze inflation out of the system. Of course, we cannot proceed immediately on every front, but let us understand the price that we have had to pay in the Bill for the great successes on other fronts.

When, in Opposition, we attacked the NEB, we did not do so solely on the ground that it was wasteful of public expenditure, though it was certainly that. We attacked it because we feared the growing power of the State and because we considered that the balance of power had been shifted too much in favour not of the bureaucrat—let us not have a vulgar attack on the Civil Service—but in favour of politicians, and not only Socialist politicians.

Let us understhand what we are doing in extending the powers of the NEB to allow it to invest about £50 million of taxpayers' money in the microchip industry and an unspecified amount in favour of small business. We are, I hope only temporarily, extending the power of the State, albeit at a time when that power is being exercised by a Tory Administration.

I am doubly sceptical of power being exercised by Socialist Governments because they have the great disadvantage of believing in State power, but I am fairly sceptical of power being exercised by Tory politicians. My right hon. Friend said that the reason for giving the NEB responsibility for high technology was the difficulty in getting investment into that area. That argument has been used time and again. I have read and re-read my right hon. Friend's pamphlet "Monetarism is Not Enough". In that, he refers to what happens when the squeeze comes and large business goes to the Government. He said: The large ones go to the Government for aid. This is nothing to do with their intrinsic merits though one can cook up an argument in favour of any decision once it is taken. That is true and I am afraid that, once the decision has been taken to support high technology projects, some sort of argument in its favour could be cooked up.

The difficulty is that we know that Tories like expensive toys. The Tories liked Concorde, and what an expensive and embarrassing toy that turned out to be. On the other hand, we know that Labour Members like old-fashioned toys. They like the steel industry and the coal industry. They believe that there is something more manly and more virtuous about disagreeable toil. We like smart new toys because that shows that we are whiz kids and more up to date. In the end, it is a value judgment to intervene in the economy taken by fallible politicians.

If we decide to put £50 million into high technology, we must recognise that when we lose power—and let us not in the arrogance of a massive victory forget that we shall lose power eventually, no doubt mistakenly—it will be intellectually easier for a Labour Government to turn back to intervention once more.

There may be a slightly better case for intervention in favour of small business. The long years of intervention have resulted in pretty massive support for big industry to the disadvantage of small industry. My preference is to get rid of all forms of intervention, but I suppose that there is just a case for what I call countervailing intervention.

I hope that the great crusade that my right hon. Friend has fought in the Tory party and the country will be recognised in a couple of years' time and that, after we have been through what will probably be an extremely disagreeable recession with a pretty high rate of unemployment, the country will understand that the days of high spending and State intervention have gone for ever.

If that happens, I hope that we shall withdraw, yes, even from our expensive toys, and say to the small business man that we have cut his taxes and he is better on his own. I hope that we shall be able to say, as we promised at the last election, that there should be only a limited role for the NEB and that by slow and steady persuasion we shall at last adhere to our promises, which are based not only on economic arguments but on deeply held philosophical views, that the role of the individual will be enhanced and the role of the politicians, whether Tory or Socialist, reduced.

8.28 pm

Dr. Oonagh McDonald (Thurrock)

No doubt the Secretary of State will be glad to have the support of the hon. Member for Wolverhampton, South-West (Mr. Budgen). However, he will wonder, as he reflects upon the hon. Gentleman's speech, quite what to make of that support.

The National Enterprise Board was recently described in the February National Westminster Bank Quarterly Review in these words: It has become a State investment bank operating on commercial criteria, competitive with private sector agencies, and with an increasingly well-defined policy. That description of the Board's present state is fair enough. It is very far indeed from the original Labour Party plans for the NEB, which saw it as exerting a controlling interest over a large slice of the economy.

In the days to come, after the industrial devastation brought about by the policies of this Government, we may, when the Labour Party returns to power, need to view the NEB in its original terms. However, that is not the question at present.

The Secretary of State, having viewed the National Enterprise Board no doubt in the way in which it was described, and understanding some of its activities, realised that it had an important role to play in, for example, investment and high technology companies. Indeed, the Secretary of State told the House on 19 July 1979: The market has been discouraged in recent years from supporting such ventures. … it seems sensible to use the NEB as one means of familiarising the market with new technologies. For my part, I see this role as being necessary."—[Official Report, 19 July 1979; Vol. 970, c. 2006.] However, the Secretary of State went on to say that he hoped its role in that respect would be temporary.

The Bill reflects the Secretary of State's ambivalent attitude. He believes that the NEB should not exist if market forces operate truly in the way in which he believes. Nevertheless, it does exist. It has a useful role. He realises that it must have some kind of continuing role. Therefore, in the Bill, he has allowed its continued existence, for the time being at any rate. No doubt he would argue that the previous Labour Government left the country's economy with gaps that were created—it is claimed—by high taxation and that it was necessary to have the NEB for a time to fill those gaps.

If we reflect on the history of the previous Labour Government, we may think that high taxation was a cause of the lack of investment by manufacturing industry in this country during their period of office. Anyone who thinks that must be living in cloud-cuckoo-land. The stock relief provisions introduced in 1974 cost £6 billion in terms of lost revenue to the previous Labour Government. Every conceivable incentive was given to manufacturing industry to invest in this country—to such an extent that many of the large companies did not pay any corporation tax during at least some of the years when the previous Labour Government were in power. We cannot accept that those gaps are created by high taxation. It is the failure of manufacturing industry that creates the gaps. That is why the National Enterprise Board must step in to provide essential funds, especially for small and medium-sized companies and companies introducing the new kinds of technology that we shall need if we are to compete sensibly with America and Japan.

The Secretary of State feels that he cannot quite get rid of the National Enterprise Board yet. What has he done in the Bill? I do not think that he has retained the NEB, in a fully operational sense, for as long as he believes that it should continue in existence. Instead, the clauses hamstring the Board and ensure not a rapid but a slow death. Perhaps the hon. Member for Wolverhampton, South-West will be glad to watch its slow decline as a result of the Bill's structures when it eventually becomes law.

Let us examine what the Bill does. Clause 1 is a gratuitous insult. It removes from the NEB the statutory function of supporting and promoting industrial democracy. That is a gratuitous insult to working people now—just at a time when the Government's economic policies will put industrial relations under the severest ever strain and when leading industrialists are coming to realise the importance of industrial democracy. Yesterday the director general of the National Economic Development Office pointed out that more should be done to encourage employee involvement in companies either through share participation or through other forms of participation.

To choose at this time to remove those statutory powers and functions from the Board is to take yet another step back into the past, into which the Tory Government are determined to drive us.

Clause 2 thus gives the Secretary of State important powers. It is he who will now direct the investment policy of the National Enterprise Board, and insist that shares should be transferred to him. The Secretary of State can also use those powers to direct the sale of shares currently owned by the NEB, from one company to another.

Earlier in the debate an hon. Member said that the Labour Government were guilty of continuous and fretful interference in the activities of industry. The Bill gives the Secretary of State precisely the power of continuous and fretful interference in the activities of the National Enterprise Board.

It is not clear to me why the Secretary of State should want these powers, why they have been written into the Bill, or whether he understands the damaging effects that they may have. They could deter the private sector from coming to arrangements with the National Enterprise Board, for a company's shares, after having been purchased from the NEB by the Secretary of State, could be transferred to a totally unacceptable partner.

A company specialising in medical technology would hate to have its shares, currently owned by the NEB, transferred to GEC. Such companies are anxious and worried about that possibility and about the action which the Secretary of State may take once the Bill gives him that sort of power. It is not necessary for the Secretary of State to have such powers, for through the guidelines laid down in December 1976 the Secretary of State has sufficient control over the level, size and disposition of investments by the NEB. No further powers are necessary.

It would be interesting to hear the Secretary of State's reason for introducing this clause into the Bill. Surely it runs counter to everything for which he claims to stand. It gives him more opportunity, not less, as a member of the Government, to intervene directly in British industry. It is not removing the Government from industry. It brings industry and the Government much closer together, possibly in a very sensitive way.

I give as an example British Leyland, one of the companies for which the NEB is responsible. The fact that the NEB has been an intermediary in the past has been useful, as the NEB has been able to deal with the sensitive problems faced by British Leyland. The implications of this clause are that it will bring the Secretary of State, the Government and British Leyland closer together and give the Secretary of State all the powers that he needs to intervene directly. The Bill is far more interventionist than any measure proposed by the last Labour Government.

Clause 4 will also have disastrous effects on industry. It deals with the statutory borrowing limits. That limit was laid down at £3 billion by the last Labour Government, with a possible extension by affirmative order to a maximum of £4.5 billion. Under the Bill passed by the Labour Government just before they went out of office, the Government simply had to bring an affirmative order before Parliament and the borrowing limits could be raised. Under this Bill, the Secretary of State will have to bring further Bills before Parliament, during a very heavy legislative programme, in order to extend the borrowing powers of the NEB. That will be senselessly slow and bureaucratic, because these measures also apply to subsidiary companies of the NEB.

Let us suppose that a small company is faced with, say, increased costs of raw materials and wishes to borrow money in order to cover the cost. Let us suppose also that its decision to do so would raise the amount borrowed to just above the NEB's borrowing limits. That company would have to wait for a Bill to go through Parliament for the borrowing limits to be raised before it could take a simple and normal action of that kind.

The Bill is absurdly bureaucratic and for that reason I am suspicious about the Government's intentions in bringing it forward. It is not the compromise measure that it appears to be. It is a way of slowly strangling the NEB and making it ineffective. The future of the NEB should be discussed in Parliament following its annual report and accounts. There should be an annual debate on its activities, with the possibility of raising such matters as the borrowing limits whenever necessary.

That is all that is needed by way of Parliament's jurisdiction over the NEB. The Bill will clip its powers and those of its chairman in such a way that the NEB will slowly die. It will die at a time when it is extremely important for it to live. Many hon. Members have said during the debate that the NEB has played an important role in the economy though in a more limited way than I should have liked to see. It does what the Government are supposed to be committed to doing, namely, helping small firms. I understand that when Cabinet members attended their first meeting they were supposed to have emblazoned on their hearts "Small is beautiful". Many members of the Cabinet were formerly associated with the largest companies in the country rather than the smallest.

Every Government action makes it more difficult for small companies to operate. Taking away an important source of funds for small and unusual companies in this manner is a dangerous course of action at a time when we need to support our industries in order to supply the jobs.

The NEB has not only worked in that area but has been active in areas such as medical technology, computers and developing the microchip. Those are areas in which our competitors are moving quickly ahead. The Financial Times today contains a supplement dealing with Japanese industry. It lists medical technology, computer technology and aeronautics as areas in which Japan is able to move ahead quickly and in which the Japanese Government are prepared to invest money.

At a time when we could move ahead and use our skills, the Government want to starve such companies of funds and ensure that we fall behind in development and rely on imported technology from America, Japan and West Germany.

That is why my right hon. and hon. Friends and I will vote against the Bill. It is designed to destroy slowly the NEB and to wreck its ability to help small firms as we move into recession and when we desperately need to ensure that jobs are provided.

8.44 pm

Mr. Allan Stewart (Renfrewshire, East)

The Bill contains proposals to revise the legislative framework in which the Scottish Development Agency undertakes direct industrial investment. The result of the Agency's activities so far suggests the need for a new framework. To put it mildly, the results have not been such as would in the private sector encourage shareholders to indulge in riotous celebrations.

It has been argued that the Agency is accident prone. Certainly there have been one or two individual and unfortunate episodes. Perhaps the best-known incident was that of a fish processing company which found itself in difficulties as a result of a scarcity of fish. The Scottish Development Agency set up a new venture, doubtless with the latest and most sophisticated management techniques. There was extensive and comprehensive consultation with all concerned except, apparently, the fish. There was a scarcity of fish before, and the fish were not terribly impressed with the need to co-operate with the new dynamic State entrepreneurship designed to regenerate Scottish economy. Another £3 million of taxpayers' money was wasted.

More generally, the Agency has been required to work towards a minimum average historic cost-based rate of return on assets of 15 per cent. by 1981. Progress so far may be described as limited. The return last year was minus 14.3 per cent. All six subsidiary companies of the Agency made a loss. One company went into receivership. Let us hope that the new framework, with the emphasis on working towards disposal, will lead to improvements.

I mention one general reservation about the work of institutions such as the Board and the Agencies. I refer to the effect which providing assistance to a company has on its competitors. That is often overlooked. Some hon. Members may think that that is purely theoretical, but it is a practical issue that is of great importance in my constituency.

On the borders of East Renfrewshire and West Renfrewshire there is the major Talbot car plant, which has recently announced redundancies. It competes with British Leyland. There is a major carpet manufacturer in my constituency, and the Scottish Development Agency has helped one of its competitors, British Carpets Ltd. I have a tanning company in my constituency, and the Minister will know of the strong representations that were made and the legal action that was taken by the tanning industry over the Board's involvement with British Tanners Products. I hope that in future the effect of intervention and assistance by the Agency and the Board on competitor companies will be borne in mind more than has been the case in the past.

I turn briefly to clause 4, which prevents a Secretary of State from raising the financial limits of the Agency. The Scottish Development Agency has been something of a Labour virility symbol in Scotland. In the dying days of the previous Administration its potential budget was increased to £800 million. Doubtless that was extremely helpful to Labour candidates during the general election. In answer to questions such as "What are you going to do about investment, comrade?" prospective Labour candidates could say "We have allocated up to £800 million to the Agency."

However, that bore no relation to reality. The Agency has now spent not much over £100 million. The present ceiling would still allow it to spend five times as much in the second five years of its existence as in the first five years. The present rate of spending would take it into the next century. The industrial investment role, which by any criterion has not been much of a success, has been extremely limited. The Agency has spent only £20 million.

The Bill redefines the framework of the Agency of selective assistance and of regional development grants but it does not concern itself with the interaction between the various forms of Government assistance. I hope that on a practical level the Government will take the opportunity to consider that interaction.

In the SDA's recently published report it is stated that West of Scotland Weatherproofs has gone into receivership. The circumstances surrounding its original move to an SDA factory were investigated by the Parliamentary Commissioner for Administration. Major efforts have been made by the hon. Member for Glasgow, Maryhill (Mr. Craigen) and others to help the company. The key point is that various Government Departments were involved and there were major delays. The managing director, who is a constituent of mine, expected to be able to move into his new factory in September 1973 but he did not move in until October 1974. It is fair to say that the company never recovered from the high costs incurred because of the delays. I hope the Government will look again at the facts of that case and at the practical operation of the various types of assistance to industry.

I finish on a positive note. No doubt the investment role of the Agency will change following the enactment of the Bill. I hope that the Agency will learn from the experience of the Welsh Development Agency, which, as I understand it, has successfully guaranteed loans from the private sector. There has not been a great deal of this kind of action in Scotland. The direct investment area is bound to be small, but within the financial frame- work laid down by the Bill there may be new ways in which the Agency can develop on the basis of its strength so far.

It is disappointing that the proposals for urban development corporations have been limited to south of the border. There may be potential for this kind of approach in Scotland, utilising the undoubted expertise of the Agency and applying the experience of new towns to the inner city problems of Glasgow. I hope that the Agency will now concentrate on those aspects of its role which it is universally agreed have been successful. I refer particularly to factory building, environmental work and the encouragement of inward investment. These functions which have been successful should be further improved and developed, and the Bill provides the opportunity for doing just that.

8.53 pm

Mr. Dafydd Wigley (Caernarvon)

I am glad to catch your eye, Mr. Speaker, not so much to put the point of view of my party—although obviously I shall do that—but because of the major impact that the Bill will have on Wales. I appear to be the only Welsh Member speaking in the debate.

I intervene with some sadness. As one who was a member of the Standing Committee on the Industry Bill 1975 and the Welsh Development Agency Bill 1975, I regret any dilution of the work of that body and of the National Enterprise Board. I am also sad because I feel that the Industry Act 1972 is being diluted. As one who was in industry before coming to the House, I believe that the 1972 Act is particularly worth while and I would not like to see its powers being eroded. It is one of the better industry measures that have been passed by either Government.

I fear that we are seeing yet another step in the active withdrawal from regional policy. I say "another step" deliberately because this follows the step taken in 1976 when the regional employment premium was withdrawn by a Labour Government. So the Labour Party does not have entirely clean hands either, but Labour did it under certain pressure from the IMF whereas I suspect the Conservatives are doing it from pleasure.

Last week we heard of a number of cutbacks that will affect Wales severely. There will be a 25 per cent. cutback in public expenditure on industry, trade and employment in Wales, That will mean a loss of £16 million at a critical time. There will also be a loss of £11 million on road building, which is extremely important for industrial development. I have companies in my constituency which, having suffered job losses as a result of REP withdrawal, now face further setbacks. I have in mind particularly a manufacturing company which probably will not go forward with an investment plan for my constituency because of a change in the regional grants formula. This change of status has a direct effect on areas of high unemployment and it is something that we should deprecate.

I do not pretend for a moment that the system of grants that exists under the 1972 and 1975 Industry Acts does everything to solve the problems of unemployment and depopulation. But, if we take these powers away, the situation can only get worse. We need more incentive, not less, and more intervention, not less. So far, it has not been opportune to judge these policies in their fullness.

We have not seen these powers in action at a time of industrial expansion. We have seen them used at a time of depression, which is likely to continue for a further year or two according to what we have heard from the Government Benches. I would like to see the incentives in these Acts given an opportunity to work when there is an upswing in the economy, when we can really judge them.

However, we need more than incentives. We need incentives together with the industrial infrastructure if we are to have a meaningful regional policy. We need roads, industrial parks, industrial services, training and education, which are necessary for the development of industry in the many areas where new jobs are greatly required. When we have the background of an upswing in the economy and the infrastructure is right, we shall be able to judge whether the incentives are working.

What we have seen is that in the first cold wind that has bitten South-East England in the last year or two there has been a withdrawal from regional policy. A fundamental question for the Secretary of State is one that he has not answered. Does he believe that free market forces can ensure job provision in development areas in Wales, Scotland and North-East England? If he believes that, he is arguing against all the experience of history, unless his solution is to transfer all young people from areas such as Wales to South-East England and for Wales to be repopulated by retiring people.

If that is not the Secretary of State's belief, the question is whether the Government have a serious policy to reverse the regional imbalance and decline that we have seen. One thing is certain—greater private spending alone will not develop jobs in those areas. What it will do, as we have already seen, is to suck in imports from Japan and elsewhere. It will not solve the employment problems of areas such as Wales, Scotland and North-East England. Does the Secretary of State seriously believe that by weakening the Welsh Development Agency and the NEB, and by reducing the grant structure, he will find an answer to these problems?

I want to refer very briefly to three matters in relation to the Bill. The first is the disastrous effect of the July announcement about changes in the development status on my area. The status of the Caernarvon and Dwyfor areas is to be changed from that of special development area to development area as from 1 August 1980, yet unemployment in Caernarvon has been between 10 per cent. and 15 per cent. It has been higher in winter and a little lower in summer because of tourism, but that is about the level of unemployment in that area. The unemployment level for men has been substantially and consistently higher in that area than in the Wrexham area, yet the Wrexham area was elevated from development area status to special development area status in the July announcement.

What are the criteria for deciding which area is a special and which is an ordinary development area? We are told that unemployment is the criterion, but that is patently not so in North Wales. We may be told that the Wrexham area has been elevated because of the impending closure of Shotton steelworks, but I put it to the Minister that if that is so, and unemployment would consequently be expected to increase, the same logic should have been applied in the Arfon area, where at Dinorwig we shall shortly be facing the ending of the construction of the electricity pumped storage scheme of the Central Electricity Generating Board, where there are 2,500 people working.

Ninety per cent, of the hourly paid are from the county of Gwynedd, and when this comes to an end—the rundown will start in 1981—we will have an enormous unemployment problem in my area. Surely this must be a central criterion for deciding which areas are special development areas and which are development areas. We are looking not just at the present static position but at the well-known trends and the certainties—things such as the ending of employment in this scheme. That must be catered for in the decisions that are taken on industrial development incentives.

The argument is that we are reducing Gwynedd from special development area status to development area status to save money. Regional grants paid to Gwynedd for 1978–79 totalled only £135,000. On that basis the total saving by these changes would be about £50,000 a year. This loss of a major incentive, at so low a cost, is just not acceptable.

I ask the Government to give an assurance that they will reconsider the position in areas such as Gwynedd where obvious changes are taking place that will materially affect unemployment levels and probably push the figure up to about 20 per cent, if there is no intervention.

Secondly, I refer briefly to the weaknesses I see in the changes that are to be made in the WDA and the NEB by the Bill. I object greatly to the limitation on share acquisition. One can see that there are mechanics for getting rid of the shares of profitable companies, so why restrict their acquisition? I object to the deletion of powers to help reorganise industry. The WDA has responsibilities for modernising industry, in clause 1(3). Certainly it ought to have powers to reorganise as well as to modernise, because the one and the other must go together.

I am very concerned about the reduction in selective financial assistance, because this has great flexibility. From my previous experience, I know the value of the flexibility in selective financial assistance, and I want an assurance that no development area or special development area in Wales will be worse off in competing with other assisted areas of Europe because of the changes to the Acts.

We want to see economic planning, particularly at the time of the development of the microprocessor. We also want to see the restrictions on forming bodies corporate by the WDA lifted, and not pressed, as is proposed in the Bill.

Finally, what are the present Government's strategies for the future? Where is the strategy to ensure that there will be jobs in the development areas? How shall we ensure the right training and the right education to meet the technological revolution? How shall we achieve greater investment when we see steps being taken to send investment overseas and the flight of capital to other areas? What will be the means of ensuring that greater private spending does not go straight into the multinationals and overseas but comes to provide jobs in our areas? How shall we ensure that a geographic balance is ensured over the coming years?

In what we have heard today there is no glimmer of hope. From our experience, the free-for-all does not provide the answers. For that reason, I shall be voting against the Second Reading of the Bill.

9.1 pm

Mr. John Browne (Winchester)

When I look at the Bills which the Government are bringing before the House in the current Session, I am convinced of one thing: the Prime Minister is giving us a new deal. It is a new deal that is just as revolutionary, just as fundamental and will prove to be just as historic as the new deal given to the people of the United States of America by the late President Roosevelt. But whereas President Roosevelt's new deal was in a time of deep recession, this new deal is offered in a time of rampant inflation and of anti-enterprise. I believe, however, that it will be successful, that it will be grasped by industrialists, entrepreneurs and working people in this country, and that it will prove to be historic.

The Bill is part of this new deal. I particularly welcome the fact that Government expenditure is being held, with the exception of clause 8. I particularly welcome the release under clause 1, and I welcome clauses 7, 15 and 16. I believe that the Bill gives freedom for individuals running business. It is absolutely right to allow the private sector to do its correct job as part of the British team.

With regard to Government expenditure, many opponents, on both sides of the House, of the present Government's policy of stabilisation of Government spending cite the writings and teachings of the great Lord Maynard Keynes, but I wonder whether it is really fair to do this, particularly today, in the last quarter of the twentieth century. Lord Keynes lived and wrote at a time of enterprise and of acute industrial depression. Today we live in a time of rampant inflation, inflation that is more serious than recession, and the spirit of enterprise has become anti-enterprise. I believe that if Lord Keynes were asked today, he would endorse the present Government's plans—plans which do not aim at cutting investment in British industry. On the contrary, the Government's aim is to increase investment, but investment by the private sector, the people whose professional skills fit them for this job. They are people who, unlike the Government, are professional investors, who know how to look for viable long-term projects.

With regard to the availability of finance, perhaps I may say as an international banker that to my certain knowledge there are vast sums of money in Britain and abroad just fighting for good investment opportunities, trampling over themselves down the yield curve looking for opportunities in which to invest. Let us just take the Eurodollar market itself—just dollars, net dollars. A total of 420,000 million dollars is available for investment. The problem is not lack of funds but lack of viable investment opportunities, where the risks are matched by the returns.

We must present viable projects to our investors, including trade union pension funds, all over the world. We shall then encounter little difficulty. It has been said that people will pay less when they have not taken the risks in the enterprises now being offered to the public. In fact, of course, this lower risk will be reflected in the price of the shares offered. A viable company gets it capital with much less dilution than does a company in trouble.

The prime duties of the Government are the provision of defence, the maintenance of law and order and the maintenance of a sound currency. They muse also provide encouragement for vibrant economic enterprise where investment, good management and good work are rewarded. The Government must now, in the twentieth century, also provide sound social welfare for the needy.

These duties have been almost totally neglected and Governments have been tempted to interfere with, and to control, business investment. They have interfered beyond their duty where they had little or no skill. Private sector investors should be encouraged, therefore, to evaluate new projects and managers must be allowed to practise in an atmosphere which encourages good management. Working people must be encouraged to work for real wages and for real job satisfaction. If we achieve that, we shall create an environment in which jobs are truly protected because we shall satisfy customers all over the world who will long to buy our goods even though we may have an inflated currency. The satisfied customer is the true, long-term protector of our jobs.

This Bill will reduce politically motivated investment which is often undertaken merely to protect jobs without looking to the future to see whether those jobs are profitable and how long they will be protected. It will give opportunities to those with skills to co-operate in joint enterprise, which alone can raise our real living standards.

The Bill is part of a new deal. Let us not fail to grasp this opportunity. Most importantly, let it never be said that we in this House, through lack of foresight and willingness to change with the times, prevented the people of our country from seizing a great opportunity.

9.8 pm

Mr. D. N. Campbell-Savours (Workington)

It seems, Mr. Sneaker, that I have two minutes to present the case for the Northern region. That is shocking, because I have sat here for four hours. I feel strongly, because it was the intention of the House, only a matter of days ago, to set up a system whereby hon. Members could speak for only 10 minutes at this time of night. It is deplorable that I should be deprived of my right to speak. I have been deprived of that right not only by hon. Members on the Government Benches but equally by hon. Members on the Opposition Benches.

I agreed to speak in this debate, and it is unfortunate that in 30 seconds I must sit down. Perhaps, Mr. Speaker, you would care to comment on my strictures.

Mr. Speaker

I accept the hon. Member's invitation. Mr. Deputy Speaker made an appeal for voluntary 10-minute speeches. Immediately following that appeal there was a speech lasting 19 minutes. The next speech lasted 17 minutes, the next 16 minutes, the next 13 minutes and the next 15 minutes. Clearly, the voluntary 10-minute rule does not work. I shall be obliged, in the interests of the House, to use the discretion for compulsory 10-minute speeches which the House vested in me last week.

9.10 pm

Mr. Eric G. Varley (Chesterfield)

In his maiden speech, my hon. Friend the Member for Leigh (Mr. Cunliffe) paid a generous tribute to his predecessor, Mr. Harold Boardman, who was a Member of the House for 34 years. We all remember him with affection and for his kindness and quiet diplomacy.

My hon. Friend the Member for Leigh is a welcome addition to the House on two counts. First, he is another powerful Labour voice from the North-West. Secondly, he is, like me, a member of the miners' group. His speech illustrated the devastating impact that Government policies will have on his constituency. The people of Leigh are fortunate to have my hon. Friend to fight their cause.

I must comment on the Secretary of State's extraordinary performance. He spent 42 minutes explaining the Bill without mentioning any of the NEB's major subsidiaries. He mentioned neither British Leyland nor Rolls-Royce. I can imagine the protests had a Labour Minister made a speech on an Industry Bill without mentioning BL or Rolls-Royce. No Conservative Member has mentioned those companies. I hope that the Secretary of State will come to the House soon to explain exactly how he intends to support BL.

In the six months since the Government have held office, their priorities have become increasingly clear. Those priorities are so well known that the Paymaster General has to use all his influence with the obedient Tory press to try to change the people's attitude towards the Government. No planted stories or articles in the Daily Mail, The Daily Telegraph or The Sun can change the reality. This Government's objectives are to add to the wealth of those who are already wealthy, at the expense of the poor and unemployed.

This miserable Bill is remarkable even when one applies Tory standards. The legislation is designed deliberately to maintain an increase in unemployment. It does that in two ways. First, it does it by meddling in the positive work of the NEB. Secondly, it does it by deliberately reducing incentives for job creation in high unemployment areas in England, Scotland and Wales.

Not only it is a miserable Bill which promotes unemployment, but it is a strange Bill, as the hon. Member for Bury St. Edmunds (Mr. Griffiths) said in an intervention. The Bill does peculiar things for reasons which are not adequately explained. For example, it sweeps away the register of interests of members of the board of British Shipbuilders and the NEB but, curiously, not of members of the British Aerospace board. When the Industry Bill was going through Parliament in 1975, we were under strong pressure from the official Tory Opposition to include a register of members' interests.

The Secretary of State said today that this was of no significance. The right hon. Member for Bridgwater (Mr. King), who is now the Minister for Local Government and Environmental Services, was passionate about what he called the answerability of members of the NEB. Tonight he, with other Tories, will troop into the Lobby to overturn something which he demanded on behalf of the official Opposition.

A theme of the Tory Party has been the need to reduce Government interference in the operation of State boards. The Tory manifesto was explicit about that and said that the Conservative Party would interfere less with management. However, in the very first Bill dealing with a State body the Government have decided to impose their own chief executive on the board. In clause 5 the Government substitute their commercial judgment for that of the board.

I understand doctrinaire Tories insisting that the NEB should be abolished. Indeed, for a brief period the abolition of the NEB was the policy of the Tory Party, as the hon. Member for Wolverhampton, South-West (Mr. Budgen) pointed out. I remember when the right hon. Gentleman who is now the Secretary of State for the Environment said: 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.] "The Right Approach" declared in 1976 that the NEB should be abolished. That is wrong-headed, but at least it is consistent. Tory policy may have been violated because the NEB has been kept in existence, but at the same time it is being hampered and harried. It will be obstructed from carrying out not only the task that the Labour Government set it but whatever job the Tories are keeping it in existence for.

We are told that the Prime Minister's most damaging adjective of condemnation is the word "wet". By her standards, the Secretary of State for Industry must be soaking wet. What a sad disappointment the right hon. Gentleman must be to her as she looks back to the days when he was her monetarist Rasputin.

There has been no denationalisation of the Post Office, although there has been petty meddling with its manufacturing powers. There has been no denationalisation of British Aerospace, although there is a half-baked scheme to sell off some shares. Subsidies for British Shipbuilders have been given, although not enough to ensure success.

It is no wonder that the hon. Member for Knutsford (Mr. Bruce-Gardyne) has refused to serve in this sopping wet Government. Nor is it any wonder that he has declared that he will not vote for the Bill and will abstain. In 1972 the hon. Gentleman kept the House up on a Friday night, during a debate on a previous Industry Bill. In that undertaking he was supported by the right hon. Member for Oswestry (Mr. Biffen). It is no wonder that the Chief Secretary—whom we all congratulate—has had to seek solace in matrimony.

The policy of the Secretary of State for Industry on the NEB is unsatisfactory by Tory standards. [AN HON. MEMBER: "Certainly."] The hon. Gentleman who said "Certainly" is with the hon. Member for Knutsford. Is there any advance on two? I assume that the hon. Gentleman will be abstaining with his hon. Friend. The Secretary of State's policy is unsatisfactory by Tory standards and by those of the hon. Member for Knutsford. The Bill does not make that policy any more palatable to the Opposition.

Mr. Bruce-Gardyne

The right hon. Gentleman referred to my explanation of why I did not feel that I could support the Bill tonight. It ill becomes him to try to take satisfaction from that because when he was Secretary of State for Industry he perpetrated, at least twice, precisely the same evasion of parliamentary responsibility as I am objecting to now.

Mr. Varley

I did not do anything different from what the right hon. Gentleman has done. I operated with the statutes passed by the House. I recall the 1972 Bill going through the House. On Second Reading—again I was replying for the Opposition—I said that an incoming Labour Government would use that Bill to good effect—and we did.

The fact that the hon. Member for Knutsford finds the Bill unsatisfactory and cannot support it makes it no more palatable for the Opposition. We gave the NEB the job of trying to assist small companies in the regions, and it made some useful investments which helped companies in difficulties in areas of high unemployment.

Under this Bill the NEB will no longer have the freedom to get on with that job. Neither will it have the finance. The small businesses that used to get assistance from the NEB, because orthodox City financiers turned them down, realise that they can expect little from the NEB under these new Tory restrictions. I predict that the flow of applicants will thin to a trickle, and I suspect that that is what the Secretary of State wants. That may be good news for several Tory Members, but it is extremely bad news for the workers which those companies would have employed.

We gave the NEB the job of promoting new ventures in high technology. Even the right hon. Gentleman, when he made his statement in July and again this afternoon—though it was not so fulsome today—acknowledged that the NEB had some expertise in this area. Sir Leslie Murphy, in his chairman's statement last year, wisely said: 'If we stand aside in this country and allow market forces alone to operate we shall be overtaken and displaced by those of our competitors who have learned the skills of forcing the pace of development and seizing market opportunity … Our activities in the field of computers and micro-electronics provide an excellent example of what I am saying. The evidence was that, left to itself, the private sector would not have secured an adequate place for the United Kingdom in this major technical and industrial revolution. We have had no assurance from the Secretary of State about the future of Inmos, for which no doubt Tory Members are still pressing their constituency claims. When we were in office, we had dozens of letters from Tory Members saying "Inmos is a very good thing. Will you see to it that it is located in my constituency?" I should think that the Department of Industry is getting similar letters now.

The forced sale of the NEB's shares in profitable companies, such as Ferranti and ICL, will not only starve the NEB of funds for investment but will expose these companies to the worst practices of City speculators. It is ironic that the management of Ferranti should have asked for the assistance of its shop stewards and trade union representatives in pleading with the Government to prevent an immediate sell-out of the NEB's shareholding en bloc because it is afraid of those who will buy into the company. I should think that the Secretary of State has had representations from Ferranti to the effect "Please do not do it in the way you suggest." It is scandalous that assets created by the taxpayer should be turned into the pickings of City speculators.

The Secretary of State gave the impression that the NEB will be allowed to take its time. The right hon. Gentleman knows that is not true, because in July he said that it had to contribute £100 million in the current financial year. The NEB has until the end of March to make that contribution. Is that the way to have forced sales? Even accepting that the Government are right and can probably get the legislation through the House, is it right that the NEB should be forced to take this action? What sort of prices will it get under that kind of threat? It is no wonder that Mr. Alun Jones, the chief executive of Ferranti, said that If the shares are sold en bloc we would lose our independent identity as a company. That is apparently what the Secretary of State wants. It will be forced to sell at a time when every objective financial adviser regards it as wrong.

The Prime Minister and the Secretary of State for Industry are constantly sermonising about the fact that the Government have no money of their own and that public money is taxpayers' money. That is absolutely right, and they should also remember that it was the taxpayers who made possible the existence and prosperity of ICL. Why is the right hon. Gentleman robbing the taxpayers of their rightful return on the £40 million investment made on their behalf by Mr. Christopher Chataway when he was a Tory Minister? Why is that return being handed over to people who have previously showed no interest in ICL?

Taxpayers' money made possible the survival and prosperity of Ferranti, and the right hon. Gentleman is robbing the taxpayers of their rightful return on that investment. The workers in Ferranti are fearful that their company will come under the control of outside interests, who will carve it up and strip its assets. What is the right hon. Gentleman doing to prevent that?

I know that the right hon. Gentleman is tired and does not get much sleep, but I shall immediately give way to him if he will tell us what he is proposing to do about forced sales. He obviously does not want to do so because he knows that I am right. To force companies to sell and to give them a deadline of 1 March is the worst possible way to dispose of public assets.

When the Labour Government rescued Ferranti, the present Secretary of State for the Environment queried whether profitability could be achieved and whether the unions would help. The work force helped, the company became profitable, and now the Government want to fling it to the speculators—and the same applies to Fairey Holdings and Brown Boveri.

ICL was rescued by the State and is now a major international computer manufacturer which is paying solid dividends to the NEB and the taxpayer. Fairey Holdings was bankrupt under private ownership. It was taken over by the NEB at the request of the management and workers, and it is now secure and increasingly profitable. Ferranti capsized under private ownership. It was rescued by the Labour Government four years ago, and is now buoyant and profitable.

The Secretary of State for Industry has not told us what he is up to. The House will remember the synthetic fury of the Tory Party when our Industry Bill came before the House last January. The Opposition moved an amendment deploring the presentation of our Bill on what they described as totally inadequate documentary evidence on the performance and prospects of the NEB. The right hon. Gentleman, however, has brought this Bill before the House, radically altering the functions of the NEB, without a single scrap of paper for the House to study. Memories are short, but after the fulminations that we had at that time, last January, from the right hon. Gentleman, he is in need of urgent treatment for amnesia. Looking at him, I would think that he could do with a good night's sleep.

The Tory Party also made a tremendous fuss about the rate of return to be set for the NEB. That went on right from the time that the right hon. Member for Henley (Mr. Heseltine) said in 1975: We simply do not believe that the NEB will earn an adequate return."—[Official Report, Standing Committee E, 13 March 1975; c. 184.] Under the Labour Government, the NEB was well on its way to reaching its financial target of a return of between 15 per cent, and 20 per cent, by 1981. The return last year was 11.3 per cent. Under this Government, that is impossible because the NEB does not know what the rate of return is supposed to be.

I do not doubt that the NEB has asked the Secretary of State if he will impose a rate of return. This afternoon the Secretary of State said that he is thinking about the matter—he does not know. Of course, the NEB will refuse to sell any of its enterprises until it knows the rate of return that will be set by the Secretary of State. If the Secretary of State strips the NEB of its profitable assets there is no way in which it can achieve the rate of return that was set for it by the Labour Government.

It is even more deplorable, coming from this Government, who occasionally have the arrogance to proclaim that they have all the financial wisdom in the country, that the statement in their manifesto on page 15 promises: We want to see those industries that remain nationalised running more successfully and we will therefore interfere less with their management and set them a clearer financial discipline in which to work. Of course, the Secretary of State has set no financial discipline because he does not know what it is.

It is becoming increasingly difficult for companies in the public and private sectors to achieve a satisfactory rate of return. Sky-high interest rates are depressing investment. The dark picture that was painted last June by the Financial Secretary to the Treasury in the Financial Statement and Budget Report is becoming still darker. The House will recall that the Financial Secretary admitted that, under the Labour Government, total investment in manufacturing rose by about 9 per cent, last year. The House will also recall that, despite the alleged massive incentives that there were going to be in the Budget—the rolling back of the frontiers of the State—the Financial Secretary forecast that economic activity would decline, that domestic demand would be weak as a result of the Budget, and that there would be a fall in the level of output.

Since then, the position has become markedly worse. Yesterday, the Financial Times survey of business opinion was published. The recent report of the CBI showed that companies are cutting back further on industrial investment. The Financial Times survey referred to the confidence about the prospects for business falling further last month to the lowest point for three years. A few days ago the Financial Weekly announced the appointment of a new executive partner in charge of insolvency at the top accountants, Peat, Marwick and Mitchell. It said: Britain's experts in liquidations, receiverships and bankruptcies are predicting a grim increase in their business this winter. … Peat, Marwick, Mitchell is not the only accountancy firm getting itself geared up. … Jan Bond, senior insolvency partner at Deloitte, Haskins and Sells said: '… we are preparing ourselves for a bit of a boom.' John Gillies, senior manager of the national insolvency office at Ernst and Whinney, said: 'We already have a very large insolvency staff … we are looking to strengthen it.' There would be 'a further increase in the number of insolvencies' because of the 'general economic condition'. Insolvency is the biggest growth industry in the country. It is the biggest industry that we shall have under this Government in their first few years of office. However, this is the time when the Government decide to lift all exchange control restrictions and allow the outflow of investment funds, such as they are. This is the time when the Chief Secretary announces expenditure cuts which, on his own admission, will increase unemployment by 300,000. This is the time when the Secretary of State brings forward a Bill which will cripple the NEB and reduce regional incentives when they are needed more than ever.

The Bill is not only a measure that will damage industry and employment; it is a confidence trick. All the sales of solid public assets which the Secretary of State is enforcing will not produce a pennyworth of extra industrial investment. They will not increase profitability by a penny piece. They will not reduce by a single man or woman the queues of unemployed which the staff of Saatchi & Saatchi used to impersonate.

In six months the Secretary of State for Industry has abandoned his own policies and has found nothing to replace them. In Opposition, he proclaimed that he had all the solutions, yet in Government he does not even know what questions to ask. How can he solve the problems when he shows no sign of understanding what they are—the problems of regional disparity, stimulating investment and bringing new jobs and homes to some of the hard-pressed areas of the country? The Bill offers no solutions. Instead, it makes the real problems harder to solve. That is why we shall vote against it tonight.

9.35 pm

The Minister of State, Department of Industry (Mr. Adam Butler)

We have had a variety of speakers and speeches. The House will form its own judgment, but I should like to add my tribute to the hon. Member for Leigh (Mr. Cunliffe) on his maiden speech. I have some sympathy with the hon. Gentleman, because he said that his main interests were textiles and mining. The same can be said of my constituency of Bosworth. The hon. Gentleman's experience is in mining, and mine is in textiles, so perhaps in future we shall have some exchanges across the Floor.

The debate has ranged across the spectrum of politics. My hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne) will not mind if I describe him as being somewhere near the Right wing. He made an important point about parliamentary scrutiny of the expenditure of money. We shall have regard to that. However, when he said that he hated all Industry Bills and that this was the best of the bunch, I felt that that was high praise.

Some good sense has been spoken and some genuine feeling has been expressed about the problems of the regions. I sympathise with the hon. Member for Workington (Mr. Campbell-Savours) in the short time he had to express his views. The most intriguing thing for Conservative Members has been to try to spot the supporters of the right hon. Member for Bristol, South-East (Mr. Benn), and, indeed, the contenders for the title or those who aspire to the label "social democrat". On the contributions to this debate, we judge that Bristol has won by six goals to one.

The speech of the right hon. Member for Chesterfield (Mr. Varley) was more miserable than any of the other contributions from Labour Members, which were quite ridiculously and exaggeratedly gloomy. We have taken a lot from the right hon. Member in the past, but I do not see how he can reconcile his accusations that apparently we are sopping wet and at the same time deliberately designing to increase unemployment. That is not an accusation that I can stand for. To set out deliberately to create unemployment requires a callousness that I hope is not to be found in this House. What the right hon. Gentleman forgets is that as Secretary of State for Industry he presided over the most massive increase in unemployment. He referred to the queues which Saatchi & Saatchi portrayed at the time of the election. They were the queues that the Labour Government had created.

Most of the debate has revolved around the National Enterprise Board, but I should first like to say something about the English Industrial Estates Corporation. This was particularly welcomed by my hon. Friend the Member for Newcastle upon Tyne, North (Sir W. Elliott), who at least has the benefit of knowing what he is talking about. He referred to the need for small factories in his area as well as for the encouragement of trading estates. He said that that was something for which the Bill provided. He asked several particular questions, and perhaps I can reply by letter because there are many other matters with which I must deal.

Our policies for the Corporation are typical of the Bill as a whole and of our industrial policy as a whole. This is a way of involving the private sector in the activities of the Corporation, giving the opportunity to tenants to buy their factories and to increase the activity of the Corporation because of the involvement of private sector money. I hope that this will be welcomed. I judge by the absence of criticism from the Opposition Benches of that part of the Bill that that is the case.

My right hon. Friend the Secretary of State made a statement on regional policy in July. There was some debate at that time. There has been further discussion of the policy from time to time in the House. I do not propose to dwell on the matter for any length of time, although a question was asked about how special development areas could be made more attractive through the present policy. It must be apparent that if one is concentrating aid on a particular area, and the rate of grant remains the same and the concentration exists, that area becomes relatively more attractive.

The hon. Member for Caernarvon (Mr. Wigley), who appears to have left the Chamber for a moment, attacked the Bill for reducing heavily the regional aid available to Wales. Exaggeration does not pay in presenting an argument. The House will be aware that the reduction in the size of population covered by the policy changes in Wales, to be phased in over two years, will reduce the proportion of population covered from 100 per cent, to 94 per cent. That will concentrate the aid where it is most needed.

The right hon. Member for Deptford (Mr. Silkin) and other hon. Members raised the question of the powers of the Secretary of State. These powers are very similar to those found in other Bills. It is not surprising that if one reduces the financial role of the NEB and thereby the limits of money that one would expect to spend, it is to be expected that one reduces the levels which require the Secretary of State's approval. This may be an increase in the Secretary of State's power, but, at least, he is responsible to Parliament and can answer questions in the House on the expenditure of taxpayers' money. The National Enterprise Board cannot answer questions in the House.

An important but seemingly technical matter was raised in relation to the power of direction under clause 2 and the possible effect on private companies and partners of the NEB. This is an extension of the existing power under section 7 of the Industry Act 1975 and subject to the same procedural requirements—for instance, prior consultation with the NEB or the Agencies, the laying of the direction before Parliament and its publication in the annual report of the Agencies.

As a number of Members raised this matter, it may be helpful to inform them that the power to direct transfer of assets will not override private rights—for example, any limitation on share transfers contained in the articles of association of private companies in which the NEB or the Agencies hold shares. Nor will it override any existing agreement between the NEB or Agencies, or their subsidiaries, and companies, restricting the transfer of shares. But, subject to any direction to the contrary, the NEB or Agencies will be under an obligation to seek to renegotiate such agreements if they conflict with the provisions of clause 2. There is no reason for present private partners, or aspiring private partners, of the NEB to have any concern on this point. I hope that hon. Members' queries have been resolved.

I judge that there is general agreement on the need for the NEB to continue, at least for the time being, its high technology role, provided that it is both limiting and tapering as private sector participation grows. As my right hon. Friend the Secretary of State said, the climate has not been conducive to the provision of private sector money for high-risk projects.

When we came to power, the NEB had that role and we judged that it would be sensible for it to continue with that role, but we require that it should dispose of its assets as soon as it is commercially sensible to do so.

In saying that private money has not been available, I remind hon. Members, as did my hon. Friend the Member for Southampton, Test (Mr. Hill), whom we welcome back as a Member of the House, of the progress of Mullard in giving employment to thousands without the expenditure of a single penny of taxpayers' money. It can be done.

Mr. Cordon Wilson (Dundee, East)

I have been listening with interest, but the Minister is not addressing himself to the problem that is materialising in Scotland. With closure after closure, the Scottish economy is facing collapse. If the Government propose to cut back expenditure of public money in industry in Scotland and, with high interest rates, prevent the private market from being able to supply money for industry, what solution will the Government produce for the Scottish economy except that which seems to be in prospect, namely, mass unemployment?

Mr. Butler

I am not sure whether the hon. Gentleman was in the Chamber when we had an exchange on Scottish matters. If so, he will have heard what was said and the helpful intervention by my hon. Friend the Under-Secretary of State for Scotland. The hon. Gentleman should know that the Scottish Development Agency has more in its budget for this year than it spent last year. That is at least one answer to his question.

I shall not have time to cover all the points raised in the debate, but I wish to deal with the question of disposals, on which there seems to be considerable confusion among Labour Members.

The right hon. Member for Chesterfield wondered why the benefit of improving a company's performance should not be felt by the taxpayer. If a company has been improved as the right hon. Gentleman described and there is evidence of growth and profits among NEB subsidiaries, the benefit of that improvement will be taken by the taxpayer when the asset is realised.

Mr. Varley

It may be the hon. Gentleman's sincere ideological belief that those assets can be disposed of, though we deplore it, but by setting a deadline and requiring that the NEB must dispose of its assets—presumably ICL, Ferranti. Brown Boveri and Fairey—by the end of March, no manoeuvrability is allowed and the disposal of assets will become a forced sale. In those circumstances, the taxpayer will not get a benefit.

Mr. Butler

The right hon. Gentleman would not appreciate the need to reduce Government expenditure and borrowing. He knows that our wish to meet that need is one of the reasons why we wish the assets to be disposed of. There is no reason why they should not realise a satisfactory market price. Another reason for disposal is that those assets would benefit from a return to the private sector.

I paid special regard to the speeches of the right hon. Members for Deptford and Bristol, South-East and the self-confessed author of the National Enterprise Board, the hon. Member for Nottingham. Carlton. Here we begin to find exactly what is the alternative strategy. As far as one can establish, it is an extension of the recipe which failed before.

When we look at the list—

Mr. Stuart Holland

The Minister referred to the hon. Member for Nottingham, Carlton as co-author of the NEB proposals. I am not sure whether he got the constituency right. If he was referring to my arguments, perhaps he would care to reply to the case.

Mr. Butler

I apologise to the hon. Member for Vauxhall (Mr. Holland). However, he delayed by 30 seconds or so my reply to his points.

The solution to our problems would appear to be massive Government involvement and power to direct investment, and if the banks and financial institutions are not prepared to direct that investment presumably they will be nationalised; a recipe of import controls; a demand to pull out of the EEC, which is the only hope for our high technology and capital-intensive industries; a need to give greater power to the trade unions; a greater reinforced National Enterprise Board, of course; and then the magic solution of the reintroduction of planning agreements.

It is inconceivable to the Government how the Opposition could wish to bring back planning agreements. Those agreements were not opposed, as the hon. Member for Vauxhall reminded us, but were subject to negotiation. If the Labour Government had had a great rapport with industry through the strategy, we would have expected a mass of planning agreements to exist now.

Mr. Campbell-Savours

rose—

Mr. Butler

I do not have time to give way.

Only two planning agreements were signed. One was a shotgun marriage with Chrysler, which did not have any money. The other was with the National Coal Board. Both agreements lapsed. Yet that is the magic factor that the Opposition say will weld the plan together.

Mr. Campbell-Savours

rose—

Mr. Butler

If the hon. Member for Workington does not wish to press his question, I shall not give way to anyone else.

Mr. Speaker

Order. It seems that the Minister was giving way, but changed his mind.

Mr. Campbell-Savours

rose—

Mr. Speaker

If the Minister does not give way, the hon. Gentleman must resume his seat.

Mr. Butler

I gave the hon. Member for Workington the opportunity to put a question. He refused to do so.

Apart from Government interference at all levels in the direction of investment, the policy of the Labour Party adds up to more, more and more money—the expenditure of taxpayers' money in every conceivable direction. That overspending, overborrowing and overtaxing brought the country to the state in which the Conservatives found it when they returned to power.

The Government's industrial policy, some of which is presented in the Bill, is designed to produce a stronger and wider industrial base against the day when North Sea oil runs out. It is we who are concerned with the creation of wealth. Too often—it was apparent from today's speeches—Labour Members are obsessed solely with its distribution, whether it is for education, social service, industrial investment or anything else. Until they learn the simple lesson that wealth has to be created before it can be distributed, they will not make a contribution to bringing this country back to where it ought to belong.

That wealth will come from the efforts, skills and inventiveness of those who work in industry. [Interruption.] The right hon. Member for Bristol, South-East might well listen to what I have to say. Wealth creation comes from those who work in industry, but it also comes from those who are prepared to put their money behind the skills and efforts of the people in industry. It is, or should be, a partnership of capital and labour in its widest sense.

Our approach is through incentive—a word that Labour Members do not like—and we have taken steps in that direction through reduction in personal income tax at all levels. It is through freedom from unnecessary Government controls and interference. It is through the encouragement of responsibility, which flows from freedom—the encouragement of responsibility on the part of both management and workers. We need a balance within industry between the forces which operate there. That, in essence, is the Conservative policy, which will bring wealth and prosperity back to this country.

The Bill represents a major step forward in implementing the Government's industrial policy. In it we are hacking back the jungle of Socialism which has so encroached upon our industrial economy in recent years, stifled prosperity and held back success. The Government were elected because people wanted less and not more nationalisation. We were elected because people wanted less taxation and because they did not want their earnings, their savings, their pension funds, to be directed by Labour's national executive into schemes dreamt up by the right hon. Member for Bristol, South-East. Most people share our view that management is best left to the managers and that industry is better off in the hands of industrialists and not in the hands of the Government.

The curse of Socialism is that it breeds the attitudes and practice of dictatorship, whatever Labour Members may say. They would tell the manufacturer what to produce. They would tell the manufacturer what wages he should pay and what prices he should charge. They would tie his

hands with planning agreements and other forms of red tape. They would deny to the consumer the choice of what he should buy and of how he should spend his own money, or what is left of it. The Government reject all those things.

The Bill will lessen the role of the State and its agencies and cut back the public sector. It will reduce the demands of the Government on the taxpayer. It will ensure the more efficient use of resources in the areas of greatest need. Above all, it will promote free enterprise and make for a healthier economy. I therefore commend it to the House.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 307, Noes 250.

Division No. 94]	AYES	[10.00 pm
Adley, Robert	Clarke, Kenneth (Rushcliffe)	Gow, Ian
Altken, Jonathan	Clegg, Walter	Gower, Sir Raymond
Alexander, Richard	Cockeram, Eric	Grant, Anthony (Harrow C)
Amery, Rt Hon Julian	Colvin, Michael	Gray, Hamish
Ancram, Michael	Cope, John	Greenway, Harry
Arnold, Tom	Cormack, Patrick	Grieve, Percy
Aspinwall, Jack	Corrie, John	Griffiths, Eldon (Bury St Edmunds)
Atkins, Robert (Preston North)	Costain, A. P.	Griffiths, Peter (Portsmouth N)
Atkinson, David (Bournemouth, East)	Cranborne, Viscount	Grist, Ian
Baker, Kenneth (St. Marylebone)	Critchley, Julian	Grylls, Michael
Baker, Nicholas (North Dorset)	Crouch, David	Gummer, John Selwyn
Beaumont-Dark, Anthony	Dean, Paul (North Somerset)	Hamilton, Hon Archie (Eps'm&Ew'll)
Bell, Ronald	Dickens, Geoffrey	Hamilton, Michael (Salisbury)
Bendall, Vivian	Dorrell, Stephen	Hampson, Dr Keith
Benyon, Thomas (Abingdon)	Douglas-Hamilton, Lord James	Hannam, John
Benyon, W. (Buckingham)	Dover, Denshore	Haselhurst, Alan
Best, Keith	du Cann, Rt Hon Edward	Hastings, Stephen
Bevan, David Gilroy	Dunn, Robert (Dartford)	Havers, Rt Hon Sir Michael
Biffen, Rt Hon John	Durant, Tony	Hawksley, Warren
Blackburn, John	Dykes, Hugh	Hayhoe, Barney
Blaker, Peter	Eden, Rt Hon Sir John	Heath, Rt Hon Edward
Bonsor, Sir Nicholas	Edwards, Rt Hon N. (Pembroke)	Heddle, John
Boscawen, Hon Robert	Eggar, Timothy	Henderson, Barry
Bottomley, Peter (Woolwich West)	Elliott, Sir William	Heseltine, Rt Hon Michael
Bowden, Andrew	Emery, Peter	Hicks, Robert
Boyson, Dr Rhodes	Eyre, Reginald	Higgins, Rt Hon Terence L.
Braine, Sir Bernard	Falrbairn, Nicholas	Hill, James
Bright, Graham	Fairgrieve, Russell	Holland, Philip (Carlton)
Brinton, Tim	Faith, Mrs Sheila	Hooson, Tom
Brittan, Leon	Farr, John	Howe, Rt Hon Sir Geoffrey
Brocklebank-Fowler, Christopher	Fell, Anthony	Howell, Rt Hon David (Guildford)
Brooke, Hon Peter	Fenner, Mrs Peggy	Howell, Ralph (North Norfolk)
Brotherton, Michael	Finsberg, Geoffrey	Hunt, David (Wirral)
Brown, Michael (Brigg & Sc'thorpe)	Fisher, Sir Nigel	Hunt, John (Ravensbourne)
Browne, John (Winchester)	Fletcher, Alexander (Edinburgh N)	Hurd, Hon Douglas
Bryan, Sir Paul	Fletcher-Cooke, Charles	Irving, Charles (Cheltenham)
Buchanan-Smith, Hon Alick	Fookes, Miss Janet	Jenkin, Rt Hon Patrick
Buck, Antony	Forman, Nigel	Johnson Smith, Geoffrey
Budgen, Nick	Fowler, Rt Hon Norman	Jopling, Rt Hon Michael
Bulmer, Esmond	Fox, Marcus	Joseph, Rt Hon Sir Keith
Burden, F. A.	Fraser, Rt Hon H. (Stafford & St)	Kaberry, Sir Donald
Butcher, John	Fraser, Peter (South Angus)	Kimball, Marcus
Butler, Hon Adam	Fry, Peter	King, Rt Hon Tom
Cadbury, Jocelyn	Galbraith, Hon T. G. D.	Kitson, Sir Timothy
Carlisle, John (Luton West)	Gardiner, George (Reigate)	Knight, Mrs Jill
Carlisle, Kenneth (Lincoln)	Gardner, Edward (South Fylde)	Knox, David
Carlisle, Rt Hon Mark (Runcorn)	Garel-Jones, Tristan	Lamont, Norman
Channon, Paul	Gilmour, Rt Hon Sir Ian	Lang, Ian
Chapman, Sydney	Goodhew, Victor	Langford-Holt, Sir John
Clark, Hon Alan (Plymouth, Sutton)	Goodlad, Alastair	Lawrence Ivan
Clark, William (Croydon South)	Gorst, John	Lawson, Nigel
Lee, John	Oppenheim, Rt Hon Mrs Sally	Squire, Robin
Lester, Jim (Beeston)	Osborn, John	Stanbrook, Ivor
Lewis, Kenneth (Rutand)	Page, John (Harrow, West)	Stanley, John
Lloyd, Ian (Havant & Waterloo)	Page, Rt Hon R. Graham (Crosby)	Steen, Anthony
Lloyd, Peter (Fareham)	Parkinson, Cecil	Stevens, Martin
Loveridge, John	Parris, Matthew	Stewart, Ian (Hitchin)
Luce, Richard	Patten, Christopher (Bath)	Stewart, Allan (East Renfrewshire)
Lyell, Nicholas	Patten, John (Oxford)	Stokes, John
McAdden, Sir Stephen	Pattie, Geoffrey	Stradling Thomas, J.
McCrindle, Robert	Pawsey, James	Tapsell, Peter
Macfarlane, Neil	Percival, Sir Ian	Taylor, Robert (Croydon NW)
MacGregor, John	Peyton, Rt Hon John	Tebbit, Norman
MacKay, John (Argyll)	Pink, R. Bonner	Temple-Morris, Peter
McNair-Wilson, Michael (Newbury)	Pollock, Alexander	Thatcher, Rt Hon Mrs Margaret
McNair-Wilson, Patrick (New Forest)	Porter, George	Thomas, Rt Hon Peter (Hendon S)
McQuarrie, Albert	Powell, Rt Hon J. Enoch (S Down)	Thompson, Donald
Madel, David	Prentice, Rt Hon Reg	Thorne, Neil (Ilford South)
Major, John	Price, David (Eastleigh)	Thornton, Malcolm
Marland, Paul	Prior, Rt Hon James	Townend, John (Bridlington)
Marlow, Tony	Proctor, K. Harvey	Townsend, Cyril D. (Bexleyheath)
Marshall, Michael (Arundel)	Pym, Rt Hon Francis	Trippier, David
Marten, Neil (Banbury)	Raison, Timothy	Trotter, Neville
Mates, Michael	Rathbone, Tim	van Straubenzee, W. R.
Mather, Carol	Rees, peter (Dover and Deal)	Vaughan, Dr Gerard
Maude, Rt Hon Angus	Rees-Davies, W. R.	Viggers, Peter
Mawby, Ray	Renton, Tim	Waddington, David
Mawhinney, Dr Brian	Rhodes James, Robert	Wakeham, John
Maxwell-Hyslop, Robin	Ridley, Hon Nicholas	Waldegrave, Hon. William
Mayhew, Patrick	Rifkind, Malcolm	Walker, Rt Hon peter (Worcester)
Mellor, David	Rippon, Rt Hon Geoffrey	Walker, Bill (Perth & E Perthshire)
Meyer, Sir Anthony	Roberts, Michael (Cardiff NW)	Walker-Smith, Rt Hon Sir Derek
Miller, Hal (Bromsgrove & Redditch)	Roberts, Wyn (Conway)	Wall, Patrick
Mills, Iain (Meriden)	Ross, Wm. (Londonderry)	Waller, Gary
Mills, Peter (West Devon)	Rost, Peter	Walters, Dennis
Miscampbell, Norman	Royle, Sir Anthony	Ward, John
Mitchell, David (Basingstoke)	Sainsbury, Hon Timothy	Watson, John
Moate, Roger	St. John-Stevas, Rt Hon Norman	Wells, John (Maidstone)
Molyneaux, James	Scott, Nicholas	Wells, Bowen (Hert'rd & Stev'nage)
Monro, Hector	Shaw, Giles (Pudsey)	Wheeler, John
Montgomery, Fergus	Shaw, Michael (Scarborough)	Whitney, Raymond
Moore, John	Shelton, William (Streatham)	Wickenden Keith
Morris, Michael (Northampton, Sth)	Shepherd, Colin (Hereford)	Wilkinson, john
Morrison, Hon Charles (Devizes)	Shepherd, Richard (Aldridge-Br'hills)	Williams, Delwyn (Montgomery)
Morrison, Hon Peter (City of Chester)	Shersby, Michael	Winterton, Nicholas
Mudd, David	Silvester, Fred	Wolfson Mark
Murphy, Christopher	Sims, Roger	Young, Sir George (Acton)
Myles David	Skeet T. H. H.	Younger, Rt Hon George
Neale, Gerrard	Smith, Dudley (War. and Leam'ton)
Needham, Richard	Speed, Keith	TELLERS FOR THE AYES:
Nelson, Anthony	Speller, Tony
Neubert, Michael	Spence, John	Mr. Spencer Le Marchant and
Newton, Tony	Spicer, Michael (S Worcestershire)	Mr. Anthony Berry.
Nott, Rt Hon John	Sproat, Iain
NOES
Abse, Leo	Canavan, Dennis	Dobson, Frank
Adams, Allen	Cant, R. B.	Dormand, Jack
Allaun, Frank	Carmichael, Neil	Douglas, Dick
Alton, David	Cartwright, John	Douglas-Mann, Bruce
Anderson, Donald	Clark, David (South Shields)	Dubs, Alfred
Archer, Rt Hon Peter	Cocks, Rt Hon Michael (Bristol S)	Duffy, A. E. P.
Armstrong, Rt Hon Ernest	Cohen, Stanley	Dunn, James A. (Liverpool, Kirkdale)
Ashley, Rt Hon Jack	Coleman, Donald	Dunnett, Jack
Ashton, Joe	Concannon, Rt Hon J. D.	Dunwoody, Mrs Gwyneth
Barnett, Guy (Greenwich)	Conlan, Bernard	Eadie, Alex
Barnett, Rt Hon Joel (Heywood)	Cook, Robin F.	Eastham, Ken
Beith, A. J.	Cowans, Harry	Ellis, Raymond (NE Derbyshire)
Benn, Rt Hon Anthony Wedgwood	Craigen, J. M. (Glasgow, Maryhill)	Ellis, Tom (Wrexham)
Bennett, Andrew (Stockport N)	Crowther, J. S.	English, Michael
Bidwell, Sydney	Cryer, Bob	Ennals, Rt Hon David
Booth, Rt Hon Albert	Cunliffe, Lawrence	Evans, Ioan (Aberdare)
Boothroyd, Miss Betty	Cunningham, George (Islington S)	Evans, John (Newton)
Bottomley, Rt Hon Arthur (M'brough)	Cunningham, Dr John (Whitehaven)	Ewing, Harry
Bradley, Tom	Dalyell, Tam	Field, Frank
Bray, Dr Jeremy	Davidson, Arthur	Fitch, Alan
Brown, Hugh D. (Provan)	Davies, Rt Hon Denzil (Llanelli)	Flannery, Martin
Brown, Robert C. (Newcastle W)	Davies, Ifor (Gower)	Fletcher, L. R. (Ilkeston)
Brown, Ronald W. (Hackney S)	Davis, Clinton (Hackney Central)	Fletcher, Ted (Darlington)
Brown, Ron (Edinburgh, Leith)	Davis, Terry (B'rm'ham, Stechford)	Ford, Ben
Buchan, Norman	Deakins, Eric	Forrester, John
Callaghan, Rt Hon J. (Cardiff SE)	Dean, Joseph (Leeds West)	Foster, Derek
Callaghan, Jim (Middleton & P)	Dempsey, James	Foulkes, George
Campbell, Ian	Dewar, Donald	Fraser, John (Lambeth, Norwood)
Campbell-Savours, Dale	Dixon, Donald	Freeson, Rt Hon Reginald

Garrett, John (Norwich S)	McKelvey, William	Sandelson, Neville
Garrett, W. E. (Wallsend)	MacKenzie, Rt Hon Gregor	Sever, John
George, Bruce	Maclennan, Robert	Sheerman, Barry
Gilbert, RI Hon Dr John	McMillan, Tom (Glasgow, Central)	Sheldon, Rt Hon Robert (A' ton-u-L)
Ginsburg, David	McNally, Thomas	Shore, Rt Hon Peter (Step and Pop)
Gourlay, Harry	McNamara, Kevin	Short, Mrs Renée
Graham, Ted	McWilliam, John	Silkin, Rt Hon John (Deptford)
Grant, George (Morpeth)	Magee, Bryan	Silkin, Rt Hon S.C. (Dulwich)
Grant, John (Islington C)	Marks, Kenneth	Silverman, Julius
Hamilton, James (Bothwell)	Marshall, David (Gl'sgow, Shettles'n)	Skinner, Dennis
Hamilton, W. W. (Central Fife)	Marshall, Dr Edmund (Goole)	Smith, Cyril (Rochdale)
Harrison, Rt Hon Walter	Marshall, Jim (Leicester South)	Snape, Peter
Hart, Rt Hon Dame Judith	Mason, Rt Hon Roy	Soley, Clive
Hattersley, Rt Hon Roy	Maxton, John	Spearing, Nigel
Haynes, Frank	Meacher, Michael	Spriggs, Leslie
Healey, Rt Hon Denis	Mellish, Rt Hon Robert	Stallard, A. W.
Heffer, Eric S.	Mikardo, Ian	Stewart, Rt Hon Donald (W Isles)
Hogg, Norman (E Dunbartonshire)	Millan, Rt Hon Bruce	Stott, Roger
Holland, Stuart (L'beth, Vauxhall)	Mitchell, Austin (Grimsby)	Strang, Gavin
Home Robertson, John	Mitchell, R. C. (Soton, Itchen)	Straw, Jack
Homewood, William	Morris, Rt Hon Alfred (Wythenshawe)	Summerskill, Hon Dr Shirley
Hooley, Frank	Morris, Rt Hon Charles (Openshaw)	Taylor, Mrs Ann (Bolton West)
Horam, John	Morris, Rt Hon John (Aberavon)	Thomas, Jeffrey (Abertillery)
Howell, Rt Hon Denis (B'ham, Sm H)	Moyle, Rt Hon Roland	Thomas, Mike (Newcastle East)
Howells, Geraint	Newens, Stanley	Thomas, Dr Roger Carmarthen)
Huckfield, Les	Oakes, Rt Hon Gordon	Thorne, Stan (Preston South)
Hughes, Mark (Durham)	Ogden, Eric	Tilley, John
Hughes, Robert (Aberdeen North)	O'Halloran, Michael	Torney, Tom
Hughes, Roy (Newport)	O'Neill, Martin	Variey, Rt Hon Eric G.
Janner, Hon Greville	Orme, Rt Hon Stanley	Wainwright, Edwin (Dearne Valley)
Jay, Rt Hon Douglas	Palmer, Arthur	Wainwright, Richard (Colne Valley)
John, Brynmor	Park, George	Walker, Rt Hon Harold (Doncaster)
Johnson, James (Hull West)	Parker, John	Watkins, David
Johnson, Walter (Derby South)	Parry, Robert	Weetch, Ken
Johnston, Russell (Inverness)	Pavitt, Laurie	Wellbeloved, James
Jones, Barry (East Flint)	Pendry, Tom	Welsh, Michael
Jones, Dan (Burnley)	Penhaligon, David	White, Frank R. (Bury & Radcliffe)
Kaufman, Rt Hon Gerald	Powell, Raymond (Ogmore)	White, James (Glasgow, Pollok)
Kerr, Russell	Prescott, John	Whitlock, William
Kilfedder, James A.	Price, Christopher (Lewisham West)	Wigley, Dafydd
Kilroy-Silk, Robert	Race, Reg	Willey, Rt Hon Frederick
Kinnock, Neil	Radice, Giles	Williams, Rt Hon Alan (Swansea W)
Lambie, David	Rees, Rt Hon Merlyn (Leeds South)	Williams, Sir Thomas (Warrington)
Lamborn, Harry	Richardson, Miss Jo	Wilson, Gordon (Dundee East)
Lamond, James	Roberts, Albert (Normanton)	Wilson, Rt Hon Sir Harold (Huyton)
Leadbitter, Ted	Roberts, Allan (Bootle)	Wilson, William (Coventry SE)
Leighton, Ronald	Roberts, Ernest (Hackney North)	Winnick, David
Lestor, Miss Joan (Elton & Slough)	Roberts, Gwilym (Cannock)	Woolmer, Kenneth
Lewis, Ron (Carlisle)	Robertson, George	Wrigglesworth, Ian
Lltherland, Robert	Robinson, Geoffrey (Coventry NW)	Wright, Shella
Lofthouse, Geoffrey	Rodgers, Rt Hon William	Young, David (Bolton East)
Lyon, Alexander (York)	Rooker, J. W.
McCartney, Hugh	Ross, Ernest (Dundee West)	ELLERS FOR THF NO
McDonald, Dr Oonagh	Ross, Stephen (Isle of Wight)	Mr. James Tinn and
McGuire, Michael (Ince)	Rowlands, Ted	Mr. George Morton.
McKay, Allen (Penistone)	Ryman, John

Question accordingly agreed to.

Bill read a Second time.

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