§ Order for Second Reading read.3.40 pm
§ The Secretary of State for Industry (Sir Keith Joseph)
I beg to move, That the Bill be now read a Second time.
The purpose of the Bill is to increase some financial limits, to write off some capital lost, to enable schemes under the Shipbuilding (Redundancy Payments) Act 1978 to be prolonged by order, and to providefor the promotion of the practice of engineeringand some industry and education understanding.
I propose to deal with the main components of the Bill: first, British Leyland; secondly, Rolls-Royce; thirdly, the National Enterprise Board; and, finally, the other clauses of this relatively short Bill.
I deal first with British Leyland. The custodian of the public shareholding in British Leyland is still the National Enterprise Board, though, by published agreement between the NEB and Department of Industry, the responsibility for monitoring British Leyland is with the Department of Industry, and I take responsibility. The National Enterprise Board is the agent for ownership of the shares and for the transmission of any finance that follows from Government decisions.
As is widely known, recently the Government have received from British Leyland the company's 1981 corporate plan. Clearly, we shall have to give very careful consideration to the proposals in the plan and to the associated funding requirement. Not until this consideration has been completed can we reach a decision on what increase in the financial limits of the National Enterprise Board or British Leyland may be necessary. As I said in reply to my hon. Friend the Member for Montgomery (Mr. Williams) on 21 November, whatever decisions are taken in connection with British Leyland, an increase in the financial limit will be necessary.
Because we have not yet come to any conclusion about what will be necessary, we have therefore included in the Bill a provision for such an increase and set the increase for the time being at a token £1 million. This is to indicate our intention to set a new financial limit for the NEB in respect of British Leyland since, whatever the decision, more money will be needed.
§ Mr. John Evans (Newton)
I am sure that the Secretary of State will appreciate that we are all studying the Bill very closely and will wish to comment on it later. He speaks of the need to increase the borrowing requirement of the NEB. Will he confirm that, if he had not removed his own powers to increase the borrowing limit in section 4 of the Industry Act 1980, it would not have been necessary for him to come to the House to make his present submission?
§ Sir Keith Joseph
It was my intention to deal with that point later in my remarks.
I return to the subject of British Leyland. Whatever the decision, it will need more money. A firm figure for the new financial limit will be announced as soon as possible, and amendments to subsections (1) and (3) of clause 1 will 23 then be tabled. I cannot promise that these will be available in Committee. If they are not, I can assure the House that there will be a full opportunity to debate the matter on Report.
I turn from British Leyland to Rolls-Royce. The House will remember that Rolls-Royce is now directly the responsibility of the Department of Industry since it was transferred from the NEB some months ago. The Government have had an opportunity to consider the company's 10-year strategic plan. This sets out the company's technical, commercial and financial objectives over the period.
In essence, the company's strategy involves further exploitation of the RB211 family of engines and continuing support of military programmes, and it looks towards the launch of a new smaller civil engine if an attractive commercial case develops. The plan foresees a return to profitability next year—
§ Sir Keith Joseph
I hope that Hansard is capable of recording exactly the tone of my hon. Friend's comment — and no requirement for additional external finance other than the funding of new engine development in 1983 or later years.
The House was informed in April 1979 about the provision of launch funding for versions of the RB211 engine, which are now in development. The strategic plan assumes that, if the new commercial engine to which I have referred were to be developed, this would also receive launch funding, which would be provided under the Civil Aviation Act 1949 and would thus be outside the limits in the Bill.
The strategy will be reviewed regularly to take into account economic circumstances both in the United Kingdom and in overseas markets and developments in the aerospace industry. But, on the basis that the operating plan of the company will confirm the financial objectives, I have accepted the strategy.
The Bill provides an upper financial limit enabling this strategy to operate over the years ahead. The actual funding will be decided as the need arises. The limit is to cover all Rolls-Royce Ltd's public funding other than engine development funding to which I have referred already and borrowing from the private sector. It is an increase of £750 million over the present limit of £750 million which was set in the Financial Limits (National Enterprise Board and Secretary of State) Order 1980. This reflects the expected expansion in the business. There is also provision for a further increase or increases by order of up to £500 million, with the new aggregate limit in clause 1 (3). This will give the House a further opportunity to debate Rolls-Royce if the company's external financing requirements go beyond £1,500 million.
I must emphasise again that these figures cover both private sector borrowing and public funding and are to cover what might happen in the next five years or so, subject to demonstration of need.
§ Mr. Michael Grylls (Surrey, North-West)
How much of the £1,500 million is likely to come from the taxpayer? Can my right hon. Friend ensure that, before the end of this debate, a fuller statement is made on the current finances of Rolls-Royce? We are being asked to approve 24 quite a large sum, and I think that if it were possible for my right hon. Friend to say a little more about the current position and cash flow the House would be helped considerably in its discussion of the Bill.
§ Sir Keith Joseph
I should prefer to see the extent to which I could spell out the exact make-up of Rolls-Royce's current financing and the degree to which the taxpayer has already provided or undertaken to provide towards it in answer to a written question. If my hon. Friend will put down a question, I shall try to comply with his request.
I turn to the National Enterprise Board. Except for the £1 million token increase on account of British Leyland of which I have spoken already, there is no increase in the financial limit for the NEB's own functions. Nor is there any proposal to increase finances for its own functions. The NEB's functions remain as they were spelt out in last year's Act and in the guidelines published at the time. They are primarily to dispose of its assets to the private sector, which it has begun substantially to do, to manage its portfolio to that end, to use its limited and declining resources only in partnership with the private sector and only in potentially profitable high technology projects which in the present period of desperately low profitability might not be taken up by the private sector alone, and to stand ready to provide some finance for suitable small firms and regional projects.
The House will be aware that Sir Arthur Knight has told me that, for personal reasons, he wishes to resign as chairman—
§ Sir Keith Joseph
—of the NEB. He has authorised me to say that there are no differences of policy with the Government and that there never have been. His resignation will be effective on 15 December.
Sir John King has accepted my invitation to become caretaking acting chairman until, at the end of January, he takes up his duties as chairman of British Airways. Sir John is the deputy chairman of the National Enterprise Board, and it is entirely natural that I should invite him to take on the role of chairman while his obligations allow him to do so. I hope to announce the name of a new chairman before Sir John King leaves to take up his appointment as chairman of British Airways.
§ Mr. Kenneth Lewis (Rutland and Stamford)
Is my right hon. Friend aware that there seems to be some confusion about the National Enterprise Board, both from outside and, it would appear, from within the NEB? Before a new chairman is appointed, would it not be better if my right hon. Friend and the Government decided either that the NEB has a role to play or, if not, to do away with it? If it has a role to play—I believe it has—will my right hon. Friend spell that out a little better? If the NEB has a role, in co-operation with free enterprise, it is important that the Government should make clear that they are behind that role. That means that it should be supported to a certain extent. Will the Secretary of State spell that out before he appoints a new chairman, otherwise he will have a lame duck organisation on his hands in perpetuity?
§ Sir Keith Joseph
I heed what my hon. Friend says, but I am not aware of any ambiguity. My hon. Friend must not confuse the possible disagreement between hon. Members on the potential role of the NEB with the clarity 25 of the role given to the NEB and accepted by its resigning chairman, Sir Arthur Knight, in last year's statement. I shall certainly spell out the statement again if my hon. Friend thinks that it is necessary.
The remit of the NEB is clear. It is to dispose of its assets in the interests of the taxpayer and the companies concerned. Sir Arthur Knight and his colleagues have successfully started that process by selling off the NEB shareholdings in ICL, Fairey and Ferranti. I am not sure that I have given a comprehensive list of its sales. There may be another company which does not come to my mind at the moment. While the Government have been in office, the NEB, by its decision, put into receivership several of the companies in which in its previous incarnation it invested.
As the House is aware, Alfred Herbert has effectively been either closed or sold off to other owners.
The second obligation of the NEB, which I think is abundantly clear, is to manage the remaining portfolio of about 60 companies that are still in its possession and to prepare them as quickly as possible for sale to private investors—what is called sale to the public but which in fact means to private investors, including pension funds. The NEB was asked by the Government to play a part in encouraging investment in high technology projects, but only in partnership with the private amount of money. That role, too, has been carried out under Sir Arthur Knight and his colleagues, modestly but I believe sensibly, as witness the limited investment by the NEB in the new biotechnology company of which the NEB—-
§ Sir Keith Joseph
I should like to finish my sentence first. That role has been carried out under Sir Arthur Knight and his colleagues, modestly but I believe sensibly, as witness the limited investment by the NEB in the new biotechnology company of which the NEB has a 44 per cent. shareholding and private enterprise a 56 per cent. shareholding, and a further investment in partnership with private enterprise of venture capital have not finished the description of the remit, but I give way to my hon. Friend.
§ Mr. Kenneth Lewis
I am sorry to interrupt my right hon. Friend, but I am trying to be helpful on this matter. If the Government propose to retain the NEB, and if they feel that there should be some co-operation between the Government and the Department and private enterprise on high technology and expansion, there is no point in using the word "limited". My right hon. Friend must say that the Government are behind that and that, if it is in the interest of the country, the role of the NEB will be expanded, not limited.
§ Sir Keith Joseph
There is a gulf between my hon. Friend and the Government, because the Government do not see the NEB as in any way the main instrument of technological investment or advance. There is massive technological investment and advance in the private sector, and to some extent in the public sector. Under the remit of the Govenment, the NEB is a useful ancillary instrument at the margin to encourage partnership with private enterprise in those, I repeat, "limited" projects which seem sensible enough to attract private enterprise to a majority or substantial minority stake but which may 26 not get off the ground during the period of limited profitability through which we are going without some contribution from the taxpayer.
I do not share my hon. Friend's confidence that public agencies, not accountable in the same way as private investors or public companies, should be given large sums of taxpayers' money with which, in the last resort, to gamble. But I complete the redescription — not the redefinition — of the remit. The NEB has also been given a relatively moderate amount of taxpayers' money with which to encourage particularly high technological projects in small businesses and in the regions. I hope that my hon. Friend will agree that there is no obscurity about the remit that has been given.
§ Mr. Dick Douglas (Dunfermline)
Surely, the Secretary of State has omitted a significant aspect of the remit, namely, that the financial targets imposed on the NEB and the nature of those financial targets related to sale are impossible to meet.
§ Sir Keith Joseph
The hon. Gentleman is right, and I shall refer to that later in my remarks.
No change is proposed in the NEB's financial limits for its own purposes. The NEB is a transitional mechanism in relation to British Leyland, and it receives an increase in its financial limit of £1 million on that account.
The Bill also introduces new financial limits for the Scottish Development Agency.
§ Mr. Alan Williams
Before the Secretary of State leaves the subject of the NEB, may I make one further point? He has dealt with the question of the resignation of Sir Arthur Knight, and we appreciate that it is unfortunate and slightly embarrassing that his resignation coincides with the publication of the Bill. Will the right hon. Gentleman comment on, and perhaps take this opportunity to refute, the suggestion in The Times today that, in addition to Sir Arthur Knight and Sir John King, the NEB is likely to lose the services of Mr. Alex Dibbs of the National Westminster Bank, Sir Robert Clayton of GEC and its chief executive, Mr. Ian Halliday?
§ Sir Keith Joseph
Has it been announced? I think that it has. I think that Mr. Dibbs has accepted an invitation to serve on the board of British Airways and it may be that when he moves to his new post he will be unable to carry out both roles. Sir Robert Clayton has given me his resignation. He is very busy with his main job. I cannot answer the hon. Gentleman about Mr. Halliday. That is a matter for the NEB.
§ Mr. Williams
This issue is most important. I am a little surprised that the Secretary of State did not tell us about Sir Robert Clayton when he was describing the health reasons for the chairman's resignation. Is it not a matter of some concern to the right hon. Gentleman that this, the second NEB board since he has been in office, is likely to lose three or possibly four of its members within about 12 months of their taking office? Does not that suggest that the Government are treating the NEB as an insignificant organisation and are not giving it the opportunity to develop continuity? Or is it that there is disagreement behind the scenes to which the Secretary of State does not want to admit?
§ Sir Keith Joseph
I repeat that there is no disagreement between the NEB board or chairman and the Government. The right hon. Gentleman, I am sure only by a slip of the 27 tongue, referred to health reasons in connection with Sir Arthur Knight. I referred not to health but to personal reasons.
§ Sir Keith Joseph
The position is even more vivid than the right hon. Gentleman describes. Such was the abundance of business talent that the Government were able to mobilise for the second version of the NEB directorship that severe losses have occurred. Mr. George Jefferson was plucked from the NEB to become the chairman of the vast British Telecom. Sir John King is being plucked to become chairman of British Airways, and Mr. Dibbs may join him on that board. Sir Robert Clayton, an intensely busy and effective man, has found that his other activities do not allow him time to continue on the board. The implications that the right hon. Gentleman is seeking to draw from the undoubted loss of great talent are, therefore, not justified.
§ Mr. David Steel (Roxburgh, Selkirk and Peebles)
The House regards this as a most important matter. Has not the Secretary of State lost not just one National Enterprise Board chairman but two, which, in Oscar Wilde's words, may be thought to be carelessness, and is not the reason for his losing these other people that the NEB is rapidly ceasing to have any confidence in its long-term role? Is it not the job of succeeding Governments to instil that confidence in it? When the Secretary of State uses words as he did a moment ago about the NEB gambling with public money, is that not indicative of his attitude towards its function?
§ Sir Keith Joseph
I was using the word "gambling" in particular in connection with the argument by my hon. Friend the Member for Rutland and Stamford (Mr. Lewis) for huge funds to be put into the NEB—[Interruption.] My hon. Friend and I may differ about the adjective that he has in mind.
It is a witticism that the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) should deny himself, to use Lady Bracknell's remark about the carelessness of two successive losses, to aggregate one loss, when there was a definite policy disagreement between Sir Leslie Murphy and the Government—I do not deny that for a moment — with another loss, on personal grounds, where Sir Arthur Knight has chosen to resign. The right hon. Gentleman will be able to confirm personally from Sir Arthur what Sir Arthur told me—that he was thoroughly enjoying the job, that he brought gusto to it and that he found no policy difference between himself and the Government. He has regretfully had to resign for personal reasons. There is no link between those reasons and that which caused Sir Leslie Murphy to resign.
§ Mr. Ioan Evans (Aberdare)
Surely, a whole board of the NEB has been lost since the Secetary of State took office. Now there are to be other appointments. Is it satisfactory for the right hon. Gentleman to announce to the House the appointment of a caretaking acting chairman to hold office just for a month or two? Is it not possible to fill the post of the chairman on a long-term basis rather than for the NEB to have three chairmen in less than 12 months? Will the right hon. Gentleman give an undertaking that he envisages a role for the NEB for the duration of this Parliament?
§ Sir Keith Joseph
In an ideal world, it would no doubt have been better if Sir Arthur Knight had not for personal reasons had to give his resignation. However, once the resignation was received, it was not sensible to leave a vacuum. It is, therefore, natural to ask the deputy chairman to assume a caretaking role until the Government have time to appoint a new chairman.
The remit of the NEB has been spelt out on a number of occasions. I have repeated it this afternoon. We see the limited role that I have described running on for the next limited period until we have to make decisions about what follows the current financing arrangements.
The Bill also introduces new financial limits for the Scottish Development Association—
§ Sir Keith Joseph
—Yes, Agency—the Welsh Development Agency and the Development Board for Rural Wales. As in the case of the limits in clause 1, these financial limits also cover external borrowing by the agencies and their subsidiaries from private sources and public funds. These new limits are to provide adequate cover for their activities over the next five years. The increases do not reflect a change in the role of these bodies. The activities of the agencies and the board continue to follow the Government's guidelines.
The financial limit for the SDA is increased from £500 million to £700 million, for the WDA from £250 million to £450 million and for the Development Board for Rural Wales from £40 million to £100 million. I am glad to see my right hon. Friend the Secretary of State for Wales and my hon. Friend the Under-Secretary of State for Scotland present on the Front Bench beside me.
§ Mr. Mark Hughes (Durham)
The two agencies and the development board are receiving significant increases in their borrowing limits, but the limit for the NEB's regional commitment is increased by only £1 million. Will the right hon. Gentleman describe the effect of that increase on that commitment?
§ Sir Keith Joseph
Yes. The NEB has, we judge, plenty of headroom within its financial limit. My right hon. Friends the Secretaries of State for Scotland and Wales judge that in the particular circumstances of which they are more fully aware than I there is not enough headroom in the borrowing limits of the agencies. We are, after all, discussing limits, not spending.
§ Sir Anthony Meyer (Flint, West)
Does my right hon. Friend accept that the possible increase in the scope of the activity of the Welsh and Scottish Development Agencies will be most welcome? Does he agree that it contrasts with the hysterical and exaggerated attitude taken by the hon. Member for Pontypool (Mr. Abse) in his application under Standing Order No. 9 this afternoon, indicating that the Government have had no regard for the urgent needs of Wales and the role that the agency can play? Is he aware that the increase will be very well received in the Principality?
§ Sir Keith Joseph
I am grateful to my hon. Friend.
The new aggregate limit in clause 1 is a provisional figure. The figure in the Bill is £4,251 million, which represents an increase of £1,251 million over the aggregate figure in the equivalent section of the Industry Act 1980. As I have explained, £1,250 million of this is for Rolls- 29 Royce, £500 million of which would require an affirmative resolution of the House to be made available. The remaining £1 million is the token increase for BL.
I now turn to a question asked of me earlier as to why the Bill increases the limits when it was I who, in the Industry Act 1980, specifically took away the power so to increase them by order. The answer is simple. The Government were determined not to seek for increases in the financial limits before they had had time to consider fully the plans for Rolls-Royce and BL. My hon. Friend the Under-Secretary of State for Industry said in Committee during the passage of the 1980 Bill that introducing legislation, as we did then, would enable hon. Members to have a far greater opportunity to debate the matter than they would have if the power simply to increase by order had been retained. The House now has a full opportunity to debate the provision for Rolls-Royce. We intend that should have a similar opportunity when a firm figure in respect of BL has been settled.
I turn to the second intervention which I promised to answer. New investment guidelines for the NEB and the agencies were published in August reflecting the new roes assigned to them by the Industry Act 1980. Section 6 of the 1975 Act requires me to determine the financial duty for the board. There are parallel provisions in respect of the agencies. In the present Bill, we are taking the power to reduce the capital of the NEB and the agencies, both public dividend capital and Government loan debt, by an amount corresponding to irrecoverable losses on past investments — investments made under the previous Government. This will make it possible to establish a firm basis to which the new financial duties can be related. We shall also be taking account of the fact that some large investments of the NEB have already been sold. Discussions are at an advanced stage with the NEB and the agencies, and I expect to be able to make an announcement in Committee of what duties are to be set.
§ Mr. Bruce-Gardyne
My right hon. Friend has just referred to irrecoverable losses. So that we can get the proposed increase in the financial limits for the agencies into perspective, will he say how many businesses into which the SDA and the WDA have injected our cash are currently in liquidation?
§ Sir Keith Joseph
I have available to me, quickly, the facts for the NEB. I do not have at hand the answers for the SDA and the WDA, but perhaps one of my hon. Friends can, at a later stage in my remarks, give me the necessary information.
§ Mr. Nick Budgen (Wolverhampton, South-West)
While my right hon. Friend is dealing with the question of sale of assets, perhaps I might hark back to what he was saying about BL a moment ago. When the statement is made about the BL corporate plan and its application for the new £l billion, will he deal at length with the passage in his statement of 20 December last year, when he said:The Government will also be looking to BL to contribute to finding needs from its internal resources, including the disposal of assets where this makes commercial sense." — [Official Report, 20 December 1979; Vol. 976, c. 885.]Perhaps he will deal with the various assets which BL has or has not sold and the various arguments which may have either facilitated or delayed their sale.
§ Sir Keith Joseph
I can give my hon. Friend a categorically positive answer to his question. I shall 30 certainly so deal when the time comes. I am grateful hire for asking a relevant question and for giving me time to find the answer to the question put by my hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne).
For the WDA I have information of the names of three companies now in liquidation — Staple Choice Manufacturing Ltd., Four T Engineering Ltd., and Brigray Group Ltd.—and seven companies now in receivership—P. Leiner and Sons Ltd., J. E. Williams Automatic Revenue Control Ltd., Callbuoy Marine Electronics Ltd., Wondabreast Poultry Ltd., Hortex Chemicals Ltd., BD Altruck Equipment Ltd., and Skyline Leisure Wear Ltd.
For the SDA I do not have the information quite so conveniently available. I shall have to write to my hon. Friend.
I turn to clause 5, which is a simple enabling measure to allow the operation of schemes under the Shipbuilding (Redundancy Payments) Act 1978 to be prolonged. The Act provides for schemes to be introduced by order, subject to affirmative resolution by both Houses, to run for two years with the option, also to be exercised by order, to extend the schemes for a further two years. Two schemes have been introduced under the Act. One provides for payments to British Shipbuilders' employees engaged in shipbuilding, ship repairing, marine engine building and ancillary activities who are made redundant or transferred to less well paid employment within the corporation. A parallel scheme operates for Harland and Wolff Ltd. The two schemes were extended by order in July 1979, and without further powers being taken they would expire on 1 July 1981.
Clause 5 would give the power to extend the schemes for a further two years to 1 July 1983. It does not, however, prolong the schemes themselves. This will be done by order, subject to affirmative resolution, and there will therefore be full opportunity to debate the renewal of the schemes.
Clause 6 covers the provision of support to two distinct activities. The first concerns the body to be sot up following the recommendations of the Finniston committee, and the second the encouragement of links between industry and education.
§ Sir Keith Joseph
Perhaps the hon. Gentleman will allow me to finish dealing with this part and will intervene a little later.
§ Several Hon. Members rose—
§ Mr. Deputy Speaker (Mr. Bernard Weatherill)
Order. The Secretary of State has been very generous in giving way, but a very large number of speakers wish to catch my eye later in the debate.
§ Sir Keith Joseph
On 7 August I announced, in answer to a question by my hon. Friend the Member for Poole (Mr. Ward), that the Government had decided to recommend to the Privy Council that Her Majesty the Queen should be advised to grant a Royal charter to a new body to act as a focal point for engineers, academics and employers to work with existing institutions to remedy the deficiencies in the present arrangement identified by the Finniston committee. The Department has consulted widely about the necessary arrangements for setting up such a body. A revised draft charter is in the process of 31 preparation to take account of the wide range of views that have been expressed. This will prepare the way for setting up the new body as soon as possible.
Our intention is that the body should be self-financing. The Bill gives me the power, however, to guarantee loans to it from the private sector or, if absolutely necessary, to make grants available to it in the initial period until it becomes self-supporting.
§ Mr. Palmer
Apart from the wrongness in principle of the House being asked to grant money to a body of this kind to be set up by Royal charter—I hope to enlarge on that as soon as I catch your eye later, Mr. Deputy Speaker — what sum of money does the right hon. Gentleman have in mind as a loan?
§ Sir Keith Joseph
We had in mind about £1 million as the necessary reserve in case anything is necessary. But I repeat that I look to the body concerned to be self-financing.
§ Sir Keith Joseph
My first hope is that the body will be self-financing. If it is not self-financing wholly from the start, a loan might conceivably be necessary. Only if both those first two hopes failed—I do not expect them to fail—would there be any question of a grant for the second or third reserve—that is, for the loan or the grant. I think that provision has been made up to an absolute maximum of £1 million.
Finally, the aim of industrial education activities is to help to improve mutual understanding between industry and education, particularly at schools level. Expenditure on existing activities has for some time been made under the authority of the Appropriation Act. Since it is a well-established principle that Departments should seek statutory authority for recurring items of expenditure at the first possible opportunity, the Bill gives me power to continue these grants and loans. We are reducing both the staff and the expenditure involved.
I am grateful to the House for allowing me to spell out, and, by answering questions, to enlarge upon, the purposes of the Bill. I hope that the House will give the Bill a Second Reading.
§ Mr. Harry Ewing (Stirling, Falkirk and Grangemouth)
The House will have listened with concern to the speech of the Secretary of State. To say that he was less than certain in his approach to the subject matter would be to put it mildly and could be described as over-kind. In my 10 years in the House, I do not think that I have seen the right hon. Gentleman in such an uncertain mood. One can understand his uncertainty, because, for the second time in his short career as Secretary of State for Industry, he has had the humiliation of having to announce the resignation of the chairman of the National Enterprise Board.
In place of the second chairman to resign, we are to have a temporary acting appointment for a few weeks, followed by a person who could by no stretch of the imagination be described as holding the post in a permanent capacity.
The Secretary of State today undermined any certainty which might previously have existed about the future of 32 the National Enterprise Board. As a result of the right hon. Gentleman's answers to the questions pressed upon him, there is now absolutely no certainty about the future of the NEB. The Secretary of State clearly has difficulties about announcing a replacement chairman, and, indeed, other members of the board. As has been said, a number of other board members will also be going—on a fairly flimsy excuse, if I may say so. It scarcely becomes the Secretary of State to tell the House that, lo and behold, he having appointed those members, they are so good that he is now letting them go elsewhere. That seems to be a contradiction in terms, and it ill becomes the right hon. Gentleman to give such an explanation to the House.
If the Secretary of State is to find a permanent replacement for the chairman of the NEB and board members of the quality that the NEB is entitled to expect, he will have to be more positive and definite than he has been today about the future of the board itself. The Under-Secretary of State for Industry who, I understand, is to reply to the debate, therefore has an obligation to tell the House whether the Government consider that the NEB has a permanent role to play. If, however—and this seemed to come through everything that the Secretary of State said —the Government believe that the NEB does not have a permanent role to play, they have an obligation to make that clear to the House and to industry.
The Secretary of State certainly went a long way today to undermine any confidence or certainty about the future of the NEB. He did not tell the whole story. I do not accuse him of withholding information from the House, as I have no doubt that he did not know. There have been other resignations. The chief executive of the Scottish Development Agency also has resigned. His term of office finishes at the end of the year, but he has already been replaced by Dr. Mathewson. If any credit is due to the Under-Secretary of State for Scotland, it is for the wisdom that he showed on this occasion in picking someone who had the good fortune to be educated in Fife. If there is anything in favour of Dr. Mathewson and to his advantage, it is that he received all his economic and industrial education in my native county. I certainly wish him well.
The Secretary of State was not to know that, as well as resignations from the National Enterprise Board, it now seems that members of the development agencies are queueing up to send their resignations to the Scottish Office or to the Secretary of State for Industry. One of the high-risk jobs of today's society appears to be the chairmanship of the NEB. One cannot wonder at that. If Sir Arthur Knight did not resign for the health reasons reported in the press, one cannot be blamed for believing that yet again there has been a difference between the chairman of the NEB and the Secretary of State for Industry in their approach to the future development of the board.
In the light of what the Secretary of State has said today to undermine the future of the NEB, it is an insult to invite any industrialist of standing to take on the chairmanship and to put his career on the line in such a fashion. When the Secretary of State reads what he has said today, he may well regret some of the words that he used.
My hon. Friend the Member for Newton (Mr. Evans) asked the Secretary of State a question earlier in the debate. The right hon. Gentleman promised a reply but failed to honour that promise. In November and December 1979, during the passage of the Industry Act 1980, my right hon. and hon. Friends explained time and again in 33 great detail to the Secretary of State and to his junior Ministers the position with regard to the borrowing limit of the NEB. I accept that it has been increased by only £1 million, and that in relation to British Leyland, but I shall come to that later.
We pointed out that the financial limits of the NEB and of the Scottish and Welsh Development Agencies were not high enough but the Government's virility symbol at that time was the determination to reduce the Scottish Development Agency figure of £800 million to the figure contained in that Industry Act and to reduce the figure for the Welsh Development Agency from £400 million to £250 million.
Those reductions were intended not as a commonsense approach or as good economic management but as a political approach to pacify the Right wing extremists supporting the Government at that time. It was to show them that at long last they had a new Government who would clip the wings of the Scottish and Welsh Development Agencies. Those who were then clamouring or reductions in the financial Limits of the Scottish and Welsh Development Agencies are noticeable by their absence today. They have not come to see and hear the U-turn for themselves. I have a feeling that the Secretary of State opened the debate today in order to have a dress rehearsal I am sure that he will be at the Dispatch Box on many occasions during the corning months and that he thought that this would give him some nice easy practice in the art of the U-turn. The right hon. Gentleman did it extremely gracefully, and we look forward to further activity in this regard.
We were told at that time that it was not necessary to have such huge financial limits and that in any case the Scottish and Welsh Development Agencies would be able to attract private capital. The explanation was that the agencies would not need all this Government money, because the combination of the reduced amount of Government money and the private investments which the agencies would attract would generate more money than the limits set in the Act which established the two agencies.
What has happened in the meantime? Has there been a failure of private capital? Are we now being told that the failure is on the part of private capital to join in this partnership which the Under-Secretary was so eloquent in promoting during Committee discussions on the Act?
§ The Under-Secretary of State for Scotland (Mr. Alexander Fletcher) indicated dissent.
§ Mr. Ewing
The Under-Secretary shakes his head. It would be interesting to know how much private capital has been attracted by the two agencies since the Government's grand expressions of hope on 13 December 1979.
Has it been a failure of Government policy? Has it been a failure on the part of the Government to anticipate the needs of the Scottish and Welsh Development Agencies? Is that why they have had to come back with a small but important Bill to amend an Act which is just a few months old? The Bill that we are now discussing seeks to amend in substantial parts the Industry Act 1980, which has only just reached the statute book.
It was interesting to note during those debates that when my right hon. and hon. Friends pressed the Government to retain the order-making power to increase the financial limits for the two agencies, both the Under-Secretary of 34 State for Industry and the Under-Secretary of State for Scotland went out of their way to say that these powers were not required because in their view the financial limits that had been set were sufficient to take account of any eventuality that might arise.
§ Mr. Ewing
I shall give way in a moment. If that is the judgment of responsible industry Ministers, and if that judgment has gone wrong in such a short time, it is a serious matter which reveals a sad and extremely lacking judgment on the part of industry Ministers who are responsible for large parts of British industry. We cannot be blamed for wondering what the future holds for British industry if Ministers who are in charge of British industry make judgments that go wrong in such a short time.
§ Mr. Bruce-Gardyne
Surely, the hon. Gentleman is making heavy weather of this matter. In December 1979, we did not know, and the Government could not entirely know, that it would be revealed that on the one hand the Scottish Development Agency had injected £4.5 million of our money into a business that was supposed to sell trucks, which virtually could not sell one, and that the Welsh Development Agency had injected £2.5 million into a business that was already virtually bankrupt, and which was paid entirely in order to disguise the fact that it was not receiving rent from that business. Had we known that, surely it would have been obvious that agencies run by people such as that would be unlikely to attract private funds.
§ Mr. Ewing
When the hon. Member represented the constituency of South Angus, I well remember going to Arbroath to debate with him. At that time, I was not sure whether he was in favour of what I was saying or whether he was against it. As a result of his intervention today, I am not sure whether the hon. Gentleman is in favour of what I am saying.
It was significant that the hon. Gentleman abstained during the Second Reading vote on the Industry Act 1979. I wonder what action he will take should there be a vote tonight. I must make it clear that the official Opposition do not intend to divide the House. However, I have no doubt that the hon. Gentleman will be looking for another hon. Member to help him divide the House. If the premise on which his intervention was based were the case, the hon. Gentleman should ask his right hon. and hon. Friends why they are giving the extra £200 million to the Scottish and Welsh Development Agencies. Perhaps he asked about that through the columns of The Daily Telegraph or Sunday Telegraph, but I have never heard him ask such uncomfortable questions.
I turn more directly to the question of the Scottish and Welsh Development Agencies and the Development Board for Rural Wales. There is one point that I should like to make about the combined increase in the funding of the Welsh Development Agency and the DBRW as opposed to the increase in the funding of the Scottish Development Agency. Last Thursday, I listened to my right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) explain in an outstanding speech the great unemployment difficulties which are now encountered in Wales. Today, my hon. Friend the Member for Pontypool (Mr. Abse) in his Standing Order No. 9 application, 35 brought out exactly the same points. In my view, the increase in funding for the Welsh Development Agency and the DBRW is totally inadequate to deal with the problems that exist in Wales.
If I argue that point with conviction, I must be scathing in my condemnation of the way in which the Secretary of State for Scotland has sold Scotland even shorter—if that is the correct expression—than the people of Wales have been sold by their Secretary of State. There is an increase of £200 million in relation to the Scottish Development Agency. It seems to me that on a number of occasions the Secretary of State for Scotland had been quite keen to give up more than his fair share during the Cabinet discussions on reductions in public expenditure. Now, when more money is to be given out, the Secretary of State for Scotland is not even prepared to fight for a fair share for Scotland. There is no doubt that on the basis of the figures that I have just given the Secretary of State for Wales stands condemned, but the Secretary of State for Scotland stands condemned even more so.
What effect will the increase in the financial limits have on the Scottish and Welsh Development Agencies, and what is the hidden purpose behind those limits? I submit that the hidden purpose is the beginning of a restructuring of the finances of both agencies for a number of reasons, which I hope the Minister will deal with when he replies to the debate.
We are told that the financial limits for the Scottish and Welsh Development Agencies are to be raised to £700 million and to £450 million, respectively, and that the public dividend capital is to be reduced. For the purposes of this part of my argument, I leave out the National Enterprise Board. The public dividend capital for the Scottish Development Agency is to be reduced by £7 million. As the Under-Secretary of State knows, public dividend capital is a contribution made by the Secretary of State. In the case of the Welsh Development Agency, public dividend capital is to be reduced by £2.7 million.
Next, we are told what is to happen regarding the loan debts of the two agencies. The loan debt of the Scottish Development Agency is to be reduced by £2 million and that of the Welsh Development Agency is to be reduced by £1 million.
All this cannot be construed save as the beginning of an alteration in the capital structure of the Scottish and Welsh Development Agencies. If that beginning of an alteration in the capital structure were a constructive approach heralding an intention to broaden the basis of operation of the Scottish and Welsh Development Agencies, I should welcome it, but I am sure that the Under-Secretary of State will admit that that is not the case.
I leave these figures with the Under-Secretary of State. The total investment of the Scottish Development Agency, I understand, at 31 March 1980 was £25.4 million, in addition to which a further £3.3 million had been committed but not consolidated into the accounts of the agency.
I come now to the crucial question of Stonefield Vehicles. The abandonment of Stonefield Vehicles —these are important figures—will reduce the investment total which I have just given by £4.74 million, and presumably the losses associated with the abandonment of Stonefield will be transferred to the agency's own profit 36 and loss account. I hope that the Minister can deal with this. That, therefore, reduces the total net investment of the Scottish Development Agency to about £24 million.
I am anxious to find out what is behind the proposals in the Bill. Half of that £24 million is held in equity and the remainder is in loans, or certainly in the form of guarantees. The actual outlay is about £18.35 million, of which £12.1 million is public dividend capital and £9.4 million is from the National Loans Fund.
I say again that public dividend capital is the contribution from the Secretary of State. The problem here is that, if that figure is reduced as proposed, the Scottish and Welsh Development Agencies have two courses open to them. Either they have to attract private investment, and there is no evidence of success in that over the past year—otherwise, one would wonder why the Government were coming forward with this increase in the capital limit—or they have to borrow on the money markets, and that is not a proposition to which one would turn, given the present high interest rates.
The Under-Secretary of State had better tell us what is going on. I do not put that as a threat. I am simply advising him to tell us whether part of the intention in this small but important Bill is the beginning of a capital restructuring of the Scottish and Welsh Development Agencies. He ought to tell the House whether that is in part what is behind the Bill, so that we may know what the future holds for these two agencies.
If the Scottish and Welsh Development Agencies fail, as they have failed, to attract private investment, and if they cannot borrow on the money markets, as they will not be able to do, because of the high interest rates, that will leave only one course open, and I suspect that the Under-Secretary knows this very well. That course is to sell off capital assets in order to raise the necessary finance to make up the shortfall.
The logic of the argument is, I suspect, unanswerable. If the two agencies cannot follow either of the two former courses, that is, attract private investment or borrow on the money market, they have only one choice left, and that is the sale of their capital assets in order to cover the shortfall in finance. The Minister will argue, no doubt, that in any case that is what the agencies should be doing. I think that in Committee on 15 December last year the Under-Secretary of State for Industry called it the recycling of money. I paraphrase his words, but he said that much of the money was in the form of loans and much of the money could be raised from the sale of capital assets so that we could bring money back in, and that money could go out again in the form of further investment.
I seriously suspect that that kind of policy is not welcome to the development agencies. I leave the financial structure of the agencies at that point, but I regard it as important that the House be told whether the Bill is the beginning of an attempt to effect a capital restructuring of the Scottish and Welsh Development Agencies.
I shall dwell for a few moments now on the affairs of the Scottish Development Agency. I have never taken the view, and neither has any of my right hon. Friends, that merely to raise financial limits or make money available is the be-all and end-all of a development agency. There must be the will to help and encourage such agencies to go about their tasks and successfully carry out the purposes for which they were set up in the first place.
My right hon. Friend the Member for Swansea, West (Mr. Williams) will deal with the position in Wales, but 37 I must point out at this stage that the position in Scotland has been anything but encouraging. In Committee last year the Under-Secretary of State for Scotland, referring to the appointment of the chairman to the Scottish Development Agency, spoke with eloquence about the new sense of cooperation and the harmonious effect that that appointment would create. I shall quote what the hon. Gentleman said. I appreciate that the occasion was very near Christmas, and, Christmas parties being what they are, one should perhaps make allowance for the festive spirit—I use "spirit" in its fullest sense—but the hope which the hon. Gentleman held out has gone sour to a great extent. Referring to the appointments which had been made, he said:Changes, of course, have been made in the personnel running the Agencies and the NEB.Perhaps one should add that further changes have been made in the NEB. Indeed, constant changes appear to be the order of the day there under the remit of the Secretary of State for Industry. The hon. Gentleman continued:Changes, of course, have been made in the personnel running the Agencies and the NEB. There is now a full understanding in hose organisations of Government policy, not just about the Agencies themselves but of regional policy in total, and there should, therefore, be a harmonious relationship and a proper understanding between the NEB and the Agencies on the one hand and Government on the other.—[Official Report, Standing Committee E, 18 December 1979; c. 677.]That was 18 December, seven days before Christmas, last year. We were entitled to expect that this harmonious relationship and this full understanding would blossom forth in the Scottish Development Agency's relationship with the Under-Secretary of State, the hon. Member for Ediribur0, North (Mr. Fletcher), over the past year. Everyone in Scotland knows that this has not happened. Nothing has been further from the truth. The Minister and the chairman he appointed have constantly had public arguments. The chairman does not agree with the Government's economic policy. To say that the chairman understands the Government's economic policy is an insult to Robin Duthie. No one understands the Government's economic policy. It is a serious accusation to make against anyone to say that he understands this Government's economic policy.
There is an ongoing argument about who should carry out the overseas role of the development agency in Scotland. We are awaiting patiently an answer from either the Secretary of State or the Under-Secretary of State—either will do in the circumstances — about who is carrying out the overseas role of the Scottish Development Agency. I have a feeling that the chairman himself is waiting patiently for an answer to that question. It may be the case that resignations of chairmen will be the order of de day if the answer to that question happens to turn out to be the wrong answer.
§ Mr. Gordon Wilson (Dundee, East)
Will the hon. Gentleman emphasise to the Government that it is not only the chairman of the SDA who has doubts about the Government's economic policy? Only at the weekend, the chairman of the Scottish CBI indicated that, unless there were some changes, there was a danger that Scottish industry would he incinerated by current policies.
§ Mr. Ewing
That is a burning quote. I noticed what David Nickson stated at the Young Tories' weekend conference. The Government will obviously wish to take cognisance about the effect of their policy on industry in Scotland.
38 I have sought not to examine the Bill in great detail but to examine the philosophy behind it. I suspect that there is much more behind the Bill than was stated by the Secretary of State in moving the Second Reading. All the detailed points can no doubt be raised when the Bill goes upstairs into Committee. In the meantime, I am content to leave my remarks as they stand and to say that it will not be my intention to advise my right hon. and hon. Friends to divide the House on the Bill.
§ Mr. Michael Grylls (Surrey, North-West)
I do not know whether the House realises that the Government, by introducing the Bill for Second Reading, are following a relatively new parliamentary tradition, started by the right hon. Member for Manchester, Ardwick (Mr. Kaufman), who is now leaving the Chamber, and the right hon. Member for Swansea, West (Mr. Williams), who is sitting on the Opposition Front Bench, of an annual or sometimes even a biannual Industry Bill. It is a little like a Budget; it comes round with great regularity. Rather like a Budget, the figures get bigger and bigger. The tradition was started by the two right hon. Gentlemen in the Labour Government. They occupied distinguished positions in that Government. I am not happy to see it followed. I hope that it will not last too long.
The debate gives the House the opportunity to look at the objectives of the National Enterprise Board under the Conservative Government. As my right hon. Friend the Secretary of State said truly and fairly in his opening speech, the disposals carried out by the National Enterprise Board have been a good beginning. Many of us would like to see the rate of disposals increase. Worried as we are about public expenditure, we must surely agree that they should be increased as quickly as possible.
I hope that the Conservative side of the House at least can come to one conclusion—that we do not believe that there is a predatory role for the National Enterprise Board, prancing around industry with taxpayers' money and, to coin my right hon. Friend's memorable but accurate phrase, punting with the taxpayers' money.
I think that most of my hon. Friends would agree that it is nonsense to imagine that the National Enterprise Board or any similar body can make a lasting or even temporary impression on British industry, or that it can fuel the flames of and encourage British industry. To imagine that it can make a big impact on the industrial scene is ridiculous. I hope that my right hon. Friend and other members of the Government agree. If they go around saying that they believe that the NEB has a role of any seriousness, they run the risk, in industrial circles at least, of making laughing stocks of themselves. I am sure that they do not take that view.
If the answer to its predatory role is "No", the NEB surely cannot be allowed, in these straitened times, to continue spending even the sums it is spending now. The amount of public dividend capital given to the NEB this year is £358 million. I recognise that £300 million is for Leyland, which I do not wish to discuss at the moment. I would say with all friendliness to my right hon. Friend that the £58 million left for the National Enterprise Board to spend in what I would describe as a predatory role is a great mistake. When business men are led to believe that the Government are trying to find ways of cutting public 39 expenditure, it weakens the credibility of the Government I want to support if they go on giving the National Enterprise Board amounts of that sort.
§ Sir Keith Joseph
Whatever the amount that proves to have been spent, about £12 million will have gone in closure costs in connection with the inheritance of Herbert. About £19 million will have gone towards Inmos, which my hon. Friend may or may not approve. It was inherited, in its first stage, from the previous Government.
§ Mr. Grylls
I agree with my right hon. Friend that the closure costs were inevitable. The decision by the National Enterprise Board at last to face reality in the Herbert situation was right and is to be applauded. Those costs clearly had to be met.
Inmos is perhaps another matter. I contest whether the Government had a duty or even an obligation to put in the extra money. That decision has been taken; it is over and done with. According to my information, however, it is almost certain that in the near future the Government will be asked for more money for Inmos either through more public dividend capital or through extra loans which the Government will stand behind. I warn the Government that they have not seen the end of the Inmos story, having started to give it support.
The point made by my right hon. Friend about the sorry story of Herbert brings me to the question I had intended to ask in considering what should be the role of the National Enterprise Board. From the practical point of view, does the record so far of the National Enterprise Board in its investment decisions lead one to suppose that it is capable of punting successfully in the future? With all the power I can command, I beg my right hon. Friend to consider—
§ Mr. Budgen
Does not the Alfred Herbert story point to the moral that it is better to take a difficult decision quickly rather than to go on supporting something in dribs and drabs until the sum either becomes so much or finally dribbles to a halt?
§ Mr. Grylls
I agree with my hon. Friend. That is nearly always the experience of experienced industrialists who also have to deal with closures. I am not embarrassed to mention the question of Ferranti. It is well known.
The directors of Ferranti would never have had their drama in 1974–75 if they had faced up earlier to the closure of their transformer division. They were over-sentimental and nearly lost their company as a result.
§ Sir Keith Joseph
I agree with the observations being made by my hon. Friends, but they must not blame the National Enterprise Board, in its previous or its present incarnation, for any predatory tactics in connection with Alfred Herbert, because that company was imposed upon the NEB as a casualty by the Labour Government.
§ Mr. Grylls
That is absolutely right. It was one of the earliest companies, with British Leyland, to be transferred to the NEB at the beginning of 1976.
§ Mr. Budgen
I am sure that my hon. Friend understood my point. It was merely an illustration of the principle.
§ Mr. Grylls
Yes, I absolutely understand that. But, when considering the record of the officials within the NEB in relation to the various companies concerned, I 40 believe that, on their performance so far, they would be turned down by any trigger-happy or wrist-happy banker. I want to be kind and not unkind about this matter. It is reasonable to ask "Why should they be competent?" They have been in operation for only a short time.
Successful industrial companies take decades to build up. The history of industry shows that it starts with small companies, which grow to medium and then to big companies. It does not happen in one year, or even in five years, I suggest to my right hon. Friend. Companies take time to grow, and as they grow they have more money to spend on developing their business. But in a period of less than five years the officials in the NEB have been given gigantic sums of taxpayers' money, having had no time, as it were, to grow with the job or to learn from experience, so why should they be competent? People in industry are worried about the figures, which are quite large. I have already mentioned the sum of £50 million—£25 million spent in the regions and £25 million spent from the head office.
I want to mention briefly the board drama that has taken place in the NEB simply to try to illustrate the point that I have just been making. I believe that the board as a whole has to some extent been the victim of compromise and that Sir Arthur Knight's resignation has had one useful effect, namely, to bring the compromise out into the open. It is no secret—I do not feel any diffidence in mentioning it—that there has been tension between the permanent staff, the chief executive and his assistants on the one hand and the part-time directors on the other. The chief executive and the permanent officials believe that they are capable of punting with the taxpayers' money and carrying on in that way, whereas the part-time directors—men of great experience in industry — have tended to say "Steady on. Should you go on spending this money? Why not first see what you have got to look after rather than rushing round spending more money?" It is obvious that the part-time directors have been highly sceptical of what has been going on, so that, unfortunately, tension exists. It may be attractive in politics to have coalitions, but I cannot believe that in running a big industrial company a coalition can lead to anything other than disaster, because there are bound to be muddled objectives.
My right hon. Friend the Secretary of State spelt out last summer what he saw as the objectives of the NEB. I hope that he will give the NEB a clear directive to pursue, above all, good housekeeping in looking after the portfolio of 60 companies that it already has. As has been pointed out, most of the investments relate back to the days of the Labour Government, but some of them relate to the time of the present Government.
The wisest course for the NEB, I suggest, would be to concentrate on what it already has in hand. There are investments which are suitable to be expanded and which should be successful. Even those making marginal losses could possibly be rehabilitated. They could be put together into a small business venture or capital trust and then floated off, in the same way as the other major companies in the portfolio were floated off. In the case of the companies which have gone too far down the road—the smaller Alfred Herberts of this world—the board will have to face the fact that they must be written off and closed down. Perhaps the people who are managing them could be encouraged to take them over for almost nothing, otherwise they should be written off.
§ Mr. James Hill (Southampton, Test)
I am following the logic of the argument. Will my hon. Friend go one step further? Why bother to deal with each one of the 60 companies? Why not put them in the market place in one company and see what the people in investment management feel they can make of them? They would be able to do the pruning, to sort out the weak from the strong, to keep going the most viable and to let the others go to where poor companies go.
§ Mr. Grylls
That would be away of doing it. My only suspicion is that so many of them are at this moment still making losses that it would not be much of a portfolio to hand over. The portfolio needs a good deal of work to be done on it. That is why I have referred to good management and good housekeeping over a period of 12 or 18 months. There could be an objective of putting them into the form of a business venture and floating it off. That might be a sensible course to adopt. We may have to agree lo differ in regard to any future punting. We hope that there will not be too much of it.
Sir Arthur Knight, who was appointed part-time, was very much involved in a full-time job. What we want is perhaps a different type of chairman, if the Government accept the objectives that I have put forward. After Sir John King has gone to British Airways in February 1981 and a new chairman is appointed, I hope that my right hon. Friend will consider the idea of having a very experienced leading accountant from a leading City firm as the part-time chairman, and under him a general manager or managing director with a perfectly normal business job of managing the portfolio in the sort of way that I have been discussing. I believe that if my right hon. Friend gives the board those clear objectives, it can get back on the rails after the rather sorry story since the board began, with so many different chairmen. What it needs is to operate in a much lower key, with a really efficient accountant and managing director, with clear objectives to get on with the job.
§ 5.7 pm
§ Mr. Gregor MacKenzie (Rutherglen)
: I hope that the Secretary of State and his hon. Friend the Member for Surrey, North-West (Mr. Grylls) will acquit me of any discourtesy if I do not follow them into a long discussion of the NEB. As might be expected, I propose to address try remarks to the Under-Secretary of State for Scotland, who has responsibility, with his right hon. Friend, for the Scottish Development Agency.
I begin my speech, as I am sure all hon. Members do, by thinking about the people who are unemployed throughout the country. I also think about the people who are unemployed in my own constituency. About a year and a half ago, when the Labour Government were in office, there were about 4,500 people unemployed in my constituency. Today the region number is in the region of 6,900—an increase of 2,400.
The hon. Member for Surrey, North-West continually talks about the taxpayers' money. I am as anxious as he is to protect the taxpayers. Indeed, I am sure that we are al concerned about the protection of the taxpayers' money. It sometimes appears to me that when he talks at out taxpayers' money he has in mind a group of people who are set apart from the ordinary people of the country.
I should add that the 6,000 people in my constituency at present unemployed through no fault of their own have 42 been taxpayers for many years. They are just as entitled as anyone else to get help from the National Enterprise Board, the Scottish Development Agency and the Welsh Development Agency. If by increasing the limits for the Scottish Development Agency the Bill does something to put some of those people back into work with a job that they want, it will perform a useful function. After all, taxpayers' money comes from all sections of the community, and those who are unemployed, through no fault of their own, have over the years made a massive contribution and are entitled to get something back.
§ Mr. Tom McNally (Stockport, South)
Does my right hon. Friend agree that it is a waste of taxpayers' money to keep millions unemployed when that money could be better used to create jobs?
§ Mr. MacKenzie
My hon. Friend is right, and he anticipates some of my later comments. I propose to say something about that matter.
I am happy to know that there is to be an increase in the amount of money to be made available to the agencies to carry on the work that they have been doing. But we have now had four changes over the past few years. In 1975 my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) gave the Scottish Development Agency a substantial sum of money to carry out its work with the undertaking that he would ensure that it would never be short of money to carry out that work.
When I succeeded my right hon. Friend and assisted him to get the 1979 Act on to the statute book, the sum available to the Scottish Development Agency was increased to £800 million. Within a few months, as my hon. Friend the Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) said, that amount was drastically reduced in order to please some of the backwoodsmen on the Conservative Back Benches. Now, the Secretary of State feels obliged, barely a year later, to tell the House that the figure is to be £700 million. Welcome though the figure of £700 million may be, it is still less than we were prepared to give in our first Bill in 1979 and, allowing for inflation, still falls short of the required amount.
There was another matter which concerned me in the speech of the Secretary of State today. He said that this money would be used by the development agencies but that they had to operate within the guidelines that he had laid down. I was disappointed to hear that, because I had hoped that the Under-Secretary of State for Scotland would be a bit more adventurous than he has been hitherto in the matter of guidelines. We know the attitude that he takes to the agency and to the National Enterprise Board. Within a few months of taking office, he and his right hon. Friend published the new guidelines for the SDA. Those guidelines were long and wordy, but the essence is that the SDA has to draw in its horns and be pretty tight with the purse strings in regard to industrial investment.
Perhaps when the Under-Secretary of State replies tonight he will tell us how much of the £700 million will be spent on new factories, on land renewal, and on all that that involves. I and doubtless many of my right hon. and hon. Friends would like to know how much of that money the hon. Gentleman sees going on direct industrial investment and on encouraging industry in Scotland to expand. I am, naturally, anxious about factory development and land renewal, but the key to the present 43 problems in Scotland lies in industrial investment and development. Unless this money is now to be used for that purpose, I do not believe that it is being used to the best possible advantage.
Yesterday I watched a television programme in which Brian Walden discussed the industrial situation with the Chancellor of the Duchy of Lancaster. I do not know how many right hon. and hon. Members saw the interview, but I am bound to say that I thought that it was the most extraordinary interview that I have witnessed in many a long day. The Chancellor of the Duchy of Lancaster contradicted many of the forecasts made by many of his right hon. and hon. Friends. He said that things were getting along, that we were now at the bottom of the recession and that by the end of next year there would be much better times. He went on to add, much to the surprise of many of us, that when that happened there would not be fewer jobs available.
I can only say that I am very glad that the Chancellor of the Duchy of Lancaster has nothing to do with industrial and economic policy. It is better that he goes to the pictures or the opera, or whatever he is required to do in his present task. I do not think that the right hon. Gentleman was being complacent in what he said, but he showed a lack of insight into the facts of industrial life. Most commentators believe that the recession will cut even deeper before things get better. We all know that, because of the revolution, as it is called, in microelectronics, fewer people will be required in that sector. We are told by the Department of Employment that there may be fewer jobs because we are slimming down our industries. I say "we", but the House will know what I mean. We know, too, that the older industries are declining rather faster.
Those are the two areas that particularly worry me. There should be much more help for the companies involved in microelectronics, and special help should be given to the areas where there are older and, sadly, declining industries — the areas where there is coal, steel-making shipbuilding and so on.
I make this appeal to the Secretary of State and his colleagues on the Treasury Bench. It is, of course, right that we should be prudent and that we should exercise a proper measure of caution with the public purse. But we are living in difficult and unusual times, and we must therefore take unusual steps. So I hope that the Undersecretary of State for Scotland, who has responsibility for the Scottish Development Agency, will tell the people who are concerned with the agency's industrial investments that they can now have a bit more latitude and exercise their commercial judgment in the hope of creating more jobs for people in Scotland.
As my hon. Friend the Member for Stockport, South (Mr. McNally) said, we are now spending massive amounts of money on unemployment and supplementary benefits. Money is pouring in from North Sea oil. The people in Scotland, and, indeed, in other parts of the United Kingdom, would like to think that that money will not be wasted and that it will create newer industries and help them to develop and provide jobs for them and their young people in the years to come.
We have many people of ingenuity in this country who should be backed, and backed up to the hilt. Of course, that involves an element of risk. But risks have to be taken at any time. If money is to be invested, I would rather risk 44 it on trying to build up a new firm and giving new jobs to people in Scotland, or wherever it may be, than simply handing it out time after time in the form of unemployment benefit. The workers do not want that. We do not want it. Therefore, I hope that the Government will have a less cautious approach to investment than the Under-Secretary has taken. The matter has to do with more than balancing books. It has to do with human beings. It is important that we stress that during this debate.
Secondly, I want to see the agency speeding the greatest amount of its money on the manufacturing sector of Scottish industry. But, by the same token, the Undersecretary should not totally rule out the prospect of assisting the service industries in Scotland and elsewhere. I am not saying that the SDA is totally against the service industries, but it could do a great deal more to help them than it is doing now. A growing number of people in Scotland work in the service industries. Therefore, it is important that the hon. Gentleman should encourage the SDA to spend rather more on service industries than it has.
The Under-Secretary of State for Industry has a special responsibility for small firms. I am pleased about that, because I know that he has a genuine interest in them. The agencies can be of particular help to small firm, but, despite the fact that I have looked at the accounts, it does not seem to me that we are doing enough to give financial help to some of the small firms.
We know that there is something of a chicken-and-egg situation, in that when a group of young men apply to the agency for financial assistance and guidance it wants to know — understandably — how much they will obtain from the banks, what their credit is and so on. But the agency could have a more direct approach to the assistance of small companies. It is a chicken-and-egg situation because those concerned cannot obtain money from the agency until they have proved themselves, and they cannot do that until they have some money to do it with. Many newer people are coming into industry, and they should be given all the help possible.
§ Mr. Grylls
The right hon. Gentleman referred to what I said about taxpayers' money. I am sure that he and I agree that we want to see new jobs created, but successful, long-term jobs. What makes the right hon. Gentleman think that the judgment of the officials in the Scottish Development Agency would be better than that of private enterprise people putting their own money into an investment? What leads him to think that they are likely to be more successful than anyone else?
§ Mr. MacKenzie
I am not saying that the officials' judgment is better than that of any commercial enterprise, but they are the people who have the £700 million. The hon. Gentleman knows perfectly well that if a young man in his constituency has a good idea for manufacturing and selling his product he will find it difficult to get the money from the big banks. No matter what is said by organisations such as Barclays Bank, which operates a small firms division, it is very difficult to obtain that kind of money from the local branch of a bank. But that it is what the agency's small firms division should be providing.
I can make my next point briefly, because it was mentioned by my hon. Friend the Member for Stirling, Falkirk and Grangemouth. When will there be a response to the report of the Select Committee on Scottish affairs 45 on inward investment? The matter has been on the go for about four months. The Committee reported to the House on 31 July, so we have had August, September, October and November for the Secretary of State to make a response. I hope that the Under-Secretary will be able to give an assurance tonight that before we rise for the Christmas Recess his right hon. Friend the Secretary of State for Scotland will be able to place that response before the House so that we may make a judgment on all these matters.
Most of us regard inward investment as being of great importance to Scotland and other parts of the United Kingdom. Having read the Select Committee report, I very much agree with what the then secretary of the Scottish Economic Planning Department said—that we could not have just one organisation looking after inward investment in Scotland That is the ideal; I should dearly like there; to be only one organisation involved, but we shall not get that. However, we should be striving towards it. Even now there are far too many organisations, to put not too fine a point on it, getting in on the act. I fear that if far too many organisations continue to get in on the act they will all get in each other's way and stumble around getting nowhere.
The Select Committee was, sadly, divided on the question. One group seemed to suggest that it was a matter only for the Scottish Development Agency. Others suggested that it should be dealt with simply by Government agencies, such as the Invest in Britain Bureau and the Consular Service. I do not think that those are the only options. I am not satisfied that the Consular Service—for which I have a high regard — or the Invest in Britain Bureau could do the job for the people of Scotland that we expect of them. It is for the Secretary of State for Scotland and the Scottish Economic Planning Department to take the lead. Of course, they will be assisted by the Scottish Development Agency and the Invest in Britain Bureau, but at the end of the day it is the Minister responsible, with all his authority, who should be going out with his officials and doing the job, assisted by the organisations concerned.
I am glad that the money provided for in the Bill is to be available. I hope that the Under-Secretary and his colleagues in the Scottish Office will not only provide the money but will ensure that the Scottish Development Agency is encouraged to spend it in the interests of protecting and creating jobs for the people of Scotland.
§ Mr. James Hill (Southampton, Test)
An hon. Friend of mine asked me a short time ago whether we would seek to divide the House on the Bill. I understand that those on the Opposition Front Bench have already said that they do not wish lo divide on the Bill. I can see why: the Bill provides for an extension of the National Enterprise Board's powers and is almost a Socialist Bill in content.
I am very disturbed that the Government are completely ignoring Conservative policy, on which we fought our successful campaign in 1979. Conservative policy then was that, although the bodies concerned, including the NEB, were intended to evolve and develop, we called in "The Right Approach" for the abolition of the NEB. This call was affirmed in "The Right Approach to the Economy", the second of the two firm legs on which we fought the general election.
In April 1978 there was a statement by my right hon. Friend the then Shadow Secretary of State for 46 Employment, now Secretary of State for Employment, who accepted the need for some form of casualty clearing station in a board which dealt with companies which for the time being ran into trouble and which, once they were restored to health, should be restored again to private enterprise. None of us on the Conservative Benches would disagree with that. My right hon. Friend believed that there was a place for the NEB, but not simply in seeking to invest in profitable companies that were already well established.
Therefore, we have the first point of our policy clear. We shall not abolish the NEB. We shall not invest in profitable companies. There is only one area left: we must invest in unprofitable companies. If the NEB tries to invest in unprofitable companies when it is trying to release 60 companies to the private market once they become profitable, it has to chase its own tail.
At one stage we were told that we could not sell Vosper Thornycroft, which is a profitable segment of British Shipbuilders. That is another conflict in Conservative Party policy. I wonder whether my right hon. Friend the Secretary of State for Industry realises that many Conservative Back Benchers are anxious not only that he should wind down the NEB but that he should abolish it, in keeping with our manifesto promises. Until he does, several Back Benchers will query the resolve of his Department.
In July 1979 the Secretary of State said:The function of the NEB will cease to be the reorganisation of the industrial undertakings or the extension of public ownership into profitable areas of manufacturing industry, or promoting industrial democracy in undertakings under the board's control as the 1975 Industry Act requires. In addition to its other unchanged role the NEB will be expected no promote the private ownership of interests in industrial undertakings by the disposal of securities and other properties held by the board or any of their subsidiaries.His position was clear in July 1979, but it is not so clear now. Many of us would like a firm statement at the end of the debate about the future of the NEB.
§ Mr. John Evans
Is not the hon. Gentleman grievously misinterpreting the Secretary of State for Industry by implying that the manifesto contained a commitment to wind up the NEB? Is the hon. Gentleman aware that on 6 November 1979 the Secretary of State, in referring to alterations to the running of the NEB, said: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." — [Official Report, 6 November 1979; Vol. 973, c. 240.]Does the hon. Gentleman accept that there was no commitment to wind up the NEB, or was the Secretary of State wrong?
§ Mr. Budgen
If my hon. Friend is right, by the time the manifesto came out the position had changed and there was no specific commitment to abolish the NEB.
§ Mr. Hill
Between the printing of two massive policy statements there was no implication of a complete change in policy. However, I accept my hon. Friend's point.
47 At the time of the Rolls-Royce dispute, an article appeared in the Sunday Telegraph, and one can be forgiven a mild satisfaction about the events this week. The article stated:If the NEB is not now on its last legs it is preciously close to it. The end is nigh and could be delivered by the Secretary of State for Industry this week.That was said by the City editor of the Sunday Telegraph, who continued:There is no case for the NEB getting involved in many of the areas which it has done. The argument for its investment in microelectronics is at the best dubious.I would not go as far as that article. There is great merit in trying to assist researchers and inventors in high technology and in moving into one of the most costly industries. In my constituency, I am grateful that another arm of the Secretary of State for Industry has given £1 million for research to Mullard (Southampton) Ltd.
I am pleased with what is happening in a small way. However, I am always horrified at the sums involved. The NEB's present limit is £2,250 million, of which £1,500 million is for British Leyland. The rest is for financing the NEB's other investments. The increase of £1 million, for which the Bill makes provision, is a token sum which will have to be amended when the Government have concluded their considerations for BL's corporate plan.
Rolls-Royce is now out of the package. I expect that British Leyland would like to get out of the package. At the end of the day, what will the NEB have? It will have 60 small companies, the most profitable of which the Secretary of State will try to hive off on to the private market. Such actions are never successful. If the Government hive off the profitable companies, the unprofitable companies will be made more significant. It is impossible to hive off the unprofitable companies. If the Government are determined, they must deal with the problem in one package. There is no other way. Certainly there is not enough time to deal with each of the 60 companies individually.
The problems in the car industry are too obvious to repeat. We wish the industry well. Its labour force now wishes it well. Certainly its managements have striven for some time to get it on its feet in order to compete with the rest of the world. At Question Time today, we discussed the importance not only of buying British but of design, quality control, pricing, delivery and after-sales service. If British Leyland gets that right, perhaps it will not need the colossal sum earmarked for it.
I become a little pessimistic at times because British Leyland seems not only to be able to use all that is available but to force the Secretary of State to go further. It has been said that a recurring budget in which the figures become larger and larger is involved. How long must we hear these dismal reports? I know that my right hon. Friend's heart is in the right place. His team is endeavouring to bring the problem to a conclusion. I say, let us have away with the NEB as soon as possible.
§ Mr. Arthur Palmer (Bristol, North-East)
I trust that the hon. Member for Southampton, Test (Mr. Hill) will forgive me if I do not take up his remarks about the National Enterprise Board. They were varying comments, but I have the general impression that the hon. Gentleman 48 does not like the NEB very much unless its beneficial effects come to his constituency, when he would take a slightly different view.
Yet, on second thoughts, I should not apologise for not taking up the hon. Gentleman's remarks. This is a mixed Bill that covers a number of different matters that are not directly connected. One cannot make a consistent speech about the whole of the Bill.
I direct the attention of the House to clause 6, which is tucked away at the end of the Bill, a clause which gives power to the Secretary of State to make grants or loans, among other things, to promote the practice of engineering. I understand that this is to cover financially the response of the Secretary of State for Industry to the Finniston report on the engineering profession. The report was debated at some length when we spent the whole of a Friday on it. That was before the Summer Recess. It was debated at equal length and, I hope, with equal wisdom in another place.
In the debate that took place in this Chamber, it was generally accepted on both sides that the Finniston report recommendations went, rightly, beyond the limits of its title, which refers to professional engineering. The beauty and the strength of the Finniston report was that it related the engineering profession—its education and training—and its place in the productive economy. It saw engineering and engineers as the concern of industry, the trade unions, the universities, the schools and the Government—indeed, the community—and to the same extent of the engineering profession itself, represented by the various chartered bodies.
A key facet of the Finniston report was the emphasis that it placed on the statutory registration and eventual licensing, perhaps, of engineers. I do not think that the Secretary of State took any part in the general debate before the Summer Recess. However, he made a number of public responses to Finniston. I thought that his responses in the first place were definitely encouraging. They encouraged one to think that legislation, as the Finniston report recommended, would be introduced to establish the engineering authority after consultation with both sides of industry and, of course, with the chartered engineering institutions.
The Finniston report wanted legislation, and it suggested that the statutory registration of engineers could be introduced fairly only through legislation. What has happened? On the last sitting day of the House before the Summer Recess the Minister announced that no legislation would be introduced but that a body would be set up, a pale shadow of what the Finniston report proposed, under the auspices of that somewhat medieval body, the Privy Council.
The House is asked by means of the Bill to make available public moneys to enable the authority to be set up under the auspices of the Privy Council. The announcement so soon before the Summer Recess was made by means of the usual planted question. I think that it was done on the very last day before the recess. There was no opportunity for hon. Members on either side of the House to question the Secretary of State as the importance of the report deserved.
It is true that the Secretary of State held a press conference. However, other matters were dealt with at that conference apart from the Finniston report. I spoke to some of the press representatives who attended the conference. They always get to know of these matters 49 before hon. Members. That can be taken for granted. They said that the right hon. Gentleman seemed bored with the whole business They might have done him an injustice or he might have had a bad afternoon, but that was the impression that was given at the conference, or so I am told.
I wish to protest in the strongest terms at this deliberate attempt, as I see it, to avoid parliamentary debate and decisions by using the archaic procedures of the Privy Council to establish the authority. I know that the Secretary of State has succumbed to the representations of the leaders of the engineering institutions. I think that I can speak without prejudice on that because I am a fellow of two of those institutions. The light hon. Gentleman has ignored the equal interest of industry and that of the trade unions, especially the staff trade unions. It is generally relieved that the majority of professional engineers are in staff unions.
There is a curious tendency for the engineering institutions to talk in terms of 1820 or 1830. They think romantically of engineers as men rather like Brunei planning the Great Western Railway or the early steamship that sailed the Atlantic. That is not the position of engineers nowadays. Industry has changed so much that the majority of chartered engineers are employees, working in teams. As employees, they take a close interest in their remuneration and conditions of employment. They are strongly organised—quite rightly—in professional trade unions. These are well-known bodies that have a high reputation such as the Institution of Professional Civil Servants, NALGO, my own union — the Electrical Power Engineers Association — or its sister body, the Engineers and Managers Association, and many others. Those bodies have had nothing like the attention from the Secretary of State that the presidents of the engineering institutions have received, divided as these institutions are normally.
Also, there is little or no evidence that the chartered institutions have taken real trouble to consult their Members since they started talking to the Secretary of State. The Institution of Electrical Engineers, of which I am a fellow, has given support to the so-called solution through the Privy Council and in doing so has contradicted Is evidence to the Finniston committee. At one time the Institution of Electrical Engineers went out of its way to check the opinions of its members. It had a poll organised independently, and 92 per cent., I think, of its members said that they wanted statutory registration of engineers. There is little hope of getting statutory registration through the Privy Council's chartered body.
To deal with the Privy Council is to enter on a misty scene. One never knows whether it is really there. I thought that it would do no harm to write to the Clerk of the Privy Council. I shall not take up the time of the House by reading my letter. It is a very good letter. I told the Clerk that I objected to the course of action taken by the Secretary of State. I argued that it is wrong in modem practice for a body of vast importance to industry, employers and the employed as well as to trade unions, schools and universities to be set up without full parliamentary scrutiny and approval.
A further point that I made was that the career promotion prospects and remuneration of many thousands —perhaps even tens of thousands—of Her Majesty's subjects could be influenced and affected by the decisions of the proposed body, without light of redress. I have 50 already mentioned that there is no proof that the ruling council of the existing chartered institutions has taken steps to obtain the approval of their members, and I informed the Clerk of the Privy Council accordingly.
I was firing shots in the dark, but I sent copies not only to the Secretary of State but to the Lord President of the Council, the Secretary of State for Education and Science, Mr. Speaker and, for good measure, Her Majesty's principal private secretary. Having now fired in so many directions, something may come back. Who knows?
There is no time for me to enlarge further on my remarks about the wrongness of the Secretary of State in using the machinery of the Bill to find money for a body not subject to parliamentary approval when there is every need and opportunity for legislation. It would probably also be out of order for me to make more general comments on the Finniston report and its aftermath.
§ Mr. Tristan Garel-Jones (Watford)
Does the hon. Gentleman agree that the proposal is that money should be found in the short term and that the eventual aim is for the body to be self-financing?
§ Mr. Palmer
That is not quite the point of my criticism. I consider that a Bill should have been brought in which would have given us the opportunity to look at all the details in Committee. It is not a matter of much contention between the parties, and the Committee stage would have been useful and constructive. If public money is to be found or loaned, it should go to a measure that has passed the scrutiny of this House and the other place, as would be necessary.
§ Mr. John Evans
My hon. Friend makes a valid point. Unless someone like him is on the Committee dealing with such a Bill, clause 6 will probably go through without discussion.
§ Mr. Palmer
My hon. Friend emphasises what I am saying. It is easy for such provisions to slip through. When a Secretary of State wants a matter to slip through without comment or not to be noticed at all, he makes it the last clause. I have noticed that over some years. Hon. Members are weary by that stage and want to get the matter over and the Bill finished.
The right hon. Gentleman must know, because I am sure that his Department serves him well in that respect, that he has had a bad press on his proposal. He has been criticised right and left. He has been criticised in technical papers like the Electrical Review, The Engineer and Engineering. The Times Educational Supplement has not handled him very kindly. The Engineering Employers Federation is still doubtful about this solution. Some members of the CBI—and, of course, it is a divided body—express doubts, although they seem to have been quietened recently.
The only industrialist who has spoken against Finniston and the statutory registration of engineers as proposed was Sir Arnold Weinstock, who presumably approves of the nearly dead thing to which the Secretary of State has given birth. I understand that he feels that the Finniston proposals will not fit in with the way in which he trains and organises engineers in his great company. Apart from Sir Arnold and some of the presidents of the chartered institutions, no one outside has been keen on what the Secretary of State proposes. Indeed, words like "betrayal" 51 have been used and it is suggested accurately that there has been an emasculation of the Finniston proposals and much else.
Only two justifications have been used by the right hon. Gentleman and perhaps other Ministers for the use of the Privy Council. In a statement on 2 August, the right hon. Gentleman said that it was important to work within the existing institutions. Surely, it was the existing institutions and their inadequacy to facilitate change that Finniston condemned. Had the existing institutions done their job over the years, there would perhaps have been no need to have the Finniston investigation at all.
The presidents of the chartered institutions say that it would be unfair for engineering to be the only profession regulated by statute. I do not believe that that is quite historically accurate. I have not had time to look up the matter, but I believe that there was legislation in the past for the better regulation of the practice of medicine and certainly for dentistry.
However, the thrust of Finniston is that engineering is inevitably linked to industrial efficiency and the productive process. It is in that sense a very different profession from, say, the profession of law.
A great blunder has been made by the Secretary of State. He has disappointed some who were anxious to think well of him—and they are not all that numerous. I hope that he will think again and drop the present approach. There is still time. He should bring in a comprehensive Bill, which would have the great advantage that details, difficulties and things overlooked or not thought about could be examined in Committee.
However, if the right hon. Gentleman is determined to persist in this half-and-half way of doing a job that needs to be done properly, I can only suggest, first, that his proposed body must be responsible for promoting the engineering dimension in industry. Secondly, it should be directly responsible for engineering standards and training. I believe that at present it is proposed to devolve that responsibility to the bodies that have failed in the past. Thirdly, it should be directly responsible for registration, if that can now be brought in; it will probably require a Bill sooner or later. Fourthly, there should be in the membership of the body a balanced representation of industry, unions, educationists and the engineering profession. It is a vital matter to industry. There is need to bring engineering back to its former importance in the service of the industrial community. It is not right simply to leave the matter to the inbred organisations of the profession—and I speak as a professional engineer.
I put forward those criticisms in order to assist the Government if they are prepared to think again. I once more beg the Secretary of State to realise that the matter is important to the whole of industry and not only to the engineering profession as he seems to suppose.
§ 6 pm
§ Mr. Nick Budgen (Wolverhampton, South-West)
I am sure that the hon. Member for Bristol, North-East (Mr. Palmer), as a professional engineer, will know that when my constituents in Wolverhampton talk about engineering they talk more especially about British Leyland. It is to British Leyland that I shall confine my speech.
When discussing the general arguments about the taxpayer supporting a significant sector of British industry, 52 I do not feel that I can properly or without impudence improve or attempt to enumerate the arguments put forward by my right hon. Friend the Secretary of State when in Opposition both between 1964 and 1970 and in the period before we came to power last year. He articulated the arguments against the politicisation of investment with a passion and an eloquence which all of us must envy and admire.
But, of course, it is also true that, when we come to consider whether it is possible to withdraw support from an enterprise or industry, the arguments of the free marketeer may obtain with force. When deciding whether to step into a new arena—for instance, whether to step into investment in high technology—the arguments are entirely free market arguments. On the other hand, when deciding to withdraw from an area, the political arguments are important.
I do not wish to be thought to be critical of my right hon. Friend when I see the vast and growing subsidies, which have been a most significant factor in increasing and putting out of joint the public sector borrowing requirement for this year and probably for next year, being extended to both shipbuilding and to the steel industry. I also feel that it is right for many of my colleagues to say to me "You do not know the political situation in Hartlepool. With your Manchester Liberal views, you do not understand the consequences of their application to my constituency." But I think that I am entitled to comment on the effect of withdrawing subsidy from British Leyland, because a very high proportion of my constituents are, directly and indirectly, concerned in British Leyland.
Perhaps I may declare an interest in this matter. My brother worked for British Leyland for 20 or 25 years. He has now left British Leyland and is working on his own account in the car industry. However, I speak mainly as one who represents a car constituency.
When the Conservatives obtained power at the last general election, my right hon. Friend had a marvellous opportunity. He had changed the climate of opinion by his wonderful and eloquent speeches, so much so that many companies, such as GKN, which had been perilously dependent on British Leyland changed their trading arrangements and, for instance, sought business in Germany and with other car manufacturers. They anticipated that, if and when my right hon. Friend became Secretary of State for Industry, the bullet would be bitten immediately and British Leyland would be obliged either to go into receivership or to sell off a large part of its assets to sustain the core of the volume car business.
What is more, I believe that there was general support throughout the country for the free market views that had been put forward by my right hon. Friend
§ Mr. Budgen
I am not sure. It may have been a brave and contentious philosophy. None the less, it was understood.
Recently, my right hon. Friend has said about the Government generally that they have lost a year. The tragedy is that my right hon. Friend has lost the year. It was in that first year that he had the great opportunity to deal with British Leyland. He had prepared the ground. But there were also those conditions in the economy that would have enabled him to do it then.
I must tell the House that I have a very great admiration in general for the right hon. Member for Leeds, East (Mr. 53 Healey). In his middle period he was a most significant and effective Chancellor of the Exchequer. Unhappily, he followed the usual British tradition of hotting up the economy just before the general election to try to corrupt the electorate into voting for his Government. I mean no party point about that. As I understand it, it is an established tradition of our political life.
Unfortunately, the right hon. Member for Leeds, East was mistaken, as most of us were, about when the general election would take place. He hotted up the economy in anticipation of a general election in June or October 1978, and the then Prime Minister frustrated his intentions completely.
As a result, when we took over the economy, it was fairly well hotted up. It would have been possible then, for instance, to have sold off Range Rover or Land Rover. If I may refer to a factory that is on the very edge of my constituency, it would have been possible to sell off Trucks and Buses. I do not wish to be an inaccurate unpaid management consultant. I do not pretend to know the various decisions which might have been available to British Leyland. But the share market was stronger and the economy was stronger. Then would have been an opportunity, if it had been done quickly, for British Leyland to be allowed to go into receivership or to be kept to a strict cash limit.
It is obvious now that British Leyland will be given the larger proportion of the £800 million or £1 billion. It is no good pretending that Sir Michael Edwardes is other than the creature of the Secretary of State. He may be given rather more licence than an established civil servant. He may be allowed to go to the CBI conference and make very rude noises about the present Government. No one minds about that very much. But, effectively, there are no private shareholders in British Leyland. There is no means for Sir Michael Edwardes to raise capital other than from the taxpayer. So, when he lets it be widely known that he wants either £1 billion or £800 million, surely it means that he has cleared it with the Secretary of State, otherwise: it would be totally humiliating for him to be flashing around figures of that sort if he was likely to be denied the lot. So we know that there will be some marginal modifications and the appearance of some conditions here or there. Gritty noises will be made, but he will get the money
What will happen? I remind the House about the very stringent undertakings given on 20 December last year. When I intervened in my right hon. Friend's speech, I referred to the promise to dispose of assets. There was enough small print. There waswhere this makes commercial sense".There were sufficient subordinate clauses to save everyone's face. But the clear impression was given that assets would be sold, and they have not been.
It was also plain that, before 20 December, Sir Michael Edwardes believed some of the speeches that had been made before the general election. Until 20 December, he vas a frightened man. So it was that the letter from him to the Secretary of State was published on 20 December. The House will remember the third paragraph of it:In particular it there is a significant shortfall in cash flew whether due to major disruptions through internal or external strikes, or to delays in any of our programmes for investment and launch of new products, restructuring and redundancies or for improving productivity and working practices, or to any other cause internal or external, the Board will abandon the Plan." —[Official Report, 20 December 1979; Vol. 976, c. 885–894]54 There must have been 20 or 30 occasions since the publication of that letter when the Secretary of State could have slopped the How of money to British Leyland if he had wished to do so. Therefore, it is plain that British Leyland will get, perhaps, £800 million. What does that mean? If the Secretary of State had bitten that bullet earlier, there would have been much anger and some distress in the West Midlands, but in 1984, if we had a balanced Budget, a low rate of inflation and a thriving economy, the withdrawal of subsidy to British Leyland in 1979 would have been forgotten and forgiven. But we are now dealing with a very large sum of money.
It has become fashionable in my party to talk about the possibility of increasing taxation indirectly. But I suspect that we have come to the end of that and that in the next year every taxpayer in the land will pay 2p extra on the standard rate of tax to British Leyland, which has already had £1 billion—that is, 2p on the standard rate of tax—in one year. As we demonstrate our compassion, we are saying to those of my constituents who are directly involved in British Leyland, whether because they work there or because they work for other companies which supply British Leyland, that we shall give them another year or two but everyone in the country will have to pay 2p extra on the standard rate of tax.
§ Mr. Douglas Hogg (Grantham)
My hon. Friend has been spelling out the financial implications of a further advance to British Leyland, but will he help the House with his scenario? If, for example, no money had been forthcoming and British Leyland had been put into receivership in 1979, there would have been massive redundancies throughout the West and East Midlands. Will my hon. Friend tell the House the number of people who would have been put out of work, directly and indirectly, how many of those people he estimates would now have obtained employment, and what would be the cost to the taxpayer of maintaining them on unemployment and associated benefits during the two or three years that they might have remained out of work?
§ Mr. Budgen
I thought that I had dealt with that earlier, but perhaps I dealt with it inadequately. What happened would depend upon the way in which either British Leyland or the receiver dealt with the matter. I accept, of course, that the volume cars are the most serious problem, but if, for the sake of argument, the businesses on the periphery of British Leyland had been sold off, there would have been no major loss of jobs. There would have been a transference of ownership, which would have been very much for the better. For example, on the borders of my constituency there is a factory that manufactures buses to order. There is no significant similarity between the sort of work that the men do there and the sort of work that is done by the men on the assembly line at Cowley or Longbridge, but they are all caught in the same wage and management structure, they are all affected in their morale if there is a major strike throughout British Leyland and they are all affected when further demands are made on taxpayers' money.
With regard to the peripheral business, there would be no unemployment. As to the amount of unemployment in the volume car business, we cannot tell, because we do not know how much the other businesses would have made if they had been sold or what arrangements might have been made by foreign car manufacturers interested in the 55 volume car business. But we can say that if 2p is added to the standard rate of tax in any one year demand will be reduced throughout the whole economy. If we talk about toys that are manufactured in the West Midlands, fewer toys would be sold at Christmas, and to that extent fewer people would be employed in the manufacture of toys.
My sad conclusion is that British Leyland will receive this money and that it will limp on in much the same way as Alfred Herbert limped on. Because of the political importance of the West Midlands to the Tory Party, which was well illustrated yesterday by Brian Walden in his excellent television programme, it will be difficult to deal with British Leyland during the course of the present Parliament, but it will have to be dealt with at some stage. I say with great regret that I should have preferred my right hon. Friend the Secretary of State to carry out the principles that he previously articulated with such eloquence and passion.
§ Mr. Tom McNally (Stockport, South)
This has been a curious debate on a curious Bill. I do not agree with the hon. Member for Southampton, Test (Mr. Hill), who, during the Secretary of State's absence, described this as a Socialist Bill. Most of the crustiness about the contents of the Bill has come from the Opposition. That is probably because it at least holds in place some of the instruments that Labour Members wish to be retained in the management of the economy.
Some of the speeches that we have heard today have been curious, in that from hearing some Conservative Members speak one would think that they were talking at the end of a golden age of British private enterprise and inventiveness. They seem to think that the criticisms from this side of the House are unworthy in the light of successes of British private enterprise and that the various rescue operations that were mounted in the 1960s and 1970s were not a condemnation of the failure of British private enterprise.
After well trailing his speech in the press, the hon. Member for Surrey, North-West (Mr. Grylls) delivered his admonitions to the Secretary of State. He said that he objected to the annual Industry Bill. Labour Members would like the Secretary of State to keep on trying until he gets it right. The hon. Member for Surrey, North-West spoke about the predatory role of the NEB. In my area, the role of the NEB has been far from predatory. But the main contrast between the two sides of the House is that Labour Members have emphasised the necessity of creating jobs and encouraging industry whereas most Conservative Members seem to have spent their preparatory time for the debate in poring over balance sheets.
The Secretary of State has already confessed to us that we enter our debates on the Bill after a lost year. In that period unemployment has doubled, output has been lower than at the time of the three-day working week and there has been a record number of bankruptcies. We on the Labour Benches will hardly disagree that it has been a lost year, although the pain of it has been almost entirely self-inflicted.
That explains why many Labour Members are surprised to find such an inadequate Bill to meet the crisis facing British industry. The Secretary of State has gone through what I would call his Pooh-Bah phase. There was a period 56 when hardly a week seemed to go by without his coming to the House to announce that he was taking over the power of an existing board and bringing it within his Department. It seemed that from there he intended to control almost the whole of British industry.
Since then the right hon. Gentleman has transferred to his Pooh-Bah phase, in which he sits frowning and confused, pondering the horror of the waste he has created. It is against that background that I should like to consider some of the proposals in the Bill.
As the Secretary of State explained, the continuation of the shipbuilding industry redundancy payments scheme is a technical extension. However, we should put on record that the scheme and the co-operation given by the shipyard workers in restructuring the industry are a credit to an industry that was not always at the forefront of good industrial relations.
I move on to clause 6. In a previous capacity, I never ceased to wonder at the way in which one hon. Member would do his homework, burrow into a question and then cause departmental problems when it appeared that something had been safely buried. If the Secretary of State has any idea of using clause 6 to erect a convenient tombstone over Finniston, the speech by my hon. Friend the Member for Bristol, North-East (Mr. Palmer), which showed such an insight into the background of Finniston and the various proposals by the engineering profession, demonstrated that there will be an interesting fight unless Ministers are prepared to think again. I welcome the Government's commitment on that clause to improve the links between education and industry. They are still sadly lacking. In my area the chemical industries have been promoting a scheme called the Manchester bridge scheme, which is designed to bring children and educationists into better contact with that industry. I commend it to the Minister as worthy of study.
§ Mr. John Maxton (Glasgow, Cathcart)
Is my hon. Friend aware that I accept his point and welcome those links? However, does he agree that the cash limits that the Government are imposing on the universities are making it difficult for them to take in new applicants for the sort of industries that he was describing? I include chemical engineers and computer graduate students. In Scotland the numbers available to go into these courses have increased by 30 per cent., but the universities simply cannot take them.
§ Mr. McNally
I could not agree more. I hope that my hon. Friend has the opportunity to speak in the debate to develop the point further. A recession is just the time when we should be devoting resources to training and to creating skills. I am worried that even when we have come out of the recession we shall still be left with some of the old cries of "skill shortages" and "bottlenecks in industry". I am not sure that we are using the time we have now as a proper breathing space to train and retrain for growth in the future.
I move next to the National Enterprise Board. There was a political and philosophical divide between the two parties on this subject, but it was a tragedy that the board had so little time to develop and put down roots before the Secretary of State took office, bringing with him his ideological vandalism. Without waiting to test the workings of the board, he set about destroying it. He 57 adopted a Malcolm Allison approach, destroying the original board and in the process destroying the concept that was essential to its good working of bringing in the expertise of industrialists and trade unionists. Since then he has allowed it to limp along without its knowing whether it had his confidence. Now, it is taking on its third chairman in a year. It is not a satisfactory or proper way of judging any public body, certainly not one that deals with a great deal of public money.
There is, however, still a role for the NEB. Perhaps that is why the Opposition will not divide the House and why we give a cautious welcome to aspects of the Bill. We believe that the NEB will have an important future role in the management of the economy.
The Secretary of State for Trade called on the country the other day lo move up market. I could not agree more. However, one of my fears about moving up market in terms of quality and the creation of new technology industries is that we shall find many of our competitors, not least the newly industrialised countries, already there. They will have gone up market no matter what lip service they may have given to the free market and laissez-faire economics. They will have done so by Government intervention, Government planning and Government aid for their industries.
The NEB has an important role to play in that direction. Over the past year and again today the Secretary of State for Industry gave the game away in respect of private enterprise and new technology in that he is leaving the responsibility of developing new technology and cooperating with private industry as a specific role of the NEB. That is a clear admission that he cannot leave this important sector to private enterprise.
We also welcome the fact that, although he is giving the board no more money, he is allowing it to retain its regional role. I say to my Front Bench, since we shall probably be unable to convince the Secretary of State on this score, that I hope we shall earmark for our future policy the enhancement of the NEB's regional role so that in the North-West and the North-West, as well as in Scotland and Wales, which have their development agencies, the NEB concept can be used oh a regional basis.
I reject the suggestion that the NEB has been wasting the taxpayer's money. My constituents work in ICL, Fairey and Ferranti. Those companies are now all going concerns. However, if the philosophy of some Conservatives had been applied in the past instead of that of the Labour Government, highly skilled technical teams would have been disbanded and viable industries destroyed.
We are not asking for good money to be thrown after bad. We are asking the Conservatives instead to exercise a little judgment when they see a firm in trouble and to use a little common sense to determine whether it is simply going through a temporary phase; and whether, with a little help and Government assistance, it could be saved to prosper once again. The answer provided by the firms that I have named is that our policy of selective intervention and selective aid was the sensible one and that the Conservative ideological blockage is doing grave damage to British industry.
My right hon. Friend the Member for Rutherglen (Mr. MacKenzie) said that on Sunday he watched the optimistic television broadcast by the Chancellor of the Duchy of Lancaster. I understand that the more interesting programme was on Independent Radio News, in which the 58 Prime Minister was likening herself to the nurse of British industry. That idea leaves me almost speechless. I had always thought of her as a more medieval medical practitioner. I refer to the bleeders—and before you rule me out of order, Mr. Deputy Speaker, let me say that the bleeders were very decent people and, rather like the Prime Minister, they thought that they were doing good and would work very hard at what they were doing, but they were a little surprised when patients popped off through anaemia.
British industry has been bled over the past year by the doubling of VAT, by high interest rates and by an overvalued pound, and in the last week, almost by mistake, it has been bled to the tune of another £1 billion through social security payments. That kind of bleeding must stop. We must have more sophisticated medicine. I do not think that the present doctors are up to the task.
§ Mr. Michael Brown (Brigg and Scunthorpe)
I am grateful for the opportunity to make a brief intervention during this debate on the second Industry Bill which my right hon. Friend the Secretary of State has introduced. The House will be aware that I represent a major steel-producing constituency as I never lose any opportunity of making that point Some Opposition Members may feel "Good heavens. What is a Conservative Member doing making a point that we may well interpret as being against the NEB and against BL when he and his constituency rely to such a considerable extent upon public funds for his constituency's welfare and perhaps for his electoral prospects?" I do not want to dwell on the subject of British Steel. I should probably be out of order in doing so, anyway. However, clearly the Bill and the long-term future of BL have considerable implications for my constituency.
Just as I do not want to see BL having to rely upon a begging-bowl approach to the Government for its survival, so in exactly the same way I candidly accept that it is not right for British Steel to go along the same route. In the Bill we have not had any indication of what the finance is likely to be for the British Steel Corporation. I understand that this is to be the subject of possible legislation later in the year, when we know the plans from the chairman of the BSC. But one thing of which I am conscious and which I try to point out to my constituents, in the same way as my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) has pointed out matters to his constituents, is that we do not do either the BSC or BL and the work forces of those industries any service by suggesting that we are right continually to expect and encourage the Government to pump further sums of money into those industries.
Ultimately, the health of BL will not depend upon the ability of one Government or another to come along with greater or lesser sums to support it. The health of the BSC will not in the long run be assisted by the extent to which a Conservative Government or a Labour Government come along with public funds to support it. The obvious temptation for any Member representing a seat such as mine, or for a Member such as my hon. Friend the Member for Wolverhampton, South-West, is always to say "Of course, we are against subsidies. We do not believe in using taxpayers' funds to bail out industry—except for our own constituencies."
59 I derive no pleasure from the fact that I represent a constituency which is at present very dependent, for better or worse, upon that begging-bowl approach to the Government. I try constantly to remind the trade unions in my constituency and the work force, and those who may or may not have voted for me, that ultimately the health of their industry will depend not on the health of BL because BL is one of the major customers of British Steel or upon the ability of BL to convince my right hon. Friend of the need to increase financial limits in an Industry Bill or by an order, but upon the extent to which the customer is willing to purchase a BL car.
It is a very interesting fact that in my constituency, a steel constituency, more than 60 per cent. of new car registrations are of foreign cars. So, when it comes to taking the decision on individual grounds, the individual consumer in my constituency makes the decision as to what he wishes to buy according to price and quality. He does not think to himself "I am a worker in British Steel. I must, therefore, buy a BL car in order that BL has an order or is producing for the BSC a healthy order book." He takes a straightforward decision according to where the best buy is and the best car. Over 60 per cent. of my constituents elect, as do many people, not to buy BL.
§ Mr. Martin J. O'Neill (Clackmannan and East Stirlingshire)
Does the hon. Member agree with his constituents' judgment as to the choice of cars which they purchase? Does he think that they are making a sensible choice, either in terms of the British economy or in terms of the quality of the product that they are buying?
§ Mr. Brown
Yes, in the long run there is no doubt that they are making a sensible choice. I believe that the British people will be suffering from a grave delusion if they are continually encouraged to buy products on grounds other than those of quality and price, and they will decide about them. At the end of the day, however much we may call for import controls and for public subsidy to support the BSC to produce steel that is not required by BL because it is not selling its cars, and however tempting it is to go along that route, I should be guilty of a gross deception on my constituency if I advocated that. The only other way would be to force matters by means of a siege economy and to get round this problem by saying to our constituents "You can afford to buy a car. You have £4,000. You will buy a BL car."
If it is a better car, of course our constituents will have taken the decision to buy that car anyway. We have to ask ourselves why they are not buying that car if it is a better car. Very often the reason will be that the product is not available because of industrial disputes, because there are workers in BL who have been used to a diet of public subsidy to bail out their industry, and they do not have to work in an industrial environment such as that in which workers in private industry have to work.
I reject totally the hon. Gentleman's view. I should be guilty of a gross deception on my constituents if I resorted to the simple device of saying to them "In order to protect your jobs and British Steel, you must buy a BL car, and that will create a demand for British Steel", because I know that that is not the route towards solving either BL's problems or those of British Steel.
Some may say "Of course, Mr. Brown, you are putting your head on the electoral chopping block." That is for the 60 electorate to decide in their own way. But, in seats such as mine, one has to point out certain realities whatever the long-term consequences may be. I happen to think that in the long run the electorate will respect a Government, such as the Government that I am proud to support, who are pointing out that we cannot continue to pump money into industries unless there is the prospect of a clear demand for their products.
The Government have brought forward the Bill, which will receive my support, but clearly it is right for us to ask, during the passage of the Bill, how BL is getting on. Certainly it has produced the right product in the Mini-Metro. I shall judge the success of BL in the end by the extent to which it is able to persuade the customer to purchase its product in preference to the foreign car, the Japanese or the German car, not on simple appeals to buy British but on the straightforward basis of "This is a better product and a good product in terms of value for money." That is the way in which we must contemplate support for British Leyland and, indirectly, British Steel.
I am worried about British Leyland in one respect, and this is where I believe that I am defending the interests of my constituency as a steel-producing constituency. In spite of the Trojan work done by the chairman of British Leyland, and in spite of all the public finance that has been granted under previous Industry Acts, I am deeply concerned that apart from the Mini-Metro we are still subsidising British Leyland to produce models which the general public do not want or cannot buy. There may be many reasons for that. For example, the product may not be available when people want it, it may not be the right product or it may not be available at the correct price.
I sincerely hope that British Leyland will seriously and urgently consider why people decide to buy foreign cars. I suspect that it is because of their immediate availability and attractiveness in terms of style. One must bear in mind the fact that many of the models now produced by British Leyland have been in existence for about 10 years. However, cars from abroad, particularly from Germany and Japan, are invariably in production for only 12 or 18 months before they receive much more than the simple facelift which seems to be carried out by British Leyland. I am not knocking British Leyland. I want the company to succeed, for the obvious reason that there is an important spin-off in my constituency according to the success of British Steel.
I was impressed by the comments made by my hon. Friend the Member for Wolverhampton, South-West. We both represent constituencies where initially we are tempted to say "We do not agree with subsidies, but, as our constituencies depend for their survival on public subsidies, we must make an exception in the case of Wolverhampton, South-West and Brigg and Scunthorpe." During the last year, I have lost no opportunity to persuade steel workers in my constituency—
§ Mr. Brown
The hon. Gentleman says "Unsuccessfully", but I believe that there is a considerable air of reality among British Steel and British Leyland workers that the begging bowl approach to industry is not the healthiest way to guarantee their jobs in the long run. If there is not a demand for steel because people are not buying British Leyland cars, for how much longer can I justify to my right hon. Friend the case for continuing to 61 pour money into the British Steel Corporation to produce steel for which there is no demand? If I go along that route, I shall be found out one day. The steel workers in my constituency must come to recognise that there will come a time when steel cannot be: piled up throughout the country unless there is a demand for it.
At the end of the day, I believe that steelworkers in my constituency will recognise that in the long ran the health of their industry will be guaranteed only so long as they produce a commodity which is demanded by British Leyland, which means that British Leyland must make products that are demanded by the consumer. There is no escaping that fact, however unpopular I may be for expressing that view.
I hope for the long-term future of my constituency and all other constituencies in which there are British Leyland factories. In the long run. I hope that we can avoid a situation whereby the health of both industries depends upon the willingness of the Government to produce: an Industry Bill which seeks public funds. I recognise that in the long run that will not guarantee job security for British Steel or British Leyland workers.
I have several slight misgivings about clause 6. I was in a considerable measure of agreement with the hon. Member for Bristol, North-East (Mr. Palmer). There is a lot of concern in the engineering industry, which is a major second industry in my own constituency, about the response to the Finniston report. There is deep concern, first, about whether the report has got the state of the engineering industry right and, secondly, about whether the Government's response to the report is right.
A number of people involved in engineering in my constituency are self-made men They are not qualified engineers, but they grew up 20, 30 or 40 years ago in an environment in which they relied on their own ingenuity. I know that they are concerned about several of the recommendations in the Finniston report. That is not entirely relevant to this debate, but there is a lack of information about how the grants and loans envisaged in clause 6 will be used. Clause 6 states:The Secretary of State may make such grants or loans to any body as he considers appropriate for the purpose of assistingin—(a) the promotion of the practice of engineering".The phrase:any body as he considers appropriateis defined later in the clause as a body fallingwithin this subsection if— (a) it is established by Royal Charter".A case could be made to support the view that if the Government are to give public funds to the industry in order to encourage education and training they should give it direct to those involved in the industry. It could be argued that we should give the money to the companies that operate in the engineering sector. I am not sure whether that it is the right approach. However, I am concerned about the fact that clause 6 seems to be rather Loosely drawn. Obviously, I shall follow Committee proceedings relating to that clause with great interest.
The hon. Member for Bristol, North-East had certain misgivings, which I share, ft might be helpful if, during our discussions in Committee, Ministers were to say how they envisage that the sums and loans will be utilised for the long-term benefit of the engineering industry.
I apologise in advance to my hon. Friend who will be replying to the debate. I shall be unable to be present later, but I shall read the Hansard report of his speech with great 62 interest. I regret that I have a constituency engagement which has been arranged for some time. I therefore hope that the House will forgive me if I am not present later. However, I shall read my hon. Friend's remarks extremely carefully.
§ Mr. John Evans (Newton)
I should like to make two comments on the speech of the hon. Member for Brigg and Scunthorpe (Mr. Brown). First, if the words "constituents" and "constituency" were omitted, I suspect that not much would be left in his speech. Secondly, the next time that the hon. Gentleman seeks to address the House during the Second Reading of a Bill, perhaps he will do us all the courtesy of reading it. He obviously missed the fact that the financial requirements of British Steel have nothing to do with the Bill. That is a separate matter that will arise later.
§ Mr. Michael Brown rose—
§ Mr. Evans
I shall not give way to the hon. Gentleman. He has spoken at great length, and there is no need for me to give way at this stage. I did not interrupt him to point out his mistake when he was speaking.
This is a remarkable debate on a remarkable Bill. I declare an interest at the outset. I had the misfortune to be the Opposition Whip during the Committee stage of the Industry Bill which subsequently became the Industry Act 1980. On Second Reading, in Committee, on Report and on Third Reading the House spent about 65 hours on that Bill.
When I read this Bill, I wondered why so many hours were wasted on that previous Bill. I do not mean only the time that my right hon. and hon. Friends and I spent in opposition to that Bill but, more significantly, the time of those Conservative Members who were drafted in to support the Government and who behaved more like Trappist monks throughout its passage. It is a tragedy that the efforts of the Opposition on that Bill were so much in vain that, after only a few months, the Government have had to bring in another Industry Bill.
As my hon. Friend the Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) said, this must be one of the strangest occasions in the history of the House, with the Secretary of State for Industry getting up to introduce a Bill on which he is so diffident and hesitant. I suspect that I know the answer. Clearly, the Secretary of State would not have been particularly worried about anything that the Opposition might say about the Bill; he was worried about the spears which he felt were about to descend on him from behind. The hon. Members for Wolverhampton, South-West (Mr. Budgen), for Surrey, North-West (Mr. Grylls), for Southampton, Test (Mr. Hill) and for Knutsford (Mr. Bruce-Gardyne) have all made it clear that their regard for the Bill is somewhat less than ecstatic.
I am not criticising the Shadow Cabinet, but I wonder whether it has not blundered a little in deciding not to oppose the Second Reading of the Bill. If it had decided to oppose it, it would have been interesting to watch the disarray in the Tory Party as its Right wing made clear its contempt for the Bill. It is also interesting to note that on this occasion the Secretary of State, who is generally regarded as being on the Right wing of the Tory Party, is having to suffer the slings, barbs and arrows of his Right-wing Back Benchers. I was also Opposition Whip on the 63 Employment Bill last Session. Then, it was the Secretary of State for Employment who had to suffer the slings, barbs and arrows of his Right wing. It is an interesting change to see the Secretary of State for Industry suffering the dismay of the Right wing of the Tory Party.
The Bill is unnecessary. I agree with my hon. Friend the Member for Bristol, North-East (Mr. Palmer) that it is a ragbag. It should have been called the "Industry (Miscellaneous Provisions) Bill". A number of separate issues have been stuffed together to form the Bill. It is clear that if the Secretary of State had not, under the Industry Act 1980, removed his own powers to increase the financial limits of the National Enterprise Board the Bill would not have been needed.
In Committee on the Industry Bill, the Opposition repeatedly begged the right hon. Gentleman not to do anything so foolish as to remove his powers in this respect. We pointed out that almost certainly he would have to come back to the House later with a request to increase the financial limits of the NEB and the two agencies. We suspected at the time that the reason for his action was his fear of being tempted by the fact that he had these powers and that, therefore, he wanted to put temptation out of his path, the best way to do that being to remove the powers.
The right hon. Gentleman accordingly did so, and here we are having to legislate again to do something that he could have done by order if he had retained his powers. In this context, it is an abuse of the House for the Secretary of State, in response to my earlier intervention, to suggest that the real reason for his action was that the House could discuss it. If he really believed that, he would not have withdrawn his earlier powers, because the affirmative order procedure would have allowed a debate in the House.
The suspicion is that the Secretary of State took the action he did in the Industry Act because he was attempting to placate his critics behind him. On Second Reading he said that the Bill—later the Industry Act—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." —[Official Report, 6 November 1979; Vol. 973 c. 240].Now we know the difference.
The explanatory and financial memorandum to the Bill says:It increases the financial limits which apply to the National Enterprise Board, the Scottish and Welsh Development Agencies and the Development Board for Rural Wales and to the Secretary of State in relation to companies of which control has been transferred to him from the NEB.So there we have a direct contradiction of the Secretary of State's own words on the Second Reading of the previous measure on 6 November 1979.
My hon. Friend the Member for Bristol, North-East has done a service in bringing the question of clause 6 of the Bill to the attention of the House, but I believe that he was too courteous in his remarks. I believe that the Secretary of State has done a great disservice to the Finniston committee and to all who served on it, and to all those great engineering institutions that gave evidence to it and assumed that once the report was published Parliament would take it seriously. What they all know now is that Parliament has treated it almost with contempt.
§ Mr. Evans
I am not criticising any hon. Members. I am saying that all those concerned will feel that Parliament has treated them with contempt and that the views and recommendations that they put forward have been pushed into a ragbag of a Bill which, when it goes into Committee, will be lucky if it gets one hour of debate unless Members like my hon. Friend the Member for Dunfermline (Mr. Douglas) and my hon. Friend the Member for Bristol, North-East are serving on the Committee, where they can make an issue of clause 6.
§ Mr. Douglas
I was trying to get over to my hon. Friend that Parliament treated the Finniston report extremely carefully. It is the Government who have treated it disrespectfully in not carrying out its major recommendations.
§ Mr. Evans
I quite agree, but I am sure that my hon. Friend will accept that it is difficult for people outside the House to differentiate in this respect between Parliament and the Government. We are aware that it is the Government who have treated the report with contempt, but people outside will assume that it is Parliament that has done so.
§ Mr. Palmer
The point of my attack on the Government—I did not know that it was all that mild—was that they had ignored the need for legislation to set up the engineering authority and were doing it by the sly device of the Privy Council.
§ Mr. Evans
I agree. I was endorsing my hon. Friend's comments. I did not say that he was mild in his attack on the Government. I said that he was over-courteous. I was supporting his contention that clause 6 should be removed from the Bill and be the subject of the separate legislation that it undoubtedly deserves to be. That would give Parliament the right to debate with all due weight the recommendations of the Finniston report.
Clause 5 will in one sense be welcomed by the Opposition because it extends for a further two years the shipbuilding industry redundancy payment provisions. But that extension in itself gives an indication of the depth of the crisis that exists in the shipbuilding industry and of the fact that an awful lot more redundancies are to come in the industry.
I remind the House, as I have done on a number of occasions, that redundancies in the shipbuilding industry have a major spin-off effect in regard to redundancies in industries that supply the shipbuilding industry and are located in places far flung from the shipbuilding areas. I suspect that one reason for this piece of amending legislation being pushed into the Bill is the surrender by the Minister of State, so far as the shipbuilding industry is concerned, to the EEC Commission. If the hon. Gentleman had stood up to the EEC and insisted that the intervention fund should be maintained at a realistic level, we should not have needed to extend the Shipbuilding (Redundancy Payments) Act for a further two years.
Clauses 3 and 4 are something of a mystery. I do not really understand why clause 3 is in the Bill. It makes provision for the reduction of the public dividend capital of the National Enterprise Board and the development agencies. I find this difficult to understand when the provision already exists in section 3 of the previous Industry Act to reduce the public dividend capital. In reply to great pressure in Committee, the Under-Secretary of State said: 65Clause 3 enables the public dividend capital of the NEB or the Agencies to be reduced with the consent of the Secretary of State and the Treasury." — [Official Report, Standing Committee E, 13 December 1979; c. 629.]Why powers have to be included in this Bill which already exist under the 1980 Act is beyond me.
The Minister can perhaps say why urban planning has been included.
The real heart of the Bill is clause 1 and its consequent clause 2. This part of the Bill increases the financial limits of the National Enterprise Board and the Scottish and Welsh Envelopment Agencies. We are also increasing the public sector borrowing requirement. Anyone who doubts that assertion has only to read the first page of the explanatory and financial memorandum, part of which I have already given to the House. Clause 1 increases the financial limit for the NEB to £2.251 billion and sets a financial limit for the Secretary of State for purposes of section 3 of the 1980 Act at £1.5 billion. It provides that the aggregate of those limits shall not exceed £4.251 billion. That is a substantial increase in the financial limits of the National Enterprise Board.
I wonder what would have happened tonight if there had been a vote on Second Reading. During the Second Reading of the Industry Bill on 6 November 1979, the Secretary of State said: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"—that was under the Labour Government—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.'"—[Official Report, 6 November 979; Vol. 972, c. 249.]It did not tale long for those words of the Secretary of State to fall flat on their face. The limit is now increased to an aggregate of £4.251 billion. We are not far from the figure that the Secretary of State, only last November, said was entirely inappropriate.
We now have a situation where the House is discussing the Second Reading of the Industry Bill which follows upon a Second Reading barely a year ago of a Bill on which there were 18 Committee sittings. All the arguments deployed during the 12 or 13 sittings devoted to the NEB and the Scottish and Welsh Development Agencies have come home to roost. The Secretary of State, although he will never admit it, is having to accept our arguments about the financial limits of the National Enterprise Board.
Another point that I want to stress is that the Bill increases the financial limits of the Scottish and Welsh Development Agencies by £200 million a year each. I welcome the increase in the limits of the Scottish and Welsh Development Agencies, as I am sure does every hon. Member on the Opposition side. One thinks of the appalling problems in those two countries that have occurred as a consequence of the Government's economic strategy.
Only on 19 July of last year, the self-same Secretary of State for Industry came to the House and announced his new regional policy. By that regional policy he reduced the entitlement to financial assistance of substantial areas, particularly in the North-West of England, part of which' I represent. That was to shift £230 million. The Bill 66 proposes to increase the financial limits of the Scottish and Welsh Development Agencies by no less than £400 million. It will hardly be surprising if English constituencies, particularly in the northern half of the country, take an extremely dim view of the £1 million increase that appears to be all that the National Enterprise Board is to obtain for its own requirements.
§ Mr. Keith Best (Anglesey)
The hon. Gentleman is glib in his criticism of the Government vis-a-vis Scotland and Wales. My principal concern is Wales. Can the hon. Gentleman point to one occasion during the period of the previous Government when a figure as high as £48 million, which is being given by my right hon. Friend the Secretary of State for Wales to help South Wales, was given to Wales?
§ Mr. Evans
I do not have to be glib to criticise the Government. There are so many areas in which one could criticise them that they look almost like a row of pins in a fairground. One simply shoots them all down.
As to the generosity of the Government towards Scotland and Wales, I am sure that my right hon. Friend the Member for Swansea, West (Mr. Williams) will deal much more fully with that matter when he winds up the debate for the Opposition. The only reason why the Government are giving money is that they have virtually destroyed the Welsh economy. That is why they are having to pump money into it. If the hon. Gentleman is so concerned about Wales—
§ Mr. Alan Williams
We are accustomed to this type of intervention by the hon. Member for Anglesey (Mr. Best). It was the Labour Administration who set up the Welsh Development Agency. It was the party now in Government that voted against its creation.
§ Mr. Evans
I am grateful to my right hon. Friend. Although I may bear a Welsh name, I am sure that the House knows that I am not a Welshman and that I do not represent a Welsh constituency. I am, therefore, loth to enter into an argument about the merits and demerits of Wales. I shall, however, repeat my criticism. The Government have virtually destroyed the Welsh economy and are now trying to put right the gross mistakes they have made by pumping some money into it. My right hon. Friend has given the real answer to the hon. Gentleman.
This has been an incredible debate. I do not know whether any more Conservative Members intend to speak. If one does, he may actually Support the Secretary of State. The right hon. Gentleman has so far been desperately short of support. I do not wish at this juncture to enter into arguments about the losing of two chairmen of the National Enterprise Board in such a remarkably short time. It is a miracle that the Secretary of State can get anyone to participate in the various boards that he, unfortunately, controls. It is obvious that the right hon. Gentleman changes his mind so many times on so many issues that hardly anyone knows what he is doing about his policy from one month to the next.
67 In view of the appalling record of the Secretary of State for Industry over the past 18 months, during which time he has presided over the demise of British industry—and he is obviously doing a major U-turn in the Bill—the country can no longer afford his political education. He should go home tonight, contemplate the 18 months during which he has presided over the Department, come back tomorrow and do the honourable thing and resign his
§ Mr. Michael McNair-Wilson (Newbury)
I shall seek to ask some questions about the objects of the Bill, which to me at least are not perhaps the objects that I hoped the Government would be continuing to pursue nearly two years after coming to office.
We know that the Bill sets out new financial limits for Rolls-Royce, British Leyland and the National Enterprise Board. We know that its main purpose is to make provision for further public expenditure within the Government's future public expenditure plans. We know that, as a result of it, Rolls-Royce can go up to £750 million more than was the case previously and that by order its borrowing can be increased to £1.2 billion.
We know that huge sums will be involved as a result of this somewhat fragmented piece of legislation. It is not unreasonable, therefore, for anyone on the Conservative Benches to ask our Ministers whether this is indeed the last such call upon our support for a measure of this kind and whether the time has not come for us all to say that this is as far as we can go along this particular path, because it is not producing the sort of result that the Government were pledged to produce, without which we shall not turn our economy into the new foundation of a prosperity that our nation so badly needs.
I well remember the agonising months of 1971, when Rolls-Royce 1971 Ltd., as we called it, was nationalised. I remember the arguments which went to and fro about whether it should have been allowed to go bankrupt and once more take its chance in the market place, sold to whoever would like to take it up and make something of its range of aeroengines. I also remember the compelling arguments about the importance of the RB211 as a breakthrough in engine technology. I allowed myself to accept the force of the argument, which was that Rolls-Royce was vital both to our defence equipment credibility and as part of the industrial heritage of our country and that if we nationalised it we did so in order to return it to profitability and then to return it to the private sector.
We are now 10 years on, hundreds of millions of pounds of public money have been put into the company, and yet this evening we are having to make provision for a further £750 million—or is it provision for a further £1.2 billion?
Very much the same arguments can be used about British Leyland. We are always told that if only it can be given an extra tranche of public money there will be light at the end of the tunnel and that, before we know where we are, success will once again adorn its efforts. British Leyland is now £1.3 billion in the red to the taxpayer. To misquote the old saying, from this mountain of public money has come forth not a mouse but a Metro.
Although I welcome the success of that little car, and although I am glad that it is picking up a bigger share of the home car market, I have to ask myself whether the 68 commitment of only £1 million in the Bill—but possibly of another £1 billion—to British Leyland can really be justified to build the Honda Bounty, the LC10 or a new Jaguar XJ40.
It is strange that we have spent £1.3 billion so that British Leyland can make cars for taxpayers to buy, paying VAT, which they cannot put on the road unless they pay another tax, the road fund licence, and which they cannot drive unless they pay a third tax, the tax on their petrol. Taxpayers may well wonder whether that is really the way in which they want to spend their money. But, whether that is the case or not, one is obliged to ask "Is there any real reason why British Leyland should continue in its present financial structure? Would it not be better if British Leyland were offered for sale to whoever would like to buy its assets?"
There has recently been the great question whether British Leyland workers would settle for the 6.8 per cent. that was offered to them by their management. We all breathed a sigh of relief when they agreed to accept it. Yet if we were to stop and think about it we would realise that here are workers in a bankrupt company asking taxpayers to find them a wage rise, although those same taxpayers may not be getting a rise of 6.8 per cent. in their pay packets.
Worse than that, we are asking other companies in the car industry which are direct competitors with British Leyland to use their profits to prop up a State-owned competitor. That sounds like economic madness, but it is so. Why should we expect those companies to be so altruistic? Why should they want to put their hard-earned profits, taken from them in taxation, into British Leyland, which has become an open maw for more and more money?
Last weekend I went round a large industrial complex in my constituency and was told that the 6.8 per cent. was now seen as the bottom limit of wage negotiations this year. Naturally, people argue that if a bankrupt State company can afford 6.8 per cent., surely everybody else can. That, too, is worrying.
So I find myself having to pose these questions to my right hon. Friend the Secretary of State, and I appreciate the fact that he has come in to listen to the debate. The moment has come when we have to say to ourselves "Yes, another Industry Bill. Is it the last one? Please, can it be the last one?" Could we, perhaps, just return to thinking a little more simply about where this vast ocean of money goes—the sort of money that we so often say the Government should be spending on all sorts of other socially worthwhile projects?
I wonder whether the Secretary of State is aware that he is now propping up not only one nationalised car company but two? There is £1.3 billion for British Leyland, plus whatever may come out of the corporate plan, and £65 million for De Lorean in Northern Ireland. Is it not just conceivable that the new Jaguar XJ40 will find itself selling in competition with one of the derivatives of Mr. De Lorean's DMC12 cars? That cannot make any sense either.
We are now beginning to duplicate our nationalised industries—two car companies, two aerospace companies, two shipbuilding companies, all of them—[Interruption.] The hon. Member for Truro (Mr. Penhaligon) says "Rubbish". Has he not heard of Harland and Wolff?
§ Mr. McNair-Wilson
I apologise to the hon. Gentleman. Yes, it is competition, but it is the competition of madness, British Shipbuilders and Harland and Wolff are trying to secure their orders in the same market, competing against each other in price, delivery and so on. Short Brothers and Harland and British Aerospace are also in competition with each other. The taxpayer owns both, and taxpayers' money is involved. British Aerospace is the only exception because it has only just been nationalised. All the others are making huge losses.
It is no wonder there is the extra touch in the Bill about redundancy payments for workers in British Shipbuilders and Harland and Wolff. Is there any common sense in having nationalised industries competing against each other when they are all commercially enfeebled?
Having raised those questions, I turn to the NEB's future. I was never very enamoured of the NEB when it was first promulgated by the previous Government. My affection for it is not much stronger today, but I roust recognise that they were dark days when it was created, along with a number of not dissimilar institutions such as Finance for Industry, the Industrial and Commercial Finance Corporation and all the other little companies that come under the holding company of Finance for Industry. Perhaps confidence was at such a low ebb that the other institutions that used to supply the finance for our industry did not want—in so far as they were able — to help British industry with the finance that it so badly needed.
Thanks to the present Government and the economic policies that they have been pursuing, the position has seen changed, and changed radically. As the clearing banks are happy to point out, they are awash with cash, with the windfall profits that some people say should be taxed, though I—gladly — have not done so. Having talked to a number of the banks, I have the impression that they now recognise that if we are to re-establish a the private enterprise industry we must re-establish the financial institutions that will provide what is required for it.
I am heartened to have been told in the past three or four days by two senior bankers that they are taking a much greater interest in the investment that the windfall profits have provided than was the case previously. Indeed, they go so far as to say that they realise that there were timidity and caution in their approach, which to some extent supported the Labour argument that only the Government would now finance certain projects, because only they were prepared to risk their capital. The institutions of the City had become cautious, timid and unwilling to take any of the risks that used to be part and parcel of their stock-in-trade.
There are not only the windfall profits to invest but the funds that are being handled by the life assurance and pension schemes. They, too, add up to vast sums, which, alas, are not going into industry as they should. I suspect that that is for the same reason — that up to new everybody has been looking for the safest bet and few people have been willing to recognise that the climate is changing and that there are fresh possibilities to be considered.
Against that background of the financial institutions once again wanting to play their part with investment, helping small and large businesses, perhaps there is a role 70 for the NEB as an honest broker. This point was touched on to some extent in the Wilson report, but in the view of at least one of those to whom I spoke the concept of shared projects—shared between the Government and private finance—does not attract much sympathy. That is for the simple reason that when the beneficiaries know that the Government are part of the whole that is underwriting the project they also know that they are no longer living in the real world but are living in a world where bankruptcy can never happen. Bankruptcy still acts as the greatest discipline to effective management and all the things that we expect from it.
Possibly the NEB could be reshaped — though perhaps it is not the right instrument, and there is something that could do the job better—as an honest broker to bring industry's needs to the attention of what I call an industrial fund, supported by the main clearing banks. I make that suggestion because I believe that the time has come when, instead of people asking "What will the Government do for me?" they realise that there are many other institutions that are as capable as the Government, or more capable, of providing what they need but with a much greater management back-up than anything the Government can provide, institutions that live in what I call the real world, the world where there is success and failure, where there is a need to manage effectively and to husband the resources that are provided.
I hope that this is the last Industry Bill of the kind that seems to suggest that we still have a bottomless pit of public money to provide. I recognise the problem of my right hon. Friend the Secretary of State. He cannot let Rolls-Royce go. He desperately hopes that British Leyland will come good and justify the vast ocean of public money that has gone into it. But there must come a time to say "Stop". I hope that the Bill represents just that.
§ Mr. David Penhaligon (Truro)
The hon. Member for Newbury (Mr. McNair-Wilson) said that we should live in the real world. It is to the real world that I should like to refer. The reason why substantial extra sums are being voted to certain industries is that they are no longer living in the real world but are living in the crazy economic world conceived by the present Government. They are trying to live in a world where the exchange rate has suddenly risen by 30 per cent. and where interest rates are in their upper teens. For many of the industries that are marginal, those were the things that pushed them back from the position to which they had struggled.
I understand that the management of British Leyland—its workers above all others in industry cannot be accused of grabbing ludicrous pay rises—believes that if it had not been for the tremendous escalation of the pound in the past 18 months the company would now be running at break-even point or perhaps even be making a small profit. That would be vastly different from what I understand to be the position.
§ Mr. Michael McNair-Wilson
Would the hon. Gentleman tell me in which year since British Leyland was taken under the State's umbrella it made a substantial profit?
§ Mr. Penhaligon
I do not think that it has made a substantial profit in that time. I did not use the word "substantial". I was talking about marginal profits.
71 I want to see British Leyland prosper, although, come the crunch, I am prepared to face up to the reality that it might not. If it does not, I am not one of those who say that there should be an open-ended commitment of funds for ever. My point is that the economic position that the hon. Gentleman's party has largely created in this country has greatly increased the problems faced by steel, British Leyland and Rolls-Royce, which are perhaps at the margin of profitability in engineering.
I am one of the few chartered engineers in the House. I can think of little in favour of clause 6. The hon. Member for Bristol, North-East (Mr. Palmer) effectively tore it apart. I do not see how anybody could vote against the clause, but nor do I see how anybody could vote for it, because it does precisely nothing. The body referred to in the clause will report to the Privy Council. If I were stopped in the street and asked what the Privy Council was, I should have to reply that it was a mechanism by which one was called earlier in parliamentary debates. That is the limit of my knowledge of what the Privy Council does. I have asked members of it what happens at their meetings and they reply "What meetings?"
The clause establishes a Royal charter. My attitude to the body depends on the contents of the charter. However, we are unable to discuss or amend the contents of the charter. Since that is the only hope for an improvement, the provision is a ridiculous farce. We live in an industrial country which relies for its survival on its ability to trade competently in the engineering world. Reference is often made to going up-market. It will be impossible to go up-market unless Britain has a large resource of competent and professional engineers. A massive project is required.
The Minister said that he hoped that the body would be self-financing. I do not know how that can be so unless he believes that members of the Institution of Mechanical Engineers are prepared to chuck another £20 a year at yet another organisation which has no powers to do anything. The Minister is optimistic if he believes that even members of voluntary professional associations will volunteer to join the proposed organisation, let alone people who are unwilling to join existing professional organisations.
There are strong arguments in favour of a compulsory association for engineers. I do not often argue in favour of the Government having enormous powers. I urge the Minister to re-examine the clause. I hope that in Committee we shall be able to discuss a proposition which will be more useful to the engineering world. The Government's proposition is a cop-out. It is an exercise by the Government, who are only pretending that they are taking action.
A rescue shop should exist somewhere in the economy. The Government have an important role in helping small industries. They should have the capacity to investigate the financial credibility of certain enterprises. They should be able to decide whether an injection of capital will see it on its way. I do not believe that the Government should collect unto themselves ever more industries and never sell them off.
In the last Parliament, I had contact with the right hon. Member for Swansea, West (Mr. Williams) about a tin mine in my constituency. It was declared bankrupt by Consolidated Gold Fields Ltd., which operated it. I have paid tribute to the right hon. Gentleman for his part in that exercise. It was a good example of how the Government 72 can help. The company wanted to stop the pumps in the mine. That would have led to its being flooded within a fortnight. The Government were persuaded to keep the pumps going.
Incredible efforts were made to find other companies which were interested in the mine. Eventually, the mine was sold to Rio Tinto-Zinc, which has invested its own money in it. It took no Government money. However, it still cost the Government a lot of money, because pumps are not run for nothing. The company has been saved. We hope that it is viable. The price of tin is not high, but real money is being invested in the scheme. It is a classic example of a rescue-shop operation. The Government moved in intelligently and sensibly and saved the enterprise. It was a superb exercise, and I hope that similar successes will be achieved in the rest of the country. The NEB has my support when acting in that role. I do not mind if the NEB has to own an enterprise for a while so long as it sells it later, preferably for a good return.
The Minister should have given us an idea about the sum that is to be made available to British Leyland. It is not good enough to say that a report will be made to the House some time during the debate. He must have some idea of whether we are discussing £1 billion or £1½ billion. The Minister could have been more forthcoming, even if the precise figures are not known. Does the Minister think that Rolls-Royce and British Leyland are functioning better under their new command structures? I have no comment to make for or against the new structures, but I shall be interested to know whether the Government think that the new set-up is better or worse.
I beg the Minister to re-examine clause 6. There are few chartered engineers in the House and, therefore, the Minister will not be subjected to an enormous lobby. I should be surprised if the Minister could produce two hon. Members who are chartered engineers to make a speech defending the proposals in clause 6. If he can, I shall bow to his persuasive ability. Clause 6 is a waste of legislative time. It will be a waste of my money, since the Government believe that engineers should finance it. Stronger measures are required if the Government wish to increase the status of engineers and improve our engineering capacity.
§ Mr. Alastair Goodlad (Northwich)
The Bill is broadly welcome. It is inappropriate for Opposition Members to criticise the Government for introducing an Industry Bill so soon on the heels of its predecessor. The Bill is a typically sensitive response to an unfolding situation — unfolding being a natural and perennial condition. It is unfair of the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) to say that the Bill undermines certainty about the future of the NEB. There can be no certainty about the future of anything, unless it be that we shall all reap the rewards or penalties of our own mortality.
The Bill gives valuable, and certainly expensive, support to the NEB's efforts. We have heard considerable debate on the philosophy, if one can call it that, of the National Enterprise Board. My hon. Friend the Member for Southampton, Test (Mr. Hill) dwelt at some length on the potential abolition of the NEB and the hiving off of many of its activities.
I agree with my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) that there are 73 at least two discrete activities of the NEB. There are the punting activities, as they have been described, which I consider to be inappropriate activities for a publicly owned body. My hon. Friend the Member for Surrey, North-West (Mr. Grylls) suggested selling them all off in what he described as a venture capital trust—as a job lot. If that would be done, I should have no objection. However, it would probably be more in the interests of the management and employees if the various activities could be sold separately. It would be more in the interests of the taxpayer if that were done. I imagine that the total price would be higher. Let us not try to second-guess the decisions of the board of the NEB.
I agreed particularly with my hon. Friend the Member for Wolverhampton, South-West, who made a characteristically lucid speech, when he said that British Leyland and Rolls-Royce are quite different. One thinks of the response of the Irishman when asked for directions in the country. He replied "You should not be starting from here." Perhaps we should not be starting from the present position, but that is where we are. There is obviously no question of there being any form of blank cheque. We are starting from a commercial situation from which, as we have heard, not least from my hon. Friend the Member for Newbury (Mr. McNair-Wilson), it has been extremely difficult to extricate ourselves.
What is the commercial situation behind the Bill? The details of British Leyland's corporate plan have been submitted to the Government, but we have no knowledge of them. It is widely reported that £800 million, or perhaps £1,000 million, may have been requested over the next two years for restructuring and new investment.
British Leyland's recovery plan has so far made only its first step forward with the Metro. It must be said that so far as can be seen it has enjoyed some success, with 7 per cent. of the market during the first 19 days of the month, pushing BL's share of the home market to about 24 per cent. The Metro plant at Longbridge required about £275 million in investment. Development costs for the remainder of the range will supposedly be less. The new Honda Bounty, which is to be built in Oxford, will probably require, so we are led to believe, less than £100 million by the time of launching later next year. Production is to be about 2,000 a week.
The new medium-range LC10 is scheduled for hunching in 1982–83. It will replace the Maxi. It will probably require rather more investment. It is supposedly the main potential recipient of BL's requested cash. BL considers that it should be profitable. The company also wishes to develop a new Jaguar that is code named XJ40. It is reported that it will be launched in 1984 at a cost of £70 million.
The acceptance of the recent 6.8 per cent. pay offer is a good sign unless it be used, as suggested by my hon. Friend the Member for Newbury, as a base on which all other claims will be founded. As; a lower limit, it would be regrettable. However, I see no reason why it should be so regarded.
The Government will have to make their decisions on British Leyland's corporate plan while bearing in mind the difficulties that the motor industry is; facing worldwide and the fact that BL made a substantial loss of over £150 million in the first half of the year. Those are matters that the House will have an opportunity of debating.
The important fact is that the Bill keeps open an option that is vital to the national interest. Rolls-Royce is 74 different from BL. The order books of Rolls-Royce are healthy, but profitability is far from healthy. In 1979 Rolls-Royce lost over £60 million. That was largely the result of the increase in sterling parity and the company's failure to cover its dollar receipts in sterling, something which has been criticised by the Public Accounts Committee. The company is still battling with its American competitors to gain further orders for the RB211.
The Government have made further provision for Rolls-Royce for this financial year, as announced in April by the Minister of State. It is an industry that is crucial to the national interest. As I have said, the Bill keeps open an important option.
Clause 6 has been mentioned by the hon. Members for Truro (Mr. Penhaligon) and Bristol, North-East (Mr. Palmer). It refers to the engineering industry and contains provisions that will enable the Secretary of State to take steps such as the making of loans and grants to encourage the improvement of communications between education and industry and to encourage people to take up careers in industry. We have had no discussion on those topics during the debate.
My right hon. Friend has said that the staff and expenditure devoted to this area will be reduced. I hope that he does not mean that this vital activity will be prosecuted any less vigorously than hitherto. I hope that he will give it his personal attention and prosecute it with more vigour than hitherto.
We are all aware of the attitude in many schools towards industry—namely, that it is a sordid necessity that should be kept as far as possible in the background and out of sight of right-thinking persons of gentility. We have all heard of the school teacher who, on taking his bus load of children away from a factory or office block, said 'That is where you will be if you fail your exams." Anything that the Government can do to counter that sort of attitude, which is far too deeply rooted in our society, will be welcome.
We are a trading nation. We are totally reliant on our success in world markets for the standard of life to which we have become accustomed and for all the services that we enjoy. We have nothing but our commercial skills and integrity to back that up. Unless we realise that commerce and industry should be regarded as honourable and worthwhile activities in which to engage, the whole of our future will be placed at risk. The Bill is a small but relatively important weapon in the armoury with which the Government will have to implement their strategy over the coming years.
In his winding-up speech on the Queen's Speech, the right hon. Member for Leeds, East (Mr. Healey), in a typically infelicitous passage, referred to the Government's attempt to get a poultry farm out of the red by killing all the chickens. One does not get a poultry farm out of the red by buying more and more chickens when there is no market for chickens or eggs, nor by striving officiously to keep alive those chickens that have ceased to lay. It is entirely a matter of judgment. The Bill enables the Government to exercise their judgment.
We heard during the economic debate of the difficulties that all Governments have in steering the economy between Scylla and Charybdis: the Scylla of reflating demand by public expenditure, leading thereby perhaps to further inflation and the destruction of our international competitiveness; the Charybdis of compounding the 75 deflationary effect of an international recession with the effect that for every additional 100,000 people out of work £500 million per annum is chargeable to the public purse in unemployment and other benefits and for every 1 per cent. drop in GNP the Exchequer loses £1,000 million in revenue, which has to be found from somewhere else. It might be said that the Bill is a slight nudge of the tiller towards Scylla and away from Charybdis.
The right hon. Member for Rutherglen (Mr. MacKenzie) said that the Government should be cautious. We need no instruction from him in that. However, he pointed out — and I agree with him—that we live in unusual times. I count myself among those who believe that the international recession will get a great deal worse. There is every sign that the conditions that have created the recession will continue and compound. The obvious ones are the price of oil and the non-recycling of the enormous OPEC surpluses throughout the world economy. If the recession deepens, the Government will be right to have as many weapons to hand as they can.
I welcome the lack of dogmatism shown in bringing forward the Bill. I congratulate the Government on keeping open some very important options.
§ Mr. Mark Hughes (Durham)
I apologise to the House. For various reasons, including the fact that I was at a meeting with the Turkish ambassador, I was not present for earlier parts of the debate.
In the Bill an additional £200 million each is added to the borrowing facilities of the Scottish Development Agency and the Welsh Development Agency and only £1 million to that of the National Enterprise Board for regional activity in England.
The second report of NECCA, a not wholly Labour-oriented association, shows that in the Northern region output per person is below the national average and the gap is not closing. Much of the growth in manufacturing industry over the past 15 years has been due to the attraction of mobile industry from outside the region, and future prospects for that are less good. Small manufacturing firms are relatively scarce. The evidence is clear that the North-East is doing less well than any other part of the United Kingdom, not only over the highly specific problem of Consett and the steel industry and Ransome Hoffmann. The levels of prospective reinvestment are absurdly low.
What does the Bill do in such a situation? It says that the Scottish and Welsh Development Agencies can each increase their facility by £200 million. However, in England, apart from £1 million, the money is swallowed by Rolls-Royce or British Leyland and there is not a brass farthing left. The Secretary of State spelt out the moneys carefully. The regions are left to last. There is a regional element in the NEB, but it is not very much. It is not a significant part. Wales and Scotland have their own enterprise boards. The amount of borrowing for England is not being increased.
What about England? We have serious unemployment in the North-East. At Consett and Hartlepool we have lost many jobs. Our unemployment is no less than that in Wales or Scotland. But in the Bill we find that Scotland is given an additional £200 million borrowing requirement 76 for the Scottish Development Agency and that Wales is given an additional £200 million. What about us?
Many of us in the North-East believe that when a Labour Government are in power the view is taken that, because it is safe Labour country, it is not necessary to bother. There are no marginal seats. It is not necessary to put Government money into these patches. It is better to put it into the bits of South Wales where a seat or two might be lost, and there is no need to trouble about the North-East because the people there always vote Labour. They are safe. They are soft. When a Tory Government come to power, it is put rather more crudely. They say "We have nothing to win up there. The unemployment rate can rise to 50 per cent. in Consett, and we shall still never win it."
That is the difficulty. In this Industry Bill, the Government had the opportunity to do two things. They could have signified to people in the North of England, who have suffered long and grievously, that the Government cared. Damn the nurses who tell us to stand on our own two feet when they have cut off our legs at the knees. What we wanted in this Industry Bill was an indication that someone in this Government understood the real problems of the North-East.
We have nothing to be ashamed of in terms of our contribution to the economic life of the country. We did not ask that the capital which accrued on the backs of our miners, shipyard workers and steel workers should be filtered away into high living in the South-East over the past 150 years. That was not our choice in the North-East. It was not our choice that our coal mines ran out of resources, that our iron ore ceased to exist and that the very reason why Consett was established in the 1870s became economic nonsense in the 1980s. That was not our choice. But what does this piffling Industry Bill do? It says that to Scotland there shall be given an extra £200 million of borrowing requirement and that to Wales there shall be given an extra £200 million of borrowing requirement but that to the regional function of the National Enterprise Board there shall be given plus or minus £1 million.
We are no less and no more privileged in Durham and Northumberland than Scotland or Wales. We ask for nothing more. We are too proud to beg for more than Scotland and Wales get. But we are darned if we will accept readily a Bill which gives £200 million more each to Scotland and to Wales but to the regional function of the National Enterprise Board, where it might just conceivably help the North-East, minus £1 million.
I put in this element what I hope is a very cogent proposal to the Minister. One of our difficulties in the North-East is that we have had too many organisations pleading our cause. It is a just cause, and they have pleaded the cause with a proper devotion. We have had the Northern Economic Planning Council under the Department of the Environment, so Department of Industry Ministers cannot answer for that. We have had the Northern Economic Development Council. The Secretary of State has cut the grant to it, so he cannot answer too much for that one. We have had the North-East County" Councils Association. The right hon. Gentleman has not put any money into that, and its representatives tell us a lot of very curious stories. We have had a plethora of organisations singing the song and pleading the case for external investors to come into the North. But, unlike Scotland and Wales, we have had no single co-ordinating 77 body to which those external investors could come. No Japanese, Americans or French could come and say "If we want to invest in the North-East, whom do we approach?" They are sent from pillar to post—from good meaning pillar to better meaning post—and eventually they go elsewhere.
Our long-term persistent unemployment is no less than that of any of the most disadvantaged areas of the United Kingdom. But we alone under the Bill find ourselves subjected to a greater disadvantage. The Welsh Development Agency, even though it cannot spend the money, has its borrowing requirement upped by £200 million. The Scottish Development Agency, even though it has difficulties in spending it; money, is to be upped by another £200 million. We in the North-East are left with a plethora of organisations of which no external industrialist can possibly know.
On 12 November, after weeks, months, even years of indecision about setting up a Northern development agency, the Secretary of State wrote to the North-East Labour group, of which I am now chairman:Thank you for your letter of 3 November. I do appreciate the urgency with which you view this question. But, as I have said before, it is one which requires deep consideration and wide consultation. I am still not in a position to take a decision either for or against an agency. When I am, I will let you know immediately.The Secretary of State for Industry knows that the Northern CBI is in favour. He knows that his colleagues in the Conservative Party in the North-East are in favour. He cannot pretend that it has just been sprung upon him. It has been a crucial and central part of the politics of the North-East—cross-party, Tory, Liberal and Labour—for many years. We are disadvantaged because we do not have a consolidating body in the North-East to compete with the facilities offered in Wales and Scotland. It would have been a marvellous opportunity if such a body could have been created by the Bill. In Committee we shall propose that such an agency should be created. It is possible, without any mischief to the long title of the Bill, for us to move that this opportunity should be taken to provide the North-East, including Cumbria, with such an agency. I say that not because Consett will have 50 per cent. male unemployment not because we have the worst record in England, Wales and Scotland on unemployment, but because we believe deeply in the North-East. Successive Governments of either Labour or Tory persuasion have held the North-East to be of no concern — Tories because they will never win a seat there, Labour because they will never lose a seat there. But that will not do. We have a problem in the North-East which I do not pretend will be solved by a Northern development agency, but the setting up of such an agency would be an earnest that the Government believe in philanthropy and compassion for their fellow human beings.
§ Mr. Albert MCQuarrie (Aberdeenshire, East)
I welcome clause 2—about which the hon. Member for Durham (Mr. Hughes) made such great play—relating to the new financial limits for the Scottish Development Agency. I welcome the increase in the limit from £500 million to £700 million because it will give the agency wider opportunities to promote employment through the media of advance factories and aid to indigenous industries, sued as those in my constituency, that are unable to obtain aid from other Government sources. The 78 increase will be accepted by the Scottish Development Agency and the people of Scotland as an indication that the Government see the agency as part of an organisation that will help to reduce the massive unemployment with which we are saddled today.
I welcome clause 6, relating to the Finniston report on the engineering profession, and the decision of my right hon. Friend the Secretary of State to set up a new body for the engineering profession. In that connection I declare an interest, because I am a council member of the Society of Engineers (Incorporated) and a member of the Society of Professional Engineers Limited, which was formed in 1969 to secure the basis upon which an equitable register of engineers could be set up nationally. I welcome the proposal to set up this new body under a Royal charter to| act as the focal point for professional engineers.
In reply to my hon. Friend the Member for Poole (Mr.' Ward) on 7 August, the Secretary of State indicated that certain aspects of the Finniston report had been of concern to the professional engineering societies. However, he also indicated that there appeared to be a readiness on the part of all professional bodies to go towards a unified approach to the status of the professional engineer. The setting up of this new body should go a long way in that direction.
We must be assured that all existing professional societies will be brought under the umbrella of the new body and that professional engineers will not be excluded because they do not belong to one of the existing bodies that have a Royal charter. No one doubts that the main recommendations of the Finniston report on the setting up of this new body are fundamental to the national interest. They will add a dimension to the engineering profession that will considerably strengthen it, and the proposals of my right hon. Friend the Secretary of State in the Bill will do so also.
I welcome the fact that it is the intention of my right hon. Friend that the new body should cease to be under Government control after its initial period. It is right that the new body should not be a quango and that it should be a professional body, handled by professional people within the profession. It is also right that in its initial stages the body should be given financial aid to ensure that it has no problems in that connection.
I hope that my right hon. Friend will not make the mistake of appointing to the new body Government nominees who are not directly connected with the professional engineering societies. I hope that he will appoint practical, professional engineers who are at present playing an active part in the industry.
When the new body is set up, its first task must be to protect the stock of existing professional engineers, regardless of any professional organisation to which they may or may not belong at the time of the setting up of the new body. That should be possible if the civil and professional engineers' registers are transferred en bloc to a new registration of registered engineer. It is essential that the titles of registered engineer and diploma of engineering be the same for existing engineers as for new entrants to the profession. That is the alternative method of dealing with existing engineers, as referred to in the Finniston report, and it should be adopted by the new body.
Account should also be taken by the new body of the engineering expertise, as well as the academic qualifications of entrants into the new body, particularly of those with a pre-1968 HNC. Those people should not be refused entrance or permission to acquire the title of 79 registered engineer or to gain a diploma in engineering simply because they were unable to gain a higher qualification than the HNC because of their circumstances at the time. The prime object of the engineering profession isto promote the science and practice of engineering, and the consideration and discussion of all subjects affecting the engineering profession, and to watch over and protect the interests of persons herein.That philosophy has remained central to the professional engineer's activities, and it must continue to do so under the new body. The new body must utilise and build upon the vast expertise which professional bodies such as the Institution of Civil Engineers and the Society of Engineers and many other allied bodies have acquired to the benefit of the country over many years. It must offer not merely positive leadership to the profession but a positive inducement to all professional engineers to belong to a learned body and to see it as an essential function in maintaining the high traditions set by those societies from which it will take over.
I welcome the proposals and I congratulate my right hon. Friend on setting up a body which has been long awaited by all professional engineers, particularly as it will now permit British professional engineers to practise throughout the EEC, an opportunity that has to some extent been denied them hitherto.
The British professional engineer is the best in the world. Now, with a national body established by Royal charter, the profession can hold its head high in every sphere in which its members practise. I wish the body well and anticipate great things for it in the future. I congratulate my right hon. Friend on taking such a positive step to secure the future of these great professions.
§ Mr. John Maxton (Glasgow, Cathcart)
Like the hon. Member for Aberdeenshire, East (Mr. McQuarrie), I shall concentrate on clause 6. I shall be unable to give the professional advice that he has tendered, but I accept his point about the value of our engineers being allowed to operate in the EEC. I welcome that. That will be an essential factor for young engineers trained in Scotland, because with this Government there will be no engineering industry left in Scotland in which they can be employed.
Under subsection 1(b) and (c), can the Secretary of State for Industry give grants in Scotland to encourage and improve links between industry and bodies and individuals concerned with education? I ask because industry and education in Scotland are the responsibility of the Secretary of State for Scotland—they are the specific portfolio of the Under-Secretary, the hon. Member for Edinburgh, North (Mr. Fletcher), who has just left the Chamber. Under the last Government, my hon. Friend the Member for Glasgow, Queen's Park (Mr. McElhone) established a pilot scheme through the Scottish Education Department to encourage these links, and the current Minister is continuing that scheme, but the farcical position could arise, with the way the Bill is worded, that the Secretary of State for Industry will be giving the Secretary of State for Scotland a grant to encourage these links. The Secretary of State for Scotland should have his own direct power to do that.
The clause sounds fine, and it may arise from the feeling by Ministers that they are doing the right thing. 80 However, to a large extent, particularly with the Minister to whom I referred a moment ago, it is no more than pious humbug. The Government's policies have decimated the engineering industry in Scotland. The part that remains is in serious trouble. It is not that the industry is badly managed, has bad industrial relations or has not invested in new technology.
In my constituency there is the Weir group, particularly Weir Pumps. It was highly profitable and had good industrial relations. It had an excellent training programme for apprentices. Over the past few years it invested some £18 million in new computerised technology. Even so, the company is now losing money and is declaring workers redundant. Its troubles arose not from poor productivity. Productivity had been rising—although, of course, never enough to satisfy the management. The chairman of the company, Lord Weir, a former chairman of the Conservative Party in Scotland, said in his annual report that the company was in trouble because of the high interest rates. The difference between the loss and the profit was almost entirely accounted for by the increased interest that it paid on money borrowed to invest in new technology.
A second factor in the plight of the company is the high value of the pound in the face of major competition from the Japanese. The value of the yen has dropped dramatically and the Japanese inflation rate has been considerably lower than ours. In 12 months the company witnessed a 30 per cent. deterioration in its competitiveness compared with the Japanese.
That has an effect on training, which is what the clause is about—fostering engineering skills in Scotland. It is to the enormous credit of the shop stewards and the trade union movement generally in Weir Pumps that at a time of threatened redundancies, when the company said that it had to pay off workers, the shop stewards insisted that it should continue to take in the full allocation of apprentices as in the past. That was all the more to their credit since the company was willing to trade that off against redundancies, saying that it would lay off fewer workers if it could take in fewer apprentices and cut the training programme. The shop stewards refused. There is a limit, however, to how much the company, if it is in financial difficulties and is cutting back production, can continue to take on apprentices year by year when it knows that it may not be able to employ large numbers of them and that if it cuts down the work force it will have difficulty in carrying out training on the shop floor. There is, therefore, a certain amount of humbug in the Government's position when this can happen.
My next point concerns the relationship between education and industry. When the Government came to power, one of their few imaginative actions—and it was only a title—was to put education and industry within the responsibility of one Minister. That is the imaginative approach that is embodied in the clause. However, if the idea is imaginative, it requires an imaginative man to implement it, and that is the problem with the Minister who was appointed. He has a split mind. He does not see the relationship between his job as an industry Minister and his job as an education Minister. Surely, he ought to combine the two. I am sure that he has two separate sets of advisers, one for industry and the other for education—and never the twain shall meet. I am certain that that is what is happening.
81 I give an example. It is not just a matter of encouraging and improving links between education and industry. It is also a matter of ensuring that one has an education system that can give people the mathematical and scientific skills, not just when they leave school or when they are in colleges of further education but from the time when they first enter the school.
In the constituency of my hon. Friend the Member for Stirling, Falkirk and Grangemouth (Mr. Ewing), there is the Grangemouth complex for refining oil and various petrochemicals, a highly technical industry that requires men of high technical skills. Just three miles away is the Callendar Park college of education, which provides the basic training for teachers first going into teaching, and the in-service training to ensure that teachers in the area can develop and redevelop their skills and the new techniques and new knowledge required of them. However, what is the Minister responsible for education and industry in Scotland doing? He is closing down Callendar Park college of education. He cannot see that there is a relationship between having a highly technical industry in an area and a college of education that will help to provide the indigenous people of the area with the skills that they require to carry on and develop in such an industry.
Before I became a Member of this place I worked in Hamilton college of education. In the last two years, as I served on the board of studies, along with other staff members I worked to develop a new course of technical education, particularly in engineering skills—a course that would allow people to develop a particular training capacity. It was unique in Scotland in terms of technical education. The idea was that a person should be able to develop his craft technical skill in a technical college and concurrently train as a teacher. That course was started and developed.
What better way is there to encourage and improve the links between industry and education than that sort of course? If the person who takes his HND decides at the end of the day that he does not want to go into teaching but wants to continue a normal course in engineering or some other skill, at least he will have some idea of what happens in schools in terms of technical education, and that must be beneficial. If he goes into education and teaches in a technical college, he will also have some knowledge of the ideas of the workshop. He will have been on the shop floor and will know what it is about, and he will be able to bring that sort of immediate knowledge into the classroom.
Once again, what is the Minister responsible for industry and education in Scotland doing? He is closing down Hamilton college of education where that course is being run. He seems incapable of seeing that there are links between industry and education. The Bill is trying to encourage these links, but the Minister seems incapable of appreciating and developing them or of trying to use the basic educational resources that are available to him in Scotland to develop the native skills that are required in Scotland if we are to have industrial regeneration.
It is not enough just to give an extra £200 million to the SDA. Although I welcome that, what we require from the government is a commitment to investment in other things as well, particularly in education, because it is only through education that we can develop the sort of skills and links that are required if we are to get the necessary movement forward in Scottish industry.
§ Sir Anthony Meyer (Flint, West)
This has been an interesting debate, nowhere more so than in the speech of the hon. Member for Glasgow, Cathcart (Mr. Maxton). It has also been a rather surprising debate.
I had imagined that this measure would be seized upon by Labour Members as proving all that they have said all along about the complete failure of the present Government to grapple with the country's industrial problems. I had supposed that the Leader of the Opposition would be in his place leading the attack on, as he would say, this miserable measure which so totally fails to meet the needs of the hour. Above all, I would have supposed that some of my Welsh colleagues from the Labour Party would be in the Chamber baying at the heels of my right hon. Friend the Secretary of State, complaining bitterly that Wales was being relegated to some back room and that her needs were not being looked after at all.
Indeed, when the hon. Member for Pontypool (Mr. Abse) sought to move the Adjournment of the House under Standing Order No. 9 earlier today, in an attempt to complain about the Government's reply to the report of the Select Committee on Welsh Affairs, in those tortes of high indignation and moral fervour and with the high-flown oratory we have come to expect from him, I supposed that this was to be the prelude of a concerted attack from the massed ranks of the Opposition against my right hon. Friend's policies. It certainly does not look like that now. Even the right hon. Member for Swansea, West (Mr. Williams), who has been fairly assiduous in his attendance during the debate, has had to slip out for his ham sandwich.
§ Sir Anthony Meyer
I have attended the debate almost continuously, except for a brief interval. I said that the right hon. Member for Swansea, West had been assiduous in his attendance. I shall not pull his leg now, because no doubt he will be replying to the debate.
§ Sir Anthony Meyer
I am sure that the right hon. Gentleman will trawl his coat, and, knowing myself, I am equally sure that I shall tread heavily on it when he does.
The Bill is open to attack from both sides. I was not in the slightest bit surprised to hear my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen), with his characteristic obduracy and honesty, weigh into the measure as being an inexcusable extension of State interference. I am all too notoriously one who sits on the fence, so that the iron has entered well into my soul.
§ Sir Anthony Meyer
My hon. Friend puts it even more delicately.
I am prepared to see a measure of State intervention if the result is a net increase in the number of real jobs. I say that in the full knowledge that State intervention costs money and that the money must come from an imposition on industry. I am equally aware that one must carefully 83 watch out lest the imposition on industry through the taxes required to finance such State intervention takes away more jobs than are created by the agencies themselves. That leads me to the conclusion that the justifiable role for State intervention relates to the pump priming of new industries and services which in the long run are commercially viable but which may take too long to pay off in order to justify support from private finance only.
I freely admit that originally I was sceptical about the role of the Welsh Development Agency. I have come to accept its role. Indeed, I would probably go further than some of my right hon. and hon. Friends in accepting that the agency should play a part in starting new businesses and participating in them rather than merely providing them with factory accommodation. Therefore, I have fewer reservations in welcoming the Bill than have most of my hon. Friends. I believe that the Welsh Development Agency has a useful role to play.
I am sorry that hon. Members representing Welsh constituencies were not here to listen to the interesting speech of the hon. Member for Durham (Mr. Hughes), with his bitter complaint that there was no provision in England corresponding to the generous help which the Government were giving in Wales and Scotland, because I believe that that might have sounded a little oddly in the ears of some Labour Members from Welsh constituencies.
§ Mr. Alan Williams
I listened carefully to what my hon. Friend the Member for Durham (Mr. Hughes) said. I have no recollection of his having said anything about the generosity of the treatment for Wales or Scotland. The only point that he made was that if extra was to be made available to Wales or to Scotland, merely restoring what was taken away a year ago, it should equally be made available to the North and to other English regions. Generosity did not enter into it.
§ Sir Anthony Meyer
If the right hon. Gentleman is fair, he will admit that he is subtracting as much from what his hon. Friend said as I am adding to it. The hon. Member for Durham did not use the word "generosity", but he spoke repeatedly of the additional £200 million being made available to Wales and also to Scotland. Although he did not actually use the word "generous", I think that his whole speech would have astonished a good many Labour Members from Welsh constituencies.
I shall not detain the House, as I know that many hon. Gentlemen—and, indeed, an hon. Lady whose contributions are invariably interesting—wish to participate in this keenly contested debate.
I wish to make two brief points in connection with the Bill. First, as I have said, I welcome the evidence that the Government are showing flexibility in allowing the Welsh Development Agency to expand its activities and I recognise the growing necessity for those activities. I hope that this will not be at the expense of the other very useful—indeed, essential—activities which some of the more far-sighted local authorities are carrying out in providing for industrial investment in their areas, particularly when those activities are undertaken not out of ratepayers' money but in partnership with private financial institutions. I hope very much, too, although this is not strictly within the terms of the Bill, that the rate support grant will not be drawn up in such a way as to penalise authorities acting in that way.
84 Finally, again only marginally connected with the Bill but arising out of the report of the Welsh Select Committee and the Government's reply to it, I make a plea that my right hon. Friend, together with my right hon. Friend the Secretary of State for Wales, should look again at the system whereby regional development grants are still deferred in their payment by a period of four months. At a time of high interest rates, this imposes a crippling burden upon struggling new businesses and causes more aggravation than it saves in public expenditure.
§ Dr. Oonagh McDonald (Thurrock)
I am grateful to the hon. Member for Flint, West (Sir A. Meyer) for getting my sex right. It is quite a relief when that occurs in the House. So often I am referred to as an hon. Gentleman or included in the collective term "hon. Gentlemen opposite", even when I have been sitting here for some time.
When the Secretary of State for Industry first described his industrial policy, on 24 July 1979, he stated his party's view, firmly and with great conviction, as follows: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.]That was indeed a proud statement but one that has been almost entirely falsified by subsequent events as industry collapses around our ears.
Shortly after that, last November the Secretary of State introduced his first Industry Bill. That retained the National Enterprise Board but restricted its powers. The Secretary of State took some of its powers back to his own Department. He restricted the borrowing limits of the board. On Second Reading of that Bill he said:Earlier this year we opposed the provisions 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."—[Official Report, 6 November 1979; Vol. 973, c. 249.]A year later we find the Secretary of State obliged to raise the borrowing limits of the board, although he had done little to enlarge the scope of the board. The guidelines that have been published already are still restrictive in scope and no doubt reflect his attitude to the board.
The Secretary of State attaches no real significance to the board. I understand that he has been known in the past to toss a coin on to a large table and say "That is the importance of the NEB"—a 10p coin in relation to a large table. Yet this is at a time when the board could be used not just in areas which the Secretary of State has assigned to it—in high technology and regional investment in providing loans for small businesses—but in a much more expansive way to revive British industry and to save it from the collapse which it is at present enduring with dire consequences, not only in Wales, Scotland and the North of England but now reaching into the supposedly rich and safe part of the country, the South-East of England.
In my constituency industries are either collapsing or are cutting back sharply, with the consequence that the present level of unemployment is above 10 per cent.—not as bad as in other regions, but we are talking about a level of unemployment being reached in what used to be a rich, industrial area in the South-East of England. Against such a background, the NEB should not be restricted in this 85 way, and, although we welcome the increase in its borrowing limits, that increase is not adequate for the purpose of reviving British industry.
I noted with interest the announcement at the weekend of the resignation of the chairman of the NEB. We are told that this is for personal reasons, and, of course, we must accept what we have been told. Nevertheless, in a recent lecture to the Institute of Fiscal Studies—an extremely interesting lecture—the chairman called for a strongly interventionist industrial policy. He compared the state of industry in this country with that in the United States, West Germany and Japan and suggested that we should copy the models of industrial intervention in those countries. He pointed out:The Japanese have both consensus and powerful institutions, the Germans have consensus, the French have powerful institutions: we have neither.He said that we must move on to the construction of improved institutions. I wonder whether he had in mind the workings of the NEB and whether he really wanted to see it as a strong and powerful interventionist body.
The chairman has made his position clear. He said:Market forces alone cannot be relied upon to create acceptable results within the time-scales which matter either to politicians or to industrialists. Whatever governments tended to say in the past, they have always ended up with an industrial policy of some kind. It might as well be one which is deliberate and carefully thought out as one which is simply dictated by the pressures of events.Those were the remarks of the outgoing chairman of the National Enterprise Board. I wonder whether those words will reverberate in the Secretary of State's ears. I wonder also whether the words referring to the time scales that matter to politicians will also ring in the Secretary of State's ears as we get nearer to the end of the time scale of the right hon. Gentleman as a leading politician responsible for industry and nearer to the end of this Government's period of office and find that industrial stagnation and collapse increase.
It is no wonder that the chairman calls for a powerful and improved institution that will be capable of developing industry. He suggests that such a period of rehabilitation should take five years, with international competitiveness for any company so improved as the test of success. I believe he is right. The activities of the NEB, rather than being restricted, should be extended. It should be looking, as he suggests, for firms in sectors of industry where success is possible. Those companies should be rehabilitated, extended and made more competitive.
I diverge from the views of the chairman when he seems to accept that, once the NEB has taken a stake in such companies, the companies should then be returned entirely to private hands. I hear Conservative Members agreeing with that view. It is a view that has always puzzled me. Conservative Members want public spending restricted End private industry to be competitive. In this sort of situation, one extends the borrowing requirements of the NEB and uses that public money to rehabilitate private companies or render them much more competitive. Alternatively, one uses public money, properly in ray View, to develop high technology where investment may not be forthcoming from the private sector. I find extraordinary the view that when money could be returned to the public sector—when the stake that the NEB has taken brings a profit for the public sector— all the taxpayers' money should go back into private hands.
86 Why should that money not be recycled and used again to redevelop, to rehabilitate or to invest in areas that are unattractive to the private sector? Why should that money not be used again to extend the profitability of British industry in general and the return to the public sector in particular? In that way, the rather dismay record of the National Enterprise Board over the last year or so could be avoided.
Since the general election, ICI, Ferranti and Fairey have been returned to the private sector. That brought £113 million to the Treasury. Many other small industries have been liquidated or a stake has been sold to partners, and a number have gone into receivership. The NEB has been losing out all the time. Instead, it should have been doing what the Labour Government intended, namely, taking a stake in profitable sectors, making them yet more profitable and using the money as a basis for further aid to industry.
The attitude of the Secretary of State is to make the NEB, whose existence he does not really value, a weak and useless body. In those circumstances, I am not surprised that the chairman of the NEB resigned. I do not suggest that this was his reason for resigning. I am not surprised, however, that he has resigned. He must have been extremely frustrated, especially when he put forward his views of the way in which industrial strategy should be developed in order to make Britain really competitive with other Western industrial nations such as Japan and West Germany, when he wanted to develop a coherent and intelligent strategy for so doing and when he found instead that the guidelines imposed on the NEB were too narrow and too limited. Even though the borrowing requirements have, quite properly, been raised in the Bill, they are insufficient for the purpose, and there are not the freedom and the flexibility that the board needs in order to develop a coherent industrial strategy.
The hon. Member for Flint, West wondered why Labour Members were not lined up here in serried ranks against the Bill. We have many opportunities in the House to attack the Government's industrial and economic strategy. This is one opportunity among many. The Bill which has been offered for our consideration is not a Bill of which one would disapprove—one approves of it mildly—but it is a piffling little Bill. It does not do anything to meet the requirements of the serious industrial position and the collapse that the country is now facing. It is hardly a Bill that is worth talking about. It is another opportunity for us to show the total and utter confusion and inadequacy of the Government's policy.
§ Mr. Tristan Garel-Jones (Watford)
I want to deal briefly with two aspects of the Bill, particularly as one of my hon. Friends is anxious to take part in the debate and we have very little time available to us. I want to deal with the part of the Bill that makes possible financial provision for British Leyland and also with clause 6, which deals with the Government's response to the Finniston report.
My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) made an interesting and thoughtful speech. The main thrust of his remarks was that in a sense the Conservative Government had missed an opportunity to fulfil their election pledges. He said that in 1979, if my right hon. Friend the Secretary of State for Industry had bitten the bullet, it would have been possible 87 to put British Leyland into receivership and that by 1984 any odium that might have accrued to our party through that action would have been forgotten and forgiven.
I recognise that my hon. Friend makes on one level a respectable intellectual case, but at the end of the day it is a matter of judgment as to how much damage the placing of British Leyland into receivership might do to our economy. My right hon. Friend the Secretary of State has clearly made his own judgment on that. My view is that any loss of the volume section of British Leyland would be a real disaster for the country. Therefore, I very much support what my right hon. Friend is proposing to do.
I think that we would all recognise, as my hon. Friend has said, that my right hon. Friend has made more powerfully than anyone in this country the case for market economy. But I think that he, too, as a Conservative, knows perhaps better than most of us that the Conservative Party has never claimed as a party—and none of us has ever claimed as an individual—to hold the key to the door leading to Utopia. My right hon. Friend, therefore, has made what I regard as a realistic and proper decision, in view of the position of British Leyland.
I sometimes question exactly what the Opposition want. They accuse this Government of rigid adherence to dogma, and my right hon. Friend is often singled out for particular attention in this respect. Yet as soon as the Government—or, indeed, my right hon. Friend—take any step showing the traditional Tory pragmatic approach, Opposition Members shout "U-turn". I suspect that they really want the Government to fail at all costs, because it is only then that they may be elected to office. That is a sad attitude for an Opposition party to take, and I regret it very much.
My hon. Friend the Member for Northwich (Mr. Goodlad) spoke in some detail about British Leyland. He mentioned the success of the Mini Metro and said that British Leyland had already gained a 24 per cent. share of the home market. He spoke of other models that are in the pipeline. Perhaps the most important factor to influence my right hon. Friend in the decision that he has to make about the recovery plan for British Leyland will be the way in which its Leyland work force showed a new realism in its approach not only to wage settlements but to industrial practices.
I turn to clause 6 and the Finniston report. I listened with interest to the speech of the hon. Member for Bristol, North-East (Mr. Palmer). This is the first time that I have heard him speak when he has not been preceded or followed by my hon. Friend the Member for Bristol, West (Mr. Waldegrave). They both speak with a great deal of knowledge and expertise about the engineering industry.
I was therefore disappointed to hear the hon. Gentleman's reaction to the Government's proposals to set up a body established by Royal charter. The hon. Gentleman's disappointment arose from the fact that there is to be no legislation and no statutory body or quango. I do not have his knowledge as a professional engineer, but I am rather pleased that the Government have proposed that this Royal charter organisation should eventually become self-financing. It is a thoroughly good idea. It seems that the Government have made clear that the organisation's responsibilities are to be similar to those originally set out in the Finniston report.
§ Mr. Garel-Jones
The hon. Gentleman refers to the fact that if we were to have legislation there would be a debate on the matter on the Floor of the House. I suggest that we have had a debate today and that he and I and other hon. Members have had the opportunity to raise these matters.
The hon. Gentleman's criticism is perhaps a little harsh. One criticism that he voiced was that my right hon. Friend had said that he hoped that the organisation would work within existing institutions, but the hon. Gentleman said that those institutions had already failed. It is a little harsh to accuse all the institutions of failure. The lack of social esteem from which the engineering profession in this country suffers stretches a long way back, and it is perhaps unfair to lay the blame at the doors of the bodies involved in it.
In my constituency I happen to have the head office of the engineering industry training board. That board welcomes the new body and very much hopes that it will recognise the work that has been going on in organisations such as its own and will attempt to work within the knowledge that these organisations already have. The board is doing a number of things. It has introduced a scheme to bring women into engineering. The scheme has met with considerable success, and I understand that there are already 30 women availing themselves of the scheme. For 10 years it has been running advanced postgraduate courses in co-operation with industry and the universities. Over 200 people are availing themselves of those opportunities each year. I therefore hope that the new body will be a success and that it will work closely with the organisations that already exist.
§ 9.5 pm
§ Mr. Raymond Whitney (Wycombe)
I agree that we have listened to sad performances from the Opposition Benches, not least from the hon. Member for Thurrock (Dr. McDonald). There is no doubt at all about her sex. From the hon. Lady and the hon. Members for Glasgow, Cathcart (Mr. Maxton) and Durham (Mr. Hughes) came sad analysis of the state of British industry, and that is understandable. However, they had an even sadder disregard for the causes of the problems.
The hon. Member for Thurrock talked about the industrial strategy as if that had not been left gathering dust by her Government as a tool which proved to be unworkable. The hon. Member for Cathcart spoke about the engineering industry in Scotland and the rest of the country. In his analysis he disregarded a major cause of the problem—the crippling strike which took place last year. For six weeks or more, the engineering industry said that great damage would be caused by the strike. That was at a time when unemployment was already rising, when the world recession was setting in and when there was low productivity in the engineering industry. Yet there was a strike. People involved were warned about the loss of markets and the damage to our reputation for supply, reliability and service.
The hon. Member for Durham spoke with great passion about the North-East. He spoke in particular about the three great industries which he claimed were forgotten by the Government. He referred to coal, shipbuilding and 89 steel. What other industries have been more generously treated by Governments of all complexions than those three great industries?
The lessons mentioned by Opposition Members bring home the danger of going in for more and more State intervention. I have no doubt that my right hon. Friend the Secretary of State brought the Bill to the House today after much heart-searching. He recognises the state of British society, the failure to inculcate the spirit of enterprise and the deadening hand of massive State intervention which we have experienced from both Governments. He recognises the burden which that creates for private manufacturing industry. My right hon. Friend is well aware of that. I hope that we shall not have many more Industry Bills, if any.
My right hon. Friend will be particularly taxed by British Leyland's problems. Its sad story has been made a good deal better by the heroic efforts of Sir Michael Edwardes. Everybody pays tribute to his efforts. We all recognise what he has achieved by the improvement in management power and the sacking of "Red Robbo". That action led some Opposition Members to take to the streets. That was less of a custom then than it is now. All praise to Sir Michael Edwardes. He stuck to his guns and management strength has been reinforced. Sir Michael has also achieved two significant pay settlements.
However, the battle is a long way from being over. Last week there was a dispute about seat-making. The morale of the labour force is always on a knife edge, as is the company's financial position. We are all delighted about the success of the Metro, but it is clear that the profit margins are small. If British Leyland is to be competitive and a true commercial success, it must be successful in its LC10 product. There is a large question mark over when that model can come on stream and sell well. I have no doubt that when my right hon. Friend comes to take that difficult decision he will bear in mind all the factors.
It is ironic that I, having paid an entirely sincere tribute to Sir Michael Edwardes, have to say that it was Sir Michael who was one of those leading the charge of the bare knuckle brigade at Brighton that demanded that the Government should provide more money and lower interest rates. Following that, it was Sir Michael who said "Please may I have another £800 million or £1,000 million?" Sir Michael knows very well the pressure that that causes for interest rates and the burden for industry generally. I am sure that my right hon. Friend recognises the very great dangers in that area. The real future for the British economy lies in stimulating a proper climate for investment. That will owe a great deal to the improvements that we must make in employment, employment legislation, trade union and labour relations sectors.
The hon. Member for Durham mentioned the problems facing companies considering investing in the North-East. British companies or foreign companies that consider investing in the North-East or the North-West examine closely the many factors that are involved, including productivity and labour relations. These are areas in which we must work hard and in which the nationalised industries and the expansion of the nationalised sector have a poor reord. The improvement of investment must come basically, from the private sector. A fundamental of that must be the improvement of the climate of industrial relations.
90 There has been an interesting series of exchanges on the Wilson committee in The Sunday Times. The committee examined the range of capital available for investment in industry. It is a complicated debate and there are no areas of black and white. Basically, money is available, but more could be done by the City. Greater flexibility should be shown. It may be that more should be done in the way of tax allowances by the Treasury.
Above all, it is the creation of a climate for industry that will regenerate British industry. I hope that the heavy, crippling and stifling burden of the State sector will not be allowed to impede the regeneration for which we hope so much.
§ Mr. Alan Williams (Swansea, West)
I am not sure what I found most intriguing about the speech of the hon. Member for Wycombe (Mr. Whitney). Was it the superficiality of the analysis, or the irrelevance of it in relation to the facts? The hon. Gentleman said that we need a proper climate for investment. We agree with that. He said that the Government were getting rid of the dead hand that had been applied to investment under the previous Administration. Has he ever bothered to consider the history of investment, especially in the private sector?
If the hon. Gentleman studies the figures he will discover that the post-war peak of investment was reached in 1969–70, when at constant prices it rose to £4,200 million. After the Macleod and Barber Budgets it fell away to £3,600 million at constant prices by 1972. Throughout the life of the Conservative Administration it never achieved the peak that the previous Conservative Administration had inherited. By the time that the previous Labour Administration left office, taking leasing into account, investment had again surpassed the previous post-war peak of 1970. That was achieved through the use of selective assistance. Under section 8 of the Industry Act, nearly £3,000 million worth of industrial projects were stimulated by the expenditure or offer of less than £400 million of Government money, which is equivalent to less than 1p on the standard rate of tax for one year only.
As a result of the Government's, tax-cutting efforts, investment is again on the slide. If the hon. Gentleman believes that there is a lesson in history, let him first find the facts relevant to the section of history in which he proclaims his interest. The history of private sector investment is completely against the hon. Gentleman and his party.
§ Mr. Williams
I suggest that the hon. Gentleman puts a series of questions to his right hon. Friend based on the facts that I have put forward and sees whether the facts produced by the Department of Industry refute my argument.
§ Mr. John Butcher (Coventry, South-West)
Does the right hon. Gentleman agree that between 1958 and 1968 the proportional volume of investment in this country was almost exactly the same as that of West Germany, but the return on capital was very different? It was much higher in Germany. What conclusions does he draw from that discrepancy?
§ Mr. Williams
That is fascinating. The lion. Gentleman should ask the Secretary of State for Industry 91 whether the rate of return to British industry is historically the lowest that it has ever been, as has been declared by industry and admitted by the Government.
§ Mr. Williams
They have wasted that, to judge from the Secretary of State. I have already forgotten how many Budgets we have had. The Secretary of State for Industry now comes forward with this piece of paper—I have it somewhere, but it is not of much relevance—less than five months, by a couple of days, after Royal Assent was given to his previous Industry Bill, which cut all the budgets that he is increasing in the new Bill.
I am told that the hon. Member for Flint, West (Sir A. Meyer) made certain comments in my absence. I have sat through all but 20 minutes of the debate, which I believe is more than he has done. It is an intriguing debate. It has been a remarkable occasion. I have listened to the drummed-up support of hon. Gentlemen who have been pushed in by the Whips to keep the debate going until 10 o'clock because the Government are afraid that there might be a vote, and the payroll vote is not due back until between 9.30 and 10 o'clock. The loyalists were pumped in at the end. However, those who turned their attention to the major content of the document were critical of it, one after the other, and I can understand why.
I remember when the Secretary of State stood in this position and lectured us. I had to listen to him ranting on about Whitehall. I am sure that the right hon. Gentleman will remember. He said that Whitehall did not know best. His other favourite was that Ministers did not know best. His third point was that Ministers were not here to second-guess business men. My hon. Friend the Member for Thurrock (Dr. McDonald) quoted the only accurate thing that he said—that the Government cannot run industry. The right hon. Gentleman has proved that. He flayed the then Government over profligacy with taxpayers' money. It was the right hon. Gentleman's evangelical phase.
How they sat there looking up to him with their little faces glowing, rosy-cheeked and starry-eyed! I have in mind especially the hon. Members for Surrey, North-West (Mr. Grylls) and for Wolverhampton, South-West (Mr. Budgen) and all the worship in their eyes as they listened to the right hon. Gentleman's stirring speeches. Even today we heard from the hon. Member for Wolverhampton, South-West that, when he listened to those speeches, he thought that they were "wonderful and eloquent".
§ Mr. Williams
I am not suggesting that the hon. Gentleman is wrong from his point of view in his analysis, but what is interesting is his hankering for the past. It is a hankering that was echoed in a series of speeches by Government supporters — [Interruption.] Some of us have spent a lot of time taking part in and listening to the debate. There are other hon. Members who have come in at the last minute for a bit of entertainment. They think that they can get a bit of easy publicity by a few shouted interjections. We have seen them before. They come, and they go. They do not last.
As I listened to the Secretary of State today, I wondered whether this could be the scourge of the bureaucracy that 92 we had known just 18 months ago. Could that man have taken the decision-making powers about Rolls-Royce from the National Enterprise Board and put them in a Government Department? Is this the person who used to preach to us? Is this the man who, having said that Ministers did not know best, is now saying "But in relation to Leyland and Rolls-Royce, this Minister does know best"? Where is this adulation for the free market forces that we used to hear from the Secretary of State?
One of the reasons why there is only £1 million in this piece of paper for British Leyland is that the right hon. Gentleman's own record does not stand much analysis when one considers what is said about giving money to British Leyland. He attacked spending on British Leyland as being "highly-paid outdoor relief". It is no wonder that he does not want a figure to go into the document at this early stage, when his Back Benchers will see whether it is to be the £800 million, which the hon. Member for Wolverhampton, South-West talked about, or some larger sum. It is no wonder that the right hon. Gentleman does not want it in for the Committee stage either. We are told that we may not have this information in time for the Committee stage but that he will see what he can do to ensure that we have it in time for Report.
Having listened to what the right hon. Gentleman said in Opposition about British Leyland, I find it even more surprising that he said today "Whatever the decision, more money will be needed." What a conversion this has been, and what a let-down it must have been for those who actually believed what he was saying when he was in Opposition.
As I say, in the Bill X marks the spot for British Leyland, but I look at a comment in the Department's press release:The aggregate limit is raised in the Bill from the present level of £3,000 million to £4,251 million. £1 million is the token increase for British Leyland.That is an increase of 40 per cent., after the Conservative Government came to the House to reduce the budget for the NEB and the agencies just a matter of months ago. If the speculations of the hon. Member for Wolverhampton, South-West are correct—and he has admitted that he is in no better position than the rest of us to know—and a further £800 million is to be added for British Leyland at the last minute before the Bill is pumped safely to the House of Lords, it will mean an 80 per cent. increase in the budget. What were we told about profligacy with taxpayers' money?
§ Mr. Williams
Oh, I approve. I would have given it in the first place. I was opposed to taking it away. I could never understand the nonsense being talked at the time when Conservative Members were trooping into the Division Lobby to take it away.
§ Mr. Garel-Jones
Of course, we on this side of the House appreciate how difficult it must be for the right hon. Gentleman, belonging as he does to a party that believes that there is some sort of tablet of stone on which the true faith is written, to see a party operating pragmatically.
§ Mr. Williams
I find it interesting to hear a party that believed something now saying, with equal conviction, that it believes the opposite, in a matter of months. Less than five months ago we trooped into the other place for 93 the Royal. Assent to the Industry Bill. We are now starting the process again and all the money will be put back—plus a little more besides in the case of one or two budgets.
There were many occasions on which the right hon. Gentleman berated us when we were in Government for the projects and expenditure that we proposed and supported. In his mind, Inmos epitomised Socialist wastefulness. However, not only did he agree to give it the extra £25 million—that was a surprise—but when I first started the campaign for Inmos to be sited in Wales in February he said in letters to me and to the then Leader of the Opposition that he had no power—
§ The Secretary of State for Wales (Mr. Nicholas Edwards)
It was the right hon. Gentleman who sent it to Bristol
§ Mr. Williams
The right hon. Gentleman could have taken part in the debate. I am surprised that he has come in for a little entertainment. He could at least do us the courtesy of letting this side of the House have its say.
The Secretary of State for Industry told the then Leader of the Opposition and me that he had no powers to tell the Inmos board where the plant should be sited, but by the time we had finished our campaign and the Government were adequately embarrassed even the Prime Minister was joining the queue to claim that she, not the Secretary of State for Wales, not the Secretary of State for Industry, and certainly not the Opposition, had intervened to get the new plant sited in Wales. That was different from what the Secretary of State had been saying earlier, namely, that it would have been wrong or improper for anyone to tell Inmos where to site its new plant.
§ Sir Anthony Meyer
We are all enjoying enormously the right hon. Gentleman's attempt to make us forget that he was the most courteous and efficient Minister in the previous Labour Government. Will he now explain how his policy would provide the money needed to sustain the industrial regeneration about which he is talking?
§ Mr. Williams
I invite the hon. Gentleman to look at the report of the Select Committee on the Treasury and Civil Service, which indicates that as a result of the Government's policies the GDP will have fallen by 6 per cert. by 1984 and will be lower than it was in 1979. In fact, the Select Committee underestimated that figure. If those policies had not been introduced, there would not be the problem of finding the money.
§ Mr. Palmer
Can my right hon. Friend say whether the money that was promised to Inmos has arrived? I am told that Inmos is still waiting for it.
§ Mr. Williams
I am not surprised. Most of industry is waling for the money that is owed to it for investment that was undertaken as a result of the decision of the Secretary of State with regard to regional development grants. I am intrigued to hear that statement from my hon. Friend the Member for Bristol, North-East (Mr. Palmer). We must pursue it further, perhaps at Question Time. It is not only the money of Inmos that has disappeared.
We also have the mystery of the disappearing—or, at least, shrinking—National Enterprise Board. We are told that it is merely a coincidence that Sir Arthur Knight, the chairman of the NEB, resigned, not for health reasons bit for personal reasons, within a matter of hours of the publication of the Bill. That is just a coincidence. Equally, it is just a coincidence that Sir John King will be leaving 94 early in the new year, and we understand the reason that the right hon. Gentleman put forward for that. In addition to those two coincidences, it is only a coincidence that Alex Dibbs will be leaving the board. In addition to those three coincidences, it is only a coincidence, that Sir Robert Clayton is also leaving the board.
When the right hon. Gentleman was explaining to the House earlier today his account of the resignation of Sir Arthur Knight, he made no attempt to tell us about the other resignations, certainly not that of Sir Robert Clayton. Still no explanation has been offered about that. There is a whole series of resignations, and it is rumoured that the chief executive, Mr. Ian Halliday, is also to resign. That is yet one more coincidence to add to the list.
I am long on charity, as the hon. Member for Flint, West recognises, and I am berated by my hon. Friends for being excessively kind and courteous to the Government. However, I must tell the Government that all these coincidences produce mind-boggling concepts of statistical probability.
We have, in effect, to contemplate the second disappearance of an NEB board within about 12 months. The life of a board under the right hon. Gentleman seems to be about a year. But what about the need for continuity that we heard about in various speeches? The hon. Member for Wolverhampton, South-West referred to that need in respect of the experience of officials. The same must apply equally to those who make policy decisions.
The decisions in the Bill about the Welsh and Scottish Development Agencies confirm what the Secretary of State has said publicly, namely, that the Government have wasted their first year in office. They have wasted their first 18 months. I do not mind them wasting their time. One might marginally regret that everyone else's time will have to be wasted in re-legislating what ought never to have been legislated last year. Far more tragic, however, is that that waste of the first year or 18 months has meant the waste of the best part of 1 million working lives and of large sectors of British industry, which it will take another decade or more to replace or build up. There has been widespread destruction of firms, which we now understand from the right hon. Gentleman arose from a mistake by the Government.
The extra cash for the development agencies in, an admission of failure. How did the right hon. Gentleman defend the fact that he was coming back to Parliament yet again? He referred to the Committee stage of the previous Bill and said that one advantage of having to re-legislate for that which ought never to have been legislated for was that it gave extra opportunity for parliamentary discussion of the workings of his Department. To resort to that, the right hon. Gentleman must be scraping the barrel for an argument.
The fact that the cuts made in the Budget have had to be restored — and more than restored in the case of Wales—is a measure of the economic disaster that the Government have unleashed, particularly in Wales where 134,000 people—one in eight—are in the dole queues. We in Wales do not pretend that our position is markedly different from what obtains in Scotland, the North-West, Yorkshire and Humberside, but the tragedy is that there is more to come. Even the 134,000 unemployed in Wales do not fully reflect the impact of decisions previously taken on steel. In West Glamorgan there are 4,000 redundancies yet to occur at the Margam works. We are waiting for the 95 critical decision on the future of the two major steelworks in Wales—whether one of them will or will not be axed.
This change in the finance for the development agencies is not enough to meet the problems that Wales and Scotland are facing. The escalating unemployment will continue to escalate for months to come. The problem has been exacerbated by last week's mini-Budget, which represents another cut in gross domestic product of 1½ per cent. It will be further exacerbated by the fact that assisted area status has largely been stolen from most parts of Wales and Scotland and from the North-West, Yorkshire and Humberside.
Since Wales and Scotland cannot claim to be alone in sharing this tragic and unnecessary experience of the extra unemployment over the past year, it is even more deplorable, as my hon. Friend the Member for Durham (Mr. Hughes) said, that nothing in the Bill, even all this money, does anything to help the North, the North-West, Yorkshire, or Humberside. Wales and Scotland will benefit, and the Midlands will benefit because of the money for BL and Rolls-Royce, but our colleagues in the other assisted areas, who desperately also need assistance, have been ignored.
The tragedy is that, in all these areas, as the dole queues lengthen, so does the time that people have to spend in those queues. We are facing long-term unemployment. That is a phenomenon that this country has not known in the post-war period. A consumer credit-based society that has never known serious hardship will now have to face the deprivation of long-term unemployment, with earnings-related supplement abolished and with benefits—be they unemployment benefit or supplementary benefits—not increasing in line with the cost of living. For two generations of people to whom the pre-war experience was just a story passed down by father or grandfather, it is now to be a personal experience in poverty.
The Government must not treat lightly the warnings that have been given about the dangers of social unrest, possibly in Wales and possibly also in other parts of the country. To refer to it is not to condone social unrest or to incite it. We do not want it. The fact remains that—
§ Mr. Williams
That was a peaceful demonstration. Is the hon. Gentleman saying that people are no longer to be allowed to go peacefully into the streets of Britain to show, in a peaceful and orderly way, that they disagree with the Government's policies? Is that the state that we are reaching under the present Government? If that is the way in which the hon. Gentleman is beginning to think, I warn him that the constitutional dangers are already even greater than he has suggested. I warn the Government that they and the chairman of the BSC must beware of what the social consequences and the consequences in terms of social unrest might be if a wrong decision is taken about the future of the major steel plants within Britain. None of us wants social unrest, but it could become a reality against a background of unemployment of 2.2 million, rising to 3 million, with the heartlessness that we see in relation to social benefits, supplementary benefits and the dole.
96 In the Bill the Government have undertaken, in one small sector of policy, a U-turn. It needs a massive and rapid U-turn if they are to head off the socially undesirable consequences of their present policies. The tragedy is that it is other people's lives and the future of our country and economy that they are ruining.
§ The Under-Secretary of State for Industry (Mr. David Mitchell)
The right hon. Member for Swansea, West (Mr. Williams) made a disgraceful play on public disorder and in doing so implanted the idea in people's minds. I did not expect such a statement from him.
The right hon. Gentleman laid about himself with great style on the subject of investment, but the crucial question is not the amount of new investment but rather the use to which we put the investment that we have. Productivity in this country is on average about 30 per cent. to 40 per cent. below that on the Continent. That is the crucial question.
The right hon. Gentleman attacked my right hon. Friend for not announcing his decision on the British Leyland corporate plan, but we are not a party of instant decisions trying to catch tomorrow's headlines. We are one devoted to making a careful assessment of a major and serious investment which must be considered. It was good knockabout stuff from the right hon. Gentleman. He attacked the potential positioning of Inmos in Bristol—a sort of sleight of hand, like the three card trick, trying to distract attention from his decision to put Inmos in Bristol in the first place.
The hon. Member for Bristol, North-East (Mr. Palmer) asked when the company would get the money. It will get it as soon as, and when, it requires it. The move is up to the company.
§ Mr. Palmer
I have been informed by the company that it is still waiting for the money and would like to have it.
§ Mr. Mitchell
I can inform the hon. Gentleman that the money will be made available to the NEB as soon as, and when, the company requires it.
§ Mr. Harry Ewing
Obviously, the NEB wants to know about this. Is the Minister saying that before the NEB gets the money it must ask for it, rather than that the agreement made by the Secretary of State for Industry when he made his announcement about the allocation of the money will operate? Is not the NEB entitled to expect that the money will merely be transferred to it, or must it ask for it first?
§ Mr. Mitchell
We are talking about the company requiring the money, not the NEB. It is up to the company to ask for it.
A Second Reading debate is a glorious opportunity for the House to consider the strategy which lies behind a Bill and even to discuss what is not in a Bill. Here I turn to some of the comments made by my hon. Friend the Member for Surrey, North-West (Mr. Grylls), who was scathing about the NEB. I fear that he has overlooked the passage of the 1980 Act, which substantially changes the NEB from its former tasks and position. After all, the 1980 Act took away from the NEB the function of reorganising industry, as well as that of extending public ownership, and gave the board the job of disposing of its investments 97 as soon as commercially practicable. My hon. Friend should take account of the considerable change in the NEB's role which has already been made.
My hon. Friend said that it was nonsense to claim that the NEB can fuel the flames of industrial innovation. Of course, I agree. He also referred to its having a predatory role. There is no intention that it should have such a role now. It now works in partnership with the private sector, pursuing a marginal and useful role. He asked whether the NEB's record gave confidence in its ability to punt around with the taxpayer's money. I have to say to him that there was not much confidence under the previous guidelines or the previous functions, but I have to remind him also that with the passage of the 1980 Act there are new functions and new criteria.
Existing companies are to be retained until opportunities for disposal catch up with them—companies engaged in the development or exploitation of advanced technology, necessary only because of the debilitated state of the private sector's financing vitality in risk undertakings. Then there is the role of industrial undertakings in the assisted areas and the small-firm role.
Behind all this lies the requirement upon the board to exercise these powers with a view to disposing to private ownership as soon as commercially practicable, and I hope that against that background my hon. Friend will see that there is a very different situation from the one which he attacked.
§ Mr. Grylls
Of course, I understand the difference the 1980 Act, and that was welcome. I was trying to draw gently to the attention of the Government the fact that the board has still spent £58 million in the past year and, therefore, a good deal of predatory action is still going on, which I hope will stop.
§ Mr. Mitchell
I hope that my hon. Friend will not overlook the fact that much of this is involved with the closure of past investments.
My hon. Friend the Member for Wolverhampton, South-West (Mr. Budges) made a civilised speech with a clear intellectual coherence, and I assure him that we will take into account what he said in our consideration of the British Leyland plan.
My hon. Friend the Member for Southampton, Test (Mr. Hill) feared that he could see in the Bill a Socialist concept. I assure him that that is not so. Not only are the functions of the board changed. There is a fundamental difference between the predatory role under a Socialist Government, who seek to concentrate power, wealth, decision-making and the resources of the country in the hands of the State, and the wholly different concept that we have of a catalytic role which is only of a temporary nature.
The hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) took my right hon. Friend to task on the ground that since he took office two successive chairmen of the NEB have resigned. That was somewhat unfair. The present chairman's predecessor resigned because of a difference of view. The resignation of the present chairman is on purely personal grounds.
The hon. Gentleman went on to refer to the loss of the other members of the board. But we have managed to choose men of such high calibre that they are being enticed away to more demanding full-time jobs than they have serving in a part-time capacity with the NEB.
98 As if that was not sufficient, the hon. Gentleman went on to talk about the retirement of the chief executive of the Scottish Development Agency. But that gentleman has come to the end of his term of office. If the Opposition can make something out of that, it is a case of making something out of nothing.
I was asked specifically about the future of the NEB and whether it has a permanent part to play. My right hon. Friend made it clear that the board has several functions and that even its disposal function will take at least two or three years. The high technology companies, such as Inmos and Celltech, will need careful management by the board and the private sector partners in Celltech before the board can dispose of them. The need for advanced technology investment arises from the low profitability of companies at present. So far as the longer-term requirements for the NEB are concerned, it is too soon to make a final judgment. The degree to which profitability has recovered will be one of the factors to be taken into account.
The hon. Member for Newton (Mr. Evans) said that clause 3 of the Bill was unnecessary because section 4 of the 1980 Act covered the same ground. He is wrong. Section 4 of the 1980 Act concerned the repayment of public dividend capital to the Secretary of State out of the proceeds of disposal. It did not deal with what this Bill deals with — the reduction of public dividend capital when money has been lost on unsuccessful investments.
The right hon. Member for Rutherglen (Mr. MacKenzie), who at one time held the post I now occupy, expressed concern about the level of unemployment. I join him in his concern. The whole House joins him in his deep sense of concern about the personal problems of those who are unemployed at a time of widespread recession. As the right hon. Gentleman said, the unemployed have, through no fault of their own, all the human problems that unemployment creates.
The right hon. Gentleman welcomed the increase in the SDA's financial limits and wanted to know how the money would be spent. The main heads will be factory provision and derelict land schemes accounting for about 70 per cent. and direct investment accounting for about 15 per cent. The right hon. Gentleman asked whether the SDA would adopt a less cautions approach for investment. I would hardly say it has been over-cautious if I were to read out the long list of firms that have gone bust or have been put into receiverships and substantial sums of money lost.
§ Mr. Mitchell
They are investments, as my hon. Friend says, made by the previous Administration. I am not, however, making that point. No one can genuinely say, with that sort of risk-taking and loss record, that this is an over-cautious level of investment.
The right hon. Gentleman also asked what was happening about the Select Committee's report on inward investment and when the House could expect a response. I hope that we shall have it shortly. I think I can arouse his anticipation and say that he may well expect it among his Christmas or, perhaps, in his case, Hogmanay presents.
My right hon. Friend the Secretary of State, in response to my hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne), gave the names of 10 companies in which the 99 WDA has invested and which are now in receivership and liquidation. Provision in the Bill for the write-off of WDA investments is in respect of 40 companies. The agency's loss in each of the other smaller cases is less than £50,000. This is a useful example of the high degree of risk that takes place in so many cases.
The hon. Member for Newton feared that the Government had disregarded what Monty Finniston had done. That is not true. I take this opportunity of paying a public and warm tribute to him for the tremendous amount of time, care, energy, wisdom and assessment that he devoted to his inquiry.
There has been reference to the debate that took place in the House at the end of the last Session. My right hon. Friend took full account of the views expressed on that occasion. Fear has been expressed that the institutions did not consult their members. I cannot comment on that. I hope that they did. I can assure the House that we in the Department of Industry consulted 70 institutions involved in engineering, the CBI, the Engineering Employers Federation, over 200 individual companies, and also a wide-ranging group of educational bodies.
Subsequently, comprehensive consultation carried out by the Department revealed a strong preference among employers, engineering institutions and others for the Royal charter route, mainly on the ground that this would provide some measure of independence from the Government for the new body. The Government decision announced on 7 August does no more than facilitate the consensus that consultation revealed.
The Bill performs a number of important functions. It increases the NEB's finance by £1 million, a token implicit in the undertaking to examine—and that is the limit of the undertaking — the British Leyland corporate plan. The hon. Member for Durham (Mr. Hughes) — who, unfortunately, is not with us at the moment but was here earlier — made a totally bogus comparison when he talked about the £1 million increase for the NEB and compared it with the increases for the WDA and the SDA. It was a totally bogus comparison because the NEB is not up against — and is nowhere near up against — the financial limits available to it.
The Bill makes available up to £1,500 million for the Rolls-Royce corporate plan—a sum which includes its private sector borrowing—and a further £500 million by order, that is to say, a potential total of £2,000 million for Rolls-Royce over the years ahead.
The Bill provides for higher spending limits for the SDA, the WDA and the Development Board for Rural Wales. I take the opportunity of paying tribute to the work of the Development Board for Rural Wales and the very considerable number of jobs—about 6,000—that it has created with its factory building and other programmes. It is something of which the Members of Parliament who pressed very strongly for it—and who have strongly supported its activities—have good reason to be proud.
The Bill writes off the public dividend capital of the NEB and the Government loans to the WDA and the SDA where they have been lost. Here there is, perhaps, a misunderstanding which appeared in the speech of the hon. Member for Stirling, Falkirk and Grangemouth, who asked me particularly about the reduction in the public dividend capital of the SDA of £7 million and of the WDA of £2.7 million. He saw this as a sinister start to capital 100 reconstruction. I am not sure whether he assumes that a reduction in public dividend capital reduces the funds for these agencies. It does not do so. All that it does is to write off the losses made in the past. If it did not, the agencies would be expected to service a capital debt related to assets which it no longer had.
If what the hon. Gentleman is saying is that it is not reducing it but writing it off—and if he assumes that there is some intention behind it, therefore, to run down the activities of the agencies—I can assure him that that is wholly untrue. He can take that reassurance absolutely and completely. Indeed, the very fact that we are extending the financial limits in the Bill is itself a guarantee to him that there is no truth in that worry and that concern.
I turn now to the further functions of the Bill. It enables the Secretary of State for Industry to extend the period of the shipbuilding redundancy scheme for two years. It allows for guarantees arising from the start-up finance of the new engineering industry Royal charter body following the Finniston report. Finally, it puts on a statutory basis the work of the Department of Industry now going on to encourage awareness of industry and commerce in the education system.
My hon. Friend the Member for Northwich (Mr. Goodlad) welcomed the wider purposes of clause 6 and called for a greater recognition of the vital importance of industry and commerce to our future as a trading nation. I echo that. One of the interesting and important factors of the Bill is that we are putting on to a statutory basis something that we have been doing in the Department of Industry successfully for some time—that is, building up links between education and industry.
Too many youngsters see choosing a career in industry and commerce as something that is not as worth while as going in for social services or something of that sort. Our young school leavers are impressionable and idealistic, motivated by a desire to serve their fellow men. We must create the circumstances in which more of them recognise that they can do that well by creating wealth as well as distributing it.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).