§ Mr. John Silkin (Deptford)
I beg to move,That this House, recognising the importance of creating a British capacity in the microelectronics industry, deplores the failure of the Secretary of State for Industry to come to a decision on the future of INMOS; and urges Her Majesty's Government forthwith to accept the advice of the National Enterprise Board given last December and to make available the second tranche of £25 million necessary for the creation of such capacity with its beneficial effects on British industry and employment prospects.There is one point in common in our motion and the Government's amendment. Both recognise the importance of the microchip industry to industry in general. But there we part company, because the amendment is apparently unwilling to say that we should have a capacity of our own in the United Kingdom, whereas the Opposition motion urges that course.
There are those who say that we do not need a United Kingdom microchip industry. The grounds on which they say that are tolerably well known. They are that we can buy in from abroad and that the United Kingdom is too far behind the United States, in particular, and Japan to engage in an industry of its own.
I believe those to be tired old arguments, arguments, which ignore the reality of the situation. There can be no guarantee that United States or Japanese chips will always be available. Some years ago it was assumed that Middle East oil would always be available and cheap and that there would be no difficulty about it.
If we had not at that time undertaken exploration for North Sea oil, the position in which we find ourselves, and would have found ourselves in any event, would have been infinitely worse. The same situation could occur in relation to microchips if we do not rely on ourselves.
1328 The microchip industry starts with small companies, which are later taken over by much larger concerns. Those larger companies are, inevitably and rightly, liable to use the chips for their own concerns in their own production, ahead of anybody else. We have experienced shortages of one sort or another during the past few years. It can be said that American satellite companies have set up, or will set up, in the United Kingdom. The tragedy is that while companies may set up in this country they never bring their research and development with them. Research and development take place abroad. This country needs new technologists and research and development. The lack of research and development and technologists has meant a slowness in harnessing new technology to our products and processes.
Another factor that I should like to mention is, in the long run, perhaps the most important. There has been a great brain drain from the United Kingdom to the United States and to other countries. I am told that many vice-presidents of companies in the semi-conductor sector in the United States are of British origin. What we need—I do not know whether the words are appropriate—is a brain magnet to bring back the brains and to exploit those that already exist in our own country. We need profitable industries. Inmos would have been successful—and will be successful, if we continue with it—in generating that momentum. Precious little new industry has been created in this country during the past few years. We cannot afford to see any chance of creating new industries disappear.
There are those who say that Inmos is a high-risk concern. It is. It was an even higher risk two years ago, and it has begun to bear fruit. It has the great advantage of possessing one of the best design teams in the whole sector. That is not my view alone. It is that of those in the United States who are most competent to make such an assessment. It is argued that we are too far behind the United States. Ten years ago, the Japanese were totally reliant on the United States. However, they went ahead, and the Japanese chip industry now caters for about 90 per cent. of its domestic needs. It is also a heavy 1329 exporter. The chance arises for us to do the same.
If it is right that we should be developing our own microchip industry, we have to look at the possible effect of delay. Delay has already cost us very much. We lag behind the United States and Japan. We are dealing with a fast-moving technology. My right hon. Friend the Member for Huyton (Sir H. Wilson) once said that a week in politics was a long time. By the same token, a week in microelectronics is eternity.
This is so fast moving an industry that unless one takes advantage of it and moves as quickly as possible, one is in danger, as we have found, of being at the mercy of one's competitors and at the mercy of suppliers from abroad. Demand is expanding the whole time and expanding world-wide. The first Inmos products are working in the United States. There is a need to expand the quantity. That is one reason why Inmos should be encouraged without delay. Inmos estimates that delay, in turnover terms—annual turnover is worth £86 million—cost £300,000 a day. On that basis, while the Secretary of State has been making up his mind we have forfeited about £36 million worth of turnover. That amounts to a good deal more than the second tranche.
What is that delay? How does it arise? Is it due to indecision? William James, in "Principles of Psychology", wrote:There is no more miserable human being than one in whom nothing is habitual but indecision.The right hon. Gentleman, as all who know him recognise, can be a jolly chap on occasions, such as at this moment. He is obviously not habitually given to indecision. My complaint about him, going back over all the years that I have known him, has not been so much his indecisions as his decisions. Any cracked-brain idea that has taken his fancy he has immediately decided upon. I recall the time when tower blocks were the residences in which the whole population was to be put. I remember the time when the right hon. Gentleman wanted to reorganise the National Health Service, and did, and would allow no one to make any amendments to the Bill that he brought before Parliament.
1330 There was also the splendid decision that he made—buried, I regret to say in the past—about socio-economic group V. He thought that socio-economic group V —another name for part of the working class—ought not to be allowed to have children. I wonder what happened to socio-economic group V. We have not heard of it for some time. More recently there has been the right hon. Gentleman's incursion into regional affairs. He said that the problems of the regions were due to immigrants. Most recently of all—last weekend—there was what may be termed the Joseph incomes policy. The right hon. Gentleman was one of the bitterest critics of the Labour Government's 5 per cent. norm incomes policy. He has now produced his own. His is a norm of a cut. It is the first incomes policy in British history, since the Conservative Government of 1931, to introduce cuts.
All these were decisive things. The right hon. Gentleman is the most decisive man one could possible meet, and, incidentally, the jolliest, while producing these various decisions. He was never so decisive—apart from on the last matter, which is still to come—as when he rejected every one of his previous decisions. That was a form of decisiveness.
It becomes very much a matter of contrast when we deal with the question of Inmos. One needs to consider the history of Inmos under the Secretary of State. A man must be allowed a fair crack of the whip and be given time to make up his mind and consider things. We start in September 1979, when the Government introduced a review of the National Enterprise Board. Hon. Members will no doubt recall the headline "Inmos decision in the balance". This must be one of the all-time record balances. It has gone on for a long time.
In December 1979, three months later, the National Enterprise Board, having reviewed Inmos reported to the Secretary of State and recommended continued support for it. Now, six months later, we find that last month the Secretary of State ordered the NEB to review its previous review.
§ The Secretary of State for Industry (Sir Keith Joseph)
I interrupt only because that is an error. The review by the NEB 1331 was undertaken not at my request but on its own initiative.
§ Mr. Silkin
I accept that that may be the case, but is not the effect the same? It must, in the end, be the Secretary of State's decision, unless he says, here and now, that he is not prepared to make any decision at all. Is he prepared to make that statement? If not, the argument must hold.
The Secretary of State's attitude appears to be that the NEB should keep reviewing Inmos over and over again until it finally reaches the wrong conclusion. We are asked to commend this method in the Government amendment. The amendment asks the House to commend yet another review. The question that must be asked is "Why is the Secretary of State delaying?" I know that it is popular to assume that the Secretary of State, as many of the popular newspapers say, is a man of indecision. I have tried to point out that he is not. On the contrary, he normally makes his decisions very carefully, but very conclusively, and sometimes instantaneously.
Why is the Secretary of State delaying over Inmos? He faces the same dilemma as he faced over Ferranti. Ferranti was a success, despite all the right hon. Gentleman's words at the beginning when it was taken over by the Government, and despite the right hon. Gentleman's philosophy. He understands the importance to the country of microelectronics. Indeed, the Government amendment says so. Yet in his heart the right hon. Gentleman does not want Inmos to succeed because it is a disputation with his own philosophy.
Last week the hon. Member for Havant and Waterloo (Mr. Lloyd) asked a question that had some relevance to steel and much relevance to the microchip industry. I shall quote only that part of his question that relates to the microchip industry. The hon. Gentleman asked:Has my right hon. Friend or his Department made any estimate of what might have been created in terms of new employment, new exports and new prosperity had £5.000 million been invested in silicon?"—[Official Report, 26 June 1980; Vol. 987, c. 762.]One can get such an investment only with public finance. It cannot be obtained from private sources. The Secretary of State obviously objects to what I say. Will he give an illustration?
§ Mr. Silkin
That is true, now that the country has invested in it.
The right hon. Gentleman's philosophy was expressed better even than by the right hon. Gentleman, who can be eloquent in expressing his philosophy, by the Under-Secretary of State for Energy, the hon. Member for Kingston-upon-Thames (Mr. Lamont), when he was a junior shadow spokesman on industry. He said that viable companies can obtain money from the markets and that those who cannot do not deserve to do so. The right hon. Gentleman nods his head. That is the basis of the Secretary of State's philosophy. It is also the basis of the accelerating decline in British industry under the present Government.
What is the Government's policy? The Secretary of State is like a small boy on a bicycle riding around saying "Look, no hands. Leave it to private investment." However, private investment prefers other avenues. It prefers avenues that are safe, remunerative in the short term and not job creating.
With the encouragement of the right hon. Gentleman and his Government, through the abolition of exchange control, money is going abroad and being invested abroad. The profits and rewards appear to investors to be better than they are by investment in their own country. Such money does not create a single job in Britain.
As I said during the debate on Ferranti, property companies listed in the Financial Times share index are valued on the Stock Exchange at about £3¼ billion. That figure is comparable with the whole of the mechanical engineering and metal sectors. In today's complex industrial societies, large-scale public intervention and investment are vital. It is impossible to exist without them.
The Secretary of State is fond of making international comparisons when it 1333 suits his book. He talks about productivity in other countries without taking any of the intermediate points of comparison. He never looks at his competitors when considering public investment. It is as well for us to do that.
I mentioned this subject at Question Time recently. I fear that the Secretary of State got his answer wrong, but perhaps he has had time to consider. En Japan, support for the microelectronics industry is about £500 million a year. En West Germany, £300 million has been given in grants for research and development in the computer industry. A further £200 million is available for the new generation of chip technology—very large-scale integration. In France, £70 million was set aside for microchip development over three years ago. That sum has grown, and all five French microchip projects receive State aid.
Even in Italy, which is experiencing economic difficulties, £80 million has been invested through State-owned semiconductor plant and £70 million in low-interest loans. In the United States, the apostle of free enterprise, which boasts about how little it relies on State intervention, the Government spent £10 billion on the electronics industry and over £2 billion on research and development in 1979.
It is possible to regenerate British industry. It is possible for British skills and innovation to bring prosperity back to the country. Three things are needed above all. First, there must be a return to full employment. Secondly, we need managed trade. Thirdly, there must be a transformation of attitudes within industry and a massive programme of public investment, including the maximum use of new technology. None of the three necessities for the advancement of British industry will occur under the present Government.
To the question implied in the motion "Can we afford further delay on Inmos?" must be added a larger question—"Can we afford a further day of the Secretary of State?" Our answer to both questions is "No", and I call upon my right hon. and hon. Friends to support me in the Lobby tonight.
§ Mr. Deputy Speaker (Mr. Bernard Weatherill)
I must inform the House that Mr. Speaker has selected the amendment in the name of the Prime Minister.
§ The Secretary of State for Industry (Sir Keith Joseph)
I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:'this House, recognising the importance of micro-electronics to United Kingdom industry, welcomes the review which the National Enterprise Board has decided to undertake of the projects for Inmos International Ltd. including the question of further finance.'.I shall speak as briefly as possible to give maximum time to hon. Members on both sides of the House. My hon. Friend the Under-Secretary of State will seek to make a short reply of about seven minutes.
There is no argument between the two Front Benches about the importance of microelectronics or about the quality of the Inmos team. I am no expert, but I am told by experts that the Inmos team is highly respected. There is no argument about that. I have testimonials, including one from my hon. Friend the Member for Havant and Waterloo (Mr. Lloyd), as to the impressive quality of the operation at Colerado Springs where Inmos has invested the bulk of the money which has so far been given it by the British taxpayer through the National Enterprise Board.
I also acknowledge the sheer political nerve of the previous Administration. I intend a genuine tribute. I gather that the decision to invest in Inmos was taken against the advice of my predecessor. That was reported publicly at the time, so I use no private knowledge. The Labour Government, the dedicated opponents of multinational companies, gave their support to the creation of a new—
§ Mr. John Silkin
I hope that I shall be forgiven for intruding into Cabinet secrets, but what the right hon. Gentleman gathered about his predecessor was incorrect.
§ Sir K. Joseph
Then the newspapers at the time misled me.
I come to the second limb of my praise for my predecessor. The previous Labour Government backed the creation of what was intended from the start to be a multinational business. They had the political 1335 guts to approve a share distribution set up by the NEB and agreed with the Inmos entrepreneurs which could, and still can if the project is successful, result in the entrepeneurs and the managers associated with them becoming very wealthy indeed. I do not blame anyone for that. It was proper of the Labour Government to understand, and to harness, the motivation of enlightened self-interest subject to competition and the law. I have to say that that Administration did not, lamentably, tie up the location of the first Inmos plant in this country.
It was perfectly consistent with the philosophy of the previous Labour Government to approve the investment of taxpayers' money in the Inmos venture through the NEB. The House will be aware that we do not share that philosophy. We have asked the NEB that in any new venture it should, wherever possible, seek partnership with private enterprise. That is not because we have any disrespect for the board of the NEB. We believe that the decision-making of those whose money is at stake in the strict sense of company responsibility will add a healthy ingredient to the decision-making process which, by hypothesis, the NEB has to follow in the market and on the frontiers of technology.
Because of our change of philosophy —that is, our request to the NEB to seek private enterprise partnership in any new schemes or in the continuation of existing schemes—the NEB sought private enterprise money for the second tranche of the Inmos project. Over recent months there have been flickers of interest from private enterprise which have absorbed several weeks of the time of which the right hon. Member for Deptford (Mr. Silkin) complained, in analysis by the private interests concerned about whether they wanted to invest in the second phase of Inmos. However, I have to report to the House that private enterprise interest has not been carried through to fulfilment and the NEB, finding that the Inmos directorate wanted, properly, to update their corporate plan sought time, on its own initiative, to review the prospects for the project. That review which started in mid-June is now in full process. I hope that it will be completed in two or three weeks, though it is the responsibility of the NEB. 1336 I have to remind the House that the NEB is responsible for the judgment it makes. It must also be accepted—
§ Sir K. Joseph
May I finish this sentence? It must also be accepted that the Government have their responsibilities, too.
Will the right hon. Gentleman explain why the private interest in Inmos has only flickered and, apparently, gone out? Is it because private enterprise has no confidence in the industrial policy of the Government? Is it because it has no confidence in the future of industry as a result of Government policies?
§ Sir K. Joseph
The hon. Member falls below his normal pungency of intervention. This is a risky project and the private enterprise firms concerned obviously considered whether it would be a sensible and prudent investment. So far they have decided that it is not. However, that is not the end of the story. There may be developments. Other private interests may make a decision the other way. The House should take careful account of the fact that those whose business it is to make successful judgments on market prospects have so far decided not to participate in an operation for which the entirety of the finance has been contributed by the taxpayer.
I have to report to the House that there may come a time when a partnership with a private interest may depend upon whether the entrepreneurs are willing to renegotiate the scale of their own equity interest in the company. I imgaine that it is in their interests to ensure that Inmos receives further finance for the second stage. But if they want that it may be necessary—I do not say that it is the only way—for them to renegotiate the scale of their own equity interest.
§ Mr. John Silkin
Does it not, then, come to this, that private enterprise in this country, at any event, is totally unwilling to invest in anything that requires high risk and waits until somebody else has made a success of it before it comes in because it is frightened?
§ Sir K. Joseph
The right hon. Gentleman gives me the opportunity to explain to him, if he does not realise it, that the philosophy and policy of the Labour Party over decades have been so hostile to the rewards of business success as to stunt the springs of risk-taking in this country. The brain drain to which he refers is, to a large extent, due precisely to that sustained hostility. The relative poverty of the people of this country, including our pensioners, is a direct product of Socialist misunderstanding of, and hostility to, the wealth-creating process.
§ Sir John Eden (Bournemouth, West)
Is there not another difficulty here, namely, that the sector in which Inmos is engaged requires world markets for its sales and that in order to proceed successfully it has to compete against American and Japanese companies which are already well established in world markets?
§ Sir K. Joseph
My right hon. Friend speaks accurately. But if this country had been more encouraging to risk-taking and profit-making, subject to competition and the law, there would be a far better climate and a far better source for risk capital than there is now.
§ Sir K. Joseph
No, I am sorry. I must not give way again.
The right hon. Member for Deptford teased me about the question of delay. It is true that there has been a six-month delay since the NEB recommended that the Government should provide the second £25 million. But I have to remind the Opposition that much of that delay has been due to the complete surprise caused to Government and Opposition by the Inmos decision to locate its first production project at Bristol.
It was necessary for the Government to consider this new project at a time when the natural instinct of any Government, when asked to contribute a large sum of money from the taxpayer, would be to see that the project went to an area crying out for new employment. My right hon. and hon. Friends do not take at all lightly any possibility of interfering with the preferences of management. We much prefer to leave management to 1338 make crucial decisions such as the location of the project.
Of course, we leave management, subject to the general law about IDCs and the rest, to make its own decisions. But when that same management is dependent upon public money the Government have to consider whether it would be right to allow the location of a first project in the highly attractive and suitable area of Bristol or to ask that it should go to some other suitable area where there are anxieties about employment.
Therefore, a certain number of weeks' delay was due to the discussion of the location and a certain number of weeks' delay was due to consideration by private enterprise firms.
I can best help the House if I canvass briefly the main arguments in favour of Inmos receiving further support, be it from private enterprise or the taxpayer, the main arguments against, and where we are now.
The main arguments in favour of providing a second slice of money for Inmos, whether from the private sector or from the taxpayer—and there is a big difference—is that Inmos, as the right hon. Member for Deptford emphasised, would provide a significant contribution if it developed here rather than in Colorado Springs to the design and production by a United Kingdom company we would hope in the United Kingdom of standard integrated memories and microprocessors. I must emphasise that Inmos would be providing a contribution to the production of standard chips. A number of British companies operating in the United Kingdom already produce special chips very effectively. The Inmos concentration, at this stage at any rate, is on standards.
The second main argument in favour is a byproduct of the first. It would increase the technology in this country and would as the right hon. Gentleman legitimately said, be an attraction to technical and relevant business brains to this country from all over the world. It is further argued that if we have our own design, research and production unit of standards—we already have it of specials—there will be easier geographical and physical access for our users of microtechnology to sustained dialogues with those operating at the frontier of the development of standard 1339 microtechnology. There is also the important question of jobs to which the right hon. Gentleman legitimately adds that it is a good to have in this country more research and development in standard integrated microtechnology.
Having given those arguments in favour of a successful development by Inmos in this country, I have to emphasise that this industry is very risky, that Inmos has chosen one of the riskiest parts of it upon which to enter, and that a further Inmos development operating in the United Kingdom may or may not be successful. It may or may not survive. It may or may not be competitive. We Cannot be sure.
§ Sir K. Joseph
No, I am sorry, but I must be as brief as possible.
It is said to be an added advantage in favour of Inmos's developing here that its competitors all over the world, formidable though they are, are not having an altogether trouble-free experience in developing the 16 and 64K RAM memories upon which Inmos is concentrating.
I come now to the arguments against. One is that the United Kingdom is not dependent for the production of standard microtechnology products upon a future development here of Inmos. There are suppliers of standard integrated circuits in the United Kingdom. Admittedly they are owned by overseas companies, but there are several of them here and some of them are expanding. Other such companies are considering coming here. They provide some design and some research, but not the whole or the centre of the design and research that the parent companies sustain. Nevertheless, our users can have access to the front end of standard technology by, at worst, going to the centres of research abroad.
§ Mr. Dan Jones
On a point of order, Mr. Deputy Speaker. Can you not persuade the right hon. Gentleman to speak to the House and not exclusively to his hon. Friends? There are those of us who are vitally interested and we want to hear clearly what the Minister is recommending.
§ Sir K. Joseph
I stand rebuked, Mr. Deputy Speaker. I should not have turned my back on the Opposition for a moment.
The arguments against the indispensability of an Inmos United Kingdom operation are, first, that we have suppliers and, second, that our users can have access to the highest technology, even if there is not a totally British research and delevopment centre here.
It is an illusion to imagine that a second stage for Inmos would involve the British taxpayer, if it were supported by the taxpayer, in only another £25 million—if I may use "only" in respect of that large sum of money. The probable risk to the taxpayer of an Inmos development would be well over the £50 million originally projected because Inmos plans to spend money which it intends to borrow, and if it were to borrow money in addition to the £50 million which might be invested by the taxpayer, and if the project were to be totally unsuccessful and it could not sell its products on the world market, far more than £50 million of taxpayers' money might be written off.
Another argument against is that, while it would cost well over £50 million at risk to ensure an Inmos operation here, we can for very much less money provide the necessary contribution to ensure that more of the overseas parent companies invest in this country subsidiary factories and production centres with associated, though perhaps relatively modest, research and design activities.
Finally, in putting the argument against —I am trying to put the balance fairly—. I have to remind the House of the formidable competition that exists in this area, as my right hon. Friend the Member for Bournemouth, West (Sir J. Eden) has reminded us. However successful Inmos has been for far—and I am told that it is on schedule—there still remains for it inevitably a hard task ahead in production and marketing.
The House must therefore be aware that the arguments are not all one way. There are costs and risks. The existence of an Inmos production and research unit in this country cannot be seen as the only way by which British users will have access to the use of, to the design of, or to the research connected with standard integrated technology.
1341 In addition to the questions about whether it is prudent for the British taxpayer to invest further money, there is the subsidiary question of where any Inmos unit would go if it were to be provided with extra money in order to develop in this country. The previous Administration did not manage to commit the Inmos team to develop in an assisted area, but there are those who have strong views that if it is to develop here with public money it should be allowed to do so only in an assisted area.
§ Sir K. Joseph
No. The hon. Gentleman is a very courteous man. He must understand that I am trying to be courteous to the House. I have given way to one Labour Member and to one of my right hon. Friends. I must defend the interests of Back Benchers.
It may be that the Opposition have chosen to debate this subject at a time when the NEB's review has kicked the decision about Inmos into touch. We cannot make a decision at this stage. I have explained that part of the delay was due to the location issue which the previous Labour Government did not tie up, and that part was due to a perfectly understandable examination by private enterprise of whether it would carry out an investment.
When the NEB is ready, it will come to its assessment of the prudence of a further investment in Inmos. It is required to continue to seek a private investment contribution. If the NEB were to decide to recommend further development of Inmos, and if it were to fail to find private enterprise money to carry out that development, it might approach the Government for further money from the taxpayer. The Government will then have to make a decision. We shall have to consider the risks. We shall have to recognise that Inmos, if it went ahead with the taxpayers' money, might be a great success, or it might not be a success. It might be profitable, or it might not be profitable.
In the light of the factors that I have explained, I hope that the House will recognise that a further development of Inmos in Britain, at the taxpayers' expense, is not so obviously indispensable that we should close our minds and say an automatic "Yes". Inmos is not a 1342 talisman, nor is it a shibboleth. If the decision falls to the Government, we have to make a prudent decision on behalf of the taxpayer.
§ Mr. Deputy Speaker
The debate is due to end at 7 o'clock. Twelve right hon. and hon. Members have indicated that they wish to take part in the debate. I appeal for short contributions.
§ Mr. Alan Williams (Swansea. West)
It is remarkable that we are debating not the rightness or wrongness of a decision but the sheer absence of a decision. Having seen a bewildered Secretary of State at the Dispatch Box today, I can understand that absence of decision. He has had six months in which to make a decision on the applications for an industrial development certificate and the £25 million. In the three years that I dealt with industrial development certificates, I cannot remember a decision taking six months. My hon. Friend the Member for Liverpool, Walton (Mr. Hefter) might have similar recollections of his time in Government.
I find it astonishing that we have heard a repeat of the Secretary of State's soul searching on the issue of principle more than a year after the Government took office. When the Labour Party was in Government and the Secretary of State was in opposition, he was in no doubt at all but held clear views on the rightness and wrongness of Inmos—although I did not agree with his conclusions. It is important to remind ourselves of the backcloth to the delay. The Government purport to support an industrial philosophy that is geared to encouraging innovation, but we have seen little sign of that so far. We are dealing with a sector of industry that is experiencing the most rapid technological change that has been experienced by any sector of industry since the Industrial Revolution. The capacity of the chip doubles in the space of each year. The commercial implications are clear. If a company does not act quickly, its product is obsolescent, If it has a new product, it must be brought into production quickly. It is instructive to note that because of the stimulation of the electronic industry in Japan that country has 10 times as many electronic engineers as there are in Britain. That was pointed out by the 1343 Under-Secretary in his speech on 25 June. What is more, Japan probably keeps them, while ours emigrate to the United States. The other important factor to remember when considering the length of the delay is the massive Government support which, as my right hon. Friend the Member for Deptford (Mr. Silkin) said, is given directly in Japan and indirectly in the United States from the space and defence programmes.
The House will recollect that at the end of November last year we were presented with a new National Enteprise Board. I do not wish to rake over old wounds, but it will be remembered that the old board walked out after a dispute with the Secretary of State, and every member resigned. The right hon. Gentleman had a unique chance. He did not inherit a board from the terrible Socialists of the previous Administration but was able to establish his own new board at the end of June last year. The board consisted of people of the Secretary of State's choice, and he would be assumed to approve of their general pattern of thinking.
On 21 December the board took its first important decision to support the Inmos application. I received a letter from the deputy chairman of the NEB about the site for Inmos, in which he said that the board had notified the Government immediately:This was before any announcement was made by the company and was designed to comply with a request from Government to be informed in advance of any announcement.That was the Government's first sign of any urgency about the issue. I am sorry to say that it was also their last. The judgment of the NEB was clear. In another letter on 18 January, after the board had taken its decision about Inmos, it said:It is in the interests of the UK as a whole that it should succeed and that it should succeed sufficiently for its production capacity to expand as planned.The Department of Industry was in no doubt about the, NEB's views. In the debate on the Consolidated Fund on 12 March, the Under-Secretary said:I believe that the NEB has studied the prospects for the company most carefully and the application for the second £25 million funding is an indication of the NEB's confidence in its ultimate success."—[Official Report. 12 March 1980; Vol. 980, c. 1461.]1344 The Secretary of State's men at the NEB were clearly of one mind about the project. The NEB was in no doubt, and the Secretary of State for Industry was in no doubt that the NEB was in no doubt.
There was another advantage. One would have thought that the Secretary of State was the right man to make quick decisions. After all, when in opposition he lectured time and again on the theme that Whitehall did not know best. Is it not strange that he should have taken British Leyland from the NEB but has dithered for so long on this issue? Time and again he said that it was not the job of Ministers to second guess business decisions. So we have a Secretary of State who does not want to second guess business decisions, who does not believe that Whitehall knows best, and whose men at the NEB are giving him a clear recommendation that the project should go ahead. Surely the way ahead is clear.
§ Mr. Dan Jones
In fairness to the argument, can it be said that the NEB was advised by experts in the microchip business?
§ Mr. Williams
I do not know the processes of consultation undertaken by the NEB. Sir Arthur Knight and his colleagues, faced with the most important investment decision since their appointment, would have considered the matter with great thoroughness. When I saw him in the new year, he indicated that the board was strongly in favour of the new project, but, far from the green light immediately being turned on for the project, the agonising began. I went to see the Secretary of State on 26 February. I took with me a deputation from various parts of the country, including my right hon. Friend the Member for Deptford. We found him deeply and genuinely concerned about the need for proximity of the production unit to the technology centre at Bristol. I asked him whether he had studied the report of PA Management Consultants Limited which, as we understood, recommended a site either in Cardiff or in Washington in the North-East, which seemed to dispose of the proximity argument. To my surprise, the right hon. Gentleman had not seen that report, yet that was the document that carried out the most detailed analysis of all the site options that were available.
§ Mr. Michael Colvin (Bristol, North-West)
One of the most refreshing things about this debate is that the one thing that we are not discussing is the siting of the Inmos production plant. Why is it that the right hon. Member is now raising this question? The Opposition do not mention the question of siting in their motion, which is a refreshing step forward.
§ Mr. Williams
The Secretary of State referred to the question of siting. Therefore, he obviously thinks that it is important in the timing of his final decision. I believe that it is legitimate to turn my attention to his comments.
As we now know—I invite Ministers to deny it—Ministers had great trouble is getting hold of a copy of that report. They had great difficulty in persuading the NEB and the company—possibly mainly the company—to part with it. Indeed, Ministers have never responded favourably to my frequent requests that a carefully doctored version—in order to avoid any confidential data—be placed in the Library for hon. Members to see. The PA Management Consultants report is almost a saga in itself. As my right hon. Friend the Member for Deptford is aware, when I visited the NEB not only could no one remember whether the PA report even recommended Bristol as a site but a copy could not be found even when the chairman requested one. When it was suggested that it should be made available to Members of Parliament, I was told that it would be misleading to do so.
Despite all the doubts about the possible site for this project, Ministers sought the most detailed study—the PA report—only after they had been put under pressure by the Opposition. Indeed, because the right hon. Gentleman was so concerned we sought to help him. The following day my right hon. Friends the Members for Chesterfield (Mr. Varley), who was Secretary of State when we were in government, and for Manchester, Ardwick (Mr. Kaufman), who was Minister of State, and myself sent a letter to The Times, in which we spelt out the commitment that we had received from the NEB—that the production units would be sited in the assisted areas if the technology centre went to Bristol. We were assured that there was no necessary link.
1346 As I am sure the right hon. Gentleman remembers, when we discussed this matter he took me to task and said "Ah, it was the NEB that said that there was no necessary link, not Inmos". However, I have with me a memorandum submitted to me by the chief executive of the South Glamorgan county council, in which he says that as late as July last yearAn Inmos Director told the South West and South Wales Computer Society that it did not matter at all whether the Inmos manufacturing modules were located in the Bristol area or not".Therefore, as recently as a year ago Inmos was saying that the site was not critical.
Since then, I should have thought that the Bristol option had worsened, because, if we can believe press reports—the right hon. Gentleman discovered this afternoon just how wary one must be about press reports—the Minister of Agriculture, Fisheries and Food is now objecting to the Bristol site on the ground that it is prime agricultural land and that if the project goes ahead on that site it might well lead to further delays as it is called in for a planning inquiry.
The Secretary of State then had his first piece of political good luck, because GEC appeared in the field and we saw the start of a political flirtation. He hoped that an expedient marriage could be arranged with a suitable partner of established private enterprise stock. He wanted that very much because it would get him off the hook with his own Back Benchers, who remembered what he had said about Inmos when he was in Opposition. He knows very well that a group of his colleagues are waiting to pounce the moment that he gives the £25 million and shout "U-turn". When one looks at what the right hon. Gentleman said in opposition, and if he gives the project the go-ahead, one realises that that is what it will be, because he was so disdainful of Inmos in opposition.
Unfortunately, as the right hon. Gentleman rightly said, the GEC project eventually came to nothing. We have now reached 1 July, and we are in a worse position than we were before the NEB took its decision on 21 December. How does Inmos assess the impact of this state of affairs? Mr. Richard Hall, the finance director, has said:The deadline has to all intents and purposes gone … each week the project is delayed 1347 means lost future opportunities for Inmos and a worse return on its investment for the NEB.That is the assessment of Inmos. There is certainly no enthusiasm on the part of Inmos for the delay that is taking place. Six months and one week after the original carefully considered decision the NEB team is now back in the United States looking at the whole question again.
The NEB will be hard pressed to make recommendations to the Government in time for a statement to be made before we go into the long Summer Recess. The team that is in the United States must come back and report to the board. The board must make a reassessment in the light of what has happened to inflation, the pound and domestic growth over the past six months. Even when the report is made, it must go to the Department of Industry, and the Department of Industry must go through the ministerial committee routine. Probably, because of the split issue of principle involved, it will then have to go to the Cabinet. Would it not be most unfortunate if we found ourselves going into recess before the Government were able to make an announcement? The only person who would be happy about that would be the Secretary of State himself. It would mean that he could make his statement when the 1922 Committee had gone on holiday.
It may well be that that is what the right hon. Gentleman is playing for. Before any hon. Member suggests that that is an outrageous suggestion, let us bear in mind that the right hon. Gentleman has just given £75 million to British Leyland and that he has not ever bothered or cared to tell his Back Benchers about that. Therefore, I am sure that if he could get away without having to face the 1922 Committee over Inmos, he would choose to do so.
The Secretary of State obviously realised that time was becoming a problem, because he said:Our review of these matters has been somewhat lengthy and very detailed."— [Official Report, 12 March 1980; Vol. 980, c. 1466.]The right hon. Gentleman said that three and a half months ago. In fact, it has taken the Government six months not 1348 to make a decision. It has taken them six months to decide what questions they should ask. It is a repeat performance of the delays that we have seen with regard to changes in assisted area status for the steel redundancy areas. It is a repeat of the delay that we saw last week when the Secretary of State made his announcement on steel and did not know what he would do, despite the fact that it is a year since the first warnings were given by the Opposition that there was no way in which British Steel could live within the £450 million ceiling that he had set. The right hon. Gentleman has created a Department of dither, dawdle and delay.
Mr. Tristan Gard-Jones (Watford)
On a point of order, Mr. Deputy Speaker. I do not intend to take part in this debate, but I have come into the Chamber in the hope of hearing one or two speeches, apart from the one that we are now listening to.
§ Mr. Deputy Speaker
Order. In no sense is that a point of order, although it may be a matter for me.
§ Mr. Williams
That is the right hon. Gentleman's sole achievement. If ever we need a patron saint of procrastination, we need look no further than the Secretary of State for Industry. His guiding principle is not to put off until tomorrow what he can put off until next week, and not to put off until next week what he can put off until next month.
§ Mr. Ian Lloyd (Havant and Waterloo)
I declare an interest because of my service in private investment. Within the last 18 months I have had the unusual opportunity of visiting Silicon Valley three times —a privilege that I share with other hon. Members. I have also had the opportunity of visiting Colorado Springs—a privilege that it not shared with other hon. Members—and I am grateful to my right hon. Friend the Secretary of State for indicating that I made known directly to him the results of my visit to Colorado Springs. On another occasion, I made 1349 known my conclusions to the Prime Minister. What I say this afternoon will largely confirm what I said then.
First, however, I should like to refer briefly to one point that was made by the right hon. Member for Deptford (Mr. Silkin), and to one point that was made by my right hon. Friend the Secretary of State. The right hon. Member for Deptford said that he thought that it was unlikely that sums of about £5,000 million would be invested in the semi-conductor industry by private enterprise. The figures belie that claim. Between 1974 and 1978 a total of $3–2 billion was invested in the United States semi-conductor industry—76 per cent. of the world total—and a substantial proportion of that sum was from private enterprise.
§ Mr. John Silkin
I do not think that the hon. Gentleman heard me correctly. I said "in this country".
§ Mr. Gwilym Roberts
Does the hon. Gentleman agree that, although there is an enormous investment in the United States, it is not in standard chips? Investment in standard chips is fairly small.
§ Mr. Lloyd
I cannot accept that. The major investment in standard chips is in the United States and Japan, and a large proportion is made by the private sector.
My right hon. Friend the Secretary of State said that the United Kingdom would not be dependent on Inmos because the United Kingdom already supplied a large output of standard chips. My information is that that is not so. There has been a massive and increasing dependence throughout the rest of Europe on the import of standard integrated circuits from the United States and Japan. My figures for the United Kingdom show that over this period imports from the United States have increased by 87 per cent. I am not suggesting that our position is satisfactory. However, I confess that there is a certain dilemma, because although I share many, if not all, of the premises of my right hon. Friend, I cannot accept all his conclusions, whereas I share some of the conclusions of the right hon. Member for Deptford without sharing any of his premises.
1350 I should like to make it abundantly clear that I accept the overriding need for economy in public expenditure. I believe that much public expenditure is excessive and misdirected, that the excess lies at the heart of our inflationary crisis, that the Government are not good entrepreneurs, and that the United States semiconductor industry owes as much to dynamic private enterprise as to Federal research and development funding. Nevertheless, no policy, least of all the policy in this sphere, should be refined to the same levels of purity as semiconductor silicon. There must be and are exceptions to every rule. There is no more significant exception to the rule than investment that lies at the heart of recovery of British industrial performance and output.
Why Inmos? There are two levels of answer. Was the original decision right? I believe that it was. Were firm commitments made? I believe that they were. Are the Inmos executives and directors the right people? My right hon. Friend has expressed the opinion that they are.
The purpose of the original decision was to create within the United Kingdom the capacity to pursue large-scale integration, and to give the United Kingdom a significant position in standard integrated circuit technology. We know that the United States, Japan, West Germany and now France have it. The recent ACARD report pointed that out dramatically. We know that it is the world's most important industry. It has been described as the most complex production process ever adapted to mass production. No self-respecting, modern industrial country can claim to continue in that respect if it opts out of this area. The use of the most advanced production engineering and technology is now a condition of success. That is likely to make a significant contribution to the modernisation of British industry.
§ Mr. Dan Jones
If we fail with the microchip, are we not likely to be at a serious economic and industrial disadvantage as compared with the rest of the world for many years?
§ Mr. Lloyd
The answer to that is undoubtedly "Yes". But I do not think that we are yet on the verge of failure. 1351 Few industries are expanding more rapidly. The total sales of semi-conductors throughout the developed world in 1979 amounted to $9.6 billion. The forecast for 1984 is $32 billion, making it probably the largest single industry in the Western developed world. No industry plays a more vital role in transforming the information technology used by other industries. Few industries offer greater opportunities to the technical and scientific genius of the British people, which is why I support it.
Reference has been made to special integrated circuits, and Ferranti gave a presentation yesterday. They are limited purpose integrated circuits, which are important and necessary. But we can no more achieve the electronic transformation of British industry on special integrated circuits than we can feed the British people on caviar.
Our competitors have fully recognised the immense significance of the mass market for standard integrated circuits, and they are all striving for dominance because so much is at stake. An integrated circuit industry which cannot produce standard integrated circuits is equivalent to a Covent Garden opera without the leading tenors and sopranos. It would be a second rate opera, and it would have a limited repertoire. Japan saw that clearly in 1970, when I had the privilege of visiting that country and discussing the matter. France and Germany saw it soon after.
§ Mr. Michael Grylls (Surrey, North West)
I am following my hon. Friend's technical knowledge carefully. If this is the hottest business prospect for years, why has nobody else seen fit to joint it?
§ Mr. Lloyd
I shall deal with that point in a moment.
The one act which I believed redeemed the previous, less than satisfactory, Administration was the act of the present leader of the Opposition when he was Prime Minister in 1977. He saw the necessity for this industry, and he acted conspicuously and importantly. I pay tribute to him for that alone.
I turn now to the arguments against the proposal. It is said that the applications are more important. The applications are more important and 1352 indispensable, but they are not a substitute for standard integrated circuit technology. The world once believed that British cloth was the best because Britain had the best wool and the best machines to produce the best cloth. But that argument is equivalent to saying "Wear the cloth, but let others produce the machines that make it". Those who build and improve the most advanced machines generally make the best product, and they make it first. That is as true of standard integrated circuits and all that flow from them.
Are we now to compete only in secondary areas of advanced technology? Who understands that better than Paul Schroeder and Dr. Petritz? They are both conspicuously successful in this area.
I now come to the argument that private industry would not invest. The decision of private industry not to invest has nothing to do with the Government's present philosophy or policy generally, but I believe that there is something approaching a sustained hostility, because Government dither in an area such as this is not encouraging to the private sector. Secondly, all the evidence points to massive State research and development support wherever else this technology is being developed.
It is asking a great deal of a private sector which has had the bashing it has in this country, as my right hon. Friend conceded, to say to it "Now come with your hundreds of millions of pounds "or whatever it may be—"and follow through in this area." Private sector confidence has been heavily eroded, and it continues to be eroded while borrowing rates remain—this may be a matter for justification by totally different criteria —at 20 per cent.
In criticising the private sector, it is rather as if we were saying to a group of people, immediately after a violent storm "Spread the table cloth and have a picnic", when we can see another dark set of clouds already on the horizon. Sensible and realistic people do not do that.
Why proceed now? First, to stop is probably a certain way of defeating the original purpose—the transfer of technology to the United Kingdom. It would, in my view, not be effective if we were to try to achieve this objective 1353 solely by merger. All the evidence is that mergers in this area do not succeed.
Secondly, the timing in integrated circuit production, as has been pointed out, is absolutely crucial. It will not tolerate the Isle of Grain syndrome. This is about the most sensitive area that there is, and if we waste time here we might as well take that £25 million and throw it down the nearest drain.
Thirdly, £25 million, large though such an absolute sum may be, is a small price to pay for a chance of succeeding in the worid's most important technology—and especially if we are willing to pay sums of the order of £5,000 million to maintain what some might describe as monuments of industrial archeology.
This is a decision of the same order or importance—I have chosen my words carefully—as Disraeli's decision to use public money to acquire the Suez Canal. If biotechnology is the left bank of that canal, integrated circuit semi-conductor technology is certainly the right bank, and they define together the channel through which national prosperity will flow. It is as important as that.
Can we ask whether firm commitments were made? I believe that the answer, from reading the record, is that they were absolute. I do not want to detain the House by going into them.
My right hon. Friend has answered my next question, which is whether these are the right people to undertake this work. I believe that the answer is "Yes".
Why do it in this way? The answer is that, as I said, there is no record of successful technology transfer via a merger, because the market for standards is international, and because the development rate is so rapid that commercial tariffs are absolutely meaningless. One either succeeds or survives in the United States and world market or one is not in business. Those are the alternatives.
The linkage between British scientific capability and United States technological and marketing expertise is, in my view, an inspired concept, and I mind not where that concept originated if it is right.
People have asked "What about Japan?" I accept that Japan is now considered to be a major threat to the United 1354 States semi-conductor industry, but I do not believe that it alters what I said about our choice between being in the first league or in the second league.
I conclude by drawing a brief set of conclusions. First, what are the implications of the debate for national policy? I believe that there are three. There is a lack of direction, cohesion and understanding throughout this field which has lasted, under successive Governments, for too long. We must now try to change that.
Secondly, major technological ventures involving long-term commitment of public as well as private money urgently require some mechanism of bipartisan appraisal, agreement and support—even if this should result, as it might well do, in two categories of projects. At least those who had bipartisan support would know that they could proceed in some safety and with some prospect of continuation.
Finally, I believe that as this House must accept final responsibility for a decision in this area—for example, whether the United Kingdom should equip itself to produce standard integrated circuits—this House should now consider when and how soon it car equip itself with an instrument such as the Office of Technology Assessment with which the United States Congress has decided to equip itself.
My right hon. Friend's amendment says that this House "welcomes the review", but that is where I part company with him. I do not welcome the review. This is too urgent a matter. The time is now—we must get on with it.
§ Mr. Arthur Palmer (Bristol, North-East)
First, I congratulate the hon. Member for Havant and Waterloo (Mr. Lloyd) on his able and courageous speech. I work closely with him on the Select Committee for Energy, of which he is Chairman, I know the quality of thought that he puts into these and other matters.
The Secretary of State showed his usual talent today for finding a middle course between decision and indecision. It was a very fine performance in that direction, even for him. He brought out once again the new doctrine by which he lives. 1355 The doctrine is that if only the Government keep out the private investor will move in and take the strain, and presumably also take a chance on making a profit.
That may or may not still be true in the United States—it probably is, with its vast reserves industrially and financially —but I am afraid that it is no longer fully true in the United Kingdom. As the former chairman of the National Enterprise Board said, private enterprise in this country is often in these days reluctant to risk its money on leading-edge technologies—certainly if there is strong international competition. It is very easily scared; it does not wish to chance its money on what may turn out to have been a gamble.
The right hon. Gentleman, again rather typically, said that the fault was that of someone else—that of the Labour movement. That is a dangerous argument for him to use. If unaided private enterprise had been capable, over the years past, of doing all that is claimed for it today, it is doubtful whether the Socialist criticism of that system would have gained all the adherents that it has gained and still continues to gain. Why should there be so many Socialists if unfettered private enterprise has always been so splendid? That question might appeal to the intellectual claims of the Secretary of State.
The truth is that in the matter of microelectronics—and especially the kind of microelectronics in which Inmos specialises—unless the State intervenes it is unlikely that it will be done at all.
Assuming that Britain is to remain not just an industrial nation but one advancing with the times to higher technology, the question to be asked is whether we should as a nation have a first-class microchip industry? My answer is the one that the hon. Member for Havant and Waterloo has just given—"Yes".
The reason I shall give is one that has not been brought forward, I think, in the debate so far. It is that, apart from direct profitability, the effective presence in the country of a quality microchip industry will stimulate inventiveness in the user industries—create new applications and new ways of doing things by the natural exchange of people and 1356 of ideas. Simply to import components first hand or second hand is to handicap general industry in this country in directions apart from microelectronics. It is another branch of the argument that can be and is brought forward in favour of an independent British aerospace industry, computer industry and, I would say, nuclear power industry as well.
Many of us thought that the Inmos decision had been made in principle in 1978, subject to certain financial safeguards—that is, to proceed through the National Enterprise Board combining public capital with private ideas and brains from both sides of the Atlantic. It seemed, both industrially and internationally, an excellent partnership.
As we know, £25 million has already been invested, but the Government are dithering over the second payment. Some of it is due, perhaps, to a lingering respect for Government economy—not convincing with such a small sum—but much of it is non-interventionist dogma.
We then had the cry to Lord Weinstock for assistance. If Conservative Ministers are in any doubt about anything, they feel that they should ask Arnold Weinstock, because he might be able to help. They made an approach, but the former Sir Arnold Weinstock, now ennobled, and his GEC, said "No". Presumably Lord Weinstock looked at his shareholders' funds very carefully and. according to his definition of what pays and what does not pay, considered that this was not an area for his kind of private enterprise. Therefore, I assume that he was accepting the argument that the Opposition is putting forward tonight, for State intervention with as much private participation as can be obtained.
Many months have passed and no real decision has yet been made. We are again waiting for the NEB's report. The Secretary of State went to California. Some of us had made that pilgrimage before him and were well aware of what went on there. I wonder whether his journey, although enjoyable, was necessary. As my right hon. Friend the Member for Swansea, West (Mr. Williams) said, there has been procrastination which I think it is difficult to defend. The Secretary of State did his best.
Had, there been time, I might have been tempted to say something about 1357 the location of the productive facility, but I have already expressed my views on that subject. The headquarters of the Inmos project is already in Bristol. The local authorities there are more than anxious to help. The Bristol city council has been in touch with the Secretary of State asking him to make up his mind, because Bristol is waiting to get on with the development of the project.
But I do not propose to argue about the location. Inmos wishes to continue in the Bristol area, but it is not in the motion and we had a debate on that matter on 12 March. I shall content myself with saying that the Government must really make up their mind soon on Inmos generally. In my judgment, there is only one direction in which they can make up their mind, and that is to give the further money to the company. Bristol is ready and willing to do the rest.
§ 6.4 pm
§ Mr. William Waldegrave (Bristol, West)
It is always a pleasure to speak after the hon. Member for Bristol, North-East (Mr. Palmer): He and I do something of a double act on this issue. We also encounter our usual opposition, the right hon. Member for Swansea, West (Mr. Williams).
I shall be brief, as others wish to speak. I thought that it was a pity that the right hon. Member for Deptford (Mr. Silkin) personalised his speech. These are serious issues, which to some extent transcend normal definitions of party politics. There are some occasions on which Conservative Governments invest in major new technology projects and others on which Labour Governments refuse such investments. We are concerned with this partticular investment and the arguments for it. The right hon. Member for Deptford is a shrewd man. I shall not follow him in personalising matters, but the question is whether people such as he would put their own money into this project.
We are concerned with two separate issues, which are closely linked. First, should we do it? Secondly, if so, what are the implications for the management of the project?
There are some poor arguments in favour of the project. The strict strategic argument is not particularly good. 1358 Inmos will not produce the nuclear blast-hardened chips that are necessary for defence systems. Those are already satisfactorily made in this country.
I should have declared an interest, in that the Inmos design unit is in my constituency and I work for GEC, which, amongst other things, manufactures special chips.
As I said, the strict strategic argument is not good. I do not think that the argument that we must secure for the systems suppliers access to standard chips is very powerful, either. The great thing about the manufacture of standard chips is, as Inmos would argue, that it must be done at high volume if it is to be done economically. From the nature of the animal, we are more likely to have a glut on the market than shortages, because of large investments trying to maximise their return by maximising output. So the access-to-supplies argument is not a particularly strong one.
The worst of all arguments that I have heard in the House today—the argument that makes me most nervous—is that based on national prestige and the "technological race". We have heard this argument before in this House, on aeroplanes, nuclear power and computers. We have, as a result, produced political aeroplanes and power stations, but they have not flown or worked very well. Whenever the taxpayer hears a politician talking about spending money on national prestige or the international race in some area, he should sew up his pockets.
On the other hand, there are arguments in favour of the project. They are the arguments of a prudent gambler, a gambler who rationally assesses the risks and the potential benefits. I accept the Secretary of State's argument that the next £25 million would not be the end of it, but the amount involved is still not very great. The House, year after year, poured money into Bristol and other constituencies for Concorde. This is the amount that Concorde at its height was costing in a few weeks. These are not gigantic sums in the inflated money of today.
The return could be very great. The return would not only be that we had one of the producers of standard chips in this country. In the next generation of the 1359 64K RAM there will be some new producers who do not now exist, or who exist only in embryo. There is no reason why we should not achieve one in this country. There is no reason why Inmos should not be one of the select few who will leapfrog into the next generation. It is likely from the history of this kind of technology that the next generation will be dominated by new companies. That has been so in the past.
If we achieve that aim in this country, there will be considerable benefits outside the immediate factory gates. It would have what I should describe as a constellation effect. The people trained in the new company would themselves start further new companies. The company would work as a flag carrier in this area of high technology, as it has done in the United States and Japan.
I have argued that it is not essential for the systems companies using electronic components, in which we are relatively strong, to have their own British-based standard chip maker, but it would be of use to them. It would strengthen those companies to have the close relations with the future design and techniques of production that would derive from having such a company in this country. I describe that as the constellation argument, and it is a strong one. It will contribute greatly to the necessary process of dragging this country back into the forefront of world technology. However, it is a gamble.
There is such a thing as rational gambling. If one wishes to minimise the odds against one, and to weigh the costs of losing against the gains from winning—a former Member of Parliament for a Manchester constituency, who is now in the other place—Lord Lever—was a great expert at that—it is important not to lengthen those odds. The House and its Ministers should have a self-denying ordinance. Perhaps it is wrong for one who is so new to the House to refer slightingly to previous industrial decisions that have arisen as a result of debates. However, they have been disasters more often than successes. Once a decision has been taken in principle, it is right to delegate responsibility to those who are more familiar with investment decisions.
If the Government wish to invest in industry, a creature such as the NEB is 1360 not so bad. However, if one has such a creature, one must let it take decisions. Sometimes those decisions will, politically, be mildly inconvenient. I admit that I have a constituency interest, but if one prevents the NEB and the management of Inmos from doing what they want about siting, the whole approach will be ruined. The odds against Inmos's success will be lengthened and the money is more likely to go straight down the drain.
The Secretary of State is accorded great respect because he tries to make decisions with compassion and care. However, the fact that an amateur gains somewhat more knowledge does not necessarily mean that his ultimate decision will be much easier or better. It makes it more difficult. Most hon. Members, with the exception, perhaps, of my hon. Friend the Member for Coventry, South-West (Mr. Butcher) and the hon. Member for Bristol, North-East (Mr. Palmer), will never become experts in these matters. The decision must be left to the experts. However, it is for the Secretary of State to take the gamble. He should not believe that it is possible to brief himself in such a way as to make himself an entrepreneur or a scientist.
The time has come to make a decision. Nothing much has been learned over the months. The decision is no easier and no more difficult now than it was six months ago. I beg my right hon. Friend to make a decision swiftly. Every day that passes lengthens the odds. With the greatest respect, with regard to this company the Government should get on or get out, now.
§ Mr. Charles R. Morris (Manchester, Openshaw)
The decision facing the House is important and serious. If the House accepts that it is in the interests of our economic well-being to have a manufacturing capability in micro-technology, a decision will be required urgently.
My right hon. Friend the Member for Deptford (Mr. Silkin) was right to emphasise the urgency of the decision facing the Secretary of State. Equally, my right hon. Friend the Member for Swansea, West (Mr. Williams) was right to remind the House that we are taking not one but two decisions. He reminded us that the decision concerned the second tranche 1361 of £25 million to Inmos, and that another decision was required about the location of the manufacturing units. It appears that Inmos wishes to establish that unit in Bristol, alongside the technologists.
Throughout discussions in 1978 I followed the events surrounding Inmos. I contributed to a debate on this issue that took place during a discussion of the Consolidated Fund. I was a member of a deputation that went to see the Secretary of State for Industry about the location of the manufacturing units. Before the Secretary of State leaves the Chamber I should tell him that I was impressed by the solicitous way in which he received us and by the obvious consideration that he gave to our arguments.
I have accepted four main points on the general issue. The British Government were right to seek to establish a manufacturing capability in microprocessors and microtechnology. The Government were also right to commit £50 million in order to provide Britain with that capability. I reluctantly accepted the unusual financial base that was offered in order to attract the so-called elite of computer technologists to return to Britain from the United States. I recently listened to representatives of Inmos at the information group meeting upstairs. They declared that technologists had a financial stake in Inmos that would make them multi-millionaires if Inmos succeeded. Unfortunately, I must accept that it was right to provide that attraction if it encouraged that quality and calibre of technologist. I even accented the decision to locate the technology centre in Bristol. However, I cannot, for the life of me accept the justification for locating the manufacturing unit alongside the technology centre.
I have listened to arguments from Conservative Members. I have also heard my colleagues say that it is technically essential for the manufacturing units to be sited alongside the technology centre, already in situ in Bristol. The same people never explain why Inmos has its research centre in Colorado Springs—a continent away. Nobody questions that simple fact. If one considers the geographical distance between the research facility in Colorado Springs and the technology centre in Bristol, one must accept 1362 that the manufacturing units should be placed in an assisted area.
There are many assisted areas, and I do not seek to make a constituency point. However, the manufacturing unit should be sited in one of the assisted areas that has suffered a severe contraction in manufacturing jobs. I do not wish to see competition between the various regions. Each manufacturing unit represents 1,000 jobs. I do not want various regions to argue that unemployment is higher in one area than in another.
§ Mr. Tim Rathbone (Lewes)
I am not interested in the location of the units from a constituency standpoint. Does the right hon. Gentleman accept that such investment is least likely to relieve unemployment in assisted areas? This type of manufacturing activity is most likely to be automated and to use robots in an innovatory way.
§ Mr. Morris
The hon. Gentleman is entitled to his view. In the long term, computer technology will save a great deal of manpower. Each manufacturing unit represents 1,000 jobs. I am convinced that those units should be placed in assisted areas.
I wish to make a brief reference to the North-West, not only because I represent that area but because it has made a manor contribution to the history and development of computers in Britain and throughout the world. The House does not need to be reminded that the first digital storage base was invented at Manchester university. Manchester university, Salford university and UMIST provide more than 12,000 graduates every year with a capability in computer technology. The area is a centre of academic excellence in computer technology, yet it does not even get a look in.
I was impressed when my right hon. Friend the Member for Swansea, West talked about the PA Management Consultants' report. Not one hon. Member has seen the report. On the last occasion when this issue was debated Ministers acknowledged that they, too, had never seen the report. In trying to justify that, they told us that the report was commissioned by Inmos. It might have been commissioned by Inmos as a private company, but it has been paid for by public 1363 money. Therefore, the House is entitled to see the report, dealing with the location for the siting of the manufacturing units.
I believe that if time is needed to arrive at a decision on the second tranche of £25 million, no further time is needed to make a decision on the location of the Inmos manufacturing units. On that aspect, the time for decision is now.
§ Mr. Barry Henderson (Fife, East)
I have little doubt that the capability for development and mass production of chips by a successful, profitable, indigenous firm is certainly in the national interest, but that is a long way from saying that we should immediately give a quick nod and agree to another £25 million of our constituents' money going to Inmos.
I have been in the computer industry for most of my working life and I have followed the Inmos story closely. For the last few years I have been advising the users of computers on these matters. In that respect I declare an interest. I have great sympathy with my right hon. Friend the Secretary of State in the difficult problems facing him in this decision. I am glad that he avoided being pushed into an ideological corner by the speech of the right hon. Member for Deptford (Mr. Silkin), which seemed to be strong on ideology and short on a view of Inmos. I find it easier to ask questions about this decision than to have opinions on it. I hope that if I ask questions now it will help me to form an opinion either before the end of the debate or shortly thereafter.
The first question relates to the national interest. If the firm is successful, profitable and indigenous, obviously it is good for the national interest. But is it essential? My hon. Friend the Member for Bristol, West (Mr. Waldegrave) indicated that there are reasons for believing that it is not essential in the national interest. We are already able to develop and produce non-standard chips in this country. We also have facilities for the production of mass-produced chips, but not by indigenous firms. Therefore, it is fair to say that the project is not essential in the national interest, although it is highly desirable.
1364 I am an unashamed supporter of free enterprise in a fair competitive market but at home and abroad we do not have all these things ideally. We have suffered from Socialism and nationalism, and worse. We are not able to look at this project entirely in that ideal context. If it is not essential in the national interest, should constituents' money be put at risk?
In his opening speech my right hon. Friend touched on a crucial matter. Does not the original deal put off private investment from here on? I suspect that it might. From my understanding of the business projections of Inmos, for the sake of buying some 5p shares the three founder members stand to make £18 million between them. That was the deal which was put forward, supported by the Labour Government at the time.
By putting £50 million of taxpayers' money into the project, the taxpayer stands to gain £37 million on the basis of the same projection. If the taxpayers' share of £50 million in total expenditure for a return of £37 million is compared with the modest investment of capital, if not of skill, of the original three, giving them £18 million, this will not encourage other sources of private capital to come forward with great enthusiasm. There is a difficult balance here, and I wonder whether that is a cause of the difficulty in introducing private capital at this stage of the project.
If that is so, it may be that we have been forced by the nature of the deals put forward previously to recognise that we cannot readily and reasonably expect an injection of private capital. At that point I must ask another question. Whether or not we like the way in which the original deal was first made, are we not honourbound to a greater or lesser extent to carry this project through to its conclusion, at least within the terms of that original deal?
Labour Members seem to be trying to get a rise out of my right hon. Friend the Secretary of State, but it seems to me that we are not in the same position now as we were in 1978, or earlier. A different situation prevails. It was a clean sheet then; now it is a muddy pond. It is wrong of Opposition Members to try to make ideological points which will further confuse the issue. 1365 The next question on which I should like more information is whether the project will be indigenous. I still do not know the answer to that. The extent to which the control of Inmos will guarantee that it becomes and remains an indigenous British firm remains a mystery. What control will anyone have over the use of taxpayers' money once the additional £25 million is put in?
§ Mr. Ian Lloyd
Does my hon. Friend not agree that the concept of indigenosity—if there is such a word—is virtually obsolete? There is hardly a major semiconductor firm in the world that is not a multinational, operating multinationally, with cross-connections of every conceivable kind.
§ Mr. Henderson
There is a great deal in what my hon. Friend says. However, the point that he has just made slightly weakens the excellent and most interesting case that he put forward earlier.
If the project is to be successful and profitable, would there be any uncertainty after the next £25 million was put forward? This relates to the question why there has been no private venture capital coming from other sources. Is it the deal that has discouraged such capital, or is it the projections? Is it doubt about the progress so far?
In view of what my hon. Friend the Member for Havant and Waterloo (Mr. Lloyd) said, I am very impressed with reports about the progress of this company so far. I am impressed by the technical competence of the people running it. I am impressed by what I have heard in a superficial way about the progress made in developing and producing the products on which the company has set its course.
Concern has been expressed to the effect that we may be too late in the sweep of international competition in the mass-produced chip business. Its history so far has been not of steady evolution and development but rather of leapfrogging. Indeed, Inmos bases the strength of its case on the fact that it is about to leapfrog. That raises the question whether it will be ready and able to make a further leapfrog after that generation of chips has been developed. This is not the time to argue about the relevant 16K static and 64K dynamic RAMS, but they are in- 1366 tended to pre-empt a section of the market.
Even if private capital has been put off by the deal originally set but the expertise available to the Minister deems that the project is likely to be successful, it is cheap at the price. Further significant delay would be wrong, whatever decision was made. Two or three weeks' delay we can stand. However, the future profitability of Inmos depends on its bringing certain projects to the home market by a leapfrog effect. If we get the timing wrong, all the projections will be thrown out.
I do not doubt that there is a market, about which my hon. Friend the Member for Havant and Waterloo has told us quite a bit. There is a huge market. I hope that the Inmos venture will be successful, and that none of us will be blinded by political prejudice in reaching a decision. We should do so on the facts that confront us, whether we like them or not. We should make the sort of sensible and defensible decision that my right hon. Friend announced in connection with Ferranti this afternoon.
§ Mr. Gwilym Roberts (Cannock)
I do not often call for a bipartisan approach. However, I echo the words of the hon. Member for Havant and Waterloo (Mr. Lloyd) in stressing that the growth of the microelectronics industry is so important that it needs, above all, the stability of a bi-partisan approach. We all agree on the need for growth in that industry and for Government support. In areas of high technology, short and medium-term profit margins may not be as high as in areas of lower technology. The danger is that developments will take place at a slightly lower level of technology if the matter is left to normal market forces. There is, therefore, an overwhelming argument for Government support.
I support the 1974 to 1979 application scheme and the 1980 to 1985 programme. If I have a criticism of the Government's approach, it is that they have reduced the sum available under the 1980 to 1985 scheme from £70 million to £55 million, when more money needs to be spent. However, Inmos is another matter. We are dealing with an area of high expertise. Almost without exception, we do not have the expertise to answer the 1367 necessary questions, and even the experts do not agree. The Secretary of State made an important point. The people and firms that have the expertise are not eager to move into standard chips. They would rather concentrate on the specialist, customer-oriented chips. Those of us who are not experts must have doubts, in view of the attitude adopted by commercial enterprise.
Inmos has a hard task ahead. America has about 60 per cent. of the microelectronics market. Britain's share is only 3 or 4 per cent., and the whole of the Western Europe has only about 20 per cent. In the United States and Japan, hundreds, if not thousands, of millions of pounds have been committed to support microelectronics development. The sum of £25 million is therefore a drop in the ocean.
By the time the production unit is producing, although there will have been a further enormous growth in the market, there will also have been an enormous increase in production generally. In Britain a dozen or more major companies might be battling for the market. The tariff position in the United States is about 10 per cent., but if the situation becomes more difficult the larger American market might prove a problem for Inmos.
I do not believe that the NEB or the Secretary of State should hesitate. The first £25 million has been committed. I shall not go into the arguments about location, although I believe that the initial £25 million should have been more closely tied up. Delays of weeks, or even days, will damage the chance of Inmos in this highly competitive market. We should not delay further. The debate is in a sense meaningless. The Secretary of State must allocate as quickly as possible this second £25 million.
I believe that the new allocation should be more closely tied, for example, to firm British jobs. We are talking about 3,000 jobs. We should ask Inmos to look at the exercise that is being undertaken. Is it going in the right direction? Perhaps it should look more at specialist chips, the defence market and customerorineted chips, and move away from standard chips. Would it be advisable 1368 for it to leapfrog beyond silicon and look at new developments?
Inmos should not regard the Government as having a bottomless purse. The Secretary of State said that more money would be required, and that may be so. We should not look at Government aid as a purse that can be dipped into indefinitely, but enormous amounts of Government money will have to be spent in microelectronics. If we are to spend vast amounts—I am talking in terms of perhaps £1,000 million or £2,000 million—it must be spent in the application of microelectronics. That should be the big area of expansion for Britain.
There is an enormous educational job to be done to allay the entrepreneurial fears prevailing throughout our industry. We shall need to allocate thousands of millions of pounds of Government money to the microelectronics industry if we are to have any chance of competing with our major industrial competitors.
§ Mr. Michael Colvin (Bristol, North-West)
It is a pleasure to speak after the hon. Member for Cannock (Mr. Roberts). I agree with much of what he said, and particularly with his pragmatic approach to the subject, though I would be more cautious than he was about the amount that a future Government should spend on microelectronics projects.
I support the amendment, but I have considerable sympathy for the views expressed in the motion, as have my constituents and others in the Bristol area, for whom the Inmos project has been front-page news—sometimes good, sometimes bad, but more often indifferent, because there has been no real news—over the past three years.
I am delighted to see from the motion that the Opposition appear to be off the hook of assisted areas. I congratulate them, because they do not now seem to wish to prejudge the siting of the production units. The implication of the motion is that the Opposition are prepared to accept the company's decision on where the production units should be sited, once that decision has been endorsed by the NEB. That is a welcome step forward.
The last time that the House discussed the Inmos project was in the debate on 1369 the Consolidated Fund Bill on 12 March, when I raised the question of grant aid via the NEB. That debate centred on what the NEB had or had not promised about the siting of the production units. We also discussed at length the report prepared by PA Management Consultants Ltd., on alternative sites. Those are important matters, but they were debated in detail at that time and I see no point in going over the same ground again.
This debate is a little premature. I appreciate the frustration that has been caused by the delays that have occurred, but the amendment states that the new NEB has authorised a full review of the Inmos project. I understand that in the meantime the application for a second tranche of £25 million has been withdrawn.
I hope that the Government can tell us the time scale for the project. When may we expect the results of the review, and can the Government say when we are likely to have a decision? I understand the company's anxiety about the delays. Indecision is frustrating and costly.
No one has mentioned the cost of the delay to Inmos Limited. The company tells me that it is costing at least £20,000 a day in increased building costs and £300,000 a day in lost future sales. Everyone must be concerned about that, but the taxpayers should be particularly concerned, because if anything is done to put the project at risk the £25 million that has already been committed to it will also be at risk.
We are debating three matters. Does the United Kingdom want or need to be in the semi-conductor industry race? If there is not a decision on that question soon, we shall probably forfeit the opportunity even to start in the race. Secondly, is Inmos the right company to be in the race? Thirdly, if the answer to the first two questions is "Yes", what is the Government's role?
The first two questions have been adequately answered by previous speakers from both sides of the House. The answer to both is "Yes". We should be in the race, and Inmos is the company that should be raising the standard for the United Kingdom. 1370 I therefore turn to the most difficult question—the role of the Government. Why is it necessary for the Government to be involved at all? I accept what my hon. Friends have said on that subject. I raised the matter in the debate on 12 March, when I asked whether there had been a failure of private enterprise capitalism. I do not think that that is the reason. I suggested in that debate that it was deplorable that a situation had arisen in which the Government were under an obligation to put in money.
However, since then I have had an opportunity to look at some of the figures that are available—some are from not wholly reliable sources; one has to put a lot of faith in the technical press—of the sort of aid that other Governments give to their microprocessor industries.
The United States Government have given $500 million in direct support over the past five years. Indirectly, through their space agencies and massive defence programmes, they have contributed $1,000 million over the past 15 years. That is probably only the tip of the iceberg of Government help for the industry in the United States.
Japan, another serious competitor, has provided $300 million in direct aid over the past nine years and $1,000 million in indirect support in the past 10 years. Japan is considering even more programmes of State aid to its industry. France was mentioned by the right hon. Member for Deptford (Mr. Silkin). The French Government have given direct aid of $400 million to specific companies.
The Koreans certainly know a good thing when they see one. Their Government have agreed a six-year programme of $200 million of State aid to develop a semi-conductor industry. The Koreans will be buying American expertise, which will enable them to get off the ground fast.
The microprocessor industry is developing so fast that it is difficult to draw meaningful historic comparisons. The best thing that the Government can do is to look ahead to the opportunities that will be available to us if our microprocessor business gets off the ground and to appreciate that Inmos is the best company to back.
The siting of the production units is an important matter, and we should not 1371 overlook the importance of achieving what the company calls an integrated capability. Splitting the technical headquarters from the production units would put the whole project at risk, which would be undesirable. In the time available it is impossible to go into detail, but I endorse the bid of the hon. Member for Bristol, North-East (Mr. Palmer) for Bristol to be considered as the "Silicon Valley" of the United Kingdom.
Mr. Giles Raelke (Chester-le-Street)
The Secretary of State said that there should be no automatic "Yes" for this project. That is a bit rich following six months of delay and a lengthy period of soul-searching, breast-beating and generally passing the buck. We must face the truth that the reason for the second NEB review is that the Government have failed to take a decision. That is the only reason.
The case for Inmos has been made strongly from the Conservative Benches. I shall not repeat it except to say that we need a British integrated circuit manufacturer. Otherwise, we shall be almost wholly dependent on foreign sources for mass-produced chips. That will be bad for native research and development, native skills and for manufacturing industry generally. If private industry will not do the job, the public sector must step in. That is the case for Inmos, made by the new chairman of the NEB, among others. A publicly owned industry has to be given proper resources. That is the case for the second tranche of £25 million. That case stands even if the company and the manufacturing process do not go to the development areas.
I want to argue briefly the case for the development areas. There is no doubt that the development areas face a major economic, industrial and, indeed, social crisis. Every day brings new redundancies in the North. Scotland and Wales. Every day unemployment is rising. Unless there are overriding technical reasons why the manufacture should not be based in a development area—I have not heard them and PA management consultants, I understand, made the case that it should specifically go to a development area—there must be a bias in favour of the development areas.
1372 As a northern Member, I hope that it goes to the North. The northern group of Labour Members has made the case to the NEB for Washington new town in my constituency. It is a new town of high quality—a former mining town that now has a varied manufacturing base. This shows the adaptability of the labour force. Its work force has been able to adapt from being miners to undertaking a whole range of new skills in industry. There is a high standard of housing—indeed, the highest standard of public housing in Europe. The new town has good schools and education standards and good leisure opportunities.
We must go ahead with Inmos. It should preferably go to a development area. It should go to the North, which has as strong a case as other regions, and to Washington in my constituency. Above all, we must make the decision now in favour of Inmos.
§ The Under-Secretary of State for Industry (Mr. Michael Marshall)
I am pleased to have the opportunity to reply, however briefly, to this debate. I appreciate the courtesy of the right hon. Member for Deptford (Mr. Silkin) in facilitating that process. We have had a fascinating debate.
I am, perhaps, one of the political romantics who regard the House as a place that plays a major part in the consideration of industrial matters. If proof was needed that this debate is worthwhile, may I say that some of the speeches have been valuable contributions that the Government will wish to take into account. I mention the tour d'horizon of my hon. Friend the Member for Havant and Waterloo (Mr. Lloyd), the "get on or get out" urging of my hon. Friend the Member for Bristol, West (Mr. Waldegrave), and the considerable expertise displayed by my hon. Friend the Member for Fife, East (Mr. Henderson), who asked questions that will certainly be pertinent to the review when it is completed. Finally, my hon. Friend the Member for Bristol, North-West (Mr. Colvin) sensibly suggested that this debate was, in a sense, premature.
Many of the speeches of Opposition Members have tended to concentrate on what, according to their argument, has been delay. It seems reasonable to accept 1373 and concede that under successive Governments delay must inevitably be locked into the process of investing risk capital when it is put forward by the taxpayer. If we consider for a moment the differing needs of Government and the pure entrepreneur, we realise that that is self-evident. I shall be dealing with some of the points raised by the right hon. Member for Swansea, West (Mr. Williams).
I should like to try to bring up to date one or two questions about which there may have been misconceptions. It will be helpful to clear them up. The first relates to the state of the market. There seems to be an assumption in some quarters that we are talking of Inmos as he only source of sandard chip manufacture in this country. It is important to put the matter in perspective. It is estimated, on the current figures, that by 1984 the Inmos production of standard chips, if it goes ahead as envisaged, will be at about £120 million a year compared with about £300 million a year of standard chip production in this country from other sources. The right hon. Member for Deptford very fairly made this point. It is interesting, however, looking down the list of those companies that have been in receipt of agreement by Governments for support in this area, to see the names Motorola in Scotland, ITT in Kent, National Semi-Conductors in Scotland and General Instruments in Scotland.
§ Mr. Marshall
The right hon. Gentleman mutters "American firms." He must consider that, as we applaud the then Government for their decision to have an Anglo-American enterprise in Inmos, we cannot argue in a sour way about the process in reverse. These arguments run on all fours.
§ Mr. Silkin
I mention only the point about native British research and development. The American companies have their research and development in the United States.
§ Mr. Marshall
I take the right hon. Gentleman's point. It is, however, a matter of argument whether one says it is an advantage to pick up others' research and development provided that they put manufacturing facility into this 1374 country. The Government of whom the right hon. Gentleman was a member were rightly willing to give support for inward investment on that basis, so have the present Government.
I turn to the potential United Kingdom investment in the same product. Reference has been made to the GEC interest. One has to recognise that where interest of this kind is expressed it would be wrong of the Government not to facilitate the process by which that kind of examination might be undertaken.
These wider questions bring us to the matter of the site. The right hon. Member for Deptford and his colleagues were coy in raising this matter. The right hon. Gentleman himself has been skilful in sitting on the fence. He has not, so far as I am aware, expressed any view on site preference. His hon. Friends, however, have taken full opportunity today and on many previous occasions to express their view. The right hon. Member for Swansea, West, who chastises the Government for delay, should appreciate that much of the delay is of his own causing. If he wants to discuss seriously the question whether the Government should play a part in the looking at an alternative site to Bristol, it is not a matter that can be decided in five minutes. The right hon. Gentleman argues the case powerfully for South Wales. His right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris) argues for Manchester. The hon. Member for Chester-le-Street (Mr. Radice) would like Inmos to go to the North-East. My hon. Friends also are inclined, naturally, to argue for their own constituencies. As my right hon. Friend made clear, if these are genuine differences, and if there is to be consideration of the question of the site, the Government have to take these views into account in making this kind of decision. All these factors must be weighed. That cannot be done in five minutes.
The question of the National Enterprise Board reappraisal is surely, above all else, the reason why this debate is, in a sense, premature. Given the state of the market and the substantial build-up of some of the companies to which I have referred, and given some of the interest expressed by other companies in a tie-up with Inmos, surely, when the National 1375 Enterprise Board comes to the view that this is the time for an overall look at Inmos, the House would want to go along with it. The idea that by making a fast decision we will get the matter right cannot seriously be argued.
The Opposition have tried to stick to the basic principles. They have tended to steer clear of some of the inconvenient matters of detail that need to be argued. The sum total of what has been urged upon the Government is part and parcel of the Opposition's general line when they say "Put the money in. It is a good cause". They do not really like getting down to the detail. It would be wrong, I feel, for the Government not to get down to the detail.
I should like to pick up one question which was put by my hon. Friend the Member for Fife, East. It is right to say that the role of the entrepreneurs and their commitment means that any potential partner would be involved in renegotiation situations. That is an added
§ complication. That is another reason why it would take time if further moves were made away from the original understanding.
§ It is not correct to say that the original agreement on the second £25 million was in some way binding. I pay tribute to the previous Government because they made the provision of the second £25 million conditional on a review of performance and progress. There is a sense of continuity. I argue strongly that if taxpayers' money is to be involved—and that is a basic question—there must be the most rigorous appraisal. That is a different kettle of fish from the normal activity of entrepreneurial ebb and flow. In such circumstances, a review is merited and right. I invite the House to reject the motion.
§ Question put, That the original words stand part of the Question:—
§ The House divided: Ayes 251, Noes 312.1379
|Division No. 382]||AYES||[7 pm|
|Abse, Leo||Cunliffe, Lawrence||Golding, John|
|Adams, Allen||Cunningham, George (Islington S)||Gourlay, Harry|
|Allaun, Frank||Cunningham, Dr John (Whitehaven)||Graham, Ted|
|Alton, David||Dalyell, Tam||Grant, George (Morpeth)|
|Anderson, Donald||Davidson, Arthur||Grant, John (Islington C)|
|Archer, Rt Hon Peter||Davies, Rt Hon Denzil (Llanelli)||Grimond, Rt Hon J.|
|Armstrong, Rt Hon Ernest||Davies, Ifor (Gower)||Hamilton, James (Bothwell)|
|Ashley, Rt Hon Jack||Davis, Clinton (Hackney Central)||Hamilton, W. W. (Central Fife)|
|Ashton, Joe||Deakins, Eric||Harrison, Rt Hon Walter|
|Atkinson, Norman (H'gey, Tott'ham)||Dean, Joseph (Leeds West)||Hart, Rt Hon Dame Judith|
|Bagier, Gordon A. T.||Dempsey, James||Hattersley, Rt Hon Roy|
|Barnett, Guy (Greenwich)||Dewar, Donald||Haynes, Frank|
|Barnett, Rt Hon Joel (Heywood)||Dixon, Donald||Healey, Rt Hon Denis|
|Benn, Rt Hon Anthony Wedgwood||Dobson, Frank||Heffer, Eric S.|
|Bennett, Andrew (Stockport N)||Dormand, Jack||Hogg, Norman (E Dunbartonshire)|
|Bidwell, Sydney||Douglas, Dick||Home Robertson, John|
|Booth, Rt Hon Albert||Douglas-Mann, Bruce||Homewood, William|
|Boothroyd, Miss Betty||Dubs, Alfred||Hooley, Frank|
|Bottomley, Rt Hon Arthur (M'brough)||Duffy, A. E. P.||Horam, John|
|Bradley, Tom||Dunn, James A. (Liverpool, Kirkdale)||Howell, Rt Hon Denis (B'ham, Sm H)|
|Bray, Dr Jeremy||Dunnett, Jack||Howells, Geraint|
|Brown, Hugh D. (Provan)||Dunwoody, Mrs Gwyneth||Huckfleld, Les|
|Brown, Robert C. (Newcastle W)||Eadie, Alex||Hudson Davies, Gwilym Ednyfed|
|Brown, Ron (Edinburgh, Leith)||Eastham, Ken||Hughes, Mark (Durham)|
|Buchan, Norman||Ellis, Raymond (NE Derbyshire)||Hughes, Robert (Aberdeen North)|
|Callaghan, Rt Hon J. (Cardiff SE)||English, Michael||Hughes, Roy (Newport)|
|Callaghan, Jim (Middleton & P)||Evans, Ioan (Aberdare)||Janner, Hon Greville|
|Campbell, Ian||Evans, John (Newton)||Jay, Rt Hon Douglas|
|Campbell-Savours, Dale||Ewing, Harry||John, Brynmor|
|Canavan, Dennis||Faulds, Andrew||Johnson, James (Hull West)|
|Cant, R. B.||Field, Frank||Johnston, Russell (Inverness)|
|Carmichael, Neil||Fitch, Alan||Jones, Rt Hon Alec (Rhondda)|
|Carter-Jones, Lewis||Flannery, Martin||Jones, Barry (East Flint)|
|Cartwright, John||Fletcher, Ted (Darlington)||Jones, Dan (Burnley)|
|Clark, Dr David (South Shields)||Foot, Rt Hon Michael||Kaufman, Rt Hon Gerald|
|Cocks, Rt Hon Michael (Bristol S)||Ford, Ben||Kilroy-Silk, Robert|
|Cohen, Stanley||Forrester, John||Kinnock, Neil|
|Concannon, Rt Hon J. D.||Foster, Derek||Lambie, David|
|Conlan, Bernard||Fraser, John (Lambeth, Norwood)||Lamborn, Harry|
|Cook, Robin F.||Freeson, Rt Hon Reginald||Lamond, James|
|Cowans, Harry||Garrett, John (Norwich S)||Leadbitter, Ted|
|Craigen, J. M. (Glasgow, Maryhill)||George, Bruce||Leighton, Ronald|
|Crowther, J. S.||Gilbert, Rt Hon Dr John||Lestor, Miss Joan (Eton & Slough)|
|Cryer, Bob||Ginsburg, David||Lewis, Arthur (Newham North West)|
|Lewis, Ron (Carlisle)||O'Neill, Martin||Spearing, Nigel|
|Litherland, Robert||Orme, Rt Hon Stanley||Spriggs, Leslie|
|Lofthouse, Geoffrey||Owen, Rt Hon Dr David||Stallard, A. W.|
|Lyon, Alexander (York)||Palmer, Arthur||Steel, Rt Hon David|
|Lyons, Edward (Bradford West)||Park, George||Stoddart, David|
|Mabon, Rt Hon Dr J. Dickson||Parker, John||Stott, Roger|
|McCartney, Hugh||Parry, Robert||Strang, Gavin|
|McDonald, Dr Oonagh||Pendry, Tom||Straw, Jack|
|McElhone, Frank||Penhaligon, David||Summerskill, Hon Dr Shirley|
|McKay, Allen (Penistone)||Powell, Raymond (Ogmore)||Taylor, Mrs Ann (Bolton West)|
|McKelvey, William||Prescott, John||Thomas, Jeffrey (Abertillery)|
|MacKenzie, Rt Hon Gregor||Price, Christopher (Lewisham West)||Thomas, Mike (Newcastle East)|
|Maclennan, Robert||Race, Reg||Thomas, Dr Roger (Carmarthen)|
|McNally, Thomas||Radice, Giles||Thorne, Stan (Preston South)|
|McNamara, Kevin||Rees, Rt Hon Merlyn (Leeds South)||Tilley, John|
|McTaggart, Robert||Richardson, Jo||Torney, Tom|
|McWilliam, John||Roberts, Albert (Normanton)||Varley, Rt Hon Eric G.|
|Magee, Bryan||Roberts, Allan (Bootle)||Wainwright, Edwin (Dearne Valley)|
|Marks, Kenneth||Roberts, Ernest (Hackney North)||Wainwright, Richard (Colne Valley)|
|Marshall, David (Gl'sgow, Shettles'n)||Roberts, Gwilym (Cannock)||Walker, Rt Hon Harold (Doncaster)|
|Marshall, Dr Edmund (Goole)||Robertson, George||Watklns, David|
|Marshall, Jim (Leicester South)||Robinson, Geoffrey (Coventry NW)||Weetch, Ken|
|Martin, Michael (Gl'gow, Springb'rn)||Rodgers, Rt Hon William||Wellbeloved, James|
|Mason, Rt Hon Roy||Rooker, J. W.||Welsh, Michael|
|Maxton, John||Roper, John||White, Frank R. (Bury & Radcliffe)|
|Maynard, Miss Joan||Ross, Ernest (Dundee West)||White, James (Glasgow, Pollok)|
|Meacher, Michael||Rowlands, Ted||Whitehead, Phillip|
|Mellish. Rt Hon Robert||Ryman, John||Whitlock, William|
|Mikardo. Ian||Sandelson, Neville||Willey, Rt Hon Frederick|
|Millan, Rt Hon Bruce||Sever, John||Williams, Rt Hon Alan (Swansea W)|
|Mitchell, Austin (Grimsby)||Sheerman, Barry||Wilson, William (Coventry SE)|
|Mitchell, R. C. (Soton, Itchen)||Sheldon, Rt Hon Robert (A'ton-u-L)||Winnick, David|
|Morris, Rt Hon Alfred (Wythenshawe)||Shore, Rt Hon Peter (Step and Pop)||Woodall, Alec|
|Morris, Rt Hon Charles (Openshaw)||Short, Mrs Renée||Woolmer, Kenneth|
|Morris, Rt Hon John (Aberavon)||Silkin, Rt Hon John (Deptford)||Wrigglesworth, Ian|
|Morton, George||Silkin, Rt Hon S. C. (Dulwich)||Wright, Sheila|
|Moyle, Rt Hon Roland||Silverman, Julius||Young, David (Bolton East)|
|Newens, Stanley||Skinner, Dennis|
|Oakes, Rt Hon Gordon||Smith, Cyril (Rochdale)||TELLERS FOR THF AYES:|
|Ogden, Eric||Smith, Rt Hon J. (North Lanarkshire)||Mr. Terry Davis and Mr. Donald Coleman|
|O'Halloran, Michael||Soley, Clive|
|Adley, Robert||Buck, Antony||Eyre, Reginald|
|Aitken, Jonathan||Budgen, Nick||Fairbairn, Nicholas|
|Alexander, Richard||Bulmer, Esmond||Fairgrieve, Russell|
|Alison, Michael||Burden, F. A.||Faith, Mrs Sheila|
|Amery, Rt Hon Julian||Butcher, John||Farr, John|
|Ancram, Michael||Butler, Hon Adam||Fell, Anthony|
|Arnold, Tom||Cadbury, Jocelyn||Fenner, Mrs Peggy|
|Aspinwall, Jack||Carlisle, John (Luton West)||Finsberg, Geoffrey|
|Atkins, Rt Hon H. (Spelthorne)||Carlisle, Kenneth (Lincoln)||Fisher, Sir Nigel|
|Atkins, Robert (Preston North)||Carlisle, Rt Hon Mark (Runcorn)||Fletcher, Alexander (Edinburgh N)|
|Baker, Kenneth (St. Marylebone)||Chalker, Mrs Lynda||Fletcher-Cooke, Charles|
|Baker, Nicholas (North Dorset)||Channon, Paul||Fookes, Miss Janet|
|Beaumont-Dark, Anthony||Chapman, Sydney||Forman, Nigel|
|Bell, Sir Ronald||Churchill, W. S.||Fowler, Rt Hon Norman|
|Bendall, Vivian||Clark, Hon Alan (Plymouth, Sutton)||Fox, Marcus|
|Benyon, Thomas (Abingdon)||Clark, Sir William (Croydon South)||Fraser, Rt Hon H. (Stafford & St)|
|Benyon, W. (Buckingham)||Clarke, Kenneth (Rushcliffe)||Fraser, Peter (South Angus)|
|Best, Keith||Clegg, Sir Walter||Fry, Peter|
|Bevan, David Gilroy||Cockeram, Eric||Galbraith, Hon T. G. D.|
|Biffen, Rt Hon John||Colvin, Michael||Gardiner, George (Reigate)|
|Biggs-Davison, John||Cope, John||Gardner, Edward (South Fylde)|
|Blackburn, John||Cormack, Patrick||Garel-Jones, Tristan|
|Blaker, Peter||Corrie, John||Glyn, Dr Alan|
|Body, Richard||Costain, A. P.||Goodhew, Victor|
|Bonsor, Sir Nicholas||Cranborne, Viscount||Goodlad, Alastair|
|Boscawen, Hon Robert||Critchley, Julian||Gorst, John|
|Bottomley, Peter (Woolwich West)||Crouch, David||Gow, Ian|
|Bowden, Andrew||Dean, Paul (North Somerset)||Gower, Sir Raymond|
|Boyson, Dr Rhodes||Dickens, Geoffrey||Gray, Hamish|
|Braine, Sir Bernard||Dorrell, Stephen||Greenway, Harry|
|Bright, Graham||Douglas-Hamilton, Lord James||Griffiths, Peter (Portsmouth N)|
|Brinton, Tim||Dover, Denshore||Grist, Ian|
|Brittan, Leon||du Cann, Rt Hon Edward||Grylls, Michael|
|Brocklebank-Fowler, Christopher||Dunn, Robert (Dartford)||Gummer, John Selwyn|
|Brooke, Hon Peter||Durant, Tony||Hamilton, Hon Archie (Eps'm&Ew'll)|
|Brotherton, Michael||Dykes, Hugh||Hamilton, Michael (Salisbury)|
|Brown, Michael (Brigg & Sc'thorpe)||Eden, Rt Hon Sir John||Hampson, Dr Keith|
|Browne, John (Winchester)||Edwards, Rt Hon N. (Pembroke)||Hannam, John|
|Bruce-Gardyne, John||Eggar, Timothy||Haselhurst, Alan|
|Bryan, Sir Paul||Elliott, Sir William||Hastings, Stephen|
|Buchanan-Smith, Hon Alick||Emery, Peter||Havers, Ri Hon Sir Michael|
|Hawksley, Warren||Mayhew, Patrick||Shelton, William (Streatham)|
|Hayhoe, Barney||Mellor, David||Shepherd, Colin (Hereford)|
|Heath, Rt Hon Edward||Meyer, Sir Anthony||Shepherd, Richard(Aldridge-Br'hills)|
|Heddle, John||Miller, Hal (Bromsgrove & Redditch)||Shersby, Michael|
|Henderson, Barry||Mills, Iain (Meriden)||Silvester, Fred|
|Heseltine, Rt Hon Michael||Mills, Peter (West Devon)||Sims, Roger|
|Hicks, Robert||Mitchell, David (Basingstoke)||Skeet, T. H. H.|
|Higgins, Rt Hon Terence L.||Moate, Roger||Speed, Keith|
|Hill, James||Molyneaux, James||Speller, Tony|
|Hogg, Hon Douglas (Grantham)||Monro, Hector||Spence, John|
|Holland, Philip (Carlton)||Montgomery, Fergus||Spicer, Jim (West Dorset)|
|Hooson, Tom||Moore, John||Spicer, Michael (S Worcestershire)|
|Hordern, Peter||Morgan, Geraint||Sproat, Iain|
|Howe, Rt Hon Sir Geoffrey||Morrison, Hon Charles (Devizes)||Squire, Robin|
|Howell, Rt Hon David (Guildford)||Morrison, Hon Peter (City of Chester)||Stanbrook, Ivor|
|Howell, Ralph (North Norfolk)||Mudd, David||Stanley, John|
|Hunt, David (Wirral)||Murphy, Christopher||Steen, Anthony|
|Hunt, John (Ravensbourne)||Myles, David||Stevens, Martin|
|Hurd, Hon Douglas||Neale, Gerrard||Stewart, Ian (Hitchin)|
|Irving, Charles (Cheltenham)||Needham, Richard||Stewart, John (East Renfrewshire)|
|Jenkin, Rt Hon Patrick||Nelson, Anthony||Stokes, John|
|Johnson Smith, Geoffrey||Neubert, Michael||Stradling Thomas, J.|
|Jopling, Rt Hon Michael||Newton, Tony||Tapsell, Peter|
|Joseph, Rt Hon Sir Keith||Normanton, Tom||Taylor, Robert (Croydon NW)|
|Kaberry, Sir Donald||Nott, Rt Hon John||Taylor, Teddy (Southend East)|
|Kellett-Bowman, Mrs Elaine||Onslow, Cranley||Tebbit, Norman|
|Kimball, Marcus||Oppenheim, Rt Hon Mrs Sally||Temple-Morris, Peter|
|King, Rt Hon Tom||Page, Rt Hon Sir R. Graham||Thatcher, Rt Hon Mrs Margaret|
|Kitson, Sir Timothy||Page, Richard (SW Hertfordshire)||Thomas, Rt Hon Peter (Hendon S)|
|Knox, David||Parkinson, Cecil||Thompson, Donald|
|Lamont, Norman||Parris, Matthew||Thorne, Neil (Ilford South)|
|Lang, Ian||Patten, Christopher (Bath)||Thornton, Malcolm|
|Langford-Holt, Sir John||Patten, John (Oxford)||Townend, John (Bridlington)|
|Latham, Michael||Pattie, Geoffrey||Townsend, Cyril D. (Bexleyheath)|
|Lawrence, Ivan||Pawsey, James||Trippier, David|
|Lawson, Nigel||Percival, Sir Ian||Trotter, Neville|
|Lee, John||Peyton, Rt Hon John||van Straubenzee, W. R.|
|Lennox-Boyd, Hon Mark||Pink, R. Bonner||Vaughan, Dr Gerard|
|Lester, Jim (Beeston)||Pollock, Alexander||Viggers, Peter|
|Lewis, Kenneth (Rutland)||Porter, George||Waddington, David|
|Lloyd, Peter (Fareham)||Powell, ft Hon J. Enoch (S Down)||Wakeham, John|
|Loveridge, John||Prentice, Rt Hon Reg||Waldegrave, Hon William|
|Luce, Richard||Price, David (Eastleigh)||Walker, Rt Hon Peter (Worcester)|
|Lyell, Nicholas||Prior Rt Hon James||Walker, Bill (Perth & E Perthshire)|
|McCrindle, Robert||Proctor, K. Harvey||Walker-Smith, Rt Hon Sir Derek|
|Macfarlane, Neil||Pym, Rt Hon Francis||Wall, Patrick|
|MacGregor, John||Raison, Timothy||Waller, Gary|
|MacKay, John (Argyll)||Rathbone, Tim||Walters, Dennis|
|Macmillan, Rt Hon M. (Farnham)||Rees, Peter (Dover and Deal)||Ward, John|
|McNair-Wilson, Michael (Newbury)||Rees-Davles, W. R.||Warren, Kenneth|
|McNair-Wilson. Patrick (New Forest)||Renton, Tim||Watson, John|
|McQuarrie, Albert||Rhys Williams, Sir Brandon||Wells, John (Maidstone)|
|Madel, David||Ridley, Hon Nicholas||Wells, Bowen (Hert'rd & Stev'nage)|
|Major, John||Ridsdale, Julian||Wheeler, John|
|Marland, Paul||Rifkind, Malcolm||Wickenden, Keith|
|Marlow, Tony||Rippon, Rt Hon Geoffrey||Wiggin, Jerry|
|Marten, Neil (Banbury)||Roberts, Michael (Cardiff NW)||Williams, Delwyn (Montgomery)|
|Martin, Michael (Gl'gow, Springb'rn)||Roberts, Wyn (Conway)||Winterton, Nicholas|
|Mates, Michael||Rost, Peter||Wolfson, Mark|
|Mather, Carol||Royle, Sir Anthony||Young, Sir George (Acton)|
|Maude, Rt Hon Angus||Sainsbury, Hon Timothy|
|Mawby, Ray||St. John-Stevas, Rt Hon Norman||TELLERS FOR THE NOES:|
|Mawhinney, Dr Brian||Scott, Nicholas||Mr. Spencer Le Marchant and Mr. Anthony Berry.|
|Maxwell-Hyslop, Robin||Shaw, Michael (Scarborough)|
§ Question accordingly negatived.
§ Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 32 (Questions on amendments), and agreed to.
That this House, recognising the importance of microelectronics to United Kingdom industry, welcomes the review which the National Enterprise Board has decided to undertake of the prospects for Inmos International Ltd. including the question of further finance.