§ Mr. Michael Colvin (Bristol, North-West)
I wish to draw attention to the section of the Supplementary Estimates on finance for the National Enterprise Board, on page 88. It relates to the provision of public dividend capital to the NEB to refinance loans to British Leyland. I shall be grateful if my hon. Friend the Minister will say something about this arrangement for a further £154 million of taxpayers' money to be pumped into British Leyland. Some of us on the Conservative Benches ask why this additional money is to be spent, especially when there are, perhaps, better investments for the Government to make through the NEB. I shall try to make clear what they may be.
For example, this section of the Supplementary Estimates raises the topical question of the Government's commitment to the Inmos microprocessor project. Urgent questions need to be answered on Inmos, questions that have a direct bearing on the Supplementary Estimates and the continued funding of that competing recipient of Government funds, British Leyland. Only limited funds can be made available for NEB investment in industry, and the Government will no doubt consider most carefully where the money should go, bearing in mind the best interests of the taxpayer, who provides it.
1426 The matter is causing considerable concern in the Bristol area, where right hon. and hon. Members on both sides of the House have buried their party political differences and campaigned jointly on the NEB investment issue. We have done so because we appreciate the need to accept the commercial judgment of the Inmos management and the NEB as regards the siting of the first production units for Inmos.
Hon. Members will no doubt view the Inmos project with mixed feelings, just as they do British Leyland. We are aware that the nation must establish a foothold in the new technology industries that Inmos represents, while being conscious of the constituency unemployment problems, the problems of companies such as British Leyland and the need to treat the spending of taxpayers' money in such large quantities with the utmost prudence.
Some of those considerations conflict. It is now surely time for the Government to decide whether they will honour their commitment to fund the Inmos project. That is what we are asking for. We are not asking for more money but are merely asking that what has already been promised should now be made available. We are also asking my right hon. Friend the Secretary of State for Industry to decide whether to grant the necessary industrial development certificate to enable at any rate the first of the two production units to be built in Bristol.
Perhaps I should explain why I say "the first". It is because Inmos, unlike British Leyland, believes that about 1,000 employees is the right number for one production unit. Nevertheless, because of economies of scale, it is siting two production units side by side on one site. It has chosen Bristol for the first. Then it may well choose another area—perhaps an assisted area—for the next two units.
There can be few hon. Members who have not heard of Inmos, but may I remind the House, for the record, that this United Kingdom semiconductor company was set up to design and manufacture integrated circuits, concentrating on the fastest-growing and newest sector of the market, which is the high-density computer memories and microprocessors. They are, in fact, whole computers on a single silicon chip.
1427 In July 1978 the NEB agreed to finance Inmos. That followed approval of the founder's business plan by both the NEB and the then Secretary of State for Industry. The plan called for total equity funding of £50 million, the first £25 million of which has already been committed by the NEB. The splitting of the investment into two tranches of money is merely due to business prudence. The second instalment was to be paid provided Inmos achieved the initial objective and produced satisfactory plans. These management objectives have now been achieved, and therefore there is no reason why the second tranche should not now be sanctioned, thereby honouring the earlier commitment by the Government.
As with British Leyland, a great deal of taxpayers' money is at stake in the project, and more still will be invested afterwards. Therefore, we have a duty to ensure that it is a commercial success. Inmos is operating in a very competitive industry, with rapidly developing technology. It is essential that it operates in a highly commercial manner if it is to be successful. If the Government ignore commercial criteria, they will put in jeopardy the substantial investment that is already being made on behalf of the nation, whether it be in Inmos or in British Leyland.
Therefore, it may be worth mentioning what the Inmos project is not. It is not a job creation scheme, and neither is British Leyland. Neither company should be regarded merely as a means of providing jobs in areas of high unemployment. Those hon. Members who face unacceptable levels of unemployment in their constituencies should realise that the Inmos project, if successful, will—in a relatively short time—repay its initial investment. In addition, it will provide tens of millions of pounds every year through taxation, which can be used to generate further investment in much needed jobs, many of which will be in the assisted areas.
§ Mr. Colvin
I shall give way in a moment. I am the first to accept that those assisted areas require Government help. We should give further help, if necessary, to British Leyland.
§ Mr. Morris
The hon. Gentleman referred to the location of Inmos at Bristol, and said that commercial criteria should be the determining factor of location. What commercial criteria does the hon. Gentleman believe determined the location of Bristol for the technology centre?
§ Mr. Colvin
The answer to that question will become clear later in my speech. However, an important point to make is that it is not for the Government to decide the commercial criteria. The company and the NEB should decide the location, and the Government should accept their recommendation, as they have done in the case of British Leyland where they accepted the commercial judgment of the corporation. They should do that with the Inmos company and the NEB.
I accept that the claims of the assisted areas have been loudest for the siting of this company, but even the previous Administration always made the point that a decision on siting was primarily one for the company and the NEB who, in this case, decided on Bristol.
Although I am now a committed supporter of the Inmos project, I regret that it should have been necessary in the first place for the NEB to become involved. I regret that the economic climate of the country at that time was not such as to encourage the establishment of a high technology innovative industry without Government help. I regret that, because of the policies of successive Labour Governments which were so hostile to investors, we were compelled to adopt a Socialist solution to finance Inmos in order to enter the silicon chip race.
Having staked £25 million of taxpayers' money on the project, I hope that the Government will stay with it and honour their obligation to provide the remainder of the money now required, in spite of their commitment to other companies such as British Leyland. It is my belief that the Government will agree to do that. I believe also that they will agree with the management of Inmos that its first production unit should be sited near its technology centre and headquarters in Bristol, in order to create what the company describe as an integrated capability. To split those functions would involve a quite unacceptable business risk.
1429 Bristol was chosen by the Inmos management following a survey by PA Management Consultants Limited of more than 200 alternative production sites. I believe that the consultants were asked not to recommend a site but merely to report the facts about the alternative sites and to give a genuine evaluation. In business, time is money. I ask my lion. Friend the Under-Secretary of State for Industry, when he replies, to tell the House first, whether there are any doubts regarding the second tranche of £25 million and, secondly, when the Government will grant the industrial development certificate for the first production site in Bristol at Coldharbour Lane.
The delay over the start of building the Inmos production plant is reported to be costing the company about £20,000 a day in higher building costs, and a further £300,000 a day in lost future production. It is bad for business, especially a new business, when targets begin to slip. The credibility of the company is called into question. Recruitment suffers if the Government, as the main financial backers, are thought to be dithering. Potential customers begin to have doubts if they read press reports—no matter how ill informed—about the Government having second thoughts.
Uncertainty is the bane of any business. The uncertainty over Inmos must be removed without delay, otherwise there is a danger that the prospects of the company may be damaged, and, therefore, the taxpayers' investment put at some risk. This is the sort of industry that we should encourage in Britain at the present time, as other industries—such as the motor car industry—face an inevitable decline. We are a nation with a shortage of raw materials, but we are rich in one vital resource, namely, that of skilled and intelligent workers.
In Bristol we have a wealth of that particular resource. Selecting Bristol as a suitable location for the Inmos technology centre and headquarters has not been an easy task for the company's management. One of the company's objectives is to achieve the highest level of technical creativity. The opportunity to establish academic links and develop positive programmes with the universities of Bristol and Bath as well as with the Bristol polytechnic, which will be opposite Inmos at 1430 the Coldharbour Lane site, were factors in choosing our city which, with its superb communications and working environment is obviously just the sort of place to attract the staff required to advance the frontiers of technology.
There is no doubt that Bristol is the best site for the first production unit. In backing Bristol, Inmos has backed a winner. I now look forward to the Government's decision to back winners—that is, to back Inmos with the second tranche of cash, and to back Bristol as the first production site.
§ Mr. Alan Williams (Swansea, West)
I wish first to make it clear that we on the Opposition Benches obviously completely agree that it is essential that the second tranche of finance be provided for Inmos. Inmos will be our first major domestic-based capability in this area. We will not be dependent upon American technology. The NEB therefore deserves congratulations for bringing the project forward.
I differ from the hon. Member for Bristol, North-West (Mr. Colvin) in his assessment of where the production unit should go. I trust that there is a slight confusion, which I should like to clear up before proceeding to my main argument. The hon. Member said that he thought that the plan was to have two production units side by side. I think that if he examines the project he will discover that there is the initial research project—the technology centre—which already exists, and that the company is asking that one production unit—the first—should go to assurance in the matter. Here I refer Bristol. The company has given a firm to a letter from the deputy chairman of the National Enterprise Board, in which he refers to thepublicly declared commitment by Inmos to locate the second UK production facility in a UK-Assisted Area.
§ Mr. Colvin
I think that the right hon. Gentleman and I are talking at cross-purposes. I understand that there will be two bases for production, but I understood Inmos to say that there would be two production units at each base. That is beside the point, however. I think that we understand, between us, that there will be two production bases, that the first one 1431 will be in Bristol—we hope—and that the second may well be in an assisted area.
§ Mr. Williams
Not "may well be", but must be. The question is whether the first must also be in an assisted area. I fully understand the hon. Gentleman's need to argue for his constituency. No one begrudges him that right.
§ Mr. Williams
That is just what I am not doing. I expect that my constituents will not quite understand why, as a spokesman on Welsh affairs, I am arguing for a site outside my constituency. I am arguing for the site that was on the short-list that was under consideration by Inmos— a site in Cardiff. I am not advancing a constituency argument. The hon. Gentleman may not be aware—there is no reason why he should be—that in the last Administration I was the Minister to whom the original application for an industrial development certificate at Bristol was made. [An HON. MEMBER: "The right hon. Gentleman approved it."] I did not approve it.
The reason for my intervention this evening is that I want to put certain facts clearly on the record. I believe that a decision is imminent. We shall be glad to have a decision, at least. I do not want Ministers to be in any doubt. I know the niceties and difficulties that confront incoming Ministers by which they are not allowed to see certain documents relating to the previous Administration. Therefore, I wish to state the background to our claim that there is already an absolute commitment that the first production unit will be sited in assisted areas, as will all production units.
When the initial application for an industrial development certificate for Bristol appeared on my desk, I said that it was essentially a mobile project, and that the technology centre and the R and D project could be sited in an assisted area. I then received a deputation led by the deputy chairman of the National Enterprise Board, Mr. Dick Morris. We discussed sites in Manchester. The right hon. Member for Manchester, Openshaw (Mr. Morris) argued for sites there. I argued with the deputy chairman that if an industrial development certificate were 1432 given to Bristol—because of the American experience of the clustering of the micro-processing industry—the logical sequence would be that I would then be asked to provide an IDC for the manufacturing unit. That is important. At that stage it looked as though it was a logical link, and, therefore, I refused to grant an IDC.
I was then offered art assurance by the NEB that in the event of a technology centre being sited in Bristol—because there was no such necessary technical link—all four production units, which would employ about 1,000 people each, would be situated in assisted areas.
I invite the Under-Secretary of State to ask the Department to show him the press announcement that it issued, stating that the technology centre was to be sited in Bristol. It was stated in that announcement that Inmos "intends" to site production units in the assisted areas.
The then Secretary of State, the Minister of State and I recently took the unusual step of writing to The Times establishing that that commitment had been given. I received deputations led by Mr. Dick Morris more than once There was a final meeting with the chairman of the NEB, accompanied by the deputy chairman and a number of other NEB representatives, with the Secretary of State, the Minister of State and myself. Again, we were given an undertaking that the production units would be sited in assisted areas. I emphasise that because there would have been no question of Department of Industry Ministers approving, or even recommending to ministerial colleagues the approval of the IDC for Bristol had it not been for the specific guarantee that the production units would be sited in assisted areas.
§ The Under-Secretary of State for Industry (Mr. David Mitchell)
The right hon. Member for Swansea, West (Mr. Williams) referred to a press release that stated that the NEB intended that the production units should be sited in development areas. Is the right hon. Gentleman trying to suggest to the douse that he hangs his argument on a press release that contained the word "intends" and to imply that that is a guarantee?
§ Mr. Williams
I was trying to think of a document that showed the clear understanding of Department of Industry Ministers of the nature of the guarantee that we received from the National Enterprise Board.
§ Mr. William Waldegrave (Bristol, West)
Towards the end of the period of the previous Administration, the hon. Member for Nuneaton (Mr. Huckfield), also a responsible Minister, on more than one occasion made statements such as:I am very conscious of the benefits that an Inmos production facility could bring to the Welsh special development areas, and to the assisted areas in general, but the location of these facilities must be a matter for the NEB and the company."—[Official Report, 5 February 1979; Vol. 962, c. 30.]That seems to indicate unity between the NEB and the company. Therefore, I hang my argument on what was said by the hon. Member for Nuneaton.
§ Mr. Williams
With respect, my hon. Friend the Member for Nuneaton (Mr. Huckfield) was not present at any of these meetings. We had three Privy Councillors, Ministers of State and the Secretary of State, present, all of whom have the same recollection. I suspect that the officials, in the advice that they are giving to the Minister, also have the same recollection.
§ Mr. David Mitchell
Will the right hon. Gentleman tell the House whether the right hon. Member for Manchester, Ardwick (Mr. Kaufman) was one of the three? Was the Minister of State at that time one of the three Ministers to whom he referred? If the right hon. Gentleman's nod is an indication that he was one of those to whom he referred, I remind him that the then Minister of State said that Inmos'slocation is a matter for the company and the NEB, subject to the NEB guidelines."—[Official Report, 29 November 1978; Vol. 959, c. 194.]That was what he stated in the House.
§ Mr. Williams
By that time the IDC had not been given. At that stage it was still under consideration. It was my decision whether an IDC was given or not. The question of preferences was 1434 for Inmos. The question whether the Government endorsed those preferences was a matter for the Government, under their powers in relation to industrial development certificates. If my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) were present I am sure that he would confirm that he and I pressed the company to site within an assisted area. Indeed, both of us received the same guarantee—that the production units would be in an assisted area.
§ Mr. Colvin
It is important to get clear whether the undertaking was given to the right hon. Gentleman by the National Enterprise Board or by the company. I have checked with the company and been told that no commitment was entered into by the Inmos management about siting in an assisted area.
§ Mr. Williams
The undertaking was given by the NEB, because it was the parent company negotiating on behalf of Inmos. Having seen the documentation that was at that stage produced on behalf of Inmos, I can understand why it did not dare let the Inmos representative loose in the Department of Industry for me to interrogate. However, I shall come to that later.
When the NEB came to see me—the NEB being the parent company that had to authorise the finance and approve the siting—it also brought along its director on the board of Inmos. I believe that he was a Mr. Dunbar. However, I have a terrible memory for names. We were given—not on one occasion, but on several occasions—a clear understanding of what the situation would be if it got the technology centre in Bristol.
I am sure that the hon. Member for Bristol, North-West as a new Member, will accept that no one stands at the Dispatch Box or in the House and deliberately makes a categorical statement of the kind that I have made unless be genuinely believes it to be true. All who have respect for the House would not deliberately mislead it. I think that each of us should do the other that credit. I assure the hon. Gentleman that I am trying to be as straightforward and factual as I can about what happened at that time. It was supported by both my colleagues who were Ministers at that time.
§ Mr. Gordon A. T. Bagier (Sunderland, South)
Does my right hon. Friend also remember that at the time he was under great pressure from development areas such as mine to obtain a clear undertaking of this nature, especially when the original technology centre was to be based at Bristol? We required—indeed, demanded—from our Ministers a categorical assurance that the manufacturing units would go to a development or special development area. I distinctly recall that we were given that assurance by our Ministers at that time.
§ Mr. Williams
I endorse entirely what my hon. Friend says. On several occasions he personally represented the interests of the Northern region. The Northern group of Members of Parliament also pressed the interests of their regions, as did many other hon. Members with constituencies in Wales, Yorkshire and Scotland. There was considerable pressure, and the understanding that we had received from the NEB was made clear in our discussions with our colleagues from the regional constituencies.
I was sceptical about the arguments then being put forward. I am not suggesting that there may not be a sound argument amongst them, but we had to look very hard for the sound arguments at that time. We were told by the person acting as the spokesman for Inmos that the Severn Bridge might close permanently and that the great advantage of Bristol was that it did not have a faculty at its university. Therefore, we were told, Bristol would be uncluttered with preconceived ideas. I am glad to see that the hon. Member for Bristol, North West (Mr. Colvin) finds that as amusing as I did.
That top research personnel would go to Bristol was said to be proven by the fact that a survey of school leavers, made in the mid 1950s—these must have been 15-year-olds—had revealed that those young people had shown a preference for living in the West Country as opposed to Wales, Scotland or the North of England. I must say that that document was hilarious. It will be seen why I was less than enthusiastic about the application of certain of the arguments that had been put forward. I am not saying that certain arguments were not sound, but the record shows that certain individuals involved in pressing the case for 1436 Inmos will trump up any hairbrained argument, in the hope that it might persuade someone.
What worries me is that none of us has been allowed to see the PA Management Consultants' report that has been put forward in support of the claims of Inmos.
§ Mr. Charles R. Morris
My right hon. Friend has just made a profound statement. He said that as a responsible Minister of State in the Department of Industry in the previous Government he never had access to the PA Management Consultants' report on the siting of the technology centre financed by the NEB and Inmos. That statement provokes intense anxiety, because it was on that report that the siting of the centre was determined.
§ Mr. Williams
The report was the result of a study to decide where the manufacturing unit should go and not where the original technology centre should go. Therefore, although it was initially started during the Labour Government's period of administration it was not completed until fairly recently. So we are not the people to whom one would have expected it to be shown. Again there is a story to tell there, but I shall come to that in correct sequence, if I am permitted to. Indeed, this is a good point at which to consider the PA Management Consultants' report.
Last week, I went to see the chairman of the NEB about the decision on the production unit. I asked a categorical question—"Did the PA Management Consultants' report recommend Bristol?" The chairman's colleague on that occasion answered "I do not remember." Let us bear in mind that it was only in December that the NEB considered the recommendations about Bristol. The chairman said "If you do not remember, why do we not look at the report?", or words to that effect, to which his colleague said "I am afraid there is not a copy available." I then said "In that case, as there is not a copy available for you to consult now or for me to see now, why do you not put an annotated version—annotated so that confidential information has been removed—in the Library of the House of Commons so that all of the regional Members will have an opportunity to see it?" I was then told that this would not be a good 1437 idea, because the report might be "confusing" to Members of Parliament. When I said "By 'confusing', what is meant is that it would confuse because it does not agree with the recommendation that we are getting from Inmos," the answer was "I do not remember."
I would be intrigued to know whether the Under-Secretary has ever seen or read the report. Is it not a fact that Inmos has flatly refused Ministers access to this report? Yet it is substantially on the basis of this report that the decision to allow the production to go to Bristol is allegedly to be made. I ask the Under-Secretary to clarify this matter. I am sure that he has not seen the report. He may need a little time, although I should welcome an answer now.
§ Mr. Colvin
Whilst my hon. Friend the Under-Secretary is chewing over that point, perhaps I may try to clarify the right hon. Member's thoughts on the subject. I think that the reason why the report might be thought to be confusing for hon. Members if it were placed in the Library is that it does not make a recommendation. I am told that the PA Management Consultants' report—I question why it was necessary to call in PA Management Consultants to do such an evaluation survey—was purely an evaluation and did not make a specific recommendation: it put facts before the company and left it, as we are doing, to the company to make a decision on the basis of the facts provided.
§ Mr. Williams
In that case is it not rather arrogant to presume that Members of Parliament are incapable of reading and studying such a report? Since there is £25 million of extra Government money, making a total of £50 million, to go to the project, is it not at least reasonable that we should have the right to judge where that money should go, against regional priorities, as well?
§ Mr. Williams
The hon. Gentleman says "No." That is his judgment, to which he is entirely entitled, but we must remember that this is NEB money and that the NEB guidelines include priority for regional employment wherever possible, where it is carrying out new investment. Therefore, it is essential 1438 that we have a chance to judge whether this project at Bristol is even in conformity with the NEB's guidelines. As Members of Parliament, that is not an unreasonable thing for which to ask.
Even more so, I should have thought that Conservative Members would be indignant if they knew that their Minister had been refused permission to see the report. I understand that that is so, and that it is not just a matter of Ministers having not read it because they did not want to do so. I realise how full Ministers' red boxes are, and that there is no great wish to see unnecessary paper, but my understanding is that the report is not available to Ministers even if they want to see it.
§ Mr. John Butcher (Coventry, South-West)
I was not a Member of the House when many of these discussions on the role of the NEB were taking place, but I read many of the reports and I know that there were heated debates on occasions. I seem to recall Labour Members often stating the case for the NEB to be able to behave as an entrepreneur. Listening to the tenor of the right hon. Gentleman's remarks, I would be most fearful of the capacity of Inmos to behave in an entrepreneurial way should his colleagues have been in power after the last general election. One cannot make commercial decisions on the ground that they are socially desirable, because one eventually ends up making penny-farthing bikes in the development areas because that is socially desirable.
I ask my hon. Friend the Under-Secretary of State to accept that to break the link between the development and implementation of the software and the marketing of the first product at this early, delicate stage would be one of the most dangerous things to do to Inmos.
§ Mr. Williams
The hon. Gentleman must be in an inconsistent position, bearing in mind his alliance with the Government Front Bench. If it is utterly wrong to pursue social objectives in promoting industrial policy, the hon. Gentleman must favour the complete abolition of industrial development certificates, which I do not. In fact, that is not favoured by the Government Front Bench. Industrial development certificates exist to add a social dimension to investment decisions.
1439 We would have applied the normal regional criteria to the project. The hon. Gentleman said that it would be disastrous to introduce separation. There would have been no separation if Ministers had not been misled in the first place, or if Ministers were not being misled now. The technology centre was provided only because the undertaking was given that the centre could be separate from the production units. It was argued that there was no necessary link. If that argument had not been advanced, the technology centre would not be in Bristol now.
I do not want to lecture the hon. Gentleman. I know that he is taking a serious interest in this subject. However, what would he feel if someone gave a pledge to a Conservative Minister, only to renege on it six months later? The pledge was given to a Minister. It does not matter whether it was a Labour Minister or a Conservative Minister. A pledge was given to a Minister to obtain a ministerial decision.
The argument of proximity is fascinating. If proximity is so critical, how was the short list drawn up, which included Bristol, Cardiff and Washington new town. I recognise that it has a strong claim. However, if proximity is a criterion, it seems odd that the other assisted areas of Wales, the North-West, Yorkshire and Humberside could be bypassed and that all the requirements could be met 200 miles away in Washington new town. The argument of proximity does not stand any detailed analysis.
Another argument presented to me by the chairman of the National Enterprise Board concerned the learning curve problem. It was said that because of new technology it would be essential for a close link to exist between those developing the new product and those about to produce it. If that is so, the commitment should not have been given in the first place. Secondly, it is a short-term link. On the other hand, the 1,000 jobs will be 1,000 long-term jobs. There would be a short-term inconvenience—it is only three-quarters of an hour away—that could easily be accommodated.
The South Wales claims are strong, but I shall not go through all the arguments. One criterion is the availability of labour. With unemployment in Wales so massively higher than in Bristol, labour should 1440 certainly be available. Another argument is the academic infrastructure. South Wales has an academic background that in this instance surpasses that which has been available in Bristol.
The pledge that has been given on the next production unit is open to question. In a letter to the secretary of the northern group of MPs Mr. Iann Barron, of Inmos, writes:The characteristic of these key people is that they are the elite of high technology, with the most exciting jobs at the forefront of technology. As such, they can command the highest salaries and can chose where they wish to live.He adds:This is true not only for now, when the company is new, but also for the future when lnmos has become mature and less exciting.How could he have made any promise about the second manufacturing project? The superficiality of analysis that appeared on the first submission is repeated. Within three sentences he contradicted himself by saying:Inmos carried out various studies to establish the preferences of such individuals…We also considered sponsoring a survey of relevant professionals, but this was rejected because we were concerned that the results might offend or even have an adverse effect on some areas of the country.On the one hand he says that a study was carried out and on the other that a proper study was not carried out. It is nonsense and arrogance on the part of Mr. Barron to write in such terms to Members of Parliament who represent northern constituencies.
I tabled a question to the Welsh Office. That question was within its ability. I asked whether, under section 7 of the Industry Act, any financial inducements had been offered to Inmos in order to encourage it to go to Wales. I received a most peculiar letter from the Welsh Office. It said that the question had been transferred to the Department of Industry. However, the Secretary of State for Wales is responsible. As the answer to my question is either "Yes" or "No", a reply should have been easy. However, on the due day—yesterday—I received a holding answer. It said that the Secretary of State would reply as soon as possible. I do not accept that an answer is not available. I believe that an answer 1441 is being deliberately held back. There will be another debate on Inmos tomorrow. The Government do not wish to reveal that no section 7 money or regional selective finance has been offered to Inmos in order to persuade it to go where jobs are most needed. I ask the Minister to answer that point.
The Minister has the necessary powers. He has power, through the IDC system, to stop Inmos going to Bristol. He also has persuasive powers. He has to approve the sum of £25 million for Inmos. I have spoken at such length because this subject is relevant in many parts of the country. Jobs are needed in the North-West, in the North, in Scotland and in Wales. Ministers and Governments should not be treated with contempt by someone who appears to have misled them about his intentions.
I hope that the Minister will reply fully to the questions that have been raised about Inmos. That might save us the experience of an Adjournment debate tomorrow. I hope that he will say whether Ministers have been allowed to see the report by PA Management Consultants. I asked the Secretary of State a question a fortnight ago to which I have received no reply. Will the Government ask the company to make that report available in the House of Commons? If someone says that such a report is not available but then produces it in support of his case, I become suspicious.
§ 9.8 pm
§ Mr. William Waldegrave (Bristol, West)
The Supply Estimates refer to public dividend capital. That is the Government's form of equity financing for risk. Risk is the key word when discussing Inmos. I hesitate to differ to any great extent from the right hon. Member for Swansea, West (Mr. Williams). He is a man of great courtesy. However, he admitted that his memory for names was a little poor. My confidence in his understanding of the history of the Inmos project was shaken when he began to speak of "a certain Mr. Iann Barron". That is like speaking of "a certain Mr. Moses in the Old Testament. Mr. Iann Barron generated this project. He invented it and is a dominant figure. He, Richard Petritz and Paul Schroeder are the founding fathers. They brought the scheme to the NEB. The NEB did not invent it. They 1442 projected the scheme way back in 1976 and came to the NEB in 1978.
My confidence was a little shaken in the right hon. Gentleman's memory of events. I accept that his understanding of the commitments was as he said. However, we must also accept the recollection of Mr. Barron and the company that they gave no commitment, and they have put that on paper. It is possible that the members of the old NEB, who resigned for one reason or another, gave such commitments. I align myself with the hon. Member for Nuneaton (Mr. Huck-field) and the right hon. Member for Manchester, Ardwick (Mr. Kaufman). If we are to have an NEB, these decisions must be for the NEB and the companies in it. Had the former NEB agreed, for reasons best known to itself, to site the production plant on the moon, that would not have been a very successful place for it.
Inmos is facing the toughest competition imaginable. A list of microelectronics companies reads like a roll call of the best companies in the world—IBM, Texas Instruments, Motorola, the great Japanese companies, National, Bell Laboratories and all the rest. We have to compete with these companies.
Many of us had grave doubts about the NEB venture. However, its objective was social and political—to give Britain the capability in this field to face the future. I do not disagree with the view that for regional and social reasons, in some instances it is right for the Government to have an influence over industry. The purpose here is not regional employment, which in other instances may be a reasonable political objectives. It was to equip Britain with a major new capacity in the big memories and microprocessor fields, which is sufficient of an objective to be going on with without adding other social objectives.
The right hon. Member for Swansea, West, who unfortunately has had to leave the Chamber, perhaps remembers something of these matters from his experience. I must declare a reverse interest. I worked, and still work part-time, for a company that will be a competitor of Inmos, if Inmos succeeds, as I hope it will. I also have a constituency interest, because the present technology centre is in my constituency.
1443 It is an "Alice-in-Wonderland" industrial policy for Ministers, however worthy and well versed in the workings of parliamentary democracy, to burrow about in the files of companies, whether financed by the Government or not; drawing out bits and pieces of recommendations, whether commissioned by consultants or not.
Those of us who have argued that there is a reason for keeping the NEB see its greatest strength as a protection between sponsored industries and politicians who bring their worthy and honourable political priorities to bear on the problems of industry. In the detailed running of industry, the combination of the two is nearly always disastrous.
I have had experience of microelectronics in this country and abroad. These companies are perhaps rather more mobile than the right hon. Member for Swansea, West understands. If a dozen people left such a company, it would he a shell, of no further interest to anyone. If that happened to Inmos, £25 million would have gone straight down the plug-hole and we should have nothing left to show for it. If the people in such a company are messed about, they leave. The history of California and Texas is littered with shells of former microelectronics companies, that people have left, usually because the company is taken over by a large conglomerate that mishandles it. They go off and found their own companies. If we drive Mr. Schroeder out of this company because he thinks he is not in microelectronics any more, but that he has become part of the British Government's regional policy, we can say goodbye to the facility in Colorado Springs which is already producing materials for test very successfully and ahead of time.
These people are mobile; they can go anywhere. We are not talking about the kind of people for whom this House has compassionate feelings—those who are losing their jobs in Wales, in the North-East and the North-West. We are talking about pursuading Mr. Schroeder and his friends to work for us, letting them run their own company in a sensible way in a highly competitive world.
1444 It is said that there are perhaps 1,000 senior microelectronics engineers of the first rank in the whole of this country. If it can get off the ground, Inmos will need about 300 or 400 of them. That means that competition will be very hot. It is not enough to mock people who say that it is all a matter of middle class values—whether one wants to live in the Cotswolds or the South-West. If that is what people feel, that is what they will do and there is nothing that we can do to stop them.
I am not being unpleasant when I say that if we want to draw people from all over the country, and indeed from all over the world, we must realise that this is a seller's market, and find the nicest possible place in Britain to put them. The right hon. Member for Swansea, West, may have a rather more old-fashioned view of industry as something associated with smoke coming out of a chimney, but we are here talking about an advanced technology industry. If we want to attract the right people, we must think of the kind of schools that are available in the area, the universities the theatres and so on. Those are the things we should start thinking about if we want to persuade the Californians to move to this country. We might be able to persuade them to move to the valleys of Wales, but we have not found a way of doing so yet.
§ Mr. Donald Thompson (Sowerby)
My area, like many others, tried for Inmos. I agree with all that my hon. Friend says, but if he fails and Bristol fails, the Government will be seen to have failed. My area has within 40 miles of its boundaries the universities of Leeds, Sheffield, Manchester and Bradford, as well as many theatres and cultural activities. It also has beautiful countryside and a civilised way of life.
In my area we have the shells of past industries. We have the shells of our mills from which the smoke came. But that has long gone. The other day I visited the shell of a brand new factory the day before the receiver came in. My hon. Friend and his constituents have a great responsibility. I do not begrudge him Inmos. But if there is a spread from it I hope that it will come to my area. I hope that my hon. Friend is aware of his great responsibility.
§ Mr. Waldegrave
Of course. Even my own constituency pride, which is highly developed, would not drive me into saying that Bristol was the only pleasant place in the country.
§ Mr. Charles R. Morris
The hon. Member referred to Mr. Schroeder and the desire of some Americans to live in the South-West. Will he confirm that Mr. Schroeder had not visited this country before he came with the Inmos team?
§ Mr. Waldegrave
My point about Paul Schroeder is that he is absolutely crucial to the company. If we lose him because he considers that what he thought was an electronics company operating in a commercial way is being used by hon. Members, honourably as an instrument of social policy, he will think that he has come to the wrong shop.
Of course, there are other places. The Inmos management looked at different places and no doubt had a difficult decision to make. That decision has been made. Some hair-raising comments were made by the right hon. Member for Swansea, West and his hon. Friends about the management of Inmos. I can assure the right hon. Gentleman that Mr. Barron is a crucial member of the team. If he is so incapable of taking a fundamental, commercial decision to do with the foundation of the company, this raises questions about the viability of the project as a whole. I do not believe that the right hon. Gentleman will want to pursue that argument. Hon. Members on the Government Benches, more hawkish than I, may begin to feel that, if these people are so incompetent, the whole project should be examined again.
It is obvious from the remarks of the right hon. Member for Swansea, West that some kind of commitment was made by somebody, probably a member of the previous NEB, apparently orally, to some Ministers at some point. The intention was published in the NEB report and elsewhere. The word "intention" was used to indicate that the first production facility should go, all things being equal, to a development area.
Times have moved on. The issue is a little behind schedule, the competition is getting even tougher. Many new developments are on the verge of coming through. Whatever those commitments, even if they were much stronger, we 1446 should now be asking whether there are any means by which the path of this company can be made easier, and the company released, if necessary, from obligations that may have been imposed on it, in order to make the survival of the whole show slightly more probable.
I do not wish to be alarmist. I think that the company has a fifty-fifty chance of success. If used in the way that Opposition Members honourably wish to see, its chances will be much less. There can be no doubt that the company wants to go to Bristol. I have a letter dated 4 February from the secretary and deputy chief executive of the NEB saying:In the view of the NEB Board it would have been indefensible to risk damaging the Inmos project by forcing upon the company's management a different site dictated by regional considerations".I cannot put the matter more succinctly. It would be indefensible. It would mean that large sums of taxpayers' money had been put at risk and that those Ministers who took the decision to use the company as an instrument of worthy social and regional policy would have to face the fact that if it failed they would stand accused of having added significantly to its chances of failure.
§ Mr. Charles R. Morris (Manchester Openshaw)
My right hon. Friend the Member for Swansea, West (Mr. Williams) has made a crucially important statement on the question of NEB-Inmos. What he has said indicates a breach of faith in the understanding between Ministers of the Labour Administration and the responsible officials of NEB-Inmos in regard to the location of the production units of the Inmos operation. The hon. Member for Bristol, West (Mr. Waldegrave) said that this is a commercial enterprise. No one argues its importance to the economic well-being of the nation. It is an important contribution. It is essential for Britain to have a microprocessor manufacturing capability. I wish NEB-Inmos all success in its efforts.
I should like to refer to what successive Governments have already done to encourage the enterprise. The previous Government not only undertook to provide £50 million for the establishment of Inmos, but they told Mr. Schroeder, Mr. Barron and some of their colleagues that they would be given part of the 1447 financial equity of the company. That commitment was unique in public financing in this country.
The members of the Inmos team have an undertaking for £50 million and a stake in the financial base of Inmos, but now they want to locate in Bristol not only the technology centre but the production unit. I am not revealing any confidences when I say that I argued in the Labour Government against the technology centre going to Bristol. I argued that it should go to the North-West, the area where there is a high level of technical creativity in the development of computers. That was not merely parochialism on my part. If one is talking of high level of technical creativity in computers, one is talking of the area where we established the National Computer Centre and the area with a unique academic combination of Manchester university, UMIST and Salford university producing 12,500 students with a facility in computer technology every year.
Yet the technology centre went to Bristol, where the university did not even have a chair of microelectronics at the time. It has established such a chair in recent weeks because the technology centre of Inmos has been established at Bristol.
I agree with the hon. Member for Bristol, West that there is a risk involved. Surely the location of the production units and the technology centre ought to have been decided on something more substantial than where a handful of technologists wish to live. The lion Gentleman said that that must be one of the determining factors but I was staggered to realise that Mr. Schroeder had no knowledge of the geography of Britain. He had never been here, so how could he conclude that Bristol, in the South-West, was the best site?
There are graver issues at stake and they arise from what has been said by my right hon. Friend the Member for Swansea, West, who indicated that Ministers in the present Government had not had access to the report of PA Management Consultants. I hope that the Minister who is to reply to the debate will answer clearly and unequivocally that serious statement. Have Ministers seen the report.
1448 Hon. Members have spoken about commercial criteria being the determining factor for the siting of the the production unit, but no one has identified those criteria. The companies with existing microprocessing capability are centred in the North-West where the academic expertise is located. It is not unreasonable that they should be there bearing in mind the fact that Manchester university invented the computer. The university invented the first digital storage base that was the forerunner of the Atlas computer—the first computer in the world.
There is a convincing, logical and almost unanswerable case for the North-West to be considered as the site for one of these production units, but there are more serious arguments and greater anxieties than that. Conservative Members have asked why we should concern ourselves. They have said that this is a unique enterprise and that those concerned with it should be given the opportunity of doing precisely what they will. That attitude is a complete abrogation of political responsibility because this project is costing £50 million of public money.
There is much use of the new word "de-industrialisation" these days. In the North-West we have seen de-industrialisation on a massive scale. We have seen the decimation of the textile industry, massive redundancies in the engineering and steel industries and contraction in the mining industry.
A new industry now appears and the North-West is not seriously considered as a location for even a production unit involving 1,000 jobs as a means of bringing new industry to an area of industrial decline. It is not on. I hope that Ministers will face up to the fact that public money is involved, and that the taxpayers who have provided it are entitled to have at least a minimal say in where the production units should be sited. A thousand new jobs would benefit the North-West, particularly Greater Manchester.
§ Mr. Bagier
It is clear from this debate that assurances were given to the previous Ministers on this issue. In the light of those assurances, it is now evident that Ministers of this Government are not prepared to use their muscle and 1449 their influence but are prepared only to use public money without ensuring that the very points made by my right hon. Friend are taken into consideration.
§ Mr. Morris
I hope that the Minister will take up the points made by my hon. Friend the Member for Sunderland, South (Mr. Bagier) because I agree that there has been a breach of faith. The whole basis of the remarks of my right hon. Friend the Member for Swansea, West was that there had been a breach of faith. Public accountability demands that there ought to be a public investigation into the precise undertakings given when the location of these production units was under consideration by the last Administration and by this Government.
§ Mr. Thompson
The right hon. Member for Manchester, Openshaw (Mr. Morris) is arguing logically. I attended a recent debate on the Northern region which I was not allowed to take part in because, apparently, I am not a Northerner. Many Labour Members made exactly the same case as that now being made by the right hon. Gentleman. They related the case to their local universities and their own areas in the same logical way. Surely, if decisions have now been made, after the Adjournment debate tomorrow night the House should wish the project god-speed. Whichever way we look at it, it means 1,000 more jobs for this country—
Mr. Deputy Speaker
Order. I have allowed the hon. Member for Sowerby (Mr. Thompson) to intervene for longer than is normal. The fact that we can sit all night is no reason for not obeying the rules of the House.
§ Mr. Morris
I understand the serious comment made by the hon. Member for Sowerby (Mr. Thompson) against the background of what is happening in his constituency. But the fact is that Manchester and Salford universities and UMIST produce 12,500 students a year—more than Edinburgh, and Birmingham universities. Each produces more than any other combination of universities or academic institutions. That is the argument for the North-West and the Greater Manchester area. I do not believe that the production units will go to Openshaw. I am not being that parochial. In the 1450 North-West there is an unusual combination of high technical creativity involving computers. That justifies at least some thought being given to its claims.
I return to the question of the Bristol location. There is an argument for siting the research and development centre in a particular area. However, the development of computers and microprocessing must take place near to industry. I cannot see why Bristol was chosen on that basis. About 50 per cent. of Britain's industry is located within 75 miles of Manchester. That is yet another factor which should influence the location.
§ Mr. Arthur Palmer (Bristol, North-East)
My right hon. Friend is doing the claims of Bristol an injustice. Bristol is a most important and modern industrial area. The aerospace industry originated in Bristol and Concorde was developed there.
§ Mr. Morris
I can fully understand the reasons why my hon. Friend the Member for Bristol, North-East (Mr. Palmer) speaks so highly of Bristol. But, Bristol university had no microelectronic chair before the Inmos technology centre was established in Bristol. It did not produce technologists in anything like the number of those produced by other universities. We are faced with a fait accompli in connection with the technology centre, but the other regions should be given some consideration.
I do not question the veracity of the statements made by my right hon. Friend the Member for Swansea, West because they were supported by the Secretary of State for Industry and other Ministers at the Department. Those statements and the siting of production units and the technology centre should be subject to a full investigation so that the public accountability is seen to be working.
§ Mr. Arthur Palmer (Bristol, North-East)
I apologise to hon. Members on both sides of the House for not having been here at the beginning of the debate. I had a long-standing engagement outside the House, which I have cut short so that I might be present for the debate.
I shall not enter into the much argued question of who gave promises to whom. It seems to me to be a tangled web and it is difficult to untangle it. I understand 1451 the legitimate local interests of my right hon. and hon. Friends, but I want to say something on behalf of the Labour movement in Bristol, which has also a point of view on the matter.
My right hon. Friend the Member for Swansea, West (Mr. Williams) argued very strongly against Bristol, but he was in no position to argue generally for the special or assisted areas, because he does not represent all those areas; he represents part of South Wales, and his case was a legitimate one for South Wales but not beyond. It is well known that there is an ancient rivalry between the Saxon and Celtic sides—
§ Mr. Alan Williams
I have no constituency interest, because I am not seeking to obtain the project for my constituency. The site is 40 miles from it. I briefly dealt with the Welsh position, but I have tried, throughout the weeks for which I have been fighting the campaign, to fight for an assisted area site—not for a specific assisted area site.
§ Mr. Palmer
I think that my right hon. Friend, who has understood interest, would not disagree that he would prefer, out of all the assisted areas, to see the project in South Wales and why not? That is my point: he speaks up for his area.
I was saying that there had always been a rivalry—I hope not hostility—between the Saxon and Celtic sides of the Severn. That perhaps goes back to the days when the Romans provisioned their fleet in the Avon for the attack on South Wales, when the Silurians fought so bravely against the Roman invaders. The invaders were probably assisted by at least some of the forefathers of today's Bristolians even before the Saxons.
In modern Bristol we are not a negligible part of the labour movement in this country. In spite of the reverses of the last general election, we still hold a majority of the city's seats. We also increased the Labour majority on the city council in the spring local elections of 1979. In putting the case for Bristol, I am not just expressing my own views or my constituency interests but echoing the views of the Labour movement as a whole in Bristol. Certainly, they are very much 1452 the views of the Labour majority on the city council.
I know that there is a dilemma in these matters, perhaps particularly for Socialists, we recognise the employment claims of the special areas, although I am not so sure that that Labour policy as a whole, looked at historically, has worked out as well as it might have. So we are in some difficulty of principle in deciding our correct attitude but we felt that we had fearlessly to put the Bristol point of view as one of value to the country.
When recently a deputation was arranged for the Bristol and district Members to talk to the Secretary of State for Industry about the matter, there were on it not only the hon. Members for Bristol, North-West (Mr. Colvin), Bristol, West (Mr. Waldegrave), Gloucestershire, South (Mr. Cope) and Kings-wood (Mr. Aspinwall)—all Conservative Members—but myself, my right hon. Friend the Opposition Chief Whip, who is the Member for Bristol, South (Mr. Cocks) and—very significant, and if anything most powerful of all—my right hon. Friend the Member for Bristol, South-East (Mr. Benn). Those on this side who went to see the Secretary of State represented a spectrum of Labour opinion. It is not for me to say who is to the Right and who is of the Centre, but I can say that the Left was stoutly represented.
I understand it when other hon. Members plead a case. This is always so, because British Members of Parliament have an obligation not only to their parties and the country but to the people whom they represent locally. I shall not go into any special claim that Bristol may have technically or administratively, but I should have thought that once the administrative software centre had been concoded to Bristol, the argument for having one of the initial manfacturing concerns at least close to it was reasonably strong.
I do not think that areas such as South Wales and those north of Bristol will necessarily lose. However, they will lose if Inmos does not succeed. When I and other Bristol Members met the Secretary of State for Industry, my worry was that, with his peculiar economic views and his dislike of State intervention, he would say "I am reversing the previous Labour 1453 Government's proposals altogether on the matter."
I have noticed, incidentally, that as much Conservative Members may say in their manifestos and election speeches that they are against State intervention, when it comes to pleading the case for their constituencies they are in favour of State intervention. As we walked away from that meeting, the Labour Members for Bristol enjoyed a little private exchange on that point, as I am sure the House will understand.
The Bristol case is not a Conservative point of view but a general Bristol point of view. I intend to sum up my opinion in the terms of an amendment to early-day motion No. 135 on the Order Paper, which is distinct from a Conservative amendment. I believe that Inmos should make a decision because it holds the responsibility. There will be intense international competition. It must make a decision about the best site for its industrial unit, certainly taking into account the claims of the assisted areas. It must take into account also the practical need to select an established area of high technology and Bristol can lay claim to that. Bristol is an expanding area, and it is good to have in Britain some areas which are expanding industrially, because they may infect the rest of British industry for the good in the future.
§ Mr. Charles R. Morris
Will my hon. Friend address his mind to the problem of regenerating those areas and regions where industrial decline is proceeding? Have we to ignore these areas and accept his arguments that new industry should go to green field sites?
§ Mr. Palmer
Bristol is not a green field site. It is obviously a much developed district industrially. My right hon. Friend should visit Bristol occasionally.
§ Mr. Palmer
I am glad to hear that. I do not wish to be too locally patriotic, but Bristol was once the second city of the kingdom and, in numbers, the second metropolis of the kingdom. It has remained a great commercial city, and has developed steadily as a modern industrial city.
I am arguing that Inmos must take into account that part of the country 1454 which, in its commercial and technical judgment, suits its purposes. If there is too much outside interference Inmos will not succeed. If that happens not only will the Bristol area be the loser, but I suggest that the whole of the British economy—including industry located in Wales, Manchester and the North-East—will be the losers. The House should recognise that there will be a good deal of profitable subcontracting available everywhere if Inmos proves successful. I have tried, I hope with success, to keep the record straight on the view of Bristol Labour Members of Parliament.
§ Mr. John Butcher (Coventry, South-West)
We shall be here for a long time tonight and therefore I rise simply to place a few sentences on the record. I think that there have been some fundamental misunderstandings of what we now call telematics—information technology—and the way in which investment decisions are made in this sphere. The hon. Member for Bristol, North-East (Mr. Palmer) accused Conservative Members of favouring an interventionist policy only when their constituencies were affected. I should like to declare my position on that. I do not like intervention, and particularly I do not like investment-push intervention. I much prefer the American style of doing things by way of demand pull and the placing of contracts rather than the sponsoring of individual projects.
An alarming theme has run through the comments of Labour Members. It is that they were prepared to entertain a sophisticated and significant application for money from Mr. Iann Barron and his colleagues. It was risk money, money which perhaps the merchant bankers were not prepared to put up. They therefore came to the NEB. Labour Members must realise that, if they are prepared to trust those three gentlemen with £50 million drawn in two tranches, surely they must trust them to make the much smaller management decisions which will be for the good of the delicate chemistry of that company in its infant state.
The right hon. Member for Manchester, Openshaw (Mr. Morris) completely misunderstands the nature of this business. Believe it or not, Mr. Speaker, it is a cottage industry. It will be a very large 1455 cottage industry, particularly when it comes to software development. It will grow in towns like Norwich, and Newbury, as well as Bristol which is far more than a town, and I shall not insult its status by describing it as such. The software men live where they like and do what they like. They put themselves together in small teams. It so happens that this one will have a production facility grafted on to it in the Bristol area. Its significance is strategic. It does not matter that it is going to Bristol. The important factor is that it will be part of the British list of options in the manufacture of these devices. Other companies such as Plessey, Ferranti, Mullard and GEC are involved. The jobs that Labour Members are looking for will spill around the company in their own way, and that will be when these devices are applied and interfaced with other devices. They can then travel back to the West of Scotland, if need be, or to Manchester or to the area of my hon. Friend the Member for Sowerby (Mr. Thompson).
We look forward with some interest to the reply of my hon. Friend the Minister.
§ Mr. Gordon A. T. Bagier (Sunderland, South)
I rise to tell the Conservative Members who have spoken in the debate what activates the thoughts of myself and my right hon. and hon. Friends on this matter. Nothing crystallises the mind more quickly than to know that male unemployment in one's constituency is running at 14 per cent. Nothing activates the mind of a thinking and caring Government—at least, nothing should—more quickly than facts such as that. Therefore, when a large new technological interest wants to establish itself particularly when it wants to use a fairly substantial amount of public money to do so—the Government should try at least to influence where that business should settle down.
Areas such as mine in the North-East and the North-West are suffering a tremendous run-down of established traditional industries. The Conservatives are arguing the cases of their areas, and I fully understand that. That is natural and logical. However, the logic of their argument is that any new technology of this 1456 kind must settle in an area that already has that technology. That means that the run-down in the shipyards, in the mines, in the textile industries and in the various other industries that have been the mainstay of most of the areas that are suffering high unemployment would not be replaced by new industry.
§ Mr. Waldegrave
That is not our argument. The right hon. Member for Manchester, Openshaw (Mr. Morris) can make a good case for a great deal of the technology going to the North-West. We are not saying that it must go to areas where there is similar technology, but that we must allow the people involved in the chemistry of creating a new company to make their own decisions.
§ Mr. Bagier
I followed that argument well. My point is that the Government of the day—with a considerable investment in that industry—should try to influence decisions. My right hon. Friend tried to influence decisions. Indeed, he received certain undertakings, but they were reneged on. That is a matter that must worry the House. If a large industry of that nature is to be created, we are entitled to ask what the score is. We are entitled to say that we have a problem in the North-East, in Wales, and in the North-West, and to ask whether there is any way in which we can be helped. The Government have the responsibility for the social consequences of what is happening. The hon. Gentleman may wish to argue for a complete free-for-all, but it is not entirely within the licence of Inmos to make that decision. This was a joint concern with the NEB. The NEB, as the major partner, was negotiating with the Government on where the jobs could and would be created.
Mr. Barron wrote to the North-East in derogatory terms. I take issue with him. I do not think that he can be called an expert on the North-East. However, I believe that Mr. Barron wrote in those terms because he knew that there would be a row. He changed his mind and ratted on a Government decision, and he used those terms in order to take some of the heat off his back. I cannot forgive him easily for doing that, because there is no measuring the damage that a man of such substantial standing in industry could have caused to other potential manufacturers.
§ Mr. Colvin
We made the point specifically that Mr. Barron had never given a commitment, so he was not reneging on anything. I remind the hon. Gentleman of not one but seven answers to parliamentary questions given by the hon. Member for Nuneaton (Mr. Huckfield), when he was a Minister, on the specific question of the siting of the production unit. He said that it was a matter for the company and the National Enterprise Board. Mr. Barron may not be an expert on politics, on the North-East, or on South Wales, but he is an expert on microprocessors.
§ Mr. Bagier
I accept that. However, Mr. Barron is not an expert on the geography of Britain and the language that he used in his letter inflamed Members representing the North-East. I have the highest regard for my hon. Friend the Member for Nuneaton (Mr. Huckfield), but, with the best respect in the world, he was a junior Minister in the previous Administration. He was not a Secretary of State or a Minister of State. He was not privy to the discussions about which my right hon. Friend has informed the House tonight.
The Minister may smile, but I hope that he will at least accept the fact that my right hon. Friend said categorically that to his understanding an assurance was given by the NEB. If it had not been given an IDC would not have been granted for the original establishment in Bristol. If that was the understanding, not of a junior Minister—my hon. Friend the Member for Nuneaton—but of the Secretary of State and the Minister of State, it is fair to say that the Government are playing with words. They are trying to find a formula to excuse themselves for an inexcusable move away from the social responsibilities of any Government towards areas that are having a tough time at the moment.
§ Mr. David Mitchell
If a Minister in the Department of Industry in the previous Labour Government gave the answers to parliamentary questions read out by my hon. Friend the Member for Bristol, West (Mr. Waldegrave) and those answers were at variance with the views of the other Ministers in the Department of Industry, is it not conceivable that there is some misunderstanding here?
§ Mr. Bagier
No, I do not think so. I have not had the opportunity of examining the answers in detail. I believe that the hon. Member for Bristol, West (Mr. Waldegrave), in his short intervention, referred to its being the responsibility of Inmos and the NEB. The hon. Gentleman indicates that he agrees with me. Therefore, the NEB, which was acknowledged as the senior negotiating member of that group, had already given a commitment to my right hon. Friend the Member for Swansea, West (Mr. Williams). That is the point that we are trying to establish. The Minister may make play of the fact that a junior Minister put words in that form, but it still does not take away from the substance of my right hon. Friend's statement that the undertaking was clearly and categorically given by the NEB to get the IDC for the original establishment in Bristol.
Having established that fact—at least, I hope that we have established it—I hope that the Minister will specifically refer to that matter. I have no disrespect for my hon. Friend the Member for Nuneaton. However, I hope that the Minister will not play on his words in that respect. Does he or does he not accept that, on the best information available to him, the previous Labour Government were given undertakings by the NEB that the establishment of the manufacturing units would be in development areas or in special development areas. If so, has the hon. Gentleman or the Secretary of State changed the direction of the NEB or, alternatively, given in to pressure from Inmos and the NEB combined?
I hope that in replying to the debate the Minister will be able to justify the situation so that I can explain it to my constituents or to those who hoped to work in the Washington area had we been fortunate in getting the first manufacturing establishment in that area. At the moment, it looks as though the Minister and his colleagues are about to rat on a decision that had social undertones in the face of something that seems to have been determined by the whims of one or two senior executives in Inmos.
§ 10.3 pm
§ The Under-Secretary of State for Industry (Mr. David Mitchell)
I congratulate my hon. Friend the Member for Bristol, North-West (Mr. Colvin) on 1459 having taken the opportunity that this debate has presented to raise issues of concern both within and beyond the House.
I shall deal first with the question concerning the Supplementary Estimate. This provision covers the conversion to equity—that is, to public dividend capital—of National Loans Fund finance provided to British Leyland by the previous Administration. As most of the debate has been concerned with the alternative expenditure that the Government might have undertaken in the area of Inmos, I shall now move on to deal with that matter.
I noted the presence of my hon. Friend the Member for Gloucestershire, South (Mr. Cope) throughout the debate. I know that he is deeply concerned, because the potential site is technically within his constituency.
I listened carefuly to the points made by my hon. Friends the Members for Bristol, West (Mr. Waldegrave) and Bristol, North-West.
The future of Inmos in general and the location of its production facilities in particular have attracted a good deal of speculation. I must say at once that I shall not be able this evening to announce any decision by the Government on either the further public funding of the company or the location of its first United Kingdom manufacturing unit.
§ Mr. Charles R. Morris
I can understand that the Minister is not in a position to give that information tonight, but can he indicate when the decision is likely to be made?
§ Mr. Mitchell
I will deal with that in the course of my speech because it is a matter that was raised by the right hon. Member for Swansea, West (Mr. Williams).
The right hon. Member for Manchester, Openshaw (Mr. Morris) earlier pleaded the advantages of Manchester, and other hon. Members, including my hon. Friend the Member for Sowerby (Mr. Thompson), referred to the advantages of their areas. Hon. Members who come from areas of high unemployment naturally believe that they have a strong claim, but there are other aspects that have to be taken into account.
I think that the House will sympathise with me in the task that I have in dealing 1460 with conflicting views. I am reminded of the man who asked whether he should be represented by a one-armed solicitor because at least the solicitor would not be able to say "on the one hand" or "on the other hand". There has certainly been a good deal of representation from both sides of the House in respect of the siting of this centre.
The right hon. Member for Openshaw specifically asked me about the report from PA Management Consultants Ltd. The report was commissioned by Inmos. It belongs to that company and does not belong to the Government. The contents of the report will no doubt arise in connection with the IDC. I will come to that point during my speech.
§ Mr. Mitchell
If the right hon. Gentleman will wait, I shall come to that later in my speech.
Inmos represents the most important green field investment by the NEB. My hon. Friend the Member for Bristol, North-West referred to it as being technical creativity, and I think that that is a phrase that encapsulates much of what is recognised about this siting. Whilst other plants have been established in the United Kingdom to manufacture standard integrated circuits in high volumes none of the companies concerned is British controlled. Inmos is the only such manufacturer, and I assume that this was the principal reason why the previous Administration considered that it was worthy of support.
My hon. Friend the Member for Coventry, South-West (Mr. Butcher), who has considerable interest and experience in this area, also referred to the importance of the technological advance.
Everyone has always recognised that the project is subject to an unusual degree of risk. While the original proposals envisaged a total of £50 million equity funding by the NEB, I understand that the previous Administration accepted the NEB's view that it was essential to review the project at the halfway stage and so decided to approve an NEB equity input of £25 million in the first instance.
When we took office, we examined the Inmos project carefully in the context of 1461 considering the future of the NEB as a whole. We decided that the NEB could perform a useful role in familiarising the capital market with the investment potential of high technology ventures. This was recognised in my right hon. Friend's statement of 19 July last setting out the Government's policy towards the NEB. On that occasion my right hon. Friend said that he would wish to subject the Inmos project to detailed review before agreeing to the second tranche of £25 million expenditure originally envisaged.
I do not suppose that any right hon. or hon. Member will deny that Inmos is a high risk project. That has been stressed by a number of hon. Members, including the hon. Members on both sides of the House representing Bristol who, if the project receives further money, are anxious that it should he sited in that city.
It is true that the market for standard integrated cicuits is increasing world-wide, but the company will be operating at the frontiers of the technology and the competition is fierce from well-established and wealthy rivals. Each is seeking to secure a substantial proportion of the world market and success or failure will depend on producing the right product at the right time. In particular, any company entering this field is vulnerable to delays in product development or in establishing production lines, or because of unforeseen technical difficulties or fluctuations in the market requirement.
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. It is significant that the total requirement for Government funding has been held at the figure of £50 million that was identified two and a half years ago when the project was first put to the Government of the day.
Earlier this year, the NEB sought the Government's approval for the release of the second £25 million funding for the project. Since then, the Government have been giving careful consideration to the issues involved.
The right hon. Member for Swansea, West referred to delay and indicated that he was anxious to see an early decision, and the right hon. Member for Manchester, Openshaw referred to the same matters. I make no apology for the fact 1462 that we have not yet taken a decision on the future funding of Inmos and the application for an industrial development certificate for the location of its first manufacturing unit at Bristol. It is a matter of critical importance for the NEB and the company, and the degree of parliamentary and public interest in the decision is a firm measure of the controversial nature of the issues involved.
Inmos has not yet drawn about £10 million of its original £25 million of NEB funding, so there is no question of the company being embarrassed financially by the few weeks which we have taken so far in examining it. A decision on the company's application for an industrial development certificate cannot sensibly be taken separately from the decision about the second £25 million. The important thing is to ensure that the decisions—and there are two decisions—when taken, are in the best interests of the company and the country at large, and an announcement to this effect, dealing with both decisions, will be made as soon as possible.
§ Mr. Alan Williams
Will the Minister have words with the Secretary of State to ensure that when the decision is taken we have a statement from the Dispatch Box, because there are two issues of great importance: on whether or not there should be the second public funding—we are in favour of it; some Conservative Members are not—and on the question of siting, which excites the attention of hon. Members in most parts of the House?
§ Mr. Mitchell
Yes, I am very much aware of the keen interest which is felt by hon. Members on both sides of the House, and I shall convey the right hon. Gentleman's view to my right hon. Friend the Secretary of State.
As is known, the company's choice of Bristol as the site for the first production plant, which had been endorsed by the NEB, has generated a good deal of discussion. My right hon. Friend has received the views, orally and in writing, of a large number of right hon. and hon. Members whose constituencies are in the assisted areas urging that the plant should be directed to one of those areas. As I have already indicated, the Government have not yet reached a decision on the issue.
1463 Perhaps, however, I should deal tentatively—I can do no more—with the points made by the right hon. Member for Swansea, West, who referred to the letter published in The Times from himself and a number of his colleagues. I have to say to him—I am sure that he will appreciate the difficulties—that, of course, there is the accepted arrangement that the papers of a previous Government are not available to their successors. I am, therefore, in some difficulty about the situation.
The hon. Members who wrote to The Times referred in their letter to wishing to place on record the commitment that they received from the NEB and Inmos. We can find no record of an unqualified commitment. The right hon. Gentleman will be able to help me by saying whether he and his colleagues entered into a commitment to spend £25 million of the taxpayers' money on this expansion without having secured a contract from the company to ensure that it went to an assisted area. The previous Secretary of State could have used the statutory powers of direction over the NEB had he sought to do so.
§ Mr. Alan Williams
I think that the hon. Gentleman will appreciate that we had already authorised the £25 million prior to the location decision. We had a series of meetings with either the chairman or deputy chairman of the NEB. Clear assurances were given—this is the recollection of the two ex-Ministers and myself—that the subsequent production units that would arise at a different stage would be placed in assisted areas. That assurance was given to persuade us to grant the IDC that was required for Bristol.
§ Mr. Mitchell
I am interested in what the right hon. Gentleman says. He will appreciate the difficulties that are faced by Ministers in the new Government. I cannot find any unqualified commitment of the sort to which the right hon. Gentleman refers. I am bound to say that I am somewhat surprised that a commitment to spend such a large sum was given without any formal contract being entered into on a matter of such enormous importance.
There is not much that I can add to the delete save to say that the IDC appli- 1464 cation was received some weeks ago. Much of the processing is under way on a contingency basis before a decision is made on the second £25 million. The normal IDC application procedures are being followed. My noble Friend the Minister of State will be seeing Inmos shortly.
§ Mr. Williams
I believe it is correct that Ministers have not yet seen the PA report. That means that they have not studied it. It is important that they have a chance to study the report before the meeting with Inmos takes place.
§ Mr. Mitchell
I am grateful to the right hon. Gentleman, who was a Minister in the Department of Industry during the previous Labour Government, for drawing attention to the importance that he attaches to the examination of the report by my noble Friend. I shall convey the right hon. Gentleman's remarks to my noble Friend.
The right hon. Gentleman referred to section 7 assistance under the Industry Act 1972. He asked me whether any section 7 assistance had been offered to Inmos. First, we must have an application. We do not go around offering money. As the right hon. Gentleman knows, the system is that applications for assistance are made. However, I can tell him that informal discussions by the Department with the company have ensured that the company has been made aware of the scale of assistance that might be available were it to apply for it.
I take up the remarks of the hon. Member for Sunderland, South (Mr. Bagier). The Government are keenly aware of the immense social problems caused by unemployment and the deep concern that is present on both sides of the House regarding social problems in areas of structural weakness and high unemployment. We are not divided about that. While carrying out a review of the project, the Government will take full account of all the points that have been raised by the various interested parties.
We need to take a long and careful look at the prospects and viability of the whole project. If we are satisfied on that point, we must decide how to apply our policy and ensure its greatest success.
§ Mr. Williams
I have still not received an answer to the question that I asked about the report of PA Management Consultants. The report has been under discussion for some time. I am not asking 1465 whether the Minister will convey my question to his noble Friend. Have any Ministers in the Department read or seen the report?
§ Mr. Mitchell
I can speak only for myself. I cannot speak for other Ministers. I have not seen the report. However, that is not surprising as it is not my responsibility to consider the IDC.
§ Mr. Mitchell
I have been as generous as I can about interventions. No decision has yet been taken. The points that have been raised will be examined carefully by my noble Friend and other Ministers before any such decision. I therefore hope that the House will accept that we are lad that hon. Members have drawn attention to the importance that they attach to this report.
§ Mr. Williams
I must press the hon. Gentleman on that point. Another Minister is sitting next to him. I can ad lib until they have finished discussing whether the report has been read. I want an answer, "Yes" or "No". Has the Minister had an opportunity to see or read that report?
§ Mr. Mitchell
When my right hon. Friend the Secretary of State makes an announcement to the House or conveys information about the decision, I am confident that he will ensure that an answer to that question is given. Indeed, I am certain that hon. Members will table questions that are designed to discover the answer to that question. I cannot give an answer before any decision has been taken and when full consideration has not yet been given to the IDC.
§ Mr. Bagier
That recent exchange has underlined the need for the Secretary of State to make a statement. The Under-Secretary has said that he will convey our opinions to the Secretary of State. However, the Secretary of State will need to 1466 bear those factors in mind when making his decision. He should make a statement so that he can be cross-examined, should that prove necessary. I should like an assurance that it will not be made in the form of a press statement, for example, after tomorrow's Cabinet meeting.
§ Mr. Speaker
Order. The same ruling still applies. An answer must be given to the first intervention before the right hon. Gentleman can intervene.
§ Mr. Mitchell
I am trying to help the hon. Member for Sunderland, South. I appreciate the importance of his question and the widespread desire for a statement. I shall convey the exact points that have been made to the Secretary of State. No doubt he will consider them sympathetically.
§ Mr. Morris
The Minister has been most forthcoming. I appreciate his indulgence in giving way. The report is vitally important. Will he convey to the Secretary of State the need to publish the report or to make it available in the Library?
§ Mr. Mitchell
I take the right hon. Gentleman's point. When he looks at the record tomorrow, I believe that he will find that I have answered it already.
PA Management Consultants Limited was invited to advise not only on the assisted area sites but on the suitability of those areas within the boundaries of local authorities that had written to the NEB pressing their claims. It does not follow that it was concerned only with the assisted areas; It was also concerned with the non-assisted areas. That is a factor that we have to bear in mind when examining the report and placing reliance on it.
Our review of these matters has been somewhat lengthy and very detailed, and I make no apology for that. We cannot afford to make expensive mistakes with the sort of sums required for this project.
I have noted with care the points raised in this short debate. I assure the House that they will not be overlooked and that I shall draw them to the attention of my colleagues.