Clause 1

HC Deb 04 February 1981 vol 998 cc312-64

FINANCIAL LIMITS RELATING TO NATIONAL ENTERPRISE

BOARD

4.56 pm

The Minister of State, Department of Industry (Mr. Norman Tebbitt)

I beg to move amendment No. 5, in page 1, line 10 leave out 'increased to £2,251 million' and insert 'reduced to £750 million'.

Mr. Speaker

With this we shall discuss Government amendments Nos. 6 to 13 and 18.

Mr. Tebbit

I am glad to see the right hon. Member for Salford, West (Mr. Orme) in his place. He is not looking very intimidated, perhaps fortified by the earlyday motion on the Order Paper. As he knows, I have never taken personal attacks to heart but I am sorry if he felt that I went so far as to cause him personal stress or distress in what I said to him last week. If I did, I am sorry. I thought that we were in the normal hurly-burly of the House, but I should not like to cause him personal offence.

Mr. Stanley Orme (Salford, West)

I thank the Minister for those words. I hope that the House will excuse my voice. I have a sore throat. I thank the Minister for making public what he put to me in writing. I accept what he says without equivocation.

Mr. Tebbit

I thank the right hon. Gentleman. I am sure that we shall bang words back and forwards across the Dispatch Box with great vigour from time to time, but never with personal malice.

Mr. Robert Adley (Christchurch and Lymington)

I do not wish to intervene in the duet between my hon. Friend the Minister and the right hon. Member for Salford, West (Mr. Orme). The serious point that perhaps lay behind my hon. Friend's comment the other day is that, if we are to discuss Japanese investment in this country, we must recognise that the Japanese are particularly sensitive to public opinion, from opinions emanating from the House and hon. Members representing particular constituencies. We should all be aware of that. Does my hon. Friend agree that that feeling has come through to him in his discussions with Datsun?

Mr. Tebbit

Yes, indeed. Although I understand what my hon. Friend says I do not think that it is relevant to amendments Nos. 5 to 13, and amendment No. 18.

All the amendments are required to make changes in the financial limits of the National Enterprise Board. The Secretary of State needed to accommodate the Government's decisions on British Leyland's 1981 corporate plan, which was announced by my right hon. Friend in his statement on 26 January. In that statement, as the House will recall, my right hon. Friend announced that the Government have approved the 1981 British Leyland corporate plan and have agreed to fund its first two years—that is £620 million in 1981–82 and £370 million in 1982–83. I heard the indrawing of breath of my hon. Friend the Member for Knutsford (Mr. BruceGardyne). Those figures have exactly the same effect on all of us.

My right hon. Friend also announced that it was the Government's intention that the public shareholding in BL should be transferred from the National Enterprise Board to the Secretary of State after the Bill receives Royal Assent.

Amendments Nos. 5 to 12 make the necessary adjustments in the financial limits of the National Enterprise Board and the Secretary of State to accommodate these two decisions. Amendment No. 18 provides that the new limits will come into operation on 31 March 1981, the date on which we intend the transfer of the BL shareholding to take place.

Before I deal with the reasons for these decisions, it would be helpful if I go briefly through the amendments in some detail to explain the effects of each. Amendments Nos. 5 and 6 reduce the National Enterprise Board's financial limits to £750 million. That is the level that will be left for the NEB's other investments when BL has been transferred to the Secretary of State. That limit covers private sector financing for the NEB's companies as well as the public money which the board invests in them. As my right hon. Friend has said, there would be plenty of room within the limit as the NEB disposes of its existing investments.

Amendment No. 7 is a tidying-up measure which repeals the provisions of section 8 of the Industry Act 1975, which are no longer necessary. Subsections (2)(a) to (2)(c) were introduced by section 5(2) of the 1980 Act to provide the mechanism for the Secretary of State to reduce the board's financial limit when shareholdings were transferred by the board to him. It also provided that the NEB's limit should not be reduced below a minimum level of £750 million. Now that this minimum has been reached it is clearly unnecessary to have provisions enabling the Secretary of State to reduce the limit to that minimum.

Amendment No. 8 is a consequence of amendment No. 12 which removes sections 5(4) of the 1980 Act. I shall come to that in a moment. Amendments Nos. 9 and 11 increase the Secretary of State's limit to £4,400 million with the power to increase that further by order to a maximum of £5,250 million. In accordance with normal practice amendment No. 10 specifies that the Secretary of State shall exercise this power only with the approval of the Treasury. The increases for which amendments Nos. 9 and 11 provide are intended to cover the needs of BL following its transfer to the Secretary of State. The House will recall that £1,500 million of the NEB's existing limit of £2,250 million is for BL's needs. When the Bill was given its Second Reading my right hon. Friend made it clear that a further increase would be needed to cover BL's needs, whatever decisions were taken on the corporate plan. However, no estimate could be made of the increase needed until the Government had taken a decision on the plan. Clause 1 accordingly included provision for an increase for BL, but set it for the time being at what is now referred to as a token level of £1 million.

5 pm

Of the new limits specified for the Secretary of State in these amendments, £2,900 million, which can be increased by order to £3,250 million, is intended for BL. As my right hon. Friend explained on Second Reading, the balance of £1,500 million, which can be increased by order to £2,000 million, is for Rolls-Royce.

Of course, it is perfectly legitimate that I should be asked why it is necessary to provide for such a large financial limit for the needs of BL when the Government have agreed to provide considerably less than this—£990 million over the next two years—in public funding. It is necessary because the limits cover the company's external financing from private sources as well as public investment. Accordingly, the limits now specified are intended to cover BL's funding from private as well as public sources over the next five years.

Mr. Nick Budgen (Wolverhampton, South-West)

What has BL said about the possibility of selling parts of the empire over, say, the next five years? I am sure that my hon. Friend will agree that it has been much talked about. Every indication we have heard from BL is that it has resisted that. We should like to know what funding can be expected from that source.

Mr. Tebbit

I do not want to avoid my hon. Friend's question, but perhaps I may come back to it in the course of my remarks on the general reasoning behind the funding, as opposed to those on the way in which the amendments operate.

Mr. Michael Grylls (Surrey, North-West)

My hon. Friend will be the first to appreciate that the circumstances surrounding the borrowing of the NEB and BL are incredibly complicated. Will he give us some indication of the extent of BL's private borrowings? On amendment No. 5 concerning the NEB, why is it necessary still to have a limit of £750 million? I understood that at he end of 1975 all the borrowings—the public dividend capital, the National Loans Fund payments, the external borrowings of subsidiaries and the guarantees, which excluded BL and Rolls-Royce—at that time totalled £268.5 million. No doubt the figure has increased since then, but the NEB has also disposed of assets. Why, therefore, is such a high ceiling needed? It would be most useful if during the debate my hon. Friend gave answers to some of these questions.

Mr. Tebbit

I shall certainly be able to help my hon. Friend in that direction, particularly if the House is moved to give me leave to reply to the debate.

Mr. Dick Douglas (Dunfermline)

Will the Minister also give some indication of the rate of interest charged on BL's private borrowings?

Mr. Tebbit

I am not sure that I shall be able to help too much in that direction because, to a considerable extent, these matters are covered by commercial confidence. However, it is not unusual for public sector organisations to borrow on the private market. British Airways among others have borrowed extensively abroad and feel that that is a reasonable way of conducting their affairs.

Amendment No. 12 removes the aggregate limit and is needed to provide an overall ceiling for the two limits, since it is possible to increase the Secretary of State's limit by correspondingly reducing the NEB's figures. Now that the NEB's limit has been reduced to the minimum level of £750 million, the aggregate control is no longer necessary.

Amendment No. 18 specifies that the new limits in clause 1 will come into operation on 1 March 1981, which is the date when we intend that the transfer of BL to the Secretary of State should take place.

I turn next to the decisions, as opposed to the mechanisms of the amendments for achieving their purpose. As the House will understand, before we arrived at the decision to provide this funding for BL we carefully considered all the choices that were open to us. The board of BL provided us towards the end of last year with a plan for the company's business activities over the next five years. It is not and never has been our practice to try to second-guess the commercial judgment of the boards of publicly funded companies. I am not sure that there is a great deal of evidence that Ministers and civil servants are particularly well equipped, on the basis of their overall track record of the past 30 years, to do so.

However, it was our clear duty to the taxpayer, who ultimately has to foot the bill for BL, to ask three main questions. First, did the plan offer a realistic prospect of success? Second, what would be the consequence of refusing to support the plan? Third, was there any middle way between supporting the plan to the tune of £990 million and refusing to support it?

To take the last of those questions first, my right hon. Friend the Secretary of State made clear when he announced that decision last week that we could find no middle way that made commercial sense for this company. I know that it is tempting to think that selling off the currently profitable parts of the company would at least reduce the cash call on the Government as my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) suggested. It was a matter we had to examine very closely in conjunction with the board. Eventually, however, we and the board were convinced that these parts of the business, perhaps with some peripheral parts as an exception, were vital to attract the collaboration of other manufacturers which must be the long-term objective of the company if it is to survive.

Mr. Budgen

Why, for instance, are trucks and buses essential in the way that my hon. Friend suggests?

Mr. Orme

May I suggest that the truck and bus division, successful as it is, also needs some of the money to survive and to expand?

Mr. Tebbit

I take the point of the right hon. Member for Salford, West but I do not think that it quite answers my hon. Friend's point, which was why we could not take out those parts at present. The simple answer to my hon. Friend is that currently, at any rate, they would not fetch enough money to make any real difference to the company's prospects. Secondly, the company feels that while it is able to consolidate its sales efforts overseas over a wide range of products it is better able to carry on its business.

Mr. James Hill (Southampton, Test)

during the negotiations there was a strong rumour that Sir Michael Edwardes was threatening to resign unless my right hon. Friend the Secretary of State gave way throughout. We on the Back Benches suspect that Sir Michael was giving my right hon. Friend the Secretary of State the same treatment as he is giving to his labour force.

Mr. Tebbit

My hon. Friend the Member for Southampton, Test (Mr. Hill) should not believe rumours. If the implication of what he said was that Sir Michael Edwardes was playing the role of the "bolshie" shop steward and was trying his luck with my right hon. Friend, I do not think he would have got any further with my right hon. Friend than the odd "bolshie" shop steward has got with Sir Michael Edwardes.

Mr. Adley

Obviously no one expects my hon. Friend to admit the truth, as so many of us believe, of what my hon. Friend the Member for Southampton, Test (Mr. Hill) has put. However, has Sir Michael Edwardes expressed any opinion about whether he would like to see parts of BL sold? Is he opposed to that or not?

Mr. Tebbit

If Sir Michael Edwardes had said to us that he would like to sell off parts of British Leyland because in his commercial judgment it was the best thing to do, we would not have stood in his way. If my hon. Friend thinks that it is pointless to ask me a question with the expectation of getting a true answer, I should be obliged if he would let me get on with my speech without so many interventions, because his interventions will not receive replies which satisfy him.

We and the board were forced to agree that these major parts of the business are vital if we are to get collaboration with another manufacturer so that the company can survive—not merely survive, but survive outside the public sector.

We also carefully considered the implications of not giving support to. the plan. It is apparent that it would not be a no-cost route for the Government to follow. As the House is aware, there are about 140,000 people now employed in British Leyland. About 70,000 of those people are in the car business. A large number of other jobs are dependent upon the continuation in business of BL.

It is a matter of judgment how many jobs would be lost if BL were to close. The figure of a loss of 1 million jobs was mentioned in the House, which I think was way out. I am tempted to add up the total number of jobs forecast to have been lost as a result of certain closures by Opposition Members in the last couple of years.It would probably add up to more than the working population of the United Kingdom. It is easy to use extravagant multipliers. [Interruption.] I am grateful for that support. These days, one has to take it from wherever one gets it.

There is no doubt that whatever figure one puts on it, the number of jobs which would be lost inside and outside British Leyland if the company were to close down is considerable—to put it mildly. Job losses on that scale cost the taxpayer money in terms of redundancy and benefit payments and lost tax revenue. No one can doubt that, at a time of high unemployment, those who lose their jobs will be not net contributors of tax paid to the economy but net drawers of benefit. On each occasion, we must face the question whether it is worth while to keep such people at. work if they are consuming wealth more rapidly than they are creating it.

Those are and were heavy considerations in our judgment, but they are not the overwhelming ones. If at any time we became convinced that the company did not have a viable future, I assure the House that we would not shrink from taking the appropriate action, costly though it might be to the taxpayer, because not to do so would be even costlier.

Therefore, the decision turned on the first of my questions: did BL have a reasonable chance of achieving its objectives within the time scale it had set up? In arriving at our decision, we had to consider closely the reasons for BL's poor financial performance during 1980. At the half year, the company turned in a trading loss of £182 million. Although it managed to keep within the limits of Government funding which had been agreed, that was at the expense of reductions in both working capital and capital expenditure.

Therefore, in looking at this year's plan, we had to try to decide how much of last year's poor financial performance was a self-inflicted wound. We concluded that Leyland's poor financial results were due—largely at any rate—to economic factors beyond its control and to which it was unable to respond in time.

5.15 pm

We took into account the fact that many British companies found it difficult to adjust to the strengthening pound last year. We took into account the fact that many major vehicle manufacturers all over the world turned in large losses last year. BL may be our spectacular, but it has not been alone in its difficulties.

Against the backdrop of its troubled financial performance, there was some of the best news for years from BL. It was an unprecedentedly good year for industrial relations within the company. Fewer than 2 per cent. of working hours were lost due to disputes. A substantial new package covering working practices was introduced in the spring of last year, and productivity in BL cars rose by 10 per cent. after a sustained fall for several years. In some parts of the business, notably the Metro operation, it rose by much more. All that happened against a backdrop of 28,000 redundancies and a wage settlement in single figures for the third year running.

During 1980 some of the first fruits of past investments started to come through. As well as the highly successful launch of the Metro, British Leyland brought out a new heavy truck model which has had a good reception, although the market for trucks is now extremely poor. Those new products, together with modifications to some existing products, have helped to turn up the company's market share during the second half of 1980. We believe that during 1980, under difficult conditions, the BL management and work force made real progress towards improving competitiveness. When we weighed up the alternative courses of action open to us we decided to fund the company's plan for two years.

Many years of investment at the taxpayers' expense are now showing results. In order to give the company a chance of success now we cannot let it rest on the laurels of one or two successful new products. Therefore, we have agreed the BL should produce a new medium car—the LM10—as well as strengthening its range of other products. We are also providing the company with funding for restructuring. The radical reorganisation of the business that Sir Michael Edwardes has undertaken is not yet complete. He had much ground to make up when he took over, and the company is intending to incur substantial restructuring costs over the next two years.

Mr. John Bruce-Gardyne (Knutsford)

I am not sure whether this is the right time to raise this matter. If it is not, perhaps my hon. Friend will come back to it later.

It would be helpful to have the Government's reaction to British Leyland's forecast of the trade-weighted exchange rate, because that is crucial. BL says that it has been ruined by the movement of the exchange rate which it got wholly wrong. Do the Government believe that the forecast of a fall from the current rate of 81 to 75 this year, and 65 by 1985 is realistic, bearing in mind that if the moneys which the House has been asked to vote today are funded through Government borrowing, and borrowed at adequate rates of interest, this is likely to push the exchange rate up, rather than down?

Mr. Tebbit

British Leyland was not the only company to get its estimate of the movement of sterling substantially wrong last year. Rolls-Royce was another, and there were many other companies in the private sector which did the same. There were also many economic journalists, some in well-known Sunday newspapers, who got it wrong. Very few people got it right. I believe that it will be difficult for anyone to get it right again this year.

Mr. Budgen rose—

Mr. Tebbit

I shall not give way at the moment.

Sterling has sharply fallen—particularly in relation to the dollar—in the last few days. I am not sure whether my hon. Friend or any of the other journalists on the Sunday papers have made fortunes by being wide awake enough to know that that was going to happen and to speculate on it successfully. I doubt whether any of those who write the smart articles in the press about what the level of sterling will be in future are backing their judgment with their own money. Let us be frank. Her Majesty's Government are not backing Leyland with anybody's money except the taxpayers'.

The point that I should make is that if it is shown that the assumptions in the Leyland plan are so far out that the plan is incapable of being carried through—that is one of the contingencies which has been envisaged in the discussions between the company and the Government—the plan would have to be reviewed.

Mr. Budgen

Is it not the case that when private sector exporters take a view about exchange rate risks, they operate in currency markets or insure in other ways to prevent them being hit by exchange rate fluctuations? Is it not odd that Rolls-Royce originally went bust because of its mistakes regarding the exchange rate yet, again, it has recently taken large gambles on the exchange rate which were not covered by any form of insurance? Are we to understand that both Rolls-Royce and BL are to take another big punt on the exchange rate, again without buying any insurance, in anticipation that, if they get it wrong, the taxpayer will pick up the debt?

Mr. Tebbit

Uncharacteristically, my hon. Friend is tending to bring together two points without separating them properly, as he should. It is true that when a private sector company has contracted to make a sale or is in the process of a delivery, it may ensure against currency risks forward. But I do not think that it would be possible for BL or anyone else to find someone to insure it on a plan of this magnitude against its estimates of the movement of currencies throughout. Those two things are different. One should insure where possible, but it is not possible to insure a plan in this way.

Mr. Cranley Onslow (Woking)

Perhaps I may complete, or correct, that point on the original bankruptcy of Rolls-Royce, of which today happens to be the melancholy anniversary. Surely it was nothing to do with any miscalculation of the exchange rate that caused the bankruptcy; it was simply that it could not calculate properly the cost of what it was making.

Mr. Tebbit

My right hon. Friend is right. I am grateful to him for all that he said, except the reminder of that melancholy anniversary. Not all the funding that BL requires is to come from the Government. As in the past, BL will continue to seek loans from the private sector. The BL board's longer term objective is to achieve collaboration with one manufacturer or several manufacturers to bring about the company's recovery—and recovery means that BL need no Longer be State-owned if it can achieve recovery.

BL already has a major collaborative arrangement with Honda, and the joint BL-Honda car will be launched later this year. We hope that BL will be able to secure other farreaching collaborative deals, including the taking of a major equity stake in BL by outsiders if that makes commercial sense. It must make commercial sense to the outsider, or he would not come in.

I am sure that some of my hon. Friends have it in mind to tell me that they remain less than totally convinced by the arguments that I have put forward to explain our decision. Let me anticipate them by reminding them of the letter sent by Sir Michael Edwardes to my right hon. Friend the Secretary of State for Industry. That letter was published in the Official Report on 26 January. In that letter Sir Michael refers to what would happen if his plan was not being achieved. He records the intention of his board to initiate a review of the plan if it appears impossible to bring about recovery within the timescale envisaged. Such a review would be initiated in consultation with the Government. If circumstances make it necessary, the Government will not shrink from taking realistic decisions, no matter how serious the consequences might appear to be. If there is no hope for Leyland, there is no point in pursuing the plan.

We have notified the European Community Commission of our intention to provide these funds to BL. As BL does not require the funds until the beginning of April, the Commission has adequate time to complete its customary consideration. We do not expect the Commission to raise objections to our proposal.

I referred earlier to the necessity for these clauses to be amended in view of the decision to transfer BL from the NEB to the Secretary of State. A similar decision was taken on Rolls-Royce during 1980. The decision to transfer BL reflects the NEB's wish to see the BL holding treated in a comparable way. It was also the wish of the BL board that the holding in the company should be transferred.

BL is a large company. Its annual turnover is about £3 billion. It has been in almost total public ownership since 1975, and substantial Government loans and equity have been channelled to the company since then. The size of the sums involved in the public funding of BL is such that the Government are inevitably closely involved in major decisions about the company, and the proposed transfer recognises that reality.

Mr. Terry Davis (Birmingham, Stechford)

Will the Minister clarify how the Government intend to proceed before he concludes his speech because it will affect later contributions to the debate? The Minister has explained the reason for these amendments. In this context it is understandable that the Minister should refer almost entirely to BL's corporate plan for 1981 and should touch only briefly on a review of BL's performance in 1980. When a similar decision was taken in December 1979, the Secretary of State made a statement and the Government took an early opportunity to arrange a debate a few weeks later during which the House was able to debate not only the corporate plan for the coming year but the company's performance during the preceding year.

Do the Government intend to act in a similar way this time? Will they arrange a debate, perhaps after the annual accounts have been published, during which we can look at the company's performance in 1980 in some detail?

Mr. Tebbit

It would always be for my right hon. Friend the Leader of the House to decide on such a proposition. It has not been in my mind to propose that we should have a separate debate to consider what has happened in BL. If the House agrees to these sums and these arrangements, I think that BL should be given a chance to get on with the making and selling of motor cars rather than being perpetually looked at and dragged up by the roots to see whether it is growing before putting it down again. We must keep an eye on what is going on, but it is not always productive to debate BL's affairs. If the hon. Gentleman has the good fortune to catch Mr. Speaker's eye. he may be able to make some of the points that he would have made in a separate debate.

Mr. John Maxton (Glasgow, Cathcart)

Some Opposition Members hoped that the Minister might say a little more about the first amendment, which reduces the NEB's financial arrangements to £750 million. Yesterday, the Daily Express described the effect of this as the NEB having its wings clipped. We should like to know a little more about the impact of this change.

Mr. Tebbit

If the House would agree to my replying to the debate later I could deal with those points then. I think that most hon. Members are anxious to debate the BL issue, but I shall certainly respond to any points on the NEB at that stage.

5.30 pm

Mr. Orme

We welcome the proposals for the funding of British Leyland. They are important for the survival of a great British industry. We believe that the breathing space that the sum of £980 million gives to British Leyland is also important. It has two years in which to turn around some of the difficulties and problems that it has faced.

A point was raised earlier about the trucks and bus division of British Leyland. A recent editorial in the Financial Times commented that that division needs financial support in its development in the coming months and years. It needs public support and public money.

The Minister commented on my remark that if British Leyland closed about 1 million jobs could be affected, directly or indirectly. I draw the attention of the Secretary of State to that because he challenged me on the figure. I have looked into the matter. The first reference to that figure was made in 1975 by my right hon. Friend the Member for Huyton (Sir H. Wilson) when he was Prime Minister and when he announced the Government's acceptance of the Ryder report. In a report for Sewells Digest in December, Professor Bhaskar gave a figure of 700,000. I consulted Britsh Leyland, and perhaps I gave the impression that that was the figure to which the management subscribed. It would be incorrect for me to say that the management subscribed to that figure, although I was informed that it is widely accepted within British Leyland. I was told that, if British Leyland were to close, 400,000 jobs would be affected directly.

We can go further than that. If British Leyland closed, the component manufacturers, many of whom are working only partially for British Leyland, could be affected. Many of those companies could collapse and close. We must also take into account steel, the mining industry and transport. I do not want to bandy figures about, but I feel that there is justification for saying that a large number of jobs—between 700,000 and 1 million—would be involved. That is the size of the problem about which we are talking.

If we look at the problem in terms of employment we must take into account the fact that an unemployed married man with two children would cost the State about £6,000 a year. That includes the loss of tax input as well at the benefits that he draws. So we are talking not only about a British product or the survival of a British car company, but about a large number of jobs.

Mr. Bruce-Gardyne

The right hon. Gentleman is indulging in the fallacy that seems to be widespread that we are faced with an alternative between the acceptance of Sir Michael Edwardes' latest version of the future and all that it implies for public finance, and closure. Those are not the sole possibilities. Some hon. Members are concerned about the reluctance of British Leyland to recognise that many parts of the business might be profitable as a going concern if they were free from the incubus of having to carry on the company's mass car division, which would no doubt continue to need longterm support.

Mr. Orme

I take the point, and I know the philosophy from which the hon. Gentleman speaks forcefully and honourably. I should like to look at the question of British Leyland in that context. There will now be four divisions, and there will be a possibility of selling one or more of those divisions. To do that would injure the whole, and it would not necessarily recoup for the taxpayer the benefits to which he is entitled when profits are made.

During an interview with Mr. Brian Walden on "Weekend World" last Sunday, the Prime Minister said that she would not rule out parts of British Leyland being sold off at a future date. We are totally opposed to that, and I believe that British Leyland is totally opposed to it. It would be morally wrong, having pumped British taxpayers' money into the company, not to give taxpayers the benefits when British Leyland starts to make a profit.

Mr. George Park (Coventry, North-East)

Does my right hon. Friend agree that when Conservative Members talk about selling off parts of British Leyland they ignore the integrated nature of the company and the fact that there are economies of scale? If companies are hived off, it would not be possible to have the long runs of producing components that is possible under the total Leyland banner.

Mr. Orme

I thank my hon. Friend, who has a great deal of experience in the car industry. I believe that he is correct.

It is essential that the company should survive. It would be wrong to split it up. It would demoralise the management and workers of British Leyland. It is in the British interest to make the company successful, and I believe that it can be made successful. The corporate plan that has been accepted by the Government is workable. The Secretary of State, with his reputation on market forces, would not have accepted Sir Michael Edwardes' proposals if he did not think that they were viable and workable.

When we talk about wets in the Cabinet, we are talking not about the Secretary of State, but about people such as the hon. Member for Knutsford (Mr. Bruce-Gardyne), who believes in market forces. Here, we have an indication that the Government are prepared to use public money—rightly—to sustain a firm that needs help now.

Mr. Adley

Is it the right hon. Gentleman's opinion that those who work in the denationalised section of Rolls-Royce are demoralised?

Mr. Orme

We could go over the Rolls-Royce issue again. In my opinion, what was done was wrong. But to start interfering with British Leyland, after all the traumas that it has had in the past, would be serious.

I turn now to the matter of the exchange rate, which was raised by many hon. Members, not least Conservative Members. It could be disastrous not only for British Leyland but for the private and public sectors generally if the exchange rate of the pound against the dollar were to rise to an unacceptable level. It would close many companies. The Government have a responsibility to consider what the exchange rate is doing to British industry, and to take some action in that regard. It is not only British Leyland that is on the line here; many companies, both public and private, are affected.

The Minister has referred to Rolls-Royce. We should like to have further information as to the financial arrangements for Rolls-Royce, and not least its accountability. We should like to know how the matter is to be dealt with, and whether it is to be reported to the House. A great deal of money is being voted for Rolls-Royce. Now that the Secretary of State—as with British Leyland—is taking the shares under his own control, he must be answerable to the House. There are pertinent questions which should be raised, either from the Government Benches or from the Opposition Benches, and the Government ought to look at them very closely. We shall certainly return to the matter of Rolls-Royce.

We are gravely concerned about the National Enterprise Board. We are concerned about the attitude of the Government and not least about the attitude of the Secretary of State. In dealing with the functions of the NEB, the Secretary of State said on Second Reading: They are primarily to dispose of its assets to the private sector, which it has begun substantially to do, to manage its portfolio to that end, to use its limited and declining resources only in partnership with the private sector and only in potentially profitable high technology projects which in the present period of desperately low profitability might not be taken up by the private sector alone, and to stand ready to provide some finance for suitable small firms and regional projects. In the same debate, the Secretary of State said that the NEB is to manage the remaining portfolio of about 60 companies that are still in its possession, and to prepare them as quickly as possible for sale to private investors".—[Official Report, 1 December 1980; Vol. 995, c. 34–6.] That, again, is a disastrous decision against the background of the current industrial position to sell off assets that were making a profit for the taxpayer.

There is a need for an expanded National Enterprise Board, not a reduced National Enterprise Board. The argument is set out in the TUC Economic Review 1980. I understand that a copy of it was sent only yesterday to the Secretary of State. On page 30, under the heading "A new planning framework", it states: A body like the NEB is needed but it must be strengthened in two ways. Us scope for intervention and the finance available to it must be greatly expanded. Secondly, it must operate through a system of planning agreements and be linked to the development of industrial democracy. What the TUC is saying is right, and I have some questions to put to the Minister or to the Secretary of State arising out of the NEB and some of the problems that it is facing.

5.45 pm

Mr. Don Dixon (Jarrow)

The NEB is the only means by which we can get investment in the North of England. We have the highest percentage of unemployment in England, Scotland or Wales. We have the second lowest number of vacancies in England, Scotland or Wales. We do not have a Northern development agency. We do not have a Minister for the North. We do not have a Grand Committee to deal with Northern affairs. We do not have a Select Committee to deal with Northern affairs. We have absolutely nothing. Unemployment in the North is reaching intolerable heights, and something will have to be done about it. I know that the Secretary of State for Industry has been having discussions with the Northern group of Members of Parliament. I hope that we shall very soon have some suggestions from him so that we can co-ordinate the efforts being made in the Northern region to get some industry there. At the moment, the only thing that we have is a Northern regional development board.

Mr. Orme

I thank my hon. Friend for his intervention. I think that the Secretary of State was listening intently to his remarks. My hon. Friend pointed out clearly the dilemma within our society, and the division between the North and the South of the United Kingdom. There are a few exceptions in different areas where there are small pockets of heavy unemployment, but generally speaking it is correct to emphasise that division.

Something has to be done about the Northern region; I accept that without qualification. I am arguing that the National Enterprise Board is one of the weapons that can be used, just as an investment bank could be used to help the Northern region. The Secretary of State has a responsibility to tell the House at the earliest opportunity what are his plans for the Northern region, and how it can be assisted. It is not a matter of looking at benefits, important as they are. Jobs are the major priority.

Mr. Grylls

Perhaps the right hon. Gentleman would be wrong to over-egg the pudding of hope—if I may use that expression—in regard to the NEB being able to do a lot in the Northern region. In the first five years of the life of the NEB, when the Labour Government were in office, unemployment soared in the North-East and the NEB did very little about it. It was not able to do much about it and probably is not able to do much now.

Mr. Orme

I am not suggesting that the NEB can automatically solve all these problems. It will be very difficult to solve some of the regional problems. If I may digress for a moment, it is obvious that Liverpool stands out as a city with problems because of its geographical position and the fact that it has been left behind in the new industrial revolution, of which it has not been part.

We have learnt from the problems of the Labour Government. We realise that not enough was done; that there was not enough intervention. I am not suggesting that one agency, the NEB, is the answer to the problems of the North-East, but it could be one of the factors in helping to resolve those problems. That is why the NEB needs to be expanded.

While on the subject of the NEB and support for industry, I should like to ask the Secretary of State to comment on the position of International Computers Ltd. which is reported today in the Financial Times. The shares of that company have been sold off. Now it is in dire circumstances. Apparently the Department of Industry is not prepared to comment at the present time. The Secretary of State ought to make a statement very soon to the House—if not this evening—about the position of ICL. My hon. Friend the Member for Whitehaven (Dr. Cunningham) will have something to say about that when he winds up for the Opposition.

Many of us have received a letter today from the convener of Talbot UK at Linwood concerning the position there, asking us to bring pressure on the Peugeot-Citroen group from the Department of Industry to ensure its future. It is no good the Government talking of fetching in fresh investment if the investment that has come in is allowed to go. That is the crucial point. Will the Secretary of State, or the Minister, in replying to the debate, say something about the Talbot situation? The problem that has arisen in the North-East could occur in Scotland.

Mr. Budgen

Is the right hon. Gentleman in favour of further subsidies for the Linwood plant? If so, does he favour further support for De Lorean and for Nissan? If so, would he then be in favour of a general subsidy for all car producers? According to his philosophy, some element of equality, it seems, should be brought into this situation so that all get fair shares at the trough.

Mr. Orme

The workers who have written about this situation have not written on a philosophical basis. They are writing about their jobs, their families and their futures. They are demanding a future with jobs and saying "Give us the robots. We are prepared to work. We are prepared to negotiate." They are not asking simply for a handout. They are asking for consultation and for agreement to be reached.

I believe that the Government should intervene. I believe that the Government, together with the people who work in this plant, can play a major part in keeping it going.

The Prime Minister was asked by Brian Walden about Talbot and ICL. She replied: If they're slap right in the Midlands or if they're slap right in a non-development area, they do not qualify under existing legislation. Brian Walden then asked: And they won't get it? The Prime Minister replied: And they won't get it. If in fact they're in the development areas they already qualify for help". Will the Government give help to Talbot at Linwood. Will they give help to ICL? Will they try to assist in the Tate and Lyle situation in Liverpool?

Mr. Budgen

Is the right hon. Gentleman in favour?

Mr. Orme

I am in favour not just of protecting jobs. That is the first thing. I am in favour of protecting the industrial base within our society which is being dangerously narrowed. It does not matter whether one comes from the North-East, Scotland or Wales, from Greater Manchester, Liverpool or parts of the Midlands. These are problems that the Government have to face. They are not facing them. We want some answers.

Mr. Tebbit

I am not sure that I can offer the right hon. Gentleman an answer. Has he worked out how much he proposes should be spent on these matters and from where the money will be raised? Will it mean income tax at 95p or 105p in the pound by the time he has finished?

Mr. Orme

The Minister is being silly. I am saying that these matters have to be considered, and that there has to be consultation. Of course, they have to be costed. One has to do what has been done with British Leyland. But the Government have to take some action, and they are not taking it at the present time.

Mr. Tebbit

I hope that the right hon. Gentleman realises that we cannot spend the same pounds twice over. The very fact that we have invested these vast sums, or are proposing to do so, in Leyland may preclude others from receiving assistance. There is not an unending supply of resources to invest in companies that consume rather than create wealth.

Mr. Orme

There are the North Sea oil revenues. Instead of using them for tax handouts for the better-off, the Government should use them for industry.

I wish to draw the attention of the House to what has happened to the manufacturing base since the Government came to office. United Kingdom manufacturing production has fallen by 16.5 per cent., or one-sixth, since the Tories came to power in May 1979. This decline has more than eliminated all the growth achieved in the 1970s. Current levels of manufacturing production are the lowest since the 1960s. The rate of decline is unprecedented. The fall of output in the period 1979–81 is almost certain to be greater than that experienced in the slump between 1929 and 1931.

Mr. Adley

On a point of order, Mr. Deputy Speaker. Are you content that we should develop this discussion into a general economic debate?

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

We are dealing with amendment No. 5, in page 1, line 10.

Mr. Orme

I did not expect the hon. Member for Christchurch and Lymington (Mr. Adley), of all people, to try to silence debate in this House. I am talking about intervention and what the National Enterprise Board can do. We are talking about the NEB in this Bill.

The recent slump in manufacturing output is unmatched anywhere in the industrial world. Our slump is greater than that in any other industrialised nation. We cannot stand by in a complacent manner. We need action. We need intervention. We have had some intervention through British Leyland. No doubt we shall get it through the steel corporate plan in a short time. I would say to the Secretary of State and to the Government that if we are not careful we shall reach a position in which British industry will not be able to recover. When the upturn comes, we shall not have the skilled labour and the manufacturing capacity. That must be a matter of serious concern to hon. Members on whichever side of the House they sit.

I make no apology for raising these issues in the manner that I have done on the Floor of the House. Time is running short. It is time for action. It is time that this Government took action.

Mr. Grylls

In proposing this amendment, my hon. Friend the Minister of State trod a delicate path. Those of us who have advanced a slightly different view are sympathetic to the difficult decision that the Government had to take. It must have been a difficult decision for the previous Government and an even more difficult one for this Government. I hope that no one on the Conservative Benches will think that any remarks of mine mean that I propose that Leyland should be closed, or anything as ridiculous as that. There are, however, a number of us who have said that we believe that the Government should look more closely, and should still look more closely, at the possibility of an earlier return to the market of certain parts of British Leyland. That would ease the burden on the taxpayer and on Government borrowing. I do believe that there is a middle way. I beg the Government to go on looking at this matter during the time of the current Leyland corporate plan.

Many of the problems that Leyland has so far not succeeded in solving will not be solved by money. Throwing money at Leyland is not the cure-all. I appreciate that to develop new models requires money. However, far too much of the £1,300 million put into Leyland since January 1975 has gone to meet losses, and those losses have increased. I should still say the same if Leyland was moving towards profit, but it is moving towards increasing losses. The loss for the 12 months up to June 1980 was £317 million, which is almost exactly equivalent to the sum that my right hon. Friend agreed on 19 December 1979 to put into BL. Instead of going to investment, that money has gone to meet losses.

6 pm Leyland, with the £1,300 million that has gone to it in the past five years, should have been able to produce four or five new models, which would have put it in a healthy financial position today such that it would be making a profit. I know that it is difficult, but I ask the Government to exert as much influence as they can upon BL to put its house in order by real improvements in productivity and further demanning. BL still has too many people. I do not underestimate the success of Sir Michael Edwardes in reducing BL's overall manpower without a major bust-up. However, those who wish BL well believe that he must go further. The losses indicate that far too many people are producing a relatively small number of cars, especially compared with the number in 1972, for example.

I approve of the transfer of responsibility from the NEB to the Department of Industry. BL will continue for some years to be a massive problem for the Government, and it is realistic that the major decisions should be considered by the Cabinet. However, the Government should be monitoring its performance in manning, productivity, and so on. There is concern about how that will be done. Far be it from anyone on the Conservative Benches to propose greater bureaucracy in the Department of Industry. However, if we are putting in the gigantic sum of nearly £1,000 million over two years, the company's performance must be carefully monitored. I hope that my hon. Friend will deal with that point.

Amendment No. 5 concerns the reduction in the NEB's borrowing limit. It may sound strange for me to quibble about the reduction. However, it is largely cosmetic. The reduction arises out of the removal of BL from the responsibility of the NEB, so we are talking only of the companies remaining, most of which are relatively small. Why does the NEB still have to have a borrowing limit of up to £750 million? ICL and Ferranti have been floated off and Alfred Herbert has been put into liquidation. At the end of 1979, the total borrowings of the subsidiaries of the board were £268.5 million. I hope that that figure has not increased much during 1980. Why, therefore, does the ceiling need to be as high as £750 million?

On 20 December 1979 the Secretary of State quoted a letter from the chairman of BL, stating: The board will monitor progress very closely, and if shortfalls in performance place the achievement of the Plan in jeopardy, then the Board consider that they will have no option but to abandon the Plan."—[Official Report, 20 December 1979; Vol. 976, c. 894.] The 1979–80 plan has fallen below what was expected.

On 26 January 1981 the Secretary of State quoted another letter from Sir Michael Edwardes, giving the assurance that if the new plan over the next two years falls below par it will not be proceeded with. The first assurance was not worth very much. Not only did the plan continue; it was doubled in size. I hope, therefore, that the Government will tell BL that they are watching it very closely and reporting to the House during the operation of the plan. As guardians of the taxpayers' money, we should have at least some idea of what is going on.

I hope that the Government will tell BL that the House takes its letter seriously. It states: Circumstances may arise in which, through a substantial deviation in performance or an appreciable departure from the assumptons underlying it, the Corporate Plan is clearly not being achieved and it appears impossible to bring about recovery within the timescale envisaged."—[Official Report, 26 January 1981; Vol. 997, c. 644.] I shall not weary the House by reading on. The letter then states that BL would therefore not proceed with the plan. I hope that the Government will hold BL firmly to that undertaking. We should ensure that during the next two years BL at least meets the bench marks that it says it will. We can then be assured that it is moving towards a profitable position.

Mr. Park

Like my right hon. Friend the Member for Salford, West (Mr. Ornie), I welcome the Government's proposals to fund British Leyland and the necessary adjustments from one account to another.

The Minister gave a fair account of the reasons why the Government came to that decision, much to the dismay of some of his colleagues. He highlighted the fact that BL and its work force had increased production dramatically, had accepted moderate wage increases over a three-year period, had accepted massive redundancies and had successfully introduced a new car that on all counts is a success.

Those who ask why Leyland has not produced more new models in the past two or three years do not understand that the gestation period for a model is about five years. It is accepted wisdom in the car trade that as one new model is introduced the next must be on the drawing board or there will be trouble sooner or later. Leyland should now be given the opportunity to get on with coping with its day-to-day problems without the spotlight of publicity constantly on it, turning over the bricks to see what is underneath. Let us give it the same opportunity as the private industry to solve its problems and become a success. Indeed, given the expression of confidence in its future I am sure that it will become successful.

When the Secretary of State made the announcement it sounded as if there had been a death in the family. As it was a message of hope, he need not have been so doleful. The same atmosphere prevails in the National Enterprise Board. One feels as if one is in the presence of a dying body. The spirit has gone out of it. No wonder! It has been chopped off at the knees, while industry languishes for lack of investment capital.

The Secretary of State now proposes to reduce the inadequate amount of money available by reducing the function and scope of the NEB. That would be understandable if private investors were lining up to invest, but they are not. They prefer to put their money anywhere but in industry. There is no shortage of money. The country is awash with money which is held by the banks and institutions, but there is a marked reluctance to put it into industry. There is an absence of that commodity that is laughingly called "risk capital". Investors do not want to take any risks. Conservative Members continually say that they want guarantees. That great entrepreneurial spirit is conspicuous by its absence.

While this situation prevails there will be no money to research and develop the products on which the future of our country depends. Government Departments seem to be falling over each other to tighten the noose round the neck of industry. Research and development cannot be carried about without skill and ability. The Secretary of State for Employment suggested that the engineering and other training boards should be funded by industry, yet industry is struggling to stay alive. The Department of Energy increased the cost of energy. As a result, companies that use a lot of gas not only have to pay more for it, but see their profits being syphoned off through the back door of taxation.

The Department of Health and Social Security suggested that industry should be responsible for the first few weeks of a worker's illness. The Treasury has weighed in and has dismantled exchange controls. It would seem that the Government are conspiring to reduce industry to a wasteland. When that expression was first used in this House it was regarded as an exaggeration. In the West Midlands, 50 people chase every job. That phrase is no longer an exaggeration, nor is its use confined to old companies. Indeed, such companies may need to be renewed and to produce new goods. But new industries, such as the electronics industry, also face problems. They cannot get the necessary funds and are being driven into the hands of receivers. That is a sad comment on the spirit of enterprise that we once had, and that I hope we shall regain.

6.15 pm

Mention has been made of Talbot. The hon. Member for Wolverhampton, South-West (Mr. Budgen) asked my right hon. Friend the Member for Salford, West if he wanted all the car firms to have a fair share of the trough. The decision to allow Nissan to develop in this country is fraught with difficulty. Given the present high levels of unemployment, I well understand the desire to snatch at anything that might provide jobs. I would not reject the decision to put a Nissan factory in the Midlands—not in a green field site—where people know something about making cars.

All the leaders in the car industry confirm that that industry suffers from overcapacity. If the Nissan factory is to be sited on a green field site in an assisted area, the Government will probably give considerable grants to that company. Instead of introducing this Japanese Trojan horse, would it not make more sense to give assistance to other multinational companies that are already established in Britain?

We in the West Midlands keep being told to pull ourselves up by our bootstraps. Unfortunately, those bootstraps are badly frayed and if we put any pressure on them they will snap completely. It might be possible to give assistance to Linwood because that plant is in an assisted area. Let the factory have some new equipment. The workers at Linwood, and in Talbot generally, are worried because there has been little or no investment since Peugeot took over. Linwood is still using equipment that was lifted from Coventry after it had done sterling duty producing Avengers. That equipment was lifted lock, stock and barrel and was put into the factory at Linwood. That factory has been using it for a decade or more.

The equipment at Linwood is well clapped out by now. Nevertheless, at Linwood—as elsewhere in Talbot—production levels have been maintained and improved. By general agreement, the quality is better than that found in France. A case can be made for helping Talbot, even within the guidelines that the Prime Minister laid down. If the Government could bring themselves to give Linwood such assistance, it would provide a degree of flexibility and encouragement to do something in the Midlands, in Luton, and in Dunstable, and a completely new company need not be brought in.

The Government are wondering whether the Japanese will help ICL. Everyone agrees that our economic recovery must depend on a sound capital base. A large proportion of that base must come from the Government, because the private institutions and the banks have shown a lack of enterprise as regards investing any money. Industry may be failing, but the money world is doing very nicely, not as a result of any enterprise that it has shown, but solely as a result of high interest rates and a highvalued pound.

Sooner or later we must realise that the prosperity of this country cannot depend purely on juggling with money. We must realise that there are other aspects, including the production of goods which can be sold for a profit and which will provide the money to achieve our social objectives. The Government should seriously consider all aspects of their policy which do not lead in that direction.

Mr. Hal Miller (Bromsgrove and Redditch)

It is always a pleasure to take up the remarks of the hon. Member for Coventry, North-East (Mr. Park), a fellow Midlander and joint chairman with me of the all-party motor industry group. I share very much the hon. Gentleman's concern about capacity and I shall turn to that in the course of my remarks.

I begin by observing that my hon. Friend the Minister of State is in an unusually sunny and civil mood, which is a welcome augury for the debate. I am tempted to wonder whether he has drawn comfort from the motto on my favourite tin of syrup—namely: Out of the strong came forth sweetness. I hope that it will not disturb my hon. Friend's mood if I venture to say what a comfort it is to me, as an exceptionally loyal supporter of the Government and member of the Conservative Party, to find that the party is now in step with me on assistance for BL after one or two unhappy passages in the previous Parliament. My hon. Friend may be somewhat surprised to learn that later in my remarks there will be a note of criticism of the way in which the Government disburse public money.

I welcome the Government's recognition of what has been achieved at BL, which alone gives a realistic prospect for future success, of which my hon. Friend spoke. Even more, I welcome the recognition in all parts of the company that it must be competitive to survive.

There is a success story starting to be told with the launch of the Metro, as the hon. Member for Coventry, North-East suggested. The success of that production has led already to increased employment. Even more important from the point of view of those working in the industry, it has led to a substantial increase in wages through bonus payments, which were up to £12 last week and are increasing to as much as £15 if the present rate of production is held. That shows the way forward to the high output-high wage economy to which I most certainly subscribe. I believe that that is the only sure hope for our future prosperity.

More importantly, the Metro has re-established the credibility of BL, the credibility of a company with its customers who must come first. It is no good making something if no one is prepared to buy it. That is where I take issue with the right hon. Member for Salford, West (Mr. Orme). The Metro has re-established credibility with customers, and included in that process is the successful launch of the T45 truck. Credibility with dealers is essential to the selling of the product. There must be credibility with the taxpayer as demonstrated by the Government. Most important, there must be credibility for the purpose of the company establishing collaboration with other manufacturing companies.

At this juncture I refer to overcapacity in the British industry and the structure of the industry. Throughout the world motor manufacturing is going through a sudden and sharp change that has given rise to a great disturbance in the United States and in many EEC countries. We are well aware of the difficulties of Chrysler in the United States. The conditions imposed by the United States Government for the injection of public funds and the guaranteeing by the Government of borrowings are considerably more severe than those that have been imposed on BL.

There is a great change taking place in the world motor industry and it is impossible to buck the trend. I know from my own constituency over the past 10 years how the wages of car workers have suffered. When I first went there—the hon. Member for Birmingham, Stechford (Mr. Davis) will happily recall his first win—car workers were the highest paid workers in Britain engaged in volume manufacturing. At present they are the lowest paid in that sector, despite the efforts of the many Governments who have been in office over the past 10 years and the various policies that have been followed. As I have said, there is no way of bucking the long-term trend of the contraction of the industry and the need to re-equip it with the new and different cars that customers are prepared to buy.

Some collaboration will be essential for the survival, let alone the success, of BL and for the future of motor manufacture in Britain. I have been insistent on collaboration in the House for the past four years. There was general agreement in a debate on the Consolidated Fund Bill in 1979, and I am glad at last to see recognition of the need to collaborate both in the company and in my hon. Friend's remarks. We must take account of what is going on in the rest of the world.

I turn to the Nissan deal and Japanese imports. On the tapes this afternoon as I was entering the Chamber there was a report that the JAMA-SSMT talks in Lisbon had broken down without any guidelines being agreed. My understanding is that an agreed statement was issued at the conclusion of the talks that most significantly referred to the adoption of even more prudent marketing in the current year. It contained the welcome indication that there would be quarterly reviews of not only the state of the market in Britain but of shipments from Japan. That is most important because we are to put £1 billion of taxpayers' money into a company without taking any action to ascertain whether there is a reasonable market for the ensuing production.

I have been involved in free trade long enough. I used to be responsible for trade relations in the Hong Kong Government, so I understand something about free trade. However, we do not enjoy free and fair trade in motor vehicles with the Iron Curtain countries, with Japan or with countries such as Spain. To allow our investment to be endangered by unfair trade seems to be without any logic and to be lacking even in political good sense.

I raised certain doubts following the statement on the Nissan deal which in subsequent discussion with the industry have been reinforced. There must be some concern about the nature of the project. It was stated that there would be the production of 200,000 cars a year. That is nearly half the worldwide production of BL cars at present. Where is the market for this one model? One can imagine the effect that that will have, let alone the introduction of a second model, which must be envisaged from the size of the site that is required. It seems far from clear that our fellow members of the Common Market will accept these cars, especially when there is as yet no clear undertaking on the volume of imports from Japan into the EEC. If these cars are not to be exported freely, that must gravely jeopardise not only companies such as Talbot, which the Member for Coventry, North-East mentioned, but the whole of the public investment put into BL. Indeed, if there were that willingness by an outside investor to produce a new model, presumably the same size as the LC10, in comparable quantities, some of my hon. Friends might well ask why the Government are putting money into BL to produce it at all.

6.30 pm

I am trying to be brief, but this is a most important subject. I turn to the need for some clear industrial policy. "Strategy" is perhaps rather a grand word. I believe that there must be very grave concern about the continuing availability of support for anybody who wishes to establish a car, lorry or bus plant in this country. Apparently, so long as he goes to a development or special development area, such a person is eligible for assistance—never mind with whom he is competing, what is the basis for the competition, or whether he intends to use any components made in this country at all.

My hon. Friend the Member for Surrey, North West (Mr. Grylls), the chairman of the Conservative committee on industry, referred to monitoring. I am not at all satisfied that monitoring will be improved by moving BL from the NEB to the purview of the Department. Indeed, I am not happy about the prospect that there might be political interference and further detailed questioning which the right hon. Member for Salford, West seemed to intimate might arise. Certainly, many of us in all parts of the House might wish to start poking our noses into detailed questions, which I think that my hon. Friend would find it very hard to resist now that he has assumed direct control.

I return to the question of monitoring. How is the undertaking given by Nissan in respect of components to be monitored? One does not need to be very familiar with the industry to see the possibility of a claim that no components of suitable specification, size or delivery were available being used to avoid whatever undertaking or understanding might have been arrived at on a Government to Government or Government to Nissan basis. This is a most important matter. Unless the Nissan plant has free export into Europe and uses a very substantial quantity—I set it as high as 80 per cent.—of United Kingdom or EEC components from the start, I see very little prospect of there not being substantial derogation from the viability of the new LC10, and it must surely lead to the closure of Talbot and other multinational assembly plants in this country.

I differ from the hon. Member for Coventry, North East on this point. My understanding is that the Government assistance is available to Talbot at the moment if Talbot or Peugeot showed any interest in putting in an additional plant. But I do not see how Opposition Members can argue that there should be more Government investment in a Talbot company which the owners themselves do not even wish to be made. I have tried to suggest that the future lies in fewer models in much greater volume. That decision must be for the Peugeot company itself to make.

On the need for industrial policy, may I briefly express concern about diesel engines, in view of the degradation of fuel that is already taking place and the prospects for exports if rougher, cruder fuel cannot be used for our engines. In the United States, General Motors has already stated that it thinks that up to 80 per cent. of small and medium passenger cars will be diesel-fitted by the end of four years and has just dedicated two entire plants to that purpose. It is not clear to me from the BL plan that there is to be any development of that sort here. I believe that that is a very necessary subject for the Government to inquire into in their discussions with the firm, and relating also to Perkins.

In conclusion, I welcome the announcement made last week and the Government's decision, while registering my concern that there is not an adequate framework of policy to support it. Indeed, I believe that the funds could have been more limited and more conditioned than they were. I welcome the fact that the lie is being comprehensively given to rumours spread by political opponents in the Midlands that the Government cared nothing for the future of the industry or of that region. But most of all, I welcome the confidence that has been given to everybody working in the industry, to the customers and to the dealers.

Mr. Maxton

I wish to follow briefly the remarks of the hon. Member for Bromsgrove and Redditch (Mr. Miller) and to make one point about the Talbot operation, in terms of Linwood in particular. The hon. Gentleman asked why the Government should give money to Talbot when Talbot is not even asking for that money. Those of us who have taken any interest in the Peugeot operation, and the change to Talbot as opposed to Chrysler, are well aware that Peugeot does not really wish to continue manufacturing in this country. Its interest in taking over the Chrysler operation was to obtain the sales franchises and outlets rather than the manufacturing capability. But that, of course, is neither the concern of the Opposition nor, I am sure, that of the Government.

We are concerned about the problem of employment. I am especially concerned about Linwood, as many of my constituents work there. We are concerned about the effects that the closure of the Talbot manufacturing operation in Britain would have upon employment, particlarly in the West of Scotland, where the roll-on effect would be disastrous in an area already suffering nearly 15 per cent. unemployment.

I therefore hope that the Government will take every possible measure to ensure that the agreements reached between the Labour Government and Chrysler, and the later agreements reached when Peugeot took over, are maintained and fulfilled, and that if extra money is required to maintain that operation, it will take place and the money will be given.

I turn to a comment made by the hon. Member for Bromsgrove and Redditch and by my hon. Friend the Member for Coventry, North-East (Mr. Park) about the Nissan operation coming to this country. I share many of their reservations. But before finally making up my mind about whether the Nissan operation is a good one or not, I should like a clear answer from the Minister to the question put by the hon. Member for Bromsgrove and Redditch about the quantities of United Kingdom components to be used by Nissan. The hon. Gentleman referred to United Kingdom and EEC components, but I would limit it to the United Kingdom. Furthermore, I should like to know what guarantees the Government have obtained from Nissan that it will use British steel in its operation and will not import steel either from Europe or, less likely perhaps, from Japan. We should certainly have some kind of guarantee from the Government that it is not just a matter of the immediate employment of some workers by Nissan—which would probably have a roll-on effect and cause further unemployment elsewhere in the car industry, as a result of which there would be no great benefit—but that there will be employment benefits in the steel and components sectors as well. I hope that the Minister can give answers to those questions.

Like my hon. Friends, I welcome what the Government are doing for British Leyland. As my right hon. Friend the Member for Salford, West (Mr. Orme) said, the collapse and fold-up of British Leyland would have the most disastrous effects on unemployment. We can all bandy figures around, but it is clear that such a collapse would have a massive and direct effect on unemployment which would continue for a long time.

I assure hon. Members that in the West of Scotland shops are now being boarded up, because income levels have dropped so dramatically in the area that they can no longer sustain themselves and are no longer viable. They too, like manufacturing industry, are laying off staff, as a result of which unemployment rolls on dramatically. It would do so even more if there was a collapse of the size of British Leyland.

Some Conservative Members have criticised the Secretary of State for giving this aid. I advise them "When the high priest of your religion shows doubts about his religion, even if only in his actions and not his words, perhaps it is time that the acolytes considered whether that religion is right." It is not the wet in the Cabinet who has come forward with this proposal, but someone who until recently clearly set his face against State intervention of any sort. He has always relied on, and been given, the support of Conservative Members who are now expressing opposition to this move.

I shall conclude, even though, Mr. Speaker, I rarely have the privilege of speaking in the Chamber when you are in the Chair. We should like to know a little more about the Government's long-term intentions for the NEB. Along with the SDA and WDA, the NEB is undoubtedly suffering from a feeling that it is not getting Government support. It feels that the Government do not believe in what it is doing. It is, therefore, much more difficult for the NEB to continue its work.

These amendments limit the NEB's ability to finance industry. Only through Government intervention and investment in industry will we see the turn-round in the British economy which is required. I hope that the Minister will tell us how he envisages the future role of the NEB, bearing in mind the limited investment which the Government will allow it.

Mr. Hill

I sympathise with my right hon. Friend the Secretary of State and my hon. Friend the Minister of State, because they have been put in the unfortunate position of having not only a genie on their backs, like Sinbad, but several albatrosses as well. In fact, the whole Department of Industry must from time to time be shaken to the core by the demands of the nationalised industries for more and more money.

I realise that the decision which has been made in respect of the BL corporate plan, the decision that will have to be made on the corporate plan of British Steel and many other decisions, have been reluctantly forced upon the Government. The hon. Member for Glasgow, Cathcart (Mr. Maxton) said that the high priest of Conservative economic policy had changed his mind. It would have been as well had the hon. Gentleman kept quiet. The country is in a terrible situation as a result of bad labour relations in the past. Between 1974 and 1977, British Leyland lost more than 1 million cars in production, which means a loss from possible profits of between £2 billion and £3 billion.

British Leyland has put forward a corporate plan which is probably more simplified than the one put forward some time ago. Indeed, we all wish Sir Michael Edwardes, his labour force and his management team, every success because this is one obligation that we shall not be able to ditch; nor would we wish to do so. All we want is proper accountability. We want to ensure that Sir Michael Edwardes keeps to his promises. We sincerely hope that the £1,500 million which will be earmarked for British Leyland will be sufficient to return the company to profitability.

I wish to refer mainly to the NEB. At times, it has been maligned. Certainly, the previous chairman, Sir Arthur Knight, took much stick. He did his best in difficult circumstances. The new chairman of the NEB now has a much simpler task.

6.45 pm

The Bill wipes out the NEB's "overdraft figure" of £40 million. It also gives it a new obligation in respect of small businesses. It can advance up to £50,000 to each small business. Sir Arthur Knight must have started this chain of thought, because once when I met him he was concerned about the fact the small businesses were hunting for finance mainly in the area of £50,000 or less. At that time, few banks were assisting high-risk business, high technology in particular. Therefore, the NEB has a new role to play in this regard.

The hon. Member for Coventry, North-East (Mr. Park) said that he thought that the Secretary of State had chopped off the NEB at the knees—[HON. MEMBERS: "He has chopped it off at the waist".] He has done quite the reverse. He has given it a new breath of life. It is now starting as a completely new business with its overdraft cancelled. Again, although the new NEB board will have a smaller commitment, we hope that it will be able to return some of the 60 companies under its control to a profitable position so that they can be sold in the market place. We hope that the board will work towards the day when it will have no further obligations within those 60 companies.

I still maintain that the NEB will have a minor role to play in the future in supporting small businesses. Until the merchant banking system and the clearing banks take up the slack, there will be a role for the NEB in order to assist small businesses.

There has been a great deal of talk concerning jobs. Of course, one man's job is another man's unemployment. If my right hon. Friend gives £1,000 million to the Midlands, one must ask whether he can spare further money for an area such as Southampton. Although the Southampton area has not suffered from great unemployment, unemployment there is certainly growing, and we should bear in mind that an area such as mine, through its taxpayers, will have to bear some of the burden for that £1,000 million. Therefore, we should always be compassionate for other hon. Members whose areas are not enjoying the fruits of the latest distribution.

I am particularly concerned about jobs for the young, and feel that the direction of those youngsters is being neglected. Clause 6, though small, is significant. In embryo form, it does what I am sure the House wants. It states: The Secretary of State may make such grants or loans to any body, as he considers appropriate for the purpose of assisting in—

1. (a) the promotion of the practice of engineering;
2. (b) the encouragement and improvement of links between industry, or any part of industry, and bodies or individuals concerned with education;
3. (c) the encouragement of young persons and others to take up careers in industry, or in any part of industry, and to pursue appropriate educational courses."

In Committee we discussed this very thoroughly when we were discussing the role of the NEB. If we are in the future to have a viable British Leyland and a viable Rolls-Royce, and if we are to compete with the Community or Japan—we seem to be becoming more blood brothers than competitors—we must redirect more money into the education of youngsters in the engineering field.

Mr. Maxton

If the hon. Member cares to read the explanatory and financial memorandum on clause 6 he will see that the Government intend to put no extra money whatsoever into this area.

Mr. Hill

I did read that and I made the point that it would be hard to contain any programme of education within a £1 million allocation. Indeed, I mentioned that there would have to be liaison between the Department of Education and Science and the Department of Industry and that £1 million would not be sufficient, but obviously it would be possible for other funds from the NEB perhaps to be redirected into clause 6. That would be a matter of interdepartmental accounting. I agree, though, that we have a problem here inasmuch as we now have a Bill spending in the next five years £5,250 million. It is increasingly difficult for Conservatives in my area who are not enjoying any of these rather good subsidies to be able to reconcile that with the fact that we have to cut back in other areas.

I am sure that within a very short time British Leyland will become profitable. I am increasingly worried about Rolls-Royce, because we have not had any statement of accounts and we have no way to judge how the £2,000 million will be spent. Nevertherless, I am sure we will have that explained thoroughly at the end of the debate. From being a very reluctant opponent of the Bill—certainly in Committee I had some moments of great regret that I seemed to be the only one in the room who was not agreeing with the Secretary of State and with the Opposition spokesman; it seemed to me a very lonely place—I realise that perhaps I was over-reacting and that the albatrosses that my right hon. Friend the Secretary of State has to bear have to be borne by all of us. I am sure we all wish Sir Michael Edwardes and the new chairman of the National Enterprise Board well. If we have to come back to discuss this matter in a year's time, I hope that there will be more light at the end of the tunnel.

Mr. David Penhaligon (Truro)

I think we have underestimated the sum we are talking about here today. The £1,000 million for British Leyland could probably build a motorway from Land's End to Birmingham, although I cannot think of any logical reason why one should be built. It represents £1 a second for the next 30 years, an incredible sum of money for British Leyland. There can be no doubt about that. Given the position in which the Government find themselves, their decision to back this recovery plan must be right. The position has been caused partly by the Government's policies leading to rising unemployment and doubt about the industrial fabric of this country.

The number of interventions made by hon. Members representing areas protesting most about high unemployment has been noticeable. I represent a constituency in which there is over 16 per cent. male unemployment. Yet, unless one takes the most remote parts, not one farthing will actually go to areas like mine. I am not against help being given, but it is worth making the point that this very large sum of money will probably not go to the areas to which one would direct it if one had £1,000 million with which to do something about unemployment.

I am not as optimistic as many that the plan in itself will succeed. I take the view that unless there is a substantial change in the current international value of the pound the plan will fail. I go farther than that to express the view that the Government should concentrate their mind on what we can do as a country in order to reduce the international value of the pound. For many years we have maintained exchange control on our currency in order to try to keep the value of the pound at a reasonable level. I can see no reason why controls like that could not be reversed. I still find it incredible that we do not differentiate between money coming into Britain for real investment, of which we would all approve, and money coming in just to take advantage of the relative security given by our North Sea oil asset and high interest rates on gilts and such like.

Mr. Tebbit

I am interested in the hon. Member's views on exchange control. Does he think that exchange control, when it was used to try to keep the pound up to $2.80, was successful? If not, why does he think that reverse exchange control would be successful in keeping the pound below $2.40?

Mr. Penhaligon

It clearly was not successful in that in the end the pound had to be revalued. There are a number who would argue that we might have been better off if we had recognised reality a little earlier on that occasion and allowed the pound to change its mind. There is no doubt that exchange control had an effect. It had the effect of holding the pound at a generally higher level than it might have been otherwise. I see no reason why such controls could not be operated in reverse at the moment.

The problem that Britain faces is that we are the only industrial country of any significance in the world that has suddenly got an oil surplus on its hands. Most of this debate today about British Steel and about the whole of the industrial decline which is taking place in all our constituencies shows the miserable failure on our part to grapple with the economic consequences of the oil phenomenon. People overseas can see that we are one of the few industrial countries not directly affected by international increases in the price of oil. They therefore think that this is a safe haven in which to put their money. The relative exchange rate shift that has taken place because of that is what we are discussing today. At least half of this money required by British Leyland has been due solely to that fact.

The second reason for my lack of optimism about the long-term recovery of British Leyland is industrial relations. A lot has been said, fairly, about the massive improvement that has taken place. I have spoken of the current management methods of British Leyland as "12 bore management" in that, in effect, it is continually saying to the work force that if it does not co-operate with this plan, sensible though it might be—I am not sufficiently involved with the company to know one way or the other—it will shoot the work force with a 12 bore gun.

If this recovery is to take place the day must come when such an argument is no longer credible. We all want British Leyland to make substantial profits. The hon. Member for Southampton, Test (Mr. Hill) expressed great confidence that that day may well arrive; we must all hope for that. If we are on the way to that situation the argument can no longer be made that if there is a strike next week that will be the final straw that will break the camel's back and that the company will go under. There is no reason to believe that there is a real change in attitude in the large British Leyland factories sufficient to give us confidence that the problems will not reappear the moment the company gains some credibility and financial stability.

I see no reason why bits cannot be sold. I reject the official Opposition's argument about the size of British Leyland. I recall that the economy of size argument created British Leyland in the first place. I am not wildly impressed with its record in the last five or 10 years. I see no reason why the management should not be able to acquire a small car outfit. Equally, I see no reason why such enterprises cannot be sold off.

7 pm

I do not criticise the Opposition's desire for the Government to be involved in saving industry. However, their attitude is that never, in any circumstances, will they get rid of anything which they have acquired. That can only result in the Government eventually owning the entire industrial network. I am not in favour of that. Although I believe that the Government have a strong role to play, I do not wish to see that role used greatly to increase Government-owned industrial fabric. I see no reason why a part of British Leyland should not be sold if a customer is available.

I wish the company well. We would do more for British Leyland, more for industry in my constituency and throughout the land if we concentrated on what we can do about the international value of the pound. I have outlined a number of options before. We could influence the international value of the pound. Some actions would be more effective than others. There is no point in denying the possibilities. I do not doubt that we could influence the value of the pound. That would do more to help industry than throwing pound notes at windmills—which seems to be the Government's current policy.

Mr. Bruce-Gardyne

A wonderful thing about the latter-day Liberals is that they cannot see anything without yearning to control it. They are the most illiberal phenomena in the House. They want to control wages, prices and the exchange rate. When we tried to control the exchange rate upwards that was not successsful. If we try to control it downwards I doubt whether it would be any more successful.

We could achieve a substantial fall in the exchange rate in one way by convincing the international currency markets that we have decided to abandon the struggle with inflation and to lie back and enjoy it. Then the exchange rate would not only move down; it would move out of sight.

Mr. Penhaligon

Does the hon. Gentleman believe that one of industry's problems today as compared with two years ago is the escalating value of the pound? Does he accept that if there was a tendency for it to go down many sectors of industry would be helped to make a recovery?

Mr. Bruce-Gardyne

That is probably true. I am concerned about the practicability of achieving that objective without abandoning the goal of abating inflation. I do not believe that it can be done. I know to what we should give the greatest priority. However, we must not go too far into the arcane mysteries of the exchange rate.

I did not agree with everything that the right hon. Member for Salford, West (Mr. Orme) said. However, I agreed with him that the House must have a full account from the Secretary of State of the performance of Rolls-Royce. A daunting sum is to be allocated to British Leyland. An equally daunting sum is to be allocated to Rolls-Royce 1971 Limited. The evidence of Rolls-Royce's progress towards viability is no more tangible or visible than that of British Leyland.

As far as we can tell, the Rolls-Royce strategy has been to announce the orders that it gets. Whether the orders are profitable is neither here nor there. In view of the sums which once again the House is being asked to give to Rolls-Royce, I hope that my right hon. Friend will expand on the company's progress, if such it can be called. We need more information before we can be expected to vote for the sums in the Bill with equanimity.

I turn to what the right hon. Member for Salford, West jeeringly described as the breathing space for BL. It must have the most expensive diaphragm in history. There has been a fair amount of talk about BL's performance. Although Sir Michael Edwardes informs us that BL's productivity is in accordance with the plan, last year vehicle output per man-year fell once again. Even more fundamentally preoccupying is the cash limit overrun which Sir Michael warned would call in question the 1980 plan, so-called in his celebrated letter to my right hon. Friend in December 1979. It was avoided at the expense of the cancellation of essential capital investment. In other words, the ice was just about ready to hold although at the expense of what the future might offer.

I wish to comment on the exchange rate in the context of BL's corporate plan. If the daunting sums which the House is asked to approve are to be financed from an expansion of Government borrowing in 1981–82 and if that borrowing is not to be achieved by the simple expedient of printing it, interest rates will go higher than they would be otherwise.

The relationship between interest rates and exchange rates is not predictable and sometimes it is perverse. However, in time I suspect that if interest rates go higher the exchange rate is likely to be higher than it would be with a lower rate of interest.

If that is so, what we are doing has a certain element of circularity about it. We are told by Sir Michael Edwardes that the rock on which his attempts have foundered up to date is the wholly unexpected and intolerable level of the exchange rate. Therefore he must have more money. The consequence of his having more money could easily be that he will have to watch the rock on which his plans have foundered growing higher and higher in front of him.

We should like an indication tonight—I put it no higher—of whether the Government regard the exchange rate suppositions which BL has written into its plans as being consistent with Government thinking. My hon. Friend gently chided me for calling upon the Government to speculate, as he put it, on the foreign exchange markets. He suggested that those of us who occasionally dabbled in newspapers had not shown much ability in that form of speculation in the past. I freely concede that many of us have had these matters wrong.

It is not entirely a question of speculation. BL has presented a corporate plan which makes a crucial assumption—a significant drop of about 20 per cent. at current rates in the exchange rate over the next four years. Does that coincide with the Government's thinking or intentions? I hope very much that it does not, but it would be helpful if my hon. Friend would comment.

I should like to mention the alternatives to what the House is being asked to approve tonight. My hon. Friend said that breaking up BL—the sale of potentially quickly profitable parts of the business—would not be in the interests of BL and would not assist its search for international partners.

Some of us are concerned about the interests of those other parts because we suspect that the future of businesses such as the bus and truck division, the special products division and the quality car division may be more encouraging away from British Leyland than when cobbled together with the mass car division. It is quite wrong of the right hon. Member for Salford, West (Mr. Orme) and others to imply that we have an exclusive choice between acceptance of Sir Michael Edwardes' plans, with the massive finance that they imply, or 400,000, 750,000 or 1 million on the dole.

Those of us who suspect that the case for what I call disaggregation—it: is an ugly word but I cannot think of a better—of the company has not been given the consideration that it deserves, recognise that for many years we should need to sustain the mass car part of the business for a number of years until we can see what the future for that part of the business might be.

Mr. Hal Miller

Does not my hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne) agree that it is quite possible that individual sections of British Leyland sold off in that way could attract more investment than it is possible to give them from the public sector but that there is a difficulty about the timing of the sale, especially now? Would not the board be a better judge of that than the Government?

7.15 pm

Mr. Bruce-Gardyne

I have a great deal of sympathy with the points that my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) has made. I entirely agree with my hon. Friend that the prospects for investment might be much better outside British Leyland. That is a sound point.

I should be more confident about leaving the timing to the judgment of Sir Michael Edwardes if I did not have the impression, like some of my hon. Friends, that Sir Michael Edwardes is determined to hang on like a limpet to the business. The present timing might not be ideal, but I am concerned that we appear to have succumbed to the proposition that it is a choice between almost unlimited finance or closure. I do not think that the choice is as crude, simple and basic as that.

I turn briefly to the extremely bizarre nature of some of the pronouncements, or leaks, that we have had in recent weeks about Government policy towards the motor car industry. My hon. Friend the Member for Bromsgrove and Redditch is a great enthusiast for an industrial strategy. Having watched from the sidelines the industrial strategy of the Labour Government, culminating in the wizard plan to give away a bunch of ships to the Poles as a disguise for lending them money that was needed to prop up their exchange rate, I have a measure of scepticism about industrial strategy. I do not think anyone would accuse my right hon. Friend the Secretary of State for Industry of indulging in anything along those lines with the motor car industry.

Mr. Hal Miller

One part of the policy that I was suggesting would enable the Government to assess the needs of cash-hungry nationalised industry against what is available and needed elsewhere, and perhaps to give it less money. I was not trying to open the purse strings to every thing in sight. I was suggesting a policy against which the applications could be judged, as I suggested in the case of Talbot.

Mr. Bruce-Gardyne

I was not accusing my hon. Friend—I should not dream of doing so—of suggesting that he would wish to open wide the coffers. I was making the point in passing that I am sceptical about the extent to which our right hon. and hon. Friends and the hardworking, painstaking civil servants who serve them are industrial strategists of the first water. That is not a charge that could be levelled at the Department of Industry.

On Monday last week we were told that British Leyland would receive another £1,100 million. We were also told last week that the Northern Ireland Office was proceeding after all, having said it would not, to consider Mr. De Lorean's latest bid for another £10 million to pay his wage bills. The curious fact is that Mr. De Lorean wishes to compete with BL. One may have legitimate doubts about the likelihood of his ever doing any such thing, but that is what the £67 million he has received to date, and the £10 million he is apparently now demanding on account, are supposed to go towards.

Within 24 hours of that we had newspaper confirmation that my right hon. Friend the Secretary of State for Scotland was waiting, with an ever-open cheque book, for the representatives of Peugeot to discuss the financial implications of—perhaps I should say their price for—continuing operations at Linwood to compete with BL.

On Thursday we were told that Datsun was on its way. When my hon. Friend the Minister of State made the announcement he said that he was surprised that I took an apparently churlish view of the arrival of this great private enterprise concern committing its investment to our shores. I would not take any such churlish view if that was what it was doing. We all know, however, that it is looking at development areas and special development areas because it can get grants running to between £50 million and £70 million automatically and on the nod, without control being exercised by this House.

That is not the end of it. It can also get support under sections 7 and 8 of one of the previous Industry Acts of this long and sorry series. I should be amazed if Datsun ended up with less than £100 million of taxpayers' money. To do what? To compete with BL, Peugeot and De Lorean. How long will it be, if Peugeot is satisfied, before Vauxhall comes along behind? So it goes on. I am in favour of competition, but competition in subsidy seems to me to be a contradiction in terms.

I hope that my hon. Friend will be able to give some indication of what assurances we have had that Datsun will be allowed to sell throughout the European Community the products of a factory it establishes in this country. We shall need such assurances. As my hon. Friend the Member for Bromsgrove and Redditch pointed out, if Datsun cannot get into Europe the implications for BL in the United Kingdom market must be dire indeed. Of course, it is said that we are all part of the Common Market and why should not Datsun be able to get into Europe? The reason is that our French partners already regard this country as the soft underbelly of the Community through which every aspiring Japanese enterprise can enter.

I should like to be assured that we have already ascertained to our full satisfaction that no obstacles will be placed in the way of exports by Datsun to France and Italy. I should like to be assured, and I am bound to confess that I should be mightily surprised to have that assurance.

Mr. Terry Davis

I welcome the Government's decision to make this money avaiable to BL. It is the right decision, not only in the interests of the workers in BL and of the West Midlands region, but in the interests of the country as a whole. When the hon. Member for Truro (Mr. Penhaligon) complains that not a penny of the money will benefit places like Cornwall it is time that he was told that he is wrong. Put bluntly, unemployed car workers will not be going on holiday in Cornwall.

I welcome the decision, although, for reasons that I shall explain, I regret that it is necessary for the Government to provide so much money for BL. I welcome also some sections of the document recently made available to us—the review of BL's performance in 1980, and the BL 1981 corporate plan. I especially welcome the table showing the improvement in productivity. The hon. Member for Knutsford (Mr. Bruce-Gardyne) complained that productivity had declined in 1980. The document makes clear that it would have improved if BL had been operating at full production. The hon. Gentleman will see from the paragraph that precedes the table that the reason BL was not operating at full production had nothing to do with industrial disputes, but had everything to do with the fall in demand. The reduction in the car and truck market was responsible for the decline in productivity in BL last year.

This document is in some respects a better document than that which was presented to us a year ago. That is because it is not such a mixture of figures. At least this time we are given comparable figures on a full year, or, at worst, on a half year's results. We no longer have a mixture of figures comparing a full year with periods of six months, nine months or some other duration. However, the document is still not good enough, and I repeat the criticism I made last year about the way in which the information is presented to the House of Commons.

In order to appraise the performance of BL in 1980 we need to compare the full year's figures with the figures for previous years. We also need to compare actual performance with the budget or target for 1980. I accept the point that has been made by successive Ministers in the past that it is not reasonable for the House of Commons to expect to be given the detailed budget and targets for BL or any other nationalised industry for the year ahead. I accept that that involves commercial confidence. However, I see no reason why we should not be told the target figures which the BL management put to the NEB and the Government a year ago for 1980 so that we could see the extent to which those targets were achieved or missed. In appraising the performance of a nationalised industry it is essential that we should compare achievement with aims.

I was disappointed, therefore, that in his immediate reaction to my earlier intervention the Minister indicated that he did not think that it would be appropriate to have another debate about BL this year. I was not, however, surprised that he wanted to avoid such a debate. It is clear in the document that BL's failure to meet its targets for 1980 had nothing to do with industrial disputes. Many Conservatives will not want to debate BL in that context. BL's failure in financial terms in 1980 was the Government's fault. It is clear from the document, comparing what was said a year ago, that the failure, which gave rise to the need for the Government's investment, arose from the high exchange rate and its effect on the car market, especially the share of that market taken by imports during 1980. It is not surprising that the Minister of State wants to avoid that fact coming out. I only hope that he will reconsider his decision and not seek to avoid that point so that when the full year's accounts are published we shall be able to debate them. If we do not have a debate on the Government's initiative, some of us will make sure that we try to raise the matter in one or other of our Adjournment debates. The poor performance of BL in 1980, as the Minister admitted, was due to economic factors that he described as being largely outside the company's control. That needs to be stated firmly in the House.

7.30 pm

Mr. Michael McNair-Wilson (Newbury)

I congratulate my hon. Friend the Minister of State on his appointment to that high office. I very much appreciated the robustness of his remarks. It could not have been easy for him to make such a speech this evening. He faced a singularly difficult situation and took what I believe to be the only course open to him. I also appreciated the honesty with which he spelt out the three choices which the Government felt they had to consider on the future of British Leyland.

The Minister said, about the British Leyland corporate plan, that the Government accepted it because there was no point in second-guessing British Leyland experts and their predictions. That was a fair statement because—I hope that the Minister will forgive me for saying this—the Department of Industry has been singularly unsuccessful over the years in monitoring the expenditure of public money on great projects.

Whether we cast our minds back to the Concorde saga when the original estimated cost of £80 million to the British taxpayer rose to £700 million, whether we think of Harland and Wolff, De Lorean or any other nationalised industry, we know that so often the House has been invited to consider a fairly low figure to start with and has ended up by seeing that figure double, treble or quadruple until many of us have wondered when the ceiling would be reached. It is a curious irony that, of all the nationalised industries, only one has been made bankrupt by a Minister of the Crown. That Minister was the right hon. Member for Bristol, South-East (Mr. Benn), who put the Beagle aircraft company finally to death.

I make that point because I wish to establish the importance of monitoring at the beginning of my remarks. My hon. Friend said that when the British Leyland corporate plan was considered, he would not second-guess its predictions. Therefore, in effect, he was asking himself two simple questions. First, can we accept the unemployment that might arise if we do not provide the money, and, secondly, what chance is there of success? In reaching his conclusion, what source other than the Department did my hon. Friend and my right hon. Friend the Secretary of State turn to for their information? Did they make an in-house calculation whether the British Leyland corporate plan could be accepted as it stood?

I claim no expertise in the car industry. Therefore, I claim no ability to read the corporate plan and to ask all the right questions. But I suggest that there must be institutions with such knowledge which could have advised the Department in such a way that, instead of it saying that it did not feel that it could second—guess those predictions, we could have been told that those predictions had been considered and monitored and changed according to the advice given. If that is not the case, I suggest that that is an area which all Governments must get right.

After all, nationalised industries have been with us for at least 40 years. We have a collection of 24 nationalised industries—or about 40 if one counts each water authority as a separate industry. The time has surely come when the Department responsible for those industries should have a monitoring technique which it could bring to bear to insist that those industries meet disciplines which are not entirely dissimilar to those in the private sector. Those disciplines should lay down criteria for those who run the industries, and those criteria should be backed by penalties. Without this we shall be in the open-ended situation were faced with Concorde. Whether or not the British Leyland corporate plan is successful, there is no possible assurance that my hon. Friend can give tonight that this will be the last money that this company will receive.

The House is carrying out its two central functions in voting legislation and Supply tonight. Without monitoring and performance criteria it is at the mercy of believing and trusting in Sir Michael Edwardes and those around him. I doubt whether many hon. Members do not respect Sir Michael Edwardes and do not believe that his judgment is commercially sound. Because I hold that view I hope that the co-porate plan will prove to be the blueprint for the success of British Leyland. Nevertheless, the central point about monitoring remains un-established. I believe that more thought ought to be given to it.

I now wish to make a second point on monitoring. I used to be a member of the Select Committee on Nationalised Industries. I am sorry that that Select Committee no longer sits. I do not suggest that its members had specialist knowledge, but we began to acquire that knowledge. Since the new set of Select Committees was created, no nationalised industry has come before a Select Committee to be investigated in depth. As far as I know, none of the annual reports of those nationalised industries has been considered by any Select Committee.

The House should not tolerate that situation if the nationalised industries quiver is to remain as full as it is. Therefore, I strongly recommend to my hon. Friend that thought be given to recreating a Select Committee with the specialist task of monitoring the performance of nationalised industries.

I shall underline my point about monitoring with some remarks which I heard last night from those who are responsible for Rolls-Royce 1971 Limited. I asked them about the profitability of the company, reminding them that today is the tenth anniversary of the company's bankruptcy and nationalisation. I asked them why Rolls-Royce had not achieved the profitability which we all hoped would spring from that rescue operation. I was told that Rolls-Royce 1971 had on occasion made profits, could have made more profits, but had decided to put its resources into research and development on new engines and exploiting the quality of its engines.

On whose decision was that attitude struck? Does the managing director of Rolls-Royce have no need to answer to the Government for his annual report? Is it for him to say that the taxpayer shall not have a return on his investment and that he shall put the taxpayer's money into the projects which he favours? If so, I press my hon. Friend to say to which disciplines the chairman of nationalised industries are asked to respond. What pressure is being put on them to ensure that profitability becomes their first priority? Profitability is the return to the taxpayer on what he or she has invested.

We all know—because the House spends most of its time discussing it—where the resources provided by the taxpayer should go. I am not anxious to support those chairmen who believe that they can turn their backs on the taxpayer because they have him across a barrel, and who decide that they can spend the taxpayer's money as they choose without the accountability which any other chairman of any other sort of enterprise would have.

I turn now to the selling-off of BL's assets. We know from the corporate plan that what are described as the non-mainstream assets are to be sold off over some years. I have one of those non-mainstream assets in my constituency—a company called Prestcold, which has just been sold for £10 million—so I appreciate the strength of that argument.

However, as my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) pointed out, and as the Transport Bill points out, in returning four of British Rail's subsidiaries to the private sector the nationalised industry which is not creating profits is unlikly to have the investment required for all its subsidiaries. It is the subsidiaries, their employment prospects and their profitability which suffer with a net loss to the State overall.

Sir Michael Edwardes in his corporate plan does not tell us what he considers to be non-mainstream activities. For instance, I wonder whether Alvis, which makes armoured cars, can be construed as such an organisation and whether it is felt necessary to keep it within the BL family.

Whether that be so or not, if there is a buyer for one of BL's subsidiaries, whether in the vehicle or any other sector, that will relieve the rest of the company from expending the necessary finance to keep that subsidiary in existence. Conceivably, it will also make that subsidiary a more profitable enterprise than it would otherwise be.

I suspect that of the three different questions that my hon Friend asked himself about the corporate plan, that relating to employment took pride of place in his thoughts. If so, employment will be guaranteed by the success of an enterprise regardless of who owns it. Indeed, it might be argued that it is more likely to be successful if it is owned not by British Leyland, which is in such a financially parlous state, but by some other organisation apparently so rich as to want to buy it and presumably wanting to buy it because it has the investment to put in to make sure that it is increasingly profitable.

To my mind what I have touched on are the three points in this group of amendments that need to be discussed.

Will my hon. Friend tell us about the prospects of British Leyland being returned to the private sector? Sir Michael Edwardes, in the last paragraph of the letter that he sent to the Secretary of State for Industry, said: The Board sees collaboration with other manufacturers as an important part of its strategy for recovery and for reducing and eventually removing dependence on Government support. That is a fairly opaque statement. Sir Michael Edwardes gives no suggestion of the time when that might happen, nor where that collaboration is to be sought. My hon Friend will appreciate that, while we support him tonight and hope that BL's corporate plan will bring the success to which he referred, we also hope that it will bring a success that in turn will mean British Leyland being returned to the private sector.

Have the Government any thoughts on this matter? For how long are they prepared to bolster British Leyland with taxpayer's money? What are they doing to further the collaboration referred to by Sir Michael Edwardes in the last paragraph of his letter? The House will welcome any thoughts that the Minister might feel able to share with us tonight.

7.45 pm

Mr. Tom McNally (Stockport, South)

I shall not follow the trend of the remarks of the hon. Member for Newbury (Mr. McNair-Wilson). However, as he followed the hon. Member for Knutsford (Mr. Bruce-Gardyne) in his usual attack on public enterprise and investment, I should point out that many of my constituents, who work for organisations such as Fairey, Ferranti, ICL and British Aerospace, do not share the hon. Gentleman's assessment of the wisdom of private enterprise because they have had the benefit of shrewd judgment by Governments— admittedly Labour Governments—in the past. They also recall that the source of many of our problems today is the lamentable investment record of British industry over the past 30 years.

This is an interesting Bill. It started as a simple little measure trying to do good. It has ended up with a large amount of money being given to, and a central debate being held on the future of, British Leyland. Those who have followed its passage and taken part in the various stages have had some interesting moments. The Secretary of State for Industry lost yet another chairman of the NEB along the way. Indeed, he lost a whole ministerial team. It was a kind of mutiny on the "Bounty" in reverse: they left Bligh on board and took to the boats. Finally, we had the announcement of the money for British Leyland. Some of us knew all along that it would be coming.

The purpose of the Bill—if it had a purpose—was a slow educative process for Government Back Benchers of the inevitability of this money for BL. As we saw when the Secretary of State came to anguish before us on 26 January, it had finally dawned on him that not giving money to BL would be infinitely more costly to the country than giving money to BL. It has taken two years for that expensive piece of political education to get home. Yet we still hear speeches decrying intervention and any role for the State in industry.

At the heart of the failure of the Government's industrial strategy is the fact that they have no heart in any policy. They are for ever trying to excuse and appease the hard men on their Back Benches. They have no convictions in which to have courage. As a result, we have this waffly industrial strategy. Conservative Members use the word "strategy" with embarrassment. As a result, there is often a lack of confidence and direction in industry.

I must again express my regret at the way that the Government have dealt with the National Enterprise Board. Before the general election they boxed themselves in in a dogmatic way. They then had to pay this ideological danegeld of taking away many of the board's powers. It would have been better by far to have had a cross-party view on developing the NEB as a useful tool for public intervention. For example, it would have been much easier for the Government to handle the ICL problem if they had not precipitately got rid of their shares in ICL. The Government dealt with the disposal of their other assets with little or no consultation with the work force because of their ideological commitment to the prejudices of their own Back Benchers rather than to any long-term view or strategy for British industry.

I have already referred to the Opposition's welcome for the commitment to British Leyland. Therefore, I shall not delay the House on that aspect. But I should like to refer to Japanese investment. I understand why some hon. Members say that we must be careful to examine each case in detail. But there is a strong argument for saying that if we are to have a healthy relationship with Japan, part of that relationship should be substantial inward investment to Britain by the Japanese.

Over the years we have often heard British industrialists say "We must invest overseas because other countries will no longer tolerate our simply exporting to them without putting something into their economies by way of industrial investment." Time and again one hears that said by British industrialists as an excuse for investing overseas.

Equally, we should tell the Japanese, who have a £1 billion surplus in industrial trade with us, that that situation cannot be tolerated indefinitely. One way of getting that balance right would be to open up their markets and to show a willingness for inward investment by Japanese industrialists. Although I am cautious and want to see the facts of the Datsun deal, I believe that Japanese investment in Britain should be welcomed and encouraged.

I should like to take up one of the points that were raised by the Minister. He trotted out the old Tory cry of "Where will all the money come from?" I thought it was a tragedy that last Sunday, although she had already received advance notice of the TUC's economic statement, the Prime Minister chose the venue of a television interview to respond in a totally sterile and negative way to an offer by the trade union movement to enter into a genuine dialogue with industry to see how we can get out of our economic and industrial difficulties. On Sunday, she committed billions of pounds, not to industrial investment as the TUC asked, but to unemployment. Perhaps in his reply the Minister will say where the money will come from for the extra billions of pounds in dole payments for the extra million people that the Prime Minister will put on the dole because of her sterile and negative response to the TUC initiative. That is the question that most people are asking.

Even during the passage of the Bill, public opinion and opinion on the Government Benches is slowly turning. People are saying that we cannot leave matters to the forces of the market and to private enterprise. There is a large role to be played by the Government. The resources from the North Sea that have been wasted in keeping men and women idle can be better used in the rejuvenation of British industry. Even at this late stage, I ask Ministers at the Department of Industry to tell the Prime Minister that she was wrong last Sunday, and that she should take up the TUC challenge and try to put British industry back to work again.

Mr. Ian Lloyd (Havant and Waterloo)

Debates on British Leyland seem to have a compulsive and magnetic quality. One comes into the Chamber, perhaps not intending to take part, and becomes so fascinated by the argument that one feels compelled to intervene, as I am now doing.

I found the speech of the hon. Member for Stockport, South (Mr. McNally) interesting, and I agree with his comments on Japanese inward investment. I am one of the few Members who have visited the Nissan-Datsun plant in Tokyo. I asked whether it was ahead of Detroit, and I was told that its technology was undoubtedly the best in the world. I was told that the best way to import technology was to let those who are the masters show others how to carry it out. In some ways that judgment is shaming.

The remarks of the hon. Member for Stockport, South about public and private sector philosophies reminded me of an interesting comment that was made in this context by none other than a professor at Moscow State university, Professor Popov, who wrote an article for The Times which was in astonishing contrast with an article that appeared underneath by the famous Professor Galbraith, criticising Conservative philosophy on monetarism. Professor Popov pointed out that in the Soviet Union—by definition 100 per cent. public sector—there is no other way. So involved and so inefficient had its industrial resource allocation become that it was devoted to a general extension of what was known as the Shchenikov experiment, in which the managers of plants in the Soviet Union were being compelled to cause redundancy and put people on the dole. The managers would then receive a reward for doing so. That is the sort of thing that we must remember when we are trading prejudices. We all believe that what we say is the naked truth and that what our opponents say is naked prejudice. We all know that the truth lies somewhere in the middle.

I presume that other hon. Members have referred to this debate as a British Leyland borrowing requirement debate. I am sorry that I was not able to attend the proceedings earlier. I wish to make a number of comments. First, again and again I am impressed by the sheer scale of the finance that the House is called upon to provide in cases such as British Leyland, British Steel and others. It is arguable that this is not a debate about low technology, because we know that Rolls-Royce is involved. It is possibly a debate about low and high productivity. The common factor seems to be commercially ineffective technology, and that is a description that we should take more seriously. But to revert to the question of scale, we are constantly being asked to approve sums of £1 billion and upwards. It is almost beyond the wit of mortal man to understand what £1 billion means.

I have been heavily involved in an inquiry in another area, and I know that it takes about £1 billion to build a one megawatt nuclear power station. We are taking out of the resources of this country the equivalent resources that would in another context build a one megawatt nuclear power station that would possibly supply one-fiftieth of the nation's electricity requirements for 50 years. That is what is going into BL. When we talk about £1 billion, it is that scale of resources that we are examining time and again.

I very much regret that because of the timing of the dissolution of Parliament in 1979 the reports of the then Select Committee on Science and Technology on innovation were not made available or brought before the House in the way that I would have wished. The Committee looked particularly at the small engine technology of British Leyland. The evidence has been made public, but the conclusions were not drawn. The evidence was significant. We were disturbed by what we managed to learn from those who gave evidence about the general level of technology that had been applied in the manufacture of the Mini Metro.

Although we all wish that car success, and hope that it will have continuing success, the conclusion that I drew from the evidence of Sir Michael Edwardes, Sir Terence Beckett, who was then chairman of Ford, Volkswagen, Mercedes, Peugeot and the other principal competitors of British Leyland was that, although the Metro may deserve to have an important success over the next two or three years, because of lack of capital investment and available funds Leyland could not introduce a new technology engine—it would have cost £250 million. Therefore, the stretch in this engine, by definition, must be limited. The real test of the Mini Metro will come when new technology engines that are being installed in vehicles produced by its principal competitors become available on the market in 1983, 1985, 1987 and so on. Unless British Leyland asks for another £500 million, or £1,000 million—inflation will bring the figure to that level—I have serious reservations about whether it will be able to fulfill its expectations and promises.

I turn now to the argument about the roll-on effects on employment. That is a serious but seriously exaggerated argument. It is often said that about 1 million employees depend indirectly on British Leyland—130,000 directly, and the other 870,000 indirectly. In a spectacular economic sense that may be true, but if we look at the totality of the suppliers of British Leyland we shall always find what the statisticians call a lognormal distribution. There will be those firms that supply even 100 per cent. of their output to British Leyland. They will be a small number at one end of the curve, and they should be described as subsidiaries of British Leyland. The employment effect on such organisations, were British Leyland to suffer serious disruption, would be grave, and should be so regarded.

But as we go across the curve from that end to the other, we come to important organisations which supply 50 per cent. of their output to British Leyland and where the impact would be severe but not necessarily disastrous. We then move across further to those organisations which perhaps supply only 10 per cent. of their output to British Leyland, where the impact would be something that they could take in their stride—and which enterprising managements ought to be able to take in their stride.

8 pm

There would inevitably be a serious fundamental process of readjustment in the economies of all those organisations which supply a considerable proportion of their output to British Leyland, but I do not accept for one moment that the argument can be sustained that because British Leyland suffered a major disruption of whatever kind, of whatever cause, that would immediately lead to 1 million people being unemployed, with all the financial consequences that we have been led to believe would follow.

But there are other important aspects of this question to be considered. We are constantly told that the unemployment would be very severe and serious. To the extent that this is true and would be visible, it is undoubtedly an important argument. But we hear much less about the effect on the jobs lost in what one might call the subsidising sector of British industry—that proportion of British industry which has to carry the fiscal and financial strain of raising the money that is required. Jobs are undoubtedly lost there and employment is reduced, but we do not see it, or we do not hear as much about it. It is much less perceptible. It does not occur in one single lump, but that it occurs generally and that it may well be generally significant can be judged from the figures which are common knowledge and, if I may say so, are our common regret.

But there is perhaps an even more important and significant effect which is less generally discussed and is, in my humble judgment, even more important. We do not hear about the effects on employment in the industries as yet unborn in this country. I have some figures from the United States. Within a period of about five years, of 9 million jobs created in the United States, 70,000 were created by the top 500 in the Fortune league—the biggest companies in America—and the rest were created by new small firms.

I do not believe that our position is in any way fundamentally different from that. It is the capacity of the United Kingdom to create, to foster and to sustain new small firms—the new growth points of the new age, whether of information technology, biotechnology or any of the other industries that we see emerging—that is much less discussed. I believe this to be the most significant cost that the country has to pay when it is asked to divert resources on this scale—whether to British Leyland, British Steel or Rolls-Royce is neither here nor there.

I had an interesting example of this the day before yesterday when I had the privilege of visiting the Rutherford laboratory and saw an absolutely outstanding and brilliant new British invention—something known as a cellular logic image processor, or clip computer. This is now being developed, and one only has so far been produced. It was my judgment that this was an outstanding achievement, and that we ought to be developing it in this country. It could well form the basis of an industry almost as large as the present computer industry, since it is a new generation, a new type, a new philosophy, of computer.

I asked "What stands in the way of its development?" I was told that what stood in the way was something between £500,000 and £1 million. I immediately said "That is one-tenth of 1 per cent. of the sum that we shall be voting for British Leyland." But the industry which could grow from it could be of the utmost significance. I hope that there may yet be ways found for it to develop. It would be an outstandingly significant British achievement, where the standard of the technology would not be easily followed and would be unlikely to be repeated.

Mr. Orme

We have the NEB.

Mr. Lloyd

The NEB has, of course, some knowledge of this and some connection with it, but that by itself is not enough. The incentive to create and sustain new projects of this kind, bringing to birth new technology, of which this country is still a great progenitor, is insufficient.

Some hon. Members have made complaints about exchange rates. Many hon. Members who have served in this House for some years will recall the agony that we went through when the exchange value of the pound was falling. I can remember well the arguments produced on each side of the House—almost independant of where we were sitting—regretting the mismanagement of national economic policy that was leading to a deterioration of our currency. I do not think that those arguments have necessarily become invalid, but the point I want to make is a much more relevant and specific one.

If we examine the relationship between the most successful industries in Japan, West Germany, the United States, and other countries such as Switzerland—those countries which in the 1960s and 1970s managed to sustain the value of their currencies far above the general downward drift that was taking place all around them—what do we discover? Their most outstandingly successful industries were shipbuilding in Japan, microelectronics and aircraft in the United States, and diesel engines in Switzerland. Despite the high value of the currencies in the countries concerned, those industries continued to prosper. Why? The answer is simple. They were industries of steadily and continuously rising productivity. It was because their productivity was rising far faster than any disadvantage that was imposed by the appreciation of their currencies that those industries flourished, and the countries in which they flourished also flourished with them.

That is the answer to the argument that for the United Kingdom to recover its position we must, as it were, destroy our own credit in the eyes of the world and deliberately create a situation in which the value of our currency falls. I do not for one moment believe that that is the answer, because all the evidence is against it. Although there are obvious and perceptible difficulties—and one should never minimise them—for those who are suffering from the sudden increase in the value of our currency, to say that as a matter of national policy we must now stand on our heads and put the policy into reverse is wholly mistaken.

I have mentioned already the size of the sums with which we are dealing. I know that my right hon. Friend argues with great conviction and great justification that nothing would be worse than for politicians to breathe down the necks of those who have the task of managing major national industries, whether of the Rolls-Royce and British Leyland variety or nationalised industries. This House has always held back from imposing on itself the obligation of such detailed supervision. That I totally accept. The day-to-day management must be a matter for them, up to a very considerable point of decision making and investment. But can we go as far as to say that we must write a blank cheque—or that this House must write a blank cheque—for £1,500 million or £2,000 million, and never know, let alone ask, in relation to a company such as British Leyland, what proportion of that sum is likely to be paid out in wages, or in higher wages, what proportion is likely to go in investment, and so on? We need not ask for detail. We might be told that, say, £100 million was going into assembly technology, £50 million into some other technology, and so on. That, at least, we ought to know.

We ought also to know what proportion of the money is going to research and development. Research and development today—not least in the automobile industry—is absolutely fundamental to the success of industry. It is largely because British Leyland neglected its research and development over a long period of years that it found itself in some of the difficulties that it now faces.

There are a few questions of that kind that this House is entitled to ask and to which it might expect to be given replies on a rather more routine basis when either Conservative or Labour Governments ask us—as they have, and will again—to endorse these very large sums for what in a sense each party regards as inevitable and unavoidable national investment.

First the bad news, now the good news. I wholly endorse the miscellaneous provisions, which have not so far been mentioned, in clause 6(1) under which the Secretary of State is asked to encourage young persons and others to take up careers in industry and to pursue appropriate educational courses. I believe that a considerably larger expenditure of national resources in pursuit of that objective is wholly justified.

Sir Charles Carter recently produced a report on the application of microelectronics in British industry that contained interesting conclusions. A study was conducted into 90 firms to see how they were reacting to the challenge. A number at the top, which understood the subject, had made judgments and were doing something effective. A second category had looked at the problem but was doing nothing. Much more serious was the third category, which had looked at the problem, had felt that there was nothing it could do, and decided to cut agents and import products from overseas. That is a reflection of lack of the appropriate educational base in microelectronics and high technology among a considerable number of people in this country.

I support the objective stated in the Bill. I support equally the diversion of significantly larger national resources in the achievement of that objective.

Mr. Bob Cryer (Keighley)

I am pleased that the Government have decided not to put BL on the waste heap, which has been the fate of so many jobs in the sad decline of British manufacturing industry over the past 18 months. The announcement recently of support for British Leyland to the extent of £950 million was welcomed by the Opposition, although it was received with rather mixed feelings, I imagine, by Conservative Members. I hope that the money allocated for the NEB in this Bill, together with the money that is going to British Leyland, will be used to help to regenerate British manufacturing industry and the skills and abilities that we possess. When the oil runs out and when the coal is diminished, the skill and ability of our people are the real resource of the nation. With the present decline in British manufacturing industry, those skills and abilities are not being properly encouraged and developed.

I wish to refer to industrial relations at British Leyland. Large sums of money are involved. We do not want a repetition of the interrupted production of the Mini Metro, which has been an extremely successful venture. The NEB has the task of promoting good industrial relations. The fact that British Leyland is to receive significant sums of money does not mean that management can afford to point a pistol at the head of the trade unions or seek to diminish the role and importance of the trade unions in the motor car industry. The British Leyland eight, who have been subjected to what appears to be a process of victimisation, feel strongly that the circumstances that have been brought about result from a determination by management to crush the power of trade unions in the motor industry.

I have spoken to one of the eight. They were amazed that 1,500 workers came out of the BL Mini Metro line because of their bitterness over the change in tempo and technique adopted by the management at British Leyland. Sir Michael Edwardes is not a guru. The creation of cars is carried out by all the factors of production involved and, most importantly, by the thousands of people who work at British Leyland. Working in the car industry is an onerous job. Time, effort and ability must be devoted to promoting good industrial relations. Such relations are not brought about by a continuing policy of confrontation against those in the work force who devote their time and effort to promoting the trade union view.

The support for British Leyland through the NEB means that many thousands of small companies are also supported. In the present state of the economy, it is often crucial that a small firm should have continuity of production even if its BL output represents perhaps only 25, 30 or 40 per cent. of its total manufacturing range. That percentage today assumes an ever more important proportion of manufacturing. The support is, therefore, a lifeline for small firms.

I should like to examine the position of Datsun in relation to British Leyland. I have already said that skills should be rebuilt and regenerated. It is important that we develop our own indigenous manufacturing industry. That is what the NEB was set up to promote. I hope that this is the purpose for which the money we are discussing will be used. The statement made by the Minister referred to local sourcing of components. The Minister did not make clear whether this meant that they would be of United Kingdom manufacture or EEC-wide manufacture. If the latter, we will have a rival concern to British Leyland, where a large chunk of this money is destined to go, which will source on the EEC and thereby diminish our manufacturing facility even further.

8.15 pm

It will hit British Leyland. It cannot be argued that competition will be increased. We find ourselves in the international subsidy league. It is important for the Opposition to examine this matter. The same procedure was adopted by the Labour Government. Conditions were attached to Japanese investment here. I hope that this Government will attach stringent conditions. What happened in the YKK case was that YKK, a Japanese zip manufacturer, opened a production facility in this country. There was no agreement about the sourcing of components that was hard and fast. As a result, the company assembled largely Japanese-made components which eroded the number of jobs in the indigenous manufacturer, Lightning, in this country to the point of a factory closure. That is absurd. I suspect that this potential exists in the Datsun investment.

What sort of money will be involved in the Datsun investment? The company is not coming here for any other reason than that the Government and the taxpayer will offer 22 per cent. regional development grant if it goes to a special development area. That is automatic. The company receives that amount for every £100 of investment in the project. There then arises the discretionary grant under regional selective assistance. This is given if the project is concerned with the creation or retention of jobs or if the project will take on another dimension if regional selective assistance is given. How much will be involved? Will it amount to 50 per cent. of the total investment? Will it be less? Will it be more?

If Datsun is established here and starts making profits, it will be able to offset against corporation tax every penny that it invests in plant and machinery in this country. At the end of a period in which suitable profits are made to offset the investment in plant and machinery, the British taxpayer, by direct grant or by failure to receive corporation tax, will have paid totally for the investment. The investment, however, will not be under their control. It will be under the control of a multinational, with its headquarters several thousand miles away, where decisions are not under the control of the work force, the people of this nation, or the Government.

That is less than satisfactory, particularly at a time when the product is having to compete with that of a Stateowned company which is rightly being supported by a considerable sum allotted by Parliament.

Everyone welcomes the creation of jos, but we must realise that jobs are better created by using our own facilities and developing our own projects instead of relying on the multinationals. There have been significant cutbacks in jobs by multinationals, particularly in development areas. We do not have legislation to prevent that from happening. France is by no means a Left-wing country, but there the Minister responsible for employment has to give his approval when jobs are cut for economic reasons. Here a firm can close and, as long as it goes through the redundancy procedure, that is an end of the matter. Handing over such a large degree of control and manufacturing responsibility to multinational companies wil not in the long term help to secure the retention and development of our manufacturing industry, particularly if the components come mainly from the EEC or Japan, with the important design and development skills being located outside the country. Without a Government committed to much greater investment in our indigenous industries and prepared to stand up to EEC restrictions, we shall find ourselves in the international subsidy race, treating the advent of a multinational, with all its dubious connotations, as a famous victory, when in fact the jobs at the end of the day will be paid for by the British taxpayer. The British taxpayer could instead own the factory, create the jobs, and undertake and control the whole enterprise. The taxpayer could control decision making through the Government of the day.

Mr. Bruce-Gardyne

I am in a considerable measure of agreement with the hon. Gentleman's criticism of the way in which taxpayer subsidies are given to such investment. However, surely that follows ineluctably from the whole series of Industry Acts passed by successive Governments over the past 10 years.

Mr. Cryer

I shall not go down that road, as if I were to do so I would probably be out of order.

Certainly the Industry Act 1975, which was supposed to attach strong strings to the money that we gave to the private sector, was significantly watered down and we lost the degree of control which we should have had and which the next Labour Government will certainly institute. They will institute, for example, planning agreements. What about a planning agreement with Datsun? What about an allocation of market share, for example, or shall we see British Leyland to which the taxpayer has contributed massively having to face that competition and possibly withering away in some areas even further?

I am in favour of public expenditure being devoted to the creation of jobs. However, we should rely on our own resources to develop design and high technology. We should not rely simply on the multinationals. The Conservative Government do not quibble about public expenditure to create jobs when they talk about spending £5 billion on Trident. Then they emphasise that such expenditure results in job creation and retention. I want to see us carry out a Labour Party policy and switch money away from defence towards peaceful purposes. The principle is the same. Public expenditure creates jobs. The money is not available from the private sector, which has let us down badly, even under a Conservative Government.

Public investment also creates jobs in the private sector. As I said earlier, putting money into British Leyland helps to create and maintain many thousands of jobs in the private sector. I use the illustration of small companies, but medium and large firms are also involved. For example, the textile industry in Lancashire and Yorkshire provides seat covers and head-linings for cars.

The Government should be determined to use their strength in the EEC. Datsun wants to get into the United Kingdom in order to get free movement for its goods within the EEC. Its market penetration in France, for example, is very small. We should be prepared to use our market, which is still an important and wealthy one, as a bargaining counter. If the multinationals want to get into our market, we can allow them in under our conditions, which should be stringent. If we choose, we can use our position, but we cannot do so as long as we adhere to the Treaty of Rome, which robs us of the opportunity to differentiate our position in order to protect our manufacturing industry from imports or investment by multinationals. Multinationals are not here to give an advantage to British manufacturing industry. They may well erode it. If we are to retain British manufacturing industry and to have the necessary investment—for example, investment in high technology—we shall have to use some form of quota or import control while our manufacturing industry catches up.

The Bill is merely a sticking plaster on the public sector, which is being drained by the Government. Sticking plasters are all right, but what we need is a Government determined to see a public sector that works and a Government determined not to use unemployment as an economic tool. We need a Government who see the ending of unemployment as an important priority—and that must be the next Labour Government.

Mr. Dixon

I am glad that my hon. Friend the Member for Keighley (Mr. Cryer) has extended the debate beyond British Leyland, although I welcome the finance that is being made available to the company.

Amendment No. 5 reduces the amount of money available to the NEB, which will hit the North and other such areas. The introduction of the National Enterprise Board was a lifeline for us. The regional enterprise boards were also greatly welcomed. As I said in an intervention, in the North we do not have a development agency, a Minister for the North, a Select Committee or a Grand Committee. However, we have the highest percentage of unemployment of any area in England, Scotland or Wales and the second lowest number of job vacancies. That means that for every vacancy in the North there are 50 unemployed people. In some areas, that figure could be multiplied by 10.

8.30 pm

My hon. Friend the Member for Stockport, South (Mr. McNally) said that we should be talking about unemployment. The Bill concerns unemployment, and attempts to alleviate it. It cannot be taken in isolation from the Government's other policies. It is no good having an employment watershed in manufacturing industry when, at the same time, there is a watershed in local government. However, many areas are in that position. It is ridiculous to tell a person that he cannot draw his wages from the local town hall, but that he can go to the local employment exchange and draw public money for doing nothing. That is the result of this Government's policies.

I asked the Prime Minister what advice she had for some of my constituents who had taken her previous advice and had moved to find employment. As a result of the Government's economic policy hundreds of males, their families and friends found themselves out of work. I wrote to the Prime Minister but she said that they would have to move on until they found employment. What way is that to run a country? People talk about vandalism and unrest. The Government are turning our people into industrial nomads, and are breaking up communities. The Prime Minister should tell the Secretary of State for the Environment to provide a certain amount of money in the housing investment programme for caravans so that workers can tow them round the country looking for work. That is the only advice that the Prime Minister will give.

I received a letter from one of my constituents. It is a pity that some of those Conservative Members who giggle like adolescent schoolgirls when we talk about unemployment are not here to listen. The letter states: Please help me! Through no fault of my own, I have been out of work for over a year now. I assure you sir I have tried, I have looked for work. Within the last year sir, I have had over 52 formal interviews within South Tyneside and out—including places as far as Dover, Hull and London. Some of these interviews I've even hiked it, even whilst I write this letter sir, I promise you I am seeking fitfull employment. My point sir, a feeling of mistrust. At the present time I am sick up to my ears with the Social Security and its treatment. Every 3 weeks since last March, I had to report to them like a schoolboy with his homework, giving them a progress report on my job seeking. Every 3 weeks I go to the Arndale House,"— that is the local exchange— I feel despair, I feel degraded, no longer a member of the human race. Whilst I sit there in reception, waiting for my name to be called out I feel so full of grief and let down, I feel like they've made me a social misfit, they think me a failure or worse sir—a malingerer. That constituent has been out of work for a year. I felt that it was important to get that letter on the record.

I welcome those parts of the Bill that deal with British Leyland and provide finance. However, the Bill does not offer anything to areas such as the North. It is a retrograde measure because it cuts the amount of money available to the NEB. The NEB could help the North. I saw the Prime Minister's interview with Brian Walden on "Weekend World" and I heard her say that an upturn would come and that when the recession was over everything would be fine.

During the 1950s and 1960s we had the longest period of sustained growth, yet 80 per cent. of the new jobs created in manufacturing industry were located in the South-East. Unless there is a strong regional policy, areas such as the North—areas that have been turned into industrial deserts as a result of the Government's policies—will have no future.

Mr. John Cunningham (Whitehaven)

I shall be brief. One thing has become clear from the debate and from the Government's statement on British Leyland, namely, that despite the Secretary of State's greatly professed ideas about intervention, not only is it back on the Government's agenda in terms of their industrial policy, but it stands in pride of place. It is ironic that the Minister should find himself in this position. We know that he is robust enough to look after himself, both at the Dispatch Box and elsewhere, but—given his well-known record on State intervention—even he will have to be a little cheeky to continue to support what is happening.

We welcome the Minister's conversion. We look forward to more of his robust parliamentary activities in support of State intervention, not only for British Leyland but for other industries such as Rolls-Royce, the steel industry, British Shipbuilders and the NEB. It is also ironic that the Secretary of State—I am pleased to see him in the Chamber this evening—should have said so much about industrial strategy, planning and attitudes to intervention in the economy. I do not use his words, but to say that some of his words are not worth the paper that they are written on would sum up some of his comments on these matters. He has already involved himself in more approaches to planning and major planning agreements than the previous Labour Government did in their whole term of office.

Of course, the right hon. Gentleman does not involve the trade union movement in the consultations that lead to things such as the British Leyland corporate plan or the MacGregor proposals for British Steel. However, these are agreements between the industries and the Secretary of State—or the Department of Industry—to plan the future of those industries. We welcome that, but we wish that the right hon. Gentleman had not taken so long to be converted to the general idea, which is a good one.

The Opposition urge the right hon. Gentleman very much to involve the trade unions in the sort of planning to which I have referred. The trouble seems to be, as the hon. Member for Bromsgrove and Redditch (Mr. Miller) said, that none of this is co-ordinated. Perhaps that will emerge over the next few months too, and we shall see the conversion of the Secretary of State.

In November 1979 the Prime Minister said: It is not for politicians to try to take over the management of public sector industries."—[Official Report, 22 November 1979; Vol. 974, c. 559.] The right hon. Gentleman has done that with Rolls-Royce and he is now doing it with British Leyland in the sense that he is removing the buffer of the National Enterprise Board from the relationship between the company and the Government.

We have heard a great deal, not only about intervention, but the scale of intervention. We heard that from the hon. Members for Havant and Waterloo (Mr. Lloyd) and for Knutsford (Mr. Bruce-Gardyne) and from others. They said that intervention on such a scale, involving such vast sums, took a lot of justifying. Words such as "unprecedented" have been used. That is not really so in terms of this country, although these are large sums compared with the cost of building a power station, a North Sea oil production platform or the development of Concorde. These are not outrageously large sums.

In an interesting paper to the Institute of Fiscal Studies, Sir Arthur Knight said: The success of our industrial competitors' more coherent policies ought to make us re-examine our attitudes. An independent study commissioned by the NEB a year or so ago concluded that the Governments in the twelve main developed countries accept that they have a role in coping with the failures and inadequacies of the market and found considerable evidence that those governments most associated with the ethos of the private market economy—Japan, Germany and the USA—intervene on a larger scale and in more varied and sophisticated ways than do governments more commonly thought to be interventionist. That is the reality of industrial investment and industrial policy in the Western industrial world. The Secretary of State and the Minister of State may pretend to fly in the face of that to win over the support of some of their more market forces orientated colleagues, but they are coming to accept reality.

We certainly want to see more of this intervention. The Governor of the Bank of England recently made a speech in which he said that he thought we should see the end of the recession later this year. If that is so—and I shall be interested to hear whether the Secretary of State agrees—is not this the time to increase investment in both the public and the private sector? If the recession is about to bottom out, should not we be ensuring now that when that upturn comes, however small it may be, our industries—or what is left of them—are well equipped, have the resources and have had the capital investment to meet whatever market opportunity arises? We should very much like to hear what the Minister has to say about that.

Unfortunately, the optimism of the Governor of the Bank of England is not altogether shared by the CBI, which predicts sharp falls in manufacturing employment throughout this year and talks of very large figures of further unemployment. A rough estimate of the present cost to the taxpayer of unemployment and associated supplementary benefit must be about £¾ billion per quarter, or approaching £3 billion per year. That is the cost to the taxpayer of keeping all those people on the dole and out of work. I shall not be diverted into an argument about whether it is all the fault of the Government that so many people are on the dole and out of work. My point is that it is no soft option for the taxpayer. It is quite the reverse. It is a waste not only of human resources in talent and skills, as my hon. Friend the Member for Keighley (Mr. Cryer) pointed out, but a waste of money which could be put to far greater purpose in terms of investment in the economy.

As my right hon. Friend the Member for Salford, West (Mr. Orme) said, we of course welcome the commitment to British Leyland. It deserves a period of sustained support, with less intervention and perhaps, even in terms of debates and discussions in this House, a period of peace and quiet in which it can be left to get on with the job. I agree with the hon. Member for Bromsgrove and Redditch (Mr. Miller) that without a medium-term commitment to the plans of the company, no one would have been settled. Management would not have been settled, the work force would not have been settled, the dealer network would not have been in a stable situation, and there would have been little hope of success. We therefore welcome the Government's commitment in that regard.

The hon. Member for Knutsford (Mr. Bruce-Gardyne) suggested that British Leyland could have been broken up and perhaps disposed of without any real damage. Nothing could be further from the truth. How could the company sustain a large dealer network without a significant range of cars to offer? The reality is that it would not be able to do so. That is one of the biggest single arguments for keeping the company in its present shape and size. If BL is to win back a share of the market, it can do so only through an expanding dealer network, and dealers will not come to the company if it cannot offer them an adequate range of vehicles. I hope that the Government will bear that very much in mind when they are tempted to respond to arguments put to them by Tory Back Benchers.

I turn to the question of Government strategy in terms of industrial policy and investment. The Financial Times recently summed it up in the following way: In his public pronouncements, Sir Keith seems to have lurched from a policy of laying down rigid targets for problem industries, which proved unachievable, to a policy of installing able management and backing it to the hilt. The new approach is more hopeful than the old, but there is still a need for the Government to set out its strategic objectives and performance criteria when large sums of public money are to be committed. 8.45 pm

We would very much welcome a great deal of that. The Government cannot go on intervening on a one-off basis or an ad hoc or unco-ordinated way. We should have an industrial strategy like most of our competitor nations such as France, Germany and Japan. There is nothing particularly Socialist about this. That is one of the ironies about the way in which the Secretary of State refutes these arguments. There is nothing particularly Socialist about those countries or their Governments, yet they see the imperative need for such an approach to industrial development in the modern world.

We therefore urge the Secretary of State to think again about such a need for Britain. It would be welcomed not only by Labour Members but by the TUC and probably by many people in the private sector, including the CBI. We think that the NEB should play a significant—not a dominant—and growing role in such a strategy.

Mr. Tebbit

With the leave of the House, I should like to reply to some of the points that have been made. I do not think that I can reply to them all, otherwise the House would become anxious and tetchy towards the second hour of my speech. I thank the hon. Member for Whitehaven (Dr. Cunningham) for the way in which he spoke. At one stage I had the feeling that he was welcoming me as a sinner come to repentance. I assure him that I am entirely unrepentant and that I have a lot of sin left in me yet. He need have no doubts whatever about that.

Dr. John Cunningham

I hesitate to don the role of cleric, but in that case we look forward to many more confessions.

Mr. Tebbit

They are always made in private. I am sorry that the hon. Gentleman tried to play down the size of the sums of money about which we are talking—the investment in British Leyland and, potentially, in RollsRoyce. He compared it with investment in Concorde and nuclear power stations. I remind him that investment in Concorde was made over a period of 20 years or so and that nuclear power stations do not seem to use up £1 billion in two years—at least, I hope not.

We must accept that these are extraordinarily large sums of money. We must ensure that, when a decision on a sum of money of this sort is taken, it is taken soberly in the knowledge of the effects that it will have on the remainder of the economy, especially when that sum of money is taken from the taxpayers or lenders generally.

I turn to some of the points made by the right hon. Member for Salford, West (Mr. Orme). He asked for a statement on ICL. At present I do not think there is a need to go further than to say that the Government are aware of the situation at ICL, following the company's annual general meeting yesterday. It is a company with which my Department has frequent contact in the normal day-to-day course of discussing its research and development programmes. Therefore, there is no lack of contact between us. I do not think that there is any call for a statement, at any rate at present.

The right hon. Gentleman also urged me to say something about the position of Talbot, in Linwood. It is also difficult to go very far at present in that respect—not least because a number of hon. Members will be meeting my right hon. Friends the Secretary of State for Industry and the Secretary of State for Scotland tomorrow in order to discuss these matters and the response which the Government should make towards the company. Certainly the company is well aware of the possibilities of investment aid that are open to it. No doubt those matters will be discussed more thoroughly tomorrow with my right hon. Friends.

It would probably be best if I were to deal generally as far as I can with a number of the points that have been made about Nissan. There was a great deal of concern about the effect of Nissan and the restrictions that might be placed upon it in the event that it decided to come to the United Kingdom. One thing which is helpful is that we are discussing these matters against the background that the SMMT and JAMA were able to announce today that they had reached agreement to the effect that the Japanese industry would resort to what they called even more prudent marketing of motor cars in the United Kingdom in 1981 than it did in 1980. That is helpful in indicating a knowledge on the part of the Japanese industry of the fears which they have created.

In regard to Nissan, it is important to remember that it is engaged on a feasibility study and that if all goes well that feasibility study could lead to production beginning at the end of 1984 and leading up to 200,000 cars a year in 1986.

Dr. John Cunningham

I do not want to delay the House except to ask this about the feasibility study. We were told in the Minister's statement that the feasibility study would take place. We also learnt that the Northern region of England and South Wales were apparently to be considered. Do the Government think it is even-handed, therefore, to send the Secretary of State for Wales rather than the Secretary of State for Industry to Japan to talk about these matters? It has left the impression in the Northern region of England that the decision has already been made.

Mr. Tebbit

I can assure the hon. Gentleman that the decision on siting has not been made and will not be made so much by Government as by the company itself. The fact that my right hon. Friend the Secretary of State for Wales is intending to visit Japan should not be regarded as having any direct relationship with the Nissan project. Like a number of Ministers, from time to time he travels abroad seeking inward investment for the United Kingdom as a whole. Certainly when I travel abroad seeking inward investment the hon. Gentleman should not assume that I am trying to get it all to come to London. I have other parts of the kingdom in mind as well. I am sure that all Ministers take the same view when they are abroad.

If I might continue, the Leyland proposal for a new medium-sized car should be on the market something like two years ahead of the Nissan car. That seems to be a signal to Nissan very clearly indeed in commercial competitive terms that BL will be ahead of it and that it will have to size its motor car and look at its share of the market taking that into account. The share of car production of United Kingdom manufacturers has fallen enormously over the years. Last year it was only 57 per cent. and I am certain that there is room for both Leyland and Nissan in the British market.

A number of hon. Members expressed anxiety on the point of the degree of local content and about whether these cars could be exported to Europe. I am sure that the Treaty of Rome is bedside reading for my hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne), as it is for many of us. He should try to find the section that will allow one nation in the Community to erect import controls against another nation's domestically-produced vehicles. It would be difficult to find such a section. The French tend to buy their own motor cars. That is not because of barriers but because of the way that the French feel about the motor car industry.

Mr. Ron Leighton (Newham, North-East)

Is the Minister aware that the Italians are stopping the import into Italy of Sony television sets made in Wales?

Mr. Tebbit

That is true. I understand that the matter has been taken up with the Commission. The Italian authorities have been told that they might be found to be in breach of the Treaty and that measures might be taken against them. Of course, some countries will try it on. Some hon. Members here think that we should try it on and breach agreements under the Treaty. I do not advocate that.

I am a little anxious about the attitude of a number of hon. Members to inward investment. The hon. Member for Keighley (Mr. Cryer) did not seem keen on it unless the company concerned is willing to hand over management of the investment to the British Government. I do not know whether he wants to chase away Ford, IBM, Vauxhall, Talbot, International Harvester and many other multinationals from Great Britain. He seemed happy to impose conditions on inward investment which would be unacceptable to the inward investors.

He said that the measures amounted only to a bit of sticking plaster. A £1 billion Elastoplast must be the most expensive produced yet. He would do well to consider that it is better to encourage inward investment and to allow British multinational companies to invest prudently overseas. The hon. Gentleman must accept that if we decided to impose such onerous conditions on investment into Britain, not only would we lose inward investment, we would cripple the chances of British multinationals investing overseas. That would have severe effects on jobs and the general economic development of the United Kingdom.

Mr. Bruce-Gardyne

Some of our anxieties might be alleviated if my hon. Friend could make it clear that, although Nissan-Datsun will be eligible for the appropriate regional development grants because of the way in which the Industry Acts are written, it is not the Government's intention to offer section 7 or section 8 assistance.

Mr. Tebbit

That has not yet arisen. I am extremely disinclined to announce such decisions in the House before the company has decided whether it wishes to come here under any circumstances. It is better to wait and see what the projects and benefits are before we make up our minds how they should be handled.

Mr. Maxton

Several hon. Members asked whether the company would be at least urged to give guarantees that it will use the British component industry and British steel. Will the Government ensure that such guarantees are given?

9 pm

Mr. Tebbit

If I were to ask the company for a guarantee, for example, that it would use British steel, it would ask me for a guarantee that the price, quality and delivery of the steel would be as competitive as other steel which was available. It would not be easy to give guarantees of that sort over a long period ahead. It is no good a company coming to this country and then being hemmed in with restrictions which might make it impossible for it to operate competitively. The test will be whether the British component industry and the British steel industry can produce to the standards and requirements of Nissan if it comes here. If they cannot match competition from abroad in supplying that factory in the United Kingdom I can see little hope of their being able to match competition when they try to export those parts in British manufactured cars.

Mr. Cryer

Is the competition subsidised?

Mr. Tebbit

The hon. Gentleman goes on about subsidies but the number of tales that I hear about subsidies in foreign economies leads me to believe that they are subsidising everything all the time. It is a puzzle to decide where the money for the subsidies is coming from. We need to think more carefully about that. There are a number of critics abroad who would say that action ought to be taken against a number of British exports in respect of the amount of British taxpayers' money which has been used to subsidise those productions.

Mr. Cryer

Does the Minister accept that it is reasonable for the British Government to seek whatever assurances they can, taking into account quality, price, delivery, and so on, that the product made by Nissan in this country should contain British-made components to the maximum degree possible?

Mr. Tebbit

The assurance from the Nissan company, which we sought, was that on start-up it would expect to take 60 per cent. and by the time that it was in full production at least 80 per cent. of components from local sources. That means EEC sources. It is important that we do not exclude that possibility. If we did, we should be opening the way to other European countries taking the view that they would have a case for taking action to prohibit the export of those cars to Europe.

I turn briefly to questions about the Leyland plan. My hon. Friend the Member for Newbury (Mr. McNairWilson) and others were interested in how the Government assessed the plan—whom did we consult, did we use outsiders, and matters of that sort. No, we did not use outsiders, but I can assure my hon. Friend that the Government are not totally bereft of advisers with industrial experience.

For some time the Government have had a policy of introducing people on secondment from industry and allowing civil servants to work in industry to learn more about it. I am satisfied that we have a number of people—probably more than ever before—who are wellqualified to look at those plans, the accounts and the propositions and to give sensible advice on them.

My hon. Friend and others were concerned about the way in which we could accelerate the progress of BL, in whole or in part, to the private sector. It is not, as some Labour Members seem to think, all joy and nothing else for the taxpayer when a publicly owned industry begins to make profits. That industry still demands cash because it can seldom generate enough profits for its cash requirements. That cash, if it is generated from Government sources, has to compete against all other uses. It has to be financed from taxation or by borrowing. That inevitably means higher interest rates, which strike against the interests of industry as a whole. However, I can assure my hon. Friend that we looked very closely at the possibility of disposals. I understand that there is a good prospect of disposals of the order of £70 million from the non-mainstream activities of BL.

I hope that in due time that collaborative venture of which there has been a great deal of talk will result, as Sir Michael Edwardes said in his letter to the Secretary of State, in a much closer relationship in which the majority holding—I would hope the minority holding as well—will eventually be taken out of Government hands. I see no reason why the British Government should be in the motor industry.

In his absence I refer briefly to the remarks by the hon. Member for Truro (Mr. Penhaligon). He gave the measure general support. I do not think that our problems have just been caused by our having oil and by the petro-pound. We have to ask whether it was all paradise before we found our oil. Were the constituents of the Leyland group all go, go, go and top flight successful motor car companies before we struck oil? I do not think that they were. These troubles were coming upon us before that.

We discussed the hon. Gentleman's views on reducing the value of the pound, and I have nothing more to say on that. I should point out, however, that if he feels that the work force has learnt nothing from its experience in the past few years, I believe that it has learnt a lot. I believe that it will remember it as we come out of the depression and move into prosperity.

My hon. Friend the Member for Surrey, North-West (Mr. Grylls) asked about the NEB limits. The hon. Member for Jarrow (Mr. Dixon) referred to a reduction in the limits. My hon. Friend spoke of an increase. I am happy to stand more of less neutrally between them and assure them that they are both wrong. There has been no change in the limit for the NEB. It is still £750 million, and I can assure my hon. Friend—perhaps to the distress of the hon. Member for Jarrow—that that does not betoken an intention to dash off immediately and spend another £400 million or £500 million through the NEB next week.

As for the way in which the NEB operates and the criteria to which it works, I can add little to the full statement made by my hon. Friend the Under-Secretary of State for Industry on 11 December 1980 in which he set the matter out extremely clearly. He made a very long statement, and I hestitate to go through it again at this time of evening.

I apologise to a number of hon. Gentlemen who spoke in the debate and to whose questions I have not referred. If any feel that I have failed lamentably to cover their points I shall, if they let me know, write to them. I see the hon. Member for Birminghan, Stechford (Mr. Davis) nodding. We shall certainly see if we can do so. I do not think that I should be popular if I went on for too long now.

The right hon. Member for Salford, West must not allow himself to slip into thinking that necessarily we should always subsidise every job that can be shown to cost less than the bill for unemployment pay and for loss of taxes. I ask him and the House to consider just how large a proportion of jobs we in this country could sustain on that basis. It would not be very large. We must ensure that we do not damage other jobs in the process of taxing and borrowing.

Of course, we all hope that this money for Leyland will enable the Leyland workers to secure their jobs, because no one else can do it but them. Equally, we can have no doubt, as we vote on these matters, that the taxing and the borrowing that are involved will strangle some existing jobs and abort others as yet unborn. Their numbers are unknown. As some hon. Members have suggested, they are scattered widely across the country. Therefore, perhaps they have no immediate constituency in the House. We would do well to remember them as we rejoice—I believe that we should all rejoice—that, for a time, the jobs at Leyland are more secure than they have been for some time past.

Amendment agreed to

Amendments made:

No. 6, in page 1, line 12, leave out "£2,251 million" and insert "£750 million".

No. 7, in page 1, line 12, at end insert— (1A) In section 8 of the Industry Act 1975, subsections (2A) to (2C) (Secretary of State's power by order to reduce the limit mentioned in subsection (2) of section (8) are hereby repealed.".

No. 8, in page 2, line 4, leave out are substituted the following subsections

and insert is substituted the following subsection".

No. 9, in page 2, line 6, leave out "£1,500 million" and insert "£4,400 million".

No. 10, in page 2, line 7, after "order", insert made with the consent of the Treasury".

No. 11, in page 2, line 8, at end insert to an amount not exceeding £5,250 million.'

No. 12, in page 2, line 9, leave out from beginning to end of line 11.—[Mr. Tebbit.]