National Enterprise (Reconstruction) Board (Hansard, 1 May 1991)

§ Mr. Gerald Howarth (Cannock and Burntwood)

I beg to move, That leave be given to bring in a Bill to establish a National Enterprise (Reconstruction) Board to identify and evaluate possibilities for commercial investment by Her Majesty's Government. Contrary to some assertions that I have heard in the House, the Bill is a serious measure. It has caused a certain amount of consternation among some of my hon. Friends, but I can assure them that that is as nothing compared to the shock which preparing the Bill had had on me. However, it is an important measure with which we need to persevere if we are to avoid the errors of the past. I well remember those distant, dark days of the 1970s when my late hon. Friend, the former illustrious Member for Eastbourne, regularly introduced Bills seeking to denationalise one industry after another. It was an hors d'oeuvre, offering the public a taste of the menu that they would enjoy after the 1979 general election. Greatly to the credit of Mr. Ian Gow, many of those industries have transferred from ownership by politicians to ownership by the public.

Curiously, the Labour party does not appear to share the same confidence in its own proposals as Mr. Gow placed in his. That lack of confidence seems to be the reason why the Labour party is coy about presenting such legislative proposals in the House, preferring press conferences to Parliament. Therefore, I thought that in the new spirit of cross-party pairing, it might be helpful if I introduced the Bill to spare the Opposition from repeating the mistakes that they made in the 1950s, the 1960s and the 1970s.

In its policy document, the Labour party spoke of an effective partnership between industry and Government which, we are told, exists in those nice countries—Germany, Italy and Japan. The good news is that out goes the command economy which brought us the National Enterprise Board and in comes the spanking new turbo-charged national technology organisation to be called British Technology Enterprise. My hon. Friends may mistakenly believe that enterprise has the same relevance to British technology as democratic has to the German Democratic Republic.

Although no one has yet mentioned it at my surgery, we are told by the Labour party that the public interest requires such an organisation which would take a longer term view to develop British innovations … and to invest in the high technologies of the future. There would also be a national investment bank—an NIB—which would provide long-term funding to small and medium-sized companies and help to mobilise private capital for publicity led projects in the country's infrastructure". The NIB would be run on strictly commercial lines and operate at arm's length from Government". There are some potential pitfalls which my Bill would help to avoid. First, the strategy would require planning. Politicians are not good at that as we know from the problem that George Brown faced when he introduced his great national plan in 1964. It ran out of print within two hours of publication.

319 Secondly, in the business of investing in the high technologies of the future, we would have to avoid being hoodwinked by American entrepreneurs making cars with gull-wing doors, which I think gave rise to the expression to be gulled or taken for a ride. Although it produced only 500 cars, the De Lorean motor company managed to siphon off £77 million of our money. It is true that at £150,000 a copy, it was a record breaker. It was the fastest motor car from the production line to the motor museum.

As I said a moment ago, the NIB would be run on strictly commercial lines. There is a risk that that commitment could be confused with the statement in 1977 that "the NEB"—that is the National Enterprise Board and should not be confused with the NIB— must base its investment policy on sound commercial criteria. Unfortunately, De Lorean was but one of a number of sound commercial investments. In addition to Rolls-Royce and British Leyland, by 1979 there were 67 Government shareholdings in companies costing £155 million. Another was British Underwater Engineering, which proved to be an aquatic leap in the dark. As my hon. Friends the Members for Surrey, North-West (Mr. Grylls) and for Wokingham (Mr. Redwood), who is now the much-respected Minister for Corporate Affairs, reported in an excellent pamphlet, in 1978 the consequence of applying those sound commercial criteria was that the NEB made a loss of £40 million after extraordinary items. Presumably the extraordinary items were the ones that made money.

By the time the unfortunate episode was concluded NEXOS office systems had been sold at a loss of £34 million in 1982 and in 1984 INMOS had been sold for £95 million but its new owners reported losses aggregating £62 million between 1984 and 1988. Of course, British Leyland had been the beneficiary of an investment of £2,500 million.

I had originally thought of another title for my Bill. It came to me as I was attending a meeting with my hon. Friend the Under-Secretary of State for Industry and Consumer Affairs. I noticed on the wall of his office a painting of a horse race meeting—obviously it was a relic of the days when the NEB was in charge of the DTI. It seemed to me that a better title for my Bill might be the Industrial Totalisator Board Bill. After all, if one puts one's money blind on the tote at least there is a chance of backing a dead cert, but if one put one's money in the NEB it would have been a certain dud.

The De Lorean experience contains a number of lessons we might usefully learn. As the Public Accounts Committee established, the business ability of the Government team was woefully lacking and the nominee directors appointed by the Government were shown to be completely ineffectual, offering little or no protection to public funds.

In the Bill, we would have to consider the competence of those responsible for the policy of picking industrial 320 winners. My hon. Friend the Member for Langbaurgh (Mr. Holt) may be one of the best qualified as he is a consultant to the National Association of Bookmakers. Regrettably, the Opposition Front Bench industry team seems to have ruled itself out because of what my right hon. Friend the Secretary of State for Trade and Industry described as its industrial virginity, unsullied by any experience of industrial management"—[Official Report, 25 March 1991; Vol. 188, c. 621.] The hon. Member for Newcastle upon Tyne, North (Mr. Henderson) has shadow responsibility for the brewing industry, but one wonders whether he is qualified to organise a drinks party in a brewery.

In all seriousness, if the new commercial Labour party's policy of picking industrial winners is to succeed, it is important that social engineering is left out. There are some alarming examples which illustrate some of the thinking within the Labour party. I use the word "thinking" loosely. For example, Walsall metropolitan borough council has an economic development strategy designed to improve the economic welfare of borough residents, particularly those who are disadvantaged for reasons of gender, race, disability or other form of economic, or social, circumstance. The trouble with the Labour party is that, whenever it gets hold of public money, it cannot resist some positive discrimination—what is known in public bars as the one-legged black lesbian syndrome.

We should not be deterred by the dramatic contrast between the performance of industry when it was in the hands of politicians and needed Government subsidies of £19 million and today when those same companies have been net contributors of £1,500 million in corporation tax to the Treasury. Nor should we be put off by the fact that many countries have beaten a path to Britain's door for advice on privatisation. I am sure that most of the 11 million shareholders would readily hand over their shares in exchange for Labour party junk bonds.

The House will agree that the best way to enable us—and the public—to examine Labour's so-called industrial strategy would be to give me leave to introduce the Bill. In Committee, we might even establish the hidden agenda behind Labour Members' support for London zoo. They hope that it will be a safe haven for their industrial lame ducks and white elephants.