HL Deb 25 January 1966 vol 272 cc48-51

4.35 p.m.


My Lords, there are two further Statements to be made and the Bill to be concluded, so perhaps the House may think it right that we should move on to the Statement that has just been made by my right honor. able friend the First Secretary of State on the Industrial Reorganization Corporation. My Lords, these are his words:

"Last week the Government announced a new system of incentives to stimulate investment in the sectors of industry and parts of the country where it is most needed. To complement these measures, we propose to set up an Industrial Reorganization Corporation to help British industry to adapt its structure and organization so that it can meet international competition more effectively.

" The structure of many industries has undergone substantial changes in recent years. But in some sectors British industry still cannot match the scale of operations of highly integrated groups abroad. The Corporation's task will be to search for opportunities to promote rationalization schemes which can yield substantial benefits to the national economy, especially in Terms of increased exports and more rapid technological advance.

"The Corporation will work in close co-operation with industry and existing financial institutions and will make full use of the facilities offered by the market. It will not act as a general holding company, but it will be able to provide finance from its own resources to promote sound rationalization schemes —by making loans or taking an equity interest in new groupings. It will also be able to provide capital for new projects or expansions of special importance to the national economy.

" The Government propose that the Corporation should be given the right in the first instance to draw as needed up to £150 million from the Exchequer.

"These proposals are set out in a White Paper"

—which is now available in the Printed Paper Office—

" and the necessary legislation will be introduced as soon as possible.

" I am pleased to inform the House that Sir Frank Kearton has accepted the Government's invitation to become Chairman of the Corporation."


My Lords, while thanking the noble Lord for the Statement that he has just made, and while, naturally, very much in favor of encouraging British industry to adapt its structure and organization so that it can meet international competition more effectively —to quote the words the noble Lord has just used—I am sure that he will not expect us to pronounce on the particular methods that the Government have chosen to pursue this objective, without our looking very carefully at the White Paper and the arguments in it to justify those methods and at the circumstances and ways in which the services of the Corporation are expected to be used.

May I just ask the noble Lord whether I am right in supposing that the legislation which he envisages will be in the form of a separate Bill, and will not be included in the same Bill as the provisions for investment incentives in the new Development Areas? If that is so, will the necessary provisions providing for these investment grants be included in the Bill? If it is not so, can he tell us whether the exact status which the Corporation is to have is set out in the White Paper?


My Lords, as I understand it, there will be two separate Bills, one dealing with the investment incentives and one with the creation of this new organization. The White Paper makes the case broadly for the proposals that the Government have in mind. It does not go into the special structure of the Corporation; that will naturally arise in the Bill. But if there is any matter in which I can help the noble Lord, I am willing to talk to him.


My Lords, as the Monopolies and Mergers Bill would appear to act as something of a stumbling block to the new Corporation, would Her Majesty's Government provide for the repeal of that Bill?


Certainly not, my Lords. The object of the Monopolies Commission, as the noble Lord knows, is to stimulate competition. In the case of this Corporation, the noble Lord, with his connections in industry, must be aware that there are many companies and organisations which, if brought together although not coming within the Monopoly Commission criteria, would be more efficient. Improved design and other techniques would make them more useful within the home industry and particularly so in dealing with exports and overseas competition.


My Lords, may I mention one other point on which I think industry will want particularly to be satisfied? The Statement just made said that the Corporation will work in close co-operation with industry and existing financial institutions. I am sure that industry will want to be assured in advance that the Corporation will act only after prior consultation with industry and the financial institutions referred to.


My Lords, the noble Lord will see, when he reads the White Paper, that the Government have in mind that the Corporation will be seeking rationalization. If it is essential for Government money to be invested through the Corporation in that rationalization, then the money will be available. But if private investment, particularly that of the City of London and the banks, is willing and able to enter into the rationalization, perhaps to the full extent, the Government would welcome it. We will certainly be seeking the utmost co-operation, as we have throughout, from various sections of industry, with the Government participating.