INDUSTRY BILL (Hansard, 2 April 1979)

§ Lord JACQUES
My Lords, I beg to move that this Bill be now read a third time. I do not think I need detain the House very long, since we had a full debate on Second Reading. We also agreed that the Committee stage should 1713 be negatived and that since this is a money Bill the Third Reading, in the normal course of business, would not have been debated. However, in the light of subsequent events, the noble Lord, Lord Carrington, as Leader of the Opposition, has sought an assurance from the Government about commitments that will be incurred against the new financial limits between the enactment of the Bill and the coming General Election.
In the Second Reading debate I told your Lordships that at the end of February £830 million was either charged or committed against the National Enterprise Board's existing financial limit of £1,000 million. That figure of £830 million is now £850 million. I went on to say that the outstanding balance was less than the requirements of British Leyland and Rolls-Royce in the near future. The National Enterprise Board would have to commit itself to £150 million in respect of British Leyland and to very substantial sums in respect of Rolls-Royce before the Election. My right honourable friend the Secretary of State for Industry is making an announcement this afternoon in another place during Question Time. There will also be an announcement expected shortly on Rolls-Royce affairs.
Your Lordships will recall that there is a technical change in the Bill that makes all borrowings of all subsidiaries count against the new financial limit so when the Bill is enacted there will be an immediate charge against the limit of £600 million. This figure was given by my right honourable friend the Secretary of State for Industry in the course of the Committee stage of the Bill in another place.
Against this background I can assure your Lordships that, apart from the technical change and the commitments about to be entered into in respect of British Leyland and Rolls-Royce, the charges that the National Enterprise Board will incur against its financial limit between now and the General Election will be contained within the existing financial limit of £1,000 million. I think that meets the letter and the spirit of the assurance that was sought by the noble Lord, and I therefore invite your Lordships to agree that this Bill should have a Third Reading.

§ Lord ORR-EWING
My Lords, in assuring the Opposition's agreement to all these measures, I think that perhaps my noble friend the Opposition Chief Whip, Lord Denham, went rather too far when he said that all these Bills had the entire support of this side. I think that on the question of the Industry Bill we had very considerable reservations about the expenditure and about the fact that £600 million had been borrowed over and above what Parliament had allowed. So we were glad to have the assurance from the noble Lord. With that assurance and our general feeling that money is being spent too liberally—it has risen —20 million since Second Reading—and with those reservations we are glad to accept the Bill as it is now. However, we have considerable reservations about the extent of the expenditure.

§ Lord DRUMALBYN
My Lords, I should like to add to that and to associate myself with what my noble friend has said. I think we must be very grateful to the noble Lord for what he has said, but I am a little puzzled as to why the period of limitation of expenditure, so to speak, is between the enactment of the Bill and the coming General Election. Would it not have been more logical to have it between the enactment of the Bill and the time when Parliament resumes after that?

Lord CAMPBELL of CROY
My Lords, as this is a Third Reading debate, perhaps it would be more convenient if I spoke before the noble Lord opposite seeks to wind up and to answer these points.
First of all, we are grateful to the noble Lord for the assurance, so far as it goes, that he has given today in reply to the point which my noble friend Lord Carrington has put since last Thursday. We will naturally study the announcement on this subject to be made in another place. This is a money Bill and therefore, as the noble Lord has said, in the normal course of events, having had a Second Reading debate, which we did last week, we would not have had a debate on Third Reading. On the other hand, very very large sums of money are involved where this Bill is concerned, and therefore it is a matter of 1715 considerable concern to your Lordships, as well as to my honourable and right honourable friends in another place, that the expenditure should be contained during the coming weeks until a new Government is in office.
It should not really be called an "Industry Bill". I must make that clear to my noble friends who were not here for the debate on Second Reading. This Bill simply raises the limits for the amount of money concerning three bodies, and it is misleading for it to have been called an "Industry Bill". But, seeing that it is confined to raising these limits, and raising them to very large sums indeed, it is of course a money Bill to which the other place has addressed itself. Again, I thank the noble Lord for having said what he did, but I should like to share the reservations of my two noble friends.

§ Lord BARNBY
My Lords, in recent years, this House has little discussed the Finance Bill or anything that comes under the heading of a money Bill. Now, in spite of the very clear explanation by the noble Lord who moved the Third Reading, this Bill comes as a surprise to many in the House. I think it is right that Back-Benchers should raise this question, because, over a long period of memory in this House, it is seldom that there has been any Bill of this magnitude presented at this period in the life of a Parliament, and, in my opinion, it would be wrong if it were to receive the agreement of the House without some protest being made. Furthermore, in spite of my noble friends' agreement to deal with the present difficult situation to the best of their ability, it seems right that there should be a voice of surprise raised.
Also, as my noble friend Lord Campbell of Croy said, this is not an Industry Bill; it is a Finance Bill. It ought to have a different name. It is entirely misleading that it should go down in history that we have voted on this as an Industry Bill, when money is not going to private industry; it is going to public bodies.

§ Lord JACQUES
My Lords, I shall reply in reverse order to the queries raised. I would remind the noble Lord, Lord Barnby, that this is not something which 1716 the Government scraped through the other place. It had a majority of 50, and since it is a money Bill that is significant. I would also say to the noble Lord, Lord Campbell of Croy, that in using the name "Industry Bill" we followed the precedent. The previous Bill dealing with this matter was called "Industry Bill", and it is right that we should follow that precedent. To the noble Lord, Lord Drumalbyn, I would say that it is intended that this should be acted upon in the spirit, and I do not think there is any significant difference between the date of the Election and the date when the new Government takes office. We certainly did not intend there to be any difference. To the noble Lord, Lord Orr-Ewing, I would say that I am quite sure he did not wish in any way to mislead the House, but he may have done so and, consequently I want to explain the point he raised.
Under present legislation, there counts against the financial limit everything that is borrowed by a wholly-owned subsidiary. But there are some subsidiaries which are not wholly-owned. Instead of being wholly-owned, they are 95 per cent. owned; for example, BL. In those cases, as the law stood, the only money borrowed which counted against the financial limit was that which was provided by the National Enterprise Board, or that which was guaranteed by the National Enterprise Board. If those subsidiaries which were not wholly-owned borrowed money in a commercial way from the bank, that did not count against the financial limit, and there is a lot to be said for that state of the law.
However, it has been brought into question for audit purposes. The auditor wants to know whether he can draw up accounts on the assumption that the business is a going concern, and in order that he may do so he may ask the National Enterprise Board for certain assurances. The National Enterprise Board may wish to give those assurances, but if it gives them it does not make any difference whatever to the credit standing of the subsidiary, nor does it give any greater security to the bank or whoever has made the loan to the subsidiary. But it does mean that there is an assurance—something short of a guarantee—and it was felt that, because of that very technical reason, there should be a change. It really means that subsidiaries of the 1717 NEB which are not fully owned and which borrow money from the bank shall have that borrowing counted against the financial limit of the NEB. That makes it clear that the financial limit is not an amount of taxpayers' money which is available to the NEB. A very great deal of it will come, in the ordinary commercial course of events, from the bank. I hope that that makes the position clear to your Lordships.

§ Lord JACQUES
My Lords, I beg to move that this Bill do now pass.