§ 4.23 p.m.
§ The MINISTER of STATE, DEPARTMENT of INDUSTRY (Viscount Trenchard)My Lords, with the leave of the House, I will repeat a Statement made by my right honourable friend the Secretary of State for Industry in the other place. The Statement is as follows:
"Mr. Speaker, I am now able to make a Statement about the Govern- 1523 ment's policy towards the National Enterprise Board.
" Over the last few weeks I have carefully reviewed the full range of the NEB's activities. My colleagues and I have had several discussions with the chairman and the NEB board. I have, too, met the board's regional directors when I visited Liverpool and Newcastle. I pay tribute—as I have before—to the sense of public service and the energy of all concerned with the NEB.
" But the House knows that we opposed the Industry Acts of 1975 and 1979, and in our Manifesto we promised to reduce the NEB's powers. We favour the encouragement of private initiative and enterprise, not the promotion of public ownership.
" But it will take time to restore the full vitality of the private sector. In the meantime, the NEB will have a continuing role for those companies which have been in difficulties and for which it now has a responsibility, so long as the business concerned has a prospect of viability and no solution based on the private sector is available. If other cases arise where the private sector is unable to provide a solution to a company's difficulties, receivership will normally be the right course. In a wholly exceptional case, circumstances could arise in which the NEB might—but only on the Government's initiative—provide temporary and tapering support, with the aim of restoring the company to commercial health as quickly as possible.
Given that the NEB has this role, I have looked at whether there is any other activity it could undertake, consistent with our policies. I see no public benefit in enabling the NEB to act as a general merchant bank; and its powers to promote businesses, or buy shares in them, will be restricted within very clearly defined limits. Our policy (as the Manifesto envisaged) is that the greater part of the NEB portfolio should be sold as circumstances permit, having regard to the interests of the taxpayer and the companies. I look to the NEB to make disposals to the value of £100 million in the current 1524 financial year, as foreshadowed in my right honourable friend's Budget statement. However, I do not think it is in the public interest, nor in the interest of the companies concerned, to identify them now or specify the timing of their disposal by the NEB. I shall also be requiring the NEB to make a substantial reduction in its expenditure in the current year and in the following years.
" I exclude, however, the investments which the NEB has made in a dozen or so newly established high technology companies, chiefly concerned with computer software, micro-electronics and their applications and which I believe justify special attention. The market has been discouraged in recent years from supporting such ventures. Time will anyway be needed for these companies to evolve before the NEB can sell them.
" In the light of this, it seems sensible to use the NEB as one means of familiarising the market with new technologies. For my part, I see this role as being necessary only until the market is clearly strengthened and I would not wish to put a term to the role now. The budget for it will he limited—but clearly defined. The objective will be to secure in each case the maximum amount of private investment, with a view to full private ownership in each case as soon as practicable. The NEB will be able to re-invest some of their receipts from disposals of these companies in new high technology ventures, but only in partnership with private capital. A market that has met the huge risks of North Sea exploration should find no insuperable difficulty here.
" The Government are also much concerned with the problems of the areas of high unemployment. An element of that regional policy is that the NEB should continue to exercise an industrial investment role in the North and North-West and with small firms, seeking always to maximise private investment and with the objective of transfer of full ownership to the private sector as soon as possible. The NEB's regional role will be very similar to the industrial investment activities of the 1525 Scottish, Welsh and Northern Ireland Development Agencies in Scotland, Wales and Northern Ireland respectively.
" We will introduce a Bill as soon as possible to give effect to these policies. We will sharply reduce the financial limits laid down by the 1979 Industry Act and amend the powers of the NEB set out in the 1975 Act, in accordance with the policies I have just announced. New guidelines will follow, which will set clear objectives for the NEB to achieve. Within that framework the NEB will have my full sup-port".
§ 4.30 p.m.
§ Lord MELCHETTMy Lords, I should like to thank the noble Viscount for repeating the Statement in his capacity as a Minister at the Department of Industry. But I hope he will forgive me for saying that it does not seem to us on this side of the House that the Statement is based on any industrial considerations whatsoever; nor, clearly, is it based on any desire to see both parts of our mixed economy, public and private, successful. Indeed, it seems to be based on the politics of envy. As soon as any part of the public sector appears to be being successful, it will be flogged off to the private sector, to private interests, normally at the maximum dis-benefit to the public. It is clear that that is what the bulk of the Statement is aimed to achieve. The public will take the risk and private interests will get the benefit.
That part of the Statement may not come as any great surprise, but I must confess that the vagueness of the Statement, talking in terms of such things as a substantial reduction in expenditure and with absolutely no indication given of any financial duties which the NEB will have to follow in future, comes as a surprise after the very long and careful consideration which the noble Viscount says has been given to the future role of the NEB. I hope that the noble Viscount might be able to tell the House a little more than the Statement does, about exactly what the NEB's finances and financial duties are to be in the future.
The Statement has some fine-sounding things to say about the NEB's regional role—a role of which I am sure the noble 1526 Viscount, with his own responsibilities, is particularly conscious—which will be all the more important after the Government's catastrophic cuts in regional aid which the noble Viscount announced earlier this week. So could he tell the House how the NEB is expected to fill the regional role which the noble Viscount has said the Government see for it, if its budget is to be cut in the way which the Statement says it will be? Indeed, the Government's regional industrial policy seems to depend entirely on making the maximum number of cuts in the expenditure in the regions which are already suffering from the highest unemployment.
The Statement also touches on the fundamental question of investing in the future. The NEB has a vital role in investing in micro-electronics, where the private sector has conspicuously failed to act, and I am glad to see that the Statement recognises that fact. I am delighted that the NEB will continue its activities in this field, which appears to have the support of noble Lords on all sides of the House. But could the noble Viscount tell us a little more than the Statement does about the future of the micro-electronics application programme—the industry support scheme—and, in particular, about the future of INMOS, which the Statement does not mention at all? Even more important, could the noble Viscount tell us how much money the NEB will have to continue this vital work, which now seems to be accepted as vital on both sides of the House, and which the Government have clearly accepted will not be done by the private sector?
It may seem strange, having done so much to destroy its effectiveness, that the Government should pay tribute to the public service energy of those involved in the NEB, and that the Statement ends by saying that the NEB will have the Government's full support. Of course, we on this side of the House fully support those sentiments and to the extent that the Government actually translate those sentiments into action—and this Statement is doing the reverse—they will have our full support.
§ 4.33 p.m.
§ Lord ROCHESTERMy Lords, I should like from these Benches to join in thanking the noble Viscount, Lord Trenchard, for having repeated this State- 1527 ment. As with other aspects of industrial policy, our main desire in considering the future of the National Enterprise Board is that it should be able to continue to do its work so that its operations are maintained on as stable, and as broadly agreed, a basis as possible, irrespective of the political complexion of the Government of the day. Clearly, we shall need to study this detailed Statement with great care, but in fairness to the present Government, I think I should say that my own first reaction to it is that its proposals are a good deal less drastic than the gracious Speech had led me, at least, to suppose they might be, and to that extent I should, on behalf of my noble friends, give it a limited welcome. Indeed, at this stage I think the best thing I can do is to ask only one question of a fairly general kind. Are the Government really satisfied that in redefining the role of the National Enterprise Board in the ways proposed in this Statement, they are leaving room for the board to exercise sufficient initiative to enable it to continue as a viable body?
§ 4.35 p.m.
§ Viscount TRENCHARDMy Lords, if I may, I will just reply to some of the points that the noble Lord, Lord Melchett, has raised, as best I can at this stage, which is only to a limited extent, and then deal particularly with the point that the noble Lord, Lord Rochester, has just raised. I do not think that mentions of the politics of envy really have any place—and I am prepared to say in either direction—in this case. We hold a sincere view, which we published quite clearly in the Manifesto, that industry will be most efficiently run with the least bill on the taxpayer and the maximum creation of wealth for the nation as a whole, by maximising private enterprise. We stick to that and we believe it to be in the interests of the whole nation. On the financial duties the Bill, which my right honourable friend's Statement mentioned, will of course spell those out. The commercial discipline on the board will of course remain. Other than that and the mentions of the short-term financial questions which I have repeated in the Statement, I cannot today add.
So far as the regional role is concerned, this has never been a major user of finance. I cannot give details at this stage, which 1528 will be worked out in the policy of the board within this general Government policy, of how much will be allowed to the regional role. But it is not an expensive part of the board's function. So far as our preoccupation with regional cuts is concerned, we have already discussed that at some length in relation to regional policy and will do so again. I would merely just repeat once more, that we see our national policy, and within it a cost effective regional policy, as being more likely to produce real growth and growth in the regions than the previous policy which has not been successful.
So far as electronics are concerned, the noble Lord, Lord Melchett, drew our attention to the fact that on all sides of the House we regard this new technology as being highly important. I repeat the sentiment of my right honourable friend's Statement, which is that a very discouraged market, a very non-profitable market, has found it not possible to develop these new technologies as fast as one would have wished. We believe that this is a temporary situation and that a revitalised market will increasingly do so. There are already many signs of the private sector developing this area, and we believe that as the general climate is improved so the private sector will increase its own developments. The question of INMOS is the subject of a separate study on which I have nothing to say today. The noble Lord questioned, as apparently odd, the sentiment of my right honourable friend about the dedication of the members of the National Enterprise Board and the staff. I do not think that my party, or any of my noble friends or right honourable friends in the other place have said anything which questions the dedication of the people who are working in this role. That is no part of our philosophy.
The noble Lord, Lord Rochester, asked me whether I felt that there was room within this policy for a viable National Enterprise Board. All I can say at this stage is that, in addition to a number of other meetings, my right honourable friend has had two major meetings with the board in the last 10 days. I shall not pretend that everybody has agreed about every subject. However, we believe that once the remit is clearly set in relation to the three main roles which I have outlined, it is a viable proposition for the board.
§ Lord BALOGHMy Lords, does not the Minister realise that he is living in a dream world? Instead of looking at our figures, he dreams up confidence which manifests itself in a large fall in investment decisions. The last forecast was worse that the one before—and that was worse that the one before that. Does not the noble Viscount realise that the social and private costs of a depression are enormous and that it is the duty of the public sector to help and sustain the private sector, which it is obviously not going to do? Finally, does the Minister realise that de-industrialisation—the demolition of British productive power—is increasing apace, that our import bill is intolerable and that our export performance is ludicrous? I should like to know why one cannot pursue a unified policy for the good of the country.
§ Viscount TRENCHARDMy Lords, neither I nor anybody else will be surprised that the Government disagree with the noble Lord. Lord Balogh, although we agree with him that industrial decline has been accelerating and that it is still accelerating. That is why we have spelled out in every economic debate since we took office—which was only a short time ago—that real change is necessary, that the policies of the past have failed and that the decline has accelerated. That is also why we have introduced totally new conditions which are not only known and proved to have been conducive to the growth of industry in many other countries but which will again be proved to be conducive to real growth in this country. That is why, furthermore, the policies which we are introducing—which will result in gradual change, not in change " at a stroke " or in an abrupt way—will be more successful than those which have been practised until recently, with such obvious failure.
§ Lord DRUMALBYNMy Lords, does my noble friend accept that the Statement which he has made will be very warmly welcomed on this side of the House—first, because it is going exactly in the direction that the people of this country voted that it should go, and, secondly, because it is not, as has always been suggested by the other side, making sudden and savage inroads into the existing situation but is going forward moderately and with determination towards the goal?
§ Viscount TRENCHARDMy Lords, I very much agree with my noble friend.
§ Lord LEE of NEWTONMy Lords, does not the noble Viscount agree that several large and vital firms in the private sector would have gone bankrupt but for the saving grace of the board? Does not the noble Viscount also agree that it appears from the Statement that if the private sector cannot keep these firms in being the Government would prefer them to go bankrupt rather than that the NEB should save them? There is also specific mention in the Statement of £100 million which must be raised. Will the sales bear any relationship to the real value of those firms rather than to the mere raising of £100 million? Finally, would the noble Viscount take it from me that, far from this being welcomed in any industrial part of the country, it sounds far and away more like a piece of vandalism?
§ Viscount TRENCHARDMy Lords, I do not wish to repeat what I have already said. Certainly we acknowledge that, outside the House, the current role of the NEB has been described as a hospital role. I should he repeating myself if I went back over the economic conditions which may have produced a rather large number of hospital cases. But we shall continue the hospital role. We shall seek to minimise that role and we hope and believe that the general economic conditions will lead to less patients or, as my right honourable friend has said, to the very occasional patient.
When one turns to a subject which may not be an easy or a popular one to discuss—whether the saving of a company is always the best thing for the employees in that company, for the country and for the regeneration of growth—I should like to say to the noble Lord that the evidence of those who have had most experience in that area is, as my right honourable friend's Statement has said, that the normal and better course is to allow the bankruptcy to take place and to allow regrowth on that basis. There are plenty of examples, known both to the Government and to my department, of successful regeneration having taken place after receivership.
Turning to the question of raising £100 million in this financial year, I do not 1531 believe, bearing in mind the size of the portfolio, that this will require any sales at knock-down prices. I do, however, believe that such is the economic situation of this country and such is the need, as was spelled out in the Budget, to raise the necessary money to change these conditions, that this amount is a fair contribution to the general needs of the economic situation.
§ Lord MELCHETTMy Lords, if the noble Viscount is unable to say what the substantial reduction in the NEB's expenditure will be—as apparently he is—would he agree with me that it is, to say the least, extremely irresponsible for the Government to come to Parliament and make statements about substantial reductions in expenditure when apparently they have not even begun to work out what kind of reductions, and what scale of reductions, they are speaking of?
If I may ask the noble Viscount one further question, he drew an analogy between the NEB's role in the future and the hospital services. This seemed to me to be a singularly inappropriate analogy. The noble Viscount suggests that the patient, having been taken to hospital and become well enough to leave, is flogged to private interests as soon as he walks out of the hospital door, those private interests having made no contribution to making him well, and that he is flogged off in such a way as to make sure that the hospital and the public generally get the least possible benefit from the sale.
§ Viscount TRENCHARDMy Lords, I do not believe it is irresponsible for us to come to Parliament at this stage, and it is certainly not irresponsible not to disclose now the kind of figures that we believe this reduced role of the NEB will require. It is not correct to suggest that the Government have not even begun to work out these reductions. We are going to work closely with the NEB, which the noble Lord is always advocating that we should do, over the details leading up to the preparation of the Bill, and for us to announce figures before that had been done and before matters had been agreed with the board of the NEB would indeed be irresponsible.
With regard to patients being flogged, for one awful moment I was getting the 1532 wrong end of the stick as regards what the noble Lord said. All we are saying is that they should not be kept in hospital but should be allowed the fresh air of the outside world.