HL Deb 28 April 1980 vol 408 cc1011-21

3.6 p.m.

The MINISTER of STATE, DEPARTMENT of INDUSTRY (Viscount Trenchard)

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, that the House do now resolve itself into Committee.—(Viscount Trenchard.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD ABERDARE in the Chair.]

Clause 1 [Functions of the Board and Agencies]:

Lord LEE of NEWTON moved Amendment No. 1:

Page 1, leave out lines 8 and 9.

The noble Lord said: I beg to move the first amendment standing in my name and those of my noble friends. The effect of leaving out lines 8 and 9 would be to retain in Section 2(2) of the Industry Act 1975 the words "reorganisation or", and paragraphs (c) and (d) of that subsection, which seek power to extend public ownership into profitable areas of manufacturing industry and to promote industrial democracy in undertakings which the National Enterprise Board control. The power of the National Enterprise Board to reorganise those firms which are within its control, in the sense of transferring the functions of one to another, may well become a most appropriate method of saving numbers of firms which are in danger of collapse.

I am, of course, well aware that there are many ways of interpreting "reorganisation"—I suppose that in the last analysis the courts would determine that—but it seems to me that in its widest interpretation it could be inimical of the ability of management within firms to reorganise their line-out, their methods of production, and that if they are to be tied down by their inability to reorganise they could be in very great danger of collapse. There cannot be within the NEB, or the Welsh and Scottish Development Agencies, the reasons which some firms in the private sector have for promoting take-over bids, which serve to eliminate competition or asset-stripping. There is no danger whatever of that kind of thing happening so far as the NEB is concerned. I do not know whether the Minister has any ideas, but, for my part, I have no knowledge of any charges ever made against the NEB by private firms that they feel in any way threatened by the powers which are now vested in the NEB under the 1975 Act.

Paragraph (b) of the subsection with which we are dealing, subsection (2), deals with this, and I invite study of the words. It does not speak only in terms of the reorganisation of an industry; it includes, or any undertaking in an industry";

and it is this wording which prompts me to wonder just how far the NEB will be inhibited by the deletion of the words in the 1975 Act. I suggest therefore that we are dealing not only with the reorganisation of an industry but with the firms within an industry. We all know of firms which are, or were, under the control of NEB which have more than one factory within their undertaking. Changing productive methods in one large undertaking often leads to switching between factories. I am thinking in terms of Rolls-Royce, Ferranti and Fairey. They may find that the reorganisation which is essential to their purpose is now forbidden to them.

One of the principal causes of the serious decline now taking place in parts of our manufacturing industries is the failure of firms to reorganise themselves on modern lines and adapt their plants and layouts to enable them to produce new lines of products as consumer demand changes. Surely, we can all agree that there has never been a period since the first Industrial Revolution when the ability to reorganise industry with the very maximum of speed was more essential to success than at the present period. Yet the first issue with which we are asked to agree is a quite deliberate attempt to freeze NEB industries into whatever form they happen to be when this Bill becomes an Act of Parliament. Many of the firms within the NEB are there because their private owners had failed to keep them profitable. They are the very ones who are in the greatest need of drastic reorganisation. Yet this paragraph in the first clause seeks to imprison these firms in an almost petrified posture, which can only deny the best managements their ability to modernise.

At Second Reading I pointed out the fact that the firms owned by the NEB which the Secretary of State said were not "up for grabs" were those in the advanced technology range. These are the ones in which the NEB have made great efforts to keep us abreast of the microelectronic revolution and the development of the silicone chip. It reminds me of a period when I was in industry when we were developing radar and when we were compelled to reorganise our methods as the "boffins" improved on previous ideas. It was almost a daily occurrence that we had to stop production and reorganise the lines completely as the "boffins" came along with new ideas. It seems to me that this is the kind of period we are now in.

I should like to comment on the efforts, for instance, of INMOS, the NEB company dealing with software in the computer industry who are doing an extremely good job in trying to ensure that the nation becomes competitive with other nations which are going ahead with this. If they are to be forbidden to indulge in any drastic reorganisation it would put back our modernisation a very long way indeed. While I am speaking of INMOS, can the Minister tell us whether they are to get the extra £25 million? I commented on this the other day. They were promised a further tranche of £25 million by the last Government. The present one does not show much inclination to come forward with this. Can the Minister say whether this is to take place or whether we are still in negotiation with Sir Arnold Weinstock on the future of INMOS and whether that may be holding up INMOS' plans while the competitors proceed on their way?

The second part of the amendment that I am moving forbids the extension of public ownership into the profitable areas of manufacturing industry. In other words, we must pass the supreme test of Tory nationalisation of manufacturing industries by making quite sure that it is unprofitable—in which event the nation can be left to shoulder the losses. Again, the NEB have no power of compulsion in the sense of taking over industries or firms in the public sector. All that would have to be by mutual agreement between the parties. Why is it that the Government feel that it is necessary to cripple the NEB in this quite ridiculous manner? In his Second Reading speech on the Industry Bill, the present Secretary of State for Industry made it clear that the object of this Bill is to increase the size of the private sector of industry and to decrease the size of the public sector. I suppose, politically, he is entitled to take that view; but, surely, that is no excuse for deliberately emasculating an organisation which nobody on any side of this Committee can argue has been a failure. In any sense, NEB have been a first-class success. Merely to say that he now proposes to cut them down for no better reason than that he wishes to see an extension of the private sector is anarchy at its worst.

The Secretary of State told the House on that occasion that he would rather see private industries going out of existence than to see them in the public sector. What a remarkable statement for a Secre- tary of State to make! If anybody wishes me to do so I will quote the source. But that is the statement he made in response to an interruption during his Second Reading speech.

It seems to me that, on the two grounds that I have mentioned, no real reason has been advanced why the Government wish to take this step. The third ground refers to the promotion of industrial democracy. The power of the NEB in the way of promoting industrial democracy is to be eliminated. The Liberal Party have an amendment down which deals with this subject. I shall certainly support them in the amendment that they move. To anybody who looks at this logically, if you are opposing the creation of industrial democracy, you are supporting its opposite; and the opposite of industrial democracy is industrial dictatorship. And this in a period when we are perfectly entitled to say that some of us, anyway, have been trying extremely hard to get the trade unions to move away from the task they were created to carry out; namely, to improve the conditions of their members. I want to see them do that, but also I want to see them take an active and responsible part in the creation of industrial democracy within the industries and the firms with which they are concerned.

I had a great deal of experience in industry before I went to the Commons in 1945, in a great factory employing many thousands of people. It was more like a town than a factory. One spent one's time as a principal representative of the unions working in complete harmony with management in trying to improve industrial democracy within that great factory. Indeed, we reached a stage in perfecting our internal negotiating machinery where we did not need to ask for the intervention of either outside trade union officials or representatives of the employers' associations; we perfected our own machinery as part of our idea of improving industrial democracy. The machinery of negotiation of course is an essential part of promoting such democracy.

In these days, when so many people on both sides seem either to have forgotten or failed to learn what constructive negotiation is about, I should have thought that Governments should be encouraging the promotion of industrial democracy, not vetoing it in this ridiculous way. I have commented before about the habit of this Government first of all telling us how abject has been the failure of incomes policies, and then bemoaning the results of free collective bargaining. This cannot be applied both ways. If one wants to encourage a constructive, positive approach by all sides of industry—the unions and employers—then there is no substitute for an arrangement by which both sides accept responsibility for the products and for the pace of production. These are the essential concomitants of an industry which can put Britain back in the position where we all want it to be. I cannot understand why a Government, which is in the terrible predicament of seeing a great deal of our manufacturing industry being eroded, should now be trying to put back the clock to the days when employees were simply numbers on a clock card. Surely, that day has gone. What I have said about the NEB also applies to the Scottish and Welsh Development Agencies.

There are noble friends here from Wales who must be wondering what kind of future Wales has with the rundown of steel and the running down that may well affect coal, and the ancillary industries which will be affected. What can be the future when, added to that picture, we are now forbidden to think in terms of an industrial democracy which to me—with some little experience of how men react to these things—is to be vetoed? I think that it is drastic and deplorable. I beg to move.

3.22 p.m.

Lord ROCHESTER

I am rather sorry that the noble Lord, Lord Lee of Newton, has framed this amendment in the way he has. My noble friends and I sympathise with the view that the NEB should retain two of the three functions that the amendment deals with and about which the noble Lord, Lord Lee, has just spoken. We believe that the board should retain the power to promote or assist the reorganisation of industry, as he has suggested. We have consistently expressed the view that the board should be able to continue its work on as broadly agreed a basis as possible, irrespective of the political complexion of the Government of the day.

I recall the more drastic fate which overtook the Industrial Reorganisation Corporation under an earlier Conservative Government; it was abolished altogether. That has not yet happened to the NEB; but I have grave doubts whether, if it loses its capacity to help in the reconstruction and development of our British industry that is so sorely needed at the present time and will be needed in the next few years, and it is left only with British Leyland, with the odd "lame duck", with some responsibility for new technology—important though that is—it can for much longer remain a viable body. If a Labour Government are returned to power in the future, are we to go through the same old rigmarole once more? Is there to be yet another reversal of national policy? If so, we shall never achieve the political equilibrium in industry that in this respect we so badly need.

If I may say so to the noble Viscount, Lord Trenchard, the Department of Industry seems to have struck an attitude that on no account must there be any intervention in industry. This constrasts markedly with the position in France, through its Civil Service; in Germany, through its Central Bank; and in Japan. In those countries over the past few years there has been an industrial performance which has been better than our own. It also contrasts most markedly with what the Minister of Agriculture was reported the other day to have said: that if you are in competition with an industry overseas, and that industry has the cooperation and collaboration of its Government, and you do not have that co-operation, then you normally lose. That is a very big indictment—if the Minister was correctly reported—coming as it does from within the Conservative Government.

Secondly, we believe that it is a mistake for the Government to deny to the National Enterprise Board any role in seeking to develop industrial democracy in undertakings for which it is responsible. I personally prefer a term such as "involvement" or "participation", if only because the term "industrial democracy", following the publication of the Bullock Report, has so many interpretations, with which some of us would not agree: things such as worker control and the pursuit, as we see it, of excessive union power on the boards of companies, and so on. Indeed, if this particular amendment that we are now considering does not succeed, then, as the noble Lord, Lord Lee of Newton, has already said, I shall be moving another amendment couched in different terms in part for this reason. Let it be clearly understood that we fully support the principle underlying the amendment of the noble Lord in this respect. How could it be otherwise when for the past 50 years the Liberal Party has taken the lead in championing this very cause?

We are in some difficulty over that part of this amendment which seeks to retain as a function of the NEB the extension of public ownership into the private sector of industry. Judged by the crucial test of performance over the past 35 years, we cannot accept that there is any case for even more nationalised industry. We therefore find ourselves in a dilemma, to say the least. I do not see how I could readily vote or recommend my friends to vote either for the Government, for the reasons that I have given, or—because of this particular difficulty—for Lord Lee's amendment. It is obviously for him to decide, together with his noble friends, whether at this juncture he should press it to a Division. We shall all listen to what others have to say, and in particular to what the noble Viscount, Lord Trenchard, has to say on behalf of the Government.

Perhaps I should say no more at this stage except that if, in the light of the discussion, the noble Lord, Lord Lee, and his friends felt that they could for the moment withdraw this amendment in its present form and come back at a later stage with some amendment to which we on these Benches could agree, that would be a happy arrangement. That might take into account, I suppose, also the fate—whatever it proves to be—of the next amendment we come to. It is entirely for him and his noble friends to decide. I mention it as the most constructive suggestion that I can think of at this moment, if he wishes to rely on our support.

3.30 p.m.

Lord BROOKS of TREMORFA

The Secretary of State for Industry said on 6th November 1979: The Government's regional policy announced in our manifesto and carried through by me is to reduce regional incentives by one third. We do not intend to abolish them. We intend to take them away from areas where economic conditions do not justify them". I wish to speak specifically to that part of this clause which refers to the Welsh Development Agency, and I should he very grateful to the noble Viscount, Lord Trenchard, if, when replying to this debate, he would tell us how the Government can possibly justify evaluating the role of the Welsh Development Agency in the light of what the Secretary of State said on 6th November.

In this House there have been a number of references to the economic and social conditions in the Principality, particularly in the light of the Government's policies since last May. But perhaps they have not been said loudly enough, and for a brief period I should like to repeat some of what was said and to bring to your Lordships new information that has come to hand as a result of a document produced by the Standing Conference on Regional Policy in South Wales.

The Standing Conference is a body comprising the three counties of Glamorgan—West, Mid- and South Glamorgan—and the County of Gwent. The West and Mid-Glamorgan counties are Labour controlled; South Glamorgan is controlled overwhelmingly by the Conservatives and in Gwent no party has an overall majority. There is no party political dispute among the elected representatives in South Wales as to the seriousness of the problems that face us.

In the document that is entitled South Wales in the 1980 Steel Crisis, they tell us that the present figure of unemployment is 90,000 and that it is suggested that it will rise to 130,000 as a result of the proposals to run down steelmaking at Llanwern and Port Talbot. The Wales TUC estimates the figure at 140,000, and the Western Mail said on 29th January that a Welsh Office projection had shown that the figure would reach 160,000 towards the end of 1981.

It took 10 years to provide 32,000 jobs in South Wales, and that was done with a whole range of regional incentives. I wonder whether at this point I may say to the noble Lord, Lord Rochester, who said that he had severe doubts about further extensions of public ownership, that we in Wales are not too perturbed about whether the industry is in private or in public ownership; we want more of both. I ask him to bear in mind when we are dealing with this clause that it refers to the Welsh Development Agency and the Scottish Development Agency, and that, for historical reasons, we in Wales have depended much on public ownership—the coal and steel industries. I think I gave a figure some months ago showing that some 70 to 80 per cent. of the people working in Wales depended on public ownership of one kind or another for their living, so that is the historical situation in which we find ourselves.

I ask the noble Lord, Lord Rochester, not to take on board the dogmatic approach of the Government in looking at these problems. When Members of Parliament representing South Wales seats are attempting to bring industry into their areas they are quite happy to negotiate with entrepreneurs in exactly the same way as they try to influence Governments in order to bring more industry and industrial activity to their areas. There is no dogma in it at all, and I ask the noble Lord, Lord Rochester, if he would reconsider his hesitancy on whether he is to support us on our amendments.

Very briefly, the document to which I refer has given a great deal of the background to the problems that we find in South Wales, and there is no question that, despite a hiccup or two, the Welsh Development Agency has played a very important role in financing and attracting new industry to the Principality.

In South Wales we have lost 100,000 jobs in steel and coal over the last 25 years. I have said to your Lordships before that there is no Luddite attitude in Wales at all. The facts and the figures speak for themselves. Pits were closed literally by the dozen in the 'fifties and the 'sixties and steelworks have already closed. I am told that many of the workers at Llanwern and Port Talbot recognise that the industry needs restructuring; although they would by no means go to the lengths to which the British Steel Corporation has gone, they recognise that there are problems in the industry and they are prepared to co-operate. I suggest that that co-operative attitude requires the same kind of response from the Government, and what are we getting? We are getting an emasculation of the Welsh Development Agency, which could play a very important part in rejuvenating the Welsh industry.

The PARLIAMENTARY UNDER-SECRETARY of STATE, HOME OFFICE (Lord Belstead)

There are two Statements this afternoon for your Lordships' House. If it be for the convenience of the Committee, I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.