INMOS (Hansard, 11 June 1984)

§ Lord Hatch of Lusby
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

§ The Chancellor of the Duchy of Lancaster (Lord Cockfield)
My Lords, the British Technology Group and INMOS are at present exploring a number of options for transferring the company to the private sector.

§ Lord Hatch of Lusby
My Lords, will the noble Lord the Minister tell the House whether it is the case that, in the instance of INMOS, the Government invested public money in the development of microchips in this country when the private sector was not prepared to take the risk, that the Government have invested £110 million in this company, and that the company has now started to make a profit? If that is the case, is there any excuse for passing over these profits to the private sector? Should they not be kept in the public sector on behalf of the taxpayers who have paid this money, and thus retain within Britain the development of this important electronic device for the development of wealth production in Britain, rather than risking its going abroad?

§ Lord Cockfield
My Lords, the noble Lord will find a full history of the INMOS story in the Fifteenth Report of the Public Accounts Committee for the Session 1983–84. Although it is a matter of satisfaction—and indeed relief—that INMOS is now trading at a profit, in other respects its performance has fallen far short of expectations. It is important to 884 bear in mind that this was not a public enterprise in the ordinary sense of the word, or a nationalised industry. It was set up by three individuals, two of whom were Americans. The part played by the British Government was to provide the initial finance, and now that the company is trading at a profit, the right course is for it to develop further in the private sector.

Lord Bruce of Donington
My Lords, is the noble Lord aware that during the 18 months which his right honourable friend Sir Keith Joseph spent dithering as to whether or not the INMOS enterprise should be supported, it was perfectly open to private capital to invest in what was then considered to be a risky venture? Is the noble Lord aware that, largely due to the taxpayers' money being invested in it, the enterprise is now becoming successful? In those circumstances, would it not be a fraud on the taxpayers to deprive them of the benefits that have arisen largely through the injection of their funds?

§ Lord Cockfield
My Lords, the noble Lord will not be at all surprised that I do not agree with any of the conclusions he reaches. In the course of negotiations for the relaunching of this company into the private sector there are three considerations that the Government will bear in mind. The first is to secure continuing access to the technology by British industry; the second is the development of the activity in the United Kingdom: and the third is to secure a price which adequately reflects the taxpayers' past investment in the company. Apart from that, I really would advise the noble Lord, Lord Bruce of Donington, before he plunges further into these matters, to read the Fifteenth Report of the Public Accounts Committee, because that report deals not only with the qualified success of INMOS but with the unqualified disaster of NEXOS.

§ Lord Bruce-Gardyne
My Lords, does not the PAC report also demonstrate that the lion's share of any employment created, and still being created, by this investment by the long-suffering British taxpayer has in fact occurred in Colorado? In view of that fact, would it not be wise that we should be prepared to accept any offer to acquire the capital of this company which offers a respectable return on the investment which the taxpayer has made, whether it comes from the United States or elsewhere?

§ Lord Cockfield
My Lords, so far as the first point made by my noble friend is concerned, it is stated in the report by the Public Accounts Committee: In October 1983 there was actually 844 staff in the United States of America and 584 in the United Kingdom". So far as the disposal of the Government's interest in the company is concerned, the considerations to be borne in mind are those which I have stated.

§ Lord Dean of Beswick
My Lords, bearing in mind the answers that the noble Lord the Minister has given to the previous questions, may I ask him whether he is aware of the article in the Guardian of, I think, last Saturday, which stated that the giant American telecommunications company, AT & T, had confirmed that they were still talking to the British 885 Government regarding the purchase of INMOS? If those talks were to be fulfilled, would it not be the fact that we were disposing of our seed corn which is necessary in order to keep us in the forefront of high technology in the future? Would the noble Lord the Minister consider using his good offices to prevent the Government from taking any such precipitate action?

§ Lord Cockfield
My Lords, a number of propositions are at present under consideration, and they will be evaluated in the light of the three considerations I have mentioned, which I am certain are supported by the noble Lord, Lord Dean of Beswick. The first is to secure continuing access to the technology by British industry. Perhaps I might divert to say that there was an imported transfer of technology from the United States to this country, and that kind of transfer of technology is something we wish to continue. The second requirement is the development of the activity in the United Kingdom.

§ Lord Hatch of Lusby
My Lords, when the noble Lord gave the figures that he has just quoted from the report, was he not aware that on only last Wednesday, in another place, his right honourable friend the Minister for Information Technology gave totally different figures, including the figure of 800 employed in Newport and 70 in Bristol? Is he further aware that there has been a report that the American AT & T company has had its offer actually on the agenda of a Cabinet committee and then removed by the Minister for Trade and Industry? Does the noble Lord not see the danger that if this company is either given or sold to the private sector, particularly abroad, this could break up the team of designers which is at present working on the important developments of the transputer for the late 1980s?

§ Lord Cockfield
My Lords, the noble Lord's speech contained a number of interesting points. So far as the first point is concerned, I was quoting from the report of the Public Accounts Committee, which is of course an impeccable source and an authoritative one. There has been an increase in employment in this respect in the United Kingdom since October 1983. There has also been an increase in employment in the United States of America. There are still more people employed in the United States than there are in the United Kingdom; and the total employed falls far short of the original estimate of 4,000 which was given at the time that this venture started. Indeed, the Public Accounts Committee in fact refers to: INMOS's failure to secure the original targets for employment, profits, import savings and exports". So far as the noble Lord's speculations about the internal workings of Government are concerned, I do not propose commenting on them save to say that a number of propositions are at present under consideration, and the criteria to be applied are those to which I have referred.

§ Lord Hatch of Lusby
My Lords, would the noble Lord answer my question on the transputer, which is an important question for the future of microchips in this country?

§ Lord Cockfield
My Lords, the transputer is an interesting and new piece of technology. It was for this reason that I referred specifically in the criteria that I mentioned to the maintenance of technology in this country.