HL Deb 27 February 1985 vol 460 cc992-1006

6.58 p.m.

Lord Bruce-Gardyne rose to ask Her Majesty's Government whether, in the light of their response to the 25th Report of the Public Accounts Committee (H.C. 127), they will outline the steps which they intend to take to ensure that there can be no repetition of the squandering of tax revenues on the De Lorean enterprise.

The noble Lord said: My Lords, I think we were all brought up on the principle that there is no point in crying over spilt milk, and it is not my intention to do so tonight. Approximately £80 million of the taxpayers' money was spilt on Mr. De Lorean. Some of it, I suspect, was lapped up by the "fat cats" of the IRA, but I do not believe there is much point in chasing that today. What I am concerned with, and have been concerned with for some time, is the need to ensure that, so far as is humanly possible, we avert a repetition in the future of this lunatic adventure. It is really in that context that I want to pose a few questions to my noble friend.

I have, of course, studied with great interest the White Paper published 10 days ago by the Northern Ireland Department as a second reply to the Public Accounts Committee on this matter. If I may venture to say so to my noble friend, I was highly impressed, in particular, by the 13 specific steps to which the Northern Ireland Department is committing itself and its officials in the light of another plausible adventurer happening to appear before them. I can only say that I hope that my noble friend will do his best to ensure that all other departments in Whitehall are circularised with what seem to me to be some extremely sensible preventive steps.

However, what still concerns me is the problem that arises when the initial error has been committed and the propensity then occurs to pour more good money after bad. I have always felt that, within the Civil Service and local administration generally, there is a tendency to behave like the office boy who puts his fingers into the till to chance a flutter on a horse. When the horse does not come home, he puts his fingers in again in the hope that he can recoup his original investment before the loss of the money is discovered.

I must honestly say to my noble friend that I do not feel altogether confident that so far we have looked sufficently at the need to try and ensure that in future, if such a folly as this were to be perpetrated, we shall know how to stop it before far more damage is done. In the first place, I find it worrying that the Public Accounts Committee was told—and I refer to Question 1470 of the evidence—by the current head of the Northern Ireland Industrial Development Board that, following the De Lorean affair, so far as he was aware, "no heads have rolled". Indeed, one has the impression that quite a number of heads have rolled onwards and upwards since. I wonder whether that actually gives entirely the right message to those who face the next plausible entrepreneur to come along.

However, more widely, I am very concerned about what seems to me to be a remarkable failure to date to consider the implications of parliamentary accountability in this whole affair. In recent weeks Parliament has spent hours of furious debate on the interesting question of whether it was or was not accurately informed about the circumstances of the sinking of a foreign vessel in a war engagement designed to put at risk the forces of the Crown. Yet so far no attention of any kind has been paid to the information—or, rather, the lack of it—given to Parliament before it was too late to stop the total loss of £80 million of the taxpayers' cash. The Public Accounts Committee did not go into this matter, because it is debarred from cross-questioning Ministers and it is essentially concerned with what happens to money after it has been voted by Parliament. I personally, for that reason, believed all the way through that it was a gross error to commit this particular inquiry to the Public Accounts Committee; I believe that it should have been given to a special Select Committee established for the purpose.

I want to ask my noble friend a number of specific questions about statements which were given to Parliament over the period between March 1979 and early 1980, which I have to say do not seem to bear much relationship to the facts as we know them prevailing at the time the statements were made.

The initial agreement concluded by the then Secretary of State for Northern Ireland, Mr. Mason, with Mr. De Lorean in the summer of 1978 was never reported to Parliament because Parliament apparently in its wisdom never asked any details about it. I find that extraordinary, but it happens to be the case. However, in March 1979, the then Parliamentary Under-Secretary at the Northern Ireland Office, Mr. Concannon, told Parliament that the "technical feasibility" of the De Lorean project has been considered before the first cash was laid on: in two studies commissioned from Booz, Allen and Hamilton, and A. T. Kearney".—[Official Report, Commons, 20/3/79; col. 590.]

In fact, we know that one of those studies was commissioned by Mr. De Lorean himself and the other was commissioned by the Puerto Rican Government. Had nobody told Mr. Concannon that, and if not, why not?

In May, 1979 his successor, my honourable friend Mr. Giles Shaw, told me in a Written Answer in the House of Commons that: On the assumption that 2,000 permanent jobs will be created, it is estimated that Government grant and loans"— to De Lorean— will total £17,953 per job".—[Official Report, Commons, 24/5/79; col. 177.]

Yet according to the Public Accounts Committee, the Northern Ireland Department itself had calculated, on the same assumptions and on the same basis one year earlier, that the actual cost per job would be £18,400. What shrank the job cost in the interval?—bearing in mind that of course there was no reference in the answer that I received to NIDA's equity investment in the project.

In January 1980 my honourable friend Mr. Shaw told the Commons that "some slippage" in construction of the Dunmurry factory, "had now been rectified". Four months later we were told that the slippage had got unrectified again to the tune of three months. How did that come about?

In January 1980, Mr. Shaw revealed to the Commons that there was an, EEC subvention … £7.5 million has been put into the De Lorean project, and this will abate the liability for public sector payment". Did it abate the liability for that payment? What happened to that subvention? I have never been able to trace it since.

In July 1979, Mr. Shaw told the House of Commons that "monitoring" of the project: is being actively and safely undertaken". In April 1981, his successor, my honourable friend Mr. Adam Butler, assured us that Her Majesty's Government were, entirely satisfied with the monitoring of the company". Presumably my honourable friend Mr. Shaw had not been informed that already, as we now know, by the summer of 1979, McKinsey, who were the retained consultants in this affair, were deeply alarmed by the lack of monitoring. Furthermore, how did it come about that my honourable friend Mr. Butler had apparently never been informed that by July 1980 it had become "completely clear" to one of NIDA's own monitors within the business, Mr. Hopkins, that "the nominee directors were powerless"? If, presumably, my honourable friend was not given that information, then surely he should have been given it. In February 1980, Mr Shaw told the Commons that "orders in excess" of 20,000 De Loreans had already "been placed by dealers" in the United States for the calendar year 1981. From where did that information come?—because it does not appear to have borne very close relationship to the actual facts.

In August 1980, the then Northern Ireland Secretary told us that the Government's last financial obligations to De Lorean had been discharged. In November, my honourable friend Mr. Shaw confirmed that there were "no proposals for further assistance". Yet less than three months later another £10 million "time-limited guarantee" was unveiled. Once again we are assured that the Government had "no further financial obligation" to Mr. De Lorean. Yet three months later there was yet another £7 million time-limited guarantee. Were Ministers not forewarned that that was going to happen?

On 3rd December 1981, my honourable friend Mr. Butler told us that "sales" of De Loreans were currently "running ahead of production". Yet now we learn from the McKinsey status report of January 1982 that in the first week of December production had amounted to 403 vehicles; whereas retail sales in the first 10 days of December had amounted to just 123. And in the immediately preceding weeks the disparities had been even greater. Who had misinformed the Minister? And why?

Finally—and this is much the most serious question in the whole matter—there is the agreement of 5th August 1980 between Mr. De Lorean and my right honourable friend the then Secretary of State for Northern Ireland, at which the taxpayer was put in for another £14 million. The Public Accounts Committee has told us that nine months earlier, in the autumn of 1979, NIDA's representatives on the De Lorean board were already expressing: considerable criticism about financial control of the company". They had been given reassurances, as a result of which they had decided not to "cut off financial support at this stage". All the same, the then head of NIDA, had in January 1980 felt it necessary to write what was described as a "formal letter of dissatisfaction" to De Lorean. In June 1980 the Chief Executive of NIDA had telexed De Lorean telling him that the company: has simply got to face financial realities … immediately". In July he had actually blocked the transfer of funds to New York.

Just weeks after that, almost days after that, my right honourable friend the then Secretary of State for Northern Ireland received Mr. De Lorean—alone, it would appear—and handed over another £14 million of the taxpayers' money for which he had been asking. How come that he had not been informed at that stage of his own department's growing dismay at what was going on? My right honourable friend explained to the Commons that at that time he had no choice in the matter. He said: We found we had a commitment … to provide funds to bring the De Lorean car "to market launch". Who had told him that there was such a commitment? We now know that the master agreement of 1978 contains not one word about additional funds. It is true that there was a covering letter which said that: the Department shall … be prepared to consider the company's application for increasing the expenditure authorised under the offer and the Department's decision will take into account the company's employment performance at the date of such an application". I would point out that by August 1980, when Mr. De Lorean was making this latest application, the company's "employment performance" was that it had still failed to take on board more than about 80 per cent. of the recruits whom it was supposed to have recruited from day one. Who doctored this agreement and the covering letter in order to persuade my right honourable friend the then Secretary of State for Northern Ireland that he had no choice but to comply with Mr. De Lorean's request, and why?

In my view, these are all questions that must be answered unless the principle of parliamentary accountability is to be regarded as a mockery. My noble friend answered a Question for Written Answer of mine today about that other great Northern Ireland project, Lear Fan, in which he referred to the terms of the agreement entered into with that business and the commitments which the Government had under that agreement. I would beg him to demand to see the original copy of that agreement in order to make quite sure that what he is told about it is literally the substance of the agreement; because on the basis of the De Lorean example we cannot be too sure.

I conclude with, I hope, a constructive suggestion. If we really want to avoid a repetition of this monumental folly, I am sure that the department's 13 steps, if I can call them that, will help. I think that the odd rolled head would help even more. But something else is needed. I submit that it might be this. When Ministers have it in mind to put our shirts upon a horse, I suggest that they should be required to join in the flutter personally by investing a set percentage—I would suggest 5 per cent., but I do not stick on a particular figure—of their personal net wealth in the project. Obviously, with my right honourable friend the present Secretary of State for Northern Ireland this would be a modest sum. With someone such as Mr. Wedgwood Benn it would be very much greater. However, the important point is that they would be required to put their cash where their mouth is, and I submit that that might—it just might—do more to avert a repetition of De Loreans in the future than anything else we could do.

7.14 p.m.

Lord Underhill

My Lords, we are grateful to the noble Lord, Lord Bruce-Gardyne, for putting down this Question and raising the important matter of accountability. Again, one of the problems—and possibly it is more acute in the case of Northern Ireland matters than in some other matters—is that our only opportunity to raise such issues is by way of Unstarred Questions or on the periodical appropriation orders that come before us. However, here there is the situation of some £77 million of public money lost. I shall try to avoid raising some of the points which the noble Lord has raised, but there will be some questions which I shall wish to ask, though perhaps in a more understanding fashion than was the case when Ministers faced this particular proposal.

We are told that in June 1978 the Department of Commerce and the development agency had before them the prospectus of the De Lorean motor company, which had been published only in March that year, and which had been inspected by the Securities Exchange Commission in the United States. This was accompanied by certified accounts and balance sheet details of the De Lorean background and a history of the development of the proposed car.

We were then told that all these documents helped to influence the department and the development agency, as a result of which they consulted Ministers, who decided that an offer of assistance should be made. We were told that both the Department of Commerce and the development agency representatives were greatly impressed by the competence and experience of the De Lorean management. Yet, we are also told in the Select Committee's report that the team which was looking into this matter consulted no American bank, no financial institution and no automobile companies with regard to the De Lorean project during the visit that they paid to America. Indeed, at no time did either the department or the development agency approach any American banks or American financial analysts for a report. The Select Committee says that that was very surprising.

The Select Committee says that the question of the investigation into personal qualities and commercial reputation, including the credit-worthiness of Mr. De Lorean, left much to be desired. The Select Committee quotes what it refers to as an astonishing reply which it received on this matter—that the agreement was with the De Lorean company and not with Mr. De Lorean personally, and therefore there was no need to look into these particular matters.

The Select Committee report also tells us that no independent engineering investigation was undertaken. I must make the same comment as the Select Committee: that this was remarkable. The Select Committee considered the adequacy of the assessment and among its comments I find that there was pressure by Mr. De Lorean for an early decision to be taken. There is also the point—and this is where I shall be a little less harsh than the noble Lord—that at that time Ministers recognised that there was a possibility of 2,000 jobs being at stake.

The response of the Department of Finance refers to two points. First, a condition was to be laid down that the plant must be set up in West Belfast which is, an area of acute economic and social deprivation", with unemployment five times that in the Greater Belfast region, which itself was well above the Great Britain average. I think that I should quote part of point four of the department's memorandum. It says: These were the circumstances in which Government faced the task of tackling the economic problems which were judged to be a significant part of the complex of interacting political, security, social and economic difficulties which existed and still exist in West Belfast, and in which the De Lorean project, offering 2,000 jobs in the area, was considered". I am not excusing them and am not detracting from the importance of the questions which the noble Lord posed; I believe that they are very important. But we must consider that we cannot look at a matter such as this free from the political, security and other matters which existed in West Belfast at that time.

As the noble Lord says, we had statement after statement which questioned the whole financial control and administration of the project, but we are told that despite this questioning the board decided to proceed subject to Government approval. Obviously the Government's approval will be given to a great extent on the advice given by both the Department of Commerce and the Development Agency.

We are told by the Select Committee—and I think we would all agree that this was necessary—that in view of the amount of public money involved, monitoring assumed considerable importance. The report sets out various arrangements which were made. As the noble Lord has said, there were questions raised even within 12 months of the master agreement being signed on the matters of financial control of the company.

The Department of Finance, in its response, seems to disagree with the Select Committee on the degree of monitoring. It states in item 8: From the early days of the project [the development agency] was receiving detailed information on performance against plan and this flow of information was steadily expanded as experience of the project developed". Is the Select Committee correct in saying that reports were made of insufficient information and that the monitoring was not satisfactory, or is the comment of the Department of Finance correct? They cannot both be correct.

The report of the Select Committee sets out an account of events and the degree of questioning about the performance of the project which took place. We have reported to us that in February 1981—and this is not a party political matter; the period covered here, 1977 to 1981, covers two different Governments because we had an election in 1979—further financial guarantees were given, and that these were again increased three months afterwards in May of that year. Paragraph 31 of the Select Committe Report states that, Ministers were fully involved", in those two decisions. And yet within 12 months we had the financial collapse and the receiver being appointed.

The Select Committee in particular criticised the Department of Commerce's assessment, and said that the detailed negotiations were inadequate. It said that the department did not have a sufficiently experienced team available to carry out this work, and emphasised that in negotiations those who were conducting them on behalf of the Government must match experience and negotiating skills.

Again we must refer to point 6 of the Memorandum. Point 6 of the memorandum says: The team of officials which negotiated the De Lorean project was responsible for the negotiation in 1978 and 1979 of 6 other new American Investments which are currently providing some 2,300 jobs (20 per cent. of all the existing jobs in US companies in Northern Ireland). Some of these companies have subsequently entered into expansion agreements". Therefore is the criticism in the Select Committee report that the team which carried out these negotiations was insufficiently experienced correct, or is the statement in the Department of Finance memorandum correct? The Select Committee also said that the monitoring was not satisfactory. I have quoted what the Department of Finance memorandum said in reply to that.

There is also the question that the nominee directors had no experience in the automobile industry. Is that correct? If so, one can see why we have the comment later in the Select Committee report that the nominee directors were, in effect, powerless.

Again in fairness one has to quote paragraph 100 of the Select Committee's report. They say: We wish however to record that those involved have a number of positive achievements to their credit, many of which reflect well on Northern Ireland as a location for new industry. They built a modern automobile plant on a greenfield site; developed and produced a new car of acceptable quality, with labour new to the industry, and using new methods for mass-producing fibre glass body shells; employed 2,600 people at peak production; and established a distribution network throughout the United States—all in two and a half years". That is a conclusion arrived at by the Select Committee despite all the criticisms it makes of the handling of the project and the negotiations.

It goes on to say that it might have been sensible to have been less ambitious and to have, aimed at producing under 10,000 cars a year, mounted with an eye for strict economy and with tight financial control, efficiently monitored, and without the massive misappropriation of funds which took place". and that this scheme "might have succeeded".

We are told in the memorandum of the Department of Finance at paragraph 13, that Government policy has changed. A project such as De Lorean would not be supported. I think we ought to know further about that change of Government policy. It says: only for projects in which a substantial part of the financial resources is provided by the private sector will such a scheme be supported. I must ask the noble Lord, what about Shorts? Shorts is owned 100 per cent. by the Government. Nobody here would challenge additional finance being given to Shorts, which has proved to be one of the most successful industries in Northern Ireland. Additional funds are still being given to Shorts, and I hope that we shall have some clarification as to what this so-called change of policy of the Government really means.

While we all regard the handling of this particular project as a tragedy, and it shows a lack of proper accountability, one has to consider the absence of outside investment possibilities in Northern Ireland. I see in the Department of Finance's final memorandum in the last sentence: In the end the commitment of public funds did not provide lasting economic benefit. Policy has, however, changed. An investment of this nature would not now be supported under present Government policy". I think we ought to find out what is the change of Government policy.

I would remind the noble Lord who will reply what I have said many a time in discussing Northern Ireland economic matters: the official figures state clearly that public sector employment in Northern Ireland counts for 45.8 per cent. of total employment. If we have too rigid a policy in carrying out what it is suggested here the Government intend to do, we could find not only further development halted in Northern Ireland but maybe even a contraction.

7.29 p.m.

The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Lyell)

My Lords, I am sure that your Lordships are immensely grateful to my noble friend for raising this fascinating subject this evening, and indeed for the, in the main, constructive questions asked by the noble Lord, Lord Underhill. Perhaps I may start by thanking my noble friend for the tone in which he asked his series of questions.

Perhaps he will accept that I find his last suggestion most easily dealt with. He suggested that Ministers taking such decisions as were taken over this particular case might well wish to support such an enterprise from their own resources. I marvelled at my noble friend's moderation. I am sure he will agree, after some of his comments, that if we pursue this idea too far, he and I, and indeed your Lordships, might well become entangled with that well-known firm of libel lawyers, Messrs. Sue, Grabitt, and Run, since I shall report swiftly the thoughts of my noble friend to my right honourable friend. Quite what might be thought by the right honourable Member for Chesterfield in the other place I do not know; I shall leave it to him to put something into expression if he wishes.

A great deal of concern has been expressed in your Lordships' House, quite properly, as well as outside the House, about Mr. De Lorean and his company. All of us have the benefit of this detailed and interesting report from the Public Accounts Committee. I think your Lordships will agree that the main areas of concern expressed this evening by the noble Lord, Lord Underhill, and by my noble friend, are in four parts: the circumstances within which the initial decision was taken; the nature of the initial assessment; the high level of contribution from public funds, which was mentioned in his last comments by the noble Lord, Lord Underhill; and (this was a continuing thread through my noble friend's comments) the nature of the arrangements for monitoring the affair.

All of us would have to admit that there are important lessons to be learned from this case. The Government share the committee's serious concern about the loss of public funds. The Government are determined that all available steps will be taken to recover as much of the loss as is possible. Indeed, we shall ensure that the lessons to be learnt from the events are fully reflected in the arrangements for dealing with industrial development in Northern Ireland. I assure your Lordships further that the Government's policy has since changed and that projects such as that proposed by Mr. De Lorean would certainly not now be supported. I stress that industrial support is made available only for projects in which a substantial part of the financial resources are provided by the private sector. I also give an assurance that the lessons to be learnt from the events that have been spoken of this evening are now fully reflected in the arrangements for dealing with industrial development in Northern Ireland.

I would add as an obiter dicta that I take on board the caveat of my noble friend that he mentioned in connection with a reply that I gave him today. I shall re-read what he said tonight and re-read everything else. I am grateful for his warning, but I have taken note of what he said and taken note of what I wrote to him today.

I shall go into the lessons which arise from the De Lorean affair in some detail, but before that I am sure that the noble Lord, Lord Underhill, and my noble friend will accept that it is worthwhile commenting on the circumstances in which the initial decision to support this project was taken. Let us not forget that the year was 1978, as has been mentioned by the noble Lord and my noble friend. A proper understanding of the whole project is essential if any of us is correctly to assess the lessons that we have to learn from it. If we take first the decision to invest in the project, we see that during the period up to 1978 Northern Ireland had been experiencing the greatest difficulty in attracting new investment, without which it was impossible to contain, still less to reverse, the, even then, rising trend in unemployment. This unemployment was already by far the highest in any region in the United Kingdom. The problem was particularly acute in West Belfast, where successive governments had attempted every conventional remedy for job creation, without success. Against this background the De Lorean project provided the Government of the day with an opportunity to try a new approach to this intractable problem of unemployment. The Government's part of the bargain was to provide the bulk of the funds and the promoter's was to provide and to manage the project.

I fully, share the concern that your Lordships have expressed about a project conceived and structured in this way. There were obvious risks, but against this the sought for pay-off for the Government would have been in the form of a large number of jobs in an unemployment blackspot. We had hoped that it would have created spin-off employment elsewhere and substantial royalty income. These are three separate factors. Further, any internationally mobile investment project such as was offered, with the prospect of 2,000 jobs, would find itself the focus of intense competition from all kinds of regions anxious to secure its location. The De Lorean project was no exception.

At the time of the first approach to Northern Ireland the project had been thoroughly evaluated by several locations and firm offers of assistance had been put on the table. As my noble friend mentioned, Puerto Rico had a head start and remained a strong competitor throughout this time. In the circumstances, the time which the NIDA and the Department of Commerce in Northern Ireland had for negotiations was limited. Indeed, the timescale for assessment of that project had to be accelerated. Nevertheless, the Government insisted on the preparation of an appropriate corporate plan and commissioned the firm of McKinsey to report on it. To supplement this the Government had access to a number of substantial studies already carried out—my noble friend has mentioned them—by Booz Allen and Hamilton as well as a report by A. T. Kearney. I grant that of these one was prepared for the company and the other prepared for Puerto Rico. I think that my noble friend and the noble Lord would see that on reading the McKinsey report.

The question of monitoring this project has been raised and quite rightly so, but I must put this question in perspective. We see in the report of the Public Accounts Committee that when monitoring projects one has to choose the right path between, on the one hand, over-detailed control and, on the other, over-reliance on the capabilities of the management. The De Lorean Motor Company Limited was a private sector company and not a public corporation. The monitoring arrangements were not designed to give the Government any detailed or day-to-day control. The arrangements which were made were designed to monitor the progress of the business and secondly, to give the Government agencies detailed information on performance against the plan. Of course, the usual arrangements for professional company audit were in place, because the arrangements made in connection with monitoring were not designed to detect misappropriation. I am sure that my noble friend and your Lordships accept that the arrangements for an audit are more specifically designed to detect misappropriation. I believe that every Member of your Lordships' House will be aware that the IDB has initiated legal action against Arthur Andersen, the auditors, and in these circumstances I am sure your Lordships will understand fully if I do not go further on this aspect.

Turning now to the lessons of the project, I have already assured your Lordships, and do so again, that changes have been made and, above all, we have learned these lessons. Indeed, the lessons have been very thoroughly learned. The main change is that, as a matter of Government policy, industrial support is made available only for projects in which a substantial proportion of the financial resource is provided by the private sector. It follows, therefore, that a number of the features for which this project has been criticised should not recur. But we also recognise that it is vital to ensure that the lessons for the future are properly applied in the context of conventional industrial development casework. As a result, 13 key points have been identified and disseminated to officials of the Industrial Development Board as guidelines for any future operations. These guidelines have been set out in the supplementary memorandum from the Department of Finance and Personnel and were published on 18th February this year.

I hope that your Lordships will bear with me if I do not repeat all of these in detail but take your Lordships through the key features as we understand them. First of all, in considering any cases of possible investment in the Province, the IDB has access to a range of skills appropriate to each project and, above all, to the relevant technical advice. The organisation takes whatever time is required to assess fully the project's viability including the consideration of what we have to call the "worst-case scenario". I am sure that your Lordships will agree that careful thought must be given to the composition of an experienced team with proved negotiating skills and, where appropriate, even to bringing in outside expertise. The second key point, we believe, is that the management quality is examined as part of the assessment process, and, where a new company is involved, the personal qualities and indeed the reputation of the entrepreneur are also investigated. I hope that my noble friend will accept that particular point.

The third key point that we see is that the responsibilities of the parties are clearly defined in an unambiguous financial-systems agreement. We stress very much that particular point. The objectives and the standards of performance and, where appropriate, detailed monitoring arrangements are all agreed in advance with financial systems payable on established performance criteria being met. The fourth key point that we see is that, where possible, agreements are based upon the principle of phased investment with a maximum initial commitment from the private investors; and we believe that care is taken to see that there is an adequate further reserve of private funds available should that project run into difficulties.

The fifth key point that we stress is that IDB have prepared and have issued extensive guidelines for the use of nominee directors which are designed to familiarise them with their particular duties. Of course, these duties can vary as we have seen in the case of De Lorean; and we took that on board. The sixth key point that we believe emanates from the lessons to be learned is that careful consideration always is given to the structure of the company; and the aim that we have is to secure a legal commitment from the company which has the overall or ultimate responsibility for the performance of those obligations. I have gone through the aspects of the affair as we have seen them.

May I turn now to the remarks made by my noble friend in asking this Unstarred Question? First of all, my noble friend raised the point that a significant part of the funding of the De Lorean project may have been diverted to what I think he called the "fat cats" of the IRA. I would ask my noble friend that if he has any evidence at all to this particular effect, or if he has any evidence at all, I should be glad to receive it and I shall certainly direct this for the swiftest action with the appropriate authorities.

My noble friend went on to note that the 13 lessons identified by the Public Accounts Committee related to the initial application and agreement only. As is normally the case in matters of investigations like this, my noble friend is absolutely right; but I am sure that he would accept that it is extremely important to ensure that future agreements are negotiated in the light of these lessons, and a satisfactory initial agreement which, in particular, addresses subsequent monitoring arrangements will do much to avoid difficulties later on in the life of a particular project. Next, my noble friend referred to the comments made by the Chief Executive of the IDB in evidence to the Public Accounts Committee. I think my noble friend mentioned the fascinating case that no heads had rolled as a result of the De Lorean affair. My noble friend will find that in Question No. 1470.

I would invite him and the noble Lord, Lord Underhill, to examine Question No. 1471, where, in reply, the same Chief Executive of the IDB mentioned that many things were possible with 20/20 hindsight. I am sure that both the noble Lord, Lord Underhill, and my noble friend will possibly temper their thoughts with that in mind as well. I would further stress in this context and draw my noble friend's attention to the fact that the team which negotiated the De Lorean project was also responsible in the most trying circumstances for the introduction of other sophisticated and highly successful American investments in Northern Ireland. The noble Lord, Lord Underhill, raised that point. I think it is in the memorandum of the Department of Finance and Personnel and, as the noble Lord, Lord Underhill, mentioned, these now provide 2,300 jobs, which is about 20 per cent. of all the jobs in the current investment of American firms in Northern Ireland. I believe that the quantity and quality of this particular achievement bears favourable comparison with regional development activity in most other areas in recent years.

My noble friend was kind enough to give me clear advance notice of the questions that he raised this evening. I hope that my noble friend and your Lordships will accept that I have found it impossible to have sufficient time to consult all the former Ministers on their particular actions and what they mentioned in the form in which the noble Lord raised them this evening. My noble friend mentioned that he regards these questions that he raised as being of the greatest importance, and we accept that; but I want to give my noble friend a considered reply. I hope he will accept that to give him a precise, accurate and full reply this evening will be impossible because, in courtesy, I must consult in some cases with my honourable friends and in other cases with my right honourable friends and the former Ministers who were involved in the statements. Indeed, all those statements were from Hansard reports, mostly of another place.

I will reply to my noble friend in writing on those questions that I cannot deal with this evening. But there are two questions that I am able to deal with now. I would confirm that the European Community paid a grant of £6.7 million in respect of the De Lorean project. I understand that the figure mentioned by my honourable friend Mr. Giles Shaw, in the other place in the course of his remarks was of the order of £7.5 million. I think my noble friend will understand that there was, I believe, a commitment, and that the actual grant paid was £6.7 million. This was in respect to the De Lorean project and was paid to the Department of Commerce in Northern Ireland. It was shown in the Northern Ireland appropriation accounts. This sum was reclaimed by the Community in 1983–84 following the collapse of the company.

A noble Lord: Good!

Lord Lyell

At least I have satisfied the noble Lord on one of his questions and I am delighted. A note of triumph has been sounded.

My noble friend also referred to the Question, again answered by my honourable friend in another place, Mr. Giles Shaw, about sales and dealers. I think the question raised was about the production of 20,000 motor cars. I would refer my noble friend to the terms of the Answer which was given by my honourable friend the Minister in February 1980. This indicated that the information that he had, the up-to-date information, the only information that he could then obtain, came from the company itself. I apologise to my noble friend that I cannot go further than that. I undertake that we shall take on board every one of the questions that he has raised. I shall reply to him very fully. I intend to make this a priority so far as speed is concerned.

If I may confine myself to a general comment on the entire project, if my noble friend and your Lordships would accept this, the De Lorean project was a very large and complex venture. It moved rapidly from negotiation to master agreement, through product development and the construction of a factory—and, let us not forget, on a greenfield site—to mass production of a very complicated motor car; and it moved on to sales in the United States market. There were financial difficulties throughout its life, and ultimately of course those led to its collapse. In such a fast-moving and complex scene it would seem perfectly reasonable to me that all the Ministers gave information to Parliament in good faith. I hope this will explain, at least this evening, a number of points which were raised by my noble friend.

The noble Lord, Lord Underhill, mentioned a number of criticisms which he quite rightly said were highlighted by the Public Accounts Committee. I assure him that those criticisms have been considered by the Industrial Development Board in the 13 lessons, and it has really put a great deal of study into the De Lorean experience and has taken on board these particular lessons.

I should like to conclude by suggesting to your Lordships that the project of the De Lorean cars was always a very high-risk venture. In the event it foundered, and the commitment of public funds did not provide any lasting economic benefit. There is, however, one benefit that we can salvage from the wreckage. It has been touched upon by the noble Lord, Lord Underhill; that is, of course, the careful application of the lessons to future casework. I hope that I have been able to satisfy your Lordships that the lessons have been learned and that changes reflecting those lessons have been made.

I should like to pick up two important points which were made by the Public Accounts Committee in its report. First, the committee would not, and does not, want the Industrial Development Board to become excessively over-cautious and bureaucratic as an organisation, in danger of rejecting viable opportunities for simple fear of criticism. I strongly endorse this, because we live in a competitive world, and in this competitive situation the IDB will have to be prepared to make very finely balanced judgments about the future viability of projects under negotiation, within of course its new operating procedures.

Secondly, I wish, as indeed did the committee, as referred to in, I think, paragraph 100 of its report, to record that there are important aspects of this case which reflect well on Northern Ireland generally and on West Belfast in particular as a location for new industry. The De Lorean organisation established a modern automobile plant on a greenfield site. It developed a new car, using new methods for mass-producing fibre-glass body shells of an entirely new design. I established a distribution network—all in two-and-a-half years. By any standards that was a major achievement, and it reflected particular credit on the West Belfast workforce. Both the workforce and the Government more than fulfilled their responsibilities to this project, and it is a pity that others did not fulfil theirs. I hope that other investors who focus on the highly effective operational performance by the workforce will have taken note and, above all, will give the area an opportunity to show its paces in the future.

House adjourned at seven minutes before eight o'clock.