Sitting of 4 February 1981

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair
Oral Answers to Questions
  Environment

    Domestic Rating System
    Mr. Knoxasked the Secretary of State for the Environment when he expects to complete the review of the domestic rating system.
    The Secretary of State for the Environment (Mr. Michael Heseltine): We are currently examining all potential alternatives to the domestic rating system. There are, of course, major issues involved, and it is not yet possible to indicate when we shall be able to make a further statement.
    Mr. Knox: Will my right hon. Friend confirm that it is the Government's view that the domestic rating system is unjust? Is he satisfied that the current review is proceeding sufficiently quickly?
    Mr. Heseltine: My hon. Friend will be pleased to hear that we are sure that the domestic rating system has great injustices within it. It is because we share his view that we gave the additional commitments to introduce changes. As for the speed at which those changes take place, we made it clear that, in view of the changed circumstances between 1974 and 1979, a different rate of priority would have to be applied while we pursued the public expenditure programmes we are now seeing through.
    Mr. Marks: Does the Secretary of State agree that if the Conservatives promise to abolish the domestic rate, that promise will be just as worthless as the promises on VAT, prescription charges and unemployment?
    Mr. Heseltine: I think that the hon. Member will be aware that the promises we make on this side of the House we keep.
    Mr. David Hunt: Does my right hon. Friend agree that the system is now so filled with anomalies that abolition is the only real answer? Does he agree that another local tax would merely be another administrative tier, that no time would ever be the best time and, taking everything into account, should he not proceed now with replacing the existing system?
    Mr. Heseltine: I agree with my hon. Friend's criticisms, but one must be sure that the criticisms we have and agree about the present system are not replaced by an equally deeply held set of criticisms about whatever we put in its place. It is in the second part of the judgment that there is need for caution and proper consultation.
    Mr. Oakes: While the Secretary of State is looking at the review of this system and at injustices, will he look at the injustice of his rate support grant and explain to the House, particularly to his right hon. and hon. Friends, why those authorities which have followed his precepts and tried to be prudent and those which have tried to sell council houses have come out worse? If he intends to devise an alternative system to rates will it be similar to the ideas of his right hon. and learned Friend the Chancellor who agreed that reduced direct taxation was at the expense of doubling VAT?
    Mr. Heseltine: I think the right hon. Member will be aware of the anomalies that were created in the distribution of taxpayers' support as a result of the totally arbitrary allocations made by his right hon. Friend the former Secretary of State for the Environment. The real concern about the domestic rating system and the levels of domestic rates is the wholly unsustained levels of expenditure that he and the Labour Party are prepared to argue for in local government.

    Local Authority Housing
    Mr. Gwilym Robertsasked the Secretary of State for the Environment what are the latest figures available for the annual totals of local authority housing starts and the number of houses currently included in their housing improvement programmes; if he will publish in the Official Report the corresponding figures for the last 15 years; and if he will make a statement.
    The Minister for Housing and Construction (Mr. John Stanley): The latest available information is that there were 29,800 local authority housing starts in England in the 12 months ending on 30 November 1980. The housing investment programme submissions by local authorities last August indicated that they were then planning to start about 29,600 dwellings and to improve about 96,000 council dwellings in 1980–81. I shall with permission publish the figures for the past 15 years in the Official Report.
    Mr. Roberts: Does the Minister accept that these figures are deplorable? Will he be honest and say that it is Government policies that have destroyed local authority housing programmes and destroyed all hope for millions of people who are on housing lists or are waiting for housing improvements? Does he accept that the Government are leaving a legacy of bad housing which will probably be with us until the next century?
    Mr. Stanley: The hon. Gentleman will remember that the previous Administration cut housing capital by half in the lifetime of the previous Parliament. He should also be aware that, at the choice of local authorities, there has been a substantial switch in the public sector from expenditure on new building to expenditure on improvements. So that the hon. Gentleman may have the complete picture he will want to be aware that in the last 12 months for which we have figures improvements to private houses have been the highest since 1975, to council houses the highest since 1973, and to housing association dwellings one of the highest ever.
    Mr. Michael Morris: Instead of just publishing lists of figures on housing starts, will my hon. Friend also publish a list of local authorities which hold empty

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    properties, and the length of time for which they have held them empty? If they cannot or will not improve them, will my hon. Friend make them available to the private sector?
    Mr. Stanley: My hon. Friend is entirely right. He will be glad to know that a few days ago my hon. Friend the Member for Melton (Mr. Latham) asked me how many local authorities had had more than 100 dwellings empty for more than a year. The answer was published in the Official Report. My hon. Friend is entirely right that improvement for sale and homesteading represent excellent ways of bringing those empty properties into use.
    Mr. Frank Allaun: Will the hon. Gentleman permit the loss caused by the six months' moratorium to be made good after April? Does he recognise that the projected 48 per cent. cut in housing expenditure by 1983 has already reached 51 per cent. with 18 months yet to go?
    Mr. Stanley: The moratorium has not affected the total allocation made available by my right hon. Friend for 1980–81. The initial allocation was about £2·2 billion, and that stands. My right hon. Friend has already made clear to the House that should authorities underspend as a result of the moratorium they will be permitted to add that amount of underspend to their allocations for 1981–82.
    Mr. Heddle: Will my hon. Friend explode the myth propounded by the hon. Member for Cannock (Mr. Roberts) that housing starts bear any relationship to housing waiting lists? The majority of people on housing waiting lists would as soon exercise the right-to-buy or rent in the private sector.
    Mr. Stanley: My hon. Friend is right. A considerable number of those on local authority waiting lists will buy—and willingly—if they have the opportunity to do so. It is significant that during 1980 the number of owneroccupied dwellings in Great Britain rose above 55 per cent. for the first time.
    Mrs. Ann Taylor: Will the Minister confirm that the figures for housing starts in the public sector for 1980 are likely to be the worst since 1925? In view of that appalling state of affairs will he give an undertaking that when the final figures are announced he will make a statement to the House and accept his full responsibility for that disaster?
    Mr. Stanley: The figures will be announced in the normal way, which has been admirably precedented by the previous Government. It is essential to look, not merely at the figures for new starts, but at other figures as well. If the hon. Lady is concerned about rented accommodation she could do a great deal to contribute to its greater availability by altering the irresponsible commitment by her right hon. Friend to repeal shortholds, which is having the direct effect of taking rented accommodation off the market.
    Following are the figures:

    Local Authority Dwellings (England) Started and Improved 1965–1979

    Dwellings started

    ✶Dwellings improved

    1965

    126,755

    †37,750

    1966

    133,537

    †30,239

    1967

    151,045

    †28,808

    1968

    133,033

    30,014

    1969

    116,042

    26,560

    1970

    100,709

    40,357

    1971

    89,871

    59,144

    Dwellings started

    ✶Dwellings improved

    1972

    80,329

    97,482

    1973

    71,736

    110,053

    1974

    95,149

    73,494

    1975

    110,335

    36,163

    1976

    107,608

    38,983

    1977

    81,099

    37,551

    1978

    67,637

    60,871

    1979

    46,647

    75,967

    1980 (January to November)

    ‡26,357

    §60,040

    ✶Including dwellings gained on conversion

    †England and Wales (separate figures for England not available)

    ‡Provisional

    §January to September—provisional

    Rate Support Grant
    Mr. Dobsonasked the Secretary of State for the Environment if he will make a statement on his Department's current assessment of the response of London local authorities to the rate support grant settlement for 1981–82.
    The Minister for Local Government and Environmental Services (Mr. Tom King): In the rate support grant debate I explained why it was decided to reverse in part the substantial increase in London's share of the grant in recent years. With a few exceptions I believe that most are responding sensibly and prudently, and endeavouring to make the expenditure savings the Government have called for, to avoid excessive rate increases.
    Mr. Dobson: Will the right hon. Gentleman confirm that as a result of the responses of the London boroughs and the Inner London Education Authority it is becoming clear that the Opposition's estimate that £200 million of rate support grant would be lost to London in the forthcoming year is proving correct, and that the figure that the Minister was bandying about of about half that sum is not?
    Mr. King: Clearly the extent of the grant loss for London will depend on expenditure decisions which are not yet finalised in a considerable number of authorities. In the present situation the amount of grant that London receives will depend on the expenditure decisions of those authorities.
    Mr. William Shelton: May I tell my hon. Friend how much I welcome the new system of grant-related—Hon. Members: Question.
    Mr. Speaker: Order. The hon. Gentleman can get the same information over if asks his right hon. Friend whether he is aware.
    Mr. Shelton: Is my right hon. Friend aware how much I welcome the new system since it must be better to relate the grant to published criteria than to ministerial whim? However, is my right hon. Friend also aware that many of his right hon. and hon. Friends think that there should be a realistic safety net in this transitional year to avoid too exaggerated a loss by the inner London boroughs?
    Mr. King: I am grateful to my hon. Friend for his opening comment. I am sure that it is right that we now

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    have for the first time ever a system that is open to rational and proper debate, as was evident during the rate support grant distribution discussions in the House.
    I understand my hon. Friend's concern about the need for a safety net. He will appreciate that while we seek to install a sensible safety net at reasonable levels of expenditure, one cannot establish a safety net that protects ratepayers irrespective of the level of expenditure incurred by individual authorities.
    Mr. Douglas-Mann: As an example of rational and proper debate will the right hon. Gentleman accept that the consequence of the system of distribution of grant introduced by this Government's Local Government, Planning and Land Act is that those local government areas that were foolish enough to elect Conservative councils which loyally complied with the Government's request to cut expenditure—these included Merton and Wandsworth—have suffered the most. Has the right hon. Gentleman read the article in the Financial Times of Monday by Robin Pauley commenting on the disaster that the right hon. Gentleman has created for local government finance as a consequence of his Act?
    Mr. King: The first part of the hon. Gentleman's statement is incorrect, and I do not accept the second part either.
    Mr. Forman: I recognise the need to curb overspending local authorites such as the London borough of Camden, but can my right hon. Friend give any reassurances to outer London boroughs such as the London borough of Sutton which has followed and observed all the guidelines issued by central Government and has had amongst the lowest administrative overheads of all local authorities?
    Mr. King: May I say something that applies to all hon. Members? We have made no secret of the fact that the rate support grant settlement is very tough. It involves a 3 per cent. volume reduction for every authority. It involves a 1 per cent. reduction of grant. Both those create considerable problems for a considerable number of local authorities. They involve, also some shift in the share of grant for London compared with the past two years. I recognise that that poses problems for a number of authorities. However, London's share of grant is still at a higher level this year than it was in any year before 1978–79.
    Mr. Graham: What advice can the Minister give to London boroughs such as mine in Enfield which are Torycontrolled and which have spent the past two years faithfully following every diktat and whim of the Minister, and yet have found that they have to pay this additional London tax? Will he invite the London borough of Enfield to send representatives to Marsham Street so that he can tell his political friends that the result of their devotion to his policies has been this additional kick in the teeth?
    Mr. King: The share of grant that London receives is at a higher level than in the first three years of the Labour Government. We believe that this is a fair basis for the rate support grant distribution. My advice to the London borough of Einfield and to every borough and council in the country and their ratepayers is that their interests are best served by a prudent and responsible council which
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    seeks to minimise its expenditure, and that the long-term interests of the ratepayers will be severely jeopardised by authorities that do not follow that advice.

    Partnership Committees
    Sir William Elliottasked the Secretary of State for the Environment if he will give his reasons why the private sector is not included in the membership of the partnership committees.
    Mr. David Huntasked the Secretary of State for the Environment if he will give his reasons why the private sector is not included in the membership of the partnership committees concerned with urban problems.
    Mr. Heseltine: We want to keep the partnership committees and the attendant bureaucracy as small as possible. But we believe that involvement of the private sector is vital to the regeneration of the inner cities, and intend to make urban grant conditional on there having been effective consultation with local industry and commerce.
    Sir William Elliott: Does my right hon. Friend appreciate that that answer is most welcome? Does he agree that the revitalisation of city centres such as that of Newcastle upon Tyne is heavily dependent upon private enterprise and the private sector, and that his answer will be welcomed in every major city?
    Mr. Heseltine: I confirm the views of my hon. Friend. I am delighted that we are able to contribute towards the success of the urban programme in Newcastle upon Tyne and towards the enterprise zone opportunities which we have also brought there.
    Mr. Hunt: I endorse what my right hon. Friend has said, but does he accept that involvement of the private sector in the membership of these committees would give a new and more commercial impetus to their work?
    Mr. Heseltine: I have considered the point put to me by my hon. Friend. However, I do not believe that involving the private sector in those committees would give a new momentum. The procedure which we have adopted will have a greater effect. It ensures that the private sector is deeply involved in the formative and consultative processes that lead to decisions on those programmes.
    Mr. Alton: Will the Secretary of State reconsider his decision and consider involving not only the local chambers of commerce, particularly in the partnership committees, but the voluntary organisations, which feel that they are being excluded from the workings of partnership committees?
    Mr. Heseltine: We want to secure the maximum involvement of the voluntary organisations. However that is difficult because of their large numbers. It is also difficult to have a process which genuinely involves them in decision-making. However, I am sympathetic to the role and scope for support in the voluntary sector.
    Mr. Steen: Will the Minister explain what the logic is of excluding the private sector from joint enterprises, when public/private partnership is at the root of urban revitalisation?
    Mr. Heseltine: If I have given that impression to my hon. Friend, I want to remove it at once. When we took

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    over responsibility for the urban programme, there was no effective involvement of the private sector. We have now ensured that future decisions about the scale and scope of the programme will be conditional upon consultation with the private sector.
    Mr. Robert C. Brown: Does not the Secretary of State recognise that membership of the partnership committees does not matter a tuppenny damn but that what matters his recognition of the problems of the inner cities and facing up to them?
    Mr. Heseltine: I do not think I would use the precise words used by the hon. Gentleman. Perhaps the flavour of what I was saying was not far away from the point he made. It is precisely because we realise the need for a public/private sector commitment to the inner cities that we are pursuing our present policies.

    Government Properties (Disposal Procedure)
    Mr. Kenneth Marksasked the Secretary of State for the Environment what changes have occured in the instructions given to the Property Services Agency about the disposal of airfields and other Government properties since May 1979.
    The Under-Secretary of State for the Environment (Mr. Geoffrey Finsberg): My right hon. Friend stated on 13 June 1979 that surplus land should be offered for sale as soon as practicable and abolished the procedure whereby surplus Government land had first to be offered to other public authorities.
    We published last September proposals for widening the scope for offering back surplus property to former owners, and expect shortly to announce the outcome of consultations on those proposals. The Property Services Agency has been acting on these proposals during the period of consultation.
    Mr. Marks: That came early after the election. If the purpose was to reduce the public sector borrowing requirement, why was Wisley airfield sold in such indecent haste to Lord Lytton at an agricultural price, when an appeal had been lodged which, if successful, would have raised the value of the land from a few hundred thousand pounds to several million pounds? Was that at the instruction of the Secretary of State?
    Mr. Finsberg: I gave a full explanation in my reply to an Adjournment debate on 24 July 1980 of the circumstances which surrounded the sale of that property to the successor of the former owner. Since that time, my hon. Friend the Member for Dorking (Mr. Wickenden) has referred the matter to the Parliamentary Commissioner for Administration, and a planning appeal is in train. Therefore, it would not be appropriate for me to comment in detail at this stage.
    Sir Albert Costain: Is the Minister aware that there are a number of Service personnel about to retire and living in houses outside the county who would like to purchase their houses? Will my hon. Friend facilitate that?
    Mr. Finsberg: If my hon. Friend would care to send me details, I should be glad to consider those cases.
    Mr. Arthur Lewis: Everyone knows—except probably the Minister—that the forerunner of this organisation has lost hundreds of millions of pounds. Is he aware that
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    the so-called investigation now going on will again cost millions of pounds, mainly going to the very highly paid lawyers who come up with condemnations, but no action will be taken? Can the Minister guarantee that some of these people will be sacked for the way in which they have milked the taxpayer of hundreds of millions of pounds?
    Mr. Finsberg: Unlike the hon. Gentleman, I have no intention of prejudging the case.
    Mr. John Wells: As it is well known that municipal airfields all lose money, will my hon. Friend take steps to persuade or coerce Kent county council to dispose of the disused West Mailing airport and not to waste the Kentish ratepayers' money in trying to bring it back into unwanted and unwarranted service?
    Mr. Finsberg: That supplementary question does not arise from this question. However, I shall draw it to the attention of my appropriate hon. Friend.

    Building Regulations
    Mrs. Reńee Shortasked the Secretary of State for the Environment when he intends to publish a Green Paper on the administration of the building regulations.
    Mr. Stanley: My right hon. Friend expects to publish a Command Paper by the end of this month.
    Mrs. Renée Short: That answer will be welcomed by everyone. However, can the Minister give an indication on how he intends to enforce the regulations, bearing in mind that there could be complications if responsibility is given to private organisations and taken away from local authorities?
    Mr. Stanley: As the hon. Lady will understand, I cannot anticipate the proposal which will come forward in the Command Paper. However, I assure her that while we wish to see and explore the possibility of a significant measure of self-regulation by the building and construction industry in this area, we also see a continuing important role for local authorities.
    Mr. Latham: Is my hon. Friend aware that it is nearly 14 months since the Secretary of State spoke to the National House Building Council and launched the consultation process on this matter? Are we not past the stage of Green Papers? Should not we be getting on with decisions and action?
    Mr. Stanley: My hon. Friend will see from the answer which I have given that I referred to a Command Paper, which denotes something between a Green Paper and a White Paper. I assure him that we shall want to combine some specific proposals with elements of this new scheme, which we wish to expose to further consultation.
    Mr. Edwin Wainwright: Will the Minister take into account that no matter what kind of building regulations we have, some builders will build faulty houses, even for owner-occupiers? There have been two such cases in my constituency. Will the Minister ensure that builders who build faulty houses and go into liquidation must, before being allowed to build, put money into a special fund so that owner-occupiers will be compensated if necessary and not be dependent on local government?
    Mr. Stanley: As the hon. Member will be aware, extensive cover is provided through the NHBC guarantee

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    scheme. As building societies will not normally advance, except on properties covered by that scheme, virtually all new building falls within the scope of that scheme.
    Mr. Chapman: As well as dealing, it is to be hoped, with matters relating to unifying and simplifying the building regulations, will the Command Paper include the crucial matter of dealing with the law of liability which is overdue since the Anns v. Merton case?
    Mr. Stanley: My hon. Friend will be aware that my noble Friend the Lord Chancellor has specific responsibility for reviewing the law in this area. I assure my hon. Friend that the issue of liability and indemnity, which is one of the central questions involved in any change of the existing system of building control, will be covered in the proposals that we want to put forward.

    Housing Corporation
    Mr. Bowdenasked the Secretary of State for the Environment when next he expects to meet the chairman of the Housing Corporation to discuss the level of grants to housing associations for 1981–82.
    Mr. Stanley: My right hon. Friend announced on 15 December that the Housing Corporation would receive £491 million in 1981–82 for distribution to housing associations. I expect to receive the Housing Corporation's formal programme for approval very shortly and will be discussing it with the corporation's chairman.
    Mr. Bowden: Will the Minister confirm that the Secretary of State has undertaken to make additional funds available for the frail elderly? On the next occasion that he meets the chairman of the corporation, will he tell him how much extra money will be available to ensure that this group and the disabled get special help?
    Mr. Stanley: I think that my hon. Friend is referring to the specific increased allocation of £12 million for 1981–82, which is to be spent on the provision of additonal hostel accommodation by the Housing Corporation. Detailed decisions on which schemes will be covered by that allocation of £12 million are for the Housing Corporation, but I expect that some of it will be devoted to schemes for the elderly.
    Mr. James A. Dunn: Will the Minister make a statement very soon about his intention to allocate the £12 million for the housing of the single homeless, because some housing associations have difficulty in understanding his proposals in that regard?
    Mr. Stanley: As I have said to my hon. Friend the Member for Brighton, Kemptown (Mr. Bowden), the detailed allocation of the £12 million for special needs hostels will be a matter for the Housing Corporation. As I have also said in reply to the hon. Member for Isle of Wight (Mr. Ross), I assure the House that that sum will not be concentrated solely on London. There will be a regional distribution, and that will be a matter for the Housing Corporation.
    Mr. Durant: Will my hon. Friend discuss with the chairman of the Housing Corporation the discrepancy between the numbers of acquisitions and completions by the Housing Corporation? Will he further discuss whether it is necessary to have the double scrutiny that takes place now between the DOE and the Housing Corporation?
    Mr. Stanley: There is a substantial discrepancy between the numbers of properties acquired and their completion. That discrepancy has continued over many years. The Housing Corporation is in the process of examining whether schemes which have been acquired and approved to be acquired previously are likely to go ahead in the near future and whether there is any scope for reducing the number of schemes in the pipeline in that way.
    From 1 April this year we shall be introducing a new system of single scrutiny exclusively by the Housing Corporation for housing association projects. I think that will substantially improve progress with housing association projects.
    Mr. Pavitt: When discussing these matters with the chairman of the Housing Corporation, will the Minister place some emphasis on the co-operative form of housing association and the way in which development there has been almost arrested in the last year? At the same time, will he make a statement about his staircase policy and how that fits into the management of a housing association by the tenants?
    Mr. Stanley: The hon. Gentleman will be aware that there is a variety of co-operative forms of housing associations. Neither the Housing Corporation nor the Department makes any distinction between the approval of schemes of normally constituted housing associations and co-operative housing associations. They are treated on the same basis.

    Rate Support Grant
    Mr. Adleyasked the Secretary of State for the Environment if he will list, in order of priority, the criteria he has established to determine the level of rate support grant; if coastal erosion is on the list; and, if not, whether he will include it next year.
    Mr. King: I refer my hon. Friend to annex J of "The Rate Support Grant Report (England) 1980" for the indicators used in the calculation of grant-related expenditure. It is not possible to list those in order of priority. An indicator relating to expenditure on coast protection is included.
    Mr. Adley: Does my right Friend agree that expenditure on coastal erosion should nevertheless qualify as essential rather than desirable expenditure? Does he accept the principle that if a bit of England falls into the sea, England should pay?
    Mr. King: My hon. Friend will be able to pursue his arguments on this point more effectively under the new system than under the previous system, under which it would have been impossible to know what sums of money were effectively allocated for this purpose or the basis on which they were distributed. I am not satisfied with the present system, but it is the best that could be introduced this year. Owing to the lack of adequate statistics on coastal erosion, it does not take that factor as fully into account as I would like. There is scope for improvement. I hope that my hon. Friend will be able to make constructive suggestions as to how this might be handled.
    Mr. Cryer: Whatever the criteria for the rate support grant, is it not a fact that the Department of the Environment is cutting back? Where is the sense in cutting

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    back the rate support grant, forcing local authorities to cut back in both the private and public sectors, and simply transferring money to the Department of Employment in larger payouts on lengthening dole queues? It is crazy economics and it makes nonsense for those joining the dole queues.
    Mr. King: The numbers who join the dole queues will be very much influenced by the attitudes of local authorities to the levels of the rating bills that they face.
    In that connection, I should think that the hon. Gentleman is thanking his lucky stars that his constituency is in West Yorkshire, which has decided to make a 25 per cent. reduction in its rates, has cut its bus subsidy completely and has managed to freeze fares for the next 17 months. However, I understand that South Yorkshire which is a Labour-controlled county council, proposes to spend no less than £65 million on subsidising bus fares with the result that industrialists in that area will face a 42 per cent. rate increase.

    Urban Programme
    Mr. Freudasked the Secretary of State for the Environment what criteria guide him in giving grant aid to a district council that applies to him under the urban programme Circular No. 21.
    Mr. King: The criteria are set out in the circular. Generally, all projects should operate in or for the benefit of urban areas where there is special social need, and aim to alleviate the deprivation identified in that area.
    Mr. Freud: I am grateful to the Minister for that reply. Will he bear in mind that the Fenland district council, which wrote to him, now has a much worse situation than at the time of writing? With the closure of Smedleys, the second largest employer in north Cambridgeshire, the position needs all the sympathy that the right hon. Gentleman can give to it.
    Mr. King: I am aware of the difficult situation in Wisbech as a result of the announcement of that closure and the problems that the hon. Gentleman has rightly raised in the House. We shall not be able to make an announcement on the urban programme grants until early April. However, the hon. Gentleman will have noticed the announcement that I made yesterday about the improved arrangements for COSIRA, which is active in his constituency. I am sure that the whole House will welcome the new arrangements under which COSIRA in the SIA areas will now be able to be a lender of last resort, and will operate schemes for fifty-fifty workshops in conjunction with local authorities in those areas, which we believe will help to provide employment in such areas.
    Mr. Foster: Will the Minister assure the House that any district council which, through the urban programme circular, funds citizens' rights centres and neighbourhood advice centres will not subsequently have that funding removed on pseudo-political grounds as his noble Friend has recently done in Sunderland?
    Mr. King: We believe that such advice centres should be genuinely operated for the service of the people in the area, not on a party political basis for propaganda and other purposes. We shall stick closely to the guidelines that were laid down by the Labour Government and by the
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    Labour Lord Chancellor who said that such advice centres should not be used for political purposes. We intend to see that that is implemented.

    Housing Subsidies
    Miss Wrightasked the Secretary of State for the Environment what effect the present moratorium on new council house building has on housing subsidies payable in the current year under section 2 of the Housing Rents and Subsidies Act 1975; and whether any decrease in subsidies will be carried over in the calculation of the base amount of housing subsidies for 1981–82 payable under section 98 (1)(b) of the Housing Act 1980.
    Mr. Stanley: The only subsidy effect of the moratorium has been to avoid payments being incurred on capital expenditure in excess of the national cash limit. The base amount for subsidy under the new subsidy system beginning on 1 April is the amount of subsidy payable in respect of 1980–81.
    Miss Wright: Is the Minister conceding that the moratorium on building basically means that there has been no new capital costs subsidy earned during this period and that, as a result, there will be an artificially low level of subsidy incorporated in next year's base amount, or is he saying—I am not clear—that it will not take into account the lower capital costs subsidy which is clearly going to local authorities as a result of the moratorium?
    Mr. Stanley: I assure the hon. Lady that subsidy is still being paid on projects that are in the process of construction and completion now. Those subsidies have continued since the moratorium started. The only effect of the moratorium is to try to ensure that the national cash limit that was previously agreed is adhered to for 1980–81. I do not accept the hon. Lady's view that there has been an artificial reduction in the amount of subsidy. We are simply trying to keep the level of expenditure down to the level that was originally announced.
    Mr. Kaufman: Will the Minister come completely clean on this matter? Is he aware that the Government have stopped local authority housing programmes in their tracks for nearly six months? Will he now make clear to the House whether, in addition to that, he is now pinching subsidy from those local authorities as a result of his preventing them from incurring capital costs?
    Mr. Stanley: I assure the right hon. Gentleman that there is no question of any subsidy being pinched. The rules on subsidies have remained unchanged. I hope that the right hon. Gentleman will be prepared to recognise that, as a result of the changes that we made with the introduction of a new system, there will be a number of significant items of expenditure that will be admissible for subsidy for the first time from 1 April.
    Mr. Kaufman: Is the Minister aware that we need to get this matter absolutely clear? Is he further aware that under section 92 of the Act it is perfectly clear that the subsidy for the next financial year is very much affected by the base amount? May I ask the Minister to make clear to the hundreds of local authorities that are affected and want to know their subsidy entitlement whether the depression of the base amount caused by the moratorium will mean that they will lose subsidy in the coming financial year?
    Mr. Stanley: The subsidy rules applying to this current financial year are wholly unchanged.

    New Towns (Public Expenditure)
    Mr. Murphyasked the Secretary of State for the Environment what priority the Government are giving to the public expenditure in the new towns as against investment in the inner urban areas.
    Mr. Heseltine: As the new towns programme reaches completion the level of public investment is bound to decline. Our new initiatives in the inner cities will increase the level of public investment there. Expenditure in both areas has, however, to be considered in the light of available resources and demands from elsewhere. There are no precise formulae for measuring the relative priorities.
    Mr. Murphy: Does my right hon. Friend agree that the speedy winding up of the new towns commission and the new towns corporations would help to free a large amount of public expenditure, which could then be used for urban renewal?
    Mr. Heseltine: I shall with permission, Mr. Speaker, make a further statement about that later this afternoon. If we do not spend so much public money on the new towns, resources will be available for expenditure elsewhere. However, it does not follow that savings in the new towns would flow into the inner urban areas.
    Mr. Newens: Has not the right hon. Gentleman discriminated against new towns, in that he has applied a rate support settlement to them which in many cases has deprived them of the necessary funds and housing subsidies? Is he aware that to date he has postponed and refused to reach a settlement on section 10 grant matters, which means that many of the new towns are unable to deal with the problems of maintenance and design defects of the houses which were passed on to them by the development corporation? Is that not a matter about which he should be ashamed?
    Mr. Heseltine: The hon. Gentleman will be pleased to know that a meeting will be conducted by my hon. Friend the Under-Secretary of State in about two weeks to discuss the precise problems to which the hon. Gentleman referred. I would not in any way accept the criticisms implied in his question about the rate support grant. We have simply reallocated to other authorities whose cases, on the measure of an independent basis of analysis, seemed to be more critical than those of the authorities that lost grants.

    Local Authorities (Statutory Duties)
    Mr. Bob Dunnasked the Secretary of State for the Environment what guidance has been given to councilors regarding the extent of local authorities' statutory duties.
    Mr. King: Although we do not issue guidance to councillors as a matter of course, we seek to respond helpfully to specific requests. Generally, the responsibility for advising councillors on these matters rests with their officers.
    Mr. Dunn: Is my right hon. Friend aware that in many local authorities officers lead councillors to believe that they have a statutory responsibility, whereas sometimes
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    the councillors could exercise discretion? Would it not be a good idea to publish a code of responsibility so that councillors know in which areas they could exercise discretion and those in which they have statutory responsibilities?
    Mr. King: As my hon. Friend is aware, we have been reviewing the range of statutory duties. In the Local Government, Planning and Land Act we removed about 300 controls and duties that were applicable to local authorities. At present we are having discussions with the associations on the further review that has been conducted on statutory duties. On completion of those discussions, we may find that there is some good sense in my hon. Friend's proposition.
    Mr. Skinner: Is it not a fact that local authorities have a statutory duty to ensure that there are sufficient houses fit for human habitation under the Public Health Act? Is not the Minister aware that the policy of the Government in running down housing completions to the lowest figure since the 1920s is an attempt to stop councils from carrying out their statutory duty to ensure that people have decent homes?
    Mr. King: I imagine that the Labour Government had that statutory duty in mind when they halved the housing programme.

    Rate Support Grant
    Mr. John Huntasked the Secretary of State for the Environment what representations he has received regarding the effect of the rate support grant settlement on the London borough of Bromley.
    Mr. King: My hon. Friend has written to me on this subject. I have also received a letter from my hon. Friend the Member for Chiselhurst (Mr. Sims), and my Department is engaged in correspondence with the borough council on a detailed aspect of the calculation of block grant.
    Mr. Hunt: Is my right hon. Friend aware that Bromley has a long and proud tradition of prudent housekeeping and steady rate levels? Is he further aware that because of his rate support grant settlement there is now talk of a 30 per cent. rate increase next year? Should not local councils which have always followed sound Conservative policies be rewarded and encouraged, rather than penalised in this way?
    Mr. King: As I sought to explain to the House earlier, there is a problem for London this year. In previous years its share of grant has increased from 13·3 per cent. to 17 per cent. of the national share. That means that other authorities in different parts of the country had their share correspondingly diminished. On an assessment of need, we thought that the shift of grant was excessive. That resulted in a shift back of the grant. The grant for London is still at a high level in historic terms, but I appreciate that this year it poses problems for a number of London authorities. I recognise the difficulties of Bromley, and I note the remarks of my hon. Friend about the efforts that it has made to economise in the past.
    Mr. Speaker: I regard that as a constituency question.

    Local Authorities (Land Disposal)
    Mr. Lathamasked the Secretary of State for the Environment what progress is being made by local authorities in disposing of land which they bought under the Community Land Act.
    The Under-Secretary of State for the Environment (Mr. Giles Shaw): Information on such disposals is no longer being collected as the remaining sites have now been merged with the general land holdings of local authorities. We are urging authorities to dispose of land suitable for private development.
    Mr. Latham: Is my hon. Friend aware that the local authorities bought a lot of land under the Community Land Act but resold hardly any? Is he further aware that the process of resale that was required under the Act should be carefully monitored by his Department to ensure that the land is sold?
    Mr. Shaw: I fully accept my hon. Friend's view that we must do everything possible to persuade and urge local authorities to dispose of land that is suitable for private development. I shall bear his point in mind.
    Mr. Skinner: Will the Minister tell his hon. Friend and others that, although they are now complaining that the Community Land Act resulted in land being bought, only a few years ago people such as the Minister and most of his colleagues on the Tory Front Bench said that the Community Land Act should be scrapped because it was not doing any good and land was not being purchased?
    Mr. Shaw: The hon. Gentleman must recognise that the sheer costs involved in the transaction have shown a poor return on the money spent.

    Disabled Persons
    Sir David Priceasked the Secretary of State for the Environment, in view of the fact that 1981 is the International Year of Disabled People, whether he will sponsor a conference on designing for the disabled.
    Mr. Geoffrey Finsberg: I have no plans to sponsor a conference, but my Department is undertaking a wide range of measures, some of which cover designing for the disabled, in connection with the International Year of Disabled People. These were set out in the reply given by my right hon. Friend to the right hon. Member for Manchester, Wythenshawe (Mr. Morris) and the hon. Member for Caernarvon (Mr. Wigley) on 19 January.
    Sir David Price: Is my hon. Friend aware that, in spite of the Chronically Sick and Disabled Persons Act, many buildings are still being constructed in this country in which the access for handicapped people is inadequate, to say the least? Is he further aware that many of those buildings are in the public sector? Does he not agree that the time has come for the Minister and his right hon. and hon. Friends to act at least catalytically with local authorities, public bodies and private builders to try to get it right? Is he aware that the technical knowledge is there, but there is a lack of action?
    Mr. Finsberg: My hon. Friend will be aware that we are commissioning a film on housing for the disabled, in order to demonstrate what can be done. [Interruption.] Perhaps there should be a little less levity on a matter which causes deep concern to many of us. There is clearly
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    a need for new initiatives, especially involving the private sector. I hope that the film will stimulate interest among private developers as well as local authorities and housing associations.
    Mr. Carter-Jones: Will the hon. Gentleman make sure that the disabled will be able to get access to the film? Will he show an earnest of his intent by supporting a Private Member's Bill on the subject of access, supported by hon. Members in all parts of the House? Will he please now give a firm undertaking that he will not oppose the Second Reading, and give us a chance to discuss the matter in this Chamber and upstairs?
    Mr. Finsberg: The hon. Gentleman should be aware that my Department is specifically interested in trying to get a proper focus on housing for disabled people. That is why we have joined with the Royal Institute of British Architects and with the National House Building Council to have a special focus on housing for disabled people by means of a design award.
    Mr. Michael Morris: Should it not now be mandatory for every public building to have adequate access for the disabled? If we took that action alone, it would be a significant step forward.
    Mr. Finsberg: I accept what my hon. Friend says, and I believe that the overwhelming majority of public buildings constructed over the past decade or so have the provision for which he is asking. It is much more difficult to conjure out of the air access to buildings that have already been built. I recall that Labour Members were not saying this when their party was in office.
    Mr. John Home-Robertson: Will the Minister stop havering about conferences and films and give the House a clear undertaking that he will take administrative—and, if necessary, legislative—action to ensure that there is proper access for disabled people, particularly those in wheelchairs, into all public buildings?
    Mr. Finsberg: I covered that point in the last answer.

    Homes Insulation Scheme
    Mr. Kenneth Carlisleasked the Secretary of State for the Environment if he is satisfied with the level of grant take-up under the Government's homes insulation scheme.
    Mr. Geoffrey Finsberg: The take-up of allocations varies from district to district, but we expect a much higher level of take-up nationally in 1980–81 than in the first two years of the scheme, when only 44 per cent. and 56 per cent. of the large sums allocated for the homes insulation scheme were spent.
    Mr. Carlisle: I thank my hon. Friend for that answer, but will he tell us what proportion of the insulation grants will go to the elderly and disabled? Is he satisfied with the take-up by these groups of people? If not, what will he do to improve the take-up?
    Mr. Finsberg: My hon. Friend will know that the special scheme for the elderly was recently introduced only, and it is too early to give the House any proper detail. All I can say is that, from the evidence that we have from all over the country, the majority of local authorities still have funds available for this special category.
    Mr. Alton: Will the Minister accept that a great deal of money is being wasted by heat being pumped into

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    people's homes and going out through the roof because of inadequate insulation? Will he also agree that there is a need to use many of our unemployed building workers by embarking on a scheme that would be. not only environmentally desirable but also economically advantageous?
    Mr. Finsberg: I have to remind the House that a massive amount of progress has been made with regard to uninsulated roofs since the schemes were first introduced and supported on each side of the House. If the hon. Gentleman is talking about something like topping up, I can only say that the cost-effective benefit of insulation comes in the first amount and not in topping up.
    Mr. Watson: Will my hon. Friend ensure that adequate publicity is given to the availability of insulation grants, particularly bearing in mind that the funds available for those grants next year will be a full 30 per cent. greater in real terms than is the case at present?
    Mr. Finsberg: I shall do my best to make everybody aware of the benefit that people will get to their own pockets from insulation, apart from any grants which may help them.

    Rate Support Grant
    Mr. Beithasked the Secretary of State for the Environment what representations he has received from the council of the borough of Berwick-upon-Tweed about the effects on it of the rate support grant settlement.
    Mr. King: I have received a letter from the mayor.
    Mr. Beith: Will the Minister explain why the council of the borough of Berwick is threatened with penalty under the rate support grant system if it does not raise its council house rents, not by £3 a week as in other areas but by £5 a week, bearing in mind that it has not been making subsidies to council house rents out of its rate funds? Why should good housekeeping be penalised, and why should the tenants in Berwick-upon-Tweed have to pay that increase?
    Mr. King: This issue is concerned with the sharing out of grant. It is a matter of how to distribute a fixed sum of grant. The hon. Gentleman's proposition is that more grant should go to the authorities charging lower rents than to those charging higher rents. If he thinks the matter through, he will see the logic in the distribution formula that was adopted.

    Local Authority Manpower
    Mr. Norman Atkinsonasked the Secretary of State for the Environment if he is satisfied that the increased net cost to the Exchequer of cutting local authority staff is in line with the Chancellor's criteria for reducing the public sector borrowig requirement.
    Mr. Heseltine: Under present policies on local authority current and capital expenditure, there will not be any net cost to the Exchequer of cutting local authority staff. On the contrary, there will be a net gain to public funds leading to a reduction in the PSBR in line with the Chancellor's objectives.
    Mr. Atkinson: Will the Secretary of State reconsider that reply in the light of the experience of, say, the London borough of Haringey? If that council had carried out the
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    recommendations made by the Secretary of State, it would have sacked about 3,800 members of its work force, at a total cost of about £16½ million to the Exchequer, assuming that those displaced people would not get other employment. Is that not in excess of the saving for which he is looking from the London borough of Haringey? Would it not therefore be a net cost to the Chancellor of the Exchequer?
    Mr. Heseltine: The hon. Member completely fails to take into account what the damage will be in terms of rising unemployment if that authority imposes on the private sector the level of rate increase that it characteristically imposes.
    Mr. Latham: Is my right hon. Friend aware that the county of Leicestershire, although it has had its rate support grant reduced this year, has nevertheless managed to restrain its proposed rate increase to only 4 per cent., and that this is a marvellous effort in the interests of business and other ratepayers.
    Mr. Heseltine: I am sure that the response from the private sector as a result will be totally different from that which is achieved in the London borough of Haringey.

    River Thames
    Mr. Jesselasked the Secretary of State for the Environment if he will take steps to protect the environment of the River Thames in 1981.
    Mr. Heseltine: I shall continue to use the powers available to me to try to improve the quality of development near the River Thames in London.
    Mr. Jessel: Will my right hon. Friend accept that the River Thames at and near Twickenham is an asset that is very highly valued by the community, with its views, its parks and its trees? Will he ensure that it is the policy of his Department to stop the construction of any large or ugly buildings along the river banks?
    Mr. Heseltine: I must not talk in detail about particular proposals which might prejudice my quasi-judicial position on planning matters, but in general terms I have as a high priority the raising of the quality of architecture for development on Thamesside.
    Mr. Spearing: Will the Secretary of State accept that in the dockland area of London many of the inhabitants believe that the environment should be protected from the urban development corporation and from the powers of the Secretary of State? Will he confirm that if the urban development corporation is established in London dockland, he will direct its officers to secure the full co-operation of the boroughs, and that he will do everything to ensure that that is provided by them by their free will?
    Mr. Heseltine: I am sure that the hon. Member appreciates that this matter is now being considered in another place, and that it will be considered again in this House. It would be wrong for me to follow him down the line of potential controversy when what I now seek is a far better deal for the people living in that area.

    Town and Country Planning Legislation
    Mr. Chapmanasked the Secretary of State for the Environment if he is satisfied that the existing town and country planning legislation, including the development

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    control system and relevant structure plans, is adequate to protect the countryside generally, and good agricultural land in particular, from the pressure for industrial, commercial and residential development in the vicinity of the M25 London orbital motorway.
    Mr. Giles Shaw: Yes, Sir.
    Mr. Chapman: I am only partially reassured by that answer. Recognising that there will be unique pressure on
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    land because of this motorway, is my hon. Friend prepared to ask his right hon. Friend to call in any planning application that is contrary to an approved structure plan to which a local planning authority is minded to grant permission?
    Mr. Shaw: As my hon. Friend will know, I cannot comment in detail on the plans now being called for in a public inquiry in relation to motorway development.

New Towns
The following questions stood upon the Order Paper:
Mr. Warren Hawksley: To ask the Secretary of State for the Environment, if he will now make a statement on the future of the third-generation new towns.
Mr. Den Dover: To ask the Secretary of State for the Environment, when he now expects to be in a position to make a statement on his policy towards the third-generation new towns.
Dr. Brian Mawhinney: To ask the Secretary of State for the Environment, if he will now make a statement on his policy for the third-generation new towns.
The Secretary of State for the Environment (Mr. Michael Heseltine): I have now completed my examination of the third-generation new towns. In all six new towns the development corporations will be expected to rely substantially on private sector investment. Public sector funding will be restricted to the minimum needed to support further growth.
In the cases of Northampton and Central Lancashire new towns, the Government consider that the aim should be to wind up the development corporations on 31 December 1984 and 31 December 1985 respectively. By these dates the population of Northampton should be of the order of 170,000 and that of the designated area of Central Lancashire new town about 270,000. I shall be consulting the local authorities concerned about the implications for them of these target dates.
The development corporations of the other four new towns should be wound up in the late 1980s. By this time the population of Milton Keynes is likely to be of the order of 150,000; that of Peterborough 150,000; that of Telford 130,000; and that of Warrington 160,000.
All these figures should not, however, be considered as targets. The rate of population growth will depend essentially on the rate of demand for private house building and the willingness of the private sector to invest.
Mr. Hawksley: I thank my right hon. Friend for that answer. I hope, in particular, that it will reassure local authorities who have been perturbed and have suffered a loss of morale because of the delay. Has the Secretary of State any proposal to smooth over and to prepare for the eventual changeover to local authority responsibility of those services which are run, at the moment, by the new towns, particularly in Telford, where the life of the new town is being extended? One hopes that what my right hon. Friend said confirms that the figures will remain the same.
Mr. Heseltine: I am grateful for my hon. Friend's support. I have no reason to suppose that there will be any difficulties. There is a perfectly well precedented, mechanical process by which all this is brought about. If, however, I felt that it was not working as I would hope, I would be prepared to enter into discussions with the appropriate bodies to see what it was necessary to do.
Mr. Dover: Will the Secretary of State accept that the people of central Lancashire greatly welcome the announcement of a date for the winding up of the Central Lancashire new town? They will also welcome the move towards private housing, rather than having so much
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rented housing. Will my right hon. Friend assure the House that he will allow only natural population growth and not induced population growth?
Mr. Heseltine: I am grateful to my hon. Friend. It is our intention to rely on natural population growth and natural investment from the private sector. I have tried to set the figures bearing in mind what is likely to emerge in the course of the years that lie ahead.
Dr. Mawhinney: I also welcome the statement made by my right hon. Friend. I should like to put two questions relating to Peterborough new town. My right hon. friend said that there would be a reduction in the amount of private investment. Will he give an assurance that this relates only to population movement and that investment necessary to provide factories and employment will be maintained at the current level?
Will my right hon. Friend bear in mind that because health care provision was not included in the New Towns Act, all the third-generation new towns have suffered health care provision inadequacies? Will he undertake to consult his right hon. Friend the Secretary of State for Social Services to make clear to him that nothing in this statement should jeopardise the building of the second district hospital in Peterborough, which is not only overdue but is badly needed?
Mr. Heseltine: I am grateful to my hon. Friend. He will appreciate that his second question is a matter for my right hon. Friend the Secretary of State for Social Services. I shall ensure that my right hon. Friend is made aware of the concern that my hon. Friend expressed.
In his first question, if I understood him correctly, my hon. Friend was talking of the consequences of the reduction in public investment. It is my view that there will be a reduction in public investment. It will be set at a point that is sufficient to provide the basic infrastructure and to maintain the growth along the levels that I have indicated but not at a higher level.
Mr. Stanley Newens: Does the right hon. Gentleman recognise that the district councils will be faced by all sorts of problems that they have neither the resources nor the powers to tackle? What will he do to avoid the same pattern of procrastination in dealing with the problems faced by these district councils that has characterised his dealings with the district councils in the first-generation new towns, where section 10 grant claims are still not settled despite the period that has elapsed since the handover of the houses?
Mr. Heseltine: I am sure that the hon. Gentleman, who has a deep concern in these matters, will realise that we have had to take over what we inherited from the Government whom we replaced. I do not think that he would want to draw too many conclusions about the state of affairs that we found. It would be my intention to proceed in what is the normal way in the transfer of assets from one public sector body to another by discussion and negotiation. I have no reason to suppose that we cannot resolve the difficulty to which the hon. Gentleman draws our attention.
Mr. Michael Morris: Does my right hon. Friend recognise that the terminal date for Northampton will be greatly welcomed? Will he ensure that any surplus land assets are monitored by his Department to make sure that they are automatically

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transferred to either county or district councils? Will he ensure that if there are any abnormal costs arising out of some of the infrastructure, care will be taken to ensure that the whole burden does not fall upon local ratepayers?
Mr. Heseltine: I am grateful to my hon. Friend. Abnormal costs and non-recurring costs are issues that we must discuss when we decide the precise mechanics of the transfer. On the question of land, I hope that before we reach the point at which these transfers take place, particularly in the Northamptonshire case that my hon. Friend mentions, we will have moved a long way in dealing with public sector land holdings on a comprehensive basis and not just within the new towns. We have already designated 33 land register areas where all public sector land that is under-used has to be registered if it is over 1 acre. I am now working on proposals whereby the existence of all under-used local authority land over a certain acreage is made known to those people living in each community. We shall therefore have a far greater awareness of land holdings in the public sector long before Northampton is transferred.
Mr. John Evans: Is the Secretary of State aware that the part of the announcement that I welcome is the fact that Warrington new town will not be wound up until the late 1980s, by which time we shall have got rid of this Government? Will the right hon. Gentleman confirm that the reason for the tremendous success of Warrington new town has been the excellent balance between private investment and public investment? The fact that he is cutting back heavily on public investment jeopardises the future of Warrington new town.
Now that the right hon. Gentleman has announced the amalgamation of Runcorn with Warrington new town, will his announcement affect the Runcorn aspect of Warrington new town?
Mr. Heseltine: The hon. Gentleman asked me three questions. The Runcorn situation is not affected by what I have said. The position is as it was before I made my announcement.
I accept that the new towns represent a balance between the public and the private sectors. All that I am doing in the policies that I am pursuing is to switch the balance to a greater reliance on private investment as opposed to public investment. One recognises that there is a balance to be struck.
I cannot disagree with the hon. Gentleman that the Government will not be in power when the transfer takes place in the late 1980s. It will, of course, be replaced by the next Conservative Administration.
Several Hon. Members rose—
Mr. Speaker: Order. I propose to call the hon. Members who have been rising, because I believe that they have constituency interests. However, I point out that this is an extension of Question Time.
Mr. Robert Atkins: Will my right hon. Friend accept that although we welcome the curtailment of the development of green field sites and the resale of the land back to agricultural use, there will be concern in Preston about the effect of the curtailment of the new town on the rehabilitation of the older parts of
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Preston and the development of the former Courtaulds and Preston dock sites? Can he assure us that every assistance will continue to be given in those important areas?
Mr. Heseltine: I share my hon. Friend's concern. I want to be sure that our policies will enable the right and proper work to continue. Indeed, in my statement I said that I would consult the local authorities concerned about the implications of the target dates. The points that my hon. Friend makes will doubtless be put to me by them.
Mr. Derek Foster: Notwithstanding the Secretary of State's statement about the third-generation new towns, will he review his decision to terminate the Aycliffe development corporation by 1985? With unemployment in the surrounding areas running at about 15 per cent., does he accept that it represents the one chance of attracting new jobs to South-West Durham? Will he refrain from dissipating the industrial development expertise that has been gathered over the years?
Mr. Heseltine: I am afraid that I cannot reconsider. The announcements have been made about the first- and second-generation decisions. Unemployment is much more a matter for the central economic thrust of the Government's policies, and not for specific considerations when we wind up one or other of the new towns.
Mr. Christopher Murphy: Will my right hon. Friend confirm that the remaining public expenditure in the new towns will be concentrated on infrastructure and employment opportunities, leaving private investment to deal with housing?
Mr. Heseltine: That is very much in line with what I am proposing. Public expenditure will be used to create the infrastructure that will make possible programmes that can broadly follow from private sector house building and industrial investment.
Mr. Kenneth Lewis: Is my right hon. Friend aware that 3,000 acres of land was taken in my constituency to provide a massive reservoir to provide water for the Peterborough and Northampton new towns? Does he accept that as the expansion is not now to take place much of that water will be unnecessary? Will he therefore refund to the Anglian water authority some of the money spent, so that my constituents can have their water rate reduced? Will he also endeavour to make sure that over-provision of water does not occur again?
Mr. Heseltine: My hon. Friend's question does not immediately relate to whether we wind up the new towns on a given date, but we are sympathetic to such matters. If he wishes, we shall be happy to discuss them with him.
Mr. Gerald Kaufman: As the planned development of Milton Keynes new town is to be wound up well below the stage originally announced, have not the residents, businesses and industrialists been attracted there under false pretences? In view of the right hon. Gentleman's answers to the hon. Members for Peterborough (Dr. Mawhinney) and for Welwyn and Hatfield (Mr. Murphy), is it not clear that it is the Government's intention that the taxpayer should provide an infrastructure, through public investment, for a rip-off by property speculators?
Mr. Heseltine: It is fascinating to listen to the way in which the right hon. Gentleman describes policies pursued by his Government. Any idea that residents in new towns

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are clamouring for new housing estates to be built alongside their houses does not accord with my experience. I am doing for the third-generation new towns what his right hon. Friend did for the first and second generation. We are marching along a road well precedented by the Labour Government. There is no reason to suppose that it will be any different for us than it was for them.
Mr. William Hamilton: On a point of order, Mr. Speaker. No doubt your attention will have been directed to the fact that the Secretary of State's statement is based on three inspired questions couched in identical terms from hon. Members on the Government Benches. It was followed by three supplementary questions from the Government Benches. That smacks to me of sharp practice. The practice is likely to increase if it is not stopped in its tracks. For instance, had there been six questions couched in identical terms, and had the Minister been allowed to make his statement in the way that he has today, would the six hon. Members asking the questions have been called one after the other? On the face of it, it is an abuse of the rules of the House. I ask you to make inquiries, Mr. Speaker, and if the practice turns out to be an abuse, to stop it.
Mr. Speaker: I considered the matter carefully before I came into the Chamber. The procedure has been very near to the making of a statement. However, the House can feel comforted by the fact that every hon. Member who wished to ask a question was called.
Mr. Dennis Skinner: Further to that point of order, Mr. Speaker—
Mr. Speaker: Order. The House is anxious to hear a statement from Mr. Secretary Carlisle.
Mr. Skinner: On a point of order, Mr. Speaker. You will recall that several years ago, during the term of office of the previous Tory Government, when the Department of Environment was headed by the fellow who is sometimes now in Europe, there had to be an inquiry about planted questions to establish what had taken place. This Tory Government do not appear to have learnt from past mistakes. It is high time that we had another inquiry. We need to teach these people a lesson.
Mr. Speaker: I do not remember what happened in that Administration. I was busy looking after Welsh affairs, and did not concern myself with English matters.
Dr. Mawhinney: Further to that point of order, Mr. Speaker. I ask for the protection of the Chair against the insinuations of the hon. Member for Fife, Central (Mr. Hamilton). The record will show that I have assiduously pursued the interests of my constituents. The Government's records will show that I have been pressing for a statement since last September. I resent and repudiate the hon. Gentleman's charges.
Mr. Arthur Lewis: Further to that point of order, Mr. Speaker—
Mr. Speaker: Order. I ask the hon. Gentleman to be as helpful as he can.
Mr. Lewis: I always am helpful, Mr. Speaker. We know that Governments of both parties sponsor questions. Questions are planted. May I suggest that when a Department does so it lets you know, so that you can
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decide whether it is being done unfairly or properly, and whether you will call one, two, three, four or six hon. Members, or whether one from either side will be sufficient? The Department is supposed to be politically unbiased. If the Department wants to plant a question I cannot understand why it does not give one question to each side of the House, to make it fair.
Mr. Speaker: I am deeply grateful to the hon. Gentleman for his help.

Inner London Education Authority
3.40 pm
The Secretary of State for Education and Science (Mr. Mark Carlisle): With permission, I wish to make a statement on the outcome of the Government's inquiry into the future of the Inner London Education Authority.
ILEA is the largest local education authority in England. Among such authorities its composition is unique. It precepts freely and without restraint on the ratepayers of the inner London boroughs and the City of London. In practice, it spends much more money per pupil than any other English authority without thereby achieving a satisfactory performance for many of its schools, particularly its secondary schools, as was shown in the HMI report on ILEA. The purpose of the inquiry was to see whether this situation could be improved by altering the constitutional arrangements for providing education in inner London.
The fundamental issue for the inquiry was whether ILEA should be broken up. There is a case for giving some responsibility for education to the inner London boroughs. There is also a case for retaining a single authority in the light of London's past development and its system of local government. But the overriding factors are educational and financial. The weight of educational opinion, including the voluntary bodies and the churches, is that the problems of inner London call for a single authority of adequate size and with adequate resources to administer its schools as well as further and higher education, and the careers service; and that responsibility for the schools should not be separated from the rest of education. The Government share that view.
This does not mean that the single authority has to be extravagant. That was one of the lessons to be learnt from the HMI report. The Government's public expenditure plans require local authority current expenditure on education in England to go down by about 7 per cent. in real terms between 1978–79 and 1981–82. ILEA has not made the response which could reasonably have been expected from an authority whose expenditure exceeds its needs by far more than any other education authority, on the basis of the assessment used for the distribution of block grant. It is apparently planning to spend next year almost as much in real terms as it did in 1978–79, although between 1978–79 and 1981–82 BLEA's pupil numbers will have fallen by some 13 per cent.
In that event ILEA would be likely to receive very little grant in 1981–82. The reason is simple. The block grant system ensures that an authority that acts irresponsibly cannot do so at the expense either of the taxpayers or of the ratepayers of authorities beyond its boundaries.
The long-term retention of the single education authority for inner London is justified only if the authority

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shows that it can give the children and students of inner London a good service in all phases of education at an acceptable cost. It is up to ILEA to put its house in order. It must recognise that the right to precept entails the obligation to spend responsibly. If ILEA systematically abuses the rating system by unchecked extravagance, additional financial controls will be needed. The Government are now considering what further measures they would take to meet that situation.
Mr. Neil Kinnock: Does the Secretary of State accept that we, together with millions of parents, children, teachers and others concerned with education in London, are relieved by rather than grateful for this statement? Does he further accept that his announcement of the obvious and sensible was spoilt by the grudging and graceless way in which he made the statement and by the insults and threats that further disfigured it? Why was it necessary to go through the spurious exercise of the Baker report? Why was it necessary to make a desperate effort to find some way of justifying the Tories' prejudices against ILEA, which was the whole purpose of the Young report. Was it because of the power of a few Tory-controlled inner London boroughs that wanted to secede from their responsibility to fund education in London, or was it because of the Prime Minister's obsessive dislike for ILEA and her determination to break it up?
May I correct some of the deliberate misrepresentations that have occurred even in the right hon. and learned Gentleman's short statement? Is the Secretary of State aware that ILEA is not unique in its ability to make precepts? That is common to all education authorities. ILEA is unique only in the democratic respect that the boroughs have direct access to the education authority. [Interruption.] I have gote the statement in front of me. That is not what the Secretary of State said, or wrote, on previous occasions.
Is the right hon. and learned Gentleman aware that Her Majesty's Inspectorate commended many schools and teachers, and that it also commended many of ILEA's practices in schools and in other aspects of its educational provision? Why did not the right hon. and learned Gentleman see fit to echo that commendation in any of his statements? Does he think that any complaints that he might have about educational standards in ILEA will be lessened by the £200 million cuts that he wishes to make through the ridiculous system of the block grant?
Is the right hon. and learned Gentleman aware that, per pupil, expenditure in ILEA is higher because the needs of this vast city are greater than those in many other parts of the country? Does not the right hon. and learned Gentleman know that London has a greater burden to bear in terms of multi-racial educational requirements and social deprivation? Does he realise that London has a larger proportion of one-parent and transitory families, which necessitates extra attention being paid to educatonal expenditure? Does the right hon. and learned Gentleman live in the same never-never land as the person who dreamt up the block grant system and grant-related expenditure?
Much of the right hon. and learned Gentleman's statement concentrated on the block grant. Is he aware that ILEA has calculated that its needs for next year will amount to £694 million net of the effect of falling rolls? Does he think that the Government's calculation that ILEA
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needs only £468 million—£226 million less—and that it can bear a 27 per cent. cut can be defended on any grounds? [Interruption.] In that case, ILEA has got it wrong. Indeed, the accountants, the chief executives and all the commentators who have made analyses of those figures have got it wrong. I suspect that the Secretary of State has got it hideously wrong, and he knows it.
How could that cut be defended? How could a cut of 27 per cent. be justified when falling rolls amount to only 13 per cent.? Even if we were to use the Government's figure of £598 million as the amount that could be allocated to ILEA, is the right hon. and learned Gentleman aware that ILEA would still lose £55 million on top of cuts of £96 million? In the words of the chief education officer and many others, ILEA could not even discharge its legal educational responsibilities.
Is the right hon. and learned Gentleman really saying that ILEA should be so hammered as to make it~ [Interruption.] I realise that Conservative Members do not like hearing the truth about one of their pet nostrums for the usefulness of ILEA, especially when it is becoming apparent that the nostrum is a load of superstitious nonsense. If the Secretary of State is lecturing ILEA about abuses and irresponsibility, how much more irresponsible would it be for it to fail to discharge its legal obligations?
The right hon. and learned Gentleman said in his statement
"The long-term retention of the single education authority for inner London is justified only".
Is that a threat of a further prospect of disruption, instability and demoralisation for parents, teachers and pupils within ILEA?
Finally, when he asks ILEA to put its house in order, is he aware that but for the resistance of the Inner London Education Authority and its members to the cuts that the Government are imposing upon them it would be a question not of putting its house in order but of the demolition of education and standards of education in inner London as we know them and as we need to see them developed?
Mr. Carlisle: The hon. Gentleman has asked me a fair number of questions. I do not blame him for that. I shall do my best to answer them. I hope that he will forgive me if I do not answer all his questions completely. I shall try to deal with them in order.
First, the hon. Gentleman said that my statement included insults and prejudices towards inner London. I do not accept that. The concern that existed in inner London, especially about its expenditure and the nature of its education performance in certain areas, was recognised, or should have been, in an area far wider than these Benches. To say that we are being merely insulting and prejudiced ignores the genuine concern felt by many thousands of parents in the inner London area.
Secondly, the hon. Gentleman asked me why we decided to set up an internal Government inquiry into the working of the Inner London Education Authority. The reasons were twofold. First, the inquiry was a response to the concern that from time to time has been expressed about inner London. It was carried out to ascertain whether the composition of ILEA could be improved in a way that would affect those concerned. Secondly, I remind the hon. Gentleman that the 1963 Act, which set up ILEA, proposed that the authority should be reviewed at the end of 10 years. It was the Labour Party that chose to change

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that statutory proposal. We believed that it was right to carry out the review that the London Government Act originally proposed.
The hon. Gentleman accused me of inaccuracies. He said that I said in my statement that the Inner London Education Authority was unique in that it had the right to precept and that I should know that every authority has that right. If he had read my statement, he would have realised that I said exactly the reverse. I said that ILEA was unique—he went on to admit this—in its composition. That is clearly so, and that is what my statement said.
I have rather lost the purport of the hon. Gentleman's next question He asked a question that I cannot remember in detail about the report of Her Majesty's Inspectorate. Anybody reading that statement would recognise that, while it pays tribute to the standards of the Inner London Education Authority in further and higher education, it is somewhat critical of special schools, it is critical in part of primary schools, and it is certainly critical of the performance in secondary schools. Those who represent those who ran ILEA do them no good by ignoring the criticisms that have been made. The greatest help that the hon. Gentleman could give to the children of inner London would be to support the report of Her Majesty's Inspectorate and to encourage those who run ILEA to learn the messages in the report.
The hon. Gentleman turned to expenditure. As I understand his argument, he contends that inner London is not really very expensive compared with other areas——
Mr. Kinnock: I did not say that.
Mr. Carlisle:—because it has greater social needs. Whether the hon. Gentleman likes the grant-related expenditure system of evaluation or whether he does not, the fact is that it is based on the same system throughout the country and takes into account varying social needs. If he tells me that the expenditure of inner London, which is 50 per cent. above the average expenditure in the rest of the country, is due to special problems, let us compare some of the other inner city areas such as Manchester, Liverpool and Birmingham. The expenditure per pupil in inner London is substantially in excess of those in other inner city areas.
I shall try to answer all the hon. Gentleman's questions, but, as I said, he asked me a great many of them. He said that the Inner London Education Authority proposes to spend £694 million this year. If that is the decision that its budget committee takes next week, it means that despite a 13 per cent. reduction in the number of pupils, and despite the economic climate, it has not made any attempt to save one penny in terms of real expenditure compared with three years ago. At a time when almost all other authorities, Labour as well as Conservative, are attempting to make savings that are consistent with the economic situation, it is a pity that the hon. Gentleman should apparently give support to the proposal of ILEA not to make any savings despite the reduction in pupil numbers, which is about twice that experienced in other parts of the country.
The hon. Gentleman asked me whether I believed that a 27 per cent. cut was possible in one year. Of course I do not believe that. I accept that the historical pattern of spending in London has been far greater than in other areas. No one suggests for a moment that it is possible to
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achieve a 27 per cent. reduction. However, if ILEA were to consider its budget seriously against the background of a decreasing number of pupils, as other authorities are doing, I believe that it could make savings. For every £7 million of savings—just 1 per cent.—it would receive an additional £4 million in grant from the Government.
Sir Brandon Rhys William: Will my right hon. and learned Friend accept that parents in inner London, as well as ratepayers, will know that his decision to retain a single unitary authority for education in inner London has been based on a balanced and detailed assesment of the pros and cons and will be accepted as such? Does he realise that ILEA's intention to spend its way out through the top of eligibility for block grant will create an intolerable situation for ratepayers in inner London in the coming year? Therefore, will he proceed at once to place an upper limit on ILEA's expenditure in the coming year and not merely to rest on threats that if it overspends the Government may reconsider their decision at some future date?
Mr. Carlisle: I am grateful to my hon. Friend for what he said about the general decision to retain a unitary authority, which I believe to be right, and for expressing concern for the ratepayers of London, bearing in mind the amount of expenditure apparently carried out by ILEA. It would be wrong, on what may be a hypothetical basis, to draw me further at this stage than what I said in the statement, namely, that, if ILEA chooses to abuse the rating system in drawing its money, the Government recognise that additional financial controls will be needed and are considering all the possible options.
Mr. Ronald W. Brown: Will the Secretary of State review his statement that ILEA is doing nothing to help in this respect? In my constituency, it proposes to close three schools, and that has now been agreed. What the Minister has said is therefore not true. Does he understand that if he really wanted to investigate ILEA he could have set up an inquiry so to do? What he did was to use his own party machine, through the so-called Baker report, to make an unwarranted attack on ILEA based on false information and he has now made the right decision in the wrong way.
Mr. Carlisle: With great respect, the hon. Gentleman is not quite right. I shall deal with his second point first. The committee under the chairmanship of my hon. Friend the Member for St. Marylebone (Mr. Baker) was a party committee which produced a party report. Arising out of that and the general concern expressed, the Government decided to hold their own internal investigation at governmental level. What I am announcing is the result of that Government inquiry, not the result of the party review.
On the hon. Gentleman's first point, I do not have the figures at my fingertips, but he must realise that the fall in numbers in Hackney in particular is enormous. When I said that the authority was apparently attempting to make no savings, I was really quoting back to the hon. Member for Bedwellty (Mr. Kinnock) the figure of £694 million to which he appeared to give credence, which I am advised means no net savings as against 1978–79 expenditure if it is computed to those terms.
Mr. David Mellor: I thank my right hon. and learned Friend for his decision to retain ILEA as a single unit, a decision with which, as he knows, I completely agree. I wish to raise two points.
First, will my right hon. and learned Friend continue to work for a solution of the precepting problem? The ILEA precepting powers may look wonderful from Bedwellty, but they do not look so wonderful from Putney, where my constituents are having to pay a 25 per cent. rate increase at a time when rolls are falling as a result of ILEA's financial irresponsibility.
Secondly, will my right hon. and learned Friend confirm that the import of the final part of his statement was to make it clear to the present political masters of ILEA that he will continue to take an interest in their activities, particularly in view of their manifesto commitment, just published, to abolish streaming in secondary schools, to abolish single-sex and denominational education and to recognise the Trotskyist National Union of School Students—things that are so utterly disreputable educationally that there may be a similar outcry next year for him to look at the matter again?
Mr. Carlisle: I thank my hon. Friend for his approving comments on the Government's decision.
With regard to precepting, I have made it clear that the Government are concerned if ILEA is to use its power in a way that abuses the rating system. My right hon. Friend the Secretary of State for the Environment, in the context of his review of the rating system generally, is considering what additional steps should be taken in relation to those local authorities, including ILEA, whose expenditure is excessive. I should have thought that it was fair, at a time when concern has been expressed about the pressure upon the private sector of our economy, to remind rating authorities that a high proportion of that which they precept falls upon business and industry throughout the city and is a burden which they can hardly bear at this time. That is something that should be taken into account.
On my hon. Friend's second point, I have made it clear that we shall continue to keep under review both ILEA's financial prudence and its education services. As I said to the hon. Member for Bedwellty, I hope very much that ILEA and its officers will take account of the comments made in the HMI report and will take advantage of them. The manifesto to which my hon. Friend referred is only a draft manifesto. Nevertheless, like my hon. Friend, I must admit that one is appalled at some of the proposals, apparently contained in the Labour Party's draft manifesto, of the type that my hon. Friend highlighted. I cannot believe that those proposals would be to the advantage of the education of children in inner London, which is what, in the end, should concern us all.
Several Hon. Members rose—
Mr. Speaker: Order. I want to call as many right hon. and hon. Members as I can, but we must have shorter questions and answers.
Mr. Douglas Jay: In the interests of economy, can the Minister say how much public money and administrative time have been wasted by the stirring up of this wholly unnecessary controversy?
Mr. Carlisle: I should have thought that the sum was very small. It was a review at Minister of State level, which then reported in one document to the Cabinet as a whole.
Mr. A. J. Beith: Is not the Minister rather pleased that on this occasion he has defeated the Prime Minister who, together with a number of Conservative Members, was determined to break up the education system of inner London? If he is worried about accountability, why does he not go for a directly elected ILEA, with a fair system of election?
Mr. Carlisle: I do not, of course, accept the hon. Gentleman's first point. We reviewed the whole working of inner London, and the decision taken to retain a unitary authority was a decision of the Government as a whole.
On the second point, we considered the question of a directly elected authority.
Mr. Nigel Spearing: It is.
Mr. Carlisle: Perhaps I may put it another way. It might be said that a directly elected authority increases democratic control—it clearly weakens financial control if that directly elected authority has no means of having to assess the expenditure on education against the demands placed upon ratepayers by the other services within London.
Mr. Martin Stevens: I join those who have congratulated my right hon. and learned Friend on the decision that he has taken, which was in accordance with my own views. Will he look again at the position of primary and secondary schools, having regard to the need to bring their management closer to local parents? In particular, will he consider devolving the appointment of head teachers from ILEA centrally to what are now 10 ILEA divisions?
Mr. Carlisle: Obviously I am concerned to get the greatest possible involvement of people at local level with the schools to which their children go. Within the concept of a unitary authority, certainly I should be prepared to give consideration to any proposal put forward by any of my hon. Friends or, indeed, any hon. Member opposite which they felt achieved that end. However, I think that one tends to ignore the increasing role that we are encouraging parents to take in the schools, both in inner London and elsewhere. I believe that parents should be actively involved in encouraging higher standards in the schools.
Mr. Spearing: In his statement the Secretary of State used the word "abuse" in conjunction with 13 per cent. expenditure. Will he tell us which items he would exclude in that 13 per cent., either now or later? If he cannot, does he agree that he should withdraw the use of the word "abuse".
Mr. Carlisle: When I referred to the question of ILEA choosing systematically to abuse the rating system, I meant that it has the power—not unique, I accept—to precept on the ratepayers of the inner London boroughs. It seems to me that that takes with it a responsibility, when the authority is not directly elected in exactly the same way as other education authorities, to recognise the needs and concern of the ratepayers. Frankly, I believe that ILEA's expenditure is so greatly above the average for the rest of the country that there must be room to make some responsible savings.
Mr. William Shelton: Does my right hon. and learned Friend accept that he is to be congratulated on introducing this review in line with the 1963 Act? He

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mentioned the HMI report on London. Is he aware that in that report the inspectorate said that mixed ability teaching in inner London did little to help the least able and hindered the most able? Following the question of my hon. Friend the Member for Putney (Mr. Mellor), is my right hon. and learned Friend aware that apparently the imposition of mixed ability teaching is contained in the Labour Party's manifesto for London?
Mr. Carlisle: I am aware that the removal of streaming from schools is in the draft manifesto. Obviously the day-to-day control of schools is a matter for local education authorities and not for the Department. All that I can do is to try to exert what influence I and my Department can by saying that I believe that at secondary school age the interests of the children are not best served merely by having mixed ability teaching.
Mr. Clinton Davis: Does the Secretary of State accept that the overwhelming view of my constituents, expressed at meetings and in letters to me, is that they pay tribute to, and support the work of, ILEA and do not accept the compendium of abuse in which he engaged against that authority? Does he also recognise that ILEA is unique inasmuch as, so far as I know, no other local education authority is confined to an inner city area? In that respect, ILEA has totally different problems from those which the Minister cited.
Mr. Carlisle: I do not accept that. One must remember that outside inner London education is not a metropolitan county responsibility but a borough responsibility. Therefore, one is dealing with inner London as against the borough of Birmingham, borough of Manchester, or borough of Liverpool rather than the surrounding areas. I therefore think that my analogy is fair.
It is not fair to suggest that I have involved myself in a compendium of abuse against ILEA. I made clear the concerns that have been expressed, which led to the setting up of the inquiry. Of course, I accept that the overwhelming volume of opinion of London parents was that they wished to see the retention of a unitary authority, but I question whether they did not accept the need for improvements within that authority.
Mr. Nigel Forman: Is my right hon. and learned Friend aware that the two-stage review which has just been concluded was worth while if only to demonstrate to the House and country that no particular pattern of ILEA organisation is sacrosanct, whatever the Socialist Party may say? Can he confirm that he is keeping ILEA under close review? Although there may be overriding educational reasons for maintaining the present structure, many of us are still not satisfied that education in the area is sufficiently accountable, both financially and politi-cally, in a democratic and direct way.
Mr. Carlisle: I am grateful to my hon. Friend. I confirm what I have already said, which is that we believe that a continuation of ILEA depends both on its educational standards and its financial responsibility.
Mr. Christopher Price: The whole House will be grateful that the Secretary of State has succeeded in defeating a combination of the Prime Minister and his own Under-Secretary of State. If he does not think that ILEA should cut by 27 per cent., by what percentage is he asking ILEA to cut this year? As he has a statutory responsibility under section 1 of the 1944 Act
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to promote—that means to improve—the education of the people of England and Wales, is it fair that he should quote selectively from the HMI report, bearing in mind that his inspectors have never made a report on any other authority? If he were to compare the ILEA report with a similar report on any other urban authority in Britain, does he think that it would be all that different?
Mr. Carlisle: I repeat that I do not believe that we benefit the education of children of inner London by turning a blind eye to what that report said. I do not want to get involved in masses of figures if I can avoid it, but if one looks at the percentage of pupils who leave with no examination results and those who get more than five higher grades at O and CSE level, one will find that the percentage in inner London is considerably lower than the average for the country as a whole. That is a matter of concern to many parents who live in the London area.
I assure the hon. Gentleman that my hon. Friend the Under-Secretary of State and myself work in complete harmony on all occasions, and have done so since 3 May 1979. Although I accept that we cannot expect a reduction of 27·3 per cent. in one year, I regret that ILEA does not appear to have responded in any positive way to the approaches that have been made to it since 1978. Secondly, at the very least one could have expected from ILEA the same degree of effort to reduce its budget that has been achieved in many other parts of the country.
Several Hon. Members rose—
Mr. Speaker: Order. If they are brief, I shall call the four hon. Members who have been seeking to catch my eye.
Mr. Thomas Cox: Is the Secretary of State aware that the saddest feature of this whole issue has been the damage which has been caused to teachers, parents and parent-teacher associations, because there was never any support for any of the attempts which the Government have tried to make? As the right hon. and learned Gentleman knows, this all started in Wandsworth, but the leader of Wandsworth council is totally out of touch with the views of the people of Wandsworth. Is he really saying that we must dismiss all the social problems, such as housing and social services, which exist in inner London and watch our education services run down in the same way? London Members will fight such a move. We shall support our local authorities and ILEA in order to protect education services for our children.
Mr. Carlisle: Of course I am not suggesting that, because I do not accept the basis of the hon. Gentleman's question. I do not believe that the hon. Gentleman's colleagues who represent other city areas would suggest that their local authorities were failing to provide an adequate service for the children in those areas commensurate with the burden placed on the ratepayers. But the fact is that such local authorities are providing that service at a considerably lower charge than ILEA. I am not suggesting that one should devastate the education service in London. However, I believe that one can achieve a degree of financial prudence commensurate with a high educational standard.
I think that the hon. Gentleman is totally wrong to suggest that our proposals will cause damage. It is good that we have carried out a review of ILEA and have taken

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decisions. I believe that the interest which parent-teacher associations, parents and others took when we set up the review is in itself healthy for education in the area.
Mr. Frank Dobson: Does not the Secretary of State accept that although inner London parents, such as myself, who send their children to inner London schools will welcome his belated decision not to dismember ILEA, they will be fearful about the later part of the statement, which seems to suggest that as he is too frightened to dismember it he intends to starve it to death instead?
Mr. Carlisle: I repeat what I said earlier. I should have thought that anyone who represented an inner London constituency and who was concerned at things such as the level of unemployment generally, particularly among youth, would recognise that those who have the right to precept on other's rates also have a responsibility to realise that they should not put too great a burden on those shoulders so as to create greater economic difficulties.
Mr. Alfred Dubs: Does not the Secretary of State accept that ILEA members were elected to have responsibility for the education of the children of London? He has suggested that ILEA members should have abdicated that responsibility because of a diktat from him and his colleagues in the Cabinet. Will he look again at the allegation which he made that ILEA has not adjusted its budget to take account of falling rolls? When I last spoke to ILEA it suggested otherwise, and said that it had taken account of the decline in the rolls when setting its budget for the coming year. Will the right hon. and learned Gentleman publish the results of the Government inquiry so that we can all see the basis on which the welcome bit of his decision was made?
Mr. Carlisle: I shall deal with the hon. Gentleman's questions in reverse order.
I see no need to publish anything. My commitment was that after the internal review had taken place I would report the outcome of it. That I have done. I made it clear that had we intended to change the unitary authority, I made it clear that I would have published a document. We have decided not to do so and, therefore, there is no need to publish anything further.
I realise that the figures are disputed by ILEA, but the best advice that I can receive is that the Government's figures are correct.
On the first part of the hon. Member's question, I am grateful to him for raising that point. It is true that every member who is elected to the GLC for the inner London area automatically becomes a member of the Inner London Education Authority. It does not contain the whole of the membership but it contains the majority; it is 35 out of the 48 members, so to that extent it is true that there is direct election. The trouble is that the GLC, as such, is not an education authority and therefore education does not tend to loom large in the issues put forward in the area of the GLC. What the hon. Gentleman said is a useful reminder to people that when they are voting for GLC candidates they are, among other things, voting for a member of the Inner London Education Authority as well as for a member of the GLC.
Mr. Martin Flannery: Will the Minister accept from me that there exists wide
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admiration for ILEA in the provinces as well as in London, and particularly in Sheffield, where educationists want ILEA to be preserved and are therefore glad that it has been kept together? Will he also accept from me that the reason why good authorities are having to put up the rates is precisely because of the actions of central Government? Will he also take note of the fact that he is threatening ILEA, having kept it together, at the same time that £60 million of public money is being filched in order to keep private education and make it more powerful? Educationists throughout the country have taken note of that money disappearing from the public sector.
Mr. Carlisle: As the hon. Gentleman knows, because we have discussed this on many previous occasions, I do not accept the last point that he made. On the other point, of course I recognise that other authorities outside London have views about inner London. He is right to say that among the representations made to the Government about inner London were many from national organisatons as well as those directly involved within the Inner London Education Authority, as I said in my statement.
In regard to the rates, the hon. Gentleman is right in indicating that part of the reduction of the grant going to inner London, which before went through the boroughs but now goes direct to inner London, is caused by the decision to reduce the RSG from 61 per cent. to 60 per cent. It is caused by the decision to shift part of the balance out of London to other parts of the country and in part by the historic overspending in London. I remind the hon. Gentleman, as a person who represents a constituency other than one in inner London, that the shift within the rate support grant of a certain amount of money from London to the rest of the country only partially offset the vast shift done at the cost of the rest of the country into inner London during the period of office of the Labour Government.

Fishing Industry
4.34 pm
Mr. Albert McQuarrie: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the critical situation which has arisen at fishing ports throughout the United Kingdom and particularly at the ports of Fraserburgh and Peterhead in my constituency."
I am grateful to you, Mr. Speaker, for having accepted this application. This matter is topical, for the reason that it is happening now. It is urgent, because an escalation of the present situation could threaten sections of the economy and put in jeopardy the jobs of over 100,000 people who are employed directly and indirectly in the fishing industry, covering 18,000 catchers and 90,000 people in the processing and allied sections of that industry.
This crisis arose out of the fact that an Icelandic reefer vessel carrying 200 tonnes of herring, 20 tonnes of laminated block cod and 15 tonnes of saith arrived at the port of Fraserburgh for delivery to a local processing company. There had been ever-increasing anger by the fishermen at the amount of white fish that was being imported into the United Kingdom at prices much lower than those that our fishermen were able to obtain at the

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quayside. There had been a justifiable grievance at the continued increase in the import of white fish, which amounted to 234,175 tonnes in 1980, with a net value of £180 million.
The fishermen, who are having the most difficult of times because of the failure, so far, to achieve a common fisheries policy, are deeply worried. They cannot make ends meet. When they see—as one example—that their counterparts in Holland can obtain fuel at £127 per tonne and in France at £117 per tonne, as against the price in Lowestoft of £153 per tonne, their anger is justified. The fishing industry has never been one for militant action. What is taking place now is not being done merely to cause disruption; it is the only way in which the fishermen can demonstrate the deep feelings that exist about the problems that they face—problems that are, tragically, growing day by day.
Imports must be restricted to the essential requirements for the processors. There is no way in which our fishermen can compete with those from Iceland and Norway, when in those countries currency has depreciated by the greatest amount, in terms of sterling, which automatically allows importers from those countries and other parts of Europe to sell white fish in the United Kingdom at prices for cheaper than can be obtained by our own catchers.
The matter is critical. Action must be taken at once, and some solution must be found to let the fishermen return to sea. With the enormous dead-load being carried by the fishermen in terms of their vessels, and the heavy overheads that were spoken about and that are not matched by quayside prices, I ask that this House should be allowed to debate the problem and try to arrive at a solution pending the completion of the common fisheries policy, which would of itself remove many of the problems that face the fishing industry today.
Mr. Speaker: The hon. Member for Aberdeenshire, East (Mr. McQuarrie) gave me notice this morning, before 12 o'clock, that he would seek leave to move the Adjournment of the House under Standing Order No. 9 for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the critical situation which has arisen at fishing ports throughout the United Kingdom and particularly at the ports of Fraserburgh and Peterhead in his constituency."
As the House knows, under Standing Order No. 9 I am directed to take into account the many factors set out in the Order but to give no reason for my decision.
The House will know that I do not decide whether this matter is to be debated. I merely decide whether there should be an emergency debate tonight or tomorrow. The hon. Gentleman indicated quite clearly that the matter to which he has drawn our attention is very grave, but I regret that I cannot rule that his submission falls within the provisions of the Standing Order. Therefore, I cannot submit his application to the House.
Mr. Frank Allaun: On a point of order, Mr. Speaker. I think that you are aware that I, too, have applied to move the Adjournment of the House under Standing Order No. 9.
Mr. Speaker: Yes, but the hon. Gentleman, who is a very experienced Member of the House, knows that he did not make his application before 12 o'clock. The House has given me instructions. It is always difficult when I have to apply the rules, especially to very senior Members. We are all senior here, but the hon. Gentleman is a Member with great experience, and he knows that I must abide by the rules.
Mr. Allaun: Further to that point of order, Mr. Speaker. You are putting me in a Catch 22 position, because earlier this morning I asked for a private notice question on this issue. I telephoned at 12.15 pm to inquire whether this had been granted. You, Mr. Speaker, decided in your wisdom that that was not to be so.
I could not seek leave to move the Adjournment of the House under Standing Order No. 9 properly before 12 o'clock. Now you say that I cannot properly ask for the Adjournment under Standing Order No. 9 after 12 o'clock. In fairness to hon. Members of the House, a brief application under Standing Order No. 9 is in order.
Mr. Speaker: I must be firm. The hon Gentleman has broken the custom of the House by revealing that he applied to me for a private notice question. It is wrong if when Mr. Speaker does not allow a private notice question an hon. Member says "Very well, I shall raise the matter under Standing Order No. 9." That is an impossible situation with which to confront Mr. Speaker. The hon. Gentleman made his choice, as all hon. Members must. They must decide whether they wish to ask for a private notice question or whether they wish to make an application under Standing Order No. 9. It is not fair to put the blame on me when the rules are clear.
Mr. Allaun: Further to that point of order, Mr. Speaker. You say that I have broken the custom of the House by saying that I wanted to apply for a debate under Standing Order No. 9 on the neutron bomb. On a previous occasion when I applied to you, Mr. Speaker, to move the Adjournment of the House under Order No. 9, my request was not granted and the press were informed. They did not learn about it from me and I was not in the least worried. It is no use you, Mr. Speaker, saying that I have broken the custom of the House.
You, Mr. Speaker, are saying that I cannot have it both ways. That is precisely what you are preventing me from doing. If I had said to you this morning "If I do not succeed with a private notice question I shall apply for a debate under Standing Order No. 9" I should have been wrong. I consider that I have behaved properly and courteously.
Mr. Speaker: Because of the hon. Gentleman's long experience I have allowed him to conduct his argument, although I should have pulled up any other hon. Member long ago. No Speaker can have an argument with a Member of the House. We have both taken the points on board and they have been registered.

Retail of Motor FuelM (Weights and Measures)
4.42 pm
Mr. Matthew Parris: I beg to move,
That leave be given to bring in a Bill to make subject to statutory instrument subject to the approval of both Houses of Parliament changes in the system of measurement according to which motor fuels are retailed.
I realise that the House is impatient to move on to the main business of the day and so I shall try to be brief. The gallon is on its death bed and I do not wish it to go without at least a brief swan song. I wish to make changes in the system of measurement according to which motor fuels are retailed.
The Bill would simply return to Parliament the powers that it relinquished in 1897 to decide the pace and timing of the metrication of fuels. It would return to Parliament the power either to promote, or if Parliament wishes, to block that process altogether.
The major oil companies plan to abandon the gallon later this year. They are free by law to do so. I accept that they have some substantial reasons for doing so. The House may accept their reasons or it may not. At present it has no say. My Bill would give the House the final say. It is overdue. The whole thing is in the most unholy mess. For instance, are we to measure petrol in litres and distance in miles? Will we have to calculate fuel consumption in miles per litre? What sort of hybrid instrument panels will motor manufacturers have to fit to their cars? For how long will it all continue?
The metrication of distance is coming, so we are told. We do not know when. It has been coming for the last 100 years or so but so has Christmas and so has the Channel tunnel and the reform of the common agricultural policy.
There is a case, although I oppose it, for abandoning both the gallon and the mile now. There is also a case for reprieving both of them for a while. There can be no case for staggering awkwardly into the most difficult position of all, with one foot in each camp—one in the metric and one in the imperial camp.
The oil companies are impatient. When the price of petrol reaches £2 a gallon petrol pumps will not be able to do the calculation without fairly expensive modification. Reducing the unit of measurement to a litre will obviate that.
Hon. Members with more than a passing acquaintance with the internal gearing mechanism of petrol pumps will understand the reasons for that. Hon. Members who have no such knowledge perhaps will accept my assurance and that of my hon. Friend the Member for Northampton, North (Mr. Marlow), who has been in the Army and understands these matters, that there are problems involved in changing the mechanism of petrol pumps. He and I, at the kind invitation of my hon. Friend the Minister for Consumer Affairs, visited the National Weights and Measures Council laboratory. We were grateful for the patience of the officers who explained the problems to us.
We do not deny that there are problems, but we believe that there are other ways of meeting them. I shall not dwell on them this afternoon, because the point of my Bill is not to pre-empt the decision but to give the House, and not the oil companies alone, the opportunity to make the decision.
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If there were free and vigorous competition in the retail of petrol there would be no such need. The public could choose between metric petrol stations and imperial petrol stations. I have little doubt which most people would choose. But when the trade is dominated as it is by a cartel the choice is denied the consumer. The cost in terms of bother is imposed upon the consumer without redress.
In our law and commercial practice a large bother caused to a single individual must be paid for one way or another. However, a multitude of small bothers caused to a large number of individuals is a cost which can rarely be charged to anybody. So it is in this case. The motorist, for instance, cannot insist that he pays for his petrol in deutschemarks because Parliament has protected garage owners against such insistence. However, the garage owner can insist that the motorist accepts his fuel in litres—at any rate he would be so able unless the House accepts my Bill which will enable us to provide that element of protection for the motorist.
At this stage I should cease the pretence of objectivity and come clean with the House. I must tell the House why I hate litres. I apologise for sounding like a sociology lecturer, but I believe that metrication causes alienation. Just as much as by high principles, economic forces and policemen, society is held together by custom, by familiarity, by good humour, by a thousand common understandings, common ways of seeing and doing things and a hundred familiar arrangements. Habits and affections are as powerful as passion, Lord Denning and the money supply rolled into one. They all contribute to the sense of belonging to a society, the ways of which are ours. When that sense weakens other more tangible parts of the social order will also weaken.
I do not pretend that our systems of measurement are an integral part of the social order. Clearly, they are not. They are only one small part of what is habitual and familiar. Alone they are dispensable. So was the threepenny bit, the county of Rutland and the North Riding. In each case there was a reasonable, rational argument for making the change.
Some hon. Members might say "What a pretentious argument to deploy in such a trifling cause." It is a trifling cause and it is a pretentious argument. However, against each of the modest and inoffensive steps that we have made in the name of progress and rationalisation, the argument has always seemed pretentious.
We have taken away from people their system of money, their systems of measurement, their county names, their county boundaries, their town councils and their village schools. At each stage there have been sensible arguments for the change. As each familiar landmark recedes, only the eccentric refuse to move on. Only the eccentric ever do.
It has been a long and weary road. How unfamiliar and unfriendly the landscape is beginning to look. I know the arguments for metrication. They are powerful arguments. They are the same arguments that can be used and will be used for changing over to driving on the right hand side of the road.
I can hear it now. There will be murmurings about our European partners, the needs of the motor industry, increasing traffic to and from the Continent and hazards to life and limb inherent in the divide. Admittedly, short-term cost people will say "What a nuisance"—
Mr. Speaker: Order. The hon. Gentleman was so interesting that I overlooked the fact that he should not say what he would say if he had had permission. He has to make out the reasons why his Bill should be given precedence.
Mr. Parris: I shall not pursue that line of argument Mr. Speaker. I was trying to demonstrate that the arguments for metrication were weak because they could be used for other things which I do not believe that the House would be disposed to accept. I confess to a deviant preference. I prefer driving on the left. I prefer gallons. I prefer feet, inches and miles. I do not care if my hon. Friends report me to my constituency association for disloyalty to Europe. They may try anonymous telephone tip-offs if they wish.
As such people dance merrily off behind the Pied Piper towards some distant butter mountain, some of us are limping sceptically behind. Garlic, EEC directives, litres and lederhosen are all part of the same thing. I imagine it will all end in our giving away Gibraltar.
I beg my right hon. Friend the Minister for Consumer Affairs—of whom I have not yet despaired—to hang behind with the rest of us, lest her good name be impugned among the petrol pumps or she be exposed to comment on the forecourt.
Most of us know in our heads that metrication must come. Many of us wish in our hearts that it would not. My Bill poses no challenge to that certainty, but it offers the House an opportunity for a small display of petulance fuelled by sentiment.
Question put and agreed to.
Bill ordered to be brought in by Mr. Matthew Parris, Mr. Ivor Stanbrook and Mr. Christopher Murphy.

RETAIL OF MOTOR FUEL (WEIGHTS AND MEASURES)
Mr. Matthew Parris accordingly presented a Bill to make subject to statutory instrument subject to the approval of both Houses of Parliament changes in the system of measurement according to which motor fuels are retailed: And the same was read the First time; and ordered to be read a Second time upon Friday 6 March and to be printed. [Bill 61].

INDUSTRY [MONEY] (No. 2)
Queen's Recommendation having been signified—
Resolved,
That, for the purposes of any Act of the present Session to increase financial limits which apply in connection with the National Enterprise Board, it is expedient to authorise any increase in the sums payable out of money provided by Parliament under any other enactment attributable to provisions of the said Act of the present Session—

(a) increasing the financial limit for the time being specified under section 5(3) of the Industry Act 1980 for the purposes of section 3 of that Act (property transferred to Secretary of State from National Enterprise Board) to £4,400 million; and

(b) providing for that limit to be increased or further increased by order of the Secretary of State made with the consent of the Treasury to an amount not exceeding £5,250 million.—[Mr. Tebbit.]

Orders of the Day
  Industry Bill
  As amended (in the Standing Committee), considered.
  Industry Bill

    Clause 1
    FINANCIAL LIMITS RELATING TO NATIONAL ENTERPRISE BOARD
    4.56 pm
    The Minister of State, Department of Industry (Mr. Norman Tebbitt): I beg to move amendment No. 5, in page 1, line 10 leave out 'increased to £2,251 million' and insert 'reduced to £750 million'.
    Mr. Speaker: With this we shall discuss Government amendments Nos. 6 to 13 and 18.
    Mr. Tebbit: I am glad to see the right hon. Member for Salford, West (Mr. Orme) in his place. He is not looking very intimidated, perhaps fortified by the earlyday motion on the Order Paper. As he knows, I have never taken personal attacks to heart but I am sorry if he felt that I went so far as to cause him personal stress or distress in what I said to him last week. If I did, I am sorry. I thought that we were in the normal hurly-burly of the House, but I should not like to cause him personal offence.
    Mr. Stanley Orme: I thank the Minister for those words. I hope that the House will excuse my voice. I have a sore throat. I thank the Minister for making public what he put to me in writing. I accept what he says without equivocation.
    Mr. Tebbit: I thank the right hon. Gentleman. I am sure that we shall bang words back and forwards across the Dispatch Box with great vigour from time to time, but never with personal malice.
    Mr. Robert Adley: I do not wish to intervene in the duet between my hon. Friend the Minister and the right hon. Member for Salford, West (Mr. Orme). The serious point that perhaps lay behind my hon. Friend's comment the other day is that, if we are to discuss Japanese investment in this country, we must recognise that the Japanese are particularly sensitive to public opinion, from opinions emanating from the House and hon. Members representing particular constituencies. We should all be aware of that. Does my hon. Friend agree that that feeling has come through to him in his discussions with Datsun?
    Mr. Tebbit: Yes, indeed. Although I understand what my hon. Friend says I do not think that it is relevant to amendments Nos. 5 to 13, and amendment No. 18.
    All the amendments are required to make changes in the financial limits of the National Enterprise Board. The Secretary of State needed to accommodate the Government's decisions on British Leyland's 1981 corporate plan, which was announced by my right hon. Friend in his statement on 26 January. In that statement, as the House will recall, my right hon. Friend announced that the Government have approved the 1981 British Leyland corporate plan and have agreed to fund its first two years—that is £620 million in 1981–82 and £370 million in 1982–83. I heard the indrawing of breath of my

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    hon. Friend the Member for Knutsford (Mr. BruceGardyne). Those figures have exactly the same effect on all of us.
    My right hon. Friend also announced that it was the Government's intention that the public shareholding in BL should be transferred from the National Enterprise Board to the Secretary of State after the Bill receives Royal Assent.
    Amendments Nos. 5 to 12 make the necessary adjustments in the financial limits of the National Enterprise Board and the Secretary of State to accommodate these two decisions. Amendment No. 18 provides that the new limits will come into operation on 31 March 1981, the date on which we intend the transfer of the BL shareholding to take place.
    Before I deal with the reasons for these decisions, it would be helpful if I go briefly through the amendments in some detail to explain the effects of each. Amendments Nos. 5 and 6 reduce the National Enterprise Board's financial limits to £750 million. That is the level that will be left for the NEB's other investments when BL has been transferred to the Secretary of State. That limit covers private sector financing for the NEB's companies as well as the public money which the board invests in them. As my right hon. Friend has said, there would be plenty of room within the limit as the NEB disposes of its existing investments.
    Amendment No. 7 is a tidying-up measure which repeals the provisions of section 8 of the Industry Act 1975, which are no longer necessary. Subsections (2)(a) to (2)(c) were introduced by section 5(2) of the 1980 Act to provide the mechanism for the Secretary of State to reduce the board's financial limit when shareholdings were transferred by the board to him. It also provided that the NEB's limit should not be reduced below a minimum level of £750 million. Now that this minimum has been reached it is clearly unnecessary to have provisions enabling the Secretary of State to reduce the limit to that minimum.
    Amendment No. 8 is a consequence of amendment No. 12 which removes sections 5(4) of the 1980 Act. I shall come to that in a moment. Amendments Nos. 9 and 11 increase the Secretary of State's limit to £4,400 million with the power to increase that further by order to a maximum of £5,250 million. In accordance with normal practice amendment No. 10 specifies that the Secretary of State shall exercise this power only with the approval of the Treasury. The increases for which amendments Nos. 9 and 11 provide are intended to cover the needs of BL following its transfer to the Secretary of State. The House will recall that £1,500 million of the NEB's existing limit of £2,250 million is for BL's needs. When the Bill was given its Second Reading my right hon. Friend made it clear that a further increase would be needed to cover BL's needs, whatever decisions were taken on the corporate plan. However, no estimate could be made of the increase needed until the Government had taken a decision on the plan. Clause 1 accordingly included provision for an increase for BL, but set it for the time being at what is now referred to as a token level of £1 million.
    5 pm
    Of the new limits specified for the Secretary of State in these amendments, £2,900 million, which can be increased by order to £3,250 million, is intended for BL.
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    As my right hon. Friend explained on Second Reading, the balance of £1,500 million, which can be increased by order to £2,000 million, is for Rolls-Royce.
    Of course, it is perfectly legitimate that I should be asked why it is necessary to provide for such a large financial limit for the needs of BL when the Government have agreed to provide considerably less than this—£990 million over the next two years—in public funding. It is necessary because the limits cover the company's external financing from private sources as well as public investment. Accordingly, the limits now specified are intended to cover BL's funding from private as well as public sources over the next five years.
    Mr. Nick Budgen: What has BL said about the possibility of selling parts of the empire over, say, the next five years? I am sure that my hon. Friend will agree that it has been much talked about. Every indication we have heard from BL is that it has resisted that. We should like to know what funding can be expected from that source.
    Mr. Tebbit: I do not want to avoid my hon. Friend's question, but perhaps I may come back to it in the course of my remarks on the general reasoning behind the funding, as opposed to those on the way in which the amendments operate.
    Mr. Michael Grylls: My hon. Friend will be the first to appreciate that the circumstances surrounding the borrowing of the NEB and BL are incredibly complicated. Will he give us some indication of the extent of BL's private borrowings? On amendment No. 5 concerning the NEB, why is it necessary still to have a limit of £750 million? I understood that at he end of 1975 all the borrowings—the public dividend capital, the National Loans Fund payments, the external borrowings of subsidiaries and the guarantees, which excluded BL and Rolls-Royce—at that time totalled £268·5 million. No doubt the figure has increased since then, but the NEB has also disposed of assets. Why, therefore, is such a high ceiling needed? It would be most useful if during the debate my hon. Friend gave answers to some of these questions.
    Mr. Tebbit: I shall certainly be able to help my hon. Friend in that direction, particularly if the House is moved to give me leave to reply to the debate.
    Mr. Dick Douglas: Will the Minister also give some indication of the rate of interest charged on BL's private borrowings?
    Mr. Tebbit: I am not sure that I shall be able to help too much in that direction because, to a considerable extent, these matters are covered by commercial confidence. However, it is not unusual for public sector organisations to borrow on the private market. British Airways among others have borrowed extensively abroad and feel that that is a reasonable way of conducting their affairs.
    Amendment No. 12 removes the aggregate limit and is needed to provide an overall ceiling for the two limits, since it is possible to increase the Secretary of State's limit by correspondingly reducing the NEB's figures. Now that the NEB's limit has been reduced to the minimum level of £750 million, the aggregate control is no longer necessary.

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    Amendment No. 18 specifies that the new limits in clause 1 will come into operation on 1 March 1981, which is the date when we intend that the transfer of BL to the Secretary of State should take place.
    I turn next to the decisions, as opposed to the mechanisms of the amendments for achieving their purpose. As the House will understand, before we arrived at the decision to provide this funding for BL we carefully considered all the choices that were open to us. The board of BL provided us towards the end of last year with a plan for the company's business activities over the next five years. It is not and never has been our practice to try to second-guess the commercial judgment of the boards of publicly funded companies. I am not sure that there is a great deal of evidence that Ministers and civil servants are particularly well equipped, on the basis of their overall track record of the past 30 years, to do so.
    However, it was our clear duty to the taxpayer, who ultimately has to foot the bill for BL, to ask three main questions. First, did the plan offer a realistic prospect of success? Second, what would be the consequence of refusing to support the plan? Third, was there any middle way between supporting the plan to the tune of £990 million and refusing to support it?
    To take the last of those questions first, my right hon. Friend the Secretary of State made clear when he announced that decision last week that we could find no middle way that made commercial sense for this company. I know that it is tempting to think that selling off the currently profitable parts of the company would at least reduce the cash call on the Government as my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) suggested. It was a matter we had to examine very closely in conjunction with the board. Eventually, however, we and the board were convinced that these parts of the business, perhaps with some peripheral parts as an exception, were vital to attract the collaboration of other manufacturers which must be the long-term objective of the company if it is to survive.
    Mr. Budgen: Why, for instance, are trucks and buses essential in the way that my hon. Friend suggests?
    Mr. Orme: May I suggest that the truck and bus division, successful as it is, also needs some of the money to survive and to expand?
    Mr. Tebbit: I take the point of the right hon. Member for Salford, West but I do not think that it quite answers my hon. Friend's point, which was why we could not take out those parts at present. The simple answer to my hon. Friend is that currently, at any rate, they would not fetch enough money to make any real difference to the company's prospects. Secondly, the company feels that while it is able to consolidate its sales efforts overseas over a wide range of products it is better able to carry on its business.
    Mr. James Hill: during the negotiations there was a strong rumour that Sir Michael Edwardes was threatening to resign unless my right hon. Friend the Secretary of State gave way throughout. We on the Back Benches suspect that Sir Michael was giving my right hon. Friend the Secretary of State the same treatment as he is giving to his labour force.
    Mr. Tebbit: My hon. Friend the Member for Southampton, Test (Mr. Hill) should not believe rumours.
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    If the implication of what he said was that Sir Michael Edwardes was playing the role of the "bolshie" shop steward and was trying his luck with my right hon. Friend, I do not think he would have got any further with my right hon. Friend than the odd "bolshie" shop steward has got with Sir Michael Edwardes.
    Mr. Adley: Obviously no one expects my hon. Friend to admit the truth, as so many of us believe, of what my hon. Friend the Member for Southampton, Test (Mr. Hill) has put. However, has Sir Michael Edwardes expressed any opinion about whether he would like to see parts of BL sold? Is he opposed to that or not?
    Mr. Tebbit: If Sir Michael Edwardes had said to us that he would like to sell off parts of British Leyland because in his commercial judgment it was the best thing to do, we would not have stood in his way. If my hon. Friend thinks that it is pointless to ask me a question with the expectation of getting a true answer, I should be obliged if he would let me get on with my speech without so many interventions, because his interventions will not receive replies which satisfy him.
    We and the board were forced to agree that these major parts of the business are vital if we are to get collaboration with another manufacturer so that the company can survive—not merely survive, but survive outside the public sector.
    We also carefully considered the implications of not giving support to. the plan. It is apparent that it would not be a no-cost route for the Government to follow. As the House is aware, there are about 140,000 people now employed in British Leyland. About 70,000 of those people are in the car business. A large number of other jobs are dependent upon the continuation in business of BL.
    It is a matter of judgment how many jobs would be lost if BL were to close. The figure of a loss of 1 million jobs was mentioned in the House, which I think was way out. I am tempted to add up the total number of jobs forecast to have been lost as a result of certain closures by Opposition Members in the last couple of years.It would probably add up to more than the working population of the United Kingdom. It is easy to use extravagant multipliers. [Interruption.] I am grateful for that support. These days, one has to take it from wherever one gets it.
    There is no doubt that whatever figure one puts on it, the number of jobs which would be lost inside and outside British Leyland if the company were to close down is considerable—to put it mildly. Job losses on that scale cost the taxpayer money in terms of redundancy and benefit payments and lost tax revenue. No one can doubt that, at a time of high unemployment, those who lose their jobs will be not net contributors of tax paid to the economy but net drawers of benefit. On each occasion, we must face the question whether it is worth while to keep such people at. work if they are consuming wealth more rapidly than they are creating it.
    Those are and were heavy considerations in our judgment, but they are not the overwhelming ones. If at any time we became convinced that the company did not have a viable future, I assure the House that we would not shrink from taking the appropriate action, costly though it might be to the taxpayer, because not to do so would be even costlier.
    Therefore, the decision turned on the first of my questions: did BL have a reasonable chance of achieving

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    its objectives within the time scale it had set up? In arriving at our decision, we had to consider closely the reasons for BL's poor financial performance during 1980. At the half year, the company turned in a trading loss of £182 million. Although it managed to keep within the limits of Government funding which had been agreed, that was at the expense of reductions in both working capital and capital expenditure.
    Therefore, in looking at this year's plan, we had to try to decide how much of last year's poor financial performance was a self-inflicted wound. We concluded that Leyland's poor financial results were due—largely at any rate—to economic factors beyond its control and to which it was unable to respond in time.
    5.15 pm
    We took into account the fact that many British companies found it difficult to adjust to the strengthening pound last year. We took into account the fact that many major vehicle manufacturers all over the world turned in large losses last year. BL may be our spectacular, but it has not been alone in its difficulties.
    Against the backdrop of its troubled financial performance, there was some of the best news for years from BL. It was an unprecedentedly good year for industrial relations within the company. Fewer than 2 per cent. of working hours were lost due to disputes. A substantial new package covering working practices was introduced in the spring of last year, and productivity in BL cars rose by 10 per cent. after a sustained fall for several years. In some parts of the business, notably the Metro operation, it rose by much more. All that happened against a backdrop of 28,000 redundancies and a wage settlement in single figures for the third year running.
    During 1980 some of the first fruits of past investments started to come through. As well as the highly successful launch of the Metro, British Leyland brought out a new heavy truck model which has had a good reception, although the market for trucks is now extremely poor. Those new products, together with modifications to some existing products, have helped to turn up the company's market share during the second half of 1980. We believe that during 1980, under difficult conditions, the BL management and work force made real progress towards improving competitiveness. When we weighed up the alternative courses of action open to us we decided to fund the company's plan for two years.
    Many years of investment at the taxpayers' expense are now showing results. In order to give the company a chance of success now we cannot let it rest on the laurels of one or two successful new products. Therefore, we have agreed the BL should produce a new medium car—the LM10—as well as strengthening its range of other products. We are also providing the company with funding for restructuring. The radical reorganisation of the business that Sir Michael Edwardes has undertaken is not yet complete. He had much ground to make up when he took over, and the company is intending to incur substantial restructuring costs over the next two years.
    Mr. John Bruce-Gardyne: I am not sure whether this is the right time to raise this matter. If it is not, perhaps my hon. Friend will come back to it later.
    It would be helpful to have the Government's reaction to British Leyland's forecast of the trade-weighted
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    exchange rate, because that is crucial. BL says that it has been ruined by the movement of the exchange rate which it got wholly wrong. Do the Government believe that the forecast of a fall from the current rate of 81 to 75 this year, and 65 by 1985 is realistic, bearing in mind that if the moneys which the House has been asked to vote today are funded through Government borrowing, and borrowed at adequate rates of interest, this is likely to push the exchange rate up, rather than down?
    Mr. Tebbit: British Leyland was not the only company to get its estimate of the movement of sterling substantially wrong last year. Rolls-Royce was another, and there were many other companies in the private sector which did the same. There were also many economic journalists, some in well-known Sunday newspapers, who got it wrong. Very few people got it right. I believe that it will be difficult for anyone to get it right again this year.
    Mr. Budgen Mr. Budgen rose—
    Mr. Tebbit: I shall not give way at the moment.
    Sterling has sharply fallen—particularly in relation to the dollar—in the last few days. I am not sure whether my hon. Friend or any of the other journalists on the Sunday papers have made fortunes by being wide awake enough to know that that was going to happen and to speculate on it successfully. I doubt whether any of those who write the smart articles in the press about what the level of sterling will be in future are backing their judgment with their own money. Let us be frank. Her Majesty's Government are not backing Leyland with anybody's money except the taxpayers'.
    The point that I should make is that if it is shown that the assumptions in the Leyland plan are so far out that the plan is incapable of being carried through—that is one of the contingencies which has been envisaged in the discussions between the company and the Government—the plan would have to be reviewed.
    Mr. Budgen: Is it not the case that when private sector exporters take a view about exchange rate risks, they operate in currency markets or insure in other ways to prevent them being hit by exchange rate fluctuations? Is it not odd that Rolls-Royce originally went bust because of its mistakes regarding the exchange rate yet, again, it has recently taken large gambles on the exchange rate which were not covered by any form of insurance? Are we to understand that both Rolls-Royce and BL are to take another big punt on the exchange rate, again without buying any insurance, in anticipation that, if they get it wrong, the taxpayer will pick up the debt?
    Mr. Tebbit: Uncharacteristically, my hon. Friend is tending to bring together two points without separating them properly, as he should. It is true that when a private sector company has contracted to make a sale or is in the process of a delivery, it may ensure against currency risks forward. But I do not think that it would be possible for BL or anyone else to find someone to insure it on a plan of this magnitude against its estimates of the movement of currencies throughout. Those two things are different. One should insure where possible, but it is not possible to insure a plan in this way.
    Mr. Cranley Onslow: Perhaps I may complete, or correct, that point on the original bankruptcy of Rolls-Royce, of which today happens to be the melancholy anniversary. Surely it was nothing to do with

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    any miscalculation of the exchange rate that caused the bankruptcy; it was simply that it could not calculate properly the cost of what it was making.
    Mr. Tebbit: My right hon. Friend is right. I am grateful to him for all that he said, except the reminder of that melancholy anniversary. Not all the funding that BL requires is to come from the Government. As in the past, BL will continue to seek loans from the private sector. The BL board's longer term objective is to achieve collaboration with one manufacturer or several manufacturers to bring about the company's recovery—and recovery means that BL need no Longer be State-owned if it can achieve recovery.
    BL already has a major collaborative arrangement with Honda, and the joint BL-Honda car will be launched later this year. We hope that BL will be able to secure other farreaching collaborative deals, including the taking of a major equity stake in BL by outsiders if that makes commercial sense. It must make commercial sense to the outsider, or he would not come in.
    I am sure that some of my hon. Friends have it in mind to tell me that they remain less than totally convinced by the arguments that I have put forward to explain our decision. Let me anticipate them by reminding them of the letter sent by Sir Michael Edwardes to my right hon. Friend the Secretary of State for Industry. That letter was published in the Official Report on 26 January. In that letter Sir Michael refers to what would happen if his plan was not being achieved. He records the intention of his board to initiate a review of the plan if
    "it appears impossible to bring about recovery within the timescale envisaged."
    Such a review would be initiated in consultation with the Government. If circumstances make it necessary, the Government will not shrink from taking realistic decisions, no matter how serious the consequences might appear to be. If there is no hope for Leyland, there is no point in pursuing the plan.
    We have notified the European Community Commission of our intention to provide these funds to BL. As BL does not require the funds until the beginning of April, the Commission has adequate time to complete its customary consideration. We do not expect the Commission to raise objections to our proposal.
    I referred earlier to the necessity for these clauses to be amended in view of the decision to transfer BL from the NEB to the Secretary of State. A similar decision was taken on Rolls-Royce during 1980. The decision to transfer BL reflects the NEB's wish to see the BL holding treated in a comparable way. It was also the wish of the BL board that the holding in the company should be transferred.
    BL is a large company. Its annual turnover is about £3 billion. It has been in almost total public ownership since 1975, and substantial Government loans and equity have been channelled to the company since then. The size of the sums involved in the public funding of BL is such that the Government are inevitably closely involved in major decisions about the company, and the proposed transfer recognises that reality.
    Mr. Terry Davis: Will the Minister clarify how the Government intend to proceed before he concludes his speech because it will affect later contributions to the debate? The Minister has explained the reason for these amendments. In this context it is
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    understandable that the Minister should refer almost entirely to BL's corporate plan for 1981 and should touch only briefly on a review of BL's performance in 1980. When a similar decision was taken in December 1979, the Secretary of State made a statement and the Government took an early opportunity to arrange a debate a few weeks later during which the House was able to debate not only the corporate plan for the coming year but the company's performance during the preceding year.
    Do the Government intend to act in a similar way this time? Will they arrange a debate, perhaps after the annual accounts have been published, during which we can look at the company's performance in 1980 in some detail?
    Mr. Tebbit: It would always be for my right hon. Friend the Leader of the House to decide on such a proposition. It has not been in my mind to propose that we should have a separate debate to consider what has happened in BL. If the House agrees to these sums and these arrangements, I think that BL should be given a chance to get on with the making and selling of motor cars rather than being perpetually looked at and dragged up by the roots to see whether it is growing before putting it down again. We must keep an eye on what is going on, but it is not always productive to debate BL's affairs. If the hon. Gentleman has the good fortune to catch Mr. Speaker's eye. he may be able to make some of the points that he would have made in a separate debate.
    Mr. John Maxton: Some Opposition Members hoped that the Minister might say a little more about the first amendment, which reduces the NEB's financial arrangements to £750 million. Yesterday, the Daily Express described the effect of this as the NEB having its wings clipped. We should like to know a little more about the impact of this change.
    Mr. Tebbit: If the House would agree to my replying to the debate later I could deal with those points then. I think that most hon. Members are anxious to debate the BL issue, but I shall certainly respond to any points on the NEB at that stage.
    5.30 pm
    Mr. Orme: We welcome the proposals for the funding of British Leyland. They are important for the survival of a great British industry. We believe that the breathing space that the sum of £980 million gives to British Leyland is also important. It has two years in which to turn around some of the difficulties and problems that it has faced.
    A point was raised earlier about the trucks and bus division of British Leyland. A recent editorial in the Financial Times commented that that division needs financial support in its development in the coming months and years. It needs public support and public money.
    The Minister commented on my remark that if British Leyland closed about 1 million jobs could be affected, directly or indirectly. I draw the attention of the Secretary of State to that because he challenged me on the figure. I have looked into the matter. The first reference to that figure was made in 1975 by my right hon. Friend the Member for Huyton (Sir H. Wilson) when he was Prime Minister and when he announced the Government's acceptance of the Ryder report. In a report for Sewells Digest in December, Professor Bhaskar gave a figure of 700,000. I consulted Britsh Leyland, and perhaps I gave the impression that that was the figure to which the

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    management subscribed. It would be incorrect for me to say that the management subscribed to that figure, although I was informed that it is widely accepted within British Leyland. I was told that, if British Leyland were to close, 400,000 jobs would be affected directly.
    We can go further than that. If British Leyland closed, the component manufacturers, many of whom are working only partially for British Leyland, could be affected. Many of those companies could collapse and close. We must also take into account steel, the mining industry and transport. I do not want to bandy figures about, but I feel that there is justification for saying that a large number of jobs—between 700,000 and 1 million—would be involved. That is the size of the problem about which we are talking.
    If we look at the problem in terms of employment we must take into account the fact that an unemployed married man with two children would cost the State about £6,000 a year. That includes the loss of tax input as well at the benefits that he draws. So we are talking not only about a British product or the survival of a British car company, but about a large number of jobs.
    Mr. Bruce-Gardyne: The right hon. Gentleman is indulging in the fallacy that seems to be widespread that we are faced with an alternative between the acceptance of Sir Michael Edwardes' latest version of the future and all that it implies for public finance, and closure. Those are not the sole possibilities. Some hon. Members are concerned about the reluctance of British Leyland to recognise that many parts of the business might be profitable as a going concern if they were free from the incubus of having to carry on the company's mass car division, which would no doubt continue to need longterm support.
    Mr. Orme: I take the point, and I know the philosophy from which the hon. Gentleman speaks forcefully and honourably. I should like to look at the question of British Leyland in that context. There will now be four divisions, and there will be a possibility of selling one or more of those divisions. To do that would injure the whole, and it would not necessarily recoup for the taxpayer the benefits to which he is entitled when profits are made.
    During an interview with Mr. Brian Walden on "Weekend World" last Sunday, the Prime Minister said that she would not rule out parts of British Leyland being sold off at a future date. We are totally opposed to that, and I believe that British Leyland is totally opposed to it. It would be morally wrong, having pumped British taxpayers' money into the company, not to give taxpayers the benefits when British Leyland starts to make a profit.
    Mr. George Park: Does my right hon. Friend agree that when Conservative Members talk about selling off parts of British Leyland they ignore the integrated nature of the company and the fact that there are economies of scale? If companies are hived off, it would not be possible to have the long runs of producing components that is possible under the total Leyland banner.
    Mr. Orme: I thank my hon. Friend, who has a great deal of experience in the car industry. I believe that he is correct.
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    It is essential that the company should survive. It would be wrong to split it up. It would demoralise the management and workers of British Leyland. It is in the British interest to make the company successful, and I believe that it can be made successful. The corporate plan that has been accepted by the Government is workable. The Secretary of State, with his reputation on market forces, would not have accepted Sir Michael Edwardes' proposals if he did not think that they were viable and workable.
    When we talk about wets in the Cabinet, we are talking not about the Secretary of State, but about people such as the hon. Member for Knutsford (Mr. Bruce-Gardyne), who believes in market forces. Here, we have an indication that the Government are prepared to use public money—rightly—to sustain a firm that needs help now.
    Mr. Adley: Is it the right hon. Gentleman's opinion that those who work in the denationalised section of Rolls-Royce are demoralised?
    Mr. Orme: We could go over the Rolls-Royce issue again. In my opinion, what was done was wrong. But to start interfering with British Leyland, after all the traumas that it has had in the past, would be serious.
    I turn now to the matter of the exchange rate, which was raised by many hon. Members, not least Conservative Members. It could be disastrous not only for British Leyland but for the private and public sectors generally if the exchange rate of the pound against the dollar were to rise to an unacceptable level. It would close many companies. The Government have a responsibility to consider what the exchange rate is doing to British industry, and to take some action in that regard. It is not only British Leyland that is on the line here; many companies, both public and private, are affected.
    The Minister has referred to Rolls-Royce. We should like to have further information as to the financial arrangements for Rolls-Royce, and not least its accountability. We should like to know how the matter is to be dealt with, and whether it is to be reported to the House. A great deal of money is being voted for Rolls-Royce. Now that the Secretary of State—as with British Leyland—is taking the shares under his own control, he must be answerable to the House. There are pertinent questions which should be raised, either from the Government Benches or from the Opposition Benches, and the Government ought to look at them very closely. We shall certainly return to the matter of Rolls-Royce.
    We are gravely concerned about the National Enterprise Board. We are concerned about the attitude of the Government and not least about the attitude of the Secretary of State. In dealing with the functions of the NEB, the Secretary of State said on Second Reading:
    "They are primarily to dispose of its assets to the private sector, which it has begun substantially to do, to manage its portfolio to that end, to use its limited and declining resources only in partnership with the private sector and only in potentially profitable high technology projects which in the present period of desperately low profitability might not be taken up by the private sector alone, and to stand ready to provide some finance for suitable small firms and regional projects."
    In the same debate, the Secretary of State said that the NEB
    "is to manage the remaining portfolio of about 60 companies that are still in its possession, and to prepare them as quickly as possible for sale to private investors".—[Official Report, 1 December 1980; Vol. 995, c. 34–6.]

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    That, again, is a disastrous decision against the background of the current industrial position to sell off assets that were making a profit for the taxpayer.
    There is a need for an expanded National Enterprise Board, not a reduced National Enterprise Board. The argument is set out in the TUC Economic Review 1980. I understand that a copy of it was sent only yesterday to the Secretary of State. On page 30, under the heading "A new planning framework", it states:
    "A body like the NEB is needed but it must be strengthened in two ways. Us scope for intervention and the finance available to it must be greatly expanded. Secondly, it must operate through a system of planning agreements and be linked to the development of industrial democracy."
    What the TUC is saying is right, and I have some questions to put to the Minister or to the Secretary of State arising out of the NEB and some of the problems that it is facing.
    5.45 pm
    Mr. Don Dixon: The NEB is the only means by which we can get investment in the North of England. We have the highest percentage of unemployment in England, Scotland or Wales. We have the second lowest number of vacancies in England, Scotland or Wales. We do not have a Northern development agency. We do not have a Minister for the North. We do not have a Grand Committee to deal with Northern affairs. We do not have a Select Committee to deal with Northern affairs. We have absolutely nothing. Unemployment in the North is reaching intolerable heights, and something will have to be done about it. I know that the Secretary of State for Industry has been having discussions with the Northern group of Members of Parliament. I hope that we shall very soon have some suggestions from him so that we can co-ordinate the efforts being made in the Northern region to get some industry there. At the moment, the only thing that we have is a Northern regional development board.
    Mr. Orme: I thank my hon. Friend for his intervention. I think that the Secretary of State was listening intently to his remarks. My hon. Friend pointed out clearly the dilemma within our society, and the division between the North and the South of the United Kingdom. There are a few exceptions in different areas where there are small pockets of heavy unemployment, but generally speaking it is correct to emphasise that division.
    Something has to be done about the Northern region; I accept that without qualification. I am arguing that the National Enterprise Board is one of the weapons that can be used, just as an investment bank could be used to help the Northern region. The Secretary of State has a responsibility to tell the House at the earliest opportunity what are his plans for the Northern region, and how it can be assisted. It is not a matter of looking at benefits, important as they are. Jobs are the major priority.
    Mr. Grylls: Perhaps the right hon. Gentleman would be wrong to over-egg the pudding of hope—if I may use that expression—in regard to the NEB being able to do a lot in the Northern region. In the first five years of the life of the NEB, when the Labour Government were in office, unemployment soared in the North-East and the NEB did very little about it. It was not able to do much about it and probably is not able to do much now.
    Mr. Orme: I am not suggesting that the NEB can automatically solve all these problems. It will be very difficult to solve some of the regional problems. If I may
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    digress for a moment, it is obvious that Liverpool stands out as a city with problems because of its geographical position and the fact that it has been left behind in the new industrial revolution, of which it has not been part.
    We have learnt from the problems of the Labour Government. We realise that not enough was done; that there was not enough intervention. I am not suggesting that one agency, the NEB, is the answer to the problems of the North-East, but it could be one of the factors in helping to resolve those problems. That is why the NEB needs to be expanded.
    While on the subject of the NEB and support for industry, I should like to ask the Secretary of State to comment on the position of International Computers Ltd. which is reported today in the Financial Times. The shares of that company have been sold off. Now it is in dire circumstances. Apparently the Department of Industry is not prepared to comment at the present time. The Secretary of State ought to make a statement very soon to the House—if not this evening—about the position of ICL. My hon. Friend the Member for Whitehaven (Dr. Cunningham) will have something to say about that when he winds up for the Opposition.
    Many of us have received a letter today from the convener of Talbot UK at Linwood concerning the position there, asking us to bring pressure on the Peugeot-Citroen group from the Department of Industry to ensure its future. It is no good the Government talking of fetching in fresh investment if the investment that has come in is allowed to go. That is the crucial point. Will the Secretary of State, or the Minister, in replying to the debate, say something about the Talbot situation? The problem that has arisen in the North-East could occur in Scotland.
    Mr. Budgen: Is the right hon. Gentleman in favour of further subsidies for the Linwood plant? If so, does he favour further support for De Lorean and for Nissan? If so, would he then be in favour of a general subsidy for all car producers? According to his philosophy, some element of equality, it seems, should be brought into this situation so that all get fair shares at the trough.
    Mr. Orme: The workers who have written about this situation have not written on a philosophical basis. They are writing about their jobs, their families and their futures. They are demanding a future with jobs and saying "Give us the robots. We are prepared to work. We are prepared to negotiate." They are not asking simply for a handout. They are asking for consultation and for agreement to be reached.
    I believe that the Government should intervene. I believe that the Government, together with the people who work in this plant, can play a major part in keeping it going.
    The Prime Minister was asked by Brian Walden about Talbot and ICL. She replied:
    "If they're slap right in the Midlands or if they're slap right in a non-development area, they do not qualify under existing legislation."
    Brian Walden then asked:
    "And they won't get it?"
    The Prime Minister replied:
    "And they won't get it. If in fact they're in the development areas they already qualify for help".
    Will the Government give help to Talbot at Linwood. Will they give help to ICL? Will they try to assist in the Tate and Lyle situation in Liverpool?
    Mr. Budgen: Is the right hon. Gentleman in favour?
    Mr. Orme: I am in favour not just of protecting jobs. That is the first thing. I am in favour of protecting the industrial base within our society which is being dangerously narrowed. It does not matter whether one comes from the North-East, Scotland or Wales, from Greater Manchester, Liverpool or parts of the Midlands. These are problems that the Government have to face. They are not facing them. We want some answers.
    Mr. Tebbit: I am not sure that I can offer the right hon. Gentleman an answer. Has he worked out how much he proposes should be spent on these matters and from where the money will be raised? Will it mean income tax at 95p or 105p in the pound by the time he has finished?
    Mr. Orme: The Minister is being silly. I am saying that these matters have to be considered, and that there has to be consultation. Of course, they have to be costed. One has to do what has been done with British Leyland. But the Government have to take some action, and they are not taking it at the present time.
    Mr. Tebbit: I hope that the right hon. Gentleman realises that we cannot spend the same pounds twice over. The very fact that we have invested these vast sums, or are proposing to do so, in Leyland may preclude others from receiving assistance. There is not an unending supply of resources to invest in companies that consume rather than create wealth.
    Mr. Orme: There are the North Sea oil revenues. Instead of using them for tax handouts for the better-off, the Government should use them for industry.
    I wish to draw the attention of the House to what has happened to the manufacturing base since the Government came to office. United Kingdom manufacturing production has fallen by 16·5 per cent., or one-sixth, since the Tories came to power in May 1979. This decline has more than eliminated all the growth achieved in the 1970s. Current levels of manufacturing production are the lowest since the 1960s. The rate of decline is unprecedented. The fall of output in the period 1979–81 is almost certain to be greater than that experienced in the slump between 1929 and 1931.
    Mr. Adley: On a point of order, Mr. Deputy Speaker. Are you content that we should develop this discussion into a general economic debate?
    Mr. Deputy Speaker (Mr. Bryant Godman Irvine): We are dealing with amendment No. 5, in page 1, line 10.
    Mr. Orme: I did not expect the hon. Member for Christchurch and Lymington (Mr. Adley), of all people, to try to silence debate in this House. I am talking about intervention and what the National Enterprise Board can do. We are talking about the NEB in this Bill.
    The recent slump in manufacturing output is unmatched anywhere in the industrial world. Our slump is greater than that in any other industrialised nation. We cannot stand by in a complacent manner. We need action. We need intervention. We have had some intervention through British Leyland. No doubt we shall get it through the steel corporate plan in a short time. I would say to the Secretary of State and to the Government that if we are not careful we shall reach a position in which British industry will not be able to recover. When the upturn comes, we shall not have the skilled labour and the manufacturing capacity. That must be a matter of serious concern to hon. Members on whichever side of the House they sit.
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    I make no apology for raising these issues in the manner that I have done on the Floor of the House. Time is running short. It is time for action. It is time that this Government took action.
    Mr. Grylls: In proposing this amendment, my hon. Friend the Minister of State trod a delicate path. Those of us who have advanced a slightly different view are sympathetic to the difficult decision that the Government had to take. It must have been a difficult decision for the previous Government and an even more difficult one for this Government. I hope that no one on the Conservative Benches will think that any remarks of mine mean that I propose that Leyland should be closed, or anything as ridiculous as that. There are, however, a number of us who have said that we believe that the Government should look more closely, and should still look more closely, at the possibility of an earlier return to the market of certain parts of British Leyland. That would ease the burden on the taxpayer and on Government borrowing. I do believe that there is a middle way. I beg the Government to go on looking at this matter during the time of the current Leyland corporate plan.
    Many of the problems that Leyland has so far not succeeded in solving will not be solved by money. Throwing money at Leyland is not the cure-all. I appreciate that to develop new models requires money. However, far too much of the £1,300 million put into Leyland since January 1975 has gone to meet losses, and those losses have increased. I should still say the same if Leyland was moving towards profit, but it is moving towards increasing losses. The loss for the 12 months up to June 1980 was £317 million, which is almost exactly equivalent to the sum that my right hon. Friend agreed on 19 December 1979 to put into BL. Instead of going to investment, that money has gone to meet losses.
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    Leyland, with the £1,300 million that has gone to it in the past five years, should have been able to produce four or five new models, which would have put it in a healthy financial position today such that it would be making a profit. I know that it is difficult, but I ask the Government to exert as much influence as they can upon BL to put its house in order by real improvements in productivity and further demanning. BL still has too many people. I do not underestimate the success of Sir Michael Edwardes in reducing BL's overall manpower without a major bust-up. However, those who wish BL well believe that he must go further. The losses indicate that far too many people are producing a relatively small number of cars, especially compared with the number in 1972, for example.
    I approve of the transfer of responsibility from the NEB to the Department of Industry. BL will continue for some years to be a massive problem for the Government, and it is realistic that the major decisions should be considered by the Cabinet. However, the Government should be monitoring its performance in manning, productivity, and so on. There is concern about how that will be done. Far be it from anyone on the Conservative Benches to propose greater bureaucracy in the Department of Industry. However, if we are putting in the gigantic sum of nearly £1,000 million over two years, the company's performance must be carefully monitored. I hope that my hon. Friend will deal with that point.
    Amendment No. 5 concerns the reduction in the NEB's borrowing limit. It may sound strange for me to quibble

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    about the reduction. However, it is largely cosmetic. The reduction arises out of the removal of BL from the responsibility of the NEB, so we are talking only of the companies remaining, most of which are relatively small. Why does the NEB still have to have a borrowing limit of up to £750 million? ICL and Ferranti have been floated off and Alfred Herbert has been put into liquidation. At the end of 1979, the total borrowings of the subsidiaries of the board were £268·5 million. I hope that that figure has not increased much during 1980. Why, therefore, does the ceiling need to be as high as £750 million?
    On 20 December 1979 the Secretary of State quoted a letter from the chairman of BL, stating:
    "The board will monitor progress very closely, and if shortfalls in performance place the achievement of the Plan in jeopardy, then the Board consider that they will have no option but to abandon the Plan."—[Official Report, 20 December 1979; Vol. 976, c. 894.]
    The 1979–80 plan has fallen below what was expected.
    On 26 January 1981 the Secretary of State quoted another letter from Sir Michael Edwardes, giving the assurance that if the new plan over the next two years falls below par it will not be proceeded with. The first assurance was not worth very much. Not only did the plan continue; it was doubled in size. I hope, therefore, that the Government will tell BL that they are watching it very closely and reporting to the House during the operation of the plan. As guardians of the taxpayers' money, we should have at least some idea of what is going on.
    I hope that the Government will tell BL that the House takes its letter seriously. It states:
    "Circumstances may arise in which, through a substantial deviation in performance or an appreciable departure from the assumptons underlying it, the Corporate Plan is clearly not being achieved and it appears impossible to bring about recovery within the timescale envisaged."—[Official Report, 26 January 1981; Vol. 997, c. 644.]
    I shall not weary the House by reading on. The letter then states that BL would therefore not proceed with the plan. I hope that the Government will hold BL firmly to that undertaking. We should ensure that during the next two years BL at least meets the bench marks that it says it will. We can then be assured that it is moving towards a profitable position.
    Mr. Park: Like my right hon. Friend the Member for Salford, West (Mr. Ornie), I welcome the Government's proposals to fund British Leyland and the necessary adjustments from one account to another.
    The Minister gave a fair account of the reasons why the Government came to that decision, much to the dismay of some of his colleagues. He highlighted the fact that BL and its work force had increased production dramatically, had accepted moderate wage increases over a three-year period, had accepted massive redundancies and had successfully introduced a new car that on all counts is a success.
    Those who ask why Leyland has not produced more new models in the past two or three years do not understand that the gestation period for a model is about five years. It is accepted wisdom in the car trade that as one new model is introduced the next must be on the drawing board or there will be trouble sooner or later. Leyland should now be given the opportunity to get on with coping with its day-to-day problems without the spotlight of publicity constantly on it, turning over the bricks to see what is underneath. Let us give it the same opportunity as the private industry to solve its problems
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    and become a success. Indeed, given the expression of confidence in its future I am sure that it will become successful.
    When the Secretary of State made the announcement it sounded as if there had been a death in the family. As it was a message of hope, he need not have been so doleful. The same atmosphere prevails in the National Enterprise Board. One feels as if one is in the presence of a dying body. The spirit has gone out of it. No wonder! It has been chopped off at the knees, while industry languishes for lack of investment capital.
    The Secretary of State now proposes to reduce the inadequate amount of money available by reducing the function and scope of the NEB. That would be understandable if private investors were lining up to invest, but they are not. They prefer to put their money anywhere but in industry. There is no shortage of money. The country is awash with money which is held by the banks and institutions, but there is a marked reluctance to put it into industry. There is an absence of that commodity that is laughingly called "risk capital". Investors do not want to take any risks. Conservative Members continually say that they want guarantees. That great entrepreneurial spirit is conspicuous by its absence.
    While this situation prevails there will be no money to research and develop the products on which the future of our country depends. Government Departments seem to be falling over each other to tighten the noose round the neck of industry. Research and development cannot be carried about without skill and ability. The Secretary of State for Employment suggested that the engineering and other training boards should be funded by industry, yet industry is struggling to stay alive. The Department of Energy increased the cost of energy. As a result, companies that use a lot of gas not only have to pay more for it, but see their profits being syphoned off through the back door of taxation.
    The Department of Health and Social Security suggested that industry should be responsible for the first few weeks of a worker's illness. The Treasury has weighed in and has dismantled exchange controls. It would seem that the Government are conspiring to reduce industry to a wasteland. When that expression was first used in this House it was regarded as an exaggeration. In the West Midlands, 50 people chase every job. That phrase is no longer an exaggeration, nor is its use confined to old companies. Indeed, such companies may need to be renewed and to produce new goods. But new industries, such as the electronics industry, also face problems. They cannot get the necessary funds and are being driven into the hands of receivers. That is a sad comment on the spirit of enterprise that we once had, and that I hope we shall regain.
    6.15 pm
    Mention has been made of Talbot. The hon. Member for Wolverhampton, South-West (Mr. Budgen) asked my right hon. Friend the Member for Salford, West if he wanted all the car firms to have a fair share of the trough. The decision to allow Nissan to develop in this country is fraught with difficulty. Given the present high levels of unemployment, I well understand the desire to snatch at anything that might provide jobs. I would not reject the decision to put a Nissan factory in the Midlands—not in a green field site—where people know something about making cars.

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    All the leaders in the car industry confirm that that industry suffers from overcapacity. If the Nissan factory is to be sited on a green field site in an assisted area, the Government will probably give considerable grants to that company. Instead of introducing this Japanese Trojan horse, would it not make more sense to give assistance to other multinational companies that are already established in Britain?
    We in the West Midlands keep being told to pull ourselves up by our bootstraps. Unfortunately, those bootstraps are badly frayed and if we put any pressure on them they will snap completely. It might be possible to give assistance to Linwood because that plant is in an assisted area. Let the factory have some new equipment. The workers at Linwood, and in Talbot generally, are worried because there has been little or no investment since Peugeot took over. Linwood is still using equipment that was lifted from Coventry after it had done sterling duty producing Avengers. That equipment was lifted lock, stock and barrel and was put into the factory at Linwood. That factory has been using it for a decade or more.
    The equipment at Linwood is well clapped out by now. Nevertheless, at Linwood—as elsewhere in Talbot—production levels have been maintained and improved. By general agreement, the quality is better than that found in France. A case can be made for helping Talbot, even within the guidelines that the Prime Minister laid down. If the Government could bring themselves to give Linwood such assistance, it would provide a degree of flexibility and encouragement to do something in the Midlands, in Luton, and in Dunstable, and a completely new company need not be brought in.
    The Government are wondering whether the Japanese will help ICL. Everyone agrees that our economic recovery must depend on a sound capital base. A large proportion of that base must come from the Government, because the private institutions and the banks have shown a lack of enterprise as regards investing any money. Industry may be failing, but the money world is doing very nicely, not as a result of any enterprise that it has shown, but solely as a result of high interest rates and a highvalued pound.
    Sooner or later we must realise that the prosperity of this country cannot depend purely on juggling with money. We must realise that there are other aspects, including the production of goods which can be sold for a profit and which will provide the money to achieve our social objectives. The Government should seriously consider all aspects of their policy which do not lead in that direction.
    Mr. Hal Miller: It is always a pleasure to take up the remarks of the hon. Member for Coventry, North-East (Mr. Park), a fellow Midlander and joint chairman with me of the all-party motor industry group. I share very much the hon. Gentleman's concern about capacity and I shall turn to that in the course of my remarks.
    I begin by observing that my hon. Friend the Minister of State is in an unusually sunny and civil mood, which is a welcome augury for the debate. I am tempted to wonder whether he has drawn comfort from the motto on my favourite tin of syrup—namely:
    "Out of the strong came forth sweetness."
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    I hope that it will not disturb my hon. Friend's mood if I venture to say what a comfort it is to me, as an exceptionally loyal supporter of the Government and member of the Conservative Party, to find that the party is now in step with me on assistance for BL after one or two unhappy passages in the previous Parliament. My hon. Friend may be somewhat surprised to learn that later in my remarks there will be a note of criticism of the way in which the Government disburse public money.
    I welcome the Government's recognition of what has been achieved at BL, which alone gives a realistic prospect for future success, of which my hon. Friend spoke. Even more, I welcome the recognition in all parts of the company that it must be competitive to survive.
    There is a success story starting to be told with the launch of the Metro, as the hon. Member for Coventry, North-East suggested. The success of that production has led already to increased employment. Even more important from the point of view of those working in the industry, it has led to a substantial increase in wages through bonus payments, which were up to £12 last week and are increasing to as much as £15 if the present rate of production is held. That shows the way forward to the high output-high wage economy to which I most certainly subscribe. I believe that that is the only sure hope for our future prosperity.
    More importantly, the Metro has re-established the credibility of BL, the credibility of a company with its customers who must come first. It is no good making something if no one is prepared to buy it. That is where I take issue with the right hon. Member for Salford, West (Mr. Orme). The Metro has re-established credibility with customers, and included in that process is the successful launch of the T45 truck. Credibility with dealers is essential to the selling of the product. There must be credibility with the taxpayer as demonstrated by the Government. Most important, there must be credibility for the purpose of the company establishing collaboration with other manufacturing companies.
    At this juncture I refer to overcapacity in the British industry and the structure of the industry. Throughout the world motor manufacturing is going through a sudden and sharp change that has given rise to a great disturbance in the United States and in many EEC countries. We are well aware of the difficulties of Chrysler in the United States. The conditions imposed by the United States Government for the injection of public funds and the guaranteeing by the Government of borrowings are considerably more severe than those that have been imposed on BL.
    There is a great change taking place in the world motor industry and it is impossible to buck the trend. I know from my own constituency over the past 10 years how the wages of car workers have suffered. When I first went there—the hon. Member for Birmingham, Stechford (Mr. Davis) will happily recall his first win—car workers were the highest paid workers in Britain engaged in volume manufacturing. At present they are the lowest paid in that sector, despite the efforts of the many Governments who have been in office over the past 10 years and the various policies that have been followed. As I have said, there is no way of bucking the long-term trend of the contraction of the industry and the need to re-equip it with the new and different cars that customers are prepared to buy.
    Some collaboration will be essential for the survival, let alone the success, of BL and for the future of motor manufacture in Britain. I have been insistent on

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    collaboration in the House for the past four years. There was general agreement in a debate on the Consolidated Fund Bill in 1979, and I am glad at last to see recognition of the need to collaborate both in the company and in my hon. Friend's remarks. We must take account of what is going on in the rest of the world.
    I turn to the Nissan deal and Japanese imports. On the tapes this afternoon as I was entering the Chamber there was a report that the JAMA-SSMT talks in Lisbon had broken down without any guidelines being agreed. My understanding is that an agreed statement was issued at the conclusion of the talks that most significantly referred to the adoption of even more prudent marketing in the current year. It contained the welcome indication that there would be quarterly reviews of not only the state of the market in Britain but of shipments from Japan. That is most important because we are to put £1 billion of taxpayers' money into a company without taking any action to ascertain whether there is a reasonable market for the ensuing production.
    I have been involved in free trade long enough. I used to be responsible for trade relations in the Hong Kong Government, so I understand something about free trade. However, we do not enjoy free and fair trade in motor vehicles with the Iron Curtain countries, with Japan or with countries such as Spain. To allow our investment to be endangered by unfair trade seems to be without any logic and to be lacking even in political good sense.
    I raised certain doubts following the statement on the Nissan deal which in subsequent discussion with the industry have been reinforced. There must be some concern about the nature of the project. It was stated that there would be the production of 200,000 cars a year. That is nearly half the worldwide production of BL cars at present. Where is the market for this one model? One can imagine the effect that that will have, let alone the introduction of a second model, which must be envisaged from the size of the site that is required. It seems far from clear that our fellow members of the Common Market will accept these cars, especially when there is as yet no clear undertaking on the volume of imports from Japan into the EEC. If these cars are not to be exported freely, that must gravely jeopardise not only companies such as Talbot, which the Member for Coventry, North-East mentioned, but the whole of the public investment put into BL. Indeed, if there were that willingness by an outside investor to produce a new model, presumably the same size as the LC10, in comparable quantities, some of my hon. Friends might well ask why the Government are putting money into BL to produce it at all.
    6.30 pm
    I am trying to be brief, but this is a most important subject. I turn to the need for some clear industrial policy. "Strategy" is perhaps rather a grand word. I believe that there must be very grave concern about the continuing availability of support for anybody who wishes to establish a car, lorry or bus plant in this country. Apparently, so long as he goes to a development or special development area, such a person is eligible for assistance—never mind with whom he is competing, what is the basis for the competition, or whether he intends to use any components made in this country at all.
    My hon. Friend the Member for Surrey, North West (Mr. Grylls), the chairman of the Conservative committee on industry, referred to monitoring. I am not at all satisfied
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    that monitoring will be improved by moving BL from the NEB to the purview of the Department. Indeed, I am not happy about the prospect that there might be political interference and further detailed questioning which the right hon. Member for Salford, West seemed to intimate might arise. Certainly, many of us in all parts of the House might wish to start poking our noses into detailed questions, which I think that my hon. Friend would find it very hard to resist now that he has assumed direct control.
    I return to the question of monitoring. How is the undertaking given by Nissan in respect of components to be monitored? One does not need to be very familiar with the industry to see the possibility of a claim that no components of suitable specification, size or delivery were available being used to avoid whatever undertaking or understanding might have been arrived at on a Government to Government or Government to Nissan basis. This is a most important matter. Unless the Nissan plant has free export into Europe and uses a very substantial quantity—I set it as high as 80 per cent.—of United Kingdom or EEC components from the start, I see very little prospect of there not being substantial derogation from the viability of the new LC10, and it must surely lead to the closure of Talbot and other multinational assembly plants in this country.
    I differ from the hon. Member for Coventry, North East on this point. My understanding is that the Government assistance is available to Talbot at the moment if Talbot or Peugeot showed any interest in putting in an additional plant. But I do not see how Opposition Members can argue that there should be more Government investment in a Talbot company which the owners themselves do not even wish to be made. I have tried to suggest that the future lies in fewer models in much greater volume. That decision must be for the Peugeot company itself to make.
    On the need for industrial policy, may I briefly express concern about diesel engines, in view of the degradation of fuel that is already taking place and the prospects for exports if rougher, cruder fuel cannot be used for our engines. In the United States, General Motors has already stated that it thinks that up to 80 per cent. of small and medium passenger cars will be diesel-fitted by the end of four years and has just dedicated two entire plants to that purpose. It is not clear to me from the BL plan that there is to be any development of that sort here. I believe that that is a very necessary subject for the Government to inquire into in their discussions with the firm, and relating also to Perkins.
    In conclusion, I welcome the announcement made last week and the Government's decision, while registering my concern that there is not an adequate framework of policy to support it. Indeed, I believe that the funds could have been more limited and more conditioned than they were. I welcome the fact that the lie is being comprehensively given to rumours spread by political opponents in the Midlands that the Government cared nothing for the future of the industry or of that region. But most of all, I welcome the confidence that has been given to everybody working in the industry, to the customers and to the dealers.
    Mr. Maxton: I wish to follow briefly the remarks of the hon. Member for Bromsgrove and Redditch (Mr. Miller) and to make one point about the Talbot operation, in terms of Linwood in particular. The hon. Gentleman asked why the Government should give money to Talbot

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    when Talbot is not even asking for that money. Those of us who have taken any interest in the Peugeot operation, and the change to Talbot as opposed to Chrysler, are well aware that Peugeot does not really wish to continue manufacturing in this country. Its interest in taking over the Chrysler operation was to obtain the sales franchises and outlets rather than the manufacturing capability. But that, of course, is neither the concern of the Opposition nor, I am sure, that of the Government.
    We are concerned about the problem of employment. I am especially concerned about Linwood, as many of my constituents work there. We are concerned about the effects that the closure of the Talbot manufacturing operation in Britain would have upon employment, particlarly in the West of Scotland, where the roll-on effect would be disastrous in an area already suffering nearly 15 per cent. unemployment.
    I therefore hope that the Government will take every possible measure to ensure that the agreements reached between the Labour Government and Chrysler, and the later agreements reached when Peugeot took over, are maintained and fulfilled, and that if extra money is required to maintain that operation, it will take place and the money will be given.
    I turn to a comment made by the hon. Member for Bromsgrove and Redditch and by my hon. Friend the Member for Coventry, North-East (Mr. Park) about the Nissan operation coming to this country. I share many of their reservations. But before finally making up my mind about whether the Nissan operation is a good one or not, I should like a clear answer from the Minister to the question put by the hon. Member for Bromsgrove and Redditch about the quantities of United Kingdom components to be used by Nissan. The hon. Gentleman referred to United Kingdom and EEC components, but I would limit it to the United Kingdom. Furthermore, I should like to know what guarantees the Government have obtained from Nissan that it will use British steel in its operation and will not import steel either from Europe or, less likely perhaps, from Japan. We should certainly have some kind of guarantee from the Government that it is not just a matter of the immediate employment of some workers by Nissan—which would probably have a roll-on effect and cause further unemployment elsewhere in the car industry, as a result of which there would be no great benefit—but that there will be employment benefits in the steel and components sectors as well. I hope that the Minister can give answers to those questions.
    Like my hon. Friends, I welcome what the Government are doing for British Leyland. As my right hon. Friend the Member for Salford, West (Mr. Orme) said, the collapse and fold-up of British Leyland would have the most disastrous effects on unemployment. We can all bandy figures around, but it is clear that such a collapse would have a massive and direct effect on unemployment which would continue for a long time.
    I assure hon. Members that in the West of Scotland shops are now being boarded up, because income levels have dropped so dramatically in the area that they can no longer sustain themselves and are no longer viable. They too, like manufacturing industry, are laying off staff, as a result of which unemployment rolls on dramatically. It would do so even more if there was a collapse of the size of British Leyland.
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    Some Conservative Members have criticised the Secretary of State for giving this aid. I advise them "When the high priest of your religion shows doubts about his religion, even if only in his actions and not his words, perhaps it is time that the acolytes considered whether that religion is right." It is not the wet in the Cabinet who has come forward with this proposal, but someone who until recently clearly set his face against State intervention of any sort. He has always relied on, and been given, the support of Conservative Members who are now expressing opposition to this move.
    I shall conclude, even though, Mr. Speaker, I rarely have the privilege of speaking in the Chamber when you are in the Chair. We should like to know a little more about the Government's long-term intentions for the NEB. Along with the SDA and WDA, the NEB is undoubtedly suffering from a feeling that it is not getting Government support. It feels that the Government do not believe in what it is doing. It is, therefore, much more difficult for the NEB to continue its work.
    These amendments limit the NEB's ability to finance industry. Only through Government intervention and investment in industry will we see the turn-round in the British economy which is required. I hope that the Minister will tell us how he envisages the future role of the NEB, bearing in mind the limited investment which the Government will allow it.
    Mr. Hill: I sympathise with my right hon. Friend the Secretary of State and my hon. Friend the Minister of State, because they have been put in the unfortunate position of having not only a genie on their backs, like Sinbad, but several albatrosses as well. In fact, the whole Department of Industry must from time to time be shaken to the core by the demands of the nationalised industries for more and more money.
    I realise that the decision which has been made in respect of the BL corporate plan, the decision that will have to be made on the corporate plan of British Steel and many other decisions, have been reluctantly forced upon the Government. The hon. Member for Glasgow, Cathcart (Mr. Maxton) said that the high priest of Conservative economic policy had changed his mind. It would have been as well had the hon. Gentleman kept quiet. The country is in a terrible situation as a result of bad labour relations in the past. Between 1974 and 1977, British Leyland lost more than 1 million cars in production, which means a loss from possible profits of between £2 billion and £3 billion.
    British Leyland has put forward a corporate plan which is probably more simplified than the one put forward some time ago. Indeed, we all wish Sir Michael Edwardes, his labour force and his management team, every success because this is one obligation that we shall not be able to ditch; nor would we wish to do so. All we want is proper accountability. We want to ensure that Sir Michael Edwardes keeps to his promises. We sincerely hope that the £1,500 million which will be earmarked for British Leyland will be sufficient to return the company to profitability.
    I wish to refer mainly to the NEB. At times, it has been maligned. Certainly, the previous chairman, Sir Arthur Knight, took much stick. He did his best in difficult circumstances. The new chairman of the NEB now has a much simpler task.

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    6.45 pm
    The Bill wipes out the NEB's "overdraft figure" of £40 million. It also gives it a new obligation in respect of small businesses. It can advance up to £50,000 to each small business. Sir Arthur Knight must have started this chain of thought, because once when I met him he was concerned about the fact the small businesses were hunting for finance mainly in the area of £50,000 or less. At that time, few banks were assisting high-risk business, high technology in particular. Therefore, the NEB has a new role to play in this regard.
    The hon. Member for Coventry, North-East (Mr. Park) said that he thought that the Secretary of State had chopped off the NEB at the knees—[HON. MEMBERS: "He has chopped it off at the waist".] He has done quite the reverse. He has given it a new breath of life. It is now starting as a completely new business with its overdraft cancelled. Again, although the new NEB board will have a smaller commitment, we hope that it will be able to return some of the 60 companies under its control to a profitable position so that they can be sold in the market place. We hope that the board will work towards the day when it will have no further obligations within those 60 companies.
    I still maintain that the NEB will have a minor role to play in the future in supporting small businesses. Until the merchant banking system and the clearing banks take up the slack, there will be a role for the NEB in order to assist small businesses.
    There has been a great deal of talk concerning jobs. Of course, one man's job is another man's unemployment. If my right hon. Friend gives £1,000 million to the Midlands, one must ask whether he can spare further money for an area such as Southampton. Although the Southampton area has not suffered from great unemployment, unemployment there is certainly growing, and we should bear in mind that an area such as mine, through its taxpayers, will have to bear some of the burden for that £1,000 million. Therefore, we should always be compassionate for other hon. Members whose areas are not enjoying the fruits of the latest distribution.
    I am particularly concerned about jobs for the young, and feel that the direction of those youngsters is being neglected. Clause 6, though small, is significant. In embryo form, it does what I am sure the House wants. It states:
    "The Secretary of State may make such grants or loans to any body, as he considers appropriate for the purpose of assisting in—

    (a) the promotion of the practice of engineering;

    (b) the encouragement and improvement of links between industry, or any part of industry, and bodies or individuals concerned with education;

    (c) the encouragement of young persons and others to take up careers in industry, or in any part of industry, and to pursue appropriate educational courses."

    In Committee we discussed this very thoroughly when we were discussing the role of the NEB. If we are in the future to have a viable British Leyland and a viable Rolls-Royce, and if we are to compete with the Community or Japan—we seem to be becoming more blood brothers than competitors—we must redirect more money into the education of youngsters in the engineering field.
    Mr. Maxton: If the hon. Member cares to read the explanatory and financial memorandum on clause 6 he will see that the Government intend to put no extra money whatsoever into this area.
    Mr. Hill: I did read that and I made the point that it would be hard to contain any programme of education within a £1 million allocation. Indeed, I mentioned that there would have to be liaison between the Department of Education and Science and the Department of Industry and that £1 million would not be sufficient, but obviously it would be possible for other funds from the NEB perhaps to be redirected into clause 6. That would be a matter of interdepartmental accounting. I agree, though, that we have a problem here inasmuch as we now have a Bill spending in the next five years £5,250 million. It is increasingly difficult for Conservatives in my area who are not enjoying any of these rather good subsidies to be able to reconcile that with the fact that we have to cut back in other areas.
    I am sure that within a very short time British Leyland will become profitable. I am increasingly worried about Rolls-Royce, because we have not had any statement of accounts and we have no way to judge how the £2,000 million will be spent. Nevertherless, I am sure we will have that explained thoroughly at the end of the debate. From being a very reluctant opponent of the Bill—certainly in Committee I had some moments of great regret that I seemed to be the only one in the room who was not agreeing with the Secretary of State and with the Opposition spokesman; it seemed to me a very lonely place—I realise that perhaps I was over-reacting and that the albatrosses that my right hon. Friend the Secretary of State has to bear have to be borne by all of us. I am sure we all wish Sir Michael Edwardes and the new chairman of the National Enterprise Board well. If we have to come back to discuss this matter in a year's time, I hope that there will be more light at the end of the tunnel.
    Mr. David Penhaligon: I think we have underestimated the sum we are talking about here today. The £1,000 million for British Leyland could probably build a motorway from Land's End to Birmingham, although I cannot think of any logical reason why one should be built. It represents £1 a second for the next 30 years, an incredible sum of money for British Leyland. There can be no doubt about that. Given the position in which the Government find themselves, their decision to back this recovery plan must be right. The position has been caused partly by the Government's policies leading to rising unemployment and doubt about the industrial fabric of this country.
    The number of interventions made by hon. Members representing areas protesting most about high unemployment has been noticeable. I represent a constituency in which there is over 16 per cent. male unemployment. Yet, unless one takes the most remote parts, not one farthing will actually go to areas like mine. I am not against help being given, but it is worth making the point that this very large sum of money will probably not go to the areas to which one would direct it if one had £1,000 million with which to do something about unemployment.
    I am not as optimistic as many that the plan in itself will succeed. I take the view that unless there is a substantial change in the current international value of the pound the plan will fail. I go farther than that to express the view that the Government should concentrate their mind on what we can do as a country in order to reduce the international value of the pound. For many years we have maintained exchange control on our currency in order to try to keep the value of the pound at a reasonable level. I can see no

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    reason why controls like that could not be reversed. I still find it incredible that we do not differentiate between money coming into Britain for real investment, of which we would all approve, and money coming in just to take advantage of the relative security given by our North Sea oil asset and high interest rates on gilts and such like.
    Mr. Tebbit: I am interested in the hon. Member's views on exchange control. Does he think that exchange control, when it was used to try to keep the pound up to $2·80, was successful? If not, why does he think that reverse exchange control would be successful in keeping the pound below $2·40?
    Mr. Penhaligon: It clearly was not successful in that in the end the pound had to be revalued. There are a number who would argue that we might have been better off if we had recognised reality a little earlier on that occasion and allowed the pound to change its mind. There is no doubt that exchange control had an effect. It had the effect of holding the pound at a generally higher level than it might have been otherwise. I see no reason why such controls could not be operated in reverse at the moment.
    The problem that Britain faces is that we are the only industrial country of any significance in the world that has suddenly got an oil surplus on its hands. Most of this debate today about British Steel and about the whole of the industrial decline which is taking place in all our constituencies shows the miserable failure on our part to grapple with the economic consequences of the oil phenomenon. People overseas can see that we are one of the few industrial countries not directly affected by international increases in the price of oil. They therefore think that this is a safe haven in which to put their money. The relative exchange rate shift that has taken place because of that is what we are discussing today. At least half of this money required by British Leyland has been due solely to that fact.
    The second reason for my lack of optimism about the long-term recovery of British Leyland is industrial relations. A lot has been said, fairly, about the massive improvement that has taken place. I have spoken of the current management methods of British Leyland as "12 bore management" in that, in effect, it is continually saying to the work force that if it does not co-operate with this plan, sensible though it might be—I am not sufficiently involved with the company to know one way or the other—it will shoot the work force with a 12 bore gun.
    If this recovery is to take place the day must come when such an argument is no longer credible. We all want British Leyland to make substantial profits. The hon. Member for Southampton, Test (Mr. Hill) expressed great confidence that that day may well arrive; we must all hope for that. If we are on the way to that situation the argument can no longer be made that if there is a strike next week that will be the final straw that will break the camel's back and that the company will go under. There is no reason to believe that there is a real change in attitude in the large British Leyland factories sufficient to give us confidence that the problems will not reappear the moment the company gains some credibility and financial stability.
    I see no reason why bits cannot be sold. I reject the official Opposition's argument about the size of British Leyland. I recall that the economy of size argument
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    created British Leyland in the first place. I am not wildly impressed with its record in the last five or 10 years. I see no reason why the management should not be able to acquire a small car outfit. Equally, I see no reason why such enterprises cannot be sold off.
    7 pm
    I do not criticise the Opposition's desire for the Government to be involved in saving industry. However, their attitude is that never, in any circumstances, will they get rid of anything which they have acquired. That can only result in the Government eventually owning the entire industrial network. I am not in favour of that. Although I believe that the Government have a strong role to play, I do not wish to see that role used greatly to increase Government-owned industrial fabric. I see no reason why a part of British Leyland should not be sold if a customer is available.
    I wish the company well. We would do more for British Leyland, more for industry in my constituency and throughout the land if we concentrated on what we can do about the international value of the pound. I have outlined a number of options before. We could influence the international value of the pound. Some actions would be more effective than others. There is no point in denying the possibilities. I do not doubt that we could influence the value of the pound. That would do more to help industry than throwing pound notes at windmills—which seems to be the Government's current policy.
    Mr. Bruce-Gardyne: A wonderful thing about the latter-day Liberals is that they cannot see anything without yearning to control it. They are the most illiberal phenomena in the House. They want to control wages, prices and the exchange rate. When we tried to control the exchange rate upwards that was not successsful. If we try to control it downwards I doubt whether it would be any more successful.
    We could achieve a substantial fall in the exchange rate in one way by convincing the international currency markets that we have decided to abandon the struggle with inflation and to lie back and enjoy it. Then the exchange rate would not only move down; it would move out of sight.
    Mr. Penhaligon: Does the hon. Gentleman believe that one of industry's problems today as compared with two years ago is the escalating value of the pound? Does he accept that if there was a tendency for it to go down many sectors of industry would be helped to make a recovery?
    Mr. Bruce-Gardyne: That is probably true. I am concerned about the practicability of achieving that objective without abandoning the goal of abating inflation. I do not believe that it can be done. I know to what we should give the greatest priority. However, we must not go too far into the arcane mysteries of the exchange rate.
    I did not agree with everything that the right hon. Member for Salford, West (Mr. Orme) said. However, I agreed with him that the House must have a full account from the Secretary of State of the performance of Rolls-Royce. A daunting sum is to be allocated to British Leyland. An equally daunting sum is to be allocated to Rolls-Royce 1971 Limited. The evidence of Rolls-Royce's progress towards viability is no more tangible or visible than that of British Leyland.

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    As far as we can tell, the Rolls-Royce strategy has been to announce the orders that it gets. Whether the orders are profitable is neither here nor there. In view of the sums which once again the House is being asked to give to Rolls-Royce, I hope that my right hon. Friend will expand on the company's progress, if such it can be called. We need more information before we can be expected to vote for the sums in the Bill with equanimity.
    I turn to what the right hon. Member for Salford, West jeeringly described as the breathing space for BL. It must have the most expensive diaphragm in history. There has been a fair amount of talk about BL's performance. Although Sir Michael Edwardes informs us that BL's productivity is in accordance with the plan, last year vehicle output per man-year fell once again. Even more fundamentally preoccupying is the cash limit overrun which Sir Michael warned would call in question the 1980 plan, so-called in his celebrated letter to my right hon. Friend in December 1979. It was avoided at the expense of the cancellation of essential capital investment. In other words, the ice was just about ready to hold although at the expense of what the future might offer.
    I wish to comment on the exchange rate in the context of BL's corporate plan. If the daunting sums which the House is asked to approve are to be financed from an expansion of Government borrowing in 1981–82 and if that borrowing is not to be achieved by the simple expedient of printing it, interest rates will go higher than they would be otherwise.
    The relationship between interest rates and exchange rates is not predictable and sometimes it is perverse. However, in time I suspect that if interest rates go higher the exchange rate is likely to be higher than it would be with a lower rate of interest.
    If that is so, what we are doing has a certain element of circularity about it. We are told by Sir Michael Edwardes that the rock on which his attempts have foundered up to date is the wholly unexpected and intolerable level of the exchange rate. Therefore he must have more money. The consequence of his having more money could easily be that he will have to watch the rock on which his plans have foundered growing higher and higher in front of him.
    We should like an indication tonight—I put it no higher—of whether the Government regard the exchange rate suppositions which BL has written into its plans as being consistent with Government thinking. My hon. Friend gently chided me for calling upon the Government to speculate, as he put it, on the foreign exchange markets. He suggested that those of us who occasionally dabbled in newspapers had not shown much ability in that form of speculation in the past. I freely concede that many of us have had these matters wrong.
    It is not entirely a question of speculation. BL has presented a corporate plan which makes a crucial assumption—a significant drop of about 20 per cent. at current rates in the exchange rate over the next four years. Does that coincide with the Government's thinking or intentions? I hope very much that it does not, but it would be helpful if my hon. Friend would comment.
    I should like to mention the alternatives to what the House is being asked to approve tonight. My hon. Friend said that breaking up BL—the sale of potentially quickly profitable parts of the business—would not be in the interests of BL and would not assist its search for international partners.
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    Some of us are concerned about the interests of those other parts because we suspect that the future of businesses such as the bus and truck division, the special products division and the quality car division may be more encouraging away from British Leyland than when cobbled together with the mass car division. It is quite wrong of the right hon. Member for Salford, West (Mr. Orme) and others to imply that we have an exclusive choice between acceptance of Sir Michael Edwardes' plans, with the massive finance that they imply, or 400,000, 750,000 or 1 million on the dole.
    Those of us who suspect that the case for what I call disaggregation—it: is an ugly word but I cannot think of a better—of the company has not been given the consideration that it deserves, recognise that for many years we should need to sustain the mass car part of the business for a number of years until we can see what the future for that part of the business might be.
    Mr. Hal Miller: Does not my hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne) agree that it is quite possible that individual sections of British Leyland sold off in that way could attract more investment than it is possible to give them from the public sector but that there is a difficulty about the timing of the sale, especially now? Would not the board be a better judge of that than the Government?
    7.15 pm
    Mr. Bruce-Gardyne: I have a great deal of sympathy with the points that my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) has made. I entirely agree with my hon. Friend that the prospects for investment might be much better outside British Leyland. That is a sound point.
    I should be more confident about leaving the timing to the judgment of Sir Michael Edwardes if I did not have the impression, like some of my hon. Friends, that Sir Michael Edwardes is determined to hang on like a limpet to the business. The present timing might not be ideal, but I am concerned that we appear to have succumbed to the proposition that it is a choice between almost unlimited finance or closure. I do not think that the choice is as crude, simple and basic as that.
    I turn briefly to the extremely bizarre nature of some of the pronouncements, or leaks, that we have had in recent weeks about Government policy towards the motor car industry. My hon. Friend the Member for Bromsgrove and Redditch is a great enthusiast for an industrial strategy. Having watched from the sidelines the industrial strategy of the Labour Government, culminating in the wizard plan to give away a bunch of ships to the Poles as a disguise for lending them money that was needed to prop up their exchange rate, I have a measure of scepticism about industrial strategy. I do not think anyone would accuse my right hon. Friend the Secretary of State for Industry of indulging in anything along those lines with the motor car industry.
    Mr. Hal Miller: One part of the policy that I was suggesting would enable the Government to assess the needs of cash-hungry nationalised industry against what is available and needed elsewhere, and perhaps to give it less money. I was not trying to open the purse strings to every thing in sight. I was suggesting a policy against which the applications could be judged, as I suggested in the case of Talbot.
    Mr. Bruce-Gardyne: I was not accusing my hon. Friend—I should not dream of doing so—of suggesting that he would wish to open wide the coffers. I was making the point in passing that I am sceptical about the extent to which our right hon. and hon. Friends and the hardworking, painstaking civil servants who serve them are industrial strategists of the first water. That is not a charge that could be levelled at the Department of Industry.
    On Monday last week we were told that British Leyland would receive another £1,100 million. We were also told last week that the Northern Ireland Office was proceeding after all, having said it would not, to consider Mr. De Lorean's latest bid for another £10 million to pay his wage bills. The curious fact is that Mr. De Lorean wishes to compete with BL. One may have legitimate doubts about the likelihood of his ever doing any such thing, but that is what the £67 million he has received to date, and the £10 million he is apparently now demanding on account, are supposed to go towards.
    Within 24 hours of that we had newspaper confirmation that my right hon. Friend the Secretary of State for Scotland was waiting, with an ever-open cheque book, for the representatives of Peugeot to discuss the financial implications of—perhaps I should say their price for—continuing operations at Linwood to compete with BL.
    On Thursday we were told that Datsun was on its way. When my hon. Friend the Minister of State made the announcement he said that he was surprised that I took an apparently churlish view of the arrival of this great private enterprise concern committing its investment to our shores. I would not take any such churlish view if that was what it was doing. We all know, however, that it is looking at development areas and special development areas because it can get grants running to between £50 million and £70 million automatically and on the nod, without control being exercised by this House.
    That is not the end of it. It can also get support under sections 7 and 8 of one of the previous Industry Acts of this long and sorry series. I should be amazed if Datsun ended up with less than £100 million of taxpayers' money. To do what? To compete with BL, Peugeot and De Lorean. How long will it be, if Peugeot is satisfied, before Vauxhall comes along behind? So it goes on. I am in favour of competition, but competition in subsidy seems to me to be a contradiction in terms.
    I hope that my hon. Friend will be able to give some indication of what assurances we have had that Datsun will be allowed to sell throughout the European Community the products of a factory it establishes in this country. We shall need such assurances. As my hon. Friend the Member for Bromsgrove and Redditch pointed out, if Datsun cannot get into Europe the implications for BL in the United Kingdom market must be dire indeed. Of course, it is said that we are all part of the Common Market and why should not Datsun be able to get into Europe? The reason is that our French partners already regard this country as the soft underbelly of the Community through which every aspiring Japanese enterprise can enter.
    I should like to be assured that we have already ascertained to our full satisfaction that no obstacles will be placed in the way of exports by Datsun to France and Italy. I should like to be assured, and I am bound to confess that I should be mightily surprised to have that assurance.
    Mr. Terry Davis: I welcome the Government's decision to make this money avaiable to BL. It is the right decision, not only in the interests of the workers in BL and of the West Midlands region, but in the interests of the country as a whole. When the hon. Member for Truro (Mr. Penhaligon) complains that not a penny of the money will benefit places like Cornwall it is time that he was told that he is wrong. Put bluntly, unemployed car workers will not be going on holiday in Cornwall.
    I welcome the decision, although, for reasons that I shall explain, I regret that it is necessary for the Government to provide so much money for BL. I welcome also some sections of the document recently made available to us—the review of BL's performance in 1980, and the BL 1981 corporate plan. I especially welcome the table showing the improvement in productivity. The hon. Member for Knutsford (Mr. Bruce-Gardyne) complained that productivity had declined in 1980. The document makes clear that it would have improved if BL had been operating at full production. The hon. Gentleman will see from the paragraph that precedes the table that the reason BL was not operating at full production had nothing to do with industrial disputes, but had everything to do with the fall in demand. The reduction in the car and truck market was responsible for the decline in productivity in BL last year.
    This document is in some respects a better document than that which was presented to us a year ago. That is because it is not such a mixture of figures. At least this time we are given comparable figures on a full year, or, at worst, on a half year's results. We no longer have a mixture of figures comparing a full year with periods of six months, nine months or some other duration. However, the document is still not good enough, and I repeat the criticism I made last year about the way in which the information is presented to the House of Commons.
    In order to appraise the performance of BL in 1980 we need to compare the full year's figures with the figures for previous years. We also need to compare actual performance with the budget or target for 1980. I accept the point that has been made by successive Ministers in the past that it is not reasonable for the House of Commons to expect to be given the detailed budget and targets for BL or any other nationalised industry for the year ahead. I accept that that involves commercial confidence. However, I see no reason why we should not be told the target figures which the BL management put to the NEB and the Government a year ago for 1980 so that we could see the extent to which those targets were achieved or missed. In appraising the performance of a nationalised industry it is essential that we should compare achievement with aims.
    I was disappointed, therefore, that in his immediate reaction to my earlier intervention the Minister indicated that he did not think that it would be appropriate to have another debate about BL this year. I was not, however, surprised that he wanted to avoid such a debate. It is clear in the document that BL's failure to meet its targets for 1980 had nothing to do with industrial disputes. Many Conservatives will not want to debate BL in that context. BL's failure in financial terms in 1980 was the Government's fault. It is clear from the document, comparing what was said a year ago, that the failure, which gave rise to the need for the Government's investment, arose from the high exchange rate and its effect on the car market, especially the share of that market

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    taken by imports during 1980. It is not surprising that the Minister of State wants to avoid that fact coming out. I only hope that he will reconsider his decision and not seek to avoid that point so that when the full year's accounts are published we shall be able to debate them. If we do not have a debate on the Government's initiative, some of us will make sure that we try to raise the matter in one or other of our Adjournment debates. The poor performance of BL in 1980, as the Minister admitted, was due to economic factors that he described as being largely outside the company's control. That needs to be stated firmly in the House.
    7.30 pm
    Mr. Michael McNair-Wilson: I congratulate my hon. Friend the Minister of State on his appointment to that high office. I very much appreciated the robustness of his remarks. It could not have been easy for him to make such a speech this evening. He faced a singularly difficult situation and took what I believe to be the only course open to him. I also appreciated the honesty with which he spelt out the three choices which the Government felt they had to consider on the future of British Leyland.
    The Minister said, about the British Leyland corporate plan, that the Government accepted it because there was no point in second-guessing British Leyland experts and their predictions. That was a fair statement because—I hope that the Minister will forgive me for saying this—the Department of Industry has been singularly unsuccessful over the years in monitoring the expenditure of public money on great projects.
    Whether we cast our minds back to the Concorde saga when the original estimated cost of £80 million to the British taxpayer rose to £700 million, whether we think of Harland and Wolff, De Lorean or any other nationalised industry, we know that so often the House has been invited to consider a fairly low figure to start with and has ended up by seeing that figure double, treble or quadruple until many of us have wondered when the ceiling would be reached. It is a curious irony that, of all the nationalised industries, only one has been made bankrupt by a Minister of the Crown. That Minister was the right hon. Member for Bristol, South-East (Mr. Benn), who put the Beagle aircraft company finally to death.
    I make that point because I wish to establish the importance of monitoring at the beginning of my remarks. My hon. Friend said that when the British Leyland corporate plan was considered, he would not second-guess its predictions. Therefore, in effect, he was asking himself two simple questions. First, can we accept the unemployment that might arise if we do not provide the money, and, secondly, what chance is there of success? In reaching his conclusion, what source other than the Department did my hon. Friend and my right hon. Friend the Secretary of State turn to for their information? Did they make an in-house calculation whether the British Leyland corporate plan could be accepted as it stood?
    I claim no expertise in the car industry. Therefore, I claim no ability to read the corporate plan and to ask all the right questions. But I suggest that there must be institutions with such knowledge which could have advised the Department in such a way that, instead of it saying that it did not feel that it could second—guess those predictions, we could have been told that those predictions
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    had been considered and monitored and changed according to the advice given. If that is not the case, I suggest that that is an area which all Governments must get right.
    After all, nationalised industries have been with us for at least 40 years. We have a collection of 24 nationalised industries—or about 40 if one counts each water authority as a separate industry. The time has surely come when the Department responsible for those industries should have a monitoring technique which it could bring to bear to insist that those industries meet disciplines which are not entirely dissimilar to those in the private sector. Those disciplines should lay down criteria for those who run the industries, and those criteria should be backed by penalties. Without this we shall be in the open-ended situation were faced with Concorde. Whether or not the British Leyland corporate plan is successful, there is no possible assurance that my hon. Friend can give tonight that this will be the last money that this company will receive.
    The House is carrying out its two central functions in voting legislation and Supply tonight. Without monitoring and performance criteria it is at the mercy of believing and trusting in Sir Michael Edwardes and those around him. I doubt whether many hon. Members do not respect Sir Michael Edwardes and do not believe that his judgment is commercially sound. Because I hold that view I hope that the co-porate plan will prove to be the blueprint for the success of British Leyland. Nevertheless, the central point about monitoring remains un-established. I believe that more thought ought to be given to it.
    I now wish to make a second point on monitoring. I used to be a member of the Select Committee on Nationalised Industries. I am sorry that that Select Committee no longer sits. I do not suggest that its members had specialist knowledge, but we began to acquire that knowledge. Since the new set of Select Committees was created, no nationalised industry has come before a Select Committee to be investigated in depth. As far as I know, none of the annual reports of those nationalised industries has been considered by any Select Committee.
    The House should not tolerate that situation if the nationalised industries quiver is to remain as full as it is. Therefore, I strongly recommend to my hon. Friend that thought be given to recreating a Select Committee with the specialist task of monitoring the performance of nationalised industries.
    I shall underline my point about monitoring with some remarks which I heard last night from those who are responsible for Rolls-Royce 1971 Limited. I asked them about the profitability of the company, reminding them that today is the tenth anniversary of the company's bankruptcy and nationalisation. I asked them why Rolls-Royce had not achieved the profitability which we all hoped would spring from that rescue operation. I was told that Rolls-Royce 1971 had on occasion made profits, could have made more profits, but had decided to put its resources into research and development on new engines and exploiting the quality of its engines.
    On whose decision was that attitude struck? Does the managing director of Rolls-Royce have no need to answer to the Government for his annual report? Is it for him to say that the taxpayer shall not have a return on his investment and that he shall put the taxpayer's money into the projects which he favours? If so, I press my hon. Friend to say to which disciplines the chairman of nationalised industries are asked to respond. What

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    pressure is being put on them to ensure that profitability becomes their first priority? Profitability is the return to the taxpayer on what he or she has invested.
    We all know—because the House spends most of its time discussing it—where the resources provided by the taxpayer should go. I am not anxious to support those chairmen who believe that they can turn their backs on the taxpayer because they have him across a barrel, and who decide that they can spend the taxpayer's money as they choose without the accountability which any other chairman of any other sort of enterprise would have.
    I turn now to the selling-off of BL's assets. We know from the corporate plan that what are described as the non-mainstream assets are to be sold off over some years. I have one of those non-mainstream assets in my constituency—a company called Prestcold, which has just been sold for £10 million—so I appreciate the strength of that argument.
    However, as my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) pointed out, and as the Transport Bill points out, in returning four of British Rail's subsidiaries to the private sector the nationalised industry which is not creating profits is unlikly to have the investment required for all its subsidiaries. It is the subsidiaries, their employment prospects and their profitability which suffer with a net loss to the State overall.
    Sir Michael Edwardes in his corporate plan does not tell us what he considers to be non-mainstream activities. For instance, I wonder whether Alvis, which makes armoured cars, can be construed as such an organisation and whether it is felt necessary to keep it within the BL family.
    Whether that be so or not, if there is a buyer for one of BL's subsidiaries, whether in the vehicle or any other sector, that will relieve the rest of the company from expending the necessary finance to keep that subsidiary in existence. Conceivably, it will also make that subsidiary a more profitable enterprise than it would otherwise be.
    I suspect that of the three different questions that my hon Friend asked himself about the corporate plan, that relating to employment took pride of place in his thoughts. If so, employment will be guaranteed by the success of an enterprise regardless of who owns it. Indeed, it might be argued that it is more likely to be successful if it is owned not by British Leyland, which is in such a financially parlous state, but by some other organisation apparently so rich as to want to buy it and presumably wanting to buy it because it has the investment to put in to make sure that it is increasingly profitable.
    To my mind what I have touched on are the three points in this group of amendments that need to be discussed.
    Will my hon. Friend tell us about the prospects of British Leyland being returned to the private sector? Sir Michael Edwardes, in the last paragraph of the letter that he sent to the Secretary of State for Industry, said:
    "The Board sees collaboration with other manufacturers as an important part of its strategy for recovery and for reducing and eventually removing dependence on Government support."
    That is a fairly opaque statement. Sir Michael Edwardes gives no suggestion of the time when that might happen, nor where that collaboration is to be sought. My hon Friend will appreciate that, while we support him tonight and hope that BL's corporate plan will bring the
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    success to which he referred, we also hope that it will bring a success that in turn will mean British Leyland being returned to the private sector.
    Have the Government any thoughts on this matter? For how long are they prepared to bolster British Leyland with taxpayer's money? What are they doing to further the collaboration referred to by Sir Michael Edwardes in the last paragraph of his letter? The House will welcome any thoughts that the Minister might feel able to share with us tonight.
    7.45 pm
    Mr. Tom McNally: I shall not follow the trend of the remarks of the hon. Member for Newbury (Mr. McNair-Wilson). However, as he followed the hon. Member for Knutsford (Mr. Bruce-Gardyne) in his usual attack on public enterprise and investment, I should point out that many of my constituents, who work for organisations such as Fairey, Ferranti, ICL and British Aerospace, do not share the hon. Gentleman's assessment of the wisdom of private enterprise because they have had the benefit of shrewd judgment by Governments— admittedly Labour Governments—in the past. They also recall that the source of many of our problems today is the lamentable investment record of British industry over the past 30 years.
    This is an interesting Bill. It started as a simple little measure trying to do good. It has ended up with a large amount of money being given to, and a central debate being held on the future of, British Leyland. Those who have followed its passage and taken part in the various stages have had some interesting moments. The Secretary of State for Industry lost yet another chairman of the NEB along the way. Indeed, he lost a whole ministerial team. It was a kind of mutiny on the "Bounty" in reverse: they left Bligh on board and took to the boats. Finally, we had the announcement of the money for British Leyland. Some of us knew all along that it would be coming.
    The purpose of the Bill—if it had a purpose—was a slow educative process for Government Back Benchers of the inevitability of this money for BL. As we saw when the Secretary of State came to anguish before us on 26 January, it had finally dawned on him that not giving money to BL would be infinitely more costly to the country than giving money to BL. It has taken two years for that expensive piece of political education to get home. Yet we still hear speeches decrying intervention and any role for the State in industry.
    At the heart of the failure of the Government's industrial strategy is the fact that they have no heart in any policy. They are for ever trying to excuse and appease the hard men on their Back Benches. They have no convictions in which to have courage. As a result, we have this waffly industrial strategy. Conservative Members use the word "strategy" with embarrassment. As a result, there is often a lack of confidence and direction in industry.
    I must again express my regret at the way that the Government have dealt with the National Enterprise Board. Before the general election they boxed themselves in in a dogmatic way. They then had to pay this ideological danegeld of taking away many of the board's powers. It would have been better by far to have had a cross-party view on developing the NEB as a useful tool for public intervention. For example, it would have been much easier for the Government to handle the ICL problem if they had not precipitately got rid of their shares in ICL. The

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    Government dealt with the disposal of their other assets with little or no consultation with the work force because of their ideological commitment to the prejudices of their own Back Benchers rather than to any long-term view or strategy for British industry.
    I have already referred to the Opposition's welcome for the commitment to British Leyland. Therefore, I shall not delay the House on that aspect. But I should like to refer to Japanese investment. I understand why some hon. Members say that we must be careful to examine each case in detail. But there is a strong argument for saying that if we are to have a healthy relationship with Japan, part of that relationship should be substantial inward investment to Britain by the Japanese.
    Over the years we have often heard British industrialists say "We must invest overseas because other countries will no longer tolerate our simply exporting to them without putting something into their economies by way of industrial investment." Time and again one hears that said by British industrialists as an excuse for investing overseas.
    Equally, we should tell the Japanese, who have a £1 billion surplus in industrial trade with us, that that situation cannot be tolerated indefinitely. One way of getting that balance right would be to open up their markets and to show a willingness for inward investment by Japanese industrialists. Although I am cautious and want to see the facts of the Datsun deal, I believe that Japanese investment in Britain should be welcomed and encouraged.
    I should like to take up one of the points that were raised by the Minister. He trotted out the old Tory cry of "Where will all the money come from?" I thought it was a tragedy that last Sunday, although she had already received advance notice of the TUC's economic statement, the Prime Minister chose the venue of a television interview to respond in a totally sterile and negative way to an offer by the trade union movement to enter into a genuine dialogue with industry to see how we can get out of our economic and industrial difficulties. On Sunday, she committed billions of pounds, not to industrial investment as the TUC asked, but to unemployment. Perhaps in his reply the Minister will say where the money will come from for the extra billions of pounds in dole payments for the extra million people that the Prime Minister will put on the dole because of her sterile and negative response to the TUC initiative. That is the question that most people are asking.
    Even during the passage of the Bill, public opinion and opinion on the Government Benches is slowly turning. People are saying that we cannot leave matters to the forces of the market and to private enterprise. There is a large role to be played by the Government. The resources from the North Sea that have been wasted in keeping men and women idle can be better used in the rejuvenation of British industry. Even at this late stage, I ask Ministers at the Department of Industry to tell the Prime Minister that she was wrong last Sunday, and that she should take up the TUC challenge and try to put British industry back to work again.
    Mr. Ian Lloyd: Debates on British Leyland seem to have a compulsive and magnetic quality. One comes into the Chamber, perhaps not intending to take part, and becomes so fascinated by the argument that one feels compelled to intervene, as I am now doing.
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    I found the speech of the hon. Member for Stockport, South (Mr. McNally) interesting, and I agree with his comments on Japanese inward investment. I am one of the few Members who have visited the Nissan-Datsun plant in Tokyo. I asked whether it was ahead of Detroit, and I was told that its technology was undoubtedly the best in the world. I was told that the best way to import technology was to let those who are the masters show others how to carry it out. In some ways that judgment is shaming.
    The remarks of the hon. Member for Stockport, South about public and private sector philosophies reminded me of an interesting comment that was made in this context by none other than a professor at Moscow State university, Professor Popov, who wrote an article for The Times which was in astonishing contrast with an article that appeared underneath by the famous Professor Galbraith, criticising Conservative philosophy on monetarism. Professor Popov pointed out that in the Soviet Union—by definition 100 per cent. public sector—there is no other way. So involved and so inefficient had its industrial resource allocation become that it was devoted to a general extension of what was known as the Shchenikov experiment, in which the managers of plants in the Soviet Union were being compelled to cause redundancy and put people on the dole. The managers would then receive a reward for doing so. That is the sort of thing that we must remember when we are trading prejudices. We all believe that what we say is the naked truth and that what our opponents say is naked prejudice. We all know that the truth lies somewhere in the middle.
    I presume that other hon. Members have referred to this debate as a British Leyland borrowing requirement debate. I am sorry that I was not able to attend the proceedings earlier. I wish to make a number of comments. First, again and again I am impressed by the sheer scale of the finance that the House is called upon to provide in cases such as British Leyland, British Steel and others. It is arguable that this is not a debate about low technology, because we know that Rolls-Royce is involved. It is possibly a debate about low and high productivity. The common factor seems to be commercially ineffective technology, and that is a description that we should take more seriously. But to revert to the question of scale, we are constantly being asked to approve sums of £1 billion and upwards. It is almost beyond the wit of mortal man to understand what £1 billion means.
    I have been heavily involved in an inquiry in another area, and I know that it takes about £1 billion to build a one megawatt nuclear power station. We are taking out of the resources of this country the equivalent resources that would in another context build a one megawatt nuclear power station that would possibly supply one-fiftieth of the nation's electricity requirements for 50 years. That is what is going into BL. When we talk about £1 billion, it is that scale of resources that we are examining time and again.
    I very much regret that because of the timing of the dissolution of Parliament in 1979 the reports of the then Select Committee on Science and Technology on innovation were not made available or brought before the House in the way that I would have wished. The Committee looked particularly at the small engine technology of British Leyland. The evidence has been made public, but the conclusions were not drawn. The evidence was significant. We were disturbed by what we

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    managed to learn from those who gave evidence about the general level of technology that had been applied in the manufacture of the Mini Metro.
    Although we all wish that car success, and hope that it will have continuing success, the conclusion that I drew from the evidence of Sir Michael Edwardes, Sir Terence Beckett, who was then chairman of Ford, Volkswagen, Mercedes, Peugeot and the other principal competitors of British Leyland was that, although the Metro may deserve to have an important success over the next two or three years, because of lack of capital investment and available funds Leyland could not introduce a new technology engine—it would have cost £250 million. Therefore, the stretch in this engine, by definition, must be limited. The real test of the Mini Metro will come when new technology engines that are being installed in vehicles produced by its principal competitors become available on the market in 1983, 1985, 1987 and so on. Unless British Leyland asks for another £500 million, or £1,000 million—inflation will bring the figure to that level—I have serious reservations about whether it will be able to fulfill its expectations and promises.
    I turn now to the argument about the roll-on effects on employment. That is a serious but seriously exaggerated argument. It is often said that about 1 million employees depend indirectly on British Leyland—130,000 directly, and the other 870,000 indirectly. In a spectacular economic sense that may be true, but if we look at the totality of the suppliers of British Leyland we shall always find what the statisticians call a lognormal distribution. There will be those firms that supply even 100 per cent. of their output to British Leyland. They will be a small number at one end of the curve, and they should be described as subsidiaries of British Leyland. The employment effect on such organisations, were British Leyland to suffer serious disruption, would be grave, and should be so regarded.
    But as we go across the curve from that end to the other, we come to important organisations which supply 50 per cent. of their output to British Leyland and where the impact would be severe but not necessarily disastrous. We then move across further to those organisations which perhaps supply only 10 per cent. of their output to British Leyland, where the impact would be something that they could take in their stride—and which enterprising managements ought to be able to take in their stride.
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    There would inevitably be a serious fundamental process of readjustment in the economies of all those organisations which supply a considerable proportion of their output to British Leyland, but I do not accept for one moment that the argument can be sustained that because British Leyland suffered a major disruption of whatever kind, of whatever cause, that would immediately lead to 1 million people being unemployed, with all the financial consequences that we have been led to believe would follow.
    But there are other important aspects of this question to be considered. We are constantly told that the unemployment would be very severe and serious. To the extent that this is true and would be visible, it is undoubtedly an important argument. But we hear much less about the effect on the jobs lost in what one might call
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    the subsidising sector of British industry—that proportion of British industry which has to carry the fiscal and financial strain of raising the money that is required. Jobs are undoubtedly lost there and employment is reduced, but we do not see it, or we do not hear as much about it. It is much less perceptible. It does not occur in one single lump, but that it occurs generally and that it may well be generally significant can be judged from the figures which are common knowledge and, if I may say so, are our common regret.
    But there is perhaps an even more important and significant effect which is less generally discussed and is, in my humble judgment, even more important. We do not hear about the effects on employment in the industries as yet unborn in this country. I have some figures from the United States. Within a period of about five years, of 9 million jobs created in the United States, 70,000 were created by the top 500 in the Fortune league—the biggest companies in America—and the rest were created by new small firms.
    I do not believe that our position is in any way fundamentally different from that. It is the capacity of the United Kingdom to create, to foster and to sustain new small firms—the new growth points of the new age, whether of information technology, biotechnology or any of the other industries that we see emerging—that is much less discussed. I believe this to be the most significant cost that the country has to pay when it is asked to divert resources on this scale—whether to British Leyland, British Steel or Rolls-Royce is neither here nor there.
    I had an interesting example of this the day before yesterday when I had the privilege of visiting the Rutherford laboratory and saw an absolutely outstanding and brilliant new British invention—something known as a cellular logic image processor, or clip computer. This is now being developed, and one only has so far been produced. It was my judgment that this was an outstanding achievement, and that we ought to be developing it in this country. It could well form the basis of an industry almost as large as the present computer industry, since it is a new generation, a new type, a new philosophy, of computer.
    I asked "What stands in the way of its development?" I was told that what stood in the way was something between £500,000 and £1 million. I immediately said "That is one-tenth of 1 per cent. of the sum that we shall be voting for British Leyland." But the industry which could grow from it could be of the utmost significance. I hope that there may yet be ways found for it to develop. It would be an outstandingly significant British achievement, where the standard of the technology would not be easily followed and would be unlikely to be repeated.
    Mr. Orme: We have the NEB.
    Mr. Lloyd: The NEB has, of course, some knowledge of this and some connection with it, but that by itself is not enough. The incentive to create and sustain new projects of this kind, bringing to birth new technology, of which this country is still a great progenitor, is insufficient.
    Some hon. Members have made complaints about exchange rates. Many hon. Members who have served in this House for some years will recall the agony that we went through when the exchange value of the pound was falling. I can remember well the arguments produced on each side of the House—almost independant of where we

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    were sitting—regretting the mismanagement of national economic policy that was leading to a deterioration of our currency. I do not think that those arguments have necessarily become invalid, but the point I want to make is a much more relevant and specific one.
    If we examine the relationship between the most successful industries in Japan, West Germany, the United States, and other countries such as Switzerland—those countries which in the 1960s and 1970s managed to sustain the value of their currencies far above the general downward drift that was taking place all around them—what do we discover? Their most outstandingly successful industries were shipbuilding in Japan, microelectronics and aircraft in the United States, and diesel engines in Switzerland. Despite the high value of the currencies in the countries concerned, those industries continued to prosper. Why? The answer is simple. They were industries of steadily and continuously rising productivity. It was because their productivity was rising far faster than any disadvantage that was imposed by the appreciation of their currencies that those industries flourished, and the countries in which they flourished also flourished with them.
    That is the answer to the argument that for the United Kingdom to recover its position we must, as it were, destroy our own credit in the eyes of the world and deliberately create a situation in which the value of our currency falls. I do not for one moment believe that that is the answer, because all the evidence is against it. Although there are obvious and perceptible difficulties—and one should never minimise them—for those who are suffering from the sudden increase in the value of our currency, to say that as a matter of national policy we must now stand on our heads and put the policy into reverse is wholly mistaken.
    I have mentioned already the size of the sums with which we are dealing. I know that my right hon. Friend argues with great conviction and great justification that nothing would be worse than for politicians to breathe down the necks of those who have the task of managing major national industries, whether of the Rolls-Royce and British Leyland variety or nationalised industries. This House has always held back from imposing on itself the obligation of such detailed supervision. That I totally accept. The day-to-day management must be a matter for them, up to a very considerable point of decision making and investment. But can we go as far as to say that we must write a blank cheque—or that this House must write a blank cheque—for £1,500 million or £2,000 million, and never know, let alone ask, in relation to a company such as British Leyland, what proportion of that sum is likely to be paid out in wages, or in higher wages, what proportion is likely to go in investment, and so on? We need not ask for detail. We might be told that, say, £100 million was going into assembly technology, £50 million into some other technology, and so on. That, at least, we ought to know.
    We ought also to know what proportion of the money is going to research and development. Research and development today—not least in the automobile industry—is absolutely fundamental to the success of industry. It is largely because British Leyland neglected its research and development over a long period of years that it found itself in some of the difficulties that it now faces.
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    There are a few questions of that kind that this House is entitled to ask and to which it might expect to be given replies on a rather more routine basis when either Conservative or Labour Governments ask us—as they have, and will again—to endorse these very large sums for what in a sense each party regards as inevitable and unavoidable national investment.
    First the bad news, now the good news. I wholly endorse the miscellaneous provisions, which have not so far been mentioned, in clause 6(1) under which the Secretary of State is asked to encourage young persons and others to take up careers in industry and to pursue appropriate educational courses. I believe that a considerably larger expenditure of national resources in pursuit of that objective is wholly justified.
    Sir Charles Carter recently produced a report on the application of microelectronics in British industry that contained interesting conclusions. A study was conducted into 90 firms to see how they were reacting to the challenge. A number at the top, which understood the subject, had made judgments and were doing something effective. A second category had looked at the problem but was doing nothing. Much more serious was the third category, which had looked at the problem, had felt that there was nothing it could do, and decided to cut agents and import products from overseas. That is a reflection of lack of the appropriate educational base in microelectronics and high technology among a considerable number of people in this country.
    I support the objective stated in the Bill. I support equally the diversion of significantly larger national resources in the achievement of that objective.
    Mr. Bob Cryer: I am pleased that the Government have decided not to put BL on the waste heap, which has been the fate of so many jobs in the sad decline of British manufacturing industry over the past 18 months. The announcement recently of support for British Leyland to the extent of £950 million was welcomed by the Opposition, although it was received with rather mixed feelings, I imagine, by Conservative Members. I hope that the money allocated for the NEB in this Bill, together with the money that is going to British Leyland, will be used to help to regenerate British manufacturing industry and the skills and abilities that we possess. When the oil runs out and when the coal is diminished, the skill and ability of our people are the real resource of the nation. With the present decline in British manufacturing industry, those skills and abilities are not being properly encouraged and developed.
    I wish to refer to industrial relations at British Leyland. Large sums of money are involved. We do not want a repetition of the interrupted production of the Mini Metro, which has been an extremely successful venture. The NEB has the task of promoting good industrial relations. The fact that British Leyland is to receive significant sums of money does not mean that management can afford to point a pistol at the head of the trade unions or seek to diminish the role and importance of the trade unions in the motor car industry. The British Leyland eight, who have been subjected to what appears to be a process of victimisation, feel strongly that the circumstances that have been brought about result from a determination by management to crush the power of trade unions in the motor industry.
    I have spoken to one of the eight. They were amazed that 1,500 workers came out of the BL Mini Metro line

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    because of their bitterness over the change in tempo and technique adopted by the management at British Leyland. Sir Michael Edwardes is not a guru. The creation of cars is carried out by all the factors of production involved and, most importantly, by the thousands of people who work at British Leyland. Working in the car industry is an onerous job. Time, effort and ability must be devoted to promoting good industrial relations. Such relations are not brought about by a continuing policy of confrontation against those in the work force who devote their time and effort to promoting the trade union view.
    The support for British Leyland through the NEB means that many thousands of small companies are also supported. In the present state of the economy, it is often crucial that a small firm should have continuity of production even if its BL output represents perhaps only 25, 30 or 40 per cent. of its total manufacturing range. That percentage today assumes an ever more important proportion of manufacturing. The support is, therefore, a lifeline for small firms.
    I should like to examine the position of Datsun in relation to British Leyland. I have already said that skills should be rebuilt and regenerated. It is important that we develop our own indigenous manufacturing industry. That is what the NEB was set up to promote. I hope that this is the purpose for which the money we are discussing will be used. The statement made by the Minister referred to local sourcing of components. The Minister did not make clear whether this meant that they would be of United Kingdom manufacture or EEC-wide manufacture. If the latter, we will have a rival concern to British Leyland, where a large chunk of this money is destined to go, which will source on the EEC and thereby diminish our manufacturing facility even further.
    8.15 pm
    It will hit British Leyland. It cannot be argued that competition will be increased. We find ourselves in the international subsidy league. It is important for the Opposition to examine this matter. The same procedure was adopted by the Labour Government. Conditions were attached to Japanese investment here. I hope that this Government will attach stringent conditions. What happened in the YKK case was that YKK, a Japanese zip manufacturer, opened a production facility in this country. There was no agreement about the sourcing of components that was hard and fast. As a result, the company assembled largely Japanese-made components which eroded the number of jobs in the indigenous manufacturer, Lightning, in this country to the point of a factory closure. That is absurd. I suspect that this potential exists in the Datsun investment.
    What sort of money will be involved in the Datsun investment? The company is not coming here for any other reason than that the Government and the taxpayer will offer 22 per cent. regional development grant if it goes to a special development area. That is automatic. The company receives that amount for every £100 of investment in the project. There then arises the discretionary grant under regional selective assistance. This is given if the project is concerned with the creation or retention of jobs or if the project will take on another
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    dimension if regional selective assistance is given. How much will be involved? Will it amount to 50 per cent. of the total investment? Will it be less? Will it be more?
    If Datsun is established here and starts making profits, it will be able to offset against corporation tax every penny that it invests in plant and machinery in this country. At the end of a period in which suitable profits are made to offset the investment in plant and machinery, the British taxpayer, by direct grant or by failure to receive corporation tax, will have paid totally for the investment. The investment, however, will not be under their control. It will be under the control of a multinational, with its headquarters several thousand miles away, where decisions are not under the control of the work force, the people of this nation, or the Government.
    That is less than satisfactory, particularly at a time when the product is having to compete with that of a Stateowned company which is rightly being supported by a considerable sum allotted by Parliament.
    Everyone welcomes the creation of jos, but we must realise that jobs are better created by using our own facilities and developing our own projects instead of relying on the multinationals. There have been significant cutbacks in jobs by multinationals, particularly in development areas. We do not have legislation to prevent that from happening. France is by no means a Left-wing country, but there the Minister responsible for employment has to give his approval when jobs are cut for economic reasons. Here a firm can close and, as long as it goes through the redundancy procedure, that is an end of the matter. Handing over such a large degree of control and manufacturing responsibility to multinational companies wil not in the long term help to secure the retention and development of our manufacturing industry, particularly if the components come mainly from the EEC or Japan, with the important design and development skills being located outside the country. Without a Government committed to much greater investment in our indigenous industries and prepared to stand up to EEC restrictions, we shall find ourselves in the international subsidy race, treating the advent of a multinational, with all its dubious connotations, as a famous victory, when in fact the jobs at the end of the day will be paid for by the British taxpayer. The British taxpayer could instead own the factory, create the jobs, and undertake and control the whole enterprise. The taxpayer could control decision making through the Government of the day.
    Mr. Bruce-Gardyne: I am in a considerable measure of agreement with the hon. Gentleman's criticism of the way in which taxpayer subsidies are given to such investment. However, surely that follows ineluctably from the whole series of Industry Acts passed by successive Governments over the past 10 years.
    Mr. Cryer: I shall not go down that road, as if I were to do so I would probably be out of order.
    Certainly the Industry Act 1975, which was supposed to attach strong strings to the money that we gave to the private sector, was significantly watered down and we lost the degree of control which we should have had and which the next Labour Government will certainly institute. They will institute, for example, planning agreements. What about a planning agreement with Datsun? What about an allocation of market share, for example, or shall we see

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    British Leyland to which the taxpayer has contributed massively having to face that competition and possibly withering away in some areas even further?
    I am in favour of public expenditure being devoted to the creation of jobs. However, we should rely on our own resources to develop design and high technology. We should not rely simply on the multinationals. The Conservative Government do not quibble about public expenditure to create jobs when they talk about spending £5 billion on Trident. Then they emphasise that such expenditure results in job creation and retention. I want to see us carry out a Labour Party policy and switch money away from defence towards peaceful purposes. The principle is the same. Public expenditure creates jobs. The money is not available from the private sector, which has let us down badly, even under a Conservative Government.
    Public investment also creates jobs in the private sector. As I said earlier, putting money into British Leyland helps to create and maintain many thousands of jobs in the private sector. I use the illustration of small companies, but medium and large firms are also involved. For example, the textile industry in Lancashire and Yorkshire provides seat covers and head-linings for cars.
    The Government should be determined to use their strength in the EEC. Datsun wants to get into the United Kingdom in order to get free movement for its goods within the EEC. Its market penetration in France, for example, is very small. We should be prepared to use our market, which is still an important and wealthy one, as a bargaining counter. If the multinationals want to get into our market, we can allow them in under our conditions, which should be stringent. If we choose, we can use our position, but we cannot do so as long as we adhere to the Treaty of Rome, which robs us of the opportunity to differentiate our position in order to protect our manufacturing industry from imports or investment by multinationals. Multinationals are not here to give an advantage to British manufacturing industry. They may well erode it. If we are to retain British manufacturing industry and to have the necessary investment—for example, investment in high technology—we shall have to use some form of quota or import control while our manufacturing industry catches up.
    The Bill is merely a sticking plaster on the public sector, which is being drained by the Government. Sticking plasters are all right, but what we need is a Government determined to see a public sector that works and a Government determined not to use unemployment as an economic tool. We need a Government who see the ending of unemployment as an important priority—and that must be the next Labour Government.
    Mr. Dixon: I am glad that my hon. Friend the Member for Keighley (Mr. Cryer) has extended the debate beyond British Leyland, although I welcome the finance that is being made available to the company.
    Amendment No. 5 reduces the amount of money available to the NEB, which will hit the North and other such areas. The introduction of the National Enterprise Board was a lifeline for us. The regional enterprise boards were also greatly welcomed. As I said in an intervention, in the North we do not have a development agency, a Minister for the North, a Select Committee or a Grand Committee. However, we have the highest percentage of unemployment of any area in England, Scotland or Wales
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    and the second lowest number of job vacancies. That means that for every vacancy in the North there are 50 unemployed people. In some areas, that figure could be multiplied by 10.
    8.30 pm
    My hon. Friend the Member for Stockport, South (Mr. McNally) said that we should be talking about unemployment. The Bill concerns unemployment, and attempts to alleviate it. It cannot be taken in isolation from the Government's other policies. It is no good having an employment watershed in manufacturing industry when, at the same time, there is a watershed in local government. However, many areas are in that position. It is ridiculous to tell a person that he cannot draw his wages from the local town hall, but that he can go to the local employment exchange and draw public money for doing nothing. That is the result of this Government's policies.
    I asked the Prime Minister what advice she had for some of my constituents who had taken her previous advice and had moved to find employment. As a result of the Government's economic policy hundreds of males, their families and friends found themselves out of work. I wrote to the Prime Minister but she said that they would have to move on until they found employment. What way is that to run a country? People talk about vandalism and unrest. The Government are turning our people into industrial nomads, and are breaking up communities. The Prime Minister should tell the Secretary of State for the Environment to provide a certain amount of money in the housing investment programme for caravans so that workers can tow them round the country looking for work. That is the only advice that the Prime Minister will give.
    I received a letter from one of my constituents. It is a pity that some of those Conservative Members who giggle like adolescent schoolgirls when we talk about unemployment are not here to listen. The letter states:
    "Please help me! Through no fault of my own, I have been out of work for over a year now. I assure you sir I have tried, I have looked for work.
    Within the last year sir, I have had over 52 formal interviews within South Tyneside and out—including places as far as Dover, Hull and London.
    Some of these interviews I've even hiked it, even whilst I write this letter sir, I promise you I am seeking fitfull employment. My point sir, a feeling of mistrust. At the present time I am sick up to my ears with the Social Security and its treatment.
    Every 3 weeks since last March, I had to report to them like a schoolboy with his homework, giving them a progress report on my job seeking.
    Every 3 weeks I go to the Arndale House,"—
    that is the local exchange—
    "I feel despair, I feel degraded, no longer a member of the human race. Whilst I sit there in reception, waiting for my name to be called out I feel so full of grief and let down, I feel like they've made me a social misfit, they think me a failure or worse sir—a malingerer."
    That constituent has been out of work for a year. I felt that it was important to get that letter on the record.
    I welcome those parts of the Bill that deal with British Leyland and provide finance. However, the Bill does not offer anything to areas such as the North. It is a retrograde measure because it cuts the amount of money available to the NEB. The NEB could help the North. I saw the Prime Minister's interview with Brian Walden on "Weekend World" and I heard her say that an upturn would come and that when the recession was over everything would be fine.
    During the 1950s and 1960s we had the longest period of sustained growth, yet 80 per cent. of the new jobs

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    created in manufacturing industry were located in the South-East. Unless there is a strong regional policy, areas such as the North—areas that have been turned into industrial deserts as a result of the Government's policies—will have no future.
    Mr. John Cunningham: I shall be brief. One thing has become clear from the debate and from the Government's statement on British Leyland, namely, that despite the Secretary of State's greatly professed ideas about intervention, not only is it back on the Government's agenda in terms of their industrial policy, but it stands in pride of place. It is ironic that the Minister should find himself in this position. We know that he is robust enough to look after himself, both at the Dispatch Box and elsewhere, but—given his well-known record on State intervention—even he will have to be a little cheeky to continue to support what is happening.
    We welcome the Minister's conversion. We look forward to more of his robust parliamentary activities in support of State intervention, not only for British Leyland but for other industries such as Rolls-Royce, the steel industry, British Shipbuilders and the NEB. It is also ironic that the Secretary of State—I am pleased to see him in the Chamber this evening—should have said so much about industrial strategy, planning and attitudes to intervention in the economy. I do not use his words, but to say that some of his words are not worth the paper that they are written on would sum up some of his comments on these matters. He has already involved himself in more approaches to planning and major planning agreements than the previous Labour Government did in their whole term of office.
    Of course, the right hon. Gentleman does not involve the trade union movement in the consultations that lead to things such as the British Leyland corporate plan or the MacGregor proposals for British Steel. However, these are agreements between the industries and the Secretary of State—or the Department of Industry—to plan the future of those industries. We welcome that, but we wish that the right hon. Gentleman had not taken so long to be converted to the general idea, which is a good one.
    The Opposition urge the right hon. Gentleman very much to involve the trade unions in the sort of planning to which I have referred. The trouble seems to be, as the hon. Member for Bromsgrove and Redditch (Mr. Miller) said, that none of this is co-ordinated. Perhaps that will emerge over the next few months too, and we shall see the conversion of the Secretary of State.
    In November 1979 the Prime Minister said:
    "It is not for politicians to try to take over the management of public sector industries."—[Official Report, 22 November 1979; Vol. 974, c. 559.]
    The right hon. Gentleman has done that with Rolls-Royce and he is now doing it with British Leyland in the sense that he is removing the buffer of the National Enterprise Board from the relationship between the company and the Government.
    We have heard a great deal, not only about intervention, but the scale of intervention. We heard that from the hon. Members for Havant and Waterloo (Mr. Lloyd) and for Knutsford (Mr. Bruce-Gardyne) and from others. They said that intervention on such a scale, involving such vast sums, took a lot of justifying. Words such as "unprecedented" have been used. That is not really
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    so in terms of this country, although these are large sums compared with the cost of building a power station, a North Sea oil production platform or the development of Concorde. These are not outrageously large sums.
    In an interesting paper to the Institute of Fiscal Studies, Sir Arthur Knight said:
    "The success of our industrial competitors' more coherent policies ought to make us re-examine our attitudes. An independent study commissioned by the NEB a year or so ago concluded that the Governments in the twelve main developed countries accept that they have a role in coping with the failures and inadequacies of the market and found considerable evidence that those governments most associated with the ethos of the private market economy—Japan, Germany and the USA—intervene on a larger scale and in more varied and sophisticated ways than do governments more commonly thought to be interventionist."
    That is the reality of industrial investment and industrial policy in the Western industrial world. The Secretary of State and the Minister of State may pretend to fly in the face of that to win over the support of some of their more market forces orientated colleagues, but they are coming to accept reality.
    We certainly want to see more of this intervention. The Governor of the Bank of England recently made a speech in which he said that he thought we should see the end of the recession later this year. If that is so—and I shall be interested to hear whether the Secretary of State agrees—is not this the time to increase investment in both the public and the private sector? If the recession is about to bottom out, should not we be ensuring now that when that upturn comes, however small it may be, our industries—or what is left of them—are well equipped, have the resources and have had the capital investment to meet whatever market opportunity arises? We should very much like to hear what the Minister has to say about that.
    Unfortunately, the optimism of the Governor of the Bank of England is not altogether shared by the CBI, which predicts sharp falls in manufacturing employment throughout this year and talks of very large figures of further unemployment. A rough estimate of the present cost to the taxpayer of unemployment and associated supplementary benefit must be about £¾ billion per quarter, or approaching £3 billion per year. That is the cost to the taxpayer of keeping all those people on the dole and out of work. I shall not be diverted into an argument about whether it is all the fault of the Government that so many people are on the dole and out of work. My point is that it is no soft option for the taxpayer. It is quite the reverse. It is a waste not only of human resources in talent and skills, as my hon. Friend the Member for Keighley (Mr. Cryer) pointed out, but a waste of money which could be put to far greater purpose in terms of investment in the economy.
    As my right hon. Friend the Member for Salford, West (Mr. Orme) said, we of course welcome the commitment to British Leyland. It deserves a period of sustained support, with less intervention and perhaps, even in terms of debates and discussions in this House, a period of peace and quiet in which it can be left to get on with the job. I agree with the hon. Member for Bromsgrove and Redditch (Mr. Miller) that without a medium-term commitment to the plans of the company, no one would have been settled. Management would not have been settled, the work force would not have been settled, the dealer network would not have been in a stable situation, and there would have been little hope of success. We therefore welcome the Government's commitment in that regard.

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    The hon. Member for Knutsford (Mr. Bruce-Gardyne) suggested that British Leyland could have been broken up and perhaps disposed of without any real damage. Nothing could be further from the truth. How could the company sustain a large dealer network without a significant range of cars to offer? The reality is that it would not be able to do so. That is one of the biggest single arguments for keeping the company in its present shape and size. If BL is to win back a share of the market, it can do so only through an expanding dealer network, and dealers will not come to the company if it cannot offer them an adequate range of vehicles. I hope that the Government will bear that very much in mind when they are tempted to respond to arguments put to them by Tory Back Benchers.
    I turn to the question of Government strategy in terms of industrial policy and investment. The Financial Times recently summed it up in the following way:
    "In his public pronouncements, Sir Keith seems to have lurched from a policy of laying down rigid targets for problem industries, which proved unachievable, to a policy of installing able management and backing it to the hilt. The new approach is more hopeful than the old, but there is still a need for the Government to set out its strategic objectives and performance criteria when large sums of public money are to be committed."
    8.45 pm
    We would very much welcome a great deal of that. The Government cannot go on intervening on a one-off basis or an ad hoc or unco-ordinated way. We should have an industrial strategy like most of our competitor nations such as France, Germany and Japan. There is nothing particularly Socialist about this. That is one of the ironies about the way in which the Secretary of State refutes these arguments. There is nothing particularly Socialist about those countries or their Governments, yet they see the imperative need for such an approach to industrial development in the modern world.
    We therefore urge the Secretary of State to think again about such a need for Britain. It would be welcomed not only by Labour Members but by the TUC and probably by many people in the private sector, including the CBI. We think that the NEB should play a significant—not a dominant—and growing role in such a strategy.
    Mr. Tebbit: With the leave of the House, I should like to reply to some of the points that have been made. I do not think that I can reply to them all, otherwise the House would become anxious and tetchy towards the second hour of my speech. I thank the hon. Member for Whitehaven (Dr. Cunningham) for the way in which he spoke. At one stage I had the feeling that he was welcoming me as a sinner come to repentance. I assure him that I am entirely unrepentant and that I have a lot of sin left in me yet. He need have no doubts whatever about that.
    Dr. John Cunningham: I hesitate to don the role of cleric, but in that case we look forward to many more confessions.
    Mr. Tebbit: They are always made in private. I am sorry that the hon. Gentleman tried to play down the size of the sums of money about which we are talking—the investment in British Leyland and, potentially, in RollsRoyce. He compared it with investment in Concorde and nuclear power stations. I remind him that investment in Concorde was made over a period of 20 years or so and that nuclear power stations do not seem to use up £1 billion in two years—at least, I hope not.
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    We must accept that these are extraordinarily large sums of money. We must ensure that, when a decision on a sum of money of this sort is taken, it is taken soberly in the knowledge of the effects that it will have on the remainder of the economy, especially when that sum of money is taken from the taxpayers or lenders generally.
    I turn to some of the points made by the right hon. Member for Salford, West (Mr. Orme). He asked for a statement on ICL. At present I do not think there is a need to go further than to say that the Government are aware of the situation at ICL, following the company's annual general meeting yesterday. It is a company with which my Department has frequent contact in the normal day-to-day course of discussing its research and development programmes. Therefore, there is no lack of contact between us. I do not think that there is any call for a statement, at any rate at present.
    The right hon. Gentleman also urged me to say something about the position of Talbot, in Linwood. It is also difficult to go very far at present in that respect—not least because a number of hon. Members will be meeting my right hon. Friends the Secretary of State for Industry and the Secretary of State for Scotland tomorrow in order to discuss these matters and the response which the Government should make towards the company. Certainly the company is well aware of the possibilities of investment aid that are open to it. No doubt those matters will be discussed more thoroughly tomorrow with my right hon. Friends.
    It would probably be best if I were to deal generally as far as I can with a number of the points that have been made about Nissan. There was a great deal of concern about the effect of Nissan and the restrictions that might be placed upon it in the event that it decided to come to the United Kingdom. One thing which is helpful is that we are discussing these matters against the background that the SMMT and JAMA were able to announce today that they had reached agreement to the effect that the Japanese industry would resort to what they called even more prudent marketing of motor cars in the United Kingdom in 1981 than it did in 1980. That is helpful in indicating a knowledge on the part of the Japanese industry of the fears which they have created.
    In regard to Nissan, it is important to remember that it is engaged on a feasibility study and that if all goes well that feasibility study could lead to production beginning at the end of 1984 and leading up to 200,000 cars a year in 1986.
    Dr. John Cunningham: I do not want to delay the House except to ask this about the feasibility study. We were told in the Minister's statement that the feasibility study would take place. We also learnt that the Northern region of England and South Wales were apparently to be considered. Do the Government think it is even-handed, therefore, to send the Secretary of State for Wales rather than the Secretary of State for Industry to Japan to talk about these matters? It has left the impression in the Northern region of England that the decision has already been made.
    Mr. Tebbit: I can assure the hon. Gentleman that the decision on siting has not been made and will not be made so much by Government as by the company itself. The fact that my right hon. Friend the Secretary of State for Wales is intending to visit Japan should not be regarded as having

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    any direct relationship with the Nissan project. Like a number of Ministers, from time to time he travels abroad seeking inward investment for the United Kingdom as a whole. Certainly when I travel abroad seeking inward investment the hon. Gentleman should not assume that I am trying to get it all to come to London. I have other parts of the kingdom in mind as well. I am sure that all Ministers take the same view when they are abroad.
    If I might continue, the Leyland proposal for a new medium-sized car should be on the market something like two years ahead of the Nissan car. That seems to be a signal to Nissan very clearly indeed in commercial competitive terms that BL will be ahead of it and that it will have to size its motor car and look at its share of the market taking that into account. The share of car production of United Kingdom manufacturers has fallen enormously over the years. Last year it was only 57 per cent. and I am certain that there is room for both Leyland and Nissan in the British market.
    A number of hon. Members expressed anxiety on the point of the degree of local content and about whether these cars could be exported to Europe. I am sure that the Treaty of Rome is bedside reading for my hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne), as it is for many of us. He should try to find the section that will allow one nation in the Community to erect import controls against another nation's domestically-produced vehicles. It would be difficult to find such a section. The French tend to buy their own motor cars. That is not because of barriers but because of the way that the French feel about the motor car industry.
    Mr. Ron Leighton: Is the Minister aware that the Italians are stopping the import into Italy of Sony television sets made in Wales?
    Mr. Tebbit: That is true. I understand that the matter has been taken up with the Commission. The Italian authorities have been told that they might be found to be in breach of the Treaty and that measures might be taken against them. Of course, some countries will try it on. Some hon. Members here think that we should try it on and breach agreements under the Treaty. I do not advocate that.
    I am a little anxious about the attitude of a number of hon. Members to inward investment. The hon. Member for Keighley (Mr. Cryer) did not seem keen on it unless the company concerned is willing to hand over management of the investment to the British Government. I do not know whether he wants to chase away Ford, IBM, Vauxhall, Talbot, International Harvester and many other multinationals from Great Britain. He seemed happy to impose conditions on inward investment which would be unacceptable to the inward investors.
    He said that the measures amounted only to a bit of sticking plaster. A £1 billion Elastoplast must be the most expensive produced yet. He would do well to consider that it is better to encourage inward investment and to allow British multinational companies to invest prudently overseas. The hon. Gentleman must accept that if we decided to impose such onerous conditions on investment into Britain, not only would we lose inward investment, we would cripple the chances of British multinationals
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    investing overseas. That would have severe effects on jobs and the general economic development of the United Kingdom.
    Mr. Bruce-Gardyne: Some of our anxieties might be alleviated if my hon. Friend could make it clear that, although Nissan-Datsun will be eligible for the appropriate regional development grants because of the way in which the Industry Acts are written, it is not the Government's intention to offer section 7 or section 8 assistance.
    Mr. Tebbit: That has not yet arisen. I am extremely disinclined to announce such decisions in the House before the company has decided whether it wishes to come here under any circumstances. It is better to wait and see what the projects and benefits are before we make up our minds how they should be handled.
    Mr. Maxton: Several hon. Members asked whether the company would be at least urged to give guarantees that it will use the British component industry and British steel. Will the Government ensure that such guarantees are given?
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    Mr. Tebbit: If I were to ask the company for a guarantee, for example, that it would use British steel, it would ask me for a guarantee that the price, quality and delivery of the steel would be as competitive as other steel which was available. It would not be easy to give guarantees of that sort over a long period ahead. It is no good a company coming to this country and then being hemmed in with restrictions which might make it impossible for it to operate competitively. The test will be whether the British component industry and the British steel industry can produce to the standards and requirements of Nissan if it comes here. If they cannot match competition from abroad in supplying that factory in the United Kingdom I can see little hope of their being able to match competition when they try to export those parts in British manufactured cars.
    Mr. Cryer: Is the competition subsidised?
    Mr. Tebbit: The hon. Gentleman goes on about subsidies but the number of tales that I hear about subsidies in foreign economies leads me to believe that they are subsidising everything all the time. It is a puzzle to decide where the money for the subsidies is coming from. We need to think more carefully about that. There are a number of critics abroad who would say that action ought to be taken against a number of British exports in respect of the amount of British taxpayers' money which has been used to subsidise those productions.
    Mr. Cryer: Does the Minister accept that it is reasonable for the British Government to seek whatever assurances they can, taking into account quality, price, delivery, and so on, that the product made by Nissan in this country should contain British-made components to the maximum degree possible?
    Mr. Tebbit: The assurance from the Nissan company, which we sought, was that on start-up it would expect to take 60 per cent. and by the time that it was in full production at least 80 per cent. of components from local sources. That means EEC sources. It is important that we do not exclude that possibility. If we did, we should be

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    opening the way to other European countries taking the view that they would have a case for taking action to prohibit the export of those cars to Europe.
    I turn briefly to questions about the Leyland plan. My hon. Friend the Member for Newbury (Mr. McNairWilson) and others were interested in how the Government assessed the plan—whom did we consult, did we use outsiders, and matters of that sort. No, we did not use outsiders, but I can assure my hon. Friend that the Government are not totally bereft of advisers with industrial experience.
    For some time the Government have had a policy of introducing people on secondment from industry and allowing civil servants to work in industry to learn more about it. I am satisfied that we have a number of people—probably more than ever before—who are wellqualified to look at those plans, the accounts and the propositions and to give sensible advice on them.
    My hon. Friend and others were concerned about the way in which we could accelerate the progress of BL, in whole or in part, to the private sector. It is not, as some Labour Members seem to think, all joy and nothing else for the taxpayer when a publicly owned industry begins to make profits. That industry still demands cash because it can seldom generate enough profits for its cash requirements. That cash, if it is generated from Government sources, has to compete against all other uses. It has to be financed from taxation or by borrowing. That inevitably means higher interest rates, which strike against the interests of industry as a whole. However, I can assure my hon. Friend that we looked very closely at the possibility of disposals. I understand that there is a good prospect of disposals of the order of £70 million from the non-mainstream activities of BL.
    I hope that in due time that collaborative venture of which there has been a great deal of talk will result, as Sir Michael Edwardes said in his letter to the Secretary of State, in a much closer relationship in which the majority holding—I would hope the minority holding as well—will eventually be taken out of Government hands. I see no reason why the British Government should be in the motor industry.
    In his absence I refer briefly to the remarks by the hon. Member for Truro (Mr. Penhaligon). He gave the measure general support. I do not think that our problems have just been caused by our having oil and by the petro-pound. We have to ask whether it was all paradise before we found our oil. Were the constituents of the Leyland group all go, go, go and top flight successful motor car companies before we struck oil? I do not think that they were. These troubles were coming upon us before that.
    We discussed the hon. Gentleman's views on reducing the value of the pound, and I have nothing more to say on that. I should point out, however, that if he feels that the work force has learnt nothing from its experience in the past few years, I believe that it has learnt a lot. I believe that it will remember it as we come out of the depression and move into prosperity.
    My hon. Friend the Member for Surrey, North-West (Mr. Grylls) asked about the NEB limits. The hon. Member for Jarrow (Mr. Dixon) referred to a reduction in the limits. My hon. Friend spoke of an increase. I am happy to stand more of less neutrally between them and assure them that they are both wrong. There has been no change in the limit for the NEB. It is still £750 million, and I can assure my hon. Friend—perhaps to the distress
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    of the hon. Member for Jarrow—that that does not betoken an intention to dash off immediately and spend another £400 million or £500 million through the NEB next week.
    As for the way in which the NEB operates and the criteria to which it works, I can add little to the full statement made by my hon. Friend the Under-Secretary of State for Industry on 11 December 1980 in which he set the matter out extremely clearly. He made a very long statement, and I hestitate to go through it again at this time of evening.
    I apologise to a number of hon. Gentlemen who spoke in the debate and to whose questions I have not referred. If any feel that I have failed lamentably to cover their points I shall, if they let me know, write to them. I see the hon. Member for Birminghan, Stechford (Mr. Davis) nodding. We shall certainly see if we can do so. I do not think that I should be popular if I went on for too long now.
    The right hon. Member for Salford, West must not allow himself to slip into thinking that necessarily we should always subsidise every job that can be shown to cost less than the bill for unemployment pay and for loss of taxes. I ask him and the House to consider just how large a proportion of jobs we in this country could sustain on that basis. It would not be very large. We must ensure that we do not damage other jobs in the process of taxing and borrowing.
    Of course, we all hope that this money for Leyland will enable the Leyland workers to secure their jobs, because no one else can do it but them. Equally, we can have no doubt, as we vote on these matters, that the taxing and the borrowing that are involved will strangle some existing jobs and abort others as yet unborn. Their numbers are unknown. As some hon. Members have suggested, they are scattered widely across the country. Therefore, perhaps they have no immediate constituency in the House. We would do well to remember them as we rejoice—I believe that we should all rejoice—that, for a time, the jobs at Leyland are more secure than they have been for some time past.
    Amendment agreed to
    Amendments made:
    No. 6, in page 1, line 12, leave out "£2,251 million" and insert "£750 million".
    No. 7, in page 1, line 12, at end insert—
    "(1A) In section 8 of the Industry Act 1975, subsections (2A) to (2C) (Secretary of State's power by order to reduce the limit mentioned in subsection (2) of section (8) are hereby repealed.".
    No. 8, in page 2, line 4, leave out
    "are substituted the following subsections"
    and insert
    "is substituted the following subsection".
    No. 9, in page 2, line 6, leave out "£1,500 million" and insert "£4,400 million".
    No. 10, in page 2, line 7, after "order", insert
    "made with the consent of the Treasury".
    No. 11, in page 2, line 8, at end insert
    "to an amount not exceeding £5,250 million.'"
    No. 12, in page 2, line 9, leave out from beginning to end of line 11.—[Mr. Tebbit.]

    Clause 6
    POWERS TO PROMOTE CAREERS IN INDUSTRY ETC.
    Mr. Douglas: I beg to move amendment No. 14, in page 3, line 2, leave out from beginning to end of line 28 on page 4.

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    The effects of this amendment would be rather devastating, because it seeks to remove the whole clause. The reason for tabling the amendment was partly probing and partly disappointment in the knowledge that the Government were content to part so vehemently and significantly from the recommendations of the Finniston report.
    It is as well to remind ourselves of what Sir Monty and his colleagues recommended in that report. One of the key phrases in the report appears in page 3 where Sir Monty attempts to define rather succinctly the engineering dimension. He said:
    "the engineering dimension—that is the effectiveness of manufacturing organisations in translating engineering expertise into the production and marketing of competitive products through efficient production processes."
    That may seem rather flamboyant, but it goes far beyond education and training. Although there is an attempt in the clause to dress this up, it goes far beyond the remit of the clause.
    We level other objections at the Government's proposals arising from the Finniston report. Although the Under-Secretary of State for Industry tried to gloss it over in Committee, the plain fact is that the Finniston report wanted this body to be a statutory body with statutory powers for registration purposes. Opposition Members would not be wise to depart from that analysis.
    In the intervening weeks and months since the publication of the Finniston report and the consultations, engineering institutions and the Council of Engineering Institutions have reasserted themselves. The Government have in many ways partly caved in to the views emanating from those bodies.
    I do not suggest that those bodies have harmed their professions. It would be wrong of me to make such a suggestion. However, if we want to condition the atmosphere to enhance the status of engineer, we must create a statutory body. The Government's current proposals for a body created by charter are not sufficient. I shall not go into detail on this matter, but I believe that, under a little pressure, the Government have conceded the point by putting the draft proposal for a charter in the Library.
    9.15 pm
    There seems to be no valid reason why those proposals should not be embodied in a statute. There is one key area in which the Government have already run into difficulty.
    The draft charter, in page 5, states:
    "The individuals who, immediately before the date when the register is established, are registered in any section of the register maintained by the Engineers Registration Board shall be registered in the corresponding section of the first mentioned register."
    That is difficult to get over at this time of night. But is the Council of Engineering Institutions, the custodian of the register, willing to give up the information to the new Engineering Council or will it resist giving such information? If so, what power have the Government to ensure that the Council of Engineering Institutions passes on the necessary information?
    The Government are seeking to create another charter body which the existing body will view not as primus inter pares but as one with which it is co-equal. That will not do. We shall run into difficulties if we go along that road.
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    There are other minor points on which I should like to be satisfied relating to this new body that is to be created. There is no provision in this draft charter for an annual report to Parliament. That may not seem important in view of all the business that we have to do, but it was important to Sir Monty Finniston and his colleagues that Parliament should have an opportunity to debate the workings of the engineering authority. It may be that the Government have in mind getting a report.
    There is a parsimonious provision of Government funds. In reality, no new funds will flow to this body. I do not want to digress too much. We have had speeches about North Sea oil and the revenue flowing from that to the Exchequer. We know that will amount to about £4,500 million in the current year and that it will increase. However, we are not proposing to devote any new funds to this important body to enhance the upstream, thrusting activity of the engineering dimension and the status of the engineering profession. Even if the funds are slight, what opportunity—I put it mildly as a member of the Public Accounts Committee—will the Comptroller and Auditor General have to examine the accounts of this proposed body?
    I have purposely tried to be brief. The Under-Secretary of State for Scotland should pay more attention. The hon. Gentleman, having been born in Greenock, ought to know something about engineering. Therefore, he should pay attention when a Scot is talking about the engineering industry and its importance to the United Kingdom's economy.
    I am concerned, albeit briefly, to express our disappointment at the Government's inadequate response to the Finniston recommendations. I know that my hon. Friend the Member for Bristol, North-East (Mr. Palmer) will want to make some points from his experience and background in promoting the Finniston report and his studies since.
    I hope that, even at this late hour, the Government will have another think and will come to the conclusions that their proposals are inadequate. We need a statutory body to co-ordinate and bring together all these aspects to enhance the importance of engineering in modern times so that we may reassert ourselves as a leading industrial nation.
    Mr. John Ward: It would be easy to go over the Finniston debate again tonight. I made clear in that debate that I was opposed to many of the recommendations of Finniston, and I remain so.
    I declare an interest, as a chartered engineer and an elected member of the Council of Engineering Institutions. I believe that the good parts of the Finniston report—those parts that both sides of the House would wish to promote—can be carried forward only if they have the support of the engineering profession. There is much good will from the engineering profession, but it is not willing to go along with an organisation which it thinks will lack independence from external interference, not have any assurance of maintaining professional standards, and does not seem to take enough note of the experience and expertise that is already available in the engineering institutions. Moreover, the polls that have been carried out by the engineering institutions show that many of the 200,000 members of those institutions are still against the charter.

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    Some of those fears could be overcome by calm discussion round a table. The engineering profession and the professional institutions are anxious to co-operate with my right hon. Friend the Secretary of State to get an organisation that will benefit engineering in the near and long-term future. They fear that the organisation that is proposed could become a vehicle for nationalisation by a less enlightened Government than this one. They believe that if a vehicle for nationalisation is needed, the party opposite is capable of devising one without any help from this side of the House.
    The first members of the Engineering Council will be appointed by my right hon. Friend the Secretary of State, and they will then be asked to devise byelaws under which their successors should be elected. I am a charitable man in these matters, but those who are appointed by the Secretary of State in the first place might be less than human if they did not see their image in their successors. I hope that, even at this late stage, my right hon. Friend will meet the heads of the professional engineering institutions—all 16 have rejected the proposed charter—and see whether there can be some common ground between him and them.
    I repeat that there is much good will for what my right hon. Friend is trying to do, but there is much concern that by going along with his present ideas they will be providing hostages to fortune. Above all, they want to help him not to set up yet another Government quango. They want to be independent financially and in their professional judgment. We should support that view.
    Mr. Arthur Palmer: The hon. Member for Poole (Mr. Ward) declared his interest as a chartered engineer and as a member of the Council of Engineering Institutions. I also declare an interest. I am a chartered engineer and a Fellow of two bodies that are affiliated to the Council of Engineering Institutions. I regret that the hon. Gentleman introduced a party note into his speech. We have had many discussions on the Finniston report almost entirely on a non-party basis, and I hope that it will remain that way.
    As the House knows, I have taken a close interest in Finniston from the very beginning; indeed, it was partly at my suggestion perhaps that the committee was appointed. In Standing Committee I made a complaint that I have often made which is that the new council should have been set up by statute, as a matter of constitutional decency. The Secretary of State, with his great willingness always to listen, if not to act, nevertheless accepted the views of the engineering institutions in so far as they were expressed through the CEI and the four presidents that it should be done by means of the Privy Council.
    I objected and object very strongly to that. It is a clumsy and bad procedure. In Standing Committee, the point I made was that the House was invited by the Secretary of State in this Bill to make funds available, by loan guarantees or otherwise, to his Privy Council body without the Standing Committee having knowledge at that time of what would constitute the responsibilities and powers of the authority.
    Through the various channels open to me, I saw the first draft of the Royal Charter. I believe that it is now in its revised form available from the Library, but rather late in the day; it was not available to the Standing Committee. I was not impressed by the first draft Royal Charter. It seemed then to be very little improvement on what exists
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    already through the CEI. It is generally agreed that the CEI has not made a very great success of its job over the years mainly because the component bodies would not give it authority.
    Since that time of the first draft there have been further consultations. It seems that the right hon. Gentleman has now to some extent broken the spell that the leaders of the engineering institutions cast upon him when he met them on 2 July. The truth is that they wanted just the minimum of change, if any change at all; they certainly did not want changes of the sweeping nature recommended by Finniston. But some forceful criticisms have been made of the first draft, through a series of consultations. They are not just criticisms by the engineering institutions, which hold one point of view, but criticisms made by industry, by the employers' side and by the trade unions, and particularly by those staff unions which organise chartered engineers. I have often made the point that the average chartered engineer in this country is an employee and not an employer.
    Those criticisms of the first draft have had some effect, I believe, on the right hon. Gentleman's mind. He has now brought forward an amended draft, which is a considerable improvement, I admit, on the first draft, though I would have preferred it to be done by statute. But nothing, I fear, will ever bring the Council of Engineering Institutions into agreement with anything that the Secretary of State does, because at heart it does not want any change. It fought against the setting up of the Finniston committee. It is not surprising, therefore, that the new draft does not please the Council of Engineering Institutions since it has moved further away from its outlook.
    I have here a letter from the Council of Engineering Institutions that was written on 28 January 1981 to the Secretary of State. Hon. Members such as myself are obliged to read this kind of thing to the House, because there has been no comprehensive Bill with a Committee stage. In the course of that letter the CEI stated:
    "We look forward to an opportunity, even at this late hour, for further discussion with your Department,"—
    the discussions have been going on for months—
    "and we believe that this will have your support. But if such discussion is to be constructive and fruitful, it must be the aim to recast the Charter to take adequately into account the representations made in our letter of 22 October. Continuing exchanges on points of detail in the existing draft would serve little if any useful purpose. We must most emphatically stress that to persist with the Charter in its present form would carry with it a serious risk of creating unworkable relationships between the new council and the existing Institutions."
    In other words, this is a plain threat of non co-operation if they do not get their way.
    9.30 pm
    Mr. Ward: In the interests of clarity, I am sure that the hon. Gentleman would wish to explain to the House that the letter is from the 16 corporation presidents as well as the chairman of the CEI.
    Mr. Palmer: I know that. They are equally mistaken. The error spreads itself.
    The Secretary of State has leaned over backwards to conciliate and to meet the points of the engineering institutions. He must equally keep in mind the views of industry and the trade unions. If, in the end, the engineering institutions—one must not suppose that the councils and officials that run these institutions necessarily speak for the rank and file because they do not—will not

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    co-operate, he will have no alternative but to withdraw what he proposes now in this Bill and bring in a comprehensive Bill that would give the authority of Parliament to the necessary change recommended by Finniston over the whole field. Complete breakdown now would be unthinkable.
    Dr. John Cunningham: I begin where my hon. Friend the Member for Bristol, North-East (Mr. Palmer) concluded. If the Secretary of State had done what my hon. Friend has suggested in the first place, we would not be sitting here this evening. When we discussed the clause in Committee, we were asked to discuss something that had not even been made public. The Committee was asked to accept something that it had not even seen. That was a rather unusual state of affairs, to say the least. The Government have moved a little way since that time. They have at least published the latest in a number of drafts of their proposed charter. As my hon. Friend the Member for Bristol, North-East and, indeed, the hon. Member for Poole (Mr. Ward) have stated, this proposal from the Government has no friends and no supporters. It has had none to date in this House. It has none among the engineering institutions themselves. That is not surprising.
    What the Government propose, as hon. Members have indicated, is a long way from Finniston. It does not have much in common with what Finniston recommended. Perhaps if it did, the engineering institutions would still be opposed to it. That is not the point. What the Government suggest has no teeth. It does not require a statutory registration. It makes no definitive statement about finance. It is a series of very general proposals—I refer to clause 6 as a whole, but it is also true, in some measure, of the charter—which a number of people feel are not only inadequate but almost an affront to the engineering institutions themselves.
    I hope that the Under-Secretary will state clearly who is in favour of the Government's proposals. We asked him this question in Committee. I repeat it now. Is the Committee of Vice-Chancellors in favour, or against, what is suggested? Is the CBI in favour? Or does it still adhere of the view of the 16 institutions responsible for the letter to which all hon. Members seem to have a copy? Is the Engineering Employers' Federation in favour of these proposals? Or is the federation, like most people, against them?
    I shall quote one sentence from the letter from the institutions of 28 January:
    "It follows that the present draft remains unacceptable."
    Nothing could be clearer than that. The institutions will not concede whatever control they exercise over the title "Chartered Engineer" to the new body that the Government propose.
    What about the financial provisions? It is unusual for hon. Members on the Government Benches to be asked to vote for general enabling measures. If that was proposed by the Opposition, the Government would be up in arms. Conservative Members are also being asked to support financial provisions about which we have no details. We should like to know more about them.
    What is so awful about a proposal not only to have statutory registration but to have a statutory body to govern engineering introduced in a Bill? For example, the General Medical Council, which is highly respected, acts as a
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    safeguard in the public interest and even exerts considerable influence over Government funding for medical training. It is a well established body. It is a good precedent, which we recommend to the Government for consideration. The GMC also involves a great deal of self-government for the medical profession. Such a provision would go some way towards meeting the point raised by the hon. Member for Poole (Mr. Ward) and the points raised by the institutions. Why should engineers not be treated in a similar way?
    Clause 6 is not acceptable, as we made clear in Committee, and neither are the specific provisions for engineering. The Secretary of State should think again. I believe that the proposals will be severely mauled in another place and the Government may be forced to think again. They should therefore be gracious and make eleventh hour changes. It is not a party political argument. It is important to take this opportunity to get the situation right for engineering, which in turn is important for our future industrial prosperity.
    The Secretary of State would be hard pressed to point to anything in the clause that remotely resembles a motive for change. Unless the Minister can convince us otherwise, we shall vote against the clause.
    The Under-Secretary of State for Industry (Mr. John MacGregor): I shall start with three points on which I believe we agree. We agree that it is not a party matter. There are disagreements about certain aspects of the Finniston approach and our approach. Some of the disagreements are greatly exaggerated. There is much more welcome for the course that we are following than would appear from this short debate.
    Nothing that I may say later will diminish my agreement with the point made by the hon. Member for Dunfermline (Mr. Douglas) about the importance of promoting engineering, and the engineering dimension. I dealt with that in Committee, but I should like to make it clear again. I entirely agree with the wider concept of the engineering dimension. We are now discussing the structural approach that should be taken to achieve that.
    9.45 pm
    I hope that we agree that there is much in the Finniston report—which we have widely welcomed—which is of great value and which is being pursued in other ways. This evening, we have picked out one important aspect of the Finniston report. Much of what was said in the Finniston report is being followed up. This disagreement does not, therefore, diminish the value of that report.
    I turn to the specific effect of the amendment tabled by the hon. Member for Dunfermline. It seeks to delete the whole of clause 6. I recognise that the hon. Gentleman wishes to reopen the debate on the type of body involved. However, the amendment would remove two provisions which are comparatively small, but not unimportant. The first provision provides specific statutory cover for the financial support which this and previous Administrations have given for certain industrial/education activities—to which some of my hon. Friends referred in the earlier debate—which are aimed at improving the mutual understanding between industry and education, particularly at school level.
    Until now, that support has been provided under the authority of the Appropriation Act. However it is an established principle—and I should have thought welcomed by this House—that statutory authority should

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    be sought at the first convenient opportunity for recurring items of expenditure. The Bill would provide that in the first part of its proposal. It would be unfortunate if we were to lose that opportunity by rejecting the clause.
    The clause enables the Secretary of State to provide certain forms of support for the proposed chartered engineering body. As I made clear in Committee, our intention is that the body should be self-financing, but we are taking powers in this clause to guarantee loans to the body from the private sector during the initial period when it is set up, and, if it proves absolutely necessary, to make grants available to it during that initial period until it has become self-supporting.
    The effect of the amendment would, therefore, be that existing expenditure on industrial-education activities would continue to be made solely under the authority of the Appropriation Act. I am sure that I do not need to persuade hon. Members that this would be unsatisfactory. Secondly, the Secretary of State would not be empowered—
    Dr. John Cunningham: We understand what the Under-Secretary is saying. Nothing would be lost by that. We are asking the Government to go away and think again. That could be put right and no one would be short of money.
    Mr. MacGregor: I recognise that the hon. Gentleman's point is central to the debate and I shall take it up later. If the clause were lost, I suppose that we could provide the money for the chartered engineering body under an Appropriation Act but—for the reasons I have given—it would be regarded as unsatisfactory. Therefore, the amendment might well prevent the body from becoming established.
    I turn to the basic arguments that have been put forward.
    Mr. Douglas: How long have these sums been made available to the organisations under the Appropriation Act? Will the hon. Gentleman indicate the difficulties involved if the Government review the situation and correct it in the other place?
    Mr. MacGregor: I am not sure about the length of time, but a number of years are involved. We are taking advantage of this opportunity to put that right. As regards the hon. Gentleman's second question, I hope that I shall demonstrate why we feel that it is right to proceed in this way and not to lose the advantage of the limited power contained in the second part of the clause.
    In Committee we heard the argument about the distinction between a statutory and a chartered body authority. That is the substance of the Opposition's criticism. I shall not go over the whole of that ground again, as I am anxious to make progress. However, the most important point is that the consultations that we engaged in earlier last year—Opposition Members agree that they were fairly extensive—did not show agreement—that has been made clear tonight—-but a clear desire for a new body. There was also a strong feeling that once set up it should work independently of Government and should build on existing practice where possible.
    9.45 pm
    The independence of Government argument is an important one. I recall the hon. Member for Whitehaven (Dr. Cunningham) reading a passage from a letter that
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    criticised some aspects of our proposals but made clear that the author—a very distinguished gentleman— supported the independence argument. That has been widely advanced by many others apart from the institutions which have responded to the consultations. It is important to recognise that it is a widely held view, a majority view, and that we are responding to it.
    The hon. Member for Whitehaven exaggerated somewhat when he said that we are a long way from Finniston. He knows that the Finniston report did not propose any statutory powers for the new statutory authority. It was proposing an authority that in addition could report to Parliament. We believe that it is right for this body to be independent of the Government and that we have adopted the route that will enable that to happen.
    The hon. Gentleman asked me who is in favour of the approach that the Government are taking. Inevitably, we have had the Opposition's views and the disagreements have been expressed. However, the Committee of Vice-Chancellors and Principals of the United Kingdom Universities, the Engineering Employers Federation and the CBI all support the draft charter. There is quite widespread support for the charter.
    Dr. John Cunningham: Only recently.
    Mr. MacGregor: The hon. Gentleman knows that the draft has been circulated comparatively recently.
    Mr. Palmer: When the Minister referred to the bodies that support the draft charter, which draft does he mean? There have been so many drafts.
    Mr. MacGregor: Only one has been circulated widely. At an earlier stage a draft was circulated to only a few individuals to try to arrive at a format that would be circulated more widely. The one that has been circulated more widely is the draft circular of 23 January, a copy of which has been put in the Library. That was done, as the hon. Gentleman knows, at the request of himself and his hon. Friend the Member for Whitehaven in the debate in Committee. I have responded to that by putting the draft charter in the Library. I did so as soon as it was circulated elsewhere.
    I continue with the arguments that we rehearsed in Committee on the distinction between a statutory and chartered body approach. I have referred already to the wide consultation that we undertook. The response indicated a clear majority view and demonstrated that there would be widespread opposition to a statutory body, which would be thought to represent excessive Government involvement in the regulation of the engineering profession.
    It is important that we make progress with the new body, in the light of the Finniston report. If we are to do that, it is important that we carry as wide a body of opinion with us as possible. It is important that we carry with us as much co-operation as possible, including those who have not been mentioned so often tonight—namely, the employers, who will have to play an important role in getting the new body off the ground. It is significant that the CBI is supporting the draft charter.
    There is a difference of view, but the opposition to the chartered approach has had more support in the House than reflects the views outside the House of a group much wider than engineers but including, I suspect, many engineers.
    I turn to some specific issues. The hon. Member for Dunfermline argued that in the light of the chartered

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    engineer title it would be more satisfactory to put that into statutory form. As I have explained, we want to proceed by agreement. There are some final matters to clear up that we are discussing with the Council of Engineering Institutions and other leading institutions. There is a widespread desire to adopt the chartered engineer title under the new arrangements, and we are hoping to facilitate that.
    It would be unfortunate if the new body had to set up new qualifications and titles for engineers, which is what the Finniston report suggested. Legislation would not have helped, because the Finniston report gave its authority no powers. We believe that the best way is to proceed by agreement.
    The hon. Gentleman asked about an annual report to Parliament and led me to believe that he thought that it would lead inevitably to an annual opportunity to discuss in Parliament the progress of the body. He knows only too well that there are so many candidates for discussion in the House that not all of them, by any means, can be accommodated in any one year. That must be a matter for the Leader of the House. But this is a point that I should be happy to consider possibly including in the charter. Again, as I have said, we want to get as much agreement as possible. One possible course would be to insist that copies of the annual report were deposited in the Library. But it is certainly a point that I should be happy to consider.
    The hon. Member for Dunfermline referred to the fact that no new funds, as recommended by Finniston, apart from the possible funds that the Government may have to guarantee in the earlier stages, were being put to the new authority. It is easy to keep proposing new activities for which extra funds should be voted, but the hon. Gentleman knows only too well the difficult climate in which we operate in relation to public expenditure. Therefore, one has to take a view of priorities, quite apart from the fact that there are other reasons for taking the course that we are taking on the chartered body approach.
    One of my hon. Friends mentioned a number of fears that are being voiced—in a somewhat exaggerated way, as I hope to prove—among the engineering institutions, or at least among the leaders of these institutions. There is some evidence that quite a lot of engineers themselves do not support the views at present being put forward. First, the fear that has been expressed that the Royal Charter body might become the vehicle for nationalisation of the professions seems to me to be quite unjustified. I cannot see how that could possibly be the case. I believe, however, that there has been much misunderstanding of the position with regard to the charter. I had hoped that the speech that I made in Committee—and I know how little attention is often paid to Standing Committee speeches—would have been circulated with the charter. Some of those who have seen that speech since expressing their original fears have now admitted that their fears have been removed altogether or to a large extent diminished. I therefore believe that one or two points that have been picked out of the charter, or even an earlier draft of the charter, have been used to suggest greater Government interference than actually would be the case in the charter itself.
    With regard to the professional judgment of engineers, nothing that we are proposing will affect the importance
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    of professional judgment. As my hon. Friend will know, however, there are wider considerations behind the setting up of the new body.
    My hon. Friend made two further points. First, he had fears that the people whom the Government appointed for the first three years would be self-perpetuating and that this would in itself indicate how the Government would continue to retain control. I must make clear that the reason for the Government doing this in the first instance is to get the new body off the ground with as wide agreement as possible and in as objective a way as possible.
    Dr. John Cunningham: How will the new body get off the ground if the Council of Engineering Institutions refuses to concede its control over the title of "chartered engineer"?
    Mr. MacGregor: As I indicated earlier, I believe that this is an area in which progress can still be made, where some of the misunderstandings about the charter and the Government's approach can really be thrashed out. We have had from the various organisations 280 suggestions for the chairman and members of the new council, which I believe indicates the degree of support which exists for the approach that we suggest. Finally, we are still awaiting the detailed comments of the institutions and others to whom the draft charter has been circulated. Clearly, those detailed comments will be taken into account.
    I think that I have already dealt with some of the points raised by the hon. Member for Bristol, North-East (Mr. Palmer) in relation to the draft charter. I hope that he will realise why the draft charter was not before the Standing Committee on 15 January, because it was not actually circulated until 23 January when we placed it in the Library. I understand his objections. We have already debated them at considerable length, as the hon. Gentleman has discussed them within the engineering profession, though not always with full support.
    It is now important to get on with the initiative that was set up under Finniston, to establish as much agreement as we can and to get the new body set up.
    I made a number of points in Committee which I believe would set at ease many of the fears of the engineering institutions. I should therefore like, in conclusion, briefly to repeat some of them. Since the matter was debated in Committee there has been considerable comment in the press and outside, much of which I believe to be based upon a misunderstanding of the Government's position. Nothing in the Government's proposals is intended to diminish the importance of the role of the engineering profession or its institutions.
    The proposed council will consult the engineering institutions, and so far as possible work through those institutions which can satisfactorily apply the standards determined by the council. Although the Government will appoint the first chairman and members, they will do so in such a way as to reflect the very broad range of interests involved. Thereafter, the council will act in its own right under the charter, and, as can be seen from the draft, there is no question of the Government being given powers to direct the work of the council.
    We would expect, and, indeed, intend, that any future proposals put forward to the Privy Council by this body for its future constitution would reflect that same balance of interests; and, indeed, that there would be full

    375
    consultation before such recommendations are made. Without this, the council itself could not possibly fulfil its objectives in the future. I stress again the great importance which we attach to the regulation of the engineering profession in this regard, taken in the wider context of national economic needs, which Sir Monty Finniston himself so eloquently defined in his excellent report.
    It is for this most important reason, which goes to the very heart of the matter, that we seek a genuine consensus to move forward, and a commitment from employers, the educational system, the individual engineer, and his representatives.
    I hope that I have made the Government's intentions perfectly clear, so that this House and all those concerned may be under no misapprehensions, and that on this basis we may all move forward together in this important matter. We will obviously welcome detailed amendments to the proposals we have already made and we look forward to receiving them, but we must now make progress on the broad basis established, and with that in mind I hope that the House will reject the amendment.
    Question put, That the amendment be made:—
    The House divided: Ayes 108, Noes 152.

    Division No. 62

    [9.56 pm

    AYES

    Alton,David

    HomeRobertson,John

    Armstrong, RtHon Ernest

    Homewood,William

    Atkinson, N.(H'gey,)

    Howells,Geraint

    Bagier,Gordon A.T.

    Hughes, Robert (Aberdeen N)

    Beith, A. J.

    John,Brynmor

    Benn, Rt Hon A. Wedgwood

    Johnson, James (Hull West)

    Bidwell,Sydney

    Jones, Rt Hon Alec (Rh 'dda)

    Booth, Rt Hon Albert

    Jones, Barry (East Flint)

    Bray, Dr Jeremy

    Jones, Dan (Burnley)

    Buchan,Norman

    Kerr, Russell

    Callaghan,Jim(Midd't'n&p)

    Lambie,David

    Campbell-Savours,Dale

    Lamond,James

    Carter-Jones Lewis

    Leadbitter,Ted

    Cocks, Rt Hon M. (B'stolS)

    Leighton,Ronald

    Coleman, Donald

    Lestor, MissJoan

    Conlan,Bernard

    Lewis, Ron (Carlisle)

    Cowans, Harry

    Litherland,Robert

    Crowther,J.S.

    Lofthouse,Geoffrey

    Cryer,Bob

    McCartney,Hugh

    Cunliffe,Lawrence

    McDonald,DrOonagh

    Cunningham, DrJ.(W'h'n)

    McElhone,Frank

    Dalyell,Tam

    McGuire,Michael(lnce)

    Davidson,Arthur

    McKay,Allen(Penistone)

    Davies, Ifor (Gower)

    McMahon,Andrew

    Davis, T. (B'ham.Stechf'd)

    McNally,Thomas

    Dixon,Donald

    McNamara,Kevin

    Dormand,Jack

    Marks,Kenneth

    Douglas,Dick

    Marshall,D(G'gowS'ton,)

    Douglas-Mann,Bruce

    Marshall, DrEdmund (Goole)

    Duffy, A. E. P.

    Maxton,John

    Dunn, James A.

    Millan, Rt Hon Bruce

    Eastham, Ken

    Miller, Dr M. S. (EKilbride)

    Evans, loan (Aberdare)

    Mitchell,Austin(Grimsby)

    Evans, John (Newton)

    Morris, Rt Hon C. (O'shaw)

    Ewing,Harry

    Mulley,Rt Hon Frederick

    Fletcher, Ted(Darlington)

    Orme, Rt Hon Stanley

    Foster, Derek

    Palmer,Arthur

    Freeson, Rt Hon Reginald

    Penhaligon,David

    Freud,Clement

    Powell, Raymond(Ogmore)

    Garrett, John (NorwichS)

    Prescott,John

    George, Bruce

    Roberts, Ernest (HackneyN)

    Golding,John

    Rowlands,Ted

    Graham,Ted

    Silkin,Rt Hon J.(Deptford)

    Grant, George (Morpeth)

    Skinner,Dennis

    Hamilton, W. W. (C'tral Fife)

    Spearing,Nigel

    Hardy, Peter

    Spriggs,Leslie

    Harrison, Rt Hon Walter

    Steel, RtHon David

    Haynes, Frank

    Stoddart,David

    Hogg, N. (EDunb't'nshire)

    Thomas,Dafydd(Merioneth)

    376

    Thorne, Stan(PrestonSouth)

    Whitlock,William

    Tinn, James

    Wigley,Dafydd

    Wainwright,R.(ColneV)

    Winnick,David

    Walker, Rt Hon H.(D'caster)

    Welsh,Michael

    Tellers for the Ayes: White, Frank R.

    White, Frank R

    Mr. Joseph Dean and

    Whitehead,Phillip

    Mr. George Morton.

    NOES

    Ancram,Michael

    LeMarchant,Spencer

    Atkins, RtHonH. (S'thorne)

    Lennox-Boyd,HonMark

    Atkinson,David(B'rn'th,E)

    Lloyd, ian(Havant& W'loo)

    Banks,Robert

    Lloyd, Peter (Fareham)

    Benyon,Thomas(A' don)

    Loveridge,John

    Berry, HonAnthony

    Lyell,Nicholas

    Best, Keith

    Macfarlane,Neil

    Bevan, David Gilroy

    MacGregor,John

    Biggs-Davison,John

    MacKay,John(Argyll)

    Boscawen,HonRobert

    McNair-Wilson,M.(N'bury)

    Bright,Graham

    Madel, David

    Brinton,Tim

    Major,john

    Brooke, Hon Peter

    Marten,Neil(Banbury)

    Brotherton,Michael

    Mather,Carol

    Brown,M.(BriggandScun)

    Maude, Rt Hon Sir Angus

    Bruce-Gardyne,John

    Maxwell-Hyslop,Robin

    Bryan,SirPaul

    Meyer,SirAnthony

    Bulmer,Esmond

    Miller,Hal(B'grove)

    Butcher,John

    Mills, lain (Meriden)

    Carlisle.John(Luton West)

    Mills, Peter(West Devon)

    Carlisle,Kenneth(Lincoln)

    Moate,Roger

    Chapman,Sydney

    Montgomery, Fergus

    Clark, Hon A. (Plym'th, S'n)

    Morrison, Hon P.(Chester)

    Clarke,Kenneth(Rushcliffe)

    Murphy,Christopher

    Clegg,SirWalter

    Myles, David

    Cockeram,Eric

    Neale,Gerrard

    Colvin,Michael

    Needham,Richard

    Cope,John

    Nelson,Anthony

    Cranborne,Viscount

    Newton,Tony

    Crouch,David

    Normanton.Tom

    Dean, Paul(North Somerset)

    Onslow,Cranley

    Dorrell,Stephen

    Page, John (Harrow, West)

    Dover,Denshore

    Page, Richard (SWHerts)

    Dunn,Robert(Dartford)

    Parris,Matthew

    Dykes, Hugh

    Patten, John(Oxford)

    Fairgrieve,Russell

    Pollock,Alexander

    Faith, MrsSheila

    Porter,Barry

    Fenner, Mrs Peggy

    Prentice, Rt Hon Reg

    Fletcher, A. (Ed'nb'ghN)

    Proctor, K. Harvey

    Fletcher-Cooke,SirCharles

    Rathbone,Tim

    Forman,Nigel

    Renton,Tim

    Garel-Jones,Tristan

    RhysWilliams,SirBrandon

    Glyn,DrAlan

    Ridley,HonNicholas

    Goodhart,Philip

    Rippon, Rt Hon Geoffrey

    Goodlad,Alastair

    Roberts, M. (Cardiff NW)

    Gorst,John

    Rossi, Hugh

    Griffiths, Peter Portsm'thN)

    Rost, Peter

    Grist, Ian

    Sainsbury,HonTimothy

    Grylls,Michael

    Shaw, Giles (Pudsey)

    Hamilton, Hon A.

    Shepherd, Colin(Hereford)

    Hamilton,Michael(Salisbury)

    Sims, Roger

    Hampson,DrKeith

    Skeet, T. H. H.

    Hawkins,Paul

    Smith,Dudley

    Hawksley,Warren

    Speller,Tony

    Henderson,Barry

    Spicer, Jim (WestDorset)

    Hill,James

    Spicer, Michael (SWorcs)

    Hogg.HonDouglas Gr'th'm)

    Sproat,lan

    Holland,Philip(Carlton)

    Stainton,Keith

    Hordern,Peter

    Stanbrook,lvor

    Hunt,John(Ravensbourne)

    Stewart,Ian(Hitchin)

    JohnsonSmith,Geoffrey

    Stewart,A.(ERenfrewshire)

    Jopling,Rt HonMichael

    StradlingThomas,J.

    Joseph, Rt Hon Sir Keith

    Taylor, Teddy (S'endE)

    Kaberry,SirDonald

    Tebbit,Norman

    Kershaw,SirAnthony

    Thompson,Donald

    Kilfedder,James A.

    Thornton,Malcolm

    King, Rt Hon Tom

    Townend,John(Bridlington)

    Knight,MrsJill

    Viggers,Peter

    Knox, David

    Waddington,David

    Lang, Ian

    Waldegrave,HonWilliam

    Langford-Holt,SirJohn

    Walker-Smith, Rt Hon Sir D.

    377

    Wall,Patrick

    Williams,D. (Montgomery)

    Ward,John

    Wolfson,Mark

    Warren, Kenneth

    Young, SirGeorge(Acton)

    Watson,John

    Wells,Bowen

    Tellers for the Noes:

    Wheeler,John

    Lord James Douglas Hamilton

    Wickenden,Keith

    and Mr. Selwyn Gummer

    Question accordingly negatived.
    It being after Ten o'clock, further consideration of the Bill stood adjourned.

  BUSINESS OF THE HOUSE
  Ordered,
  That, at this day's sitting, the Industry Bill may be proceeded with, though opposed, until any hour.—[Mr. Le Marchant.]

  New Schedule

  'REPEALS

  Chapter

  Short title

  Extent of repeal

  1975 c. 68.

  The Industry Act 1975.

  Section 8(2A) to (2C).

  1976 c. 75.

  The Development of Rural Wales Act 1976.

  Section 12(3).

  1979 c. 32.

  The Industry Act 1979.

  Section 1(2) to (4)

  1980 c. 33.

  The Industry Act 1980.

  In section 5, in subsection (1) the words "section 8(2) of the Industry Act 1975" and "The National Enterprise Board and", and subsection (2).

  Statutory Instruments

  S.I. 1980/1211.

  The Financial Limits (National Enterprise Board and Secretary of State) Order 1980

  The whole Order.

  S.I. 1980/235.

  The Development Board for Rural Wales (Financial Limit) Order.

  The whole Order..

  —[Mr. MacGregor.]

  Brought up, read the First and Second Time, and added to the Bill.
  Question, That the Bill be now read the Third time, put and agreed to.
  Bill accordingly read the Third time and passed.

  EUROPEAN LEGISLATION
  Ordered.
  That the Standing Order of 2nd July 1979 relating to the nomination of the Select Committee on European Legislation, &c. be amended, by leaving out Mr. Mark Lennox-Boyd and inserting Mr. David Myles.—[Mr. John Stradling Thomas.]
  Bill, as amended (in the Standing Committee), again considered.

  Clause 7
  SHORT TITLE AND EXTENT
  Amendment made: No. 18, in page 4, line 29, at end insert—
  '(1A) Section 1 of this Act comes into force on 31st March 1981
  (1B) The Acts and instruments specified in the Schedule to this Act are repealed to the extent set out in the third coulmen of that Schedule.'.—[Mr. MacGregor.]

  Roadline Depot, Kirkdale
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Le Marchant.]
  10.9 pm
  Mr. James A. Dunn: I am grateful for this opportunity to express my absolute opposition to the proposals of the National Freight Company contained in its corporate plan to close and transfer the Roadline depot in Townsend Lane, Tuebrook, within the Liverpool, Kirkdale constituency.
  I wish to draw attention to the dire consequences for the commercial and business life of the city if the proposal is to be implemented in accordance with the first proposal. There would be tragic consequences for employment against a background of an already unacceptably high level of unemployment. That would be inflicted at a time when job opportunities are scarce. It would also have a tragic impact upon those with long-standing loyal service to this enterprise. The far-reaching consequences will be a burden not only upon those who represent that enterprise, but upon their families and the neighbourhood.
  The city is suffering greatly from high unemployment. The recent figures show that there are 51,000 presently upon the unemployment register. Those figures do not disclose the full truth because a number of people do not register for further employment when they become unemployed. They include those working part-time and the casually employed, and others who would not register for a variety of reasons, including domestic reasons.
  I wish to convey to the Minister the anxieties and disquiet felt by the Liverpool city council, and the concern and apprehension of all small businesses in the city, which have always depended upon an effective, efficient and

  379
  economically based road haulage, parcels delivery and collection service. I also draw attention to the distress that will be caused to other industries which have been dependent upon this form of service, including the mail order stores, of which there have been recent declarations of financial and commercial difficulties.
  If Roadline closes at Townsend Lane, that will have other effects upon the National Carriers depot at Wavertree Road. It will have disastrous consequences upon the Huskinson dock freight line services and have a general impact upon Merseyside, and Liverpool in particular. The area would be deprived of a reputable and reliable national road haulage parcels and service and carrier. The rail linkage, which has been built up, will be grieviously affected and no doubt will disappear as a regular service for customers. That would all be to the detriment of the economic future of Merseyside's industry and commerce. It would have disastrous consequences throughout the surrounding area.
  British Road Services has operated on Merseyside always in the Townsend Lane-Brick Road area. That enterprise was successfully operated from 1947–48 until a new Roadline depot was started at Townsend Lane. I cannot be certain of the date, but I think that it was either 1959 or early 1960. If I recall events correctly, the transfer was well received at the time and was applauded by the then Conservative Administration as a step forward in a co-ordinated transport policy.
  The depot is well located geographically. It is almost on top of an inner city ring road—there is no need to build another. It has the advantages of an urban ring road—Queens Drive—of which the hon. Member for Liverpool, Wavertree (Mr. Steen) will be well aware. It is very close to the M6, and it is a stone's throw away from the M62. If one turns over backwards, one falls over the M58. It is not too far to two Mersey tunnels—we have one to spare. That soon takes traffic to the Wirral. From the Wirral the journey is anyone's guess—to North Wales or Cheshire. One could find oneself at Runcorn in a very few minutes once one reached the M53. In terms of geography and the road network, therefore, the depot is ideally situated.
  The East Lancashire road, Southport, Preston and the coastal areas are well served by Queens Drive and the Southport Road. They provide a direct route all the way up the coastline and to Preston. The ease of access has been of great advantage to the undertaking. It has been able to build up a good custom. If National Carriers and the National Freight Company were to relinquish their participation at Townsend Lane, that could cause havoc to the business interests located on Merseyside, and particularly in the centre of Liverpool.
  I am reliably informed that the present operation could easily be extended tenfold. I am told that handling and storing of the traffic would cause few problems either long or short term, because warehousing facilities are readily available in the redundant dockside warehouses in the north and south of the city and in Birkenhead. All these facilities that once represented a burden to the business are now an assistance to it because of the closure of the south docks and the reallocation of the warehousing resources.
  I am also told that to meet any further requirements for a road-rail link the yard is adjacent to a rail line and is not far from the major marshalling yard at Edge HillSpekeland Road which is not always currently fully utilised. I therefore fail to understand the closure
  380
  proposals, unless—here I chide the Minister and I hope that he will take it in good part—this is part of the Government's policy to withdraw and leave the lucrative part of a parcels collection and delivery agency for private enterprise to make a considerable success of.
  In recent times Labour and Conservative Governments have recognised the very special needs of Liverpool and Merseyside generally and have given it special development area status. It has been accepted that the city cannot overcome the historic imbalance of its infrastructure from its own resources. Hence, the introduction of the inner city partnership with considerable financial investment. The urban development corporation is soon to commence work. Ministers who have answered questions on this topic have shown that considerable resources will be made available to enable it to fulfil its promise.
  There is to be an enterprise zone which it is hoped will rejuvenate and regenerate some of the industries that have been failing on Merseyside. All this investment is dependent on a good road network and communications system. It is no use having roads if there is nothing to run on them, to make the deliveries and to provide the service.
  The difficulties, I understand, are that, while the Government may provide the road communications and services that are so desirable, we shall be denied the means of transport, the units that will carry the traffic.
  The Departments of the Environment, Industry, Employment and Transport have contributed to and participated in the grand plans for the rejuvenation of the area. I fail to see how they can hope to be successful if they do not have the support of a carrier service by road haulage and the rail and road links that are necessary.
  Why is the unit to be closed? If I were to speak honestly, I would say that I believe that it is part of a concerted campaign which has not been well thought out by those who are carrying out some aspects of Government policy. In an indirect way, they are denationalising publicly owned industry. In so doing, perhaps I am making an appeal to the Minister for reconsideration and asking him to stop the closure forthwith. Perhaps my appeal will fall on deaf ears. However, I know that he will have been advised to say, as part of his answer tonight, that the commercial management of this undertaking must be left to resolve some of its own problems and that it is no part of the Government's operation to intervene or to interfere.
  I hope that the Minister does not say that, because in any other industry there would be a shareholding. The Minister will be aware from speeches made by hon. Members representing Liverpool and Merseyside constituencies of some of the problems and difficulties in this area. Shareholding rights would have been expressed in such a way as to persuade a board by logic to change its decision. In this case, the shareholders are the taxpayers. They have no direct voice—only through the agency of the Government. The Minister must not neglect to fulfil that responsibility. It would be unacceptable if he decided to plead that the commercial confidentiality and decisions of this enterprise should be left to its own experienced specialists and members of the board. There would be no counterbalance and check.
  I conclude by appealing, even at this late stage, to the Minister to cause a complete revision of the proposals. If this unit were to be transferred from Liverpool to another geographical area—perhaps Greater Manchester—there would be an all-round journey of 60 miles. That would be

  381
  an on-cost, and, with mileage, demurrage and maintenance on vehicles, could soon make a partial service uneconomic to operate on Mersey side. That would be a tragedy for all and would belie what the Government have said about their intentions to rejuvenate Merseyside, and Liverpool in particular.
  10.24 pm
  Mr. Anthony Steen: I am grateful to the hon. Member for Liverpool, Kirkdale (Mr. Dunn) for allowing me to intervene in this debate about a matter which concerns all on Merseyside, and in Liverpool in particular. The Minister must realise that the situation in Liverpool is becoming so serious that all of us are increasingly embarrassed to say in the Chamber that there is another closure or another series of jobs being lost. At the moment there is a danger of losing 1,600 jobs in Tate and Lyle. Men will never have the chance to work at those jobs again.
  I am told that this unit is a successful road haulage business running above budget which provides an invaluable service in Liverpool. It has already lost 135 jobs in the last two years through redundancies and is now down to 120 jobs. It is the last outpost of the National Freight Company on Merseyside. This would be a serious matter anyway, but it is doubly serious in an inner area of Liverpool which is increasingly resembling a shanty town. There are many people without jobs and many firms are closing. This situation is causing all Liverpool Members great heart-searching.
  Whereas the private sector is prepared to compete with all other private sectors throughout the country in fighting for business in difficult times, the Conservative Party must not put any obstructions in the way of small firms or businesses which will prevent them from operating or discriminate in such a way as to make life more difficult for people on Merseyside.
  There seems every reason why there should be a National Freight Company presence on Merseyside. Speaking as a Conservative Member for a Liverpool constituency, I urge the Minister to recognise the gravity of the situation not only for this company, which will have another 135 men laid off, but for the whole of Merseyside. If the Government do not prevent this kind of company closing down—a company which supplies a real need in a modern purpose-built plant in Liverpool—there will be nothing to stop the rest of the cards from collapsing.
  All Liverpool Members must be equally concerned about the Government intervening to prevent another series of redundancies in favour of Manchester. That is happening time and again. One company in Liverpool or on Merseyside is closed and another company is opened in Manchester.
  I urge the Minister to give us some hope that the NFC will continue to have a presence on Merseyside and that more jobs will not be driven out to Manchester.
  10.26 pm
  Mr. David Alton: I wish briefly, knowing that the Minister will want to reply, to endorse wholeheartedly what has been said by the hon. Members for Liverpool, Kirkdale (Mr. Dunn) and
  382
  Liverpool, Wavertree (Mr. Steen). They have my total support. I hope that the Minister will respond with a message of hope for the people of Liverpool.
  There are more than 100,000 people out of work on Merseyside and the social and economic implications are incredible. This set of redundancies will add to an enormously growing picture of redundancy.
  I hope that the Minister will tell the House that there is hope for Merseyside. I hope that, having listened to the hon. Member for Kirkdale, he will be prepared to intervene and do something about the matter.
  10.27 pm
  The Under-Secretary of State for Transport (Mr. Kenneth Clarke): It was with great regret that I heard that the National Freight Company had announced the forthcoming closure of the Roadline depot at Townsend Lane, Liverpool. No date has yet been fixed for the closure, but the company expects to close the depot within the next three months, and operations from that depot will be transferred to Manchester. That closure, if it is carried out, will involve the loss of 115 jobs in Liverpool.
  I appreciate what has been said by the hon. Members for Liverpool, Kirkdale (Mr. Dunn) and Liverpool, Edge Hill (Mr. Alton) and my hon. Friend the Member for Liverpool, Wavertree (Mr. Steen). This is a matter of grave concern for Merseyside, which has already suffered great blows. I fully understand the concern that led the hon. Member for Kirkdale, for whom I have great respect, to raise this matter. Indeed, he has won all-party support.
  The fact is that the NFC has taken the decision, not the Government. There is no question of the Government intervening. The company is now discussing the matter with the unions with the aim of minimising redundancies. It has apparently been agreed that the Liverpool employees will be offered such jobs as will be available in Manchester when the transfer takes place, but I regret that not many jobs can be offered in that way.
  All three hon. Members who have spoken have asked me to explain the Government's role and to ask the Government to intervene because of the impending closure. Roadline is a subsidiary of the NFC. That is now a Companies Act company. My right hon. Friend the Secretary of State is the owner of all the shares. It is the Government's present intention to float the company in the near future. When we float the company, we probably will sell the Government's interest so that it becomes a fully private operation. But, even when it was a nationalised corporation, the rule was, as the hon. Member for Kirkdale anticipated, because he once stood at this Box and therefore knows the situation, that Ministers did not intervene in the day-to-day management of the corporation or seek to override the business judgment of the professional management. When they attempted to do so they invariably made a mess of it. When it was a nationalised corporation, that had no effect on the trading position or the job security of those who worked for it.
  The National Freight Company and its subsidiary, Roadline, have found themselves in difficult times in recent years because of their falling profitability in a very competitive market. Before this Government came into office, and before there was a change of policy, the number of employees in Roadline nationally fell from 11,200 in 1969 to 6,775 in 1979—a loss of 40 per cent. of the total jobs in the operation over 10 years, when it was a fully nationalised corporation under two successive

  383
  Governments of different parties. That is not a happy story. It is an unfortunate history of lost jobs and dwindling business. I hope that that helps to refute the suggestion that lay behind the speech of the hon. Member for Kirkdale that the present problems arose out of a change of policy by this Government or other underlying political aims.
  Roadline has been going through a difficult time as a trading company, and there will be no job security and no long-term future for the company until it returns to profitability and it is put on a sound trading basis. Therefore, we have to leave the matter to the business judgment of the managers and not interfere in the day-to-day management decisions that they must make, even when they face difficult decisions, as they do at the moment. That is not to say that we intend to act irresponsibly on behalf of the taxpayers, who are the 100 per cent. owners of the shares. Of course, we exercise control over the investment and borrowing of the company in order to discharge my right hon. Friend's responsibility for the shares that he owns to Parliament and to the public, who are the real owners of the company.
  In addition to being responsible for the sound management of the assets and the money, we as Ministers, are also concerned about the well-being of the work force. If they are to have secure jobs with a real future when they become privately owned, the NFC and Roadline will have to be turned round into profitability and established as strong competitive commercial undertakings.
  I am glad that the National Freight Corporation as a whole has made impressive strides in recent years and is rapidly turning itself round to become a competitive and profitable enterprise. That has to be done, and anything that deters it will threaten more jobs in the long term than are involved at the moment. As a loss-maker it has no future, and none of its subsidiaries can provide secure job prospects for those who work within it. It is necessary to pursue a strategy that gets it back on to a sound footing. I am satisfied that the management of the NFC is now doing that.
  I turn to the difficulties of Roadline, which have given rise to this particularly worrying problem in the inner city area of Merseyside. It is in the parcels business and, unfortunately, that is a very crowded, fiercely competitive part of the road haulage industry. There is a large amount of parcels traffic in Britain—about 210 million parcels a year—with a total expenditure by customers of about £500 million. But if we leave aside the Post Office, there are at present nine large national parcels carriers in the market, including Roadline and National Carriers, which are both owned by the NFC. There are a number of significant small operators. The recession has reduced business, and there is intense competition, with a need for greater efficiency.
  British Rail is making enormous losses on its collect and deliver parcels service, and it has been forced into a decision to withdraw from the market, which has left the other parcels operators competing to gain the extra business and to put themselves on a profitable and successful footing.
  Roadline was formed in February 1976 from the parcels division of British Road Services. I am afraid that over the years its trading results have deteriorated badly. It used to be profitable to a small extent. It first went into a loss in 1976, it has been making losses for the last two years and it is expected to make losses this year. But I am glad to
  384
  say that the NFC has decided on a rehabilitation strategy for Roadline which is designed to reduce costs, improve financial performance and achieve a reliable delivery service for the customers.
  The present strategy is designed to provide a guaranteed 24-hour service for the bulk of the company's traffic by 1982. The NFC regards this as necessary to compete effectively and is having to rationalise its business in order to achieve that. It shows that the company is planning a future for the business. It is looking at the financial problems it faces which have led to such a dramatic loss of jobs in Roadline over the last 10 years. It is trying to halt the bleeding away of business and jobs and to provide a secure future for a number of employees who really can be supported by the business. I am afraid that the Government cannot interfere with that commercial judgment and start trying to make the company take short-term decisions under political pressure which will interfere with the recovery of the business.
  I therefore have to resist what has been put to me. I appreciate that this kind of response is bound to come from Merseyside, where there has been so much bad news for the last two years, with job loss after job loss. The firm of Tate and Lyle was mentioned by my hon. Friend the Member for Wavertree. I have visited the plant and know the part that it has played in Liverpool and in the clocks for so long. It must be a very bad blow in the city, and it is very hard for Merseyside to take another loss of this kind as part of the reorganisation of a national business.
  But the Government certainly have not intervened to take the jobs from Liverpool and put them in Manchester. The constant Government involvement in Merseyside is to try to stop this job loss and to regenerate the area. The whole purpose of the policy underlying the urban development corporation, and the reason for the constant ministerial visits to Liverpool that are going on at the moment is to try to establish a basis for the local economy to begin to revive and for jobs to be won back, for derelict land to be used and for new investment to take place to offset losses of this kind.
  Mr. Eric Ogden: Will the Minister at least recognise the inconsistency? He has said that the Government are trying to help Merseyside. He has listed some names. At the same time, a company in which he and his Ministers are major shareholders is doing exactly the opposite privately, as it were, to what he and his Ministers claim that it is doing. Roadline is running as a city centre to city centre major operation in order to make a profit. In the meantime, the Minister has an area which is being denuded of the real competitiveness of private parcels.
  Mr. Clarke: As I have tried to explain, looking at it nationally, as one must first of all, Roadline is a business which is losing over £1 million each year. It has no future as a business anywhere in the United Kingdom if it cannot stop that rate of loss.
  The process of decline that I have described as taking place over the last 10 years would continue to the point of the company's extinction. The company is trying to reverse that and to turn itself round, but it is having to reduce the number of depots and rationalise its business in order to get a streamlined 24-hour service to its customers. I wish it success in that effort.
  It is my very deep regret that one of the losses which have resulted from that rationalisation has fallen on

  385
  Merseyside. But the future of Merseyside must depend on the efforts that the Government are putting in to regenerate the economy in other ways by the winning of new investment and improving the infrastructure of the city bringing all the derelict land in the south docks and so on back into use. I am afraid that the future of Merseyside will not be secure if the Government step in and keep one depot going for a month or two more in totally loss-making and futureless effort.
  Mr. James A. Dunn: Perhaps the Minister will have a quick look at the real commercial prospectus of Townsend Lane. On the basis of 2,500 parcels daily pick-up, if it is a commercial proposition, and if it has not made losses itself, will he consider the matter and readvise Roadline accordingly?
  Mr. Clarke: That involves the Government having to check the commercial judgment of Roadline, which says
  386
  that the depot is contributing to the losses, and that the closure of the depot would contribute to the revival of the business.
  I hope that the discussions going on between Roadline and the unions will produce some easement in the redundancy figures, and that some of the staff will take jobs in Manchester. But the future of jobs in the parcels business depends on putting the business back on a sound competitive footing. Ministers cannot take the decisions to do that and civil servants cannot take them, but I have every confidence that the management will eventually.
  All these disasters will redouble the efforts of the Government to do something about the underlying problems of Merseyside and bring some new investment back into the area.
  Question put and agreed to.
  Adjourned accordingly at twenty-one minutes to Eleven o'clock.

Employment
  Construction Industry
  Construction Industry
  Disabled Persons
  Disabled Persons
  Dundee
  Dundee
  Short-time Working Compensation Scheme
  Short-time Working Compensation Scheme
  Greater London
  Greater London
  Brent
  Brent
  North Staffordshire
  North Staffordshire
  Disabled Advisory Committee (Kent)
  Disabled Advisory Committee (Kent)
  Unemployment Levels (International Comparisons)
  Unemployment Levels (International Comparisons)
  Keighley
  Keighley
  Farming Accidents
  Farming Accidents
  Ethnic Minority Groups (West Midlands)
  Ethnic Minority Groups (West Midlands)
  Job Seekers (Cut Price Bus Fares)
  Job Seekers (Cut Price Bus Fares)
  Disabled Persons (Quota Scheme)
  Disabled Persons (Quota Scheme)
Trade
  Indonesia
  Indonesia
  Automotive Components
  Automotive Components
  Scotia Investments and Alco Metropolitan Properties
  Scotia Investments and Alco Metropolitan Properties
  State Controlled Assets
  State Controlled Assets
  Soviet Union
  Soviet Union
  Origin Marking
  Origin Marking
  Tampons
  Tampons
House of Commons
  Computer Services
  Computer Services
Energy
  British Gas Corporation
  British Gas Corporation
Home Department
  Police Officers (Trial Delays)
  Police Officers (Trial Delays)
  Immigration
  Immigration
  Salusbury Road, Kilburn (Fire)
  Salusbury Road, Kilburn (Fire)
  Electoral Boundaries
  Electoral Boundaries
  Offensive Weapons
  Offensive Weapons
  Elections (Business Vote)
  Elections (Business Vote)
National Finance
  Building Societies
  Building Societies
Civil Service
  Freedom of Information Bill
  Freedom of Information Bill
  Administration Trainees
  Administration Trainees
  European Community Budget
  European Community Budget
  BL Limited
  BL Limited
  Personal Incomes
  Personal Incomes
  Department for National Savings
  Department for National Savings
Attorney-General
  Council on Tribunals (Chairman's Salary)
  Council on Tribunals (Chairman's Salary)
  Scotia Investments Limited
  Scotia Investments Limited
  Mold Crown Court (Arson Trial)
  Mold Crown Court (Arson Trial)
Agriculture, Fisheries and Food
  Departmental Sections (Alnwick)
  Departmental Sections (Alnwick)
  Tate and Lyle, Liverpool
  Tate and Lyle, Liverpool
  Apple and Pear Development Council
  Apple and Pear Development Council
  Sugar Beet
  Sugar Beet
Environment
  Dog Wardens
  Dog Wardens
  Homes Insulation Scheme
  Homes Insulation Scheme
  Homeless Persons
  Homeless Persons
  Low-cost Home Ownership
  Low-cost Home Ownership
  Council Houses (Sale)
  Council Houses (Sale)
  River Mersey (Pollution)
  River Mersey (Pollution)
  Council Houses (Condensation)
  Council Houses (Condensation)
  Housing Associations
  Housing Associations
  Council House Rents
  Council House Rents
  Caravans
  Caravans
  Water Authorities
  Water Authorities
  Housing Corporation.
  Housing Corporation.
  Enterprise Zones
  Enterprise Zones
  Transitional Grant Arrangements
  Transitional Grant Arrangements
  New Towns (Housing Maintenance)
  New Towns (Housing Maintenance)
  Vacant and Waste Land
  Vacant and Waste Land
  South Africa (Sporting Links)
  South Africa (Sporting Links)
Wales
  Dust Disease Research Centre
  Dust Disease Research Centre
  Young Persons (Employment)
  Young Persons (Employment)
  Steel Areas (Assistance)
  Steel Areas (Assistance)
  Local Authorities (Services and Functions)
  Local Authorities (Services and Functions)
Defence
  Royal Navy (Fuel Savings)
  Royal Navy (Fuel Savings)
  Recruitment Costs
  Recruitment Costs
  HMS "ArkRoyal"
  HMS "ArkRoyal"
  Standby Squadron
  Standby Squadron
Foreign and Commonwealth Affairs
  Tate and Lyle, Liverpool
  Tate and Lyle, Liverpool
  Soviet Union
  Soviet Union
  South Africa
  South Africa
  Gibraltar
  Gibraltar
Industry
  British Steel Corporation
  British Steel Corporation
  BL Limited
  BL Limited
  Department of Industry (Education Section)
  Department of Industry (Education Section)
  Business Premises (Powers of Entry)
  Business Premises (Powers of Entry)
  Howden Glucose Company Limited
  Howden Glucose Company Limited
Scotland
  Highlands and Islands Shipping Services
  Highlands and Islands Shipping Services
  Unemployment (Dundee)
  Unemployment (Dundee)
  Terrorists (Extradition Proceedings)
  Terrorists (Extradition Proceedings)
  Schools (Vandalism)
  Schools (Vandalism)
  Farmers (Income)
  Farmers (Income)
  Blood Lead Levels
  Blood Lead Levels
  Lead Levels (Water Supply)
  Lead Levels (Water Supply)
  Urban Programme
  Urban Programme
  THE URBAN PROGRAMMES IN SCOTLAND CRITERIA, PRIORITIES AND AMOUNT OF GRANT
  THE URBAN PROGRAMMES IN SCOTLAND CRITERIA, PRIORITIES AND AMOUNT OF GRANT
Employment
  Youth Opportunities Programme (Staffordshire)
  Youth Opportunities Programme (Staffordshire)
  Short-time Working
  Short-time Working
  Redundancies
  Redundancies
  Peterlee and Wingate
  Peterlee and Wingate
  Short-time Working
  Short-time Working
  Redundancy Payments
  Redundancy Payments
  Wages and Salaries (Cheshire)
  Wages and Salaries (Cheshire)
  Military Training
  Military Training
  North Staffordshire
  North Staffordshire
  Disabled Persons (Dartford)
  Disabled Persons (Dartford)
  Keighley
  Keighley
Social Services
  Sexually Transmitted Diseases
  Sexually Transmitted Diseases
  Departmental Research Funds
  Departmental Research Funds
  New Born Infants
  New Born Infants
  Homoeopathic Medicines
  Homoeopathic Medicines
  Sick and Disabled Persons
  Sick and Disabled Persons
  Depo-Provera
  Depo-Provera
  Mobility Allowances
  Mobility Allowances
  Attendance Allowances
  Attendance Allowances
  Family Income
  Family Income
  Hospitals (Private Capital)
  Hospitals (Private Capital)
  Supplementary Benefit
  Supplementary Benefit
  Testing of Drugs
  Testing of Drugs
  Friedreich's Ataxia
  Friedreich's Ataxia
Education and Science
  Devon
  Devon
  University of London
  University of London
Northern Ireland
  Local Authorities (Services and Functions)
  Local Authorities (Services and Functions)
  Fat Cattle
  Fat Cattle
Environment
  Olympic Games
  Olympic Games
  Empty Dwellings
  Empty Dwellings
  Mobile Homes
  Mobile Homes
  Housing Investment Programme
  Housing Investment Programme
  Council House Rents and Rates
  Council House Rents and Rates
  House of Commons Services (Select Committee Report)
  House of Commons Services (Select Committee Report)
  Rating System
  Rating System
  Housing Policies
  Housing Policies
  Improvement Grants
  Improvement Grants
  Planning Procedures (Costs)
  Planning Procedures (Costs)
  Homeless Persons
  Homeless Persons
  Partnership Committees
  Partnership Committees
  Rate Support Grant
  Rate Support Grant
  Palace of Westminster (Lift Attendants)
  Palace of Westminster (Lift Attendants)
  Property Services Agency
  Property Services Agency
  Vacant Land
  Vacant Land
  Housing Investment Programme
  Housing Investment Programme
  Housing Corporation
  Housing Corporation
  Council Houses (Sales)
  Council Houses (Sales)
  Rate Support Grant
  Rate Support Grant
  Vacant Dwellings
  Vacant Dwellings
  Earth Tremors (Wickersley)
  Earth Tremors (Wickersley)
  Stansted Airport (Public Inquiry)
  Stansted Airport (Public Inquiry)
  Water Industry
  Water Industry
  Housing Demand
  Housing Demand
  Community Services
  Community Services
  Sporting Occasions (Attendance)
  Sporting Occasions (Attendance)
  House Building
  House Building
  North-Eastern Housing Association
  North-Eastern Housing Association
  Homlessness (False Claims)
  Homlessness (False Claims)
  House Purchase (Mortgages)
  House Purchase (Mortgages)
  Housing Costs
  Housing Costs
  Local Authority Electorates
  Local Authority Electorates
  Palace of Westminster
  Palace of Westminster
  Greater London Council
  Greater London Council
  Homesteading Scheme (Ealing)
  Homesteading Scheme (Ealing)
  Shared Ownership Leases
  Shared Ownership Leases
  Local Authority Expenditure
  Local Authority Expenditure
Transport
  Heavy Lorries
  Heavy Lorries
  State Controlled Assets
  State Controlled Assets
  Midland Link Motorways
  Midland Link Motorways
Industry
  State-controlled Assets
  State-controlled Assets

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR Oil the Woolsack.
Prayers—Read by the Lord Bishop of Salisbury.

Doctors: Unemployment Rate
Lord Wells-Pestell: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how many doctors are at present unemployed owing to health authorities cutting back on medical services.
Lord Cullen of Ashbourne: My Lords, we have no evidence of medical unemployment arising from the reasons specified by the noble Lord. On 11th December 1980, 641 unemployed persons were registered as seeking work as doctors in Great Britain, but there is no evidence that this is due to cutbacks. Health authorities generally are not cutting back on appointments to medical posts.
Lord Wells-Pestell: My Lords, may I advise the Government—
Noble Lords: No!
Lord Wells-Pestell: My Lords, may I ask the Minister whether I may advise the Government that, if they get in touch with the British Medical Association, that body will assure them that there are 400 doctors unemployed at the moment, that that is due to the fact that health authorities are cutting back on medical services and that the BMA anticipate that between 2,000 and 3,000 doctors will be unable to find employment in the not too distant future?
Lord Cullen of Ashbourne: The noble Lord has figures I do not have, my Lords, and course some of them are estimates, for example the 2,000 or 3,000 doctors he mentioned. The position at the moment is that at a time of very high unemployment throughout the country the number of doctors who are unemployed, many temporarily, is 6 per cent.
Lord Wells-Pestell: My Lords, having regard to the waiting lists of people who want to go into hospital and who need medical attention, is it not disgraceful that the Government are admitting to your Lordships that some doctors are unemployed?
Lord Cullen of Ashbourne: No, my Lords: it is impossible in any industry to have everybody fully employed at any time. Some of these people are moving from one area to another and some of them are unemployed for only very short periods. If only we had the same record of employment throughout the country as we have with National Health Service doctors we should all be very happy.
Lord Avebury: My Lords, is the Minister aware that I received a letter yesterday from a distinguished community physician who has been employed, among other authorities, by the World Health Organisation on missions in various parts of the world and that she has been unable to find a job after more than three months of searching?
Lord Cullen of Ashbourne: My Lords, it would be interesting to know in what specialty this particular doctor was involved. I know it varies in different areas, but I am very surprised at what the noble Lord tells me and perhaps he will let me have details.
Lord Avebury: I shall, my Lords.
Lord Leatherland: My Lords, the Minister said he would be happy if there were fewer unemployed in the country. Can he do anything to make himself happy by persuading the Government to reduce the number of unemployed?
Lord Cullen of Ashbourne: My Lords, the Government will undoubtedly reduce the number of unemployed over a period of time when we have got the economy on to a proper basis.
Lord Elwyn-Jones: My Lords, is not the use of the word "industry" in relation to the medical profession very curious?

Aviation Security
2.40 p.m.
Baroness Burton of Coventry: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will indicate the points to be considered by Lord Trefgarne in the report to be made by him on airport security matters; when it is estimated that the report will be completed; and whether they will make a statement.
The Parliamentary Under-Secretary of State, Department of Trade (Lord Trefgarne): My Lords, I understand that the noble Baroness is referring to the undertakings given by my honourable friend the Parliamentary Under-Secretary of State in another place on 19th January 1981 to the effect that I would give careful consideration to a number of points regarding aviation security. I shall indeed consider them carefully, but I do not propose to make a report.
Baroness Burton of Coventry: My Lords, the Minister is quite right: I was referring to that, and I gave him the date. May I ask, as it was said that he would be considering five points, four of them in connection with the security levy and one in connection with air traffic control, whether the noble Lord would feel able to let the House have information on those points when he has considered them? Is he further aware that all the airlines, I think without reservation, consider

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that the air security charges are too high, that they add to their costs and that they add to the fares charged to customers?
Lord Trefgarne: My Lords, the Aviation Security Fund, to which the noble Baroness refers, is one of the matters I am looking into carefully. I should not wish to be tied to making a statement when I have considered the implications of this matter, but I would be willing to answer a Question, perhaps for Written Answer, when the moment comes.
Baroness Burton of Coventry: My Lords, I am grateful to the Minister, but might it be possible to have an oral Answer if one put down a Question?
Lord Trefgarne: My Lords, the nature and timing of Questions tabled by Members of your Lordships' House is not a matter for me. I shall be glad to answer the noble Baroness's Questions as best I can whenever she tables them.

Scotch Whisky: EEC Payment to Distillers
2.42 p.m.
The Earl of Kinnoull: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will make a statement on the EEC payment due to the Scotch whisky distillers.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers): My Lords, agreement to the payment of refunds on Community cereals which are used in exported Scotch whisky was secured at the 1980 price-fixing. We are now pressing for early implementation of the Commission proposals which were presented in December last year.
The Earl of Kinnoull: My Lords, while thanking my noble friend for that reply, may I ask him to explain whether the refunds are retrospective, how far they go back, whether they are interest-bearing and when they will be paid?
Earl Ferrers: My Lords, when we joined the Community, the Council of Ministers said that in the absence of an agreement by 1st August, 1973, on an alcohol regime, which was then being discussed, refunds under Protocol 19, which deals with cereals included in spirit drinks, would be paid as from that date. At the 1980 price fixing, as there had been no agreement on an alcohol régime, the Council decided in response to pressure from my right honourable friend the Minister of Agriculture that as from 1st January 1981 refunds would be provided for cereals used in exported spirits under the cereals réegime, as Protocol 19 determined. Approximately £18 million per year will be the value of this, and the retrospective value, which is of course a matter yet for discussion, we consider to be in the region of £60 million.
Lord Davies of Leek: My Lords, is the noble Earl telling the House that the EEC still owes the poor Scotch distillers money? If that is so, will the noble Earl tell us how much trade the European Common Market is likely to gain in view of the fact that 100 of those marvellous European MPs are bouncing around South America at the European taxpayers' expense, at a quarter of a million quid a time?
Earl Ferrers: My Lords, the answer to the noble Lord's first supplementary question is, Yes. I am unable to give him a satisfactory reply to his observation about Members of the European Parliament bouncing around South America.

British Transport Police
2.45 p.m.
Lord Inglewood: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government why the Research Study No. 10 of the Royal Commission on Criminal Procedures entitled Prosecutions by private individuals and non-police agencies, published by HMSO, should include prosecutions by the British Transport Police and how this force differs in standards of recruitment, training, responsibilities and pay from those of county constabularies.
Lord Sandys: My Lords, this is not a matter for which Her Majesty's Government are responsible, but page
5 of the Research Study discusses the problems of terminology and explains the authors' choice of title, while Chapter 7 describes the status, powers, and size of the British Transport Police. Broadly, the force, whose members receive the same pay as the civil police, and are recruited and trained in much the same way, possesses powers limited to property used by the British Railways Board, London Transport Executive, British Transport Docks Board, and associated undertakings.
Lord Inglewood: My Lords, I thank the noble Lord for the full reply. Bearing in mind police loyalty and pride in their service, would not the noble Lord agree that it is not much of a compliment, nor much help to morale, to bracket the achievements of a fine force with more exacting initial training than any other force in this country, under a heading, Prosecutions by private individuals and non-police agencies?
Lord Sandys: My Lords, I do not agree with what the noble Lord says because the Government have great respect for the efficiency, morale and discipline of the British Transport Police. The Question refers to prosecutions, and as the Research Study shows, the British Transport Police prosecutes its own offences in much the same way as the civil police, although, unlike most civil police forces in England and Wales, it has no central prosecuting solicitors' department; so this is a technicality.

ILEA's Future
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon, my noble friend Lady Young will, with the leave of the House, repeat a Statement which is to be made in another place on the future of the Inner London Education Authority.

Industry: The Public Sector
2.46 p.m.
Lord Beswickrose to call attention to the constant ministerial criticism of the public sector of the British economy; to the sale of profitable publicly-owned assets; and to the need for a more constructive and positive policy which recognises the value of a properly-balanced and integrated mixed economy; and to move for Papers.
The noble Lord said: My Lords, the Motion before us is worded a little differently from that originally set down, not because I have changed my views, but because on the advice of the Clerk of the Parliaments I naturally agreed to conform with the practice of the House in relation to a Motion calling for Papers. At the outset of the debate I want to underline the last part of the Motion which I am moving; namely, Britain's need
"for a more constructive and positive policy which recognises the value of a properly-balanced and integrated mixed economy".
I shall not spend time in attacking private enterprise, but if anyone seeks to show as a matter of first principle that it is a superior form of activity, then I would remind him that we have it on the highest Conservative authority that there is an unacceptable face of capitalism. If it is a matter of finding faults, I would say that for every one fault in the public sector, there can be quoted two, three, four or more in the private sector, starting probably with the independent report of a few weeks' ago which shed light on one area of private enterprise and found that of 50 garage firms, only two were not open to charges ranging from incompetence to dishonesty.
I make those references only to strengthen the advice which I tender to the House, that it would be unwise and unrewarding to turn the debate into an argument of private versus public enterprise. I am asking for
"a properly-balanced and integrated mixed economy"
and there is a need, and a proper place, for the best in both private and public enterprise.
So while I recognise that there are in the private sector companies of proven worth, led by individuals of ability and integrity—some of them in this House—I also want to say as strongly as I can that I deeply and bitterly resent the unwarranted and damaging criticisms constantly levelled at the public sector and, by implication, if not design, against those men and women who serve in it. I have in mind extravagent language which uses words such as, "horrific", "debilitating", "poisonous", "voracious" and most recently from the Prime Minister, "haemorrhage"—all applied to productive enterprises and all as unwarranted as they are offensive. I suggest that this is sick language. It may serve to set up a scapegoat
1200
for the sad failure of economic policy, but it obscures the real issues.
The other day the noble Lord, Lord Orr-Ewing, made play of a figure of £3·1 billion which, he would have us believe, was squandered by the public sector. At the Dispatch Box the noble Earl, Lord Gowrie, dutifully told us that this expenditure was due to previous nationalisation policies. Much more usefully he could have told us how much of that money was returned in excessive interest charges, how much had gone on redundancy payments due to Government policy and how much was making good a previous lack of investment in the private sector. Then we could more usefully have considered the real problems of Britain.
A large slice of that £3·1 billion must have gone to British Leyland—a company which, under private enterprise, was called the most under-capitalised in the country. How much better if Austin Morris had been prepared to invest in a really modern production line! We now have the Mini Metro, which the Prime Minister, very rightly, has been boosting; but there would have been no such model if noble Lords' prejudiced approach had prevailed. In a Conservative Party broadcast on October 1st last year they were actually illustrating Britain's industrial achievements under conservatism with pictures of what was called "the most modern car production plant in the world". There was no mention in that broadcast of squandering taxpayers' money; nor was there any indication that it was in fact due to public enterprise.
Let me give more detailed examples of the governmental criticism of which I complain. On 14th December 1979, Mr. Adam Butler, as industry Ministry of State, addressed a gathering of businessmen. He said, among other similar things:
"Nationalised industry bills are horrific. They are debilitating the economy".
This is the "haemorrhage" theme. Some of the "sinners", he said, were utilities.
In my dealings with Mr. Butler—and I say this very sincerely—I found him one of the most courteous and helpful Ministers and, indeed, parliamentarians that I have ever been privileged to meet. But that speech caused great and understandable offence among all the chairmen of nationalised industries. The "sinners", as he described them, were men of considerable dedication, providing essential national services which were for the most part paying their way. Those "horrific" bills would have been applauded as wise investments had they been made in the private sector; and if they were not wise, they should not have been approved in the first place.
Then there was the broadcast speech of Sir Keith Joseph, in which he referred to nationalisation as "one of the poisons in our economic system". On 10th July last year, when challenged about this in the Commons, he was prepared, he said, to substitute the word "handicap" for "poison". Again, I regard Sir Keith as one of the most honest and straightforward men in public life; but honesty ought not to be compounded with such prejudice, and straightforwardness is more acceptable if it is allied to accuracy. He could more accurately, and certainly more generously, have substituted the word, "stimulus" for "poisons". The investment through the public sector has been,

1201
and still is, a most valuable stimulus to the private sector. In 1979, 12 of the nationalised industries between them bought out £5,875 million worth of goods and services, and 95 per cent. of that was spent in Britain. In the case of the National Coal Board, it was 98 per cent. Hundreds of private companies have benefited directly by the investment programmes of the public sector, and have benefited indirectly because new technology tools, developed for the British customer, have found a market abroad.
In that same TV party broadcast, the Tories boasted of the equipment in the clay coal mine at Killingly—again public enterprise supporting the private sector, though no recognition in the broadcast of the public enterprise contribution. Ask the mining equipment people whether they think that the NCB has been a poison in our system. Ask the Federation of Civil Engineering Contractors what they think of what they call:
"… the Government's general prejudice against the public sector".
There is another side to this, and it is as damaging as it is cruel. I happened recently to say to Sir Derek Ezra that I thought working conditions down the pit were easier than in the days when I used to wait at the pit gates for my father and brother, the days before nationalisation and mechanisation. I was told by Sir Derek Ezra to go down again and see. From the shaft bottom, I travelled the first 600 yards of the two miles to the coal face on my stomach on a conveyor belt. If you lifted your head up you got it knocked down or knocked off. Ought we not to be more careful before we describe men who, each working day, travel to work in conditions like that as being part of the poison in our system?
Then, in our debate on economic affairs on 27th November last year the noble Lord the Leader of the House—and I am grateful to him for his presence; I did drop him a note—with all the vehemence which he so impressively commands, said:
"Our precious oil revenues which should be husbanded for investment for the future are being squandered on the voracious demands of our nationalised industries".
In the list of such voracious and wasteful industries he specifically named one which I happened to know rather well, and not unnaturally, noble Lords may think, I found myself on my feet. I will not take time repeating what I then said about British Aerospace, but the noble Lord later attempted to qualify, to hedge, on what he had said. He explained that he was speaking generally, and that he realised some industries—some—made a profit because they were efficient or (and I quote) "have a monopoly and control over their prices".
Presumably he was excluding British Aerospace from that category, but was thinking of what his right honourable friend had called "the sinners", the utilities. Gas is a utility, and maybe we can look at the record of British Gas. The history of British Gas, which brought together all those disparate old-fashioned, if worthy, gas companies, is one of the biggest single success stories in our industrial history. British Gas now supply over half of Britain's domestic energy and more than a quarter of British industry's heat requirements. Five years ago their outstanding debt stood at £2·26 billion. What a target it was then
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for the noble Lord, Lord Orr-Ewing! But, today, all those Government loans have been repaid, and last year, I understand, they were actually lending money to this Conservative Government.
The noble Lord spoke of their being able to control their own prices, but even that is not the whole truth. He could have said that a few years ago one Conservative Government compelled them to keep prices down in order to disguise inflation. Then a later Conservative Government—the present one—are compelling them to put prices up as part of their fetish of monetary control. But on top of that the noble Lord should really have said that he was a Minister of a Government who were going to impose a levy on the sale of gas, which will in effect he a tax on the consumer.
I noticed that the Energy Minister, to justify the price rises which he himself had called for, said last week that domestic gas prices in the United Kingdom are only half those in France and half those in West Germany. Does the noble Lord really think in the light of those facts that his words about squandering resources and voracious appetite can be justified? The noble Lord said that he was speaking generally, so I put down a parliamentary Question in general terms and the noble Lord, Lord Cockfield, in his usual helpful manner, gave me a list of 18 nationalised undertakings with their financial results for 1979–80. The list, I should say, does not include British Leyland or Rolls-Royce because, under the Treasury definition, I gather that they are not nationalised. Of those 18, the list shows 15 as making a profit; and, according to my addition, the profit totals more than £1·9 billion. After interest charges on all the borrowings, totalling some £1,800 million, they show between them, net of interest charges and net of advance corporation tax, no less than £117 million.
Speaking generally, I should not have chosen the expression "voracious appetite". Moreover, if we are talking of the contribution to Britain, we should also note that between them those industries showed export earnings in the year of £2,881 million. Again speaking generally, I should not have said that this was squandering national assets. No doubt the list for the following year will show a worsened outturn, but I should be surprised if it were worse than that of the private sector—and both suffer from the same suffocation by present economic policy.
The Motion that I ask your Lordships to consider calls attention to the sale of national assets. I can conceive of good reasons for selling national liabilities. But why are these superior entrepreneurs brought in only when the problems are easier, when the difficulties of merging have been surmounted and when profits arc bigger? As Sir Peter Parker said the other day, "Who is making a bid for the National Coal Board or for the London commuter services?" There is another aspect of this selling-off policy which involves the benefit to Britain when a more broadly-based corporation is enabled to take a longer view in the national interest and still keep in the black. I would relate this point to what was said by the noble Lord, Lord Weinstock, in the debate on 27th November last year—and I wrote to him to say that I was going to make this reference. The noble Lord made a remark in his maiden speech which I am sure he thought was uncontroversial but which the conventions of the

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House did not permit me to challenge. He said that the record of British Aerospace—and I quote:
"resulted from the long period of private ownership".
Had I been making a claim, I should have said that the success was due to the grand efforts of those who work for the corporation. My experience of those in the manufacture and operation of aircraft goes back rather further than that of the noble Lord. My respect and affection for those who have carried those responsibilities since the war years is certainly not second to that of the noble Lord, Lord Weinstock. If I were making a claim I should have said that those men had greater opportunity under public ownership. We inherited from GEC and its partners a profitable enterprise, certainly, but a contracting one. There were redundancy schemes at all the civil sites. When I left we had recruiting campaigns; there was new investment in civil programmes that could never have been considered by the previous owners. The doctrine of the "bottom line" did not, for us, obscure the national interest. But that is possible only if a concern is broadly based, making an investment which will pay off in the longer term but retaining the self-respect which comes from paying one's way because they are able to retain programmes which pay off in the shorter term.
I read today that British Aerospace is about to be floated on the market. There are respectable arguments for the company type of structure; but there was no commercial need to float it on the market. Wholly owned by the Government would have been a better solution. After some millions of pounds of wasteful expenditure on commissions and legal fees, the whole operation will almost certainly be reversed in two or three years' time. Suitable arrangements have been made to prevent foreign interests taking financial control of British Aerospace and carving it up; but I take this opportunity of asking now (as I asked a year ago) what precautions have been taken to prevent any one United Kingdom financial interest from getting majority control and using that control to serve their other interests?—or, as one inside observer put it, "picking the eyes out of the corporation"? Can the noble Earl who is to reply give an assurance that this will not be allowed to happen?
On this same point of hiving off the profitable parts of a public business, I ask for another assurance. If, as in the case of British Gas, there is proven success and management of high order, why should their initiative in allied fields not be encouraged? Why, for example, should the Government seek to stop the initiative of British Gas in their offshore oil activities? Why should they seek to hive off the promising onshore oil development at Wytch Farm, the discovery and development of which was entirely due to British Gas? I ask the noble Earl this. Can he give us an assurance that in both those instances the initiative of that successful public corporation will be encouraged?
My Lords, having done my best to show that generalised criticism of the public sector is both unwarranted and destructive, may I make it clear that in my own view in the public sector we have lessons to learn and improvements to make? In passing, I might say that it is 35 years since I first worked for a public corporation and, in one way or another, I
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have been involved with them ever since. Firstly, I would say that Parliament or Whitehall should not try to impose a structure or corporate plan on an industry. The ten-year steel plan in the Tory White Paper of some years ago was an example of how not to do these things.
Similarly, in my view, it is a mistake for Parliament to try to impose a pattern of what we have come to call industrial democracy. That there should be progress towards genuine employee participation must be incontestable. That the public sector should provide the front-runners in this field, I hope we can all accept. In the legislation setting up British Aerospace, there was reference to the "organic growth of industrial democracy". I am sure that that is the right approach.
Then there is the question of relationships between Government and corporations. Just as decentralised responsibility down the management line—which I have no doubt many here can speak of with greater authority than I, although I have had some experience—has been proven better in industry, so, I hope, all Government departments will seek optimum decentralisation of responsibility to the people they have chosen to run an organisation. That there must be an overall national economic strategy is surely right; but once an investment programme is agreed, then there must be a sense of full responsibility infusing, or enthusing, those who are paid to implement that strategy.
That brings me to what we in the nationalised sector used to call cash limits. An agreed investment figure, intended for productive, wealth-creating purposes, and on which a return is expected, is different and should be seen to be different from subsidies, and different from local government or central Government administrative expenses. They should not all be lumped together in the public sector borrowing requirement and decried as a bad thing. They should be stated separately and seen as a sign of industrial vitality. In the course of the discussions over the past two years the nationalised industries have asked that this be done, and that there should be access to sources of United Kingdom capital other than the National Loans Fund. I wonder whether the noble Earl who is to reply can tell me what progress has been made on that.
For my part, I should like to see a financial structure for the public sector, including the oil interests, quite separate from the rest of Treasury book-keeping. There is no reason why the public sector should not be, and be seen to be, taken as a whole, self-financing and making an increasing contribution to the nation's housekeeping expenses.
Finally, I want to say something about motivation. First-rate motivation can make all the difference to the performance of a football team, a private company or a public service. In the public service motivation must be bound up with the public image and with Government policy. If Government policy is to decry, to denigrate, then motivation must be affected.
H. G. Wells once said:
"A man's guiding and satisfying idea of himself is what Jung calls his persona".
In other words, man tries to live the part expected of him and to the standard he sets for himself. If in some cases in some public services the current behaviour

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is below a standard we should like to see, might it not be in part because we have this pernicious criticism of the public sector? And might it not be in part because of this insistence that market forces, the market economy, should guide all our efforts and set our standards? Remember what Frank Cousens said:
"If we are to have a free-for-all, then we are part of the all".
Someone said the other day:
"Heaven help us if we leave everything to the market economy".
I believe that to be literally true. We should in truth need Heaven's help and forgiveness if our society was left completely wide open to market forces. Satisfying the lowest common denominator may yield the biggest circulation but it will not give us an enduring society.
On the other hand, properly guided, public service can be a powerful force for good. All that I have seen and heard and read and felt in my lifetime suggests that most of the finest achievements, in peace and in war, spring from a motivation far above the market forces. That motivation we should encourage. That motivation we have not yet learned fully to use in our industrial life.
My Lords, I seek one more assurance from the noble Lord who is to reply. In quite striking contrast to the ministerial language which I have quoted, the noble Earl said two weeks ago:
"It is time that we, perhaps, broke away from the concepts of nationalisation on the one side and private enterprise on the other".
The assurance which I seek from the noble Earl is that he will now do his utmost to convince his colleagues that this is a much more constructive approach to the economic and social problems of the Western World and that, as a start, he will now accept the Motion which I move for Papers.
3.16 p.m.
Lord Rochester: My Lords, we have heard from the noble Lord, Lord Beswick, a speech of the robust nature that we have come to expect of him. For my part I am rather sorry that the first part of his Motion, on which he spent the first 20 minutes or so of his speech, was couched in what seems to me somewhat negative terms, for in my experience criticism and counter-criticism seldom lead to solutions of industrial problems. However that may be, for my part I should like to concentrate on the last part of the Motion, that which calls
"for a more constructive and positive policy which recognises the value of a properly balanced and integrated mixed economy".
Even on that point—if I may say so with respect to the noble Lord, whom I have supported on a number of occasions in the past year or two—I do not recall that that was quite the line that he was taking shortly after the last Labour Government came into power. In this House he played a prominent part in the support of policies of nationalisation of the aircraft, shipbuilding and ship repair industries. That certainly represented an attempt to alter the balance of our mixed economy. It was then said that there was a mandate for such policies because they had been included in the Labour Party Manifesto at the previous general election. In fact the great majority of those
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who voted in that election were opposed to such policies and, in so far as they have been implemented, they have in my view proved to be quite irrelevant to the solution of our basic problems.
I think that the best way of describing my own party's view of the Motion before us is to say that we do indeed recognise the value of a properly balanced and integrated mixed economy in which the public sector becomes more efficient and the private sector more profitable. That is not to say that the balance between the two sectors should remain in its present form immutably. Indeed, in my view the process of restructuring some of our most basic industries still has a long way to go, and there is no reason why within that process parts of our great state monopolies should not be hived off to private enterprise or, for that matter, the public sector enlarged or, again, joint ventures between the two sectors on occasion encouraged.
But in every case the test should be objective criteria rather than political dogma. What the Government of the day should at all costs avoid is the introduction of legislation which can reasonably be judged by the Opposition to be so extreme as to mean that it is then reversed as soon as the Opposition become the Government. Industry as a whole is then left to pick up the pieces.
It is against that background, in seeing the need for a more constructive long-term industrial strategy—such as is operated, for example, in France, Germany or Japan—that we on these Benches have for years advocated making use of well-qualified and relatively independent organisations such as the old IRC—dismembered by an earlier Conservative Government—and now the National Enterprise Board.
All along we have maintained that, irrespective of the political complexion of the Government in power, there should be as much continuity as possible in the operation of those bodies. We for our part, therefore, regret that in their actions to date, for example in relation to Rolls-Royce and British Leyland, this does not seem to have been the Government's view. In consequence they have lost the services of someone who might have led the way admirably to the desired stability: I refer to Sir Leslie Murphy.
Lastly, if we are to have a healthy mixed economy, some accommodation will have to be found eventually between the political parties and within industry itself as to how such an economy can be run in such a way that we do not continue to award ourselves increases in pay that far outstrip improvements in productivity. On this point I was greatly impressed by a letter which appeared in The Times on 20th November last under the heading: "An alternative route to disinflation". It was written by Sir Alexander Cairncross, James Meade and Sir Henry Phelps Brown, and I should like to quote the last sentences of that letter, if I may, in relation to the present Government's economic policy:
"An unconditional reversal of the present policy could result in a resurgence of the explosive inflation of pay and prices which the policy is beginning to constrain. We are in a cleft stick. Either we suffer our present misery and control inflation or we restore employment and inflation. In fact we can achieve full employment without inflation only if we can suitably modify our present pay-fixing arrangements. The strength of the case for disinflation by depression is, we are told, that there is no alter

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native. But surely we have suffered enough for men and women of good sense, from all political parties and from both sides of industry to get together and make just one more effort to find ways of modifying our present pay-fixing arrangements so as to enable us to promote economic expansion and employment without a pay explosion".
I am sorry, as we all must be, that the noble Viscount, Lord Amory, is no longer with us; and in calling his views in aid, as 1 shall take the liberty of doing in a moment, I should like first to pay my own small tribute to his memory. He was a wise, modest, humorous and (although he would be the last person to acknowledge it) a truly noble man.
Several noble Lords: Hear, hear!
Lord Rochester: I am deeply grateful for all the help, advice and kindness that he showed to me personally. In a debate in our House on 10th April 1978 Lord Amory made plain his belief' that under inflationary conditions uninfluenced collective bargaining was not feasible, that some form of incomes policy was essential and that in any case the Government must have one in relation to their own employees and those of the nationalised industries. He further expressed the view that there was need for some accepted sum to be sought, in his view, under the aegis of the National Economic Development Council, which would in the aggregate be made available for pay increases in any yew, and that such a figure should be authoritatively worked out and accepted by public opinion.
Just before the last general election everybody seemed to be in favour of this idea. The CBI under Sir John Metliven had proposed a national economic forum with what they called "links" into Parliament. The TUC had signed a joint statement with the Labour Government committing itself to a national assessment each Easter. Detailed proposals for an incomes policy had been signed by 12 leading trade unionists in a pamphlet called A better way. Also, the Conservative Party had proposed concerted action in their document, The Right Approach to the Economy.
But where is all that now? I do not underestimate the difficulties that would be involved in making such a concept actually work in practice, particularly in relation to the collective bargaining that would still have to follow at lower levels. Indeed, having firsthand experience of wage negotiations, I am all too painfully aware of some of those difficulties. Nevertheless, I believe that another attempt has to be made, and I believe it because I think the alternative is demonstrably worse. It is even more difficult than may be generally supposed, because the question of pay determination cannot be isolated from problems concerning prices, investment and employment; so that any such national assessment would, in my view, have to be reached only after discussing the allocation of national resources as a whole.
At the end, of course, the Government would have to take their own decisions just as they now do. Further, they would have to take responsibility for those decisions in Parliament; but I suggest that they would command very much wider assent if they were made after discussions of which the general public were, as far as possible, made aware, rather than, as now, without any understanding by the
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people of all the issues involved. And at a moment when Mr. Len Murray has just said that trade unions have to show that they can balance their responsibilities to their members with wider responsibilities, would it not now be particularly opportune for the Government to give a lead in this direction?
A further way in which I suggest the performance of our mixed economy might be improved would be by encouraging action aimed at increasing the involvment of employees, both financially through share investment schemes and in exercising more influence in the making of decisions that affect them. In the field of wage negotiations, with or without improved procedures for pay determination, I believe that this increased participation could best be achieved through management disclosing to employee representatives more information aimed at observing a shared understanding of the relationship between productivity, pay, prices, investment and employment.
In this connection I was delighted to see that Sir Ray Pennock, president of the CBI, last week asked employers whether they informed their employees at every level, disclosed information on profit performance, explained how profit, if any, was earned and distributed and, as chief executives, had regular face-to-face discussions with their employees on the state of their businesses. He told them that, if they could not answer, Yes, to those questions, they had not begun to put future wage negotiations on a basis of understanding rather than fear, and that it was high time they did so.
Personally, I would prefer to see employee participation develop through such ways as organic growth, of which the noble Lord, Lord Beswick, spoke, and which starts at the bottom, working upwards to the highest level. But development there must be, or employers may one day find that it is imposed on them by legislation—and legislation of a kind which does not command their assent. In my view, the most constructive and positive way in which in the words of the Motion
"the need for a … properly-balanced and integrated mixed economy"
could be met, would he for elements in all political parties to get together to achieve that end. Alas! it seems to us on these Benches that neither of the major political parties is willing to do anything to facilitate that process. There is much talk nowadays of the block votes that are wielded by the trade unions, but you have only to look at our rotten electoral system to see disproportionate representation at its worst.
Noble Lords: Oh!
Lord Rochester: That may be unpleasant for certain noble Lords to listen to, but what a way in which to run a mixed economy! Take the steel industry in the last 25 years—nationalised, de-nationalised, re-nationalised and now almost in ruins. Happily, there is some evidence that more and more people have rumbled what has been going on and are making their views known. I hope that, in this matter of electoral reform, more and more people will make a common cause in order to establish that stability and

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continuity of economic and industrial policy for which this country is longing.
3.31 p.m.
The Minister of State, Department of Employment (The Earl of Gowrie): My Lords, 1, too, should like to join with the noble Lord, Lord Rochester, in paying a quick and affectionate tribute to my late noble friend Viscount Amory. My late noble friend, who had a great sense of humour which we on all sides of the House miss, would, I am sure, have enjoyed the ingenuity with which the noble Lord, Lord Rochester, succeeded in getting proportional representation and electoral reform into a debate on the tendency of Conservatives to criticise nationalised industries.
I, of course, welcome the opportunity given to us by the noble Lord, Lord Beswick—who, whatever our differences of view, is an immensely experienced and respected figure in this whole field—to set out the Government's approach to the nationalised industries, and to say something about our policies of transferring them wherever we are able to do so, and whenever we are able to do so, to the private sector. I use that sentence because I am afraid that, in the interests of not detaining your Lordships too long, I shall after it have to lapse into the horrid shorthand and jargon of "privatisation". But at least it should be clear now that the House knows what I mean.
The common ground, or middle ground, is a rather crowded and noisy place at the moment and it is ground into which, on many issues, I occasionally put a toe myself. But it seems to me that it would waste the time of the House if I tried to pretend that we were not light years away, in our approach towards this matter, from the noble Lord, Lord Beswick, both as members of a political party and a Government which has been consistently trying to tilt the balance away from the public and towards the private sector.
Curiously enough, I think that, philosophically, we are rather nearer the position of Mr. Lech Walesa, who said yesterday of the situation in Poland—and I am quoting him—
"Perhaps if our workers could buy their industries, the industries would do rather better".
I am reminded of a speech some years back by my honourable friend Dr. Rhodes Boyson, who said:
"If nationalisation of the mines meant that the miners owned them, look what would happen to productivity in the coalmining industry".
As I said, I think we are rather nearer to that kind of approach.
Nor do I accept that a non-nationalised industry is, in some way, a non-national industry. That is what I had in mind when in an intervention last week, to which the noble Lord, Lord Beswick, was kind enough to refer, I said to the noble Lord, Lord Shinwell, that I thought there was an element of sterility in the language we used about these various sectors.
Our view is that the public sector is now overextended, that it is less efficient than it might be, and that the resources that it claims from. Governments, including our own Government, now contribute towards our present inflation. Our purpose, therefore, is to reduce it in size wherever we can and, where industries remain in the public sector, we are deter
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mined that they shall operate more efficiently and be more responsive to the needs of the taxpayer and the consumer.
If I may quote from an article about the nationalised industries in today's Times, it says:
"the price index for consumer goods and services supplied by them has been rising consistently faster than prices in general—by 30 per cent. last year, which was twice the … inflation rate".
So our policies are being framed to try to bring this about in the interests of a markedly different balance within the mixed economy.
Of course, no Government can, or should, ignore the nationalised industries. Their size and importance gives them a central position in the economy. They take a huge share of national resources. They account for more than 10 per cent. of total output and nearly 20 per cent. of all fixed investment; they provide services which are essential to the life of the nation; directly or indirectly, they influence the prosperity of wide reaches of British industry, both public and private. Taken together, they employ about 1·7 million people or 7 to 8 per cent. of all employed. The Post Office alone employs 400,000 people; the National Coal Board over 200,000 people; the electricity supply industry more than 150,000 people, and the nationalised industries are dominant in energy, transport, communications and steel.
Yet—and this is something that is often lost in talking about the nationalised industries in aggregate—the differences between individual industries are very great. Some are monopolies, or almost so; others operate in internationally competitive markets. Some are labour intensive; others are capital intensive. Some are new and rapidly changing industries; others are old and traditional ones. Some require heavy external funding in grants and loans; others help us finance our own borrowing requirement, including that huge portion of it which devolves as a result of the older or traditional nationalised industries.
Some require money to meet their losses, others to finance large investment programmes. The investment programmes themselves vary between simple replacement of existing assets in broadly the same form and programmes which add to capacity in what are now technologically very advanced forms. So of course I recognise that sweeping generalisations about the nationalised industries are, therefore, dangerous. But I would say to the noble Lord, Lord Beswick, that the generalisations about the nationalised industries are not confined to one or other of our sides.
Nevertheless, what unites them is that they are a part of the enterprise sector of the economy which is wholly owned and controlled by the Government, and therefore—and there is no escaping this—sheltered from the full rigour of market disciplines. So what we find unsatisfactory about the nationalised industries, and the burdens which they impose on Government resources, is therefore inherent and certainly not usually the fault of those who run them. I repudiate the personalia in which the noble Lord, Lord Beswick, indulged. I do not know of instances when Ministers have been publicly snide or critical of the dedicated men who run the nationalised industries which we find—
Lord Beswick: My Lords, would the noble Earl be

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good enough to look at Hansard tomorrow and see that I gave the references in all cases?
The Earl of Gowrie: Of course, I will look at Hansard tomorrow, but it is a fairly easy game to quote Hansard in a different context. So let me repeat what I mean. I do not know of occasions when my colleagues have made publicly critical remarks in a snide way about these dedicated men who run our industries. In a market economy, competition is the normal guarantor of the efficiency of businesses. I do not think that that is a very contentious or very novel political or economic theory. The more efficient grow and increase their market share, while the less efficient eventually may go to the wall. This is the world in which the ordinary businessman lives and whose challenge he accepts. But these disciplines tend to be absent in the nationalised sector, or to exist only to a limited extent. Some of the industries, such as gas, electricity and the Post Office, are monopolies, or near monopolies. Others, like steel or airways, may face domestic and foreign competition, but they, too, have it relatively easy compared with companies in the private sector, because everybody knows, not least their own workforce, that the Government stand behind them. They do not have to face the challenge of raising money from shareholders or from capital markets on the basis of their track record, but the Governments who stand behind them have to raise money on those same markets. The interest rates that thereby accrue can squeeze out the private sector.
This invulnerability of industries in the state sector is the source of many of their problems and weaknesses. How, in these circumstances, can they be made as efficient as they would be were they open to the forces of competition? Of course, these problems are not new. Governments of both parties have grappled with this legacy since the war. There are no easy solutions and the problems are deep-seated, but in each and every case surely it is the Government's responsibility to try to ensure that the industries are as efficient, competitive and profitable as possible. En the absence of market pressures, the Government must provide the spur to the improvement in performance necessary if the industries in aggregate are to turn from wealth consumers into wealth creators. If the British steel industry had dealt with its overmanning in the mid-1970s—the noble Lord, Lord Beswick, was himself involved in this—those then made redundant would have entered the labour market in a much more favourable climate than now when the redundancies which were put off have inevitably accrued. So our policies of privatising are a major method of attacking such problems, and in a few moments I shall try to illustrate what we are doing. For the moment, however, I should like to discuss our approach to those industries which for the foreseeable future will remain in the public sector.
In 1979–1980 the nationalised industries together were responsible for a net contribution to the public sector borrowing requirement of £2·4 billion, or over 20 per cent. of the whole PSBR. Of course, not all of that was "dead weight". Some added to the funds which the industries themselves generated to finance investment intended to earn a reasonable
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return. But over £l billion (£1,000 million) was in the form of grants, primarily to coal and rail, and the four main loss-making industries—coal, rail, steel and shipbuilding—together required £2·2 thousand million in grants and loans. The losses of these industries made an immediate and heavy demand on the taxpayer. Overall, they greatly increased the Government's need to borrow, making the task of controlling the money supply much more difficult. No wonder the Government seek to get these borrowing requirements off their own books as rapidly as possible.
The position in 1980–1981 remains the same. Of the total £2·9 thousand million required by the in dustries, after allowing an obvious sum for the net contribution of the major profitmakers, £2·5 billion will go to the main loss-makers. Next year the position will be similar. Against that background, who could deny the need to secure a major transformation in the aggregate financing requirements of the nationalised industries? It may or may not be possible to achieve that transformation within the time-scale laid down in the last public expenditure White Paper, although we shall of course try. But that improvement, based on the industries' own forecasts, depends on their securing the improvements in efficiency and productivity which they themselves have planned. The impact of the recession makes the improvement more, rather than less, necessary.
Before coming on to the means by which the Government are seeking to tackle this problem, let us look for a moment at the industries' record, both individually and collectively. Over the last 12 months, as I said earlier, nationalised industry prices to the consumer have risen very fast—some 30 per cent., or twice the general rate of inflation. I acknowledge that it would be unfair to lay all the blame for this at a given industry's door. Some of it is the result of events beyond their control, such as increases in the price of oil. Some of it is due to the ending of artificially low prices, especially for energy, which were deliberately, as an act of policy, held down by the previous Government. But there has also been a failure by the nationalised industries adequately to control their costs, to adjust capacity and output rapidly to changing market requirements, to get proper manning levels and, above all, to control the level of pay settlements. In the last pay round, the increases in earnings achieved by nationalised industry employees, taking account of catching up payments from the previous round, were on average higher than in private manufacturing industry. This contributed to higher prices and so to the increased costs for all who buy their output. So from its relatively sheltered position the market-protected sector, as I like to think of it, has been adding to inflation.
But the problems go back much further than the past 12 or 24 months. Over the last 10 years, employment costs per head in the industries have risen faster than the average for the economy as a whole: 25 per cent. faster in gas, 12 per cent faster in electricity, 11 per cent. faster in telecommunications. Productivity growth has been slower in some sectors; 8 per cent. slower in rail, 12 per cent. slower in coal, 18 per cent. slower in posts and a massive 31 per cent. slower in steel. Indeed, in steel, productivity has actually fallen over the past decade while unit labour costs rose 50 per cent. faster than in the whole of the rest of the economy.

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In some industries productivity has improved faster than in the rest of the economy—for instance, in gas and telecommunications, where there has been a marked increase in demand. This spread of achievement could be mirrored elsewhere in the economy and I salute it, hut our responsibilities in relation to the industries mean that we must provide tile stimulus to these industries by policy, by criticism, to substitute for the market place in making them more competitive and more efficient.
How do we do this? First, wherever we can we try to demolish the monopoly power of the industries and open them up to competition. Surely this is the most significant single step. It mirrors for the industries the steps which we have taken in other fields more generally to free industries from restraint—restraint over prices, over pay, over dividends in the foreign exchanges—and to allow markets to operate more freely. One example of increasing competition and its effect can be seen from the lively competition in bus, rail and air fares as a result of the changes in bus licensing in the Transport Act 1980. Another is the Telecommunications Bill which contains long-overdue powers to reduce the post and telecommunications monopoly. We have also announced our intention to remove the statutory prohibition on the generation of electricity as a main business. We shall seek further opportunities, and I am glad to be able to announce that we have sought such an opportunity today.
My honourable friend the Minister of State for Industry has today announced in another place that arrangements are in hand for the offer for sale by Kleinwort Benson Limited on behalf of the Secretary of State for Industry of about half of the issued ordinary shares of the British Aerospace Public Limited Company. The Government will retain between 48·37 per cent. and 50 per cent. of the issued shares, the percentage being dependent upon the number of shares taken up under special arrangements being made for the employees. Noble Lords will appreciate that I cannot give any further details about the offer for sale at this stage. The Government's position as promoter of the company places severe legal restrictions on the comments which Ministers can make about the offer, but I hope that the House will read the prospectus when it is published and will accept that nothing I might say could add to or detract from that document.
The policy of privatising British Aerospace was extensively debated during the passage through Parliament of the British Aerospace Bill, and I simply say now that I warmly endorse what has been said about the successful commercial record of British Aerospace. I reiterate that the Government believe that an organisation competing in international markets such as aerospace best lies within the private sector where it is free to respond to competition without being subject to Government or political pressures.
The noble Lord, Lord Beswick, was kind enough to give me notice of a question and he wanted an assurance that no single financial interest will have majority control in British Aerospace Limited. I will make three quick points in reply to this question. First, under the offer for sale only between 48 and 50 per cent. of the shares in the company will be offered, the exact proportion depending upon the number of shares taken up under special arrangements for employees. After the
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offer for sale, the shareholding retained by the Government will be equal to the number of shares sold under the offer for sale, the balance of the share capital being held by the employees. In a strict numerical sense, therefore, there is no question of a majority of the shares going to a single financial interest.
Secondly, the Government have repeatedly made clear their intention of promoting the widest possible ownership of shares, and so far as possible this intention will be taken into account when making allocations in the event of the offer being over-subscribed. Thirdly, if at some time in the future it appears to the Secretary of State for Trade that a shareholder was able, directly or indirectly, to control or materially to influence the policy of the company, then he could invoke the provisions of Section 64 of the Fair Trading Act 1973. This would involve a reference to the Monopolies and Mergers Commission, who would be required to investigate and report whether that fact operated, or might be expected to operate, against the public interest. It would be open to the Commission to recommend that such control or influence should not be permitted by the Secretary of State for Trade. I hope the noble Lord will therefore accept that the company will certainly not be defence less against any possible threat by a financial interest to acquire overall control.
The noble Lord, Lord Beswick, was also kind enough to give me notice of a question about British Gas in relation to onshore interests. I have the answer here, but if the noble Lord and the House will forgive me I will ask my noble friend Lord Trefgarne to answer it because, in view of the time, I think I should now get on with the rest of my speech.
We also believe that the setting of clear and firm financial disciplines against which the performance of the industry can be measured will, over time, exert a beneficial influence. Almost all industries now have medium-term financial targets, normally in the form of an expected percentage return on their assets. This provides a clear objective for the industry for three or five years ahead and a benchmark against which their success or failure can be judged. Industries which meet these targets should have their performance applauded as a record of success on which they can build. Industries which fail to meet their targets cannot expect to be dealt with kindly, any more than a private sector company which fails to live up to the expectations of its shareholders. In the 1980 Competition Act we took powers to refer state industries to the Monopolies and Mergers Commission. The reports so far show ample scope for such improvements in efficiency. And the Commission may be helpful, (as my earlier answer in the case of British Aerospace has indicated).
Improvements can therefore be brought about. We are not prepared to "write off" the industries as a sink of inefficiency. They are too important for that. It is our belief that all nationalised industries—those in profit as well as those making losses—can make improvements in efficiency which will benefit the whole economy. We do not interfere—and we do not seek to interfere—with day-to-day management of these industries. The Government themselves therefore cannot bring about any improvements. Our role is to

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encourage and stimulate—by criticism, if necessary—rather than to cushion and protect.
As noble Lords are aware, we also provide enormous help to the industries with the cost of adjustments and restructuring necessary for their long-term future. We cannot, of course, scatter largesse, and we must concentrate help where it is most needed. But this year we have announced increases in the external financing limits for four major industries—steel, shipbuilding, rail and airways—by nearly £600 million, bringing their total EFLs to over £2 billion. More recently we have agreed to provide nearly £1,000 billion over two years to support British Leyland.
As against this the Opposition spokesman, Mr. Peter Shore, has proposed to abandon the target for the finances of the nationalised industries. But that target, as well as reflecting a move towards economic pricing, also reflects the improvement which the industries themselves want to make in productivity and efficiency. I really cannot imagine that noble Lords opposite would wish to discourage those achievements and the return of the industries concerned to financial health. To do so would be astonishingly perverse. Our job, surely, whether in relation to the nationalised industries or for the economy more generally, must be to work to secure the improved performance on which the future of the country depends. We see this as a constructive policy designed to secure a proper balance between the public and private sectors.
As I said earlier, we are not privatising—to use that awful word—wholesale. The characteristic of our approach is an industry-by-industry approach and an industry-by-industry examination of the position, with solutions geared to meet particular circumstances and needs. We have deliberately chosen different courses to go private; for instance, the National Freight Company, where the Government do not seek to retain a shareholding; British Airways and British Aerospace, where the Government will retain about half the shares; and British Rail subsidiaries, where ultimately there will be a minority holding by British Rail, and the gas gathering pipeline, where the public sector will be taking a shareholding in an essentially private sector venture.
So we have made a good start on this policy. In the last Session, legislation was passed providing for privatisation of the National Freight Company, British Aerospace and British Airways. We have already sold a number of NEB subsidiaries. This Session, we have brought in legislation affecting the British Transport Docks Board, British Rail Subsidiaries, the Radio Chemical Centre and Cable and Wireless. In the telecommunications sector the British Telecommunications Bill will encourage partnerships with private capital. We believe that the result of this process will be beneficial to all concerned and will represent a major national effort that will aid the Government in their struggle to counter inflation.
I will conclude by saying this. Our policies have a number of strands. The objective is simple: to establish and foster a sound and efficient public sector contributing to the success of the whole economy. Of course this will take some years to achieve. The public sector includes complex and strategic industries which have been subjected to inappropriate policies
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for a considerable time. Of course it is taking time, but we have moved much further in this vital policy than any previous Conservative Government.

ILEA's Future
3.59 p.m.
The Minister of State, Department of Education and Science (Baroness Young): My, Lords, with the leave of the House I should like to repeat a Statement being made in another place by my right honourable friend the Secretary of State for Education and Science on the outcome of the Government's inquiry into the future of the Inner London Education Authority:
"The ILEA is the largest local education authority in England. Among such authorities its composition is unique. It precepts freely and without restraint on the ratepayers of the inner London Boroughs and the City of London. In practice it spends much more money per pupil than any other English authority without thereby achieving a satisfactory performance for many of its schools, particularly its secondary schools as was shown in the HMI report on ILEA. The purpose of the inquiry was to see whether this situation could be improved by altering the constitutional arrangements for providing education in inner London.
"The fundamental issue for the inquiry was whether ILEA should be broken up. There is a case for giving some responsibility for education to the inner London Boroughs. There is also a case for retaining a single authority in the light of London's past development and its system of local government. But the overriding factors are educational and financial. The weight of educational opinion, including the voluntary bodies and the Churches, is that the problems of inner London call for a single authority of adequate size and with adequate resources to administer its schools, as well as further and higher education, and the careers service; and that responsibility for the schools should not be separated from the rest of education. The Government share that view.
"This does not mean that the single authority has to be extravagant. That was one of the lessons to be drawn from the HMI Report. The Government's public expenditure plans require local authority current expenditure on education in England to go down by about 7 per cent. in real terms between 1978–79 and 1981–82. ILEA has not made the response which could reasonably have been expected from an authority whose expenditure exceeds its needs by far more than any other education authority, on the basis of assessment used for the distribution of block grant. It is apparently planning to spend next year almost as much in real terms as it did in 1978–79 although between 1978–79 and 1981–82 ILEA's pupil numbers will fall by some 13 per cent.
"In that event ILEA would be likely to receive very little grant in 1981–82. The reason is simple. The block grant system ensures that an authority which acts irresponsibly cannot do so at the expense either of the taxpayer or of the ratepayers of authorities beyond its boundaries.

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"The long-term retention of the single education authority for inner London is justified only if the authority shows that it call give the children and students of inner London a good service in all phases of education at an acceptable cost. It is up to ILEA to put its house in order. It must recognise that the right to precept entails the obligation to spend responsibly. If ILEA systematically abuses the rating system by unchecked extravagance, additional financial controls will be needed. The Government are now considering what further measures they would take to meet that situation".
My Lords, that concludes the Statement.
Baroness David: My Lords, I must thank the Minister for reading the Statement and express our pleasure because the decision to keep the structure of ILEA as it is has been made. After that I would say that the Statement is an extremely hostile, threatening and ungenerous one. It is one of a long series of hostile statements the Tory party have put out about ILEA. They have wanted for a long time, since the Prime Minister was Secretary of State, to break up that authority, but they have lost out on that policy when they have gone to the electorate. Now, having failed to impose their will and get the structure changed, because of the sheer weight of evidence against them, they appear from the threats in the Statement to be trying to impose it by means of the block grant. Their attitude can be judged by the emotive language used in various parts of the Statement; for example, "precepts freely and without restraint".
Would the Minister agree with ILEA's Chief Education Officer's report to his committee, which said that if they limited the expenditure to the level prescribed in the grant they would be unable to fulfil their statutory responsibilities under the education law? Would the Minister agree that parents will be very concerned by this Statement, a major Statement on education where the word "children" appears only once and in a throwaway line in the last paragraph. There is here a real and unpleasant threat to the education of children in London. I wonder whether I might ask the Minister if this is the Statement which the Prime Minister approved after the report of the noble Baroness's Committee had to be rewritten, we understand, quite a number of times?
Lord Beaumont of Whitley: My Lords, I, too, would like to congratulate the Government on deciding not to break up ILEA. We on these Benches only wish they had similar sense about some of their other policies. We are sympathetic to them on that, and we are also I think more sympathetic to them than the Labour Front Bench seem to be about the whole question of the responsibility of ILEA. I would ask the Government what plans they have to make ILEA more responsible to the electors of London. Will they consider the possibility of having separate elections for the authority, preferably by a sane method of election?
4.6 p.m.
Baroness Young: My Lords, if I may answer those questions, first I am glad of the welcome the noble Baroness, Lady David, and the noble Lord, Lord Beaumont, have given to the Statement. I deeply
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regret the attitude the noble Baroness, Lady David, has taken in the suggestion that the Statement is in some way hostile to ILEA. The truth of the matter is that we now have for the first time a great deal of information about ILEA, particularly the report from the inspectorate, which makes it clear that particularly ILEA's secondary schools are not doing as well as they should—this despite the fact that the capitation allowances in ILEA are almost twice those of other authorities in the country, and the expenditure per pupil in ILEA is almost twice as much as in authorities with comparable problems, such as inner Liverpool, Birmingham and Manchester. Yet the results are not satisfactory.
The noble Lord, Lord Beaumont, has asked me what steps we shall take. This, I think, is the right and responsible attitude, and I think it is very important for all those who care about the education of children in London to support those within the authority who are trying now to meet the criticisms of the inspectorate's report in order that the education of the authority will be improved. What has become clear is that simply spending money is not the answer to that problem.
Baroness David: My Lords, I would make one further comment. I said that this Statement is ungenerous, and I think the Minister's comments—
Lord Sandys: My Lords, I think the noble Baroness is out of order, because there was a question to be put from the Cross-Benches by the noble Lord, Lord Alexander of Potterhill.
Lord Alexander of Potterhill: My Lords, following the Statement, with which I personally find myself in very substantial agreement, I merely wish to ask the Minister whether the danger in the situation relates to a precepting authority. Is there any possibility of moving at some time, if there are to be ad hoc local education authorities, which ILEA is, to a position of insisting that they should raise their monies directly from the electorate and not by precept?
Baroness Young: My Lords, I am very glad of the welcome that the noble Lord, Lord Alexander, has given to this Statement, particularly in view of his long connections with the education service. He asked two questions about future financing. One of the possibilities that has been considered is the question of direct elections. Certainly this is a matter which has attracted a lot of interest. The fact is that if one had a single authority only concerned with education, directly elected, with the right to precept, it would never have to measure its expenditure on education against other services' expenditure, which other local authorities have to do, and there is no evidence that it would be less extravagant in its behaviour than ILEA is. One of the difficulties of ILEA is its right to precept, and the fact that the electorate does not always recognise that those who are elected to it, the GLC members, are not only GLC members but also members of the Inner London Education Authority; the direct relationship which occurs in other county councils does not always occur in ILEA.
We are concerned that its right to precept has been used in this extravagant way. We very much hope that it will bear in mind what has been said over all

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these matters, including the decision to retain it as a unitary authority, and that it will try, as indicated in the Statement, to behave in a less extravagant way in the future.
Baroness Phillips: My Lords, I should like to pay tribute to the noble Baroness, who, I understand through leaks, was in fact one of the people who fought for the retention of the ILEA as a single authority. If that is the case then I should like to thank the noble Baroness. I should also like to know whether this is the final debate that we shall have on this matter or whether we are to see the famous report of the inspectorate? As chairman for a period of years of the governors of a school where we certainly do not even have inside lavatories yet—and we are very typical of many London schools—I am extremely puzzled to know how the inspectorate found that we exceeded our needs and, indeed, that we displayed unchecked extravagance. Those arc very emotive words and if the inspectorate actually found that to be the case I think that those of us who work within the ILEA are entitled to know in what particulars they found both those statements to be true.
Baroness Young: My Lords, the inspectorate's report was, of course, sent to the ILEA as, indeed, is always the case with inspectorate reports. However, a copy of it was placed in the Library of another place and in the Library of your Lordships' House. It is available for people to read who would like to do so and I have no doubt that it has been distributed to the schools in the ILEA.
The basic facts of the costs of the ILEA are well known to anyone who studies either the CIPFA statistics on local government or the particular local authority expenditure. But there is no question at all that the latest unit costs available—those for 1978–79—indicate that in an ILEA primary school it costs £542 per head and over the whole of England the average is £371. In Birmingham it is £350 per head, in Liverpool £388 and in Manchester £439. It would, therefore, seem that the ILEA is considerably more expensive when compared with authorities with similar problems. I think that the point that the noble Baroness has raised indicates a false sense of priorities on the part of the ILEA. It has clearly had a lot of money to spend and it has not spent it on elementary matters like seeing that all school lavatories are inside the building.
Lord Clifford of Chudleigh: My Lords, I should like to ask the noble Baroness whether, in carrying out this review of the expenses of the Inner London Education Authority, she will bear in mind that this authority provides certain smaller services which deal, in effect, with the country as a whole. Perhaps I may quote my own case as an example. For the past six or seven years I have been having—until the lady retired—lip-reading lessons at the City Arts Centre. I understand that that is supported by the Inner London Education Authority and that it also acts as a training centre for lip-reading teachers throughout the country as a whole. I should be very loath to see any restrictions put on the Inner London Education Authority which
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would make it sacrifice what I would call these special national aspects of education.
Baroness Young: My Lords, in that connection I should like to point out that one of the aspects of the inspectorate's report which paid tribute to the ILEA was its higher and further education, where it was generally regarded as satisfactory. And, although the particular point that the noble Lord raises is somewhat wide of the Statement, nevertheless it reflects the services which are provided in the capital city in this particular way.
I should also thank—and I apologise that during my answer to the previous question I omitted to do so—the noble Baroness, Lady Phillips, for her very kind remarks about myself. I should simply like to say that in the course of this inquiry I have learnt a lot about the ILEA.
Lord Pargiter: My Lords, as regards the Minister's reference to precepting, I should like to know whether, if that is to be considered, it will be considered as a whole and certainly not against one particular authority, when we bear in mind how many precepting authorities there are in the country as a whole?
Baroness Young: My Lords, as the Statement indicates, this would be primarily a matter for my right honourable friend the Secretary of State for the Environment to look at in the context of a review generally of these matters.
Lord Marshall of Leeds: My Lords, I should like to congratulate the noble Baroness on the Statement which she has repeated. I had the job of producing a report on the government of Great London in 1977–78 and I came to the firm conclusion, after hearing a vast amount of evidence, that the ILEA was financially unaccountable and that the only privilege that the GLC had was to pick up the tab at the end of the day when they received the ILEA precept. We now know that something will be done about financial non-accountability. I also came to the conclusion that the ILEA was democratically not accountable. I wonder whether the noble Baroness can tell us whether the Government have plans to put that matter right also?
Baroness Young: My Lords, I should like to thank the noble Lord, Lord Marshall of Leeds, for his kind remarks about myself. First, as the Statement indicates, we hope that the ILEA will put its own house in order. It has an opportunity to do so and if it reduces its expenditure it will, of course, gain through the block grant mechanism and receive more Government grant. We hope very much that, before it takes any irrevocable decisions, it will consider what it does in the light of the Statement that has been made and in the hope that it will be able to achieve the educational improvements that we should all like to see in the interests of the children of London and in the interests of a great many ratepayers on whom the very high ILEA rate bears very heavily. I think particularly not just of the domestic ratepayer, but of the industries in London which, of course, have to contribute very heavily towards this end. The Statement makes it clear that we believe that the right way to proceed is

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that if the ILEA is unable to meet the financial requests that we have asked of it, we shall be reviewing the financial arrangements. That is as far as I would go at this stage.
Lord Sandys: My Lords, in view of the fact that we have spent 18 minutes on this Statement and the noble Lord, Lord Harris of High Cross, has been waiting so patiently, perhaps we may return to the debate.

Industry: The Public Sector
Debate resumed.
4.18 p.m.
Lord Harris of High Cross: My Lords, I would have waited just a little longer, but I am glad to begin by thanking the noble Lord, Lord Beswick, for the opportunity to join in this wide-ranging debate. If I may say so, without appearing to patronise, I thought that his speech was quite delightful and that it was, in parts, very plausible and that it tended in other parts towards excessive complacency.
I must at the outset apologise to noble Lords that a meeting of the Political Economy Club, of which I am the honorary secretary, will prevent me from staying until the end of the debate. But I shall read the full Hansard with special interest because in one respect at any rate I stand midway between the Opposition and the Government Benches on this matter.
I must confess that I do not make any complaint about ministerial criticisms of the so-called "public sector". But I do complain that Ministers have not acted sufficiently on their criticisms in curbing the heavy cost of what I would rather call the present governmental conglomerate.
Government, in all its aspects, now spends one-half of the national income and it employs almost one-third of the total labour force. In raising its revenue it is inevitable that it should throw some burdens on to private industry. Taxes, after all, inflate costs; they discourage effort, they discourage investment and they can discourage employment. Yet much of this hard won tax revenue is then spent on shielding the nationalised industries from the very market disciplines to which private industry is fully subjected. A series of Written Answers last October from the noble Lord, Lord Cockfield, revealed the fact that the current and capital subsidies to the nationalised industries—excluding the NEB—amounted since 1960 to £26,000 million at 1978–79 prices.
Steel, which is dealt with quite separately for accounting purposes, has, in addition, already run away with £6,000 million since nationalisation in 1967. I do not believe that it is fanciful to regard this process as a perverse transfusion of finance from struggling, productive industry to a pampered and often less efficient sector under Government control and regulation. If we were to add the cost of nationalised health, nationalised education, nationalised housing and assorted local government services, the full burden on the private sector would be truly crushing.
I sometimes detect some scepticism in this House about economists and their conflicting theories. I
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think that is a healthy instinct, and it seems to me it would be particularly correct on the issue before us today. I want to say that throughout my lifetime much of the most damaging Government intervention of which I complain has been based upon a false deduction drawn from an abstract economic theory. This theory taught to every first-year economist, starts from a concept which is called "perfect competition". Perfect competition assumes that consumers and producers have complete knowledge of all relevant facts. It assumes that there is free mobility of all the factors of production, and it assumes an unmixed range of products that are homogeneous and compete only in price.
Not surprisingly, economists who come into the real world find that markets do not operate in full accord with this textbook model. But they then make the naive deduction—a misplaced deduction—that if private enterprise works "imperfectly", public intervention would necessarily work better. It has taken long decades of empirical experience to discover that Government failure is often so much worse than so-called market failures.
This word "public"—of which the noble Lord, Lord Beswick, made such effective use—is often a semantic pretence. I once recall seeing a notice board which gave the game away; it read simply "Public property—keep out". The plain truth is that the ordinary public have less access to the control of the National Coal Board or the BNOC than they have to ownership of Shell or ICI. The critical difference which makes public industries different from private industries is that the nationalised industries cannot go bankrupt, because the public can be made to pay their debts.
As the noble Earl the Minister said, where nationalised industries are monopolies they can sometimes collude with powerful trade unions to batten on the public as both taxpayers and customers. There are many examples which we could take, but the case of the National Coal Board is instructive. The oil cartel obligingly raised the price of the main alternative fuel ten-fold in the decade of the 1970s. Yet the National Coal Board, having raised its price sixfold in a decade, is to this day still a charge upon the Exchequer, and its coal is still more expensive than coal we could import from the United States or from Australia.
It is well known, especially to those who have been involved in nationalised industries, that they have often become the playthings of political expediency. There are many examples in many industries going back over the last 20 or more years. But my favourite example was revealed by one of the former colleagues of the noble Lord, Lord Beswick, a Labour Member of Parliament who is now going straight. Sir Richard Marsh has told how, when he was Minister of Transport in the late 1960s, he found that there was a railway line 90 miles long which lost £380,000 a year and carried six regular passengers. He set his heart on what may seem to be a rather modest ambition for an able Minister in a radical reforming Government; he set himself the objective of closing that uneconomic line. He has told how he mounted a strong case and brought it, with some confidence, before the Cabinet, where he reports it was turned down after very little

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discussion when the Welsh Secretary declared that that railway line happened to run through six marginal constituencies.
We must make these allowances when we talk of how the public sector will be run. There was once in Cambridge a Professor of Economics who understood the real world rather better than some of the present incumbents. His name was Alfred Marshall. When students used to urge on him that this and that problem should be solved by Government intervention, Marshall always used to ask the same question—you will find it in the "Memorials" of Alfred Marshall: "Do you mean Government all-wise, all-just, all-powerful or Government as it now is?"
The trouble with our mixed economy is that the frontier between the market and the political domain is drawn on no stable principle. Every extension of Government soon creates a pretext for further encroachments. I think that the noble Lord, Lord Beswick, said "Heaven help us if we leave everything to the market economy". Of course the noble Lord is setting up an Aunt Sally. We need Government—we need effective Government—to fulfil quite specific tasks, well understood in the literature on the subject. We need Government to provide defence, to provide law and order, to guarantee minimum standards, to assist those poor or handicapped who cannot maintain themselves in a market system. We need Government—dare I say it?—to provide a stable monetary system.
But in Britain and elsewhere the mixed economy has degenerated into a muddled, mixed-up economy. It muddles the jobs which Governments have to perform with jobs which the market could do better. It muddles help for the needy with indiscriminate provision of welfare and other services for all, irrespective of need. It muddles compassion and good intentions with ill-chosen methods and perverse results.
I conclude with a simple question. When Governments of both parties have so often failed to live up to their hopes and promises, should not the noble Lord, Lord Beswick, and others set a more modest objective for politicians in the future? Let us suppose that we aimed at getting central and local government out of all activities which private enterprise could do better. We would then free politicians and their hard-pressed bureaucracies to concentrate on the limited range of tasks which Governments must discharge and which, in our experience, they have often discharged very badly indeed.
4.29 p.m.
Lord Glenamara: My Lords, first, I should like briefly to associate myself with the noble Lord, Lord Rochester, in what he said about the late Lord Amory. I, together with many noble Lords and Baronesses here, sat with him for many years in another place and we came to have great affection for him. Over the years I have had many kindnesses from him and have received a great deal of sound but always gentle advice. He will long be remembered.
Secondly, I should like to say how grateful we are to our noble friend Lord Beswick for initiating this debate. It seems to me that after 21 months a clear, two-pronged strategy of this Government is emerging.
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First, they seek to reduce the welfare state to an irreducible minimum; secondly, they seek to roll back the public sector also to an irreducible minimum, which the private sector will not be interested to acquire. If this is done, we are told, by some mysterious economic alchemy self-help will become the order of the day, everybody will stand on their own two feet and become much more reliant, the private sector will be liberated and small businesses will blossom in everybody's backyard. Every month, every week that goes by, shows the utter lunacy of this strategy.
Of course this debate is not about the welfare state; this is about the public sector, for which the Prime Minister and her Ministers have such an abiding hatred. If the noble Earl, Lord Gowrie, wants more evidence on this I would be pleased to send him another 20 quotations by his colleagues about the public sector. Incidentally, I was astonished to hear him advocating syndicalism, which the Labour Party abandoned 70 years ago.
The public sector to the Government, of course, means all Government departments, all local government, and all publicly-owned industries. This all-encompassing definition is the first illogicality; the lumping together of half a dozen of the biggest industries in the United Kingdom, a dozen or so medium-sized industries, together with Government departments and local authorities which are purely administrative bodies, sometimes providing a service but of course not concerned with reaching commercial and financial targets.
The Government's policy is to roll back the whole public sector. Less Government, less local government, less publicly-owned industry. So far as the publicly-owned industries are concerned they aim to do this in three ways. First, by—and I use this dreadful word they have coined—privatisation; secondly, by ending monopoly rights and obligations—the noble Earl, Lord Gowrie, told us today that that process is going on; and, thirdly, by sheer attrition, if that is not a contradiction in terms; the kind of war of attrition we have heard announced against ILEA today.
All that can be summarised by saying that their policy is to "do in" the public sector by any means available. But of course this is part of the credo of monetarism; to do the public sector in. When I was a child I learned the Church catechism. I think I can still recite the whole of it. Learn to fight against—
"the devil and all his works; the pomps and vanities of this wicked world and all the sinful lusts of the flesh".
I think there is a kind of monetarist catechism which ministerial hopefuls in the Government probably have to learn. It goes something like this: They have to promise to fight against the public sector and all its works; against the posts and telecoms of this wicked world; and against all the sinful chairmen of all the public bodies.
In their war of attrition against the public sector of industry the Government's heavy artillery is the device known as external financing limits; cash limits. When I was Postmaster General in the 1960s the Post Office aimed at generating about half the funds it needed for its investment programme and borrowing the other half from the Government. But in the 1970s the problem about public expenditure was such that cash limits were introduced by the Labour Government

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in 1976; but the Labour Government on the whole applied them sensibly and flexibly. This Government, on the other hand, are using them, or abusing them, with such rigidity and ferocity as to make it virtually impossible for the big public corporations either to reach their financial targets or to carry out their obligations to their customers. Perhaps noble Lords have read an article by Sir Leslie Murphy in the Guardian today where he says precisely that.
When the corporations do fail to meet their obligations to their customers, it will then be said, and it is being said—the noble Earl, Lord Gowrie, almost said it today—that they are failing the nation; in the case of the energy industries, the Post Office and British Rail, that they are rapidly increasing charges, and are inflicting great hardship on the public and on private industry—which indeed they are—but of course these are Government induced increases. I think that the noble Earl, Lord Gowrie, agreed with that today. I am not quite sure what he said, but I shall read it tomorrow. Of course increased charges for transport, for gas, for electricity, for telephones are just as acceptable to the monetarists who are running our affairs today as an increase in income tax.
The EFL device, cash limit device, is a simple one. So, of course, is the hangman's noose, or the executioner's axe, and, like them, its consequences can be dire in the extreme. It means that any excess expenditure, current or capital, over internally generated funds has to be borrowed, as in any other business. It is this additional amount over and above the normal cash flow which is subjected to arbitrary Government imposed limits. They do that on the argument that the enterprise is owned by the Government and the Government must ultimately guarantee its repayment, and this will apply, of course, even if the borrowing is from non-Government sources.
I read the statement made in a Committee in the other place yesterday, and it is quite clear, as the Daily Telegraph comments today. I quote from the Telegraph:
"No method has yet been devised, as the Minister admitted yesterday, to keep such borrowing out of the public sector borrowing calculation".
So what was announced yesterday makes no difference whatsoever to the operation of this device. In the case of the Post Office in particular, and other profitable publicly-owned industries, there is not the slightest possibility of them defaulting on the repayment of these loans. But none the less, despite that, the Government lump it with all other Government and local government expenditure and count it as part of the public sector borrowing requirement, which they limit, they believe, in order to limit the money supply, which in turn they believe will bring down the rate of inflation.
So the borrowing requirements of some of Britain's biggest industries, which are vital elements in an efficient economy, are subject to the same constraints, the same device, the same mechanism, as expenditure on Whitehall Government departments, or on social security, or on local town halls. Many noble Lords are involved in the business world, and rightly so. Supposing that a private company's banker placed an arbitrary limit on the finance he was prepared to lend, for reasons which were unconnected with the
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business concerned. Your Lordships would be the first to complain, and rightly so. It would disrupt that company's investment and development planning; it would cause great problems in the workforce; it would frighten off outside investors, and of course it would greatly reduce that company's competitiveness because its competitors would not be subjected to the same constraints. But that is precisely what the Government are doing, and that is precisely what is happening to these large public corporations, which are Britain's biggest businesses.
The Earl of Gowrie: My Lords, would the noble Lord give way? I am most grateful to him. The noble Lord mentioned me. Surely the essential difference between the analogy he gives and the position that the Government are in is that the bank manager can see his client, in the noble Lord's example, going bankrupt, whereas in the public sector that is much more difficult for the Government.
Lord Glenamara: My Lords, I think that the noble Earl has said that many times before. We are told now that the dreadful dog's dinner which the Government intend to create out of the telecommunication side of the Post Office—it will be a chaotic pattern they are creating—is going to include a number of subsidiary companies. This has been said in the Committee in another place. These companies are going to he ordinary Companies Act companies, but owned either by British Telecom or jointly with private enterprise. We are told that the cash limits will apply equally to these subsidiary companies, unless of course British Telecom is a minority shareholder. They will have to compete with private industry with their hands tied behind their backs. It is the theology of monetarism carried to the point of sheer absurdity to say that subsidiary Companies Act companies which are to be created to carry out profitable enterprises under British Telecom will be subjected to the same kind of mechanism. Were it not so serious, it would be comic.
The method by which the cash limits are arrived at each year, as well as the arbitrary fixing of them, causes problems as well. It is a typically Civil Service method; in November of each year assumptions are arrived at by the Treasury about pay and price levels for the following 18 months. Governments—I speak from experience—are always over-optimistic about the way in which their policies will work out, and Government assumption on prices and pay are almost invariably over-optimistic. Until recently these were kept secret. They may still be, but I understand they are to be reported in future as a result of the joint committee which considered this matter.
At the same time, the industries concerned make their own assumptions on these matters. As they are living in the real world, their assumptions are nearly always much more realistic. They may or may not coincide with the Government's assumptions on pay and increases in prices, but the Treasury's assumptions always prevail in arriving at the cash limits. In our Whitehall machinery the Treasury always gets its way. In my view, the Treasury in Britain is the biggest impediment to good government and if I may give my right honourable friend the Leader of the Labour

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Party some advice; when he comes to office, if he does, in two years' time he should move out at least 20 to 25 people from the top of the Treasury and bring in some good accountants and businessmen from outside to advise.
If pay and prices do not turn out as they have been assumed, the Government will not alter the cash limits, except in so far as they recently agreed to a small relaxation whereby a small percentage from the following year could be brought in, but with no increase over the two-year period. What can the corporations do when, first, the external financing limit is inadequate to start with, and most of them are this year, or, secondly, the assumptions on which they are based, about prices and inflation, prove to be inadequate, as they usually do? Of course, if these corporations—the Coal Board, the Post Office, British Rail and so on—want to continue their investment programmes, as they must, they must take short-term measures, which are very often against their better commercial judgment.
A recent example was putting up the charges for telephones by a total of 30 per cent. in 1980, an increase which was damaging to private industry and which is causing great hardship to many telephone users, especially old people. But they had no option; it was the only option left to them if they were not to cut their investment programme. As I said, in effect this 30 per cent. is additional taxation induced by the Government, but of course it is disguised and described as the inefficiency of public enterprise, or alternatively as the weakness of public enterprise in agreeing to over-large wage demands, both of which are demonstrably untrue.
The Government's stated aim over the four years 1980 to 1984 is to secure a turnround of £3,000 million in borrowing from the Government: from minus £2,300 million in 1980 to plus £400 million in 1984. I am aware that in the last few weeks this has become some-what unstuck, but it is still presumably the Government's broad aim, and so far as subventions to British Leyland, Rolls Royce and British Steel—all legacies of private enterprise—are concerned, the Daily Express rightly points out today that had the Government let them go under, it would have been the equivalent of a nuclear bomb in the economy. This turnround represents the biggest financial upheaval ever imposed on the public corporations. The aim is to cut back their size and scope simply because they are public and not private.
The Labour Party has always been accused of being a doctrinaire party. The Rabbinical scholars who erected those pyramids of theology, the relatively simple Law of Moses, had nothing on Mrs. Thatcher so far as theology is concerned. As the noble Earl said, the publicly-owned industries account for one-tenth of the national product, one-fifth of the total fixed investment, employ 7 per cent. of all employed people, hold the dominant position in energy, communications, steel and transport and their influence on the economic performance of the United Kingdom is enormous. It follows therefore that an efficient public sector in industry can at least create the conditions for an efficient economy, but it can do that only if it has the support and encouragement of the Government.
The present Government inherited this weapon; it was placed in their hands by the electorate in 1979.
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They could have nurtured it and used it to do just that—to create the conditions for an efficient economy—but instead they are selling it off, eating the seed-corn and creating enormous and damaging problems for it. They are harassing it at every turn. It is difficult to speak temperately of a Government who are destroying the manufacturing base of our industry—that is another of the most demonstrably true facts in the current scene—and at the same time are making life impossible for public industries which underpin the private sector. Incredulous though it may seem, the Government are pulling down the walls of the economy and attacking the foundations at the same time. It will take a generation for Britain to recover from this Government.
4.48 p.m.
Lord Thorneycroft: My Lords, it is a privilege to speak following the noble Lord, Lord Glenamara, who himself made an important contribution to the public sector in his work, and I wish at the outset to thank him for the tribute he paid to my friend the late Lord Amory. It was only a few months ago, just before I last spoke in your Lordships' House in an economic debate, that telephoned Lord Amory—it was in the closing days of his life—to ask his advice. I will not be the only person in this House to miss the counsel and advice of that wise and good man. I thank the noble Lord for that tribute, and I thank the noble Lord, Lord Beswick, for the way in which he opened the debate. His Motion taunts the Government with their attitude to the public sector. I suggest the argument is not really about whether we have a public sector; obviously we are going to have a large public sector in this country. I think the argument is about the size of the public sector and how best its welfare can be secured.
I speak as a Conservative and I happen to be the chairman of that party. The Government deal with the detail of the argument. If the House will forgive me—and I shall speak briefly—I should prefer to stick mainly to the principles; and may I say that we in the Conservative Party make no apology whatever for where we stand in regard to public enterprise in this country. I would put briefly before your Lordships four propositions which I intend to deal with in my speech.
First, we believe in a mixed economy, like the noble Lord, Lord Beswick. We believe that there is a role for both public and private enterprise in the United Kingdom. Secondly, we think that at the moment the public sector has become too large and too costly to be easily supported by the private sector and private citizens as they are today. Thirdly, in those circumstances our role is not to abandon the public sector. The role of a Conservative is not to destroy things; it is surely to support them. We should provide the public sector with management and money. We should reduce it, and, where we can, provide it with partners and additional finance. Fourthly, and overall, we should, by our financial policies, seek to reduce that inflation which is so damaging to public and private enterprise alike.
That seems to me to be the central position of British politics today. All the rest is on the periphery—the question, for instance, of what one does about an

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incomes policy? That is very difficult. The noble Lord, Lord Rochester, referred to this, but the problems that he posed were of a fantastic character. There is, for instance, the question of how one handles the leadership of the Labour Party. These are fascinating problems, but they are peripheral to the real issues which we are trying to debate.
I accept that if one is in the centre of events, and is attempting a central position, one is open to attack. I accept also that occasionally we are attacked as rabid monetarists—by the noble Lord, Lord Glenamara, for instance—and for providing a billion pounds to support and maintain the great car industry of this country, upon which thousands of jobs today depend. If one is in the centre of events, one must expect to be attacked from both sides. But we in the Conservative Party are as proud and as unapologetic about our determination to contain inflation, as we are about our determination to support both the public and the private industry of this country in the middle of a world recession, and so help it fight its way back to the proud position that it has always held in the conduct of trade throughout the world.
That is where we stand. If I may say so—and I agreed so much with what the noble Lord, Lord Harris of High Cross, said—we stand there in a real world. It is not an imaginary world. It is not the world of a perfect market, beloved by some of the economists. It is not a working-class proletariat talked of by the Marxists. It is the real world of this country as it is today, with the British people, with all their faults and virtues, in the circumstances in which in fact we find ourselves, far from perfection in many respects, but in which we can only do our best.
But if we say that that is where we stand, I think we are entitled to ask where other people stand. The noble Lord, Lord Beswick, spoke for the Labour Party as I speak for the Conservatives. The Labour Party, it seems to me, has moved very far to the Left. I make no personal criticism of a man whom I have known as a friend and opponent, as well as a brilliant parliamentarian, all my life, but Mr. Foot believes—and has said so—in a continuous process of nationalisation. Nobody imagines for one moment that if Mr. Foot were in charge, the balance between the public and the private sectors would remain where it is today. We are told in every speech, on every television programme, that the balance would move much further—much further—towards the public side.
I think that your Lordships should ponder the wisdom or otherwise of a policy of that kind. It is a policy which is proving daunting even to many members of Mr. Foot's party, members who stuck with it right through the re-nationalisation of steel, right through the rather unpleasant business of the takeover of shipbuilding and aircraft; but even they are now finding that enough is almost, though perhaps not quite, enough, and they are by slow degrees tending to leave the party. I would suggest to your Lordships that whatever else may make sense in British politics today, a further extension of the public sector could not possibly make any sense.
There are arguments about the public sector which one can make. It has problems. Even its keenest supporters would admit that it has problems. It has problems about the monopoly power that it gives to
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unions, about the control of prices and, above all, about the fact that it never goes bankrupt. It never closes that railway line in Wales—and the wonderful thing about the illustration given by the noble Lord, Lord Harris of High Cross, is that that conversation in the Cabinet could have taken place in the Cabinet of either party. The damn thing goes through the marginal seats. It is too embarrassing. There are difficulties about the public sector—and let all of us, however much we support it, admit that they exist. And may I say that there are great pluses, too, and it has made—and many areas will always have to make—an enormous contribution to various things.
But my arguments about the public sector are not doctrinaire; I am not going to bother with that. They are based on something much more pragmatic: the question of what one can afford. The public sector costs money—a little money to buy it, but enormous sums of money for the new capital formation that has to go into it, or for the losses which are sustained. This year the revenue from North Sea oil was £4 billion. What pride we can take in that? What a magnificent thing for this country? The external financing limits—the money that goes into the public sector—amounted to £3 billion, or three-quarters of the total of the North Sea oil revenue. I am not saying for one moment—and I hope I am clear on this—that that money was wasted; I am not saying that. What I am saying is that it is an enormous financial responsibility, and it seems to me that it should make anyone pause before he says, "We are going to extend these obligations further".
Lord Beswick: My Lords, I wonder whether the noble Lord would allow me to interrupt him? I am moved to get to my feet because the noble Lord, Lord Soames, was rather inciting me. Would the noble Lord, Lord Thorneycroft, be kind enough to analyse that large figure and tell us how much of it is going in investment and how much is going to be returned on that investment?
Lord Thorneycroft: My Lords, my noble friend Lord Gowrie spent paragraphs doing this in his opening speech, and that is why I said I was not going to go into massive figures. I simply say this—and I think that I probably carry with me quite a number of noble Lords on both sides of the House—that however good public enterprise can he, there is a limit to what you can do in the way of adding to it; and if anybody really suggested today that we should as a matter of policy add to the public sector and these financial burdens, I should have thought that that was an area of policy which most sensible men of any political party would reject.
Now large areas will remain—of course they will—and I certainly am not opposed to that. Nor do I oppose public enterprise; I count many friends among those in it. I have had the privilege to work with men like Derek Ezra, who has made a tremendous contribution to the affairs of this country—a man of wisdom, of courage and of humanity. Then, look at the trade union leaders: men like Joe Gormley and Tom Jackson, in the tradition of some of the great trade union leaders of this country and, on the whole, an immensely

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moderating influence on the difficult and tangled industrial scene that often confronts us.
But I would utter this warning, that too large a public sector, struggling, to reduce its costs and supported by an overburdened and overtaxed private sector, is a recipe for unemployment. It really is. If the objective of policy—and it must be high among our objectives—is to find jobs at the present time, then a smaller, more efficient public sector, supported by a richer and expanding private sector, must be high on the list of political objectives in the United Kingdom. Match that with new investment, with the minimum Government interference, with low taxation and, for the sake of employment in this country, (and I would commend this to the Labour Party) with retaining the massive potential market which lies in Europe, and match it also with financial policies which really pin inflation down—this is the broad, central ground of politics today, and I must say that I am proud and happy to see the Conservative Party securely placed upon it.
5.4 p.m.
Lord Kaldor: My Lords, I should first like to associate myself fully with what other noble Lords have said about the late Lord Amory. I participated in numerous debates which he initiated, or in which he took a prominent part, and I learned to appreciate not only his intellectual qualities but his exceptional honesty and seriousness of purpose, and his search after truth and after the common ground. After many of the debates I had a feeling that our points of view moved closer together, and were nearer to each other at the end of the debate than they were at the beginning. I think this is the first economic debate in which I have participated in this House at which Lord Amory is not present, and I think that we on this side of the House, too, will miss him for a long time to come.
My Lords, I was glad to have one assurance from the noble Lord, Lord Thorneycroft: that he agrees with the view I was going to express that, apart from a lunatic fringe, there is no one in this country who belongs to either extreme in the matter of private versus public enterprise. We do not have many communists or many Left-wing socialists who want to abolish private enterprise altogether, nor do we have very many Right-wing capitalists who want to get rid of public enterprise. What is true is that the present Government and the party opposite, as Lord Thorneycroft emphasised, find that the public sector in this country is too large—a blot on the landscape. He did not explain on what basis they regard it as being too large, but they regard it as a burden and they want to reduce its size—and they neglect no opportunity to emphasise their intention to re-privatise publicly-owned enterprises, at least those which yield a profit and for which buyers can be found.
My Lords, I would advise them to hurry up if that is their intention, because soon they may find it difficult to find profitable sectors to hive off, and they may find it even more difficult to find buyers, knowing the uncertainty to which the future status of such re-privatised businesses will be subject. But I am not very optimistic, from their point of view, about what is going to happen, because the real trouble is that by
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their present general economic policies—the policies of economic depression—they are destroying private industry so fast that, contrary to their objectives, they are rapidly diminishing the weight of the private sector relative to the public sector, and not the other way round. They scream against nationalised industries, but it is private industry which they ruin, much more than nationalised industry. On top of that, they might well end up, as the depression deepens, having to take large enterprises into public ownership to prevent their extinction, just as Mr. Heath was compelled to do in the case of Rolls-Royce aero engines, to give but one example.
The noble Earl, Lord Gowrie, said that the difference between public and private enterprise is that private enterprise can go bankrupt. I think this is not quite accurate. If private enterprise is important, or if it supplies something which is vital to the national interest, or simply if it is an important segment of the economy, then it cannot go bankrupt, any more than can public enterprise. What happens is that it is taken into public ownership, which is not the same thing. Bankruptcies caused by recession simply increase the size of the public sector, just as, if you look at Mussolini's Italy, which was all against public enterprise, you see that they ended up with almost the whole of industry being owned by the state.
This could possibly happen here, also. This is not a debate on the economic situation, and therefore I cannot now go into the reasons. But, contrary to the optimism expressed by our Prime Minister in numerous speeches, prosperity is not just around the corner, and we are not approaching the bottom. I think there are important forces making for economic contraction which have not really begun to operate yet. We have had a big recession due to de-stocking, but the consequences on private consumption, on private investment, on fixed investment, and on exports—the three main factors determining the level of economic activity—are all set to turn down, and as they do we are going to see a much deeper recession than has yet been seen. In the course of that, I am willing to prophesy, the range of the public sector will be rapidly enlarged and not diminished.
Leaving aside the current situation, I can quite see that it is in the interests of the owners of capital that the opportunity for making profits should be spread as widely as possible and every act of nationalisation which narrows that field is inimical to their interests. This was no doubt the motive behind the agitation and lobbying for commercial television some years ago. When the question was first debated, there were many who feared that this was bound to lead to the kind of gutter television concentrating on sex and violence found in America. In retrospect, these fears were largely groundless, but mainly because the publicly-owned sector, the BBC, more than held its own and by its success forced the private commercial sector to compete with it in programmes of high quality.
The BBC is a unique institution which has no equal in any other country in the world, as people of many nationalities would confirm. I think noble Lords will not disagree—any more than they would in the case of the Navy—that this is a field in which public enterprise has proved far more efficient and imaginative than private enterprise.

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We have another unique national institution which has been much in the news lately; that is The Times, a newspaper which for the greater part of nearly two centuries has been recognised as the authentic voice of Britain. I much regret that the possibility of nationalising The Times—by which I mean transferring its ownership to a public corporation run on much the same lines as the BBC—has not been contemplated, let alone seriously discussed. Its future, its independence and its ability to serve the national interest would have been far better guaranteed in that way than by its absorption by—I was about to say an Australian but perhaps should say a multinational publishing empire of chequered reputation.
I realise that a BBC-like solution may not suit the party of the noble Lords opposite nearly as much, since the present arrangement will ensure that The Times will continue to be a thinly disguised organ of the Conservative Party and not a national paper above parties. However, I suggest in all seriousness for the future that if national newspapers continue to run into the sort of financial difficulties which we have witnessed so frequently in the past 30 years, the Government should be ready to step in and transfer their ownership to a public agency with the independence of the BBC or of the judiciary or of many others of the best institutions that we possess. Democracy requires a press that speaks with many voices. I do not think that that would be disputed. More than any other nation, Britain has a tradition of public service and of institutions which are capable of jealously guarding their independence. We are therefore exceptionally well placed to use the assistance of the state to preserve an independent press which speaks with many voices. I think that would be a most important guarantee for the survival of a healthy democratic system.
For reasons which were set out by my noble friend Lord Beswick, the industries which the first post-war Labour Government nationalised brought enormous benefits to the British economy. A far more efficient service was created in vital sectors than could have been provided under private enterprise. Why was that? It is partly because the nationalised industry was able to work on the basis of a comprehensive, long-term plan, and partly because, barring exceptional periods of ideologically hostile Governments such as the present one, it was able to undertake sustained investment on a very much larger scale than private enterprise would have done.
In these respects, British private enterprise, I regret to say, is in general much inferior not only to British public enterprise but to the privately-run industries in other industrial countries. We have one of the most extensive and sophisticated financial markets in the world to serve the needs of industry, yet industrial investment has been inadequate in this country for more than 100 years. As a proportion of the value of manufacturing output, gross investment in manufacturing has been only one-half as high in the post-Second World War period as in our competitor countries. If we go back to the 1920s, or even further to the 40 years preceding World War I, inferiorty of industrial investment of Britain was far greater in relation to countries such as Germany, America, Japan and so on.
What has been the main reason for this? There are no universally accepted explanations, and I do not
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think that my own view would commend itself to many people in this House; but my view is that the very existence of the City of London, the supremacy of financial capitalism over industrial capitalism, has had a deleterious effect on our industrial development. It has certainly increased the attractions and the facility of foreign investment against home investment.
It has also meant, in the more recent decades since the Second World War that the managers of our businesses have been engaged in a continuous struggle either in averting certain takeover bids or in putting themselves into a position to be taken over on favourable terms, or else in the position to take over other firms—a game which requires clever accountants who can show the best-looking profit and loss accounts. We find more accountants among the heads of industrial firms of this country than in any other country in the world. This financial game, the gains from successful takeover bids—that you are either taking over or else are taken over—are far more rewarding to owners and controllers of firms than the profits derived from developing new lines or new markets, all of which are, by their nature, slow and long-term operations, but which, in contrast to the short-term financial gains, are in the national interest.
The Earl of Gowrie: My Lords, I am grateful to the noble Lord for giving way. I am following what he is saying with great interest. Would he not think that one of the reasons why the City in his argument may have been inimical to industrial investment on the scale that both he and I would like is that the fiscal policies of successive Governments have provided strong disincentives to the smaller or individual investors (who are most likely to gain from a generalised capital or equity market) and therefore strong incentives to the large corporate investors who will go naturally for the longest and safest return?
Lord Kaldor: My Lords, I should be far more ready to follow the thoughts of the noble Earl were it not for the fact that all these shortcomings I have been talking about were more prominent in the late Victorian era and the Edwardian era (when the fiscal disincentives that he mentioned were completely inoperative) than in the years since the Second World War, or even in the period between the two wars. The real period of Britain's poor performance relatively to other countries was from 1873 to 1914. It has never been worse than that either before or since. That was not a period in which fiscal disincentives could possibly have played a role.
I need not say to noble Lords that there is a great difference between large gains made from takeover bids and gains made developing new markets. The latter add to national wealth; the former merely change the distribution of wealth. Economists call it a zero sum game; what some people gain, others lose. I am convinced that if we wanted to make private enterprise capitalism more successful, we should need revolutionary changes in our institutional framework, in our company law, in our system of technical education and in our system of selection of business leaders.
In the meantime we require more public enterprise, not less, and a fundamentally different attitude to public enterprise—not one which regards public investment as a burden on the community. In the past few years—

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and I admit that the last years of the Labour Government share part of the blame—economies in public spending were largely concentrated on public investment as the easiest field in which to cut. This was the result of muddled thinking—people thought—and ministers still think—that, compared with private investment, public investment was not wealth-creating, that it was just a burden on the taxpayer. This is of course nonsense. Take, for example, motorways. Superficially there is nothing to distinguish British motorways from French motorways except that they are called autoroutes. But in the eyes of Ministers there is all the difference in the world. French motorways are profit-making enterprises and therefore they are wealth-creating. By levying a toll on users, just like the turnpike trusts in Britain in the 18th century, they are made highly profitable. They are built by companies which are in part at least—sometimes 50 per cent., sometimes more—privately owned.
The French Government may be just as anxious to keep down their version of the PSBR (which is a much more sensible version than ours to start with) but all this does not come into it. It does not make them cut road building in times of unemployment for utterly irrelevant financial reasons. Although the French Government are criticised quite a lot in France for their financially conservative attitudes, they are miles ahead of us in their attitude to economic development, to co-operation of public and private enterprise and meshing the development of various sectors together, and also to the central direction of industrial investment, none of which is known in this country.
However, before I sit down—and I am sorry that I have spoken for too long—I must congratulate the Government on having had the courage to suspend their convictions in the decision to rescue and try to put British Leyland on its feet. I should also like to congratulate the noble Earl on what he said in encouraging workers' co-operatives as a form of enterprise. I hope that he will have success in convincing his colleagues in the Government. I should also like to congratulate them on encouraging Datsun to manufacture cars in this country. The Japanese are so much ahead of us, both in technical know-how and in human relations—in showing how to treat their employees and get the best out of them—that we ought to give them every encouragement to transfer more of their industrial activities to Britain and, if possible, take some of our industrial managers in exchange. In the long run this might have the same kind of effect on our industrial future as the coming of the Flemish weavers in the 15th century.
The most urgent problem of any in this country is not whether more or less wealth should be privately owned, but that capital investment should be stepped up as soon and as much as possible, both in manufacturing industry and in social infrastructure if we wish to arrest and reverse our economic decline and add to our total wealth. This must involve a dramatic increase in the scale of capital investment in modernising our manufacturing industries. I can see no other way of doing this at the moment except either by creating new public enterprises or by new joint enterprises which are at least in part publicly owned.
Very few noble Lords realise that the possession of
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North Sea oil will give us no benefit whatever if it merely means a corresponding shrinkage in manufacturing or in other sectors of the economy. To derive a benefit from it, we must use it so as to enlarge our productive potential in manufacturing industry and in the other sectors. We can only do so if North Sea oil is used in order to increase our investment on a very large scale. I see that this runs contrary to the wholly mistaken monetarist philosophy of this Government, and I do not see how this conflict can for the moment be overcome. But I am convinced that this is the only way we can save ourselves.
5.27 p.m.
Lord Underhill: My Lords, I am positive that there is no noble Lord on this side of the House who regards public ownership as the panacea for all our problems. In any event, public ownership would need to be linked to appropriate economic and fiscal policies. They would have to go hand in hand. Public ownership opens up the possibility of effective economic planning, greater accountability and planned investment. On this side we accept the need for a mixed economy. Noble Lords opposite say they do so also. If one goes back to previous economic debates, I have had to complain of how seldom noble Lords opposite have gone out of their way to praise in any way sectors of public ownership. I hope that will be done in the same way as on this side we will give full credit to the best elements in private ownership.
Public ownership is not a British Labour Party monopoly. It so happens that I was looking at a document issued in 1978 which revealed that eight of the top 20 industrial companies in Europe were wholly or part state-owned. In West Germany the Government have a participating share of the top 50 industrial concerns, including Volkswagen and Lufthansa, the national airline. In Italy the Government, through the holding company, owns concerns such as Alfa Romeo, four major banks and again the state airline. In France we have the giant Renault concern, 100 per cent. state-owned, and the Government have an important stake in the oil business.
In Sweden, I find that one of the largest iron ore producers in the world is owned by the state as is also Sweden's largest commercial bank. Austria have a large national holding company which accounts for 20 per cent. of the industry. Most companies of any size, ranging over steel, oil, chemicals or engineering come under the holding company. It also controls two main joint stock banks. These are just some examples to suggest that public ownership is not just a British Labour Party disease.
I find also that the nine EEC countries have a pattern of public ownership similar to ours. Basic industries and services such as fuel, transport, post and telecommunications are all in their public sectors. Those countries seem to have come to terms with public ownership in their mixed economies. Also, I wonder whether it is fully understood how much of the banking in EEC countries is in the public sector—state-owned, municipal and co-operative—because I have found that an answer to a Written Question to the Commission of European Communities (835/77) was given as a percentage of deposits in public sector credit institutions

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which, as the answer said, in the wider sense includes not only those institutions established by law but those controlled either directly or indirectly by a public authority, whether central or local. The figures given are as follows: France, 80 per cent., Italy, 70 per cent., Germany, 60 per cent., Belgium, 50 per cent., the Netherlands, 40 per cent., Denmark, 30 per cent., Britain and Ireland, which are lumped together for some reason, 10 per cent. I mention these facts to indicate how respectable public ownership is in other countries and how essential public ownership is regarded by those other countries, which accept also the need for a mixed economy.
The noble Lord, Lord Glenamara, said that in talking about the public sector we must include the Civil Service and those in local government administration. Tributes are paid time and time again to the fact that we have the best Civil Service in the world as regards its integrity and impartiality; yet we have to listen to snide comments which give the impression that those who are in the Civil Service or engaged in local government administration are shameful persons living on Government funds. I hope that that attitude is going to be corrected.
There is no immutable law as to whether things should be run by public ownership or private ownership. No one except a madman—even the Conservative Government—would think of handing over our police service to the private security firms or handing back the Fire Service to the private insurance companies who had them at one time. It is good to hear the noble Lord, Lord Thorneycroft, say that the question is: "How much public ownership?" I wondered what a little research would yield if I looked back at all the speeches that were made when all the Labour Government Bills for public ownership were introduced. I cannot remember the Conservative Party supporting any one of them, no matter what might now be said about support for a certain amount of public ownership. The question is: what are the economic arguments for public ownership and the political decisions that have to be made?
It is worth while looking at some of the older nationalised industries which took over out-of-date assets which were badly in need of replacement. I think everybody would recognise that was so in respect of the railways. The community paid £941 million through 3 per cent. transport stock; and even the House of Commons reference sheet on the financing of public industries, as I noticed the other day when I looked at it, said that the assets were over-valued and that their earning capacity was virtually nil. In fact, I believe that in the years prior to the war no ordinary dividends had been paid in the private companies for some years. Does anyone visualise handing back the railways to private ownership? If not, somebody ought to say "Why not?"
My noble friend Lord Beswick referred to the gas industry. Those who move around the country will recognise small undertakings, many of them broken down with differing degrees of viability and will have noticed the change that took place within a few years. As one travelled around, one could see what was happening to the gas industry once it had passed into public ownership. Does anyone really envisage disbanding the Electricity Council, the Central Electricity
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Board and the area boards? I am not quite certain what the noble Earl, Lord Gowrie, said about this aspect, but part of what he said rather suggested that there might be a certain breaking-up, and that greatly alarmed me.
I know it is history, but as regards coal, where would the coal industry be if the Labour Government had not decided to bring it into public ownership in that great reforming Government of 1945–55? Before the war, commission after commission had said that the only hope for the coal industry was to bring it under nationalisation, and it was not until the Labour Government in 1945 that that was achieved. I moved to Birmingham in 1948 and travelled around all the coalfields in the West Midlands. Frankly, it was amazing to see the change which came over small, broken-down townships with coal nationalisation. A new pride and a new standard of living was secured for those engaged in that dangerous industry. As regards research and safety, last year I understand that the number of fatal accidents in the coal industry and the number of reportable accidents was the lowest on record—an achievement which has gradually been developed under public ownership. Again, I doubt whether anyone would suggest that coal should revert to private ownership, and again I say that it would be interesting to know why.
Did not our publicly-owned Atomic Energy Authority lead the world in developing the use of nuclear energy for commercial purposes? We ought also to refer to the work of the National Research Development Corporation. Despite the cash limits, most of our public institutions have manged to carry out intensive training and also research. Perhaps I could just mention some good examples: the development by British Rail of the high-speed train and the advanced passenger train. Its research and consultancy service are much sought after by railway administrations overseas, and now they are experimenting with a light rail-bus which they are developing themselves.
There is also a love hate relationship with the Post Office and telecommunications (Telecom). When I go, as I do most years, to the far North-East Highlands of Scotland, I can appreciate what a great institution our Post Office is. Even in the most remote hamlets letters are delivered and there is a post-bus service which is now covering some 170 routes. I hope that will be further developed. This much-criticised institution has developed Inter-post, the world's first electronic mail service for sending mail by satellite. That is to be extended. We have the Data-post for overnight express delivery and delivery door to door; we have the Expresspost, from same-day collection and delivery by special messenger. Some may criticise the fact that the Post Office has 23,000 post offices—more per head of the population than any other developed country. I think it is an asset to our country and is a great contribution to the ordinary people who need to go to the Post Office for all sorts of operations.
Perhaps I might also say a word about Telecom. In the last year, despite criticism, 2 million additional telephones were installed. There is now inland direct dialling by STD to every customer and our publicly-owned Telecom led the world in international direct dialling: some 420 million telephones in nearly 100 countries are within reach of 96 per cent. of Telecom's

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customers. Then there is British Prestel, the first in the world, for a public view-data service. It is to be followed in July by Prestel International, which will be the first world international service. All these things have been achieved by research and development through our public institutions.
My noble friend Lord Beswick referred to the Federation of Civil Engineers. I should like to quote one sentence from a statement issued by that body which is:
"… The Government's general prejudice against the public sector is widely acknowledged, even among their own supporters, to be leading to highly damaging cuts in public capital investment programmes".
In an accompanying document, The British Economic Base, it is stated that the whole of British industry, which accounts for 47 per cent. of GDP, is wholly dependent for its operation on the services provided by the public sector by road and rail networks, docks and airports, and the energy undertakings of coal, gas and electricity. Another quotation from that document is:
"Public sector investment has compared unfavourably with that in all other industrialised countries which have achieved a comparable level of economic development".
The Government have allowed their doctrinaire attitude to dominate their decisions.
Incidentally, I wonder what would have happened if public ownership had made a mess-up of the contract that was made with Rolls-Royce—an institution which we all greatly admire, whether it is private or public. That great concern was nearly brought to its knees. Then, why place the British Transport Docks Board in private hands, when Government Ministers have paid tribute to the efficiency and good standing of that undertaking? Why mess about with it? Why not leave it where it is? We shall be debating that, and the sale of British Rail subsidiaries, under the Transport Bill, but may I just mention one?
The Railways Property Board has contributed useful money to British Rail, where it is carrying out developments jointly with private developers. Why not leave it where it is and let British Rail have the benefit of appreciating land values and increased rates? Why did the Government even consider placing the very successful Ordnance Survey in private hands? We have not heard much of that recently, so I hope that that idea has been dropped.
I hope that that is also the case with the Government's suggestion of taking the testing of heavy goods vehicles and public service vehicles out of the public sector, when even the Ministers responsible have said that it is a most efficient unit and is practically the best in the world. This is why we say that this Government is doctrinaire. Why do these things to units of an organisation which are functioning so successfully?
In conclusion, I hope that this debate will encourage the Government to drop their doctrinaire attitude and, in words which some noble Lords have used today, will generally accept the essential need for public ownership within our mixed economy, and will ensure that there is adequate investment to assist the development of these organisations on which the private sector depends. As we have said in previous debates, the amount of development in the big public organisations can
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greatly affect the success of private industry, and many firms are looking to the development of the publicly owned organisations in order to get out of their own recession.
5.43 p.m.
Lord Boyd-Carpenter: My Lords, may I join with most noble Lords who have spoken so far, in paying a short but very sincere tribute to Derrick Amory? I do so with particular feeling, because I think I probably knew him longer than most noble Lords in this House, having the privilege of first getting to know him well before that war in which, as your Lordships know, he served with such gallantry and suffered so severe a wound. I shall miss him a great deal.
I could not help recalling, particularly during the opening passages of the speech of the noble Lord, Lord Underhill, the experience which a good many noble Lords now in this House had—for example, I see the noble Lord, Lord Bruce of Donington—of serving in the 1945 Parliament, when the procession of nationalisation statutes was making its slow but inevitable progress towards the statute book.
Those of your Lordships who had that experience will recall the splendid and rather touching enthusiasm with which those measures were supported. There was going to be a new heaven and a new earth, under the magic touch of public ownership. Your Lordships may recall that ringing remark of the late Aneurin Bevan, that they would bring the commanding heights of the economy under public ownership. Now perhaps if that great master of phraseology was still with us he would describe them as the demanding depths.
But I have never taken—and I shall quote an example in a moment, if it be necessary, to demonstrate it—a doctrinaire view of public ownership. My own view has always been that each case should be looked at on its merits, and that there are undoubtedly cases in which public ownership is the only sensible solution, as there are equally cases in which to impose it is lunacy.
I can quote in self-justification my experience a quarter of a century ago, when I was Minister of Transport—my noble friend Lord Thorneycroft will recall the occasion—and when I incurred a great deal of demerit with my own party, by declining to push the denationalisation of road haulage through to the final point of dismembering the national road haulage network, which could not be disposed of en masse and which I declined to break up for the purposes of sale. I quote that only to show that, not only in making a speech but as a practical working rule, I have never taken the extreme view which some noble Lords, and still more people in another House, take either way on this vexed question of public ownership.
It is in that spirit that I approach this very peculiar Motion which the noble Lord, Lord Beswick, has put on the Order Paper. His speech—if it is not an impertinence for me to say so—was admirable. But I would not extend that comment to this quite extraordinary Motion, even in its final or expurgated form which we arc actually, as a result of a variety of matters which I will not go into, now debating. First, it confines itself to a grumble, because some of Her Majesty's Ministers have dared to say unkind things about some nationalised industries. It goes on to criticise proposals for the return to the private

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sector of certain aspects of publicly-owned enterprises, and then has a wonderful ringing phrase about,
"a more constructive and positive policy which recognises the value of a properly balanced and integrated mixed economy".
I should like to pursue that last splendid phrase, which must have cost the noble Lord, Lord Beswick, or his assistants, much midnight oil and, at a time of need for energy economy, one realises how dearly that has been bought. What does that mean? Does it mean that the party for whom he speaks—and he speaks for his party from that Box—is committed to the mixed economy? Has he studied the speeches of his leader in another place and, still more, the speeches of the likely successor of that leader, both of them advocating, in their different ways and with their different emphases and techniques, very substantial increases in public ownership? It is very easy to say that you want a mixed economy, if you do not predicate how the mixture is made up.
In that connection, I could not help recalling the delightful cartoon in the Daily Express the other day. At some business conference, a gentleman was ordering a drink and turning to the waiter said,
" Make it a gin and tonic, with a 51 per cent. controlling interest for the gin ".
I suspect that that is rather the attitude of the noble Lord, Lord Beswick, except that I do not think he would stop at 51 per cent. This is, of course, very germane to his Motion.
If Labour Governments, when they are in office, regularly nationalise and transfer sections of British industry to the public sector, as they are entitled to do if they have won a majority at the election and have put it in their election manifesto—I shall not pursue in the noble Lord's presence the sensitive question as to who in future will draft that manifesto, or be responsible for it—then surely it follows, if one believes in a balanced economy, that when a Conservative Government are returned to power, with a manifesto commitment to de-nationalise certain parts of the nationalised sector, they arc fully entitled so to do. I hope that the noble Lord, Lord Beswick, will take this point. Unless this is so, it is sheer mockery to talk about a mixed economy, if what he really means by it is simply that the mixture gets stronger and stronger on the nationalised side, and smaller and smaller on the private sector side. If the noble Lord is asserting the right of his party, should it ever again come to office—perhaps that is a matter of entertaining speculation at the moment—to nationalise some more, why on earth, if he believes in a mixed economy, does he grumble when a Conservative Government, looking at particular cases on their merits, denationalise?
The noble Lord objects to their de-nationalising profitable sections of the public sector. I hope that the noble Lord will be realistic. I have had to undertake the process of de-nationalisation and I can give noble Lords opposite the present of saying that it is not a particularly easy thing. If you are to denationalise you have got to find a buyer. It is plain that if you are to find a buyer—at least a buyer whose mental stability might not involve certification—it is unlikely that you will be successful unless the enterprise in question looks as though it is going to be profitable. The noble Lord—I will give him another question if he wishes to rise so that we can economise his time,
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which I know is precious—should consider this: if, for example, someone were to say that he was quite prepared at the moment to buy British Steel that might raise a question, (might it not?) as to his mental stability? If the noble Lord wants to intervene, of course I shall be delighted.
Lord Beswick: My Lords, can I put it this way: if noble Lords opposite take such pleasure in decrying the public sector, is it not rather odd if they sell off the profitable ones and then say how badly the rest are doing?
Lord Boyd-Carpenter: My Lords, let me take this by stages. The noble Lord did not challenge my proposition that it was likely, if you were permitted to sell off—and I think he accepts that you are—that you would sell off those which are saleable, otherwise you would be wasting everybody's time. Those are the profitable ones. The noble Lord then led me very tactfully to the second part of his Motion: disagreement with the utterances of Ministers on the subject of the nationalised sector. The noble Lord quoted the Prime Minister's moderate phrase about "a financial haemorrhage". It is typical perhaps of my right honourable friend's habitual moderation of language and elegance of phrase that she used the word "haemorrhage" instead of, as perhaps others ight have, the synonym "a bleeding shame".
The attitude of noble Lords opposite, that you may not criticise any part of the public sector, is extraordinary. Given whatever its faults, given the present position of the public sector, or some parts of it, and given the enormous deficits which are having to be met by taxpayers' money, is the noble Lord suggesting that Ministers should indulge in paeons of praise of the public sector and say, "This is wonderful, isn't it? It's only costing us £3,000 million this year. Aren't they absolutely marvellous?" The noble Lord is hardly in the real world when he suggests that any Government, even a Government composed of his noble friends, would not be disposed on occasion to make a mildly critical observation about a section of activity which was involving this very substantial sum of money. If the Government did not do so, we should find many other people who would.
Those of us who are in industry—and many of us are in industry which, despite the problems of the day, still returns a modest profit—are not all that enthusiastic about being heavily taxed in order to make up the deficits of other industries which are making a loss, simply because they are in public ownership. Noble Lords must understand that those who struggle in the conditions of today to carry on a viable enterprise are not full of enthusiasm at having to hand over substantial proportions of the hard-earned profits that they make in order to maintain other industries which, for whatever reason, are themselves failing to pay their way. If after his experience both as a Minister of the Crown and as the very successful head of a nationalised industry the noble Lord does not understand that, it suggests that he really does not understand how people's minds work. Does the noble Lord, Lord Kaldor, wish to intervene?
Lord Kaldor: My Lords, does not the noble Lord agree that it clearly follows from his remarks that the lower the level of economic activity and the less the profits that are earned, both in the public and the private sectors, the more the enterprises which will be run at a loss, and that if more enterprises are run at a loss the necessary consequence will be that the state will have to take over more enterprises? Instead of re-privatisation, there will be the very opposite.
Lord Boyd-Carpenter: My Lords, I could not count whether there were three or four non sequiturs in that observation. But the most obvious and patent of them, which therefore stuck in my mind, was Lord Kaldor's suggestion that if an enterprise was failing the State would have to take it over.
Lord Kaldor: My Lords, that is right.
Lord Boyd-Carpenter: My Lords, I certainly do not accept that. If an enterprise is failing, it by no means follows that other enterprises should have to be taxed in order to maintain it. If it is failing, it is failing for one of several reasons. Either it is making a product which people do not want and which they are not prepared, for that reason, to pay a reasonable price for, or it is inefficient, or it is extravagantly run. I simply do not accept that, although I am grateful to the noble Lord for giving us this blinding revelation of the philosophy which he holds. Your Lordships will be aware that it is very interesting as indicating the noble Lord's philosophy. And he is a most distinguished economist. Your Lordships will recall that successive Governments of the party opposite have acted with absolute devotion on the noble Lord's advice. We are learning this afternoon some, at least, of the explanations of the disastrous outcome of the financial policies of quite a number of Labour Governments.
Lord Kaldor: Conservative Governments, also, my Lords.
Lord Boyd-Carpenter: My Lords, I have already given way and I must not detain the House for too long. That was a most interesting intervention and the noble Lord will allow me to thank him most warmly for it. It was most helpful and it greatly sustains my argument. To return to my argument, why does the noble Lord, Lord Beswick, grumble because there are criticisms? Is he really arguing that there is no ground for criticism? Unless he is arguing that, surely it is not only the right but it is the duty of those responsible for managing our national affairs to make criticisms when they are due. Does the noble Lord really feel that those men, many of them very able men, who run these industries are such shy, sensitive flowers that they will be blighted by a harsh word from my noble friend, that a slight comment from the Secretary of State for Industry or an aside by my honourable friend the Parliamentary Secretary at the Board of Trade will blight them and that they will go into a decline? If there were such people in charge of such industries, the sooner they went into a decline the better. But many of them are very able men. I join in the tribute which my noble friend Lord Thorneycroft paid to Sir Derek Ezra whose services to the coal industry, to the country and to a succession of
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governments of all colours are very remarkable and deserving of the highest praise.
So what does this motion boil down to? It boils down to a one-sided view of a mixed economy, an economy which is always being mixed one way but which it is an offence to mix backwards. It sets up the idea of a public sector so sensitive, so delicate that even if it fails in any respect nobody is allowed to point this out. This is quite an extraordinary Motion, so may I suggest to my noble friend a somewhat entertaining outcome to the debate. This is basically a Motion for Papers and there is a precedent for acceptance by the Government of a Motion for Papers. The precedent is that of that great man, the late Lord Woolton. May I suggest with respect to my noble friend that he accepts the Motion for Papers and then tomorrow morning, in compliance with the wishes of the House, delivers to the private residence of the noble Lord, Lord Beswick, a selected mass of the quotations from the 1940s onwards of those who have said that our economy would be saved by nationalisation. It would be a wonderful collection which would give the noble Lord a most entertaining and reminiscent weekend.
6 p.m.
Lord Davies of Leek: My Lords, it has been entertaining to listen to the intellectual gymnastics of the noble Lord who has just sat down because he has put logic before common sense. In the first place he has misinterpreted the Motion, as I will show in a moment. Nevertheless, do not let us spoil the atmosphere. There was a purpose about this. We have had an admission from a noble Lord opposite who has had experience in this House and in the other place as long as I have had and who was an excellent Minister, and a very able noble Lord who has just spoken. We have had an excellent example of the capacity of both men when they were in positions of responsibility.
This was meant to be not just a carping criticism but a serious look at the problems confronting us today. If one is eulogising private enterprise, God knows what we think of it at the present moment all over the world, not just in Britain—the business system seems to be breaking down and there is no one at the moment, including the monetarists, finding the answers. Those of us who have been around a long time know how difficult it is. Now we have an admission that both sides of the House recognise that ownership of some of the public sectors is needed to get—and I will use the words contained in the Motion—" a balanced economy ". We may argue about how we will finance it; we may argue about how much. Nevertheless, we are not arguing about that tonight; we are arguing for the acceptance of the fact that public ownership is needed. I will deal with one case particularly and I shall try to speak for only 10 minutes. I do not want to reiterate all the arguments because the House is getting tired. I will deal briefly with forestry later on.
A Government, whether it is Labour, Liberal or Conservative, do occasionally dream a few dreams and think about beauty. When the forestry devastation Bill comes before this House to "pinch" the land set up by an intelligent Government in 1920 for the

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Forestry Commission, will noble Lords from the backwoods of Britain pile up those Benches like trenches and fire at the Government as they have been doing all this week on wildlife? This is a section that is needed for the spiritual health of the country as well as for the economic areas, such as forestry. Those are the kind of things. The ideology of the—not of noble Lords but of some members of that party opposite is becoming as fanatical as that of some of the communists, whom they talk about. That is the problem. Monetarism has gone mad and it is rather pathetic.
I will not analyse the semantics of this point. The noble Lord has interpreted it completely differently from what the Motion is aiming at. As I promised to take only about 10 minutes I will not analyse it like he did; I will get down to the "nitty-gritty". Let me ask the 64,000 dollar question. I am suspicious about steel. I think, having read the speeches by the West German Minister, that there is now an underground agreement that the main steel industry of the Common Market of Europe is no longer to be in Britain or France or anywhere else but in the Ruhr and parts of the Saar, and there is an underground agreement somewhere that the steel industry could possibly move into that area. If that is true, the British steel industry is fighting a losing battle.
We want to know about this because there seems to be a common acceptance that the European steel industry will be built up. So are we cutting off the steel industry and bringing in Americans galore? There are more Americans than Tommy Lipton's good tea leaves advising the Prime Minister, rolling through the door of No. 10 every day of the week. They are supposed to be experts on finance, yet America has bigger problems than we have and in unemployment in Detroit. Anyone who knows the car industry there will know the truth. They are facing the same problem; I have been there and have seen it. So let us shut up in running Britain down all the time and running anybody else down who happens to criticise what this Government are doing to the public sector. I want an answer one day about the steel industry.
This is not a policy. We are not judging on merit. We are judging, on an ideology, as to what we should do. An avaricious, greedy, covetous, grab and grasp group of people with no souls will willingly take their chance at public enterprise that is being sold off and which has already been subsidised by the taxpayer for 30 or 40 years. My noble friend pointed out, but he had no time to go into the fact that there were no shares being paid out until the Labour Government nationalised and took over the railways of Britain.
With regard to the roads, we could have done a better job on the roads. If we are accused, we should remember that there are responsible Members on both sides of the House, and there is the chairman of the Commons Treasury Select Committee, none other than the right honourable Edward Du Cann who in his report talks about investment. What does he say in Hansard on the 7th May 1980? This is one of the leading, able, financial experts and industrialists. He says at cols. 328 and 329:
"My right honourable and learned friend is right to say that the Government cannot control everything".
Right.
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"Nor should they attempt to do so. Again, he was right when he said that perhaps there is a new mood of realism in our nation in that people are understanding better the realities of our economic situation. That is all the more reason why the Government should set an example of good management in their own house.
"More serious still is the continuing emphasis that is being given to cutting capital rather than current expenditure … the Committee received extremely worrying evidence."
That is the committee on which the noble Lord sat in his day —
"A statistic or two will illustrate my point. Capital expenditure will fall in 1980–81, as a proportion of total programmed spending, from 13 per cent. last year to 11 per cent. It was twice that six or seven years ago.
"Between 1972 and 1978 public sector capital investment fell by nearly 20 per cent. The result of all this neglect over many years"—
and this is pathetic—
"is that large parts of the nation's vital capital structure are ageing, deteriorating, not being built or not being modernised. The longer the work is delayed, the more expensive it will"
become; and in fact part of Britain where we are hoping to build up the tourist trade looks like a slum, because we are cutting local government services, sewerage systems, refuse collection. It is terrible for those of us who have knocked around the world, to see this great country of ours deteriorating because of this ideological fanaticism to cut sections of the public sector in the hope of reviving industry in this country. People are beginning not to come here because of it. That report, the chairman of which is a respectable member—and probably always will be—of the Conservative Party, should make this noble House think.
The other night I listened to the right honourable lady. I have every respect for her but she is like an ornamental catalpa tree, sitting there, trumpeting away, fanatically. I do not think she will last as the leader of the party opposite if they are going to carry on this policy, because the country will be in such a state that no longer will there he anything else that they can sell off.
I have one minute that I can spend on my forests. I do not want to trespass on the time of the House; we have heard things repeated 10 times over. Are we going to sell off this forestry land? Are the Forestry Commission lands going to be sold? If they are, why not sell Hampstead Heath as well? There are some Philistines who would do that! Is not there something worth saving besides pounds, shillings and pence, and which will give a nation at least the timbre of greatness? If ever this microcephalic Government start selling off forest land, I hope when they start to do it, as I said at the beginning, noble Lords will come here and fight tooth and nail to prevent this public sector forestry being sold to private enterprise. Only 8 per cent. of Britain now has this wonderful chance of forest land, compared with about 24 per cent. over the rest of Europe.
I promised to be 10 minutes and I have been, and I am cutting some of my speech. But I will finish with a tribute to a noble Viscount I had the pleasure of working with, who has now passed away and to whom tributes have been paid tonight; we worked on the Commodity Commission together. I thought he was a great, noble—all right, Conservative—gentleman, and there is no better praise you can give to a man than that.
6.11 p.m.
Lord Nugent of Guildford: My Lords, I certainly join with the noble Lord, Lord Davies of Leek, in that tribute to my old friend Lord Amory. I must thank the noble Lord, Lord Beswick, for giving us the chance to discuss this interesting topic, and in fact I can, perhaps rather surprisingly to him, give him a little support on the first part of his Motion. As an old boy of the club of chairman of nationalised industries, I have some sympathy with the first part of the Motion. Chairmanship of a nationalised industry, as those of us who have so been know, is a very arduous job; it really is a bed of nails. You are on your own. It is poorly rewarded in material terms, though somewhat better now than when I started eight years ago; even the honours which used to be distributed to those who took part are now withheld.
In fact there is only one motive left and that is pro bona publico. I agree with the noble Lord that there are some very dedicated men there. In addition to guiding the affairs of a major national industry, the chairman must cater for the political relationship with the Secretary of State to whom he is responsible. He must, therefore, develop a relationship of mutual confidence with the Secretary of State, so that the management of his industry conforms so far as is possible with the political policies of the Government of the day and does not expose his Minister to political attack. He must take care to warn the Secretary of State in good time if a situation is developing in the industry which may have political implications. In return he should be able to expect from the Secretary of State reasonable support in the political field for the leadership in and management of the industry as it develops policies to meet the future.
All this means that a chairman must have exceptionally well developed antennae to cultivate public confidence in his industry, both in the industrial field of his customers and in the political field of Parliament and the Government in particular. If then his Minister gratuitously knocks him about, for political or other reasons, he is put in an impossible position. He cannot retaliate publicly without causing a public row, but if he takes it lying down his position of authority in his industry is undermined. In my opinion, such action by Ministers is counter-productive in terms of the good management of the industry concerned and should be avoided at all costs. I add this point, that we all know that when a chairmanship falls vacant today there is no ugly rush of first-class applicants to fill it; in fact it has become increasingly difficult to find men of the necessary calibre, and the supply will dry up altogether unless these chairmen are treated with reasonable consideration.
With the other parts of the noble Lord's Motion I do not feel so much sympathy, and I have a critical word to say. In my opinion, justification for nationalising an industry must, as my noble friends on this side have said, be exceptionally strong, because it is thereby protected from the risks of the market. And here I entirely agree with my noble friend Lord Gowrie, who most trenchantly dealt with this point. Private industry and commerce must sell its goods and services at home and abroad in competition with all comers. By the profit on the total operation we as a nation make our living. Companies or individuals who fail to make a
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profit pay the penalty and go out of business. I do not think I need deal further with the point raised by the noble Lord, Lord Kaldor, after the comprehensive comments of my noble friend Lord Boyd-Carpenter. They do go out of business, and governments on the whole are not going to pick up the bits.
No such penalty hangs over a nationalised industry. In the great nationalised utilities, which are mostly monopolies, if there is a trading deficit it can always be met by increasing the price to the customers, the public. And even in the nationalised industries which are not monopolies there is always taxpayers' money to be drawn upon to cover a deficit or to provide new capital. These are facts. Experience has shown over the past 30 years, during which we have had a great deal of experience of nationalised industries, that, compared with the private sector, the public sector operates at a serious disadvantage in terms of reducing overmanning and increasing productivity, and thus reducing the cost of the service, the product, for the benefit of the nation. This is a matter of fact. It is particularly evident at the present time, when we see in the private sector great resilience, great initiative being shown by firms up and down the country in keeping their selling prices competitive, whereas the public sector is increasing its prices very much more in percentage terms.
In addition to this sheltered trading position, the public sector carries the further burden for the nation of index-linked pensions for all its employees, thereby giving them at the expense of the nation protection against inflation, which nobody else gets.
Lord Glenamara: My Lords, will the noble Lord allow me to intervene? Is he aware of the reply to a parliamentary Question in another place which stated that 64 per cent. of all pensions are index-linked? That means a vast number of pensions in the private sector are index-linked as well. Can we end this myth that they are only in the public sector?
Lord Nugent of Guildford: My Lords, I should like the noble Lord to give me details of the private firms that do give index-linked pensions. I simply do not believe it. It cannot be done. Perhaps the noble Lord, Lord Glenamara, will give me that information. The fact is that in the public sector the pension funds provide what pensions they can, and in order to keep at the level which has been set every year the employer's section has to increase its contribution in order to keep the pension fund solvent. Private firms cannot do that; they cannot go on increasing their prices in order to do it.
That is not to say that I am knocking nationalised industries. I should like to pay a tribute to the great efforts that are made by boards of management generally to try to improve productivity, to try to reduce overmanning. But the fact is that these organisations do lack the incentive and the urgency of private business. Those which can make a profit I applaud; British Gas has been mentioned and British Aerospace as well: very good. But generally speaking this is the situation. And it is against this background that I maintain the general proposition that nationalisation is only justified in the national interest in very exceptional circumstances, such as overwhelming techno

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logical advantage, perhaps in one of the great utilities, electricity, gas water, the industry in which I served myself.
In this context, Britain has one of the biggest public sectors in the world of free economies—some 25 per cent. of the working population are engaged in the public sector. And—to answer the point raised by the noble Lord, Lord Underhill—in Germany the relevant figure is 11 per cent., in France 13 per cent., and in the United States it is 15 per cent. That gives some idea of the extent to which our public sector is larger than that of other nations with whom we must compete.
I believe that the over-large public sector in our country is a positive disadvantage to our competitiveness as a nation, to our prospect of winning new markets, expanding our businesses and reducing the number of unemployed. Accordingly, I warmly support my noble friends and my right honourable friends in the Government in their policy of selling-off selected bits of the nationalised industries where they have a reasonable prospect of profitable, independent existence. I believe that that would be for the benefit of the economy. I believe that we should be moving into a better balance in the mixed economy, which we all accept, than we have inherited from the last Government.
A further inherent weakness in nationalised industries is undoubtedly in the area of industrial relations. For several years I conducted the industrial relations of the water industry, including, of course, the wage and salary negotiations. At this moment, when wage negotiations in the water industry have reached a critical point, and the leaders of the trade unions concerned arc threatening industrial action unless their demands for a wage increase are met, the question is squarely posed whether any body of men should be given the power to hold to ransom the life of the nation. That is the position. That is what industrial action, which stops the supply of water to every home and work place in the country, means. The same goes for electricity and gas. That question, clearly put to the nation, could have only one answer and that answer would he a resounding, No, from everybody—high, low and in the middle. Yet, that is the dilemma with which we as a nation have to live. In my judgment one day some government must grasp the nettle and consult with the trade unions concerned with a view to legislating to set up a structure of arbitration to settle the wage and salary levels of these great utilities on which the life of the nation depends, without the kind of hassle that is going on at present—and the sooner the better.
In the meantime—and I say this with regard to old friends in the water industry—I am sure that the great majority of those who work in the water industry, whether salaried staff or manual, just would not take action to cut off the water supply on which our life depends and that goes for the trade union leaders too. I therefore earnestly hope that wiser counsels will soon prevail. In conclusion, I reckon that the major single factor—and I say this with all sincerity to the noble Lord, Lord Beswick, who I know cares a great deal for the public sector—which would improve the climate of opinion for nationalised industries, for their welfare, would be stability in this area. If the Labour Party would stop committing itself to a whole shopping list of new nationalisation, if we could reach stability
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in this area, then the passions that are aroused as regards this matter, not just in Parliament but throughout the country, would have a chance to die down and there would be a reasonable prospect that gradually, with stability, the public would stop shooting at these bodies, fighting over them, and there would be a reasonable chance for the boards and the managements to make the best of their industries for the benefit of all concerned.
When we look at other countries like France, Italy and so on which have been mentioned by the noble Lord, Lord Underhill, we find that nationalised industries work quite well. A motor car industry like Renault is marvellously successful and the banks in Italy are doing extremely well. However, they stabilised years ago and they do not keep on extending their boundaries. It is the continuous extending of the boundaries which raises passions and makes it impossibly difficult to give a fair judgment to the nationalised industries as they now exist. So I hope and pray that the noble Lord with much common sense and with great ideals in his head, will have some influence on his colleagues to stop them committing themselves to another great slice of nationalisation. Let us denationalise what can reasonably be done and then, for Heaven's sake!, let us call it a peace and try to make the best of what we have.
Lord Kaldor: My Lords, before the noble Lord sits down I should like to ask him what were the last industries that were nationalised by a Labour Government for reasons of nationalisation'? So far as I know, the only cases of nationalisation were those done by the Conservative Government under Mr. Heath which nationalised Rolls-Royce Aero-Engines and, I believe, also Upper Clyde Shipbuilders. There was also British Leyland. They were all cases of nationalisation because the companies were bankrupt.
Lord Nugent of Guildford: My Lords, I shall give the noble Lord a comprehensive list of what his party nationalised during their years of office from 1974 to 1979. I shall give him a supplementary list of those that his party is committed to nationalise now—such as insurance, construction, banking and so on. I earnestly ask the noble Lord, with the influence that he possesses, to try to get some common sense into this. Unless we get stability our nationalised industries will never have the chance that they have in other countries to make the best of themselves.
6.26 p.m.
The Earl of Longford: My Lords, in recent times I have followed the noble Lord, Lord Nugent of Guildford, so slavishly on one or two moral issues that I was rather nervous at the thought that today I might have to differ from him sharply. But at any rate his opening remarks were of the utmost value and indeed fitted in extremely well with one aspect of the Motion and one aspect of what the noble Lord had to say. The noble Lord, Lord Nugent—and it comes particularly well from him in view of his very successful conduct of a public authority—knows extremely well and told us very clearly that the nationalised industry chairmen have not had a fair deal to the extent that we might reasonably expect. I shall not dwell on his later

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remarks because they would need thinking over more carefully.
There have been a number of very important speeches. Indeed, all the major points have been covered and, therefore, I shall try to think of something else to say and not repeat what has already been said. However, I must repeat two matters which have been mentioned. I must certainly repeat the tributes paid by so many people to Lord Amory. It has been expressed in different ways by different members of the House, notably by the noble Lord, Lord Boyd-Carpenter, but I would suggest that there is probably no member of this House whose opinion one would rather have on any point affecting the technique of debate or more fundamentally a moral topic. I would think, therefore, that his opinion was perhaps the most valued of any individual noble Lord's opinion during his life.
I should also like to repeat the handsome tribute paid by the noble Earl, Lord Gowrie, to my noble friend Lord Beswick who referred to him as widely experienced, and—what is even more important—widely respected. There was a time—now he is my leader and I am an acolyte—when I was a Minister of Civil Aviation and he was my parliamentary secretary. Even in those far off days he was a man already beginning to be much respected and that has continued ever since.
About 50 years ago I came to know the arguments in favour of nationalisation very well and as I was then working in the Conservative Research Department I found it easy to believe many of them. A few years after that I became a Labour councillor for the Cowley and Iffley ward of Oxford—we were a fairly Left-wing party in those days—and I came to know the arguments for nationalisation just as well as I had known the arguments against nationalisation and, in due course, I believed many of them.
But at no time have I ever supposed that if my party, the Labour Party, came to power they would nationalise all the means of production, distribution and exchange. I have never supposed that that would happen. In my opinion there is no possibility of that happening in the lifetime of the youngest here. I have always assumed that we should have a mixed economy but that it would be necessary to possess what later came to be a called the "commanding heights of the economy". If I may say so very respectfully, the noble Lord, Lord Boyd-Carpenter, fell below his usual standard of wit and humour by making a very ponderous reference to—what did he call them?
Lord Boyd-Carpenter: My Lords, as the noble Earl is polite enough to be interested in my phrase, which I personally rather like, I can tell him that it was,
"The demanding depths of the economy as an antithesis to the commanding heights".
The Earl of Longford: My Lords, the noble Lord is a master of phraseology. In his time he was the most brilliant epigrammatist in the Oxford Union. But I think that that is the feeblest joke that he has ever made, either in the Oxford Union or in your Lordships' House, and I know that he will never sink to such demanding depths again. However, I hasten to say that he made many other points which were interesting to listen to.
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For all those years I and many others in the Labour Party have believed in a measure of nationalisation. How far nationalisation should go will always be a matter for argument. It is a practical question, and it is no good anyone trying to dogmatise now, saying that we have reached the perfect amount, that we must never go any further or never go back in any direction. We shall continue to argue about that side of it.
This debate is not only about what one might call economic performance; it is about attitudes. The Motion starts by referring, indirectly, to attitudes. If I may say to my noble friend Lord Boyd-Carpenter —if I may venture still to call him that—the remark that he found so amusing to deliver is a good example of the contemptuous way in which over the years Conservative statesmen have spoken about the nationalised industries. If we made that sort of remark about private industry, people would think that we were four-letter men. It would be thought to be a disgraceful remark to make. Anything goes about the nationalised industries; that was so in my time when I was a Minister and it is so today. That sort of remark is just tossed off, the man who makes it thinking nothing of it.
However, I think that we should consider the question of attitudes a little more closely. The noble Lord, Lord Kaldor, referred to the coming of commercial television. I very well remember the debates in those days. The Conservative notables—including the noble and learned Lord, Lord Hailsham of Saint Marylebone, then a rising star—took a very poor view of commercial television. They thought that the introduction of commercial standards would lower the tone of the public corporation and of broadcasting generally. The noble Marquess, Lord Salisbury—then the Leader of the House—gently explained that, from his experience of the City, although politicians might regard their morality as a great deal higher than that of businessmen, curiously enough in business it was exactly the other way around. The noble Lord, Lord Thorneycroft, is equally eminent in politics and business, and he will know that what Lord Salisbury said was remarkably true.
I remember the time when, having been Minister of Civil Aviation, I became chairman of a bank; I took the Underground—I did not run to a company car in those days—from the Mansion House to Westminster or vice-versa, and I suddenly found myself in a world of different values. I am not saying which values are better or which are worse, but it was a world of different values. Many people in this House today have had experience of business and politics and they know to what I refer.
Turning to the nationalised industries, they come halfway between Government service—such as the Civil Service and the fighting services and, for that matter, politics—and private business. I think it is fair to say—and I am not being disrespectful to the nationalised industries—that they have not had time to work out a completely new identity for themselves. Therefore, I do not think that the public are quite sure how to regard them. But as the noble Lord, Lord Thorneycroft, and other noble Lords have said, there they are. There is no question of abandoning the nationalised industries. They will be a very considerable sector of our national life, and this country will not succeed unless the nationalised industries are successful.

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So we start from there. It is no good sniggering or sneering at them. I am not now referring to what my noble friend Lord Boyd-Carpenter said. It is no good deriding them. That is not helpful to the country. The noble Lord, Lord Nugent, brought out that point very well.
However, I must record my opinion, and it endorses the first part of the Motion of the noble Lord, Lord Beswick, that over the years Conservative politicians and Conservative newspapers have gone in for this very process. They have derided these industries and those who perform in them at high or low levels. I was Minister of Civil Aviation for three years and I found out how that process worked; day in and day out there was this process of denigration and disparagement. It did not matter whether the chairman was a distinguished businessman like the late Miles Thomas or a Marshal of the Royal Air Force like Sholto Douglas. It did not matter who the chairman was and I do not think it was a question of who the Minister was; they were recorded as contemptible objects and they were treated in that way in those years gone by.
In his speech the noble Lord, Lord Beswick, produced some fairly good examples—and no doubt he will produce a great many more—of how that process continues today. I see that. understandably at this point, the noble Earl, Lord Gowrie, has fled from the House because I was going to ask him rather an awkward question. However, if he returns I may still have an opportunity to do so. The noble Lord, Lord Beswick, produced examples of how these industries are referred to by Conservative leaders. However scholars may explain away Mrs. Thatcher's remarks, if I were working in a nationalised industry now I would regard her as having continued this process of denigration and disparagement, which was first begun so many years ago.
How can we overcome this attitude of intolerance and, indeed, contempt towards people who are undoubtedly doing a very important job? We must try to ask ourselves what is to be our attitude to private business, public service and nationalised industries. I have spoken for 11 minutes, which is one minute longer than the noble Earl, and I shall not go on for long. When I was an undergraduate my economic set books were Adam Smith's Wealth of Nations, which I believe has recently been introduced to Mrs. Thatcher—or at any rate she has recently quoted from the Wealth of Nations as a new bible—and Karl Marx. The noble Lord, Lord Robbins, did not have the pleasure of teaching me those subjects because he left New College to go to higher things at just about that time. However, those were our economic set books. I cannot imagine which would be more likely to do harm to the immature mind: the Wealth of Nations, which I have consulted in the Library after a lapse of 50 years and which makes excellent reading (there is a copy free of charge in the Library), or Marx's Das Kapital, which undoubtedly does not make for such easy reading. If anyone wants a quick guide to Marxism, they had better take the Communist manifesto, which can he read in half an hour.
Let me take Mrs. Thatcher's new bible, the Wealth of Nations. Adam Smith had the idea that if a business
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man served his own interests, he served the interests of the country. To quote only one sentence:
"By directing industry in such a manner as his produce may be of the greatest value"—
that means to himself—
"he intends only his own gain"—
this is the businessman—
"and he is in this, as in many other cases, led by an invisible hand. To promote an end is no part of his intentions".
So he believed in the invisible hand. That is what we are being guided by in Britain at the present time, the invisible hand—and unfortunately its handiwork is a bit too noticeable to millions of unemployed. That is the doctrine. She espoused Adam Smith only the other day, and that is what he taught us.
I was subjected to these two poisons. I can only hope that one poison, so to speak, was an antidote to the other. I quite agree that the Marxist poison is at least equally as poisonous and possibly in the end more so, because it is more immoral. At least Adam Smith was a moralist. Heaven forbid that the Labour Party should ever go Marxist. Of course there have always been elements who were Marxist in the Labour Party. When I first joined some of them were crypto-Communists, but there have always been such people about in the Labour Party. But there are some odd fish, if I may say so respectfully as someone who lapsed many years ago from the Conservatives, even in the Conservative ranks. At any rate there have been these Marxists in the Labour Party, but Heaven forbid! that they should ever get control or become dominant.
I now say something that I hope will not cause offence to the noble Earl, Lord Gowrie. Well, it cannot, because he is not there, but it might cause offence to the noble Lord who is going to wind up. I hope it will not cause offence. These perpetual attacks on the nationalised industries, if you like, are a smaller aspect of this policy, but the ideological fanaticism, this pursuit of monetarism which is the latest version of Adam Smith's doctrine carried to the extremes it is now being carried, is one way in which the Labour Party could be driven into Marxism. I hope that point can be placed in front of noble Lords opposite.
I shall not continue further. I end the way I began: we all want to make a success of the nationalised industries in our better moments. I only hope that the Conservatives will realise that their attitude to the nationalised industries can be, and has often been, and is still being very damaging to the country, and I hope and pray that they will reconsider their attitude in the future.
Lord Boyd-Carpenter: My Lords, before the noble Earl sits down, perhaps he would address himself on that last point to the point my noble friend Lord Nugent made so well; that so long as the Labour Party goes on advocating an extension of nationalisation, it is quite inescapable that Conservatives will criticise it. If Labour will drop those desires of extension and call it a day, they are likely to find the whole atmosphere changed as the noble Earl wants, and as I want.
The Earl of Longford: My Lords, I cannot make any sense of that suggestion. The noble Lord made a denigratory remark, albeit it may be said humorously,

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about the nationalised industries. Whether the Labour Party is trying to extend the area or not does not affect the issue. We have got these nationalised industries and I beg the noble Lord, certainly as much respected as any Member of this House, to think again in the future.
6.44 p.m.
Baroness Phillips: My Lords, I begin to feel that it is a pity we ever invented the word "nationalised" industries. I recall quite recently doing some canvassing, and a very strange old lady told me she did not want to support the Labour Party because they were going to nationalise all women. I suggested to her that possibly it would have increased her chances, but she did not seem to accept the nature of my comment. When I was a young Socialist we did not speak of nationalised industries, and neither did the noble Lord who introduced this debate. He referred to public owned. I always saw community-owned facilities.
I certainly think that you could never really give a true service to everybody if you were going to demand a profit. This seems to me where we went wrong, and this blame must lie, also, with some of our own Governments. You cannot give a true service in transport to everyone who needs it if you are going to demand a profit from that undertaking. You cannot give a true service in energy if you are going to demand that everyone must pay for this. I repeat what I said once before; there is a total nonsense in the poor old lady who cannot afford her gas bill and has to go to the Supplementary Benefits Commission in order to collect the money to pay another undertaking owned by the community. We have got to cease this crazy idea that the nationalised industries, in inverted commas, must always provide a profit. They are there to provide a service.
When I taught school it never entered my head that I would receive a capitation fee for a child that I taught, and no doctor would want to revert to the idea that he only received a fee when he went out to serve someone. If something is community owned then that is the basis on which it must be considered. Unfortunately we moved a long way from this. In passing, I noted that the noble Lord, Lord Nugent, paid tribute to those who control our publicly-owned corporations. I would ask in passing, why has there never been a woman chairman? Perhaps they would be a little too efficient and actually get the thing moving in a much better way. We have to do a complete rethink on what we have, the publicly-owned services which are there for all the community.
I resent very much the suggestion that came again today from the Minister who introduced the debate—and he might be surprised to know my defence here—that only the inefficient will go to the wall. Just how true is that statement? I am now going to speak of private industry. It is one of my privileges to go round and give the Queen's Award for Industry, and I have had the opportunity to talk with many small industries. Why do we always talk about the vast industries? This is a country made up of many small industries; family firms which have made goods for many years.
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The problems which confront these small industries have nothing whatever to do with the publicly-owned sector of our economy. They are certainly nothing to do with efficiency or inefficiency. I could have selected any number. I could have selected the textile industry, of which the noble Lord, Lord Rhodes, spoke eloquently, and which we have allowed to die. You have only to go to Lancashire or to the Midlands to talk to people not in the vast firms but in small firms which have been allowed to die, and not from in-efficiency.
You could go to the Potteries and talk to the industries there. Have they been allowed to die through inefficiency? It is not so. I just choose two small ones, but what I have to say is typical of a vast group of industries in this country. I went round a factory the other day where they employ about 200 people, all craftsmen, making small, exquisite, leather articles with a high export performance. It is a family firm which has been looking after this particular industry for many years, going back to the grandfather and the great-grandfather.
What did the owner say to me? She said, "I am terribly upset. I have got these 200 people and I am responsible for them". That is the attitude of the good employer. They have a moral responsibility to their employees. She said, "I have got to get orders. But when I get orders, look at the factors that work against me".
I would take in that connection another small craft industry. It is a family industry, an all-family firm, not making vast profits, this is the point, and working always in the factory with their workers. That is those who make pianos. I noted that the noble Lord, Lord Davies, said, as he always does, that man does not live by bread alone, and that the people who provide the things we enjoy in our leisure are equally as important as the people who provide the articles that we need for our working lives. For many years this industry has concentrated on exports, exporting about 50 per cent. of the goods it makes. It fought to get those markets. Exports are not easy to get and it does not ask for any quarter or resent fair competition.
What has gone wrong with these sort of industries? That is the question I put to the Government and I do not pretend to have the answer; I am not an economist. The value of the pound against the currencies of other manufacturing countries has a strong bearing on this. It must be only we, the British, who could turn oil into a disaster. The Arabs seem to have managed to use it much more efficiently and they are busy buying up the rest of the world, including Britain. We have hardened the pound to the point where it is difficult for those who want to export to do so, and what that has done to our tourist industry is nobody's business.
In the industry about which I am speaking, and which is typical of many, the penetration of the EEC market by goods made in the Comecon countries and South-East Asia, using cheap exploited labour, has been terrific. I always try to put over to consumers the fact that if you can buy a plastic toy for 20p, does it not occur to you that it was made by an exploited child on the other side of the world? We must educate consumers as well in considering this matter. These industries have to try to compete with that activity.

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Indeed, many articles are sold at the price which the acutal materials cost the industries in this country.
Pianos are made in South Korea and Taiwan, who even go in for the dubious method of selling of using some mysterious names which rather look like names we all recognise, so they mislead the public. The facts are frightening. These small industries are going under day by day, and it has nothing to do with their efficiency. Interest rates for borrowed money are far too high, and that applies equally to the public sector. Employers are having to reduce their staff and even close their factories. It is not a case of waiting for the upturn but of considering for how long they can continue to trade. Will the Government please examine this and not glibly say that only the inefficient go to the wall? Those who go to the wall may be the people who will never re-open their doors again.
6.53 p.m.
Lord Winstanley: My Lords, I hope I shall be excused if, speaking below the line, as it were, I introduce some new thoughts on this subject at this late stage. I shall probably find it necessary to do that because, I say with great respect, in some ways the Motion of the noble Lord, Lord Beswick, is defective in that it focuses our attention on the wrong issues. The noble Lord, Lord Boyd-Carpenter, described it as peculiar, and to that extent I am with him. Nevertheless, I am grateful to Lord Beswick for what he said and the way he said it, and I agreed with much of what he said. In particular I agreed profoundly when he said that we should not turn the debate into an argument about the relative merits of nationalised industries and private enterprise.
The speech of the noble Lord, Lord Beswick, was concerned mainly with persuading the Government to acknowledge the contribution—in my view the immense contribution—made to our affairs by the public sector. I entirely agree with him on that. Indeed, when a curious accident of fate projected me on to the Post Office Board for about two years, I often thought that our activities were not wholly acknowledged in the right places and that the efforts made by our posts and telecommunications did not always receive the kind of credit they deserved.
For the sake of balance—and the noble Lord, Lord Beswick, refers in his Motion to the need for balance—he should also have endeavoured to persuade some of his party colleagues to recognise the immense importance of the private sector. I appreciate that many of his noble friends recognise that—indeed, many of them are substantially the private sector—but the morale of private industry is not helped or stimulated by people like Mr. Benn going round the country talking about nationalising 100 companies in a fortnight, or whatever the figure was. I sometimes rather depart from Mr. Benn on the numbers game. I recall it was 1,000 new Peers in 100 days, so I may be wrong in the other figure, but I think he spoke of nationalising 100 companies in a fortnight. I regret the tendency of some of the honourable friends of the noble Lord, Lord Beswick, to attack the private sector, particularly when it makes profits. I hasten to say to noble Lords on the Labour Benches that I do not for a moment regard profit alone as a wholly adequate motivation for all our activities.
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Indeed, I believe that on many occasions what is very profitable in the short-term can be very damaging in the longer-term. But it is not a helpful stimulus to efficiency if merely to be profitable is to attract the criticism of one particular party; and the noble Lord, Lord Kaldor, put the record right a little in relation to independent television. Perhaps the independent television companies would not have been criticised so much had they not been so profitable. Should they cease to be so profitable, as the case may be, if certain trends continue, they may then get more recognition.
Referring to another industry about which I know a great deal, although I hasten to add that I have no interest whatever in it to declare—the pharmaceutical industry—I accept there is much wrong with it. It is a highly competitive industry and I accept that much of the competition is wasteful and sometimes leads to costly duplication. It is, nevertheless, a fact that in the Soviet Union, where immense strides and advances have been made in surgery and medicine, the wholly state-owned pharmaceutical industry has not yet produced a single new therapeutic substance of any real significance. Our private sector pharmaceutical industry has changed the whole face of our lives in many ways and has abolished certain diseases from the face of the earth. That does not mean that I think the pharmaceutical industry is wholly well-organised, but I am bound to say that merely transferring it into public ownership would have very adverse effects, rather than the reverse. I am in this context thinking very much of large-scale enterprises which are sometimes almost in a monopoly situation.
Many of my noble friends on these Benches, rather like the noble Baroness, Lady Phillips, think the real opportunity for growth in both productivity and employment in this country lies in small businesses, and inevitably small businesses must be in the private sector and cannot really be in the public sector. I am glad of the recognition I have heard so often from Government spokesmen of the need to assist small businesses. Unfortunately, however, when I have talked personally to Ministers in the present Government, as I have on the subject of small businesses, I have soon found out that they seem to be talking about Ferrantis, Pilkingtons and "small businesses" of that kind. There seems to be a failure to understand that much of the wealth of Britain was built up in the North of England on small businesses which consisted initially of two men and a lad and that, by the use of a great deal of ingenuity and effort, they then grew.
It is said, as the noble Baroness said, that many of these small businesses are going into liquidation. They tend then immediately to be swallowed up by large enterprises, and once they are swallowed up with their personnel and resources by big outfits, their entrepreneurial spirit tends to be extinguished and thereby we lose a great deal. However, despite my preference for the small, I have to accept that in the science-based industries, and particularly those involved with new technology, there is no substitute for size; the massive investment necessary means very large units.
Indeed if those industries are in a monopoly situation, there are sometimes sound arguments in relation to the public interest as to why perhaps they should be in public ownership. That was a point upon which the noble Lord, Lord Boyd-Carpenter, spent some time,

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though I doubt whether he would agree with me wholly. Let us look at some of those industries and consider posts, about which I know something. I am quite sure that there would be much enthusiastic competition by the private sector to run postal services in London or perhaps in the metropolitan counties of Manchester or Merseyside, but I doubt whether there would be much enthusiasm from the private sector to run posts in Cornwall, Cumbria, or the Isle of Mull. There are difficulties there.
If some of these types of monopoly industries and large industries are to be in public ownership, then I certainly do not wish to see Governments seeking to intervene in detailed management decisions. However, I should like greater recognition from Governments of the fact that the huge purchasing power of these bodies, if used creatively, could be a major factor in the rejuvenation of the private sector.
The question facing us is not, Who owns the shop? but, How should we organise and structure large-scale enterprises, irrespective of who owns them, so as to make them competitive, humane, sensitive, and, above all, accountable to those who depend upon them for goods and services, as well as those who depend upon them for their livelihood as employees? On the question of depending on these organisations for goods and services, I would say that I was interested in what the noble Earl, Lord Gowrie, had to say: his view was moving towards syndicalism. He appeared to believe not just in worker participation, or co-partnership, or even worker control, but in worker ownership. I go a fair way with him in that. But once one gets into that area, one tends to forget altogether about the customer; and I believe that the customer, the consumer, the person dependent on the organization—be it nationalised or private sector—really ought to have a better voice than he has now.
We have tried many means of organising these large-scale enterprises and I think that many people have been surprised by the results. I have had close connections in many ways—family connections and so on—with the mining industry, and I remember very well that before nationalisation miners tended to feel that once the colliery companies went into public ownership, they would all be working for themselves and the whole thing would change and be very different. But in reality the divisions are still the same. It is still "us" and "them", and there is no substantial difference to the collier between the National Coal Board and the old coalmine owner, though I agree that conditions have improved vastly, but not enough, as I am quite sure many noble Lords would agree.
However, regardless of whether these large-scale enterprises are to be in private or public ownership, it is surely vital—and not just for the sake of industrial relations, but also for productivity—that we should do something in these large outfits to bring decision-taking closer to the work front. How do we make these organisations more accountable to the customer? We have tried many methods. It is interesting to look at the work of the consumer councils in relation to nationalised industries. These bodies do excellent work, but I fear that they tend to become merely the respository of complaints. They allow time to pass and perhaps indignation to wane a little, but they are
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not really in a position to do a great deal about the complaints. From my own experience on the Post Office Board I believe that the Post Office Users' National Council does an immensely good job, but I think that it might do a slightly better job if its chairman was also a member of the Post Office Board and was able at board level to raise matters concerning the customer, the person on the receiving end.
I was on the Post Office Board with the responsibility of representing consumer interests, and I felt that the work was interesting. If your Lordships will forgive me for saying so, l believe that there are perhaps advantages in having an amateur blundering about on a public board, occasionally unearthing things which are of great significance to the consumer but which management sometimes likes to be quiet about, or has perhaps forgotten about. We should rethink the way that we represent the consumer interest on the boards of public enterprises.
I do not want to go on and on; time is pressing. I say that we are trying to answer the wrong question. It is not the question of who owns the shop, but rather, what sort of a deal does the shop give us? If we are customers the question is asked in terms of goods and services, and if we are employees we want to know what sort of a deal the shop will give us. How accountable it is to us as employees or as customers? It is about that question that we should be thinking. We should be thinking not of whether or not the organisation is nationalised, but about how we should run it and make it much more accountable.
Finally, I should like to underline very strongly what my noble friend Lord Rochester said earlier in the debate about the need for a long-term strategy with regard to the balance between the public and private sectors and the need for stability and continuity. Here I really was surprised that the noble Lord, Lord Thorneycroft, dismissed totally our electoral system as being wholly irrelevant to these issues. I understand his motivation in so doing, but surely we should not persist with a situation in which we oscillate from a Government who want to nationalise everything, or, if they do not actually want to do that, tend to threaten to nationalise everything, to a Government who want to denationalise everything, or, if they do not actually want to do that, tend to threaten that they are going to denationalise everything. I do not believe that that kind of perpetual oscillation provides any means towards stability and continuity. It can result only in the further decline of both public and private sectors, and not in the kind of re-invigoration which we all so much need.
7.7 p.m.
Lord Gregson: My Lords, speaking at the end of this wide-ranging debate—and I am not sure that it has kept strictly to the subject—in the vernacular of recent debates in this Chamber, I feel that most of the foxes have been shot. Therefore I shall attempt to confine myself to a few remarks which may add to the debate as it has proceeded. Like the noble Lord, Lord Thorneycroft, I, too, believe in a mixed economy. I believe that there are overriding questions with regard to matters such as the defence of the realm and the economic well-being of the nation as a whole which simply cannot be left to the interplay of the so-called

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market forces. There are also services where duplication would be economic nonsense and would result in many areas of the country being ill-served with essential requirements. Equally, I completely accept that there is a need for entrepreneurial enterprise of all kinds, in particular in manufactured goods and direct services, and most of these are better created and fostered by the private sector. There is more than enough room for organisations of all kinds, both private and public, to contribute to the essential wealth creation needed by this kingdom both now and particularly beyond the period of the bonanza of North Sea oil and gas; and I shall return to that question later.
I am principally employed in the private sector, but I am a part-time member of the British Steel Corporation and I have been associated with other parts of the public sector, particularly those relating to energy and defence, over a period of many years. The enigma that I do not understand is that I find it quite impossible to recognise the dedicated, hard-working, competent people with whom I deal in the public sector in the role of incompetent spendthrifts, which seems to be implied by many of the comments that are attributed to the party opposite.
On the other hand, I have also found it difficult to identify some of the people I know, and have known, in the private sector under the collective noun that might relate to paragons of virtue. Further, my Lords, I also find it difficult to understand the differential distribution of chastisement and sympathy to organisations, public and private, that have been drastically affected by the catastrophic economic crisis which exists in industry in this country at the present time.
I would comment to the noble Earl the Minister that one of the problems of the sort of comments that have been made and are continuously being made is that, like when throwing a stone into a pond, the ripples spread outwards. Perhaps I can quote the leading article in the Daily Telegraph on Monday last as an example of the immoderate language which is created by this atmosphere that everything in the public sector is bad. I quote:
"it is the haemorrhage'"—
that is quoted from elsewhere—
"into BSC, British Leyland, British Shipbuilders, British Railways, NCB, etc.…";
and,
"these parasitic nationalised work-simulation centres".
I would suggest that that sort of comment is not helpful or constructive in generating the sort of feeling and effort that one requires among the workforce within the public sector.
The Earl of Gowrie: My Lords, I am most grateful to the noble Lord for giving way. The Government are not yet in the position of dictating the leaders in the Daily Telegraph.
Lord Gregson: My Lords, if I may reply briefly to that, the need for that particular quotation was, in inverted commas, the word "haemorrhage", and that did come from the Government. That is what started this whole series of comments.
Lord Thorneycroft: My Lords, the noble Lord will also note that that leader made a savage attack on the
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Central Office at the same time, so I hope he will feel that we are all on the same side about this leader.
Lord Gregson: My Lords, I am delighted to find an ally. In the most part, the public sector provides goods and services to the rest of British industry and to the public, and is directly affected by their economic circumstances. This direct effect means that both the private and the public sectors are finding great difficulty in maintaining control considering the unprecedented rate of decline that has been wrought on the British economy as compared with the conditions pertaining in the rest of the Western world. The point I am making here is that it is the rate of decline which is affecting so much of British industry. It is a rate which has not been seen in this country this century, possibly, and certainly it is a rate of decline which is greater and faster than that in any other part of the Western world at the present time. It is a totally unstabilising situation.
There is no doubt that there are problem areas on both sides. There are successes, there are failures; there are problems of motivation, and there are pockets of unacceptable practices. But they are the same people. There is no monopoly of horns and forked tails on one side and haloes on the other; and what this Motion is asking is for equity of treatment and recognition of the devoted service which, in this country, is synonymous with the public sector.
Perhaps I may now turn to a related subject that I have introduced into debate previously in your Lordships' House; namely, the failure of the United Kingdom over a period of many decades to invest ill innovation and product developments—a failure which has built up over the years to what now amounts to a massive backlog. This, my Lords, is really a failure of private industry, since we spent more than most nations on research, particularly in the universities, and with some outstanding successes, but industry has failed miserably to exploit the outcome.
An outstanding example of this is to be found in the problems that have confronted, and continue to confront, British Leyland. The failure over a number of decades to invest in product development when that company was in private hands, or even in its original constituent companies, is manifest. In fact, until quite recently the company was without proper test facilities—it is almost unbelievable—and its engineering capacity was woefully inadequate. It is expensive to retrieve this situation, and I agree that it is costing an awful lot of money. But when things have been allowed to slide to that extent there really is no alternative if we are to have a viable manufacturing industry.
The overall problem of our out-of-date product range was clearly outlined by Sir Alan Cottrell, Master of Jesus College, Cambridge, and a former chief scientific adviser to the British Government, in his lecture a fortnight ago to the Society of the Chemical Industry. With your Lordships' permission, I shall quote part of that lecture:
"Looking in the overall, statistical way at our problem, we can say first that any given line of industrial product becomes more and more out of date, the longer it is on the market. Eventually it becomes too dated to be saleable any longer. This obsolescence time obviously varies greatly, e.g. five years for aerospace and electronics goods, 10 years for motor vehicles. As a broad average we will take it as 10 years for the bulk of industrial goods. Applying this factor to the £46,000 million

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of manufactured goods (i.e. 28 per cent. GDP), we see that about £4,500 million becomes unsaleable each year, at present values. Merely to stay level in the markets, then, this amount has to be replaced with newly marketed goods each year. Again, a rough rule is that £1·5 of capital investment is needed to provide the equipment to produce £1 of net output. Hence, nearly £7,000 million of capital investment, per annum, is needed purely for innovation to keep level. Experience shows that about half as much again is needed to service this innovatory investment with R and D, design, trials and testing, modifying the initial product, stockpiling and marketing".
This gives a total of some £10,000 million each year that needs to be spent on innovations merely to stand still in the markets.
Sir Alan then goes on to analyse as clearly as he can what might be the sort of figure that is being spent in this country at the present time, and the nearest he can come to a figure, which he admits is probably the top figure, is £2,000 million. There is a differential of 5 to 1, and that is the rate at which we are sliding into decline; that is the rate at which our industry is disappearing into a non-saleable product situation. One has only to look back at the British Leyland situation to recognise how long the Mini was on the market before its replacement came along and the amount of money it was necessary to inject into the development of the new Metro in order to replace that product. It is one enormous problem.
I have no doubt that this problem will be overcome only by Government intervention in both the public and the private sectors, since market forces have led to the present state of affairs and there is no way, starting from now, that private finance can make up the difference. On this question of intervention, this is really no different from the practice carried out in most other countries in the Western world, either by direct public sector support, as in France, or by private sector support, as in America, either through state support for industry or through agencies, like the massive support that is poured into American industry by their enormous defence programme. And we should remember that the whole technology of micro-electronics, for instance, including the silicon chip, came directly from Government-funded research and development in the United States of America. There is no question, I believe, that Government assistance to industry in both sectors is absolutely vital if we are to stand any chance of recovering from the economic decline which is now firmly established in this country.
If I might comment on one or two of the remarks which have been made so far, I would comment first on the various questions raised by the noble Earl, Lord Gowrie. The first comment I would make is that I do not really believe that private ownership or private investment is the answer in a quite broad spectrum of the sort of services that the public requires in any civilised country. For instance, when the full history of the Three Mile Island accident in the United States is published I think that we shall thank Heavens that we in the United Kingdom have a publicly-owned electricity generating sector, because the thought of the type of problems that have arisen with the funding of the utilities in the States, and the way they are managed, raise grave questions over that type of activity being in private hands.
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The other point that I should like to make—this point has been made thoroughly elsewhere—is that do not think that cash limits is a very accurate or flexible tool by which to control industries of the size of the nationalised industries. I think there are many better ways of coming to that sort of control over the requirements of those industries.
The Earl of Gowrie: My Lords, I am sorry to interrupt the noble Lord, but he will be aware that it was the previous Labour Government who introduced—rightly, I think—the cash limits system; and we praised them for it at the time.
Lord Gregson: My Lords, I accept the point entirely, and I do not take back one word of what I have said. If I could comment shortly about the speech of the noble Lord, Lord Harris of High Cross—and I am sorry that he had to go—I think that when he reads in Hansard the very useful comments made by my noble friend Lord Kaldor he might modify his opinions somewhat. I hope, too, he will take the trouble to obtain Sir Alan Cottrell's lecture in full and read that. I think it was an important and serious contribution to the debate in this country. I find myself on dangerous ground in dealing with Lord Thorneycroft's speech because I find myself agreeing with almost everything he said. I was not quite sure whether we ought not both apply to join the Social Democratic Council—but he got it right at the end; and the point where I decided that I should disagree with him lay in the fact that I do not believe that private finance without Government assistance will be able to turn round the economic problems of British industry. I seriously believe that Government assistance will be required to put thrust into the change of direction. That is where we disagree. I am glad that we reached the point where that happened.
I make one or two comments now about the wide-ranging speech of the noble Lord, Lord Boyd-Carpenter. He said that we were "reacting to mildly critical remarks". I do not think that we would react to mildly critical remarks. I think that the whole tenor of Lord Boyd-Carpenter's speech turned on the fact that he used that phrase. We are saying that the remarks are not mildly critical. The other point is that we are not only talking about the people who run the nationalised industries. It is just as important, and probably more so, that the people who work in the nationalised industries, right down to the shop floor at whatever level, must be motivated. The way not to motivate them is to perpetrate some such remarks as those made by the Daily Telegraph on Monday.
Lord Boyd-Carpenter: My Lords, may I put to the noble Lord a point that I put, without getting a response, to his noble friend Lord Longford? Will be appreciate that so long as he and his noble friends pursue and announce a policy of further nationalisation, so long will, inevitably, the whole working of nationalisation and the nationalised industries be a matter of controversy? He would find that the criticisms that he is talking about would die away if they dropped these policies.
Lord Gregson: My Lords, can I suggest to the noble Lord that we ought to concentrate upon this point in

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time instead of flights of fancy into the future; we need to concentrate a civilised approach to those parts of the nationalised industries which exist at the present time. Let us forget the flights of fancy into the future. They are not real. We have a real problem on our hands—
Lord Trefgarne: My Lords—
Noble Lords: Order, Order!
Lord Gregson: My Lords, we have a real problem of trying to rescue the whole of British industry—and that includes the public and the private sectors. All that I am suggesting in this is that we deal in a civilised manner with the public sector.
I make one more point to the noble Lord, Lord Boyd-Carpenter. I know from my many friends who work in the Civil Aviation Authority of the respect that they have and had for the noble Lord for the period of time that he was chairman of the Civil Aviation Authority. It was a tremendous respect. If somebody said what the Daily Telegraph said on Monday about the Civil Aviation Authority when Lord Boyd-Carpenter was the chairman, I know for certain what he would do and say.
Lord Boyd-Carpenter: My Lords, they never did!
Lord Gregson: My Lords, if I may comment on a point that the noble Lord, Lord Nugent of Guidlford, made—it also reflects on what the noble Earl, Lord Gowrie, and the noble Lords, Lord Thorneycroft, said—there is a misunderstanding about the question of private companies going into bankruptcy. There seems to be a feeling—and it came through in this debate—that that was the end of those companies. But it rarely is. In many cases for many of them it is the beginning of a new life. They go through receivership. There arc very few of the major British companies that go, in effect, into bankruptcy—or however one may wish to express it—who do not come out on the other side of the receivership in some form or another. There is continuity in that situation. It is not quite the dichotomy with the public sector that is being suggested. One can give a whole list of companies who went through—
Lord Nugent of Guildford: My Lords, I know that the noble Lord has put up with many interruptions; but I must say that private capital is lost on a large scale every time that happens. If the noble Lord understands the problem of making private capital, that you have to start by borrowing and creating it, he will realise that this is a loss which cuts deeply.
Lord Gregson: My Lords, I could not agree more. The shareholders lose out, just as in the public sector. It is just the same. Finally, could I say to the noble Lord, Lord Winstanley, on his comments about the remarks by Members of the Labour Party in the other place that we now have a large cross-section of opinion in our party; and you choose which bit you like. Thank you, my Lords.
7.30 p.m.
Lord Trefgarne: My Lords, I wonder whether I could start to pull some of the threads of this debate together by adding my thoughts on the tragic death of my noble friend Lord Amory, with a story that he told me a year or so ago. It was about the time—I think it must have been around 1951—when he was appointed as a Minister of State by the then Mr. Winston Churchill.
Lord Amory was summoned to No. 10, as is the practice, and was offered the job of Minister of State which at that time was a new post—I was going to say that Ministers of State had fallen into disrepute at about that time. Mr. Amory (as he was then) asked the Prime Minister what exactly was a Minister of State. The Prime Minister apparently was not immediately certain but replied that it was a position of the utmost dignity and importance. I know that Lord Amory found that very reassuring in the years of office that followed.
If I may put the Government's policy towards the nationalised industries first in the context of our overall economic strategy, the nationalised industries are such an important component in the national life that they cannot be allowed to be insulated from the pressures for efficiency facing the private sector.
We are applying to the nationalised industries a framework of financial discipline in place of all the competitive pressures faced by the private sector. Noble Lords opposite have, as their record in office showed, misunderstood, I fear, the burden on the economy and indeed upon the private sector of a policy of profligate public expenditure. Worse, there has been inadequate restraint on the increasing costs of the nationalised industries. Costs in these industries rose well ahead of those in the rest of the economy.
During the past 10 years employment costs per head have risen much faster than the average for the economy. For example, they rose particularly fast in energy and telecommunications; in the British Steel Corporation unit labour costs rose 50 per cent. faster than in the rest of the economy. I hope that this point will not be lost upon the noble Lord, Lord Davies of Leek.
This, I fear, is an unacceptable burden for the consumer and taxpayer. As my noble friend Lord Thorneycroft so rightly pointed out, our financial policies and our policies towards nationalised industries seek to reduce the damaging inflation. We have, as my noble friend Lord Gowrie indicated, taken steps to see that the nationalised industries earn a proper return upon the very considerable assets which are employed. As a result, they are now moving towards soundly based financial targets and pricing.
Regrettably, after years of artificial price restraint this is a painful experience. But the alternative is to waste national resources and formalise inefficiency. This is not to say that we are satisfied with the unrestrained use of monopoly power. We have taken positive steps to increase the pressure of competition. For some nationalised industries this means an increase in competition for their products and services. For others it means the infusion of private capital.
For all the nationalised industries which remain in public ownership there must be a continuous improvement in working methods and efficiency. We are

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setting for each industry performance targets as a means for reassuring the consumer that where the industries are monopolies, the financial targets are met with due regard to costs and efficiency. Here, as elsewhere, our aim is to provide both a stimulus and an objective measure of assessing performance to substitute for lack of competitive pressure.
My own department, the Department of Trade, has an important role to play in this area. We have undertaken a series of references to the Monopolies Commission. The reports that we have received so far show the scope for improvement in efficiency. The report on the London commuter train services, for example, found that since 1970 productivity increased by only 5 per cent. That is 5 per cent. in 10 years. The report on the inner London letter post found:
"During the 11 years 1968–1979 productivity in inner London appears to have declined by 20 per cent. to 25 per cent.".
I stress "declined".
The Government do not interfere with the day-to-day management in the industries. The Government cannot themselves therefore bring about these improvements. Our role is to encourage and stimulate—by criticism, if necessary—rather than to cushion and protect.
A number of noble Lords—particularly the noble Lord, Lord Glenamara, and indeed the noble Lord, Lord Beswick—have criticised the Government's approach to the operation of external financing limits. The Government regard EFLs as one of the main elements in the framework of financial discipline within which the industries are required to operate and as an essential instrument for the short-term control of public sector borrowing. In the present circumstances, therefore, they are bound to be operated tightly. But it has always been recognised that since the nationalised industries are trading organisations with large flows of expenditure and revenue, EFLs cannot be immutable and the statement issued by the Chancellor in his Statement of 4th August, which followed consultations with the Nationalised Industries' Chairmen's Group, announced two elements of flexibility in the administration of the system.
The first is if economic circumstances differ significantly from assumptions made at the time the limits were fixed, industries or Government will be able to initiate consultation over corrective action by the industry and for adjustment of the EFLs. Secondly, increases in short-term borrowing from the NLF will be allowed at the end of a year in excess of that year's EFL, within one per cent. of forecast turnover and fixed investment, on condition that the excess is deducted from the following year's EFL. This element of end-year flexibility will be operable from the year 1981–82.
By these arrangements, the Government are seeking to provide a degree of flexibility which is helpful to the industries while at the same time manageable in terms of our overall financial responsibilities which require that a firm framework of financial discipline should be maintained.
The noble Lord, Lord Beswick, also suggested that the industries' external financing requirements for profitable investment were being unduly hampered.
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But most of the burden on the PSBR can be explained in terms of grants and "soft loans" to the industries. Perhaps I can draw your Lordships' attention to some of the facts and figures. In 1979–80 the industries' capital requirements amounted to some £4,000 million (1980 survey prices) £2,600 million of which was met from external finance, £1,400 million from internal resources. In aggregate therefore the industries were one-third self-financing. Of the £2.6 billion external finance, grants amounted to some £1.1 billion and PDC and issues under Section 18 of the 1975 Iron and Steel Act to £1.2 billion. So the greater part of the industries' net external finance needs in 1979–80 took the form of grants and soft loans.
For 1981–82, the industries' capital requirements are projected at £5.45 billion, their internal resources at £3.7 billion and external finance at £1.75 billion (all at 1980 survey prices). Hence next year the industries in aggregate are projected to be two-thirds self-financing. Grants are again about £1 billion, PDC and Section 18 issues about £¾billion, NLF borrowing being balanced by net repayments of overseas and market borrowing. The aggregate net external financing figure is again explicable in terms of grants and soft loans.
The lesson is clear. It is to press ahead as rapidly as possible with our efforts to get the loss-making industries to stand on their own feet so as to achieve further reductions in the industries' external financing requirements and further reduce the burden of public expenditure and a high PSBR on the economy.
Lord Beswick: My Lords, if the noble Lord has finished on that point, I did ask about the possibility of short-term borrowing outside the National Loans Fund.
Lord Trefgarne: My Lords, that is a detail point on which, if the noble Lord will allow me, I will write to him.
The Principal Deputy Chairman of Committees (Baroness White): I ask the noble Lord whether his attention has been drawn to the article by Sir Leslie Murphy in today's Guardian, where he points out what to many of us would be the highly inappropriate way in which the Government appear to deal with profitable and loss-making industries on more or less the same lines? If you have a profitable industry, you should surely relax your borrowing restraints upon it, my Lords.
Lord Trefgarne: My Lords, the difficulty is that whatever the trading position of the nationalised industry at the present time, the money still has to come from the public purse or at least be counted against the PSBR, and that is the figure that we are endeavouring to contain.
Baroness White: My Lords, with great respect to the noble Lord, the end result is very different.
Lord Trefgarne: My Lords, I agree that the net result on the enterprise itself is very different, but the net result on public borrowing requirement is the same, and that is what we are seeking to control.
Lord Glenamara: My Lords, would he say why the Post Office, a highly profitable enterprise, should not be able to borrow from non-Government sources? Why should that be counted in the public sector borrowing requirement when there is not the slightest possibility of their not being able to honour that debt?
Lord Trefgarne: My Lords, this is a matter of long tradition and the fact is that the doctrine I have enunciated this evening is not a new one: it is one which applied equally in the time of the earlier Administration. The truth of the matter of course is that lenders lend with considerably more alacrity to bodies like the Post Office, in the sure knowledge that if anything went wrong the Government would stand behind that particular loan. The noble Lord suggests that the Post Office would never renege on its commitments. I have no doubt that that is true, but in the back of the mind of the lender is standing the security of the British Government; and that is where the difference lies.
I turn now to some of the other points that have been raised during the debate. One noble Lord raised the question of British Airways, and that is a matter which now falls directly to me and to my right honourable friend the Secretary of State for Trade. We had a series of very thorough and constructive debates on the Government's plans to privatise British Airways when we considered the Civil Aviation Bill last year. It is evident from some of the contributions today and outside the House that there remains a fundamental disagreement regarding the principles and purposes underlying that policy and I do not delude myself that I shall persuade otherwise those Members of your Lordships' House who disagree with them. However, I should repeat very briefly why the Government consider that the policy is right.
Unlike many nationalised industries, British Airways is not a monopoly. It has to compete with a large and increasing number of other airlines in both domestic and international aviation markets which are becoming more and more competitive. It is the Government's firm belief that in these circumstances British Airways will stand the best chance of competing successfully and profitably both at home and abroad only if it is given freedom from the existing régime of Government controls which are applied to the nationalised industries. British Airways therefore should be taken right out of the public sector and its management given sole responsibility to decide essential matters such as the amount and nature of the airline's capital investment and the level of borrowings. They should be answerable for such decisions direct to the airline's shareholders and bankers. That would provide a necessary degree of freedom, balanced by traditional private sector disciplines.
My noble friend Lord Gowrie referred to the offer for sale of shares in British Aerospace. My honourable friend the Minister of State for Industry is this evening making a full Written Answer in another place. Perhaps I could repeat the main points of that Answer for the benefit of your Lordships. I apologise for the fact that it is a little long, but this is a crucial matter, and I think that the noble Lord, Lord Beswick, in particular would be anxious to know about it. I quote:
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"Arrangements have now been completed for the offer for sale by Kleinwort, Benson Limited on behalf of my right honourable friend the Secretary of State for Industry of up to 100 million ordinary shares of 50p each of British Aerospace Public Limited Company at 150 pence per share, payable in full on application. The offer for sale has been underwritten by Kleinwort, Benson Limited, Hill Samuel and Company Limited, Morgan Grenfell and Co. Limited and J. Henry Shroeder Wagg and Co. Limited.
"The prospectus will be advertised in the newspapers on Monday, 9th February 1981, and will be laid before the House on that day. Application lists will open at 10.00 a.m. on Friday, 13th February 1981.
"Of the Ordinary Shares being offered for sale, 66,666,667 are new Ordinary Shares which my right honourable friend the Secretary of State has agreed to subscribe at the offer price and which will be paid for out of the proceeds of this offer for sale, thus raising £100 million of new equity capital for British Aerospace PLC.
"The Government have made arrangements for each employee of British Aerospace PLC who is eligible under the terms of the British Aerospace Employee Share Ownership Scheme to be offered, free of cost and at the Government's expense, 33 Ordinary Shares (worth approximately £50) to be held on his behalf by the Trustees of the Scheme. In addition the Government have arranged for up to 2,178,990 Ordinary Shares to be available to eligible employees for purchase at the offer price (subject to a limit of 600 Ordinary Shares per employee and to scaling-down in the event of over-application by such employees); each employee who purchases shares under this arrangement and vests them in the Trustees will then have appropriated to him, free of cost and at the Government's expense, an equal number of Ordinary Shares to be held on his behalf by the Trustees. In addition, preferential consideration will be given to applications received from all employees at the offer price; and so far as possible the Government's intention of promoting the widest possible ownership of shares will be taken into account when making allocations in the event of oversubscription.
"Immediately after the offer for sale, the Government will hold the same number of shares as are sold under the offer for sale (that is, between 48·37 per cent. and 50 per cent. of the issued share capital of the Company), the balance of the issued share capital being those shares acquired by or on behalf of the eligible employees under the special arrangements which I have described.
"In order that British Aerospace PLC should remain under t he control of citizens of the United Kingdom and Colonies, the Articles of Association of the Company restrict the number of foreign-held shares at any one time to 15 per cent. of all the voting shares in issue".
My honourable friend's announcement also includes the text of a letter written by the Secretary of State for Industry to the chairman of British Aerospace PLC concerning the future relationship between Her Majesty's Government and the company. I am arranging for a copy of this letter to be placed in the Library of the House. I apologise for the length of that statement but I thought it would be of interest to your Lordships.
The noble Lord, Lord Glenamara, argued that the nationalised industries' external financing requirements should be stated separately from the PSBR and even removed from it. I think the noble Lord has gone, but perhaps I dealt adequately with that point earlier and I need not return to it now. The noble Lord, Lord Beswick, suggested that there should be no further pressure on British Gas to sell off its offshore oil interests, particularly in Wych Farm. I can see no reason to give the noble Lord such an assurance. The Government are concerned to reduce the size of the public sector where activities could equally well—sometimes better—be in the private sector. I recognise that the Wych Farm oil field is something of a success story but it could not be immune from consideration on that account. A self-damaging ordinance in

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respect of this or any other prima facie commercially attractive asset does not seem appropriate, but I will, of course, draw the noble Lord's concern in this matter to the attention of my right honourable friend the Secretary of State for Energy.
The special relationship of the industries with Government cannot exempt them from the need to change. We are prepared to help in this in the interests of the economy generally. Within the public sector there is scope for a sustained and determined effort to bring about an improvement in productivity efficiency and in levels of service. An important task therefore devolves upon the managements concerned: but in carrying it through the industries know that they have the Government's continuing and wholehearted support in the interests of securing a better balance and a more productive economy. I hope that my remarks, and in particular the more eloquent words of my noble friends, will have persuaded your Lordships of the shortcomings of the Motion moved by the noble Lord, Lord Beswick, and that he will therefore see fit to withdraw it.
7.50 p.m.
Lord Beswick: My Lords, it will not be expected of me to go over all the arguments again, but I should like to thank those who have taken part in the debate. I should particularly like to agree with my noble friend Lady Phillips that the word "nationalisation" should be dropped from our vocabulary. I never allowed it to be used in my office when I was chairman. It now has the effect before certain Tories that I understand the bell had before Pavlov's dogs.
The noble Earl, Lord Gowrie, said that I was wrong to consider that the criticism that I quoted had any personal content. Of course, I know the individuals concerned well enough to realise that their kindly nature did not mean it to be taken personally. I accept that. On the other hand, the noble Earl must also accept that an organisation is made up of human beings. I absolutely agree with what the noble Lord, Lord Nugent, said, that if you criticise an organisation in those terms inevitably it means that the individuals, the men and women, the human beings, inside that organisation take it very hardly indeed.
The noble Lord, Lord Boyd-Carpenter, spoke very gaily about their not being shrinking violets. No, my Lords, but they arc human beings, and my experience of life is that you get better results, sometimes, from encouraging, rather than from the kind of language to which I referred. If this debate enables all of us to consider rather more carefully our comments about the public sector of our economy, and the efforts of those who work within it, then I shall feel that the debate was worthwhile. Meanwhile, I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Criminal Justice (Amendment) Bill [H.L.]
7.52 p.m.
Lord Wigoder: My Lords, I beg to move that this Bill be now read a third time. In doing so, may I just
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for one moment read the roll of those who have supported this Bill, both inside and outside your Lordships' House? I do so in the hope that it might encourage the other place, in due course, to realise that this is a widely supported, short, uncontroversial measure which, although modest, is nevertheless of some little significance.
Inside your Lordships' House, the noble and learned Lord, Lord Widgery, when he was Lord Chief Justice, came specially to support this Bill. Two former Lord Chancellors, the noble and learned Lord, Lord Elwyn-Jones, and the noble and learned Lord, Lord Gardiner, have indicated their support. The noble Lord, Lord Boston of Faversham, has done likewise from the Opposition Front Bench. Furthermore, three Law Lords have told me that I may cite their names in support of this measure—the noble and learned Lord, Lord Diplock, the noble and learned Lord, Lord Edmund-Davies, and the late Lord Dilhorne.
Outside your Lordships' House, the objective of this Bill has had the support of Lord Justice Lawton, who is chairman of the Criminal Law Revision Committee. Perhaps I should also remind your Lordships that the Bill is very much on the lines of a Parliamentary Answer given by the Attorney-General, Sir Michael Havers, on 25th June 1979. I think that the Bill is also on the lines of the Law Society's Memorandum of Evidence to the Royal Commission on Criminal Procedure.
Finally, may I thank the noble Lord, Lord Belstead, and his officials and the parliamentary draftsmen for their very great assistance, and for the support which they have been throughout the passage of this Bill. I am deeply grateful to them. My Lords, I beg to move.
Moved, That the Bill be now read 3a.—(Lord Wigoder.)
Lord Boston of Faversham: My Lords, I should like to thank the noble Lord, Lord Wigoder, for his kind words and, also, to offer my congratulations from these Benches, both on having introduced this Bill and on having piloted it through your Lordships' House so far. Although it is a modest measure in terms of length, I nevertheless feel most strongly that, if passed by Parliament, it will play a significant part in the administration of justice. I only hope that your Lordships will feel disposed to pass it and speed it on its way to another place, where I hope, too, that it will be favourably received.
Lord Sandys: My Lords, for the Government, I should like to say that the Bill to which the House is invited to give a Third Reading tonight has found a wide measure of support among your Lordships. Indeed, the only amendments which the House has seen fit to make during the passage of the Bill have been moved by the noble Lord, Lord Wigoder, himself, and none of those has affected the basic principle of the Bill. As my noble friend Lord Belstead said on the occasion of the Third Reading of the noble Lord's Bill in the last Session of Parliament, this Bill, too, is in every sense Lord Wigoder's Bill. Indeed, if it is given a Third Reading by your Lordships' House the Government, for their part, will watch with interest to see whether it also commands support when it is considered in another place.
On Question, Bill read 3ª, and passed, and sent to the Commons.

English Industrial Estates Corporation Bill [H.L.]
Reported from the Joint Committee with amendments, and recommitted to a Committee of the Whole House; Bill to be printed as amended.
  UNITED KINGDOM-EC TRADE IN FUELS
  UNITED KINGDOM-EC TRADE IN FUELS
  ORGANISERS OF VOLUNTEERS IN THE NHS
  ORGANISERS OF VOLUNTEERS IN THE NHS
  RAMPTON HOSPITAL INMATE: TRANSFER REQUEST
  RAMPTON HOSPITAL INMATE: TRANSFER REQUEST
  BANGLADESH: VISAS AND ADMISSION
  BANGLADESH: VISAS AND ADMISSION
  NAVAL SHIPS: FUEL CONSUMPTION
  NAVAL SHIPS: FUEL CONSUMPTION