INDUSTRY BILL

§ Mr. Speaker

Before I call the Secretary of State for Industry to move the Second Reading of the Bill, I should tell the House that we have already lost an hour of the time that should have been available to debate this measure. An extra hour has been allowed for today's debate, but more than 40 hon. Members want to speak. I hope, therefore, that even though this is a two-day debate and we have the extra hour, Members will be reasonably brief in their speeches.

§ The Secretary of State for Industry (Mr. Anthony Wedgwood Benn)

I beg to move, That the Bill be now read a Second time.

This Bill, based on policies long advocated by my right hon. and hon. Friends and clearly set out in our manifestos, contains the Government's proposals for far-reaching democratic Socialist reforms affecting the relations between the community, management and workers and is designed to deal direct with the problems of manufacturing industry that lie at the heart of Britain's present industrial and economic weakness.

The reforms contained in the Bill have three prime objectives. The first is to reverse the long decline in British manufacturing industry by providing a new and important source of public investment which in its turn will help to sustain and expand employment. The second is to inject both the national and the regional interest, and the interests of working people, into the strategic decisions made by major industrial firms, and to improve our use of existing plant and equipment. The third objective is to extend industrial democracy in those firms to make them more accountable and thus help to bring about the shift in the balance of power towards working people which we see as a prime necessity if our underlying problems are to be overcome. I should add that we intend to meet these objectives by winning active support for these policies.

936 The Bill provides for the development of new instruments for those purposes. First, it extends and strengthens the Industry Act 1972 which we inherited from our predecessors. We are proposing that the power to acquire up to 100 per cent. of the shares of a company by agreement, which had been limited to assisted areas, should be extended to the country generally, and to remove the restrictions imposed by the old Act which made a public shareholding possible only as a last resort. We are also making it possible for these shares when acquired by the Government to be retained, since in our view, if public money is to be invested in private firms, it is reasonable that the taxpayer should benefit fully from his investment.

We are removing the time limit on Section 8 of the Industry Act under which it would have expired in 1977. We are retaining the Industrial Development Advisory Board, and I shall shortly be announcing some fresh appointments to it, but I must make it clear to the House that the responsibility for reaching decisions rests with the Minister, who is accountable to the House of Commons, and I have no intention whatever of shielding behind outside advice or of avoiding my responsibilities for policy decisions.

§ Mr. Norman Atkinson (Tottenham)

I apologise for intervening so early in the debate, but an important aspect of the whole legislation is to whom the Minister is to be accountable. Is he to be accountable to the House, or to the Commissioners in Europe? Will those Commissioners have a right of veto, and will they be subject to any control by the Council of Ministers? What is the position concerning the provisions which my right hon. Friend has just announced? Will this House be free to come to a decision on these matters?

§ Mr. Benn

I shall deal with the Industrial Development Advisory Board. I do not want to touch on matters of renegotiation, but my hon. Friend will know that Articles 92 to 94 of the Treaty of Rome, coupled with Article 189, make its regulations applicable in this country and that Section 2 of the European Communities Act means that the Bill when enacted will be subject to the provisions of those articles in the treaty.

937 The Bill also establishes a National Enterprise Board with the functions and powers set out in Clauses 1 to 8, which give it the power to work anywhere in the United Kingdom, including Northern Ireland.

Clause 2 specifies the purposes, functions and powers in greater detail, based upon the policy contained in the White Paper published last August. As the sponsor of the Bill and the new Board, the Secretary of State will be accountable to the House of Commons for the work of the board, because with the power to give specific directions contained in Clause 6 the accountability will be greater than for a normal nationalised industry.

The board will also work under the general supervision of the Government, in exactly the same way as the Bill and the White Paper on which it is based were subjected to detailed collective scrutiny and approval before they were published.

The National Enterprise Board will have an initial statutory tranche of £700 million with power to increase this amount if Parliament approves to £1,000 million. This sum is, of course, additional to the £550 million provided for under Section 8 of the 1972 Industry Act, subject to parliamentary approval for successive tranches, and an unlimited sum already provided by statute under Section 7 of the 1972 Act.

The National Enterprise Board will have no compulsory powers of acquisition. The White Paper set out the Government's specific nationalisation proposals, which will be dealt with by normal legislative process separate from the National Enterprise Board.

The Board will have responsibility for promoting industrial democracy, which we believe must develop organically out of the needs, experiences and aspirations of those who work within the firms in which the NEB will participate.

Clauses 9 to 13 provide powers in relation to the transfer of control of important manufacturing undertakings to non-residents, and these powers should be welcomed in present circumstances.

Clause 14 deals with Planning Agreements which, though voluntary in character, will provide that regional development grants under them will not 938 be reduced during the lifetime of each Agreement. This is an important response to the demands from industry that there should be greater certainty in its dealings with the Government.

The Planning Agreements will, we believe, allow us to move towards a more successful and constructive tripartite dialogue between Government, management and workers in the firms concerned, and managements will also get the benefit of greater disclosure of Government forecasts to help them in their own planning. These Government forecasts will be more likely to be accurate because they will be based upon a greater disclosure from the firms.

Clause 15 amends the Industry Act along the lines that I have already indicated.

§ Mr. Douglas Jay (Battersea, North)

Before my right hon. Friend leaves the subject of Clause 14, which refers to regional policy, will he assure the House that the Government's powers under this clause, and the regional policy generally, can be exercised without the permission or without the interference of the EEC Commission?

§ Mr. Benn

My right hon. Friend is probably the greatest expert in regional policy in the House of Commons and he also knows the Treaty of Rome. He also knows, that all regional policy, in so far as it involves State aid, is subject to the European Commission and to the articles to which I referred when answering my hon. Friend the Member for Tottenham (Mr. Atkinson). In our manifesto the Labour Party referred to the "Draconion curtailment of parliamentary powers".

I now come to Clause 15, which amends the Industry Act.

§ Mr. Peter Rost (Derbyshire, South-East)

On the question of Planning Agreements, what provisions will be made to ensure that confidential information from companies will remain confidential?

§ Mr. Benn

I shall come to that in a moment. I am now dealing with the clause which concerns Planning Agreements and I shall come to disclosure in a minute.

Clauses 16 to 18 increase the limits on ships and off-shore installations from the 939 £1,400 million, provided by the previous Government, to £1,800 million.

Clause 19 raises the discretionary powers of the National Research and Developme nt Corporation to deal itself, with certain projects, without detailed ministerial oversight.

Clauses 20 to 24 deal with the disclosure of information by firms both to Government and workers, subject to safeguards for the national interest, and provides for arbitration where the release of sensitive commercial information is at issue between the firm and the workers in it. That is set out in the Bill. We believe that those who invest their lives in industry are entitled to know much more about the prospects for the firms in which they work than has hitherto been the accepted practice. I recognise that the details need to be worked out with great care and I shall be entering into discussions on this matter with the CBI and TUC in the near future. I am hopeful that these provisions for greater disclosure will go a long way towards bringing about industrial democracy and better industrial relations.

The Bill ends with five supplementary clauses and four schedules dealing with various financial and administrative matters.

§ Mr. Dafydd Wigley (Caernarvon)

On Clause 21(2), concerning disclosure, will the Secretary of State indicate whether paragraphs (a) to (j) are exclusive or whether other information will also be required?

§ Mr. Benn

I should prefer to deal with that matter in Committee since the disclosure provisions are somewhat complex in character. In considering this Bill may I move the House to examine the magnitude of the problems that confront this country at this time? Britain, like all industrialised countries, is now threatened by the danger of a world recession. The oil price increases and the energy crisis have adversely affected the prospects for world trade. Inflation is world-wide, investment is sagging in many countries, and unemployment in the United States is high and growing.

Britain suffers from these problems along with other countries. Bur we entered this crisis weakened by years of 940 relative industrial decline as a great manufacturing nation. The numbers of our people engaged in manufacture have fallen and our imports of manufactured goods have risen sharply. Our investment record is poor compared with those of our principal competitors.

Since 1970 British manufacturing industry has been investing a mere 4p in every pound of our gross national income in new plant and equipment. The United States, Japan and France invest twice as much per worker as do we. Governments of both parties have worked hard to improve this investment rate, and policies of public subsidy and public intervention designed to correct it have been introduced.

When the Conservative Party was in power, public subsidies by means of grants, incentives and inducements of all kinds reached the level of £2 million a day. This was supplemented by the most elaborate system of direct controls over private industry ever imposed in peacetime.

§ Mr. Michael Heseltine (Henley)

What proportion does that £2 million a day represent of the revenue in tax obtained from those same private companies?

§ Mr. Benn

The hon. Gentleman must not make assumptions. I shall deal with the question in my own way.

The level of subsidies to private industry by the previous Government was at the rate of £2 million a day. When the Conservative Party was in power it denied to the House of Commons the knowledge of the sums of money that were paid to individual companies. It was not until this Government came to power that we were ready and able to reveal to the House of Commons the names of the companies which had received these subsidies.

§ Mr. Churchill (Stretford)

The Secretary of State mentioned Britain's investment record compared with those of the United States, France, West Germany and Japan. Is it not strange that he should call in aid countries which are not burdened with the comparable level of corporate taxation as is Britain, or a comparable level of personal taxation? Those countries have a substantially lower proportion of State control of industry than 941 Britain, and are not faced with the pernicious legislation which the Secretary of State has put before the House today.

§ Mr. Benn

The hon. Gentleman should turn his mind to this question. When the Conservative Party was in power, and had the opportunity to make all these changes, there was a catastrophic fall in investment below the levels at which it was when the Labour Government left office in 1970.

Dealing with the measures taken by the previous Government, there were the Industry Act, the Pay Board, the Price Commission, the Industry Relations Act, providing investment checks, profit checks, and a direct attempt to control labour, coupled with company tax cuts and endless exhortations to invest, notably by the right hon. Member for Worcester (Mr. Walker), once the initial 1970 policy of non-intervention and disengagement, along with its main advocate, had been dropped from the Department of Indusdustry. That full panoply of central and bureaucratic control was actually accompanied by a further sharp fall in investment, and the whole policy finally collapsed under its own weight, lacking the consent that any industry policy requires for success.

I hope, therefore, that in criticising the Bill the Opposition do not fall into the trap of arguing that they are opposed to intervention. They even nationalised Rolls-Royce and Govan Shipbuilders as part of their strategy for a managed economy.

§ Mr Tom King (Bridgwater)

We should discuss these matters meaningfully. The right hon. Gentleman understands the position. He know the true record of the investment situation of this country. It took us two years to reverse the decline which had already set in in 1970, and by the time the Conservative Government left office investment was sharply rising. It is only since then that there has been a catastrophic decline.

§ Mr. Benn

Since the hon. Gentleman invites us to discuss these matters, over the last 30 years, under Governments of both parties, the country has failed to obtain the level of industrial investment it needs to be effective. This is a start-point for our debate.

942 The argument is not about a managed economy but about the much more important question, "In whose interests is it to be managed?" Is it to be intervention to prop up a system that has failed in a last effort to make it work, or is it to be intervention to release the wasted energies of our people by instituting long-overdue reforms in our industrial structure that offer real prospects of success because they meet the needs of those who create the nation's wealth? For many years we have been told that business has not had the confidence to invest and that, if only there were new laws, lower taxes, higher prices and profits, more moderate workers or a change of Government, that confidence would be restored and the investment would take place.

However, investment on the scale we needed never took place and we now know that it must take place if we are to put British industry back on its face—[Interruption.]—back on its feet.

Are we to define industrial confidence only in terms of the political prejudices of those who own industry, or are we to extend our definition of confidence by seeing British industry as being no less and no more than the British people at work? I have no doubt that it is the confidence of the whole nation that we must now seek.

We have come to the end of a chapter in our industrial history. The industrial system to which the Tory Party adheres—at least officially and in its manifestos—has failed us. I am not sure that any individual or groups of individuals can be personally blamed for what has happened. There are no villains and there are certainly no heroes in this story. We shall never make progress if we waste time looking for scapegoats or even for bogymen, or even supposing that it was all the fault of the right hon. Member for Sidcup (Mr. Heath).

It is no use blaming working people or the unions if they have to work in ancient factories with obsolete equipment producing old-fashioned goods at unecomonic prices and earning low wages as well. Working people not only are not responsible for the weakness of British manufacturing industry. They have hitherto been denied the tools and tackle that they needed to put it right.

943 Professional managers have suffered, too. They have also been denied the essential information they needed to learn, in time, what might be wrong with the firms for which they worked and how their performance could be improved, and they were shut out from the decisions that might have put it right.

I ask those hon. Members who carry on about disclosure to consider what might have been the benefits if the problems of British Leyland, Herbert, Fodens, and Ferranti had been disclosed to the workers in those firms and to the professional side of management early enough for them to be put right.

We have got to make a fresh start now. We have got to get investment up, and to get it up as soon as we can. If the market economy cannot or will not give us that investment, we must do it direct.

The prospects of a world recession are thought by many to be great. Everyone knows that lean years lie ahead. However, it is of critical importance that we in Britain use those years for re-equipment and emerge at the end with a manufacturing industry re-equipped and reconstructed to allow us to build on a securer basis for the future. We will not accept a return to the pre-war conditions of the wage cut and investment slump that destroyed our morale and undermined our strength at that time.

There is another reason for action. My hon. Friend who will be winding up the debate will deal with the regional aspects of our policy. I say this bluntly to the House, and especially to those members of all parties who represent areas of high and persistent unemployment in England, Scotland and Wales; successive Governments have developed policies designed to deal with these problems. There has been some success, but the hard core problem of unemployment remains.

I see no prospect whatever of reversing an even sharper downward trend in job opportunities in the development areas during this recession, where branch factories are so vulnerable, unless we have the power through the National Enterprise Board or the Scottish Development Agency or the Welsh Development Agency to act directly on the problems.

Nor do I see how we can prevent the Midlands, with its vital but often ill-equipped engineering industry, from enter 944 ing on a downward slide towards development area status, unless we are prepared to act directly on the investment gap and find some alternative to the industrial disputes that have troubled that indusry.

Even in the rich South-East, London Members are becoming concerned increasingly at the loss of manufacturing jobs. I make no apology for being concerned with jobs which are of central importance.

§ Mr. Gwynfor Evans (Carmarthen)

The right hon. Gentleman referred to Wales and Scotland. Is the House to understand that the powers of the NEB will be given to the Welsh Development Agency, and will that development authority be made accountable to the Welsh Assembly?

§ Mr. Benn

The hon. Gentleman is tempting me into an area of devolution which I am not briefed to answer correctly. The National Enterprise Board will operate throughout the United Kingdom, including Scotland and Wales, and will be to that extent working in parallel with the two development agencies in Scotland and Wales when they are set up.

It is no good talking about full employment if jobs cannot be maintained. Redeployment requires investment, and redundancy without redeployment simply lengthens the dole queues.

What are the arguments against the Bill? One is that there is to be too much intervention, that there is to be too much power for the Government and the Secretary of State at the expense of Parliament. That criticism is made by a party that transferred more power to the Commission in Brussels without any accountability whatsoever to the House of Commons.

I have heard the Bill described as a charter for workers' control. Both things cannot be true. It cannot be true that this is a Mussolini nightmare and a Trotskyite nightmare at one and the same time. We are seeking to get the relationship between Government, management and workers into a better balance.

Another criticism is that this is a Socialist measure. It is; and who is to argue that where public money goes in there should not be an equity stake and public accountability? Public sector investment—now 28 per cent.—was one 945 of the major sources of continuing confidence, even during the period of recession.

It is argued that the Bill destroys the mixed economy, but even the Planning Agreements, quite apart from public ownership, are designed for at most 100 to 150 firms out of hundreds of thousands. However, we do not accept the definition of a mixed economy that leaves the public sector permanently loss making by Government action and the private sector permanently profitable by public subsidy.

§ Mr. Eldon Griffiths (Bury St. Edmunds)

I am obliged to the Secretary of State for saying that he now envisages the Planning Agreements extending to 150 firms. He previously said 100. Will he name the 150 firms he has in mind?

§ Mr. Benn

I was just coming to the hon. Gentleman and I will deal with his question as I do so. It was his party that defined category 1 companies in the Counter-Inflation Act and the Pay and Price Codes. Aneurin Bevan used the more colourful phrase—"the commanding heights of the economy". It took the bureaucratic mind of the Tory Party to make them category 1 firms. We have never produced a list of Planning Agreement companies—

§ Mr. Griffiths

Where does the right hon. Gentleman get the figure of 150 from?

§ Mr. Benn

The category 1 firms to which reference was made in the policy of the Tory Party. In considering these Planning Agreements, we shall be entering into discussions with any firms that might propose Planning Agreements or where the Government might seek Planning Agreements. As the hon. Gentleman knows very well, the Planning Agreement system is a voluntary system.

For the Conservative Party no one has worked harder than the hon. Members for Henley (Mr. Heseltine) and Bury St. Edmunds (Mr. Griffiths) over the past year to distort the real meaning of this policy. They first invented the secret list of named companies for nationalisation. They had to drop that when it became clear that there was no secret 946 list. In fact, there never was. They knew that, and they had to drop that charge.

We have not heard one constructive proposal from the spokesmen of the Conservative Party since they left office nearly a year ago. They have busied themselves entirely with misrepresentation. I expect that we shall get more of it today. What is their policy? What would they do? With the publication of this Bill the country is entitled to ask how the Opposition see the task ahead. How would they boost investment? How would they win the co-operation of the nation? How would they cope with the depression in the regions and the problem of world trade? I doubt whether we shall hear any answers today if past form is anything to go by.

Negative opposition will not be enough as the reforms contained in the Bill become more widely known throughout the country. It is true that this is a powerful Bill, but its power is not the power of the members of the National Enterprise Board, the power of the Seccretary of State or the power of the Cabinet. It is the power of the ideas that have already gone into this policy which already excites the imagination of people who know that the nation can do better than it has been allowed to do so far.

The Conservative Party has nothing to offer, but the British people know that we need investment and that we must harness our skills and achieve co-operation and not the three-day week, if we are to produce more than ever from our old factories with their old equipment and extend industrial democracy. The British people will come increasingly to see the Bill as an instrument that they can use for themselves to put this country once again in the forefront of the world's industrial nations. Those are the powerful ideas that give the Bill the power that it will need to succeed. I have the great honour of begging the House to pass this measure.

§ Mr. Michael Heseltine (Henley)

I shall start where the Secretary of State ended and deal with the misrepresentations that he put before the House. The right hon. Gentleman raised a number of 947 points which I thought he could have explained at slightly greater length.

First, I shall deal with the £2 million a day which it is suggested is a subsidy to the private sector. That has to be seen as the payment to private companies in order to get them to do things that the politicians want them to undertake. It represents 25 per cent. of the total that the companies give the Government out of their taxes. In other words, £8 million in taxes goes into the Government from the private sector and £2 million goes back on our decision as politicians. If the House feels that anybody should be accountable for the spending of that money, the responsibility must be with us. If we misspend it, it is not the private companies which are responsible but ourselves. If we decide that we shall spend on Concorde £1,500 million, or our half of it, that is our decision and that is included as part of the £2 million a day. Let us have no more repetition being equated with truth, that being the right hon. Gentleman's stock in trade on all these matters.

Next, the right hon. Gentleman said that we had affronted the House by transferring power to the Commission in Brussels. That is no legitimate source of complaint. The previous Conservative Government succeeded whereas his Government failed. The then Labour Government tried to do precisely the same thing but the Conservative Government managed to negotiate successfully the signature of this country to the Treaty of Rome. I have not the slightest doubt that that is precisely what the right hon. Gentleman's Government will shortly be announcing—namely, that they intend to remain within it.

The third matter which the right hon. Gentleman dealt with was the decline in investment. My hon. Friend the Member for Bridgwater (Mr. King) accurately put the situation before the House. The House knows the figures. Investment declined in 1970 and 1971 because industrial confidence collapsed in 1969 and 1970. Industrial confidence collapsed as a direct consequence of the financial policies of the then Chancellor of the Exchequer. It is because Labour hon. Members do not understand the time lag between the decline of confidence and the fall in 948 capital investment that they see fit to repeat the same accusation.

The reality is that we rebuilt confidence in the early 1970s and that that threw up higher and rising levels of investment in 1972 and 1973. One reason for us having a relatively high rate of investment at this moment is because of the confidence that was built in 1972 and 1973. Perhaps Labour Members need not go on repeating what the House understands to be the total misrepresentation put forward by the Secretary of State.

§ The Under-Secretary of State for Industry (Mr. Michael Meacher)

This is a point of some importance in view of the hon. Gentleman's pretence that he is correct in representing what my right hon. Friend said. Will he not acknowledge that, contrary to what he said, in 1968 manufacturing investments rose by 6½ per cent., that in 1969 it rose by 7 per cent. on the previous year and that in 1970 it rose by 8 per cent., whereas when the Conservative administration took office in 1971 it was minus 6½ per cent. and in 1972 it was minus 10 per cent.? The hon. Gentleman does not know what he is talking about.

§ Mr. Heseltine

I think it would have helped if the hon. Gentleman had listened. The figures that he has given bear out the argument I was deploying. He gave the figures for capital investment actually spent. Those figures always lag behind a decline in confidence. For that reason the hon. Gentleman misunderstands what is now happening. The present decline in confidence will destroy investment over the next two years. The Secretary of State's Department has already produced all the figures.

I now leave the points that were made inaccurately by the right hon. Gentleman. The House will remember that three years ago at this Dispatch Box the present Secretary of State for Industry took part in a debate on the Industry Bill 1972. He was speaking in Opposition. He said: We believe that the arbitrary nature of the Bill is likely to strain relations between Government and industry given the massive range of powers which the Secretary of State has and the large sums involved."—[Official Report. 22nd May 1972; Vol. 837, c. 1031.] That is what the right hon. Gentleman said when he opposed the Industry Bill 949 1972. He was speaking from the then Opposition Front Bench.

What did the legislation do which he described as likely to lead to a strain in the good relations between industry and Government? It gave £150 million for general aid to industry. Today he is taking powers for the National Enterprise Board to spend £700 million, and powers in his own name to direct the NEB specifically on how to spend that money. He is repealing most of the safeguards which were built into the 1972 Act to protect the private enterprise economy. He is taking powers to compel British industry to disclose forward plans and to make available information which will inevitably become public. That does not happen in any other country in the world.

What the right hon. Gentleman warned as likely to emerge from the Industry Act which the previous Conservative administration placed on the Statute Book—namely, a strained relationship—is as nothing compared with the consequences of the strain in the relationship which will emerge as a consequence of this Bill.

Last summer we saw the beginning of the attempt by the Prime Minister to suggest that the ideas that the right hon. Gentleman has rightly said lie behind the Bill would not be as radical, as purposive or Socialist as all of us have believed. In the middle of last summer the Prime Minister announced that the responsibility for drafting this Bill was to be removed from the Secretary of State and was to be placed under the personal command of the Prime Minister.

The next attempt to allay public anxiety was the appointment of the industrial adviser to the Government, the chairman-designate of the National Enterprise Board, not to work for the architect of the proposals or in the Department of Industry, but to answer direct to the Prime Minister in the Cabinet Office. Last Friday, according to Press reports, the Prime Minister, speaking on Merseyside, seemed to be converted to the curious constitutional view that the White Paper was to become the law and that the Bill would be subservient to what was said in the White Paper.

However, if we are not convinced by the idea that the White Paper is to be 950 the law, there are other reassurances for us. The Treasury will be there pitching to protect the taxpayers' funds against the ravages of the Secretary of State. If the Treasury fails, there is to be the hard-nosed Sir Don Ryder, who would have to be overruled before the Secretary of State was able to do what he wanted. But, for all the Prime Minister's assurances, the Bill is what the House is considering. The White Paper and the presence of Sir Don Ryder as chairman of the Board are in no way a barrier to the use of the powers in the Bill by the Secretary of State should he decide to use them.

The latest published evidence about the consequences of the Bill in its infant form from the Department and from the CBI shows that investment intentions and industrial confidence are gloomier than they have been at any other time since measurements of industrial confidence have been taken. It is no small wonder. From the date of the publication of the policy documents in 1973, it has been clear that the Left-wing architects of the Bill have been determined—[HON. MEMBERS: "Oh."] I am delighted that my words should have brought such a welcome chorus from hon. Members opposite. It does not take long to identify where they sit.

The purpose of the Bill was to achieve three principal functions for the National Enterprise Board and the Government. First, there was the unfettered freedom to nationalise individual companies. Secondly, there was power to direct those companies to obey the political will of the Government. Thirdly, there were the compulsory powers to force companies into Planning Agreements. The Secretary of State suggests that the powers are voluntary. We shall see when we reach the appropriate stage of the Bill. The Bill achieves all three objectives which have been persistently sought by the Secretary of State and his Left-wing colleagues. The Bill has emerged with the maximum powers for the Secretary of State and the minimum of parliamentary scrutiny.

Let us consider the Secretary of State's powers in the Bill. He has absolute power to appoint the National Enterprise Board. He has power to direct the Board to use the provisions contained in Sections 7 and 8 of the Industry Act 951 1972, and the Board will have no right of appeal against him if he should issue a directive. The right hon. Gentleman has the right to determine the financial objectives of the Board. He has power to give specific directions to the Board which it cannot resist. He has power to force companies to disclose information to the Government and to unions on a scale unequalled in the world.

I do not suggest that there is not reference on occasion in the Bill to the Treasury. The Secretary of State must consult the Treasury before he fixes the financial objectives of the Board. But the terms within which he fixes them are so vague—simply to show an adequate rate of return as calculated in advance—as to be totally meaningless.

The power of the Secretary of State is widened, as the right hon. Gentleman has pointed out, by the repeal of the limitations in the Industry Act 1972. The limitation of 50 per cent. of a company's equity which could be taken under Section 8 has gone. The restriction to use the powers only in the last resort has gone. The provision that all the powers should come up for review at the end of 1977 so that Parliament could see whether there had been worthwhile use of taxpayers' money has gone.

There has not been one economic justification, not one industrial rationalisation, to explain why the safeguards built into the 1972 legislation should be swept aside on the assumption, apparently, that they had failed.

Even the limited parliamentary control once promised by the Secretary of State for Industry before companies were nationalised has gone. I quote from the working document which the right hon. Gentleman produced shortly after he took office: The Industry Act will provide us with powers to extend public ownership by the acquisition of individual companies through a full parliamentary process. I defy the Secretary of State to show what "full parliamentary process" any company acquired by the National Enterprise Board, under his directive or not, must go through. The reality is that there is no parliamentary process. This is one of the most serious extensions of power in the Bill. It is a total reversal of the argument that there would be 952 parliamentary control on the use of the powers.

The National Enterprise Board is empowered to bid for any company. When hon. Members opposite have been campaigning throughout the country saying that there would have to be acquisition by agreement, the impression has always been left that there would be friendly negotiation after which, if everybody was reconciled to the company going into the hands of the State, agreement would be reached. But that is not the situation. The Board, with or without the direction of the Secretary of State, has the power to make aggressive takeover bids for any company it requires. The one parliamentary safeguard against it is that it cannot acquire more than 30 per cent. of the equity or spend more than £10 million without the Secretary of State's approval. I wonder how many hon. Members think that there would be any difficulty in obtaining that approval.

The more one looks at the powers in the legislation, the more obvious it is that the more serious the powers the less the parliamentary control, and the more trivial the powers the greater the parliamentary control. For example, there must be absolute parliamentary agreement before the £700 million is raised to £1,000 million. But the £700 million will be spent without parliamentary control. The Secretary of State will tell us when he considers that a company is an important manufacturing company. However, he has already told us that the Table A companies are those companies. But he must lay that information in an order before the House—as though he is giving information about which we do not know already.

The Treasury is then brought in to deal with a secondary range of relatively minor powers which set the totally undefined target for the National Enterprise Board. The Treasury must be consulted when the Secretary of State wishes to extend the guarantee limit on shipbuilding loans. If the right hon. Gentleman wishes to give help with interest payments to people owed money under the shipbuilding Act, the Treasury must be consulted. If he goes as far as to raise the ceiling below which ministerial approval for NRDC projects is not required, the 953 Treasury must be consulted. No one can doubt that there will be plenty of work for the Treasury under the Bill, but it is not in areas where it has relevance to parliamentary control or scrutiny.

The powers where the Secretary of State stands alone are totally different. He has power to direct the Board to buy any company; power to exempt the Board from the statutory restriction on what it can buy and the money it can spend; power to order companies to disclose to him and the unions all details of their business over an unlimited period. In his working document the Secretary of State says that it will be a three-year period. He has power to direct, without any appeal, the Board in the use of the powers given to him in the Industry Act.

However the Secretary of State may put the case, there is no doubt that parliamentary accountability has been one of the principal and earliest victims of the Bill and it will be the task of my hon. Friends and myself in Committee greatly to strengthen Parliament's opportunity to scrutinise the legislation.

The Secretary of State has been asked about parliamentary accountability. For those of my hon. Friends who did not see the "Panorama" programme I shall quote what the right hon. Gentleman said about the use of the powers under the Bill. The transcript reads: DIMBLEBY: … But according to this Bill, you will have power to direct the National Enterprise Board how they spend £700 million without actually going back to Parliament. BENN: Ah yes but then you see … DIMBLEBY: It's an awful lot of money isn't it? BENN: Well, I know, but then a Minister with power of that kind accountable for how he exercise it … accountable on a daily basis, more accountable than if I didn't have the power. How will the House know about any directives the right hon. Gentleman gives to the NEB? We shall find out some 18 months later when the Board's annual report is published. There is no parliamentary accountability, and faced with that sort of situation I would rather settle for the Kirkby precedent. Let us have the stuff published when the House has gone home for Christmas, because at least we get it within a fortnight.

954 Moving to the next aspect of the Bill, I agree that the rationale of the legislation is the need for investment.

§ Mr. Benn

Before the hon. Member moves on, will he deal with the point I made? Every year that the hon. Member was a Minister £700 million was given to private industry and he concealed from Parliament the names of the firms that received it. It took this Government to make public the names of the firms that had received Government money.

§ Mr. Heseltine

That is a marvellous argument to illustrate the degree of confidentiality that industry can expect from the right hon. Gentleman when the Bill becomes law. As he knows, he has not published this information. I stand to be corrected, but as far as I know there is no information available listing, company by company, the £700 million of grants to private firms. There is a list concerning 20 companies. It was published not because the right hon. Gentleman wanted anybody to have the information for genuine reasons, but simply to damage the credibility of the free enterprise system.

§ Mr. Neville Sandelson (Hayes and Harlington)

Is the hon. Member saying that where there is such a vast outlay of public funds information should not be given to the public about where the money has gone?

§ Mr. Heseltine

The hon. Member has completely missed the point. There is a degree of accountability for spending this money, as there should be, and it is for Parliament to take the decisions to spend it. If we decide to spend it on regional aid, the RB 211, Concorde or shipbuilding grants, that is all very well, but let us account for it. Do not let us expect industry, under the sort of propaganda the Secretary of State was conducting, to carry the rap for the policies formulated in this House.

§ The Minister of State, Department of Industry (Mr. Eric Heffer)

Is the hon. Member asking the Government to publish every detail of every loan and grant made to every company? If that were done industry would lose confidence for that reason more than for any other.

§ Mr. Heseltine

The hon. Member should have listened more carefully. It 955 was his right hon. Friend the Secretary of State who said that he had published all this information, and I made clear that he had not—

§ Mr. Heffer

No.

§ Mr. Heseltine

The Minister of State should not keep interrupting. We shall have a lengthy Committee stage and we shall give him all the time he requires when we get to it.

Perhaps I may now deal with the NEB. The Secretary of State for Industry approached the matter by arguing that industry had failed to invest and that therefore the Government must invest for it. We totally and utterly reject this approach to industrial investment. We believe that the most effective investment comes where Governments create the atmosphere in which investment is attractive and in which industry, in partnership with Government, is given every incentive to carry out investment in those conditions.

I agree with the Secretary of State about the failure of investment over the last two decades, but it is not a failure of industry but of the political system and of Governments to bring about the climate of partnership which has been created between industry and Government in the rest of the capitalist world. The failure was because our management of the economy has constantly subjected industry to a stop-go situation, because Government and politicians were totally obsessed with the concept of nationalisation on the one hand or total abstinence on the other, because they failed to understand what was happening across the world and because they totally misunderstood and never worked out the sophisticated mechanism which might have led to the renewal of confidence we all want.

If the right hon. Gentleman is trying to find out why we have not got the scale of investment we need, I can tell him it is because the ratio of profit to GDP has fallen, because free cash for disposal after all costs and tax has been dramatically reduced for the private company and because industry has been forced to operate in an atmosphere of sharp lurches from expansion to contraction and back again. The position is worse than it has ever been and consequences of the social 956 contract with its rapidly rising wages will do more to destroy investment over the next decade than anything any benefits from this Bill will do to encourage it.

§ Mrs. Audrey Wise (Coventry, South-West)

The hon. Member constantly refers to industry. Does his definition of industry include the workers? What contribution did his Government make to ensuring that the workers had confidence?

§ Mr. Heseltine

I can give the hon. Member the assurance she wants, but of course my workers include everybody in a company, not just those who belong to trade unions.

Circumstances today are worse than they have ever been, and in these prevailing economic conditions the Government's policy of highly selective investment in industry will mean that the weakest will come to collect the cash and the strongest will be gradually debilitated. We shall therefore have a situation of selective industrial support in which the strength of British industry is continually debilitated and there is a failure to back the successes of the economy without which there is no long-term future for British industry. It is always the weakest companies that come first, even if they have had Government help in the past. Take, for example, some of the companies that the IRC supported—British Leyland and Alfred Herbert. They were helped by the Government, but three to four years later they were back again because their fundamental problems had never been faced or tackled.

The remedies are clear. We have to establish a new basis for explaining the nature of profitability in a capitalist economy, and we have to pursue policies that give industry the opportunity to retain sufficient of its cash so that it can then respond to market forces at home and overseas and invest in a way in which industry would then be capable of achieving. Too many of us in this House have failed to see the need for that over far too long a period.

I can give one big example of the worst sort of Government intervention where the Government own the industry. It concerns the steel review announced by the right hon. Gentleman recently. What is the consequence of that review? The right hon. Gentleman has delayed the 957 long-term investment strategy of the British Steel Corporation for 12 months. He claims that he has saved 13,500 jobs. In fact he has only delayed the loss of them for two to four years. We do not know what cash will be needed to finance the review, and there has been no attempt to spell out the implications of the review for the economy. He has provided an additional two to four years of uncertainty for 13,500 workers after which they will find that the Government can no longer support them. He has failed to give the necessary degree of impetus to retraining, re-employing and rehousing which would have been a much better way of investing the money.

In addition, he has done much worse. The Government have shown every British worker whose employment depends on the sale of products which use steel from the BSC that for a long time the BSC's capability to provide good quality steel at an effective price is prejudiced. The whole of Britain's manufacturing capability, with all the jobs at stake, is being deliberately undermined by the strategy of holding up the investment programme of the British Steel Corporation. Nationalisation has all too often turned out to be a deceit, and a confidence trick on the British people.

§ Dr. Jeremy Bray (Motherwell and Wishaw)

Is the hon. Member not aware that many of the works that are scheduled for closure in the British Steel Corporation have been making a profit, and that the complaint of industry is that it has not been able to get enough steel? This state of affairs is likely to continue. Many people in BSC feel that the delay in the closure programme is needed.

§ Mr. Heseltine

Let us go back over the history. What did we do in this country to the steel industry? We nationalised it, denationalised it and renationalised it. We subjected it to every sort of political interference. Then we wonder why we have not got the steel. The failure of British industry is in this House and the inability of the politicians to see the real need to build investment over the past 20 years. That is why the British Steel Corporation cannot provide steel. If we had done what the Europeans did, which was to back the private sector of their steel industry and expand it, we would 958 not have had half the problems that we have had with our steel industry.

§ Mr. Michael Marshall (Arundel)

Does my hon. Friend agree that it is because of the recent delay during the closure review that the cost of the £3,000 million investment programme has risen to £4,500 million? Is that not a typical example of how planning delay will lead us down a slippery slope?

§ Mr. Heseltine

My hon. Friend is right. That is an example of the unrevealed costs which have been incurred simply to play to the populist ambitions of one Labour politician. It is all very well for Sir Don Ryder, talking to the Investor's Chronicle, to say that his aim for the NEB is to see this as a totally commercial animal, not some big Santa Claus … I have no intention of participating in something that is just a home for lame ducks. Before making such remarks, he ought to speak to some of the chairman of the nationalised industries and learn what public interference and political pressure are all about. All Governments and all Ministers have interfered with the nationalised industry, and the price that is being paid is incalculable.

I come next to the concept of the Planning Agreement. First, I shall say what we are not talking about. There is no question of any Conservative Members suggesting that information should not be made available to employees in companies, though not necessarily to trade unions, who represent some of the employees. The best companies do it on an ever-increasing scale. As we made clear in our manifesto at the last election, we would have moved forward purposefully to achieve greater progress in this important matter.

We are not talking about disclosure of information or a desire to involve work people in the companies for which they work. That is not the issue. What we are talking about is the disclosure of information which adds up to the corporate plans of British manufacturing industry. The reason we are against it is that it is based upon a fundamental misunderstanding of what a corporate plan is all about. We know, and Labour Members who have industrial experience also know, that corporate plans are essentially vague extensions of an understanding of what the possibilities might be.

959 It is right intellectually that companies should indulge in corporate planning, look forward and work out what the options are likely to be. But nobody in industry would put a corporate plan on a piece of paper and say, "That is what will emerge". Nobody would do that, but Governments will, and trade unions will. That is where the trouble will start. That is why we are fundamentally opposed to the whole approach of revealing information on this basis.

The question was always seen against the background of corporate plans being voluntary. Let us go back to the same "Panorama" programme and see how voluntary the intentions behind some of the thinking on these plans happen to be. Mr. Dimbleby by this time was talking to Mr. Don Groves, who is the regional organiser of Mr. Jenkin's union, ASTMS, in the Midlands. DIMBLEBY: The system of planning agreements is meant to be entirely voluntary, is that your understanding? Do you think this system can be put into effect on a voluntary basis? GROVES: Well, its like any negotiations, isn't it? It's voluntary. I've never yet met an employer that wants to volunteer to bargain decent salaries, or decent conditions, it's a matter of gently persuading them in the usual traditional way, put their arm up their back and when they yell out you sit down and negotiate with them, and planning agreements will, in fact, occur in exactly the same way. This is described as the regeneration of British industry. Perhaps Mr. Groves had a more accurate summary of what was going on when in reply to an earlier question he said: much more important the employers aren't aware yet of the impact of planning agreement … it's a completely new development … and this development as far as I know hasn't been tried in any other country outside of the Socialist bloc. That is the practical approach of a person—

§ Mr. Benn

Would the hon. Gentleman care to comment on the situation that now confronts the workers in, for example, the Imperial Typewriter factories at Hull and Leicester, the Honeywell factory in Lanarkshire, the Singer Sewing Machine companies in West Central Scotland, and in many other factories who wake up and find that their jobs have been taken away from them, not by their arms being put behind their backs and twisted, but by their being sacked without notice, without prior disclosure 960 of the plans to those most directly concerned?

§ Mr. Heseltine

I imagine that they feel much like the 40,000 people laid off by the British Steel Corporation in the past five years or the 200,000 laid off by the National Coal Board. Much of that happened under the last Labour Government. There is no question but that we must improve on this matter. No one disputes that. But that is not what the Bill is dealing with. We are dealing with long-term plans which would have serious ill-effects on the jobs and the security of the very people the Secretary of State is trying to protect.

The deal was to be a quid pro quo. Industry was to have a Planning Agreement with the Government and the basis of that agreement was that the Government would give to industry certain information. That is what the right hon. Gentleman said in his speech today. Certain information would be handed to industry and certain grants would also be made available on a permanent basis. In exchange, industry would hand to the Government a great deal of information, so that the Government could then build their plans on that information.

It is interesting to see that in Clause 14 the grants to be handed over are clearly spelled out, as the right hon. Gentleman rightly said. But on page vii of the Explanatory Memorandum to the Bill we find that it is the Government's intention that the grants will not be reduced in any case. Therefore, I cannot see what benefit there is to industry in that bribe.

The second question is what information industry will receive from the Government that would help it with its job. There are several questions on this. Will only companies which enter into Planning Agreements receive that information? If so, how are the big companies which do not enter into Planning Agreements to be able to compete with those that have? They will not have the same information. Will that be used as a threat of a special advantage to companies, thereby prejudicing those that do not enter into Planning Agreements and compelling them to do so? If the argument is that all the big companies will have entered into the agreements, what about the small and medium companies which are excluded altogether? How will they compete with 961 the big companies which are given privileged information? Those questions must be answered.

Many Opposition Members wonder just what information the Government have that will be handed over to private industry to make it that much more efficient. What is it that the Government know which, if given to industry, would make it eaiser for industry to trade profitably or invest successfully? We hear not a word from the right hon. Gentleman. If the finance director of a large company had asked for guidance from the Chancellor of the Exchequer last October and had been told to budget forward at 8½ per cent. inflation, his company would be bust today. If he read the Labour Party manifesto saying that inflation would be down to 10 per cent. at the end of this year, he would also be bust today. If he went to the Chancellor of the Exchequer to discuss his cash flow problems, he would be talking to the man who succeeded in taking £1,000 million from industry in one Budget, only to be forced to give it back six months later because he got his sums wrong. He would also be talking to the man who had to come to the House a few weeks ago to explain that his borrowing calculations were £2,000 million out in six months.

This is the basis of the information upon which the Government say that they have a contribution to make to the private sector. It is a total and absolute delusion. I should have thought that what lies behind the reality of the situation is contained in a speech by Richard Marsh. He ought to know. He has experience on both sides in this House and industry. As the chairman of a nationalised industry he has worked with Ministers in both Governments. On the way that the Government deal with the nationalised industries and the disclosure of information he says: None of the five-year investment plans we have produced has remained intact for more than six months because of the inability and unwillingness of Government to settle investment plans for more than an inadequate period ahead. The cost to the taxpayer of the present short-term nature of the Government's … method of allocating investment to the nationalised industries is frightening. That is somebody who knows.

Why does not the Secretary of State for Industry and the Government put the 962 nationalised industries through the Planning Agreement process and make it work so that we can all see what the arguments and advantages are?

To show the fatuity of the whole thing, the Bill provides for 250 people to monitor the whole of British industry, including clerks, messengers, bottle washers and the corporate planners. It is suggested that 250 people will do the whole thing. ICI alone has 250 doing that kind of work. The Secretary of State thinks that he will monitor the whole of British industry in this way. The right hon. Gentleman has a staff of 10,000 now and yet he cannot answer a simple factual question when asked for information in this House.

We know what will happen. Information handed to the Minister will assume a significance and a validity which no corporate planner would ever give to information of that kind. The first Minister will build on the information assumptions which it does not warrant. He will make claims in the heat of a by-election or meet the need during a General Election for a survey of intentions. The first Minister will have a bonanza with the great regional development plans about which he has been told over two, three and four year periods hence. He will then go, because the plans will not work out in the way he promised. What will his successor say? He will say, "I will not be caught in that way. I will make sure that I have a double or triple check. I want more information and details earlier." So the bureaucracy, which always feeds on itself, will multiply as more intrusions are made into the private sector of the British industry.

Let us look at some of the areas where the disclosure of information will have a harmful effect. The right hon. Gentleman said that there would be confidentiality. How can he tell this House that he believes in confidentiality when he is the Minister who, in dealing with Sir Arnold Hall, the chairman of Hawker Siddeley, published the whole of his side of correspondence about the HS146 without ringing Sir Arnold Hall to find out whether he had any objection to it? How can the right hon. Gentleman, who has seen his civil servants' recommendation about Kirkby leaked to the Press—I do not know where from—tell us that the secrets of British industry will be safe 963 in his Department? The right hon. Gentleman will be playing with the forward investment programmes of a significant area of British industry upon which the jobs of Britain's working people depend. The House had better understand the dangers.

I will point to some of the more precise and technical difficulties. If the right hon. Gentleman were in Opposition we would hear emotive words of insider dealing. Let us consider the problems of the Government and the unions being given this information. In my view, it would put them in an impossible position. We hear talk of confidentiality. Let us consider a situation where the National Enterprise Board is preparing to buy into a manufacturing processing company, reaches agreement, thinks that it is a very good deal from both points of view, and therefore puts forward its recommendations to the Treasury and the Department of Industry. Then, when it is about to be signed and approved by the Government, somebody says, "We have a Corporate Plan from one of the company's competitors showing that it is is about to invest £10 million in a competitive process which will destroy the validity of that company". According to what we are told, the Government would not tell the National Enterprise Board. Therefore, how they ever sustain a charge from the Public Accounts Committee that they had let the National Enterprise Board go ahead with investment which they knew would turn out to be a complete waste of money?

What does the trade union leader, given a Corporate Plan about a particular company, do if it looks bad and gloomy and he happens to be a trustee for the pension fund of his union which owns a lot of shares? Is he allowed to sell them? If he does not sell them, he will be held to criticism by his members for not doing so.

How will we deal with that kind of situation if all these plans are made available? [AN HON. MEMBER: "It was in the IR Bill."] There was nothing like this in the IR Bill. I have it here and will read from it, if necessary.

Let us look at the effect on employment of companies which have investment to make in this country or elsewhere in Europe because they want a 964 base within the Common Market. Will they come here? Will they invest in this country? Will they invest in partnership schemes in Europe with British companies knowing that they have the choice between a non-British and a British partner, one of which carries with it total disclosure and the other total confidentiality? Is that the kind of risk to which hon. Gentlemen are seriously suggesting employment prospects should be subjected?

The reality is that trade union leaders are placed in an impossible position. It is interesting that the unions are to get the information, not the employees. I sympathise with the right hon. Gentleman because I know that he is trying hard to get the information given to employees, not to the unions. One has to praise him for trying and to sympathise with him for losing the only battle that he lost on the Bill.

What will happen to the ambitious trade union member who sees his responsible leader accept a Corporate Plan which allows a degree of profitability to a particular company? At the next union election he will say, "Lads, back me and I will get more of that profit for you." Elections to unions will be fought on the amount that can be extracted from projected profits of the Corporate Plans three years ahead. That will lead to the further diminution of profitability in British industry and a further reduction of investment opportunities in this country. So it will go on.

We shall go into more detail in Committee of the endless numbers of examples of this kind which will bring about a cataclysmic decline in the possibilities of success for the British free enterprise system. Against the background of the economic policies of this Government that is gravely weakening the morale and confidence of British industry, with the worsening prospect every day of investment in industry and the certainty of rising unemployment.

There could not be a worse moment at which to introduce the Bill. It would be a bad bill to be introduced at any moment. It is a weary combination of old-fashioned nationalisation and a damaging erosion of privacy within which every Government and every company 965 must, to an extent, operate. It will destroy, not create, jobs. It will divide management and unions, not bring them together. It is mischievous, and deliberately so. I tell the House, on behalf of the Conservative Party, that we shall repeal this Bill.

§ Mr. Roy Hughes (Newport)

Having listened carefully to the hon. Member for Henley (Mr. Heseltine), it is clear to me that the Opposition have little constructive criticism to offer to this debate. I welcome the Bill as an attempt at what has been described as the regeneration of British industry. Most of us know that it is long overdue.

Essentially, this is a mild measure building on the 1972 Act that was put through this House by the previous Government. The Secretary of State has been subjected to the usual hysterical attacks from big business and the Conservative Party. In my view, they are a fair indication that my right hon. Friend is progressing on the right lines.

We know all about the huffing and puffing from the hon. Member for Henley and from his colleague the hon. Member for Bury St. Edmunds (Mr. Griffiths), but essentially they are fighting a sham fight. Their strategy is to make a fuss about a measure like this in order to try to deter our Labour Government from introducing even tougher measures.

If my argument that this is essentially a mild measure needs bearing out, I notice that even the Welsh CBI is singing muted songs of praise about the Bill, and the Welsh CBI is not exactly the most progressive of bodies. On the other hand, if capitalism had been so successful, my right hon. Friend would have had to use vastly different arguments. However, the fact is that the capitalists have let down Britain by their failure to invest. This great defect has to be remedied to give British work people more power to their elbows so that we as a country can compete in the markets of the world.

Clause 1 of the Bill establishes the National Enterprise Board, and Clause 2 sets out its functions for the promotion of industrial efficiency and international competitiveness. Success here could be of immense benefit to the country.

966 Then the Bill speaks about the maintenance and safeguarding of employment. The key priority here lies in getting the support of work people, because naturally they are concerned above all else about the security of their jobs. We know all the difficulties in Wales, in the north of England and in Scotland over the years.

I refer in passing to the problem of Northern Ireland. The fact is that there is already a Finance Corporation operating in Northern Ireland. It might be described as a forerunner of the National Enterprise Board. But, in view of the effectiveness of that body, I hope that we may expect the support of the Irish Unionist Members in the Division Lobby.

A further function of the board is to help firms which are in difficulties, broadening and extending the interventionist policies contained in the 1972 Act which, as I say, was brought forward by the previous Conservative Government. It could be described as propping up capitalism. Big business and the Conservative Party have no objection to Government aid for industry. They are concerned about the possible change in the old structure of ownership and decision making in industry. They will try in any way that they can to hide the failure of their own stewardship. They will blame the work people. They will blame the trade unions. Anything can be sacrificed. No slander is too malicious to maintain their essential control. In a mild way, this is now being challenged.

Clause 7 specifies an overall borrowing limit of £700 million. With the consent of the Treasury, that limit could be raised to £1,000 million. I question whether that is enough, especially bearing in mind the statement a few days ago by Lord Stokes that British Leyland alone needed £200 million immediately, as he put it, "just to stand still". Vast sums are needed if the economy of the United Kingdom is to expand and if our living standards are to improve.

Clause 2(2)(c) speaks of an extension of public ownership into profitable areas of manufacturing. I wonder what that means in practice. The amounts quoted are not enough to buy out major concerns such as ICI. Is this merely buying part of the shareholding in different concerns? This is what the late Hugh Gaitskell advocated nearly 20 years ago, for which he was so severely criticised by the 967 British Left at the time. However, I agree that if there is to be public money invested in this way, likewise there should be public accountability.

We need to get away from the Morrisonian concept of public ownership. The Secretary of State already has the British Steel Corporation under his control. The corporation has 1,500 headquarters staff planning how to make other people redundant. The hon. Member for Henley referred to the BSC and said that he felt that it should have more freedom. In Newport, I have had a fair amount of experience of the BSC. Frankly, I have not much confidence in it. It closed our tube works with the loss of nearly 1,500 jobs. Now there is a shortage of the product. The work people argued at the time that what was needed was not closure but capital invested in the works.

When we talk of public ownership through this Bill and the National Enterprise Board or the existing nationalised industries, I feel that certain criteria have to be accepted. First, there is accountability. The National Enterprise Board is closely allied to the Government. The Secretary of State needs to tell us more about its accountability to Parliament. To an extent, I agree with the hon. Member for Henley, but I am sure that it is for vastly different reasons. Organisations like the BSC resent very much the implications of political control, but, whenever this has been raised on previous occasions I have not noticed the hon. Member for Henley being so keen on the BSC coming under the direct control of the House of Commons. The BSC is keen for Britain to stay in the Common Market. That is yet another indication that it wants to get away from political control.

It raises also the question asked earlier in the debate by my hon. Friend the Member for Tottenham (Mr. Atkinson), who wanted to know from the Secretary of State how far the Common Market would affect the functions of the National Enterprise Board, provided that we stayed in—which Heaven forbid. From the reply of my right hon. Friend about Articles 92 to 94 of the Treaty of Rome, it seems that changes will be needed in the treaty rules. I am sure that my right hon. Friend the Foreign and Commonwealth Secretary will be taking this matter into 968 consideration, because the Brussels Commission refuses to allow major changes in the structure of industry without its prior approval. The Brussels Commission could veto the Board's function and ensure through the court that it did not aid the industries in the manner which the Bill suggests.

The question of interference by the Common Market is vital because that organisation is already interfering so much in our affairs. Public enterprise concerns should appoint managers who believe in public enterprise. They should not appoint people who are anxious to sell public enterprise back to private enterprise. We have seen examples of this recently.

In publicly-owned enterprises there should be a major extension of industrial democracy, bringing work people into the decision-making process, giving them a say in the enterprises in which they invest the whole of their working lives. Work-people should be informed of their rights under the Bill when it becomes law. Plainly written leaflets should be issued giving them an explanation of their rights. This, in turn, puts new responsibilities on the trade union movement.

I welcome this Bill. The question still arises whether its provisions are tough enough. We must bear in mind the huge problems that exist in industry and the years of neglect that have gone by.

§ Mr. Richard Wainwright (Colne Valley)

It would be wrong not to acknowledge that on this occasion the Government have attempted to provide the House with some sort of framework within which the inevitably massive assistance to industrial investment is to be provided. This is something which the House and the country entirely lacked during the régime of the Conservative Government. In spite of a speech or super-Gladstonian length from the hon. Member for Henley (Mr. Heseltine) it was notable that there were no signs of positive Conservative thinking about the framework within which this unavoidably massive investment is to be provided. But the framework in this Bill is so frail that it can be pushed into almost any shape which may suit any Government from time to time. We have all read advertisements for gadgets for the home 969 which are so flexible and adaptable that they will fit either the smallest semi or the largest mansion—telescopic, collapsible and infinitely suited to almost any range of uses. That is the characteristic of the framework in this Bill. As a result, the Government are left largely free to do what they please.

We on the Liberal benches fear most—[HON. MEMBERS: "Where are they?"] Hon. Members should have no fear, Liberal reinforcements always arrive and hon. Members should have noticed that the bons mots in Liberal speeches are always reserved for the later part of the oration.

The danger is, not that the country will have some fearful Soviet inflicted upon it or that the corporate State will dawn next year under the leadership of the Secretary of State; it is a much more dreary and unattractive one, namely, that the largest farmyard of lame ducks ever known will be under the presidency of the NEB although not under the leadership of Sir Don Ryder, necessarily. I predict that his life in that post will be a short one, because a man of such tremendous commercial acumen and determination is not likely to wish to remain long surrounded by the wreckage of once-great industries.

Those industries will also be notably vulnerable to the terrible dangers of political and social pressure; they will be massively labour-intensive, in which there will be appalling resistance when the inevitable lay-offs and redundancies are rightly suggested. Liberals are aghast because, during the whole of the discussion of this Bill, and in the Minister's speech this afternoon, there has been no positive mention of retraining. Yet this is probably one of the main elements to which this country must look for industrial salvation.

Furthermore, there is no substructure on which a Bill like this can hope to operate successfully. There is no substructure of works councils or other democratically-composed workers' organisations which could be entrusted with the otherwise admirable provisions for disclosure. As a result, disclosure is to be made, quite unsuitably in our opinion, to union representatives who may have no loyalty whatever to the plant con 970 cerned. There is also no structure for parliamentary control, partly because the outgoing Conservative administration left no legacy of parliamentary control whatever in this field. It was up to the Government to provide one when they first took office almost a year ago. This is important, because the key factor for a body which is to intervene to prevent great industries decaying is the ability to spot the symptoms of decline at the earliest stage. In this country there is no mechanism for doing that.

In 25 years of practice in an international firm of chartered accountants one of the few things I learnt was that only people on the very inside of such concerns can spot the first signs of decay. The tree appears to be in magnificent leaf, the branches are still growing and the fruit is appearing, but those on the inside know that management, research, salesmanship or market development—perhaps all of them—are beginning to fall off and that decline is setting in. Where, in the whole of this imposing structure, is there any arrangement for detecting these things early, before the duck becomes acutely lame?

In an effort to inject a constructive approach into this debate, even at a fairly late stage, I make this suggestion. The State is overwhelmingly the biggest buyer of manufactured goods in this country. Intelligent buyers soon spot when the supplier is going to seed. I hope that there will be some provision for State purchasers to report to the right hon. Gentleman when they detect that even famous names are beginning to offer an inferior service. Far more could also be done by commercial attaches abroad to report the gossip of the market place in their respective capitals, when they hear that great British exporters are beginning to lose their cutting edge.

§ Mr. Eldon Griffiths (Bury St. Edmunds)

I am intrigued by the suggestion of commercial attaches listening to the gossip of the market place and then reporting back to the Secretary of State. What happens when one of the Government purchasers or a commercial attaché finds that one of our nationalised industries is falling down on the job? There is the case of a gentleman from the Coal Board who reported that the board wrongly spent £2 million. He was sacked. 971 What happens when the report concerns public and not merely private industry?

§ Mr. Wainwright

There is no problem here. It was implicit in what I said that reports which are critical of the nationalised industries should be acted on. I am aware of the example which the hon. Member cited, since it centred round Doncaster, in Yorkshire. It is entirely inapposite. I do not want to be led astray, Mr. Deputy Speaker, because you will be the first to rebuke me afterwards. The example is inapposite because Mr. Grimshawe, the gentleman in question, was not an independent Government servant like a commercial attaché or a purchaser. He was simply an employee of a nationalised extractive industry. Furthermore, the duties of auditors could be extended when some Government gets down to a long overdue new Companies Act. For example, auditors share some responsibility in approving or otherwise every word in a chairman's statement, since some statements tend to give confidence that a concern is still fully alive when morbidity has set in.

The people who, above all, are in the best position to witness the first signs of the onset of industrial decay, are the workers. They are the people who see the managing director's efforts slackening off. They are the ones who notice when the boss's car is being driven off in the direction of the golf course. They are the people who know that the components are no longer arriving at the moment when they are required. They are the people who notice if more time is being spent in wining and dining than in selling the product. Therefore a structure where those working in a concern can monitor the directors' performance—and, indeed, can have a vote at the meeting which appoints directors—is long overdue.

§ Mr. John Davies (Knutsford)

Is the hon. Gentleman speaking about professional activities, or an industrial concern? If he is speaking of an industrial concern, it is certainly one I do not recognise.

§ Mr. Wainwright

I am speaking of industries of which, over a period of 25 years, I have accumulated some modest knowledge.

§ Mr. Davies

In what capacity?

§ Mr. Wainwright

In addition to lack of provision in the Bill in this respect we on the Liberal bench are concerned lest the NEB, having providing Labour Members with some political glory and ammunition, be overwhelmed in its early years by too great a task.

It was disappointing that the Secretary of State for Industry did not get round to saying which of the existing Government shareholdings would be taken on board by the NEB. Assuming they all are, we would say that Rolls-Royce, ICL, the subsidiary of George Kent, parts of the motor-cycle industry, British Leyland, Foden and Ferranti are enough for a start, without spending another £700 million in the early stages on further acquisitions.

A question which has already been touched upon is that of parliamentary control. Surely by now Labour Members should have learned from the experience of their earlier creation of the IRC—but obviously they have not done so. No less an authority than the present Paymaster-General, writing in 1973, when in opposition, said, in his book, "Political Responsibility and Industry", To whom, and in what respects, was the IRC responsible? The Government found that, like Frankenstein, it had little control over its monster. Going a little further than that, a young Fabian, Donald Roy, writing in a Fabian pamphlet only last September, said this of the NEB proposal: This would involve a transfer of sovereignty from Parliament more significant than either entry into the EEC or the setting up of the Pay Board and the Price Commission. In dealing with this point I do not want to raise Committee points, but I shall mention one by way of illustration. The measure contains all manner of subtle clauses designed to truncate the usual procedure of affirmative resolution in this House and to deprive both Houses of Parliament of the usual rights which traditionally they have in respect of that procedure.

In the opinion of the Liberal Party, this Bill cannot work until, first of all, there is set up some proper apparatus of worker representation. The provision that information must go to trade unions is dangerous and also inappropriate. There are many examples, some of which my 973 hon. Friends gathered when we had a nation-wide industrial campaign a year ago, involving information which was either available at Transport House or at union headquarters and yet which was not passed down the line to those who could understand it and use it in their own industrial experience. There are also cases of information being given, even in present conditions, to local union officials, who are then extremely jealous and who sometimes place obstacles in the way of that information being passed on to the workers on the shop floor.

The only people who should have a right to this information are those with a definite loyalty to the company concerned either through being members of the company under a new company law, or else being members of a supervisory board or works council. But the present provision tends to create two classes of trade union member—those trade union members on whom the Government have conferred the privilege of special inside information—and "the rest", who are to be left in their present regrettable and undeserved ignorance. This creates a privileged class of trade unionist and in our opinion is wholly deplorable.

I hope that if somebody else from this bench manages to catch Mr. Speaker's eye during this two-day debate this theme will be developed. I shall not pursue the matter now.

I welcome the greater part of the provisions in respect of Planning Agreements—partly because, in so far as anything these days is "voluntary", they certainly are. The only proposal which I have to make under this heading is that the first Planning Agreement should be between the NEB and the Secretary of State for Industry, otherwise the board's operations will enjoy an inappropriate obscurity.

There is a danger that the Bill, far from being the Soviet monster as described in the Tory Press,