INDUSTRY BILL

§ Mr. Speaker

I still have more than 20 hon. and right hon. Members who wish to speak from the back benches. I hope that hon. Members will take note of that fact.

§ Mr. Peter Viggers (Gosport)

I am deeply grateful for this opportunity of continuing the speech which I commenced at two seconds to eleven last night.

This is a controversial Bill not only in what it seeks to achieve but even in the interpretation put upon its power and sphere of activities. To some hon. Members on the Government side it appears a moderate Bill. To others it is the basis of the trade union breakthrough and the dawn of industrial democracy. What is the truth? There are three main purposes of the Bill. The first is to set up the National Enterprise Board, the second is to bring in Planning Agreements and the third is to provide for the provision of information. The last two are linked.

First, on the National Enterprise Board, I am sure that most of us on this side of the House have nothing against the creation of a Government agency to act as a holding board of Government-held stakes in industry. But what an agency this National Enterprise Board is! By Clause 6 the Board is entirely subject to the Secretary of State for Industry. I quote: … the Secretary of State may give the Board directions of a general or specific character as to the exercise of their functions; and it shall be the duty of the Board to give effect to any such directions. By Clause 3 of the Bill the Board shall be subject to the Secretary of State's direction in respect of powers previously exercisable under Sections 7 and 8 of the Industry Act 1972. The Board's powers: … shall not be exercisable by the Board except in any particular case in which the Secretary of State has directed the Board to exercise them. 1126 And, It shall be the Board's duty to give effect to any such direction. By Clause 15 all the vital safeguards of the 1972 Industry Act are swept away. First, the Government want to remove the limitation on the Government's powers to purchase shares only where no reasonable alternative exists; secondly, they want to take away the requirement for the disposal of shares as soon as practical; thirdly, they want to take away the limitation of the percentage that may be taken in companies outside the assisted areas to 50 per cent.; fourthly, they want to remove the date—31st December 1977—beyond which there will be no powers to take equity outside the assisted areas.

By Clause 7 of the new Bill there is no real limit on the financial provisions available to the Secretary of State, because the limit of £700 million—which can be extended by agreement to £1,000 million—does not include amounts paid out under Clause 3 of the new Bill. The Secretary of State has virtually a free hand in the expenditure of Government money, subject only to one proviso, and that proviso is not parliamentary but practical. The Secretary of State will be subject to the practical limitation of having to find the money to carry out his plans.

The operation of the National Enterprise Board will depend upon the extent to which the Secretary of State can persuade other Ministers to surrender money from their budgets to enable him to carry through his industrial plans, and to subordinate their budgets to his huge demands. And huge indeed his demands will be. He will need money for the companies already under the wing of the State. They will include British Leyland, which will clearly need hundreds of millions of pounds. They will include the extraordinary experiments at Meriden and Kirkby. And if the Government have their way they will include shipbuilding and aircraft companies. Altogether a massive amount of capital will be required. The expense will be massive, and the benefit to the country is problematical.

I come next to Planning Agreements and the provision of information. There is no doubt that industry and the Government need to co-operate on the basis 1127 of a longer time scale than Government normally contemplate. In the debate yesterday some of my hon. Friends mentioned three to five years as the time scale for decisions in industry. I would maintain that the time scale for a major decision is five or even ten years from the time of the development of the concept to the time that the factory which is the result of the concept is producing.

There is nothing inherently wrong with Planning Agreements or with the provision of information, but—and this goes to the root of the problem—the present Bill envisages information being provided to trade unions, not to employees.

As for Planning Agreements, we heard several hon. Members from below the Gangway—members of the Tribune Group—say yesterday that they saw Planning Agreements and the provision of information as weapons for them to use against management and to help them on the road to increased worker control and nationalisation.

The Government and their supporters claim to speak for workers. But they do not. We can refer to an objective criterion on this by quoting from The Times of 13th January 1975. The Times commissioned the Opinion Research Centre to carry out a survey on opinions about nationalisation. The headline says it all: Most British workers are against nationalisation". The findings are based on the views of a sample of 2,000 people who work full-time for organisations employing more than 20 people. They consider the views of employees about whether their employers are doing a good job. People who think that their employers are doing a very good job account for 33 per cent., those who think that their employers are doing quite a good job, 40 per cent., those who think that they are doing only a fair job, 20 per cent., those who think that they are doing a poor job, 5 per cent. Those working for private enterprise tend to think their company is doing a better job than do the employees of nationalised industries.

Another question put was: On balance which do you think would do more to strengthen British business and industry—for the Government to become more involved with the management and planning 1128 of company affairs, or to be less involved …? Those who thought that the balance at the moment was about right were 31 per cent. The percentage who thought that the Government should become more involved with the management and planning of company affairs was 19 per cent. Those who thought that the Government should be less involved, leaving companies to run their own affairs, were 46 per cent.

Having established their spontaneous opinion, employees in the private sector were shown two cards, one set suggesting good effects of nationalisation of their own company and one suggesting the opposite. They were asked to say which would happen. Those expecting a better deal for employees under nationalisation were 19 per cent., and those expecting a worse deal for employees were 24 per cent. Those who expected more efficient management under nationalisation were 12 per cent. and those expecting less efficient management were 37 per cent. Those expecting a better deal for people buying the company's products or services were 11 per cent. and those who expected a worse deal for them were 23 per cent. Those who expected better export sales were 10 per cent., and those expecting worse export sales were 15 per cent. But here is the clincher: those expecting fewer industrial disputes and strikes were 9 per cent. and those expecting more under nationalisation were 30 per cent.

The summary is contained in the final question: Taking everything into account, do you support or oppose the nationalisation of your own company? Those who supported nationalisation were 18 per cent. Those who opposed it were 67 per cent.

§ Mr. John Lee (Birmingham, Handsworth)

If there is any validity in the arguments which the hon. Gentleman seeks to support by referring to that opinion poll, what does he fear from the disclosure of information to trade unions or workers or, for that matter, to anyone else?

§ Mr. Viggers

I have nothing against the provision of information. I am in favour of it. It is the use to which it will be put that worries me. If the hon. Gentleman reads yesterday's debate, he 1129 will see that his hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) and other Government supporters said that they saw planning agreements and the provision of information as weapons for them to use against management. It is to that that I object.

If workers are against nationalisation, who is in favour of it? Who wants nationalisation and State control? It is not the employees. They do not want union management. They want good management. The advocates of State control are the pseudo-intellectuals and the commissars-manqués of the Socialist Left wing. What could be more divisive and backward-looking than a petrification of the old battleground between unions and management? That is not the way forward.

We know that industrial investment has been disappointing. But the answer lies away from the sterile field of Socialism, with its spreading tentacles of central Government and its diminution of individual choice and personal freedom.

Investment will follow a restoration of confidence and security, and it flows directly from a fiscal and economic climate in which investment is worth while because it is profitable.

This is not a good Bill. It is vague on key issues, and the powers which it gives to the Secretary of State are unwise. As my hon. Friend the Member for Henley (Mr. Heseltine) said yesterday, we shall repeal it.

§ The Paymaster-General (Mr. Edmund Dell)

The hon. Member for Gosport (Mr. Viggers) will find that I shall deal with many of his remarks during the course of my speech. But I warn him in advance that I shall not be speaking as a commissar manqué.

Again and again throughout the years we have heard in this House from both Front Benchers and back benchers the continual lament about industry's failure to invest, about our poor export performance and about our perennial balance of payments problems. These have been attributed in part to the failures of industrial management and in part to failures of the economic policies of successive Governments.

1130 It is hardly deniable that our economic record since the war has not been one of success, that we have fallen behind our industrial competitors, and that we stand in grave danger of falling further yet. But, however one attributes responsibility for this situation, the truth is that the interventionist policies of successive Governments have not been particularly successful either.

Governments have concentrated too largely on grandiose projects which have diverted resources and skills from stress of our industrial economy which would have brought the nation a higher return. If we examine the record of this country's industrial policy since the war and up until the mid-1960s, at any rate, the area of Government activity which did most beneficial service to our industrial competitiveness was probably the Export Credits Guarantee Department, whose useful functions are seldom the subject of ideological controversy across the Floor of the House.

With the creation in 1966 and 1967 of the Industrial Reorganisation Corporation, there came the beginning of a new approach, a Government agency that could use public money to promote industrial development. I am sure that the fundamental principle of using public money in this way was right. But, in my judgment, the particular IRC approach was in certain respects defective. There was, for example, too great a dedication to mergers. The hon. Member for Colne Valley (Mr. Wainwright) quoted me yesterday as having written that the IRC was too little under Government control. Now that we propose greater Government control, there are further complaints.

On the basis of experience with the IRC, there was a learning process. Part of the learning was indeed by industry, which had opposed the creation of the IRC but came to understand that it had great potential value as an instrument of Government support for industry. I am sure that if a Labour Government had been returned in 1970, the Industrial Reorganisation Corporation would have formed the basis for a further development of constructive Government involvement with industry.

Instead, the Conservative Government abolished the Industrial Reorganisation Corporation. They did so much to the 1131 regret of much of industry. They did so in their Selsdon period of thoughtless disengagement from industry, the period which the hon. Member for Henley (Mr. Heseltine) curiously described yesterday as the period of total abstinence. But it was on the basis of experience with the Industrial Reorganisation Corporation that many of us proposed the creation in this country of a State Holding Company, based on existing Government shareholdings in industry, which could carry forward in new ways the type of work which the IRC had begun.

During the last year and again yesterday, right hon. and hon. Gentlemen opposite quoted words which I used in 1973, and indeed would not now change. Certainly I was against equipping a State Holding Company with powers of compulsory acquisition over the private sector of our economy, and indeed I criticised the extent of the proposed acquisitions. This Bill contains no power of compulsory acquisition, except in one limited case, which I think is welcome to industry and to which I shall come in a minute.

What right hon. and hon. Gentlemen of the Opposition do not quote is the continuing support I have given from an early stage of the debate to the idea of a State Holding Company. On 10th December 1971, on a Private Member's day, I proposed a motion, That this House urges Her Majesty's Government to establish a State Holding Company. I made no proposals for any power of compulsory acquisition. But I did propose that such a State Holding Company should have the power to establish publicly-owned enterprises or to act jointly either with private capital or with nationalised industries to establish new enterprises. I explained the purposes of the State Holding Company in words which, I think I dare claim, anticipated the White Paper "The Regeneration of British Industry". There is no need for a State Holding Company to have powers of compulsory acquisition. Indeed, as I will explain later, in my judgment such a power would be counter-productive.

There is, however, one power of compulsory acquisition in this Bill, a power vested not in the National Enterprise Board but in the Minister, and it is a power subject to the approval of this 1132 House. It exists only in the limited cases covered by Clauses 9–13; that is for the purpose of preventing undesirable foreign acquisitions of existing firms. I believe that such a power is needed and indeed that much of industry will regard such a power as needed. But even here this power is limited by the possibility of a prohibition order which would avoid acquisition by the Government. Therefore the need compulsorily to acquire to prevent foreign takeovers should be exceptional.

§ Mr. Michael Heseltine (Henley)

Will the right hon. Gentleman answer the question which the Minister of State, Department of Industry said that he would answer yesterday but then did not answer? Has the National Enterprise Board powers to make aggressive takeover bids for companies?

§ Mr. Dell

If the hon. Gentleman will wait, I shall be discussing this whole question. I think that he should wait for me to deal with these matters in some order. I am dealing at present with acquisitions by foreign companies of existing British firms.

§ Mr. David Crouch (Canterbury)

Has the right hon. Gentleman left Clause 2? He was touching on that clause before he came to the acquisitions by foreign companies in this country. If I remember rightly, his letter published in The Guardian issued a warning, to which I referred in my speech last night, to his own party and to the Government, about the danger of extending the National Enterprise Board and giving that Board powers to move into the profitable areas of industry, whereas in other countries where such bodies as the NEB already exists such as Sweden, there is no move to enlarge the enterprise boards so that they can move ad lib into the profitable areas. Where does the right hon. Gentleman stand on this matter? Will he give us some constructive thought?

§ Mr. Dell

The hon. Gentleman has read my letter in The Guardian. I am sorry that I did not hear his speech, nor have I read it. What I opposed in my letter to The Guardian was the compulsory acquisition of large sections of the private sector of British industry to be put under the control of the NEB. I say that there is no power of compulsory acquisition in the Bill.

§ Mr. Eldon Griffiths (Bury St. Edmunds)

This is an important point. I am sure that the right hon. Gentleman would want to give a clear reply to the House so that there is no confusion in industry on this point. Can the NEB make a resisted bid for a company? Where the company does not want the NEB to buy in, what happens if it resists?

§ Mr. Dell

As I have just said in answer to the hon. Member for Henley, I propose to come to this point and to deal with it in due order. If hon. Members will wait, I shall give them the opportunity of intervening then.

I was about to refer to the fact that the hon. Member for Surrey, North-West (Mr. Grylls) asked yesterday why a power is needed in this respect, that is, to protect against the take-overs by foreign firms, going beyond the Exchange Control Act. The answer is that there could well be cases where it was thought necessary, particularly in current circumstances, to protect an existing firm against foreign take-over for reasons which did not justify the use of the Exchange Control Act. Moreover, the hon. Member is wrong in thinking this power inconsistent with the encouragement the Chancellor of the Exchequer wishes to give to inward investment. This power protects existing firms. It is not available for use against new investments.

I would make clear, moreover, that these powers do not provide a means by which the Government could interfere in international companies already based in this country, where there is no proposal for change of ownership, nor with the expansion of those activities, nor with foreign companies coming in and setting up new enterprises here.

While I am on the subject of international companies, I should like to say a little more about this. What we expect of international companies with activities in this country is the same degree of attention to the interests of this country and the workers they employ in this country as we would expect from domestically-owned companies, no more and no less. There is no threat to the multinationals in this Bill. Multinational companies have made an important contribution to our economy, just as British investment in many countries abroad has contributed to the development of other economies.

1134 In many cases, as a matter of fact, foreign-owned companies are among the more efficient and have grown faster. This all adds to our national wealth and our standard of living and provides employment. We must recognise and welcome their activities. The present Government are perfectly aware of the harm which could be done to the economy and to the interests of British working people by frightening off these companies. But we are of course, like any other country, entitled to expect responsible behaviour from them, and in the vast majority of cases we have no complaints on that score. I can assure them, in relation to the information powers, that there is no intention to single them out for special attention.

§ Mr. Tom King (Bridgwater)

The whole House will welcome the statement about encouragement for inward investment, which is much more responsible, as is the statement about the contribution of multinational companies. But does not the right hon. Gentleman recognise that the real threat lies in the disclosure provisions, and that if confidential processes are being operated by multinational companies and they are thinking of introducing them into this country, they may think twice and put them into another country?

§ Mr. Dell

If the hon. Gentleman will let me get on, I shall be dealing with the disclosure provisions.

I have said that a power of compulsory acquisition vested in the National Enterprise Board would be counter-productive. The White Paper makes the reason perfectly clear. It says in paragraph 1 We need … a vigorous, alert, responsible and profitable private sector. Such an objective, a profitable private sector, would certainly be gravely prejudiced if the National Enterprise Board had a power of compulsory acquisition. We expect the National Enterprise Board to act in voluntary co-operation with private sector companies. It is the Government's intention that the National Enterprise Board will act with agreement. I place that on the record and we can certainly discuss whether it should be placed on the record in a more formal manner.

§ Mr. Heseltine

As the right hon. Gentleman is now absolutely on the point we are discussing, it could be said that if a bid is made for a company's equity on the market and the shareholders agree to accept it, that that is by agreement; but it might be against the agreement of the directors of the company. Will he explain exactly what "agreement" means in the terms in which he is using the word?

§ Mr. Dell

The hon. Gentleman has exactly identified the point. What he says is right. What I have said is that it is the policy of the Government that the NEB will act with agreement, and we are considering in what form that must be put on the record. I can go no further on that point today.

I take no credit for expressing, as the White Paper does, this need for a profitable private sector. In a mixed economy, the economic success of the Government and the nation depends on the success of the private sector quite as much as it does on the success of the public sector. Any idea that we can substitute for it, that Whitehall can manage British industry, that it can take its investment decisions, its marketing decisions, its research and development decisions, would be an illusion. Nor would I suggest that to the extent to which the private sector has failed to invest, there is anything like a full answer to the problem in the Bill. Our investment record depends on the will of those who work in industry as well as on the general economic climate.

That does not mean there is no value in consultation. It does not mean there is no value in co-operation between the private sector and an agency such as the National Enterprise Board, nor does it mean that co-operation between the two and indeed competition between the two, cannot help to promote investment and development in the British economy.

I know that it is suggested that the NEB may use public money to undermine the private sector by subsidised competition. This is a nightmare without substance. It is the sort of nightmare that was raised when the IRC was founded, when the Industrial Expansion Act was passed, indeed, when the Industry Act 1972 was going through this House. I pay tribute to the skill of Conservative hon. Members with extrava- 1136 gant language. I am never quite sure whether it is the efficiency of the public sector or the subsidised inefficiency of the public sector that is thought to be the more dangerous to the private sector.

The hon. Member for Henley suggested yesterday that the Treasury's powers regarding the National Enterprise Board were ineffective, that we were brought in to deal with a secondary range of minor powers such as those dealing with shipbuilding credit and the NRDC. This criticism is entirely misplaced. The Treasury is given a prominent rôle in determining the financial duties of the board in Clause 5. Moreover, under Schedule 2 Treasury approval is needed before the Secretary of State can lend any sums to the Board from the National Loans Fund, or make any advances from the Consolidated Fund by way of public dividend capital. All this amounts to a major control on the proceedings of the Board. It would prevent, if there were need to prevent, the undermining of private sector firms by subsidised competition.

In any case, one should set the resources at the disposal of the National Enterprise Board against the scale of resources available to the private sector. The £700 million or £1,000 million available to the National Enterprise Board is intended to cover a number of years. These figures are not at all out of line with the financial provision made by the Conservative Government under Sections 7 and 8 of the 1972 Industry Act. These sums are right for their purpose, the purpose of stimulating new investment, new enterprises and joint enterprises with the private sector within the bounds of what is likely to be practicable in such a period.

Certainly there must be criteria for intervention, and the National Enterprise Board must act on a commercial basis, whether its interventions consist of assistance to the private sector under Sections 7 or 8 of the 1972 Industry Act or joint ventures between the NEB and private sector companies, or joint ventures with nationalised industries, or the establishment of wholly publicly-owned enterprises.

§ Mr. John Roper (Farnworth)

Does my right hon. Friend think that the interventions which the NEB is likely to make 1137 are likely to fall foul of the various clauses of the Treaty of Rome or the regulations which the Commission has made?

§ Mr. Dell

I do not think that they will fall foul. My right hon. Friend the Prime Minister answered a question like that today. There are rules, but if there were not this country would be in danger of competition within the Community from countries richer than ours. They would be able to give better subsidies than we can afford. There were rules within the European Free Trade Area. The only way in which we could avoid rules of this sort in these days would be by shutting ourselves in a fortress.

Profitability and the return on capital, measured in financial terms, remain the best prima facie indication of a company's efficiency in using resources and meeting its customers' needs. If we are to achieve the overriding objective of improving our industrial performance, resources need to be directed wherever possible to companies which have the soundest performance and the best prospects as regards viability and the rate of return, or where there are outstanding opportunities of improving performance. It may be argued that such companies will in any case command the necessary resources without the benefit of the National Enterprise Board. But there can be shortages of management, as well as of money on the right terms, and the National Enterprise Board can help to direct management as well as money. This was certainly one of the better achievements of the Industrial Reorganisation Corporation.

The hon. Member for Henley said yesterday that 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. There is certainly always a danger that Government money will go to the weakest, and that has certainly been a large part of our experience of industrial policy in recent years. Indeed, I criticised the Industry Bill of 1972 on the grounds that there was little in it to protect the public against precisely that kind of danger.

It is precisely for that reason that in my judgment if intervention is to be financed by public money it should be 1138 through the instrumentality of an agency such as the National Enterprise Board, upon which obligations can be placed and which will be responsible for its results.

§ Mr. Heseltine

Is the Minister aware that the Industrial Development Advisory Board was set up to protect the public in just the way that he has pointed out—a Board that has been ignored five times by the present Secretary of State for Industry?

§ Mr. Dell

The Secretary of State is entitled under the Act to ignore the advice of the Industrial Development Advisory Board. I will come to other aspects of the Act in a moment, but I remind the hon. Gentleman that the board was considered so important by the previous Conservative Government that they did not even include a mention of it in the original draft that was presented to the House.

I was going on to say that if there are to be subsidies to particular companies to protect them from collapse for social reasons—and all Government act in that way—the subsidies should be overt and the Government should provide the money for them directly. The National Enterprise Board is to be required under this Bill to run a commercial operation. So it is equally right that where the National Enterprise Board acts on behalf of the Secretary of State in a social rather than a commercial context, that fact must be clear and clearly defended on its own merits.

In summary the position is that the Secretary of State, with the consent of the Treasury, will determine the financial duties of the Board, which will result in an adequate return on the capital employed by the Board. We would envisage that there will be a minimum rate of return, at any rate so far as the Board's wholly-owned subsidiaries are concerned.

The Bill will allow different financial duties to be determined in relation to different assets and activities. But as the White Paper makes clear, where the Government require the NEB to depart from its commercial objectives on social grounds, and the Government are subsidising the NEB, these subsidies will be accounted for separately. This enables the Government to make use of the 1139 expertise and knowledge which the NEB will have. It certainly does not imply that the money provided to the National Enterprise Board to prosecute its commercial functions will be used on any other basis than that the NEB must back success and the prospect of success. We are, after all, discussing very largely not the question whether there should be intervention by Government but how it should be conducted.

Whatever was the case at the time of Selsdon it is now accepted between the principal parties that the Government need a power to intervene and a capacity to intervene in industry. The right hon. Lady the Leader of the Opposition, was quoted in the Daily Telegraph of 14th February as saying to the 1922 Committee: If an industry got into difficulty you might have to help it out. But you would do so by making that industry fit and healthy again, so that it could tackle its own problems. This would be intervention on a temporary basis—quite a different form of intervention from going in to take it over. Whether it is permanent intervention or temporary intervention, it is still intervention. We can say of the right hon. Lady that she starts well this side of Selsdon. I would simply issue the warning that if one starts on a course of intervention it is not always so easy to put a limit to it. If large amounts of public money are invested in private companies it is not satisfactory that the future of those enterprises should be left simply to private management. The Government are responsible for that money. One needs strict criteria and control. One needs the right instruments.

But there is another reason for a Government needing the power and capacity to intervene going beyond the need from time to time to help weak industries. Again, it was a reason accepted after its Selsdon period by the former Conservative Government. It is because Government, with the economic record of this country since the war, cannot limit themselves simply to incentives or to macro-economic influences to encourage investment by British industry.

Nor did the right hon. Gentleman for Sidcup (Mr. Heath) find his other stimulus to investment—namely, dinners with businessmen at Chequers—a particularly effective method. The economic record of this 1140 country since the war has not been magnificent. The fact that it has not been magnificent provokes questions. Are there ways in which we could do better? How could it be otherwise than that such questions should be asked? These questions are not to be answered by a confrontation of established ideologies.

Practical experience shows that among the most damaging features of British economic policy since the war has been the uncertainty it has engendered. Industry has been compelled to ask itself in any period of growth how much trust it could put in its duration. Every investment decision has been made more risky by such uncertainties. It also seems sensible that there should be discussion between Government and industry to see whether there are ways in which Government can help to reduce the special risks attached to investment decisions in a slow-growing economy. Thus correct demand management policy is the principal instrument in the hands of Government.

§ Dr. John A. Cunningham (Whitehaven)

Is thais not the most crucial argument in terms of regional policy? Will my right hon. Friend make it clear that the powers which the Government are about to take and which many of us support are not intended to be used piecemeal, or in an arbitrary fashion, or as a short-term expedient, but are intended to be used strategically? If not, the regeneration of British industry that we seek will not result.

§ Mr. Dell

That is certainly the intention. I understand that my hon. Friend the Minister of State, Department of Industry, will deal later with the subject of regional employment.

Incentives have also been used and they have their value. The Government already help with investment incentives. By international standards our investment incentives are very substantial. What industry and the country want above all is steady growth. Governments which have failed to ensure steady growth have provided large investment incentives instead as a very poor second best.

The present Government have left the investment incentives inherited from the previous Government unaltered—first, because we do not want to make another change in the system for what could 1141 only be marginal benefits but, secondly and primarily, because no one can expect industry—after its experience since the war—to rely in its investment decisions on the prospect of steady growth simply because the Government say that that is their objective. It will take many years of happier experience before such a trend will be regarded as reliably established. I regard investment incentives as simply an inevitable ingredient in a slow-growth economy.

In addition, I have always placed great emphasis on the rôle of competition policy. But something more is also needed—namely, a direct power to stimulate investment and development, particularly perhaps counter-cyclical investment and development. This will not bring many benefits in the short term.

It would be entirely wrong to overestimate what an instrument such as the National Enterprise Board, or indeed any other form of direct Government intervention, can achieve to deal with the problems we face in the coming months. But it is an essential supplement to other policies. It will be immediately useful to help with particular industrial problems that are bound to arise.

There is, of course, a legitimate point of disagreement between the political parties about the instrument through which intervention should be conducted. Should the intervention be by the Government directly, or by a Government agency such as the National Enterprise Board? Successive Labour Governments have believed that there should be a Government agency. I have shared that view because I am sceptical of the capacity of Whitehall to act effectively in this field, because there is a need for a continuing responsibility and surveillance over such interventions in industry which Whitehall and Ministers cannot easily exercise—and which, on the record, they have inadequately exercised. I believe that a Government agency can act more independently, more vigorously, more rapidly. It can be staffed for the purpose. Like the IRC, it can redeploy capable managers. In my judgment, an agency represents the better technique.

§ Dr. Jeremy Bray (Motherwell and Wishaw)

I follow the argument about the relative rôles of the agency 1142 and of the Government, but will my right hon. Friend confirm that he sees the power in the Bill as intended to be used systematically to make a measurable impact on the economy as a whole and not merely in what he once described as "case work" of a kind which can be left to an agency?

§ Mr. Dell

I accept that the agency will be used in a systematic way. If my hon. Friend will refer again to the excellent book to which he referred, he will see that I was making a distinction in the book between the Government's social intervention and other kinds of intervention.

However, the Government of the right hon. Member for Sidcup, instead of setting up a Government agency, established in 1972 an industrial development executive within the then Department of Trade and Industry. They said that they had chosen that method because of the importance of Ministerial responsibility. There may be a difference of judgment as to the most effective location for an activity of this kind. It is hardly a question of principle. Indeed, as we know, that Government carefully considered the desirability of acting through an agency outside Government before concluding in favour of the Industrial Development Executive. That is quite clear from the discussions that were going on in this House at the time. In the end, they decided to reject the idea of an agency; but I have always suspected that it was not so much on what they judged to be the merits of the argument as because they did not wish to appear simply to be reviving the Industrial Reorganisation Corporation which they had abolished the year before.

The fact that this Government have decided to establish an agency for this purpose hardly justifies the scaremongering of hon. and right hon. Gentlemen opposite. I know that the hon. Gentleman the Member for Henley said that there were four safeguards in the 1972 Act which are to be repealed. The right hon. Member for Knutsford (Mr. Davies), who was responsible for that Act, made the same point yesterday. The hon. Member for Henley made this point in a letter sent to the chairmen of Britain's thousand largest companies outlining the 1143 initial reaction of the Conservative Party to the Industry Bill.

The safeguards to which he was referring are as follows—and I quote from his letter as printed in a Conservative Central Office handout of the 13th February:

1. "1. The limiting of Government powers of purchasing shares only to those cases where no reasonable alternative form of finance exists.
2. 2. The requirement that shares taken should be disposed of as soon as practicable.
3. 3. The limitation of a percentage of a company's equity that the State may take in companies outside the assisted areas to 50 per cent.
4. 4. The date—31st December 1977—after which the Government would no longer have powers to take equity outside assisted areas."

It is worth examining these four safeguards on which the hon. Gentleman so much relies and whose disappearance he so much regrets.

Let us take the first, which he describes as the limit placed on Government powers of purchasing shares only to those cases where no reasonable alternative form of finance exists. This limitation on the right to acquire shares was regarded by the previous Conservative Government as so important that it did not appear in the original draft given to this House of Clause 8 of the 1972 Industry Bill. There has, of course, never been a comparable restriction to Section 7 of the 1972 Industry Act. This restriction was al ways a nonsense—a nonsense impeding Government action quite unnecessarily. It is largely no doubt because of this provision that Section 8 of the 1972 Industry Act has been of so little value. Nor is it needed for the protection of companies.

So far as the NEB is concerned, the real protection for companies lies in the fact, first, that their relations with the National Enterprise Board will be entirely voluntary; secondly, that any National Enterprise Board intervention will be by agreement, and, above all in the fact, that if the company can get money elsewhere, it is at liberty to do so—including, incidentally, private sector money through Finance For Industry. These are the real safeguards and not this entirely self-defeating provision that was installed into the Industry Act at the last minute under pressure from the then Government's supporters.

1144 The second safeguard is the requirement that shares taken should be disposed of as soon as practicable. Once again this safeguard in Section 8(iv) of the Industry Act was regarded by the previous Government as so important that it did not appear in the original Industry Bill of 1972. Again, it was always a nonsense. It is important that the National Enterprise Board should have a continuing responsibility for the success of its investments and not least for those which it undertakes under Clause 8. It would be entirely wrong to compel it to get out as soon as "reasonably practical" as it would be required to do—or as the then Government required itself to do under pressure from back benchers.

§ Mr. Viggers

Does the same point apply to Clause 7(5) as to Clause 8(4)?

§ Mr. Cyril Smith (Rochdale)

I wish to ask, Mr. Deputy Speaker, for protection from the Chair for back benchers in this debate. The fact is that the Minister has now been speaking for 35 minutes. This is the second day of the debate on this Bill. The Bill was introduced by a senior Minister yesterday. Yesterday, at the opening of the debate, Mr. Speaker appealed to back benchers to cut their speeches short and said that over 20 hon. Members wished to take part in the debate. We are now listening to another Front Bench speech and there is to be an Opposition Front Bench contribution before back benchers will have the opportunity to contribute. Will you, Mr. Deputy Speaker, make a plea to the two Front Benches similar to that which Mr. Speaker made to back benchers yesterday?

§ Mr. Deputy Speaker (Mr. George Thomas)

Once an hon. or right hon. Member is called, the length of time he takes is up to him. Those hon. Members who spoke yesterday might exercise the self-discipline of not making interruptions today, thus saving the time of other hon. Members.

§ Mr. Dell

I apologise to the House. The House will realise that I have taken this length of time because I have given way to every hon. Member who wished to intervene. I therefore take it as the wish of the House that I should give way no further.

1145 I shall look up the clauses, as requested by the hon. Member for Gosport, and give him an answer.

The third safeguard is the limitation of the percentage of a company's equity that the State may take in companies outside the assisted areas to 50 per cent. Again this safeguard was thought by the previous Government to be so important, so vital a part of its industrial legislation, that it did not appear in the original 1972 Industry Bill. Once more it was always a nonsense. Why should there be a difference between assisted areas, where there is no limit on the right to acquire shares, and non-assisted areas? Does anyone imagine that the Government or the National Enterprise Board cannot control a company for most purposes with 50 per cent. of its equity? The real safeguard is that the National Enterprise Board has no power of compulsory acquisition of a company's equity.

The final safeguard is the 1977 limitation on the powers to take equity outside assisted areas. This one, unlike all the others, was in the original 1972 Industry Bill. Although in that respect it is different from these other supposed safeguards it shares with them the fact that it was always nonsense. There is no evidence at all that need for this type of assistance will cease in 1977. Indeed if the right hon. Member for Finchley (Mrs. Thatcher) is to have the opportunity of discharging the duty, which she sees, of occasionally assisting weak industries, I am afraid she will acquire this power only long, long after 1977.

I come to the provisions regarding the disclosure of information on Clauses 20 to 24 of the Bill. These clauses have caused great, though perhaps exaggerated, anxiety. It is important to improve the level of disclosure in British industry and to ensure that employees are properly informed about their companies' plans and prospects. It is entirely wrong that, as has happened again and again, large, sudden redundancies should throw thousands of people into unemployment. There can therefore be no doubt about the need to improve the flow of information in British industry.

There is equally a need to improve the flow of information from British industry 1146 to the Government and indeed vice versa. I hope that large companies when invited to enter into Planning Agreements will be alert to the demands which they can put on Government and just not those that the Government are seeking to put on them. Indeed I am surprised at the inferiority complex that so rapidly seizes so many British companies when they read a piece of legislation such as this. In my experience of the relations between Government and industry, companies are at least as well equipped to look after their own interests as are Government Departments to look after the public interest.

However, those powers have caused anxiety and worry as to how they might be used. Provided the principles of greater information disclosure is maintained, we are ready to listen to and consider constructive criticism and alternative proposals for safeguarding information of vital importance to a firm.

Yesterday the hon. Member for Henley referred to the failure of the political system in this country to create a partnership between Government and industry of the kind that had been created in other countries. He is absolutely right and he will also note that the other countries to which he refers do not suffer from the obsession for or against public ownership which exists in this country, nor is there the continual battle about public ownership or about the need for agencies such as the National Enterprise Board. Those countries extend public ownership when, on pragmatic grounds, they think it right. They even introduce agencies of this kind when, again on pragmatic grounds, they think it right. It does not cause uproar, nor does it lead shadow industry spokesment to circulate tendentious letters in hundreds of copies protesting against the activities of a Government who wish precisely to create the type of partnership with industry which has helped towards economic success in other countries.

It is not so much a failure in our political system but a long tradition that the public sector and the private sector must not meet or mix, or, if they do, only with a mutual sense of incorruptible distrust for one another. It is this distrust which must be overcome. On the one hand, there is the slanging of industry by Governments that seek in industrial failure an excuse for their own mistakes, 1147 and, on the other hand, there is the rejection of Government intervention, except in extremis, on the ground that such intervention, especially if it comes from a Labour Government, must be motivated by greed, envy and, what is even worse, ideology.

In building a new partnership it is essential that the Government should not over-emphasise the short-term benefits of action such as the creation of a National Enterprise Board. It is an instrument with a long-term potential. It cannot bring miraculous short-term solutions.

Nevertheless the creation of the National Enterprise Board is a valuable and constructive initiative. The fears of industry will decline and disappear in exactly the same way as they did in the case of the Industrial Reorganisation Corporation and, indeed, the Industrial Expansion Act.

I come back to the perceptive words of the Bolton Committee in its Report on Small Companies. It said: There appears to be a tendency to mistrust initiatives of a Labour Government on principle and irrespective of their merits. It will, however, in due course be found and accepted in industry that the National Enterprise Board is, in fact, a useful instrument of partnership with industry. To conduct the battle today in the extreme terminology of Selsdon, as the Opposition evidently intend to do, even though they now claim to have rejected Selsdon, is in my judgment both a crime and a blunder.

§ Mr. Eldon Griffiths (Bury St. Edmunds)

In congratulating the right hon. Gentleman on the time he took for the splendid illustration of the new doctrine of divided Cabinet responsibility, perhaps I should describe it as a case of the Treasury hand on the dog collar. Today we heard the Treasury speech, which was careful and orthodox, with several deep bows in the direction of the private sector which are much appreciated, and a clear recognition of the need to safeguard public money. I am very glad that the right hon. Gentleman made that speech. I am sure that what he said will go some way at least to relieving the worst fears of industry.

1148 The Paymaster-General will not have failed to notice that the Secretary of State for Industry left the Chamber in the middle of his speech.

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

rose—

§ Mr. Griffiths

I have no doubt that the Secretary of State for Industry had reason to leave. I accept that. However, I believe that his departure was symbolic, as indeed is the absence for the most part of the Tribune group, who sit on the benches below the Gangway.

§ Mr. Heffer

On a point of order, Mr. Deputy Speaker. My right hon. Friend had to leave to attend a Cabinet committee meeting. There was no other reason why he left. He left his apologies to the Paymaster-General for having left in the middle of his speech.

§ Mr. Deputy Speaker

I hope that honour is satisfied on both sides and that we shall continue.

§ Mr. Griffiths

I continue to note that the Secretary of State has left for more important business. I make no complaint. I insist that I find it symbolic that the empty Tribune benches and the departure of the Secretary of State underline the essential division within the Labour Party on this important Bill. If the Paymaster-General, whose contribution I admired, had been in the House yesterday he would have heard the speech from the Department of Industry, all the red blood and thunder about the failures and the selfishness of private enterprise and all the language that we were given about the opening up of a new era of worker control.

Which Minister is speaking for the Government? Which twin has the Toni? I believe that we are being treated to the evidence of a Government with a Left wing which regards the National Enterprise Board as a mechanism for Socialism and another portion of which is horrified in our present economic circumstances by the possible consequences of what the Secretary of State for Industry is now doing to industry. No doubt when the Minister of State replies this evening we shall hear the red-blooded side of the argument.

1149 However, I hope that the Paymaster-General will answer two questions that arose from the debate he missed yesterday. I refer him to the speech made by his hon. Friend the Member for Luton, West (Mr. Sedgemore), who is not in his place today, in which he said: It is a Bill which will pave the way to a new industrial revolution—a revolution which will change the face of British industry and the social structure of the United Kingdom.…. It is a Bill which will end the single-minded ethos of the joint stock company … end the managerial society … transform and transfer industrial economics and ultimately social power in Britain."—[Official Report, 17th February 1975; Vol. 886, c. 1017.] For the benefit of people engaged in joint stock companies, will the right hon. Gentleman tell us whether the Government do or do not want to put an end to them, as the hon. Member for Luton, West said? For the benefit of industrial managers, may we know whether the Government want to end the managerial society? I hope that the right hon. Gentleman will give the answers to those questions. Perhaps he will do so now.

§ Mr. Dell

The hon. Gentleman is well aware that I dealt with those points in my speech, which was apparently too long for the hon. Member for Rochdale (Mr. Smith). The Government are not responsible for speeches made by backbench Members on either side of the House. Hon Members may express themselves here in any way they wish. I stand by what I said.

§ Mr. Griffiths

I am glad that the right hon. Gentleman stands by what he said, but I am sure he could not stand by what his right hon. Friend said.

I turn now to what I believe is some common ground. The common ground must start with the fact that this country faces a national economic crisis. Inflation is very nearly out of control, despite the fact that we are no longer importing it. Wage increases in the public sector are now well over 25 per cent. compared with the 6½ per cent. on which the German trade unions settled in the last few days. Prices are rocketing upwards. The electricity bill for the average householder is up from just over £40 to £55 a year. Food, even with subsidies, is set to rise by an extra 20p to 40p a week. Rates are up by almost one-quarter in most parts of the country and 1150 in some areas by one-third. The cost of motoring, not only petrol—that is easy—but repairs, insurance and tyres, is 29 per cent. up on a year ago. And so the spiral goes on.

Meanwhile, as a Treasury Minister would be the first to recognise, Government borrowing is swelling to proportions which cast doubt upon the Chancellor's ability to finance it. The pound is propped up by the Arabs, whose money is kept in London far more by the skill and trustworthiness of the City of London than by the Secretary of State for Industry, who constantly derides the City's great contribution to our national accounts. All the time the crisis deepens, and with it unemployment.

I should like to ask another question to which I hope to get an answer. Mr. Jack Jones, speaking on behalf of the Transport and General Workers' Union late last week, said: there is an immediate need for a special and huge jobs rescue plan in industry. The only way to start the rescue is for the Government to tell the State industries to … take on more people. The Government has really direct power in the State sector industries and it must use it now . . to stop the growing threat of a million people out of work". Does the right hon. Gentleman, like the Secretary of State for Industry, regard the National Enterprise Board as a mechanism for coercing industries to take on more people to meet Mr. Jack Jones' point? The Secretary of State certainly implied that and has gone round the country bamboozling workers into believing that the NEB is the answer to unemployment.

The miners' settlement, soon to be followed by other settlements with the railways and the power stations, is already causing some members of the Cabinet to think the unthinkable—that a statutory freeze of some kind may soon be inevitable.

There is talk of an import surcharge, In the meantime industrial production is falling sharply. Treasury Ministers, including the Chancellor to do him justice, have now hoisted the danger signals. The Chancellor told us that we may well be heading for "national bankruptcy". No longer does he tell us that inflation is slowing down.

1151 Therefore the question, as we come to the Bill, is what we should do to overcome this crisis before it overcomes us. I do not pretend for a moment that the Opposition have all the answers, but of one thing I am certain. Faced with so grave a crisis, which sooner or later could spill over into social unrest and episodic violence, the last things that Britain can now afford are an increase in non-productive public expenditure and the disruption of industry by the Government. Yet that is precisely what the Secretary of State for Industry apparently has in store. At a time when his colleagues are having to cut down on roads, schools and hospitals and to abandon the Channel Tunnel and the expanded nuclear power programme that the country needs, the Secretary of State for Industry proposes to splurge hundreds of millions of pounds simply to switch the ownership of large sectors of British industry from one set of hands to another.

I can think of nothing more irrelevant to our economic problems at this time than the proposal to spend £100 million or more on switching the aircraft industry from one set of hands to another and £40 million or £50 million—we do not know the figure—on switching the shipbuilding industry from one set of hands to another.

The Secretary of State told us that the Bill will bring in a new era. The right hon. Gentleman built his speech, as he built his whole campaign, on three main themes: first, the need for investment; secondly, the belief that the State can do a better job than private enterprise, which he quite falsely said had failed; and, thirdly, industrial democracy. I want to say a few words about each of those themes.

§ Mr. Ted Leadbitter (Hartlepool)

Before the hon. Gentleman utters those few words, may I ask whether, in view of his comment about my right hon. Friend leaving the Chamber, he has noticed that his hon. Friend the Member for Henley (Mr. Heseltine) has just left?

§ Mr. Griffiths

The essential difference is that my hon. Friend and I happen to agree.

I believe that is is common ground between us that British industry, public as well as private, does not invest and has 1152 not invested enough. I hope that it is also common ground that much of our investment, more perhaps in the public than in the private sector, has been misdirected or has produced far too low a return on capital. The questions which divide us are why this has happened and how best our investment can be not only increased by rendered more effective.

We believe that the best and, in the long run, the only sustainable source of income for British industry is profits. This applies both to the public and the private sector. When profits are healthy, investment starts to grow, though there is always a lead time. When any industry is starved of reasonable profits, investment, again after a period of lag, rapidly starts to decline. The record of recent years bears this out completely, and in view of yesterday's debate I should make the record quite straight. Under the last Labour Government, as my right hon. Friend the Member for Knutsford (Mr. Davies) said, the profits of British companies declined disastrously. In 1968 there was a 33⅓ per cent. fall from the profits of 1967, in 1969 a further 12 per cent. fall in profits compared with 1968, and in 1970 there was a 16 per cent. fall from 1969.

§ Dr. Bray

What happened to investment?

§ Mr. Griffiths

I am coming to investment. Here is the reason, when Labour left office, that the investment intentions of the British industry had fallen to a very low ebb. They went on falling into 1971 and 1972.

§ Dr. Bray

What about actual investment?

§ Mr. Griffiths

I shall deal with that. Profits honestly earned after 1970 once again started to rise, as production increased and confidence was gradually restored. Thus in 1971, adjusted profits were 12 per cent. up, and in 1972 they were up again by 12 per cent. In 1973, the year when the increased prices of oil and of other raw materials hit industry, profits rose only by just over 1 per cent. The pattern is clear—under the Labour years the consistent and disastrous falls in profit, and with them, the investment intentions, and under the Conservatives the substantial increase in profits and the return of investment to industry.

1153 I will tell hon. Gentlemen how industry responded. There is a lag time, a long lead time, requiring the purchase of equipment, buildings, plant and so on. In the CBI survey of more than 1,000 firms there is shown unmistakeably that in the last six months of 1971 investment intentions rose by just under 20 per cent. In 1972 they went up a further 20 per cent. In the first 10 months of 1973, before the fuel crisis, they went up by a further 18 per cent. I think there is absolutely clear evidence here that when industy is profitable it invests and when it is starved of profits it does not invest. Hon. Members talk about the private and public sectors, but it makes no difference. If industry is allowed to make profits, it will invest. If it is not allowed to make profits it will not invest. It cannot.

Since investment lies at the heart of this Bill, I think we must see what the present Government have been doing to encourage industry to invest. The Chancellor of the Exchequer banged up corporation tax and advance corporation tax. He very much raised national insurance contributions and extended price control so that industry was unable to pass on the full effects. Local authorities, with Government encouragement, banged up industry's rates bill as much as 30 per cent. in 1974, with more to come this year.

Meanwhile, inflation not only in the price of fuel and raw materials but increasingly in the explosion of real wage costs to industry, is driving company after company to the wall—so much so that the number of bankruptcies has risen from 882 in the third quarter of last year to 1,355 bankruptcies in the third quarter of the 1974–75 year. Hon. Members will realise that the bankruptcies of individual private firms means the joblessness of thousands of men who work in them.

All these were body blows to industrial investment. It is, therefore, no surprise at all that the Bank of England, in its Quarterly Bulletin of last December, estimates that in the first quarter of 1974 industrial and commercial firms made no real profits at all. Rather, they suffered a financial deficit of £740 million. That is a measure of the stewardship of the present Government of British industry. 1154 One cannot expect investment out of a negative cash flow.

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

If the hon. Gentleman thinks that the relationship between profitability and investment is the key factor, how does he explain that profits successively rose considerably in the first three years under the last Conservative Government and yet when they went out of office investment was 10 per cent. below, in real terms, what it was when they came in?

§ Mr. Griffiths

The hon. Gentleman will forgive me if I do not follow him along that road. He spoke last night. He does not understand the rôle of confidence in investment, and so long as he stays in office, I doubt very much whether confidence will return.

The only recourse for industrial firms if they do not generate the profits with which to supply their investments is to turn to the banks. But they are caught up by the sky-high interest rates which reflect the Chancellor's need to pay over the odds to keep Arab money in Britain.

On the subject of investment, industry has been treated abominably by the present Government. It is, therefore, no wonder that the latest survey shows that 41 per cent. of firms expect to invest less in the next 12 months, that 31 per cent. are less optimistic about exports, that 61 per cent. are working below capacity and 34 per cent. believe that they will be forced to shed labour. We have indeed a crisis.

Against that background, where industry's profits have been destroyed by excessive taxation and runaway inflation, it is an impertinence for the Secretary of State to go around complaining that industry has failed to invest. He and his right hon. Friends have shattered confidence. They have made investment impossible. Their attitude is like that of the mediaeval apothecary who first bled his patient white and then wondered why his patient was anaemic. There is, of course, a less charitable explanation. I would not for one moment level it at the right hon. Gentleman.

§ Mr. Michael Mates (Petersfield)

Go on!

§ Mr. Griffiths

It is that the Secretary of State for Industry, far from being unhappy about this fall in investment, is quite satisfied to see private industry being driven to the wall because he welcomes the sight of great British firms being pushed near to bankruptcy and forced against their wishes to look to him—their tormentor and soon their executioner—for help. I do not wish to do the right hon. Gentleman an injustice, but I must tell him that a large number of people who are just as dedicated to the success of British industry as he is, and who have a good deal more experience, are convinced that in his private thoughts he rejoices at the sight of his colleagues' measures and his own threats bringing great private firms to their knees because he knows that only in this way can he possibly justify his plans to take them over.

The Conservative Party opposes this Bill absolutely, and we shall, as soon as circumstances permit, get rid of it. We oppose it because it stands not by itself but is one of a whole series of measures designed to impose State Socialism on the country. It is not by itself. On top of it there are the measures for all-out nationalisation. Beyond coal, gas, electricity, railways, waterways, airlines, the National Freight Corporation and steel, Labour is now proposing to nationalise shipbuilding, ship repairing, marine engineering, airframes, aero engines, aerospace, the remaining free enterprise ports and effectively building land.

Nor is this the end of it. The Labour Party Manifesto says: We shall take over profitable sections of individual firms including sections of pharmaceuticals, road haulage, construction and machine tools in addition to our proposals for North Sea and Celtic Sea oil and gas. If the Government do what they say, it means that the great bulk of our productive capacity, one way or the other, will be in the hands of the State and that, taking account of those employed in central and local government, well over half of the working population of Britain will be employees of the State. They will not have much chance to change their employer then.

In addition, there are the financial measures, capital transfer tax, penal taxes on company profits, higher income tax and surtax—and no doubt we shall see 1156 more of those in the Budget—the forthcoming wealth tax and the ever-higher charges for national insurance and rates. Taken together these will mean—indeed they already do mean—that the State, one way or another, takes away from the citizens a far larger share of the gross national income than it does in any of our main industrial competitors in the free countries of the world.

Next, the Government, in the name of industrial democracy, propose to hand over more and more of the day-to-day power in British industry and commerce to one section of the community—the leaders of the trade unions. The Government have already put through the closed shop legislation. In this Bill they seek to create a new, privileged class through the disclosure arrangements that give to union officials, and union officials only, privileges that will be denied to shareholders, consumers or even to this House.

Before long, or so we are promised, Ministers propose to impose 50 per cent. trade union membership on the boards of companies, irrespective of whether the workers in the companies have joined a union.

Taken together, all these measures give the lie to what the right hon. Gentleman has sought to tell the House this afternoon. We can live with him and his reasonable attitudes, but these measures add up to the most concentrated, most destructive and most class-conscious attack on what remains of private enterprise and individual capital and property ownership that we have seen in this country. They make a nonsense of the Chancellor's protestations that he wants a healthy and vigorous private sector. They give the lie to the Prime Minister's claim that, in the interests of confidence, he wants what he called a stable frontier between the private and public sectors.

I give credit where it is due. The Tribune group has never concealed its desire to see the private enterprise mixed economy destroyed. They are honest men. Who can say that of the Government? The Chancellor of the Exchequer hands out reassurances about private capitalism behind a haze of cigar smoke at the Guildhall while the Chancellor of the Duchy of Lancaster does the same in Wall Street. They both tell the City not to worry about the Secretary of State for Industry—"Harold has him 1157 tamed", they say. The Prime Minister even tells the nation that the Secretary of State is not to be master in his own house, that all the powers given to him are only window-dressing, while the real power to clip his wings remains in the Treasury. I hope that that is so.

I was interested to note that all these soothing noises and especially the cosy chat which the Prime Minister is said to have had with the CBI at No. 10, have alarmed the hon. Member for Bethnal Green and Bow (Mr. Mikardo). He made that plain yesterday. They have certainly not assisted the Secretary of State for Industry, although he would be the first to recognise that he does not inspire the same loyalty from his Cabinet colleagues as he does from the Left of his party. In my view the hon. Member for Bethnal Green and Bow and the Tribune group need not worry. They are winning hands down, perhaps not as quickly as they would like but steadily and inexorably.

The Labour Party is moving towards all-out Socialism, snuffing out private enterprise in industry after industry, confiscating private property, taxing away personal capital, restricting consumer choice and concentrating economic, financial and political power into fewer and fewer hands. It is doing this on the basis of no clear electoral mandate.

I turn to the question of consent. The Secretary of State told us yesterday that he is winning consent for his measures. He was apparently reported in Monday morning's papers as saying that he finds growing support for his Bill among management. It appears that managers of British industry do not read it in quite that way.

The Association of British Chambers of Commerce issued a statement following the Secretary of State's remarks. They said: we are most puzzled by the claim … by the Secretary of State for Industry … that there is growing support for the Industry Bill among the ranks of management. The Bill and its preceding White Paper have been under steady scrutiny in Chambers of Commerce for months. Yet in all that time we have not been made aware of any measure of support from management. All that our efforts have revealed are a growing number of inherent snags, and a growing awareness of the irrelevance of the measure to the real economic problems facing us. 1158 The right hon. Gentleman will know that this association is hardly the voice of privilege. It represents 50,000 British companies, both large and small, industrial and commercial and in every region of Britain. It is easily the largest representative group of its kind in the country and its most active participants are drawn from just the levels of middle management which the Secretary of State quite wrongly claims to be supporting this Bill. The association concludes the statement with these words: One thing we are aware of … has been the assiduous effort of certain members of the Government to visit individual Chambers and meet their members. On occasion such talks have been followed by an unfounded ministerial claim that Government ideas were received sympathetically. We were simply being polite. That is the comment of the managers of British industry. It underlines the self-deluding capability of the Secretary of State. He has an extraordinary ability, together with his hon. Friends, to turn up at trade union meetings, get a large round of applause and then go away convinced that he has carried the nation.

I thought that the late Dick Crossman put it very well when, in an article published this week in The Sunday Times, he said: I like Tony Benn a great deal and I had every hope of him when Harold appointed him Postmaster-General. It's a queer thing but I am not very happy about him now I see him at work. To begin with, on every single occasion when he is about to bring a plan to Cabinet a leak occurs giving the full details in advance. How is industry to treat the confidentiality of the Secretary of State on the Planning Agreements if that is the way he handles his Cabinet papers? Mr. Crossman continued: In the second place, there is an odd hardness about him … he has at times a kind of mechanical Nonconformist self-righteousness about him which seems to come out even more strongly in office. I hope that the Under-Secretary will tell his master that his self-deceiving ability has made him, as the right hon. Member for Knutsford (Mr. Davies) said, the scourge and not the friend of industry.

During the debate yesterday my hon. Friend the Member for Henley (Mr. Heseltine) was asked whether he would attempt to set out the ways in which a Conservative Government would handle 1159 this mater differently. That is a fair question and in the spirit of the right hon. Gentleman's speech. I would like to conclude with a few remarks on that point.

We shall resist by every constitutional means open to us this onslaught on private enterprise and on the freedom of the individual to own and manage capital in a competitive and responsible fashion.

We shall resist it for the following reasons: first, because it involves the squandering and waste of public money. We cannot afford to spend hundreds of millions of pounds to satisfy the Secretary of State's taste for industrial experimentation. Secondly, we shall resist it because it would dislocate industry and distract the attention of managements and workers at a time when every effort needs to be devoted to increasing output, to holding down costs and to expanding overseas sales.

Thirdly, we shall oppose it because much of it is a phoney. The National Enterprise Board in reality is a licensed State take-over board, and the Secretary of State's regeneration will turn out to be the degeneration of British industry, just as his industrial democracy is no more than a fancy label for a shop steward's oligarchy.

We shall oppose the Bill because, in principle, along with other actions of the Government, it lays an axe at the roots of industrial efficiency. The Conservative Party is as keen as any hon. Gentleman opposite on worker participation and the disclosure of information by private companies, but the ham-handed manner and the excessive pernickety detail which the right hon. Gentleman has instructed his parliamentary draftsmen to inflict on the day-to-day management of complex businesses reveals that total but dangerous innocence on his part that makes industry despair of Government intervention.

Above all, we shall oppose the Bill—and, indeed, the right hon. Gentleman's whole bag of tricks—because it strikes at the heart of the free, responsible and capital-owning society which we believe the large majority of the British people instinctively prefer to the rigid collectivist system which the Labour Party seeks to impose.

1160 Private enterprise—and it is fair that I state this plainly so that Labour Members can disagree if they will—is to us by far the most effective method of harnessing the energy and ambitions of the individual for increasing the wealth of the nation, for pioneering new projects and technology, for holding down prices through the mechanism of competition and, above all, for widening the range of choice of goods, services and jobs.

To us, capital ownership is the outward and visible sign of something quite basic in the spirit of man, that is the desire to have and to hold what human beings earn for themselves, and it expresses a man's reasonable desire to pass on to his children some fruits of his own labour.

More important is the matter of freedom. At a time when the individual citizen finds himself hemmed in by big Government, big media and big unions, the wider the spread of capital ownership, the more secure his personal liberty. Where the State owns and manages everything, no one save the bureaucrat has any real freedom of choice. It is only where large numbers of citizens—preferably the large majority—themselves own and manage substantial portions of society and are protected by law from the arbitrary usurpation of their property rights that the individual can maintain, with any hope of success his independence, his personal privacy, his ability to change his employer or his basic right to disagree with those who govern him.

§ Mr. Roger Stott (Westhoughton)

I did not interrupt the hon. Member for Bury St. Edmunds (Mr. Griffiths) because I am conscious of the time, but I hope to take him up on some of the spurious arguments that he has just deployed.

I have sat in this Chamber all today and yesterday listening to Conservative Members deploying their arguments, and it seems to me that we have been witnessing something similar to a group of surgeons looking at a sick patient and each surgeon coming up with a different answer on how to make him well.

Those of us who have worked in industry all our lives and have had the good fortune recently to enter this House have for many years had our own ideas of why British industry is in its present decline. We have seen a growing 1161 malignancy in British industry, a malignancy which in some cases has become terminal. Industries as diverse as aerospace and washing machines have been floundering in a sea of incompetence, uncertainty and inefficiency.

Year after year we have witnessed industry, both big and small, coming to the Department of Industry to seek Government assistance of one kind or another. This has happened with industries such as Upper Clyde Shipbuilders, Rolls-Royce, Fisher-Bendix, Jensen Cars, Hawker Siddeley, Govan Shipbuilders, Ferranti, and latterly the British Leyland Motor Corporation.

In addition to the big ones, there are small companies which have received and are still receiving Government assistance, and the House ought to ask itself—and that is what it has been doing for the last two days—why British industry has got itself into such a position. Why have successive British Governments failed to achieve their industrial aims?

There are a number of reasons for that, and I shall attempt to deploy some of them. Industry has undoubtedly suffered from the rapid rate of inflation, coupled with various economic and fiscal policies pursued by successive Governments. In addition, there are many examples of poor and bad managements which are unable to perceive the complexities of a rapidly changing technological world. The demise of small companies has led to the growth of multinational corporations and companies whose wealth in some cases is greater than the wealth of individual nations and whose power is greater than that of some sovereign States. These companies operate on a unilateral basis without any regard for the consequences of their actions either at regional or local level.

British industry has also suffered from low productivity. This stems largely from the fact that we have had a bad period of industrial relations, brought about mainly by the catastrophic decision of the Conservative Party to bring in the Industrial Relations Act—an Act which brought a positive concerto of confrontation into the industrial scene. I am glad that that Act has finally been buried.

There is another and even more important reason—and it has been touched 1162 on during the last two days—why British industry is facing its present demise. This is the lack of investment in British manufacturing industry over the past 30, 20, 10 or five years. We have been positively gorged over the last two days with statistics and figures to show why British industry is doing so poorly, or so well, depending on how one interprets the statistics.

I asked the Library to let me have some statistics. If we take the percentage GDP invested in manufacturing industry, we learn that from 1968 to the present time we have invested 6 per cent., as against 8.2 per cent. in France, 9 per cent. in Germany, 6.2 per cent. in Italy, and 7.4 per cent. in the Netherlands. I assure the House that it gives me no pleasure to draw attention to our bottom of the league position in industrial investment.

Another example of industrial investment was poignantly brought to my notice the other week when, with some of my colleagues, I attended a meeting at Preston called by British Leyland Motor Corporation shop stewards, because some of us have constituency interests. We listened to what the shop stewards said, and at the end of the meeting they gave us a document which I find contains answers to some questions.

My right hon. Friend the Secretary of State for Industry said to the shop stewards, "You tell me what you think is wrong with British Leyland. You answer four questions which I shall ask you". The document says: The main reason for the sickness in the British Leyland Motor Corporation is the lack of monetary nourishment."— Those are their words, not mine. As as result our productivity has been low—because of failure in past management to invest in equipment to do the job in hand as effectively as possible in order to compete intelligently with our competitors. It is no accident or the quality of the BLMC worker that his counterpart in Fiat, or Volkswagen can lay claim to producing twice and three times more respectively than the British Leyland Motor Corporation worker, but for the simple and indeed tragic reason that Fiat along with VW have a far higher rate of investment. Fiat and VW in 1972 as an example, invested £142 millions and £278 millions respectively against a relatively small amount of £42 millions in the British Leyland Motor Corporation. So, by any reasonable yardstick that can be applied it is obvious that there has 1163 been a failure to invest in British industry. That is tantamount to failing to invest in the future of the British nation.

I do not claim to be an economist but I believe that there has been a failure to invest in industry because it has been more lucrative to invest in land, building, houses and many other projects. If industry is not capable of generating its own finance, it must presumably go to the market. I do not know whether the Stock Market is a true barometer of the nation, whether it is a good thermometer in the mouth of the ailing patient. However, judging from its performance last year, it was more beneficial to invest money in a lousy, derelict building in the middle of London called Centre Point than it was to invest in British Leyland. A fact like that certainly concentrates the minds of my constituents who work for BLMC.

There is therefore an overwhelming case for the creation of an organisation which is tuned and developed to be an imaginative instrument of State participation, and I believe that the NEB is such an organisation. I should like to see the Board operate in four or five ways. It must first improve the basic industrial system and create economic wealth. Secondly, it must promote a wider public interest and make the activities of the industrial system more acountable to the public. It must also pursue a policy of involving the workpeople themselves. These aims are vital if we are to achieve the objectives of the NEB, and therefore all the interested parties must be determined to secure greater efficiency, more sensible management and a reconstruction of attitude towards industry.

The question of the voluntary planning agreements is by far the most difficult. There are many obvious pitfalls. I am not sure whether any of us know the exact ramifications of embarking upon a policy like this. I am sure, however, that there is a need for closer co-operation between Government and industry if we are to get the best out of both. We have seen in the past the economic and fiscal policies of Governments moving in one direction while industry has been moving in another direction, neither side knowing what the other is doing.

If there is one single main deficiency in the operation of the British industrial 1164 system it is the inability by all parties—Government, companies and unions—to develop a useful, logical and sensible perspective. So the objectives of planning agreements should be to try to develop the capacity to formulate a strategy both in Government and in individual corporations and to promote a systematic perception and willingness in corporate management to see itself as contributing part of the whole social