HL Deb 30 June 1975 vol 362 cc15-48

3.3 p.m.


My Lords, I beg to move that this Bill be read a second time. May I first remind the House of the events which led to this Bill, before I describe its purpose. British Leyland approached the Government early in December for support for the company's longer-term investment programme. At that time the motor vehicle industry, not just British Leyland, had been beset by especial difficulties. Higher oil fuel costs, the increased cost of materials, economic uncertainties and inflation had all contributed to an unprecedented decline in major car markets throughout the world. Nearly all major car manufacturers had resorted to redundancies, short-time working or lay-offs. The inevitable result was a sharp decline in sales, revenue and profits—and an increasingly fierce competitive environment.

In December last year, Her Majesty's Government responded to British Leyland's request by deciding to appoint a high-level team, led by Sir Don Ryder the Government's Chief Industrial Adviser, to advise on British Leyland's situation and prospects. The team of inquiry worked intensively for a period of three months. The team supplemented their own considerable expertise by calling upon professional support services. Members of the team had meetings with members of the board and senior executives of British Leyland and visited nearly all the Corporation's plants. They also met with trade union representatives, including representatives of British Leyland shop stewards. The team's report was submitted to the Government on 26th March.

Following consideration of that report and its recommendations, my right honourable friend the Prime Minister made a Statement in another place on 24th April outlining the Government's decisions. My right honourable friend explained that the Government accepted the report's proposals as a basis for future policy. The report recommended that the vehicle production industry ought to remain an essential part of the United Kingdom's economic base and that British Leyland should, therefore, remain a major vehicle producer. Urgent action was required to enable the company to compete effectively in world markets, and in particular the inquiry team identified an urgent need for a large capital investment programme. They concluded that most of the money needed could be provided only by the Government, and they argued that there was an overwhelming case for this to be done. The Government accepted these arguments in the light of the significance of the company to the national economy. British Leyland is one of our biggest exporters. The company employs nearly 170,000 people and it provides employment elsewhere for several hundred thousand more. The balance-of-payments implications are enormous and, apart from lost exports, the failure of the company would undoubtedly mean massive additional imports.

My Lords, there have been a number of developments since that Statement was made. The company has co-operated with the Government by implementing the report's proposals for internal reorganisation. Many new appointments have been made within the company, including the important posts of managing director of each of what the report describes as four new businesses: in other words, separate profit centres for each of the four main operations: cars, trucks and buses, international and special products. Progress has also been made in other areas. In particular, the preparatory work has been done to secure the necessary approvals for a Scheme of Arrangement with the object of reconstructing the finances of the company. Sir Don Ryder's team recommended this Scheme of Arrangement as the best way of proceeding, and I will describe the Government's role in this in a moment. A document setting out the scheme has been sent by the Board of British Leyland to all the company's shareholders and convertible stockholders. This document contains the unanimous and strong advice of the British Leyland Board to shareholders that they should vote in favour of the scheme. Shareholders will meet on 14th July and if, as I expect, they give their approval to the scheme it will be necessary to secure the sanction of the Court afterwards.

The Bill before us provides authority for the Government to make an offer to existing shareholders in the company and subsequently to participate in a rights issue. This is an essential part of the implementation of the recommendations contained in Sir Don Ryder's report. The report, as I have already said, recommends that large amounts of money from external sources will be needed over the coming years and that a large proportion of this should be made available from public sources. Between now and September 1978 it is envisaged that the company will require a total of £900 million, a figure which incorporates the team's own assumptions about the rate of inflation over that period. Two hundred million pounds of this is expected to be provided by overdraft facilities. A further £200 million is to be provided by enlarging substantially the equity base of the company. This portion will constitute the first stage of new finance and it is this part with which the Bill before us today is concerned. It is intended that the remaining £500 million will be provided by way of long-term loan capital, and I shall say a little more about this later.

In view of the size of the new equity capital of £200 million which the team of inquiry thought necessary, the team also recommended that present shareholders should be given an opportunity to sell their shares. They recommended that the Government should offer 10p per existing share, which the team considered a fair price. Although the British Leyland Board made an effort to get the Government to increase this price, the Board have now recommended shareholders to accept the Government's offer of 10p per share. The Board have also said that on the basis of an examination by the company's auditors, they do not believe that shareholders could expect with confidence to receive any payment in respect of their shares in the event of liquidation. The Bill before us therefore provides for the Government to spend up to £65 million on acquiring those shares owned by existing shareholders and those to which convertible unsecured loan stockholders would be entitled if they exercised their right to convert.

Under the proposed Scheme of Arrangement a new company, British Leyland Limited, will be formed with an authorised capital sufficient to permit an offer for the existing share capital of BLMC and a subsequent rights issue. When the capital has been reconstructed it is proposed that the £200 million of new capital should be raised by way of a rights issue of new ordinary shares of a nominal value of 50p each at £1 per share. The Government will underwrite the issue to shareholders who have not taken up the offer for their shares and will themselves take up the remainder of the issue to a limit of £200 million. The Government expect as a result to become the holder of a majority of the shares in the new company, but clearly the extent to which the £265 million will be expended will depend upon the extent to which shareholders and convertible loan stockholders, if entitled, accept the offer for their shares and do not take up the rights issue offered to them.

My Lords, there have been suggestions that in all this the Government should have proceeded at a more leisurely pace, but I am afraid that these situations do not normally allow the luxury of lengthy discussion. This company has to survive in a highly competitive environment and the timing of Government action is subject to these disciplines. The harsh fact is that it will be a very considerable challenge to put this company on a sound and profitable basis and that each day of delay will make the task harder.

However, although the situation is urgent, the inquiry team accepted the need for safeguards when such large sums of public money are concerned. It is intended, therefore, that arrangements for scrutiny will be worked out between the National Enterprise Board, once this new body has been set up, and the company. There will also be close contact with the Department of Industry through the new system of planning agreements. Sir Don Ryder's report drew attention to the importance of improved industrial relations in the future and the need to make more productive use of both existing and additional capital investment.

The implications of that are paramount. Progress of the capital expenditure programme and the injection of new finance by the Government will be staged and each stage will depend on a tangible contribution by the management and work force to the improvement of industrial relations and productivity. The Prime Minister has made it clear that this is a condition to which the Government attach supreme importance. Following the initial provision of £200 million of new equity there will be annual review points during the period 1976 to 1978. That portion of the £500 million of loan capital to which I referred earlier will be made available in three stages. The release of each tranche will be conditional on satisfactory progress having been made.

My Lords, in this connection I should draw the attention of noble Lords to the report's emphasis on the fact that British Leyland's success will depend most of all on the skills, efforts and attitudes of its employees. Unless those skills are fully and constructively applied, then all else is lost. The inquiry team identified in this industry the same factor as is becoming evident elsewhere: that the alternative to constant confrontation was increasingly constructive collaboration. I have little need in this House to argue the merits of industrial democracy. All those—and there are many—who have industrial experience, realise that this is the path along which we must go. The speed of advance, the precise method of advance, are matters for discussion, but the principle is inescapable. The report proposes that a new structure of joint management/union committees should be set up to provide a forum in which representatives of British Leyland's workers can contribute effectively to improving the company's efficiency. Discussions on setting up these committees have already begun within the company.

The Government's intentions in this whole matter are clear. We acted swiftly to seek expert advice and have accepted the advice given. The remedy will make a heavy call on public expenditure, but we cannot will the end and deny the means. This Bill provides the means towards an end which I hope we can all share. My Lords, I beg to move.

Moved, That the Bill be now read 2a—(Lord Beswick.)

3.17 p.m.


My Lords, the House will be grateful to the noble Lord, Lord Beswick, for having explained this Bill in detail and for having given us further information, in particular about the various financial arrangements concerned with the shareholding and the reconstruction of the company. This is, of course, a Money Bill and therefore your Lordships have very little chance of doing much about it on this occasion other than debating some of the principles that underlie it.

For my part, I recognise straight away that, as the noble Lord has explained, there was a need for Government action. The noble Lord did not draw attention to the fact—although he might well have done—that we faced a situation of a not too different kind with the Rolls-Royce crisis, and clearly there was a need for the Government to take action in the case of British Leyland. There are those who would disagree with that view, and say that British Leyland should have been allowed to go to the wall. To me, that hardly seems to be a credible proposition. The noble Lord has himself told us that there are some 170,000 workers employed by British Leyland and that a considerable number of other workers are employed by other firms which supply goods and services to British Leyland. Moreover, there is no doubt that British Leyland makes a very large contribution to our export performance and, per contra, the import implications of allowing British Leyland to go out of business would have been extremely severe. Accepting that something has to be done, the question that remains to be asked is: what should be done? It is there that we have criticisms to make of the Government's action.

The report of the committee of Sir Don Ryder—or should we call him (I am not sure) the noble Lord, Lord Ryder?—has been accepted by the Government and is implemented in this Bill. It requires the expenditure over the years of an enormous sum of money. The noble Lord took us over the years up to 1978, but going as far ahead as 1982 the sum envisaged and the total expenditure required to finance the Government's plans for British Leyland at inflated prices is £2,800 million, half of it, according to the Ryder Report, to be found by profit generated by the company and half of it by the taxpayer—and this at a time when we should surely be seeking to reduce and not increase public expenditure.

This is indeed a huge sum of money; £1,400 million is double the £700 million that is available to the National Enterprise Board in toto, and it dwarfs the petty £100 million that the Welsh Development Agency has to put up with. It is an enormous commitment of public resources to this one company. Even this sum is arrived at only on certain assumptions. For example, the Ryder Report assumes that the rate of inflation for this year, 1975–76, will be 15 per cent., reducing to 12½ per cent. in 1976–77 and to 10 per cent. in 1979–80. Let us hope that this will come about, but the assumption of 15 per cent. for 1975–76 seems wildly improbable, when at the present moment inflation is going ahead at something over 30 per cent. If these assumptions are not true, then the figure for the investment of public money will be even greater.

The Government have swallowed the Ryder Report, hook, line and £2,800 million, and we are critical that there seems to have been no attempt to consider and to cost any alternative plans for British Leyland. Surely the committee under Sir Don Ryder's chairmanship should have produced some costed alternatives for the Government to consider, which would allow them to make a final choice in full possession of all the facts and all the courses that might be open to them. Obviously, every alternative has its drawbacks, but there is also no doubt that the present solution adopted by the Government has the very serious drawback of its vast expense. Without doubt there could have been no more expensive solution, and one wonders whether it would not have been right for other solutions to be carefully considered before committing this vast sum of money.

It also perpetuates a large conglomerate that has not so far been able to work properly as a single unified business. I believe that there was a feeling on the shop floor at British Leyland of increasing dangers ahead, and a new willingness to co-operate in policies that would have pulled the company together. But I am afraid that the result of the Ryder report and the Government's acceptance of it may well result in a feeling of relief and false confidence that will damage the future prospects for the company. The Government have come in with their bottomless purse and there is the feeling, "We're all right now, Jack. No need to worry about redundancy or overmanning. All will be right in the end." I believe that this very dangerous attitude of complacency may well overtake British Leyland as a result of this Bill. But we find it hard to judge, as we have no details of any possible alternative plans and what they would cost. I believe that the Ryder committee should have presented to the Government alternative plans, properly costed, to enable them to judge between the merits of those plans, so that in due course they could come to Parliament with clearly indicated alternatives and the reasons why they had adopted the one that they have.

Presumably, the Government are confident that the ultimate goal fixed by the Ryder Committee for British Leyland is attainable. Again, this is very difficult for us to judge because, for perfectly understandable and right reasons a number of vital chapters of the report containing information which is commercially delicate have been omitted. At the same time, it makes it very difficult for those of us who are trying to judge whether or not the commercial judgment exercised by the committee is right. Certainly, on their assumptions, the outlook for the future is very rosy compared to what has happened in the past. Profits are expected to increase from an average of 6½ per cent. in 1968–74 to almost double, 11 per cent., in 1981–82; the average rate of return on assets is expected to increase from 9.6 per cent. in 1968–74 to double, 19.6 per cent., in 1974–82; and British Leyland is expected to increase its sales within the European Economic Community by 62 per cent. by 1980. These are very ambitious goals, and all this at a time when car cales are falling, inflation is rising, competition within the European Community is intense and difficulties surround the future of the company. It certainly seems a very ambitious programme on which to invest £2,800 million.

There is another factor that could potentially wreck these plans; that is, the future of industrial relations within the company. The Ryder committee state blandly that there must be a reduction in manhours lost through industrial disputes and more realistic manning levels. I do not think anybody would disagree with those two statements. They suggest arrangements for greater involvement of the employees in the company's affairs. I agree with the noble Lord that we would certainly welcome this experiment in what he called "industrial democracy", although some of us have had our differences as to what it really means. Certainly, we would hope that this venture in the new form of industrial co-operation—what I think the noble Lord called "constructive collaboration"—will succeed. Nevertheless, the company has not had a happy past history of industrial relations, and it is not always the best recipe for negotiations over wage claims when it seems that the Government with their seemingly bottomless purse stand behind the company's management.

My Lords, the Ryder Committee suggested periodic reviews of the contribution by the work force to improving British Leyland's efficiency. This was mentioned also by the noble Lord who referred to the tangible contribution that the work force and the management should put into the company's future. I wonder how this will really work out. How can that contribution be assessed? What will be the criteria for assessing the contribution, and if it is considered inadequate what happens then? Do the Government refuse to put up further money, and will the company then start to fall back into difficulty again? If the forecast of the Ryder committee is correct and this capital is required for the future of the company, what is to happen if that capital is not forthcoming because a tangible contribution to industrial relations is not made by either the work force or the management?

I find it a difficult concept to understand, although one with which I am in very great sympathy, because unless a sense of realism is brought into the affairs of British Leyland—if the overmanning which exists at present is not reduced and if there is not greater cooperation between the workforce and the management—then however much money the Government put into the company they will merely be throwing good money after bad. For these reasons we are very far from happy at the Government's complete acceptance of the Ryder Committee's Report. It seems to us to be based on over-optimistic assumptions; it is enormously expensive and seemingly alternative proposals have not been properly considered.

3.31 p.m.

Baroness SEEAR

My Lords, we on these Benches are fully aware of the importance to the export trade of the car industry in general and of British Leyland in particular. We are also as aware as any section of your Lordships' House of the grievous consequences of unemployment which would have arisen if Government action had not been taken at this stage in order to assist this great company in its difficulties. I say this and I underline it because with full recognition of the nature and gravity of the problems we remain very critical indeed of the solution that the Government have arrived at.

The Government are relying in their policy—in their extremely costly policy—on the Ryder report, and what I have to say about that report I say with no wish to carp at what was no doubt a very gallant effort on the part of Sir Don Ryder and his collaborators to produce a report about a very complicated, very confused and very important issue. The fact remains that that inquiry was set up on the 18th December 1974, and the report was handed to the Government on the 24th March 1975. Any of us who in however humble a way have taken part in investigations of matters far less complex and far less important would doubt whether a competent job can really be done in 14 weeks, which includes Christmas and printing and handing it in to the Government. I doubt very much whether any professional consultant, whose career and reputation depend on it, would have contemplated doing a job of these dimensions and making recommendations involving expenditure on this scale in a period of less than 14 weeks. It can mean that only some aspects of the problems were adequately explored and some questions investigated in relative degrees of depth and detail.

As we all know, in an inquiry of this kind the results one gets depend on the questions one asks and the questions asked depend on the hypotheses with which one starts. This must underline some doubt about the validity of the Ryder report as a basis for so vast an expenditure of taxpayers' money; for vast it undoubtedly is. The noble Lord, Lord Aberdare, has already given the figures and I will not repeat them. But when we look at figures of these dimensions, even the Government's plainly optimistic hope as to what is to be financed out of profits—and it must be regarded as optimistic—and taking the most hopeful view of the forecast, the amount of taxpayers' money going into this venture is immense.

Let us look at it from the point of view of chapter one of the simplest book on economics. What other things could have been bought with that money, what other things could be done and what will not be done because this money is going into British Leyland? There are other industrial competitors, not in the motor industry but in other industries, who might well have given a better return on that money than the return that can be given on it by British Leyland. There are other causes—causes in the field of social welfare and education—that might have used the money to better effect than it will be used inside British Leyland. Even if we accept—as, of course, we do—that some money had to go, and go quickly, into British Leyland, was it necessary to commit so vast a sum so quickly? A capital base could have been secured and then a far more detailed and thorough investigation done into the real needs and prospects of the different elements that go to make up British Leyland and what they could produce. It is reasonable to suggest that certain parts of that business need to be supported, but that other parts might indeed have to be sacrificed; that a smaller and more efficient business with some contraction in some areas and expansion in the more profitable areas might have been a better and much cheaper alternative. But we do not see this kind of option discussed in any detail inside the Ryder Report, nor has the noble Lord, Lord Beswick, discussed alternatives of this kind with us today.

It was not an all or nothing challenge. It could have been the maintenance of British Leyland in part rather than in whole. This was argued with considerable force in another place and it is disappointing that no reference has been made to the possibility of maintaining sections of British Leyland rather than finding it necessary to support the whole, and in that way getting a far better return on a smaller amount of money and leaving some of that money for other equally deserving causes.

Indeed it is admitted that there is considerable overmanning in British Leyland. A better plan might have been to look in detail at the shortages which still exist for skilled men in other industries and other trades, and to put some of that money into a redeployment of the excess labour in British Leyland, moving them into skilled jobs through well-financed training, supporting their standard of living. In these jobs they will make a better contribution to the economy of the country and, indeed, in the long run a better contribution to their own well-being. But such options are nowhere discussed.

Then we have to ask what quid pro quo are we to get for the support for British Leyland in terms of improved productivity and in terms of improved industrial relations. We know that there have been shortcomings which, of course, are due to a variety of factors. I do not wish to go into them at the present time, but the figures are hair-raising and no one in your Lordships' House will deny that there is (to put it mildly) ample room for improvement. It is not unreasonable. It is a well established tradition in many parts of the private sector that there should be, in exchange for new advantages and new benefits, some kind of productivity agreement and that there will be definite improvements and changes.

The noble Lord, Lord Beswick, has said that certain tranches of the money that are to be paid into the industry are going to be dependent on improvements. As the noble Lord, Lord Aberdare, has already said, it is not only right but essential that we should know under what conditions those tranches are to be forthcoming, and that we should be given an undertaking that, if the conditions laid down are not met, additional money paid by the taxpayer does not go into British Leyland. Interested as your Lordships' House is surely allowed to be interested, even in a Money Bill, in what happens to taxpayers' money, this is the least that we can reasonably ask.

The noble Lord, Lord Beswick, said—and here again, noble Lords from all sides of the House would agree—that it is vital there should be greater collaboration between management and employee representatives in British Leyland as, indeed, throughout British industry. May we, for one moment, consider some of the implications of that improved collaboration. One of the great benefits of improved collaboration between employer and employed is that employee representatives, because they take a part in the making of decisions vital to the interests of the industry, sometimes for the first time, are faced with the real facts and the real problems that confront management day in, day out. I accept that it is a weakness of management that these facts and problems have not been sufficiently and adequately communicated to the labour force inside the place of work. Collaboration is not only beneficial because it gives the employee an opportunity to have a say in the running of the business but it also gives the employee the experience of facing responsible choices in very different situations.

But if there is the belief, at the end of the day, that whatever choices are made, the Government will bail out the company because Government money is always there, then this major benefit from collaboration is lost. Whenever a discussion is entered into, whenever awkward unpopular choices have to be faced by the employee representatives because these are the facts of the situation, if at the back of their minds there is the knowledge that come what may, however facile or short-sighted the decision they make, the Government will always help them out, this major benefit of collaboration is destroyed before the experiment even starts.

In this context, I implore the Government to remember that collaboration is collaboration between employee representatives and management, and increasingly it is between skilled and professional management. One must hope that the Government and their representatives inside British Leyland, in the reconstruction that they are making, are looking for the best calibre of professional management they can get. That professional management, when we have it, must be allowed to manage. In encouraging collaboration and industrial democracy—and we on these Benches are second to none in our support of this—we must make sure that we get good collaboration, with proper support for the role of professional management.

Too often when these matters are discussed, it is forgotten that the role of professional management is one of the most socially important roles in the country at the moment. Indeed, when one thinks about the contribution expected from a professional manager, and the contribution that professional managers, given their head, are able to make, one wonders very much at the role to be played by the Department of Industry and NEB in judging the competence of the performance of British Leyland or, indeed, any other enterprise. A weakness which worries many of us is that the people who are to do the judging, the people whose advice is to be relied on, are those far less skilled, far less well-trained, and far less professional than the people whom they are judging.

3.49 p.m.


My Lords, before I came to the Chamber this afternoon I was a little uncertain of the attitude that would be taken by the noble Lord, Lord Aberdare, with regard to this Bill. I gathered towards the conclusion of his remarks that he was far from happy. I think he was being a little modest. As I judge the position from listening to his speech, he was thoroughly unhappy, being outdone in this only by the noble Baroness, Lady Seear, who seemed to be thoroughly miserable.

My Lords, the Bill before us this afternoon presents the opportunity to this country, to its industrialists, management and workers, of making a constructive contribution to the re-establishment of what is almost universally agreed to be one of the most important industrial units of this country, employing some 170,000 people, with subsidiary employment in all the ancillary trades and other businesses dependent on it, possibly to the extent of another half a million people. So we are discussing something of importance. After all this time, I would think that the members of the Opposition and noble Lords on the Liberal Benches could have found it in their hearts to give an enthusiastic boost to what, in any event, will be the great task facing all those likely to be involved in it—but we have had nothing of the kind. It is quite clear that those who debated this matter from the Benches opposite had not examined the Ryder report in detail, because if they had, they would have realised the enormity of the defects that had accumulated in that company, particularly over the last eight years.

I have before me the annual report and accounts of British Leyland for the year 1974. I want to quote the first sentence only from the directors' report, which says: At the beginning of the financial year"— that was 1st October 1973— the Corporation was in the strongest position both financially and organisationally since its formation in 1968. The Ryder report proves conclusively and in detail—and I am willing to be challenged on any paragraph in it—that this was not so, and that far from being in "the strongest position both financially and organisationally since its formation", it was in a most disastrous position, organisationally and otherwise.

I turn first to the question of organisation. I wish to draw the attention of your Lordships to the old organisation as revealed in Chart No. 12.1 on page 52 of the Ryder report. I invite the detailed attention of your Lordships to this because it shows just how one important company in British industry was in fact organised at the time that Sir Don Ryder examined it. This is completely illustrative of the type of organisation in force over quite a wide segment of companies in this country, though happily, not in all. On examining the organisational chart, we find that the managing director, Mr. J. N. R. Barber, had no less than 14 executives responsible directly to him—I repeat, 14. In addition, he had responsibilities for what are technically termed "lateral consultations" with a further seven people; in other words, the managing director had to maintain contact with some 21 executives on a more or less continuous basis. Any second-year student at the Institute of Management would be able immediately to detect this incredible defect, because it is axiomatic within modern standards of management established over the last 25 years, that the maximum number of senior executives for which any director can accept direct responsibility is seven.

This is the form that has been reproduced in the new proposed reorganisation that Sir Don Ryder has suggested. If noble Lords will look at Charts 12.3, 12.4, 12.5, 12.6 and 12.7, they will find that like most sensible managers—and we should be greatly indebted to Sir Don Ryden—he has followed that rule of 7. This is chaotic management: 14 senior people responsible to one man, with seven for lateral consultation. It does not lie in any noble Lord's mouth, either on this side of the House or the other, to blame the unfortunate managing director, Mr. Barber, for this. I doubt whether he liked it very much. It was his board of directors who were responsible.

One thing that one notes on an examination of the Ryder report—and Sir Don Ryder has been very kind—is that the board of directors have not been mentioned anywhere; they are nowhere mentioned in the report. Noble Lords in this House are told many times, and the country is told, that British industry has some of the finest captains of industry in control; that these are the people with the enterprise, initiative, drive and enthusiasm that lie at the root of our industrial power. Sir Don Ryder does not mention them, for a very good reason—because it was they who were responsible in the final analysis for this organisational state of affairs. I have the list of them here.

I am not going to weary the House by identifying the directors of British Leyland, these captains of industry, except to say that there were 13 of them and that on average they drew per annum £26,000 each, which is a fair way, probably after rises, out of the Social Contract. Suffice it to say that the board contained individuals representative of some very strong institutions. There was a representative from the National Westminster Bank; there was a representative on the board from the Midland Bank; there was a representative from the Slater Walker Investment Trust and there was a representative from a firm of stockbrokers. A number of them, of course, were not full-time directors. At least one of them had 17 company directorships completely outside the British Leyland group, and another one had 17. The final responsibility for the organisational state of affairs was on these individuals. And yet when I listened to the noble Baroness, Lady Seear, I gathered that she had some concept of hiving-off certain parts of it, or devoting money to one part and not to another part. It should be clear to her, as it should be clear to your Lordships, that the organisational structure was thoroughly unsound from top to bottom.

When we come to the physical side of the operation, we find reference to the age of its plant. Paragraph 28 of the Ryder report says this: The most serious feature of BL's production facilities is, however, that a large proportion of the plant and machinery is old, outdated and inefficient. If one turns to page 20 of the report, one discovers the full extent of this. One finds that over two-thirds of its plant, in cost terms, was acquired prior to the year 1969; that almost a quarter of it dates back to 1957 and even far back beyond that. In other words, the plant and machinery of British Leyland has been allowed to run down.

This is not a new phenomenon in British industry. Indeed your Lordships will recall, if you will forgive me the indulgence, some remarks I had the honour of addressing to you on the same general subject approximately a week ago. This has happened in the whole of British industry. There has been this considerable underinvestment. When the noble Lord, Lord Aberdare, wrung his hands and said that at inflated prices he did not like to put his finger on a definite figure but we wanted another £2,000 million for fixed capital investment and another £750 million for working capital, he really at the same time posed to the House the same kind of problem that will come before it when we have the opportunity of discussing and debating the Industry Bill when it comes from another place. The fact of the matter is that the unit costs in British Leyland were too high precisely because the ratio of the labour costs to machinery used were also far too high. And this needed a surgical operation. It needed a massive injection of investment capital into plant and machinery. The Government are the only body at this time capable of making the massive injection required.

What else were the board of directors responsible for, this board that is not referred to by Sir Don Ryder? It ensured that out of the £74 million profits after tax made in the last seven years no less than £70 million was paid out in dividends, leaving only £4 million in retained profits out of which to make further investment in fixed plant and machinery. These are the people who are supposed to be capable of conducting the country's industry. These are the people whose virtues are daily extolled by the Press, in which they advertise; by the Press which is controlled in the main by the Party interest that sustains their cause.

Sir Don Ryder came to the conclusion, a very sensible conclusion, that the only way to deal with a situation of this kind was reorganisation, a very drastic reorganisation, and an injection of capital. The noble Baroness, Lady Seear, said that 14 weeks was a short time in which to produce a report of this kind, I agree. It indeed is a mammoth task to accomplish in such a very short time, and reflects very great credit upon Sir Don Ryder and those who assisted him. But I implore the noble Baroness to realise that the reason why it took such a short time was because the problem was so radically simple; there was nothing complicated about it at all. As I have said, a second year student at a British college of management could almost have produced a report of this kind on the basis of the published figures. It is precisely because the errors were so glaring and so precise that he was able to produce a report within this period of time. Noble Lords opposite, the noble Lord, Lord Aberdare, and the noble Baroness, Lady Seear, said: "Well, why do not the Government come out with alternatives? Why did not Sir Don Ryder himself suggest some alternatives?" The implication behind this is that there is a great variety of solutions to a problem of this kind.

I implore your Lordships to believe that there are no several and alternative solutions other than those imposed by the existence of the time scale and the availability of resources. The organisational task to be accomplished is quite clear and has to be done, in any event, in conformity with the known and accepted rules of management. The financial deficiency, in terms of the money required for investment in plant and machinery, is simple enough. It does not need a don from Oxford University or investment analysts from the City of London to determine what is required physically in the company. To that extent, I will agree with the noble Baroness and the noble Lord, Lord Aberdare.

The success of this enterprise, after there has been this capital investment and this restructuring, urgently requires the fullest collaboration on the part of all the operatives. The plea that should go out from this House is one for responsibility within the organisation as a whole; a real sense of responsibility among the 170,000 operatives within it. Even though society owes it to all of its citizens to see that they are protected from the consequences of adversity and sickness, every one of us also has his own responsibility to society, and the workers in British Leyland, at whatever level they operate, however low or high, also have this vital responsibility. I hope that your Lordships, by your decision this afternoon and during later stages of this Bill, will give your vote of confidence to all those working in British Leyland, at whatever level, for the future success of what we all hope will be a great and magnificent enterprise.

4.3 p.m.


My Lords, I am sorry that the noble Lord, Lord Bruce of Donington, has treated us to such a long historical survey of the events leading up to the rather disastrous position in which British Leyland found themselves 18 months ago. The noble Lord accused my noble friend Lord Aberdare of being miserable in his speech. It may be that my noble friend saw a rather hard and miserable path in front of British Leyland, the Government and everyone else concerned. But at least he did not make the mistake of looking so far back that he tripped over that which was in front of him. I am grateful to my noble friend for that. I can see no point in looking back. Indeed, casting one's mind across the automobile industries of the world—and the noble Lord, Lord Beswick, made mention of this fact—nearly every major manufacturer has, through a variety of circumstances, found itself in some kind of difficulty over these last few years.

It is a fact that, proportionate to its size, British Leyland's difficulties, if measured in terms of pounds and pence, are a good deal smaller than those of other major worldwide manufacturers. I do not think that whatever Ryder may have said in his report in condemnation of the management, the structure and organisation of British Leyland is tremendously material to the problem in front of that company. Nobody wanted to see British Leyland in the difficulties in which they found themselves; and nobody, least of all my noble friends on this side of the House, wanted to see British Leyland go to the wall. This would not be at all in the best interest of the nation. That the present Government found themselves in the position of having to receive the call for aid is, in some respects, fortuitous. It would be quite wrong, in my view, to put any political connotation on the method by which the present Government decided to give the aid. Quite necessary and immediate cash was due without any delay at all.

My Lords, the Ryder report, very shortly brought out, leaves many of us with areas of disquiet. Perhaps at this stage it might be proper for me to remind your Lordships of my interest in the industry—not in manufacturing but more in retailing. There are certainly those on the retail side of the industry who are perhaps not entirely happy about some aspects of this report. Nevertheless, Ryder attempts to set out part of a plan. That the Government have accepted the entire report is perhaps mistaken, but there is time to modify that report. I would regard it not as a blueprint for British Leyland, but as part of, and only part of, a very long-term plan in which they say that certain things could happen. I am sorry that the noble Lord, Lord Bruce of Donington, has left his seat, because I wanted to take up a point he made.


My Lords, he has whispered his excuse. The EEC Committee of which he is a member is meeting, and he makes his apologies for his absence so soon after his speech. I thought that the noble Lord would like to know that it was not discourtesy.


My Lords, I am quite sure the noble Lord, Lord Bruce of Donington, would not be discourteous. I hope that his noble friend Lord Davies of Leek will draw his attention to Hansard tomorrow. The noble Lord, Lord Bruce of Donington, said that Ryder suggested a rearrangement of the company. He said in comment to the noble Baroness. Lady Seear, something about the company divesting itself of certain of the profitable parts or divisions. I was going to accuse the noble Lord, Lord Bruce of Donington, of trying to keep the same old pudding which the Ryder report commends and trying to put it in different bowls hoping it will come out a different shape. That it will not do. One can appreciate any Government, looking at a complex organisation like British Leyland which is manufacturing so many different kinds of things, not wishing to be accused of hiving off particular aspects to this body and that body, to private enterprise or somebody else. I suppose that that would be almost political suicide in this context. Nevetheless, if British Leyland are to be the most forceful of the United Kingdom-based motor companies, some of their activities must go. They will have to recognise where their forte is and concentrate their energies, efforts, expertise and the money available to them in that direction.

I come from nearly 30 years in the retail motor industry. I feel that it is right to remind your Lordships that the retail industry has invested, man for man and pound for pound, just as much as have the manufacturers. Without a viable retail network—and I am not talking only about the United Kingdom but also about overseas retail dealers—and without the support of the dealers over the last eight years, British Leyland would not have got as far as it has. It has proved to be the biggest exporter of goods from this country and the biggest profit earner of those exported goods, so that condemning the company's achievements is not helpful.

When the noble Lord, Lord Beswick, speaks about the amounts of money which will be allowed to British Leyland against some measurement of performance over the years, let him please consider the retail industry throughout the world which is to put up the cash for the goods and to do so in advance—because dealers lay their cheques with order, they do not pay on the nail as is done in many other businesses. Will they be happy to do so when they know that, at some indeterminate time and for some undetermined reason Government support could be withdrawn and the company could cease to exist? I do not believe that the Ryder report or—though I speak with the greatest deference—the Minister have paid sufficient regard to the people who are handling the end product. Retail dealers throughout the world are quite happy to handle a good product which comes from a good manufacturer when they know that the supply source is stable.

I should not like Her Majesty's Government or my noble friends to be too much swayed by the recent talk about limiting the imports of foreign motor cars. That would not be helpful to our own domestically-based trade. I do not speak of anti-dumping but of the normal manufacturing retail competitive entry of other makes of motor car. The world wide network and our own network of retail dealing are based on certain marketing factors. If one were to deny the import of foreign cars even for a short time or for particular reasons, the balance of retail marketing in this country would be severely upset, and that could be only to the detriment of the United Kingdom-based manufacturers, including British Leyland. They need stability of labour relations, of raw material supplies, of dealer support and of sales of their goods in the United Kingdom and worldwide. Without that they cannot succeed at all.

My Lords, one may pour many millions of pounds into a business, but nothing will be achieved without effective management. From this side of the House, there has been mild criticism of the management of the company. Time alone will tell whether the existing management structure and its hopes of worker participation will do better. However, one American motor car manufacturer told me a short while ago that, given continuity of production he could produce all the cars he needed for his share of the world market and make a decent return on the capital employed by working eight months of the year. However, that meant working every hour, every day of every week of those eight months. Then the other four months could go hang.

Stopping and starting a production line, as I know to my cost from my experience of one 30 years ago, destroys efficiency and the reliability of the product. Also, in those days, it hit everybody's pocket, because profits were based on keeping the line moving. The Bill provides financial limits. It would, in my view, be quite wrong for us to criticise how far that should go at this time. One would like to see, over the course of the next 12 months, a far more wide-ranging review of the company's affairs and needs, so that, in the event of vast sums of money being needed, there would be a greater opportunity of discussing what is to be done.

More should come out than the Ryder report was allowed to bring out. We can appreciate the reasons but, in the industry, we have had to make intelligent guesses about the omissions. In relation to the point made by my noble friend Lord Aberdare, we could then decide how, when and for what purpose to spend the taxpayers' money and the matter could be more fully debated. At a time when everybody is required to pull back and when public spending is being criticised, it is quite wrong that the British public and those people who are working in the industry should think that the purse is bottomless just because the Government are footing the bill.

4.18 p.m.


My Lords, I shall be very brief, but I want to ask for one small guarantee and to have a statement of fact recorded in Hansard First, let me say that I fully support the speech made by my noble friend Lord Aberdare. However, the sum of money involved in the British Leyland project is enormous and I want to ask the noble Lord, Lord Beswick, whether, when he comes to reply, he will give a guarantee that, with this tremendous amount of money which is being spent, my part of the country and others which may be in need of help will also receive assistance and that not all the money will go to British Leyland to the exclusion of the real needs of industries in other parts of the country. I should like to have that guarantee because I think it is very necessary.

My noble friend Lord Lucas of Chilworth said, rightly, that there was no point in going back. I agree, but I want one point recorded in Hansard for this House because there is one particular matter which needs to be remembered. I doubt very much whether many noble Lords who are here today will remember the beginning of the last war. On that occasion, an assessment was made—and I do not criticise it—that my part of the world and much of the East Coast would be the first part of the country to be bombed by Germany, as we were nearer than British Leyland and other parts of the country which subsequently suffered enormously.

When that assessment was made it was laid down that my part of the world, and the East Coast in general, was to have no new industry of any kind—or indeed anything else—because of the fear that if, in connection with the war effort, new industries were set up in my area, they, and possibly new houses and hospitals, might be bombed. Therefore by the time the war ended all the new industries had been set up in other places: in the Midlands, in the Birmingham area, which had the whole of the motor car industry, as well as the radio and television industry. A little further North the man made fibres industry had been set up. Meanwhile, we on the East Coast were left with no new industries at all.

In Northumberland and Durham we had probably the oldest coalfields in the country. Many of them, as the House will be aware, are now closed down. So there we were, at the end of the war, in the position I have described. But nobody in my part of the world complained about this. They realised why the Government's decision on industry had been made; they accepted it, and they had been prepared to work with everybody else in the country until the war was won. But in my area for many years we experienced a very high level of unemployment. We received a great deal of help—but we needed that help.

It is not always easy to persuade new industries to move up to my area. The South still regards those of us in the North as barbarians; of that I am well aware. I want to put these points on the record, because although my noble friend Lord Lucas of Chilworth, said, "Let's forget the past", I am afraid that I cannot forget that part of it in which my area had such a struggle to build up new industries and new employment—


My Lords, I am sure that the noble Baroness will not mind my interrupting her for a moment, but I wish to point out that if she reads Hansard tomorrow she will see what I said. I said that I did not see the point in delving into the past in relation to the history of the management of British Leyland. My remarks about not delving into the past were not intended in terms of employment and social events in the North-East.


My Lords, I am very grateful that my noble friend has explained that point. I am always listening for what is to be done for my part of the world. I had not realised that my noble friend had been referring to the management of British Leyland when he said that there was no point in discussing the past. I want to put that right. I want this matter put on the record, so that all noble Lords, of all Parties, will know how hard we suffered as a result of the action that had to be taken during the war. I appreciate that other places, like Coventry, Portsmouth and Southampton, were subject to bombing. Thank goodness the assessment regarding my area did not, on the whole, prove to be right!

I say to the noble Lord, Lord Beswick, that I hope that if huge sums of money are to be invested in British Leyland, not all the money to support new industries will go to British Leyland, with the result that there is none left for us. I wished merely to put my point on the record, my Lords, and I assure your Lordships that I shall do all I can to help in the present very difficult situation in British Leyland.

4.25 p.m.


My Lords, I wish to detain your Lordships for only three or four minutes. The speeches made so far in this debate have been made from the Party Benches, and I wish to add a note of personal disquiet about the Bill now before us. Your Lordships have listened to a very downright and outspoken condemnation of British Leyland's past by the noble Lord, Lord Bruce of Donington. It is not my intention to attempt to contravert those observations. Indeed, I suspect that although there may have been over-simplifications and exaggerations in the noble Lord's strictures, many of his observations will be found to be justified. I find it difficult to believe that a company of this type could have got into such extreme difficulties had there not been gross deficiencies of management, as well as great deficiencies which have been hinted at in previous speeches.

I suspect, my Lords, that there may be something in the view which has from time to time been voiced previously, that British Leyland is, archetypally, one of those aggregations which should never have come into being on that scale. There is something to be said in favour of the view that some industries can be too large and that greater efficiency may be obtained by disaggregation. But that is not what I want to say. I think that disquiet about this Bill, quite apart from the disquiet about the past from which it springs, may reasonably be expressed on two counts. The first was mentioned by the noble Lord, Lord Aberdare, when he suggested that there is—I speak with hesitation in this matter—an appearance of undue precipitancy in rushing in at this moment with so ambitious a commitment.

It is surely arguable that while no reasonable person will question the need for emergency action in this respect to save the momentary situation, it might have been more prudent to have delayed these ambitious plans which involve the perpetuation of the same organisation—to pour the phrase used by the noble Lord, Lord Lucas of Chilworth, into a different mould—rather than pausing to consider whether some more drastic reorganisation and perhaps disaggregation may not have been in order.

My second reservation relates to the extent of the commitment. I must confess to your Lordships that to me any projection of prices and profitability reaching forward to the year 1981 is pure nonsense. I cannot believe that any expert could lay his hand on his heart and predict what prices and profitability will be in a year's time, let alone in another five years, when who knows what the effects will be of continuing inflation or whatever efforts are made to contain inflation. Any consideration of an aggregate figure of investment to be made over the next five years may be good shop window, but it certainly will not convince anybody who wishes to go into the matter in any detail.

I confess that I should have wished for more precise details concerning the nature of the reviews which are promised from time to time to ensure that the investment is worth while. Surely this at any rate is a matter on which we could have been more fully informed. It is pie in the sky to predict future prices and profitability, but it is surely a matter of, if not the science of management as was suggested by the noble Lord, Lord Bruce of Donington, at any rate the art of it to devise modes of review which will satisfy reasonable people, whatever the prices and profitability may be. The absence of further detail on that matter at this stage when your Lordships, with their limited powers, are asked to give qualified assent to this most ambitious project, is something which I must regret.

4.32 p.m.


My Lords I feel compelled to speak in this debate, because I spent 25 years helping to mould what has become a cornerstone of British Leyland. I wish that the noble Lord, Lord Bruce of Donington, had not kept referring to it as "a unit of industry" because British Leyland is not a unit; it is a fragmented complex and I believe that it wants far more drastic treatment than has been proposed in the Ryder report. I hope that before this report is implemented or accepted, it will be examined again because in my view it is far too optimistic, as the noble Lord, Lord Robbins, just said, in its premises and it is too lush in the amount of money that is projected.

As soon as the arrangements proposed by Lord Ryder were known in the Midlands, the bookings for overseas holidays by Midland workers escalated by leaps and bounds. It was not just a question of, "I'm all right Jack" but "Jane is all right too; we're going abroad and we'll have jobs for the rest of our lives." That is why I say that this very lush and expensive projection of money that will be poured into Longbridge, Preston and all the other places is a mistake and it should be cut back and modified.

I have another question to ask. Why perpetuate the name "Leyland" in such an important matter? Why make it the main brand name? Admittedly, for trucks, coaches, buses and so on it is fine, but there are several very good other brand names in the complex. One does not find General Motors in America calling themselves General Buicks or General Oldsmobiles. Let us emphasise the word "British" and forget the brand name "Leyland", a name which in many people's minds conjures up something heavy and bulky, although certainly well engineered. It is not the best way of projecting the automobiles from which the bulk of the business should come, so let us have another look at the Ryder report before it is wholly accepted. I have listened with great interest and admiration to the speeches of the noble Lord, Lord Aberdare, the noble Baroness, Lady Seear, and the noble Lord, Lord Bruce of Donington, although I wish he had not been quite so impassioned in the way he put his criticism of the past management.

4.35 p.m.


My Lords, having spent years of my life trying to promote exports of British motor cars, I should like to say something about the difficulties which have to be solved if we are not to pour money down the drain. Frankly, the servicing facilities for British cars abroad are still inadequate. The spare parts arrangements are not very good either and we have not been able to maintain a good reputation; and I am afraid this goes for British Leyland, too. If we pour all this money into British Leyland—and I suppose we are going to do it—we will lose it unless a lot of these outside faults are corrected. Some of the faults lie outside the country.

I once went all the way from Stockholm to see Mr. Harriman, and I told him that they were going to lose their Swedish market unless they improved their servicing facilities. I suggested the British motor car companies should get together and form a servicing and spare parts organisation common to the whole lot. I said that they could slit each other's necks on styling, price, delivery dates and the rest, but when it came to servicing and spare parts they should stand together and then they would have the Germans beaten. Mr. Harriman replied, "I can see you don't know much about the British motor industry. That is quite out of the question." I replied, "If it is out of the question, you will be hard pressed to keep your share of the motor car market abroad," and if it had not been for EFTA that is what would have happened.

One of the difficulties about selling British motor cars abroad on the scale which is necessary to make this enormous investment profitable is that they are not properly treated in British ports. I have Dutch friends who like buying British cars, but they complain that when our vehicles arrive they are short of wheels or tyres and sometimes the headlights or generators are taken, and while I know that these items are covered by insurance, the nuisance—


My Lords, may I interrupt the noble Lord to call his attention to the fact that this is a Money Bill which has a narrow application and has absolutely nothing to do with the treatment of cars at British ports?


Nevertheless, my Lords, we will lose this enormous sum of money unless we put this matter right. If we allow thieving to go on in our ports on the present scale, the money with which this Money Bill deals will be wasted.

It is obviously very desirable that the workers should be represented on management but the legislation which the present Government have forced your Lordships to pass is really of such a nature that nobody has any control over the work force any more. It is impossible for management to manage. Anybody can go on strike for just about anything. It is not a matter of whom one has as the liaison man in the boardroom or with management; he will not be able to control the workers because your Lordships have passed two Acts which make it possible for anybody to go on strike on any excuse, and in these circumstances it is impossible to run a large integrated modern industry which requires close cooperation.

I was very interested in what the noble Lord, Lord Lucas of Chilworth, said about the American motor car manufacturer who commented that if he could keep everything working constantly for eight months he could make the grade in any year. I am sure that the same applies to British Leyland, but they are so bewitched and bewildered by strikes which put various parts of the organisation out of kilter one after another, that they find it very hard to get on with the proper job of management. Having seen the situation abroad, I know that the disability of the British motor industry—and this applies not only to British Leyland—in regard to delivering their goods on time is a source of utter despair to their agents abroad. This has happened constantly over the years and it has steadily become worse. I have no doubt that if we do not correct this state of affairs in our factories in some way or other, we shall lose this enormous sum of money.

I am shocked at the way our affairs have been handled. The shares were each worth a number of pounds not so long ago. There have been restrictions on dividends and prices. The shares have gone down steadily in price, largely due to Government action. The Government are now going to buy them up at 10p a share. It is rather like a director gambling in the shares of his own company. It throws a sombre light on the way our affairs are now conducted. My Lords, we are obviously going to pass this Bill; we have to make this money available. I want the Government to make sure that it is not going down the drain. If the affairs of this industry and others continue to be treated in the way they have been treated in the past few years, we shall lose this and a great deal more besides.

4.41 p.m.


My Lords, I am grateful for the approach made by the noble Lord, Lord Aberdare, to this Bill, and although it is a Money Bill I am sure I will be expected to reply to some of the points which have been made. I was particularly glad that the noble Lord, Lord Aberdare, did not press the possibility of a solution on the lines of the Rolls-Royce situation. A receivership there was bad enough. In the case of British Leyland, with its consumer image to consider, it would have been absolutely fatal. The noble Lord appeared to be a little dismayed at the sums of money involved by the solution put forward by the Ryder report which the Government have accepted.

I sympathise with what was said by the noble Baroness, Lady Seear, the noble Lord, Lord Robbins, and others, when one considers how large the sums of money are. Nevertheless, we have to relate them to the task in front of us. It is the considered view that moneys of this order are required if the company is to have the equipment that is needed over a period of years. Perhaps the noble Lord, Lord Robbins, and others, view this large figure thinking it is to be spent this year and next, but of course it is not. It is to be spread over a number of years; moreover, it is to be raised in different ways: some from the cash-flow of the company and some from the Government. Maybe it is just possible that the pessimism of the noble Lord, Lord Robbins, as to this is not entirely justified. It has been suggested by a number of noble Lords, and by the noble Baroness, Lady Seear, that not enough attention has been given to the alternatives. The alternatives were set out fairly clearly in paragraph 12 of the report, and they were considered by the Ryder team. Obviously some of the possibilities had to be taken into account, but if one dismisses some of those possibilities on grounds of principle I do not think it would have been justified to go into long and detailed financial study of each of the alternatives which has been given to the solution which the Ryder report has put forward.

The noble Lord, Lord Lucas of Chilworth, said it would be possible to hive off certain activities—and he was tantalising when he suggested what he had in mind. Clearly there can be no question of hiving off divisions such as Jaguar. Hiving off Austin Motors scarcely justifies the term "hiving off". Maybe what the noble Lord was thinking about was the paragraph where Ryder says that once the new organisation is set up, once there are the four new profit centres, certain matters have to be looked at very carefully, indeed. The noble Lord, Lord Lucas of Chilworth, reminded us—and we do not need reminding—of the great experience he has had on the distribution side of this industry. The association with which he is connected gave evidence to the Ryder team. Much of that evidence has been treated as confidential, but it was considered.

There was a certain amount of criticism that the estimates of the Ryder team about the future market of the motor car industry were a little optimistic. The noble Lord, Lord Thomas, was talking about them as being lush, but I am not certain that it can be said that they are over-optimistic when, after all, it is suggested that by 1980 we may get back to the position reached in 1973. One can juggle with figures, and the noble Lord, Lord Aberdare, was skilful in this when he said they were anticipating a 62 per cent. increase of business in the EEC; but one can put that another way and say that what, in fact, is intended is to secure another 1 per cent. of the market in 10 years' time; that is to say 4 per cent. in 10 years' time as against 3 per cent. at the present time.


My Lords, may I interrupt the noble Lord for a moment? He alluded to my observations as pessimistic. If he substitutes the word "agnostic" he would be nearer the mark.


My Lords, I am prepared to accept many suggestions from the noble Lord, Lord Robbins, and I am happy to accept that one. One has to look at this with caution. At the present moment I do not think that there is any direction in which we can turn where we are justified in being ebullient. One has to be cautious. I put it to the noble Lord, Lord Robbins, and to the noble Baroness, Lady Seear, that if you come to the conclusion that you are not going to invest money in this type of project, then where are you going to invest your money? The noble Baroness made certain suggestions: that we can get a better return by putting it in the social services. But we are not going to be able to invest any money in the social services unless we have effective exporting companies in this country. Over and over again I hear criticisms made of money going into the aircraft industry and the motor car industry, and why should we not invest it anywhere else. These proposals can be put up and they can be shot down equally as easily as one can this imaginative investment proposition for motor car industry.

It was said by a number of noble Lords that we must not give the impression that, no matter what happens in this company in the future, they will be baled out. If that impression is given, it is a false one. None of us on either side of the House should help to further that impression. I do not accept what the noble Lord, Lord Thomas, said, that because a person is going to take a holiday this year this means he thinks he is going to be baled out come what may in the motor car industry. If he was in his place I would say to the noble Lord that that was an absurd proposal to put forward.

My Lords, let us look at this fairly and in the round. I have criticised some of the actions of the work force in this industry and elsewhere. The Ryder report states clearly that they do not subscribe to the view that all the ills of the company can be laid at the door of strike-prone and workshy labour force. They were handicaped with out of date plant and equipment and that is to be replaced. There was one additional interesting point made by the noble Lord, Lord Robbins, when he advocated quite precisely the propositions now put forward that, "small is probably beautiful" and that, "big is not necessarily better". I think there is a good deal in that. Nevertheless, when one looks at the competition this company has to face, I do not think they are going to be over-big in relation to their competitors. Moreover, one of the aspects of the reorganisation put forward by the Ryder team is that there should now be what they call these four new businesses or profit centres, allowing for a good deal of delegation and getting some of the benefits of disaggregation, which the noble Lord, Lord Robbins, suggested could be helpful.

I was asked for an assurance by the noble Baroness, Lady Ward, that not all the money available under various schemes under the Industry Act would go here instead of to her beloved North-East. I am glad to be able to give her that assurance. That will not be the situation at all, but I would tell the noble Baroness that there are companies in her North-East which depend upon a successful British motor car industry. Therefore, I hope that we shall be helping the North-East as well, even though the money may not be operating directly there. There was one other point which I think I should correct. The noble Lord, Lord Aberdare, mentioned that the Ryder Report had assumed a 15 per cent. inflation rate for this year. That is not quite true. What in fact they assumed was a rate of 22½ per cent. from September 1974 to September 1975, and a rate of 15 per cent. from September 1975 to September 1976.

I should like to end by agreeing again with the noble Lord, Lord Robbins, that in the present situation to look ahead for five or ten years and try to make precise calculations is a misuse of human effort. On the other hand, one has to make certain assumptions. One has to do something. To say that times are difficult and inflation formidable so that we cannot make estimates, and then just sit back, can be a formula for complete disaster. I think what is proposed here is constructive. The money will have to be spent carefully and those who operate equipment will have to recognise their responsibilities.

There will also need to be a careful monitoring of results. In this connection, I should like to say that I do not think it is as difficult as some people assumed to monitor each year how each company is doing. The noble Lord, Lord Robbins, knows better than to suggest it is impossible to do this. Of course, the annual report will go to the NEB, and the Prime Minister has indicated that those reports, together with any comments made by the NEB on them, will be made available to Parliament. I hope that that will answer the very reasonable request made by the noble Baroness, Lady Seear. With those explanations, my Lords, I hope that we can now give a Second Reading to this Bill.

On Question, Bill read 2a; Committee negatived.