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Volume 975: debated on Monday 10 December 1979

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National Enterprise Board


asked the Secretary of State for Industry whether any guidelines have been given to the newly constituted National Enterprise Board.

The existing guidelines will remain in force until the Industry Bill has been enacted. A draft of the revised guidelines reflecting the Bill's provisions and the new role of the NEB will be available to the House tomorrow.

Is the Secretary of State aware of deep concern in the North-East now that it is being said that Inmos is not to locate one of its manufacturing units in that region? Does not that warrant intervention by the National Enterprise Board, particularly as it is also said that a second allocation will be made to Bristol, which is not a special development area?

That decision is for the company and the National Enterprise Board to make.

Does my right hon. Friend agree that the general guidelines should be for Her Majesty's Government to encourage private enterprise where it is willing and able to do the job?

Will the Secretary of State confirm that the guidelines just mentioned will not preclude the possibility of the Northern region having a northern development agency, of the type pressed upon him by the northern group of Labour Members?

The guidelines will not preclude such a possibility, which will be considered on its merits.

Since, on Thursday, the Under-Secretary, the hon. Member for Basingstoke (Mr. Mitchell), told us in Committee that he would apologise if the guidelines were altered before they were published, and since at the same time the new board of the NEB proposes changes in those guidelines, what does the Secretary of State propose to do? Will he apologise or will he force the resignation of this board?

My hon. Friend offered to apologise if the guidelines were not available for presentation tomorrow and we adhere to the intention to publish the guidelines tomorrow. The National Enterprise Board has been consulted.

British Leyland


asked the Secretary of State for Industry whether he has yet received the British Leyland corporate plan.


asked the Secretary of State for Industry if he has yet received any request from British Leyland for additional public funds; and if he expects to do so.


asked the Secretary of State for Industry when he proposes to make a statement to the House regarding the further financial requirements of British Leyland.

I received the BL 1980 corporate plan on 5 December. The plan envisages public funding additional to that already provided to BL. I am considering the BL proposals and shall make a statement to the House as soon as possible.

Since it has been announced that imports represent 60 per cent. of the British car market, what considerations will guide my right hon. Friend in his deliberations on the corporate plan?

In the light of my right hon. Friend's answer to my previous question, will he agree, as regards British Leyland, to facilitate purchase by the private sector of any manufacturing capacity at plants that the State cannot, or will not, run profitably?

I understand that British Leyland is ready to consider any proposition to purchase that makes commercial sense.

Is the Secretary of State aware that last week the management of British Leyland removed its franchise from a Norwich garage that is under new ownership and with which I am associated? Is he aware that the garage wished to increase its throughput of British Leyland cars from 20 to 500 a year but that British Leyland management labelled that garage as "too aggressive"? If that is the attitude of British Leyland management, will the Secretary of State assure us that no further taxpayers' funds go to British Leyland?

I was not aware of that, but my hon. Friend's question is entirely for the board of British Leyland. I am sure that members of that board will read what my hon. Friend has said.

Does "the national interest" include the problem of the thousands of people in Coventry who are to be made redundant?

Can my right hon. Friend tell the House when other motor manufacturers, such as Vauxhall, can expect fair competition from Leyland without the distorting effects of taxpayers' subsidies?

That is another factor in the considerations which the Government have to give.

Following my right hon. Friend's answers to the questions put to him by my hon. Friend the Member for Christchurch and Lymington (Mr. Adley), may I ask him to facilitate the sale of MG to those who might want to buy it?

I repeat that that is for the management of BL to consider. I understand that it has already had a meeting with the potential purchasers to discuss possibilities.

National Enterprise Board


asked the Secretary of State for Industry if he will make a statement regarding progress in filling the remaining places on the National Enterprise Board.


asked the Secretary of State for Industry if he has yet appointed any trade union members to the National Enterprise Board.

Since his statement on 21 November, my right hon. Friend has appointed Mr. J. F. G. Emms of the Commercial Union Assurance Co. Ltd. to the board.

I regret that the TUC has felt unable to accept my right hon. Friend's invitation to suggest the names of senior trade unionists for consideration for appointment to the board; but the offer remains open and, I hope, will be taken up.

Will the Minister concede that his right hon. Friend's actions have contributed severely to disharmony in industrial relations throughout the country and that he ought to abolish his doctrinaire approach to this board?

There is no question of a doctrinaire approach to this board. We have regretted the resignation of the previous board on masse, and the House has debated it. We hope that the trade union movement will now see fit to put forward names so that the unions can take part in harmonious co-operation of the kind to which the hon. Gentleman refers.

Will the Minister consider appointing a member of the Irish Development Authority to the National Enterprise Board, since the former body is a thousand times more successful in attracting mobile manufacturing industry? On that score, will the hon. Gentleman also look at the incentives which are available from the Irish Government for the attraction of industry, with a view to upgrading the incentives which are currently proving a failure here in the United Kingdom?

I was not aware that the hon. Gentleman represented Irish interests. Obviously if there are lessons to be learnt, I hope that they will be drawn.

Does not the hon. Gentleman now regret his right hon. Friend's cavalier attitude to TUC nominees on the National Enterprise Board, and will it not be seen to be a grave error, when, in the future, this Government need the support of TUC members, and it is not likely to be forthcoming?

I do not think that there was any cavalier attitude in this. I know that the TUC feels that it has been treated shabbily. That is a matter for the opinion of its members. All that my right hon. Friend has done—and I have repeated it today—is say that the places on the board are open and that we hope very much that the TUC will take advantage of them shortly.

British Steel Corporation (Industry) Limited


asked the Secretary of State for Industry if he will issue a direction to the British Steel Corporation, pursuant to section 4(5)(a) of the Iron and Steel Act 1975, to wind up British Steel Corporation (Industry) Limited.

The answer is, of course, as I had expected. If an hon. Member wishes to ask questions about the nationalised industries, he has to indulge in subterfuge, which is regrettable. But may I say that I hope—

Order. Let me point out two matters to the hon. Gentleman. First, he must ask a question. Secondly, he must keep his comments until a more appropriate time.

I was just about to put my question to my hon. Friend. Bearing in mind the mess that British Steel has made of its own industry, will my hon. Friend have talks with the chairman to make sure that he does not try to rearrange the deckchairs of the "Titanic" by attempting to lure industry away from Birmingham to the rest of the country? Will my hon. Friend stop him from spending tens of thousands of pounds trying to persuade Birmingham industry to go elsewhere, when industry in terms of British Steel has failed? In the Midlands, we are tired of British Steel taking our industry to cover its own mistakes.

I am well aware of my hon. Friend's concern to make sure that Birmingham and the West Midlands get their fair share of investment. However, I know he takes a balanced view of these matters, and I am sure that he will appreciate that this is a problem which is related to plant closures and that there are now no fewer than eight sites where BSC plant or land has been available as part of the closure arrangements. Having set the financial parameters for the British Steel Corporation, we must leave it to resolve the problems in the way that seems best to it.

Will the Government at least facilitate British Steel hiving off those plants that it no longer wishes to run to the private sector—if the private sector wishes to run them properly—while we still have an industry left with people to employ?

I appreciate, of course, what my hon. Friend suggests. However, these are matters where at present it may be a case of the least said, soonest mended.

Since the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) is so highly conversant with the private enterprise sector of the steel industry of the West Midlands, can we be sure that one of his colleagues will be raising the question shortly of Round Oak, the private enterprise company in the West Midlands which is in serious trouble?

Does not my hon. Friend agree that British Steel can save jobs only if its fully competitive? Is not it being impeded in its efforts to become competitive by its inability to obtain cheaper supplies of coking coal? Will my hon. Friend assure the House that the British Steel Corporation will be able to import these supplies of cheaper coking coal?

My hon. Friend raises yet another argument which suggests that non-intervention is the best policy at present.

Bearing in mind the problems of the British steel industry, the possibility of a national strike on 2 January and the troubles that steel-making at Sheffield is having due to the dismissal of a shop steward, does not the hon. Gentleman agree that it is time that we debated in this House what is happening to the steel industry?

Recognising the present difficulties of the British Steel Corporation, when my hon. Friend refers to non-intervention in the case of coking coal will he accept that we have examples of intervention in other Common Market countries in support of their steel industries? Is it not therefore a great shame that the British Steel Corporation cannot receive similar energy supplies to assist the survival of the industry?

My hon. Friend may want to think this through in the wider context. He will probably be one of the first to agree that it is better to move away from a war of subsidy than to go too fast down that path.

Cannot the hon. Gentleman understand that when he talks about non-intervention to his hon. Friend the Member for Lincoln (Mr. Carlisle), he is encouraging the import of German coking coal, for example, with 29 times the subsidy given to such coal in this country? If he does not want to subsidise British coking coal, why do not he and his right hon. and hon. Friends ensure that subsidised coking coal is not allowed to come into the country?

This argument has been thrashed out many times. The right hon. Gentleman is aware that the subsidy argument cannot be related to only one aspect of this issue. It has to be moved on to a much wider basis, and in the view of the Government this is a matter for agreement within the Community.

National Enterprise Board


asked the Secretary of State for Industry when he will meet next the chairman of the National Enterprise Board.


asked the Secretary of State for Industry when he expects next to meet the board of the new National Enterprise Board.

I meet Sir Arthur Knight quite often, and I shall meet the full board soon.

Will the right hon. Gentleman remind the chairman of the NEB about the board's regional responsibilities? Does not he agree that the best way to show that it is living up to those responsibilities would to locate the Inmos factory in a special development area?

I do not think that there is any need to remind Sir Arthur or the new board of regional responsibilities. The decision on Inmos is for them.

Will the right hon. Gentleman tell the NEB, when he meets it, that in no circumstances will he ever come to the House to say that the board is thinking of resigning before ascertaining whether it intends to do so? Will the right hon. Gentleman now apologise to the House for what he said about Rolls-Royce during the debate that we had on that subject?

In view of the horrifying and growing massive de-industrialisation of the British economy, does the right hon. Gentleman agree that this is a time for abandoning entrenched attitudes on all sides and for him to discuss with the chairman of the National Enterprise Board a series of selective interventions to shore up parts of British industry that we cannot afford to lose?

The process to which the hon. and learned Gentleman refers has been intensified over the years. That was so during the lifetime of the Labour Government, when the policy that he recommends was carried out in vain.

Will the right hon. Gentleman comment on the press reports that the new chairman of the National Enterprise Board is apparently about to advise him that in the remaining few weeks of the financial year, and after the Industry Bill receives Royal Assent, it would be foolish in the extreme to flog off assets in five or six important British industries?

The hon. Gentleman made his point of view plain in the most recent sitting of the Industry Bill in Committee. I am sure that the chairman of the NEB will have read his remarks.

Small Businesses


asked the Secretary of State for Industry what action he is taking to reduce the impact of high interest rates on small businesses.

The Government recognise that the high interest rates add to the difficulties faced by businesses of all sizes. But we must pursue our policies to control monetary growth if inflation is to be squeezed out of the economy. That is the most effective action we can take to assist small firms.

Since Conservative Members believe that small businesses are the engine of future economic well-being, and as such businesses will be squeezed by the forthcoming world recession, and by their customers retaining cash because of high interest rates, will my hon. Friend be more positive? I am sure that many small businesses throughout the country will wish to hear a more realistic appraisal from the Government.

There is no greater destructor of small businesses than rampant inflation, the removal of which has to be our first priority.

Is it not true that high interest rates are smashing small businesses? Is it not also true that the attitude of the Government towards large public and private enterprises, such as British Leyland, for example, will take its toll on small businesses? Does the hon. Gentleman accept that when the Government attack large enterprises they are, in turn, attacking many small businesses which supply components and services?

The future of British Leyland depends upon the management and workers. We fully recognise the implications for the smaller business community.

Will my hon. Friend always treat advice from the hon. Member for Keighley (Mr. Cryer) with all the respect that it deserves? Is he aware that when the hon. Gentleman held the position my hon. Friend now occupies he was described as being about as suitable to look after small businesses as Jack the Ripper would have been to look after a nurses' home?

I shall not comment on that, save to say that the only piece of furniture that I inherited from the hon. Gentleman was a picture of a twisted railway line ending in a brick wall. I draw my own conclusions.

Does the hon. Gentleman agree that unless the Government reduce interest rates quickly the only growth industry in Great Britain will be bankruptcy?

I am aware that the efforts of the Labour Government led to the highest rate of bankruptcy that has ever occurred in Britain's history. We recognise that the consequences of dealing with the problems of inflation, which we inherited, will be difficult for small businesses. We have taken that on board. Unless we squeeze inflation out of the economy we shall do immense damage to all businesses, large and small.

British Leyland


asked the Secretary of State for Industry when he intends next to meet the senior management of British Leyland.

I see members of BL's senior management as and when the need arises.

When my right hon. Friend meets the senior management of British Leyland will he make it clear that it has no obligation to purchase high-price steel from the British Steel Corporation, and that it may be in its best interests, in view of recent developments, to enter into long-term supply contracts with Continental suppliers?

Has the right hon. Gentleman seen the figures published today showing the increased import penetration of foreign cars into Britain? Does he now realise that if British Leyland is to compete with foreign manufacturers it is necessary for it to have a large injection of capital so that it may produce the new models which will sell in Britain and on the export markets?

I have explained that that BL plan is now before me. I shall report to the House the Government's decision as soon as possible.

Will my right hon. Friend bear in mind that the car industry's output has decreased from nearly 2 million cars 10 years ago to barely 1 million this year? Will he also bear in mind that that is affecting both the private and public sectors in the steel industry because of a lack of orders from the domestic car industry? What chance does my right hon. Friend see of bringing more work to our steel industry?

Yes, Sir, I realise that. Many firms and industries are interdependent.

British Steel Corporation


asked the Secretary of State for Industry when he expects to meet the board of the British Steel Corporation.

I have no plans at present to do so, but I meet the chairman and board members when necessary.

Will my right hon. Friend, as a matter of urgency, write to the board of the British Steel Corporation and commend the work that has been done by the staff side, trade unions and management at the Round Oak steelworks in my constituency? Will he also commend the manner in which 800 jobs are being shed to maintain steel-working on the site, where it has taken place for the past 200 years?

I am sure that all concerned will read the comments of my hon. Friend with gratification.

When the right hon. Gentleman next speaks to the chairman of the British Steel Corporation will he refer him to the letter sent to him by the hon. Member for Both well asking that the Clydale works at Mossend get the multi-pass mill? Will he bear in mind that if the works does not get the mill it will mean the demise of Clydale within the next six years, which in turn will mean another 2,000 jobs lost in the steel industry?

I am sure that the chairman and the management of the British Steel Corporation take all such matters seriously into account.

Will my right hon. Friend seek an early meeting with the chairman of British Steel to ask him how much progress the corporation is making in cutting some of its bureaucratic, top-heavy management, and to ask whether it will seriously consider off-loading to the private sector some of the plants that it cannot run profitably?

I regret that I have so often to say to hon. Members on both sides of the House that a proposition is for the management of British Steel. Once again, I have to tell my hon. Friend that if British Steel is not already well aware of the argument that he is advancing, I am sure that it will be made so by his remarks today.

Has the right hon. Gentleman heard from the board of the British Steel Corporation of the widespread resentment in the industry over the ruthless and ferocious way in which he is applying his financial policies?

The hon. Gentleman and the House must recognise that the market for steel has been much reduced, and that within that market competitiveness is the only way to preserve jobs and to be viable. The board of the corporation recognises that it is facing a falling market, and it is seeking to be competitive.

I accept my right hon. Friend's desire to ensure that the target that he set the British Steel Corporation earlier this year is met, but does he recognise that, following the publication last week of the half-yearly figures, it is clear that the corporation will not be able to meet the target within the time set? Does he accept that if we are to have a viable steel industry in future there will have to be more time for the corporation to meet his directive?

The Government are already planning to provide the corporation with no less than £450 million of the taxpayers' money for the next financial year. We adhere to the proposition that we shall not fund losses during the next financial year. The corporation has confirmed its intention to break even next year. It finds it essential to do so because the market has fallen so sharply.

Will the right hon. Gentleman say whether he proposes to allow BSC to default on the payment of wages and other bills after the end of March?

Some months ago I told the British Steel Corporation board that I did not expect it to get into a position in which it ran out of funds next year. It has had ample warning of the need so to arrange its affairs that the contingency foreseen by the hon. Gentleman does not occur.

Does my right hon. Friend remember the remark attributed to the previous chairman of the BSC, Sir Monty Finniston, that he could make all the steel needed in Britain, competitively, but with a work force of 50,000 men? Are not many of the troubles of the present chairman due to the insistence of the previous Labour Government in keeping overmanned marginal steelworks going because they were located in Labour constituencies?

I think that misplaced—be it kindness, or timidity—has, by preventing adjustment when the market was better, succeeded in forcing upon the British steel industry far sharper cuts than might have been necessary.

Does not the right hon. Gentleman realise that, if he were right in that, it would apply to the private sector of the steel industry, which is in just as much trouble as the public sector, if not worse? But is not the real reason the fact that competition from other countries, particularly in Europe, is coming in on a subsidised and unfair basis? In the light of that, how can he possibly expect viability by March 1980?

I do not think that the right hon. Gentleman's main proposition is true.



asked the Secretary of State for Industry if he will introduce incentives for British industry to adopt robots.

It is important that British firms should consider urgently what benefits robotics may offer them and take an early interest where these are likely to be crucial, even in the longer term. Support of novel applications is possible through existing arrangements, for example the microprocessor applications project.

As that sounds a bit like misplaced timidity, if I may say so, may I ask whether the Minister is aware that we have had the need in this area for the past 15 years but that, as usual, those who want to develop robots have been deprived of resources? Is he further aware that our main competitor in this area—Germany—is investing greatly? What does he intend to do about it?

As I said to the hon. Lady, it is possible to support novel applications through existing arrangements, for example the microprocessor applications project. We shall, of course, help support and develop robotics in the United Kingdom where such support is essential and can be found within existing provisions.

Is my hon. Friend aware that of far greater potential benefit to the United Kingdom economy than the manufacture of silicon chips is the application of these devices to British industry? Is he satisfied in this connection that those British firms which are tailor-making equipment to provide for the automation of British industry, are showing the necessary ingenuity and flexibility?

My hon. Friend is absolutely right to draw attention to the benefits which come from the application rather than from the original main invention. We should like to see—and seek to create—an environment in which we encourage British industry to take more advantage of new processes of this kind.

Will the Minister always keep his eyes to the future and to modernisation? Will he also bear in mind such schemes as that which has been brought into operation by Mr. Len Ferns, I think, in the North-West, who has decided to pay the income tax of his employees and has therefore cut out the squabbles and enmity that is created by employees having to pay income tax on their wages? Will he look into that scheme and see whether he can enlarge it?

I am grateful to the hon. Gentleman for drawing attention to that particular scheme. I visited the factory and saw for myself the dynamic effects it has had on the pace of the work of those employed there. There may well be wider applications, but the lesson from it, surely, is that lower tax is a major incentive and that we should not fail to take note of that.

European Community (Regional Development Fund)


asked the Secretary of State for Industry what is the total value of grants made towards projects in England by the European regional development fund since 1975.

The sum of £146 million. This includes £58·5 million in respect of industrial projects and £87·5 million in respect of infrastructure projects.

Does my hon. Friend agree that these are beneficial to the United Kingdom and provide further evidence of the advantages that accrue to us through our membership of the Common Market? What steps are the Government taking at the Council of Ministers to develop the European regional development fund, as this would be greatly to the advantage of the United Kingdom?

My hon. Friend is right to draw attention to the benefits to the United Kingdom arising from this fund. The regional fund is one of the few parts of the Community budget to give us a modest net benefit and is one that is guaranteed because of fixed national quotas. As to further opportunities that may come in the future, in view of the current state of flux I hope my hon. Friend agrees that that is another question.

Is not it true that if the regional fund is made larger we shall simply have a larger proportion to pay? Will the hon. Gentleman look at the whole machinery, which at the moment is simply being used for some parts of the infrastructure and not for industry at all?

It is perfectly true that, within the totality of the Common Market budget, there seems to be a lack of balance at present. We shall continue to pursue the United Kingdom interest in that connection.

Will my hon. Friend consider moving away from the discredited doctrine of additionality in the distribution of these funds, particularly now that the areas in which they might be helpful are being reduced by Government policy?

Is not it a fact that the Minister can no longer take refuge in euphemisms about lack of balance? Are not we paying £1,000 million more than anybody else, although we are far behind in our gross national product? Is it not time that the Prime Minister fought it out and told the Europeans bluntly that if we do not get the money back we shall come out of the Common Market?

I am sorry that the hon. Gentleman was not in the House when the Prime Minister reported that she had been doing just that.

British Steel Corporation


asked the Secretary of State for Industry what account of official or national support given to the steel industries in other countries he takes in his own consideration of the position of the British Steel Corporation.

In setting the corporation the target of operating at a profit in 1980–81 my right hon. Friend had very much in mind the efforts being made by steel industries in other countries also to operate profitably.

Is the Minister aware that British Steel Corporation's losses per ton are dissimilar and that, indeed, the position may be better than in other countries where the steel industries enjoy sustained support from their Governments, who are busily engaged in exporting their unemployment to this country? Will he not, in the national interest, ensure that his right hon. Friend curbs his excessive concern to slaughter British Steel Corporation's capacity, which is required and should be sustained for the longer term?

First, comparisons are very difficult to make. However, if the hon. Gentleman considers them, he will see that British Steel, in terms of losses per ton, is very much at the bottom of the European table. Nowhere, as far as I am aware, will he find any European Government or taxpayers who have put £3 billion into their industry over the past four years, as we have. Second, if he looks at the comparisons, he will see that, for the greater part, either the European steel industries are operating profitably, or are showing a break-even, or are expecting profits in the near future.

Will my hon. Friend discuss with Sir Charles Villiers his statistics released in the press last week showing that United States and European engineering and steel production increased over the past five years and that there was a dramatic decrease in Britain? Does he not agree that this trend in Britain must now be reversed after a disastrous five years?

One of the problems in the European situation, as my hon. Friend probably knows better than I do, has been the increase in capacity in some countries. The result today is, I believe, that the European steel industry as a whole operates at about 70 per cent. of capacity. That is one of our problems. The chairman of BSC made some thorough assessments. It is his view that the United Kingdom industry must bring capacity down in line with demand, which will mean a reduction of the order of 5 million tons per annum.

Will the Minister acknowledge that the steel industry is not working in a textbook world of perfect competition? The Secretary of State should know what a Utopian world of perfect competition is. Is he aware that, by insisting on rigid cash limits, he will cause catastrophic losses in many regions at a time when, by his industrial policy, he is removing the very weapons that can provide jobs?

The hon. Gentleman must realise that the reasons for the plans that the British Steel Corporation has announced in outline and is discussing with the unions are lack of demand and a weak market. Those matters are not directly related to the cash position.

Does my hon. Friend agree that there is a great paradox on this issue displayed in the attitude of the right hon. Member for Deptford (Mr. Silkin), in that while he is tremendously opposed to the Common Market, the greatest support for European industry in the past two years has come from an EEC initiative—the Davignon plan?

Indeed. The purpose of Ministers is to try to ensure the continuation of the Davignon proposals into next year.

Does the Minister agree that the successive destruction of Scunthorpe, Llanwern and Port Talbot will destroy capacity in this country which can be replaced in future only by imports, which will do even more ferocious damage to the balance of payments than the Government have done so far?

Without commenting on the particular plants, I can only repeat that the assessment of BSC management is that there is no market for the steel. Unlike the Labour Party, I think that the British Steel Corporation tries to live in the land of reality. Because the market is weak, it sees the need to bring down capacity to meet it.

Did my hon. Friend gather from the recent debate on the steel industry that the salient feature was that sales equal production which equals employment? In view of the thousands of jobs lost in my constituency, can we convey to people how important sales are?

Sales will come about only through the British Steel Corporation being competitive, getting its manning in line with European manning and getting its product up to the quality of its competitors. Then it will sell steel.

Does the Minister of State deny that European steel producers are receiving larger subsidies than the British Steel Corporation—perhaps hidden in the coking coal subsidy? Does he also deny that the British Steel Corporation's losses per ton are smaller than many European steel producers? Will he confirm that we are likely to see the closure of steel-making capacity in this country which is more modern and efficient than that which is likely to remain open in the rest of Europe?

Certainly. I think that I have already acknowledged that some European companies and industries are subsidised. I am not aware that, over recent years and at present, they are subsidised to the extent of BSC. If the hon. Gentleman will table a question I shall be happy to send him the loss figures of European companies. I have the list here. British Steel Corporation's loss in the last year is higher than that of any other company in this list.

Industrial Investment


asked the Secretary of State for Industry whether he is satisfied with the current level of industrial investment; and if he will make a statement.

No. But the way in which many firms use existing investment is equally disappointing.

Is the Minister aware that Scottish industry will be starved of investment because of the Government's decisions to cut the budget and powers of the Scottish Development Agency and to withdraw development area status from many places where unemployment is still too high? Does he realise that we need more, not less, public investment, especially since the ending of exchange controls will shift more private investment out of the country?

Questions concerning the budget for the Scottish Development Agency are matters for my right hon. Friend the Secretary of State for Scotland.

Does my hon. Friend accept that, with minimum lending rate at 17 per cent. and, therefore, industrial borrowing 3 or 4 per cent. higher, there is an even greater need—if we are to get on top of inflation so that interest rates can come down—for the trade union movement to back Government policy in cutting public expenditure and not oppose it?

My hon. Friend is right. The low level of productivity and the consequent low level of sales in this country are caused by a number of circumstances, not least lack of incentives, inadequate management and restrictive practices, all of which have played their part.

Will Conservative Members, who seem to have a balance-sheet mentality in relation to industry, accept that their policies have been entirely loss-making? In those circumstances, will the Minister give an assessment of how long this loss-making white elephant of a Government will continue?

The Government's first target of cutting inflation at its sources will be followed by a second one of helping the creation of many thousands more businesses, which will create sufficient wealth that, by the time of and after the next election, we shall have another Conservative Government?

Rolls-Royce Ltd


asked the Secretary of State for Industry whether he has had a meeting with the board of Rolls-Royce Ltd. following his statement announcing the members of the National Enterprise Board.

Has not the Secretary of State's row with the National Enterprise Board distracted attention from the real financial problems facing Rolls-Royce? Will he give some kind of assurance that he will treat this major company in a high technology area with some sympathy and support and not with the ruthless abandon that seems to have been exhibited towards certain other major publicly owned companies?

I am sure that the present and future management of Rolls-Royce will make as great a success as can conceivably be made of the triumphant increase in orders that the management and work force have achieved.

Does my right hon. Friend agree that orders alone are not enough, if they are not profitable? Will he assure the House that his Department's financial objectives for Rolls-Royce will be no less stringent than those of the NEB—namely, the achievement of at least a 10 per cent. return on assets by 1981?

Is the right hon. Gentleman aware that when Rolls-Royce was under the auspices of the NEB, as part of the NEB's guidelines, Rolls-Royce had a duty to promote industrial democracy—despite the political lock-out that it organised during the engineering industry dispute? Now that the right hon. Gentleman presumes to run, or to handle, Rolls-Royce directly from his Department, what kind of guidelines or advice on industrial relations will he give to the chairman of Rolls-Royce?

We have expressed our general desire that industrial relations shall be as good as possible. We do not think that edicts from the Government or fiats under the law will improve industrial relations. We note that the legal requirement on the NEB to impose industrial democracy was totally ineffective under the previous Labour Government.

Post Office (Industrial Democracy)


asked the Secretary of State for Industry whether he will make a statement on the continuation of the Post Office industry democracy experiment.

The views of all interested parties are at present being considered. My right hon. Friend expects to make a statement shortly.

Is the hon. Gentleman aware that there is a great deal of suspicion that his Department is about to terminate this experiment? Is he also aware that there is a great deal of concern, because many in the trade union movement feel that it has been a valuable experiment? Will he give an undertaking that he will assure trade union members who have been appointed to the Post Office Board that they have done valuable work and that, because of that work, this experiment will be continued?

First of all, I can assure the hon. Gentleman that I am well aware of the views on this subject, because I have consulted widely, I have spoken to the Post Office management, the trade union members on the board, other trade unionists, and others who are interested. I remind the hon. Gentleman that this arrangement was set up by agreement between the two parties concerned for an experimental period of two years. If there is no agreement between the two parties about its continuation, the experiment lapses.

In view of the Secretary of State's most recent announcement that he does not believe that fiats from Government do anything to help industrial relations, will the Minister of State advise the House whether his right hon. Friend intends to vote against the Employment Bill due to be introduced next Monday?

I do not think that that is relevant to this question. The hon. Gentleman is disagreeing with his hon. Friend the Member for Nuneaton (Mr. Huckfield), who appears to be asking for intervention by the Minister concerned—myself or my right hon. Friend—over the continuation of this agreement. We are saying that this is a matter between the parties concerned. It is much better that experiments such as this continue by agreement and not by diktat.