Orders Of The Day

Supply

[19th ALLOTTED DAY]— considered

Ferranti Limited

4.30 pm

Mr. John Silkin  (Deptford)
I beg to move, That this House, recognising the signal achievements of the work force, technicians and management of Ferranti Limited since it was rescued from insolvency by the action of the Labour Government and the National enterprise Board, believes that any sale of the Board's holding in the company which threatens the well being of the company and the security and future employment prospects of its 17,000 employees would be contrary to the national interest. In the current edition of Ferranti News, Mr. Alun-Jones, the managing director, has this to say : " You will all have been aware of the Government's instruction to the NEB to disinvest from Ferranti Limited." So everybody knows that it is the Government's instruction. Apparently everyone does not know that that is so, because in reply to a question from my hon. Friend the Member for Edinburgh, East (Mr. Strang) on 10 June 1980, the Prime Minister said : " The NEB and the previous Labour Government assisted Ferranti during a very difficult period. Ferranti no longer needs that assistance. The NEB wishes to sell the shares and to obtain the best possible price. It must be free to do that."—[Official Report, 10 June 1980; Vol. 986, c. 300.] Of course, the truth of the matter is that the NEB is about as free as a dog on a chain. It is the Government that dictate the sale of Ferranti shares, not the NEB. If evidence of that were required, one has only to turn to paragraph 9 of the draft guidelines for the NEB dated 11 December 1979, which runs as follows : " The Board shall exercise their powers with a view to disposing to private ownership as soon as practicable all of their securities and other property." Futhermore, it is the Secretary of State who, under paragraph 11 of the draft guidelines, decides who the NEB may dispose to and whether it can dispose at all. The Government themselves admit this; in their amendment to the motion, they talk of "the Government's  intention" that the shareholding should be sold. Perhaps someone should tell the Prime Minister. The Labour Government brought the NEB into existence because they realised that the failure of manufacturing industry in our country was primarily due to its need to modernise and to re-equip and to the lack of investment that had taken place. The present Government, on the other hand, believe in the lottery of the market place. They say so quite distinctly. The Secretary of State has many times said this. He says it again in the draft guidelines to which I have referred. He says in paragraph 2: " The Board's relationship with their subsidiaries and other companies and persons will be conducted on normal commercial principles." There is no question there of the national interest; it is purely "normal commercial principles." There could hardly be a more classic case than that of Ferranti to test these two philosophies : are we in favour of public investment or are we in favour of market forces? Here, after all, is a company with a long history of advanced technological achievement, starting nearly 100 years ago—in my own constituency of Deptford. It is a company with a large and continuing series of Government contracts, and a company with perhaps the most skilled work force in the whole country, and the likelihood of expansion in its major areas of the Northwest and of Scotland, and indeed, of many other areas throughout the country. Therefore, here is a test. What actually happened? When Ferranti got into difficulties in 1974—with all the advantages that I have expressed—this was a splendid opportunity for the private entrepreneur of whom the Secretary of State is so proud. What happened? First, the City and financial institutions were approached. They listened, and looked the other way. Then that great private entrepreneur, the National Westminster Bank, heard bravely of Ferranti's troubles, and promptly called in the overdraft. It reminds me of Samuel Johnson's letter to the Earl of Chesterfield in 1775: " Is not a patron, my Lord, one who looks with unconcern on a man struggling for life in the water and when he has reached ground encumbers him with help?" That is the early history of Ferranti, and it is the history of Ferranti today.

Mr. John Bruce-Gardyne  (Knutsford)
Will the right hon. Gentleman give way?

Mr. Silkin
No. I do not mean to be discourteous, but this is a very short debate and I have very little time; otherwise, I would be delighted to give way. There will no doubt be other opportunities for the hon. Gentleman, and he can make his speech. When the Ferranti family and their shareholding interest were faced with this position—with the fact that there was nowhere else to turn—they turned in desperation, no doubt hating themselves for doing it, to a Labour Government, and they asked that Government for help. What happened then was that the Government and the workers in the industry rallied round. They are the real entrepreneurs.

Mr. Bruce-Gardyne
A travesty.

Mr. Silkin
The Government and later the NEB, when it took over, brought in the finance and the new management required. The work force and the technicians brought in their skill and expertise.

Mr. Bruce-Gardyne
The right hon. Gentleman ought to find out the facts.

Mr. Silkin
Even the present Government, in their somewhat feeble amendment, recognise the effect that the work force and the technicians had. They say so in the amendment. Yet the work force and technicians are the only people not to be consulted by the Government. The result today is that the company has expanded with enormous benefit to the whole country. The Ferranti family shareholding has increased in value, some say by as much as £10 million. The banks, the City and the financial institutions are buzzing away like bluebottles around a honey pot encumbering the company with help and offers. It is against that background that the Government have decided that there must be a sale. What the Prime Minister tells us is that the sale has to be at "the best possible price." It is worth analysing that for a moment. What do we mean by "the best possible price"? All sorts of candidates are willing to offer a very good price indeed. Suppose that the best possible price in money terms were to come from foreign companies. Would the  Government instruct the NEB to take that offer? Is that what it is about? Suppose that that were not so and that, instead, it were to come—as it well could come—from a large combine such as GEC, whose name has been mentioned rather frequently in this connection. Would the Government accept that as the best possible price? I find it rather hard, in view of the Chancellor's Budget speech such a short while ago, to believe that that ought to be the Government's attitude, because the Chancellor said : " I believe that there are cases where businesses are grouped together inefficiently under a single company umbrella. They could in practice be run more dynamically and effectively if they could be ' demerged'… and allowed to pursue their own separate ways".—[Official Report, 26 March 1980; Vol. 981, cc. 1484–85.] If so, this would not exactly be a case of demerging. On the contrary, a very large combine would be increasing in size. It would certainly not be an encouragement to demerging. What the work force and the Opposition fear is that it would be an encouragement, instead, to closures and to redundancies. That is what we are prepared to fight. One has to ask what would be the best possible price in the "real world" which, I believe, is the current phrase. The truth is that the best possible price has already been paid by the public. The issue of Ferranti News from which I have already quoted carries a report by the Scottish general manager telling of the enormous possibilities for further expansion by Ferranti. What is true in Scotland is probably equally true in the North-West and in other parts of the country. The expansion could well take the form of far greater participation in civil contracts. Expansion is possible. The company is healthy. It has been brought back to that state of health by the public, by those who work in it, and by the NEB. The question arises of how the NEB achieved this situation. Why was it not achieved by the financial institutions and the banks?

Mr. Bruce-Gardyne
That would not have been allowed by a Labour Government.

Mr. Silkin
That is not what has been stated. The hon. Gentleman can make  his own rather curious speeches in his own rather curious way. The truth is that the financial institutions—in other words, the United Kingdom capital market—set the wrong priorities. One needs only to contrast the valuation of manufacturing companies—I assume that no hon. Member denies that manufacturing industry is required in this country—on the Stock Exchange with the valuation of property and finance companies. The evidence exists. The Economist on 10 May identified the 25 highest rated shares in terms of price-earnings ratios, excluding property companies. It found that almost one year—that was the period it took—after the present Government came to office, the highest valued company was the Savoy Hotel. The Financial Times on 31 May found that the property companies in the Financial Times share index were valued on the Stock Exchange at about £3¼ billion—a figure comparable with the whole of the mechanical engineering and metals sectors. Therein one sees the truth of the matter and the priorities. It is a question of either public investment or market forces. Market forces have failed and will continue to fail. In the Opposition's view, public investment should be expanded, not curtailed. In particular, the National Enterprise Board holding in Ferranti should be preserved, not simply in the interests of the long suffering tax payer, although it is in his interests, not simply in the interests of the jobs, the work force and the industry, although, again, it is in their interests, but, above all, in the interests of the health, and the possibility of expansion, of industry for the whole country. It is in that spirit and with a re-affirmation of our belief in the value of public investment and public enterprise that we have tabled the motion.

4.44 pm

The Secretary of State for Industry (Sir Keith Joseph)
I beg to move, to leave out from "Limited" to the end of the Question and to add instead thereof : " in restoring the company to prosperity, welcomes the Government's intention that the National Enterprise Board's shareholding should be sold as soon as practicable, having regard to the interests of the company, the taxpayer and such other considerations as the Government may draw to the Board's attention.". I shall go into more detail than the right hon. Member for Deptford (Mr. Silkin) did, because it is my purpose to explain some of the implications of the various options facing the Government. As the right hon. Gentleman has explained, it is the Government's policy that the National Enterprise Board should sell its assets. That is a summary of the position. It is a question of choosing times in the interests of the company concerned and the taxpayer. In the case of Ferranti, the National Enterprise Board has asked the Government for their advice. If the Bill now going through the House, and due to receive further consideration this evening, passes into law, the Secretary of State for Industry will have powers, within what is lawful, to direct the NEB in the sale of its assets. Moreover, the consent of the Secretary of State is required for the NEB to sell any of its assets. The Government have not yet decided what advice to give to the NEB in connection with Ferranti, and this debate therefore comes at a fortunate time. My right hon. Friends and I will take careful account of the arguments advanced from both sides of the House. I regard it as my duty to set out some of the implications of the options that are before us. I wish first, to pay ungrudging tribute to all concerned with the recovery of Ferranti. It has been a remarkable performance by the management at all levels and by the work force, of every skill and discipline. The House must be united in its delight at the success that has been achieved. I accept that the decision by the Labour Government at the time to intervene in the case of Ferranti has come right. It was not a decision of the National Enterprise Board. At that time the NEB was not in legal existence. The actual negotiation was done by Lord Ryder in his then capacity as industrial adviser to the Department of which I am now Secretary of State. I should not like the House to believe that support by the Government was the only way in which Ferranti could have risen from what appeared, at the time, to be its ashes. As my hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne) has rightly reminded the House, the problem with Ferranti at the time was almost entirely connected with the transformer  division. The then management of the company now accepts that it probably did not act quickly enough in rationalising the transformer division, which was pulling the company down towards insolvency. It may have been thought at the time—I do not dispute my hon. Friend's comment—that had the company sought to rationalise the transformer division and so rescue itself the then Government might not have allowed it to do so. Whatever the views of the then Government, when the NEB came into possession of the shares of Ferranti, over the following years it allowed the transformer division to be run down and the transformer work to be replaced with other work. I make no comment or criticism, except to point out that if the worst had happened and Ferranti had gone into insolvency, a number of parts of Ferranti, I am confident, would have been acquired by other parts of the private enterprise sector and might have done as well as they have since done. It does not follow that the intervention of the previous Labour Government was the only way in which to achieve the results that we welcome today. For the bulk of Ferranti's new life, since the Department of Industry passed its shares to the NEB, the board has studiously avoided interference. I make no criticism of that—on the contrary! The successful top management was brought in by Lord Ryder. The NEB wisely adopted a policy of benign detachment from the affairs of Ferranti because the management was so good. The credit for Ferranti's performance is wholly due to the management and the work force, and we welcome it wholeheartely. In general, we are much in favour of independence. We are in favour of the dispersion of ownership, of competition and of freedom of choice. It is not always easy to reconcile those four objectives. One option only do the Government rule out, and that is the option of leaving Ferranti with the National Enterprise Board. We do not believe that that is in the interests of the company or of the taxpayer. We think that the taxpayer's money was risked, although it has turned into more money. We think that, at a time when the highest priority is to reduce the public sector borrowing requirement, the contribution to be made  by the sale of NEB assets cannot be neglected. We do not think that it is sensible to freeze the ownership of a company, even a company that is as successful as Ferranti. Some hon. Members might ask "Why not sell just half of the NEB's assets, leaving 25 per cent. of the shares in the NEB's hands?". The ownership of 25 per cent of the shares by the NEB is no guarantee of the independence which the management and work force of Ferranti have sought so earnestly to persuade us is right. Some hon. Members might say that if the sale of half the shares will not preserve the independence of Ferranti—although it is not independent now, since half are owned by the NEB—why not sell the NEB's shares in two stages? It might be suggested that half should be sold now and half six or nine months later, thus creating an intended obstacle to the result that some people in Ferranti fear. However, that would not guarantee any desired result and would simply prolong the uncertainty which is already a great worry to all concerned.

Mr. Alex Eadie  (Midlothian)
The Secretary of State created the uncertainty.

Sir K. Joseph
I am trying to explain that, having made the decision that the NEB should dispose of its assets in the national interest, the options have certain repercussions.

Mr. Eadie
The right hon. Gentleman caused the uncertainty.

Sir K. Joseph
Some of my hon. Friends—[Interruption.]

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)
Order. Sedentary observations are out of order.

Mr. Eadie
Will the right hon. Gentleman give way?

Sir K. Joseph
Some of my hon. Friends might say that they are in favour of the NEB selling its shares but that they would like Ferranti to have a couple of years' more protection from the market and then for the company to take its chance. Taking that wish seriously, I must now discuss some of the implications of the options that might be thought likely to achieve such a purpose. I shall  have to discuss various aspects of the possibility of imposing conditions upon the sale. The Government propose to apply one condition—and this is a direct answer to the right hon. Member for Deptford. Because of the importance of Ferranti Ltd. as a United Kingdom defence contractor in terms of the United Kingdom manufacturing industry, the Government are not prepared to contemplate its passing into foreign ownership. Under the Industry Act 1975 the Secretary of State has powers to prohibit control of important United Kingdom manufacturing undertakings passing into foreign hands. I hope that it will not prove necessary to use the powers, but they are available if necessary. Because of the importance of the company to United Kingdom defence interests, the Treaty of Rome will not inhibit the use of Industry Act powers. I turn to other aspects of conditions. When the Opposition tabled their motion we examined it carefully, as any Government would, to see whether it was acceptable. At first sight I thought that it might be tactful for me to correct one or two of the mistakes in it—and I am not seeking to quibble about them. I thought that it might be possible to explain to the House that no Government could guarantee the continued, unqualified security of every employee for ever. That is what the motion seems to seek. I might have explained that that could not be guaranteed, but that, subject to that understanding, we would accept the motion. However, I was afraid that there might be a misunderstanding of our acceptance of a motion which calls for what appears to be a permanent guarantee of employment for each member of the Ferranti organisation. Therefore, my right hon. Friends and I preferred to table an amendment that makes plain what we propose. It is true that Ferranti is a successful company, but it operates in a high-risk business. No one can guarantee the permanent security of everyone employed in it. That is implied in the motion, which reads : "believes that any sale of the Board's holding in the company which threatens the wellbeing of the company and the security and future employment prospects of its 17,000 employees". That implies a guarantee of employment [HON. MEMBERS : "Nonsense."] I think that it might be misunderstood. I am seeking to avoid any disingenuous response to the motion. That is why we tabled our amendment. I have explained the Government's position on foreign ownership. Obviously there is another procedure that might become relevant. The degree, if any, to which any particular bid might justify reference to the monopolies and Mergers Commission would have to be assessed. There are severe limitations upon the Government in the options open to them, and they should be explained to the House. We must balance the interests of the company with the interests of the taxpayer. The word "company" is shorthand for all people concerned with the company—investors, workers, pensioners, users of the company's products and suppliers to the company We must balance the interests of those groups with the interests of the taxpayer. We must also bear in mind another set of people whose interests have not so far been mentioned in all the discussions about Ferranti. The NEB owns 50 per cent. of the shares in Ferranti. The Ferranti family and trusts connected with it own 19 per cent. of the shares. A total of 31 per cent. of the shares are owned by others, including the usual range of private individuals, pension funds, investment trusts and insurance companies. They are owned by the usual range, which now tends to be dominated by the institutional investors who hold the funds of the general mass of the population for pension or insurance purposes. We must bear their interests in mind. They have certain rights. It is against the rule of law, and the Companies Act, that they—a substantial quorum or small minority—should be oppressively treated by the majority. We must bear their interests in mind. I have to discuss whether it would be sensible for the Government to declare that our prime purpose is not to obtain the highest price for the taxpayers. I have to discuss whether the purpose of the national interest would be best served by forgoing the highest price for the taxpayer. Would we, if our purpose was to achieve at least a temporary period of independence for Ferranti,  achieve that purpose if we forewent on behalf of the taxpayer the pursuit of the highest price? I do not say that that would, necessarily, be in the best interests of Scotland, the company and all who sail in her. Who can discern what is in the best interests of Ferranti and those who work in the company? Who can be sure that it is in the best interests of Scotland and of Ferranti that the ownership should remain precisely as now? No one can tell. The future depends upon the drive, the skills of management, technicians and the work force, the research and development and marketing divisions, general resources and all the other aspects of business success. I shall now follow the options that lie before the Government. First, they could invite the NEB to disperse widely the 50 per cent. of shares which they own in Ferranti, by a share offer.

Mr. Eric S. Heffer  (Liverpool, Walton)
Will the right hon. Gentleman give way?

Sir K. Joseph
No. I am following the precedent of the right hon. Member for Deptford.

Mr. Heffer
On a point of order, Mr. Deputy Speaker. No Opposition Back Bencher can be responsible for what Front Bench Opposition spokesman do. Therefore, we can only ask questions about Government policy. As the Secretary of State has made a series of assertions, for which we seek evidence, surely we are entitled to ask him questions and expect a few minutes' reply?

Mr. Deputy Speaker
The Secretary of State is entitled to decide whether he gives way.

Sir K. Joseph
The first option that the Government could consider is an invitation to the NEB to disperse its shares widely by way of a share offer. That would, inevitably, tend to be below the market price, because why should people buy at a higher price man that at which the 31 per cent. of shareholders would probably sell their shares? If those 31 per cent. were on offer at a higher price, inevitably a share offer by the NEB would be at a lower price than the current market level. The attractions of disbursing shares in this way would be obvious to all of us.  A large number of people would have the chance of owning them and arrangements could be made for an advantageous offer of shares to employees of Ferranti. That would please all Conservative Members, and I hope that it would please a number of Opposition Members. The dispersal of shares is, in itself, attractive, but the House must realise that the more dispersed the shares are, the more opportunity there is for a bidder to acquire control of the company. The first option, therefore, of putting the shares on the market for wide dispersal would in no way guarantee the continued independence of Ferranti, which is what we are asked to take intensely seriously by the Opposition and by those who have been lobbying us. The second option is that we should invite the NEB to place shares without conditions. A placing of shares would, again, tend to be below the market price. That is the normal result of placing, as opposed to the sort of price that would emerge from bids for a company. If we invite the NEB to place shares the taxpayer would probably get less than be would if bids for the company were considered. Let us suppose that we accepted that there would be a lower price for the taxpayer and advised the NEB to place the shares without conditions. The result would almost certainly be that, the shares having been placed below the price at which the market valued them, a bidder, or bidders, could come along and offer for the shares. In that case the taxpayer would not have the benefit from the higher price, and the independence of the company, which would have been the purpose of the exercise, would not have been preserved.

Mr. Gordon Wilson  (Dundee, East)
Will the right hon. Gentleman give way?

Sir K. Joseph
No, I will not. Therefore, there is no particular advantage, for the purposes of the Opposition, in following that course.

Mr. Wilson
rose——

Sir K. Joseph
No, I will not give way. I am sorry, but I am not giving way.  Let us suppose that the NEB were invited to place the shares, subject to conditions. Here we come up against another complication. If the shares were placed subject to conditions and assurances being sought that a single institution would hold the shares in Ferranti for several years, and a simple institution bought the 50 per cent. of shares from the NEB, under the rules of the Stock Exchange and the takeover panel the acquiring organisation would have to bid for the 31 per cent. of the shares remaining in the company. The moment that an organisation had to bid for the remaining 31 per cent. of the shares we would, once again, be in the bidding situation and other bidders could come in. So, placing the shares subject to conditions with an institution would not guarantee the independence of Ferranti. Nor, moreover, would placing the shares subject to conditions with a group of institutions necessarily protect Ferranti's independence, because a group of institutions buying the 50 per cent. of shares from NEB would, perhaps—though the decision would be for the Stock Exchange council on the advice of the takeover panel—have to bid for the 31 per cent. outstanding non-NEB non-family held shares and others, and we would be back again in the bidding arena. I leave aside at this stage the question of how binding any conditions would be and for how long those conditions would last. The more rigid the conditions that the Government advise the NEB to seek to impose upon any sale, the lower the price would tend to be. The lower the price, the more unhappy the 31 per cent. of shareholders would be, and the more unhappy they were, the more scope there would be for bidders. Therefore, I have to tell the House that if, in order to protect the independence of Ferranti, we seek to avoid any bidding for the 50 per cent. of NEB shares and the 31 per cent. of other shares, the route through either an offer of shares or the placing of shares, with or without conditions, with a single institution or a group of institutions would not provide a guarantee of independence. I was bound, as quickly as I could, to spell out the implications of the options for the Government. I now turn to another, and, I believe, even more important, aspect of reality. I am referring to the limitations, not upon the options facing the Government, but upon the options facing potential bidders. What is the perceived self- interest of potential bidders? Any organisation will not, surely, bid for Ferranti in the pursuit of trouble. What people value in Ferranti are its skills, its team work and the profits that those skills and that team work have created. Any potential bidder for Ferranti will be aware of the strong feelings that we have all witnessed among the management and work force of Ferranti. Any bidder will take those strong feelings very much into account. Any potential bidder will be aware that while only one-third of the Ferranti work force is employed in Scotland——

Mr. Gordon Wilson
Forty per cent.

Sir K. Joseph
I am grateful to the hon. Gentleman for that correction. While 40 per cent. of the work force is employed in Scotland, about 50 per cent. of the profits are earned in Ferranti's Scottish activities. No potential bidder would ignore the importance to Ferranti of its Scottish operations and the morale of the management and the work force in all its operations. It is absurd to contemplate that any bidder would want to risk his company's money by bidding for a company that would be discouraged, disheartened or intimidated by its approach. It would have to make its approach and bid in a form to reconcile the management and work force to a new owner.

Mr. Michael Meacher  (Oldham, West)
Will the right hon. Gentleman give way?

Sir K. Joseph
No. I am coming to the end of my speech. I want to sit back and listen to the views of the House. I hope that right hon. and hon. Members will take seriously the implications of the alternatives. Our scope for securing any particular outcome rather than another is limited. The degree to which any option will achieve any desired outcome is literally unknowable. Rejecting the policy of the highest bidder in favour of some apparent alternative will not in itself guarantee the continued independence of Ferranti. The guarantee of jobs, prosperity, pride, expansion, harmony.  competitiveness and job satisfaction lies in the skill and team work of the management and the work force. They have shown that skill and team work. The Government will take intensely seriously the arguments put forward from both sides of the House. I hope that I have explained the implications of the options.

5.12 pm

Mr. Charles R. Morris  (Manchester, Openshaw)
This afternoon we have listened to a fascinating speech by the Secretary of State for Industry. He has posed a number of options concerning the sale of the National Enterprise Board's holding in Ferranti. However, he did not examine the option posed in the motion moved by my right hon. Friend the Member for Deptford (Mr. Silkin) that we should question the justification for selling the Ferranti shares. The Secretary of State enjoined us to condition our attitude to the sale of the Ferranti shares with concern for the interests of the taxpayer, the company and the shareholders. That is an understandable argument for the right hon. Gentleman to advance. However, I hope that at some time in the debate concern will be expressed for the 17,000 employees in Greater Manchester, Scotland and Wales whose very future is tied to the success of Ferranti. I hope that their interests will be paramount in our approach to the question of the selling of these shares. Of particular interest in the Secretary of State's speech was his effort to justify the changed political direction that the Government, through the Industry Bill, propose to impose on the NEB to divest itself of its 50 per cent. controlling interest in Ferranti. The one redeeming feature of the right hon. Gentleman's speech was when he declared his ungrudging admiration for the contribution made by management and the work force to the success of Ferranti. He was right to express that admiration, which I think is reflected on both sides of the House. The debate essentially is about a remarkable success story—the history of Ferranti since 1974–75 and the endeavours of its 17,000 employees. These people have transformed Ferranti from bankruptcy to profitability. They have  translated an NEB investment of £7 million in 1974–75 to a current share value of £58 million if we are to believe the point made by Sebastian de Ferranti in his letter to The Times today. The cruel irony of this success story is that those who have made the greatest contribution to it—those whose lives are tied up with the future of Ferranti and have the most to lose—have received little or no consideration in the arrangements proposed by the Government and the NEB for selling the NEB's controlling interest in the company. As my right hon. Friend the Member for Deptford indicated, many have done particularly well out of Ferranti's success. The NEB and the taxpayer have done well and the directors of the company have done particularly well. The success of Ferranti has meant a financial bonanza to the Ferranti family. All have done well, but the dedicated staff of the company have so far received nothing but a great deal of needless anxiety. The Prime Minister never wearies of lecturing or hectoring British workers on what they need to do to achieve a secure industrial future. She has told them repeatedly—at the Conservative Women's conference and at the International Press Association lunch—that they must increase productivity and be competitive because British companies must export to survive. Ferranti's employees have done all that and more. Only recently the Prime Minister nominated the company for the Queen's Award for Industry because of its export achievements. What has that meant for the 17,000 workers who have contributed to Ferranti's success? In effect, it has meant a new anxiety which has been injected into their lives by the NEB's decision, under the Government's direction, to sell off its controlling interest in the company. One of the most unfortunate facets of the NEB's relationship with the company and its work force is that it did not bother to consult either the management or the staff when it made the press statement at the end of May indicating that it proposed to sell its shares. The motivation for the concern of Ferranti's 17,000 employees is the way that the NEB dealt with an almost analogous situation. I want briefly to refer to the NEB's handling of the sale of its  interest in the Fairey Engineering Company. If the sale of its Ferranti shares goes anything like the sale of its holding in the Fairey Engineering Company, we had better watch out. My justification is an article which appeared in The Guardian last Saturday, 14 June, under the heading : " £24 million sale of Fairey to Pearson in doubt" The article tells of the conflicting competition between the Pearson group and the Hambros' banking consortium for acquisition of the Fairey engineering Company. The Guardian's industrial correspondent, Jane McLoughlin, reported that the NEB failed to discuss the future of Fairey with its board, and ignored the firm's view of its commercial advantage. If that is to happen with the NEB holding in Ferranti, the Government have a duty to inform the House. I was delighted when the Secretary of State reiterated to the House the undertaking that he gave to myself and other parliamentary colleagues who met him in his ministerial room last night. He said that he had an open mind. I hope that that is the genuine position. When I listened to him examining the options, he seemed to close almost every option.

Sir Keith Joseph
The right hon. Gentleman is usually scrupulously fair in these matters. I cannot remember using the words "an open mind". I said that I would listen carefully to the debate today, and that the Government had not made their decision.

Mr. Morris
I hope that the Secretary of State will forgive me if I have misrepresented him. I withdraw any such implications——

Mr. Gavin Strang  (Edinburgh, East)
Does my right hon. Friend agree that the statement made by the Secretary of State today was more depressing and disappointing than the statement that he made at our meeting last night?

Mr. Morris
Indeed it was. My hon. Friend is absolutely right. I interpreted the Secretary of State's remarks last night as indicating a genuine open-minded approach. He said that he would listen, and that he would reiterate that undertaking in his speech today—and he has quite rightly done so.

Sir Keith Joseph
I shall have to defend myself. I do not think that I made a statement to the group of Opposition Members who saw me yesterday. I listened, and I heeded what they said. I made no statement, except to the effect that the Government had not reached a decision, and that we would listen carefully to the debate today.

Mr. Morris
It is encouraging to hear the Secretary of State reiterate that he is continuing to listen. But he has not much time to go on listening. He knows, as I know, that the annual general meeting of the Ferranti company is to be held on 24 June, and that a decision will have to be reached by that time. I hope that he does listen to the interests of the 17,000 employees at Ferranti. I have indicated the area of my concern. The analogous position in the Fairey engineering firm is colouring the anxieties of the many people who are taking a continuing and genuine interest in the matter. It is factors such as these which are motivating the anxiety of the Ferranti employees. Not only are the Ferranti employees anxious; the Manchester city council, the Mayor of Oldham, and even the Church of Scotland have expressed concern about the further loss of manufacturing jobs in their areas. I leave the Secretary of State with this thought—all the Ferranti plants and factories are located in assisted areas, geographical areas that were formerly assisted areas, or in special development areas. Those areas have already experienced a catastrophic decline in manufacturing jobs. I looked at the figures for the City of Manchester to see the drop in manufacturing employment. The only years for which I could obtain accepted statistics were 1961 to 1976, when the number of manufacturing jobs fell from 168,850 to 86,450. Those statistics are concerning the civic and local authorities. If the Secretary of State and the Government are indeed listening, that factor should be given close consideration. The only companies that have the financial resources to take over in a block the controlling interest in Ferranti are GEC, Racal or a consortium of banking interests. The present management and work force, if Ferranti were left in the control of the NEB, could continue to build on the success and the expansion that they have demonstrated to date. I hope that in the debate which is now proceeding the Government will not respond with—and I say this with some regret—what has become the feature of all debates involving the Secretary of State for Industry, namely, an almost daily confrontation and with closed minds. I hope that he will listen. I hope that he will take account of the interests of the employees of Ferranti. Quite frankly, despite the vote on this issue at 7 o'clock tonight, the management, technicians and work force at Ferranti are entitled to a vote of confidence, and not the proposals and directions that are being given by the Government.

Several Hon. Members
rose——

Mr. Deputy Speaker
It appears that some hon. Members were not in the House when Mr. Speaker made his appeal for brevity. I wish to remind right hon. and hon. Members that there are about 19 Back-Bench speeches to be fitted in in not much more than an hour.

5.27 pm

Mr. Fergus Montgomery  (Altrincham and Sale)
I shall heed your words, Mr. Deputy Speaker, and make a short speech. I hope that my right hon. Friend the Secretary of State will stick to his statement that he will listen carefully to the views expressed during the debate. I am sure that he realises that many of my hon. Friends have a sense of disquiet about the whole business. My reason for intervening in the debate is that I have a large number of constituents who are employed by Ferranti. Over the past two weeks I have received many letters from them, and last Thursday a number of them came to the House to lobby me on this issue. They put their case fairly and reasonably. Their fear was that the NEB would sell its 50 per cent. holding in one block. I must be honest and say that their anxiety was that that block would be sold to GEC, which would lead to the closure of several Ferranti plants with the inevitable redundancies that would ensue. One of the ladies who came to see me said that she had worked for Ferranti since she left school. I did not give her the stock political answer that that must have been only last year, because the lady was not young. She felt that if GEC took over Ferranti shares, and if  that meant redundancy, she would be one of those who would be made redundant. She was concerned that at her time of life there would be little or no hope of finding another job. I have a feeling that that is the viewpoint of many who are employed by Ferranti. Therefore, it is a matter of human concern. It is true that Ferranti was rescued from the brink of collapse about six years ago. Since then, there has been a complete transformation. The appointment of the managing director was a stroke of genius, because in him Ferranti found a man with the talent of managing diverse operations, and with a healthy respect for cash control. We have seen the results of that improvement over the years. From a 1975 pre-tax loss of £500,000 on sales of £86·3 million, in 1976 the company achieved a profit of £4·1 million, and continued to increase profit levels by 49 per cent. in each of the subsequent two years. The result was that by the summer of 1978—three years after the Government had injected £15 million into Ferranti in the form of equity and loan capital—Ferranti had reported a pre-tax profit of £9·1 million on a turnover of £156·9 million. Because of that record, the NEB was able to reduce its holding from 62·5 per cent. to the 50 per cent. that we are debating today. Because of the success of Ferranti over the past two years, those who are employed there are now worried about losing their independence. I realise that taxpayers' money is involved and that it was used to save Ferranti. But the current market value of the shares held by the NEB is in excess of £50 million. So the company has been saved, jobs have been safeguarded, and the taxpayer has shown a profit on the deal. I should have thought that that was most satisfactory. It is crystal clear that Ferranti is anxious that nothing should be done to end the company's independence. It therefore proposed to the NEB that the shares should be disposed of to a large number of separate buyers and that some of the shareholding should be made available to employees on reasonably advantageous terms. This point was mentioned by my right hon. Friend the Secretary of State, and he welcomed it. I was surprised by the lack of response from the Labour Benches. Labour Members  seemed to show no joy in the prospect of employees being able to buy shares in the firm for which they work. For some reason, the NEB refused to countenance the proposal. I must warn the Government that, if they put the shares out to the highest bidder, irrespective of the wishes of Ferranti, they will have proved that they know the price of everything and the value of nothing. Therefore, I shall vote for the Government's amendment tonight because of its pledge that the Government will pay regard to the interests of the company. But I must warn my right hon. Friend that if that pledge is not kept I shall, when this matter is debated in the House again, vote against the Government without fear.

5.31 pm

Mr. Robin F. Cook  (Edinburgh, Central)
Perhaps I may take up only one point made in a courageous speech by the hon. Member for Altrincham and Sale (Mr. Montgomery) and that concerns the sale of shares on advantageous terms to employees of the company. There may or may not be merit in encouraging employees to hold shares in the company for which they work. It is unnecessary for us to go into the merits of that tonight. But it is an illusion to hold that out to the work force as a solution for safeguarding the independence of the company. Even if every employee of Ferranti found £1,000 to invest—and that is most unlikely—the employees would between them be able to purchase only about 15 per cent. of the shares on offer. Plainly, therefore, that solution offers no way out of the difficulty we face tonight, which is to safeguard the independence of the company. I am happy that on that at least I appear to be carrying the Secretary of State with me. The Secretary of State made a remarkable speech. He gave us an illuminating stream of consciousness. I compliment him on having totally demolished the case for selling any of the shares held by the NEB. He made perfectly plain the dangers of a takeover which would arise from any way in which those shares are disposed of. He was understating one of the options to some extent. If he is to go ahead with the sale—I would prefer that he did not sell even one share—  there might be merit in exploring the possibility of placing parcels of the controlling interest with different pensions institutions. Those bodies tend to look for a long-term return, not for a quick killing on a speculative purchase, selling out subsequently for a takeover. I offer that thought for the options that the right hon. Gentleman described. I must take on board the full force of his argument that any disposal of these shares will create a situation in which the company is vulnerable to a takeover by one of the other predatory companies in that sector. I compliment the Secretary of State on accepting that the responsibility for what we are discussing rests with him. I respect him at least for not seeking to hide behind the pretence that we are debating a decision of the NEB. It would be difficult for him to pretend that, because the chairman of the NEB has made it clear that the Board is selling the shares at the "express wish" of the Government. The chairman put a particularly harsh passage in the NEB's recent annual report in which he pointed out that the financial duty laid upon the NEB by the Government cannot be fulfilled if the Government insist that the NEB disposes of every asset once it becomes profitable. Since the Secretary of State has accepted responsibility for what has happened, perhaps I may put it to him that by frogmarching the NEB in the direction of a compulsory sale he is fundamentally altering the nature of the NEB. It was chosen in 1974 by the Labour Government as the instrument to rescue the company. It is one of tonight's ironies that had the right hon. Gentleman been in power then not only would we not be having this debate but we might well have had no Ferranti to discuss. Since the NEB was chosen as the rescuing instrument it is now left with a controlling interest in the company. If the Secretary of State obliges the NEB to dispose of that controlling interest at one go to a single bidder, he is converting the NEB from an instrument of rescue to a take over vehicle. If anyone on the Labour Benches in 1974 had suggested that we were rescuing this company in order to facilitate its takeover by one of its rivals there would have been spontaneous indignation from the Tory Benches. However, that is exactly the  logic of what the right hon. Gentleman is doing. The Secretary of State has lectured us countless times on the virtues of nonintervention. I remind him, therefore, that his approach is one of intervention. He is intervening in the stable framework that has enabled this company to expand over the past six years. No one is asking him to intervene. One of the other ironies of the debate is that the Government have achieved that unity of purpose between the workers, the management and even the shareholders which the Government tell us is the objective of their industrial policy. All three groups are united, but in opposition to what the Secretary of State wants to do to them. If he truly cares about the strong feelings of the work force and about its morale he will not push through this proposal which is greeted with the united opposition of everyone in the company. All those in the company are opposed to it because they know that they have made a success of the last six years. Let me outline the success story that we have witnessed in Scotland in the six years since Ferranti was rescued by the last Labour Government. Ferranti has created 2,000 new jobs in Scotland. It has increased its factory space by 50 per cent. It at present has five separate building projects of new factories or signifificant extensions. It has plans to employ 500 more people in Scotland. Very few companies are expanding in Scotland at present, and we cannot afford to jeopardise the prospects of one of the few companies that are. There are also few companies in Scotland with anything like the same concentration of high technology and skill that we need if we are to survive as a manufacturing nation. In Scotland alone Ferranti employs 900 graduates and 3,000 draughtsmen or skilled craftsmen. It also employs 430 apprentices. That is exactly the kind of investment that we need to make in our future. These are the real assets that are up for sale. These are the people who have contributed to the success of Ferranti over the past six years and who now face the cruellest paradox of all. The paradox is that, if they had not contributed their creative skills to that success, if they had not cooperated in the rescue, they would not now be faced with the logical cones-  quences of their actions, which is the creation of an attractive investment for takeover which calls their survivial into question. Given that record and the importance of the company to the Scottish economy we are nervous indeed about the prospect of a takeover. We are nervous because we have experience of what happened in these circumstances before. In 1969 the numerical control division of Ferranti was taken over by Plessey. I am not making a party point, because the takeover was facilitated by the Industrial Reorganisation Corporation under the Labour Government. Plessey transferred the division from the Lothians to Alexandria. It transferred the division and the work force on a firm commitment that it would expand on the site in Alexandria. Within one year the plant was closed, and the machinery was shipped to Poole. But the tale does not end there. The transplant did not work. The numerical control division did not succeed in Poole, and Plessey closed it down. Britain does not now have a numerical control capacity. Hon. Members have only to go into any sophisticated machine shop to see how desperately dependent we are on imports for numerical control. That is why we are nervous about the possibility of takeover. We have seen what has happened in the past, and we are concerned that it will happen again in the future. That is why a variety of Scottish organisations, including the Scottish Council for Development Industry and the Church of Scotland, are opposed to the Secretary of State's proposal. I ask the Secretary of State to recognise the reality of the market forces about which he continually lectures the House. It may turn out that whoever purchases the company will have different interests. If GEC purchases the company it will be in the interests of Arnold Weinstock to rationalise and slim down production, to close some of the lines and eliminate the competition which is at present depriving some of his subsidiaries of work. But that will not be in the interest of the nation, which will lose the valuable capacity. It will not be in the interest of the regions, which will lose jobs. We must remember that Ferranti is mainly concentrated in the North-West and Scotland, which were development areas until the present Secretary of State came into office. It will not be in the interest  of the clients, who will lose because of competition. The Government are Ferranti's biggest single client. About 60 per cent. of the production of Ferranti goes to the Ministry of Defence. Whatever the Government gain in added premium by selling to a single bidder they will lose within two years because of added prices on defence contracts. Six years ago the taxpayer put some risk capital into Ferranti. The taxpayer is now entitled to benefit from the revenues. They should not be returned to the private sector. If the Secretary of State consulted any stockbroker for professional personal advice, he would be advised to hold on to his controlling interest. But if he must sell, if he is determined, because of ideological prejudice or a deep psychological interest, to go along this irrational road, I beg him to do so in a way that does not compromise the independence of the company. We have already lost a substantial amount of industrial capacity in the last year, as companies have been squeezed by higher interest rates and an unrealistic exchange rate. We cannot afford to gamble with the future of one of the few companies that is thriving, despite the millstones that the Government have hung around the neck of the British industry.

5.43 pm

Mr. Michael Ancram  (Edinburgh, South)
I am grateful for the opportunity to intervene briefly in this important debate. While Ferranti is a United Kingdom company, it has great implications for Scotland, because nearly one-third of its work force is employed in Scotland. As a Member representing part of Edinburgh, I have a particular interest, because most of the work force is centred on that city. I welcome the Government's amendment, and I thank my right hon. Friend the Secretary of State for his speech. He set out the options, and he has undertaken to listen to views from both sides of the House. My right hon. Friend's speech and the amendment make it clear that the interests of the company and the other considerations are balanced with the taxpayer's interests. It is argued that in one sense those are synonymous, as the promotion of a strong, viable and expand-  ing company with good productivity and export potential is ultimately in the best possible interests of the taxpayer and lies at the heart of our hopes of economic revival and success. I do not think that there is any real argument on this side of the House about whether the NEB holding should be disposed. I understand that the company management does not oppose it, and to do so would be to fly in the face of economic common sense. Labour Members who oppose it do so as part of their attraction to the old shibboleth of State control and public ownership. The real anxiety in this debate is about how the shares are disposed and the possible—I say "possible" because this must be speculative—effects that the various methods of dispersal might have on the company. The background to this debate must be that we are not dealing with a lame duck or a public liability. We are dealing with a viable company with a sound and reasonable future. We are therefore talking about the best way in which to dispose of these holdings with a reasonable return to the taxpayer, and in a way that has the best hope of securing a viable future for the company and security of jobs for those who work in it, who are loyal supporters of the company. As I understand it, there is no disputing that this firm is back on its feet again and is prospering. As I further understand, it is doing so in an area of business—the electronics industry—and in an area of the country, so far as the Scottish part of the company is concerned, where it is the Government's declared intention to encourage such enterprise as the basis for building the industrial economy of the future. Its value in Scotland can be seen in its declared intention to expand by another 500 jobs—which are badly needed. Yet all this must depend on its being able to innovate and to expand according to its own business needs. The present anxiety of the company is that a disposal of shares could prevent innovation and expansion. By bid, the shares could be acquired by a company which was not innovative and which would frustrate the present undoubted dynamic of the company and lead to a loss of the younger elements on which much of its future depends. An even greater anxiety lies in the possibility that, by bid, Ferranti could be acquired by a company with which it was in competition, leading almost inevitably to rationalisation, when jobs would be lost and momentum slowed, down. That anxiety is particularly great in Scotland because, for geographical and logistical reasons, rationalisation so often starts at the Scottish end. I cannot emphasise strongly enough that Scotland cannot afford to lose a company of the sort that Ferranti provides in terms of technology, job prospects and a basis for an expanding foot in the undoubted market of the future. I am sure that my right hon. Friend will take that firmly into account in reaching a decision. The effects of any disposal must be largely conjectural. There is a real anxiety in the company about a takeover by GEC. I am in no position to judge the basis of those fears, but I have heard nothing in connection with GEC that would lead me to believe that those fears were groundless. On that basis, I fear that a disposal to the highest bidder is not the answer, and I am not convinced that a marginal increase in the return to public funds warrants the possible consequences to the company, its employees and the community in which it operates. I can, however, see less objection to the disposal by direction to a company that is not in competition with Ferranti, and which would regard it more as a garden to be watered than as a crop to be harvested. Ideally, I should prefer the maintenance of the independence of the firm. The options have been described. I should like to comment on the option that the holdings could be disposed of in two phases, one-half now, and one half in nine months, within the financial year, thus satisfying the PSBR requirements. My hon. Friend said that that would lead to uncertainty. However, that option is favoured by the Scottish management of the company, and I do not believe that it would seriously affect the price to the Government, particularly as the firm is getting stronger. I feel that it would create a sufficient challenge of intent to ensure that the shares were bought by a promoter of Ferranti's future rather than by an intended destroyer of the company. I re-emphasise the role of Ferranti in Scotland, and especially in the community of Edinburgh. It has for years played a leading role within the city as an employer and leader within the community. That, too, has a value. I hope that it will be regarded by my right hon. Friend as a consideration that must be taken into account. It would be a bitter blow if any decision were taken which caused this expanding firm to diminish its role within the community. As far as I can judge, it will not need to do so independently. I ask my right hon. Friend to ensure that any other form of disposal upon which he might decide will, as far as possible, insure against doing either. We in Scotland look to him for that.

5.51 pm

Mr. Alfred Morris  (Manchester, Wythenshawe)
Ferranti is the second biggest employer in my constituency. This debate is, therefore, one of major importance for me as a Member of Parliament and for very large numbers of my constituents and their families. It is my constituents in the past five years who, among others, have turned a public investment of less than £7 million into one which, according to Sebastian de Ferranti in his letter to The Times this morning, is now worth in the region of £58 million. Some might think that it could be worth very much more in the near future. The story of the past five years is one of conspicuous success both for the management of Ferranti and its workpeople. As Mr. J. D. Alun-Jones, the managing director, said in a letter to me on 4 June, the firm's success since the intervention of the NEB is indeed one that owes everything to the high level of confidence and co-operation which exists between the firm's management and employees. Working together, Mr. Deputy Speaker, they have taken the firm from the intensive care unit of five years ago to the remarkably strong trading position of today. To harm the firm now would be a gross betrayal of management and workpeople alike. Last week, as the House has heard, representatives of the Ferranti work force came here to plead for the continued independence of their extremely successful enterprise. I am sure that every right hon. and hon. Member who met  them will agree that they were very well informed and argued their case both with dignity and restraint. It was a compelling case and they deserve our support in this debate. Mr. Alun-Jones went on to say in his letter to me on 4 June : "The overwhelming majority of employees, the executive and the board are united in their conviction that the sale of the 50 per cent. NEB share to one company, which would then effectively control Ferranti Limited, would jeopardise existing jobs, the creation of new jobs and our ability to react to rapidly developing technology." That statement alone should persuade the House of its responsibility, indeed of its bounden duty, to ensure that Ferranti remains independent. When I drew the letter that I received from Mr. Alun-Jones to the attention of the Secretary of State, he replied very quickly, and I am grateful to him for his help in doing so. In his reply he said : "… the draft NEB guidelines … require that the board should dispose of all its securities as soon as is practicable, having regard to the interests of the company and the taxpayer, and such other considerations as I may draw to their attention …" That is an important statement. For who is the best judge of the company's interests? Is it the Minister aided by his civil servants? Or are the best judges the employees, the executive and the board of the firm, who are all united in their view that it must remain independent? Surely they, having done so well for the taxpayer over the past five years, are entitled to pride of place in any judging competition about the future of their enterprise. Therefore, if the NEB should attempt to ignore the best interests of the company, as everyone who works there sees those interests, will the Secretary of State refuse his consent? There is need for a much clearer statement of Government policy before this debate ends and I hope that the Minister of State, in winding up, will be much more specific than was his right hon. Friend. Will the Minister of State say when he expects that a definitive ministerial statement about the future of the public holding will be made? Will it be in three weeks, four weeks, five weeks, or when? One other straight question to the Minister of State is whether, if GEC were to be allowed to acquire the company,  that would constitute an unacceptable further move towards monopoly. I have referred to the achievements that have flowed from the excellence of the understanding there has been at Ferranti between the management and employees. I take some pride, as his Member of Parliament, in the outstanding contribution to this outcome of my friend Councillor Griff Berry, the convener of the Ferranti factory in Wythen-shawe and chairman of the Ferranti trades union committee. Griff Berry, who, with Peter Morton and other trade unionists, has achieved so much in fostering good industrial relations at the firm, said when he came to Westminster last week : " It is ironic that most lobbies of Parliament arise because of some form of failure. The Ferranti lobby is based on total success." He was right to emphasise that Ferranti is now in danger of becoming a bizarre victim of its own success. The public holding is an asset on which many who would have allowed Ferranti to die in 1974–75 have fixed their attention. They are rubbing their hands at the prospect of a "Sale of the Century" from which they can profit. That is why this House should speak out loud and clear today in support of those who saved the firm and have made it so successful since. I should like to quote from another of my constituents who wrote to me this week about her fears for the future of the firm. She is Mrs. Maureen Taylor, of 52 Calve Croft Road, Peel Hall, Manchester, 22, and she said—[Interruption.] The hon. Member for Knutsford (Mr. Bruce-Gardyne) sniggers and smiles at my reference to the views of the workpeople. This is not a laughing matter. It is one of deadly seriousness for the 17,000 workpeople whose very future is tied up with the outcome of this debate. My constituent said : " The relationship between ' management' and ' workforce' is extremely good and this has the effect of being with a ' family concern ' and not working for ' faceless moneymakers' although the final results are equally profitable." She went on : " There is enough unemployment in the country today, especially in the North-West, so it would be catastrophic to encourage any further possible loss of employment on a large scale. I therefore ask you to do your utmost to prevent any form of sale of the NEB shares in block as has been suggested." That, Mr Deputy Speaker, is typical of a great many letters that I have received  from constituents. Their view is one that deserves respect in this debate and is one that I am sure many other right hon. and hon. Members will reflect in their speeches. The mass media never tire of telling us about all the strife in British industry. What the media hardly ever do is to point to success based on mutual understanding between management and workers of the kind achieved at Ferranti. I hope that after this debate the achievements of people like Griff Berry, Mr. Alun-Jones and Mr. Peter Morton, among many others, both in the Ferranti management and work force, will be given much more attention than they have been given so far. Even before then, I trust that the Minister of State will go further than his right hon. Friend in reassuring those who have achieved so much for their company and for the taxpayer.

5.59 pm

Mr. Churchill  (Stretford)
I am delighted to speak after the right hon. Member for Manchester, Wythenshawe (Mr. Morris), who strongly advocated the virtues of family companies and free enterprise. In common with many other hon. Members, I have received strong representations from my constituents to the effect that the 17,000-strong work force at Ferranti Limited wish their company to remain independent. It is an axiom that the Government are the custodians of the national interest. I believe that the Secretary of State's decision to dispose of the State's holdings in Ferranti is right. At a time of economic constraint Governments are tempted to secure a premium on the disposal of those shares—which might be as much as £10 million or £20 million—by selling their controlling share in the company to the highest bidder. The Secretary of State would do well to forswear any siren voices that urge him to tread in that direction. At heart, Ferranti is still a family firm, with a fierce sense of pride and independence that extends throughout the work force. It is a world-beater in many areas of high technology, especially in the military sphere, where its head-up displays and lasers have regularly wiped the floor with competition from Britain and abroad. Ferranti happens to be the only British company that has designed, and is currently manufacturing, its own  microprocessor. For the past two years it has sustained a viable microprocessing business, and has a £30 million turnover, with a 20 per cent. return on invested capital. Although the GEC has linked with Fairchild, it has yet to get to the starting post. Thanks to the previous Labour Government's insistence on reinventing the wheel, the NEB has achieved nothing beyond providing outdoor relief for a tiny handful of scientists in Texas, at a cost of about £25 million. There are three reasons why the Government should insist that Ferranti remains independent. Not only should the Government persuade the NEB; with the nod-and-wink procedure that we well understand they should persuade the Monopolies and Mergers Commission about Ferranti's future. As many hon. Members have said, the management is strong and efficient and enjoys as good a relationship with its work force as can be found anywhere in the United Kingdom. That asset should not be denigrated. Secondly, in view of Ferranti's importance as a defence contractor with the Government, I am convinced that it would be contrary to the public interest if a near-monopoly were to be created in high-technology electronics. Thirdly, to take away Ferranti's independence would be contrary to all the tenets of the Conservative Party's philosophy of free and fair competition. I trust that that is dear to my right hon. Friend's heart, as he is its undoubted champion. For those reasons, the Government should be well content with the seven——

Sir Keith Joseph
I am grateful to my hon. Friend for giving me a chance to intervene, a little belatedly. I am anxious that it should not be thought that I accept my hon. Friend's reference to a "nod-and-wink" relationship between the Government and the Monopolies and Mergers Commission. It is far from a "nod-and-wink" procedure. There is a formal process. The Monopolies and Mergers Commission is not the creature of any Minister or of the Government.

Mr. Churchill
I am sure that the House and country will be reassured by what my right hon. Friend said. For the reasons that I have advanced, I believe that the Government should be well satisfied with the sevenfold or eightfold return on the £7 million investment that  was made on behalf of taxpayers. That return should be amply sufficient to satiate the greediest of Treasury mandarins or the fiercest Cabinet guardians of taxpayers' interests. If the Government allow themselves to be seduced by the prospect of securing an additional £10 million or £20 million premium by sacrificing the independence of Ferranti Limited, they will repent that decision at their leisure. That decision will gravely prejudice the public interest, because it will end all competition in defence contracting. Any short-term gain will be more than outweighed by higher prices for defence and other Government contracts. I trust that my right hon. Friend will instruct the NEB that the long-term interests of the nation require that Ferranti should retain its independence.

6.5 pm

Mr. Cyril Smith  (Rochdale)
I understand the need for brevity, and I shall make my points quickly. I shall not deal with the company's past. It is more important that those of us who catch your eye, Mr. Speaker, should deal with Ferranti's future during the four or five minutes given to us. However, the past has been one of success. The company's success is not due to the NEB. I am glad that the Secretary of State is indicating his agreement. I hope that he will also agree with my reasons for saying that. The management and work force achieved that success. It is true that that success was built on the fact that the NEB sank money into Ferranti. As management and workers have achieved that success, is it unreasonable to take their views into account when deciding what should happen? In addition, the Government should reward their efforts and enterprise. Obviously, the workers are concerned about their future. This is a constituency issue as well as a political issue. In my part of the world, textile mills are continually closing. Those who live among the textile workers can see what is happening. They are concerned about the future of their jobs. That is a perfectly natural phenomenon. Those workers can see what is happening in other industies in the area. The Secretary of State cannot guarantee the company's future independence.  No one in his right senses would say that he could guarantee independence, but the Secretary of State can ensure that it is less likely that independence will be eroded as a result of the sale. His actions in determining how those shares are disposed of are important. I hope that the Government are concerned about maintaining our manufacturing base. We must not simply become a servicing nation. We must maintain and develop our manufacturing bases. If the shares are sold to the wrong company or to the wrong purchasers, part of our manufacturing base may be destroyed. Our first consideration should be to ensure that those bases are maintained and that the sale of shares will not prejudice that end. I previously pointed out that much of Ferranti's success was due to the efforts and skill of its management and work force. The Secretary of State was kind enough to indicate his agreement. Therefore, the first thing that I suggest is that the Government should not be afraid to reward that skill by creating some kind of trust fund out of the money that they will gain. A percentage of the shares could be invested or given—I use that word deliberately—by the National Enterprise Board to a trust fund organised by representatives of the workers of the company. I see no reason at all why 5 per cent., or even 10 per cent., of those shares could not be given to a trust fund. Such a fund could then have the opportunity, from the future profits that would accrue from those shares, to purchase more shares in the company. Certainly there should be a legal right to do so. The hon. Member for Stretford (Mr. Churchill) said something about being satisfied with five, six or seven times the amount invested. Even if the Government were to give away 5 per cent. of the 50 per cent. invested in order to create a workers' trust, that would be a mere drop in the ocean in terms of the total amount of money that they will get from the sale of the other 45 per cent. of shares. That would be a step in the right direction in the disposal of shares, and also a step along the road to worker participation in this industry. That would be imaginative—a step to be encouraged. Perhaps it would give the lead for the future organisation of companies in this country. I should also like to see the right of employees to purchase shares. I accept the point that even if everyone invested £1,000 it would amount to only 15 per cent. of the shares. I am not arguing that this would guarantee the independence of the company; all I am saying is that while the Secretary of State considers how these shares should be disposed of the priority rights of employees to purchase shares should not be lost sight of. Certainly, that is the direction that should be given to the NEB. Thirdly, I turn to the disposal of the rest of the shares. I remember that some years ago, when I was in the Labour Party in Rochdale, a leading Conservative gave me a little lecture on the purchase of shares. He told me that if ever I went in for buying shares I should never be afraid to leave a little bit for the other fellow. That is very sound advice for the Government as well. They really do not need to be concerned about extracting the maximum possible price for these shares, because what they lose as a result of not selling to the highest bidder they can save as a result of not having to pay higher prices for defence contracts, or not paying people on the dole. I hope that the long-term implications of maintaining the independence of this company will be taken into account. I hope that we shall ensure that these shares—I do not object to their sale; I am concerned only with the question to whom the shares are sold—are disposed of in such a way as to safeguard the future independence of the company. Therefore, the shares should not be sold to competitors of the company, whose object in purchasing them might be to stifle and kill the competition from Ferranti. I urge the Government to take great care in the sale of these shares and, above all, to understand that while some of us are not opposed to the selling of shares by the NEB we would be prepared to support that policy only if we could be satisfied that the Government had taken all reasonable steps and had given all reasonable directions in order to maintain the independence of the company as a consequence of the sale.

6.15 pm

Mr. Gordon Wilson  (Dundee, East)
Like other hon. Members, I shall try to be brief. I was a little disappointed  with the speech of the right hon. Member for Deptford (Mr. Silkin). He concentrated on the history of the company and the role of the National Enterprise Board. He did not dwell at all on the regional and industrial aspects involved, and the strategic interests that may result from the sale of these shares. One of the significant things that we remember Ferranti for in Scotland is that one of the one-time managers of that company, Sir John Toothill, was responsible for the whole theory and practice of growth centres in relation to regional development. That is the role that Ferranti has played in Scotland and that is why there has been such an outcry from within Scotland about the danger of the sale of shares. Secondly, it is scandalous that there do not seem to be any winding-up speeches on either side from Scottish Members, despite the 40 per cent. of jobs that exist in Scotland in Ferranti. That is most unfortunate. When one considers the whole concept of the sale of shares one must be ready to agree with the arguments of the Secretary of State. He settled the issue quite clearly that these shares should not be sold, because if they were there would be a potential danger to the company. Even if the shares were sold in a dispersed fashion, there would be a danger of takeover bids occurring thereafter. The shares could be gobbled up and the Secretary of State foresaw that that could lead to the control of the company passing. If that is so, there is a strong argument that the shares should remain in the possession of the NEB. As far as I am aware, there is no criticism of the fact that the company has recovered in the last six years under the umbrella of the NEB, with substantial private holdings still in the company. If that is so, it is reasonable to let well alone. I would have thought that that was in keeping with the Government's own industrial practices. The Secretary of State is committing another grievous sin. One of the problems facing United Kingdom industry is insufficient investment. That is because people can derive better profits from investing in property or in banks. They prefer to put their money into those areas rather than into manufacturing. Here we have an example of the Government  themselves taking their money and interest out of manufacturing industry and putting it towards the reduction of their indebtedness to the public sector borrowing requirement. If that is so, all that they are doing is giving a guide to other sections in the financial community to keep clear of manufacturing industry, because there is a better profit in leaving the money in the bank or reducing indebtedness. That is the flaw in the Government's practice. I not only represent the Scottish National Party in this matter : I have a constituency interest. Many Ferranti workers live in my constituency. Dundee has a factory with about 650 employees. That factory has existed for about 15 years and has grown steadily over that period. At a time when jobs in Dundee are vanishing—the jute mills are being closed down, engineering workshops are retracting, and the carpet industry is in difficulty—it is good to have one company that is expanding at the rate of 10 per cent. a year without any problems. There is fear amongst the workers about the future. They have almost unanimously signed a petition, which they sent to me and which I have sent to the Prime Minister. The petition outlines their worries. They make six points. I shall quote two. They say : " We have worked hard and co-operated with management to secure our future and independence for the company. We expect the Government to reward enterprise and achievement, not simply sell out to the highest bidder regardless of the consequences." They go on : " The present book value of the NEB investment is less than £7 million and we do not see why the NEB cannot retain the company holding. But if they must sell the shares they should be sold in such a manner as to retain independence for the company and still realise a return for the taxpayer. We have worked hard to realise a sound NEB investment." Those are the comments of the work force, contained in a petition organised by the AUEW in the factory. As has been said by the hon. Members for Edinburgh, Central (Mr. Cook) and for Edinburgh, South (Mr. Ancram), Ferranti is in a strong position. Although it has been controlled from outside Scotland, it has performed its role in the high technology area with maturity and re-  sponsibility. It is still a family company, and is regarded as such by the work force. The Secretary of State says that the Government are determined to sell. From the arguments put forward by the Secretary of State I do not see why. If the company is retained, the taxpayers' investment will grow. Dividends accruing to the NEB from this successful company will benefit the taxpayer. It is unacceptable that a company such as the GEC is waiting in the wings to snap up Ferranti. The machine tool industry has been rationalised, not necessarily to its betterment. In Scotland there are innumerable examples of companies that have been taken over and factories that have closed down. The GEC has already been taken to the Monopolies and Mergers Commission on two occasions, which is significant.

Mr. Nicholas Winterton  (Macclesfield)
Does the hon. Gentleman agree that the GEC has one of the finest records for closing down companies that it takes over? Sir Arnold Weinstock has perhaps received a peerage for the finest record in creating redundancies. People may wonder why he received that honour.

Mr. Wilson
I accept that. The GEC has a ruthless reputation for dealing with people.

Mr. Nick Budgen  (Wolverhampton, South-West)
Will the hon. Gentleman give way?

Mr. Wilson
I have already agreed with one opinion advanced from the Conservative Benches. The hon. Gentleman must make his own speech. Have the Government decided to sell all the NEB's shares, or only some? If only some are to be sold, will the residue be left with the NEB or will the Government consider transferring, say, 40 per cent. of the shares, representative of the Scottish work force, to the Scottish Development Agency? That would keep a significant shareholding in public control to protect the independence of the company. However, if the Secretary of State is determined to sell all the shares, they should be sold in small tranches and over a considerable time, as has been said. I support the suggestions of the hon. Member for Rochdale (Mr. Smith)  regarding a trust fund and giving the work force an opportunity to purchase shares, if people wish to do so.

6.22 pm

Mr. Peter Griffiths  (Portsmouth, North)
In my constituency and in neighbouring constituencies surrounding the Royal Naval base at Portsmouth there are Ferranti offices, and Ferranti has a permanent presence in the Royal Naval dockyard. I refute the suggestion made from the Opposition Benches that within Ferranti there is "united opposition" to the sale of the NEB holding. In a statement to management and union conveners the managing director said : "The Board has never sought to oppose in principle the departure of the NEB as a shareholder". Last week I was lobbied by workers from my constituency and neighbouring constituencies and by Ferranti workers from the North of England. They wanted to talk to a Tory Member of Parliament. They made the point that they did not wish the issue to be seen as a party political squabble. Among the groups that visited me were those who wanted to see the NEB holding maintained and those who were strongly opposed to it. However, the workers are united in wanting provisions to ensure the continued independence of the company if the shares are to be disposed of, and given the political climate we can assume that they will be.

Mr. Eadie
Will the hon. Gentleman give way?

Mr. Griffiths
With respect, there is not sufficient time. There is nothing inconsistent with the private enterprise system——

Mr. Eadie
Will the hon. Gentleman give way?

Mr. Deputy Speaker
Order. Front Bench speeches will begin in five minutes.

Mr. Eadie
On a point of order, Mr. Deputy Speaker. It is a courtesy in the House that when an hon. Member refers to——

Mr. Deputy Speaker
Order. That is not a matter for the Chair.

Mr. Griffiths
The principles on which the Government were elected and are operating are not incompatible with  orderly marketing. The disposal of the NEB holding in Ferranti should be an example of that. The shares should be sold to ensure the widest dispersal of ownership. Steps should be taken to ensure that Ferranti employees have the opportunity to obtain and develop a holding in the company. I agree with my right hon. Friend that employees' holdings are not a solution to the company's problems, but they can be part of the solution. A strong worker ownership of shares would help the morale of the company and ensure its essential independence. The Government tonight should give the firmest possible warning to potential monopolists that they regard it as their duty to draw to the attention of the Monopolies and Mergers Commission, not by a nod and a wink, but by formal representations, procedures that appear to reduce the competitive element in this section of industry. My right hon. Friend helpfully listed the motives that a potential purchaser of a controlling interest might have. There were two motives which he did not list and which might be significant to anyone prepared to pay a premium for a controlling interest. First, there is the reduction of competition in an especially competitive area. Secondly, there is the reduction of capacity, which would inevitably involve a reduction in employment opportunities for skilled people. In the years to come we shall need everyone who has skill, enterprise and initiative—management, middle management and shop floor workers—in this sector, where we can foresee expansion. The Government's policies should be geared to the expansion and prosperity of a successful industry, and the maintentance of an independent Ferranti operation.

6.29 pm

Dr. John Cunningham  (Whitehaven)
At the conclusion of the debate one is even more entitled to ask why Ferranti is for sale. Every speaker has asked the Secretary of State for a guarantee of the future independence of this company. I hope that those outside following the debate will have been impressed by the tone and manner of the speeches. They cannot fail to conclude that the Government have brought the problem upon themselves for no good reason. It is especially interesting to note that in all the speeches, including those from the Government Benches, there has not been a single call for the untrammelled forces of the market to decide the outcome of any Ferranti sale. The conclusion that one draws from this is that people really want to have intervention by another name. It is worth asking this question for several other reasons. There is no doubt about the NEB view. I quote from a letter from the chairman of the NEB to my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman), in which he said : " I note your own strong view that the NEB should not be disposing of its Ferranti shareholding at all. We are, of course, doing so at the express wish of the Government as part of its overall efforts to reduce the public sector borrowing requirement." That in itself cannot be a very good reason for creating this dilemma. The sale of Ferranti in toto could make a reduction of about half of 1 per cent. in the public sector borrowing requirement. It could hardly make a massive impact on the PSBR. If that is the best reason the Secretary of State can find for thus instructing the NEB, he really ought to go away and think again. Is it in the taxpayers' interest? We have heard the taxpayers' interest quoted. I remind the Secretary of State of what The Scotsman said on 9 June : " But if Margaret Thatcher really did apply her financial beliefs to Ferranti there would be no sale at all; holding on to the shares almost certainly would be the advice she would get from any stockbroker. That may be irony enough but a sharper one is that, had she been in Downing Street six years ago, there would be no Ferranti at all now—and no opportunity for the Government to make a profit out of the sale of its shares." So it is not really in the taxpayers' interests either. Is it good commercial practise? It can hardly be good commercial practice to have an enforced sale of shares against the wishes of the united board of the company involved and against the wishes also of the NEB. Hawking the shares around in this way can hardly be described as good commercial practice. The precedents under this Government—for example, their dealings most recently with Fairey Holdings—hardly give  ground for confidence that the outcome will be successful. From what we read in well-informed newspapers, near and far, something very wrong has happened in that deal, which we were told was being pursued in the taxpayers' interest. Are small investors to gain from the sale? Apparently not, if we follow the examples of Fairey and ICL. Not one small investor participated or gained in those sales. What about the Budget strategy, which the Secretary of State mentioned, on the de-merging of companies? Is it not likely that the sale will produce the opposite effect and, far from de-merging, will produce an even greater concentration, as many speakers have said, less competition, and less choice for the Ministry of Defence in highly specialised and very expensive public ordering contracts? That again is hardly in the national interest or in the taxpayers' interest. There are no good grounds under any of those headings for having this sale. During the passage of the Industry Bill—which, of course, is not yet law, and under the provisions of which the Secretary of State is forcing the sale—we had a great debate about industrial reorganisation. The Secretary of State is removing the powers of the NEB to reorganise industry, but will not one of the effects of the sale be that the private sector will rationalise industry, that GEC or ITT—perhaps notwithstanding his guarantee about foreign companies—or Racal will buy Ferranti and rationalise it, closing down factories and creating more unemployment in Scotland and perhaps also in the North-West? As many people have said, Ferranti is one of the few firms expanding at the moment. Its story of success has also been a story of job creation in the Northwest and in Scotland. The hon. Member for Dundee, East (Mr. Wilson) made a sarcastic comment about my right hon. Friend the Member for Deptford (Mr. Silkin). Let me tell the hon. Member that if he had not participated in bringing this Government to office Ferranti would not be in jeopardy. Is the reason for the disposal of Ferranti industrial growth? That is hardly so, because it is growing at the moment as an independent company under the auspices of the NEB. As  I have just said, Scotland and the Northwest in particular have benefited greatly from that position. From all sides the Secretary of State has been told that the sale will bring closures. It will bring less choice for the MOD. It will bring no major or lasting gain to the PSBR or to the taxpayers. What then, do we conclude is the real reason for the sale? It is one of dogma. It is a doctrinaire decision, not supported by any rational argument, and least of all supported by the Secretary of State's own speech, which seemed to be riddled with inconsistencies—a kind of public agonising about the difficulties that he faces, which are all of his own making. One of the other significant points made in the debate by several hon. Members is that British industry is fed up with being a kind of political football. What could be a worse example of British industry being kicked around and mucked about against its wishes—for no industrial or commercial advantage to itself—than this one? Perhaps when the Minister of State replies he will answer that and some of the other questions that I have posed. Who supports this forced sale, apart from the Secretary of State, the Treasury and, no doubt, the Prime Minister? The Prime Minister's support for it is very odd, in view of her recent speech about our industrial dilemma. She was reported as saying that " trade union leaders had to decide whether to work with economic forces for the benefit of their members, or whether to use their industrial muscle to secure a short-term gain at the cost of making this worse for those they represent in the long run." Is not that exactly what her Secretary of State for Industry is now indulging in—a decision to make a short-term gain against our interest in the long run? That is exactly the position described in the Prime Minister's own speech. I wonder whether the Secretary of State is supported in his decision by the Ministry of Defence. I wonder whether he is supported by the Scottish Office or the Department of Trade—or, indeed, by anyone other than the Prime Minister and the Chancellor of the Exchequer. There is no doubt that it must be against the interests of the Ministry of Defence and the Scottish Office, and it  must at least embarrass the Secretary of State for Trade that his right hon. Friend is almost inevitably forcing him into the position of having to make a referral to the Monopolies and Mergers Commission of the decision of his own Cabinet colleagues. That really is standing reality on his head. Although he may have support in the Lobby, on this decision the Secretary of State is not really supported by many friends in his Administration, so far as we can tell. He certainly does not have the NEB's support. What guarantees are people entitled to expect or to request? I hope that the Government will not take the view that no one is entitled to ask for guarantees, because, on the other side of the coin, buyers of the NEB assets are asking for guarantees. S. Pearson is asking for guarantees about Fairey Holdings' future profitability, so why are not the Government, in the national interest, entitled to ask for guarantees when sales are being arranged? Are any guarantees to be given to the management and the trade unions of Ferranti? The chairman of Ferranti wrote to The Times today asking for the independence of his company to be guaranteed. I say to him that his best guarantee of independence is for these shares to stay exactly where they are—in the NEB. The Secretary of State acknowledged in his speech that the NEB had not sought to interfere with the management of Ferranti in any material way——

Mr. Bruce-Gardyne
Oh, come on.

Dr. Cunningham
and apart from doctrinal claptrap about the NEB from Right-wing windbags who write for The Sunday Telegraph, the NEB position vis-a-vis Ferranti is the best guarantee that the chairman and his directors can have. In this forced sale, no national interest at all is being served. No industrial interest and no Ferranti interest is being served. No employment interest is being served, either. It is significant that successive speeches from Conservative Members, all lukewarm about the sale in the first place and all falling far short of open support for what the Government are doing, have contained some feeling about jobs in their  constituencies. None of these things is guaranteed by what the Government are doing. The hon. Member for Altrincham and Sale (Mr. Montgomery) made a brave speech but said that he would vote for the Government this time but not on a future occasion. He had better recognise that he will not get a second chance on this issue. I ask two more questions about the Secretary of State's attitude in this matter, which perhaps the Minister of State will answer. I should like to contrast the Secretary of State's attitude in this dilemma with his attitude towards the NEB and Rolls-Royce. On that occasion he justified at some length to the House his support for the chairman of Rolls-Royce against the NEB. He said that for all sorts of governmental reasons—non-intervention against the NEB, and on commercial grounds—he had to accept the judgment of the chairman of Rolls-Royce. Why is it that on this occasion the Secretary of State has swapped horses and is now backing the NEB and telling it that is must go ahead with this proposal against the commercial judgment of the chairman of Ferranti Limited? That is a fairly amazing turn-round. Even allowing for the fact that there may be some agreement between the NEB and himself about the sale, it is certainly not wholeheartedly with him. That also deserves an explanation. At present, the trading prospects of Ferranti are good, but they are being damaged. About 40 per cent. of Ferranti's production goes in exports. Those prospects are being damaged. Morale is being undermined in the management and throughout the work force of the company. This squalid squabble is demotivating people in the company from the top to the bottom. Anyone who has talked to anyone in the company at any level can have no doubt about that. Why is it all happening? That is the central question of the whole debate. Shall we gain in any material way? The answer to that is a resounding "No." It is happening because of a doctrinal attitude towards the NEB. The only thing in this whole debate which has stopped Conservative Members from supporting  the status quo is that the status quo happens to mean some public involvement. In other circumstances, Conservative Members would all support the status quo—but for being frozen in some political permafrost which prevents them from exercising the proper judgment in the interests of their constituents, of the company and of the wider success of British industry. It is for those reasons that we shall be voting against the Government's proposals tonight.

6.45 pm

The Minister of State, Department of Industry (Mr. Adam Butler)
rose——

Mr. Ron Brown  (Edinburgh, Leith)
On a point of order, Mr. Deputy Speaker. Many Back Benchers have not had the opportunity to participate in this debate. Does the Minister appreciate that the Secretary of State refused to be cross-examined? That is contrary to basic justice in this House.

Mr. Deputy Speaker
Order. Those are not matters for the Chair.

Mr. Butler
I think that this has been a useful debate, during which we have covered the subject fairly comprehensively. It has been hard-hitting in parts, but what the House ought to remember, first, is that the subject and the motion were chosen by the Opposition. What the House will then observe is that instead of putting down a motion that required the shares in Ferranti to be held by the NEB, the Opposition put down a totally different motion. If they had put down such a motion as that they would have discovered, as has been clear from the speeches of my hon. Friends, that all of my hon. Friends are in favour of the NEB shares being disposed of. As my hon. Friend the Member for Edinburgh, South (Mr. Ancram) pointed out, the debate has essentially been about the manner in which the Government should dispose of their shareholding in this commercial organisation. In any situation this is complex and difficult enough, but I think that in the present case the problem is at its greatest. This is a situation in which the Government's holding is a controlling one and if acquired by a single bidder would trigger off an automatic bid for the rest  of the shares. It is a situation in which there are, or appear likely to be, a number of companies interested in the possibility of acquiring Ferranti because they see, in some cases, common products, and in some cases complementary products. What has not so far been said in the debate is that it is not unreasonable to suppose that a larger company acquiring Ferranti would gain strength from doing so and would, therefore, increase its own internal, and particularly its own international, competitiveness. That is something that has to be taken into account with all the other arguments that have been put forward. Then there is the important point—to which I shall return—that we have a situation in which an acquisition by a single bidder would almost certainly provide the taxpayer with a substantially better return than would any other route. My right hon. Friend the Secretary of State spelt out logically and clearly the options before the NEB and the Government. He made it clear that his mind has not been made up. [HON. MEMBERS : "Oh!"] These points were argued and counter-argued by my hon. Friends and Opposition Members. Many hon. Members put the case with passion and eloquence for Ferranti remaining as an independent company. It is impossible not to be impressed by strength of feeling of hon. Members about what they think would be in the best interests of their constituents. That strength of feeling arises also out of the views of the members of Ferranti's management and work force.

Mr. Kenneth Marks  (Manchester, Gorton)
rose——

Mr. Butler
I am sorry, but I cannot give way. There is insufficient time. I shall come to the matter that the hon. Gentleman wishes to raise. The dilemma of the Government over the method of disposal has been underlined. It is probable, but by no means certain, that a decision by the Government to let the company go to the highest bidder would result in the company being acquired by another. Some would describe that as allowing market forces to operate. It might be argued that if the Government did not follow that route they would be behaving uncommercially. Others  might argue that such Government action would be acquiescing in a takeover and therefore ensuring effectively that it came about. Those same people might argue for action that ensured the independence of Ferranti—again, a deliberate decision in industrial structuring. That is the dilemma. There is a strong political dimension. If an example is needed, it is that Governments make bad shareholders. Some hon. Members have pressed the case for the shares to remain with the NEB. In that situation, as my hon. Friends have reminded me, the company is not independent but is subject to political interference and subject to being made a political football of the sort to which the hon. Member for Whitehaven (Dr. Cunningham) referred. The hon. Member for Edinburgh, Central (Mr. Cook), in what I thought was one of the better speeches, spoilt his argument by telling the House that the numerical control side of Ferranti had been ordered to be disposed of to Plessey by what was essentially a political body, the IRC. The result, as spelt out by the hon. Gentleman, was no more numerical control work in this country. It was a good example of political interference that arises eventually in any situation through having a Government agency at work. I should like to deal with some of the points that have been raised. A number of my hon. Friends and also the hon. Member for Whitehaven raised the question whether the Government should be prepared to forgo the premium. My hon. Friend the Member for Stretford (Mr. Churchill) gave a figure of £10 million to £20 million. I do not know whether he is right. I suspect that the figure is somewhere in the upper range of those that he gave. Such a figure cannot be ignored, except for good reason, at a time when the Government are trying to cut the PSBR, reduce interest rates and combat inflation. My hon. Friends have spelt out some reasons that have to be considered. It was suggested that the NEB might sell in two stages. This would continue uncertainty and give no guarantee about the independence of the company. A bidder could bid for the 25 per cent. when sold and bid for the other shares on the market. The right non. Member for Manchester, Wythenshawe (Mr. Morris) raised the question of monopoly reference. The House is aware of the procedures that are laid down. The Office of Fair Trading has to come to a conclusion and make a recommendation to the Secretary of State for Trade. It is not a responsibility of my Department. A fairly strong degree of competition exists and is fairly well split in the industry. I welcome the fact that the question of employee shareholding was raised by my hon. Friends and also by the hon. Member for Rochdale (Mr. Smith). This is a matter which I hope the National Enterprise Board will bear in mind. I was also asked about the possibility of a statement. I wish to make the position clear. If, and I underline the words "if", it is a question of my right hon. Friend giving a direction under the 1980 Bill, which may or may not be law at that time, such a direction has to be laid before Parliament. I have no doubt that my right hon. Friend will, in any circumstance, wish to keep the House informed of what he finally decides to say to the NEB.

Mr. Marks
Will the House have an opportunity to vote on this issue when the Secretary of State has made up his mind? Conservative Members have been saying that they want this.

Mr. Butler
The House has had the opportunity today of a debate. We have the opportunity of a vote. The Opposition had the choice of the motion, this being a Supply Day. I have given the House a firm assurance that my right hon. Friend will keep the House informed of what he says on this matter. The Opposition motion, on which I assume we shall have the opportunity of voting, is both hypocritical and unrealistic. It is hypocritical because the Opposition, as the right hon. Member for Deptford (Mr. Silkin) and speaker after speaker on the Opposition Benches have made clear, wish for nothing better than to acquire the remaining 50 per cent. of Ferranti shares. If they had followed that basic wish in the wording of their motion, they would at least have made clear to the House where they stand in these matters. It is amazing—I am sorry that there is no chance to press the right hon. Mem-for Deptford—that the House has heard nothing about renationalisation without compensation. That cry has been heard in the House before, but not tonight. The more moderate voices have been heard. The House knows, however, that it is the avowed intention of the Labour Party to nationalise where it can. That is why I charge the Opposition with hypocrisy in putting forward this motion.

Mr. Churchill
Will my hon. Friend confirm that if the Government decided to maintain the independence of Ferranti they could do so by making it clear that they would refer to the Monopolies and Mergers Commission any takeover that would bring about a monopoly situation?

Mr. Butter
The Government are not in a position to pre-judge this issue. The procedures are laid down. The Office of Fair Trading has to make its views known to the Secretary of State for Trade, who may accept the recommendation put before him. He may overrule it. The motion is unrealistic because it looks for guarantees in security of employment. A guarantee of jobs cannot be decided by this House. That comes through the ability of a company to compete. It comes from products that can sell in the international market place and can sell profitably. It comes from a company that can maintain its financial strength. Employment prospects depend upon the efficiency and hard work of the employees, on the skills of its designers and technicians and on the special aptitudes of its managers. It is because of those aptitudes and skills that there can be confidence about jobs in the future, confidence about work on research and development and confidence about work on production. The debate has been of immense value. It has highlighted the problems. It has produced many and often conflicting commercial, financial, political and human arguments. My hon. Friends have presented the views of their constituents. We have stated that a decision has not been taken. Our amendment acknowledges that recommendations can be made to the NEB. My right hon. Friend cannot ignore the speeches that have been made in this debate.

Question put That the original words stand part of the Question :—

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|Abse, Leo                           |Foster, Derek                        |Morris, Rt Hon John (Aberavon)        |
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|Adams, Allen                        |Foulkes, George                      |Morton, George                        |
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|Allaun, Frank                       |Fraser, John (Lambeth, Norwood)      |Moyle, Rt Hon Roland                  |
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|Alton, David                        |Freeson, Rt Hon Reginald             |Newens, Stanley                       |
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|Anderson, Donald                    |Freud, Clement                       |Oakes, Rt Hon Gordon                  |
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|Archer, Rt Hon Peter                |Garrett, John (Norwich S)            |Ogden, Eric                           |
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|Armstrong, Rt Hon Ernest            |George, Bruce                        |O'Halloran, Michael                   |
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|Ashley, Rt Hon Jack                 |Gilbert, Rt Hon Dr John              |Orme, Rt Hon Stanley                  |
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|Ashton, Joe                         |Ginsburg, David                      |Owen, Rt Hon Dr David                 |
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|Atkinson, Norman (H'gey, Tott'ham)  |Gourlay, Harry                       |Palmer, Arthur                        |
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|Bagier, Gordon A. T                 |Graham, Ted                          |Park, George                          |
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|Barnett, Guy (Greenwich)            |Grant, George (Morpeth)              |Parry, Robert                         |
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|Barnett, Rt Hon Joel (Heywood)      |Grant, John (Islington C)            |Pendry, Tom                           |
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|Beith, A. J                         |Grimond, Rt Hon J.                   |Powell, Raymond (Ogmore)              |
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|Benn, Rt Hon Anthony Wedgwood       |Hamilton, James (Bothwell)           |Prescott, John                        |
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|Bennett, Andrew (Stockport N)       |Hamilton, W. W. (Central File)       |Race, Reg                             |
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|Bidwell, Sydney                     |Harrison, Rt Hon Waiter              |Radice, Giles                         |
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|Booth, Rt Hon Albert                |Hart, Rt Hon Dame Judith             |Rees, Rt Hon Merlyn (Leeds South)     |
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|Bottomley, Rt Hon Arthur (M'brough) |Hattersley, Rt Hon Roy               |Richardson, Jo                        |
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|Bradley, Tom                        |Haynes, Frank                        |Roberts, Albert (Normanton)           |
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|Brown, Hugh D. (Provan)             |Healey, Rt Hon Denis                 |Roberts, Allan (Bootle)               |
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|Brown, Robert C. (Newcastle W)      |Heffer, Eric S.                      |Roberts, Ernest (Hackney North)       |
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|Brown, Ron (Edinburgh, Leith)       |Holland, Stuart (L'beth, Vauxhall)   |Roberts, Gwilym (Cannock)             |
-------------------------------------------------------------------------------------------------------------------
|Buchan, Norman                      |Homewood, William                    |Robertson, George                     |
-------------------------------------------------------------------------------------------------------------------
|Callaghan, Rt Hon J. (Cardiff SE)   |Hooley, Frank                        |Robinson, Geoffrey (Coventry NW)      |
-------------------------------------------------------------------------------------------------------------------
|Callaghan, Jim (Middleton & P)  |Horam, John                          |Rodgers, Rt Hon William               |
-------------------------------------------------------------------------------------------------------------------
|Campbell, Ian                       |Howell, Rt Hon Denis (B'ham, Sm H)   |Rooker, J. W.                         |
-------------------------------------------------------------------------------------------------------------------
|Campbell-Savours, Dale              |Howells, Geraint                     |Ross, Ernest (Dundee West)            |
-------------------------------------------------------------------------------------------------------------------
|Cant, R. B.                         |Huckfield, Les                       |Ryman, John                           |
-------------------------------------------------------------------------------------------------------------------
|Cartwright, John                    |Hughes, Mark (Durham)                |Sandelson, Neville                    |
-------------------------------------------------------------------------------------------------------------------
|Clark, Dr David (South Shields)     |Hughes, Robert (Aberdeen North)      |Sever, John                           |
-------------------------------------------------------------------------------------------------------------------
|Cocks, Rt Hon Michael (Bristol S)   |Hughes, Roy (Newport)                |Sheerman, Barry                       |
-------------------------------------------------------------------------------------------------------------------
|Cohen, Stanley                      |Janner, Hon Greville                 |Sheldon, Rt Hon Robert (A'ton-u-L)    |
-------------------------------------------------------------------------------------------------------------------
|Coleman, Donald                     |Jay, Rt Hon Douglas                  |Shore, Rt Hon Peter (Step and Pop)    |
-------------------------------------------------------------------------------------------------------------------
|Conlan, Bernard                     |John, Brynmor                        |Short, Mrs Renée                      |
-------------------------------------------------------------------------------------------------------------------
|Cook, Robin F.                      |Johnson, James (Hull West)           |Silkin, Rt Hon John (Deptford)        |
-------------------------------------------------------------------------------------------------------------------
|Cowans, Harry                       |Johnson, Walter (Derby South)        |Silkin, Rt Hon S. C. (Dulwich)        |
-------------------------------------------------------------------------------------------------------------------
|Crowther, J. S.                     |Jones, Rt Hon Alec (Rhondda)         |Silverman, Julius                     |
-------------------------------------------------------------------------------------------------------------------
|Cryer, Bob                          |Jones, Barry (East Flint)            |Skinner, Dennis                       |
-------------------------------------------------------------------------------------------------------------------
|Cunliffe, Lawrence                  |Jones, Dan (Burnley)                 |Smith, Cyril (Rochdale)               |
-------------------------------------------------------------------------------------------------------------------
|Cunningham, George (Islington S)    |Kaufman, Rt Hon Gerald               |Smith, Rt Hon J. (North Lanarkshire)  |
-------------------------------------------------------------------------------------------------------------------
|Cunningham, Dr John (Whitehaven)    |Kerr, Russell                        |Soley, Clive                          |
-------------------------------------------------------------------------------------------------------------------
|Dalyell, Tam                        |Kilfedder, James A.                  |Spearing, Nigel                       |
-------------------------------------------------------------------------------------------------------------------
|Davidson, Arthur                    |Kilroy-Silk, Robert                  |Spriggs, Leslie                       |
-------------------------------------------------------------------------------------------------------------------
|Davies, Rt Hon Denzil (Llanelli)    |Kinnock, Neil                        |Stallard, A. W.                       |
-------------------------------------------------------------------------------------------------------------------
|Davies, Ifor (Gower)                |Lamborn, Harry                       |Stewart, Rt Hon Donald (W Isles)      |
-------------------------------------------------------------------------------------------------------------------
|Davis, Clinton (Hackney Central)    |Lamond, James                        |Stoddart, David                       |
-------------------------------------------------------------------------------------------------------------------
|Davis, Terry (B'rm'ham, Stechford)  |Leadbitter, Ted                      |Stott, Roger                          |
-------------------------------------------------------------------------------------------------------------------
|Deakins, Eric                       |Lestor, Miss Joan (Eton & Slough)|Strang, Gavin                         |
-------------------------------------------------------------------------------------------------------------------
|Dean, Joseph (Leeds West)           |Lewis, Arthur (Newham North West)    |Straw, Jack                           |
-------------------------------------------------------------------------------------------------------------------
|Dempsey, James                      |Lewis, Ron (Carlisle)                |Summerskill, Hon Dr Shirley           |
-------------------------------------------------------------------------------------------------------------------
|Dixon, Donald                       |Litherland, Robert                   |Taylor, Mrs Ann (Bolton West)         |
-------------------------------------------------------------------------------------------------------------------
|Dobson, Frank                       |Lofthouse, Geoffrey                  |Thomas, Jeffrey (Abertillery)         |
-------------------------------------------------------------------------------------------------------------------
|Dormand, Jack                       |Lyons, Edward (Bradford West)        |Thomas, Mike (Newcastle East)         |
-------------------------------------------------------------------------------------------------------------------
|Douglas, Dick                       |Mabon, Rt Hon Dr J Dickson           |Thomas, Dr Roger (Carmarthen)         |
-------------------------------------------------------------------------------------------------------------------
|Douglas-Mann, Bruce                 |McDonald, Dr Oonagh                  |Thorne, Stan (Preston South)          |
-------------------------------------------------------------------------------------------------------------------
|Dubs, Alfred                        |McElhone, Frank                      |Tilley, John                          |
-------------------------------------------------------------------------------------------------------------------
|Dunn, James A. (Liverpool, Kirkdale)|McKay, Allen (Penistone)             |Torney, Tom                           |
-------------------------------------------------------------------------------------------------------------------
|Dunnett, Jack                       |McKelvey, William                    |Urwin, Rt Hon Tom                     |
-------------------------------------------------------------------------------------------------------------------
|Dunwoody, Mrs Gwyneth               |MacKenzie, Rt Hon Gregor             |Varley, Rt Hon Eric G.                |
-------------------------------------------------------------------------------------------------------------------
|Eadie, Alex                         |Maclennan, Robert                    |Wainwrlght, Edwin (Dearne Valley)     |
-------------------------------------------------------------------------------------------------------------------
|Eastham, Ken                        |McNally, Thomas                      |Wainwrlght, Richard (Colne Valley)    |
-------------------------------------------------------------------------------------------------------------------
|Edwards, Robert (Wolv SE)           |McWilliam, John                      |Walker, Rt Hon Harold (Doncaster)     |
-------------------------------------------------------------------------------------------------------------------
|Ellis, Raymond (NE Derbyshire)      |Magee, Bryan                         |Watkins, David                        |
-------------------------------------------------------------------------------------------------------------------
|Ellis, Tom (Wrexham)                |Marks, Kenneth                       |Weetch, Ken                           |
-------------------------------------------------------------------------------------------------------------------
|English, Michael                    |Marshall, Dr Edmund (Goole)          |Wellbeloved, James                    |
-------------------------------------------------------------------------------------------------------------------
|Ennals, Rt Hon David                |Marshall, Jim (Leicester South)      |Welsh, Michael                        |
-------------------------------------------------------------------------------------------------------------------
|Evans, loan (Aberdare)              |Martin, Michael (Gl'gow, Springb'rn) |White, Frank R. (Bury & Radcllffe)|
-------------------------------------------------------------------------------------------------------------------
|Evans, John (Newton)                |Mason, Rt Hon Roy                    |While, James (Glasgow, Pollok)        |
-------------------------------------------------------------------------------------------------------------------
|Ewing, Harry                        |Maxton, John                         |Whitehead, Phillip                    |
-------------------------------------------------------------------------------------------------------------------
|Faulds, Andrew                      |Maynard, Miss Joan                   |Whitlock, William                     |
-------------------------------------------------------------------------------------------------------------------
|Field, Frank                        |Meacher, Michael                     |Willey, Rt Hon Frederick              |
-------------------------------------------------------------------------------------------------------------------
|Fitch, Alan                         |Mellish, Rt Hon Robert               |Williams, Rt Hon Alan (Swansea W)     |
-------------------------------------------------------------------------------------------------------------------
|Flannery, Martin                    |Mikardo, Ian                         |Williams, Sir Thomas (Warrington)     |
-------------------------------------------------------------------------------------------------------------------
|Fletcher, L. R. (Ilkeston)          |Millan, Rt Hon Bruce                 |Wilson, Gordon (Dundee East)          |
-------------------------------------------------------------------------------------------------------------------
|Fletcher, Ted (Darlington)          |Miller, Dr M. S. (East Kilbride)     |Wilson, William (Coventry SE)         |
-------------------------------------------------------------------------------------------------------------------
|Foot, Rt Hon Michael                |Mitchell, Austin (Grimsby)           |Winnick, David                        |
-------------------------------------------------------------------------------------------------------------------
|Ford, Ben                           |Morris, Rt Hon Alfred (Wythenshawe)  |Woodall, Alec                         |
-------------------------------------------------------------------------------------------------------------------
|Forrester, John                     |Morris, Rt Hon Charles (Openshaw)    |Woolmer, Kenneth                      |
-------------------------------------------------------------------------------------------------------------------

The House divided : Ayes 240, Noes 307.

---------------------------------------------------
|Wrigglesworth, Ian        |TELLERS FOR THE AYES. |
---------------------------------------------------
|Wright, Sheila            |Mr. Hugh McCartney and|
---------------------------------------------------
|Young, David (Bolton East)|Mr. James Tinn.       |
---------------------------------------------------

---------------------------------------------------------------------------------------------------------------------
|Adley, Robert                         |Eggar, Timothy                        |Lester, Jim (Beeston)                |
---------------------------------------------------------------------------------------------------------------------
|Aitken, Jonathan                      |Elliott, Sir William                  |Lewis, Kenneth (Rutland)             |
---------------------------------------------------------------------------------------------------------------------
|Alexander, Richard                    |Emery, Peter                          |Lloyd, Peter (Fareham)               |
---------------------------------------------------------------------------------------------------------------------
|Alison, Michael                       |Eyre, Reginald                        |Loveridge, John                      |
---------------------------------------------------------------------------------------------------------------------
|Amery, Rt Hon Julian                  |Feirbairn, Nicholas                   |Luce, Richard                        |
---------------------------------------------------------------------------------------------------------------------
|Ancram, Michael                       |Fairgrieve, Russell                   |Lyell, Nicholas                      |
---------------------------------------------------------------------------------------------------------------------
|Arnold, Tom                           |Faith, Mrs Sheila                     |McCrindle, Robert                    |
---------------------------------------------------------------------------------------------------------------------
|Aspinwall, Jack                       |Farr, John                            |Macfarlane, Neil                     |
---------------------------------------------------------------------------------------------------------------------
|Atkins, Rt Hon H. (Spelthorne)        |Fell, Anthony                         |MacGregor, John                      |
---------------------------------------------------------------------------------------------------------------------
|Atkins, Robert (Preston North)        |Fenner, Mrs Peggy                     |MacKay, John (Argyll)                |
---------------------------------------------------------------------------------------------------------------------
|Atkinson, David (B'mouth, East)       |Finsberg, Geoffrey                    |Macmillan, Rt Hon M. (Farnham)       |
---------------------------------------------------------------------------------------------------------------------
|Baker, Kenneth (St. Marylebone)       |Fisher, Sir Nigel                     |McNair-Wilson, Michael (Newbury)     |
---------------------------------------------------------------------------------------------------------------------
|Baker, Nicholas (North Dorset)        |Fletcher, Alexander (Edinburgh N)     |McNair-Wilson, Patrick (New Forest)  |
---------------------------------------------------------------------------------------------------------------------
|Banks, Robert                         |Fletcher-Cooke, Charles               |McQuarrie, Albert                    |
---------------------------------------------------------------------------------------------------------------------
|Beaumont-Dark, Anthony                |Fookes, Miss Janet                    |Madel, David                         |
---------------------------------------------------------------------------------------------------------------------
|Bell, Sir Ronald                      |Forman, Nigel                         |Marland, Paul                        |
---------------------------------------------------------------------------------------------------------------------
|Bendall, Vivian                       |Fowler, Rt Hon Norman                 |Marlow, Tony                         |
---------------------------------------------------------------------------------------------------------------------
|Benyon, Thomas (Abingdon)             |Fox, Marcus                           |Marshall, Michael (Arundel)          |
---------------------------------------------------------------------------------------------------------------------
|Benyon, W. (Buckingham)               |Fraser, Rt Hon H. (Stafford & St) |Marten, Neil (Banbury)               |
---------------------------------------------------------------------------------------------------------------------
|Best, Keith                           |Fry, Peter                            |Mates, Michael                       |
---------------------------------------------------------------------------------------------------------------------
|Bevan, David Gilroy                   |Galbraith, Hon T. G. D.               |Mather, Carol                        |
---------------------------------------------------------------------------------------------------------------------
|Bitten, Rt Hon John                   |Gardiner, George (Reigate)            |Maude, Rt Hon Angus                  |
---------------------------------------------------------------------------------------------------------------------
|Biggs-Davison, John                   |Gardner, Edward (South Fylde)         |Mawby, Ray                           |
---------------------------------------------------------------------------------------------------------------------
|Blackburn, John                       |Garel-Jones, Tristan                  |Mawhinney, Dr Brian                  |
---------------------------------------------------------------------------------------------------------------------
|Blaker, Peter                         |Gilmour, Rt Hon Sir Ian               |Maxwell-Hyslop, Robin                |
---------------------------------------------------------------------------------------------------------------------
|Body, Richard                         |Glyn, Dr Alan                         |Mayhew, Patrick                      |
---------------------------------------------------------------------------------------------------------------------
|Bonsor, Sir Nicholas                  |Goodhew, Victor                       |Mellor, David                        |
---------------------------------------------------------------------------------------------------------------------
|Boscawen, Hon Robert                  |Goodlad, Alastair                     |Meyer, Sir Anthony                   |
---------------------------------------------------------------------------------------------------------------------
|Bottomely, peter (woolwich which)     |Gow, Ian                              |Miller Hal (Bromsgrove&Redditch) |
---------------------------------------------------------------------------------------------------------------------
|Bowden, Andrew                        |Gower, Sir Raymond                    |Mills, lain (Meriden)                |
---------------------------------------------------------------------------------------------------------------------
|Boyson, Dr Rhodes                     |Grant, Anthony (Harrow C)             |Mills, Peter (West Devon)            |
---------------------------------------------------------------------------------------------------------------------
|Braine, Sir Bernard                   |Gray, Hamish                          |Miscampbell, Norman                  |
---------------------------------------------------------------------------------------------------------------------
|Bright, Graham                        |Greenway, Harry                       |Mitchell, David (Basingstoke)        |
---------------------------------------------------------------------------------------------------------------------
|Brinton, Tim                          |Grieve, Percy                         |Moate Roger                          |
---------------------------------------------------------------------------------------------------------------------
|Brocklebank-Fowler, Christopher       |Griffiths, Eldon (Bury St Edmunds)    |Molyneaux, James                     |
---------------------------------------------------------------------------------------------------------------------
|Brooke, Hon Peter                     |Griffiths, Peter (Portsmouth N)       |Monro, Hector                        |
---------------------------------------------------------------------------------------------------------------------
|Brotherton, Michael                   |Grist, Ian                            |Montgomery, Fergus                   |
---------------------------------------------------------------------------------------------------------------------
|Brown, Michael (Brigg & Sc'thorpe)|Gummer, John Selwyn                   |Moore, John                          |
---------------------------------------------------------------------------------------------------------------------
|Browne, John (Winchester)             |Hamilton, Hon Archie (Eps'm&Ew'll)|Morgant, Geraint                     |
---------------------------------------------------------------------------------------------------------------------
|Bruce-Gar dyne, John                  |Hamilton, Michael (Salisbury)         |Morris, Michael (Northampton. Sth)   |
---------------------------------------------------------------------------------------------------------------------
|Bryan, Sir Paul                       |Hampson, Dr Keith                     |Morrison, Hon Peter (City of Chester)|
---------------------------------------------------------------------------------------------------------------------
|Buchanan-Smith, Hon Alick             |Hannam, John                          |Mudd, David                          |
---------------------------------------------------------------------------------------------------------------------
|Budgen, Nick                          |Haselhurst, Alan                      |Murphy, Christopher                  |
---------------------------------------------------------------------------------------------------------------------
|Bulmer, Esmond                        |Hastings, Stephen                     |Neale, Gerrard                       |
---------------------------------------------------------------------------------------------------------------------
|Burden, F. A.                         |Hawkins, Paul                         |Needham, Richard                     |
---------------------------------------------------------------------------------------------------------------------
|Butcher, John                         |Hawksley, Warren                      |Nelson, Anthony                      |
---------------------------------------------------------------------------------------------------------------------
|Butler, Hon Adam                      |Hayhoe, Barney                        |Neubert, Michael                     |
---------------------------------------------------------------------------------------------------------------------
|Cadbury, Jocelyn                      |Heddle, John                          |Newton, Tony                         |
---------------------------------------------------------------------------------------------------------------------
|Carlisle, John (Luton West)           |Henderson, Barry                      |Nott, Rt Hon John                    |
---------------------------------------------------------------------------------------------------------------------
|Carlisle, Kenneth (Lincoln)           |Heseltine, Rt Hon Michael             |Onslow, Cranley                      |
---------------------------------------------------------------------------------------------------------------------
|Carlisle, Rt Hon Mark (Runcorn)       |Hicks, Robert                         |Oppenhelm, Rt Hon Mrs Sally          |
---------------------------------------------------------------------------------------------------------------------
|Chalker, Mrs Lynda                    |Higgins, Rt Hon Terence L.            |Osborn, John                         |
---------------------------------------------------------------------------------------------------------------------
|Channon, Paul                         |Holland, Philip (Carlton)             |Page, Rt Hon Sir R. Graham           |
---------------------------------------------------------------------------------------------------------------------
|Chapman, Sydney                       |Hooson, Tom                           |Page, Richard (SW Hertfordshire)     |
---------------------------------------------------------------------------------------------------------------------
|Churchill, W. S.                      |Hordern, Peter                        |Parkinson, Cecil                     |
---------------------------------------------------------------------------------------------------------------------
|Clark, Hon Alan (Plymouth, Sutton)    |Howe, Rt Hon Sir Geoffrey             |Parris, Matthew                      |
---------------------------------------------------------------------------------------------------------------------
|Clark, Sir William (Croydon South)    |Howell, Rt Hon David (Guildford)      |Pattern, Christopher (Bath)          |
---------------------------------------------------------------------------------------------------------------------
|Clarke, Kenneth (Rushcliffe)          |Howell, Ralph (North Norfolk)         |Patten, John (Oxford)                |
---------------------------------------------------------------------------------------------------------------------
|Clegg, Sir Walter                     |Hunt, David (Wirral)                  |Pawsey, James                        |
---------------------------------------------------------------------------------------------------------------------
|Cockeram, Eric                        |Hunt, John (Ravensbourne)             |Percival, Sir Ian                    |
---------------------------------------------------------------------------------------------------------------------
|Colvin, Michael                       |Hurd, Hon Douglas                     |Peyton, Rt Hon John                  |
---------------------------------------------------------------------------------------------------------------------
|Cope, John                            |Irving, Charles (Cheltenham)          |Pink, R. Bonner                      |
---------------------------------------------------------------------------------------------------------------------
|Cormack, Patrick                      |Jenkin, Rt Hon Patrick                |Pollock, Alexander                   |
---------------------------------------------------------------------------------------------------------------------
|Corrie, John                          |Jessel, Toby                          |Porter, George                       |
---------------------------------------------------------------------------------------------------------------------
|Costain, A. P.                        |Johnson Smith, Geoffrey               |Powell, Rt Hon J. Enoch (S Down)     |
---------------------------------------------------------------------------------------------------------------------
|Cranborne, Viscount                   |Jopling, Rt Hon Michael               |Prentice, Rt Hon Reg                 |
---------------------------------------------------------------------------------------------------------------------
|Crilchley, Julian                     |Joseph, Rt Hon Sir Keith              |Price, David (Eastleigh)             |
---------------------------------------------------------------------------------------------------------------------
|Crouch, David                         |Kaberry, Sir Donald                   |Proctor, K. Harvey                   |
---------------------------------------------------------------------------------------------------------------------
|Dean, Paul (North Somerset)           |Kershaw, Anthony                      |Pym, Rt Hon Francis                  |
---------------------------------------------------------------------------------------------------------------------
|Dorreil, Stephen                      |Kimball, Marcus                       |Raison, Timothy                      |
---------------------------------------------------------------------------------------------------------------------
|Douglas-Hamilton, Lord James          |Kitson, Sir Timothy                   |Rathbone, Tim                        |
---------------------------------------------------------------------------------------------------------------------
|Dover, Denshore                       |Knox, David                           |Rees, Peter (Dover and Deal)         |
---------------------------------------------------------------------------------------------------------------------
|du Cann, Rt Hon Edward                |Lang, Ian                             |Rees-Davies, W. R.                   |
---------------------------------------------------------------------------------------------------------------------
|Dunlop, John                          |Langford-Holt, Sir John               |Renton, Tim                          |
---------------------------------------------------------------------------------------------------------------------
|Dunn, Robert (Dartford)               |Latham, Michael                       |Rhodes James, Robert                 |
---------------------------------------------------------------------------------------------------------------------
|Durant, Tony                          |Lawrence, Ivan                        |Ridsdale, Julian                     |
---------------------------------------------------------------------------------------------------------------------
|Dykes, Hugh                           |Lawson, Nigel                         |Rifkind, Malcolm                     |
---------------------------------------------------------------------------------------------------------------------
|Eden, Rt Hon Sir John                 |Lee, John                             |Rippon, Rt Hon Geoffrey              |
---------------------------------------------------------------------------------------------------------------------
|Edwards, Rt Hon N. (Pembroke)         |Lennox-Boyd, Hon Mark                 |                                     |
---------------------------------------------------------------------------------------------------------------------

 
 
 ----------------------------------------------------------------------------------------------------------------
|Roberts, Michael (Cardiff NW)        |Squire, Robin                   |Waldegrave, Hon William                |
----------------------------------------------------------------------------------------------------------------
|Roberts, Wyn (Conway)                |Stanbrook, Ivor                 |walker, Rt Hon Peter (Worcester)       |
----------------------------------------------------------------------------------------------------------------
|Ross, Wm (Londonderry)               |Stanley, John                   |Walker, Bill (Perth & E Perthshire)|
----------------------------------------------------------------------------------------------------------------
|Rossi, Hugh                          |Steen, Anthony                  |Walker-Smith, Rt Hon Sir Derek         |
----------------------------------------------------------------------------------------------------------------
|Rost, Peter                          |Stevens, Martin                 |Waller, Gary                           |
----------------------------------------------------------------------------------------------------------------
|Royle, Sir Anthony                   |Stewart, Ian (Hitchin)          |walters, Dennis                        |
----------------------------------------------------------------------------------------------------------------
|Sainsbury, Hon Timothy               |Stokes, John                    |Ward, John                             |
----------------------------------------------------------------------------------------------------------------
|St. John-Stevas, Rt Hon Norman       |Stradling Thomas, J.            |Warren, Kenneth                        |
----------------------------------------------------------------------------------------------------------------
|Scott, Nicholas                      |Tapsell, Peter                  |Watson, John                           |
----------------------------------------------------------------------------------------------------------------
|Shaw, Giles (Pudsey)                 |Taylor, Robert (Croydon NW)     |Wells, John (Maidstone)                |
----------------------------------------------------------------------------------------------------------------
|Shaw, Michael (Scarborough)          |Taylor, Teddy (Southend East)   |Wells, Bowen (Hert'rd & Stev'nage) |
----------------------------------------------------------------------------------------------------------------
|Shelton, William (Streatham)         |Temple-Morris, Peter            |Wheeler, John                          |
----------------------------------------------------------------------------------------------------------------
|Shepherd, Colin (Hereford)           |Thatcher, Rt Hon Mrs Margaret   |Whitelaw, Rt Hon William               |
----------------------------------------------------------------------------------------------------------------
|Shepherd, Richard (Aldridge-Br'hllls)|Thomas, Rt Hon Peter (Hendon S) |Whitney, Raymond                       |
----------------------------------------------------------------------------------------------------------------
|Shersby, Michael                     |Thompson, Donald                |Wickeden keith                         |
----------------------------------------------------------------------------------------------------------------
|Silvester, Fred                      |Thorne, Neil (llford South)     |Wiggin, Jerry                          |
----------------------------------------------------------------------------------------------------------------
|Sims, Roger                          |Thornton, Malcolm               |Wilkinson John                         |
----------------------------------------------------------------------------------------------------------------
|Skeet, T. H. H.                      |Townsend, Cyril D. (Bexleyheath)|Williams, Delwyn (Montgomery)          |
----------------------------------------------------------------------------------------------------------------
|Smith, Dudley (War. and Leam'ton)    |Trippier, David                 |Wolfson, Mark                          |
----------------------------------------------------------------------------------------------------------------
|Speed, Keith                         |Trotter, Neville                |Young, Sir George (Acton)              |
----------------------------------------------------------------------------------------------------------------
|Speller, Tony                        |van Straubenzee, W. B.          |Younger, Rt Hon George                 |
----------------------------------------------------------------------------------------------------------------
|Spence, John                         |Vaughan, Dr Gerard              |                                       |
----------------------------------------------------------------------------------------------------------------
|Spicer, Jim (West Dorset)            |Viggers, Peter                  |TELLERS FOR THE NOES :                 |
----------------------------------------------------------------------------------------------------------------
|Spicer, Michael (S Worcestershire)   |Waddington, David               |Mr. Spencer Le Marchant and            |
----------------------------------------------------------------------------------------------------------------
|Sproat, lain                         |Wakeham, John                   |Mr. Anthony Berry.                     |
----------------------------------------------------------------------------------------------------------------

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 32 ( Questions on amendments):—

The House divided : Ayes 305, Noes 239.

------------------------------------------------------------------------------------------------------------------
|Adley, Robert                         |Butcher, John                     |Finsberg, Geoffrey                    |
------------------------------------------------------------------------------------------------------------------
|Aitken, Jonathan                      |Butler, Hon Adam                  |Fisher, Sir Nigel                     |
------------------------------------------------------------------------------------------------------------------
|Alexander, Richard                    |Cadbury, Jocelyn                  |Fletcher, Alexander (Edinburgh N)     |
------------------------------------------------------------------------------------------------------------------
|Alison, Michael                       |Carlisle, John (Luton West)       |Fletcher-Cooke, Charles               |
------------------------------------------------------------------------------------------------------------------
|Amery, Rt Hon Julian                  |Carlisle, Kenneth (Lincoin)       |Fookes Miss Janet                     |
------------------------------------------------------------------------------------------------------------------
|Ancram, Michael                       |Carlisle, Rt Hon Marx (Runcorn)   |Forman, Nigel                         |
------------------------------------------------------------------------------------------------------------------
|Arnold, Tom                           |ChalKer, Mrs Lynaa                |Fowler, Rt Hon Norman                 |
------------------------------------------------------------------------------------------------------------------
|Aspinwall, Jack                       |Channon, Paul                     |Fox, Marcus                           |
------------------------------------------------------------------------------------------------------------------
|Atkins, Rt Hon H. (Spelthorne)        |Chapman, Sydney                   |Fraser, Rt Hon H. (Stafford & St) |
------------------------------------------------------------------------------------------------------------------
|Atkins, Robert (Preston North)        |Churchill, W. S.                  |Fry, Peter                            |
------------------------------------------------------------------------------------------------------------------
|Atkinson, David (B'mouth, East)       |Clark, Hon Alan (Plymouth, Sutton)|Galbraith Hon T. G. D.                |
------------------------------------------------------------------------------------------------------------------
|Baker, Kenneth (St. Marylebone)       |Clark, Sir William (Croydon South)|Gardiner George (Reigate)             |
------------------------------------------------------------------------------------------------------------------
|Baker, Nicholas (North Dorset)        |Clarke, Kenneth (Rushcliffe)      |Gardner Edward (South Eulda)          |
------------------------------------------------------------------------------------------------------------------
|Banks, Robert                         |Clegg, Sir walter                 |Garel-Jones, Tristan                  |
------------------------------------------------------------------------------------------------------------------
|Beaumont-Dark, Anthony                |Cockeram, Eric                    |Gilmour, Rt Hon Sir Ian               |
------------------------------------------------------------------------------------------------------------------
|Bell, Sir Ronald                      |Colvin, Michael                   |Glyn, Dr Alan                         |
------------------------------------------------------------------------------------------------------------------
|Bendall, Vivian                       |Cope, John                        |Goodhew, Victor                       |
------------------------------------------------------------------------------------------------------------------
|Benyon, Thomaa (Abingdon)             |Cormack, Patrick                  |Goodlad, Alastair                     |
------------------------------------------------------------------------------------------------------------------
|Benyon, W. (Buckingham)               |Corrie, John                      |Gow, Ian                              |
------------------------------------------------------------------------------------------------------------------
|Best, Keith                           |Costain. A. P.                    |Gower, Sir Raymond                    |
------------------------------------------------------------------------------------------------------------------
|Bevan, David Gilroy                   |Cranborne, Viscount               |Grant, Anthony (Harrow C)             |
------------------------------------------------------------------------------------------------------------------
|Biffen, Rt Hon John                   |Critchley, Julian                 |Gray, Hamish                          |
------------------------------------------------------------------------------------------------------------------
|Biggs-Davlson, John                   |Crouch, David                     |Greenway, Harry                       |
------------------------------------------------------------------------------------------------------------------
|Blackburn, John                       |Dean paul (North Somerset)        |Grieve, Percy                         |
------------------------------------------------------------------------------------------------------------------
|Body, Richard                         |Dorrell, Stephen                  |Griffiths, Eldon (Bury St Edmunds)    |
------------------------------------------------------------------------------------------------------------------
|Bonsor, Sir Nicholas                  |Douglas-Hamilton. Lord James      |Griffiths, Peter (Portsmouth N)       |
------------------------------------------------------------------------------------------------------------------
|Boscawen, Hon Robert                  |Dover, Denshore                   |Grist, Ian                            |
------------------------------------------------------------------------------------------------------------------
|Bottomely Peter (Woolwich West)       |du Cann, Rt Hon Edward            |Gummer, John Selwyn                   |
------------------------------------------------------------------------------------------------------------------
|Bowden, Andrew                        |Dunlop, john                      |Hamilton, Hon Archie (Eps'm&Ew'll)|
------------------------------------------------------------------------------------------------------------------
|Boyson, Dr Rhodes                     |Dunn, Robert (Dartford)           |Hamilton, Michael (Salisbury)         |
------------------------------------------------------------------------------------------------------------------
|Brains, Sir Bernard                   |Durant, Tony                      |Hampson, Dr Keith                     |
------------------------------------------------------------------------------------------------------------------
|Bright, Graham                        |Dykes Hugh                        |Hannam, John                          |
------------------------------------------------------------------------------------------------------------------
|Brinton, Tim                          |Eden Rt Hon Sir John              |Haselhurst, Alan                      |
------------------------------------------------------------------------------------------------------------------
|Brocklebank-Fowler, Christopher       |Edwards, Rt Hon N. (Pembroke)     |Hastings Stephen                      |
------------------------------------------------------------------------------------------------------------------
|Brooke, Hon Peter                     |Eggar, Timothy                    |Hawkins, Paul                         |
------------------------------------------------------------------------------------------------------------------
|Brotherton, Michael                   |Elliott, Sir William              |Hawkeley Warren                       |
------------------------------------------------------------------------------------------------------------------
|Brown, Michael (Brlgg & Sc'thorpe)|Emery, Peter                      |Raynoe, Darney                        |
------------------------------------------------------------------------------------------------------------------
|Browne, John (Winchester)             |Eyre, Reginald                    |Helddel, John                         |
------------------------------------------------------------------------------------------------------------------
|Bruce-Gardyne, John                   |Fairbairn, Nicholas               |Henderson, Barry                      |
------------------------------------------------------------------------------------------------------------------
|Bryan, Sir Paul                       |Fairgrieve, Russell               |Haseltine Rt Hon Michael              |
------------------------------------------------------------------------------------------------------------------
|Buchanan-Smith, Hon Alick             |Faith, Mrs Shellla                |Hicks Robert                          |
------------------------------------------------------------------------------------------------------------------
|Budgen, Nick                          |Farr, John                        |Higgns, Rt Hon Terence L.             |
------------------------------------------------------------------------------------------------------------------
|Bulmer, Esmond                        |Fell, Anthony                     |Holland, Phllip (Carlton)             |
------------------------------------------------------------------------------------------------------------------
|Burden, F. A.                         |Fenner, Mrs Peggy                 |Hooson, Tom                           |
------------------------------------------------------------------------------------------------------------------

 
 
 -----------------------------------------------------------------------------------------------------------------------
|Hordern, Peter                         |Monro, Hector                        |Sims, Roger                            |
-----------------------------------------------------------------------------------------------------------------------
|Howe, Rt Hon Sir Geoffrey              |Montgomery, Fergus                   |Skeet, T. H. H.                        |
-----------------------------------------------------------------------------------------------------------------------
|Howell, Ralph (North Norfolk)          |Moore, John                          |Smith, Dudley (War. and Leam'ton)      |
-----------------------------------------------------------------------------------------------------------------------
|Hunt, David (Wirral)                   |Morgan, Geraint                      |Speed, Keith                           |
-----------------------------------------------------------------------------------------------------------------------
|Hunt, John (Ravensbourne)              |Morris, Michael (Northampton, Sth)   |Speller, Tony                          |
-----------------------------------------------------------------------------------------------------------------------
|Hurd, Hon Douglas                      |Morrison, Hon Peter (City of Chester)|Spence, John                           |
-----------------------------------------------------------------------------------------------------------------------
|Irving, Charles (Cheltenham)           |Murfd, David                         |Spicer, Jim (West Dorset)              |
-----------------------------------------------------------------------------------------------------------------------
|Jenkin, Rt Hon Patrick                 |Murphy, Christopher                  |Spicer, Michael (S Worcestershire)     |
-----------------------------------------------------------------------------------------------------------------------
|Jessel, Toby                           |Neale, Gerrard                       |Sproat, lain                           |
-----------------------------------------------------------------------------------------------------------------------
|Johnson Smith, Geoffrey                |Keedham, Richard                     |Squire, Robin                          |
-----------------------------------------------------------------------------------------------------------------------
|Jopling, Rt Hon Michael                |Nelson, Anthony                      |Stanbrook, Ivor                        |
-----------------------------------------------------------------------------------------------------------------------
|Joseph, Rt Hon Sir Keith               |Neubert, Michael                     |Stanley, John                          |
-----------------------------------------------------------------------------------------------------------------------
|Kaberry, Sir Donald                    |Newton, Tony                         |Steen, Anthony                         |
-----------------------------------------------------------------------------------------------------------------------
|Kershaw, Anthony                       |Noll, Rt Hon John                    |Stevens, Martin                        |
-----------------------------------------------------------------------------------------------------------------------
|Kimball, Marcus                        |Onslow, Cranley                      |Stewart, Ian (Hitchin)                 |
-----------------------------------------------------------------------------------------------------------------------
|Kitson, Sir Timothy                    |Oppenheim, Rt Hon Mrs Sally          |Stokes, John                           |
-----------------------------------------------------------------------------------------------------------------------
|Knox, David                            |Osborn, John                         |Stradling Thomas, J.                   |
-----------------------------------------------------------------------------------------------------------------------
|Lang, Ian                              |Page, Rt Hon Sir R. Graham           |Tapsell, Peter                         |
-----------------------------------------------------------------------------------------------------------------------
|Langford-Holt, Sir John                |Page, Richard (SW Hertfordshire)     |Taylor, Robert (Croydon NW)            |
-----------------------------------------------------------------------------------------------------------------------
|Latham, Michael                        |Parkinson, Cecil                     |Taylor, Teddy (Southend East)          |
-----------------------------------------------------------------------------------------------------------------------
|Lawrence, Ivan                         |Parris, Matthew                      |Temple-Morris, Peter                   |
-----------------------------------------------------------------------------------------------------------------------
|Lawson, Nigel                          |Patten, Christopher (Bath)           |Thatcher, Rt Hon Mrs Margaret          |
-----------------------------------------------------------------------------------------------------------------------
|Lee, John                              |Patten, John (Oxford)                |Thomas, Rt Hon Peter (Hendon S)        |
-----------------------------------------------------------------------------------------------------------------------
|Lennox-Boyd, Hon Mark                  |Pawsey, James                        |Thompson, Donald                       |
-----------------------------------------------------------------------------------------------------------------------
|Lester, Jim (Beeston)                  |Percival, Sir Ian                    |Thome, Neil (llford South)             |
-----------------------------------------------------------------------------------------------------------------------
|Lewis, Kenneth (Rutland)               |Peyton, Rt Hon John                  |Thornton, Malcolm                      |
-----------------------------------------------------------------------------------------------------------------------
|Lloyd, Peter (Fareham)                 |Pink, R. Bonner                      |Townsend, Cyril D. (Bexleyheath)       |
-----------------------------------------------------------------------------------------------------------------------
|Loveridge, John                        |Pollock, Alexander                   |Trippier, David                        |
-----------------------------------------------------------------------------------------------------------------------
|Luce, Richard                          |Porter, George                       |Trotter, Neville                       |
-----------------------------------------------------------------------------------------------------------------------
|Lyell, Nicholas                        |Powell, Rt Hon J. Enoch (S Down)     |van Straubenzee, W. R.                 |
-----------------------------------------------------------------------------------------------------------------------
|McCrindle, Robert                      |Prentice, Rt Hon Reg                 |Vaughan, Dr Gerard                     |
-----------------------------------------------------------------------------------------------------------------------
|Macfarlane, Neil                       |Price, David (Eastleigh)             |Viggers, Peter                         |
-----------------------------------------------------------------------------------------------------------------------
|MacGregor, John                        |Proctor, K. Harvey                   |Waddlngton, David                      |
-----------------------------------------------------------------------------------------------------------------------
|MacKay, John (Argyll)                  |Pym, Rt Hon Francis                  |Wakeham, John                          |
-----------------------------------------------------------------------------------------------------------------------
|Macmillan, Rt Hon M. (Farnham)         |Raison, Timothy                      |Waldegrave, Hon William                |
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|McNair-Wilson, Michael (Newbury)       |Rathbone, Tim                        |Walker, Rt Hon Peter (Worcester)       |
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|McNair-Wilson, Patrick (New Forest)    |Rees, Peter (Dover and Deal)         |Walker, Bill (Perth & E Perthshire)|
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|McOuarrie, Albert                      |Rees-Davies, W. R.                   |Walker-Smith, Rt Hon Sk- Derek         |
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|Madel, David                           |Renton, Tim                          |Waller, Gary                           |
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|Mariand, Paul                          |Rhodes James, Robert                 |Walters, Dennis                        |
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|Marlow, Tony                           |Ridsdale, Julian                     |Ward, John                             |
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|Marshall, Michael (Arundel)            |Rifkind, Malcolm                     |Warren, Kenneth                        |
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|Marten, Neil (Banbury)                 |Rippon, Rt Hon Geoffrey              |Watson, John                           |
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|Mates, Michael                         |Roberts, Michael (Cardiff NW)        |Wells, John (Maidstone)                |
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|Mather, Carol                          |Roberts, Wyn (Conway)                |Wells, Bowen (Hert'rd & Stev'nage) |
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|Maude, Rt Hon Angus                    |Ross, Wm. (Londonderry)              |Wheeler, John                          |
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|Mawby, Ray                             |Rossi, Hugh                          |Whitelaw, Rt Hon William               |
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|Mawhinney, Dr Brian                    |Rost, Peter                          |Whitney, Raymond                       |
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|Maxwell-Hyslop, Robin                  |Royle, Sir Anthony                   |Wickenden, Keith                       |
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|Mayhew, Patrick                        |Sainsbury, Hon Timothy               |Wiggin, Jerry                          |
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|Mellor, David                          |St. John-Stevas, Rt Hon Norman       |Wilkinson, John                        |
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|Meyer, Sir Anthony                     |Scott, Nicholas                      |Williams, Delwyn (Montgomery)          |
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|Miller, Hal (Bromsgrove & Redditch)|Shaw, Giles (Pudsey)                 |Wolfson, Mark                          |
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|Mills, lain (Meriden)                  |Shaw, Michael (Scarborough)          |Young, Sir George (Acton)              |
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|Mills, Peter (West Devon)              |Shelton, William (Streatham)         |Younger, Rt Hon George                 |
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|Miscampbell, Norman                    |Shepherd, Colin (Hereford)           |                                       |
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|Mitchell, David (Basingstoke)          |Shepherd, Richard (Aldridge-Br'hills)|TELLERS FOR THE AYES :                 |
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|Moate, Roger                           |Shersby, Michael                     |Mr. Spencer Le Marchant and            |
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|Molyneaux, James                       |Silvester, Fred                      |Mr. Anthony Berry.                     |
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|Abse, Leo                          |Buchan, Norman                    |Davis, Clinton (Hackney Central)    |
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|Adams, Allen                       |Callaghan, Rt Hon J. (Cardiff SE) |Davis, Terry (B'rm'ham, Stechford)  |
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|Allaun, Frank                      |Callaghan, Jim (Middieton & P)|Deakins, Eric                       |
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|Alton, David                       |Campbell, Ian                     |Dean, Joseph (Leeds West)           |
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|Anderson, Donald                   |Campbell-Savours, Dale            |Dempsey, James                      |
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|Archer, Rt Hon Peter               |Cant, R. B.                       |Dixon, Donald                       |
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|Armstrong, Rt Hon Ernest           |Cartwright, John                  |Dobson, Frank                       |
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|Ashley, Rt Hon Jack                |Clark, Dr David (South Shields)   |Dormand, Jack                       |
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|Ashton, Joe                        |Cocks, Rt Hon Michael (Bristol S) |Douglas, Dick                       |
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|Atkinson, Norman (H'gey, Tott'ham) |Cohen, Stanley                    |Douglas-Mann, Bruce                 |
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|Bagier, Gordon A. T                |Coleman, Donald                   |Dubs, Alfred                        |
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|Barnett, Guy (Greenwich)           |Conlan, Bernard                   |Dunn, James A. (Liverpool, Kirkdale)|
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|Barnett, Rt Hon Joel (Heywood)     |Cook, Robin F.                    |Dunnett, Jack                       |
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|Beith, A. J                        |Cowans, Harry                     |Dunwoody, Mrs Gwyneth               |
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|Benn, Rt Hon Anthony Wedgwood      |Crowther, J. S.                   |Eadle, Alex                         |
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|Bennett, Andrew (Stockport N)      |Cryer, Bob                        |Eastham, Ken                        |
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|Bidwell, Sydney                    |Cunliffe, Lawrence                |Edwards, Robert (Wolv SE)           |
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|Booth, Rt Hon Albert               |Cunningham, George (Islington S)  |Ellis, Raymond (NE Derbyshire)      |
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|Bottomley, Rt Hon Arthur (M'brough)|Cunningham, Dr John (Whitehaven)  |Ellis, Tom (Wrexham)                |
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|Bradley, Tom                       |Dalyell, Tarn                     |English, Michael                    |
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|Brown, Hugh D. (Provan)            |Davidson, Arthur                  |Ennals, Rt Hon David                |
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|Brown, Robert C. (Newcastle W)     |Davies, Rt Hon Denzll (Llanelli)  |Evans, loan (Aberdare)              |
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|Brown, Ron (Edinburgh, Leith)      |Davies, Ifor (Gower)              |Evans, John (Newton)                |
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|Ewing, Harry                         |Lewis, Arthur (Newham North West)   |Sandelson, Neville                    |
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|Faulds, Andrew                       |Lewis, Ron (Carlisle)               |Sever, John                           |
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|Field, Frank                         |Lltherlend, Robert                  |Sheerman, Barry                       |
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|Filch, Alan                          |Lofthouse, Geoffrey                 |Sheldon, Rt Hon Robert (A'ton-u-L)    |
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|Flannery, Martin                     |Lyons, Edward (Bradford West)       |Shore, Rt Hon Peter (Step and Pop)    |
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|Fletcher, L. ft. (Ilkeston)          |Mabon, Rt Hon Dr J Dickson          |Short, Mrs Renée                      |
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|Fletcher, Ted (Darlington)           |McCartney, Hugh                     |Silkin, Rt Hon John (Deptford)        |
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|Foot, Rt Hon Michael                 |McDonald, Dr Oonagh                 |Silkin, Rt Hon S. C. (Dulwich)        |
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|Ford, Ben                            |McElhone, Frank                     |Silverman, Julius                     |
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|Forrester, John                      |McKay, Allen (Penistone)            |Skinner, Dennis                       |
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|Foster, Derek                        |McKelvey, William                   |Smith, Cyril (Rochdale)               |
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|Foulkes, George                      |MacKenzie, Rt Hon Gregor            |Smith, Rt Hon J. (North Lanarkshire)  |
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|Fraser, John (Lambeth, Norwood)      |Maclennan, Robert                   |Soley, Clive                          |
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|Freeson, Rt Hon Reginald             |McNally, Thomas                     |Spearing, Nigel                       |
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|Freud, Clement                       |McWilllam, John                     |Spriggs, Leslie                       |
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|Garrett, John (Norwich S)            |Magee, Bryan                        |Stailard, A. W.                       |
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|George, Bruce                        |Marks, Kenneth                      |Stewart, Rt Hon Donald (W isles)      |
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|Gilbert, Rt Hon Dr John              |Marshall, Dr Edmund (Goole)         |Stoddart, David                       |
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|Ginsburg, David                      |Marshall, Jim (Leicester South)     |Stott, Roger                          |
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|Gourlay, Harry                       |Martin, Michael (Gl'gow, Springb'rn)|Strang, Gavin                         |
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|Graham, Ted                          |Mason, Rt Hon Roy                   |Straw, Jack                           |
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|Grant, George (Morpeth)              |Maxton, John                        |Summerskill, Hon Dr Shirley           |
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|Grant, John (Islington C)            |Maynard, Miss Joan                  |Taylor, Mrs Ann (Bolton West)         |
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|Hamilton, James (Bothwell)           |Meacher, Michael                    |Thomas, Jeffrey (Abertillery)         |
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|Hamilton, W. W. (Central Fife)       |Mellish, Rt Hon Robert              |Thomas, Mike (Newcastle East)         |
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|Harrison, Rt Hon Walter              |Mlkardo, Ian                        |Thomas, Dr Roger (Carmarthen)         |
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|Hart, Rt Hon Dams Judith             |Millan, Rt Hon Bruce                |Thome, Slan (Preston South)           |
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|Hattersley, Rt Hon Roy               |Miller, Dr M. S. (East Kilbride)    |Tilley, John                          |
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|Haynes, Frank                        |Morris, Rt Hon Alfred (Wythenshawe) |Tinn, James                           |
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|Healey, Rt Hon Denis                 |Morris, Rt Hon Charles (Openshaw)   |Torney, Tom                           |
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|Heffer, Eric S.                      |Morris, Rt Hon John (Aberavon)      |Urwin, Rt Hon Tom                     |
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|Holland, Stuart (L'beth, Vauxhall)   |Moyle, Rt Hon Roland                |Varley, Rt Hon Eric G.                |
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|Homewood, William                    |Newens, Stanley                     |Wainwright, Edwin (Dearne Valley)     |
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|Hooley, Frank                        |Oakes, Rt Hon Gordon                |Wainwright, Richard (Colne Valley)    |
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|Horam, John                          |Ogden, Eric                         |Walker, Rt Hon Harold (Doncaster)     |
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|Howell, Rt Hon Denis (B'ham, Sm H)   |O'Halloran, Michael                 |Watkins, David                        |
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|Howells, Geraint                     |Orme, Rt Hon Stanley                |Weetch, Ken                           |
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|Huckfield, Les                       |Owen, Rt Hon Dr David               |Wellbeloved, James                    |
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|Hughes, Mark (Durham)                |Palmer, Arthur                      |Welsh, Michael                        |
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|Hughes, Robert (Aberdeen North)      |Park, George                        |White, Frank R. (Bury & Radcliffe)|
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|Hughes, Roy (Newport)                |Parry, Robert                       |White, James (Glasgow, Pollok)        |
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|Janner, Hon Greville                 |Pendry, Tom                         |Whitehead, Phillip                    |
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|Jay, Rt Hon Douglas                  |Powell, Raymond (Ogmore)            |Whitlock, William                     |
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|John, Brynmor                        |Prescott, John                      |Willey, Rt Hon Frederick              |
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|Johnson, James (Hull West)           |Race, Reg                           |Williams, Rt Hon Alan (Swansea W)     |
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|Johnson, Walter (Derby South)        |Radice, Giles                       |Williams, Sir Thomas (Warrington)     |
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|Jones, Rt Hon Alec (Rhondda)         |Rees, Rt Hon Merlyn (Leeds South)   |Wilson, Gordon (Dundee East)          |
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|Jones, Barry (East Flint)            |Richardson, Jo                      |Wilson, William (Coventry SE)         |
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|Jones, Dan (Burnley)                 |Roberts, Albert (Normanton)         |Winnlck, David                        |
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|Kaufman, Rt Hon Gerald               |Roberts, Allan (Bootle)             |Woodall, Alec                         |
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|Kerr, Russell                        |Roberts, Ernest (Hackney North)     |Woolmer, Kenneth                      |
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|Kilfedder, James A.                  |Roberts, Gwilym (Cannock)           |Wriggleaworth, Ian                    |
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|Kilroy-Sllk, Robert                  |Robertson, George                   |Wright, Sheila                        |
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|Kinnock, Nell                        |Robinson, Geoffrey (Coventry NW)    |Young, David (Bolton East)            |
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|Lamborn, Harry                       |Rodgers, Rt Hon William             |                                      |
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|Lamond, James                        |Rooker, J. W.                       |TELLERS FOR THE NOES :                |
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|Leadbitter, Ted                      |Ross, Ernest (Dundee West)          |Mr. George Morton and                 |
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|Lestor, Miss Joan (Eton & Slough)|Ryman, John                         |Mr. Austin Mitchell.                  |
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Question accordingly agreed to.

Main Question, as amended, agreed to.

Resolved,

That this House, recognising the signal achievements of the work force, technicians and  management of Ferranti Limited in restoring the company to prosperity, welcomes the Government's intention that the National Enterprise Board's shareholding should be sold as soon as practicable, having regard to the interests of the company, the taxpayer and other such considerations as the Government may draw to the Board's attention.

British Railways Bill  (By Order)

Order for Second Reading read.

Motion made, and Question proposed, That the Bill be now read a Second time.

Mr. Deputy Speaker (Mr. Richard Crawshaw)
I inform the House that Mr. Speaker has not selected the instruction in the name of the hon. Member for Sheffield, Hallam (Mr. Osborn).

7.24 pm

Mr. Patrick McNair-Wilson  (New Forest)
The Bill was introduced in January, but because of a number of objections, it has come to us at this late stage. However, I am happy to tell the House that almost all the objections have now been resolved. I hope to deal later with those which still exist. It has always been the custom in discussions of general purpose Bills for hon. Members, if they wish, to raise matters relating to the railway system. The Bill comes at an important time in the development of British Rail. We have already seen a great deal of new investment in rolling stock and permanent way, and we are delighted that the service is improving its time-keeping quite dramatically. Although the general output per man in the industry is good compared with our European competitors, unfortunately we are very near the bottom of the league in the freight sector; and so is the railwayman in the amount of pay that he takes out of the business. However, provided that we can continue to improve efficiency and use the existing facilities to the best possible effect, it is to be hoped this can be changed. The Bill goes a long way towards achieving that end. The Bill is long and is divided into seven distinct parts. Part I is comparatively simple, and I shall not dwell on it. It is merely a definition of the terms used and an incorporation of various Acts of Parliament affected by the Bill. Part II deals with the major works proposed. A number of these are not contentious. Nevertheless, others have perhaps correctly created a certain amount of concern among those living in the areas affected. Work No. 1 is designed to increase the line capacity of the route to Brighton. This is all part of the improvment in time-keeping and speed on various routes throughout the country. In order to do this, it is necessary to build a spur line which will divert traffic from London to Coulsdon North over the Tattenham Corner branch line. The board already owns the land. I do not think that this is a matter for contention. Works Nos. 2 and 3 again deal with the Brighton development and are concerned with resignalling for this piece of track. I turn now to work No. 5 which has concerned a number of hon. Members. It is the work to which my hon. Friend the Member for Sheffield, Hallam (Mr. Osborn) has referred in his instruction. I understand that the hon. Member for Rotherham (Mr. Crowther) may wish to say something about that matter, too. At this stage I should like to set out the situation as it is, and I shall try, if I have the leave of the House, to reply at the end of the debate. Work No. 5 is designed to benefit the travelling public between Doncaster and Sheffield. Sheffield is a city which I frequently visit. It is not as well served by railways as might be imagined from the fact that it is in the centre of the country. Unfortunately, even though I am a strong supporter of British Rail, I tend to use my car when I go to Sheffield. The station for Rotherham is Masbrough, which is outside the centre of Rotherham. As a result, it has meant that many people who might use the rail service have been tempted not to do so because of the inconvenience of a five-minute walk to get there. It is proposed to build a short piece of track that will be known as Holmes Chord, which will make it possible to link the existing line with Rotherham Central—which will be re-opened, it having been closed in 1966. The building of that piece of track inevitably means that there will be a large amount of local upheaval. A number of businesses, including British Steel, are concerned about the effect of that upheaval, and others are concerned about the dislocation of traffic. It is a finely balanced judgment as to whether Holmes Chord should be built. British Rail operates in that area on behalf of the South Yorkshire PTE and is obligated to do all that it can to help. To travel on that piece of track from Rotherham Masbrough to Sheffield takes eight minutes. If we travelled on the next door railway track, presently reserved for freight—the great central line—it would take 14½ minutes. If that were improved, the time could be reduced to about 12½ minutes. Nevertheless, the South Yorkshire PTE has decided that work should go ahead, and the Bill makes provision for that. I realise that hon. Members who represent that part of the country may wish to ask more detailed questions. But today we are making provision for the Holmes Chord project to go ahead. The matter can be discussed further in Committee, and no doubt it will be. Work No. 6 is in the Birmingham area, and is to be carried out at the request of the West Midlands PTE, which is seeking powers for the reinstatement of a disused line to improve passenger services between Kidderminster and Dorridge, via Snow Hill. I do not think that that is contentious. Works Nos. 7 to 9 are worthy of some remark. They are a further step towards the final electrification of Southern region. As a result of the need to make improvements to lines in the area of Tonbridge and Tunbridge Wells, certain plans have been put forward to enable wagons and cars to go under the bridge. That will entail a major rebuilding job. However, contrary to the proposals in the Bill, as a result of technical studies it has become possible to delete work Nos. 7 and 8. I am advised that in Committee permission may be sought to delete Nos. 7 and 8, but to continue with No. 9, which is needed in the tunnel at Tunbridge Wells Central because of the new vehicles that will pass through. I am delighted to welcome work No. 10, which affects the journey to my constituency of New Forest. The work is necessary because of the board's determination to maintain a line speed of 90 miles per hour between Waterloo and Bournemouth. The electrification of that line has made a tremendous difference to all who use it. In an aside, may I urge my hon. Friend the Minister to do all that he can to ensure that we press ahead with electrification throughout Britain.  That must be a more sensible way of using fuel. As I tried to point out to the House last night, if we use more electricity it would have the advantage of helping the coal industry, which requires its demand to be stepped up. Work No. 10 makes it possible for regular engineering works to take place on the line between Basingstoke and Southampton. To do that, we must divert some freight business through Salisbury which, in turn, means that some alteration will be required in the Salisbury area. Work No. 9 is designed to undertake such alteration on the Salisbury curve, so that the freight trains could use that line while passenger trains could continue to the South-West by the fastest route. I wish that work every possible success and speed. That is all that I wish to say about part II of the Bill. Part III deals with land and its acquisition where it is required, and also with the temporary possession of land where it is required for the works to which I have referred. To some extent, part III is consequential. Part IV deals with another contentious matter, and affects an area near to my constituency. It deals with the plans by Sealink (UK)—a wholly-owned subsidiary of British Rail—for improvement to the Isle of Wight ferry service, which arrives at the Isle of Wight in Wootton Creek at Fishbourne. I recognise that there is a great deal of local feeling on that matter. The hon. Member for Isle of Wight (Mr. Ross) wrote to me explaining that he could not take part in the debate tonight because of parliamentary duties elsewhere. He asked me if I could deal with some of the points raised by his constituents, and I am happy to do so. I know the Isle of Wight extremely well. It is a favoured holiday haunt for many people. The present position is unsatisfactory. There is a good deal of illegal parking, a long backlog of people wanting to board a vessel returning to the mainland, and the facilities that exist are wholly inadequate. I wish to point out to the local residents of Fishbourne, who feel, not surprisingly, that any extension of the services would be detrimental to them, that if nothing were done the jammed roads and the other problems to which I have referred could only become worse. There  is a petition from some of the constituents of the hon. Member for Isle of Wight. I say to those who do not wish to see any alteration in the service that that would be detrimental to those living in Fishbourne. A second petition relates to the activities of British Rail in Fishbourne when it undertakes development. The petitioners are concerned that, British Rail having undertaken the development, dangers could arise in the area of the jetty. As a result, the petitioners have asked that a maximum speed limit of five knots be imposed, and that only one vessel be allowed to tie up at the outer dolphin at any one time. British Rail is concerned about all safety aspects of the operation of its ferry services. It has taken advice on those two specific points. A survey is currently taking place by the Hydraulics Research Station. If it finds that there is any danger either to the banks or to the bed of the area, or in any other way, and recommends that the speed limit should be restricted to a certain figure, Sealink would be happy to accept that recommendation. On the question of not more than one vessel tying up at one time, Sealink has already discussed the matter at length with the harbour master, who is ultimately responsible for safety within his harbour. He is convinced that, given good seamanship—which is always implied in any dealings of that sort—there is no danger. I think that on those two recommendations we should be satisfied that the safety elements have been taken care of. There is every advantage in the new plans because they will have the effect of larger and therefore, it is hoped, fewer craft coming into Fishbourne. It will mean no backlog building up which can be extremely difficult in the holiday season with people sleeping in their cars. It will mean much better facilities for the passengers who use that point of entry to the island. In all respects, therefore, I regard the Fishbourne scheme as most helpful and thoroughly appropriate to the needs of the island. Other parts of the Bill cover many detailed points, some of which may be better dealt with in Committee. I know that the hon. Member for Kingston upon Hull, East (Mr. Prescott) has raised the  matter of clause 69 and the extension of British Rail's police powers. Further to my comments about Sealink, it is essential to have proper policing of the services and of British Rail's subsidiaries, just as it is necesary to be able to deal with any outbursts of hooliganism on soccer trains. This general purposes Bill covers a number of important points and is part and parcel of the steady determination of the Board to improve its system. If hon. Members have any detailed points that I have not covered I shall, with the leave of the House, do my best to deal with them at the end of the debate.

7.42 pm

Mr. Stan Crowther  (Rotherham)
I shall occupy the time of the House for a very short period on two aspects of the Bill in the proposal described as work No. 5, which have caused some concern to my constituents. As the hon. Member for New Forest (Mr. McNair-Wilson) said, the scheme will undoubtedly improve rail facilities in my constituency, and that is laudable. However, the way in which the matter is being handled has caused some concern. One part of the scheme involves constructing 912 metres of new track linking the old LNER and LMS lines so that Central station, currently closed, can be reopened. Unfortunately, that takes quite a large piece of land out of the site of a company called Slag Reduction Limited, and it is worried about whether it will be able to remain in business on that site. The company converts steelworks' slag into road building material, and that is not the sort of operation that can be located just anywhere. It must be remote from residential areas, and it is unlikely that any alternative site can be found for it if it has to be removed from its present location. That has naturally caused a good deal of worry. About 30 to 40 jobs are involved. The only plan in existence until a few days ago showed an area that was liable to be acquired. If the whole of that area were acquired, there is litle doubt that the company would have to go out of business on that site. The other matter that has caused some anxiety among several firms in the area is the fact that the new line will cross a road by means of a level crossing. The road is used by 1,200 lorries a day, I am  told. It is intended to run a minimum of three trains an hour in each direction, but possibly more. There is a good deal of concern that the congestion caused by the frequent closing of the level crossing gates will result in great difficulties of access to the premises of these firms. Fortunately, within the last two or three days the picture has appeared to be not quite as black as it was. On the first matter, as recently as last week British Rail finally decided where to locate the line. It appears that it will be in a position that will make it possible for Slag Reduction Limited to continue operating from its present site. The company will have to move its plant around, but its consulting engineer told me yesterday that it might prove possible for the company to stay where it is. I was told by a British Rail representative only this afternoon that so efficient will be the operation of the level crossing gates that the road will have to be closed for only one minute and 40 seconds each time a train passes. I shall believe that when I see it. If they are right, however, the maximum period of closure in an hour will be 12 minutes. If British Rail is willing, as I believe it is, to construct some kind of waiting area alongside the road for lorries that have been held up by the crossing gates, that might prove a solution to the problem. The position therefore does not appear to be as black as it did. However, I am not happy about the way in which British Rail has handled this business from the time that it first produced the Bill. It has been less co-operative and helpful in dealing with people with genuine problems than it might have been. It was only a few days ago that British Rail finally decided where it would put the line. That was only a matter of days before the Bill was due to have its Second Reading. Indeed, the Bill would have come up for Second Reading before British Rail had decided on the location of the line if hon. Members had not initially opposed the Second Reading. If this had been a planning application, rather than a Private Bill, in the days when I was the chairman of the planning committee in Rotherham, we should have thrown it out and told British Rail to do its homework properly before making proposals. It is unfair for people to be kept in doubt as they have been. The consulting engineer for Slag Reduction Limited told me yesterday that he had been trying since January to arrange a meeting with British Rail at engineering level. Even now he has not had an opportunity to discuss the matter with its engineers. That is unhelpful and does not enhance British Rail's image. I shall not oppose the Bill, but I hope that the Committee will satisfy itself that the assurances that have been given verbally will be carried out, so that those who have genuine and sincere worries may have them set at rest.

7.47 pm

Mr. John H. Osborn  (Sheffield, Hallam)
Work No. 5 concerns the constituency of the hon. Member for Rotherham (Mr. Crowther), and I may therefore be asked what my interest is. The whole scheme is important for South Yorkshire, and I am a Member for a constituency in one district of South Yorkshire. As the hon. Member for Rotherham knows, many of the managers of the firms concerned—British Oxygen, Slag Reduction Limited and Booth—live in my constituency, which is at the west end of the area that we are discussing. They had doubts whether any Labour Member would feel inclined to speak against the decisions of Labour-controlled district councils, passenger transport authorities and, above all, the Labour-controlled South Yorkshire county council. If I had known that the hon. Member for Rotherham was going to make the speech he did I might have left him to table the instruction and not intervened myself. I am disappointed that you have decided, Mr. Deputy Speaker, not to select the instruction for debate. I am certain that there will be even greater disappointment among those who asked me to pursue the matter. There is, however, a petition. If, as I am assured is the case, the Bill goes to an opposed Bill Committee, and if the points that the hon. Member for Rotherham has made so lucidly are considered there, I am quite certain that those who put their case to me will be consoled. The hon. Member for Rotherham pointed out explicitly that Slag Reduction would be cut by half, and that sites for the slag after it had been processed would not be available, as my hon. Friend  the Member for New Forest (Mr. McNair-Wilson) also recognised. There has been land use and transportation study which was welcomed by hon. Members representing constituencies in South Yorkshire and Rotherham. A structure plan has been formulated and seminars have been held. Undoubtedly, the concepts of improving rail links, and of dovetailing rail services with bus services between Don-caster, Rotherham and Sheffield have been accepted by all concerned. The Sheffield-Doncaster corridor is part of a package of improvements. I discussed them with a representative of the Passenger Transport Executive before Whitsun and again today. But reorganisation will take place. Conservative councillors on the South Yorkshire county council supported the decision of their officials. Councillor Pinder, who was involved in the matter, is chairman of my constituency association. Councillor Pat-nick is leader of the Conservative group of the South Yorkshire county council. I ask them and Councillor Arnold to bear in mind the strictures of the Secretary of State for the Environment that every aspect of capital investment must be scrutinised. I hope that they understand that, and I hope that the Select Committee will scrutinise the scheme. When he considers priorities of expenditure for passenger transport the Parliamentary Secretary to the Ministry of Transport should bear in mind that the citizens of Sheffield and Rotherham would like a high-speed train service between Sheffield and London, comparable to the service from Leeds, York and Manchester to London. He should take the advice of the citizens of Sheffield and Rotherham on the extent to which they would prefer a fast inter-city link to new local services. The Bill is promoted by the British Railways Board. The concept is that of the Passenger Transport Executive, but the plan, which is part of the transport development plan, does not show that the cost of the work can be justified on a social or economic basis. I have with me a map that shows that there will be a new station at Denby— and a new curve between Mexborough and Swinton, as well as a new station in Rotherham. Some estimates put the cost of the new link at Rotherham—  called Holmes Chord—at between £800,000 and £900,000. But the cost of the removal of the station must also be taken into account. I hope that the Secretary of State for the Environment and the Minister of Transport will be satisfied that this is justified. There are practical difficulties concerning Slag Reduction and the use of Brims-worth Street during construction, to which the hon. Member for Rotherham referred. The board is now seeking powers of temporary stopping-up during construction. That power is limited, but it could impede normal working. Another crucial factor is the frequency of trains over the level crossing. There is no guarantee that the frequency will be limited, particularly if the scheme is a success. Brimsworth Street is an access road for four large works and it is heavily used by large vehicles. Assurances must be given that there will be no stoppage of work. I do not understand what is proposed. What area of land will be used, particularly if double track is constructed? We now know that it will be a single track, but is that wise? I have constantly had to persuade objectors to the scheme that if some of British Rail or British Steel's land was made available to Slag Reduction there could be a compromise. As yet, there has been no discussions on the matter, so why should a Bill of this type—a blank cheque—go through the House without adequate safeguards? A statement of expenses has been deposited under standing orders, but we have no idea of the cost of the scheme and whether it will be cost-effective. We must decide on the value of the improvement, and we must compare the benefits with the disadvantages. If this concept has been studied and approved, provided it is cost-effective, and is not given priority over other matters, provided we know the extent to which the Government will have to contribute as part of the transport grant, and provided the interests of the objectors are examined, I do not object to the scheme. I merely wish to put down a marker so that the questions can be examined by the Select Committee and adequate answers given. If those answers are not given, I hope that my hon. Friend the Member for New Forest will realise that we shall table amendments on Report.  I seek assurance that the Select Committtee will deal with the reservations of the objectors and with the concern of the ratepayers in the South Yorkshire area.

7.57 pm

Mr. David Atkinson  (Bournemouth, East)
I refer to the proposals in part IV of the Bill which confer powers on Sealink United Kingdom Limited to construct an extension of its existing Fishbourne terminal at Wootton Creek on the Isle of Wight. I wish to refer to the effects of those proposals on the area, and on the Isle of Wight generally. I have indicated my interest in the matter to the hon. Member for the Isle of Wight (Mr. Ross), who is at present abroad on parliamentary business. My interest stems from the fact that I used to live on the Isle of Wight, and I have maintained strong family links with the island. My father had a business in Fishbourne Lane, the road that would be most affected by the proposals. As a result of the proposals, the character of Fisbourne would be dramatically, detrimentally and irretrievably affected. Existing British Rail vehicles disgorge vehicles into Fishbourne Lane regularly, but Fishbourne maintains a rural character with its charming cottages and well-kept gardens. Fishbourne Lane terminates in a cul-de-sac, which provides a village green atmosphere enhanced by the local pub, the Fishbourne Inn. British Rail's plan will destroy for all time that rural character of the village of Fishbourne. The proposed new jetty and the loading ramp that is referred to in clause 40 will be built adjacent to people's properties, and it will hardly enhance their views. It is bound to provide noise, nuisance and other inconvenience from the vehicles using the jetty almost non-stop throughout the day. The proposed dredging of Wootton Creek, which is referred to in clause 42, will require about 78,000 cubic metres of material to be dredged to accommodate the deeper draught of the larger ferries that are provided for in British Rail's plans. That in itself arouses fears of erosion of the waterside frontages of the properties overlooking the creek. There is also fear about the effect of the wash resulting from the larger ferries, bearing in mind that they are proposed to be 250 ft. long compared with the 180  ft. ferries now using the creek. That has aroused the fears that are referred to in the petition mentioned by my hon. Friend the Member for New Forest (Mr. McNair-Wilson). I am pleased that Sealink is to undertake a survey and has pledged itself to introduce a speed limit if that proves necessary. British Rail's plans will have their greatest effect on Fishbourne Lane—namely, the B331. That road is barely able to cope with existing traffic. It is used by 150 vehicles an hour. It takes about 25 minutes to clear the queues of vehicles using the ferry from the end of Fishbourne Lane. It is not wide enough in its present form to deal adequately with the nature of the traffic, which includes long trailers and caravans. It clearly requires to be widened with the introduction of the new ferries proposed by British Rail. However, there is no provision in the Bill for the widening of Fishbourne Lane. The greatest bottleneck of all will occur where Fishbourne Lane meets the A3054, the main Ryde to Newport road. The two roads form a T-junction. It requires a filter lane for traffic coming from Ryde, from the East, and aiming to get to the ferry. A system of traffic lights, or perhaps a roundabout, will be required at the junction to accommodate the increased traffic that British Rail's plans will incur. However, neither traffic lights nor a roundabout are included in the county council's estimates for the next five years. Many of the residents who live in Fishbourne Lane are professional people—for example, doctors. They require easy access to their homes. They cannot contemplate the delay that would result in gaining access as a result of the inevitable queues that would build up outside their homes. They may be forced to leave their homes. Another bottleneck occurs further down the road about a mile to the east in Wootton High Street. It is caused by traffic on the way to Ryde, Sandown and Shanldin. The extra traffic generated by British Rail's plans will undoubtedly add to the congestion, to the detriment of local residents and the character of Wootton village. Again, no estimates are included in the county structure plan to cope with the extra traffic and the increased congestion.  Local people are asking who will pay for the extra cost of the road improvements that are required to cope with British Rail's plans. The local people are already under pressure in trying to provide sufficient money to ensure that there are adequate social services to cope with the elderly who have chosen to retire to the Isle of Wight. The local people are also asking why it is necessary to develop a further ferry route, as British Rail proposes, to Fishbourne when there already exist two good ferry routes from Lymington to Yarmouth and from Cowes to Southampton. They say that it is a proposal that threatens to transform a rural village into a busy port, especially when the county council spent a great deal of money a few years ago on providing better roads to service the East Cowes ferry. It is suggested by some that British Rail wants to avoid renewing its lease on Ryde pier. British Rail provides a passenger service from Ryde to Portsmouth. It will shortly be required to renew the pier pilings. It is suggested that it will avoid that requirement by developing the Fishbourne route. If British Rail is to discontinue the use of Ryde pier, that will undoubtedly mean the end of the railway service from Ryde to Sandown and Shanklin, which is of great social and tourist importance to the Isle of Wight. The coaches that now meet passengers at Ryde pier will go to Fishbourne and add to the congestion that I have described I hope that I have adequately voiced the fears expressed to me by island people about the British Rail's plans that are contained in the Bill. I hope that the consequences of its plans will be properly scrutinised in Committee.

8.7 pm

Mr. John Prescott  (Kingston upon Hull, East)
I rise briefly to acknowledge the contribution of the hon. Member for New Forest (Mr. McNair-Wilson). The hon. Gentleman said that I inquired about schedule 6, which includes powers being extended to provide for the right of arrest without warrant. He rightly said that concern about football hooliganism is such that suitable powers should be provided to deal adequately with the prob-  lem. With my background as a seaman. I am more concerned about those who use the dock area as a means of access to their occupation—namely, seafarers. Therefore, any extension of powers in that area concerns me. I am glad to say that I have been satisfied by the authorities that are involved with the Bill : I have been reassured that we are talking only of an extension into an area that was omitted in previous legislation when Sea-link was made a separate company. There is growing concern about the restrictions laid on level crossings. I can understand the difficulties experienced by British Rail in having to man a considerable number of crossings. There is a stretch of railway in my area that runs to Bridlington and that has more crossings than any other line. That makes it extremely difficult to retain and to operate economically. Thankfully, British Rail is managing to do so. The Bill proposes to close no fewer than 17 level crossings from about 8 o'clock in the evening to about 8 o'clock in the morning. I hope that the hon. Member for New Forest will indicate whether any protests have been received. In some instances there is little traffic passing over a crossing during the day, quite apart from at night. Does it make sense to close such crossings? We read in the Bill about a new crossing over which about 1,200 lorries will pass in a day. It is clear that a great range of usage is involved. I hope that the hon. Gentleman will indicate whether protests have been received and whether there is still protest about the restriction of access, especially to road vehicles. I come from the Humberside area, and I have received no protest from the authority that is concerned, or from any of the districts that are directly involved. If the Minister intends to intervene, I hope that he will indicate whether he is satisfied that an undue restriction is not being imposed. As I have said, I understand the economic reasons. I hope that the House will forgive me for not resisting the temptation to make the following comments. First, I welcome the Bill. It seeks to expand a section of rail, and anything that expands rail development I welcome. We are branching out into a new line, a new station and a new level crossing. More people will use the service. Any area  that manages to increase rail traffic is to be congratulated. As is usual in such expansion, there is also an expansion in road transport. The infamous South Yorkshire authority is expanding in this way. It is the only authority that is expanding into road traffic, and now it is branching out into rail traffic. Those interested in transport systems might find that there is a lesson to be learnt. The Private Bill contains an essential point, namely the expansion of transport in South Yorkshire. I am glad to say, that the Labour Party is devoted to a comprehensive transport system.

8.10 pm

The Parliamentary Secretary to the Ministry of Transport (Mr. Kenneth Clarke)
The House will be relieved to know that I have not been provoked into making a political speech. I shall intervene briefly, because this Bill is essentially a Private Bill. Any detailed points will be answered by my hon. Friend the Member for New Forest (Mr. McNair-Wilson), in his usual expert way, as he is the sponsor. I agree with the hon. Member for Kingston upon Hull, East (Mr. Prescott). At this stage, the Government are happy to support the Bill and to commend it to the House. We suggest that it should be given a Second Reading so that anxieties can be considered in Committee. However, we support the main objective, namely, to make worthwhile improvements to rail traffic in various parts of the country. I am sure that the House would like the points that have been raised to be considered seriously in Committee. The Committee is under a heavy obligation to weigh up the issue carefully before any decision is made as to whether the proposed works should go ahead. I listened carefully to the speeches made by the hon. Member for Rotherham (Mr. Crowther) and by my hon. Friend the Member for Sheffield, Hallam (Mr. Osborn). I was concerned about the proposed works in Rotherham. On the face of it, those works would appear to be worth while. They will improve the standard of passenger service in Rotherham. However, while listening to those speeches I could not help contrasting the procedures involved in a Private Bill with those that would be involved if a new road were being contemplated through the  middle of Rotherham. We long ago abandoned the idea of promoting roads by means of Private Bills. Technically, a local authority can still try to avoid the more cumbersome procedures of road promotion by bringing forward a Private Bill. I do not wish to commit myself, but I do not think that the Government would look with favour on any local authority that tried to promote a controversial road scheme in that way. If a new stretch of road through Rotherham were proposed, there would be full public consultation. The plans would then be published in detail, and objections would be invited. If objections were forthcoming, a public inquiry would be set up. Only on the report of an independent inspector would the Minister go on to decide whether to build that road. It is right that the House should look upon British Rail with favour. In the knowledge that most hon. Members are anxious to promote rail traffic, British Raid used the procedure of a Private Bill. I understood that Second Reading and the Committee stage are a substitute for the road planning process. British Rail is being given planning permission, consent, and statutory powers to go ahead with the works. I hope that I have not misunderstood the hon. Member for Rotherham. However, I understand that a week ago there was some uncertainty about where the line would go. I was concerned to hear about the problems of a small firm whose continued existence may be placed in jeopardy by the line. Such a situation would have given rise to serious consideration if a road scheme had been involved. We do not wish to promote road schemes aimed at helping industry, only to find that we are putting firms that are in the path of that road out of business. I therefore hope that the Committee will consider those objections with care. I hope that those who have pettioned against the Bill will be treated with the same care and objectivity that is given when any engineering work in the public good intrudes on private interests. The same points are relevant to the Isle of Wight. I listened carefully to the remarks of my hon. Friend the Member for Bournemouth, East (Mr. Atkinson). I know that the issue is controversial on the Isle of Wight. However, it is an issue that the Committee should consider. There  are great advantages in improving the service to the Isle of Wight and in avoiding many of the delays that are involved in getting on and off the ferry. However, I trust that those in Fishbourne who are concerned about the effect of the developments proposed will be listened to carefully by the Committee. The House will benefit from their objective advice. I was invited to respond on the subject of level crossings. Economies can be made in the case of manned level crossings. I imagine that the crossings involved are manned crossings, as they are closed for several hours when there is a minimum amount of road traffic in the area. With the Government's full support, British Rail hopes to spread the use of the type of automatic level crossings that are activated by rail traffic. That represents a great cost-saving. Such systems have a better safety record than manned level crossings. They avoid the problem of delays to road traffic and they also avoid the need to economise on the cost of manned level crossings. I am sure that that will prove to be the answer for most level crossings. This is a Private Bill and will be considered in Committee. I await with interest the response of my hon. Friend the Member for New Forest, on behalf of British Rail. The House will agree that, although there is serious concern about the local implications of the Bill, its overall aim is highly desirable. No one wishes to inhibit the better development of rail services. I trust that the House will give the Bill a Second Reading.

8.16 pm

Mr. Patrick McNair-Wilson
I should like to deal with the points that have been raised. I turn first to the points raised by the hon. Member for Rotherham (Mr. Crowther) and by my hon. Friend the Member for Sheffield, Hallam (Mr. Osborn). Unfortunately, my hon. Friend has told me that he has had to go to another engagement. On behalf of the board, I am empowered to say that the problem facing the board about Holmes Chord is that a substantial interest is involved, because some businesses will be affected by the works. Much of the original plan was therefore made in outline form. Now that the details are being thrashed out, it  is possible to set up a meeting. The hon. Member for Rotherham knows that Slag Reduction Ltd. is meeting the board later this month. It is hoped that firms affected will also have meetings with the engineers, so that those problems can be dealt with before the works go ahead. British Rail is conscious that, as some of the plans are in outline form, it has not been possible to give the detailed consideration sought. However, that consideration is now available. I hope that hon. Member for Rotherham will be satisfied. My hon. Friend the Member for Bournemouth, East (Mr. Atkinson) asked about the Isle of Wight and the plans put forward by Sealink. He suggested that it might be possible to expand the Lymington ferry. Lymington used to be in my constituency. However, it was given to my hon. Friend the Member for Christchurch and Lymington (Mr. Adley). I assure my hon. Friend the Member for Bournemouth, East that access roads to Lymington are inadequate. I cannot for-see that the mainland would be able to provide the facilities that exist in the Portsmouth area. It would be difficult to expand Lymington. I have sought advice about the closure of Ryde pier. There is no foundation behind the belief that British Rail is trying to pull a fast one. The scheme is designed to take account of an increasing flow of traffic. The junction is certainly a matter for consideration by the county council. I hope that a proper solution can be found. If nothing can be done in Wootton Creek, illegal parking, and so on, will become worse. As the county council is now part of the discussions, I hope that we can ensure that that lovely part of the island is not spoilt. The hon. Member for Kingston upon Hull, East (Mr. Prescott) rightly raised the question of crossings. He is right to say that many crossings are referred to in the Bill. I remind the hon. Member that the Bill was blocked at one stage by two of my hon. Friends who were protesting about the matter of crossings. My hon. Friend the Member for Anglesey (Mr. Best) was concerned about a crossing at a place which I shall refer to as Llanfair PG. In fact it is a good Welsh word of 20 letters, and I shall not try to pronounce it. This was  an exact example of the point put forward by the hon. Member for Kingston upon Hull, East. There had been a request that the crossing should be closed between 9 pm and 8 am. This would have had a serious effect on those who normally used it. As a result of discussions with the Gwynedd county council, it has been possible to shorten the closure period to between 11 pm and 7 am. Consequently, my hon. Friend the Member for Anglesey removed his block on the Bill. There was a similar situation at Grange-over-Sands on a crossing known as Cart Lane. In that case my hon. Friend the Member for Morecambe and Lonsdale (Mr. Lennox-Boyd) tabled a blocking motion. Here again, as a result of local discussions, the point has been met.  The hon. Member for Kingston upon Hull, East is absolutely right—the closure of crossings and alterations of lines of routes which have been established over many years, rather like rights of way, properly causes considerable local concern. The British Railways Board will always try to reach a proper accommodation with the appropriate local authority. I am grateful to the hon. Member for his comments on clause 69, and, indeed, his interpretation is quite right. With those comments on the points that have been raised, I express the hope that the House will give the Bill a Second reading.

Question put and agreed to.

Bill accordingly read a Second time and referred to the Examiners of Petitions for Private Bills.

Industry Money (No 3)

Queen's Recommendation having been signified—

Motion made, and Question proposed, That, for the purposes of any Act of the present Session to make further provision in relation to the National Enterprise Board, the Scottish Development Agency, the Welsh Development Agency and the English Industrial Estates Corporation, to authorise the Secretary of State to acquire securities of, make loans to and provide guarantees for companies in which he acquires shares from the National Enterprise Board, and to amend the Industry Act 1972 and the Industry Act 1975, it is expedient to authorise— (a) any increase in the sums payable out of money provided by Parliament under the Industry Act 1972 which is attributable to provisions of the said Act of the present Session authorising the payment in certain cases of grant under Part I of the said Act of 1972 calculated at the rate of 20 per cent, of the expenditure concerned instead of at a lower rate, and(b) the issue out of the Consolidated Fund of any sums required by the Treasury for fulfilling any guarantee given in respect of sums borrowed by the English Industrial Estates Corporation from the Commission of the European Communities or from the European Investment Bank.—[Mr. Law-son.]

8.25pm

Dr. John Cunningham  (Whitehaven)
I hope that the Under-Secretary will give us an explanation of this money resolution, not least because it is the third money resolution associated with this Bill. That, in itself, is extraordinary. More than that, this resolution probably in some way presages some increase in public expenditure, and the House is entitled to an explanation of that. The Under-Secretary looks a bit puzzled, so perhaps I am mistaken on that. I should be very grateful if he would explain the reason why this is the third occasion on which we have had a money resolution associated with this Bill.

8.26pm

The Under-Secretary of State for Industry (Mr. David Mitchell)
The money resolution is required to enable the House to approve, if it so wishes, Lords amendments Nos. 2 and 3 to the Industry Bill.  These are minor technical matters. Lords Amendment No. 2 enables the Treasury to guarantee borrowings by the English Industrial Estates Corporation, which may arise as a result of Lords amendment No. 1 dealing with the ability to borrow from the European Investment Bank and European funds. Lords amendment No. 3 is a minor, highly technical provision to ensure fair treatment for a small number of firms which would otherwise be disadvantaged by the upgrading of their assisted areas. We shall shortly debate these highly technical matters, but I can assure the House that they are purely technical matters that were not foreseen at the time of the Bill's earlier passage. I am sure that when we debate these matters the hon. Member will find himself able to support them.

Dr. John Cunningham
The Under-Secretary says that these are technical matters. In truth, they result from the parsimony of the Government in respect of the changes in their regional policy assistance. The amendments are more than technical. The Government have got themselves into a bit of a fix because of their changes in regional policy and the effects and counter-effects of the subsequent amendments to their own Bill. I assume that this third money resolution is the way out of that. The amendments may be technical in that sense, but the changes themselves are more than technical in the way that they affect the companies in the regions concerned.

Mr. David Mitchell
I am sure that the hon. Member will not wish to delay the House in getting on to substantive matters contained in the amendments. I assure him that parsimony is not the appropriate phrase to apply to the amendments that give rise to the money resolution. We are seeking rather generously to lean over backwards to ensure that a small number of firms which would have been disadvantaged will now not be disadvantaged. I hope that the hon. Member will enable us to move on to the debates on the amendments.

Question put and agreed to.

Industry Bill

Lords amendments considered.

Mr. Deputy Speaker (Mr. Richard Crawshaw)
I wish to inform the House that all the amendments with the exception of amendment No. 5, involve privilege and in respect of any such amendment that the House is minded to accept, I will cause the appropriate entry to be made in the Journal.

New Clause A

Power For The Corporation To Borrow

Lords amendment : No. 1, after clause 12, in page 9, line 31, at end insert—
 (1) The English Industrial Estates Corporation may, in accordance with directions under section 10(3) of this Act given with the approval of the Treasury, borrow in any currency from the Commission of the European Communities or from the European In vestment Bank, but subject to subsection (2) below.(2) The aggregate amount outstanding in respect of the principal of sums borrowed under this section shall not exceed £30 million or such greater sum not exceeding £50 million as the Secretary of State may with the approval of the Treasury by order specify.(3) The power to make orders under this section shall be exercisable by statutory instrument, and no such order shall be made unless a draft of it has been laid before and approved by resolution of the House of Commons.(4) In section 11(8) of the Local Employment Act 1972 (receipts of Corporation, with certain exceptions, to be paid over to Secretary of State) after paragraph (a) there shall be inserted— "(aa) receipts consisting of sums borrowed under section (Power for the Corporation to borrow) of the Industry Act 1980; and". Read a Second time.

The Under-Secretary of State for Industry (Mr. David Mitchell)
I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker
With this we may take Lords amendment No. 2—in page 9, line 31, at end insert new Clause B (Treasury Guarantees):— (1) The Treasury may guarantee, in such manner and on such conditions as they think fit, the repayment of the principal of, and the payment of interest on, any sums borrowed under section (Power for the Corporation to borrow) of this Act.(2) Immediately after a guarantee is given under this section, the Treasury shall lay a statement of the guarantee before each House of Parliament; and where any sum is issued for fulfilling a guarantee so given the Treasury shall, as soon as possible after the end of each financial year (beginning with that in which the sum is issued and ending with that in which all liability in respect of the principal of the sum and in respect of interest thereon is finally discharged) lay before each House of Parliament a statement relating to that sum.

Mr. Mitchell
This is a technical amendment, which need not take up too much of our time. At present the English Industrial Estates Corporation has no borrowing powers, nor has it ever had such powers, nor have they ever been needed. As an instrument of the Government's regional policy, the corporation has been financed from the Vote of the Department of Industry and it will continue to be so financed, except in so far as the private sector may provide funds for its activities. However, it is not beyond the bounds of possibility that the Government might want the corporation to borrow from the European Investment Bank or from the European Coal and Steel Community. I do not say at this stage that this is probable, or even likely. Much obviously depends on the individual circumstances of each loan or project, and in particular on the desirability of borrowing in foreign currencies and so substituting the disadvantage of a long-term exchange risk for the disadvantage of temporarily higher domestic interest rates. This is a technical fiscal judgment, as hon. Members will recognise. The purpose of the new clauses is simply to allow the kind of borrowing that I have described, should it be thought to be a good thing at any time. This is identical in substance, if not in words, with the comparable provisions relating to the European Investment Bank or EEC borrowing in the Welsh Development Agency Act and the Scottish Development Agency Act of 1975.

Dr. John Cunningham  (Whitehaven)
We shall not oppose amendments Nos. 1 and 2. The English Industrial Estates Corporation has a good record, and anything that is done to facilitate its more effective operation is welcome to us. Certainly we subscribe to the view that the EIEC should be helped in whatever way possible to do the very great and  increasing job that the Government are placing upon it. 8.30 pm The corporation has a difficult task in helping industrial growth and regeneration and providing advance factories in its headquarter area in the Northern region and other areas in England. One has only to look at the latest Government figures for bankruptcies and liquidations to see that any help given to the corporation, however small and technical, is welcome. We urge the Government to consider providing wider powers to the corporation. The Labour Party is committed to the creation of a northern development agency, as the Minister knows, which would have implications for the work of the corporation and for the northern arm of the National Enterprise Board. I hope that the corporation will continue vigorously to tackle problems in the regions. In a debate earlier today the Government demonstrated the scant regard that is being paid to job safety in the North-West and Scotland, which, admittedly, does not come under the corporation. I hope that the Minister will take account of the serious concern that I and my hon. Friend the Member for Workington (Mr. Campbell-Savours) share about the Northern region, and West Cumbria in particular. Had it not been for the public expenditure devoted to the operations of the corporation, among other public expenditure, the situation would be worse. The Under-Secretary said that the second amendment was technical. No one would disagree. The Minister of State in another place had difficulty in explaining what the amendment meant.

Mr. John Evans  (Newton)
When we debated the clauses relating to the English Industrial Estates Corporation in Committee we indicated that we would give them a fair wind. I welcome the proposed changes in the corporation. In Committee I said that it could be the embryo of an English Development Agency. Funds which, we hope, are available from European institutions can benefit the corporation, although I am surprised that legislation is required to enable it to borrow those funds. Perhaps the  Under-Secretary can explain that. I assumed that the corporation already had such powers. The European Investment Bank takes a fairly leisurely look at loan applications and will recognise that the corporation is, in effect, a Government body. In view of what the Minister said, I should like clarification about the corporation's ability to borrow from the ECSC. Over the past few years I have had dealings with the ECSC. Basically, its role is to make funds available for projects that will create employment in areas where there is a rundown in either the steel or the coal mining industry. I am rather surprised that that has been brought into the measure. It is not stated in as many words in the clause. I should have thought that any project that offered employment in rundown areas, where there are redundancies among steel or coal workers, would qualify for aid from the ECSC. Those are only general points, and I am concerned with a more important matter. I feel very strongly that, in the context of the Industry Bill, which we debated at length in Committee and on the Floor of the House, the Government have seriously disadvantaged substantial areas of the country, particularly in the North-West, by removing assisted area status from many parts of the country, and especially from my constituency. I am sure that the Minister will appreciate that I did not spend a great deal of time in Committee raising matters concerning my own constituency, but I feel entitled on this occasion to raise this question, because the net effect of the clause—which will strengthen the English Industrial Estates Corporation, and to that extent I welcome it—will be further to disadvantage areas such as my own which have lost their assisted area status. I am sure that the Minister will be prepared to concede that when he and his hon. Friends—particularly the Secretary of State—referred in the past to concentrating aid on areas that have the greatest need they were open to the charge of hypocrisy, because they have not added a penny to the special development areas, where the need is greatest. They have simply lopped off the funds that were available to the assisted areas. There are potentially substantial sums of money that will be available on loan from European institutions and will obviously go only to the development areas and special development areas. They will not go to areas such as my constituency, because under the terms of the Industry Bill the English Industrial Estates Corporation will be precluded from acting in any area other than an assisted area. I am sure that the Minister will concede that I am right there. I am sure that areas in which the English Industrial Estates Corporation is now acting will have to sell off their assets because they are no longer assisted. As I have indicated, I feel strongly that areas such as my own will be further disadvantaged. We have just had a debate on Ferranti, in the course of which some of my hon. Friends outlined the appalling job loss that has taken place in the North-West over the past 12 months, particularly in the Greater Manchester area. The fact that we have now no assistance leads to great difficulty in relation to the special development areas. Special development areas, such as my own constituency, the Greater Manchester area, parts of Northern Lancashire and parts of Cheshire, are in competition not only with the special development area of Merseyside, but with development areas and special development area types of organisation throughout the European Community, and this is a great problem. Other countries in Europe are pouring millions of pounds into large areas of their countries and increasing the total amount of national aid that they give them in order to protect industries and jobs. But this Government, to the amazement of the rest of the world, are cutting back on the gross total being made available for desperately needed assistance in industry in Great Britain. I feel that I have a duty tonight to put forward the claims of areas, such as my own, which have lost their assisted area status and are now losing jobs at an appalling rate. The Minister will recall that on two or three occasions in Committee I said that the only growth industry that there would be in this country for the next couple of years would be the bankruptcy industry. He must concede that the figures that have been produced prove that there were more bank-  ruptcies in the first quarter of this year than has been the case almost since records have been kept. We all know that that is only the fringe. A tremendous number of bankruptcies have still to come. Some of the greatest names in British industry will be going to the wall in the not-too-distant future. We recognise the help that the new clauses will bring to the English Industrial Estates Corporation and the work that it can do in certain areas of the country, provided that the Government let it get on with the job—which I doubt. Nevertheless, we must not lose sight of the fact that vast areas of the United Kingdom, particularly in the north-west of England, and especially in the Newton constituency, are going to the wall. They are being decimated. Jobs are disappearing. Redundancies are occurring. Closures and bankruptcies are occurring on a scale that is alarming even the Tory Party in the North-West. We welcome the new clauses, but we hope that the Minister will not for one moment think that our acceptance of them means that we give a helping hand to the Bill. Like so much of the rest of the Government's legislation since the disaster that overtook Britain last May, it is an appalling Bill. All that the new clauses do is to add just one little bit to one beneficial part of the Bill. I hope that the Minister does not think that I have in any way lessened my hostility to his appalling Bill.

Mr. David Mitchell
The hon. Member for Whitehaven (Dr. Cunningham) rightly praised the work of the English Industrial Estates Corporation. I am grateful to him for doing so, and I thoroughly agree with his sentiments. My answer to the slightly carping tone of the hon. Member for Newton (Mr. Evans), is that it would be untrue to suggest, as he did, that under the Government the work of factory provision by the corporation is being held back. The truth is that public sector expenditure by the corporation will be about £35 million this year, to which must be added £25 million which has already been raised in private sector money. Taking those two together, we are spending at least twice as much as has ever been spent by the corporation. I hope that the House will recognise the very  substantial benefit that this will bring to the areas in which the building is taking place.

Dr. John Cunningham
We recognise that what the Minister says is true, but I hope that he is not attempting to convey the impression that, because of this provision, somehow aid to the regions is being increased by the Government through this Bill, because the reverse is the truth, as he well knows. There will be a real cut of one-third in total aid to the regions as a result of the Government's policies. We had better have that clear in our minds.

Mr. Mitchell
If I trespass on to debating the whole area of regional policy, Mr. Deputy Speaker, I fear that I shall find myself out of order. However, on this amendment, concerned as it is with the English Industrial Estates Corporation and its activities, I know that the hon. Gentleman will wish to praise the fact that the Government have ensured that the corporation's expenditure this year will be more than double what it has ever been. 8.45 pm The hon. Gentleman referred to the need for a Northern Development Agency. He said that this would have implications for the English Industrial Estates Corporation. This is, perhaps, not the right place, but it is unsettling for such an organisation to be given a sense of uncertainty, which inevitably is implied in changes that would mean that its factory building activities were taken away from it in the Northern area. If that is not to happen, I hope that the hon. Gentleman will put the record straight.

Dr. Cunningham
As the Under-Secretary of State invites me to put the record straight, I do so with pleasure. He should be assured, as should the people of the Northern region, who do not, however, need reassuring, because a glance at the record of parliamentary election results in the Northern region will more than adequately support what I say. They are not in any doubt about which of the two politicial parties, when in government, brings more succour and benefit to the region.

Mr. Deputy Speaker (Mr. Bernard Weatherill)
Order. I hope that the Minister will not be tempted to go along that line too far. We are concerned with the English Industrial Estates Corporation.

Mr. Mitchell
It is a pity that the Opposition have not taken the opportunity of this brief exchange to give an assurance and remove the uncertainty that their earlier remarks created. I point out to the hon. Member for Newton that amendment No. 1 enables the English Industrial Estates Corporation to borrow. It has never before had borrowing powers. It has always been financed direct from the Department of Industry Vote. It is now thought that there might be circumstances—the Treasury feels that it might be helpful—in which it should have the opportunity, if in the judgment of those dealing with financial transactions this would be favourable, to borrow from either the European Investment Bank or the ECSC. Lords Amendment No. 2 enables the Treasury to guarantee the corporation's borrowing. It is hardly a genuine need to guarantee, since the corporation itself is a creature of the Government and will not undertake borrowings without Treasury approval. Nevertheless, within our constitution there is a requirement that when the Treasury takes on a potential liability—which is what a guarantee is, in Treasury eyes—it must have Parliament's approval to incur that notional risk. I hope that I can reassure the hon. Gentleman that we are dealing with a technical and minor matter. Since there are other matters with which the House wishes to deal, I hope that I have been able to satisfy the hon. Gentleman.

Question put and agreed to. [ Special Entry.]

Lords amendment No. 2 agreed to. [ Special Entry.]

Clause 14

Regional Development Grants

Lords amendment : No. 3 in page 11, line 5, at end insert—
 ' (3A) Where, apart from this subsection, the amount of a grant under Part I of the Industry Act 1972 towards expenditure falling within subsection (3B) below would be less than 20  per cent, of the expenditure, the amount shall instead be 20 per cent, of the expenditure. (3B) The expenditure falling within this subsection is expenditure incurred— (a) in providing an asset as part of, or on or for use in, qualifying premises in a relevant special development area in such circumstances that, by reason of Article 5(1) and (4)(d) or Article 5A(2) and (5)(b) of the Assisted Areas Order 1979, any grant under Part I of the Industry Act 1972 towards the expenditure is to be made at the rate appropriate to a development area which is not a special development area, or(b) in providing a building or works at any time as part of or on qualifying premises in a relevant development area in such circumstances that, by reason of Article 5(2) and (4)(d) of that order, no grant may be made under Part I of that Act towards any expenditure incurred in providing machinery or plant at that time for use in those premises. (3C) In subsection (3B) above— (a) "relevant special development area" means an area which became a special development area on the coming into operation of the Assisted Areas Order 1977, the Assisted Areas Order 1979 or the Assisted Areas (Amendment) Order 1979, and(b) "relevant development area" means an area which became a development area on the coming into operation of the Assisted Areas Order 1977, the Assisted Areas (No. 2) Order 1977 or the Assisted Areas Order 1979.'

Mr. David Mitchell
I beg to move, That this House doth agree with the Lords in the said Amendment. This is a technical amendment to reverse an unforeseen effect of the transitional provisions in the Assisted Areas Order 1979 and the Assisted Areas (Amendment) Order 1979 which, combined with the effects of the Regional Development Grants (Variation of Prescribed Percentages) Order 1979 would result in some companies in upgraded areas suffering an unintended shortfall of regional development grant. The companies affected are those that accepted offers of selective assistance in excess of £20,000 before the orders came in to operation. The transitional provisions allow such companies the option of retaining the selective assistance and receiving RDG during the period of the assisted project as if the areas had not been upgraded or of repaying the selective assistance, forgoing future assistance received under the offer and receiving the new and higher rate of regional development grant. The intenion was that companies that retained their selective assistance should continue to receive grants at the 20 per cent, rate during the period of their assisted project. They cannot receive the full benefits of RDG that their expenditure would otherwise have attracted in the upgraded areas. The Regional Development Grants Variation of Prescribed Percentages) Order reduces the rate to 15 per cent, on assets provided on or after 1 August 1980. The outcome is that some applicants in assisted areas that have been upgraded because of special problems will not only not receive any benefit from the upgrading but will be disadvantaged. About 52 projects in the new special development and development areas are affected by the transitional provisions, with an unexpected loss of RDG estimated at about £480,000. The amendment reverses that effect and provides that applicants in the new special development and development areas which opt to retain their selective assistance shall continue to receive the 20 per cent, rate of grant during the period of their assisted project. I commend the amendment to the House.

Mr. John Evans
The amendment is a piece of exceptionally obscure parliamentary gobbledegook. We are dealing with areas that used to be assisted areas or intermediate areas and which have been upgraded to special development areas. Which particular area has been upgraded from intermediate area to special development area? Some areas have been upgraded from intermediate to development area and from development area special development area. I cannot recall an area which has been upgraded from intermediate area through to special development area.

Mr. Mitchell
That question does not arise under the amendment. There will be further cross-examination from the Opposition Front Bench and I shall do my best to explain the detail.

Dr. John Cunningham
The Minister is waiting for information from his civil servants rather than for my questions.

Mr. Mitchell
That is not true. The intervention was irrelevent to the amendment. No areas have made a double jump.

Dr. Cunningham
Perhaps that is the answer, but perhaps the Minister is unsure, as we are unsure. It is not surprising that there is confusion. Perhaps I was over-hasty a few moments ago. If anyone in a factory or office in my constituency that had just lost special area development status were presented with this amendment, even if local advisers or solicitors or the Minister's civil servants from the regional office were called in there would be difficulty in deciding what it all means. I am tempted to read everything into the record to make the point, but I fear that even attempting that would be too difficult, because the issue is so complicated in its wording and cross-references. It is a classic piece of Civil Service gobbledegook and legal jargon. Industrialists, their staff and advisers will have grave difficulty in understanding what is proposed. I therefore hope that the Minister will do two or three things in order to overcome those difficulties. Will he, first, in words, if not of one then at least of two syllables, explain in more detail what the effect of these amendments will be in terms of regional policy? It would be helpful if he did that. Secondly, will he give us an assurance that every project and every company that has been affected by this technicality which he says was not intentional—we accept that—will be advised of the circumstances and given the opportunity to take advantage of whatever is the best option for them? I am not too clear whether an option exists for them or not. Thirdly, will the hon. Gentleman undertake either to write to my hon. Friend the Member for Newton (Mr. Evans) about the point that he raised, or to myself or to both of us, when he is able to give a satisfactory answer? That would assure us that a project or company in a development area will not lose as a result of this legal labyrinth into which the Government have staggered as a result of their desire to change regional incentives. I hesitate to pass judgment on this because I have had grave difficulty in reading the measure and understanding its intention. It is clear, as my hon. Friend the Member for Newton said and as many of us know, that though the Government  are being helpful in this respect they are being unhelpful in relation to a number of the other changes that they have made in regional policy incentives. I speak of the downgrading of areas and the subsequent loss of grant. Those things are having a serious effect in the regions. Perhaps this debate on these Lords amendments is not the appropriate time to discuss that matter, but I can assure the hon. Gentleman that though we shall not oppose this amendment he should be clear—as he seemed not to be clear in his remarks a few moments ago—that we regard these amendments as being not only eminently avoidable but not in the best industrial interests of the regions that they affect.

Mr. J. W. Rooker  (Birmingham, Perry Barr)
I intervene briefly in this debate to say that the amendment is, as my hon. Friends have said, extremely complicated. I tried this afternoon to marry up some of the orders, because I wish to raise a point in the context of the purchases of equipment in development areas. Not enough of the equipment purchased for factories in development areas is manufactured in the West Midlands. I thought that I would be able to make my points during the debate on the two new clauses, but I took advice from the Clerks and was told that this would be the most suitable juncture at which to make my plea on behalf of a company. One of the advantages of that procedure is that the amendment that we are discussing is so complex, because of the references to orders that were read out by the Minister, that I do not intend to take more than four or five minutes to make my point. However, I wish to raise with the Minister the matter of grants payable as well as some of the projects that he has mentioned. The sum of £500,000 has been mentioned. 9 pm During the course of recent visits that I have made to machine tool manufacturers in the West Midlands I have come across allegations of gross irregularities amounting to corruption in the purchase of machine tools for installation in factories in development areas. The purchase of the machine tools was by Rolls-Royce. At the request of the management and representatives of the employees of the company which feels aggrieved, because its machine tools were involved  in the first place, I am making the points that they wish to have made. There is another advantage in raising this matter. The money resolution affects this point. However, I do not intend to go into that aspect, because it would be out of order to do so. The company concerned, Rolls-Royce, is to ge into the direct ownership of the Department of Industry as a result of the measures in the Bill. The shares will be transferred from the National Enterprise Board to the Department. The Government will be on the receiving end because they will own a company with factories in development areas. I hope that at least the Minister will look into the points that I wish to make. I can explain this matter very simply. At the Glasgow plant of Rolls-Royce there is a facility for producing a component known as a high pressure disc, using machine tools manufactured by Webster and Bennett in Coventry. The machines—known technically as vertical turning machines or boring mills—were specially built to do the job and perform to specification. By pure accident, it came to the attention of the management of Webster and Bennett in December 1978—some time ago, when these grants were available—that a duplicate set of machines to produce exactly—I repeat, exactly—the same component as was produced in Glasgow had been ordered for Rolls-Royce's Sunderland plant. They had not been ordered from Webster and Bennett, nor was the company requested to quote for them. These machines would have attracted grants. The machines—nine in all—were ordered from Morando, an Italian company, a subsidiary of an organisation called Comay which is itself owned by Fiat. Witnesses have seen in the Turin factory of Morando during the manufacture of these machines the Webster and Bennett operation sheets which were used when the Glasgow machines were manufactured—sheets subsequently handed over to Rolls-Royce. Morando did not obtain those operation sheets from Webster and Bennett. They could have been obtained only from someone within Rolls-Royce for the Sunderland factory, which is in a development area, for machines  purchased abroad to attract the grants referred to in the amendment. Well over a year ago the NEB was informed of Webster and Bennett's unease about the matter, but it shrugged it off with claims about the component being different and about price and delivery. Webster and Bennett was never approached about the order. Its price of £165,000 per machine was cheaper than the £182,000 of Morando, and the component was exactly the same, as confirmed on 18 January 1979 when executives of Webster and Bennett visited the Rolls-Royce plant in Glasgow. This is not a claim on behalf of a bucket shop operation. Webster and Bennett, which was started in 1885, supplies 78 per cent, of the United Kingdom market in boring mills and has a good export record, rightly feels aggrieved about this matter. After Webster and Bennett heard what was happening about the machines ordered for Sunderland, its chief executive got himself inside the Morando plant in Turin. He was accompanied by the British Government's trade official, Mr. G. E. Gostauda. He saw his company's operation sheets lying around. Morando was asked how it got the Rolls-Royce order for Sunderland attracting the grant. We are talking of over £1½ million in orders. The trade official is a witness to the fact that the answer was that someone was bribed and that Morando could get any order that it wanted from Rolls-Royce. It is alleged that the person responsible inside Rolls-Royce for obtaining orders for Morando in this way is a Mr. Frank Turner, currently plant applications manager, Rolls-Royce production centre, Derby.

Mr. Dennis Skinner  (Bolsover)
Is he a Tory?

Mr. Rooker
Inside Rolls-Royce, Mr. Turner has been the leading advocate that the company should drop Webster and Bennett in favour of Morando. He certainly made that clear at the Sunderland plant on 18 April 1978. That was eight months before Webster and Bennett heard about the Sunderland facility, and nine months before 18 January 1979 when, during a visit to Rolls-Royce in Glasgow, Webster and Bennett executives  were officially told of the Morando order for the Sunderland factory owned by Rolls-Royce. Other inquiries have revealed that Webster and Bennett was ruled out as a "policy decision" within Rolls-Royce. Some Rolls-Royce executives have privately apologised to Webster and Bennett for Mr. Turner's conduct but say that they can do nothing. That action is being repeated in the United States, where Rolls-Royce is planning one to three plants for the RB211 engine programme, again using Morando machines. The British company has not been given the chance to quote. That is the end of my story. I wish to conclude by asking five questions about the points that I have raised and in the context of the amendment that we are discussing. First, how did the foreign manufacturer obtain the British manufacturer's operation sheets? Rolls-Royce is owned by the public, it purchased machines with public funds, and it received extra grants because the machines were going into a development area factory. Secondly, why did Rolls-Royce executives—almost civil servants—apologise to Webster and Bennett for the conduct of Mr. Turner but not take the matter further? Thirdly, how did Morando know that it could obtain any order from Rolls-Royce and feel secure enough to say so in front of witnesses? Fourthly, why did the NEB not look fully into the matter, having been informed of part of the story a long time ago? Fifthly, will the Department look into the matter now? I am quite prepared to admit that I have made a substantial allegation against a company in the public sector, and also against an individual. Having considered the information given to me by the company that felt aggrieved, I made that allegation at the request of both the management and the representatives of the work force. I do not usually take lightly the use of the protection of parliamentary privilege. The charges are substantial. They affect the lifeblood of the part of the country that I represent. They affect the machine tool industry, which is dying on its feet. They affect one of our premier companies—Rolls-Royce—a leading exporter world renowned for the excellence of its engineering. Given the fact  that the NEB was told part, if not the whole, of the story, it is a tragedy that I have been requested to make these allegations. I have used Lords amendment No. 3 as a vehicle to do so. I hope that Government grants have been paid to Rolls-Royce. I make no suggestion that the money should be withdrawn. I am not sure whether the plant is one of the 52 to which the Minister referred. I am grateful for the fact that he did not interrupt me to make the point that it was not one of those plants. That might have given you, Mr. Deputy Speaker, the opportunity to rule me out of order. However, it is a development area site. That practice that I have alleged tonight will happen in other factories unless we alter the conduct both of the executives and of the company.

Mr. John Evans
My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) made an extremely grave charge. Obviously, I do not intend to follow him down that road, because I have no knowledge of the issue that he raised. I am sure that the Minister, and the House, will agree that my hon. Friend has a long and proud record of bringing matters of that nature to public attention. I am sure that the Minister will not take my hon. Friend's charge lightly. It is important to recognise that some hon. Members have long felt that there was a danger of a measure of sharp dealing, if not outright corruption, in the development grants for machinery in assisted areas. I am sure that the Minister will agree that those hon. Members who have lived most of their lives in assisted areas have complained bitterly about firms that open within our areas for a brief period, buy expensive machinery with Government assistance, and, after a short period, close down and leave for other parts of the country taking the machinery with them. That is a nice operation for them to pull off. I hope that the Minister will appreciate that my hon. Friend has made no political charges. He has not attacked the Government. He made the major point that he was referring to events in 1978, when the previous Labour Administration were in office. On clause 14 we are discussing grants. I hope that the Minister will recognise that it is important that my hon. Friend's  charge is examined in some detail. Consequent upon the Industry Bill, Rolls-Royce has passed from the orbit of the NEB into the direct control of the Department of Industry. I hope, therefore, that the Minister will as a matter of urgency look into the grave charges that my hon. Friend has made. I return to the Lords amendment. I understand the reluctance of my hon. Friend the Member for Whitehaven (Dr. Cunningham) to read out the whole of clause 14, but I think that he had a public duty to do so. If he had read it the general public would have seen the incredible gobbledegook to which the parliamentary draftsmen have to resort—I suspect because of the activities of the legal profesion. This is an extremely difficult area to understand. The Minister will recall assuring me that no areas had made a double jump from assisted area status to that of special development area. I suspect that the Minister is right, but equally I suspect that this provision has nothing to do with that. I suspect that we are concerned here with areas which were assisted areas, which have been promoted to development areas, but which have suffered a cut in the level of grant from 20 to 15 per cent, in accordance with the Bill. Clause 14 amends the table in section 1 of the Industry Act 1972.

Clause 14 states that for the purpose of regional development grants expenditure incurred in
 "Providing a building as part of, or providing works on, qualifying premises in a development area"

will attract a prescribed percentage as follows :
 " If the qualifying premises are in a special development area : 22 per cent. If not : 15 percent."

So special development areas will receive a 22 per cent, grant whereas development areas and intermediate areas will receive a 15 per cent, grant. The clause then goes on to make a similar statement in relation to machinery and plant. Section 1 of the 1972 Act, which this Bill amends, states that expenditure incurred in
 " Providing a building as part of. or providing works on, qualifying premises in— (a) a development area."
 attracts a prescribed percentage as follows
 "If the qualifying premises are in a special development area : 22 per cent. If not : 20 per cent."

It then goes on to say that in an intermediate area the prescribed level is 20 per cent.

There is no change in the special development areas. We are therefore concerned with intermediate areas. The provision applies to much of the area of the Wigan metropolitan district council which for some time after the publication of the Bill in 1979 was congratulating itself on being promoted at long last from intermediate area to development area status. The members of the council were somewhat deflated when I pointed out that as a result the area would get less grant.

I suggest that the Government have now recognised the odd circumstances that they are creating for an admittedly small number of companies and have accordingly tabled the amendment to protect those areas from promotion to development area status. I hope that the Minister will confirm the accuracy of what I have said.

I find that obnoxious since in Committee we spent a great deal of time arguing on clause 14 on behalf of the substantial number of firms which will stand to lose grant if the expense incurred in providing the asset is incurred before 1 August 1980 or defrayed before July 1979.

9.15 pm

We spent a long time discussing the matter. We pointed out that there was an engineering strike last year, and that we were in the throes of a steel strike. Firms signed contracts with the Department in good faith and because of circumstances outside their control they risk losing substantial sums of money because they cannot complete construction before 1 August this year. I know that many companies are desperately trying to get the work finished, but with not very much hope of doing so.

It is curious that the Government should produce this gobbledegook of an amendment which no one will be able to understand. One would have to be a barrister-at-law and chief engineer rolled into one to be able to understand it. Serious problems are being created  for many firms because of the Government's actions—and for no reason. They are not saving a substantial amount of money. They are merely creating bad faith with firms which, at the behest of the Government and local authorities, moved to assisted areas to provide employment. They have been cut off, and the Government have done nothing to assist them.

I hope that the Minister will say why, even at this late hour, the Government are not prepared to throw a lifeline to those firms which could lose a substantial amount of money unless they conclude their building work—presumably to the satisfaction of the Department—by 1 August. Will he agree that I have spelt out correctly that the reason for amendment No. 3 is that the promoted areas that at one time congratulated themselves on being uplifted to the giddy heights of development areas have lost grants in the process. If I am wrong, the Minister should give a more convincing explanation in his reply than he gave in his introduction. With respect, I could not make head or tail of his opening remarks, or of Lords Amendment No. 3.

Mr. John Butcher  (Coventry, South-West)
It had not been my intention to participate in the debate on this clause, but after the remarks of the hon. Member for Birmingham, Perry Barr (Mr. Rooker) I hope that I will be forgiven for placing a few sentences on the record. I am curious as to why this complaint came through the hon. Member for Perry Barr, and why he had to use the privilege of the Floor of the House in order to make strong allegations. Neither Webster and Bennett nor Rolls-Royce is in my constituency, but, as the only Coventry Member present, I should like to ask my hon. Friend the Under-Secretary to conduct whatever necessary investigations are required with all speed, because very serious allegations have been made. Either vindication or exoneration must be established as soon as possible. Will my hon. Friend also ensure that the four hon. Members representing Coventry constituencies receive, if not an advance copy of the conclusions, a copy as soon as it is made available to the House generally?

Mr. D. N. Campbell-Savours  (Workington)
I commence by congratulating you, Mr. Deputy Speaker, on being so  liberal. I felt that you were tolerant in allowing to be brought before the House, an issue of national concern and significance. I am sure that my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) will wish to join me in thanking you for your tolerance. It is good that on occasions the precedents of the House can be modified to allow hon. Members to accomplish their objectives, which is essentially that there be justice in our society. It seems that the clause that is being amended consolidates the provisions of the regional development grant orders that were placed before the House in July 1979 by the Secretary of State for Industry. I should have been much more satisfied if those in another place, in their so-called wisdom, had removed the whole of clause 14. If that had been done, much of the difficulty embodied in the Bill as presented to the House would have been removed. That would have led to some form of continuity in industrial development. I find remarkable the unintelligible nature of the amendment that has been drafted by another place. I cannot imagine what sort of mind is able to contrive such a remarkable amendment. When I first saw it I found it incomprehensible. I turned to my hon. Friend the Member for Whitehaven (Dr. Cunningham), to whom I regularly turn for guidance, and he told me to refer to the discussion in another place. I did so and it was only then that I was able to gain a marginal interpretation of the objective. As the objective unfolded, I realised that embodied in the amendment was a gross inconsistency. The amendment deals with the problems of companies that are about to lose grant. I think that the sum is £460,000 in areas to be upgraded. However, it fails to deal with the problems of companies in areas that are to be down-graded. In view of the sums involved and the considerable hardship that will be caused to many companies in development areas that have lost regional support directly as a result of the introduction of the Bill, those in another place would have been far wiser to turn their attention to a much more important issue. Mistakes  have been made by the Government because they have failed to understand the increasing nature of unemployment and the increasing misery that it brings. At the same time they have been willing to introduce measures to down-grade certain areas. A company in my constituency is involved in the down-grading process. As millions of pounds are involved, I think that I should bring the issue before the House. A measure was brought before the House when the previous Labour Government were in office, and the then hon. Member representing Workington, who now represents another constituency, referred during the debate that then took place to Thames Board Mills and the allocation of selective financial assistance and other forms of financial assistance to that company to help it with the investment that it was making in its plant in Workington. In negotiations with the Department of Industry the company was led to believe that a certain sum would be made available. Since 1978 it has made various investments in pieces of machinery to ensure that within a reasonable period from the original application, its investment having been laid, it will be able to begin production of the product that it intended to manufacture. The guillotine fell in July 1979. The Secretary of State for Industry made a statement to the effect that if within 12 months a programme had not been carried out financial assistance would be removed. At that time, the Thames Board Mills project—which was sponsored by the Department of Industry—had only used 50 per cent, of investment moneys for machinery orders. Only 50 per cent. of the buildings had been created. The new measures reduce the amount of grant given to that company. I do not wish to discuss the merits of whether that level of assistance should be paid to companies in development areas. I simply wish to refer to the principle of making an agreement with a company that will affect its cash flow, and on which it will determine its future investment.

Mr. David Mitchell
I wish to clarify that point. The hon. Gentleman referred to making an agreement with the company. Was he referring to selective  assistance, or to a regional development grant?

Mr. Campbell-Savours
I was referring to both forms of assistance. However, I shall refer specifically to regional development grant applications. The company's total investment in machinery amounted to £63 million. Last year, the Secretary of State for Industry decided to introduce a measure. That decision will cost the company £3 million this year in potential investment. The company will lose £1 million on its investment in buildings. That sum could have been greater. However, the company has informed me that negotiations have taken place with representatives from Department of Industry, and that agreements have been made. The amendment deals with the trivial—although in one sense important—amount of about £500,000. However, it means £4 million to that company. Hundreds of companies are losing money as a direct result of the Secretary of State's decision to erect that limit. Representatives of the Department of Industry said "Hard luck" when Thames Board Mills asked whether the Secretary of State would pay the money in accordance with the agreement made by the previous Labour Administration. I understand that such things can be modified under the 1975 Act. However, there is such a thing as the spirit of an agreement. In this case, the spirit was that moneys would be paid. Where such agreements have been made, those moneys should be paid. I ask hon. Members to maintain pressure on the Government to ensure that the problems of companies that have been dealt a savage blow by the Secretary of State's measures are adequately aired in the corridors of power, where decisions are taken.

Mr. Bob Cryer  (Keighley)
The amendment would appear to have a long and chequered career if one examines the Department of Industry's policy of making variations in prescribed percentages orders. The Regional Development Grants (Variation of Prescribed Percentages) Order 1979, amended by the Lords amendment, had to be revoked at short notice because it was found to be defective. Clause 14 is in that tradition. It may not be technically deficient, but it is obscure. I should like to enter a plea for clarity in legislation. Officials of the Department of Industry are necessarily involved in some interpretation of the law when they deal with applications for development grants, but the same applies to those who apply for such grants. The Government want people to use those development grants. Whenever a steelworks closes as a result of the Government's disastrous policies, they say that special development area status or development status will soften the blow. The Government should try to devise legislation that is clear and that can be used by the people concerned. I share the view of my hon. Friend the Member for Workington (Mr. Campbell-Savours) that the Lords would have been better occupied in ensuring that intermediate areas such as Keighley were not denied all regional development grant, rather than remedying technical deficiencies in this way. 9.30 pm Keighley will lose its regional development aid on 31 July—the end of next month. This is particularly important, bearing in mind the difficulties that the textile industry is experiencing in West Yorkshire where jobs are being lost at the rate of 500 a month. When the Minister replies, no doubt he will argue that in the application of regional development grant, unemployment is not the only criterion to be taken into account. This is the sort of standard line that the civil servants feed to him when he is in difficulties because he is denying an area a certain status. In Keighley the level of unemployment during the five years of Labour Government was consistently below the level of national unemployment. It is now creeping up fast. In 13 months of Conservative Government we have achieved almost the national average of unemployment, principally because of losses in the textile industry. Therefore, it is extremely important that the Minister should consider retaining intermediate area status for the Keighley travel-to-work area, so that the difficulties that face the textile industry, resulting in job losses, can be met, in Keighley and in other areas of West Yorkshire, by retaining the attractions of intermediate area status.

Mr. Skinner
About 300 words ago my hon. Friend the Member for Keighley (Mr. Cryer) referred to the House of Lords and the way in which it has dragged up this obscure amendment. We are always told by those who aspire to the other place, having been here for too long, that the sensible and appropriate function of the House of Lords is to "polish things up" and to look at things dispassionately. The other place is supposed to smooth off the rough corners. It is supposed to be better at putting things logically and understandably than the House of Commons. Yet here we have typical gobbledegook, so that even that argument for the House of Lords falls flat in the light of these silly amendments.

Mr. Cryer
My hon. Friend is absolutely right.

Mr. John Evans
My hon. Friend the Member for Keighley (Mr. Cryer) referred to the theory that the House of Lords should concentrate on areas of significance instead of producing this sort of nonsense. He referred to the many problems of Keighley caused by the loss of intermediate area status. Is he aware that another difficulty will occur as a result of the loss of intermediate area status—that is, the loss of derelict land clearance area status. That will add to the problems of these areas. We have spent many hours trying to persuade the Government to see sense and ameliorate the worst effects of clause 14. Had the other place been doing the job that my hon. Friend the Member for Bolsover (Mr. Skinner) rightly suggests that it should, this is another area that it would have concentrated on.

Mr. Cryer
That is so. Intermediate area status also provides the opportunity for European Investment Bank loans. Intermediate area status ends for Keighley on 1 August 1982. It would also be useful to have discretionary grants from the Department of Industtry to assist development and safeguard jobs. Those are two important elements. The amendment and the clause may have a narrow application, but assisted areas are given grants and other financial assistance because they have particular difficulties. Those difficulties are being  accentuated because of the Government's determined inertia over the textile industry. The Under-Secretary replies to points raised in the usual clicé-ridden terms.

Mr. Deputy Speaker
Although the Lords amendment may be difficult to understand, the hon. Gentleman is straying wildly from it. Will he confine his remarks to the amendment?

Mr. Cryer
The clause relates to the assisted areas order 1979 and grants under part 1 of the Industry Act 1972, which are concerned with regional development and the assisted area programme. My remarks were to illustrate the importance of regional assistance to an area such as Keighley, which is facing recession in the textile and other industries. The Under-Secretary's platitudes are not good enough. Employers, including the chairman of the Wool Textile Federation, have written to the Prime Minister and the Department of Industry in strong terms, expressing deep regret at the Government's inaction. As a member of the Select Committee on Statutory Instruments I often see the ambiguities and difficulties that legislation causes people. It is part of that Committee's task to try to draw the attention of the House to ambiguities and excessive use of power in Government Departments. I have to plough through that legislation, and I see no reason why primary legislation should not be subject to the same scrutiny. That is what we are doing in this Chamber. In English legislation we do not often achieve clarity of thought followed by clarity of expression. The House of Lords has not distinguished itself in this legislation. The Bill represents a cutback in expenditure. The Government have done it in a shoddy and ill-defined way, which is a fair summary of their general industrial policy.

Mr. David Mitchell
Before I come to the main substance of the speech of the hon. Member for Whitehaven (Dr. Cunningham) and other hon. Members who concentrated on the Lords amendment, may I say to the hon. Member for Birmingham, Perry Barr (Mr. Rooker) that he has made a charge of industrial espionage and a charge that a major  British company, a publicly owned industry, paid more for Italian equipment than the equivalent United Kingdom equipment. He has also made a charge against an individual who is not able to defend himself because it was made in the House. The hon. Gentleman will have to consider whether it is appropriate to repeat that charge outside, where he will have to stand on the strength of the certainty of what he is saying. I shall examine the Official Report carefully to see what the hon. Gentleman said. I regret that he did not see fit to write to me or come to see me as the Minister with some responsibility in this area or to see my hon. Friend the Minister of State with responsibility for the public sector in the Department of Industry. Nevertheless, these are very serious matters that he has raised, and, as my hon. Friend the Member for Coventry, South-West (Mr. Butcher) said, they need to be examined swiftly. I undertake to ensure that the hon. Members for the Coventry constituencies will be written to as a result of the points which have been raised. I now turn to another extraneous matter, raised by the hon. Member for Newton (Mr. Evans), who alleged that companies had been buying equipment with regional developing grant and then promptly closing and moving somewhere else, taking the machinery with them. I assure him that we carry out a regular inspection system, where regional development grant payments have been made, to ensure that over the specific term that equipment stays in the assisted areas. If he has any example of a company that he thinks may have failed to notify us, I hope that he will let me have the details, so that we can take the usual procedures to secure recovery of the grant.

Mr. John Evans
I am glad that the Minister has dealt with the point that I intended to convey. If I did not convey it correctly, I apologise to the House. I was not attempting to allege that companies were getting machinery via assisted area status and then transferring it out of one plant into another. It may well be that I did not make my point sufficiently clearly. It is that there are many instances on the record of companies moving into assisted areas, purchasing plant as part of the move and then, after a relatively  short space of time, closing down completely in that area and returning to their home base, taking with them the machinery and plant which they had previously purchased with Government assistance. I suspect that in those circumstances—I may be wrong, and if so the Minister will no doubt correct me—there is no requirement on them to pay anything back to the Government.

Mr. Mitchell
I assure the hon. Gentleman that if the action of ceasing to operate the equipment in the assisted area and moving it to a non-assisted area takes place within a specified time, we reclaim the regional development grant that has been paid. If the firm notifies us, it is done on a pro rata basis. If it fails to notify us and we discover it in the course of our regular inspections, the amount is wholly reclaimed. I hasten to assure the hon. Gentleman that I had understood what he said earlier in the debate. If he knows of a case in which he believes it has happened, I shall be happy to look into it for him. But since we are scrupulously careful, in carrying out inspections, to ensure that the precise action that the hon. Gentleman described does not take place—I have frequently written letters to companies telling them that they must repay—I hope that I shall find that he is inaccurate in the charge that he makes. The hon. Member for Keighley (Mr. Cryer) seems to regard assisted area status as some sort of virility symbol. I doubt whether I would be within the rules of order if I sought to deal with the question of whether Keighley should be an assisted area. I now turn to the substance of the points made by the hon. Member for Workington (Mr. Campbell-Savours). He said that the amendment deals with an inconsistency that helps companies in areas which have been downgraded. No, it is companies in areas which have been upgraded to which this applies. If I misunderstood the hon. Gentleman, I apologise; but that is what I understood him to say. The hon. Gentleman is erroneous in thinking that it applies to the generality of companies affected by upgrading or downgrading. It refers to some 45 to 52 companies in a very special situation, which I shall proceed to describe in a moment.  in response to the points made by the hon. Member for Whitehaven. 9.45 pm The hon. Member for Workington specifically raised the point of Thames Board Mills. Like every other company that is affected by a development which is not completed before 31 July this year, it loses out on the regional development grant concerned. However, if it is clear to us that a project is in jeopardy, we are able to consider whether an application for selective assistance under section 7 of the Industry Act may be appropriate. In the case of Thames Board Mills, I have discussed the matter with senior staff from the parent company. But I have equally to say—I am sure that the hon. Gentleman will appreciate this—that details are commercially confidential in relation to any particular company. But certainly we have sought to do what we could to help. I turn to the main point made by the hon. Member for Whitehaven and made, in part, by the hon. Members for Workington and for Newton. That was that we are dealing here with a complex technicality. I was asked to express it more simply than I did when I introduced the amendment. I deliberately did something in the House then which I dislike doing. That was to read very carefully the detailed brief which I had for introducing the amendment, because I wanted to be sure that I put on the record, for those outside who will turn to the record, exactly and precisely in technical terms what the purpose of the amendment was. But now I should like to do what I much prefer to do, which is to try to explain, in simple layman's language, what we are about. What we are about here is the peculiar unforeseen effects which have arisen in relation to a very small number of companies in areas which have been upgraded. What has happened is that a number of companies were made selective assistance offers under section 7 of the Industry Act. Those section 7 assistance calculations were made on the assumption of regional development grant being available at the levels ruling at the time the offers of selective assistance were made. Once those offers have been made, they are firm. We are in the position, therefore, that the basis of the calculation, that they required so  much selective assistance on top of so much regional development grant in order to make the project viable, has been altered because the regional development grant to which they were entitled has been altered by reason of the order which was passed in the House last year. These companies have been given a simple choice. They have been told that they can either retain their selective assistance and not have the higher level of regional development grant which applies in their areas, or return the section 7 selective assistance and take the higher amount of regional development grant. The difficulty is that the small number who chose the first option are worse off because of the order passed last summer. The orginal offer was based on the old higher rate of regional development grant. The lower rate would have applied as a result of the Regional Development Grants (Variation of Prescribed Percentages) Order passed in the House last summer, which would be unfair to these companies. In order to put them back into the precise position in which they understood themselves to be, and the precise position upon which the selective assistance grant was calculated at the time the offer was made, this amendment is before the House. I hope hat the hon. Member for Newton has followed what I have said. I have tried to explain the matter in words that, while not as technical as those I used in my introduction, make clear to the House what we are doing. We are righting what would otherwise be an injustice to a small number of firms.

Mr. John Evans
I accept that I am a little thick in these matters and that they have to be spelt out. Is the Minister saying that areas that were previously assisted areas were promoted to development areas and at the same time the level of grant was dropped from 20 per cent, to 15 per cent., that this is how the injustice has come about and that the amendment is therefore needed to remove that injustice?

Mr. Mitchell
The position is that the House passed last year the Regional Development Grants (Variation of Prescribed Percentages) Order which had the effect of preventing firms that would otherwise have made an unintended gain from doing so. That upset the basis of  the arrangements made for the 53 firms that were offered selective assistance on the basis of the then known level of regional development grant. I was asked by the hon. Member for Whitehaven (Dr. Cunningham) whether I will ensure that every company affected by the change is notified. I readily agree to do that.

Question put and agreed to. [ Special Entry.]

Clause 15

Assistance Under Section 8 Of The Industry Act 1972

Lords amendment : No. 4, in page 11, line 9, at beginning insert—

' (1) For subsection (4) of section 7 of the Industry Act 1972 there shall be substituted—
 " (4) Financial assistance shall not be given under this section in the way described in subsection (3)(a) above unless the Secretary of State is satisfied that it cannot, or cannot appropriately, be so given in any other way, and the Secretary of State, in giving financial assistance in the way so described, shall not acquire any shares or stock in a company without the consent of that company."

(2) In section 8(1) of that Act, after paragraph ( b) there shall be added—
 " and (c) the financial assistance cannot, or cannot appropriately, be so provided otherwise than by the Secretary of State."

(3) For subsection (3) of section 8 of that Acts there shall be substituted—
 "(Financial assistance shall not be given under this section in the way described in subsection (3)(a) of the last preceding section unless the Secretary of State is satisfied that it cannot, or cannot appropriately, be so given in any other way, and the Secretary of State, in giving financial assistance in the way so described, shall not acquire any shares or stock in a company without the consent of that company".'

Mr. David Mitchell
I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker
With this it will be convenient to take Lords amendments Nos. 5, 6 and 7. These are amendments that I think all hon. Members will understand. I hope that those hon. Members who speak will stick to them.

Mr. Mitchell
This amendment seeks to reintroduce into the 1972 Industry Act certain safeguards that were in the original Act and were repealed in 1975. The amendment will have two effects.  First, it will require that assistance, under either section 7 or section 8, in the form of loan or share capital shall be given only in that form if the Secretary of State is satisfied that it cannot, or cannot appropriately, be given in any other way. Secondly, it will require that assistance under section 8 shall be given only when it cannot, or cannot appropriately, be provided other than by the Secretary of State. We feel that it is right that both these safeguards should be put back on the statute book. As far as the first is concerned, it is important that the Secretary of State should be able to acquire shares or stock in a company only where this is absolutely necessary. It goes without saying that this amendment will make no difference to the policies pursued by my right hon. Friend, but we believe it right that this safeguard should be on the statute book. The second part of the amendment more or less speaks for itself. As the House will be well aware, the Government are not, generally speaking, in favour of subsidising industry. Our policies are intended to provide a climate in which industry can generate sufficient profits to meet its own investment needs. We accept that in present circumstances there continues to be a need for Government support in some cases, but it is right that Government should intervene only when the private sector cannot meet the need. I commend the amendment to the House.

Dr. John Cunningham
The Under-Secretary has carefully remade the speech made by his noble Friend in another place in recommending amendment No. 4, in particular, to the House. The Government seek to remove from the Industry Act 1972 amendments made by the Industry Act 1975. I presume that the Government wish to remove from themselves the temptation in dire circumstances—and there will be some in the immediate future—to intervene in a way which is contrary to the Government's doctrinaire stance towards Government aid and assistance for British industry, and manufacturing industry in particular. The amendment is proposed so that the Secretary of State will be able to say to industrialists who ask for assistance  " I am sorry, but I do not have the power to help you. I do not have the legal authority. To ensure that I do not have that ability I have removed that facility by legislation." Industrialists should not be in any doubt that it will not be an accident that they receive no assistance from the Government. It will be by design. We cannot accept the amendments. The Government came to office claiming that they intended to create a new industrial climate. Their slogan was that they intended to create a new climate for enterprise. Since then inflation has risen to 22 per cent. Lending rates are at crisis levels with MLR at 17 per cent. Sterling is so over-valued that it breaks the bounds of credibility, particularly as it affects exporting manufacturing industries. There has been a continuing growth in the number of bankruptcies and liquidations. They approach all-time record levels. There are no signs of the growth diminishing. That is a direct result of Government policies. In the first three months of this year almost 2,500 companies were declared bankrupt or were going into liquidation. The latest quarterly figures from the Department of Trade reveal the highest level of company failure for three years. Investment in British manufacturing industry has fallen. Major companies are cutting their investment programmes in the face of the new climate for enterprise. Reductions in regional aid have been mentioned by many of my hon. Friends. Many companies are experiencing cash flow problems because of the abrupt change in policy. The Minister knows about the effect that that has had on many companies in development and special development areas. Unemployment has increased in the regions in particular. My constituency is affected. The textile industry is experiencing closures at the rate of almost one mill a week. The footwear and leather industries are being devastated. The chemical industry, one of the most successful sectors of British manufacturing industry in the last two or three decades, is in difficulties. There are records levels of chemical imports. Against that background the Government are reducing flexibility and their help to British manufacturing industry. There cannot have been an occasion in  modern times when any Government have taken such a step willingly. From some of the amendments that we have discussed we can see that the Government have sometimes taken the step inadvertently. Now they are deliberately reducing their ability to help the British economy and manufacturing industry. Far from creating a new and better climate for enterprise the Government have created one of the most hostile climates that British industry has ever experienced. If that sound like the Labour Party, what about The Sunday Times as a back-up to that statement? The SundayTimes leader—

It being Ten o'clock, the debate stood adjourned.

Ordered, That, at this day's sitting, the consideration of Lords Amendments to the Industry Bill may be proceeded with, though opposed, until any hour—[Mr. Newton.]

Question again proposed, That this House doth agree with the Lords in the said amendment.

Dr. Cunningham
I was about to quote from The Sunday Times leader of 15 June, 1980 which said : " Now Mrs. Thatcher's Government is persisting in a deflation which is more sharp than anywhere else and is beginning to assume the characteristics of a reckless gamble with the industrial strength of this country and the tolerance of its people … What is disturbing now is the reduction of economic policy to a single minded, extreme, and irrational version of monetarism." Nowhere are those views more relevant than in the debate on the amendment before us. Against that background it is not only incredible but intolerable that the British Government with such wide-ranging responsibility for the future economic well-being of the country should be proposing these amendments.

Mr. John Bruce-Gardyne  (Knutsford)
Since I was not here at the time, I am not altogether clear what the responsibility of the hon. Member for Whitehaven (Dr. Cunningham) was in the previous Government, but if he was in any way connected with the Department of Industry does he recall the instance of the National Enterprise Board's assistance for British Tanners That was a classic example of a company that  might have got support from the City but that was provided with alternative support from the NEB. That was to the great detriment of competition in the tanning industry and units of competition that were much more efficient than the company that received assistance.

Dr. Cunningham
Since I was not associated with the Department of Industry at any time during the previous Labour Administration I am tempted to say that the question does not arise. But since the hon. Member for Knutsford (Mr. Bruce-Gardyne) lays himself open to a response, I should say that I was associated with the Department of Energy which he will recall if he thinks more clearly. It is an interesting point. The hon. Gentleman says that money might have been available from the City. We heard about that earlier, in the Ferranti debate. It is quite clear that in that case money was not available. Now the City cannot wait to get its sticky hands on Ferranti, but it would not touch that company with a barge pole when it was in difficulties. I am afraid that that has all too often been the record of our financial institutions when we experience industrial problems. For good measure, let me tell the hon. Gentleman what was said by his right hon. Friend the present Secretary of State for the Environment when he was Opposition spokesman for industry. Referring to the Ferranti statement he said on 14 May 1975 in a question to my right hon. Friend the Member for Bristol. South-East (Mr. Benn): "whether the right hon. Gentleman would agree that this"— he was referring to the Ferranti statement— " is an unnecessary and expensive deal …? Does he agree that, first, it contains no indication about how profitability is to be achieved, nor does it give any indication of a commitment from the unions that they will help in achievin "that profitability?"—[Official Report, 14 May 1975; Vol. 892. c. 459.] How wrong can one be? All of those things were forthcoming in an NEB enterprise. I agree, as the hon. Gentleman said, that they do not always succeed no one ever claimed that they would. The City does not make that claim, nor does capitalism, otherwise, the problems would not arise in the first place. I cannot accept what the hon. Gentleman implies—that intervention is unnecessary or that it will fail. Elsewhere within the EEC, the United States of America and Japan, intervention is a reality, and it is a reality on a wide scale. We are the only Western industrial nation with a Government who are reducing their ability to help their own manufacturing industry. There can be no bigger indictment of this Administration than that charge. The Secretary of State has recently been on a visit to the United States. I am told that he was not only surprised but astonished at the number of people—he would refer to them as entrepreneurs —who had succeeded in business not because of what the hon. Member for Knuts-ford would call market opportunities, but on the back of federal programmes for defence, space development, and so on, based on public expenditure. That is another area of opposition to what the Goverment are doing. The hon. Gentleman and his right hon. and hon. Friends apparently do not recognise that every public expenditure reduction in terms of building hospitals or schools is a business entreprise denied.

Mr. Bruce-Gardyne
What has that got to do with it?

Dr. Cunningham
It has to do with the Government's philosophy, which is encapsulated in the amendment. I apologise, Mr. Deputy Speaker, if I have allowed the somewhat irrelevant intervention by the hon. Member for Knutsford to tempt me into straying slightly from the subject.

Mr. Campbell-Savours
My hon. Friend has raised a particularly important point, which will interest all hon. Members. I refer to the effects of cuts in public expenditure on jobs in the regions. It might be for my hon. Friend to seek an undertaking from the Minister to investigate the effects of these cuts in public expenditure certainly on small businesses and other kinds of enterprises. In the development of the Government's policy there seems to be a dire lack of understanding and willingness to go out and discover the impoct of these cuts on people in the regions.

Mr. Bruce-Gardyne
Answer that.

Dr. Cunningham
The short answer is that I agree with the views of my hon. Friend whose constituency neighbours mine and who, like me, daily faces redundancies on an increasing scale throughout West Cumbria, including hitherto successful companies such as Courtaulds.

Mr. Bruce-Gardyne
Hard luck.

Mr. Campbell-Savours
The hon. Gentleman said "Hard luck".

Dr. Cunningham
The people of West Cumbria—particularly those who are losing their jobs—will note the complete lack of care or understanding expressed by the hon. Member for Knutsford and no doubt shared or acquiesed in by many of his right hon. and hon. Friends. Apparently if people are out of work, the Tory response is "Hard luck". That is what the hon. Gentleman said. The Government know that bankruptcies are increasing and will continue to increase. There may be several spectacular failures, as we saw in the period between 1970 and 1972 when the predecessor of the hon. Member for Knutsford, the late Mr. John Davies, coined the phrase "lame duck", espousing a similar industrial philosophy. It was not long before we saw the then Administration nationalise two major companies—Upper Clyde Shipbuilders and Rolls-Royce. They had to bring in Bills to do that, because they did not have the ability to assist those companies. Now they have such ability and, even though it exists—and we believe that it should exist as an insurance policy and long stop measure—they are determined to erase it from the statute book. As my right hon. Friend the Member for Deptford (Mr. Silkin) said earlier, we are seeing the City institutions—of which the Minister thinks so highly—choosing to support property development and developments other than industrial. We have seen the re-emergence from the woodwork of Slater and Bentley, no doubt sniffing for the opportunities that existed so widely under the Conservative Administration of 1970–1974. When these powers are removed—and we know that they will be removed, because of the Government's majority—when difficulties arise, when jobs are threatened, when major companies are forced into bankruptcy and liquidation, is  it the intention of the Government to stand idly by and see unemployment inevitably and inexorably increased? That is the implication of Lords amendment No. 4. We respectfully request a clear and unequivocal answer to that question. We shall not oppose the other amendments that we are discussing. In some respects, they are consequential amendments. However, it is our determination to resist Lords amendment No. 4, and we shall vote against it in the Lobbies tonight.

Mr. Butcher
I listened closely to the remarks of the hon. Member for Whitehaven (Dr. Cunningham). He chastised the Government for causing difficulties for business men through the high minimum lending rate. If the hon. Gentleman were to support the Government in reducing further the public sector borrowing requirement he might find that his wish for a lower minimum lending rate would be achieved more rapidly should the output side of our expenditure equation be reduced. Similarly, the hon. Gentleman criticised us for our reductions in regional aid. I represent a West Midlands constituency and I find that a difficult pill to swallow. I commend to the hon. Gentleman a well-reasoned report, written by Professor Schofield under the charming title "Macro Evaluations of the Impact of Regional Policy in Britain". At this hour, and bearing in mind that my hon. Friend the Member for Meriden (Mr. Mills) will, at some time this evening, wish to become involved in his Adjournment debate, I commend one small piece of the report to Opposition Members. In talking about the balance between what is created in one part of the economy being a loss to another, Professor Schofield referred to "the analysis of the effect of regional policy in shifting the aggregate Phillips Curve leftwards". I am sure that Opposition Members will be delighted that the aggregate Phillips Curve does shift leftwards. But that phenomenon is referring to the reduction of jobs in parts of the country that are not assisted or development areas and the shifting of those jobs to other parts that are assisted or development areas. I said earlier that I have some strength of feeling on the matter, because there is  an example of that happening in the Coventry area. Hon. Members will know that, as a matter of deliberate policy, the Triumph TR7 was taken away from Coventry, its Canley plant, and its natural home—where people knew how to build cars—and shifted to Liverpool. We found that the Liverpudlians were not so skilful in building cars. Much money was wasted, and many of the problems caused by the labour disputes that emanated, somewhat ironically and fairly typically, from the Liverpool area, caused additional difficulties for the company. The car's production was shifted back to the Midlands. In the meantime, there was a weakened division in British Leyland, which now has had to shift the product further along the fine to Solihull. The net result of that form of regional policy has been the loss of about 4,000 jobs to Coventrians. 10.15 pm I am grateful for the opposition voiced by Labour Members. I greatly enjoyed the show put on by the "Three Musketeers", which involved House of Lords reform, membership of the House of Lords, its capabilities and, at one stage, corruption in high places in nationalised industries. I regret that I feel obliged to refer to the amendment that we are supposed to be discussing. I wish to place on record my opposition to another comment by the hon. Member for Whitehaven when he quoted from The Sunday Times. He again castigated us for taking an exclusive view of monetarism—a view that was somehow all-important and all-denying to other policies in the Government's economic strategy. If the hon. Gentleman wishes to examine such topics further, I commend the pamphlet entitled "Monetarism is not enough" written by my right hon. Friend the Secretary of State——

Mr. Deputy Speaker
Order. This debate is not about monetarism. The reference to the The Sunday Times was on the last amendment. May we stick to this amendment, please?

Mr. Butcher
I am obliged to you for that guidance, Mr. Deputy Speaker. The amendment seeks to circumscribe the powers of the Secretary of State, and that would be right. We are amending section 8 of the 1972 Act so as to restore  a power that was deleted by the 1975 Act. I fully support the reapplication of this circumscription of the Secretary of State's powers. I should like to quote the example of the measures that are available to foster what we now call the information technology industry. There have been a number of debates on this industry, but in the context of this clause I should like to demonstrate that the amendment will help us in fostering an industry that is a growth industry. The hon. Member for Newton (Mr. Evans) said that the only growth industry was likely to be that which dealt with liquidations and bankruptcies. He may be interested to know that in the state of California alone about 3 million jobs have been created in real terms in the industry. We are therefore discussing one of the few ball games in town, as the Americans would say. Let us consider, in the context of the power of the Secretary of State, what happens to his equivalent in France. There is a gifted gentleman—in this country we would call him a bureaucrat—called Simon Nora, who has written a report for the French Government at the personal instigation of Valery Giscard d'Estaing, which has assumed that only two industries are worth bothering about in the 1980s. One is food production. The other is telematique—information technology. Many people are seized of the opportunities here, including Ken Gill, who is not exactly a friend of my party, and Mr. Clive Jenkins, who seems to be no one's friend but his own. I wish that there were another opportunity, on another day, to debate this matter fully. It is most important that we take note of what the French Secretary of State for Industry could do under his powers, but that we do not necessarily take the French line, which needs an almost centralised and Napoleonic form of administration in order to direct the measures required under that system. By contrast, the Secretary of State for Industry in Japan would not have his powers circumscribed in this way. He would presumably work through an organisation called MITI, which is, significantly, the Ministry for International Trade and Industry. It is an intervene-  tionist machine. Its task is to pick out individual industries, put specilic sums into individual companies to protect them while they are growing—I see Labour Members nodding—and, when they have grown, to release them on to the international market. Again, I am delighted that our Government do not take the Japanese route. In this country, whenever we have taken investment-push decisions, we have invariably made some colossal errors. My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) said on another occasion that when Conservative Governments dole out money, they like expensive toys—technocratic gimmicky toys—whereas Socialist Governments tend to like old-fashioned toys and old-fashioned industries, such as shipbuilding or the coal industry. I turn immediately to the United States. The hon. Member for Whitehaven referred accurately to what happens in that country, but he did not make clear that in the electronics industry in the United States, which has a turnover of about £30 billion, £8 billion of that consists of Space Agency contracts, contracts for defence, and so on. Instead of using an investment-push route, it uses a demand-pull route—if I may use some convenient jargon. I can recommend that method to the House, and for that reason I think that the powers of the Secretary of State should be circumscribed. I am ashamed to report to the House that the most significant success that the United Kingdom has had recently in information technology—the Prestel tele-data system—has, according to today's news, been adopted whole-heartedly in Germany. On a British system, using demand-pull methods, it will install about 3,000 British-designed sets in Dusseldorf and another 3,000 sets in West Berlin. Surely that is a signal to Britain that we, too, can take enlightened buying decisions. I hope that the money that is now being saved on the restriction of investments will be used for the placing of contracts in crucial areas of our economy. especially in information technology. The British approach has always been an ad hoc approach. Whenever we have taken investment decisions they have become politicised. Some hon. Members who are present today participated in a debate on Inmos about six weeks ago.  The debate was untidy. Those present were mainly Scottish Members, clamouring for a factory to be built in their area. If we quarrel over the building of factories like dogs quarrelling over a bone, we shall produce only a dog's breakfast. As I understand, the NEB was set up by the previous Administration to act as an entrepreneur, but as soon as it does so, and makes money, we quarrel over the decisions that it has taken. We say that for social or socio-economic reasons we should like the factory to be built elsewhere. In that approach, I sense the seeds of another TR7 scandal. There is a role for my right hon. Friend the Secretary of State in this key industry—the co-ordination of all the procurement of public agencies, nationalised industries and, most important, Government Departments. I refer my right hon. Friend the Secretary of State to his hon. Friend the Under-Secretary of State for Education and Science, who has produced what I believe is a beneficial schools programme, which I hope will use the maximum amount of British hardware. Surely that is an area where some liaison with the Department of Industry will be helpful if we are to seek a policy of backing our winners. I commend to my right hon. and hon. Friends three areas where the powers of the Secretary of State could be used. The first is the System X telephone exchange. I am aware that a policy has been started, but the procurement programme could be brought forward and enhanced. The second area is that of fibre-optic cabling, which will help us to achieve breakthroughs in terms of the increase in traffic and telecommunications that is desirable. Thirdly, although it is too late for us to say that we have taken the lead, can we not follow the German lead and ensure that viewdata systems are installed in many Government Departments and in nationalised industries? I thank you for your indulgence, Mr. Deputy Speaker. We can now return to the debate on the Lords amendments.

Mr. Cryer
The amendments are intended to proscribe the Secretary of State's powers. As my hon. Friend the Member for Whitehaven (Dr. Cunningham) said, they are a reflection of the Government's philosophy—namely, to circumscribe intervention in industry. That philosophy is being implemented at a time when British manufacturing  industry is facing a decline in production greater than any other throughout the post-war period. We are facing job losses in British industry unequalled since the 1930s. It is predicted that the level of unemployment over the next few months will hit 2 million. Various commentators are suggesting that unless the Government's policies are changed we shall have 2½ million unemployed in 12 months. I suspect that changes are coming in any event. The cheers that the Prime Minister and the Chancellor of the Exchequer get when they talk of creating an atmosphere that encourages entrepreneurs as their economic policy are not quite so full as they were 12 months ago shortly after the May 1979 election. Conservative Members must be starting to besiege the Department of Industry with pleas to save jobs in their constituencies. The CBI is changing its tune. It is not only British Leyland that is starting to feel the pinch. Other large car companies are also feeling it. A great deal of pressure is being generated and placed on Ministers who see the economic salvation to all our problems as the creation of massive dole queues to manipulate the population and the trade unions and to curb the public sector borrowing requirement. The Secretary of State's ability to provide assistance is already pretty well circumscribed without limits being placed on sections 7 and 8. For example, the Secretary of State has the Industrial Development Advisory Board to assist him in assessing applications. The board has the right, if the Secretary of State disagrees with its decision and makes a grant, to place a statement before the House. The permanent secretary at the Department of Industry, Sir Peter Carey, has the authority of an accounting officer under the Exchange and Audit Department Act 1866. If he disagrees with any expenditure on which the Secretary of State, the PUSSs—that is the shorthand term for Parliamentary Under-Secretary of State—or the Minister of State has embarked, he can submit a minute in protest, which can be taken up by the Public Accounts Committee. The curtailment of public expenditure by the Secretary of State is already pretty  well defined. Why should the Government restore the sections of the 1972 Act? By the time that the Secretary of State is satisfied that financial interests cannot be met appropriately in any other way, the firm in question may well have gone into liquidation. He has to carry out an examination. He has to question other institutions under the terms of section 8. In many areas the position changes from week to week. For example, there were sudden events at Rolls-Royce. Several large concerns have restrictions on their cash flows. A contract may change overnight; there may be a rapid change of Government—as happened in Iran—or an even more rapid rise than usual in the level of the pound. Such events could seriously affect a company. Any rescue would have to be carried out rapidly. Needlessly to circumscribe the Secre tary of State's powers is absurd. It is conceivable that such circumscription will lead to unemployment. The Secretary of State may not be able to act quickly enough. Some lunatics in the Government are driving people on to the dole queues. Industrialists have told me that they are deeply disappointed with the Government. High interest rates——

Mr. Bruce-Gardyne
What industrialists?

10.30 pm

Mr. Cryer
A small business man borrowed money to install plant that cost £80,000. He borrowed that money at an interest rate of 8 per cent, when the Labour Party was in power. He is now paying 16 per cent, on the loan. He said, "We are deeply disappointed with Mrs Thatcher". He is not alone.

Dr. John Cunningham
That business man is certainly not alone. The hon. Member for Knutsford (Mr. Bruce-Gardyne) appears not to accept our remarks, but perhaps he will accept a statement that appeared yesterday in the Financial Times. In a major article on the Government's policies, John Elliott wrote : "' There is a real danger of running industry down so much that it won't recover', one company chairman, a life-long Conservative, told me. ' If we go to 2½ million unemployed, we'll not solve the problems in the way the Government hopes, but will create others'." The hon. Gentleman should not hazard the suggestion that industrialists are not saying such things. They say them every day.

Mr. Cryer
Some industrialists have spoken to me. I have just quoted one. More and more industrialists are talking to Labour Members because they recognise that they made a grievous mistake when they supported the notions that the Conservative Party put forward in May. It may be a joke to some Hon. Members, but there is a different world outside. People are deeply concerned about the wrecking tactics that the Department of Industry and the Government are adopting towards British industry. The two amendments are examples of that.

Mr. Campbell-Savours
Does not the attitude of Conservative Members in such debates disturb my hon. Friend? Some hon. Members come to the Chamber time after time and watch the amusement of certain Conservative Members. The conduct of the hon. Member for Knutsford (Mr. Bruce-Gardyne) has been deplorable. It is about time he understood that many hon. Members come from areas of increasing unemployment. We do not want to be baited with amusing comments such as those made by him.

Mr. Cryer
I am grateful to my hon. Friend for his apposite comments. Section 8 schemes are already the subject of wide consultation. However, the Secretary of State apparently has to be satisfied that assistance cannot be given in any other way before authorising the scheme. We know from experience. Without assistance the ferrous foundry industry would not have modernised in the way that it has and the non-ferrous foundry industry would not have undertaken a modernisation programme. The machine tool industry was stimulated to invest by the machine tool programme. The Department of Industry conducted a detailed survey into the wool textile scheme. It found an increase in product quality that made the industry more competitive. I am gravely disturbed when the Prime Minister trills at the Dispatch Box that the wool textile industry is doing well with exports. In 1979 there was a deficit in textile goods of over £700 million. In  the first four months of this year the deficit was £200 million. It is an industry that has been highly modernised, with a great deal of investment, under the wool textile scheme. The scheme was started under a Conservative Government and was carried on by a Labour Government. The Secretary of State has to stay within the statutes, and he will now have another qualification on granting finance. It is absurd to pursue this policy. We have to compete with other Common Market countries. As The Guardian points out, there is a greater level of intervention in Western Germany and France. The Government are blinded by an absurd dogma, and are busily undermining and destroying British manufacturing industry. As lengthy dole queues testify, there are closures, liquidations and bankruptcies throughout the country. Not only the big section 8 rescue cases are affected when the Government choose not to intervene. While the Secretary of State is busy assessing whether the City can provide assistance and the company is going out of existence, the small companies that provide services and components are also going bust. We are led to believe that the Conservative Government are concerned about small companies. They criticise the Labour Government for rescuing British Leyland and Chrysler. Over 10,000 small companies supplied components to British Leyland and Chrysler. The Conservatives voted against those rescues and thereby against the rescue of 10,000 small companies. The hon. Member for Coventry, South-West (Mr. Butcher) talks about the amendment prescribing further regional assistance, but the West Midlands would be an industrial desert had it not been for the intervention of the Labour Government. Hundreds of millions of pounds have gone to British Leyland, Chrysler and Alfred Herbert. Jobs have been preserved in Coventry by such intervention. It is the only way to retain our manufacturing base. The, hon. Gentleman mentioned the TR7 scandal. The whole of the Triumph Stag was made at Speke. It is not a scandal that the manufacture was moved there; it is a scandal that it was moved back.

Mr. Rooker
Does my hon. Friend recall the difference between the argu-  ments under the Labour Government and what has been said tonight? I do not know of one of my hon. Friends from the West Midlands who would want his area to benefit from jobs lost in other parts of the country. The West Midlands has suffered badly under both Governments. However, no one on the Opposition Benches would have the temerity to suggest that there should be greater unemployment in other areas to protect the West Midlands. We are not in the business of choosing where unemployment should be higher. We want to defend our own areas and have lower unemployment throughout the country. We have never made a naked attack on jobs in specific areas, as does the hon. Member for Coventry, South-West (Mr. Butcher).

Mr. Cryer
The hon. Gentleman also made shoddy comments on workers in Liverpool and their strike record. I spoke to a large meeting of shop stewards in Birmingham. They adopted a principled attitude, just as my hon. Friend the Member for Birmingham, Selly Oak—Perry Barr (Mr. Rooker) describes. We should preserve jobs and fight for them in every part of the country—the West Midlands, Liverpool, Tyneside, and so on. The tragedy of going on to the dole is the same wherever it is. I see that my hon. Friends from the Wearside area are here tonight because of their concern for jobs in that region.

Mr. Butcher
Perhaps it was a Freudian slip when the hon. Gentleman referred to his hon. Friend the Member for Birmingham, Perry Bar (Mr. Rooker) as the hon. Member for Birmingham, Selly Oak, because my hon. Friend the Member for Selly Oak (Mr. Beaumont-Dark') is an expert on the asset stripping that has taken place at Government behest in the West Midlands. In his maiden speech, my hon. Friend referred to about 112,000 jobs that have been created elsewhere as a result of having been moved out of the West Midlands conurbation. The moral of the story about the TR7 is that once we mix up social and political decision-making with economic criteria, we eventually have to face up to the truth that that product becomes non-viable in two locations, with a loss of jobs eventually. It takes a very courageous politician, if I may say so, to  explain to people that that which is unpleasant in the short term may eventually produce a long-term benefit.

Mr. Cryer
What the hon. Member is saying is that his economic system has no understanding of or care for social consequences. I reject his economic system, which puts people on the dole in Tyne-side, West Midlands, Liverpool, or anywhere else in this country. The Government have a prime duty, which they are miserably failing to fulfil, to provide decent opportunities for workers in this country. I see that the Minister of State finds the whole thing incredibly funny. He is not exactly a person who has faced the dole queue himself, having been born with a rather large silver spoon in his mouth. I am filled with contempt by the way in which Tory Members find the whole question of unemployment so passively amusing. It is the chaps outside who face the dole queue, while the people on the Conservative Benches enjoy their membership here and generally half a dozen company directorships as well. Their lack of understanding and concern is disgraceful, and it is shown in the policies involved in the amendments. The Government have no mandate to destroy British manufacturing industry. The only way in which we shall be able to develop British manufacturing industry is.. achieving a balance, helping firms, nation-wide, that need assistance. There are some firms that do not and will not need it; that is all to the good. But there are a number of industries that simply do not have the information, or the skill and understanding, to collate the necessary information about where the level of investment in their industry is most needed. That is why the Government have in the past undertaken discussions nation-wide with machine tool organisations and with organisations representing foundries, and produced a scheme, with the co-operation of the industry concerned. This sort of amendment is an inhibiting factor on that ability to produce schemes—schemes that the industries themselves have said are of advantage, enabling them to increase productivity and to have a better chance against international competitors. We have to balance national schemes with help for the regions, the areas that have the greatest amount of deprivation, the greatest amount of un-  employment, which, sadly, is growing apace week by week. This sort of amendment inhibits the Secretary of State's ability to bring assistance to bear where it is needed. The sad fact for Conservative Members is that capitalism is failing. It cannot exist by itself. The rising dole queues, the decline in production and the erosion of British manufacturing industry are a testimony to the fact that capitalism cannot stand on its own.

10.45 pm

Mr. T. W. Urwin  (Houghton-le-Spring)
I support my hon. Friend the Member for Whitehaven (Dr. Cunningham) in the excellent manner in which he opposed the amendment. I also support most of the remarks of my hon. Friend the Member for Keighley (Mr. Cryer). To a very large extent, we are now in the same situation as we were in 1970 and 1971, especially in the first year of the previous Conservative Government, when all the hesitations and consultations that were taking place about the presentation of their regional policy created a complete crisis of confidence in industry. We face the same position now—high interest rates, and the deliberate destructive efforts by the Government to dismantle the regional policy which they inherited and which, despite anything that Conservative Members may say, achieved a very large measure of success in the development areas. I view with a great deal of horror and revulsion the attitude of the hon. Member for Knutsford (Mr. Bruce-Gardyne) when we talk about unemployment almost at unparalleled levels. It is certainly at the highest level since the end of the last war in Scotland, in the Northern region, on Merseyside and in the South-West.

Mr. Campbell-Savours
And the hon. Gentleman says "Hard luck".

Mr. Urwin
Yes, indeed. The best and only answer that the hon. Member can give is "Hard luck".

Mr. Bruce-Gardyne
Will the right hon. Gentleman give way?

Mr. Urwin
No, I shall not. I am sorry. I have been told that I have only a few minutes.

Mr. Bruce-Gardyne
Will the right hon. Gentleman give way? He has made an allegation which is totally without  foundation. Will he allow me to correct it?

Mr. Urwin
No, I shall not.

Mr. Bruce-Gardyne
rose——

Mr. Deputy Speaker
Order. The hon. Member for Knutsford (Mr. Bruce-Gardyne) may have his chance if he catches my eye.

Mr. Bruce-Gardyne
On a point of order, Mr. Deputy Speaker. I think I am right in saying that there is absolutely no pressure on the right hon. Gentleman concerning time. He has made an allegation against me which is totally without foundation. It may be that it is based on a misunderstanding. He owes it to me and to the House to give me a chance to put him straight.

Mr. Urwin
I am sorry, Mr. Deputy Speaker, but—

Mr. Deputy Speaker
Order. That was a point of order. If the right hon. Member for Houghton-le-Spring (Mr. Urwin) made a personal allegation, I think that it would be reasonable for him to give way; but if it was not a personal allegation—

Mr. Bruce-Gardyne
It was a personal allegation.

Mr. Deputy Speaker
the right hon. Member must take responsibility for his speech.

Mr. Urwin
I have no intention, Mr. Deputy Speaker, of withdrawing what I said. All of my hon. Friends present will confirm that when my hon. Friend the Member for Workington (Mr. Campbell-Savours) made the point about the loss of jobs in Cumbria, the hon. Member for Knutsford said, quite audibly, loud enough for all of us to hear—and I am the farthest from him—" Hard luck."

Mr. Bruce-Gardyne
Yes, indeed—but not on that point. I am grateful to the right hon. Gentleman for allowing me to put him straight. I said "Hard luck" in reference to the fact that the hon. Member for Whitehaven (Dr. Cunningham) had the hon. Member for Workington (Mr. Campbell-Savours) as a neighbouring MP. That is what I was referring to—[Interruption] Indeed—and not to the subject of unemployment at all.

Mr. Urwin
The hon. Gentleman gets further into the mire the longer he talks. I maintain what I said. I listened to his remark with horror and revulsion, because he has certainly no understanding of what it means to be unemployed. Those of us who have had that experience know only too well how we are stripped of our dignity, when we have acquired skills by our diligence and effort and are rendered unemployed not once but several times in a working lifetime. And that is the response that we get from the hon. Gentleman. This awful fate has befallen more and more people during the 13 months of the present Conservative Government. We have the same crisis of confidence. I am afraid that Lords amendment No. 4 will further worsen conditions for the attraction of new industry into development areas such as the Northern region. Almost every day, the Northern press, whether a morning or evening newspaper, in Sunderland, Tyneside, Cumbria, or any other part of the region, carries new accounts of a factory closure involving a loss of 20 to 1,000 jobs next week or the week after that. The possibility of attracting new industry and generating new job opportunities recedes further into the future. Every credit is due to the local authorities in the Northern region—in Sunderland, the county of Durham, and Tyne-and-Wear—that are taking on the role of the Government by investing in small factory units to relieve the desolation of unemployment so many people have to undergo The deliberate attack on regional incentives, the whole regional policy of the Government, contributes to the developing unemployment. Reference has been made to the possibility that, in all too short a time, the figure will reach 2 million. For as long as I have lived, the Northern region has borne more than its fair share of unemployment, with little benefit in return for the sacrifices that have been made. The Northern region runs a grave risk of becoming an industrial wasteland. There will be no possibility of recovery even to the level of unemployment that the Conservative Government inherited on taking office. There has been reference to the ravaging of jobs on the West Midlands. I should like to know how many jobs from the West Midlands or anywhere else in the United Kingdom  have come to the Northern region in the last 13 months. The answer, I believe, is none, or very few. I long for the day when regional policies are so streamlined, effective, efficient and productive that we in the Northern region can say that we have arrived at the same economic plateau as the West Midlands, the South and the South-East. That would satisfy us to a greater extent than is ever likely to be the case under the present Government.

Mr. Bruce-Gardyne
I have learnt, not for the first time, that one should beware of the interpretation liable not to be placed on asides. I do not regard and have never regarded unemployment as a matter of bad luck. My comments, I assure hon. Members, were related to the predicament of the hon. Member for Whitehaven (Dr. Cunningham) in his political neighbourhood. It was purely an aside. I do not regard unemployment as a matter of bad luck. Nor do I take kindly to remarks by Opposition Members such as the hon. Member for Keighley (Mr. Cryer) who was a member of the Government when unemployment doubled. I do not accept for one moment that unemployment is made more attractive to its victims when they are told that the Ministers responsible are shedding crocodile tears every night. That does not improve the situation. It is a load of hypocrisy for people such as the Member for Keighley, who held office in the previous Labour Government, at a period when unemployment was doubling, to tell the House that hon. Members on the Conservative side do not care about unemployment. That is a load of hypocrisy. It does not add to the reputation of the House to treat the issue in that way. That has been welling up for a while. I shall return to the Lords amendment.

Mr. Russell Kerr  (Feltham and Heston)
Let us have a song instead.

Mr. Bruce-Gardyne
I am sure that the hon. Member can find a song somewhere downstairs. I should not like to inflict my vocal chords on the House at this hour. The amendment is designed to diminish the area of temptation for Ministers. I confess that I have always believed that  Ministers of all parties, like Oscar Wilde, can resist almost anything except temptation. I am all for putting temptation a little further out of their reach. Two instances seem to be relevant to the debate. One relates to the subject which we discussed earlier—Ferranti. I refer to 1975 when Ferranti ran into trouble.

Mr. Deputy Speaker
Order. I hope that the hon. Gentleman will relate his remarks to the amendments.

Mr. Bruce-Gardyne
I intend to do that. Under the terms of the amendments Ministers are required, as they should be, to satisfy themselves that a business seeking assistance under section 7 or section 8 is unable to obtain assistance from an alternative source. The problem with Ferranti in 1975 was that it could have obtained assistance from an alternative source but for one thing—it had a nonviable transformer division which had to be rationalised. Because the then Government had taken the powers to provide assistance—

Mr. Deputy Speaker
Order. The hon. Gentleman is making a speech which might have been made earlier if he had been fortunate enough to catch the eye of the Chair. He must not deal with Ferranti except by way of illustration. He is referring to what happened when the previous Government were in power.

Mr. Bruce-Gardyne
We are debating a Lords amendment to remove the additional powers which the Labour Government gave themselves under the Finance Act 1975 to provide assistance, whether or not alternative sources of assistance were available. Ferranti's predicament today to some extent relates to the fact that under that Act, which we seek to amend, the Government were enabled to provide assistance to Ferranti under terms which, had the amendment been on the statute book, they would not have been able to make. The rationalisation of Ferranti through the capital markets would have occurred in a way which today would guarantee the integrity and independence of Ferranti. That is my point.

11 pm

Mr. Richard Wainwright  (Colne Valley)
When the hon. Gentleman talks about rationalisation of Lancashire industries and the capital markets, does he  not bear in mind the destruction of the Lancashire cotton industry by the capital market after the First World War and the havoc wrought by unleashed private enterprise in that industry throughout Lancashire?

Mr. Bruce-Gardyne
I feel that I should get into great trouble with you, Mr. Deputy Speaker, if I followed the hon. Member for Colne Valley (Mr. Wainwright) down that path. The point I was seeking to make is that in this case the rationalisation occurred. The fact that it was done by the NEB and not by the capital markets did not prevent it from happening. The transformer division of Ferranti effectively disappeared. That happened through the NEB where otherwise it would have happened through the capital market. This is where my point is relevant to the amendments we are discussing. I submit that if the Government at that time had not amended the Industry Act 1972—for which I hold no brief, since I opposed it at every stage—by the 1975 Act they would not have been able to put Sir Don Ryder into Ferranti to destroy its independence and create the problem with which we dealt earlier today. Hence, this is a specific example of the sort of temptation which we should remove from the Government by passing this amendment. The second example I wish to cite relates to the intervention that I made during the speech of the hon. Member for Whitehaven. That concerned the case of Barrow Hepburn and the support of the National Enterprise Board for British Tanners in 1978. There, once again, was an instance where, if the Government had not taken power under the 1975 Act to provide assistance—notwithstanding the possibility of finding alternative commercial means of assistance—Barrow Hepburn would not have been able to load British Tanners on to the NEB. It would not have been able to face the rest of the tanning industry, which was a great deal more efficient than British Tanners, with the subsidised competition which eventually ended in disaster and which the NEB had to concede was a grotesque affair. None of those things would have happened, I suggest, if we had retained the restraints on ministerial propensity to succumb to temptation which were applied in the 1972 Act. I do not think, however, that the restraints on that ministerial propensity to succumb to temptation in the 1972 Act were adequate. I have always been in favour of the notion that Ministers, if they wish to inject the taxpayers' money into private industry, should have to put some of their own capital behind the project which they think will be successful. But if I went down that way I am sure that you would rule me out of order, Mr. Deputy Speaker. Therefore, I will not go down that way. I have quoted those two instances because they seem to me to be particular examples of why we need the safeguard which is included in this amendment so long as we intend to operate under the provisions of the Industry Act 1972. Therefore, I strongly support my hon. Friend in inviting the House to endorse these amendments from another place.

Mr. Bill Walker  (Perth and East Perthshire)
I shall be brief. I welcome the amendment. For the benefit of the hon. Member for Keighley (Mr. Cryer), I should point out that the experience of unemployment does not belong only to Opposition Members. That experience is shared by many in the House. It is on record, and I am not ashamed of it, that I am one of eight children whose father was unemployed before the war, and I remember it vividly. I assure the hon. Gentleman that unemployment means something to me. Part of Dundee lies in my constituency; and its unemployment problem is very real. However, I do not believe that Dundee was assisted by what we are attempting to remove through the amendment. I know Dundee well and I know that it was not assisted. If the hon. Gentleman believes that the previous Labour Government's record in places such as Dundee was good, I recommend him to go there and talk to the people because they do not see it that way. In my judgment, the amendment will help to sort out some of the problems that have been created by well-intentioned, well-meaning but sadly ineffective measures in the past.

Mr. David Mitchell
The Lords amendment seeks to circumscribe the powers of the Secretary of State so that he will not be able to give financial  assistance unless he is satisfied that it cannot be found in other ways. The hon. Member for Whitehaven (Dr. Cunningham) sought to illustrate the damage which would be done to the Secretary of State's powers to assist industry by referring to Ferranti. I remind him, since he has forgotten it, that the subsection about which he is so concerned was on the statute book at the time that the Ferranti rescue operation was mounted. Therefore, there can be no bigger piece of nonsense than for the hon. Gentleman to pray in aid that this clause would have prevented the Government from carrying out a rescue operation on Ferranti. The hon. Gentleman—I was careful to write down what he said—raised the matter of Ferranti. I did not. The hon. Gentleman also quoted from the Financial Times the article on the North. But he gave a quotation out of context of one industrialist who was in trouble. Perhaps it would have been better if he had come to some of the broader and more general conclusions—some of the surprising ones—in that article : "These impressions have been built up during conversations with a wide range of industrialists, and especially during a four-day tour of the north-east which has always been one of the country's most depressed areas but which now presents the visitor with some glimpses of potential prosperity". That is from the article that the hon. Gentleman chose to quote. He may laugh, because he does not like to have the article that he chose to quote from quoted back at him. If he believes that article forms a judgment, perhaps he will in fairness allow me to quote from it.

Dr. John Cunningham
The Under-Secretary can go on and quote David Brown of D. J. Brown Engineering, one of the most successful entrepreneurs in the North-East, who is about to expand his business. Unfortunately, because of Government policy—and he is quoted in the article—he says that he will expand in the United States. Is the hon. Gentleman saying that this comment about "glimpses of potential prosperity" in the Northern region is real when it has the highest unemployment rate of any region of the United Kingdom, except Northern Ireland?

Mr. Mitchell
The hon. Gentleman is right to draw attention to the high level of unemployment in the North-East, and I shall come back to that later. Before doing so, I should say that my hon. Friend the Member for Coventry, South-West (Mr. Butcher) made an important and valuable contribution to the debate with a considerable number of ideas and suggestions that I should like to look at carefully in the Official Report tomorrow. The right hon. Member for Houghton-le-Spring (Mr. Urwin) spoke about the danger of unemployment rising, particularly in the North-East. I understood him to say that he wished that more Ministers would pay visits to that area.

Mr. Urwin
I did not say that.

Mr. Mitchell
Then I misunderstood the right hon. Gentleman. However, I am going to the North-East on Friday and Saturday of this week. I share with him a concern about the problems in that area.

Mr. Urwin
For the Minister's information, I must point out that I did not say that we should have more visits from Ministers. One reason is that, no matter how many Ministers have visited us in the past 13 months, there is no distinguishable improvement, or likelihood of improvement, in the employment position while the Government remain in office. However, that being said, I look forward to meeting the Minister in Sunderland on Friday afternoon. I hope that he will be able to say to the leader of the council and others that he will not shelter behind the limitations imposed upon the Government as a result of the amendment. I hope that he will be able to give them the benefit of some sound, good advice about bringing new industries into that heavily depressed area.

Mr. Mitchell
I am grateful to the right hon. Gentleman for his clarification. I look forward to seeing him on Friday. My hon. Friend the Member for Perth and East Perthshire (Mr. Walker) spoke with genuine feeling about the problems of unemployment. I am deeply concerned about job losses. The hon. Member for Keighley (Mr. Cryer) called on the Government to save jobs. That is not within the gift of the Government. Jobs are created because men and management are jointly producing what the customer wants, at a price  that he is prepared to pay. No amount of shaking the head from the hon. Member for Keighley will alter that reality. The Government cannot do that—only men and management can do that, in cooperation with each other.

Mr. Cryer
Will the Minister accept that the National Research Development Corporation helped to fund the hovercraft, and also to fund the development of the computer in Britain? The development and creation of new ideas and jobs should not be left to the market place and to individual entrepreneurs, who seem a bit thin on the ground these days.

Mr. Mitchell
. The NRDC is continuing its work of helping in the area of technological advance investments. We are anxious to encourage it in that role. I would have thought it somewhat embarrassing for the hon. Member for Keighley to intervene in the debate on the theme that he sung about the way in which the Government could prevent unemployment from rising. He occupied my position as a junior Minister in the Department of Industry, and he presided over a period in our history when unemployment doubled. On that basis, he seems an ill person to whom to look for advice when dealing with the problems of unemployment.

Mr. John Evans
Will the Minister confirm that his party was elected to office on 3 May last year on the slogan that it intended to solve the problem of unemployment, and especially to do away with the problems that it claimed the previous Labour Government had created? Far from anything having been solved, unemployment has increased. Is the Minister prepared to stand at the Dispatch Box and say that in 18 months' time there will not be 3 million unemployed in Britain?

Mr. Mitchell
I shall come to the major economic problems that have been raised. Before I reach that stage, I wish to refer to the speech of my hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne). He warned against Ministers yielding to temptation. Perhaps I shall have to not yield to the temptation to follow him in the routes down which he sought to lead the debate. I return to the central points that have occupied the speeches of a number of  hon. Members, especially the hon. Member for Whitehaven who opened the debate for the Opposition. I refer to the problems of bankruptcies, inflation, minimum lending rate and the level of the pound. Those are the central economic issues that were raised during the past two and a half hours. I, of course, share the concern which Labour Members have expressed about the rising level of bankruptcies. However, it ill-behoves them to harp on that subject when during the period of their Administration bankruptcies reached the highest level since records were first kept in 1914. On that basis the hon. Member for Whitehaven should be careful in seeking to level criticism. 11.15 pm The hon. Member for Whitehaven also referred to inflation. Inflation is the greatest destroyer of jobs and business growth. It destroys jobs because it makes every business cash hungry. Businesses then run up to the limits in the bank and are unable to extend their borrowing. They have to stop expanding, but their overheads continue to rise—rates and rent and so on. The business then sees its profit margin being eroded and the skids are under it. Repeatedly, businesses are driven into trouble because of the consequences of inflation. It is therefore the Government's top priority to deal with the causes of inflation. Fascinating and vital words were used by the hon. Member for Whitehaven when he said that inflation was rising "inexorably". He put his finger, in a Freudian slip, on the important factor. There is an 18-month to two-year delay before money management of the country's economy works through in inflation. The inexorable aspect is that 18 months ago there was lack of control of a runaway money supply. That has now come through in inflation. It was caused by the activities of the Labour Government. If we are to attack the causes of inflation we must steadily reduce the increase in the money supply. One of the consequences of that is high interest rates. My hon. Friend the Member for Coventry, South-West was right when he called on Labour Members to join the Government in seeking to encourage cuts in Government expenditure so that the public sector borrowing requirements  can be reduced and interest rates can fall the quicker. That is a central aspect of our policy. Labour Members also sought to berate the Government over the high level of the pound. The pound is high because of the law of supply and demand in an international market. That market is not controlled by the British Government. We are a stable society sitting on an oil well. There is nothing we can do to avoid making this country an immensely attractive place into which foreign Chancellors will put their money. In addition to the oil strength of the pound there is the strength that comes from the high interest rate. I say "Courage, mon ami"; keep your nerve.

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|Alexander, Richard                    |Griffiths, Peter (Portsmouth N)        |Page, Rt Hon Sir R. Graham             |
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|Ancram, Michael                       |Grist, Ian                             |Page, Richard (SW Hertfordshire)       |
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|Arnold, Tom                           |Gummer, John Selwyn                    |Parris, Matthew                        |
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|Aspinwall, Jack                       |Hamilton, Hon Archie (Eps'm&Ew'll) |Patten, Christopher (Bath)             |
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|Atkinson, David (B'mouth, East)       |Haselhurst, Alan                       |Patten, John (Oxford)                  |
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|Baker, Nicholas (North Dorset)        |Hawkins, Paul                          |Pollock, Alexander                     |
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|Beaumont-Dark, Anthony                |Hawksley, Warren                       |Rathbone, Tim                          |
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|Benyon, Thomas (Abingdon)             |Henderson, Barry                       |Rhodes James, Robert                   |
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|Berry, Hon Anthony                    |Hicks, Robert                          |Rhys Williams, Sir Brandon             |
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|Best, Keith                           |Hogg, Hon Douglas (Grantham)           |Roberts, Michael (Cardiff NW)          |
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|Bevan, David Gllroy                   |Hooson, Tom                            |Rost, Peter                            |
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|Blackburn, John                       |Hordern, Peter                         |Scott, Nicholas                        |
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|Boscawen, Hon Robert                  |Hunt, David (Wirral)                   |Shaw, Giles (Pudsey)                   |
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|Bright, Graham                        |Hunt, John (Ravensbourne)              |Shelton, William (Streatham)           |
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|Brinton, Tim                          |Jopling, Rt Hon Michael                |Shepherd, Colin (Hereford)             |
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|Brocklebank-Fowler, Christopher       |Kershaw, Anthony                       |Sims, Roger                            |
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|Brooke, Hon Peter                     |Lee, John                              |Speed, Keith                           |
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|Brotherton, Michael                   |Le Marchant, Spencer                   |Speller, Tony                          |
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|Brown, Michael (Brlgg & Sc'thorpe)|Lester, Jim (Beeston)                  |Stevens, Martin                        |
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|Bruce-Gardyne, John                   |Lloyd, Peter (Fareham)                 |Stokes, John                           |
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|Butler, Hon Adam                      |Loveridge, John                        |Stradling Thomas, J.                   |
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|Cadbury, Jocelyn                      |Lyell, Nicholas                        |Temple-Morris, Peter                   |
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|Carlisle, John (Luton West)           |MacGregor, John                        |Thomas, Rt Hon Peter (Hendon S)        |
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|Carlisle, Kenneth (Lincoln)           |MacKay, John (Argyll)                  |Thompson, Donald                       |
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|Churchill, W. S.                      |McNair-Wilson, Michael (Newbury)       |Thome, Neil (Ilford South)             |
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|Clark, Hon Alan (Plymouth, Sutton)    |Marshall, Michael (Arundel)            |Viggers, Peter                         |
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|Clarke, Kenneth (Rushcliffe)          |Mates, Michael                         |Wakeham, John                          |
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|Clegg, Sir Walter                     |Mather, Carol                          |Walker, Bill (Perth & E Perthshire)|
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|Colvin, Michael                       |Maxwell-Hyslop, Robin                  |Waller, Gary                           |
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|Crouch, David                         |Meyer, Sir Anthony                     |Ward, John                             |
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|Dorrell, Stephen                      |Miller, Hal (Bromsgrove & Redditch)|Watson, John                           |
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|Douglas-Hamilton, Lord James          |Mills, lain (Meriden)                  |Wells, Bowen (Hert'rd & Stev'nage) |
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|Dover, Denshore                       |Miscampbell, Norman                    |Wheeler, John                          |
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|Dykes, Hugh                           |Mitchell, David (Basingstoke)          |Wickenden, Keith                       |
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|Fairgrieve, Russell                   |Moate, Roger                           |Wilkinson, John                        |
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|Faith, Mrs Sheila                     |Morgan, Geraint                        |Winterton, Nicholas                    |
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|Fenner, Mrs Peggy                     |Murphy, Christopher                    |Wolfson, Mark                          |
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|Fox, Marcus                           |Neale, Gerrard                         |Young, Sir George (Acton)              |
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|Gardiner, George (Reigate)            |Needham, Richard                       |                                       |
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|Garel-Jones, Tristan                  |Neubert, Michael                       |TELLERS FOR THE AYES :                 |
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|Gow, Ian                              |Newton, Tony                           |Mr. David Waddington and               |
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|Grant, Anthony (Harrow C)             |Onslow, Cranley                        |Mr. John Cope.                         |
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|Grieve, Percy                         |                                       |                                       |
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|Bennett, Andrew (Stockport N)     |Cryer, Bob                      |Dubs, Alfred         |
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|Booth, Rt Hon Albert              |Cunliffe, Lawrence              |Dunwoody, Mrs Gwyneth|
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|Callaghan, Jim (Middleton & P)|Cunningham, Dr John (Whitehaven)|Eastham, Ken         |
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|Campbell-Savours, Dale            |Dalyell, Tarn                   |Evans, John (Newton) |
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|Clark, Dr David (South Shields)   |Dixon, Donald                   |Field, Frank         |
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|Cocks, Rt Hon Michael (Bristol S) |Dormand, Jack                   |Foster, Derek        |
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|Cowans, Harry                     |Douglas, Dick                   |Foulkes, George      |
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As interest rates fall, so we shall have the desirable combination of lower interest rates and some easing in the level of the pound—a combination that the business community is calling for and which it will get as the Government succeed in fulfilling their policies as set out by my right hon. and learned Friend the Chancellor in his Budget Statement this year.

The debate has been wide-ranging, and I am glad to have had the opportunity to reply to the points that have been raisel. I hope that the House will accept the Lords amendments.

Question put, That this House doth agree with the Lords in the said amendment :—

The House divided : Ayes 123, Noes 53.

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|George, Bruce                     |Lyons, Edward (Bradford West)   |Skinner, Dennis                     |
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|Gilbert, Rt Hon Dr John           |McCartney, Hugh                 |Smith, Rt Hon J. (North Lanarkshire)|
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|Grant, George (Morpeth)           |Millan, Rt Hon Bruce            |Soley, Clive                        |
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|Hamilton, W. W. (Central Fife)    |Newens, Stanley                 |Tinn, James                         |
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|Harrison, Rt Hon Walter           |Parry, Robert                   |Urwin, Rt Hon Tom                   |
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|Haynes, Frank                     |Powell, Raymond (Ogmore)        |Wainwright, Richard (Colne Valley)  |
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|Home Robertson, John              |Prescott, John                  |Welsh, Michael                      |
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|Homewood, William                 |Roberts, Ernest (Hackney North) |Woolmer, Kenneth                    |
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|Howell, Rt Hon Denis (B'ham, Sm H)|Robertson, George               |                                    |
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|Hughes, Robert (Aberdeen North)   |Robinson, Geoffrey (Coventry NW)|TELLERS FOR THE NOES                |
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|Lamond, James                     |Rooker, J. W.                   |Mr. Terry Davis and                 |
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|Litherland, Robert                |Silkin, Rt Hon John (Deptford)  |Mr. George Morton.                  |
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Question accordingly agreed to. [ Special Entry.]

Lords amendment No. 5 agreed to.

Lords amendments Nos. 6 and 7 agreed to. [ Special Entry.]

Birmingham Airport

Motion made, and Question proposed, That this House do now adjourn.—[ Mr. Berry.]

11.30 pm

Mr. Iain Mills  (Meriden)
I welcome the fact that there are so many hon. Members present to hear this debate concerning the expansion of Birmingham airport. I would not want the House to think that I am raising this question lightly. I also ask the House to accept that I have not decided to take this serious step of raising the matter in the House in a selfish, narrow or overly protective way. However, as the Member for the constituency which contains the airport and, therefore, the constituency which is much affected by any changes to it, it is my duty and responsibility to represent the views of my constituents. I would therefore tonight raise the vitally important question of the expansion of Birmingham airport planning application which was recently determined. I draw the attention of my hon. Friend the Under-Secretary to the fact that so burningly strong is the feeling among local residents that a number of parties have come by car and coach and are at present in the Strangers Gallery. Thousands of residents living near Elmdon airport are burning with resentment and are bitterly unhappy about the decision to allow the expansion of the airport to go ahead. Both before and during the public inquiry concerning the planning application I had thousands of letters and complaints, and since the decision a few weeks ago that has been repeated many times over. I will read to my hon. Friend a few extracts from the letters I have received. This letter comes from a family living off Elmdon Road in Hidcote Grove and was written to the Secretary of State : " I felt that I must write to you to show my disgust of your decision to pass the new Birmingham Airport Expansion Proposal.As a mother of four young children, three of whom have to suffer the aircraft noise daily in school …" Copies were sent to the Prime Minister and myself. I quote from a letter from, again, somebody living in Elmdon Road : " However, in view of the serious impact the Minister's decision will have on the fives of thousands of local residents, the anger and bitterness it will arouse, we should like to know what steps you as our local Member of Parliament propose to take." These are the steps I am tonight taking, and I hope that my hon. Friend the Under-Secretary will pay careful heed to what I have to say and in some way will try to find a solution to these problems. The problems basically are clear and were recognised both by the inspector and by my right hon. Friend the Secretary of State for the Environment in his determination. In his report, the inspector acknowledged the unhappy effect of the juxtaposition of the airport with densely populated residential areas—"an accident of history." The inspector concluded that this unsatisfactory situation was not insignificant or of a temporary or transitory nature and that, because of its local and regional importance, the provision of adequate accommodation and facilities was necessary. So there in the two parts are the problem and the suggestion that the need for a regional airport should be of no importance in the consideration of the needs of my constituents. The decision to go ahead must be condemned as cavalier and unjust to the local residents. The regional jackboot has trampled the lives and happiness of local  residents with tragic ruthlessness. As a result, some of my constituents feel so strongly that they want to lie on the runways and prevent such expansion. However ill advised that attitude might be, it illustrates the power and bitterness of local feeling. That resentment is also due to the feeling that the planning inquiry was cosmetic. In addition, my constituents resent the fact that the Secretary of State did not accept the inspector's recommendation for a ban on night flights. I quote from a letter that I received today. It states : " It is with regret that I notice that it is as if no inquiry had been held." Such is the feeling of loss and bitterness among my constituents. I have always advocated limited expansion of Birmingham airport. I assure hon. Members that we did not feel it would be right to restrict Birmingham airport completely. We feel that it is right to allow natural growth, particularly of the business traffic which is needed to help the industrial regeneration of the area. Limited growth might be tolerable. However, major expansion is proposed. Apparently it can be financially viable to the airport authorities and the airlines only if there is a massive amount of holiday flight traffic. Holiday traffic will mean a considerable amount of night flying so that travel companies can generate business at the right economic level to allow cheap holiday flights. This sad business cycle means that my constituents will ultimately be forced to suffer in order that others can have cheap holidays. They scarcely involve national or regional needs, let alone the burning business needs that are important to the West Midlands. The noise generated by night flights in the area is intolerable. The inspector said : " I also have to accept that reaction to noise nuisance is subjective and emotional and in the context of a situation which is already intolerable to some this sort of criterion may well be beyond understanding and acceptance. I believe that I have to take the wider view." Yet again, the inspector and the Secretary of State admit that there will be considerable consequences for my constituents but that they believe that the nation or region has a more important need. On behalf of my constituents, I  heartily condemn the "wider view". The valid and legitimate desires of local residents for peace and quiet have been jack-booted under the heel of regional need. During the inquiry, much scientific analysis was used to assess noise. My constituents feel that, however the arguments are presented, the present noise level is intolerable. Any increase—however scientifically argued or presented—will be devastating. Evening and night flights in particular will make life almost impossible. Again, I should like to quote from a constituent's letter. It comes from Elmdon Lane, near the airport. It is addressed to the Secretary of State and states : " In fact through your decision to override nearly all the inspector's recommendations, we now face a situation that will mean a living hell for thousands of people in years to come. What is going to happen is that 150 yards from my bedroom window, 24 hours a day, day in day out, we are to have modern jet aircraft revving up and taking off. The jet engine is not a quiet thing and nothing can prevent the disturbance they cause." What a sad letter for someone to have to write. It is particularly sad because the inspector recommended a ban on night flying. So why did the Secretary of State change that recommendation? The inspector said : " It seems to me that to restrict night flying in the manner suggested would provide a considerable benefit to those who live near to the airport and are subjected to nuisance by noise. On this basis alone I believe that to restrict night flying in the manner proposed is wholly justified." I stress that last phrase. However, the Secretary of State did not accept the recommendation and my constituents will have night flights. Hell will be created in Marston Green. The Government are concerned. They are investigating a code of practice. However, we need a ban on night flying, not a code. The excuse of noise-certified planes with restrictions on take-offs—which are noisier than landings—may be put forward. Night flights are not tolerable for my constituents. It is not just, fair, democratic or right to promote cheap holiday flights paid for in sleepless nights and misery for thousands of local residents. The noise screens and earth bunds will offer only a marginal improvement. I have a further letter from a constituent in Clifton Road, Castle Bromwich,  which is even further from the airport. He states that there are " three early morning flights out of Elmdon, at 3.40 am, 4 am and 4.20 am, which must have disturbed the sleep of many thousands of people, including those in Castle Bromwich. I hope that there will be no repetition of this experience but with more facilities available to airlines when the extensions come into use it seems obvious that more, rather than fewer, night flights will be operated." What can I say to my constituents about the decision? The inspector's report goes on : " I must however note that at one end there will be no protection for taxiing or airborne noise afforded for properties in Digby Drive and that I am not wholly convinced of the situation in respect of Moseley Drive." The inspector expresses severe doubts and feels that parts will not be protected by acoustic screens. How can I advise my constituents to deal with that? There are other problems in addition to noise. The area is in great danger of follow-on development, despite the views of the inspector and the Secretary of State. The National Exhibition Centre was said not be to be a precedent for further development, yet it was used as an argument for an expanded airport. I predict that massive industrial development will follow, with the excuse given yet again of regional need. The inspector commented splendidly that the proposal was not contrary to the development plan policy for the area " including the green belt element and clearly it is in line with the policies contained within the draft proposals for the alterations to the West Midlands County Structure Plan … I do not consider that development of a new airport terminal and ancillary features need in any way be regarded as a precedent". Within days of that announcement, the West Midlands county council was considering a prestige site of 100 acres near the exhibition centre, such was the callousness of its approach. The authority may deny that an expanded airport has anything to do with the massive prestige industrial site, with salesmen and suppliers flying in and out. The authority's disregard of the fact that airport expansion should not be a precedent is cynical. This is only the start of the environmental disaster that will eventually join Birmingham to Coventry in a mass of development, similar to that around London. All this comes to light in dis-  cussions concerned with the structure plan that the inspector implied would afford some protection for my constituents. There is also the problem of public expenditure. Is it not intolerable that £50 million or more of public money is to be spent at a time when the Government, whom I fully and loyally support, are calling for austerity, self-restraint and public spending reductions? Some of the money will be a direct Government grant. I ask the Government to reconsider. In addition, I believe that the airport authorities are applying for EEC funds or loans. Lord Trenchard wrote to me on 6 June : " Much European Community aid is, as you are obviously well aware, restricted to the Assisted Areas." Birmingham is not an assisted area. " The European Investment Bank provides medium and long-term loans primarily to finance investment which promotes the development of less-developed regions." There are exceptions. The Community has assisted other areas on the ground that it furthers the interests of the Community as a whole. According to that letter, EEC aid is not applicable. Can my hon. Friend confirm that? I have written to Mr. Roy Jenkins, President of the Commission of the European Communities, to ask for his help. With his history in the area, we may obtain it. The Department of Trade's reply to my parliamentary question of 12 June shows that it is committed by the 1960 agreement to Government funds. I ask the Government to reconsider and, if necessary, bring forward legislation to prevent the grant. In summary, will my hon. Friend consider the following points? Will the Secretary of State for the Environment reconsider his decision? Can there be a Government or county council scheme to allow residents to sell their houses or move to similar houses, so that they obtain their full market value and do not lose because of the depression caused by the noise levels of the airport? Can we look at a really effective system—a massive system—of free double glazing instead of the really poor scheme offered at the moment? Can we, please, look at special sound-proofing in schools, libraries and places where people have to work during the day, during the noise of the airport? Most important, can we,  please, as the inspector suggested, have major restrictions, ideally a total ban on night flights and on evening flights? I cannot emphasise this enough. I know that we make a lot of noise in this House late at night, but I invite hon. Members to imagine the aircraft noise when lying in bed, with children trying to sleep—not once, not once a week, not a week in a year, but every night, every week, every month of the year. Can we, please, replace the lost recreational facilities? Can we restrict planes using Elmdon airport to only the larger, more silent planes? Can we have a full and real guarantee of no further expansion? This last point, in the long term, is perhaps the most important. It seems that this exercise may well not be the end of the saga. Perhaps in a few years' time, when Heathrow and other London airports such as Luton have succeeded—as they seem to be doing very well—in restricting more and more night flights, the commercial interests and the arrogant over-ambition of the county council will result in more expansion at Birmingham and more night flights. A new terminal may allow further development, but it is in my view essential to ask for an absolute guarantee that there will be no such further extension. The ruthless ambition of the West Midlands county council must be controlled. It is for this reason that I raise these matters in the House. I hope that my hon. Friend will realise that in the occasional passionate words that I used there lies the really burning resentment felt in the heart of England, and that there is great dissatisfaction and much bitterness. We most sincerely ask for these issues to be re-examined.

11.47 pm

The Under-Secretary of State for the Environment (Mr. Marcus Fox)
My hon. Friend the Member for Meriden (Mr. Mills) has raised for debate this evening a matter of great importance both to his constituents and to the West Midlands generally. Birmingham airport is one of the most important regional airports in this country. During the last 20 years the number of passengers using it each year has in-  creased sixfold, from around ¼ million to over 1½ million. In the last two years alone, traffic has increased at an annual rate of 21 per cent., compared with about 13 per cent, for regional airports as a whole and 10 per cent, for the London area airports. Such growth reflects the fact that there is a demand in the West Midlands for decent local air travel facilities. This demand is by no means only for "bucket and spade" services or, as my hon. Friend referred to them, cheap holiday flights to holiday destinations. In 1979, 54 per cent, of the passengers travelled on scheduled flights, a high proportion of whom were business travellers, and only 46 per cent, were accounted for by inclusive tours and charters. In other words, the airport plays an important role in the economic prosperity of the West Midlands as a whole. It serves the needs of local industry and thus contributes to the development of trade and employment. One of the reasons for this is that the airport is so well located : it lies within easy reach of Birmingham and is linked to other industrial centres in the Midlands through the motorway network. As my hon. Friend said—although with a certain amount of derogatoriness—it is close to Birmingham international railway station, on one of the most important railway lines in the country, and is adjacent to the National Exhibition Centre. The problem is the inadequacy of the existing terminal building. It was built in the late 1930s to cater for the type of air traffic prevalent at that time and, although it has been patched up several times, these modifications have failed to keep pace with the growth of traffic, with the result that the present terminal facilities are congested and inadequate for coping with the level of traffic expected in the 1980s. Indeed, as anyone who has used Birmingham airport will know, at times the present conditions for passengers at the airport cannot be regarded as satisfactory. The present terminal was simply not designed to handle the present level of traffic. It is not, therefore, surprising that there has been growing pressure over the years from the consumer, business and local authority interests for something to be done to rectify this situation. In 1978, the West Midlands county council brought forward proposals for the construction of a new terminal building at Birmingham which, with its associated facilities, was designed to provide an airport more in keeping with the requirement of meeting the natural growth in air traffic in the West Midlands up to the end of the present decade. I am glad that my hon. Friend announced tonight that he is in favour of a certain growth at this airport. Those proposals were also in accord with the role for Birmingham set out in our predecessors' White Paper on airports policy in February 1978. However, that same White Paper recognised that expansion of Birmingham could not take place without difficulty. The airport occupies a restricted site close to built-up areas and has serious aircraft noise and environmental problems. I take note of the interest in this matter, which has led to a number of people being present in the Strangers Gallery for this debate. We have not underestimated the hardship or the noise and the nuisance that the airport has caused to many people. But no airport in the United Kingdom can operate without some environmental disturbance. In a crowded island such as ours, there is never a right place either to build a new airport or to extend an existing one. As regards Birmingham airport, I should like to pay a tribute to my hon. Friend the Member for Meriden. No Member of Parliament could have done more to draw attention to these matters. Indeed, sometimes at the Department of the Environment I have begun to think that he was the only Member with whom I had to deal. Supported, as he has been, by a number of other hon. Members, particularly my hon. Friend the Member for Birmingham, Yardley (Mr. Bevan), he has been tireless in pointing to the environmental consequences which must flow both from the operation of the airport and from any expansion of its facilities. Nobody could have fought harder to defend the interests of his constituents. I take this opportunity to place on record my admiration of his unstinting efforts to ensure that in the formulation of their airports policy the Government never lose sight of the costs which may be incurred, and I do not mean simply the costs in financial terms. It was precisely in order that the views of all those affected by the proposal to build a new terminal should be properly heard that my right hon. Friend the Secretary of State for the Environment decided that there should be a full public inquiry before a decision was taken on the application for planning permission for the proposed development. That inquiry was duly held last autumn and, indeed, my hon. Friend gave evidence and I sent him a copy of the inspector's report. In the event, my right hon. Friend accepted the inspector's main recommendation that permission should be given. It has to be recognised that such decisions can involve striking a balance between what are often conflicting interests—perhaps, as my hon. Friend has suggested in this case, between the wider regional economic interests and those of local residents. This is never easy, and I can assure my hon. Friend that the Birmingham decision was taken only after the most careful consideration of the inspector's report. However, I must go on to emphasise that once the Secretary of State for the Environment has made his decision he has discharged his statutory function in the matter. Therefore, there can be no question of this decision being reconsidered. I feel that I should draw attention to some of the conditions which were attached to the planning permission and to our general policy concerned with aircraft noise disturbance. First, my hon. Friend has complained that my right hon. Friend did not, as part of the planning permission, impose a general ban on night flying at the airport. This was suggested by the inspector, though he expressed doubts about the validity of such action in the context of the particular proposals that were before him. As the decision letter made clear, it would have meant seeking to restrict the continuing use of existing runways. But I must point out that conditions restricting night use were imposed on the new developments which were specifically the subject of the planning permission. Thus, there is a condition banning night movements of aircraft or the running of aircraft engines on the new parallel taxiway or on the link from that  taxiway to the new apron. These conditions will, in practice, restrict the number of movements which can take place on the main runway during the night. Secondly, the county council's proposal to build a taxiway linking the apron with the northern end of the cross-runway was disallowed so as to permit an unbroken length of acoustic screen to be built along the northern edge of the apron. Thirdly, my right hon. Friend has also insisted that details of the earth noise barriers be approved before the building of the parallel taxiway and that the barriers themselves be built before the taxiway is opened. My right hon. Friend has asked the airport authority to introduce its new restrictions on night flying before the new terminal comes into use and has supported the county council's decision to extend its noise insulation scheme. He has also supported its plan to provide a ground power supply at the apron to restrict use of noisy auxiliary power units in the airport. My hon. Friend has raised a number of questions this evening about what more can be done to alleviate the effects of this development on his constituency. Many of his points were matters for the West Midlands county council, which owns and operates the airport and is responsible for alleviating its environmental impact. The Land Compensation Act 1973 allows certain limited discretionary purchases to be made by agreement by the responsible authority where an owner's enjoyment of a property in the immediate area is seriously affected by the carrying out or use of any public works. For those in a wider area, the West Midlands county council has power to implement schemes for noise insulation. I note my hon. Friend's request that there should be another look at this help. I give the assurance that this will be done. I understand that two such schemes have so far been made, and, while details are for the local authority, I am sure that it will consider my hon. Friend's representations most carefully and keep the position under review. Where, despite such efforts to mitigate aircraft noise nuisance, property values  are depreciated by the use of the new aprons or taxiways, compensation may, in due course, become payable under the Land Compensation Act. My right hon. Friend the Secretary of State for Trade, who has responsibilities concerning aircraft noise, is acutely conscious of the problems, not only at Birmingham but elsewhere in the country. We believe that this problem can be alleviated by action taken at airports, but it can be effectively tackled only at source. We have, therefore, taken an active role in international discussions designed to encourage the development and introduction of quieter aircraft. The use of non-noise certificated subsonic jet aircraft acquired by United Kingdom operators after 30 September 1978 has already been prohibited. The use of all non-noise certificated subsonic iet aircraft on the United Kingdom register will be prohibited from 1 January 1986. Similar measures announced or in prospect in other countries with major civil aviation interests are expected to result in a marked improvement in the noise climate around United Kingdom airports during the 1980s. The previous Government designated Birmingham as a category B airport in their 1978 White Paper on airports policy. We concur in this description, which means that Birmingham's role is to remain a regional airport designed to meet the demand for short and medium-haul traffic. The presently planned developments do not affect the main runway and will not facilitate a widening of the range of aircraft able to operate there. In fact, the restricted nature of the site virtually precludes any significant development of the main runway and thus severely limits the possibility of mounting long-haul intercontinental services which are currently provided from London and Manchester. The county council has made clear that it has no ambition to provide facilities other than to meet the demand for European and domestic services which are so important to local industry and tourism. I assure my hon. Friend that there is no question of directing South-East traffic to Birmingham, and we certainly do not regard Birmingham as a potential Heathrow in the Midlands with long-haul connections all over the world. Civil aviation is one of our few growth industries and it would not be in our national interest or, I suggest, the regional interest to restrict it artificially. I regret the fact that my hon. Friend used such terms as "jackboot" and "ruthlessness". It is unfortunate in all matters of this kind, where decisions have to be taken, that such misinterpretations can be made. I again assure my hon. Friend that the decision was not taken lightly. Although we cannot reconsider it, I believe that the conditions imposed are sensible and will make life easier for many of the people who live in the vicinity. The Government believe that we must make use of civil aviation's potential to assist economic growth and develop our trade with European countries while recognising and seeking to minimise the environmental costs incurred. I am grateful to my hon. Friend for introducing the debate. I hope that I have gone some way to reassure him that we have in mind the concern that he has expressed and the concern of his constituents about this decision.

Question put and agreed to.

Adjourned accordingly at one minute to Twelve o'clock.