asked the Secretary of State for Industry if he has any plans to introduce legislation to denationalise Cable and Wireless Limited.

In pursuit of their policy of introducing private sector capital into appropriate public holdings, the Government have been looking at the possibility of selling some of their shares in Cable and Wireless. The Government will consider legislation in the light of their eventual decision on the sale of shares.

I thank my hon. Friend for his encouraging reply, which I am sure will be welcomed not only by Conservative Members, but by the chairman and board of Cable and Wireless. In view of that company's considerable overseas business, will my hon. Friend assure the House that he will consult overseas client Governments before such legislation is introduced?

I am grateful to my hon. Friend for his remarks. He is right to point to the international ramifications of the sale of shares in Cable and Wireless. I assure him that no final decision will be taken until the views of overseas Governments concerned have been obtained.

In view of the fact that the private sector is crying out for investment, and that manufacturing investment is decreasing, why are the Government choosing this time to sell off parts of the public sector? Will there be guarantees that there will not be decreased investment in Cable and Wireless?

The hon. Gentleman must not draw conclusions before a decision is reached. I hope that he has carefully listened to and studied my reply. There will he considerable benefit to the public sector borrowing requirement through the disposal of shares in companies such as Cable and Wireless, and that will be of great advantage to the private manufacturing sector.

asked the Secretary of State for Industry what further steps he intends to take to stimulate investment in industry.

The Government are pursuing the slow, difficult policies necessary to abate inflation, and reduce the level of interest rates and the degree of crowding out of private industry. I am trying to persuade the trade unions, which urge more investment, that they could transform the prospects for investment and jobs as inflation abates if they would throw their influence into offering employers higher productivity and a rise in the catastrophically low level of real profits on average in manufacturing industry by reducing restrictive labour practices and overmanning.

Is the Secretary of State aware that he will be thwarted, rather than assisted in his efforts, by activities of companies such as the Reed Group, which in my constituency is closing the Shand Kydd factory in Christchurch, and is refusing to negotiate with a group that is willing and able to take part of that factory in order to maintain some of the employment? Is he further aware that the unions are deliberately pushing up wage claims at national level that are creating further insolvency in the company? Will not my right hon. Friend deplore this sort of attitude, which is surely contrary to the Government's intention of encouraging small businesses?

There are parts of my hon. Friend's supplementary question with which I agree in general, but I cannot pronounce on an issue which is not known to me.

Does not the Secretary of State agree that the private sector is not investing because the real rate of return is too low? If we are ever to get out of this vicious circle of low productivity and low investment will not central Government need to create a fund to channel North Sea oil revenues into manufacturing industry, particularly into areas of high unemployment, such as the North-East?

I agree with the hon. Gentleman that low productivity, high in- flation and low profits are a poor background for greater investment. However, it would not be sensible to try to channel North Sea oil money into investment decisions via the Government, as opposed to via the consumer.

Will my right hon. Friend agree that over the years the record of State investment in selecting the commercial winners of the future, from Concorde downwards, compares somewhat unfavourably with that of a drunken punter with a bent pin?

I will even give my hon. Friend a puff by saying that his book on the subject, coupled with the words of my hon. Friend the Financial Secretary, should be required reading.

Is not a greater deterrent to investment by private sources in this country the Government's own policy in three distinct ways: first, an overvalued pound, second, the highest interest rates in the history of our country and, thirdly, the abolition of exchange controls, all of which together have made it much more profitable for private investment to go abroad or into areas other than manufacturing industry?

No, I think that the right hon. Gentleman is wrong on all three counts. The pound reflects the demand for and supply of the currency and is not overvalued in the market in that sense. Interest rates at their supply and demand level are a necessary part of reducing inflation. As for the abolition of exchange controls, contrary to the mythology that is widely believed by some people, including the Opposition and many trade unions, there is to some degree a choice between money and jobs going abroad.

Is the Secretary of State aware that we disagree with him entirely in his analysis? Is he also aware that he has not answered the question? Is not a greater reason for the present lack of private investment those three aspects of Government policy?

The answer is "No", because an attempt to manipulate downwards the exchange rate or interest rates would accelerate inflation, which is the biggest danger of all to investment.

asked the Secretary of State for Industry whether he has now reached any conclusions as a result of the meeting held in May between the Under-Secretary of State and representatives from local authorities in the Central region of Scotland about industrial development.

I am giving careful consideration to the arguments raised by the deputation about the changes in regional aids in the Central region.

In view of the fact that, since that meeting, the unemployment position in the Central region has got even worse, with thousands more young school leavers looking for work and about a thousand more notified redundancies in the past few weeks alone, why are the Government so hell-bent on going ahead with downgrading development area status in some parts of the region? Instead of simply blaming unemployment on the unemployed, is it not time that the Secretary of State realised that he is the biggest single cause of unemployment in this country, because his mad policies are causing the high rate of inflation, the high interest rates and the cuts in public investment which are crippling industry in this country?

We shall take into account in our review all the matters that the hon. Gentleman has raised. He may wish to take some satisfaction from the fact that unemployment has risen by a smaller percentage in Scotland than in Great Britain as a whole.

Is the hon. Gentleman aware that his right hon. Friend told the Members of Parliament from the North-West group that downgrading of areas represented success? If success means higher unemployment figures in each of the towns concerned in the North-West, how does he—

Order. The hon. Gentleman may ask about the Central region of Scotland but if he wishes to ask about the North-West he may have an opportunity later.

I accept your ruling. Mr. Speaker.

asked the Secretary of State for Industry if he will make a further statement on further aid for Inmos.

No, Sir.

Will the hon. Gentleman agree that, although in last week's debates there were differing views on the feasibility of Inmos and the conditions which will be associated with any further money, there was almost complete consensus that the Government now have no choice but to give a second £25 million, and that the delay is merely damaging Inmos and costing additional money?

The hon. Gentleman, who played a valuable part in the debate, called for a bipartisan approach, but his summary of the debate is a little inaccurate.

Will my hon. Friend agree that the granting of the second tranche of £25 million could be conditional on all future investment being made from private funds? Might not that course of events make the company more attractive to private funds in the future?

That is a consideration to be taken into account, but the first step must now be to await the review.

Will the hon. Gentleman accept that the answer to the debate last week was most unsatisfactory? Major countries throughout the world are investing hundreds of millions of pounds in the silicon chip. This is a potentially lucrative area, as my motion on the Order Paper shows. Will the hon. Gentleman reconsider his decision lest we fall behind every other major country in developing this very lucrative area?

The hon. Gentleman is venturing down a dangerous path in suggesting that we should have some kind of investment support war on these lines. If he considers these matters more carefully, he will see that, on the matter of inward investment and on the matter of standard chips, under the Government two further projects have come forward from National Semiconductors and from General Instruments, both for investment in Scotland, which are to be welcomed.

Will my hon. Friend accept that one of the problems of introducing private capital into Inmos is the great difficulty that private companies have in getting any information from either the National Enterprise Board or Inmos?

If my hon. Friend has any information on those lines I shall be happy to pass it on, but it is not a view that has been put directly to me.

asked the Secretary of State for Industry whether he has any proposals to alleviate the economic and social consequences of job losses in industries, other than the steel industry, in those areas in the North-West where such losses have been concentrated and substantial.

asked the Secretary of State for Industry, in view of the economic and social consequences of the substantial and concentrated job losses in the North-West, what plans he has to alleviate the deteriorating situation.

As money supply comes adequately under control and inflation declines, it will be seen that our policies have created the conditions for a sustained revival of wealth and job-creating enterprises throughout the United Kingdom, including the North-West.

Is the Minister aware that his answer will be found unconvincing in many areas of the North-West and that it runs wholly against the experience of that area over the last 12 months? Is he aware that, while the population of Blackburn is only 2 per cent. of that of the North-West, its increase in unemployment was so great last month that it contributed one in six to the increase in unemployment in the whole North-West region?

The hon. Member may consider my response to be unconvincing. Time will prove it to have been right. The hon. Gentleman is asking what we can do. In helping to encourage new businesses in the area, including small businesses, we have now entered into an arrangement with the Norwich Union which will ensure that its funds become available for small firms through the use of our counselling service.

Is the Minister aware that, while the money supply is coming under control—if it ever does—thousands and thousands of jobs are being lost day after day, and the people who suffer the loss are not, oddly enough, monetarists? Will the hon. Gentleman say how long it will be before he will take some radical action to help an area which has never known as bad a time as it is going through at present?

I understand the problem to which the hon. and learned Gentleman is drawing attention, but he has to accept—I am sure he does—that inflation is the greatest destroyer of jobs that there is, and it is essential that the attack on the causes of inflation should be the Government's first priority.

Has my hon. Friend had an opportunity to consider the case of my constituent, a small business man in Blackburn, who sought the help of the counselling service for his industry and was told by the Department that he would be able to get some assistance if he moved into a special area but that he could not now get it in Blackburn? Will my hon. Friend bear in mind that sort of case when he is considering how regional policy is to work?

The whole purpose of our regional policy is to concentrate help on the areas of greatest need. That inevitably means that there is less help concentrated on the areas of lesser need.

Has the Minister seen the letter from the Manchester chamber of commerce which suggests that the true crisis in the North-West is being masked temporarily by a cutback in investment, training and apprenticeships and stock? Is he aware that, unlike the hon. Member for Knutsford (Mr. Bruce-Gardyne), many workers in my constituency, in Fairey, Ferranti, British Aerospace and ICL have every confidence in public investment to protect jobs and back winners?

They should read the record.

They have.

If the. hon. Gentleman wants to do something constructive to help to prevent unemployment, he might care to go back to his constituency and explain that if workers ask for more wages for producing the same amount of goods, the goods will cost more and will become less competitive and jobs will be lost.

Will my hon. Friend accept my thanks for successfully negotiating a deal with the English Industrial Estates Corporation whereby it will invest in small workshop units up to 2,500 sq. ft. and for negotiating terms with the Norwich Union whereby it will invest its money, not taxpayers' money, in small firms? What interest has been shown in these two schemes?

We are expecting to start over 1,000 small units of up to 2,500 sq. ft. in assisted areas during this year. The Norwich Union scheme, like the Post Office scheme, is in its early stages, but a good deal of attention has already been aroused.

asked the Secretary of State for Industry whether he has yet concluded his review of the Post Office monopolies; and if he will make a statement.

The reviews of the postal and telecommunications monopolies are nearing completion. My right hon. Friend will make a statement as soon as possible.

I am grateful to my hon. Friend for that reply. I am sure that he will agree that the review of the mails monopoly has been some time in coming. Will he assure the House that, when my right hon. Friend makes his announcement, he will take note of and act on the fact that the Monopolies and Mergers Commission has already found that a monopoly of the mails acts against the public interest?

There has not been any undue delay in coming forward with policy statements either on the postal or telecommunications monopolies. We hope that statements will be made before the Summer Recess. The report of the Monopolies and Mergers Commission has been studied and is being taken into account in deciding exactly what we should do.

Does the Minister accept that excessively tight cash and borrowing limits are now preventing commercially profitable investment in British communications? Will he consider a more flexible system in this area?

The external financing limit covers matters such as investment, but it is conditioned by a number of factors, including the levels of wage costs and settlements in the industry.

Will my hon. Friend ensure that he will take into account, when making a decision, in view of all the pressures for the ending of the monopoly, that rural areas will be very expensive to supply? Does he agree that we want an efficient Post Office service and that if we were to concentrate on that we would get what we wanted?

I assure my hon. Friend that we want the efficiency and the service for the rural areas.

Will the hon. Gentleman bear in mind that there is a great concern in rural areas along the lines stressed by his hon. Friend the Member for Eye (Mr. Gummer)? How does he intend to maintain and improve the service that the Post Office provides in rural areas if the service in the inner cities and other profitable areas will in future be subject to competition? Will he also bear in mind that there is great concern about how the monopoly can be preserved, or even diminished, while the service in rural areas is improved even further?

The hon. Gentleman will have to wait for my right hon. Friend's statement, but I ask him not to stir up anxieties needlessly.

Will the Minister undertake that before the review is completed he will consult the Post Office Users National Council for its views on this matter?

I assure the House that we have had very wide consultations with the POUNC, the unions and all other interested parties, as far as I am aware.

asked the Secretary of State for Industry if he will make a statement on the level of industrial investment in the Northern region.

asked the Secretary of State for Industry if he is satisfied with the progress being made in attracting industry to the Northern region; and if he will make a statement.

In 1978, the latest year for which figures are available, investment by manufacturing industry in the Northern region totalled £648.7 million—10.8 per cent. of the total for the United Kingdom. The Government's regional policies concentrate help where the need is greatest. Much of the Northern region is a development or special development area where high levels of regional assistance are available to industry.

Are not the Government's policies pricing investment out of the Northern region? Is the Minister aware that I have received a letter from the chairman of York Trailers, which had 165 redundancies in my constituency during this year, in which he makes the point that what he refers to as the present "usurious interest rates" are his company's main bugbear, preventing expansion? Is he aware that this is in one of the special development areas to which the hon. Gentleman has just referred?

High interest rates are a necessary part of dealing with the muses of inflation. It ill behoves the Labour Party, having left us the Augean stables to clear up, to complain about the size of the shovel that we have to use.

Does the Minister agree that the problems of the Northern region are unique and therefore require special solutions? Is he aware that the disastrous effect of his right hon. Friend's policies is the destruction of business confidence with its long-term effects? My experience is the same as that of my hon. Friend the Member for Consett (Mr. Watkins). Will the hon. Gentleman, as a matter of urgency, seek to persuade his right hon. Friend to accept the proposal put to him recently by hon. Members for the establishment of a Northern development agency? We do not think that it would work miracles, but it would be the first step in the rehabilitation of the Northern region.

The proposal for a Northern development agency has been around for a very long time, including the period when the Labour Government were in office. My right hon. Friend is considering the representations that have been made to him. Perhaps I could helpfully add that, to encourage investment in the North-East and in other development areas, interest on European Investment Bank loans has now gone down to 10 per cent. fixed for seven years. That may be helpful to a number of projects.

Is my hon. Friend satisfied with the activities of the financial institutions in the Northern region in providing risk capital for new industrial development?

I can assure my hon. Friend that we are doing our best to encourage the banks to extend the frontiers of their lending wherever they can see ways of doing so.

Is the Minister aware that the Government's industrial policies are having a calamitous effect on the industrial base of the Northern region? We may now be running the danger of creating an industrial wasteland in the North as a result of these policies. Worse still, industry will find itself in an almost irrecoverable position as a result of these policies. Will the hon. Gentleman at least give us some idea of the more objective and conclusive approaches which may be expected from the Government as a result of successive ministerial visits, including his own two or three weeks ago to Sunderland, and all the difficult problems which were presented to him by trade unionists, local government members and Members of Parliament?

It is regrettable that the right hon. Gentleman should seek to destroy confidence in that way when those who have examined what we are seeking to do to attack the causes of inflation have great confidence in the success of our policies in the longer term.

rose—

Order. I appeal for short questions, if possible, and, of course, answers will be short to follow.

Is my hon. Friend aware that the problems of the Northern region are not unique and that a more even-handed national policy would be welcomed?

Yes, Sir.

Will the Under-Secretary explain how Government policy of increasing the inflation rate from 9 per cent. on 3 May 1979 to 22 per cent. a year later by means of the highest interest rates that we have ever known, and increasing value added tax to 15 per cent. can actually bring down inflation?

The right hon. Gentleman is aware that there is a direct correlation between the time at which one increases the money supply and the time, about 18 months later, when inflation comes through. We are now—and the right hon. Gentleman knows it—on the flood tide of the inflation caused by his Government.

I am not aware of that and neither is the Minister of Agriculture. Fisheries and Food.

asked the Secretary of State for Industry when he expects to make an announcement on the conditions he will impose on the sale of Ferranti shares by the National Enterprise Board.

asked the Secretary of State for Industry what guidance of direction he proposes to give to the National Enterprise Board in relation to the sale of the National Enterprise Board's 50 per cent. shareholding in Ferranti Ltd.

I have nothing to add to my right hon. Friend's statement of 1 July.

The Secretary of State was not very clear about the conditions he would impose on the sale of the 4 per cent. of shares to the work force. Will he have any objections to the purchase of shares by groups of workers? Will he have any objections to the representation at annual meetings of those workers by their trade unions?

It is true that the details of the proposed scheme have not been worked out. This will be done in consultation between the Department and the National Enterprise Board and the company. With regard to representation at the annual general meeting, the purchaser of a share, irrespective of whether it is held in trust, under the Finance Act, for instance, will be able to attend and vote in the normal way.

In the light of the exchanges which took place on the Secretary of State's statement on the Ferranti company, has the Minister given further consideration to the adequacy of the 4 per cent. shares allocated for distribution to the 17,000 employees and staff of the company, who make such a signal contribution to its success?

I think that the amount of shares, which is 2 per cent. of the total, and at the valuation of 530p equivalent to about £2¼ million, will be sufficient.

Will my hon. Friend also consider putting the same conditions on those shares sold to the employees—of their not being able to sell them for two years—as will be the case with the institutions?

As I have told the House, we have not yet worked out the proposals, but if, for instance, those shares were put in trust under the relevant Finance Acts, they would have to be held for two years.

While acknowledging that the Minister of State has to operate under the ever-ambitious shadow of the hon. Member for Knutsford (Mr. Bruce-Gardyne), may I ask whether he will concede to the House that, without the intervention of the Labour Government to save Ferranti, the country would have lost a major advanced industry, and the similar companies which could be of service to the country in the future will be left naked in similar circumstances by the present Government's philosophy?

We had a long question and answer session following my right hon. Friend's statement. I think that these points were covered and I have nothing to add to them.

Just to set the record straight, may I ask my hon. Friend whether he agrees that, had there been greater reassurance in the private sector that those who might have come to the aid of Ferranti when it ran into trouble would be allowed to undertake the necessary rationalisation of the transformer business by the then Labour Government, there would have been no need for the NEB in the first place?

I think that my hon. Friend speaks truth, as so often on these occasions. We certainly hope that in the future the private sector will be able to cope with these situations.

asked the Secretary of State for Industry how many people in his Department are primarily dealing with matters concerned with the footwear industry.

There are nine officials in the relevant sponsorship branch of the Department dealing with, but not exclusively with, the footwear industry.

Have these officials told my hon. Friend that, for the first time, 50 per cent. of the home market is now being provided by imports, and this on a declining market; that the British footwear industry is a very efficient industry with a reputation for quality second to none, and yet at the moment it has massive redundancies and massive layoff spending; and that this is largely due to the dumping of foreign shoes in this country and the closure of markets, also, in industrialised countries, against British footwear?

My hon. Friend will be aware that the industry suffers from a shrinking market in the United Kingdom, at the same time as there has been an increase in imports. As to imports being in the form of unfair competition, as soon as we receive evidence to that effect we take action as quickly as possible.

Is the Minister aware that in previous recessions the so-called shrinking market has not affected British footwear because people still have to wear shoes even when afflicted by Tory Government policy? Has not the time come when he should recognise the grim misery in places such as Leicester, which depend traditionally on the footwear industry, and when he should make efforts to see that foreign shoes are not dumped on our market?

Both I and the Minister for Trade conveyed to the Brazilian ambassador very frankly our concern at the dramatic increase of exports to the United Kingdom of Brazilian footwear only last week.

Is my hon. Friend aware that the retail commitment in the footwear industry is virtually non-existent and is certainly not being effectively monitored? Is there not a case for a new retail commitment, monitored by Government, with Government actively encouraging the retailers to buy British wherever possible?

That is a matter for the trade. Certainly we shall be happy to co-operate with it in that attitude.

asked the Secretary of State for Industry if he will make a statement on his recent visit to California.

I visited San Francisco from 28 to 30 May to fulfil an invitation to address the Electronics Association of California. Whilst there I met industrialists contemplating investment in the United Kingdom and held discussions with people in the electronics and biotechnology industries. I was impressed by the vigorous and adaptable economy of California, by the wide-ranging employment oppportunities being opened up by microelectronics and by the role of venture capitalists in promoting high technology.

Is it not a fact that when the right hon. Gentleman was speaking there, he said, in seeking to attract United States investment here, that we enjoyed—he did not use that word, but that was what he implied—a low wage and good industrial relations society? If that is correct, how does he square that with the brutally crazy concept that he enunciated a week ago, that if workers who are now being threatened with unemployment would seek reduced wages, they could maintain their jobs?

But it is true that we have low wages, relatively, in this country, because we have low output, relatively. It also remains true that people can preserve their jobs or price themselves into jobs if they offer to their employers lower unit labour costs, either by way of lower earnings or by higher productivity, or by a combination of both.

Will my right hon. Friend consider making one of his colleagues in his Department specifically responsible for information technology, so that he could act as a focal point for the whole of this industry, ranging from microtechnology in schools to new public procurement policies? Is it not clear that in the difficulties that we are facing in the industrial and manufacturing area this particular industry provides some of the greatest opportunities for Britain, where in certain products we have a world lead?

My hon. Friend has picked on one of the several suggestions in his recent speech on the subject which is certainly being considered by the Government.

When he was in America, did not the right hon. Gentleman show that he has not yet grasped the enormous damage that his policy has done to British industry? Is he not unnerved by the great tide of redundancies, lay-offs and closures in British manufacturing industry? Is it not likely that when the recession ends our country will suffer the humiliation of having no manufacturing industry to meet supply and of having to import manufactured goods?

The precipitation of current problems is well covered by the New Statesman in its leading article this week. The onslaught by trade unions on efficiency, modernisation and profits over recent years has caused the chickens that are now coming home to roost in such abundant numbers.

Does my right hon. Friend agree that one of the lessons of Californian success is the extent to which the State is open to public sector procurement and to a positive relationship between the private sector and the public sector? When will his Department put flesh on the skeleton of the suggestion advanced by my right hon. Friend the Prime Minister some time ago in the "no confidence" debate?

It is right that a huge defence programme in America is a vehicle for public procurement of an enlightened order. We are seeking to spread the good public purchasing practices of significant sections of the public sector to the sections that need to learn from it.

If the right hon. Gentleman was impressed by the capability of the economy of the State of California to generate about half a million net new jobs every year, will he take into account that most recent studies have shown that that is connected not with the tax-cutting activities of propositions 13 and 9 but with the Government's own research and development expenditure through their own budget, through the aerospace industry?

There is probably more than one cause in the phenomenon but the phenomenon is impressive.

asked the Secretary of State for Industry what representations he has received about the state of industry in the West Midlands.

asked the Secretary of State for Industry if he will now take steps to reverse the industrial decline in the West Midlands.

In addition to questions tabled by hon. Members, my right hon. Friend has received a number of representations from local authorities and other bodies about the industrial situation in the West Midlands. Industry in that region will benefit from the national measures that the Government are taking to put the economy on a sound footing.

Is my hon. Friend aware that in spite of the fillip to confidence given by the reduction in interest rates this week, there is a widespread feeling in industry in the West Midlands that it is competing on an unequal basis with many imports? Is he further aware that that feeling is aggravated by the suspicion that industry is bearing the brunt of the squeeze on the money supply while public expenditure goes unchecked?

My hon. Friend will know that his constituents' supposition is wrong in that the money supply is very much under control. However, he is right in pointing to the need for that control as a benefit to the private sector.

Is the hon. Gentleman aware that hardly a day passes without news of further redundancies in the West Midlands, and that dole queues are becoming longer and longer in a once prosperous region? Bearing in mind the remarks made over the weekend by the Minister of Agriculture, Fisheries and Food at the Tory Reform Group, is that not an additional reason why the Secretary of State for Industry should be sacked to ensure some economic and industrial sanity?

The hon. Gentleman knows that the rate of inflation is the greatest enemy of business, whether it is in the West Midlands or elsewhere. It is that battle that the Government are starting to win.

Does my hon. Friend agree that the salvation of industry in the West Midlands, as elsewhere, lies more than anything else in greater productivity per man and greater productivity at work? Does he further agree that, however much some may complain of imports from abroad, any protective measures would be disastrous for a country that depends on free trade for its living?

There can be no doubt that import controls of the sort advocated by the Opposition would have an effect on productivity would reduce the progress that is being made and would increase prices.

Does the hon. Gentleman recollect that his hon. Friend the Under-Secretary of State for Industry, the hon. Member for Basingstoke (Mr. Mitchell), referred to growth industries in the West Midlands at the previous Industry Question Time and promptly failed to identify them? Is he aware that since then 1,300 employees of Alfred Herbert have been given their notice and that another large British Leyland closure somewhere in the Midlands is rumoured, apart from the closures forecast by Sir Michael Edwardes? Against that background, will the hon. Gentleman tell the House, especially West Midlands Members, what are supposed to be the growth industries in the West Midlands?

My hon. Friend did not have time to identify the growth industries in the West Midlands at the previous Industry Question Time. However, the hon. Gentleman will remember that during the debate on the West Midlands I drew special attention to two such areas. Many small businesses are expanding and businesses involved in high technology are also expanding.

Will my hon. Friend confirm his belief that a British car industry should be retained not least because of the thousands of jobs in the car component sector which are dependent on the industry and which are mainly located in the West Midlands?

We recognise the continuing dependence of the engineering component industry and other industries on the car industry in the West Midlands, although there has been an element of diversification in recent years. My hon. Friend is aware of the assistance that has been given to British Leyland.

asked the Secretary of State for Industry whether he will consider extra aid for the economically deprived industries of Leicester; and whether he will make a statement.

It is not possible to get high employment, successful industrial enterprise and economic growth, either nationally or in the regions, simply by paying out taxpayers money in grants and subsidies. Our priority is to overcome inflation and create an economic climate in which industry can prosper.

Is the hon. Gentleman aware that, far from creating a climate in which economic prosperity can grow, he has created one of the deepest gloom in every section of industry in the East Midlands, from knitwear, hosiery and footwear to engineering and confectionery? Every business, large or small, is affected by this misery. Does he intend to sit complacently on the Government Front Bench while our industry decays?

I shall do what I was doing this weekend in my constituency in the East Midlands—namely, visiting companies and factories that are expanding.

asked the Secretary of State for Industry what progress is being made with the capital reconstruction of the British Steel Corporation; and if he will make a statement.

As my hon. Friend told the House on 22 May, we intend to introduce legislation in the next parliamentary Session to provide for a capital reconstruction of the British Steel Corporation. The timing, extent and scope of the reconstruction have not yet been determined.

Is the right hon. Gentleman aware that the £2,000 million of taxpayers' money that has been put into the British Steel Corporation over the past few years has created an industry of enormous modern technological productive capacity? Will it not be an act of folly to massacre that industry, which is capable of producing real wealth to the tune of £4,000 million a year?

It is true that the industry has been equipped by the taxpayer to a large extent with massive modern plant. However, low productivity, an under-emphasis on the market and a lack of competitiveness mean that the taxpayer has, to some extent, a bad investment, and part of it will have to be written off.

Will my right hon. Friend be good enough to keep in mind the suggestion that I made to him a few days ago—namely, that in view of the serious situation in the steel industry, and while recognising the immense problems facing the new chairman, he should seriously consider making a further statement on the position of the steel industry, the Government's intentions towards it and the chairman's plans before we rise for the Summer Recess?

I shall bear in mind my right hon. Friend's suggestion. I think that he will agree that not even the parliamentary timetable should truncate the time needed by the new chairman to assess the position.

Will the right hon. Gentleman remember that I have the tube producing side of the steel industry in my constituency? A multi-pass mill is required urgently to enhance expertise in the tube producing sector and to enable it to enter world markets. Is it right that the Government, on behalf of the BSC, are about to announce the hiving-off of the tube manufacturing side to private industry?

I do not know of any such intention, but I am sure that the chairman of the corporation will read the hon. Gentleman's question.

If the right hon. Gentleman is concerned about keeping a bulk steel industry—I thought that his answer the other day was highly ambivalent—why does he talk about low productivity in relation to the closure of the Consett works? Does he not accept that that plant is viable and extremely well and productively operated?

The right hon. Gentleman's party introduced legislation which left decisions on such issues to the British Steel Corporation. It was its judgment.

asked the Attorney-General when the Director of Public Prosecutions will have reached his conclusions about further prosecutions as a result of the Operation Countryman investigations.

The director has under consideration at the moment allegations against 11 officers as a result of these investigations. It is impossible to estimate when he may reach a decision in respect of any of them.

How does the Attorney-General reconcile his statement in the House earlier this year—to the effect that, although there had been no obstruction by senior officers, there could have been obstruction by junior officers—with Deputy Commissioner Kavanagh's recent statement from Scotland Yard, to the effect that there had been no obstruction by anybody? In addition, how does he reconcile his statement with that made by Mr. Hambleton, the previous head of Operation Countryman and retired chief constable of Dorset, who said that there had been considerable obstruction by junior officers and some obstruction by one senior officer? Does he not accept that such statements should be cleared up before Operation Countryman is brushed under the carpet?

Naturally, I have sought to clear up what has been reported in the press. As regards junior officers, some weeks ago I said in the House that anybody, whether a police officer or not, was entitled to refuse to answer possible incriminating questions that were put by police officers inquiring into criminal allegations. Like any other citizen, he is exercising a right that is protected by the law. That cannot be treated as obstruction. I can see nothing inconsistent about Mr. Kavanagh's statement and my answer. I have had a long interview with Mr. Hambleton. The Director of Public Prosecutions has seen him several times. At no time did Mr. Hambleton give me, or the Director of Public Prosecutions, details of any obstruction of the type reported in the newspapers.

How long has Operation Countryman been in progress? Is it not an inordinately long time? Although everybody wishes to ensure that the police are above reproach, does not my right hon. and learned Friend accept that it does good to no one if such things are allowed to drag on for so long?

It is inevitable that an inquiry of this size, which involves several allegations that have been made by people serving long sentences of imprisonment, should take a considerable time to investigate. Other delays have been caused for other reasons. For example, it was intended to call two persons to give evidence in a case against a police officer. Those two persons were awaiting trial. It was rightly decided that the trials involving the future witnesses should be concluded before the two persons were called as witnesses for the prosecution against a police officer.

How many more police officers will be investigated by the Operation Countryman team? Is the right hon. and learned Gentleman aware that any attempt to truncate the inquiries will be seen as an attempt at a cover-up?

I can reassure the hon. and learned Gentleman that there is no intention of truncating the inquiry. Eleven more officers are now under investigation by the Director of Public Prosecutions. As the inquiries are in progress it is impossible for the Director of Public Prosecutions or me to estimate how many more cases there will be. Neither the Director of Public Prosecutions nor I intend to call a halt to this inquiry before it has been properly concluded.

asked the Attorney-General why he has decided not to refer the matter of privileged communication to the Law Commission.

The matter was considered by the Law Reform Committee in its sixteenth report, published in 1967. It concluded that the law at that time was broadly right and, as it has undergone no significant change since that date, it is not thought there is any present need for a further review.

Is not the Attorney-General aware that there is grave unease among journalists at the distinct possibility of their being imprisoned if they refuse to disclose their sources? Will not he consider my Bill, which is designed to protect journalists where the public in- terest so demands? Will he undertake to introduce such legislation in the next Session, if the opportunity arises?

It would be wiser for the House to await the decision of the other place, which is likely to consider a case soon. In the meantime, there does not seem to be any evidence to suggest that the present law inhibits free expression or, in suitable cases, fails to protect confidential communications. In general, the court must still balance the interests of those involved against the need to reach a just conclusion in judicial proceedings.

Does the Attorney-General agree that the type of balance to which he referred is essentially a political question? Does not he accept that whatever the existing law may be held to be it is ultimately a matter for debate and decision by Parliament?

We cannot comment on the present case, but when it is concluded I am sure that the House will be able to discuss this problem.

asked the Attorney-General if, in the light of the recent statement by the Secretary of State for the Home Department on prison overcrowding, the Lord Chancellor will arrange a sentencing conference for magistrates to discuss reducing the use of custodial sentences in cases of social security fraud.

Adequate facilities for sentencing conferences already exist, and full use will be made of these. A single sentencing conference for the entire magistracy, whether for a single purpose or generally, is not a feasible proposition.

Does not the Attorney-General owe it to the Home Secretary to help him face the crisis in our prisons? Is he aware that a man in my constituency was recently gaoled for one month for defrauding the DHSS of £110, despite the fact that he had not been in trouble for 12 years? Does not the right hon. and learned Gentleman accept that as we do not readily gaol people for fiddling expense accounts or income tax, there can be no justification for doing so in such social security cases, where com- munity service orders are available? Will the Attorney-General arrange a sentencing conference that will give guidance to magistrates and judges?

Guidance to magistrates will come from sentencing conferences—which are going on all the time—from the presiding judge, from the Lord Chancellor or, more often, from the courts. I remind the hon. Gentleman of what was said in the Divisional Court on 8 October 1979. The presiding judge said:

"Where persons deliberately defraud the State of social security moneys, an immediate custodial sentence is inevitable and is to be expected where there is a substantial plundering of the public purse."

Does not my right hon. and learned Friend accept that, as overcrowding continues, pressures on magistrates to impose shorter sentences, or no sentences for lesser crimes, are increasing? Is not the answer to build more prisons?

Until that situation has been achieved, my right hon. Friend the Home Secretary and others will advise magistrates. Obviously, directions cannot be given. Only advice can be offered. The present tendency towards finding an alternative to custody for less serious crimes is appreciated by the courts.

Is the right hon. and learned Gentleman aware that constituents who are charged with defrauding the DHSS are being convicted by magistrates' courts without being given legal aid or advice? Will he take powers to ensure that the poorest people in the land are given the best legal aid in defence of their cases?

I am surprised that that has happened. Generally, legal aid is available to anyone who does not have the means of providing for his defence in a magistrates' court. If the hon. Gentleman writes to me about the cases he has in mind, I shall make inquiries.

asked the Attorney-General if he is now in a position to make a statement on jury vetting.

Following a recent decision of the Court of Appeal I thought it desirable to consult again the Lord Chancellor and the Home Secretary and other interested parties. I have nearly finished these consultations but those with the chief officers of police, which are being conducted through Home Office officials, will not take place until Thursday of this week, 10 July. I hope I shall be ready to make a statement not long afterwards but, in any event before the House rises for the Summer Recess.

Is the Attorney-General aware that everyone understands his embarassment at finding himself in the difficult position of having given an undertaking, to this House that jury vetting would not take place without his consent when such jury vetting is taking place without his consent? Does he appreciate that we look forward to an early statement so that we can clarify the present muddled position?

I accept that the position is not as clear as I should like it to be. But I reassure the hon. Member that any case which involves vetting with Special Branch records will still be reserved for my decision. In any event, I have said that there is to be no inquiry made at local CIDs except to resolve identification problems when there may be four Smiths involved in a jury list.

In my right hon. and learned Friend's consideration of this important matter, will he never lose sight of the fact that the administration of justice is not to be polluted or diverted by persons of serious criminal conviction serving on juries? To that extent, jury vetting is essential for the protection of the public and the administration of justice.

That is one of the matters which I shall take into consideration when I reach a conclusion.

Will the Attorney-General accept that the Opposition welcome his assurance that there will be a statement on this matter before the recess? In his consideration of the statement, will the right hon. and learned Gentleman bear in mind the statement made by Lord Denning in a recent Court of Appeal case that jury vetting is unconstitutional? In view of the disquiet and apparent conflict in decisions, should not this matter come to Parliament for right hon. and hon. Members to decide whether there should be an increase in the classification or any change in those who should be entitled to serve on a jury? Will the Attorney-General consider asking a senior judge to look into the various differences that have arisen and to make recommendations for legislation?

I shall bear in mind what the right hon. and learned Gentleman has said.