Orders of the Day — Rolls-Royce

Part of the debate – in the House of Commons at 12:00 am on 15 May 1973.

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Photo of Mrs Judith Hart Mrs Judith Hart , Lanark 12:00, 15 May 1973

I will remember the many occasions when the right hon. and learned Member for Gloucestershire, South (Sir F. Corfield) came to the House to give us the latest saga of the crisis in Rolls-Royce, because one of the major aero-engine factories is situated in my constituency. I recall that from time to time some of us had a good deal of sympathy with the right hon. and learned Gentleman. We felt that he was trying to persuade a somewhat reluctant Cabinet to do something more for Rolls-Royce, and we were sympathetic because on more than one occasion he returned to the House only to give us an unsatisfactory answer. We were aware that he had for the time being failed to convince the Cabinet.

The whole of the effort at that time owed a great deal to the assiduity and perseverence of a number of Members on both sides of the House who, in initiating debates, tabling Questions and keeping up the pressure, performed the House of Commons activity of possibly persuading the Government to change their mind to the extent that the Government produced the policy they did. Hon. Members on our side of the House were delightfully surprised when a Conservative Government decided to introduce one of the most ruthless pieces of nationalisation which had ever come from any Government.

It must also be remembered that my right hon. Friend the Member for Bristol, South-East (Mr. Benn) played an important part in this matter, particularly at the time when we were in such doubt whether the RB211 would be bought by the Americans and when the issue hung on a thread. That is now in the past.

I rise to my feet on this occasion mainly because I was provoked to do so by the remarks made by the Secretary of State for Trade and Industry. In the last two or three years we have seen the remarkable failure of the private enterprise party which now sits on the Government benches. We recall the failure to invest—though this is now picking up again and we may be in for a consumer-led boom; and we also know the dangers involved in that policy. We also look back at the high level of unemployment, and we have seen the Government forced to stand the Selsdon Park doctrine on its head and to introduce the Industry Act—an Act which the right hon. and learned Member for Gloucestershire, South sees as a rather uncomfortable reversal of Tory policy. Therefore, it is for the Government to justify their own attitude to the provision of subvention payments for private company boardrooms without ensuring an adequate social or economic return to the British people. The tenor of the argument today must be that the Government must justify themselves rather than that we should justify our intention to take into public ownership those companies which have succeeded in their policies only as a result of large injections of taxpayers' money.

The Conservatives have two attitudes to taxpayers' money, and they depend on what area of taxpayers' money they are dealing with. If they are dealing with injections of money into private enterprise—if it is money expended in connection with the lame duck policy, £15 million here and £30 million there, or indeed a sum of £150 million allocated to Rolls-Royce in the past—in the minds of the Conservative Party there is a total justification for taxation and, indeed, a need for increased taxation to enable those things to be done. But when one thinks in terms of helping the disabled, raising pensions and doing things for ordinary people, suddenly the Conservatives stress the impossibility of finding money for those purposes. There is total schizophrenia in the Conservative Party about its attitude to taxation according to what areas of activity the taxation will benefit.

When we look at the relationship between the public and the private sectors, we have to ask what is the service which the private sector, in so far as it is supported by public money, is rendering to the national economy. There are certain areas in which everybody, irrespective of party politics, wants to see the nation succeed, and to this extent there is a national will towards those ends. We all want to see exports thrive, a healthy balance of payments and effective job creation in the regions. As part of this progress we want to see a high level of employment; we want to see expansion and a higher level of industrial investment. These are national ends, and on the whole the nation will support the party which it believes is most likely to achieve these national objectives. The country will support the party which it believes can achieve those national objectives in fairness, justice and equity to everybody concerned.

But then the Conservative Party says "In terms of the public sector, we shall take out of it those parts which might be in danger of yielding a profit to the taxpayer". It says "We shall hive off the profitable parts of the existing publicly-owned industries". It does not say— and one wonders why in the light of some of the things said by the Secretary of State this afternoon—that it is demanding denationalisation of some of the other existing elements of the public sector. We do not hear any cries for the denationalisation of electricity, atomic energy, gas or coal. Why not? The answer is clear, and it is clearest of all to City boardrooms. The reason why the Conservative Party is not demanding wholesale denationalisation is that 20 per cent of the gross national product in the public sector is now that part of British industry which is largely of a service nature and which is not of its nature concerned with the expansion of production because it is not related to manufacturing it is in fact subsidising the private sector. This is why the Tories do not want to denationalise a major part of the existing public sector. This is why they are interested only in hiving off the profitable parts of the public sector.

When we come to look at the job that needs to be done in the economy, it is clear that the existing public sector is extremely limited in being able to offer to the nation those greater possibilities of employment and exports and meeting the other objectives which I have outlined. It is not in the service industries where expansion will take place, although if it is not limited by a Conservative Government, there are measures of diversification which can result. Industry can move here or there into little bits of productive industry, but in the public sector it is very limited indeed.

Therefore, it is to productive manufacturing industry that we must now look for greater exports and investment, employment and particularly job creation in the regions. The private manufacturing sector, in spite of all the exhortations of the Government and the tax incentives of government has not over the last 10 to 15 years come up to national expectations of increasing exports. Because of its performance, some of us are considering the need for an expansion of the public sector in order to meet national economic objectives, a view we did not take 10 or 15 years ago when we thought that, given governmental incentives and exhortations, the private sector would be able to succeed. It is now clear that it cannot.

We know that, according to a recent analysis, about 75 firms are responsible for the majority of British exports. We know that many private British firms which should be exporting are not doing so. They should be introducing techniques and methods which would allow them to export, but they are not. No amount of Government exhortation or direct assistance seems able to persuade them to become successful exporters. However, they are remarkably successful importers, and that is one of the problems of the balance of payments.

Let us consider the problem of job creation in the regions, an objective which has been accepted with varying degrees of sincerity in all parts of the House. All hon. Members would agree that one of the urgent needs of our economic situation is to correct the imbalance of industry as the older industries decline and the new technological industries, largely concentrated in the Midlands and the South East, and now probably concentrated much more in the areas of the country nearest to Western Europe, take over. In spite of all the various incentives, whether investment grants or tax incentives, successive Governments have not so far managed to give the necessary correction to regional imbalance and create the jobs which are needed in the regions.

British Leyland has announced its first major expansion for some years. It is to undertake a new major project in the car industry and we shall now witness a battle in the regions as to where that project should go, because it is so rare for private enterprise to provide anything substantial outside London, the Midlands and the South East. What is to be done? In 1964 the Labour Party manifesto said that where private enterprise coud not provide the jobs that were needed in the regions, public enterprise would have to move in and do it instead. We spent six or seven years discovering that, no matter what Governments did, private enterprise still failed to provide jobs in the regions.

What is now becoming clearer is that, if jobs are to be provided in the regions, it will have to be the public sector which provides them, and if it is the public sector it will have to be as the result of manufacturing firms coming within the public sector. It will have to be as the result of diversification into manufacturing and production by the existing nationalised industries. The private sector is clearly unable to do what is required. Similarly, the private sector showed itself utterly unresponsive to all the efforts of the Government to encourage investment when the nation needed it.

Not only is the private sector unresponsive to Government policies on these matters concerning the most urgent and basic questions of our economy, but it is so unresponsive that successive Governments have found it impossible to predict what will happen even a year ahead. As anyone who has been in government will know, the Treasury issues medium-and short-term assessments. These are proved all too often to be wildly wrong, so that after six months the Treasury comes forward with another medium-term assessment, admits that it was wrong in its original estimates, and hence the revised figures. A modern nation cannot be run on this kind of relationship, with the Government seeking to express national objectives which are beyond the private sector's ability to achieve. If it cannot be run in that way, as we now see, there must be a change in the balance between the private and the public sectors in those key areas where help can be given and where the Government have the capacity to determine what happens.

This is why it is essential that those key areas of the economy should be involved much more in the public sector. Of course, all the nonsense which has been talked this afternoon, all the jesting about the Labour Party's view of compensation is a nonsense. Let us hear no more about it. We have made it clear throughout the years that when we take new industries into the public sector, we pay compensation. However, we have now gone on to say that, because of the behaviour of the Government, because of the profit hunger of the Government for their City friends, where they denationalise a profitable part of the public sector we shall regard it as wrong that people should make a profit out of that denationalisation. I hope that is now clear to the Minister and that we shall have an end to some of the fun and games about this aspect of Labour Party policy.