National Enterprise Board (Capital Requirements)
Mr Hilary Miller (Bromsgrove and Redditch)
I distinctly heard the hon. Member characterise the Conservative Party as the party of business. I was merely pointing out that we were a little more careful of the taxpayers' money than he appeared to be suggesting that his party was.
The difficulty to which we should be addressing ourselves is how Parliament is to arrange itself and constitute the body for the purpose to ensure that public money disbursed in this way is suitably monitored. Obviously across the Floor of this House we are in no position to discuss the various details of models or uses of expenditure or, indeed, the confidential nature of some of these uses. But we need to consider some means whereby we can exercise our responsibilities for public expenditure.
In the debate on the Eighth Report of the Public Accounts Committee I drew attention to this and I was disappointed not to have any reply on that occasion. I hope that we shall hear some comment about it later tonight. I also made it clear on that occasion that it was no longer realistic to expect the Leyland operation to continue on the basis of drip feed. That is one major reason why I support the proposal before the House for an injection of equity.
Before I leave the Ryder plan, I ought to remind the House that that was based on over-optimistic assumptions. It was characterised as a blue skies forecast. However, it takes a very considerable time for attitudes to change, and even the great new broom has not managed to change all the attitudes, as was evidenced by the refusal of the productivity scheme by the work force at the end of last week. So do not let us go overboard in this direction, because some people, including myself, may have been too optimistic about the previous scheme. It takes a long time for attitudes to change and for results to be achieved in that direction.
Moving on from Parliament, I must remind right hon. and hon. Members that there is a severe limit to public funds, and the £850 million which is being made available to Leyland in the next 12 months and the funds which the Secretary of State has announced already for British Steel in round figures have effectively pre-empted one year of the gain from North Sea oil. There is therefore a real limit on the funds which can be made available.
It was for this reason that some of my right hon. and hon. Friends were encouraged to inquire whether some of the operations not directly connected with vehicle manufacture might not be able to satisfy their investment needs to the extent which they themselves would wish by being freed from the shackle of public investment and being allowed to seek their fortunes on the market. I cannot see how, for instance, the separation of commercial refrigeration or construction equipment would affect the morale of those working in the motor force. This is another respect with which I disagree with the hon. Member for Colne Valley.
I do not suggest that this could be done today, but it could and should be organised on such a basis that it ought to be possible, because there is a limit to the public funds which can be made available, and it may be that the growth of these companies is being inhibited unduly by the need to spread the limited amount of butter.
Moving on to British Leyland, it is difficult for the House to form an effective judgment when the detail before right hon. and hon. Members is necessarily scarce. We have no indication of how much of this money is to go for working capital and how much is for investment, and we are lacking various other information which an ordinary shareholder would expect in a prospectus from a company seeking to acquire additional finance.
Here is another area where I feel that we in Parliament are not living up to our responsibilities. But part of the lack of information which concerns me is that we do not know how much of this new investment may be going into competing with already existing industries. I have in mind components, for example. I know that this is a very real worry. Several large component makers have approached me in the past year, and there have been deputations to the NEB. I hope to be able to catch the ear of the Minister who is to reply so that we may have some information about whether any of this investment is to go into component manufacture and compete with existing firms. I shall resist any suggestion that part of any run-down in Leyland's work force should be mitigated by transferring workers to component manufacture. The only result of that would be to put people out of work in those factories with which they would be competing. That has been confirmed to me on a series of recent visits to our major component makers. We should like some assurance on that score.
We have not been able to identify from the figures before us the relative profitability of any of the operations. I would resent the perhaps facile assumption that all is well in Rover and Jaguar and that it is only Austin and Morris that are holding back the whole body corporate from success. That has not been proven to us. There is another area where adequate information has not been available.
The National Enterprise Board in its report has not considered adequately, as far as I can judge, British Leyland's position as a European car maker in the European car market. There is a serious danger of over-production of cars in Europe over the next five years. I am not convinced that British Leyland's production plans have been considered in that light. I, like the hon. Member for Colne Valley, would wish to go further and have some reassurance that there is a more positive move towards ensuring that British Leyland is an effective part of the European motor car industry. I do not believe that it will be able to survive long without having, as it were, at least two legs on which to stand.
One of the reasons for that is the colossal size of the investment that is now required to mount new technology. It is significant that Renault had to co-operate with Peugeot and Volvo to produce a new six-cylinder engine. It is likely that there will have to be further co-operative efforts of that sort, because the scale of investment that is now required is too much for any one company to find, even one backed with public funds. That does not appear to have been considered in the NEB report.
In speaking of the NEB report, I emphasise the remarks made by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) on productivity. It is an issue that has been brought to my attention recently by the works committee at Longbridge, which is most concerned that the productivity aim is not ambitious enough. The European productivity, with which comparisons are constantly being made, will have made further advances on the basis of investment and new technology even during the period of the Edwardes plan. That factor has not been considered sufficiently in the report let alone answered.
There are many queries and we are being asked to make an act of faith. The unfortunate probability is that we shall be asked to renew it at regular intervals. For example, next year we have an additional £400 million to provide in one form or another. How are we to fulfil our duty to our constituents and satisfy ourselves on some of the major points that I, with others, have been trying to make this evening?
From the fairly close observation that I try to keep on the operation of the company and of those who work in it, and the contacts that I have with them, I believe that real progress has been made, although the extent of it is not yet immediately apparent. Progress has been made especially in participation. One of the worries of the works committee was that the new management might mean going backwards in that regard when it felt that advances had been made. I was happy to receive assurances on that score.
We now have to face that further funds are needed for the enterprise to continue. It must be observed that an equivalent amount of investment is being required from dealers, who will have to revamp the whole of their dealership structure. Many of them will be required to make a considerable investment both in stock and in capital equipment. The employees of the dealers are equivalent to those who work in Leyland's manufacturing assembly plants. The same thing may be said for the component suppliers.
Therefore, we can assure ourselves that public money is being used in some sense as a seed corn. It is promoting a great deal of additional private complementary investment to go along with it both at the beginning and end of the manufacturing process.
It is fair to say that we have a duty to sustain the confidence of those involved in the whole chain from the supplier through the assembler through the dealer to the customer. We have a duty to sustain their confidence, and tonight we should show that we have an equal commitment.