There are two Amendments on the Order Paper that have been made in another place, and although each will have to be taken separately I wonder whether, if it is agreeable to you, Mr. Speaker, and the House, we might debate them together, because they relate to the same point, the one being consequential on the other.
I think that clearly there is an overlap between the two, but as I shall try to show if I catch your eye, Mr. Speaker, there is a certain difference of emphasis in the position as the Bill has been drafted. I should have thought that it might be possible to deal with the second one in its particular aspects, but the general arguments on the first apply to the second.
The points contained in the Lords Amendment were fully debated in Committee and were the subject of an Amendment there. We also fully debated on the Floor of the House the desirability or otherwise of providing in the Bill for the appropriate Minister to take an equity holding in a firm which would feature in an industrial investment scheme. If it were passed, the Amendment would deny the House the opportunity to approve in any Orders that might come forward even a scheme which received the support of the firms; and was sponsored by the Minister, if such a scheme included any equity investment.
Since the matter has been so fully debated in the House, I urge the rejection of the Amendment.
The point in question was the right of the Minister under an industrial investment scheme to purchase equity. That is the heart of the Amendment and the subject was very fully debated on Second Reading and in Committee. That debate was not on an identical Amendment, but the substance was the same. I do not think that it would be right for me to detain the House in speaking further about the Amendment.
The right hon. Gentleman is not quite correct in saying that we went in great depth into the proposal that their Lordships have put before us on Second Reading, in Committee or on Report. If he looks at the OFFICIAL REPORT of our Committee proceedings I think that he will bear me out in saying that we discussed the preamble in Clause 2(2), to which the Amendment relates, in very general terms, and that we did not debate the second Lords Amendment at all in the terms in which it is phrased. But I suspect that I would be out of order if I discussed what we do on the second Amendment before we come to it.
In Clause 2(2) the Government have laid out their financial proposals for the implementation of the Bill in two forms— what one might call the braces and the belt. The preamble before paragraphs (a) to (f) is what I would call the braces, and it is that that another place is attempting to amend. When we come on to the specific methods by which the Government are empowered to finance industrial investment schemes, we find the equivalent of the belt.
The preamble is in very general terms, allowing
… a competent authority to provide financial support in any form for the purposes of a project …
and so on. We took exception in Committee to this omnibus power. Their Lordships seem to have accepted, whereas we did not, the omnibus nature of the powers, but they have tried to restrict it in one respect, which we are now debating, in that it should not apply to equity capital.
I do not wish to detain the House unnecessarily, but the right hon. Gentleman is not quite correct to say that we debated this question in this form. We were anxious to take the whole of this general provision out and rest content on the specific powers in paragraphs (a) to (f). As the right hon. Gentleman has not vouchsafed us a great deal of insight into his thinking on why we should disagree with their Lordships, I shall have to rest my case on the arguments of the Government spokesman in another place, the Paymaster-General and Leader of the House of Lords, in trying to resist the Amendment. He said:
… Government shareholding would provide the best possibility of a proper return on the taxpayers' investment, including an equity investment."—[OFFICIAL REPORT, House of Lords, 27th May, 1968; Vol. 292, c. 999.]
That is a most interesting argument when one takes it in the context of the purposes of the Bill. The Government invest under Clause 2(1) when an industrial investment scheme
… would not be undertaken without such financial support as is authorised by this section.
Yet the Paymaster-General deployed the argument that using this method of taking equity will provide the best possibility of a proper return on the taxpayers' investment. This seems to be a rather peculiar argument. The object of the Bill is not to set up an investment trust for taxpayers in order that they may get a proper return. The objects are laid down in Clause 2(1) as follows:
The Government's case seems to rest on the proposition also that Governments can spot winners where the private sector fails to spot them. Again I remind the House that this is not a general provision for Government investment wherever they want to do it. It is clearly stated that the Government will give financial support where the scheme would not go ahead unless such support were made available. That is a limiting provision.
We are looking at a particular form of investment. In these circumstances, it is singularly risky to put taxpayers' money into such a scheme in the form of equity capital. The very reverse of what the Paymaster-General thinks will happen. The taxpayer is more likely to lose his money because of this provision, which would circumscribe the whole objective we are discussing. On 15th October, the Observer—which I am sure hon. Members opposite will not regard as being a Tory newspaper, for it normally lends support to the Government—had an article by Mr. Anthony Bainbridge, which said
The willingness to take risks clearly fluctuates from country to country and period to period. After the series of economic crises Britain has suffered—each one worse than the last—it is small wonder that our risk takers are inclined to caution. However, it is dangerous to conclude that Whitehall will be able to step in and spot those areas where a profit was wating to be picked. It would be better employed fashioning an economic climate that encouraged the taking of risks.
Hon. Members opposite entertain a peculiar myth about taxpayers investment, embodied in the words used by the Paymaster-General in another place. In fact, the taxpayer will have absolutely no say in the investment to be made under the Bill. It will be determined by Ministers without reference to the taxpayer's choice of investment. It is, as we have said, an unfair investment. Furthermore, I know that some hon. Members opposite take the view that, if Government money is to be used to support a commercial venture, the taxpayer is entitled to a return. We would agree
with that but we say that, in the very nature of speculative ventures, equity capital is the least efficient way of ensuring a proper return to the taxpayer.
It cannot be pointed out too often that the State automatically shares in the profits of every company, irrespective of whether it has had Government money or not, because the State takes 42½ per cent, of the profits in Corporation Tax. So the taxpayer is sharing the profits of every British company and in most cases without having the risk of investment in the form of equity. I quote the Paymaster-General again:
It is not the intention of the Government under the Bill to use the existence of the shareholding, whatever size it may be, to interfere in a company's day-to-day business."— [OFFICIAL REPORT, House of Lords, 16th May, 1968; Vol. 292, c. 424.]
In many ways I am glad to read that, but one of the arguments which might have been used by the Government—and I am surprised that it is not—is that there are companies of a speculative nature which they feel are in the national interest but which do not appeal to the market, probably because the market has not sufficiently high confidence in the management, whereas the Government have. If the Government take a sizeable stake, they surely will want some control over policy. Those words of the Paymaster-General are no reassurance to me that our arguments against the Government taking equities are diminished.
There is also the idea that, in order to promote faster economic growth, higher productivity and greater technology, somehow or other public ownership makes the activities of a company more acceptable.
Then there is the idea that, where the State owns equity in a company, the individual citizen has a personal stake in that company—that, in some personal sense, he feels that its activities are more real to him and that he is participating in it. This, too, is a complete myth. It is the sort of primitive belief which was held, no doubt with great honour, by some of our earlier Socialists before State Socialism was seen working in action. That argument is far removed from popular reality, whether of the old right or the new left. It is also a long way removed from the interesting proposals which the right hon. Gentleman made last weekend about how one moves towards what he called a participating democracy. Most of us have publicly owned industries in our constituencies. But do my constituents feel that they own the Southern Region of British Railways in any personal sense?
I agree with my hon. Friend but I do not want to elaborate on that. We can all give examples from our own constituencies. To my mind, the idea of Government ownership of equity in private industry not only does not advance the right hon. Gentleman's interesting proposition about participating democracy but moves in the other direction. I may say that I was myself very interested in some of the propositions the right hon. Gentleman put in his speech.
These are general objections to Government equity, but if one is to have an equity stake in a company one ought to have views on how it operates. This is particularly so if one is an investor on the scale; of the Government or of an institution. If a large investor does not have views, certainly at policy level, about how a company should be run, one gets the irresponsible ownership that is often criticised by hon. Members.
Let us look at the scale of the Government's activities. They produce a Budget of about £11,000 million a year. Compare that with our largest employer, I.C.I., which has a turnover of barely £900 million. It does not suggest that there is a great deal of attention and effort by the Government to put their minds to playing a part actively in companies in which they have an equity stake.
On a strictly pragmatic level, I challenge the competence of Government to run industry. Under this Government or any predecessor or successor, I believe that the evidence is in the direction of the fact that Governments are incompetent to run industry. My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) said on Second Reading:
We wish to repeat, and repeat again, that the public sector is inherently likely to be more inefficient than the private sector because it is not subject to the discipline of the market and because, in many cases, it is subsidised.
We object to the expansion of the public sector, particularly when it is subsidised."— [OFFICIAL REPORT, 1st February, 1968; Vol. 757, c. 1603.]
In supporting their Lordships today against the Government, we are reaffirming what my right hon. Friend said. That is not only our view but the view of many people outside who have had experience of this.
On a point of order. Might I draw attention to the disgraceful state of attendance to the debate. So far there have been two Ministers, a P.P.S. and one back-bench Member on the benches opposite. There is no quorum.
Further to that point of order. I am disturbed about the Ruling that you, Mr. Deputy Speaker, appear to have given. My own view is that nothing could be more basic to the Bill than the Lords Amendment which has been returned to this House. I should be sorry if your Ruling were that we cannot discuss this fundamental matter of the control of equity shares in industry. This is surely basic to the Bill and raises issues between the two sides of the House.
I appreciate that it is a very important Amendment. Provided the debate is confined to the relevance of the Amendment it will be in order. I thought that the hon. Member for Eastleigh (Mr. David Price) was proceeding to discuss the whole principle of the Bill and embark upon something more appropriate to a Second Reading debate. I agree that it is difficult to draw the line, but I thought it right to draw the attention of the House to the fact that we are dealing with a Lords Amendment, not Second Reading.
Further to that point of order. Would not the hon. Gentleman be assisted in his project if his hon. Friend did not attempt to count the House out in circumstances when obviously there are innumerable Members in the House?
I will try to assist the House in making further progress. I was coming to the inappropriate form of financing that the Government are proposing to restore to the Bill. I am in a difficult position, because I am trying to defend their Lordships' Amendment when we have not heard from the right hon. Gentleman why we should reverse their Lordships' decision. It makes it difficult. We can defend their Lordships' position on pragmatic as well as on general grounds.
To put the matter succinctly, I should like to quote briefly from an article by Mr. Ronald Grierson whose credentials, having been managing director of the I.R.C., are formidable and should bear weight with the House. In an article in The Spectator on 10th April last, talking of the inappropriateness of equity finance, he says:
The prudent financial view has always been that equities are a gamble and that, especially in risky situations—which by definition are those most likely to be proposed— the safe course is to be a creditor and, if at all possible, a secured one …
This puts clearly the point that I was developing earlier.
I would be delighted. I thought I was being reprimanded by the House and by hon. Gentlemen opposite for detaining the House too long. I have the full article, but I will not read it. Hon. Gentlemen opposite who are waiting for the next debate, I am sure, would not be pleased if I read the whole of Mr. Grierson's admirable article.
I think that it is unjust of the hon. Gentleman to make that an excuse for not reading the quotation. I am sure that my hon. Friends will not object if he reads a quotation which enables the House to get to the nub of the matter.
I can read a lot more. I am in your hands, Mr. Deputy Speaker. I will read the article:
One is thus left with the uneasy sensation that one of the prime motives behind the desire to take equity investment is a certain financial showmanship which has recently become manifest in Whitehall. There have always been those who eagerly wanted the state to share in what they regarded as the ' super-profits' of industry; to their numbers have now been added certain others who feel that it would redound to the credit of a Labour administration to pull off one or two spectacular financial coups.
It is highly questionable whether such an approach is really in the public interest. The prudent financial view has always been that equities are a gamble and that, especially in risky situations—which by definition are those most likely to be proposed—the safe course is to be a creditor and if at all possible a secured one; and that if one has to be an unsecured creditor, the lack of security should be compensated by some form of free profit-sharing. It is difficult to see why in the case of public money this sound financial principle should be stood on its head.
I suggest that the methods used by the N.R.D.C. are by far the best. I recognise that there is a certain area where private and public meet—a sort of interface—particularly concerning some of the industries for which right hon. and hon. Gentlemen opposite are responsible. I believe that the N.R.D.C. type of financing is most appropriate, not only in terms of the industry concerned, but also in terms of the taxpayer. Even more important, it enables a fairly limited quantum of public money to be recircu-lated. That cannot be done if the money is put down in equity, because, by definition, equity is permanent finance. One of the attractions of the N.R.D.C. method is that it is used as launching
aid, is then recovered and it can go into new projects. In terms of advancing the kind of schemes which I certainly wish to see Britain doing, the N.R.D.C. method is a much more productive use of any quantum of public investment than tying it down in equity. I could go into the computer merger case, but that might more appropriately wait for the next Amendment.
To conclude, we have had no reasons given by the Minister of Technology for rejecting their Lordships' Amendment. Convincing and persuasive though my arguments have been, even more persuasive has been the silence of the right hon. Gentleman.
The Minister's reasons for disagreeing with their Lordships, for all practical purposes, have not been given to this House. Therefore, my hon. Friend the Member for Eastleigh (Mr. David Price) was placed in the difficult position of having to demolish arguments on this Clause that were given in the other place. The Minister's view appears to be: "We have discussed all this. Their Lordships are wrong. We are right. That is the end of it." With respect, this is an impertinence.
In passing, it comes strangely from the right hon. Gentleman, who has been lecturing the country about participating in the democratic process, to tell us nothing, expect us to accept it, and regard himself as having done his duty. It is not good enough.
We are bound to rely upon the arguments advanced by his noble Friend in another place to understand the Government's reasons for disagreeing with the Amendment. I have read those arguments very carefully. I find that the arguments which led their Lordships to make this Amendment made absolute mincemeat of the Government's case. I can think of no better argument for the other place than this succinct and brilliant Amendment, which I support in every way. At the end of the debate in the other place the right hon. Gentleman's noble Friend described this Amendment as "a blot on the Bill." I regard the Bill as the blot and this Amendment as one of the few redeeming features of an otherwise extremely bad and unnecessary piece of legislation.
I suspect that I know why it is that the Minister has moved to disagree with the Amendment. Is it not possible that he has formed, or is about to form an international computer company, and that he is planning, or he may even have given undertakings, to take up equity capital in this company, on Government account, and furthermore that he has done all this in anticipation of Parliament agreeing to this Bill and specifically to this Clause, which has been amended? I do not mind a little bit of forethought or foresight on the part of Ministers— we have all too little of it now. But I object to the Government taking Parliamentary approval of this original Clause, as amended, for granted, and assuming that the House will simply rubber-stamp anything that the right hon. Gentleman says.
It would not be surprising if this were so, because it has been done twice recently. The first case was the Ombudsman and the other was decimal coinage. In both instances it was obvious that the Government had taken administrative action in anticipation of the certainty of Parliament legislating to make that action good.
I have no doubt that we shall come to this matter in greater detail on the next Amendment. I oppose this power that the Government seek to take equity capital. I agree with the Lords Amendment for other reasons than my suspicion of the arbitrariness of the present Minister.
I have two sets of objections—one practical and one political—to this power being given. To take the practical ones, if the Government take equity capital in the private sector, unlike a private investor they are unlikely ever again to be able to realise that investment. The Government are not in a position to sell those equities again on the open market. Why? Because Government holdings of these equities would almost invariably tend to be pretty large. A large quantity of equity capital will be taken up, and the problem of the Government unloading that equity capital on to the market would be very serious. Once word got out that the Government were selling off their equities then a lot of others would want to know why.
There would be a suspicion that the Government knew something about the company which made its equity capital less worth holding. Consequently there would be a run away from the remaining share of the company and the Government would find themselves holding equities which were less value on the open market. This is no way to protect the taxpayers' money, on the contrary it is a certain way to lose it.
On practical grounds, I say that by taking private equity capital in this fashion the right hon. Gentleman is putting Government money in a position where, almost invariably, it could not be got at again without loss. It is possible that the Government could seek to sell off their equities in dribbles and drabbles, so that no one would notice. This is exactly the kind of activity that I would expect of the present Administration. If they were to do that, it would take a long time. It might be, if they held a substantial number of shares, that it could take 5, 10 or 15 or more years. We have General Elections during that period, and I suggest to the right hon. Gentleman that he ought not to place a successor Government, and there will be one very shortly, in the position of holding shares which can be sold only at a loss.
My second practical objection to the Government taking over equity shares is that it is unnecessary for them to do so, even for the purposes set out in the Bill. The Government already take 42½ per cent, of all the net profits of all the companies, and therefore it cannot be the argument that they are taking up the shares simply in order to share in the profits. They can supply firms in need of money with capital in other ways. They already do so through an amplitude of Government agencies—the whole place is crawling with them. The Minister of Technology can provide capital if necessary; the Industrial Reorganisation Corporation can do likewise. There is massive Government aid to industries in the development areas of up to £250 million a year and there is the whole area of Government contracts.
There is no doubt that this policy could be achieved, and is being achieved, without the Government having to take up equities within private companies. This is the point their Lordships argued and this is precisely why this admirably short and sensible Amendment should be in-porated in the Clause.
There is another objection going to the heart of the matter, a political objection. It is the difference between the two sides of the House and it could not be more effectively illustrated than by this short Amendment. I believe in private enterprise and that is why I support their Lordships in the words that they have sent back to us. I do not believe that there can be private enterprise if the Government get a lock on the equities. Industry does not want Government to take up equities in it.
The C.B.I, said:
We cannot see the need for this legislation in any way.
On the same point Mr. Grierson, former managing director of the Industrial Reorganisation Corporation, on 10th November, 1967, in the same journal from which my hon. Friend the Member for Eastleigh quoted, described the Bill and the point with which we are dealing as
… a form of gimmickry which elevates temporary expedient to a major principle of economic administration.
As I read those words I thought that they must be referring to the Prime Minister. They were, of course, referring to the right hon. Gentleman. The Institute of Directors, representing 50,000 firms, small and large, has said quite clearly that it is wholly opposed to the taking up by the Government of equity capital in private industry. Its objections are met in full by the Lords Amendment. The Amendment asks this House to keep the Government out of equities in order, above all else, to avoid the backstage arm twisting which would go on once Government directors were put on private boards.
The Minister has said again and again that there will be no compulsion, but when one considers equity capital, what else can happen but the appointment by the Government of directors to sit on the boards of these private corporations? Once these directors are placed on the boards, they will not sit there like dummies. They will not act as lobby fodder. They will intervene actively in the policies of the corporations, otherwise they will be no good there at all. It is this arm twisting to which I object, and to which their Lordships objected so admirably.
My last: objection is that the acquisition of equity capital means, above all, State control. It means nationalisation by the dack door. It means the very process which has brought our country into its present difficult pass. It means a process —as we know on the railways, and in other respects—of large losses, bad service, high taxes, and a vast bureaucracy. These are the things to which the Government's proposals will condemn our country, and their Lordships have seen the wisdom of sending to this House a short, sharp Amendment to knock out this disease from our midst.
I have not had an opportunity to speak on this subject before, but I am glad of it now because my constituency is the largest source of capital for industry. I speak about the Amendment in no partisan spirit, but simply with the experience of having worked in this principal source of capital for 20 years. It is inadvisable for the Government to hold an equity stake in companies. I do not believe that it is in the best interests of the taxpayer, or of the electorate, if it is possible to separate them.
There are arguments relating to control, and there are arguments relating to financial return or profit; it is the financial argument with which I shall deal first.
There is an assumption—I do not impute it to all hon. Gentlemen opposite —that equities are always the most profitable way to participate in a venture, but to dispel that one has only to think of Short Brothers and Harland, or the Beagle Aircraft Company, or, as we shall probably see, Fairfields, which are three out of seven or eight ventures in which the Government have a stake.
There is also an assumption that a company will always resist a Government holding of its equity. That is not so, because the less attractive a venture, the readier the company will be to accept Government money by way of equity. The projects which need Government encouragement are those which, by definition, are likely to result in a loss. If they were not likely to result in a loss, non-Government finance would be forthcoming from my constituency.
Indeed it seems curious for the Government to insist on a share in the profits when, by definition, the venture is more likely to result in a loss. Can the Government point to any instance in which a company has been unable to raise the necessary founds for a viable commercial venture? We have the best capital market in the world, and if a venture cannot be financed in that market, it is at least a good indication that it is not likely to be profitable.
Further, an equity in a loss-making venture is far more of a subsidy than is a loan. The attitude of some hon. Gentlemen opposite is that a loan is a subsidy to a company, but in fact an equity investment in a company is much more of a subsidy. There is no fixed rate of interest on an equity and an equity investment is a permanent investment and is not repayable.
Viewed from the Government's side as shareholder, if the venture fails the Government have lost the taxpayer's money anyway; and if it succeeds there are many obstacles and pressures—financial and political—which effectively prevent the Government from selling their shares. I do not place much stress on the financial obstacles. To say that the Government will be unable to sell their shares in a venture they have subsidised is in a way to criticise the capital market which could have put up the capital for that venture by saying that it now cannot absorb the shares. I therefore do not stress that argument, but the political arguments against the Government's selling their shares in a company are strong, and money put up by the Government in the form of equity capital has effectively gone for ever.
I do not think that permanence is a suitable feature for investment under the Bill. The purpose of the Bill is to get enterprises off the ground and over humps. In neither case is a permanent investment needed—or, very often, good for the company. There is many a company which has overloaded itself with capital.
Moreover—and this is a point which I have not heard made—a permanent investment by a Government is inflationary. Government lending, as opposed to Government borrowing, should be short, so that the additional money put into the system by the lending is withdrawn again as soon as possible. I believe that that principle has always been recognised by the Treasury.
Further the Government are not a taxpayer. The attractions of equity investment are overwhelmingly to taxpayers, and an investor who is not a taxpayer, such as the Government, a pension fund, or a charity, has a built-in bias away from equities and towards fixed-interest investment.
To turn to questions of control, one can have an equity interest without a voting right. I have not checked it, but I believe that the Government took participation of this sort when Elliott-Automation was merged with English Electric. But a non-voting participation, for various reasons, is unlikely, and on the part of private investors it is very much discouraged.
Equities therefore will involve the Government in the awkwardness and odium of difficult, unpopular, and in some cases wrong decisions, such as for example the sacking of Mr. Wrangham from Short Bros. The existence of a Government shareholding undoubtedly discourages people from serving with such a company—and indeed it visibly discouraged them in the case of Short Bros.
Next, it is essential in any successful enterprise that the participants should all have the same objectives. In any company the objective of the shareholders and the directors is the long-term interests of the shareholders. I say "long term" because the long-term interest of the shareholders includes seeing to it that the company has a satisfied staff, satisfied customers, and indeed a satisfied public. Enlightened self-interest is what should drive shareholders on, to the benefit of the whole community. But self-interest is exactly what we do not want a Government to have in a company, because the Government may then be urged or forced to take actions which are not in the interest of shareholders as a whole, or indeed which have nothing to do with the shareholders at all.
Governments are bound, through ownership of parts of companies, to get into political difficulties. One has only to think of companies like British Petroleum or Fairfields or the Government's attitude to take-overs. At present, I think rightly, the Government encourage takeovers, but they did not always do so, and they may not do so again. I wonder how the Government, as shareholders would have acted if they had been shareholders at the time of the take-over in A.E.I.; and subsequently as shareholders in G.E.C. when faced with all the confusion and troubles over the closure of factories. We shall have two sorts of shareholder and two sorts of director with conflicting voices, and there lies the certainty of trouble and the certainty of failure.
To sum up, if the Government wish to stimulate changes in industry—I do not want to debate that, but I do not accept it out of hand—it should be done either by way of loan, with interest rates high or low, with or with participation in profits—the Parliamentary Secretary's intervention implied that he did not see the distinction between an equity and a participating prior charge, and there may turn out to be no difference on the profits front, but there is a great difference in the other aspects which I have described —or by guarantee, with or without royalty or annexure arrangements, as has been done in the past. But if the Government proceed by way of equity, there is a risk of pushing Government orders to uncompetitive firms; a risk—many of us here will put pressure on the Government to do so—of preserving the status quo, of encouraging the ossification of industry to which we are all too prone; and a risk of financing prestige ventures.
Without wishing to be disagreeable, I view this part of the Bill as a piece of financial showmanship and I earnestly hope that the House will accept the Amendment.
I underline some of the points of my hon. Friend the Member for the Cities of London and Westminster (Mr. John Smith), who went to the heart of the matter. The Bill is wrongly named. It speaks of industrial expansion when it is about the financing of industry. If it is necessary for the Government to finance industry, there are several solutions. It can be done by loan, by grant, by providing fixed-interest capital or by equity.
This is the fundamental difference between Socialism and private enterprise. The Government will naturally always hanker for a share in the ownership of industry. The Bill is not concerned with providing the finance to launch or encourage businesses but, as one stated object, to improve the productive capacity of existing industries. I cannot conceive that it would often be necessary for a Government to provide capital for this purpose. As has been said, they would be backing a hopeless loser.
Once an enterprise has begun to show its paces, of course, the market will support it. On the whole, one would assume that the provision of capital would normally be a launching operation, but if the market was not satisfied that the enterprise would be profitable in the long run, why do the Government think that they would be better judges? I realise that they wish to take part of the risk capital and are assuming that this would be for the public benefit, but they would be better safeguarded by having fixed-interest capital secured on the value of the business so that something might be saved if the venture failed, rather than taking risk capital, which is inevitably lost if there is a failure, when fixed-interest shareholders often retain something.
The question of prestige always arises over a political interest in a company's success. Any Ministry which has put our taxpayers' money into an enterprise is bound to do its best to see that it succeeds. As a businessman, I deny that that would be done because the Government would provide some outstanding managerial ability. But what they can provide is an awful lot of pull and some push around the corners to assist enterprises in which they have taken an equity holding to produce success which those enterprises would not have earned in ordinary private operation.
This is the great danger. Belonging to the party that I do, I naturally believe in the separation between political and economic power and that the fusing of the two produces a dangerous result. The result of the Bill will be that the pushing up of an equity interest by the Government will eventually lead them to favour the firms concerned—possibly, even probably, uneconomically—merely to ensure that the enterprise shows an apparent success.
It is also likely that further money will be pushed in to assist that equity in the form of extra loans or grants in order to show a success where none has been earned. I do not believe that Governments—I do not refer to this one in particular—are immune from the temptation to put nice goods in the shop window, even though they do not exist, by assisting unduly and uneconomically enterprises in which they have taken the responsibility inherent in an equity interest.
The argument for taking equity interests is nothing more or less than the old Socialist argument for nationalisation. It is the desire to own enterprises instead of merely assisting them for the public good. The fusing of these two interests has in the past led to failure, to the putting of political considerations, the avoidance of political embarrassments by the sacrifice of economic considerations, with the disastrous results which we see in so many nationalised industries.
Let us not broaden this but learn from sacrifice and let this sacrifice by the Government to their own Left-wing be quietly forgotten. It will have to be forgotten when we are returned to power, because I am certain that we will not risk public money in the taking of equity in that province which properly belongs to private enterprise.
The Amendment in the name of my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths) and myself was not intended as an expression of disagreement with the Amendment passed in another place, but merely to highlight the undesirable embarrassments which we believe would be attendant upon the Government holding equity shares accompanied by voting rights. Perhaps I may be allowed to say at the outset how nice it is for one who has been upstairs in that stuffy hermitage No. 10—the Committee Room, not No. 10 Downing Street, that would be even worse—to be down here having comparatively fresh air and plenty of room. The view of the empty benches opposite is one of the nicest one sees in Parliament.
The Amendment we are discussing is to limit the power of the so-called "competent authority" to provide financial support and in particular to provide
it by means of equity capital. "Competent authority" is defined in page 2 of the Bill as:
the Minister of Technology, a Secretary of State, the Board of Trade, the Minister of Public Building and Works, the Minister of Transport, the Minister of Power, the Minister of Agriculture, Fisheries and Food and the Minister of Health.
If one were to look at the past of any one of those right hon. Gentlemen one would find in their factual records abundant grounds for concluding that if they were authorities at all they were certainly not competent.
Would my hon. Friend agree that we have here an extraordinary example of their incompetence? The Government Amendment has had to be starred because they did not even have the competence to get it down before that of my hon. Friend the Member for Yeovil (Mr. Peyton).
I am very much obliged to my hon. Friend, and of course it is something to which we are very well accustomed by now. Even with all the machinery they have they still cannot achieve competence.
I quite understand that if my hon. Friend the Member for Cathcart had not read this Clause of the Bill, he would be well justified in suffering from a very severe shock. Equally, I believe he would conclude on reflection that it would be unfair if he were to blame me for so describing the Secretary of State for Scotland. Such a thing would not occur to me in my wildest, most irresponsible moments. I agree with the biting comment of the hon. Gentleman the Member for Bury St. Edmunds that we really have not heard enough—and indeed we have not heard anything—from the Minister as to the reasons for rejecting this very important Amendment that we have received from another place. I hope the Parliamentary Secretary will take a little notice of the arguments of the Opposition, otherwise they have to be repeated more frequently.
I am sorry that the right hon. Gentleman the Minister of Technology should obviously regard these objections as being arguments which have been made before and views which he does not accept and therefore arguments to which he is under no duty to listen. But I hope that the Parliamentary Secretary will be good enough to pass on to his right hon. Friend a note of the anxiety of Parliament, or at any rate of this side of the House, to know whether Parliamentary agreement to this Measure has been preempted. Have the Government already embarked upon a Measure for which they do not have the present authority? Perhaps the Parliamentary Secretary would rise to his feet now and tell me; or are we to conclude that the Government again stand in the dock convicted by their own silence, that they have embarked upon some commercial venture for which the consent of Parliament was necessary without first bothering to obtain that consent and that they knew they could steamroller this Measure through Parliament by means of their normally docile majority? Is the Parliamentary Secretary going to deny that?
If the hon. Gentleman wishes me to convey what he has said to my right hon. Friend I will certainly do so, and I am sure he will reply to the points the hon. Gentleman is making.
I am very much obliged to the Parliamentary Secretary, but we on this side tried to flatter him with the impression that he has some responsibility for or knowledge of what happens in his Department. I have asked a plain question which we are told is to be passed to the Minister but which I should have thought any Parliamentary Secretary would have been able to answer. The Parliamentary Secretary has answered this eloquently by his silence. It appears that at this stage Parliament has once again been taken for granted. I very much agree with the prediction of my hon. Friend the Member for the Cities of London and Westminster (Mr. John Smith) when he foresees in this Measure the certainty of trouble and that there will be a series of awkward and quite un-covenanted predicaments into which the Government can get. I would also like respectfully to comment on what was said by my hon. Friend the Member for Kidderminster (Sir T. Brinton) who accused the Government of a desire to own and control quite divorced from any considerations of public good.
It seems to me that any Government should regard themselves as the trustees of the taxpayers' money, and moreover trustees who are under a very much more onerous and high standard of duty than ordinary trustees. It is sad for our country that this is habitually forgotten by governments and very particularly by this one. I believe the Government are under a duty to take a very high standard of care; and the shocking negligence and carelessness with which this Government embarks on one ill-considered venture after another is not a good background for proposals such as this. That is the reason why we feel that the Government, as holders of equity shares, would be doing no service to themselves or to the taxpayers or to any company in the affairs of which they seek to embark. It may well be argued that British Petroleum is an example of how things can work out the other way. I believe that British Petroleum is an example of the exception which proves the rule.
The Minister of Technology shows his contempt for Parliamentary democracy and perhaps his Parliamentary Secretary could persuade his right hon. Friend to read these remarks in the OFFICIAL REPORT tomorrow. If he or any other Member of this wretched Administration has either the acumen or the good fortune to make the kind of investment which a British Government made in what is now British Petroleum in 1910 and in the years immediately following, we will be the first to congratulate them. But, as those two things are themselves unlikely and as it is even more unlikely that the right hon. Gentleman, if he did have either the acumen or the luck to make such an investment, would have the modesty to refrain from interfering, therefore, I say that British Petroleum is a complete exception.
By and large, it has been a brilliantly successful enterprise. If any British Government have the acumen or luck to make a similar investment I will be the first to congratulate them and rejoice with them.
Various questions are bound to crop up and they will make for awkwardness at every stage. Who will control the company? I wonder if the Government are a good minority shareholder? Should any Government, who handle the taxpayers' money, be a minority shareholder? There is also the question of the relations between the Government and their co-shareholders—between the Government and the company itself. Few employees of any nationalised industry or Government Department would be enthusiastic advocates of the idea that the Government are the best possible employer.
What will happen in the event of a take-over bid? What sort of role will the Government play? They cannot pretend that they are not there, particularly since they have enormous influence. The Government cannot sell their shares because once it became known that they were selling, the market would become greatly depressed. And what about the other shareholders in the concern? On this basis the taxpayers' money is tied up for ever.
Even worse, it is virtually certain that the Government will be drawn into areas which offer no great promise. Opportunities are likely to come the Government's way, but they are also likely to be doubtful. It seems that once the Government decide to go into one of these ventures it will be difficult for them to pull out and say, "Enough is enough".
All Governments try to cover their failures, even if it means pouring good money after bad. I have been convinced that if I could persuade a Government Department to lend me £5 to dig a hole in the road for no disclosed purpose, I could, once I had obtained my money, go on and get millions of £s until a courageous Minister finally wrote the whole thing off as a ghastly failure. I am, therefore, worried at the possibility of the Government being drawn into one flabby commercial proposition after another and not having the guts to withdraw and say, "No more".
On commercial considerations, it would be difficult to find worse judges than Governments. In any event, do not the Government have enough to do? At present they are woefully neglecting their responsibilities. Why they should now be so concerned with owning a few equity shares I do not know. They should drop this terrible habit of interfering in other people's affairs and get on with their job, which at present they are leaving to hazard.
I will not quote from the outburst of idiocy of the Minister of Technology last week. Some of it was arrogant even by his standards. Perhaps I should have informed the right hon. Gentleman that I intended to refer to him. He referred to the demand for greater political responsibility and power for the individual. What did he mean by that when, at the same time, he is embarking on proposals of this kind? I cannot guess what sort of play on words he was making. Now we are told that there will be a new popular democracy to replace the present Parliamentary democracy. The right hon. Gentleman is skilled at suggesting that the faults today lie at the door of Parliament and not, as is the fact, with the present Administration, who stand charged with heavy neglect of their duties and gross interference with the legitimate interests of the private citizen.
Before us today is another example of their neglect and interference. The nation and British industry have been done a service by their Lordships' House in calling attention to the danger of Government interference on this scale. I regret that the obedient, docile and complacent majority opposite—they have not even bothered to turn up to listen to this discussion—will shortly file obediently through the Lobby in support of a Minister who has not even bothered to listen to the arguments which my hon. Friends are deploying against him.
We are constantly getting insults thrown at the House. The nonchalance with which Ministers conduct their Parliamentary duties, under an Administration who are tottering towards ruin—I would not mind that if it were not the nation's ruin as well—is an affront which I hope the House will not tolerate.
It is always difficult to follow my hon. Friend the Member for Yeovil (Mr. Peyton), but it is even more difficult today because he dealt so clearly and comprehensively with the Amendment.
My hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths) said that the arguments adduced in the House of Lords made mincemeat of the Government's proposal. To the man in the street, the Government's case might sound reasonable, for they are saying that if it is right for the individual and groups of individuals to make profit from industry and allow profits to come from industry, the Government, as the custodian of the people's money, should have an opportunity to share in the loot? That seems an argument of some merit, but when one examines it one sees that it is irresponsible and bad for the nation.
It is basically wrong to consider the Government and the individual in the same way. I believe in capitalism and that the natural disciplines of the capitalist system work to the advantage of the people generally. When we consider Government participation in equities, we can see how these natural disciplines will be interfered with. What happens when a company wishes to attract capital? It pays out dividends to ensure that, when it wants a rights issue, it can raise money in the market. To that extent they try to increase dividends so that it will be easier to attract capital.
If the Government have a 40 per cent. stage in the equity of that company there is no obligation on the company to pay out dividends to the extent that it should. Companies have a natural ability to hold on to money for investment purposes. The profitable and potentially profitable companies should attract capital, and the companies which do not have a rosy future will not. A major Government stake in a company will ensure that the company has access to unlimited sources of capital, and the Government will be interfering with one of the natural disciplines of the capitalist system which can lead to industrial expansion, which is the title of the Bill.
When I was rich, before I came to the House, I had the pleasure of being a shareholder in a small company. I had 50 shares with Associated Bakeries and General Investments. The investment amounted to £6. I was proud of it and, as I was a shareholder, I thought that I should take an active interest in the company's affairs, so I went to the annual general meeting. Only seven people were present, the meeting lasted for 10 minutes, and then we had a lunch which I felt was more than adequate dividend for the small stake I had in the company. The company was well and effectively run, and the shareholders left it entirely alone and allowed the management to get on with the business of running the company.
The distinction between ownership and control is dealt with in a book which was written by a man called Burnham who belongs to the opposite ideological camp. How can a Government with a major stake in equity, with our present political set-up, be a sleeping partner? B.P. has been mentioned by my hon. Friend as the exception which proves the rule, but let us see the situation that could arise. The Government wished to stop oil going to Rhodesia, but I was there in the summer and they were getting all the oil they wanted. The hon. Member for Liverpool, Walton (Mr. Heffer) late one night raised the matter of B.P. tankers carrying oil to Rhodesia and he said how shameful it was that ships in which the Government have a stake should be used for this purpose.
My hon. Friend on the Front Bench has been fighting for Short Bros., and they are very fortunate to have such a splendid advocate. Although it was not so with Short Bros, and Harlands, it could happen when the Government have a major stake, that orders may be directed to companies when they should not be directed. The natural disciplines of the capital system would be interfered with, which would be bad for the country.
Since my hon. Friend has mentioned Short Bros., he might care to dwell upon the wretched relations which have existed between the Government and industry. Mr. Wrangham, the chairman of Shorts, was disgracefully treated, and so was Sir Reginald Verdon Smith, of Bristol Siddeley.
I am very grateful to my hon. Friend for getting me an audience which, by my own efforts I could not get, although hon. Members are not staying very long.
A major Government shareholding can interfere with the natural discipline of the capitalist economy which works in the interests of the nation and of growth.
It is argued that a Government stake in equity is a good investment, in the sense that it takes care of inflation. There is a better way by which the Government can safeguard themselves against inflation, and that is by not getting so involved in industry and not eating up so much of the capital of industry by the legislation which they bring forward.
If the Government go ahead with their proposal to have a major stake in the equity of companies and also with nationalisation schemes, then inflation is inevitable. Inflation is caused by Government spending, Government investment, and by the way in which the Government allocate scarce resources of capital.
My hon. Friend the Member for Yeovil was right to say that the Government are the custodians of the public purse and that they should be more careful with it than we are with our own money. If they are involved with major equity shareholdings, this will not be possible. Equity shares are never the first charge on the assets of a company, but debentures and preference shares exist. If the company got into difficulties then the Government's investment, that is to say the people's investment, could disappear overnight.
If the Lords Amendment is rejected, and the Government go ahead with their plans to buy equities, can they say where the new capital will come from? A factor which is preventing industrial expansion is the increasing share of the national cake which is being eaten up by the Government in the way that they are allocating capital and spending their money. It is a sad reflection on the Government that in three short years the burden on the average family in taxation has increased by £3 a week. This is caused by the Government spending money as they propose to do in the Bill and in other directions. We should, therefore, support the Lords in their Amendment.
The Government are obsessed by ideology. This is not an isolated case. Only a few hours ago we were considering the Transport Bill which involved the spending of £1,900 million of public money. The Bill provides for unlimited activity by the State—
Mr. Speaker, I am sorry in some ways that it is, because we had many important matters with which it was not possible to deal.
In this very important Amendment, we see yet another example of the Government's obsession with ideology. My hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths) said that there was a possibility that the Government had gone ahead with these powers before the legislation was passed. The suspicion grew when my hon. Friend the Member for Yeovil tried to intervene in the Parliamentary Secretary's speech and failed to do so.
It was suggested that a major European computer company was being considered and might be one of the first to be set up under the legislation. I wonder whether there is any truth in that? I have a suspicion that the Government are considering something of the sort. They are becoming obsessed with the possibilities of the Common Market, and recently we have had the introduction of such factors as decimal currency, Summer time—
I apologise, Mr. Speaker.
I would ask the Government seriously to consider whether this is the sort of investment for the people when it is not a first charge on the assets of the companies involved. There is a danger that, once an equity stock is taken, the Government will have a stake in the survival of that company, whether it is profitable or not. Having spent £5 million, say, for an equity stake, politically and economically they have a vested interest in the success of the company, come what may. It might be in its normal commercial interests to close down, but the danger is that, once £5 million of public money has gone into it, another £5 million will be added.
This is not in the national interest. It is a bad move. The House of Lords was quite right in its Amendment, and I hope that the Government will consider it. It may be good for the Government to consider it seriously, because it is probably the first of many more Amendments from the other place. Bearing in mind future Amendments on more significant Measures, it would be good training for the Government if they accepted this one and showed their good will in that way.
Much of our debate on Second Reading and in Committee took place before I had the good fortune to be able to take part. But I have studied the reports in detail, and I have studied the reasons why their Lordships decided to make this important Amendment. I hope that I will have the indulgence of the House in putting forward one or two comments.
Nearly all of the remarks made about this proposal have been studying the Measure from the taxpayer's viewpoint. However, the object of the Bill is to promote efficiency. After all, its name is the Industrial Expansion Bill, and I think that it would be fruitful to consider the effect that it will have on management performance and management attitudes if it becomes an Act.
If the Bill is simply a Measure to provide subsidies, it stands well enough as it is. If it is intended to provide the Government with a measure of control, with a view to changing the policy or direction of the firms concerned, the Amendment becomes pivotal. In my own observation, the principal cause of inefficiency in limited liability companies is the virtual abdication of the shareholders. Meetings are nearly always unattended. If shareholders go, it is rare that they have an opportunity of raising a question which is likely to change the direction of the management's thinking.
The institutions are said to be in a position to exercise shareholders' power, and no doubt they would be if they had the resources to study the inner problems of management in all the many hundreds of companies in which they have interests. However, our big financial institutions are in competition with each other and cannot afford to take on large staffs of qualified people who would be able to look with an informed eye at what is going on in the companies in which they have shares. If an institution begins to doubt whether a firm is taking the right direction or its management is competent, usually it opts out, sells its holding and does not attempt to intervene.
The Press is an element in the discipline of management, and it has been growing in the last year or 18 months. However, when one knows the innermost secrets of a company and then reads what the Press says about it, all too often it is clear that newspaper correspondents are unable to extract the information that they need in order fully to explain a latent inefficiency or wrong decisions.
Quite an element of discipline is exercised by a take-over bidder; but he is an executioner rather than a doctor. By the time that a take-over bid has reached the stage where it is likely to succeed, it is far too late for the management to put its house in order. Some way must be found for making the equity shareholder more effective, and, after living with the problem of managerial efficiency for several years, I am convinced that this is an area in which the Government must act. But it is wrong to dilute the equity shareholding by introducing a new type of shareholder whose interests are not the same as those of the others. That is a wrong approach and will not succeed.
If I may give the Government a hint, should they want to follow up the idea of introducing greater efficiency into industry and business by legislation they should see what can be done by introducing the concept of the management audit rather than by diluting the equity shareholding. Looking at the matter from the viewpoint of the management, it is clear that either the Government intend to exercise their rights as a shareholder, or they do not. If they do not, the taxpayer will be in a position of taking risks without responsibilities— what might be called the prerogative of the non-voting shareholder throughout all crises.
If they do decide to exercise authority, they will be introducing a new element into the running of companies. Managements will have to bear in mind that a large or small element in the equity holding is in the hands of people whose minds lean towards political or social considerations and that these are paramount for the Government shareholders, although they are only of secondary importance to the rest. We shall see in the boardrooms of companies that have accepted help by way of an equity shareholding—or had it forced upon them—signs of schizophrenia, because they will not know who they are supposed to serve.
While I sympathise with the Government's object, the Bill has all the appearance of having been drafted by people who have learned about industry out of books. Unfortunately, that is all too often the case with the Government's industrial measures. If they would draw on the advice of people who have practical experience of the real problems affecting the management of industry and business, they would not add to the problems which are distracting managements by refusing to accept this Amendment.
In opposing the Government's proposition, I hope to keep my comments brief, but I cannot be as brief as the Minister was in making his very casual speech.
I am glad that we have this chance of a further debate for a few minutes on the Bill, because it seems to me that the position in which we find ourselves today is topical. Tribute has been paid to the work done on the Bill in another place. Having taken part in the proceedings in Standing Committee, I know how keen has been the scrutiny that their Lordships have given to the Bill. I hope that they will be able to give a similar critical judgment to other Measures which may be reaching them in the near future, notably, the Transport Bill and the Prices and Incomes Bill.
Many arguments have been put for-ward, and I stress only two matters, the first of them political and the other financial. There has been and still is a widespread public fear of back-door nationalisation. The Government make light of it. The matter arose several times in Committee. I ask the Government to take this much more seriously as a matter of very great psychological importance in the country today. It is largely their own fault that this has arisen because of the many statements from the party opposite about nationalisation.
For years we have had this theme of extension of public ownership. If they allege that we start with a strong prejudice against it, it is fair to say that they show a very strong prejudice for it and they show no sign of losing that prejudice. We had the era of wholesale nationalisation Measures just after the war, and more recently the Prime Minister in particular has been talking of other forms of public control and public ownership. Month after month on the Order Paper we are reminded of the predilection for public ownership by various Motions which are put forward by hon. Members opposite. The most recent case in legislation, apart from this Bill, was the Steel Nationalisation Bill, which was carried through against all the merits.
I beg your pardon, Mr. Speaker. I was about to make no more than a passing reference to it and also to say that if only the right hon. Gentleman's rather heady idea of a referendum had been in force that Bill would never have reached the Statute Book.
This is the background against which we have to judge the assurances we have had from the right hon. Gentleman and his colleagues that this Bill is in no sense a form of back-door nationalisation. The difficulty is that on all these questions we hear so many voices from the Government. There have been the Prime Minister, the Chancellor of the Exchequer, the Secretary of State for Economic Affairs—
I am sorry again. I ask that the House should agree with their Lordships in excluding equity shareholdings from the provisions of Clause 2 of the Bill. If we did that we should do something to allay the widespread uneasiness I have been talking about.
The other point is the financial one about the form of support that should be given to schemes provided for in the Bill. The type of scheme envisaged in the words of Clause 2 is one which
would not be undertaken without such financial support as is authorised by this section.
For these schemes from the financial viewpoint loans are a much preferable form of support. Loans would provide a sure return to the public funds at what may be a tricky time in the history of a venture. It is much fairer and more safe for the taxpayer who has seen too much money go down the drain in unwise ventures. There is a certain interest to come back throughout the term of the loan. This is a much better form of investment in these circumstances than an equity holding. It is easier to get the advance back and to keep public money circulating in desirable ventures.
The Government may argue that when the public are taking a risk they should get their reward, but loans are much more satisfactory in the narrow context in which we are discussing the Bill. Anyway, the Government automatically get 42½ per cent. of all profits on all ventures. I remind the Government of what they are always saying about the need for partnership with industry. This is the psychological reason for agreeing with their Lordships in this Amendment. Today, that partnership falls far short of what it ought to be, but this Amendment would go some way towards putting that right.
That the Bill is being proceeded with at all is a sign of the rather topsy-turvy priorities we have had from the Government. I am glad to see my hon. Friend the Member for Warwick and Leamington (Mr. Dudley Smith) in his place, because I think that it was in that by-election that the right hon. Gentleman spoke of the pledges the Government
were giving us. One very relevant pledge was:
The Government will, if necessary, hold back things which are less essential.
It is a thousand pities that they did not apply that excellent principle to this Bill. It remains a bad Bill, but it would be slightly less bad if the House agreed with their Lordships in this Amendment.
The Financial Times, on 1st November last year, had an article headed, "How the Government may act". The article began:
Of all the proposed legislation which was contained in the Queen's Speech yesterday, the most controversial is almost certainly the Industrial Expansion Bill.
When we began to debate the matter this afternoon, I could not help feeling that there was some danger that what had been heralded as a controversial matter might be in danger of going out not with a bang, but with a whimper. However, I had not reckoned with the very powerful speeches which have been made by my hon. Friends.
The principle enshrined in this Amendment strikes at the very root of the basic difference between the two sides of the House. I think that even the Minister would agree with that. We on this side of the House are concerned that the Bill should be amended in this way, because it tends to extend the principle of public ownership. We are convinced that it is through private enterprise and not through Government intervention, that we are likely to get a better rate of progress in the economy.
At least one thing can be said for the Bill. Unlike the other controversial Measures which have over-shadowed the industrial scene, such as prices and incomes and the Finance Bill, it was considered in great detail in Committee. Therefore, it is right that we should return to it this evening. I disagree with the Minister, who, in his opening speech, which by any standard must have been regarded as inadequate—indeed, almost perfunctory—that the point made in this debate was covered in any great detail.
As my hon. Friend the Member for Eastleigh (Mr. David Price) pointed out, we debated it in rather broader terms, but not on the specific narrow issue, although we would not dispute that the narrow issue of equity raises a point of principle almost identical with the point of principle we debated on Second Reading.
The Minister, throughout our earlier debates, was anxious to play down the fact that this is an extension of public ownership. His justification for the Bill was expressed almost entirely in terms of various considerations which were set out in Clause 2(a) to (f), the various cases for making loans to encourage efficiency, and so on. The extension of public ownership was something which he wished to minimise. Perhaps that was why we had such an inadequate explanation of the reasons why he thought the House should reject the Amendment their Lordships had made and which we feel ought to be supported.
There is a very great division of opinion between the two sides of the House because our view is that it is not the function of the Government to engage in undertakings which are essentially risk-bearing undertakings and to invest money in them. A number of hon. Members who have spoken, my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths), for example, have pointed out that if an enterprise is profitable the Government take about 45 per cent. in Corporation Tax and other taxes. He did not point out that if the Government engage in an enterprise which may not turn out to be profitable they make a loss on both accounts. In addition to the, loss of tax revenue there is the possible loss of the assets which turn out not to be profitable.
If the Government propose to take an equity interest in a firm or group of firms it is reasonable that the House should be given a real prospectus on investment in that industry. It is really in the position of a shareholder being asked to invest in a company. One could say that the House should have a capital proposal worked out in detail justifying the equity investment. But under the present arrangement, while the House will in some cases get more information than it has had on previous occasions, that information is still not comparable to that which one would expect in private industry. It is certainly not comparable with that which the directors of a firm would expect to get, and, therefore, is not a firm basis for deciding to invest in a company. This being so, it may well be that the Government, in taking the equity interest, impose a further charge on the taxpayer. That brings me to the second point which we should consider, which was not debated when the matter was discussed before. If the Government are to take an equity interest in a firm or industry, what criteria will they use for an acceptable rate of return? We debated in Committee specific projects such as the Beagle aircraft project and the Concorde, but we never had a clear answer from the Minister on what rate of return he thought was reasonable, although we established that in many of these projects there is not likley to be any rate of return for a number of years.
Even passing the Amendment which we are now considering would not affect the Concorde or Beagle, because the Amendment relates to the industrial investment schemes and those projects are dealt with by separate Clauses. I hope that the hon. Gentleman is not in any doubt on that.
I am in no doubt at all about that, but I was concerned that projects should be appraised on a consistent basis. We have had no clear indication of what the Minister regards as an acceptable rate of return if we are to take an equity interest under the Bill, and I was commenting in passing that it looked as though on some of the projects he did not even expect a positive rate of return for a number of years.
When we considered the National Loans Act there was considerable discussion on what the rate of return should be if a nationalised industry made an investment in a particular field. It seems that the nationalised industries are being asked to have an 8 per cent. rate of return. It is not unreasonable to ask the Minister what rate of return he thinks would justify an equity investment by the Government. We have had no clear answer.
In the Committee on the National Loans Act I quoted from the White Paper on investment in the nationalised industries—a Review of Economic and Financial Objectives—when referring to the question of the discount rate and the test rate of return. The White Paper said:
Equally, it does not follow that all investments passing the test rate"—
that is, the 8 per cent. rate—
are automatically undertaken. The test rate of discount is essentially a device to ensure that the calls of the public and private sectors upon resources do not get out of line with each other over the long term.
One of the things we are concerned about in considering whether the Government should take an equity interest beyond the nationalised industries, extending the scope of public ownership, is whether or not that equity investment is likely to be even consistent with the meagre rates of return which the Government expect to get from the nationalised industries.
And which, in many cases, as my hon. Friend rightly points out, they have not obtained. This is a serious point that is very relevant to their Lordships' Amendment, and we should have a reply from the Government tonight.
A number of my hon. Friends have put forward powerful arguments on the question of whether the Government should have control if they take an equity interest in an undertaking. It is the general consensus on this side of the House that whether or not they have control there are still objections in principle against their investing in the way in which they would be able to invest if the Amendment is not approved by the House.
The criterion should be what the profitability is or is not. We were told in an earlier speech on the subject that companies would not be forced to have the Government taking an equity interest. This is not surprising. It may well be that an unprofitable company or one which is very risky will not feel that it should object unduly to the Government's giving it money or even taking an equity interest. We feel that that is not likely to result in the right use of the country's resources, that a Welfare State for industry, or subsidies of this kind, are not likely to be in the long-term interests of the country or of the taxpayers, who are likely to have a considerable burden placed on them here.
I entirely agree with my hon. Friend. This may well be the case, and if nationalisation in general is anything to go by it will almost certainly be the case. We need to know what the projects are and to have further information on the subject.
It would be common ground throughout the House that the overall level of investment in the country is too low to create the rate of economic growth we should like to see. This has been brought about by the policies the Government have pursued over the last few years, resulting in a great deal of competition for capital by industry.
If the Government are enabled under the Bill to take an equity interest in this or that project which they believe is right, rather than using the forces of the market to allocate resources to those projects which are most profitable and therefore most likely to reflect the consumers' demands for their products, we are likely to find ourselves in a position where the Government's chosen companies and projects, assessed on a basis about which we are not entirely clear, are given priority over others.
When a sudden credit squeeze is being imposed by the Chancellor of the Exchequer, working through the financial institutions, when rates of interest are exceptionally high, when devaluation is likely to have an adverse effect, and when dividend restraint is making it more difficult for firms to attract capital, this is something of which the House should not approve at the present time, even if it were not wrong in principle.
Is not there another danger which my hon. Friend has ommitted to mention, that once Government money is invested in a business such as the air corporations the Government are in a position to restrict competition, such as over the question of licensing the independents? Thus, we get less competition and less effcient service for the consumer, as well as a stultifying of the growth of the independents, which is bad for the country as a whole. Is not this an aspect which we should also consider?
This is a very important point. As my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) pointed out, one of the implications of the Government's saying that they will finance a particular firm is that they may not be all that anxious that the degree of competition which the firm faces shall be as high as it might otherwise be. I would dearly like to digress on the question of the I.A.T.A. and the lack of competition in air fares, but I suspect, Mr. Speaker, that I should be straining your kindness if I were to do so.
But a point which is in order is again one raised by my hon. Friend the Member for Cathcart, when he said that the great advantage of working through the ordinary mechanics of the market is that a firm which is really efficient, profitable and is meeting consumer demand, makes high profits and can pay high dividends —except for the Government's policy of restraint—and, therefore, is able to attract capital. These are the firms we should encourage rather than the sort of firms which the Government feel for one reason or another are likely to be in the public interest.
We have grave doubts of the Government's ability to select these projects or criteria. We do not believe that they are likely to work out in the public interest. The Government are proposing to take an equity interest in particular projects at a cost to the taxpayer of between £100 million and £150 million. We do not believe that the Bill is likely to further the interests of the country in our present economic situation. We feel that the Amendment is likely to remove at any rate some of the disadvantages of the Bill, and I hope that my right hon. and hon. Friends will support it in the Lobby.
On a point of order, Mr. Speaker. I see the Minister of Technology rising to speak. May I ask you whether he is permitted to speak for the second time in a debate of this kind? He has absented himself arbitrarily and arrogantly for long periods and I cannot see how he can possibly know what has been said and make a proper reply.
I will deal with the point of order in that submission. The rest is a matter of comment. The right hon. Gentleman has the right to speak a second time, but he must have leave of the House.
I was about to ask leave of the House to reply, Mr. Speaker.
I apologise for having left the Chamber during the course of the debate for a total of about half an hour, but I have had brought to my attention the points made during my absence and I hope that the House will acquit me of discourtesy in introducing the debate so briefly. I thought that it would be better to be brief in opening and to deal at the end with the points raised in the debate, thus saving two long speeches from myself.
The House debated the Bill fully when it was before it, including identical Amendments. We had an extremely good Committee stage upstairs and good debates on Second Reading, Report stage and Third Reading on the Floor of the House. The House then sent the Bill to another place in a certain form and the case for changing the Bill needed to be made by those who believe that change was required. I thought that the proper thing to do was to indicate that the Government thought that the Bill was in the right form as it left the House and then listen to those who support the Lords Amendment.
What struck me about the speeches in the debate is how very few hon. Members opposite spoke of this from the point of view of industry and of the problems that it has to face in meeting overseas competition. The dream world pictured for us by the hon. Member for Worthing (Mr. Higgins), of market forces shaping these things, is not the real world. Any one who suposes that the American taxpayer does not intervene powerfully to reinforce American advanced industries has no idea of what is happening.
Of course, the Americans are so rich that they do it by means of enormous procurement programmes, which finance research, design, development and early production targets of American products, and then American businessmen, having had all their learning costs paid for them, venture abroad and confront British industries which have not had the advantage of this degree of public procurement.
The hon. Member for Worthing is infinitely more knowledgeable than I about the ways of the City and the financing of industry. If he is addressing himself to the problems of making British industry competitive, which is the objective of this exercise, he should take some account of the fact that we are confronting other large industrial corporations abroad which simply exist upon large contracts from foreign Governments. This is the problem.
Of course they do; and this is the problem. Does the hon. Gentleman think that I.B.M. would be in its present position without the space programme, or that the micro-electronics industry would be in the position it is without American defence spending? Of course this is the problem. We are considering what is the appropriate form by which the Government can work with industry in order to see that our industrial competitiveness is improved without direct or indirect subsidy.
The work of my Department is really more closely connected with industrial problems than it is with the application of technology as such in industry. Let us look, for example, at the work in the shipbuilding, computer, motor, aeroengine, nuclear power, machine tool and micro-electronics industries. Almost all the work of my Department has been in this area, which the Lords Amendment touches on. It is that of industrial structure and how and in what form and by what rules and under what conditions the Government should be in a position to provide assistance.
The debate would have been more helpful to me and others who will read HANSARD if hon. Members opposite had tried to look at this matter from the point of view that they would have to look at it were they occupying our positions. Yet we heard market forces spoken of in the same breath as the aircraft industry when there is no one here in his senses who believes that the British aircraft industry or any aircraft industry could' survive five minutes on the basis of market forces.
Are hon. Members opposite really saying that launching aid, research and development contracts and the spin-off of military spending have no relevance? The hon. Member for Belfast, East (Mr. McMaster) might have mentioned Short Bros, and Harland. Does he claim that one can separate Government and industry one from another in the age in which we live?
I am grateful to you for being so patient, Mr. Speaker, because this is the background to the Amendment. If there is a need—and no one in the House would deny it—for very substantial Government expenditure in industry, then is it right to exclude for all time and in alt circumstances any possibility of this being done by equity holdings?
We did the same sort of thing in the Shipbuilding Industry Act. It contained identical provisions to those in this Bill. When I took over the piloting of that Act through the House, I urged that we should include equity capital as one of the proper tools to have in the tool bag when approaching the shipbuilding industry. It has not been used. I did not think that would be used often in that case, for some of the reasons given by hon. Members. Why should we use equity if there is a more appropriate way of achieving the objective'? It happens that there has been one change in Government policy in the shipbuilding industry. It has, in a sense, been in the opposite direction. Whereas the Fairfield yard was mainly a Government-owned yard, it is now a 17 per cent. holding in the Upper Clyde Group, which is principally privately owned.
For the Opposition to get out the dogs of war and ask them to bay or bray weakly as though there were a great principle dividing the parties on this matter does not bear examination. It sounds grand, on the eve of the Queen's Speech, to produce the drums and sound them, but after a year's detailed debate on the problems of Government-industrial relationships and whether equity should be one of the facilities available, to produce a trumpet and give it a toot now is not convincing.
Is not the Amendment concerned with the purchase of equities? The right hon. Gentleman has referred to the United States. We recognise that market forces are not and can not, be of use in the micro-industry. Can he give one example of an American firm in which the Federal Government have purchased equities?
No, the hon. Gentleman has missed the point vis-a-vis the United States. The point is that the Americans are aided by a procurement programme of gargantuan scale. It is a degree of support for industry which we cannot emulate. If we are trying to do it in a more cost-effective way, but on a much smaller scale by the injection of support at key points, this is quite different.
We are doing it in this instance by equity. Is it right to exclude this as one of the tools in the tool kit, if it is agreeable and there is no compulsory power? Is it wrong, if it is agreeable to the firm and the Government, which it would not always be, and if it is agreeable to the House, that each case will have to be brought under Affirmative Order? Can there be anything wrong with that?
The reason I did not mention Short Bros, was because I did not intervene in the debate. To take the example of Short's, would the Minister not agree that while it may be desirable for the Government to take an equity interest in the shares of a company to enable it to meet foreign competition, it is only a temporary measure? It should be made clear that Government policy is that once the special conditions have passed and the firm is on its feet and able to compete, the Government would relinquish their holding as quickly as possible, and leave it to private enterprise to get on with running the company?
Now that Short's have become well established, would it not be wise to reduce, and finally completely relinquish, the Government's shareholding in a company such as this?
If this is the burning issue dividing the parties, the ultimate litmus paper, why was it not sold by the party opposite during its 13 years of office? I am not trying to make a party point here. This is not the critical issue between the parties in this area. As I made clear in Committee, the object of the Industrial Expansion Bill is not to get equities. If we want to take over a company the proper thing to do is to bring forward a Bill, make the case and argue it out, and then take it over. One of the reasons why hon. Members opopsite have muffed so many opportunities in this debate is that they believe that this is the motivation.
I have listened to all the debates on this. "Back-door nationalisation" is one of the oldest phrases there is, and it came up at every stage in Committee. If the party opposite thinks that the object of this change is to increase public sector ownership, it has missed the opportunity to have some extremely interesting debates on the relationship between Government and industry. The Bill seeks to make a partnership with industry, designed to see that the country is competitive with its foreign competitors.
The hon. Gentleman said that the Bill had been hailed as controversial. Not by me. It was the Leader of his own party who demanded the withdrawal of the Bill. The great controversy was from the other side of the House. In the event, and I said this at many stages during the passage of the Bill, it will not be controversial in practice. It cannot be, because there are no compulsory powers, direct or indirect contained within the Bill. What we are trying to do, and this is something we debated in an atmosphere of considerable good will —I learned a lot—is to work out the ground rules under which Government and industry, using equity, if it is right, can work together as a partnership.
What the right hon. Gentleman is doing is bringing in matters which are not directly relevant to the Amendment in order to justify his case. There is a fundamental difference between the two sides on whether the Government should or should not take equities. If this back-door nationalisation is a by-product of the Bill, we are still opposed to that.
This is not so, in this sense, for this purpose, for this Bill. Quite apart from the cases where the party opposite has taken equity in companies, we have the first case coming up, if the Bill passes the House and gets the Royal Assent. We will have the opportunity of knowing then whether the House wants to reject this first proposal—the International Computers proposal—in which equity is a feature, as agreed between the parties, and subject to the approval of the House.
I shall await with the keenest interest the opportunity to test the hon. Gentleman's political judgment, and to know whether the party opposite will vote against the International Computers Order when it comes before the House. If this Bill gets through, when this comes before the House we shall see what divides the parties. We have heard that the hon. Gentleman will be voting against the Order.
There is a large element of hypocrisy in what is said about the relationship between the Government and industry and about equities. There are a number of firms operating in areas where some sort of Government help is required. On one day the heads of these firms are very happy to discuss this with us. This is not financing of lame ducks or white elephants, but the serious advanced technological projects which are facing competition from abroad, possibly through foreign procurement. These people come to discuss with us and it is obvious that public money will be required through equities, or in some other way. The computer arrangement has this feature. This is not only non-controversial, but is accepted as being one of the possibilities that ought to be discussed.
This has gone on while there have been "noises off" from those who say that this is fundamentally wrong and that the Government ought to keep out of industry. Sometimes the very people saying this are those with whom we have been dealing. I would like to say to industrialists, and those who engage in the double game of recognising the reality of the need for partnership and then make speeches denouncing the partnership that they have proposed, that this is something which does not reflect great credit on them and does not damage us. The Government are interested only in the industrial success of the project.
Will the right hon. Gentleman tell us whether, having obtained this power to take equities, he will undertake never to use pressure to obtain equities in a company that is unwilling to give them? It is obviously possible for a company which badly requires cash finance to be faced by the Minister with the demand that this finance should be in the form of equities rather than anything else. What is his attitude?
If the hon. Gentleman is asking me to give an assurance that where public money is concerned I shall always be guided by the views of the directors of the company with which I am dealing, then it will not be possible to give such an assurance.
I do not quite know what sort of pressure it is if one says to someone, "This would be interesting. Does it interest you?" If they say, "No", and one then goes away, that is not a very formidable pressure. No minister can give an undertaking that he would always give money to companies in the amounts they wanted without any consideration of the proper interests involved. It was an unhelpful intervention.
One question asked was whether we had anticipated legislation by the computer arrangement. I say "arrangement". It is, in fact, a draft agreement, subject to the consent of the House if this Bill gets the Royal Assent. I can give an assurance that, although the planning has been based upon the assumption and belief that the House will pass the Bill and, therefore, will be able to look at the Order, no Minister could give a commitment until the Order has come forward and received the assent of the House.
If hon. Members will reflect on what would happen if the Lords' Amendments were carried, the computer deal would collapse in a way that would do grave damage to that particular project. Further legislation would be required. This legislation would come before the House and occupy a lot of time when we are told there is a congestion of legislation. It would merely duplicate the ground rules, in relation to computers, that are provided for in the Bill. If hon. Members opposite are really urging me to say that aid for industry is to be so rare an episode that each should be looked at legislatively as a separate Bill, they are asking for something which is not very sensible.
Relations between Government and industry are getting closer. This is why I think the Bill has merit. The Bill gives the House the opportunity to debate at length the ground rules which ought to operate, including a discussion about the circumstances under which equity is appropriate. After that every Order has to come forward and the House can say, "Yes, we accept it in this case. No, we do not accept it in the other."
This equity provision does not enable me to take equity in any company. Every case will come before the House and all the questions about discounted cash flow and so on, will be debated. I can promise—and this applies to all the projects I bring forward—that the information which will be made available to the House on the International Computers Order, subject to the Bill being enacted in its present form, will contain the fullest details ever given to Parliament by any Government of any involvement of public money in an industrial project.
I have written to the hon. Member for Eastleigh (Mr. David Price), who leads for the Opposition on this matter—he will not have received the letter yet, because I have not signed it—informing him of my intention to discuss ways and means by which we can see that this information is made available. I have done this because he and I agreed in Committee that it was important that it should be done. The House will have an opportunity of a kind that it has never had in the past to discuss in detail, with all the information that in this case will be available to shareholders and to others involved, whether it wants equity to be a part of the computer company which has been set up.
Has the right hon. Gentleman considered the possibility, when he lays a scheme before the House and it comes to the question of an Order, of making two Orders where equity is involved?
It is no use the hon. Gentleman asking me at this stage, because we have discussed the ground rules on the Bill. I could not, even if I agreed to, introduce such an Amendment.
One of the main objects of the Bill was to see that Parliament considered at length and at leisure how money should be injected into industry and in what form and, in addition, should have an opportunity of considering whether in every case it was satisfied that that was done. Hundreds of millions of pounds have been put into the aircraft industry by successive Governments without ever coming to Parliament. There was no authorisation for launching aid procedures or for the enormous expenditure that went into that industry. In this non-aero-space, non-nuclear sphere of engineering, in which the Government think they will be required to operate, we are bringing forward a procedure which gives the House a right, which it has never had before, to look at these things carefully. This is an improvement in parliamentary control, as well as being a development of the partnership between Government and industry.
The hon. Member for the Cities of London and Westminster (Mr. John Smith), bringing considerable knowledge to the subject, raised a number of points for the information of the House. Some I have tried to deal with, but there are two I wish to deal with specifically. He said that equity was not always the most profitable way of investing money. Of course, he is right. In deciding whether to take an equity holding the Government will have to have regard, first, to the success of the project it wishes to sponsor and, secondly, to the consideration of getting the best value for the shareholders' money.
One of the reasons why we have not made use of the powers relating to the Shipbuilding Industry Board, which are identical to the ones we are discussing now, is that in no case brought forward by the Shipbuilding Industry Board has equity been the most appropriate means by which this money should be made avail- able. It is not the object of the exercise to get equity. But, if it is right to go for equity and it is agreed by the company, I see no reason why the noble Lords should amend the Bill to deny to this House, the firms and the Government, the right to include equity as a discussable possibility between a firm and the Government Department.
The hon. Member for the Cities of London and Westminster also raised the question of the undesirability of having Government directors. I wonder whether he has not misunderstood the arrangements under which Government directors are appointed.
I understood that the hon. Gentleman had raised a number of points, one of which was that this would be undesirable. It was raised by one hon. Member. I apologise if it was not the hon. Member for the Cities of London and Westminster.
Our dealings with companies, whether there is a Government director or not, are linked through the chairmen. It is right that, even though there may be a Government director, we should deal with the chairman in each case. The role of the Government director, under existing companies law, is to represent the interests of the Government. That is why the industrial investment scheme has been brought forward.
The hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) raised the question of political pressures. All Governments are subject to political pressures. But I assure the hon. Gentleman that political pressures are not limited to companies in which the Government have a shareholding. As the House knows, British industry—particularly engineering—is going through a serious period of rationalisation. The Table Office—I make no complaint about this; this is one of the conventions of the constitution which has developed— will more or less accept, and I accept, Questions about what happens in industry whether we have a shareholding or not.
All Governments today, in a world where industry interacts on Government, are bound to be subject to political pressures, whether a firm is privately owned, publicly owned, or is a private company with some public holding. Any fear or hope the hon. Gentleman might have that one could in some way avoid political pressure by not having any public shareholding is mistaken. He really should exchange jobs to see what political pressures come from people who are anxious about their jobs, even where they work in firms in which the Government have no interest at all.
Finally, I would say a word or two to the hon. Member for Cambridge (Mr. Lane), who contributed a great deal to our debates in Committee. He again raised the great question of public enterprise and nationalisation. I have said before, and perhaps I may say it again to put the record straight, that the concept of public enterprise as it is being used by my Department—except for Short's or Beagle; I am not a holder of shares in a large way—is not confined to the idea that we should, in certain circumstances, as we have with steel and will do in other areas, nationalise an industry. The concept of public enterprise which we have brought forward is that the Government should be able to create agencies in which, with the help of public money, enterprising things can be done.
The first of these goes back to the N.R.D.C., in 1948, in which the Government gave money to a group of public corporations manned by people with industrial experience and said, "Will you operate in this field?". Much of what was said about the Industrial Expansion Bill and the dangers of equity holding was said at the time the N.R.D.C. was set up, but that Corporation is now as respectable as the W.V.S. In the old days it was the monster created by a Labour Government to seize control of industry. If one reads the speeches made then, one sees that some extraordinary bogeys were produced.
Since then we have had the I.R.C., and all the debates about whether it was concerned principally to extend public ownership. As I said on Second Reading—and we have tried to get it across on many occasions—its purpose is to rotate public holdings through the public sector to leave industry modernised and stronger, and to use equity if it is appropriate to do so. Now we have the Shipbuilding Industry Board, which is the use of public enterprise rotating through the shipbuilding industry to leave it more efficient, but not with the object of getting a majority holding.
We have similar proposals under the Industrial Expansion Bill. This is a form of entrepreneurial activity by public agencies, which are not even controlled in the direct sense by my Department. Where there is a consensus of opinion after a lot of debate, one gets a total of public money, and one then devolves responsibility for the implementation of that policy on industrialists like Sir William Swallow of the Shipbuilding Board, Sir Frank Kearton, of the I.R.C., and Sir William Black, of the N.R.D.C. If only hon. Gentlemen opposite could grasp that this is also public enterprise, and realise that we are engaged in the process of devolving industrial policy on to people with industrial experience, a lot less nonsense would be talked about the objects of Measures such as this.
I am not saying that this is the limit to which we shall go. In our dealings with industry we may find it necessary to come forward with a variety of other Measures. In terms of regional discrimination, we have done so. In terms of investment grants, R.E.P., and so on, there are a number of Measures which it is possible to bring forward. The purpose of the Bill is to get an agreed consensus about the relations between Government and industry, to include the possibility of equity if that is right, and then to invite industrial boards, or industrialists, to implement it by general agreement. If hon. Gentlemen opposite would grasp what we are trying to do, their criticisms of the Bill would be a little more helpful.
It means exactly what it says, that we take a holding to achieve a result, and when the result is achieved we bring it out again. That is what we have been urged to do by hon. Gentlemen opposite.
I hope that the House will not agree with the Lords in the Amendment, because if it is accepted it will handicap the freedom of industry, of the Government, and of Parliament to reach a sensible solution to some of the problems with which we shall all have to deal.
|Division No. 206.]||AYES||[7.23 p.m.|
|Armstrong, Ernest||Hannan, William||Orme, Stanley|
|Atkinson, Norman (Tottenham)||Harper, Joseph||Oswald, Thomas|
|Barnett, Joel||Harrison, Walter (Wakefield)||Pannell, Rt. Hn. Charles|
|Benn, Rt. Hn. Anthony Wedgwood||Hart, Rt. Hn. Judith||Park, Trevor|
|Bidwell, Sydney||Hazell, Bert||Parker, John (Dagenham)|
|Binns, John||Hilton, W. S.||Parkyn, Brian (Bedford)|
|Bishop, E. S.||Hooley, Frank||Pavitt, Laurence|
|Blackburn, F.||Houghton, Rt. Hn. Douglas||Peart, Rt. Hn. Fred|
|Blenkinsop, Arthur||Howarth, Harry (Wellingborough)||Pentland, Norman|
|Booth, Albert||Howell, Denis (Small Heath)||Perry, George H. (Nottingham, S.)|
|Braddock, Mrs. E. M.||Howie, W.||Prentice, Rt. Hn. R. E.|
|Bray, Dr. Jeremy||Hughes, Rt. Hn. Cledwyn (Anglesey)||Price, William (Rugby)|
|Broughton, Dr. A. D. D.||Hughes, Emrys (Ayrshire, S.)||Rees, Merlyn|
|Brown, Rt. Hon. George (Belper)||Hughes, Hector (Aberdeen, N.)||Reynolds, G. W.|
|Brown, Bob (N'c'tle-upon-Tyne,W.)||Hunter, Adam||Roberts, Gwilym (Bedfordshire, S.)|
|Brown, R. W. (Shoreditch & F'bury)||Hynd, John||Robinson, Rt. Hn. Kenneth(St.P'c'as)|
|Buchan, Norman||Janner, Sir Barnett||Robinson, W. O. J. (Walth'stow, E.)|
|Butler, Herbert (Hackney, C.)||Jeger, Mrs. Lena (H'b'n & St.P'cras, S.)||Roebuck, Roy|
|Callaghan, Rt. Hon. James||Johnson, James (K'ston-on-Hull, W.)||Rogers, George (Kensington, N.)|
|Carmichael, Neil||Johnston, Russell (Inverness)||Ross, Rt. Hn. William|
|Castle, Rt. Hn. Barbara||Jones, Rt. Hn. Sir Elwyn (W.Ham, S.)||Rowlands, E. (Cardiff, N.)|
|Chapman, Donald||Judd, Frank||Shaw, Arnold (Ilford, S.)|
|Concannon, J. D.||Kelley, Richard||Sheldon, Robert|
|Crossman, Rt. Hn. Richard||Kerr, Mrs. Anne (R'ter & Chatham)||Short, Mrs. Renée (W'hampton, N. E.)|
|Dalyell, Tarn||Ledger, Ron||Silkin, Rt. Hn. John (Oeptford)|
|Davidson, James (Aberdeenshire, W.)||Lee, Rt. Hn. Frederick (Newton)||Silkin, Hn. S. C. (Dulwich)|
|Dell, Edmund||Lee, John (Reading)||Silverman, Julius (Aston)|
|Dickens, James||Lestor, Miss Joan||Skeffington, Arthur|
|Dobson, Ray||Lomas, Kenneth||Slater, Joseph|
|Doig, Peter||Loughlin, Charles||Small, William|
|Dunnett, Jack||Lubbock, Eric||Snow, Julian|
|Dunwoody, Mrs. Gwyneth (Exeter)||Lyon, Alexander W. (York)||Stonehouse, John|
|Dunwoody, Dr. John (F'th & C'b'e)||MacColl, James||Swain Thomas|
|Eadie, Alex||Macdonald, A. H.||Swingler, Stephen|
|Ellis, John||Marsh, Rt. Hn. Richard||Taverne, Dick|
|English, Michael||Mason, Rt. Hn. Roy||Thomas, Rt. Hn. George|
|Evans, loan L. (Birm'h'm, Yardley)||Mendelson, J. J.||Tinn, James|
|Faulds, Andrew||Mikardo, Ian||Urwin, T. W.|
|Fletcher, Ted (Darlington)||Millan, Bruce||Varley, Eric G.|
|Foley, Maurice||Miller, Dr. M. S.||Wallace George|
|Foot, Michael (Ebbw Vale)||Mitchell, R. C. (S'th'pton, Test)||Wellbeloved, James|
|Forrester, John||Molloy, William||Whitaker, Ben|
|Fowler, Gerry||Morgan, Elystan (Cardiganshire)||Whitlock, William|
|Fraser, John (Norwood)||Morris, Charles R. (Openshaw)||Williams, Alan (Swansea, W.)|
|Freeson, Reginald||Morris, John (Aberavon)||Williams, Alan Lee (Hornchurch)|
|Galpem, Sir Myer||Moyle, Roland||Winnick, David|
|Garrett, W. E.||Murray, Albert||Winstanley, Dr. M. P.|
|Gray, Dr. Hugh (Yarmouth)||Newens, Stan||Yates, Victor|
|Grey, Charles (Durham)||Ogden, Eric|
|Griffiths, Rt. Hn. James (Llanelly)||O'Malley, Brian||TELLERS FOR THE AYES:|
|Griffiths. Will (Exchange)||Oram, Albert E.||Mr. Ernest G. Perry and|
|Grimond, Rt. Hn. J.||Orbach, Maurice||Mr. Neil McBride.|
|Allason, James (Hemel Hempstead)||Clark, Henry||Giles, Rear-Adm. Morgan|
|Atkins, Humphrey (M't'n & M'd'n)||Clegg, Walter||Goodhew, Victor|
|Balniel, Lord||Cooper-Key, Sir Neill||Griffiths, Eldon (Bury St. Edmunds)|
|Bennett, Dr. Reginald (Gos. & Fhm)||Corfield, F. V.||Gurden, Harold|
|Biffen, John||Craddock, Sir Beresford (Spelthorne)||Harris, Frederic (Croydon, N.W.)|
|Biggs-Davison, John||Crouch, David||Harrison, Col. Sir Harwood (Eye)|
|Birch, Rt. Hn. Nigel||Deedes, Rt. Hn. W. F. (Ashford)||Harvie Anderson, Miss|
|Blaker, Peter||Drayson, G. B.||Hastings, Stephen|
|Boardman, Tom (Leicester, S.W.)||Elliott, Cant. Walter (Carshalton)||Higgins, Terence L.|
|Body, Richard||Elliott, R. W. (N'c'tle-upon-T,N.)||Hogg, Rt. Hn. Quintin|
|Boyd-Carpenter, Rt. Hn. John||Emery, Peter||Holland, Philip|
|Boyle, Rt. Hn. Sir Edward||Errington, Sir Eric||Howell, David (Guildford)|
|Brinton, Sir Tatton||Fletcher-Cooke, Charles||Hunt, John|
|Brown, Sir Edward (Bath)||Fortescue, Tim||Iremonger, T. L.|
|Carr, Rt. Hn. Robert||Foster, Sir John||Kershaw, Anthony|
|Kirk, Peter||Percival, Ian||Tapsell, Peter|
|Kitson, Timothy||Pink, R. Bonner||Taylor, Sir Charles (Eastbourne)|
|Knight, Mrs. Jill||Powell, Rt. Hn. J. Enoch||Taylor,Edward M.(G'gow,Cathcart)|
|Lane, David||Price, David (Eastleigh)||Vaughan-Morgan, Rt. Hn. Sir John|
|Legge-Bourke, Sir Harry||Prior, J. M. L.||Weatherill, Bernard|
|McAdden, Sir Stephen||Pym, Francis||Wells, John (Maidstone)|
|Maclean, Sir Fitzroy||Rhys Williams, Sir Brandon||Whitelaw, Rt. Hn. William|
|Maddan, Martin||Ridley, Hn. Nicholas||Williams, Donald (Dudley)|
|Mawby, Ray||Rossi, Hugh (Hornsey)||Wolrige-Gordon, Patrick|
|Miscampbell, Norman||Royle, Anthony||Wood, Rt. Hn. Richard|
|Morgan, Geraint (Denbigh)||Russell, Sir Ronald||Worsley, Marcus|
|Neave, Airey||Scott, Nicholas|
|Noble, Rt. Hn. Michael||Sharples, Richard||TELLERS FOR THE NOES:|
|Page, Graham (Crosby)||Silvester, Frederick||Mr. Reginald Eyre and|
|Page, John (Harrow, W.)||Smith, Dudley (W'wick & L'mington)||Mr. Anthony Grant|
|Peel, John||Speed, Keith|
As the right hon. Gentleman implied, the subject of the Amendment was largely covered in our last discussion, so I will be brief, especially as other hon. Members wish to get on to subsequent business. Whether the Government's proposal is carried or the Lords' method remains, there will be a restriction on what the Government can do in the matter of equity, because it is covered by the earlier part of subsection (2), which provides that a competent authority may be authorised to provide "financial support in any form". That seems to over-ride the more limited concession in paragraph (e).
The right hon. Gentleman mentioned his computer Order and challenged our line on it. It depends on the nature of the Order. I am grateful for his offer to discuss it with me. The Order will be unamendable, although there may be one feature, that relating to equity, which we do not like. So, on the Government's insistence on the policy merger—
I am obliged. I was worried for a moment.
If their Lordships' removal of paragraph (e) is to be reversed, we should then have to discuss the Order which would be made. Of the £17 million of public money which is to go into the venture, £13½ million will be a grant and only £3½ million will be on equity, so only that amount will be at risk in relation to the Amendment.
Without wishing to anticipate the debate on the Order, the whole argument will be, if the hon. Gentleman objects to the equity element, that we must give the £13½ million research and development money without getting any return for it. But this will come forward when the Order is discussed. If the Amendment were accepted, it would put in peril the preparation of schemes of this kind even for the consideration of the House.