Herbert Limited

– in the House of Commons at 12:00 am on 2nd December 1975.

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11.16 p.m.

Photo of Gerald Kaufman Gerald Kaufman Parliamentary Under-Secretary (Department of Industry)

I beg to move, That this House authorises the Secretary of State to pay, or undertake to pay, sums not exceeding £26,179,765 by way of financial assistance in respect of the acquisition of share capital in Herbert Limited under section 8 of the Industry Act 1972, as amended by section 22 of, and Part I of Schedule 4 to, the Industry Act 1975. At the outset I should like to say how sorry I am that the hon. Member for Bridgwater (Mr. King) is not well enough to take part in this debate. I am sure that all hon. Members wish him a speedy recovery and will welcome the hon. Member for Tonbridge and Mailing (Mr. Stanley) in his place.

We are now coming to the end of the long process of re-establishing Alfred Herbert on a sound financial footing to enable it to work towards a full recovery. It was announced on 29th October 1974 that the Government proposed to guarantee an increase in the company's overdraft to enable it to carry on business while proposals for its future were worked out. These guarantees were given under Section 8 of the Industry Act 1972 and were kept within a limit of £5 million while examination of the company's problems proceeded.

A very full investigation was carried out by consultants working in conjunction with both management and employees in the company. A detailed report was submitted to the Government showing that the company's problems were serious and deep-seated but that strategies could be devised for a return to profitability. The Government concluded that a basis existed for seeking to restore the company, and on 9th July we announced the decision to make available up to £25 million by way of assistance in the course of a capital reconstruction. The House approved a resolution authorising my right hon. Friend to increase the temporary guarantees up to a maximum of £15 million while the reconstruction was negotiated.

We are now at the point where the House's approval is required for the provision of assistance on a permanent basis. A scheme of arrangement under Section 206 of the Companies Act has been published. It was approved at a meeting of the ordinary shareholders of Alfred Herbert Ltd. on 24th November. If the House approves the resolution, the sanction of the court will be sought at a hearing on 8th December. The scheme would then be implemented as quickly as possible.

The scheme provides for a new company, Herbert Ltd., to which the Government will provide £26,179,765 by means of acquisition of shares, whereupon existing guarantees will be withdrawn. Of this sum, Herbert Ltd. will use £1,179,765 to purchase all the ordinary shares of Alfred Herbert Ltd. at a price of 6p per share. The remaining £25 million, less expenses, will be made available to Alfred Herbert Ltd. partly by way of new equity and partly in the form of loans. Herbert Ltd. will be a holding company wholly owned by the Government, and the Government's holding will forthwith be transferred to the National Enterprise Board. The equity of Alfred Herbert Ltd. will be wholly owned by Herbert Ltd., and Alfred Herbert will continue as the operating company.

In any strategy for the future prosperity of this country, engineering is bound to have a fundamental role. Within engineering, the machine tool industry, providing the tools and the manufacturing know-how, is of crucial importance. Directly or indirectly, the machine tool industry contributes to every field of manufacture, and there can be little argument that we need a healthy machine tool industry. This is why the Government announced in August a scheme of assistance for this industry under Section 8 of the Industry Act 1972.

It does not follow that every machine tool manufacturer must be supported, whatever its performance and prospects. But there has already been a serious contraction of the industry following the previous recession. We took the view that the loss in addition of a company as large, in its context, as Alfred Herbert would be a serious blow to the industry. The traditional skills of the company which were the foundation of its proud reputation in the past are still needed and will continue to be needed in the course of the re-equipment and regeneration of British industry.

It has to be recognised that the problems which have caused the company's record of heavy losses for the last few years are serious and deep-seated. Following the joint examination of these problems last winter, there are now few illusions in the company about what needs to be done. There are practical problems which will need determined attention, and there are painful decisions to be taken, because it is plain that the company is overstaffed in relation to its output and, moreover, has been diffusing its energies over too wide a range of products. The company has to be slimmed down and must concentrate on the products with a promising future.

The extent of reorganisation and change in methods that is required is not easy to carry through successfully. But there are also important assets. There are some good, competitive products with advanced technology, there is a fund of experience and technical skill, and, above all, there is a loyal work force anxious to be given a lead to restoring the company. A notable feature in all our consultations has been the very responsible and constructive attitude of the employees at all levels and of their trade union representatives. The task should not be underrated, but I believe that, under the guidance of the National Enterprise Board, a striking success is possible.

It has been suggested that the £25 million we are allocating in assistance will disappear in paying off existing debts. This is not so. As I said in answer to a Question on 25th November, less than half of this money will be devoted to reducing existing debt. The remainder will be available for working capital and investment in fixed assets.

Photo of Mr John Biffen Mr John Biffen , Oswestry

I have no wish to anticipate what may be in the remarks of the Under-Secretary of State, but will he quantify the "striking success" which he thinks lies within the potential of the company? Will he give us some idea of the target returns on capital that are being sought by the National Enterprise Board for the revised company?

Photo of Gerald Kaufman Gerald Kaufman Parliamentary Under-Secretary (Department of Industry)

These are matters for the company in consultation with the National Enterprise Board. The hon. Gentleman has asked me for quantification, which I am not able to provide him with at this stage.

Photo of Mr Michael Heseltine Mr Michael Heseltine Shadow Secretary of State, Shadow Secretary of State for Industry

We were told that the Government would decide the rates of return for the National Enterprise Board, not that the Government would leave it to the NEB and its subsidiary companies.

Photo of Gerald Kaufman Gerald Kaufman Parliamentary Under-Secretary (Department of Industry)

This is a subsidiary of the NEB; it is not the NEB. The hon. Member for Henley (Mr. Heseltine), whose multifarious participation in our proceedings this evening is greatly appreciated, should recognise that fact as he served for 100 hours in Committee on the Industry Bill which set up the NEB.

Photo of Mr John Biffen Mr John Biffen , Oswestry

Will the hon. Gentleman give an indication of the factors in prospect which enable him to talk in terms of a "striking success"? What is to be the nature of the reorganisation, what are the limits which it is believed will bring a "striking success", where are the markets, what undertakings have been established in respect of reorganisation? Surely the House deserves at least that basic outline of information.

Photo of Gerald Kaufman Gerald Kaufman Parliamentary Under-Secretary (Department of Industry)

I spoke earlier this evening about the schizophrenia on the Conservative Benches. Throughout today we have had great and ominous warnings from the Conservative Party

Photo of Gerald Kaufman Gerald Kaufman Parliamentary Under-Secretary (Department of Industry)

The hon. Gentleman should contain himself. I am attempting to answer the question with the seriousness that the hon. Member for Oswestry (Mr. Biffen) always merits, unlike the hon. Member for Pembroke (Mr. Edwards). I was saying to the hon. Member for Oswestry that throughout today we have had complaints from his party of the dangers of constant fiddling Government interference in companies which are in the public sector, and now we are being asked to undertake this kind of "fiddling Government interference" in a company in the private sector. We cannot do this, because what we are doing is setting up a subsidiary of the NEB which will proceed in consultation with the NEB until it reaches commercial viability, which is what we seek.

The hon. Gentleman quite fairly asked about the prospects. Despite the hon. Gentleman's well-known and always consistent and honourable views, I think that he will accept that it would be very dangerous if the manufacturing base in the machine tool industry in this country were further to contract so that when the economic upturn does come we are in the position of having to import rather than having our own manufacturing capability. I draw the hon. Gentleman's attention to a report in The Times today about the problems of the machine tool industry in which the Director of Production Engineering for British Leyland Cars has said that the machine tool industry is already contracting to a dangerous level.

Photo of Gerald Kaufman Gerald Kaufman Parliamentary Under-Secretary (Department of Industry)

The hon. Member wishes me to give way to him. I shall gladly do so, but I must tell hon. Members that the more I give way, the less time there will be in the debate for other hon. Members to speak, because, as the hon. Gentleman knows, there is a limitation on this debate. However, I readily give way to the hon. Gentleman.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

I am grateful to the hon. Gentleman. We are, as it were, giving £26 million for Alfred Herbert, and we are told that there is to be this "striking success", perhaps. Ought we not, as the providers of the capital, be given some estimate as to what rate of return we might expect, or at least what the Under-Secretary considers to be a striking success—a return of 10 per cent., 20 per cent. or 30 per cent. would be a striking success—so that we may have some idea of how to justify this expenditure to our constituents, who are producing the money by their taxes?

Photo of Gerald Kaufman Gerald Kaufman Parliamentary Under-Secretary (Department of Industry)

A striking success would be a movement towards profitability by this firm and the ability of this firm, while providing employment for people in an area in which the unemployment rate is too high, to manufacture machine tools which will be necessary for our manufacturing industry—including, as we very much trust, British Leyland—as the economic upturn comes. I am afraid that I cannot add to what I said to the hon. Member for Oswestry.

I was saying that, as I said in answer to a Question on 25th November, less than half of the money specified in this motion will be devoted to reducing existing debt. The remainder will be available for working capital and investment in fixed assets. The management has expressed the view that several million pounds more may be required, and we have been pressed by the unions to increase the total of assistance. We have had to make it clear that the total announced in July remains the limit of what the Government are willing to provide, and the management must, there-fore, plan its strategy on that basis. It is certainly the management's intention to keep within the bounds of the finance that is being made available to it.

Photo of Gerald Kaufman Gerald Kaufman Parliamentary Under-Secretary (Department of Industry)

I shall not give way again. I have given way many times, and there are hon. Members on both sides of the House who are interested in this subject, including some of my hon. Friends who have constituency interests and who have a right to participate in the debate.

Of course, as I have said, there must be uncertainty about financial forecasting for a year or more ahead, and the market is more than usually uncertain. If, in the event, the management believes that there is a case for investing any more money, this is something that it will have to put to the National Enterprise Board.

There has been concern about the need for redundancies, following a warning by the management that employment might need to be reduced by as many as 1,500. This was obviously a matter for great concern not only among the employees affected but also in the local communities, which, as I have said, already face a high level of unemployment. But it was plain from the investigations carried out last winter that a reduction was a prerequisite for turning the company round, and this was recognised by the employees' representatives at the time, who took a very realistic and co-operative view. I am glad to say that this readiness to co-operate for the benefit of the company still prevails. There have been hard negotiations between the trade unions and the management, and a trade union delegation also discussed the problem with my right hon. Friend the Secretary of State. I understand that agreement has now been reached on acceptable terms for achieving the reduction required. It has also now been established after more detailed work that, even if it should prove impossible to dispose of the grinding machine business at Red Lane as a going concern, the number of redundancies required will be between 1,100 and 1,200, which is less than was originally forecast. This is a matter on which discussions are still proceeding.

It has been widely accepted that it would have been unwise to impose upon this company—and here I come to points which have been raised by hon. Members—a particular strategy, to determine which products and sites should be retained and which should be abandoned. These are complex decisions which the strengthened management has to reach and carry through in full consultation with the employees. It knows that it has to steer a course that avoids two dangers. On the one hand, it needs to reduce the excessive overheads and the losses resulting from a dissipation of resources over too wide a front—

Photo of Mr Tom Litterick Mr Tom Litterick , Birmingham, Selly Oak

I am puzzled and not a little disquieted by the remarks which my hon. Friend has just made. I understood that an agreement, called a white book agreement, had some time ago been reached between the management and unions concerned in Herberts, which involved some rationalisation of the organisation and some general running down of the labour force, but not to the extent indicated in my hon. Friend's remarks. I should like to be corrected if I am wrong, but can my hon. Friend say what the status of the white book agreement now is? It seems to me that it is the only extant agreement between the unions and the management involved in the Herbert organisation. If that were to be unilaterally abrogated, it would be very disquieting.

Photo of Gerald Kaufman Gerald Kaufman Parliamentary Under-Secretary (Department of Industry)

My hon. Friend is right to voice any misgivings he may have on behalf of his constituents. It is extraordinary that when hon. Members raise serious matters of employment affecting their constituents hon. Members opposite sit and titter.

Photo of Gerald Kaufman Gerald Kaufman Parliamentary Under-Secretary (Department of Industry)

I will answer the question, but not at the dictation of the hon. Member for Hertfordshire, South (Mr. Parkinson). My hon. Friend's misgivings are not justified. The situation, as I sought to illustrate, is that when the original discussions were taking place, a certain level of redundancies was expected. What I have been able to say tonight is that that level of redundancies, I am glad to say, turns out to be smaller than was expected and accepted by the work force. This is one of the things for which we are very much obliged to the work force, because they have been negotiating in a constructive and helpful way, knowing that redundancies were necessary if Alfred Herbert was to survive on the financial basis laid down, and I am pleased to be able to say that the redundancies are fewer than was expected.

I was saying that, while it is necessary to reduce the excessive overheads, at the same time the company cannot afford to reduce its activities to a level too low to be economic or commercially effective. I am confident that the company can find its proper place in a strengthening British machine tool manufacturing industry, and I invite the House to approve the motion.

11.34 p.m.

Photo of John Stanley John Stanley , Tonbridge and Malling

(Tonbridge and Mailing): My hon. Friends and I appreciated the opening remarks of the Undersecretary of State when he referred to my hon. Friend the Member for Bridgwater (Mr. King).

The first point I wish to make about the motion is that the title is not at all correct. It is headed on the Order Paper Financial Assistance for Industry (Herbert Limited)". But, as the House will have gathered from listening to the Under-Secretary, we are not talking about financial assistance. What we are discussing in this debate is outright nationalisation of Alfred Herbert, albeit, I admit, with the shareholders' consent.

We should like to stress that this nationalisation is being carried out under the Industry Act 1975 and not essentially under the Industry Act 1972. If the motion had been brought forward under Section 8 of the Industry Art 1972, it would have been impossible to acquire more than a 50 per cent. interest in the company, whereas 100 per cent. interest is being acquired. In addition, there would have been a statutory obligation on the Secretary of State to dispose of the shares acquired as soon as…it is reasonably practicable to do so. That obligation has disappeared as a result of the 1975 Act. The powers under Section 22 of this Act are being used here for the first time, and it is now possible for the Government to take a majority and permanent interest in a company located anywhere in the United Kingdom by the simple expedient of laying an Order before the House. Many of us feel that this confers an unacceptable degree of ministerial power over which there is inadequate parliamentary control.

We recognise the dilemma the Government faced in deciding their policy towards Herbert. The choice was stark—nationalisation or receivership. Alfred Herbert is a once great British company. It still employs more than 6,000 people, many of whom have a long and loyal association with the company. Its places of manufacture are situated mainly in the West Midlands, which has a high level of unemployment at a time when we have a record national level of unemployment. But, while we recognise the Government's dilemma, it is inexcusable and unacceptable that, having made the decision to nationalise the firm rather than let it go into receivership, the Government have failed to give any reasonable justification or factual evidence for the decision to spend £26 million of taxpayers' money in this way. This was starkly revealed in the non-replies received from the Under-Secretary by my hon. Friend the Member for Oswestry (Mr. Biffen) and my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley).

There is no lack of detailed information available about the company. There have been at least three reports—from the Industrial Development Advisory Board, from the independent consultants Peat, Marwick and Mitchell, and the joint report by the firm's management and unions. It is striking that the Government have not seen fit to publish any of these reports. None of them is available to us.

Many of us felt that the Ryder Report was a pitifully inadequate document, but at least it was available to the House in the discussions on the British Leyland Order and Bill. The Government have been preaching to us incessantly on the virtues of disclosure, but they have disclosed less about the three reports on Herbert than they did about Leyland.

Photo of Mr Leslie Spriggs Mr Leslie Spriggs , St Helens

In view of the hon. Member's criticisms of my hon. Friend's speech, is he saying that the Opposition would have let the British machine tool industry go rather than save it?

Photo of John Stanley John Stanley , Tonbridge and Malling

If the hon. Member will allow me to continue, I shall give our view on how we ought to vote on this motion and our reasons for doing so.

One would have expected the Undersecretary to place the giving of money to Herbert in this way within the context of the Government's overall strategy for the machine tool industry, but now that he has sat down we are none the wiser as to what that strategy is. It appears to be thoroughly contradictory. On 5th August the Secretary of State said that £20 million of taxpayers' money would be made available through the Machine Tool Industry Scheme. It was made clear that this money would be directed towards profitable parts of the industry. The Department of Industry said in a statement: Applicants will need to satisfy the Department on their viability and that the project proposed forms an integral part of a realistic business plan for the next 3 to 5 years whose objective is to enable the company to establish or maintain a worthwhile share in a substantial market as well as an ability to compete effectively and profitably with prospects for future expansion. On one hand, therefore, £20 million was put into a profitable section of the machine tool industry and now, four months later an even greater sum—£26 million—is going into Alfred Herbert, which, on all historic evidence, it patently unprofitable, and on the future viability of which we have had no evidence from the Government tonight. We are dependent on the limited published information available to us, and, therefore, we can conclude only that the outlook for Alfred Herbert must be extremely gloomy.

I invite the House to consider seven facts about the company's position. First, the company has lost a total of £14 4 million over the last four years. Second it has lost a further £3·5 million in the first six months of this year, and the board stated to shareholders on 1st November that losses of this order are continuing. Third, the company has been unable to make a dividend payment since 1971. Fourth, when the company approached the Department of Industry in 1974 for finance it had stated in writing its firm view even then that it would have to cease trading if funds were not forthcoming. We are discussing, therefore, a company which has been insolvent for the last 15 months. Fifth, the Chairman of Alfred Herbert, in an interim statement on 6th October, expressed the view that the rate of intake of orders was only half the rate of current output, which is a fearful trading reflection of insolvency. Sixth, the company's bankers, in a letter to shareholders on 1st November, made it clear that it is not possible to say when the future Herbert Ltd. will be able to pay a dividend on the new shares to be held by the NEB. Finally, IDAB has made a recommendation about the future of this company, which is that it should go into receivership.

It is hardly surprising in light of these grisly facts that the Opposition should have grave doubts about the wisdom of pursuing a further injection of public funds into Alfred Herbert. Even the Secretary of State appears to have considerable reservations about proceeding with the scheme. In the Scheme of Arrangement he has left himself a bolt hole which enables him, if he so chooses, not to operate the scheme at all. Paragraph 3 of the explanatory statement of the Scheme of Arrangement states that one of the conditions which must be satisfied before the scheme can become operative is this: the Secretary of State, not having notified Alfred Herbert, prior to the hearing of the petition to sanction the scheme, that in his opinion there has been a material adverse change, other than as now envisaged, in the financial position and/or prospects of Alfred Herbert. In other words, we are debating an order which deliberately enables the Secretary of State not to implement it.

That seems to be a poor reflection on the right hon. Gentleman's confidence in the scheme. The only basis on which one could reasonably proceed to this expenditure of public money and to sanction the nationalisation of Alfred Herbert tonight is on the strength of clear and tangible evidence that the company can be restored to viability in the near future. That is the only way to provide secure employment for the work force. In the absence of any such tangible evidence, we have no alternative tonight but to vote against the motion.

11.44 p.m.

Photo of Mr George Park Mr George Park , Coventry North East

Whilst I welcome the steps outlined by my hon. Friend the Minister, he has had to admit that behind the euphemism that the company must be slimmed down lies the lamentable fact that before the year ends a further 1,200 people must leave Herbert Machine Tools. That number is in addition to 4,500 people who have been lost to the company since 1970. Three-day weeks and four-day weeks are being worked in all the Alfred Herbert plants, and no injection of money at this stage will affect the position.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

My hon. Friend mentioned 1970. Would he be surprised to know that in 1963, when I was the Labour candidate for Warwick and Leamington, a shop steward who was an elector in that area came to me in great distress, fearing that Alfred Herbert would go into the liquidator's hands if it did not watch out, because it was getting its profits on imports and was not dealing with the new designs necessary to live up to the firm's historic reputation? That was 12 years ago.

Photo of Mr George Park Mr George Park , Coventry North East

I agree with my hon. Friend. Alfred Herbert was a company under the domination of one man, no doubt an object of respect by Conservative Members, who continued to pursue a policy of producing machines which were more and more out-dated and which more and more failed to compete in the markets of the world, but whom the other members of the management were unable to influence. That situation developed over as long a period as the period mentioned by my hon. Friend.

The reply of my hon. Friend the Minister to my hon. Friend the Member for Birmingham, Selly Oak (Mr. Litterick) tended to gloss over the situation concerning the white book agreement. That was an agreement reached in good faith with a previous Minister, with the trade unions and management all fully represented. It stated bluntly that there would be no compulsory redundancies. It is in black and white. I have read the book. There is an element of compulsory redundancy in the redundancies which will take place before Christmas. Redundancy—a better term is "sacking"—is a loss of job, no matter what it is called. With Coventry in its present position, there is nowhere else for the men to go. But undoubtedly they will find other occupations, as they have since 1970, and they will be most reluctant to return to a machine tool trade which cannot offer them reasonable employment at reasonable wages, something that Alfred Herbert has signally failed to do over a long period.

When there is a resurgence of industry, one of the bottle-necks is always the supply of skilled labour. Undoubtedly this will happen again in the case of Alfred Herbert unless something is done about it. The men will go, and their skills are irreplaceable.

I have confidence in the skill and ability of the work-people in that company. I cannot say that I have or had the same confidence in the managements. I use the plural because there have been several managements, many of them now gone, their members protected by substantial golden handshakes from the cold blast of taking responsibility for the faults which they made in the company. I should like my hon. Friend to add up the amounts paid out to former members of management to get rid of services which were no longer wanted and were detrimental to the company.

Following recession, increased demand always outpaces the machine tool industry's ability to meet orders. There fore, we see the situation which applied at Alfred Herbert, and which is all too common in the machine tool trade, of companies finding that they can make more profit from importing machine tools than by using the skilled labour in Coventry and elsewhere in the West Midlands to produce the machines in this country.

No doubt Conservative Members would have been happy to see the company go into liquidation, because there is no doubt that it could have continued to act as an agent and make a profit, if that is the only thing that they care about. This is not the only situation we have to face in the machine tool trade. There are firms now in the machine tool industry which are giving delivery dates of two years. Does anyone imagine that when British Leyland places its orders it will wait two years for a supply of machinery? Of course not. It will import the machinery.

In other cases we find that the technical excellence of our machines has fallen far behind and that companies, in the pursuit of efficiency, are even now having to import machines which designers in this country ought to be able to match and better. Here is an industry which no one will disagree is highly cyclical. I urge the Government to adopt the NEDO suggestion of an investment reserve fund. Only if we maintain the machine tool industry working, producing and stocking machines at times when orders are not available shall we stop this relentless importing of machines.

It is appropriate, in view of the remarks made on the Aircraft and Shipbuilding Industries Bill about nationalisation, that we have here almost a classic case of "private enterprise" failing the workpeople and the work-people having to reap the whirlwind of management mistakes. I understand from my hon. Friend that the monitoring of this company is to be done through the National Enterprise Board. I hope that it will be done thoroughly, because to my knowledge in the recent past this company set out on a production programme which was totally unrealistic and had progressively adjusted downwards. But no one in the buying department thought about adjusting the purchasing of the expensive bits and pieces of modern machine tools such as computer panels. One of the reasons for the problem over cash flow in Herberts is that the stores are full of expensive computer panels which cannot be used until the production programme reaches higher levels. I hope that this monitoring will be thorough and constant, because it is vital that, having put this money in, we make sure that the taxpayer and the workers—who are the same people—get value for their money.

11.53 p.m.

Photo of Mr John Biffen Mr John Biffen , Oswestry

This is a sad occasion. I spent part of my life before coming into this House associated with the engineering industry in the Midlands, and, as the hon. Member for Coventry, North-East (Mr. Park) will recollect, part of my political apprenticeship was served in Coventry. No one can consider the present and immediate past fortunes of Alfred Herbert without feeling a sense of grief that this fate should have overtaken what was once the jewel in the crown of engineering. I very much agree with those who feel that when the story comes to be analysed it will be the management rather than the workers who will bear the major share of the blame.

I am not sure that that kind of recrimination is appropriate this evening. This occasion is sad on a second count also, and that is for the way in which the Under-Secretary has treated the House in presenting the motion. It is quite irrelevant for him to say that there is an aspiration from the Conservative Benches to have detailed Government interference in this company. This is not what is at issue. What is at issue is the question of information. The debate will be about the totally trivial nature of the information presented by the Under-Secretary in seeking the support of the House for his proposals. I suspect that he will find that there will be hon. Members on the Government Benches as well as on the Opposition Benches who feel that this is the moment when Parliament can ask questions and can legitimately expect answers. Hereafter there will be between this House and knowledge of what is happening the institution of the National Enterprise Board. Extra-parliamentary agencies such as that will be a shield which will prevent the hon. Member for Coventry, North-East from prosecuting his questions in the way that he would wish.

If we were a gathering of young Roman Catholic activists at an annual general meeting of Consolidated Goldfields, there would be practically a riot if the chairman sought to obtain money and powers of the kind which the Under-Secretary is seeking on the quality of the information he is prepared to disclose to the House.

I ask hon. Members to consider five points of information which can be legitimately requested from all quarters of the House. No doubt we shall have different ideological attitudes about the quality of the reply that we shall receive, but I imagine that we shall be at one in saying that these are topics which should be ventilated now, for this is the last occasion, in my judgment, when they can be properly ventilated in a parliamentary forum.

First, what is the broad strategy in terms of product rationalisation which has convinced the Under-Secretary of the possibility of a striking success for this company? I should like to know in particular how the forward plan of product relationalisation was related to the investment programme of British Leyland. This is a question of fundamental importance. It must exercise the mind of almost every engineer of any significance in the West Midlands. Why should he not look to a parliamentary occasion such as this for some idea of the product rationalisation of Alfred Herbert and its relationship with the investment programme of British Leyland? Or does he have to hang around the cocktail bar of the Queen's Hotel, Birmingham, or whatever it may be, to get some idea of what is in the various reports referred to by my hon. Friend the Member for Ton-bridge and Mailing (Mr. Stanley) which have not been revealed to this House? It is a discourtesy to this House that it has not been given this information.

Photo of Mr Tom Litterick Mr Tom Litterick , Birmingham, Selly Oak

The Queen's Hotel was demolished a good many years ago.

Photo of Mr John Biffen Mr John Biffen , Oswestry

I accept the correction. I hope that the argument will be more profound than that. It may be some years since I was industrially and politically active in Birmingham, but I served an apprenticeship there which remains with me in a lively form, even if the hostelries have changed. The basic industrial problems remain much the same. I hope that the hon. Gentleman will feel that he has made a valuable contribution to the debate.

Second—this point has been touched on by the hon. Member for Coventry, North-East—what will be the market strategy for Herbert under the new regime? In particular, what will be its market strategy in relation to imports? That is a wholly legitimate question. I dare say that that has outlived the demolition of the Queen's Hotel. I hope that the hon. Member for Birmingham, Selly Oak (Mr. Litterick) will think that it is a perfectly legitimate question to have answered here and now.

Third, what plans are afoot for worker participation in Herbert when it comes under the new regime? The Government could well be anxious to reveal to the investing public the new techniques of worker participation which may have a beneficial consequence.

Fourth—and I regard this as much more serious—how substantial have been the changes in management? If management has been the weakness of Herbert in recent years, that weakness is not remedied by firing the odd field marshal. I suspect that the management weaknesses went to a far deeper level. We are told by the Under-Secretary of State that the management already has alternative strategy which requires considerably more money than we are currently investing. Is that the behaviour of a management which has the confidence of the Undersecretary of State? Is that the behaviour of a management which is substantially the same as has presided over the misfortunes of this company? Is this the request of a management which is substantially transformed? I suspect that those who live in and around Coventry and Birmingham will believe that the management is substantially the same as the management that has been in control over recent years with a number of alterations at board level and not much more. Those are questions which deserve to be answered in some depth.

Fifth, once this company comes under Government control, even through the indirect agency of the National Enterprise Board, there are certain subsidiary activities of the company which cannot be viewed as if they were being conducted by a free enterprise company untouched by the authority of government. I recollect that Alfred Herbert has interests in South Africa. Will the policies that are being pursued in South Africa be affected in any way by the new regime and the new management? That is the kind of question that would be put to the Under-Secretary of State by some of those who have recently been appearing at the annual meeting of Consolidated Goldfields. We in this House should be no less vigilant than are those outside.

The Under-Secretary of State may be right in saying that we have in prospect a striking success for Alfred Herbert. All those who remember the company and have an affection for the engineering tradition of the Midlands will hope that he is right. But we are certainly entitled to know a great deal more about the basis on which the decision is being recommended and undertaken, for the Minister is dealing with a substantial section of the British engineering industry. There was an almost light-hearted cynicism about his speech in introducing the motion—the suggestion that it might easily be mistaken for a contemporary South Sea Bubble—and that will not do. The House is at a crucial point in the relationships it will have with the National Enterprise Board. I fear that what we are seeing this evening will be the first of a number of recommendations, as various industries are brought under the control and authority of the Board. Now is the occasion for the House to insist that it is every bit as important for the information to be made available to the House as it is for it to be made available at the shareholders' meeting. We shall not settle for less.

Photo of Ms Audrey Wise Ms Audrey Wise , Coventry South West

I am surprised at the enthusiasm being shown by the Opposition for the disclosure of information. On the Labour Benches we have been arguing for information to be disclosed but we have not, I am sorry to say, had support from the Opposition. But the hon. Member for Oswestry (Mr. Biffen) is wrong to say that this is the moment for information to be disclosed. Information ought to have been disclosed a long time ago—not simply to this House but to the workers in the company concerned, because it is the workers who stand to lose the most.

But I agree entirely with the hon. Member that more information ought to be given now, especially on the control of management. I noticed that the Minister's attention was distracted when my hon. Friend for Coventry, North-East (Mr. Park) drew his attention to recent failures of management, and so I repeat that we have evidence that in recent months, while the Government already had their eye on Alfred Herbert, the management allowed the tying up of capital by buying in components which cannot possibly be used, and which the workers know cannot be used, for some time to come. The management has taken no steps whatever to introduce rational buying policies.

The monitoring of the company should be extremely thorough, and the workers should know exactly how the Government propose to conduct the monitoring. It will not be sufficient for the Minister to hide behind the National Enterprise Board on this matter, because it involves public money. The Opposition are right when they say that this is public money or taxpayers' money—but the workers at Alfred Herbert have an interest both as taxpayers and as workers. We want to know if there will be more far-reaching changes in management than there is evidence of so far.

It is far better to use taxpayers' money in this way than to use it for unemployment benefit, redundancy pay or supplementary benefits. [HON. MEMBERS: "Not necessarily"] I hope the Coventry papers pick up the remarks that it is not necessarily better to put public money into the machine tool industry than into supplementary benefits and unemployment pay.

Photo of Ms Audrey Wise Ms Audrey Wise , Coventry South West

No. It is a short debate. I must ask the Minister to deal more carefully with the point about redundancies because it is simply not—[Interruption.]

Photo of Mr Myer Galpern Mr Myer Galpern , Glasgow Shettleston

Order. Hon. Members know full well that if an hon. Member does not wish to give way, that is the end of it.

Photo of Ms Audrey Wise Ms Audrey Wise , Coventry South West

One can tell that hon. Members opposite did not learn their debating methods in the Labour or trade union movement, where such disorderly behaviour would not be tolerated.

My hon. Friend the Under-Secretary of State said that the redundancy now intended, of 1,200, is less than originally contemplated. That is not accurate, although I hate to have to say it. The original agreement was for voluntary redundancies and natural wastage of about 800 or 900, spread over 18 months. This was sanctified in an agreement. The figure of 1,500 was the management's unilateral threat.

Photo of Ms Audrey Wise Ms Audrey Wise , Coventry South West

My hon. Friend shakes his head, but we have seen the agreement in black and white, and so has the Secretary of State. I can only suggest that my hon. Friend should complain bitterly about the briefing he has received for the debate if he is not aware of that situation. It is not satisfactory to us to say that 1,200 is less than the threatened figure put by the management. We accept this, and perhaps we are grateful for small mercies, but the mercies are very small and my hon. Friend should not overstate them.

It has been suggested that we are pressing our complaints about the management in a spirit of recrimination. That is not so. Recrimination is not the point. But hon. Members opposite do not hesitate to indulge in recrimination of the fiercest kind against the workers, and they have done so time and again. Yet they are singularly silent about this company's industrial relations record.

Why are hon. Members opposite not trying to explain to us how a company with the most peaceful record of industrial relations—where some senior shop stewards have been working for 35 years and have been on strike, briefly, on only two occasions—is in the situation of Alfred Herbert? Where are the congratulations of hon. Members opposite to the work force? Where are their demands that the company be rescued? We hear none.

However, hon. Members opposite say that it might be preferable to pay unemployment money and supplementary benefit. The workers must learn to show scepticism of accusations that it is strikes which cause the problems of private enterprise. This is a classic case where a company should be singularly successful if success depended on good industrial relations. Much good has it done to the work force!

I ask my hon. Friend to deal a little more with the position of the grinding machine plant at Red Lane, because he rather airily dismissed it. Is it not the case that the plant produces machines used by the British Steel Corporation which, if no longer produced at Red Lane, will have to be imported? Are not the Government concerned about the importation of these machine tools just as much as with the importation of machine tools produced by the remainder of Alfred Herbert?

12.13 a.m.

Photo of Mr Anthony Nelson Mr Anthony Nelson , Chichester

I want to put five questions, on which I want to be satisfied before sanctioning the use of this money.

The first question concerns the terms of the offer being made for the equity shares. Why is an offer of 6p a share being made, totalling £1,179,755, when in the accounts of the company and the prospectus document in October last year the net assets were about £17,600,000 and six months' losses from that date were £3,400,000? Can we be satisfied as to precisely what the value of the company is and why this figure has been struck as compensation to be paid to shareholders? I do not say that it is too much. I do not say that it is too small. There is, however, no evidence in the prospectus, and no evidence has been made available to this House, to justify the figure which has been given.

Let me quote the words of Mr. John Buckley, the chairman, who said: …in the absence of an injection of substantial additional funds, your board would have to put Alfred Herbert into liquidation. That seems to imply that there is virtually a nil value for the shares, and therefore we wonder why something over £1 million is being paid for the equity shares.

Then may I ask the Under-Secretary about the additional funds which may be required over and above those that he seeks to make available tonight? We are told that more than £26 million will be injected into the company. But in the prospectus document which was made available to shareholders, where they were recommended to accept the offer of the National Enterprise Board, the chairman said: To complete the rationalisation and reorganisation programme and commence a programme of capital investment will require funds additional to the £25 million of long-term finance and to those at present available from any alternative source. What alternative sources will there be to raise money over and above that which the Under-Secretary seeks to inject, and will he be returning to this House in the future to request them? What are the demands of the cash flow projections which have been placed before him? Can he underline the assurance given to him in July that no sums over and above the £26 million will be sought from this House for extra capital finance for the company?

May I next ask about the application of the money to be provided? We are told in the prospectus made available to shareholders by the chairman of the company: The £25 million less expenses will be made available to Alfred Herbert partly by way of share capital and partly by way of interest-bearing loans. The Under-Secretary said that half the money to be provided would go to repay loans. Will it go to repay loans which are currently the subject of Government guarantees? The Government have given guarantees to the extent of £11·5 million. Are we still on the hook for that sum over and above the £26 million which we are currently injecting, or will part of that money go to repay loans and, therefore, extinguish the guarantees that we are making available?

What is the status of those loans? There is currently nearly £8·5 million of loans which have been made available, in the 1974 balance sheet, to Alfred Herbert and which are secured loans. How will the loans which Herbert Limited makes available to it rank with regard to those existing loans?

I should also like further details of the company reorganisation. This request has been made by my hon. Friend the Member for Oswestry (Mr. Biffen), but, bearing in mind that the company plan for reconstruction was submitted to the Minister in April, I think we are entitled to know its details.

The chairman of the company has said that the accumulated losses of the company to date can largely be blamed on the steep rise of material costs and the inadequate levels of production in the company. What specific proposals are to be made to tackle both problems?

Finally, what board of management changes are to be made? We have heard expressions of disquiet from both sides of the House about management's performance. The new chairman, Mr. Buckley, has been there only a short time, yet his statements on the performance of the company are not exactly encouraging. It would appear that the company's fortunes have not been reversed under his present board's management. Is his position and that of existing board members being considered? The implication at the moment is that they are not and that simple additions will be made to existing board members.

I apologise for raising these technical matters, but we are being asked on behalf of the taxpayer to spend £26 million and it is proper that, as any commercial banker would seek to do, we seek adequate assurances that this money will be protected and that a reasonable return can be expected from it.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

Order. There are approximately 15 minutes before the winding-up speeches and I hope to call at least two hon. Members in that time.

12.20 a.m.

Photo of Mr Richard Wainwright Mr Richard Wainwright , Colne Valley

The Under-Secretary of State, in his desperate efforts to placate the workers of Alfred Herbert Ltd., seems to have overlooked the appalling impression which his obstinate secrecy will create in other parts of the country—for instance, among workers in other successful machine tool companies.

I have only a few constituents, relatively speaking, who work for successful machine tool companies, but already two or three of them have asked me "What must our companies do to come in for money like this?" Although their companies are successful, because of raging inflation they are finding it difficult to keep up their stocks and to maintain their fixed assets. They could certainly do with a lump of Government money.

As long as the Under-Secretary persists in his obstinate secrecy about the three recent major reports on Alfred Herbert, the work forces of other companies with much better records and trends than Alfred Herbert, which is still losing money at a fantastic rate, are bound to be suspicious about the whole enterprise.

We must also consider the taxpayers. Under the present Government, people on the supplementary benefit level are now paying income tax. That is the great badge of success of this Government. They are charging income tax on people who have scarcely enough to live on anyway. Some of them will be wondering why they are charged tax to maintain a piece of industrial archaeology, a piece of industrial wreckage. It seems an odd way to help the machine tool industry by pouring money into its weakest member. There are plenty of ways of assisting our machine tool industry effectively without bolstering up this concern.

Finally, I come to the worst concern of all: the great risk that, when the State has been panicked into investing so recklessly and massively into this company, which has only one-third of the order book that it needs to keep going, one of its bedfellows in the National Enterprise BoardBritish Leyland—will be pressurised into placing its machine tool orders with Albert Herbert for many of the Alfred Herbert products which should have been abandoned years ago. That is what happened to the airframe industry. Because our airframe industry had become such an enormous State white elephant, British industry was pressurised into buying from it worse bargains than it could have obtained in other parts of the world.

In a period when there is hysteria—temporary, passing hysteria, I think—about foreign imports and when xenophobia is raging over the country, there is a great danger that, supported by that wave of hysteria, the NEB will pressurise British Leyland into an unwise dependence on Alfred Herbert, which in the end will not do Alfred Herbert any good because it will distract its attention from the need to modernise.

I hope that on that point, as well as on the content of the three reports, one of which I believe firmly recommended receivership for Alfred Herbert, we shall have some assurance from the Undersecretary tonight.

12.24 a.m.

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

I understand that the hon. Member for Colne Valley (Mr. Wainwright) represents the Liberal Party on this matter. Let him rest assured that those of us who represent the Coventry area will lose no time in pressing the point that he has made on Liberal candidates, if they stand for any of the Coventry seats in future.

Those of us who represent Midlands constituencies, particularly in the Coventry area, know and understand the precarious unemployment situation now confronting us. Bearing in mind the possible redundancies emanating from British Leyland, Chrysler, GEC and Alfred Herbert, as my hon. Friend the Member for Coventry, North-East (Mr. Park) has said, those of us who represent the areas concerned cannot see any other jobs being available in Coventry for those made redundant. That is the sort of situation that will face those who are made redundant.

I am speaking about highly-skilled men. I am speaking about many of my constituents who have spent 25, 30 and 35 years working for Alfred Herbert. I only wish that some Conservative Members who are so expert in talking about some of the company's accounting statistics could be just that bit more expert about some of the human problems that would be caused if the industry went to the wall. If they would show some concern about some of the human problems as they show concern about some of the financial problems, I think that one or two people might be impressed by the speeches that we have heard tonight.

The history of Labour and Conservative Government support for the machine tool industry is hardly one that fills me with praise. I am bound to say that when my constituents who work at Alfred Herbert have raised with me the subject of imported machine tools paid for with Government grants, I have been sceptical about some of the grant-aided policies which the Labour Party, when in Government, has pursued to assist the industry. I venture to say that Alfred Herbert must have made of some of its profits in the past when importing machine tools with grants made by Labour Governments.

When we consider the history of the machine tool industry, we must come to the conclusion that some of the incursion into British firms' prospects must have been made with the assistance of Government grants supported by the Labour Party. If we are to have assistance given to companies to buy machine tools, I hope that in future it will be given to those which buy British machine tools. I hope that it will discriminate against the import of foreign machine tools and in favour of Alfred Herbert machine tools.

The question which we always ask from this side of the House when we have a debate on these matters—I asked the hon. Member for Henley (Mr. Heseltine) the same question when we were discussing Norton Villiers Triumph and British Leyland, and I am sure we are all eager to put it to him tonight—is what the Opposition would do instead of putting money into a company, instead of taking it into public ownership. We did not get an answer regarding NVT and British Leyland, and we shall not get one tonight.

Very few Conservative Members are prepared to follow their principles consistently, unlike the hon. Member for Oswestry (Mr. Biffen) and some others, but the Conservative Party would rather let Alfred Herbert go to the wall. It would let my constituents be unemployed. That is the logic of what the hon. Member for Tonbridge and Mailing (Mr. Stanley) said from the Opposition Front Bench. That is the logic of every case that the Opposition have made in every debate we have had about putting money into companies. I can only say that their policies have pretty well laid waste the whole of the industrial Midlands since they have been in Opposition. [HON. MEMBERS: "Oh."] Thank God they have not been in Government.

Photo of Mr Leslie Spriggs Mr Leslie Spriggs , St Helens

Do not thank God. Thank the electors.

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

Let us also thank the electors that the Conservatives were never given a chance to put their policies into practice. If we follow through the logic of what Conservative Members are saying, they want the money which the Labour Party pledged to put into British Leyland and which the Government intend to use to resurrect the British motor car industry to be spent on imported machine tools. If they follow the logic of their case, it would be easier on the balance of payments if we did not rescue British Leyland but spent the money on importing cars. If we are to put a large sum of both fixed and working capital into British Leyland before 1982 and if that money is not spent on machine tools made in Britain, the effect on the balance of payments could be almost the same as importing cars directly. I hope that Opposition Members have thought through the logic of what they are saying in advocating that the House should not support Alfred Herbert tonight.

Finally, in order to ensure an adequate supply of machine tools from this company, and in order to ensure an adequate purchasing policy on the part of not only British Leyland but also other companies in this country, I hope that my hon. Friend the Under-Secretary and his right hon. Friend will say something about what kind of counter-cyclical policies they intend to pursue with the machine tool industry. My predecessor in this House, Frank Cousins, inaugurated a few such policies. Unfortunately, many of them were not carried out logically by the Conservatives when they had the chance.

I hope that my hon. Friend the Undersecretary will be able to say something more not only about the continuing support which I hope the Government will give to Alfred Herbert but also about the kind of assistance that the Government will give to British companies to enable them to buy British machine tools. Without some kind of further assistance and without some alteration in grant policy, I am very much afraid that if British companies are to be given Government grants in future they could well be spent on imported machine tools.

12.32 a.m.

Photo of John Stanley John Stanley , Tonbridge and Malling

With the leave of the House, I should like to make some brief comments at the end of the debate to add to the very pertinent questions that have been posed in admirable speeches by my hon. Friend the Member for Oswestry (Mr. Biffen) and my hon. Friend the Member for Chichester (Mr. Nelson) and to add to the important point made by the hon. Member for Colne Valley (Mr. Wainwright), all of which I hope that the Under-Secretary will deal with fully in his reply.

The debate has underlined the total inadequacy of the parliamentary procedures which are now possible under the present Governments Industry Act 1975. Under the Act it is now possible, as we have seen tonight, for the Government to nationalise a company, wholly and permanently, with precisely 90 minutes of debate after 10 o'clock and with no information worth the name being provided to the House. It is patently evident that the House is being treated tonight as a rubber stamp. This should arouse concern in all parts of the House.

The hon. Member for Nuneaton (Mr. Huckfield) appeared to be somewhat confused as to which party was the Government. He has wholly misrepresented the position that we on the Opposition side of the House have been taking up. I ask him to consider one aspect of what is proposed here. It is proposed that £26 million should go to Alfred Herbert. That is actually worth nearly £4,000 for every employee in the company. I suggest to the hon. Gentleman that it is for consideration whether the employees of the company, including his own constituents, might be able to get more secure and more viable long-term employment by being assisted by part of that money at least being relocated into more profitable parts of the machine tool industry rather than remaining in Alfred Herbert, where for all we know the redundancy which seems inevitable now may simply be being deferred. That is a serious option which should be considered, and there is no evidence that the Government have considered it.

I should like to draw the Under-Secretary's attention to two points that were raised by my hon. Friend the Member for Chichester. The first is about the valuation of the shares at 6p a share. Last Friday I asked the Under-Secretary, in a Question, what was the basis for offering a price of 6p for an ordinary share. The Under-Secretary replied: We took into account the company's financial position and the market price of its ordinary shares."—[Official Report, 1st December 1975; Vol. 901, c. 400.] Hon. Members may have been forgiven for thinking that that was a realistic estimate of the value of the shares in the company. I can only tell the House that the company itself takes a totally different view as to the value of its shares. The chairman of the company, in a letter to its shareholders on 1st November, said: I have to advise you that the Board's best estimate, based on a full and careful consideration of all the relevant factors, including an examination of the position by our auditors, Peat, Marwick, Mitchell & Co., is that, in a liquidation, neither Preference nor Ordinary Shareholders could expect to receive any payment in respect of their shares. We therefore ask the Under-Secretary exactly why over £1 million of taxpayers' money is being used to buy shares in a company which the company itself has publicly acknowledged to be worthless.

I turn to the question of the future capital requirements of the company. If the scheme of arrangement goes through, the company will get £25 million of long-term capital. The most disturbing feature of the scheme is that it is acknowledged on all sides that £25 million will not be enough. It is evident that we are not debating the final taxpayers' liability to Alfred Herbert. We are debating simply the first instalment. It is significant that throughout the Press each and every one of the financial commentators has said that £25 million will not be sufficient. This is a view which was expressed in the Financial Times of 29th October, The Times and the Guardian of 3rd November, the Investors Chronicle of 7th November and the Economist of 8th November. There is total unanimity that £25 million will not be sufficient.

As my hon. Friend the Member for Chichester pointed out, the company itself has recognised that £25 million will not be sufficient, and the chairman said to the shareholders on 1st November: To complete the rationalisation and reorganisation programme and commence a programme of capital investment will require funds additional to the £25 million of long-term finance and to those at present available from any alternative source. The Under-Secretary made the extraordinary statement that it was the Government's firm position that £25 million was the ceiling of the Government's liability. How can the Government say that there will be any ceiling to their liability when the company acknowledges that further funds will be needed, and the Government own 100 per cent. of the share capital of the company?

Although there is a sum of money mentioned in the motion, the House is being asked tonight to sign a blank cheque. The Opposition see no case for adding their signature.

I believe that the right course for the Government would be to withdraw the motion. They should then publish, taking out anything which is strictly commercially confidential, the three reports and the Government's own comments on them. Having done that, if they still feel that they wish to proceed, they should bring forward the motion again, which would enable us to have a full and informed debate on this important industrial decision which we are being asked to take.

If the Government will not withdraw the motion, we shall vote against it to-night. We shall do so because the Government have failed to show that this is the best way of helping the machine tool industry and is even a satisfactory way of providing long-term viable employment for those who work in Alfred Herbert. We shall vote against it because the Government have failed to come clean with the House as to what is to be the ultimate total commitment of public funds to Alfred Herbert.

We shall vote against the motion because the Government have so far failed to demonstrate why they are spending over £1 million of taxpayers' money on the purchase of shares which the company has acknowledged to be worthless. We shall vote against it also because we believe that the onus lies firmly on the Government to provide proper justification for the expenditure of public money, and this the Government have failed to do tonight.

12. 39 a.m.

Photo of Gerald Kaufman Gerald Kaufman Parliamentary Under-Secretary (Department of Industry)

With the leave of the House, Mr. Deputy Speaker, may I say that the hon. Member for Tonbridge and Mailing (Mr. Stanley) talked about "coming clean." What those on the Opposition Front Bench have not come clean about is whether they would have let Alfred Herbert go under. The hon. Member for Oswestry (Mr. Biffen) has made his position clear. The right hon. Member for Down, South (Mr. Powell) has made his position clear. What we have got from the Opposition official spokesman is total abnegation. The Opposition will not say whether they would have let the company go under. They will not say whether they would lose for the country the machine tool capacity of this company. They will not say whether they would let the workers in this company become unemployed.

The Conservatives were joined by the hon. Member for Colne Valley (Mr. Wainwright), whose contribution made some Opposition Members look positively progressive. It is all very well for him to attack Government aid of this kind, but Liberal Members come running to the Government for financial aid for their constituencies when they have problems. The hon. Member's own constituency takes up money from the Government's clothing scheme. When he talks about hysteria concerning imports, let him talk to his hon. Friend the Member for Rochdale (Mr. Smith), who comes running to the Government asking for import controls to protect Rochdale.

Photo of Gerald Kaufman Gerald Kaufman Parliamentary Under-Secretary (Department of Industry)

I shall not give way. I have not time. [HON. MEMBERS: "Answer the debate."] I shall naswer the debate in my own way and I shall deal with the hypocrisy of the Opposition Front Bench on this issue.

My hon. Friends have posed the pertinent questions about production and employment. My hon. Friend the Member for Coventry, North-East (Mr. Park), who knows more about this subject than all the Opposition parties put together, rightly asked about the white book agreement, and my hon. Friend the Member for Coventry, Southwest (Mrs. Wise) expressed misgivings about redundancies. The white book agreement, important though it was, was a report submitted to the Government by the management and workers. The Government were not a party to it, but we have encouraged consultations between the company and the workers.

Consultations on redundancies have taken place between the workers and the management. There has been hard bargaining and the result has been accepted by the workers. They realise what would have happened if we had done what the Opposition apparently want and let the company go under.

When Opposition Members talk about prospects for orders, they should realise that the company faces double problems—those spelt out by the hon. Member for Oswestry and the problems of the recession. The management has decided to keep direct workers on short time where necessary in order to be ready for the upturn when it comes. The Opposition show a remarkable attitude by laughing about keeping workers in employment in this counter-cyclical situation so that when the cycle ends we shall have a work force and a capacity in machine tools that will enable us to avoid having to import and putting a burden on the balance of payments for which the Opposition would attack us at that time.

I can tell my hon. Friends that discussions are going on to find a purchaser for the grinding machine plant at Red Lane and that we would like to maintain that capacity if possible.

Photo of Gerald Kaufman Gerald Kaufman Parliamentary Under-Secretary (Department of Industry)

Mr. Buckley was appointed with the first task of finding new executives. With my right hon. Friend's approval he secured Mr. Lees, who took up his post in September. It is his job to strengthen the rest of the management and he is making a start. His main task so far has been involved in decentralisation and simplification.

Photo of Gerald Kaufman Gerald Kaufman Parliamentary Under-Secretary (Department of Industry)

Mr. Buckley and Mr. Lees must have time to assess people before deciding on changes.

A question was put by the hon. Member for Chichester (Mr. Nelson) about Government guarantees. Those guarantees will be withdrawn as soon as this money is made available, and the overdraft borrowing covered by that will be repaid. Other existing borrowing will remain.

Photo of Mr Michael Heseltine Mr Michael Heseltine Shadow Secretary of State, Shadow Secretary of State for Industry

On a point of order, Mr. Deputy Speaker. Since the Undersecretary has not had time to answer any of the questions put to him by my

right hon. and hon. Friends, is there some way in which you can extend the debate in order that we may hear the information to which we are entitled before we take a decision?

Photo of Gerald Kaufman Gerald Kaufman Parliamentary Under-Secretary (Department of Industry)

If the Conservatives did not intervene the whole time, I might get the opportunity to answer more questions—

It being one and a half hours after the commencement of proceedings on the motion, Mr. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted Business):—

The House divided: Ayes 272, Noes 244.

Division No. 8.]AYES[12.47 p.m.
Allaun, FrankDeakins, EricIrvine, Rt Hon Sir A. (Edge Hill)
Anderson, DonaldDean, Joseph (Leeds West)Irving, Rt Hon S. (Dartford)
Archer, PeterDelargy, HughJackson, Colin (Brighouse)
Armstrong, ErnestDell, Rt Hon EdmundJackson, Miss Margaret (Lincoln)
Ashley, JackDempsey, JamesJanner, Greville
Ashton, JoeDoig, PeterJay, Rt Hon Douglas
Atkins, Ronald (Preston N)Douglas-Mann, BruceJeger, Mrs Lena
Atkinson, NormanDuffy, A. E. P.Jenkins, Hugh (Putney)
Bagier, Gordon A. T.Dunlop, JohnJenkins, Rt Hon Roy (Stechford)
Barnett, Rt Hon Joel (Heywood)Dunn, James AJohn, Brynmor
Bates, AltDunnett, JackJohnson, Walter (Derby S)
Bean, R. E.Eadie, AlexJones, Alec (Rhondda)
Benn, Rt Hon Anthony WedgwoodEdge, GeoffJones, Barry (East Flint)
Bennett, Andrew (Stockport N)Ellis, John (Brigg & Scun)Jones, Dan (Burnley)
Bidwell, SydneyEnglish, MichaelJudd, Frank
Bishop, E. S.Ennals, DavidKaufman, Gerald
Blenkinsop, ArthurEvans, Ioan (Aberdare)Kelley, Richard
Boardman, H.Evans, John (Newton)Kerr, Russell
Booth, AlbertEwing, Harry (Stirling)Kilroy-Silk, Robert
Boothroyd, Miss BettyFernyhough, Rt Hon E.Kinnock, Nell
Bottomiey, Rt Hon ArthurFitch, Alan (Wigan)Lambie, David
Boyden, James (Bish Auck)Fitt, Gerard (Belfast W)Lamborn, Harry
Bradley, TomFlannery, MartinLatham, Arthur (Paddington)
Bray, Dr JeremyFoot, Rt Hon MichaelLeadbitter, Ted
Brown, Hugh D. (Provan)Ford, BenLee, John
Brown, Robert C. (Newcastle W)Forrester, JohnLevtor, Miss Joan (Eton & Slough)
Buchan, NormanFowler, Gerald (The Wrekin)Lever, Rt Hon Harold
Buchanan, RichardFreeson, ReginaldLewis, Ron (Carlisle)
Butler, Mrs Joyce (Wood Green)Garrett, John (Norwich S)Litterick, Tom
Callaghan, Jim (Middleton & P)Garrett, W. E. (Wallsend)Loyden, Eddie
Canavan, DennisGeorge, BruceLuard, Evan
Cant, R. B.Gilbert, Dr JohnLyon, Alexander (York)
Carmichael, NeilGolding, JohnLyons, Edward (Bradford W)
Carson, JohnGould, BryanMcCartney, Hugh
Carter-Jones, LewisGourlay, HarryMcElhone, Frank
Cartwright, JohnGraham, TedMacFarquhar, Roderick
Castle, Rt Hon BarbaraGrant, George (Morpeth)McGuire, Michael (Ince)
Clemitson, IvorGrocott, BruceMackenzie, Gregor
Cocks, Michael (Bristol S)Hamilton, James (Bothwell)Mackintosh, John P.
Coleman, DonaldHarrison, Walter (Wakefield)Maclennan, Robert
Colquhoun, Mrs MaureenHart, Rt Hon JudithMcMillan, Tom (Glasgow C)
Conlan, BernardHattersley, Rt Hon RoyMcNamara, Kevin
Cook, Robin F. (Edin C)Hatton, FrankMadden, Max
Corbett, RobinHayman, Mrs HeleneMagee, Bryan
Cox, Thomas (Tooting)Healey, Rt Hon DenisMahon, Simon
Craigen, J. M. (Maryhill)Heffer, Eric S.Marks, Kenneth
Crawshaw, RichardHooley, FrankMarquand, David
Cronin, JohnHoram, JohnMarshall, Dr Edmund (Goole)
Crosland, Rt Hon AnthonyHowell, Denis (B'ham, Sm H)Marshall, Jim (Leicester S)
Cryer, BobHoyle, Doug (Nelson)Mason, Rt Hon Roy
Cunningham, G. (Islington S)Huckfield, LesMaynard, Miss Joan
Cunningham, Dr J. (Whiteh)Hughes, Rt Hon C. (Anglesey)Meacher, Michael
Davidson, ArthurHughes, Mark (Durham)Mellish, Rt Hon Robert
Davies, Denzil (Llanelli)Hughes, Robert (Aberdeen N)Mikardo, Ian
Davies, Ifor (Gower)Hughes, Roy (Newport)Millan, Bruce
Davis, Clinton (Hackney C)Hunter, AdamMiller, Dr M. S. (E Kilbride)
Miller, Mrs Millie (Ilford N)Roberts, Albert (Normanton)Thorne, Stan (Preston South)
Mitchell, R. C. (Soton, Itchen)Roberts, Gwilym (Cannock)Tierney, Sydney
Moonman, EricRobertson, John (Paisley)Tinn, James
Morris, Alfred (Wythenshawe)Roderick, CaerwynTomlinson, John
Morris, Charles R. (Openshaw)Rodgers, George (Chorley)Tomney, Frank
Morris, Rt Hon J. (Aberavon)Rodgers, William (Stockton)Torney, Tom
Moyle, RolandRooker, J. W.Tuck, Raphael
Mulley, Rl Hon FrederickRoss, Rt Hon W. (Kilmarnock)Varley, Rt Hon Eric G.
Murray, Rt Hon Ronald KingSandelson, NevilleWalden, Brian (B'ham, L'dyw'd)
Newens, StanleySedgemore, BrianWalker, Harold (Doncaster)
Noble, MikeShaw, Arnold (llford South)Walker, Terry (Kingswood)
Oakes, GordonSheldon, Robert (Ashton-u-Lyne)Ward, Michael
Ogden, EricShore, Rt Hon PeterWatkins, David
O'Halloran, MichaelShort, Mrs René e (Wolv NE)Watkinson, John
O'Malley, Rt Hon BrianSilkin, Rt Hon John (Deptford)Weetch, Ken
Orbach, MauriceSilkin, Rt Hon S. C. (Dulwich)Weitzman, David
Orme, Rt Hon StanleySillars, JamesWellbeloved, James
Ovenden, JohnSilverman, JuliusWhite, Frank R. (Bury)
Owen, Dr DavidSkinner, DennisWhite, James (Pollok)
Padley, WalterSmall, WilliamWhitlock, William
Paisley, Rev IanSmith, John (N Lanarkshire)Willey, Rt Hon Frederick
Palmer, ArthurSnape, PeterWilliams, Alan (Swansea W)
Park, GeorgeSpearing, NigelWilliams, Alan Lee (Hornch'ch)
Parker, JohnSpriggs, LeslieWilliams, Rt Hon Shirley (Hertford)
Parry, RobertStallard, A. W.Williams, W. T. (Warrington)
Pavitt, LaurieStewart, Rt Hon M. (Fulham)Wilson, Alexander (Hamilton)
Peart, Rt Hon FredStonehouse, Rt Hon JohnWilson, William (Coventry SE)
Pendry, TomStott, RogerWise, Mrs Audrey
Perry, ErnestStrang, GavinWoodall, Alec
Phipps, Dr ColinStrauss, Rt Hon G. R.Woof, Robert
Prentice, Rt Hon RegSummerskill, Hon Dr ShirleyWrigglesworth, Ian
Price, C. (Lewisham W)Swain, ThomasYoung, David (Bolton E)
Price, William (Rugby)Taylor, Mrs Ann (Bolton W)
Radice, GilesThomas, Jeffrey (Abertillery)TELLERS FOR THE AYES
Rees, RI Hon Merlyn (Leeds S)Thomas, Mike (Newcastle E)Mr. Joseph Harper and
Richardson, Miss JoThomas, Ron (Bristol NW)Mr. David Stoddart
NOES
Adiey, RobertCrowder, F. P.Hannam, John
Aitken, JonathanDavies Rt Hon J. (Knutsford)Harvie Anderson, Rt Kan Miss
Alison, MichaelDean, Paul (N Somerset)Hastings, Stephen
Amery, Rt Hon JulianDodsworth, GeoffreyHavers, Sir Michael
Arnold, TomDouglas-Hamilton, Lord JamesHawkins, Paul
Atkins, Rt Hon H. (Spelthorne)Drayson, BurnabyHayhoe, Barney
Awdry, Danieldu Cann, Rt Hon EdwardHeseltine, Michael
Baker, KennethDurant, TonyHicks, Robert
Banks, RobertEden, Rt Hon Sir JohnHiggins, Terence L.
Beith, A. J.Edwards, Nicholas (Pembroke)Hordern, Peter
Bell, RonaldElliott, Sir WilliamHowe, Rt Hon Sir Geoffrey
Bennett, Dr Reginald (Fareham)Emery, PeterHowell, David (Guildford)
Biffen, JohnEyre, ReginaldHurd, Douglas
Biggs-Davison, JohnFairbairn, NicholasHutchison, Michael Clark
Blaker, PeterFairgrieve, RussellIrvine, Bryant Godman (Rye)
Body, RichardFell, AnthonyIrving, Charles (Cheltenham)
Boscawen, Hon RobertFinsberg, GeoffreyJames, David
Bottomley, PeterFisher, Sir NigelJenkin, Rt Hon P. (Wanst'd & W'df'd)
Bowden, A. (Brighton, Kemptown)Fletcher, Alex (Edinburgh N)Jessel, Toby
Boyson, Dr Rhodes (Brent)Fletcher-Cooke, CharlesJohnson Smith, G. (E Grinstead)
Braine, Sir BernardFookes, Miss JanetJohnston, Russell (Inverness)
Brittan, LeonFowler, Norman (Sutton C'f'd)Jones, Arthur (Daventry)
Brotherton, MichaelFox, MarcusJopling, Michael
Brown, Sir Edward (Bath)Fraser, Rt Hon H. (Stafford & St)Joseph, Rt Hon Sir Keith
Bryan, Sir PaulFreud, ClementKaberry, Sir Donald
Buchanan-Smith, AlickFry, PeterKellett-Bowman, Mrs Elaine
Budgen, NickGardiner, George (Reigate)Kershaw, Anthony
Bulmer, EsmondGardner, Edward (S Fylde)Kimball, Marcus
Burden, F. A.Gilmour, Rt Hon Ian (Chesham)King, Evelyn (South Dorset)
Butler, Adam (Bosworth)Glyn, Dr AlanKitson, Sir Timothy
Carlisle, MarkGodber, Rt Hon JosephKnight, Mrs Jill
Carr, Rt Hon RobertGoodhart, PhilipKnox, David
Chalker, Mrs LyndaGoodhew, VictorLamont, Norman
Churchill, W. S.Goodlad, AlastairLane, David
Clark, Alan (Plymouth, Sutton)Gorst, JohnLangford-Holt, Sir John
Clark, William (Croydon S)Gow, Ian (Eastbourne)Latham, Michael (Melton)
Clarke, Kenneth (Rushcliffe)Gower, Sir Raymond (Barry)Lawrence, Ivan
Clegg, WalterGrant, Anthony (Harrow, C)Lawson, Nigel
Cockcroft, JohnGray, HamishLe Marchant, Spencer
Cooke, Robert (Bristol W)Griffiths, EldonLestor, Jim (Beeston)
Cope, JohnGrist, IanLewis, Kenneth (Rutland)
Cormack, PatrickHall, Sir JohnLloyd, Ian
Come, JohnHall-Davit, A. G. F.Loveridge, John
Costain, A. P.Hamilton, Michael (Salisbury)Luce, Richard
Crouch, DavidHampson, Dr KeithMcAdden, Sir Stephen
McCrindle, RobertPenhaligon, DavidSpeed, Keith
Macfarlane, NeilPercival, IanSpence, John
MacGregor, JohnPeyton, Rt Hon JohnSpicer, Michael (S Worcester)
Macmillan, Rt Hon M. (Farnham)Pink. R, BonnerSproat, lain
McNair-Wilson, M. (Newbury)Powell, Rt Hon J. EnochStainton, Keith
McNair-Wilson, P. (New Forest)Price, David (Eastleigh)stanbrook, Ivor
Madel, DavidPrior, Rt Hon JamesStanley, John
Marten, NeilPym, Rt Hon FrancisSteen, Anthony (Wavertree)
Mates, MichaelRaison, TimothyStewart, Ian (Hitchin)
Mather, CarolRathbone, TimStokes, John
Maude, AngusRawlinson, Rt Hon Sir PeterStradling Thomas J.
Maudling, Rt Hon ReginaldRees, Peter (Dover & Deal)Tapsell, Peter
Mawby, RayRees-Davies, W. R.Taylor, R (Croydon NW)
Maxwell-Hyslop, RobinRenton, Rt Hon Sir D. (Hunts)Taylor, Teddy (Cathcart)
Mayhew, PatrickRenton, Tim (Mid-Sussex)Tebbit, Norman
Meyer Sir AnthonyRhys Williams, Sir BrandonTemple-Morris, Peter
Miscampbell, NormanRidley, Hon NicholasThatcher, Rt Hon Margaret
Mitchell, David (Basingstoke)Ridsdale, JulianThomas, Rt Hon P. (Hendon S)
Moate, RogerRifkind, MalcolmTownsend, Cyril D.
Molyneaux, JamesRippon, Rt Hon GeoffreyTrotter, Neville
Monro, HectorRoberts, Michael (Cardiff NW)van Straubenzee, W. R.
Montgomery, FergusRoberts, Wyn (Conway)Vaughan, Dr Gerard
Moore, John (Croydon C)Ross, Stephen (Isle of Wight)Viggers, Peter
More Jasper (Ludlow)Ross, William (Londonderry)Wainwright, Richard (Coine V)
Morris Michael (Northampton S)Rost, Peter (SE Derbyshire)Wakeham, John
Royle, Sir AnthonyWall, Patrick
Morrison, Charles (Devizes)Sainsbury, TimWalters, Dennis
Morrison, Hon Peter (Chester)St. John-Stevas, NormanWeatherill, Bernard
Nelson, AnthonyScott, NicholasWells, John
Neubert, MichaelShaw, Giles (Pudsey)whitelaw, Rt Hon William
Newton, TonyShaw, Michael (Scarborough)Wiggin, Jerry
Nott, JohnShelton, William (Streatham)Winterton, Nicholas
Onslow, CranleyShepherd, ColinYoung, Sir G. (Ealing, Acton)
Oppenheim, Mrs SallyShersby, MichaelYounger, Hon George
Osborn, JohnSims, Roger
Page, Rt Hon R. Graham (Crosby)Sinclair, Sir GeorgeTELLERS FOR THE NOES:
Parkinson, CecilSmith, Cyril (Rochdale)Mr. W. Benyon and
Pattie, GeoffreySmith, Dudley (Warwick)Mr. Anthony Berry

Question accordingly agreed to.

Resolved,That this House authorises the Secretary of State to pay, or undertake to pay, sums not exceeding £26, 179, 765 by way of financial assistance in respect of the acquisition of share capital in Herbert Limited under section 8 of the Industry Act 1972, as amended by section 22 of, and Part I of Schedule 4 to, the Industry Act 1975.