I am very satisfied with the progress made by the Board. It has now sole ownership of Rolls-Royce (1971) and Herbert; it has a controlling interest in British Leyland and Ferranti, and three other minority shareholdings. It is arranging to provide finance on commercial terms to several companies for building stocks of machine tools; it has joined with other companies in bidding for overseas construction contracts that should generate substantial British exports; and it has a number of other projects at an advanced stage but which are still commercially confidential.
Is my right hon. Friend aware that there is considerable disappointment at the NEB not living up to the hoped-for expectation, for example, in not directing investment into industry in a positive enough manner and not concluding planning agreements quickly enough? Does my right hon. Friend accept that steps are needed to ensure that the NEB plays the vigorous rôle that was envisaged for it in regenerating British industry?
I ask my hon. Friend to be a little patient. The NEB has been in existence for only five months and, as I have demonstrated, it has made considerable progress so far. For example, my hon. Friend will be interested to know that it has appointed directors for the North-West and for the North. These are senior men, based at Liverpool and Newcastle. The aim of the Board is still that it should extend its interests into profitable manufacturing industries, and I shall be giving it all the encouragement that I can to do that.
How can the right hon. Gentleman possibly say that the NEB is meeting its objectives when no financial objectives have been set for it? As it is now five months since the NEB was set up, why are we still in a position in which we have only draft guidelines and not full guidelines for the operation of the Board? Is not this a most unsatisfactory situation?
I do not think it is an unsatisfactory situation. The transfer of Rolls-Royce, Herbert and British Leyland has only just taken place, and a good deal of information has to be obtained before the financial objectives can be settled. I note that the hon. Gentleman has unintentionally jumped the gun, because the hon. Member for Bedford (Mr Skeet) has a later Question on this precise point.
I shall be settling appropriate financial objectives for the National Enterprise Board in the early summer, after consultation with the Board and the Treasury. The Government have indicated in the draft NEB guidelines that separate objectives would be set for the Board's major holdings—for instance, those in British Leyland Ltd. and Rolls-Royce (1971) Ltd. These will be determined in the light of the long-term plans of the companies.
As the right hon. Gentleman is aware that the NEB was intended to acquire further profitable industries, is he not also aware that it is many years since the State corporations had any financial objectives? Does the right hon. Gentleman want the rate of return on capital investment on these large sums to be small—as, for example, with IRI, of Italy—or substantial?
It is our intention that the NEB should extend its interest into the profitable sector, with comparable financial objectives. The hon. Gentleman, who is very fair about these matters, knows how the financial objectives of the nationalised industries have been distorted because of the counter-inflation policy and the direct decisions of the last Administration not to allow economic pricing for their products and services. Therefore, I do not think that the position that the hon. Gentleman instances between the NEB and the nationalised industries is comparable.
Will my right hon. Friend comment on the Government's policy to reduce public expenditure in order to transfer resources into British manufacturing industry, and the very modest sum of £250 million per annum which the NEB will have to spend? Surely, if the transfer of resources is to be made, it should be through the NEB, and my right hon. Friend should meet the TUC's demand for at least £1,000 million a year.
I know that this matter has caused concern not only to my hon. Friend but to other Members of Parliament and organisations. The best thing I can tell my hon. Friend is that at the 19. Mr. Skeet asked the Secretary of present stage the provision of support for the National Enterprise Board is inevitably arbitrary, and it is our intention that it should be kept under review.
It will not be directly represented on the Rolls-Royce Board, but I know from past experience that the hon. Gentleman is very interested in seeing that the Government-owned Rolls-Royce should co-operate closely with the NEB. I think that the understanding that has been reached between NEB and Rolls-Royce is satisfactory. As the hon. Gentleman knows, it has been welcomed by both sides.
If the Secretary of State believes that the nationalised industries were distorted after 1972, will he point to one of the nationalised industries in any year before 1970 which, in his view, was earning an adequate return on its assets?
There are one or two nationalised industries which would meet the objectives set down by the hon. Gentleman. [Interruption.] It is interesting that for the very first time the hon. Gentleman has admitted——
I do not think that the hon. Gentleman wants to hear the reply. For the very first time he has admitted to the House that the distortion that took place during the period of the last Conservative Government in the prices of the products of nationalised industries has contributed to their present financial difficulties.