Industrial Strategy

– in the House of Commons at 12:00 am on 8th July 1976.

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Photo of Mr Eric Varley Mr Eric Varley , Chesterfield 12:00 am, 8th July 1976

With your permission, Mr. Speaker, I should like to make a statement about the progress on industrial strategy, which was the subject of an all-day meeting of the National Economic Development Council yesterday with my right hon. Friend the Prime Minister in the chair.

The Government's approach to industrial strategy was outlined in the White Paper published after the meeting of NEDC at Chequers last November. Our prime aim is to put Britain on the path to a high-wage, high-output, full-employment economy, by improving productive potential and the performance of manufacturing industry.

The prospects and problems of over 30 sectors of manufacturing industry were selected for more detailed examination, on a tripartite basis. These sectors represent about 60 per cent. of total manufacturing output. In the first phase of their work the sector working parties were asked to concentrate in particular on constraints or bottlenecks that might limit their ability to exploit the opportunities provided by the economic upturn. The working parties were further asked to recommend appropriate action. They were also asked to develop strategies for improving the performance of the sectors in the longer term, though it was recognised that this would take some time to complete.

The reports on the first stage of this work were considered by the NEDC yesterday. The council welcomed these reports as a very valuable first stage in the strategy programme. Many of the individual sectoral reports will be made publicly available, although the decision to publish is a matter for each working party to take. Copies of a summary of the issues raised in the reports have been placed in the Library, together with copies of the covering paper that my right hon. Friend the Chancellor of the Exchequer and I presented to the NEDC.

We want this work to lead to action. Many of the recommendations of the working parties are addressed to the Government, and we shall be considering the action that we as a Government need to take. In some cases we have already been able to take the necessary steps. The NEB, planning agreements, the Manpower Services Commission, the schemes to encourage and accelerate investment, and other instruments of our policy, will all play their part.

Many of the recommendations are for action by management and unions at the level of the sector, the enterprise and the factory. The TUC and CBI have both undertaken to play their part.

The working parties themselves will also have an important rôle in their follow-up. The Government are setting in hand arrangements for monitoring and follow-up in collaboration with the CBI, the TUC and the National Economic Development Office.

At its next meeting the National Economic Development Council will go on to consider detailed proposals for the second stage of the work. The intention is for the sector working parties to report again by the end of the year, so that my right hon. Friend the Chancellor of the Exchequer can take account of their recommendations in the formulation of his Budget strategy.

It is essential for this country to develop an effective industrial strategy that will reverse the contraction of our industrial base and enable us to create wealth through industrial production. Only in this way can we achieve the social improvements to which we must aspire.

Our tripartite approach to industrial strategy has made an encouraging start and we intend to build on this for the future.

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

Does the Secretary of State agree that his announcement is designed to give a new sense of strength and confidence to private enterprise companies? If so, to that extent I welcome it.

The real value of the exercise can be judged only by the result, which must obviously be something to be seen in the future, but does the Secretary of State agree that his statement today, with its reliance on the private sector, heralds the end of the view that a Labour Government, armed with compulsory powers, can create a climate for successful industry?

Does the Secretary of State further agree that the overwhelming conclusion from the whole NEDC exercise is that British industry does not make enough profit and does not keep enough of the profit that it makes?

Does the Secretary of State realise that, while the level of public expenditure keep interest rates at their present levels, and while tax rates and the Price Code remain a substantial deterrent, all the interesting, detailed proposals of the NEDC exercise will be dwarfed in their impact by the adverse economic climate?

Finally, will the Secretary of State confirm that where the National Enterprise Board is used as a vehicle for recycling taxes back to industry, there is no automatic insistence on an equity stake? Secondly, will he confirm that the NEB is no longer seen as an instrument for taking control of all profitable manufacturing companies?

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

Concerning the point about the NEB, it remains one of our major aims, crucial to the overall strategy. It will be for the National Enterprise Board to decide exactly how it proceeds. It has been given a wide measure of operational freedom. That is how it should remain. It is also the Government's intention that it should have funds.

I hope that the hon. Gentleman is also aware that the National Enterprise Board has been welcomed by private industry, and is also collaborating with private industry in many important projects, not only in this country but overseas.

As for profits, as a Government we have never denied the need for profitability. Changes have been made and announced to the House by my right hon. Friend on many occasions.

As to the question of private industry as opposed to public industry, it is the Government's view that both sides of industry have a major rôle to play. It is not a question of heralding the end of one side or the other. There will be a cooperative approach to this matter. We have to make sure that we expand our manufacturing capacity in this country and improve our competitiveness and productivity. That is the way in which we should go about it.

Photo of Mr Eric Heffer Mr Eric Heffer , Liverpool, Walton

Will my right hon. Friend accept that that is a disappointing statement to many of us on the Government side of the House? It falls far short of the proposals in the national executive programme that will be placed before the Labour Party conference, which will call for a national planning campaign within the Government machinery, for compulsory planning agreements and for the National Enterprise Board to be reestablished as an instrument for extending public ownership along the lines originally envisaged by the Labour Party. Will my right hon. Friend take into consideration the points raised by the national executive committee and have a look at those proposals again?

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

I can tell my hon. Friend that "Labour and Industry, The Next Steps" is never far away from me, and I take all the provisions of that policy into account. I also take into account particular points in the Labour Party document, which says that we must ensure that necessary resources and savings are made available within the economy to make the investment available and also that the National Enterprise Board should not be a repository of "lame ducks". I can assure my hon. Friend that I do take those points into account.

As my hon. Friend was a Minister in my Department he will know that the Government have made it plain that planning agreements will be voluntary. I have said over and over again that I am not satisfied with the progress being made in respect of planning agreements. But I think that industry is much more relaxed about planning agreements, and many leading industrialists—[Interruption.] The hon. Member for Henley (Mr. Heseltine) chimes in and tries to scoff but I can tell him that many leading industrial companies in this country now realise the value of co-operating in planning agreements and building on the best practices that exist within those companies. They know that if they are to harness much of the enthusiasm of the work force it will only be done on this basis.

Photo of Mr Donald Stewart Mr Donald Stewart , Na h-Eileanan an Iar

Is the Secretary of State aware that, so far as some of us are concerned, his statement is a total nonevent? It was all light and sound, and signified nothing. It was much ado about nothing, and was a load of rubbish. It was an exercise in futility, equalled only by the rejoinder from the Conservative Front Bench.

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

It is difficult to please the Scottish National Party. [Interruption.] I see the gesture that the hon. Member for Western Isles (Mr. Stewart) is making. The hon. Gentleman makes gestures like that when he receives communications from the trade unions in Scotland, and we know exactly how to deal with them.

There has been some criticism, in terms of the tripartite approach that we are developing within NEDC, that Parliament has not been consulted. It will take a long time to develop a strategy, and we felt that it would be best if we took the first opportunity to report progress to the House of Commons and get the views of hon. Members. I think we can all disregard what the hon. Gentleman said. I know that his views are not shared by Scottish trade unionists and Scottish industrialists.

Photo of Mr Hugh Fraser Mr Hugh Fraser , Stafford and Stone

On a point of order, Mr. Speaker. Can the House be protected from Ministers coming here and making totally meaningless statements which signify absolutely nothing? It really is an abuse of public time—

Photo of Mr George Thomas Mr George Thomas , Cardiff West

Order. I wish the House could be protected against points of order that are not points of order.

Photo of Mr John Garrett Mr John Garrett , Norwich South

Will my right hon. Friend tell the House what machinery exists in this planning system for the planning of imports?

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

When my hon. Friend has had a chance to look at the sectoral reports—and I am sure he will do so because he considers these matters a great deal—he will see that some sectors have made recommendations about imports and import penetration. In fact, arising out of the initial discussion there are about 350 recommendations, of which 200 call for action by the Government. I would tell the House that we will not be able to accept all these recommendations —no one would expect us to accept them all—but we are already studying them and we want to see how best we can develop this strategy. In addition, 150 recommendations call for action from management and trade unions, and that is equally important. It is not just an exercise for the Government to deliver the goods that would improve our performance, but it depends on this approach.

Photo of Mr David Crouch Mr David Crouch , Canterbury

Will the Secretary of State at least take it from me that I for one am grateful for having this fairly quick reply about what went on yesterday outside Parliament in the important consultations between two sides of industry? Will he also bear in mind that there is increasing concern in Parliament, and I think outside, that these consultations should bear a greater relevance to the problems of the country and, that Parliament should be involved, not just to hear a report, but to take part in such discussions? Will he give some thought, with his friends and colleagues in the Cabinet, as well as the Prime Minister, to the need for involving Parliament in these important consultations in future? If Parliament cannot be involved completely in the decision-making process, should it not at least be involved in the consideration of the decision that is so important to this country's economic future?

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

I very much agree with the hon. Gentleman and thank him for his remarks. We thought it necessary and desirable to report to the House of Commons what took place. In fact, I am sure the criticism would have been the other way had we not taken this first opportunity to report to the House. We shall look at ways of getting the House involved in the discussions. It is highly desirable that hon. Gentlemen on both sides should take an interest in this work if we are to get the collaborative approach which is desired.

Photo of Mr Arthur Lewis Mr Arthur Lewis , Newham North West

Is the Minister aware that I listened to his statement with interest, because I heard reports of this on the radio? I also heard the Prime Minister's statement, which was also in favour of helping private industry make profits. However, I have just heard of a company which, following the Government's example, reports a 20 per cent. increase in profits, to £80 million. That was done after paying hundreds of thousands of pounds to company directors, and paying them hundreds of thousands of pounds in perks. Since Mr. Tiny Rowland is free, perhaps my right hon. Friend could get him to come in to help. Perhaps he could also appoint Lord Duncan Sandys to the board. Those people are apparently doing exactly what the Government want them to do.

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

That just proves how difficult it is to please hon. Members in all parts of the House. As far as I am concerned—the Government have made it plain time and again—the White Paper produced in August 1974 by my predecessor in the Department, concerning the regeneration of British industry, said that we wanted to see a vigorous, alert and profitable private sector of industry. If we are ever to fulfil the social policies that my hon. Friend and I share it will only be on the basis of making sure that we expand our industry and our manufacturing base. If my hon. Friend does not understand that, he does not understand anything.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

Will the Secretary of State say whether he feels that this statement and the policies of the NEDC fit in more comfortably with the Prime Minister's newly announced intention to help support, nurture and cherish the acceptable face of capitalism by assisting capitalist companies to make greater profits, or whether they fit more into the Secretary of State for Energy's intentions, announced last night, of nationalising more of the private sector to bring it under direct State control?

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

It is always very easy for hon. Gentlemen to refer to speeches that other Ministers have made and to suggest that there are conflicts in the Government. I ask the hon. Gentleman, instead of trying to create difficulties, or referring to problems in the Labour Party, to look at his own Front Bench. There are five or six different economic policies. There is the Heath policy, the Joseph policy, and so on. He would be better advised to try to sort out his own right hon. and hon. Friends than try to pick a quarrel with me.

Photo of Mr Roderick MacFarquhar Mr Roderick MacFarquhar , Belper

I welcome my right hon. Friend's announcement, but will he say whether or not, at yesterday's meeting of NEDC, measures were discussed to ensure that the greater room for manoeuvre which has been given to private companies under the Government's policy will genuinely make them invest in manufacturing industry in a way which has not happened in the past 30 years?

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

It is absolutely essential that investment should go ahead. The commitment made by the President of the CBI yesterday is something that we welcome. He took part in the discussions, along with the TUC, and on this tripartite basis joined in the Press conference afterwards. I do not want to quote all Lord Watkinson's words, but he said that the CBI would co-operate with the industrial strategy and make it a success.

I would say this to my hon. Friends, who should observe what is taking place within this general framework—

Photo of Dennis Skinner Dennis Skinner , Bolsover

We know what is taking place.

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

My hon. Friend keeps shouting. I know that I can always rely on his full support for everything I do, but what we must do is ensure that this policy is a success. I think that some of my hon. Friends—

Photo of Mr Eric Heffer Mr Eric Heffer , Liverpool, Walton

Some of us have remained Socialists, Eric.

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

My hon. Friend shouts. I do not want to pick up every point that is made, but he was in the Department of Industry and made the winding-up speech in the Second Reading debate on the Industry Act 1975, when he said that planning agreements would be voluntary, and he subscribed to all the then policies of the Government. He has probably changed over the last five months; I have not.

Photo of Mr Michael Marshall Mr Michael Marshall , Arundel

Does the right hon. Gentleman agree that there are a vast number of commitments, or rather recommendations, on which the Government have to act if they are not to be regarded as a window-dressing exercise by the large number of working, parties? It would be helpful if we could be told how he saw his Department working through these recommendations. On the steel working party, will he say whether the recommendation that the arrangement whereby the independent sector, the British Steel Corporation, the unions and the Government should go on having that forum, will or will not be accepted by the Government?

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

The steel working party produced a valuable report. Within the sector reports, concern was expressed again and again that when the upturn gets under way there will be steel shortages. Sir Monty Finniston, who is a member of the NEDC, had a good deal to say about supply and customer relationships. That work is to continue within the framework of NEDC. I cannot give the hon. Gentleman a complete answer about how the work will proceed —that is very much for the working party and the National Economic Development Office to decide—but we shall take account of what he said.

Photo of Mr Eric Moonman Mr Eric Moonman , Basildon

My right hon. Friend is to be congratulated on persisting with a very difficult policy, with all the problems that have been outlined. What analysis was made of the sectors—that is, what steps were taken to see whether the traditional industries should get greater priority than the industries of innovation? My right hon. Friend could stimulate a greater sense of urgency at the meeting if the report could come back before the end of the year. That seems a long way off.

Photo of Mr Eric Varley Mr Eric Varley , Chesterfield

What I have tried to emphasise again and again is that this is not a one-off exercise; it is not a question of producing reports and then leaving them and saying that the work has been done. We shall return to the industrial strategy work at every meeting of the NEDC. Already, some of the proposals for action are being taken. Further reports will be put before the NEDC in January, and certainly in good time for the Budget, or when my right hon. Friend frames his Budget. That is the way in which we hope to proceed, and the situation will develop. Given the nature of our society, we cannot have an instant industrial strategy. That is the lesson that we must learn.

Several Hon. Members:

Several Hon. Membersrose

Photo of Mr George Thomas Mr George Thomas , Cardiff West

Order. We must move on. We cannot debate this matter now.