Clause 2

Industry Bill – in the House of Commons at 8:15 pm on 6th February 1980.

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TRANSFER OF PROPERTY TO SECRETARY OF STATE

Photo of Mr George Robertson Mr George Robertson , Hamilton

I beg to move amendment No. 8, in page 2, line 41, at end insert: '(1A) Any direction given to the National Enterprise Board, Scottish Development Agency or Welsh Development Agency under this section or any transfer from the National Enterprise Board, Scottish Development Agency, or Welsh Development Agency to the Secretary of State shall be made in a statutory instrument requiring approval by resolution of the House of Commons.' Clause 2 is one of the principal clauses in the Bill and has already precipitated the resignation of the whole board of the NEB and created a widespread sense of dismay throughout many sections of industry associated with the NEB.

By most standards, the clause is important and, only eight or nine months into the life of the Government, it marks a watershed in the development of their policy. The clause could be described as the Government's philosophical apocalypse—the point at which the dog-eared thoughts of Professor Milton Friedman

clash with the realities of industrial life and the Government find themselves in what can only be described as an economic black hole.

Lost from sight are all the high-flown sentiments that Ministers expressed during the election campaign about non-intervention and distancing themselves from day-to-day control of industry. Clause 2 means that we are seeing instead the Secretary of State for Industry and all his acolytes taking powers for deeper interventions in industry than many of my hon. Friends have ever seen.

The amendment seeks to give back to Parliament responsibility for the power that the Bill gives to the Secretary of State. The remarkable thing about the clause is that it gives new, increased and almost blanket powers to the Secretary of State to interfere in the day-to-day working of the NEB and suddenly to take to himself as many of the assets of the NEB as he wishes to lay his hands on.

The amendment is designed to bring back a degree of democratic accountability—which does not seem to have crossed the Government's mind—and to allow Parliament to decide which assets should be transferred from the NEB to the Department of Industry or commandeered by the Secretaries of State for Scotland and Wales.

The more that one looks at the clause—and the enormous attendance in the Chamber indicates that few hon. Members have managed to do so—the more remarkable the powers given to the Secretary of State appear.

One might describe clause 2 as being the nationaliser's dream machine. The Secretary of State for Industry, the high priest of free enterprise, might well, once news of this clause gets out in the country, find himself the darling of the Militant Tendency, because the powers conferred upon the Secretary of State for Industry, without further reference to Parliament, would allow that organisation to realise its target of nationalising 200 companies overnight, with a degree of non-accountable and blanket powers being conferred upon the Secretary of State for Industry—whosoever that Secretary of State might be.

During the Second Reading debate the hon. Member for Knutsford (Mr. BruceGardyne), who is sadly not with us at this stage of the debate, felt so strongly about the provisions being put forward in this part of the Bill that he felt obliged to abstain from supporting the Government that evening. That was on 6 November, not very far into the life of the Government. Yet the hon. Member for Knutsford, who is a recent entrant to the House, coming to depart from the tion, felt compelled to depart from the team that leads the Government, so strongly did he feel that the interventionist powers in this part of the Bill went against his principles. He did so on the basis that the degree of non-accountable powers put forward in the Bill went far beyond what should be expected in a democratic Parliament. He said that for the reasons he illustrated: I find it impossible to give my support in the Lobby tonight to a Bill which makes no provision—as I believe we should make—to ensure that this sort of evasion of the obligation of parliamentary accountability is ignored in future."—[Official Report, 6 November 1979; Vol. 973, c. 297.]

If the hon. Member for Knutsford and colleagues of his who share the reservations that he expressed on that evening were disturbed on 6 November, they should be even more disturbed this evening, because since 6 November not only have we seen the powers of the Secretary of State for Industry already being exercised in the case of Rolls-Royce, precipitating the resignation of the members of the National Enterprise Board; we have new clauses and new amendments on the Notice Paper this evening that would strengthen the non-accountable and blanket powers that the Secretary of State already has.

Parliament in no way is strengthened by these additions on the Notice Paper this evening, and the non-accountable powers remain in exactly the same form as those which gave the hon. Member for Knutsford such a great degree of concern then. What the hon. Member for Knutsford expressed in the House that evening and discharged by abstaining in the Lobby that night, many hon. Members on the Government Benches have expressed privately and during sittings of the Industry Bill Committee since then.

What, then, are the circumstances in which the provisions of clause 2 can be exercised? The clause specifies that the Secretary of State will have, without any reservations at all, the power to direct the National Enterprise Board and, in the case of Scotland and Wales, the Development Agencies to transfer assets from their portfolios into the hands of the Department of Industry.

In his Second Reading speech, the Secretary of State for Industry denied that there was any chance that he would be involved in the nationalisation of companies or that he wished to get involved in the day-to-day control of the companies that were involved with the National Enterprise Board. Yet during the Committee stage of the Industry Bill the Secretary of State was challenged to give examples of circumstances in which this power would be necessary, other than the single circumstance that has already been illustrated of the alleged clash of personalities between the National Enterprise Board and the Rolls-Royce board. The Secretary of State said on 11 December: there might well be the occasional case when the general policy of the Government was that the NEB should dispose, at a time appropriate to the interest of the company concerned and of the taxpayer, of its saleable assets either in whole or in part to the private sector. Where such disposal would take an inordinately long time, it seemed to us unreasonable to leave on the NEB the burden of managing a company for an inordinately long time, a distraction of its management, and a burden upon its financial obligations.

The NEB is to be relieved of its worst management problems by transferring them, holus-bolus, to the Department of Industry for an undetermined period. Apparently Whitehall knows best. The civil servants in the Department of Industry are apparently in a better position to deal with companies with enormous management problems than are the industrialists whom the Government only recently appointed to the NEB.

The Secretary of State said: Under the impulse of the duties laid upon it by the guidelines of the time and of the required target return on its investments the NEB might seek to carry out a particular disposal which the Secretary of State thought, in the national interest, was undesirable."—[Official Report, Standing Committee E, 11 December 1979; c. 586–87.] The Secretary of State was speaking about how he might need to use executive powers if the NEB act against the national interest. The Secretary of State has decided the criteria by which he will transfer assets—companies that employ people—from the stewardship of the NEB and the Government-appointed industrialists to the civil servants in the Department of Industry.

The circle has made its full turn. The The arch high priest of free enterprise and non-intervention has decided that he will take arbitrary powers to decide which NEB assets are undesirable and should be disposed of. At the same time, he issues instructions to the Department of Industry to dispose of as many assets as are needed under the public sector borrowing requirement.

The Government's argument is that the powers are necessary to provide a two-way flow of assets between the NEB and the Government. The Government seem to have misunderstood the logic of the last Government. It was no accident that the last Government decided not to give themselves power to hand back assets from the NEB to the Department of Industry. That decision was taken because of the need to maintain a balance. It was decided that assets should be placed at arm's length and transferred to an agency operating in a commercial sphere. The Government decided that it was not logical for them to demand at a minute's notice that companies operating in a commercial sphere should be returned to the public sector.

I ask the Under-Secretary of State for Scotland to explain what his view would have been if a Labour Secretary of State for Scotland had decided to take the powers that the Government intend to take under the Bill. If he were in Opposition, he would say that such a move was a charter for the nationalisation of any number of companies. He would have said that it was an irresponsible use of Government power.

Photo of Mr Alexander Fletcher Mr Alexander Fletcher , Edinburgh North

The hon. Member for Hamilton (Mr. Robertson) misunderstands the clause.

Photo of Mr George Robertson Mr George Robertson , Hamilton

I may have misunderstood, but the National Enterprise Board does not. It has lost a board of senior industrialists in the process of comprehending what the clause is about. Many people in industry are about to discover the practical implications.

What will happen in industry when this clause becomes law—if, indeed, it does after this afternoon—is that those companies that are attracted to the NEB by the blandishments of the Government and their agencies will see the prospect of forced partnerships with organisations and companies that they perhaps sought to avoid by going to the NEB in the first place.

Perhaps more important is the direct intervention by the Secretary of State for Industry. In his Second Reading speech, he said that although the Government would trim the powers of the NEB they still saw it as having a residual role to perform. Therefore, the Government left the NEB with powers and money. One of the areas in which the Government claimed that the NEB could still contribute—even within the restricted vision of the Secretary of State for Industry, and even with his ideological opposition to it—was the area of high technology, where the private sector has been so glaringly absent in the past.

In May of last year, coincidental with the election that was won by the Conservative Party, the Bow Group published a document called "The NEB under the Tories". In the preface to that document, the six authors said: The conclusions which are presented in this paper, therefore, represent an industrial view of the NEB, and how it can be used by the Conservative Government in pursuit of its economic and industrial objectives. That document was completed after a major survey of industrial opinion by the Bow Group writers.

One of the principal conclusions of the pamphleteers was: Many of those we spoke to thought that given the considerable reluctance of U.K. companies to invest in new, high risk industries, this facet of the present activities of the NEB was its major success. That paper highlighted time and again that private enterprise and private capital was not providing the resources for the high-risk areas of technology. It was highlighted in that document that even in capitalist economies of countries such as America, public intervention was sometimes required in a pump-priming form to provide the necessary take-off.

The Secretary of State for Industry, who can hardly be described as interventionist in character—although the Bill seems to prove the contrary—also underlined that role for the NEB in his Second Reading speech. Yet could anyone in the House with any experience of industry, especially high-risk technology, believe that industrialists, with their skills, abilities, ideas and enterprise, would involve themselves in an operation when there was a risk that the Secretary of State—or, more likely, the civil servants within his Department—would decide that it was fair game for nationalisation or appropriation by the Department of Industry, the Scottish Office or the Welsh Office? Is it likely that they would get involved when there was a possibility that the organisation could be taken into the public net and possibly sold to the highest bidder? I cannot think of anything more likely to dull the idea of stimulating high-risk industries and entrepreneurs than that sort of threat hanging over those who are attracted to the NEB.

Photo of Sir Albert Costain Sir Albert Costain , Folkestone and Hythe

How does the hon. Gentleman explain that the NRDC is doing so much work? Why cannot that organisation take on this work? It is doing a good job and is not going to be removed.

Photo of Mr George Robertson Mr George Robertson , Hamilton

The hon. Member for Folkestone and Hythe (Mr. Costain) mentions the NRDC. That organisation has an extremely limited role at present and its finances in no way stretch to backing the commercial judgment that would be involved in developing high-risk technologies. The NRDC is a technical institution with some expertise in this area, but it has quite properly been denied the sort of venture capital that is involved here.

What the NEB should do, and what the agencies are doing, is to examine the commercial potential of such areas and take risks. If we are to compete in the future, we must achieve the competitive edge now. Even the Conservative Party members who wrote the pamphlet to which I referred recognised that that was true. The Secretary of State for Industry, among his readings of the decaying volumes from Chicago university, seems to have picked up the fact that there was a degree of reality and commendable value in that part of the pamphlet.

Involved with this clause and the Bill is the destruction of the arm's length relationship that previously existed in relation to the Civil Service, so decried by the Secretary of State and Conservative Members before they came to power. It is a positive limitation on the flexibility that will exist between the sort of role conceived and even retained for the NEB and a distinct narrowing of the commercial freedom envisaged in the previous NEB guidelines, and yet it is still pretended by the Government, in their conversations with Sir Arthur Knight, to be the main basis of the relationship today.

Indeed, the new guidelines for the NEB seem specifically designed as a charter for intervention by the Secretary of State for Industry. He has given himself brand new powers to intervene in the day-to-day running of the NEB. The Under-Secretary of State for Scotland is there as a vulture hanging over the head of his new chairman of the SDA.

I have some experience as a former board member of the SDA. Perhaps I can therefore conceive in more graphic terms of how the board members must feel with the prospect of the Under-Secretary of State for Scotland hanging over their heads, or even around their necks at times, when they come to make commercial decisions about their assets.

The draft guidelines for the NEB—and we must remember that the NEB has the Secretary of State for Industry around its neck—say: The Secretary of State is answerable to Parliament"— but not much— for the exercise of his statutory powers, but he will not normally use his powers of specific direction to intervene in day-to-day matters.

The arm's length relationship was conceived as being a valuable addition to the work of the NEB, but we are now going back to the days of day-to-day control by politicians in the commercial affairs of a State holding company.

The guidelines go that bit further, because in two key sections under the disposal of assets the guidelines say, first, that The Board shall obtain the approval of the Secretary of State before they dispose of voting shares or stock. Hon. Members should know that those words are underlined and that the meaning of the underlining is that they have legal force. That particular sentence has the force of law, and the sentences in the draft guidelines that are not underlined do not have the force of law.

Paragraph 12 of the draft guidelines says: The Secretary of State has statutory power to direct the Board to dispose of, or transfer to him, securities and other property. These powers do not override private rights limiting share transfers, such as those in private companies' Articles of Association.

What is particularly important about these two quotations from the guidelines is that one has the force of law—the obligation of the board to consult the Secretary of State—but the Secretary of State's statutory powers to direct the disposal of and transfer of assets do not have the force of law. We are, therefore, weakening parliamentary control over the affairs of the NEB and at the same time strengthening the arbitrary powers of the Secretaries of State for Industry, Wales and Scotland. That is a retrograde step.

Photo of Mr Michael Grylls Mr Michael Grylls , Surrey North West

If the hon. Gentleman refreshes his memory by looking back at the 1975 Act, he will find that sections 5 and 7 gave considerable arbitrary powers to the Secretary of State and that Parliament was not involved at all when those decisions were taken. The only way that Parliament knew anything about matters was when a bit of paper was laid in the Library. There was no statutory instrument, so why ask for one now? The Labour Government never had one under their Act, so why are the Opposition asking for one now?

Photo of Mr George Robertson Mr George Robertson , Hamilton

If the hon. Member is as concerned as he makes out in dealing with the detail of the Bill—perhaps he is looking at it afresh for the first time—he will find that the powers conferred upon the Secretary of State for Industry are considerably greater than any powers conferred on the previous Secretary of State under the 1975 Act. Let me read out again what those powers are: The Secretary of State has statutory powers to direct the Board to dispose of, or transfer to him, securities and other property. The Bill introduces such new powers for the first time which give the Secretary of State considerably greater discretion to do what he wants without even tabling an order.

Photo of Mr Michael Grylls Mr Michael Grylls , Surrey North West

With great respect to the hon. Member, when shares or securities were transferred from the Secretary of State when the NEB was set up in 1976, that was on the decision of the Secretary of State. Parliament was not consulted. The shares of British Leyland, Alfred Herbert, Ferranti and ICL were all transferred to the NEB and Parliament was not consulted in any way.

Photo of Mr George Robertson Mr George Robertson , Hamilton

The hon. Gentleman misses the point completely. The Industry Act 1975 was specifically designed to give an arm's length body control over assets that were being managed at that stage by the Department of Industry or its equivalent. One-way transfer was conferred upon it in order that the exact parallel operation that is being embarked upon here would not happen. We are talking about the Secretary of State taking upon himself the power to demand that the NEB disposes of its assets. More worryingly, if one is a democrat, we are talking about giving him the power to dictate that the assets be transferred from the NEB back into the Department of Industry. That is quite arbitrary and without any parliamentary control. We are destroying the idea of a commercial body taking commercial decisions and going back—if we ever believed it—to the idea that the Civil Service is capable of running industry in a day-to-day way.

It is clear from the clause that the Government are not interested in helping or supporting industry. They are not even interested in stimulating industry. What they are interested in is pursuing preconceived idea logical will-o'-the-wisps which are not born out of industrial reality—or even derive from their supporters in industry and on the NEB—but come from the imagination of the Secretary of State for Industry and his numerous friends in the Cabinet. They seem hell-bent on keeping going in their own unique direction, despite the way in which the world keeps disobeying their predictions and performances. I commend the amendment to the House.

Photo of Mr Bob Cryer Mr Bob Cryer , Keighley

For a number of reasons, it would be of advantage if the amendment were passed, not least in the interest of democratic accountability. However, there are other reasons. The amendment is only a sticking plaster to try to provide some democratic accountability in a Bill which is the latest in a string of denationalisation measures which we regard with total anathema and to which we are totally opposed.

We believe the Bill to be against the interests of the nation as a whole and we have a duty to oppose it and to try to make it reasonable legislation to the best of our ability. We have to bear in mind that we are a minority and that the Government use their majority to push matters through as they choose. This is a bit of sticking plaster to put over one of the cracks in a shabby little doctrinaire Bill that is a compromise between the Right-wing extremists in the Tory Party—I notice that the Chief Secretary to the Treasury is gracing the Front Bench—and other Conservative Members. One wing wanted to get rid of the NEB entirely. I see endorsement of that point of view from another Right-wing extremist on the Tory Benches, the hon. Member for Wycombe (Mr. Whitney). The other body of opinion felt that there might be some value in the body and that some assets should not be sold off. The taxpayer will be the loser.

Under clause 2, the NEB is subject to instruction to sell off assets. The bits that are sold off will not be those that are unprofitable. They may be vital to the national interest, but that will not interest the greedy friends of the Conservative Party who contribute to its coffers. Those people expect some rich dividend in the form of assets. Alfred Herbert will not be sold off, because it is in a critical position. That company is vital to the national interest. It is an important component in the machine tool manufacturing industry. Such companies are vital in a manufacturing nation.

If a section is profitable, representations will be made to the Secretary of State from some of the Tory front organisations that hover about on such occasions. Representations will be made by large concerns that are keen to pick up a few succulent morsels that the taxpayer had previously rescued. Those industries will be hived off. Such concerns are interested not in the national interest but in their own self-interest.

The Government argue that the self-interest of those wonderful people who are now motivated by the tax concessions of the last Budget can be identified as the national interest. However, our experience does not bear that out. Our experience has not been that those wonderful gents pour their money into the efforts of British working men and women. They pour their money into the area that will provide the fastest buck. At the beginning of the Heath era there was a property boom.

Photo of Lieut-Colonel Dick Crawshaw Lieut-Colonel Dick Crawshaw , Liverpool Toxteth

I am sure that the hon. Gentleman will relate his point to the amendment. He is going rather wide of it.

Photo of Mr Bob Cryer Mr Bob Cryer , Keighley

I was just coming to that point. I am pleased, Mr. Deputy Speaker, that you have anticipated my next words.

Clause 2 is very important. It concerns directions to the NEB and to the Scottish and Welsh Development Agencies for the disposal of assets. When those directions are given, they will be given in the knowledge that the assets to be disposed of are those that will serve the taxpayer best. The taxpayer will be denied those benefits, because unprofitable sections that are important to the national interest will not be readily saleable.

The point that I was about to make, Mr. Deputy Speaker, when you so helpfully intervened, was that the nation's experience is that people are motivated not by the national interest to buy assets but by their own self-interest. In the early 1970s they did not care that money was needed for machinery, plant and equipment. Massive tax concessions were given, but they poured their money into property where money was not needed. Those are the values of the Government's supporters. Such people have influence and they penetrate the Government. They can make representations because they have an identity of values and attitudes.

It is a bad deal for the taxpayer who rescued those businesses. Through the NEB, taxpayers took the risk. Part of the NEB's purpose is to take a risk where private enterprise is not prepared to do so. Companies were picked up and turned into successes. All credit is due to the management and people in those companies. The taxpayer, having invested risk capital that could not be obtained under the conventional capitalist system, will lose those assets. The Conservative Party thinks that the capitalist system is wonderful. However, the taxpayer is now being kicked in the teeth. The reward for risk-bearing—the reward for the entrepreneur whom the Adam Smiths of the Tory Party hold up as an idol—will go not to the taxpayer but to the friends of the Conservative Party. That is our basic objection.

Secondly, the clause gives directions to enable the Secretary of State to hold part of the NEB or agency assets. That is a strange development. The Government did that in the British Aerospace Bill and the Civil Aviation Bill. In the case of British Aerospace, two civil servants will each hold a £100 company, pending the emergence of a larger company in which shares will be sold.

Here we shall have a subsidiary company, held by the Secretary of State or his nominee. Who will that be—Sir Arnold Weinstock, who works closely with the Department of Industry? Will it be a civil servant, as with British Aerospace?

There is a great deal of public concern that top, elite civil servants, such as permanent secretaries—and I am not talking about ordinary civil servants who do a good day's work and play a vital part in Government administration—when they retire, hop into the boardrooms of large and influential companies with which they have been dealing. More companies will now come under the Department of Industry, and they will be intimately connected with some of those civil servants.

We need more stringent rules so that those civil servants do not retire into the boardrooms of the companies that the Department holds. The danger is that their judgment may be blurred m anticipation of future benefit for themselves.

We know that the practice goes on. Sir Antony Part, who was permanent secretary at the Department of Industry, leapt into the boardroom of Lucas Aerospace and several insurance companies. He is doing rather well for himself.

With 1½ million unemployed, there should not be that duplication of jobs and moonlighting. My hon. Friend the Member for Hamilton (Mr. Robertson) drew attention to the necessity for keeping those arrangements at arm's length. Arrangements should be uniform throughout the NEB's activities, which would be a safeguard against individual preferential relationships building up within the confines of the Department of Industry.

The Minister may assure the House that the arrangements will work. However, on retirement senior civil servants appear to be able to manipulate themselves with ease into these positions. A civil servant may be released, for example, from a merchant bank to work in the industrial development unit for three or four years. He does not find his way back into the merchant bank, as should happen under the terms of his contract. He may go to a company such as GEC, where he had a working relationship with the vice-chairman. That happened in the past. We are too soft about such occurrences.

The clause could facilitate such arrangements. I am against that. Many civil servants untiringly devote themselves to the public good. It is too easy to bring all civil servants into disrepute when a tiny number act in that way.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

Does the hon. Gentleman agree that the problems to which he refers are an inevitable consequence of a too large public sector and too close involvement by the State in the affairs of individual businesses?

Photo of Mr Bob Cryer Mr Bob Cryer , Keighley

That would be true if those civil servants went to the public sector. They do not. They go to the private sector. An extraordinary fact is that during the past five years of Labour Government many members of the CBI, together with business men up and down the country, criticised civil servants hand over fist. They said that civil servants could not make decisions. They said that the men in Whitehall, who do not know best, were dictating to them. Yet they chase those men from Whitehall as soon as they retire and snare them into the boardroom because of their knowledge.

It is a question not of the size of the public sector but of the determination of the Government of the day to lay down tight ground rules.

Photo of Mr Bob Cryer Mr Bob Cryer , Keighley

I am not concerned with what Roy Jenkins said about the size of the public sector. I am not sure whether he is still in the Labour Party. He has never been a concern of mine.

As the clause gives power to the Secretary of State to allow the assets to be held by the Secretary of State or his nominee—that means that the power would be held by civil servants—the problem would be solved by the announcement of tighter rules, the implementation of existing rules and the ending of this constant succession of waivers to the top people. I shall not pursue the matter any further as it has been covered exhaustively.

I wish to speak about accountability because the amendment contains the words to the Secretary of State shall be made in a statutory instrument requiring approval by resolution of the House of Commons. That means that it comes to the House for affirmative approval, and there is nothing wrong with that.

I have consistently held the view that under successive Governments there should have been more statutory instruments subject to affirmative resolution. The statutory instrument procedure is less than satisfactory. About 2,000 instruments are made every year. They are a necessary arm of government. As the Secretary of State has said, we have a regulatory framework. It is surprising that, when we have such a kind private enterprise system, the Government apparently need such a comprehensive regulatory framework. Nevertheless, it is clear that they do.

Laws that affect people can be put through the House, and the only way that one can find out about them is if one is eagle-eyed. One then puts down a prayer and, with luck, the prayer will be debated. We know that the balance of probability against a prayer being debated is high.

The only sound means of having a prayer debated is if the Front Bench supports it, or if a few Privy Councillors—because of the manner in which the House works—put their signatures to it. There may then be a chance that debating time will be granted. I do not regard that as satisfactory. It is far better that the House should have affirmative resolutions for statutory instruments, which would bring them to the Floor of the House.

I still take the view—it is not the traditional view that is the guiding light of my right hon. Friend the Member for Ebbw Vale (Mr. Foot)—that the Chamber is important and should be used to air views and to raise issues. It is important that it should remain so. If an instrument is introduced, an opportunity for debate arises.

It could be argued by the Government that if there were too many affirmative resolutions they would choke the business of the House. That might not be a bad thing, especially in view of some of the current business of the Government. That is a problem that we would have to solve. Many hon. Members would say that it is a better system, that we must solve it and that we must find more time or establish a system whereby these matters can be dealt with. The principle of accountability on the Floor of the House is right because of this factor.

The Government recognise that the NEB has a role to play. We say that it has an important and dynamic role to play. The Government are cramping the role of the NEB, but it does have a role. There is that common factor between the parties, so it is of importance. Yet the Government are giving powers to the Secretary of State to dispose of assets with virtually no scrutiny at all. If it is a matter of importance to a greater or lesser degree on both sides of the House, it should, by common consent, be of sufficient importance to be brought to the Floor of the House.

I submit that it is wrong to hive off anyway, but, accepting that our will is not likely to prevail in view of the balance, the taxpayer will get a bad deal.

Another point to be borne in mind is that Back-Bench Members do not have carte blanche in asking questions in this place. If one asks certain questions, one is told that, because it is part of the rules of the House, it is a matter of internal Government administration. There are times when that is incompatible with the democratic examination of factors that Members of Parliament need to examine. With the affirmative resolution procedure, we cannot be fobbed off with the bureaucratic reasoning that it is an internal Government matter if we put down questions about the hiving off of assets.

I emphasise that to varying degrees in the House it is accepted that the NEB is an important body. It consists of taxpayers' assets. Taxpayers have taken a risk. Therefore, we reasonably ask, as of right, that the taxpayers' representatives should have the opportunity of debating the Secretary of State's decisions on these matters and that that should be by way of affirmative resolution, as the amendment suggests.

Photo of Mr Alexander Fletcher Mr Alexander Fletcher , Edinburgh North

Perhaps I might intervene at this point in the debate in view of the wide-ranging remarks made by the hon. Member for Hamilton (Mr. Robertson) in moving the amendment.

The hon. Gentleman suggested that this was a blanket clause. It is not. It is a part of the Bill which we envisage will rarely be used. The hon. Gentleman's expression was "a nationaliser's dream machine". When he made that point, I suggested that he had misunderstood the clause.

The hon. Gentleman will see in the explanatory and financial memorandum: Clause2 empowers the NEB and the Agencies to transfer assets held or controlled by them to the Secretary of State and extends his powers of direction to enable him to require them to transfer assets to him. The assets referred to are already in public ownership. That is an essential part of the clause. That is why I said that the clause would rarely be used. Therefore, I repeat that the hon. Gentleman, unusually for him, did not comprehend the nature of the clause.

Photo of Mr George Robertson Mr George Robertson , Hamilton

The Minister does not understand the clause. He quoted from the explanatory and financial memorandum. The clause refers to the transfer of assets. It does not state that the assets have to be 100 per cent. securities in the companies concerned. It is the transfer of the assets which, at that stage, may be only partially in the public sector. I am sure that many of the hon. Gentleman's hon. Friends will be disturbed at the prospect of any Secretary of State taking upon himself powers to direct assets, even partially acquired assets, from the semi-public sector to the wholly-public sector.

Photo of Mr Alexander Fletcher Mr Alexander Fletcher , Edinburgh North 9:45 pm, 6th February 1980

The hon. Gentleman has now qualified the point that he was making. The fact remains that we are talking about the direction of assets. In these exceptional cases it is almost certain that these assets, from the majority shareholding point of view, will be owned either by the agency or by the Secretary of State.

The purpose of the clause is to deal with companies whose scale or complexity of operations, or whore commercial position in the country, presents considerations of national interest—important considerations which could perhaps overwhelm the NEB or the agencies in the conduct of the affairs of these businesses. That is a factor that must be taken into account if one looks at the balance of a company such as Rolls-Royce as part of the plethora of the NEB and the size and importance of Rolls-Royce in relation to the other activities of the National Enterprise Board.

The hon. Member for Hamilton again indulged in what I have previously described as the claiming of an exaggerated role for the National Enterprise Board and the development agencies. This was not particularly relevant to the debate, but I should like to refer to the Scottish Development Agency and its investment role. It is important to remember that, on an annual basis, the value of the investments that the SDA has made, and is likely to make, is less than 1 per cent. of the total manufacturing investment that takes place within the manufacturing sector in Scotland in any one year. It does a disservice to the community at large to present the NEB or the agencies as some great saviour from the economic difficulties and the problems that face people in various regions. It is wrong to exaggerate this role. It was mentioned a number of times in Committee, and it has come up again in the course of the debate.

Photo of Mr George Robertson Mr George Robertson , Hamilton

That has nothing to do with it.

Photo of Mr Alexander Fletcher Mr Alexander Fletcher , Edinburgh North

It has this to do with the clause. The hon Gentleman, in presenting his amendment, indulged in exaggeration of the importance of the role of the NEB and the agencies in relation to the situation in the economy generally. This was a point that my right hon. Friend the Secretary of State tried, in previous debates, to put in some sort of scale for the benefit of Opposition Members.

Photo of Mr James Lamond Mr James Lamond , Oldham East

The hon. Gentleman is explaining that clause 2, as it stands, allows the transfer of assets. He has given some possible reasons why they might be transferred, which I accept. Circumstances can arise which require the transfer of assets. However, I was under the impression that the amendment asked that the transfer of these assets should be subjected to examination by the House before the transfer is agreed so that those who work in National Enterprise Board companies would be satisfied that there was good reason for it. Will the hon. Gentleman address himself to the amendment and say why he feels that it is not necessary for the Government to explain the reasons for wanting to transfer these assets?

Photo of Mr Alexander Fletcher Mr Alexander Fletcher , Edinburgh North

I shall come to that point. It is unfair of the hon. Gentleman to suggest that I should be strictly confined to the amendment and its purpose when speeches by Opposition Members strayed far from that point. I am replying to some of the points that were made by Opposition Members.

The hon. Member for Hamilton referred to the guidelines requirement that the NEB should consult the Secretary of State about disposals. That requirement was laid upon the NEB by the right hon. Member for Chesterfield (Mr. Varley) when he was the Secretary of State, and the reference to the existing rights of shareholders does not need to be given the force of a statutory direction as it is a statement of the law.

The hon. Member also suggested that the new clause and the amendment to clause 4 add to the lack of accountability in clause 2. That is not correct. One of the reasons for introducing the new clause rather relying on powers in other legislation is to provide a measure of accountability which is appropriate to Parliament today.

Photo of Mr George Robertson Mr George Robertson , Hamilton

The amendment to clause 4 and the new clause do not strengthen the powers of public accountability. They provide new ceilings for loans and guarantees that might be given to companies that come into the hands of the Secretary of State for Industry. If they have no need of loans or guarantees, no public accountability is involved.

Photo of Mr Alexander Fletcher Mr Alexander Fletcher , Edinburgh North

The amendments cover the points made by the hon. Gentleman.

The hon. Member for Keighley (Mr. Cryer) was perhaps close to being out of order, but he demonstrated once again one of the basic ingredients of Britain's current economic and politicalproblems—the desire to prolong the class war. It is very much a phoney war. It is an essential part of the strategy of the Labour Party, and without it that party could not survive. I suppose, therefore, that the hon. Gentleman should be allowed his daily dose of envy.

The amendment refers to the fact that the Secretary of State is already required under section 7 of the Industry Act 1975 to lay before each House of Parliament a copy of any direction that he may give to the NEB. There are similar provisions for the Scottish and Welsh Development Agencies. Clause 2 extends these requirements to directions made as to transfers of property to the Secretary of State. However, the amendment proposes that such directions should be subject to the approval of this House.

It is not clear whether the purpose of the amendment is that all transfers under clause 2 would be subject to such approval or only transfers made under direction. In either case, however, I believe that the proposal would be inappropriate. The clause 2 power is a counterpart of section 5 of the 1975 Act. That provides that the Secretary of State may, at his discretion, transfer publicly owned property to the NEB. The approval of the House is not required for such transfers, and I do not see why it should be thought necessary when events flow in the reverse direction. The hon. Member for Hamilton did not complete his argument on that but presented only one side of the picture in moving the amendment.

There is a separate question of principle. The exercise of the Secretary of State's power of direction under section 7 of the 1975 Act is not subject to the approval of the House. That power is very wide. It extends to the exercise by the NEB of any of its statutory functions, and so to the whole range of its activities. It would be illogical to apply a constraint to the Secretary of State's use of a different power of direction which is of such limited application, especially as there is no constraint on its counterpart. That is why I invite the House to reject the amendment.

Mr. Tom Ellis:

My hon. Friend the Member for Keighley (Mr. Cryer) said that our objection to the clause and the reason for our amendment was that the rewards would go not so much to the taxpayer as to the friends of the Conservative Party. I agree with him. That is an objection, though not the basic objection. There are more substantial objections. I also agree with my hon. Friend about the need for accountability. Accountability is a different issue, and my hon. Friend made the point that we are introducing a kind of second-best amendment. We are trying to salvage something from the wreck. I make my contribution in the light of that "second-best" approach.

The clause as it stands follows quite naturally from clause 1, which expresses the fundamentalist notion of ownership held by Conservative Members and the Government. They feel that there are two kinds of ownership—private ownership and public ownership. The reality is far more complex. There is a multiplicity of kinds of ownership, which have their origins in the nineteenth century. We start with the entrepreneurial concept and move on to institutional ownership and from there to the example of the little old widow putting her money into an insurance company. Ownership comprises those people who buy shares and includes the concept of the NEB. Government shares in such enterprises as BP and our stake in the nationalised industries are other forms of ownership. That is an enormous range.

It is a pity that the Bill over-simplifies the nature of ownership. That idea of ownership will lead this country one step further along the road of chronic decline that we have been treading for so long. That is the fundamental reason for our amendment and why we are trying to alter the nature of the Bill. There is a desperate need in this country to arrest and reverse that chronic decline. The Bill, and this clause in particular, is a paradox and an anachronism. If the Tories say that private enterprise is good and public enterprise is bad—

Photo of Lieut-Colonel Dick Crawshaw Lieut-Colonel Dick Crawshaw , Liverpool Toxteth

Order. We have ranged pretty widely in this debate, but we are concerned with the question whether parliamentary approval should be sought for this. I hope that the hon. Member for Wrexham (Mr. Ellis) will keep to the point.

Mr. Ellis:

I will come rapidly to the specific point, Mr. Deputy Speaker. I was merely seeking to explore a point, and I apologise.

The specific amendment deals with ministerial control on the one hand and parliamentary control on the other, and we should be considering the merits and demerits of the two types of control. In industrial Britain, against the background of public ownership, I believe that both types of control are unsatisfactory. They have far more weaknesses than strengths.

I could quote many examples of the weaknesses of ministerial control. Clause 8, as it stands, strengthens ministerial control, despite the fact that the hon. Gentleman says that it is an academic issue and that that control will rarely be used. The clause gives the Minister considerably greater power—"influence" is perhaps a better word—in any company owned by the State.

I could give many examples, but I will cite only one. I know about it because at the time I was a full-time exployee in the coal industry. My example concerns the pricing policy of the National Coal Board in the 1950s, when there was a desperate shortage of coal for two or three years. The Board, which had a statutory duty to fix its own prices under a kind of break-even arrangement, taking a good year with a bad year, had a gentleman's agreement concerning pricing. There was no question of a legal document. The issue was decided by something as vague as the influence of the Minister who decided that a certain price should be charged for coal.

For a time we were importing coal from America at one price and selling it on the British market at a lower price, and if I remember rightly £73 million was lost on the deal. This was done for purely political reasons, and the National Coal Board carried the can. There are many examples that I could give to illustrate that sort of ministerial influence. This is wholly bad, not in the short-term sense of "doing a fiddle", as in the example that I have just given, but in influencing policies in an industry for all the wrong reasons. An element of political capriciousness becomes dominant in that industry, and as a result there is a lack of continuity in policy and all the consequential failings that are suffered by so many British industries—

It being Ten o'clock, the debate stood adjourned.

Ordered,

That, at this day's sitting, the Industry Bill may be proceeded with, though opposed, until any hour.—[Mr. Boscawen.]

Question again proposed, That the amendment be made.

Mr. Ellis:

The ministerial control, as it stands and as it will be when it is strengthened by the proposals in the clause, is bad for British industry. Certainly it is bad for British industry that is publicly owned and in which the Minister has considerable influence and authority.

As a last resort, one is obliged to put forward an alternative. The alternative that we suggest is some kind of parliamentary control. I am forced to accept that this is manifestly unsatisfactory. I cannot help but feel that when the steel Sub-Committee of the Select Committee of the House summoned the chairman of the British Steel Corporation to give evidence, it was redolent of the nineteenth century approach.

It is most unsatisfactory to have a Committee of Members sitting down formally for two or three sessions during the afternoon scrutinising the affairs of as complex a concern as the British Steel Corporation. That simply cannot be done. It would need a permanent investigation of several weeks or even months of the affairs of that Corporation before we could reach any sort of satisfactory conclusion about the nature of the problems, how they were being dealt with, and the efficiency of the management. I am the first to accept that parliamentary control, as such, is unsatisfactory.

Having said all that, one must accept also that while it may be true that a Government may publicly state that they have given a directive, they may not say that they have squeezed someone's arm. If it is written into the Act that the Government's decision to instruct a company must come to the light of day in this House, at least some responsibility will be placed on the Minister concerned. Whatever the consequences for the industry, the results—good or bad—would land fairly and squarely on the shoulders of the Minister concerned. For that reason we are perfectly right to suggest this amendment, which I support.

Photo of Mr Michael Grylls Mr Michael Grylls , Surrey North West

The Opposition arguments so far have been about the NEB. If they have done nothing else, they have proved the point made earlier by my right hon. Friend the Secretary of State for Industry that there is a deep divide of comprehension between the two sides as to what industry is all about.

The hon. Member for Keighley (Mr. Cryer) showed in his speech a degree of lack of comprehension that was even more amazing because at one time he was actually a Minister in the Department of Industry. His speech was pure humbug. When he was a Minister, he was responsible for transferring to the NEB assets then held by the Secretary of State. There were no statutory instruments when that happened in 1976. Because we propose to transfer the assets back to the Department of Industry in certain circumstances, he claims that it is all wrong, yet we are proposing to transfer them in exactly the same way as the hon. Member did. People listening to this debate will wonder what it is all about. There is no doubt that there is a good deal of humbug involved.

During the last Parliament I was critical of the NEB. I was particularly critical of its lack of accountability to Parliament. The Public Accounts Committee—the senior Select Committee of the House of Commons—recommended to the then Labour Government that the Comptroller and Auditor General should be allowed to look at the books and to make sure that everything was all right. The Labour Government resisted that. So far, we have not been successful with the present Government on that matter. The only thing that I can say in defence of this Government is that there is less activity, so perhaps there is less need for the Comptroller and Auditor General.

One good point about transferring shares from the NEB to the Department of Industry is that the Comptroller and Auditor General will be able to get his hands on the companies concerned and examine the books. The Opposition should agree that it is a good thing to bring the shares back into the Department of Industry.

The argument is not about the disposal of shares. It is about transferring them from the NEB into the Department of Industry. The silver lining to the argument of the Opposition—who are against any tinkering with the NEB—is that when the shares are transferred back, the Comptroller and Auditor General will be able to look at the companies and he will be able to tell us what is going on. That is a good point.

I draw the Opposition's attention to section 2(2)(c) of the Industry Act 1975, which states that one of the functions of the Board shall be to extend public ownership into profitable areas of manufacturing industry. The NEB could do that without any reference to the House, without a statutory instrument, and without any overseeing by the Comptroller and Auditor General. All the decisions of the NEB can be taken without reference to Parliament. Yet we have heard supreme humbug speeches from the Opposition, suggesting that there should be a statutory instrument, with all that that entails, for the simple action of transferring shares back into the hands of the Secretary of State. The public will see the rough side of Socialism. When it comes to extending the frontiers of Socialism, it can be done without any reference to the House. On the other hand, when the Government believe that it is better, for example, for Rolls-Royce to be under the wing—if that is the right way of putting it—of the Department of Industry rather than the NEB, there is a great deal of excitement about statutory instruments and so on.

I believe that amendment No. 8 should be discarded. I shall be glad if the few remaining shares that remain under the control of the NEB after a few years of Conservative Government are transferred to the Department of Industry. I should like the Comptroller and Auditor General to look at the books and see how the taxpayers' money is being wasted.

This is a humbug amendment. It should be disposed of quickly. The House should reject it and show clearly to the public that there are two facets to Socialism. When it is extending the frontiers of nationalisation it can be done in secrecy, with no reference to it, but when a modest change is proposed there is a cry for parliamentary control.

Photo of Mr James Lamond Mr James Lamond , Oldham East

It is surprising that Conservative Back Benchers object to the amendment. It is simply trying to ensure that when the Government make such a decision there is a possibility of examining the reasons for doing so. The argument is not about extending the frontiers of Socialism or whether there are times when it is necessary to make transfers. I accept that it will be necessary to make transfers from time to time, for various reasons. I object to the fact that Parliament will not be given the opportunity of asking, if necessary, why such action is then taken.

We are told that such action would be taken on only exceptional occasions, so it cannot be argued that debating the matter on the Floor of the House would take a great deal of time. Hon. Members who have an interest in a company, perhaps because they have constituents employed there, will obviously wish to find out what is happening to it.

My hon. Friend the Member for Keighley (Mr. Cryer) made a fine speech and covered a number of important aspects. He made the general point about the need for the House to be able to raise questions on statutory instruments and approve them before they can be put into effect.

I want to put a more particular case. Thousands of my constituents work for Ferranti's, which is owned by the NEB. We can speak of the need for Parliament to know and the need to safeguard the taxpayers' interest, and so on, but I am concerned more about the rights of workers to know what is being done to the company that employs them.

Hon. Members should not think that employees are not interested. A number of my constituents who work for Ferranti's recently invited me and other hon. Members from the Oldham area to meet them, because they were distressed about the future of the company. They knew that changes were on the way and that there was little that we could do, since the Labour Party lost the election, but they did not know what was to happen to the company.

If a transfer of Ferranti assets is proposed, the employees will hear of it and will ask me what is happening. I shall write to the Minister, but that is not the same as being able to debate the matter and question the Minister on the Floor of the House, which is what the amendment is designed to achieve.

Hon. Members may not wish to object to the Government's action. They may recognise the reality of the Secretary of State's position or concede that it will result in an improvement in the prospects of the firm and the workers. Hon. Members may be happy to approve the statutory instrument, but they will want to know what is happening so that they can inform their constituents whose lives are tied up in NEB companies and who may have spent their whole working lives in those firms. Surely those workers are entitled to know what the Government intend to do, especially as changes can so sharply affect their futures.

Photo of Mr Tom McNally Mr Tom McNally , Stockport South

My right hon. Friend the Member for Deptford (Mr. Silkin) rightly described clause 1 as the body of the Government's industrial strategy. Clause 2 shows how they intend to dispose of the body, and the amendment is an attempt to snatch the body back into public debate.

I have listened to most of our debates today and I have heard no recognition from Ministers—and little from Conservative Back Benchers—of the fact that we are talking about the jobs and working lives of men and women and the investment that they have put into industry. I am surprised that the Government oppose the amendment. If they are to daily with workers' jobs and lives, they have a duty to justify themselves to the House.

I think that it is a rather sad and ironic debate, because I do not think that either side of the House can claim to have in its back pocket a flip solution to Britain's industrial problems for all the 30 years—as the Secretary of State has said, perhaps 100 years—of industrial decline.

Photo of Mr Tom McNally Mr Tom McNally , Stockport South

Relative industrial decline; I take the right hon. Gentleman's point.

What is worrying is that in his statements in the House and elsewhere, both in Government and in Opposition, he has shown an almost fanatical obsession with a single solution—this "magic hand" of the market. It is that which really worries me in clause 2, giving him so much power over industry. The Minister was right when he said that the NEB and the various agencies had had relatively small control over the whole range of industrial investment. Indeed, those who prepared the pre-1974 Labour Party programme probably regretted that it was so small during the period 1974–79. But, if it so small, why are the Government so vindictive? Why such a determination to curb the National Enterprise Board?

I do not want to make a constituency speech this evening, but I have to say that within my constituency a very large number of people work for Fairey Engineering, for Ferranti and for ICL. A large number of those people ask me why they are doing this, what did they do wrong; what is the sin of which the NEB is guilty to give rise to the Bill and this whole thrust of Government policy.

We were told earlier that the NEB was to be a kind of rampaging monster of Socialism let loose on the land. In fact it turned out, as I know from my own experience and from industrialists in my constituency, to be a rather amiable beast in that respect. Industrialists began to build up a rapport with the NEB; they began to trust its judgment and, in times of difficulty, they saw the help of the NEB at the time as giving stability and a little forward look to their company.

What I find difficult to understand and what I have not heard mentioned at all today is why, when the NEB has performed for many thousands of my constituents a very valuable task in preserving their jobs and for the country in preserving industries, design teams and whole organisations that would have been dispersed, not once today have we heard any detailed criticism of its performance. As a result of that good work and that confidence between management and workers, we have this little piece of petty vandalism by the Secretary of State in particular.

I worry, because I am asked continually by constituents of mine who work for NEB firms what are these powers that will be given to the Secretary of State. Who will be consulted, and how? I heard the hon. Member for Bury St. Edmunds (Mr. Griffiths) demanding that management should be consulted, but when will the workers be consulted? How are they to be consulted, and what are the criteria by which these powers are to be used?

Photo of Lieut-Colonel Dick Crawshaw Lieut-Colonel Dick Crawshaw , Liverpool Toxteth

Order. It is a question whether Parliament should be consulted. I hope that the hon. Gentleman will get on to that point.

Photo of Mr Tom McNally Mr Tom McNally , Stockport South

Absolutely, Mr. Deputy Speaker.

I hope that Parliament will be used as a means of consulting and justifying the action and the powers that we are about to transfer if we should lose this vote tonight. The real worry—I hope that it is one that will be kept before Parliament constantly; it is certainly the worry of my constituents—is that when these powers are used they will not be to the interest of the worker or of industry but will be Treasury directives, or promises made by the Secretary of State in a hard battle in the Cabinet, to fulfil another Tory manifesto commitment on taxes for the rich.

According to the chairman of the Post Office, the present policy involves the process of "leaning on". The Secretary of State declared that he would not intervene, and yet he is taking more powers than any other Secretary of State for Industry has taken in peacetime. He is amassing more power for himself over industry.

The amendment is designed to establish a minimum of parliamentary control against the fanaticism of the Secretary of State. It is a justifiable and reasonable amendment, and I hope that even those who are whipped and dragooned will see it as such tonight.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

We are discussing a bad Bill and a bad clause. The amendment does not go far to improve the clause, but at least it gives us some parliamentary accountability. The Secretary of State talked about the great divide between the parties. The Government have an obsession that all our problems are the result of public ownership. The shipbuilding industry had 38 per cent. of the world's trade in 1950. It had declined to 4 per cent. in 1975. The Conservative Government were in power for 19 of those years. That decline was a failure for private enterprise.

One of British Leyland's biggest competitors is the Renault company, which is publicly owned. When there is a world recession, pushing back the frontiers of public ownership is irrelevant. The previous Government set up the National Enterprise Board and the Scottish and Welsh Development Agencies.

Photo of Lieut-Colonel Dick Crawshaw Lieut-Colonel Dick Crawshaw , Liverpool Toxteth

Order. The hon. Member for Aberdare (Mr. Evans) is debating a matter that has nothing to do with the amendment.

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

There was opposition to the setting up of the Welsh Development Agency and the NEB. However, Conservatives accept that the Scottish and Welsh Development Agencies and the NEB have a role to play. The Secretary of State for Wales made a statement in the House this week. He said that the Government planned to make available about £48 million in the next two years for remedial measures because of the catastrophe caused in Wales by Government policies. He said that a major part of the additional resources would go to the Welsh Development Agency.

In spite of the Government's mad obsession with expenditure cuts, they recognise that the Welsh Development Agency is the only organisation in Wales that can prevent the hopeless plight that could result from steel and coal industry closures.

If money is allocated to the Welsh Development Agency and the NEB intervenes to take over British Leyland and Rolls-Royce, private enterprise will have failed, as it did in the shipbuilding industry. British Leyland is to be transferred from the NEB to the Secretary of State's office. We are worried, because the Secretary of State says that the steel strike is none of his business. In the Bill, he seeks to intervene. If those industries are to be transferred to the Department of Industry, before the Secretary of State decides that Slater Walker or someone else is to take over British Leyland, or that it is to be sold to Honda or Renault, he should report to the House. He should report to the House before public assets that have been acquired—

Photo of Mr Ioan Evans Mr Ioan Evans , Aberdare

I will not give way, because I have been asked to finish quickly. We do not want to delay the proceedings on the Bill.

If these public assets, which have been acquired with public funds, are to be made more profitable, we must safeguard ourselves for the time when they become profitable. They may be sold to private enterprise because of the dogmatic land doctrinaire attitude of the Conservative Party. The Government are quite willing that we should nationalise an industry that is not profitable, but once it becomes profitable they say that it must be handed back to the friends of the Conservatives. Because of the Government's obsession with rolling back the public sector, we say that our amendment should be carried by the House and that before the Secretary of State takes any action he should be accountable to Parliament.

If the Secretary of State intends to instruct the NEB to tell BL and the new micro-chip industries that the Government are to take them over so that they can be transferred to the financial backers of the Tory Party, the House must be able to keep a check on that, and the amendment, if carried, will go some way to achieving it.

Photo of Dr Jack Cunningham Dr Jack Cunningham Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Industry)

As the Government Benches seem to be rather uncertain why we have moved this amendment, let me try to spell it out. Clause 2 gives the NEB a new power to transfer to the Secretary of State shares and property, including the shares and property of its subsidiaries. The Secretary of State already has power under section 5 of the 1975 Act to transfer shares and property to the NEB.

Previous members of the board expressed the view that the absence of any power to enable it to make such transfers had never been a problem either in its operations or in its dealings with the previous Secretary of State and officials at the Department of Industry. Of course, it is this Government and this Secretary of State who are taking this power and no doubt requiring the NEB to make transfers from companies such as Rolls-Royce.

The clause is explicit about this new power for the NEB, subject to the Secretary of State's section 7 general and specific powers of direction. Otherwise I believe that there would be doubt about the ability of the Secretary of State to direct the NEB to transfer assets to him. If those circumstances and those powers are not important to Government Members, they are important to us.

The previous board was so concerned about these developments—as my hon. Friend the Member for Hamilton (Mr. Robertson) said—that it came into direct conflict with the Secretary of State and subsequently resigned en masse. I re-emphasise that we are not talking about some raving, Left-wing members of the NEB, as was suggested earlier by the hon. Member for Southampton, Test (Mr. Hill). It was quite the reverse. The Secretary of State smiles and nods.

The members of the board were not willing to have their commercial judgment overridden by the Secretary of State for Industry, especially a Secretary of State who prides himself on not wanting to run industry, not knowing how to run industry and not wanting to have anything to do with intervention. The antithesis of all that he has said during his nine months in office is epitomised in the power contained in clause 2, to which the ex-members of the board, to a man, took such violent exception.

It is for those reasons, substantial reasons of considerable commercial and industrial policy importance, that we have tabled the amendment. We shall not be put off by the comment of the Under-Secretary of State for Scotland that the amendment is not, perhaps, as tightly worded as it might be. I concede that that may well be so, but that is peripheral to the issue before the House.

All the non-interventionists have now disappeared. The hon. Members for Surrey, North-West (Mr. Grylls), for Wolverhampton, South-West (Mr. Budgen) and others are no longer in their places. I have already referred to the hon. Member for Southampton, Test. I suppose that they are plucking up courage to go through the Lobby in support of something that must be anathema to them in reality, given their previous record on issues of this kind.

Also, the Secretary of State wants powers to direct the NEB to sell assets. We understand from the press, particularly the Financial Times of 19 and 21 December, that even that worm has now turned and that the present board, appointees to a man of the present Secretary of State, have themselves said that they are not willing to be dictated to, apparently, and that they are not willing to have their commercial judgment overridden.

Perhaps we shall discover in time that this sale of assets before the end of the financial year will not take place. I hope that that will be so. It was being done for reasons of party dogma to do with the PSBR and it had nothing to do with good commercial judgment or good industrial management. The Secretary of State is as well aware of that as is anyone. Of course, this was another reason why we were unhappy to let the clause go through unamended.

My hon. Friend the Member for Keighley (Mr. Cryer) was quite right; we would prefer not to be discussing the Bill's provisions at all. But since we have to do that and, as realists, we are aware of the Government's majority in the House, the least of our responsibilities was to table an amendment of this kind to give the House the opportunity to discuss matters affected by these powers.

The situation will be that the Secretary of State will be able to substitute his judgment and that of his advisers for the commercial judgment of the NEB and its advisers. This must be the biggest contradiction in his whole position—and there are many contradictions in his position at present. It must be the biggest of all, coming from him, as it does, with all that he professes to believe about the need not to intervene. Indeed, in one of the debates that we had about the Rolls-Royce hiatus, the right hon. Gentleman and his hon. Friends said that a distinguished board such as the board of Rolls-Royce was not willing to be second-guessed by the NEB. He is now putting himself in exactly that position. He will be second-guessing the NEB itself in the situation in which he is likely to be when the Bill becomes an Act, as we suspect it will.

We are entitled to ask a number of questions about what will happen in these circumstances, because the guidelines and the statement of the Secretary of State leave a number of issues unclear.

Another reason why we have put forward the amendment is that the Secretary of State will have the power to direct the NEB to move assets, perhaps contrary to the wishes of the boards of companies, whether they are subsidiaries, wholly owned or partially owned by the NEB or the agencies, and, even worse, to force companies into partnerships, perhaps with organisations that they do not want to join. That is a serious and strong power. It is a power that no merchant bank, city organisation or investment institution would tolerate for one moment if it were applied to them. Apparently, the Secretary of State intends that such power should be exercised in respect of taxpayers' assets by him and his advisers. Again, that is a massive contradiction of his position.

What are the contractual obligations that exist where the NEB has shareholdings? The Secretary of State has been remarkably reticent about those. Will they be overriden by his power? That is another question that the Government spokesmen have failed to answer. The point about the rights of workers was excellently made by my hon. Friend the Member for Stockport, South (Mr.McNally). In the previous clause we have seen the intention not to further industrial democracy. Are the workers in Ferranti, Fairey Aviation or Alfred Herbert—even British Leyland, since we heard so much about the vote on the Michael Edwardes' plan—to be consulted before there is a forced change of asset holders? Will the Secretary of State applaud that and agree with it? There are no guarantees for the workers in these industries.

It is significant that even directors of the companies—managing directors and their boards—have expressed the gravest possible doubts about the position, following the publication of the Bill and the refusal of the Government to accept any amendment to the provisions, in particular during the Committee stage.

The NEB is involved in a great many companies—between 12 and 60 wholly-owned and about 60 to 70 in which it has a partial interest. A great many workers—a large number of assets—are involved. To make matters worse, later tonight we shall be discussing new clause 1 and amendment 12, which are both long, involved, complex matters relating to clause 4. Again, that was unamended and will obviously also have great impact on asset control and ownership by the Secretary of State.

Although the Bill retains the present £3,000 million limit, as the Secretary of State compels NEB to reduce its assets and, therefore, its capital, more of the limit will be left in his hands for him to exercise. I should have thought that many Conservative Members would also be concerned about the matter, because it is another massive seizing of power, giving room for manoeuvre for the noninterventionist Secretary of State. Not a peep has been heard about that. If the hon. Member for Surrey, North-West showed half as much concern for such matters as for decrying ideas simply because they emanate from Socialists or the Labour Party, we would think more of his intentions. All he seemed to do tonight was to repeat in several different ways the word "humbug", rather like Mr. Scrooge. He made no real contribution to the issues.

On commercial judgment, on any proper commercial practice, the powers

would be regarded as unacceptable. They brought about the resignation of a public board. In itself, that is unprecedented. Apparently they have already caused a difference of opinion between the Secretary of State and his appointees.

The House should accept the amendment so that Parliament, if no one else, may have the opportunity to debate such issues before a final decision is made.

Question put, That the amendment be made:—

The House divided: Ayes 235, Noes 292.

Division No. 157]AYES[10.40 pm
Abse, LeoDunn, James A. (Liverpool, Kirkdale)Leadbitter, Ted
Adams, AllenDunwoody, Mrs. GwynethLeighton, Ronald
Allaun, FrankEadie, AlexLestor, Miss Joan (Eton & Slough)
Anderson, DonaldEastham, KenLewis, Ron (Carlisle)
Archer, Rt Hon PeterEllis, Raymond (NE Derbyshire)Litherland, Robert
Armstrong, Rt Hon ErnestEllis, Tom (Wrexham)Lofthouse, Geoffrey
Ashley, Rt Hon JackEnglish, MichaelLyons, Edward (Bradford West)
Ashton, JoeEvans, Ioan (Aberdare)McCartney, Hugh
Barnett, Guy (Greenwich)Evans, John (Newton)McDonald, Dr Oonagh
Barnett, Rt Hon Joel (Heywood)Ewing, HarryMcElhone, Frank
Benn, Rt Hon Anthony WedgwoodField, FrankMcGuire, Michael (Ince)
Bennett, Andrew (Stockport N)Flannery, MartinMcKelvey, William
Bidwell, SydneyFletcher, Ted (Darlington)MacKenzie, Rt Hon Gregor
Booth, Rt Hon AlbertFoot, Rt Hon MichaelMaclennan, Robert
Boothroyd, Miss BettyFord, BenMcMahon, Andrew
Bradford, Rev. R.Forrester, JohnMcMillan, Tom (Glasgow, Central)
Bradley, TomFoster, DerekMcNally, Thomas
Bray, Dr JeremyFoulkes, GeorgeMcNamara, Kevin
Brown, Hugh D. (Provan)Fraser, John (Lambeth, Norwood)McWilliam, John
Brown, Robert C. (Newcastle W)Freeson, Rt Hon ReginaldMagee, Bryan
Brown, Ronald W. (Hackney S)Garrett, John (Norwich S)Marks, Kenneth
Brown, Ron (Edinburgh, Leith)Garrett, W. E. (Wallsend)Marshall, David (Gl'sgow,Shettles'n)
Buchan, NormanGinsburg, DavidMarshall, Dr Edmund (Goole)
Callaghan, Rt Hon J. (Cardiff SE)Golding, JohnMarshall, Jim (Leicester South)
Callaghan, Jim (Middleton & P)Gourlay, HarryMartin, Michael (Gl'gow, Springb'rn)
Campbell, IanGrant, George (Morpeth)Mason, Rt Hon Roy
Campbell-Savours, DaleGrant, John (Islington C)Maxton, John
Canavan, DennisHamilton, James (Bothwell)Maynard, Miss Joan
Cant, R. B.Hamilton, W. W. (Central Fife)Meacher, Michael
Carmichael, NeilHardy, PeterMellish, Rt Hon Robert
Carter-Jones, LewisHarrison, Rt Hon WalterMikardo, Ian
Clark, Dr David (South Shields)Hart, Rt Hon Dame JudithMillan, Rt Hon Bruce
Cocks, Rt Hon Michael (Bristol S)Hattersley, Rt Hon RoyMitchell, Austin (Grimsby)
Cohen, StanleyHaynes, FrankMolyneaux, James
Coleman, DonaldHealey, Rt Hon DenisMorris, Rt Hon Alfred (Wythenshawe)
Concannon, Rt Hon J. D.Heffer, Eric S.Morris, Rt Hon Charles (Openshaw)
Cook, Robin F.Hogg, Norman (E Dunbartonshire)Morris, Rt Hon John (Aberavon)
Craigen, J. M. (Glasgow, Maryhill)Holland, Stuart (L'beth, Vauxhall)Moyle, Rt Hon Roland
Crowther, J. S.Home Robertson, JohnMulley, Rt Hon Frederick
Cryer, BobHoram, JohnNewens, Stanley
Cunliffe, LawrenceHowells, GeraintOakes, Rt Hon Gordon
Cunningham, George (Islington S)Huckfield, LesO'Halloran, Michael
Cunningham, Dr John (Whitehaven)Hudson Davies, Gwilym EdnyfedO'Neill, Martin
Dalyell, TamHughes, Mark (Durham)Orme, Rt Hon Stanley
Davidson, ArthurHughes, Robert (Aberdeen North)Owen, Rt Hon Dr David
Davis, Clinton (Hackney Central)Hughes, Roy (Newport)Palmer, Arthur
Davis, Terry (B'rm'ham, Stechford)Janner, Hon GrevillePark, George
Deakins, EricJay, Rt Hon DouglasParker, John
Dean, Joseph (Leeds West)John, BrynmorParry, Robert
Dempsey, JamesJohnston, Russell (Inverness)Pavitt, Laurie
Dewar, DonaldJones, Rt Hon Alec (Rhondda)Penhaligon, David
Dixon, DonaldJones, Dan (Burnley)Powell, Rt Hon J. Enoch (S Down)
Dobson, FrankKaufman, Rt Hon GeraldPowell, Raymond (Ogmore)
Dormand, JackKerr, RussellPrescott, John
Douglas, DickKilroy-Silk, RobertPrice, Christopher (Lewisham West)
Douglas-Mann, BruceLambie, DavidRace, Reg
Dubs, AlfredLamborn, HarryRees, Rt Hon Merlyn (Leeds South)
Duffy, A. E. P.Lamond, JamesRichardson, Jo
Roberts, Allan (Bootle)Soley, CliveWeetch, Ken
Roberts, Ernest (Hackney North)Spearing, NigelWellbeloved, James
Roberts, Gwilym (Cannock)Spriggs, LeslieWelsh, Michael
Robertson, GeorgeStallard, A. W.White, Frank R. (Bury & Radcliffe)
Rodgers, Rt Hon WilliamSteel, Rt Hon DavidWhite, James (Glasgow, Pollock)
Rooker, J. W.Stewart, Rt Hon Donald (W Isles)Whitlock, William
Ross, Ernest (Dundee West)Stoddart, DavidWigley, Dafydd
Ross, Stephen (Isle of Wight)Stott, RogerWilley, Rt Hon Frederick
Ross, Wm. (Londonderry)Strang, GavinWilliams, Rt Hon Alan (Swansea W)
Rowlands, TedStraw, JackWilliams, Sir Thomas (Warrington)
Ryman, JohnTaylor, Mrs Ann (Bolton West)Wilson, Gordon (Dundee East)
Sandelson, NevilleThomas, Jeffrey (Abertillery)Wilson, Rt Hon Sir Harold (Huyton)
Sever, JohnThomas, Mike (Newcastle East)Wilson, William (Coventry SE)
Sheerman, BarryThomas, Dr Roger (Carmarthen)Winnick, David
Sheldon, Rt Hon Robert (A'ton-u-L)Thorne, Stan (Preston South)Woodall, Alec
Shore, Rt Hon Peter (Step and Pop)Tilley, JohnWoolmer, Kenneth
Short, Mrs. RenéeTinn, JamesWrigglesworth, Ian
Silkin, Rt Hon John (Deptford)Torney, Tom
Silkin, Rt Hon S. C. (Dulwich)Varley, Rt Hon Eric G.TELLERS FOR THE AYES
Silverman, JuliusWainwright, Edwin (Dearne Valley)Mr. Ted Graham and
Smith, Cyril (Rochdale)Walker, Rt Hon Harold (Doncaster) Mr. George Morton.
Smith, Rt Hon J. (North Lanarkshire)Watkins, David
NOES
Adley, RobertCostain, A. P.Heseltine, Rt Hon Michael
Aitken, JonathanCranborne, ViscountHicks, Robert
Alexander, RichardCritchley, JulianHiggins, Rt Hon Terence L.
Alison, MichaelCrouch, DavidHill, James
Amery, Rt Hon JulianDean, Paul (North Somerset)Hogg, Hon Douglas (Grantham)
Ancram, MichaelDickens, GeoffreyHolland, Philip (Carlton)
Arnold, TomDorrell, StephenHooson, Tom
Aspinwall, JackDover, DenshoreHordern, Peter
Atkins, Rt Hon H. (Spelthorne)du Cann, Rt Hon EdwardHowe, Rt Hon Sir Geoffrey
Atkins, Robert (Preston North)Dunn, Robert (Dartford)Howell, Rt Hon David (Guildford)
Atkinson, David (B'mouth, East)Durant, TonyHowell, Ralph (North Norfolk)
Baker, Kenneth (St. Marylebone)Eden, Rt Hon Sir JohnHunt, David (Wirral)
Baker, Nicholas (North Dorset)Edwards, Rt Hon N. (Pembroke)Hunt, John (Ravensbourne)
Beaumont-Dark, AnthonyEggar, TimothyHurd, Hon Douglas
Bell, Sir RonaldElliott, Sir WilliamIrving, Charles (Cheltenham)
Bendall, VivianEmery, PeterJenkin, Rt Hon Patrick
Benyon, Thomas (Abingdon)Eyre, ReginaldJessel, Toby
Benyon, W. (Buckingham)Fairgrieve, RussellJohnson Smith, Geoffrey
Berry, Hon AnthonyFaith, Mrs SheilaJopling, Rt Hon Michael
Best, KeithFarr, JohnJoseph, Rt Hon Sir Keith
Bevan, David GilroyFell, AnthonyKaberry, Sir Donald
Biffen, Rt Hon JohnFenner, Mrs PeggyKellett-Bowman, Mrs Elaine
Biggs-Davison, JohnFinsberg, GeoffreyKershaw, Anthony
Blackburn, JohnFisher, Sir NigelKimball, Marcus
Blaker, PeterFletcher, Alexander (Edinburgh N)King, Rt Hon Tom
Body, RichardFletcher-Cooke, CharlesKnight, Mrs Jill
Bonsor, Sir NicholasFookes, Miss JanetKnox, David
Boscawen, Hon RobertForman, NigelLang, Ian
Bottomley, Peter (Woolwich West)Fowler, Rt Hon NormanLatham, Michael
Bowden, AndrewFox, MarcusLawrence, Ivan
Boyson, Dr RhodesFraser, Rt Hon H. (Stafford & St)Lawson, Nigel
Bright, GrahamFraser, Peter (South Angus)Lee, John
Brinton, TimFry, PeterLe Marchant, Spencer
Brittan, LeonGalbraith, Hon T. G. D.Lennox-Boyd, Hon Mark
Brocklebank-Fowler, ChristopherGardiner George (Reigate)Lewis, Kenneth (Rutland)
Brooke, Hon PeterGardner, Edward (South Fylde)Lloyd, Ian (Havant & Waterloo)
Brotherton, MichaelGarel-Jones, TristanLloyd, Peter (Fareham)
Brown, Michael (Brigg & Sc'thorpe)Gilmour, Rt Hon Sir IanLoveridge, John
Browne, John (Winchester)Glyn, Dr AlanLuce, Richard
Bruce-Gardyne, JohnGorst, JohnLyell, Nicholas
Bryan, Sir PaulGow, IanMacfarlane, Neil
Buchanan-Smith, Hon AlickGower, Sir RaymondMacGregor, John
Budgen, NickGreenway, HarryMacKay, John (Argyll)
Bulmer, EsmondGrieve, PercyMcNair-Wilson, Michael (Newbury)
Burden, F. A.Griffiths, Eldon (Bury St Edmunds)McNair-Wilson, Patrick (New Forest)
Butcher, JohnGriffiths, Peter (Portsmouth N)McQuarrie, Albert
Butler, Hon AdamGrist, IanMadel, David
Cadbury, JocelynGrylls, MichaelMajor, John
Carlisle, John (Luton West)Gummer, John SelwynMarland, Paul
Carlisle, Kenneth (Lincoln)Hamilton, Hon Archie (Eps'm&Ew'll)Marlow, Antony
Carlisle, Rt Hon Mark (Runcorn)Hamilton, Michael (Salisbury)Marshall, Michael (Arundel)
Chalker, Mrs. LyndaHampson, Dr KeithMarten, Neil (Banbury)
Channon, PaulHannam, JohnMaude, Rt Hon Angus
Clark, Sir William (Croydon South)Haselhurst, AlanMawby, Ray
Clarke, Kenneth (Rushcliffe)Hastings, StephenMawhinney, Dr Brian
Cockeram, EricHavers, Rt Hon Sir MichaelMaxwell-Hyslop, Robin
Colvin, MichaelHawksley, WarrenMayhew, Patrick
Cope, JohnHayhoe, BarneyMellor, David
Cormack, PatrickHeddle, JohnMeyer, Sir Anthony
Corrie, JohnHenderson, BarryMiller, Hal (Bromsgrove & Redditch)
Mills, Iain (Meriden)Rees-Davies, W. R.Tebbit, Norman
Mills, Peter (West Devon)Renton, TimTemple-Morris, Peter
Miscampbell, NormanRhodes James, RobertThompson, Donald
Mitchell, David (Basingstoke)Rhys Williams, Sir BrandonThorne, Neil (Ilford South)
Moate, RogerRidley, Hon NicholasThornton, Malcolm
Montgomery, FergusRifkind, MalcolmTownend, John (Bridlington)
Moore, JohnRoberts, Wyn (Conway)Townsend, Cyril D. (Bexleyheath)
Morgan, GeraintRossi, HughTrippier, David
Morris, Michael (Northampton, Sth)Rost, PeterTrotter, Neville
Morrison, Hon Peter (City of Chester)Royle, Sir Anthonyvan Straubenzee, W. R.
Mudd, DavidSainsbury, Hon TimothyViggers, Peter
Murphy, ChristopherScott, NicholasWaddington, David
Myles, DavidShaw, Giles (Pudsey)Wakeham, John
Neale, GerrardShaw, Michael (Scarborough)Waldegrave, Hon William
Needham, RichardShelton, William (Streatham)Walker, Rt Hon Peter (Worcester)
Nelson, AnthonyShepherd, Colin (Hereford)Walker, Bill (Perth & E Perthshire)
Neubert, MichaelShepherd, Richard (Aldridge-Br'hills)Wall, Patrick
Newton, TonyShersby, MichaelWaller, Gary
Normanton, TomSilvester, FredWalters, Dennis
Nott, Rt Hon JohnSims, RogerWard, John
Osborn, JohnSkeet, T. H. H.Warren, Kenneth
Page, John (Harrow, West)Smith, Dudley (War. and Leam'ton)Watson, John
Page, Rt Hon Sir R. GrahamSpeller, TonyWells, John (Maidstone)
Page, Richard (SW Hertfordshire)Spence, JohnWells, Bowen (Hert'rd & Stev'nage)
Parris, MatthewSpicer, Jim (West Dorset)Wheeler, John
Patten, Christopher (Bath)Spicer, Michael (S Worcestershire)Whitelaw, Rt Hon William
Patten, John (Oxford)Sproat, IainWhitney, Raymond
Pawsey, JamesSquire, RobinWickenden, Keith
Percival, Sir IanStainton, KeithWiggin, Jerry
Pink, R. BonnerStanbrook, IvorWilliams, Delwyn (Montgomery)
Pollock, AlexanderStanley, JohnWinterton, Nicholas
Porter, GeorgeSteen, AnthonyWolfson, Mark
Prentice, Rt Hon RegStevens, MartinYoung, Sir George (Acton)
Price, David (Eastleigh)Stewart, Ian (Hitchin)Younger, Rt Hon George
Proctor, K. HarveyStewart, John (East Renfrewshire)
Pym, Rt Hon FrancisStokes, JohnTELLERS FOR THE NOES:
Raison, TimothyStradling Thomas, J.Mr. Carol Mather and
Rathbone, TimTapsell, PeterLord James Douglas-Hamilton.
Rees, Peter (Dover and Deal)Taylor, Robert (Croydon NW)

Question accordingly negatived.