Below is the text of the speech made by Peter Walker, the then Conservative MP for Worcester, in the House of Commons on 13 March 1974.

I congratulate the Minister, first, on being returned to the House of Commons in what was considered to be a marginal constituency against a diversity of opponents and, secondly, on taking up his new and important Cabinet office. It is said that when Winston Churchill returned to the Admiralty a message was immediately radioed to the Fleet “Winston is back”. Unfortunately, two-thirds of what would have been the right hon. Gentleman’s fleet sailed off to other commands the moment he returned. I am not certain whether that was at their request or at the instigation of the Prime Minister. One thing is certain: it was not at the suggestion of the Secretary of State for Industry.

It is surprising that such a change should have taken place with no comment yesterday by the Prime Minister and no comment today by the Secretary of State for Industry. When in the past considerable changes have taken place in the construction of Whitehall there has been in-depth discussion with the Civil Service and sometimes White Papers have been published. The fragmentation of the former Department of Trade and ​ Industry in this way without discussion and without consultation will result in some considerable disadvantages to the Government.

I bring this to the Government’s attention in the hope that they will be able to overcome the harm which fragmentation will do to the regional set-up of the Department. During the last two or three years there has been a considerable strengthening in the quality and grade of staff at the regional offices, and this has had a considerable impact upon the development of industry in the regions. In the regional offices there is a combination of staff capable of applying the various facets of the Industry Act, who can look after the export potentialities of the region and the industrial development certificate policy and positively encourage small businesses. To weaken those regional offices by splitting them up between three Departments will prove to be a considerable disadvantage.

As Secretary of State for Industry the right hon. Gentleman will find grave disadvantage in not having in his Department information about the export and import substitution potential that automatically comes from the trade side of Government. There were many instances where we applied the Industry Act on the basis of information that we had from the trade side of the Department. That will no longer be available to the right hon. Gentleman.

Likewise, in the development of major industrial investment programmes, it was of tremendous advantage in the Department of Trade and Industry—for example, when we embarked upon the steel modernisation programme—to call in the steel plant managers and link them with the international potentialities of exporting steel plants on the back of a healthy domestic demand. That type of linkage between domestic demand in industry, for which the right hon. Gentleman will have responsibility, and export potential will be severely handicapped by the new structure.

The right hon. Gentleman has mentioned monopolies and mergers and the importance of having a positive policy to pursue the proposals that he has in mind. I presume that monopolies and mergers are no longer his responsibility ​ as they have been moved to the new Secretary of State for Prices and Consumer Protection. In the old Department consumer aspects were looked into by the Minister responsible for consumer affairs; likewise, industrial policies and rationalisation aspects were very much concerned with the industry part of the Department. To have monopolies and mergers firmly with the consumer affairs side of government and not in the right hon. Gentleman’s hands will prove a considerable disadvantage.

Another remarkable break-up has taken place as a result of the move without any form of consultation or national dialogue. The right hon. Gentleman will be responsible for the aircraft industry and the Secretary of State for Trade will be responsible for civil aviation. I am sure that the aircraft industry will be quick to tell him that its most important consideration is the procurement programme from the civil aviation side of what used to be the Department of Trade and Industry. Here again is an important break which will prove to the disadvantage of the future development of our economy.

The right hon. Gentleman has said very little about inward investment. I think he will be advised by his right hon. Friend the Member for Manchester, Central (Mr. Lever) that one of the most important aspects of any Government policy over the next few years will be the encouragement of inward investment into this country. The right hon. Gentleman has no international presence in his new post. To have no international presence at a time when we want to encourage inward investment will be a grave and serious disadvantage.

I turn now to the Government’s outward investment policies. There may come a time when the Secretary of State for Industry should be actively engaged in encouraging outward investment from this country. The right hon. Gentleman’s new Department will not have the strength to carry out that function.

Mr. George Cunningham (Islington, South and Finsbury)

Does the right hon. Gentleman agree that the outgoing Government intended that there should be large foreign investment in the energy industry in this country and yet decided ​ to hive off the energy side from the Department of Trade and Industry?

Mr. Walker

I know of no decision to have large outside investment in the energy industry in this country. It was not the policy of the then Government.

On all these aspects there is no doubt that seemingly this decision was taken not on the basis of any logic about Whitehall or any improvement in the efficiency of developing commercial strategy, but on the basis of trying to find separate Cabinet posts for three Ministers.

I welcome the Prime Minister’s approach in 1974 as opposed to the approach that he made on forming a Government in 1964. We do not know whether this new approach is due to the size of his minority or to the lessons that he learned from the experiences of 1964. It is interesting to note that in 1964 his first task was to maximise the importance of the £800 million deficit, and, having got this out of perspective, his actions in increasing consumer demand soon shattered confidence abroad. He has not made that mistake on this occasion. Yesterday he recited how stagnation, the rising unemployment that took place in the regions during the period of the last Labour Government and the lack of achieving the social service success that he endeavoured to obtain was the price that he paid for the manner in which he handled the situation then.

The Prime Minister was right to emphasise the record export order books of British industry at this time. I am pleased that the Secretary of State for Industry today followed the Prime Minister’s example by correctly emphasising the potential opportunities that now exist instead of emphasising that the size and magnitude of the deficit on trade which faces the country has to be met by massive deflationary policies.

Now that the Government recognise the true reality of the deficit on our trade, resulting from a massive increase in the importation of new machinery, vital raw materials and, the biggest factor, the enormous increase in world prices, they must consider the approach that they will bring to the economic scene. There is no doubt that if we had pursued the policies that the then Opposition advocated of going for heavy deflationary ​ policies over the last 12 months, we would have crippled the investment potentiality of this country for a generation. It was right not to pursue that policy.
I hope that the Government will genuinely pursue the twin objectives outlined by the Secretary of State for Industry of exports and investment as the two main priorities.

Mr. Dennis Skinner (Bolsover)

As a man who started his business career by running off with the Co-op divi and finishing up in Government, leaving us with a deficit on 31st December of £2,348 million, and rising every minute, may I ask the right hon. Gentleman whether, in his more relaxed way of life, he will now be going back to Slater-Walker to reorganise its many disparate interests not only here but abroad?

Mr. Walker

No. I shall be staying here to listen to the eloquent speeches so constantly made by the hon. Gentleman. One would miss his wit far too much if one lost any opportunity of being in the House.

I wonder how the Government hope to give priority to exports and investment when they are already advocating having no statutory wages policy. To have a free-for-all in wages, to increase taxation on potential savers in this country and to increase consumer demand by various items of public expenditure in combination is a policy which will be of considerable disadvantage both to exports and to investment.

I hope that the new Secretary of State for Trade will get into perspective the importance of Common Market trade to the future of our export programme. When the previous Labour Government left office our exports to Common Market countries were £2,355 million a year. They are now over £4,000 million a year, comprising nearly a third of our total exports. Therefore, the Secretary of State for Trade, with his hostility to Europe, must be very careful in his negotiations not to endanger that considerable proportion of our trade. Not only is it a substantial proportion, but it is one of the fastest rising areas of our trade. Whereas our exports nationally went up by 26 per cent. last year, our exports to the Community went up by 39 per ​ cent. It was a major contribution to our export drive, and for the Government to negotiate on Europe on a basis that would handicap that trade would be of considerable disadvantage to us.

I hope, too, that, on the question of exports, the Government will pay far greater respect to new markets in the world—such as Iran—than they did when they were in opposition. I say that because these markets in the Middle East will be of considerable importance to our future trade potentiality. The comments made by hon. Gentlemen opposite when we were negotiating trade agreements with Iran were anything but friendly and tended to be hostile to such arrangements, and I hope that there will be moves by the Government to repair the bad reputation which they have in those countries.

I hope that the Secretary of State for Industry will do everything in his power to encourage the maximum increase in export prices because there is an immense opportunity for us to increase and improve our export performance. Our goods are exceedingly competitive in world markets, and it must be in our interests to raise prices to the maximum levels obtainable in those markets. That means that the profits of the companies concerned will rise. When ICI declared record profits recently many hostile remarks were made about them, but I hope that the Government will recognise that a great deal of that increase resulted from exports. It would be disastrous if the Government were to do anything other than encourage the maximum profits from export markets, but so far there is no indication that they intend to encourage exporters in that way.

The Government must encourage investment. The Secretary of State for Industry said that a prime task would be to get far more investment into British industry and re-equip it. The Prime Minister has described himself as the custodian of the manifesto. Fortunately, judging from his speech yesterday, the right hon. Gentleman interprets his rôle of custodian as that of seeing that the manifesto’s proposals are kept under lock and key, and we commend him on that decision.

I hope that the Secretary of State for Industry realises that real damage is done to investment by the existence of nationalisation proposals. One cannot illustrate ​ that better than by considering the record of investment in the steel industry. Yesterday the Prime Minister mentioned steel as one of the potential shortages which could handicap future economic growth. Any student of the steel industry will recognise that from 1964 to 1966 steel investment went down from £180 million a year to £50 million because of the threat of nationalisation. During the period after nationalisation the industry was unable to start its investment programme, and that meant that from 1963 to 1970 steel investment was more than halved, and not under me but under you. [Interruption.] I apologise, Mr. Speaker, because you certainly would not be guilty of such policies. The Prime Minister was responsible for the biggest drop in steel investment since the war, and the Conservative Government inherited the problem of the lack of steel capacity.

The Prime Minister (Mr. Harold Wilson)

The right hon. Gentleman was most kind to refer to what I said yesterday about the steel shortage. I said that it was due to the three-day week. I cannot understand why no one from the Opposition Front Bench has mentioned that in this debate.

Mr. Walker

If the right hon. Gentleman had taken an interest in these matters during the week before the General Election he would have known that long before the three-day week was introduced there was a shortage of steel because of the lack of investment due to his policies. The Prime Minister made it clear yesterday that no nationalisation proposals would be introduced without going through the full parliamentary process. The right hon. Gentleman is well aware that no nationalisation proposal could go through the full parliamentary procedure in this Parliament. He has, by that commitment, shown that during this Parliament he does not intend to proceed with any nationalisation proposals. If that is so, it would be in the interests of encouraging investment in the aircraft, shipbuilding, pharmaceutical, road haulage and machine tool industries if the Government were to make it clear that they have no intention of introducing such proposals.

Mr. Laurie Pavitt (Brent, South)

The right hon. Gentleman mentioned the pharmaceutical industry. Is he aware ​ that 75 per cent. of National Health Service purchases are from foreign-owned companies?

Mr. Walker

That industry is one of our major exporters, and I believe that if the Secretary of State for Industry consults the workers before introducing nationalisation proposals he will not proceed with its nationalisation.

Mr. Benn

As the right hon. Gentleman was associated with the take-over of a number of firms without any pretence of consultation with the people whose futures were at stake, perhaps he will recognise that our proposals for public ownership follow long and deep consultations with the workers involved and that in every case the industry concerned has suffered from private management.

Mr. Walker

I still remember the telegram that I received from the shop stewards of Rolls-Royce about the complete lack of consultation by the right hon. Gentleman on his nationalisation proposals. That was to be done without any consultation with anybody, and originally without compensation. We know how shallow is the consultation by hon. Gentlemen on the Government side.

Nationalisation proposals cannot be anything but a discouragement to investment in a number of vital spheres, such as the machine tool industry. I hope that, in the climate of this Parliament, instead of hiding behind the words in the Gracious Speech and saying that the full parliamentary process will be adopted for any nationalisation proposals, the Government will come clean and say that they have no intention of nationalising this industry during this Parliament.

The Government will have to deal with the manner in which they will raise money for their proposals to increase public expenditure. They must face the reality of some of the myths which they created when in opposition about where the money would come from. There was the myth that it would all come from North Sea oil. It was interesting to hear the Secretary of State for Industry say this afternoon that we should have to wait for that and that people must not rely on it too much as it is very much in the future, because during the election campaign, whenever it was asked where the money would come from, it was said that ​ more money would be obtained from North Sea oil. The Government now know that it will be several years before there will be a chance of taxing profits from North Sea oil, because it will not be available for about that period.

The same comment applies to company profits. Another bogy was that the big corporations would be taxed far more than they are now, but, with dividend restraint and price restrictions limiting profit margins at home, the only possible scope for increasing taxation is in company profits made from exports, and that is not the way to encourage people to export.

On the question of capital gains, the Financial Times ordinary index is lower than it was four years ago or 10 years ago, and the Government will not have a great source of revenue there. The fact is that if the Government embark on the heavy increases in taxation which they have in mind they will have to tax savings, and that is not the way to encourage investment.

The Secretary of State will soon discover that with the present problem of liquidity and of trying to compete abroad it is vital to maintain a healthy capital market here. If the right hon. Gentleman does not do that he will lose the confidence of industry, which is vital to his programme to increase investment. In addition, he will lose confidence abroad. I hope that the more commonsense approach to the problem of the right hon. Member for Manchester, Central in his new rôle will influence the decisions that the Government take.

During our three and a half years in office we accepted that the Government had many functions to perform in a modern free enterprise society. The Government have a duty to pursue fiscal policies that will encourage growth. They must help shape the economy so that it is equipped to benefit as fully as possible from the changing pattern of world trade. The Government must set parameters for the protection of the natural environment and improving wherever possible the manmade environment. They have to decide upon the proportion of resources to be allocated to the social services. They have to provide an education system that not only enriches people’s minds throughout their lives but opens up more possibilities of equality of opportunity. They have to see that the framework of law in which the corporation operates is equable, open and fully accountable to the nation as a whole. They have to see that the power of the consumer is strong enough to have its proper impact upon the quality and diversity of products.

The Government have to see that forward-looking regional policies are pursued so that the fruits of the new capitalism are not concentrated on any one region but are shared fairly throughout the nation. They have to see that training and retraining facilities for those engaged in industry are tackled to meet the challenges of technological change.

In three and a half years we did bring growth back to the economy; we did help to reshape the economy to meet new challenges overseas; we did bring about a build-up of the major investment programme from which the economy will now benefit.

Mrs. Elaine Kellett-Bowman (Lancaster)

Will my right hon. Friend accept the thanks of my constituency for restoring growth to that area by giving it intermediate status?

Mr. Walker

It was indeed the regions of the North-West and North-East and Wales and Scotland, where unemployment was rising during the last years of the previous Labour Government, which benefited most from the growth in the economy which we achieved. We devoted far more of the nation’s resources to the social services and education than our predecessors did. We prepared the legislation to make corporations more accountable. We substantially improved the power of the consumer and we brought many new jobs and opportunities to the regions most in need of them.

But in all these areas we have much further progress to make, and it is our intention to use such period of opposition as is available to us to prepare for further progress towards the creation of a society enjoying all the advantages from man’s enterprise and initiative and harnessing the economic growth he creates to bringing about a better quality of society.