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Catalogue Reference:CAB/129/178/13
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D O C U M E N T IS T H E P R O P E R T Y O F H E R B R I T A N N I C M A J E S T Y ' S G O V E R N M E N T
C ( 7 4 ) 88
COPY NO
& &
1 A u g u s t 1974
CABINET
PLANNING AGREEMENTS AND THE NATIONAL
ENTERPRISE BOARD
N o t e b y t h e S e c r e t a r y of t h e C a b i n e t
(
B y d i r e c t i o n of t h e P r i m e M i n i s t e r t h e a t t a c h e d d r a f t s e c t i o n s of a W h i t e
P a p e r on Planning A g r e e m e n t s and the National E n t e r p r i s e B o a r d a r e
circulated for consideration by the Cabinet on 2 A u g u s t .
The introductory
paragraphs will be circulated separately.
Signed
Cabinet Office
1 A u g u s t 1974
JOHN HUNT
PLANNING AGREEMENTS
1.
I n t h e i r a p p l i c a t i o n t o t h e p r i v a t e s e c t o r , Planning Agreements w i l l p r o v i d e a new and improved framework f o r c o - o p e r a t i o n between t h e Government and l e a d i n g i n d u s t r i a l companies,
A P l a n n i n g Agreement w i l l n o t be a n a g r e e ­
ment i n t h e sense of a c i v i l c o n t r a c t e n f o r c e a b l e a t l a w .
I t w i l l , however, be given s u f f i c i e n t r e c o g n i t i o n b y s t a t u t e t o e n a b l e t h e company concerned t o r e l y on a s s i s t a n c e promised under i t .
The Act which gives e f f e c t t o t h e new system w i l l a l s o p r o v i d e r e s e r v e powers t o r e q u i r e t h e r e l e v a n t companies t o ' p r o v i d e t h e Government and t h e workers i n t h e firm w i t h t h e i n f o r m a t i o n needed
t o f o r m u l a t e and monitor a Planning Agreement.
There w i l l , however, be no
s t a t u t o r y r e q u i r e m e n t upon a company t o conclude an Agreement.
2.
The h e a r t of t h i s system w i l l be a s e r i e s of c o n s u l t a t i o n s between t h e
Government and companies, l e a d i n g t o an Agreement about p l a n s f o r t h e following
three years;
t h e s e w i l l be reviewed and r o l l e d forward a n n u a l l y .
In the
course of t h e s e c o n s u l t a t i o n s , t h e Government w i l l a s s e s s w i t h t h e company
i t s needs f o r a s s i s t a n c e t o support and r e i n f o r c e a g r e e d company p l a n s .
In
p a r t i c u l a r , i f i n t h e c o u r s e of t h e s e d i s c u s s i o n s i t becomes c l e a r t h a t i n
o r d e r t o a l i g n t h e company's p l a n s w i t h n a t i o n a l needs some f i n a n c i a l
ft
it
ij
'
a s s i s t a n c e i s r e q u i r e d beyond t h a t which would i n any c a s e b e a v a i l a b l e t o
t h e company b y way of r e g i o n a l development a i d and r e g i o n a l employment
premium, t h e Government w i l l be r e a d y t o p r o v i d e t h e k i n d of d i s c r e t i o n a r y
financial
a s s i s t a n c e b y way of g r a n t s and l o a n s f a r which t h e I n d u s t r y Act
now p r o v i d e s , and w i l l d i s c u s s w i t h t h e company the s c a l e on which and t h e
purposes f o r which t h i s a s s i s t a n c e should be p r o v i d e d , so a s t o meet t h e
r e q u i r e m e n t s of i n d i v i d u a l r e c i p i e n t s and t o f u r t h e r t h e achievement of
national objectives.
I n o r d e r t h a t companies s h a l l have g r e a t e r c e r t a i n t y
i n making and c a r r y i n g o u t t h e i r p l a n s , t h e Government i n t e n d t h a t once an
Agreement h a s been concluded, r e g i o n a l a s s i s t a n c e f o r t h e p r o j e c t s which i t
c o v e r s w i l l , d u r i n g t h e c u r r e n c y of t h e Agreement, n o t f a l l below t h e r a t e s
i n f o r c e a t t h e time of t h e Agreement.
Moreover t h e s e d i s c u s s i o n s could
h e l p t o i d e n t i f y r e q u i r e m e n t s f o r investment funds f o r c o n s i d e r a t i o n by t h e
NEB, i f n e c e s s a r y by means of j o i n t v e n t u r e s w i t h t h e companies.
More
g e n e r a l l y , t h e i n t e n t i o n i s t h a t t h e outcome o f d i s c u s s i o n s w i t h companies
w i l l have a n i m p o r t a n t b e a r i n g on the f o r m u l a t i o n of t h e Government's own
plans;
i n t h i s way t h e needs of companies and t h e economy w i l l be b e t t e r
served.
1
F i n a n c i a l a s s i s t a n c e under t h e I n d u s t r y Aot w i l l of course c o n t i n u e t o he
3.
a v a i l a b l e f o r companies n o t covered b y Planning Agreements, a s w e l l a s t h o s e
e n t e r i n g i n t o Agreements which s a t i s f y c r i t e r i a f o r a s s i s t a n c e .
The a d m i n i s t r a ­
t i o n of t h e s e programmes w i l l be reviewed t o ensure t h a t t h e needs of small
companies o u t s i d e t h e arrangements f o r P l a n n i n g Agreements w i l l be c a t e r e d f o r .
The Government a l s o i n t e n d s t o conduct a thorough-going review of t h e a r r a n g e ­
ments f o r g r a n t i n g r e g i o n a l development a i d , b u t t h e r e w i l l be no changes i n
t h e e x i s t i n g arrangements over t h e n e x t twelve months.
The payment of
Regional Employment Premium w i l l n o t be a f f e c t e d by any of t h e s e p r o p o s a l s .
3
2 4*
I n t h e i r d i s c u s s i o n s w i t h companies, t h e Government w i l l he concerned
only w i t h s t r a t e g i c i s s u e s .
I n a d d i t i o n , t h e y r e g a r d I t a s most important
t h a t t h e new arrangements should not r e s t r i c t t h e freedom of companies t o
respond t o market changes, p a r t i c u l a r l y where they a r e i n c o m p e t i t i o n w i t h
overseas m a n u f a c t u r e r s .
The Government would welcome t h e views of f i r m s on
t h e i s s u e s t h a t p r i n c i p a l l y concern them.
C l e a r l y t h e y might w e l l v a r y from
company t o company hut m a t t e r s of obvious concern t o t h e Government would
include
-
I n v e s t m e n t , w i t h p a r t i c u l a r r e f e r e n c e t o i t s t i m i n g and l o c a t i o n ;
Productivity;
Employment, w i t h s p e c i a l r e f e r e n c e t o i t s r e g i o n a l b a l a n c e ;
E x p o r t s and import s a v i n g , and i n v e s t m e n t d i r e c t e d t o t h e s e
ends;
Product development;
I m p l i c a t i o n s of company p l a n s f o r i n d u s t r i a l r e l a t i o n s and arrangements
f o r n e g o t i a t i o n and c o n s u l t a t i o n ;
I n t e r e s t s of consumers and t h e conmiunity.
5*
The, Government r e c o g n i s e t h a t , even i n r e l a t i o n t o a small number of
important i s s u e s of t h i s k i n d , companies
1
p l a n s and f o r e c a s t s which go beyond
t h e immediate f u t u r e may be s u b j e c t t o change at s h o r t n o t i c e i n r e s p o n s e t o
market f l u c t u a t i o n s ,
D e s p i t e t h e s e r e s e r v a t i o n s and u n c e r t a i n t i e s , t h e
Government b e l i e v e t h a t t h e new r e l a t i o n s h i p t h e y a r e s e e k i n g w i t h companies
and t h e a s s o c i a t e d f i n a n c i a l a s s i s t a n c e would b e n e f i t t h e companies t a k i n g p a r t
and would lead t o b e t t e r arrangements f o r t h e management of t h e economy.
COMPANIES TO BE COVERED
6i
Tho now arrangements w i l l apply t o major and s t r a t e g i c firms i n key
s e c t o r s of m a n u f a c t u r i n g i n d u s t r y , and i n s e l e c t e d i n d u s t r i e s o t h e r t h a n
m a n u f a c t u r i n g of p a r t i c u l a r importance t o t h e oconomy.
K u l t i n a t i o n a l companies
w i l l be i n c l u d e d i n r e s p e c t of t h o i r B r i t i s h h o l d i n g s .
I t w i l l * howeverj
not be p o s s i b l e t o o p e r a t e P l a n n i n g Agreements from t h e v e r y o u t s e t so t h a t
t h e y cover a l l t h e companies t h a t w i l l e v e n t u a l l y f a l l w i t h i n t h e i r s c o p e .
A t r a n s i t i o n a l p e r i o d w i l l be n e c e s s a r y , b o t h f o r t h e companies t h e m s e l v e s
and f o r Government Departments which w i l l need t o d e v e l o p adequate a r r a n g e ­
ments t o h a n d l e t h e p l a n s which a r e put t o them w i t h o u t d e l a y .
The Government
a r e determined t o s e e t h a t t h e b e n e f i t s of t h e new arrangements t h e y propose
should be secured w i t h t h e minimum of e x t r a a d m i n i s t r a t i v e cost f o r t h e companies
concerned and f o r t h e Government s e r v i c e .
They w i l l t h e r e f o r e be s e l e c t i v e
CONFIDENTIAL i n t h e i r i n i t i a l approach, and w i l l i n t r o d u c e P l a n n i n g Agreements i n s e l e c t e d
s e c t o r s of p a r t i c u l a r importance-
We i n t e n d t o b e g i n w i t h companies i n s e c t o r s
, w h i c h l i k e t h e e n g i n e e r i n g i n d u s t r y , l i e at t h e h e a r t of our export
f
7*
effort,
The major n a t i o n a l i s e d i n d u s t r i e s and publicly-owned f i r m s w i l l a l s o f a l l
w i t h i n t h e scope of t h e P l a n n i n g Agreements system, which i n t h e i r case w i l l
be a d m i n i s t e r e d through t h e s p o n s o r i n g Departments.
Their r e l a t i o n s h i p w i t h
Government i s a l r e a d y very c l o s e , and e x t e n d s beyond t h e r e l e v a n t
governing t h e n a t i o n a l i s e d i n d u s t r i e s i n t o , f o r example, t h e j o i n t
of t h e i r c o r p o r a t e p l a n s .
statutes
scrutiny
Recent y e a r s have seen t h e i n t r o d u c t i o n of a r r a n g e ­
ments by which t h e n a t i o n a l i s e d i n d u s t r i e s and major publicly-owned firms
submit c o r p o r a t e p l a n s t o Government, and "by which Departments monitor t h e i r ­
progress, a t r e g u l a r
I'
80
C
^%
is
i n t e r v a l s a g a i n s t an a n n u a l o p e r a t i n g p l a n .
A
Employees and t h e i r r e p r e s e n t a t i v e s w i l l have a major i n t e r e s t i n t h e
i s s u e s covered "by Planning Agreements.
The Government i n t e n d t h a t t h e p l a n s
t o be covered by an Agreement w i l l be drawn up by management i n c l o s e c o n s u l ­
t a t i o n w i t h t r a d e union r e p r e s e n t a t i v e s at t h e l e v e l of t h e f i r m .
The framing
HHHflNRMHHMHMMBRPn
and u p - d a t i n g of Agreements would t h u s i n v o l v e a c o n t i n u i n g d i s c u s s i o n between
management and unions and would c o n s t i t u t e an i m p o r t a n t advance i n t h e p a r t
t o be played by i n d u s t r i a l democracy i n t h e p l a n n i n g of company s t r a t e g y .
The Government would a l s o envisage t h a t u n i o n r e p r e s e n t a t i v e s from companies,
w h i l e not f o r m a l l y p a r t i e s t o P l a n n i n g Agreements, would a l s o t a k e p a r t where
they so wished i n c o n s u l t a t i o n s on Agreements w i t h t h e Government.
9.
I f c o n s u l t a t i o n i s t o be e f f e c t i v e , u n i o n r e p r e s e n t a t i v e s must be provided
w i t h a l l t h e n e c e s s a r y i n f o r m a t i o n r e l e v a n t t o t h e c o n t e n t s of P l a n n i n g
Agreements.
The Government would t h e r e f o r e r e q u i r e employers t o d i s c l o s e
i n f o r m a t i o n of t h i s k i n d , except where d i s c l o s u r e could s e r i o u s l y p r e j u d i c e
t h e company's commercial i n t e r e s t s or would be c o n t r a r y t o t h e i n t e r e s t s
of n a t i o n a l s e c u r i t y .
,
t!
CONSULTATION
1 0 .
The Government propose t o e n t e r i n t o immediate d i s c u s s i o n s w i t h both,
s i d e s of i n d u s t r y , and with t h e N a t i o n a l Economic Development Council, about
t h e b e s t means of implementing t h e new system and t h e s e c t o r s of i n d u s t r y
i n which i t might most u s e f u l l y be f i r s t employed.
The Government's i n t e n t i o n
throughout would be t o look f o r arrangements which were simple and f l e x i b l e and
were so f a r a s p o s s i b l e based on t h e e x i s t i n g ^ p l a n n i n g arrangements of
i n d i v i d u a l companies.
The k i n d of p r o c e d u r a l arrangements which might l e a d
up t o a P l a n n i n g Agreement a r e b r i e f l y d e s c r i b e d i n an Annex.
INFORMATION TO BE PROVIDED BY GOVERNMENT
1 1 .
The G o v e r n m e n t s p r o j e c t i o n s and t h e companies' own i n t e n t i o n s and
p l a n s w i l l i n t e r a c t on each o t h e r :
Agreement i s t h a t they s h o u l d .
t h e primary purpose of a P l a n n i n g
I n producing t h e i r p r o j e c t i o n s t h e Government
w i l l need t o t a k e account of companies' own p l a n s , w h i l e t h e companies w i l l
. f o r t h e i r p a r t want t o know t h e Government*s views on t h e l i k e l y development
y ; i
of the^economy.
I n t h i s way t h e Government and t h e companies concerned w i l l
s h a r e w i t h each o t h e r t h e i r d e v e l o p i n g assessments of f u t u r e t r e n d s .
The
Government would welcome t h e views of t h o s e r e s p o n s i b l e f o r c o r p o r a t e p l a n n i n g
i n i n d u s t r y about t h e i n f o r m a t i o n which would be of t h e g r e a t e s t value t o
them and how i t might most s u i t a b l y be d i s s e m i n a t e d .
The q u e s t i o n i s not
whether Government p r o j e c t i o n s should be s u p p l i e d w i t h i n t h e c o n t e x t of
Planning Agreements but which p r o j e c t i o n s , g i v e n t h e u n a v o i d a b l e
u n c e r t a i n t i e s , a r e l i k e l y t o be of most v a l u e .
5 ! NATIONAL ENTERPRISE BOARD
I
.
- - ­
; OUTLINE
12.
The Government propose t o c r e a t e a new instrument t o s e c u r e where necessary l a r g e s c a l e s u s t a i n e d investment t o o f f s e t t h e e f f e c t s of t h e short term p u l l of market f o r c e s .
These new powers of i n i t i a t i v e a r e b e t t e r e x e r c i s e d t h r o u g h a new agency t h a n d e a l t with d i r e c t by Government, and f o r t h i s purpose i t i s proposed t o s e t up a N a t i o n a l E n t e r p r i s e Board (NEB). 13* One of t h e f u n c t i o n s of t h i s new agency w i l l be t b b u i l d on and
enlarge t h e a c t i v i t i e s p r e v i o u s l y d i s c h a r g e d by t h e I n d u s t r i a l
Corporation (iRC)i
Reorganisation
I t w i l l i n a d d i t i o n be an i n d u s t r i a l h o l d i n g company with
companies i n
n a l m
fao
t o
in
g
iadu^.
A numter of e x i t i n g Govern­
ment s h a r e h o l d i n g s i n companies w i l l be t r a n s f e r r e d t o t h e Board immediately
on i t s e s t a b l i s h m e n t .
I t s main s t r e n g t h i n manufacturing w i l l come however
from t h e a c q u i s i t i o n of a number of key f i r m s ( s e e paragraph 2
-1
*
/ V
-/,'
1..'
(
below).
It
-
­
will have power t o s t a r t new v e n t u r e s and p a r t i c i p a t e i n j o i n t v e n t u r e s
with companies i n t h e p r i v a t e s e c t o r .
Adequate funds w i l l be made a v a i l a b l e
t o enable theXBoard t o expand i t s a c t i v i t i e s v i g o r o u s l y t o d i s c h a r g e t h e
r e s p o n s i b i l i t i e s set out b e l o w ­
-
a.
,
--' ^-
­
I t w i l l be a new source of investment c a p i t a l f o r manufacturing
i n d u s t r y ; i n p r o v i d i n g finance i t w i l l normally t a k e a corresponding
share i n the equity c a p i t a l .
I n t h i s i t w i l l set out t o supplement and
n o t t o d i s p l a c e t h e supply of investment from e x i s t i n g f i n a n c i a l
i n s t i t u t i o n s and from companies' own r e s o u r c e s ( s e e p a r a g r a p h 16).
b.
I t w i l l have t h e former I n d u s t r i a l R e o r g a n i s a t i o n C o r p o r a t i o n ' s
e n t r e p r e n e u r i a l r o l e i n promoting i n d u s t r i a l e f f i c i e n c y and p r o f i t a ­
b i l i t y by promoting or a s s i s t i n g t h e r e o r g a n i s a t i o n or development of
an i n d u s t r y b u t , u n l i k e t h e IRC, t h e NEB w i l l i n g e n e r a l r e t a i n t h e
shareholdings i t a c q u i r e s .
I n d i s c h a r g i n g t h e s e f u n c t i o n s i t may t a k e
f i n a n c i a l i n t e r e s t s i n companies// or a c t i n a p u r e l y advisory r o l e
( s e e paragraph 17).
c.
I t w i l l a c t a s a h o l d i n g company t o . c o n t r o l and e x e r c i s e c e n t r a l
management of
i.
­
c e r t a i n e x i s t i n g Government s h a r e h o l d i n g s v e s t e d i n
iuj
ii.
i n t e r e s t s t a k e n i n t o p u b l i c ownership under powers i n t h e
I n d u s t r y Act 1972, which i t i s proposed t o c o n s o l i d a t e and extend;
i i i * new a c q u i s i t i o n s by t h e NEB ( s e e p a r a g r a p h s
6
18-23).
"CONFIDENTIAL d.
I t w i l l be a c h a n n e l t h r o u g h which t h e Government w i l l
sound companies which a r e i n s h o r t t e r m f i n a n c i a l
difficulties
e.*
assist
or m a n a g e r i a l
( s e e paragraph 22).
I t wtfell he an i n s t r u m e n t t h r o u g h w h i c h t h e Government o p e r a t e
d i r e c t l y t o c r e a t e employment i n a r e a s of h i g h unemployment
(see
paragraph 25).
T,'
" f t " f t
%:
ft
:'
^^ftftft^V ^^
,
(:''h'\Y-:! y-y(:'-':%
:
s
;
;:
ft:%ftftftft\! ; .r/^ftft '/ft;ftft^ftftftH
ftftftft/;.:-;.:";/;//
;
'
'
f.
Government D e p a r t m e n t s , t h e n a t i o n a l i s e d i n d u s t r i e s nnd p r i v a t e
f i r m s w i l l be a b l e t o s e e k t h e a d v i c e o f t h e NEB on f i n a n c i a l
managerial
14.
3
and
issues.
The Board w i l l be r e s p o n s i b l e f o r s e c u r i n g t h e e f f i c i e n t
of t h e companies and a s s e t s v e s t e d i n i t .
management
I t w i l l compete w i t h companies
i n t h e p r i v a t e s e c t o r and be e x p e c t e d t o o p e r a t e i n a c c o r d a n c e w i t h s u i t a b l e
financial
objectives.
I t s guiding f i n a n c i a l
o b j e c t i v e w i l l be t o s e c u r e an
adequate r e t u r n on t h a t p a r t o f t h e n a t i o n * s c a p i t a l f o r w h i c h i t
responsible.
objective
is
When t h e Government r e q u i r e t h e NEB t o d e p a r t from t h i s
on s o c i a l g r o u n d s , t h e s u b s i d i e s w i l l be a d m i n i s t e r e d b y t h e NEB,
and w i l l b e s e p a r a t e l y a c c o u n t e d f o r .
The B o a r d ' s f i n a n c i a l
arrangements
w i l l have t o be c a r e f u l l y worked out t o s a f e g u a r d a g a i n s t uneconomic
1
of the n a t i o n s
allocation
resources.
INDUSTRIAL DEMOCRACY
15*
The Government e n v i s a g e s a major development of i n d u s t r i a l
throughout i n d u s t r y i n the years ahead.
democracy
W i t h i n t h a t framework, the KBB w i l l
p l a y i t s p a r t i n e n s u r i n g t h a t e n t e r p r i s e s under i t s c o n t r o l p r o v i d e f o r t h e
f u l l i n v o l v e m e n t of e m p l o y e e s i n d e c i s i o n - m a k i n g a t a l l
levels.
I PROVISION OP INVESTMENT CAPITAL
16.
W i t h i n t h e framework o f M i n i s t e r i a l o v e r s i g h t o u t l i n e d b e l o w , t h e NEB
w i l l have powers t o make l o a n s and t o t a k e s h a r e h o l d i n g s i n companies where
i t c o n s i d e r s t h a t s u c h a c t i o n i s i n t h e p u b l i c i n t e r e s t and i n p a r t i c u l a r
when i n i t s judgement l a c k of f i n a n c e i s p r e j u d i c i n g w o r t h w h i l e
industrial
development.
financial
I n d e c i d i n g which p r o j e c t s t o s u p p o r t w i t h i n i t s
a l l o c a t i o n , i t w i l l be e x p e c t e d t o g i v e e m p h a s i s t o t h e p r o m o t i o n of
industrial
efficiency!
areas;
t o t h e crea-fcion o f employment o p p o r t u n i t i e s i n a s s i s t e d
t o i n c r e a s i n g e x p o r t s or r e d u c i n g undue dependence on i m p o r t s ;
to
co-operation
w i t h t h e O f f s h o r e S u p p l i e s O f f i c e i n p r o m o t i n g development i n t h e o f f s h o r e
supplies industry;
of monopoly.
and t o sponsoring investment t h a t w i l l o f f s e t t h e
CONFIDENTIAL
oil
effect
RESTRUCTURIHG INDUSTRIES
17*
In e x e r c i s i n g i t s powers -fco promote or a s s i s t i n t h e r e o r g a n i s a t i o n
o r development of an i n d u s t r y t h e Board may t a k e share i n t h e e q u i t y c a p i t a l
of e x i s t i n g companies or t a k e p a r t i n t h e e s t a b l i s h m e n t of new e n t e r p r i s e s .
When i t i s involved i n r e s t r u c t u r i n g programmes, i t s o v e r r i d i n g purpose w i l l
be t o promote t h e e f f e c t i v e n e s s and e f f i c i e n c y of t h e i n d u s t r y .
I t w i l l work
c l o s e l y w i t h t h e Department of I n d u s t r y which w i l l he able t o complement
i n i t i a t i v e s "by t h e MSB through t h e use of i t s powers of s e l e c t i v e
financial
a s s i s t a n c e under t h e I n d u s t r y Act.
VESTING EXISTING GOVERNMENT SHAREHOLDINGS
18.
The Government have a number of e x i s t i n g s h a r e h o l d i n g s in i n d u s t r y .
Thei^ a c q u i s i t i o n over a l a r g e number of y e a r s has been i n r e s p o n s e t o a
d i v e r s e range of p o l i c y o b j e c t i v e s .
Some of t h e s e h o l d i n g s may not be
a p p r o p r i a t e f o r v e s t i n g i n t h e NEB e g , the h o l d i n g s i n s h i p b u i l d i n g
companies o r - m companies whose a c t i v i t i e s a r e l a r g e l y overseas
( B r i t i s h Petroleum, Cable and W i r e l e s s Ltd and t h e Suez Finance Company). - I t
i s however i n t e n d e d t h a t t h e Government s h a r e h o l d i n g s i n t h e following companies
;aMBHHBHBHHBHBiilHHHI
should be v e s t e d i n t h e NEB R o l l s Royce (1971) Ltd I n t e r n a t i o n a l Computers (Holdings) Ltd [George Kent Ltd] \\'
Nuclear E n t e r p r i s e s Ltd Bunford E l l i o t t Ltd Kearney and Trecker Marwin Ltd Norton V i l l i e r s Triumph Ltd FUTURE ACQUISITIONS
'19. During t h o p a s t few y e a r s v a s t i n d u s t r i a l o n p i ^ a have been b u i l t on t h o b a s i s
of a s s e t - s t r i p p i n g and f i n a n c i a l m a n i p u l a t i o n s .
These have p a i d s c a n t r e g a r d
i t o t h e i n t e r e s t s of t h e workers i n t h e f i r m s i n v o l v e d and t h e r e a l needs of
t h e n a t i o n a l economy,,
The MB w i l l be t h e i n s t r u m e n t by which t h e Government
e n s u r e s t h a t t h e n a t i o n ' s r e s o u r c e s a r e deployed t o t h e b e n e f i t of a l l , by
e x t e n d i n g p u b l i c ownership i n t o p r o f i t a b l e manufacturing i n d u s t r y i n
accordance w i t h t h e p o l i c i e s d e f i n e d i n paragraphs
20 t o 2 3 belcw
0
l o q c i s i t i c a s b y , A o r on b e h a l f o f , t h e NEB n a y t a k e p l a o o i n a- number o f
waysu
Wherever p o s s i b l e , companies w i l l be wholly acquired by agreements
M i n o r i t y h o l d i n g s i n companies may b e a c q u i r e d i n f u t u r e i n r e t u r n f o r
a s s i s t a n c e from t h e Government under t h e I n d u s t r y Act and t h e s e w i l l normally
be h e l d by t h e NEB.
The Board may a l s o a c q u i r e p a r t h o l d i n g s i n companies
t h r o u g h j o i n t v e n t u r e s or t h r o u g h i t s p a r t i c i p a t i o n i n a r e o r g a n i s a t i o n .
But
t o a c t d e c i s i v e l y i n i t s r o l e of c r e a t i n g employment and c r e a t i n g new i n d u s t r i a l
c a p a c i t y , t h e Board w i l l need a number of
companies where i t h o l d s
-]00 p e r c e n t
of t h e e q u i t y c a p i t a l , i n o r d e r t o avoid c o n f l i c t between i t s o b j e c t i v e s and
t h e i n t e r e s t s of p r i v a t e s h a r e h o l d e r s .
When a company i s provided with s p e c i a l
r e g i o n a l a s s i s t a n c e , i t i s n o t i n t e n d e d t h a t t h e NEB should on t h a t a c c o u n t '
alone t a k e a s h a r e h o l d i n g i n t h e company.
The Government c o n s i d e r t h a t
suitable
c a t e g o r i e s of firms f o r a c q u i s i t i o n i n c l u d e t h o s e where t h e r e i s a danger
of a B r i t i s h company p a s s i n g i n t o f o r e i g n c o n t r o l s and s e c t o r s where
a c q u i s i t i o n by t h e NEB would s t i m u l a t e c o m p e t i t i o n where t h i s i s now weak,
07-;:5\li'-tv^
21.
\^:-;:XSiiy .
:
-..-.J;.;i,I;^..-:i;'I'v-:V'.
:
';:J^^^^;H- :
:
;:;
:
:
/V v" Y7V i7 C S T O
The main t h r u s t of t h e Government *s p r o p o s a l s f o r e x t e n d i n g p u b l i c owner­
s h i p w i l l f o l l o w t h e programme s e t out i n i t s E l e c t i o n M a n i f e s t o . The PHbHHBHMSMHH
Government w i l l soon p u b l i s h t h e i r p r o p o s a l s f o r development l a n d .
Plans
have a l r e a d y been announced t o e s t a b l i s h a B r i t i s h N a t i o n a l O i l C o r p o r a t i o n which w i l l safeguard t h e c o u n t r y ' s stake i n o i l from t h e C o n t i n e n t a l Shelf and t o t a k e t h e s h i p b u i l d i n g i n d u s t r y i n t o p u b l i c ownership.
The a i r c r a f t i n d u s t r y w i l l a l s o be n a t i o n a l i s e d / a n d t h e Government's p r o p o s a l s f o r i t w i l l be p u b l i s h e d s e p a r a t e l y .
Outside manufacturing, t h e Government p l a n t o e x t e n d t h e p u b l i c s e c t o r i n t h e r o a d haulage i n d u s t r y and t o e s t a b l i s h a v i g o r o u s , competitive public sector i n t h e construction i n d u s t r y .
They a r e a l s o p r e p a r i n g a f u l l y comprehensive soheme f o r b r i n g i n g commercial p o r t s and c a r g o - h a n d l i n g a c t i v i t i e s under p u b l i c ownership and c o n t r o l .
For t h e p o r t s , a new N a t i o n a l P o r t s A u t h o r i t y , s e p a r a t e from t h e NEB, w i l l be e s t a b l i s h e d , -
w i t h powers of c o n t r o l and c o - o r d i n a t i o n .
9
22.
Although t h e NED w i l l he p r i n c i p a l l y concerned with p r o f i t a b l e companies,
i t may on o c c a s i o n he c a l l e d on t o t a k e over an a i l i n g company which i s i n
danger of c o l l a p s e but needs t o be m a i n t a i n e d and r e s t o r e d t o a sound economic
b a s i s f o r r e a s o n s of r e g i o n a l employment or i n d u s t r i a l p o l i c y .
This r e s p o n s i ­
b i l i t y of t h e NEB w i l l be d i s t i n c t from i t s o t h e r f u n c t i o n s , and w i l l be
s e p a r a t e d i n such a way from them t h a t t h e NEB w i l l be compensated
specifically
f o r t h i s r e s c u e a c t i v i t y , t o ensure t h a t i t s o v e r a l l f i n a n c i a l d i s c i p l i n e i s not
undermined.
The Board may a l s o be asked t o a c t i n
support of f i n a n c i a l
measures by t h e S e c r e t a r y of S t a t e f o r I n d u s t r y t o a s s i s t a company
i
n
temporary d i f f i c u l t y ^ f o r example by p r o v i d i n g managerial r e i n f o r c e m e n t .
23o
The p r e c e d i n g p a r a g r a p h s r e p r e s e n t t h e Government''s p o l i c y towards p u b l i c
ownership f o r t h e next P a r l i a m e n t .
I f unforeseen developments r e q u i r e f u r t h e r
p r o p o s a l s t o be framed, t h e Government would b r i n g them b e f o r e P a r l i a m e n t and any
compulsory a c q u i s i t i o n would r e q u i r e a s p e c i f i c Act of P a r l i a m e n t .
In circum­
s t a n c e s of compelling urgency t h e Government would b r i n g t h e i s s u e b e f o r e
P a r l i a m e n t and any a c t i o n would r e q u i r e s p e c i f i c P a r l i a m e n t a r y a p p r o v a l .
If
any compulsory a c q u i s i t i o n proved t o be necessary i t would be s u b j e c t
t o prompt and f a i r compensation t o e x i s t i n g s h a r e h o l d e r s .
THE OFFICIAL TRUSTEE
2A*
The Government wish however t o r e t a i n other means of d e a l i n g w i t h f a c t o r y
c l o s u r e s i n t h e p r i v a t e s e c t o r on t h o s e o c c a s i o n s when, f o r s o c i a l and economic
r e a s o n s , i t i s d e s i r a b l e t o f i n d some way of keeping a p l a n t i n o p e r a t i o n w h i l e
Government Departments and o t h e r i n t e r e s t s concerned c o n s i d e r whether a permanent
s o l u t i o n t o t h e r e s u l t i n g problem can be found.
To supplement t h e powers t h a t
a l r e a d y e x i s t under S e c t i o n s 7.and 8 of t h e I n d u s t r y Act, which enable f i n a n c i a l
a s s i s t a n c e t o be provided i n o r d e r t o s u s t a i n p r o d u c t i v e c a p a c i t y , i t may t h e r e f o r e
be d e s i r a b l e t o p r o v i d e f o r t h e i n t e r v e n t i o n of a Government Manager or T r u s t e e who
would t a k e over temporary r e s p o n s i b i l i t y f o r h a n d l i n g t h e c r i s i s .
But such a
p r o p o s a l i n e v i t a b l y r a i s e s d i f f i c u l t i s s u e s of company law and w i l l need f u r t h e r
study b e f o r e d e c i s i o n s can be t a k e n by t h e Government.
10 CREATING JOBS
25,
The Government r e c o g n i s e t h e importance i n d u s t r y a t t a c h e s t o s t a b i l i t y
and c e r t a i n t y i n f i n a n c i a l i n c e n t i v e s t o s t i m u l a t e i n d u s t r i a l and commercial
expansion i n a r e a s of h i g h unemployment. ^They t h e r e f o r e propose t o m a i n t a i n
t h e p r e s e n t "broad framework of measures i n t r o d u c e d i n t h e 1972 I n d u s t r y A c t .
But t h e experience of t h e l a s t 25 y e a r s shows t h a t f i n a n c i a l i n c e n t i v e s are by
themselves i n a d e q u a t e ,
t h e Government need a power of d i r e c t a c t i o n and t h e
N a t i o n a l E n t e r p r i s e Board w i l l t h e r e f o r e have a r e s p o n s i b i l i t y t o c r e a t e
employment through commercially sound p u b l i c e n t e r p r i s e s and j o i n t v e n t u r e s
w i t h p r i v a t e e n t e r p r i s e i n t h e a r e a s of h i g h unemployment.
I t s subsidiary
companies w i l l q u a l i f y f o r f i n a n c i a l a s s i s t a n c e under t h e I n d u s t r y Act on
t h e same terms as comparable companies i n t h e p r i v a t e s e c t o r .
11 FINANCIAL ARRANGEMENTS
26,
The N a t i o n a l E n t e r p r i s e Board w i l l he funded by t h e Government and t h e
S e c r e t a r y of S t a t e f o r I n d u s t r y w i l l be empowered, w i t h t h e approval of t h e
Treasury, t o make funds a v a i l a b l e by way of l o a n s or i n t h e form of p u b l i c
dividend c a p i t a l .
This i s c a p i t a l which does not bear a f i x e d r a t e of
i n t e r e s t , but on which a p u b l i c c o r p o r a t i o n i s expected t o pay a dividend
s i m i l a r t o d i v i d e n d s on e q u i t y s h a r e s i n p r i v a t e companies.
Since t h e NEB
w i l l he competing w i t h t h e p r i v a t e s e c t o r and i s i n t e n d e d p r i m a r i l y t o
o p e r a t e w i t h i n p r o f i t a b l e s e c t o r s of manufacturing i n d u s t r y , i t
is
a p p r o p r i a t e t h a t a p a r t of i t s funds should have t h e c h a r a c t e r of e q u i t y
r a t h e r t h a n of f i x e d i n t e r e s t
27
e
finance.
The Board w i l l be a source of f i n a n c e f o r t h e companies i n which i t
s h a r e s and f o r any new p u b l i c e n t e r p r i s e which i t e s t a b l i s h e s
i n paragraph 16.
holds
a s envisaged
The NEB*s i n t e r n a l f i n a n c i a l r e l a t i o n s h i p s with i t s
s u b s i d i a r y companies w i l l be f o r i t t o s e t t l e w i t h them.
The NEB w i l l be
given f i n a n c i a l o b l i g a t i o n s which r e f l e c t i t s d u t y of s e c u r i n g t h e
management i n t h e p u b l i c i n t e r e s t of t h e companies v e s t e d i n i t .
efficient
Detailed
f i n a n c i a l g u i d e l i n e s f o r t h i s purpose w i l l be p r e s c r i b e d by Government.
RELATIONS WITH THE GOVERNMENT
28.
Within t h e framework of i t s c o n s t i t u t i o n and t h e funds made a v a i l a b l e
t o i t , t h e NEB w i l l be f r e e t o e x e r c i s e i t s commercial judgement i n
c a r r y i n g out t h e f u n c t i o n s d e s c r i b e d i n p a r a g r a p h 13 a b o v e .
I t w i l l however
r e q u i r e t h e p r i o r agreement of t h e Government b e f o r e i t t a k e s a c o n t r o l l i n g
i n t e r e s t i n any e n t e r p r i s e o r a m i n o r i t y i n t e r e s t exceeding £5 m i l l i o n .
12
The
p o l i c y o b j e c t i v e s t o which t h o NEB w i l l be r e q u i r e d t o c o n t r i b u t e a r e so
'wide r a n g i n g t h a t i t would be u n r e a l i s t i c t o t r y t o e n s h r i n e them r i g i d l y
i n an Act
a
There w i l l a l s o be o c c a s i o n s when t h e Government w i l l wish t o
i n f l u e n c e t h e a c t i v i t i e s of t h e Board and i t s c o n s t i t u e n t companies i n t h e
national i n t e r e s t .
The Government w i l l t h e r e f o r e need a power t o g i v e
g e n e r a l and s p e c i f i c d i r e c t i o n s t o t h e Board.
The Government w i l l not
however i n t e r f e r e i n d e t a i l e d i s s u e s of day t o day management.
Directions
t o t h e NEB w i l l have t o be g i v e n i n w r i t i n g by t h e Government and w i l l be
p u b l i s h e d i n due c o u r s e i n t h e B o a r d s annual r e p o r t .
PARLIAMENTARY CONTROL
-"^i)
\f:
29
0
K
'' ")'
"
A'
' M
'
"
'
'
'
'
:
j.'"
The NEB w i l l be set up under a new I n d u s t r y B i l l which w i l l o c n e o l i d a t
and develop e x i s t i n g l e g i s l a t i o n t o promote n a t i o n a l i n d u s t r i a l expansion.
The Board w i l l be a c c o u n t a b l e f o r i t s a c t i o n s t o t h e Government who, i n
t u r n , w i l l be f u l l y a c c o u n t a b l e t o Parliament f o r t h e B o a r d s e x p e n d i t u r e .
I n a d d i t i o n , t h e Board w i l l produce an annual r e p o r t and a c c o u n t s which
w i l l be l a i d b e f o r e Parliament and i t s a c t i v i t i e s , l i k e t h o s e of any o t h e r
major p u b l i c s e c t o r body, w i l l come under review by t h e a p p r o p r i a t e
P a r l i a m e n t a r y Committee.
30o
The Government a l r e a d y have powers under S e c t i o n s 7 and 8 of t h e
I n d u s t r y Act 1972 t o p r o v i d e f i n a n c i a l a s s i s t a n c e t o a company by t a k i n g
share c a p i t a l .
made permanent.
These powers of agreed share purchase w i l l be widened and
The Government propose t h a t P a r l i a m e n t a r y c o n t r o l of t h i s
extended power should be on t h e l i n e s of S e c t i o n 8 of t h e I n d u s t r y Act,
i e e x p e n d i t u r e on a s i n g l e a c q u i s i t i o n i n e x c e s s of £5 m i l l i o n should be
a u t h o r i s e d by R e s o l u t i o n of t h e House of Commons under main l e g i s l a t i o n
which p r o v i d e s t h e means by which t h i s i s t o be done.
I
13 8
'
SCOTLAND, WALES AND NORTHERN IRELAND
31. I n S c o t l a n d , t h e Government have announced t h e i r i n t e n t i o n t o
i n t r o d u c e l e g i s l a t i o n s e t t i n g up a S c o t t i s h Development Agency, r e s p o n s i b l e
t o t h e S e c r e t a r y of S t a t e , which w i l l be given a s u b s t a n t i a l measure of
r e s p o n s i b i l i t y f o r t h e promotion of i n d u s t r i a l and economic development.
32
0
The Government c o n s i d e r t h a t t h e most e f f e c t i v e a s s i s t a n c e and
support f o r t h e m o d e r n i s a t i o n and growth of S c o t t i s h i n d u s t r y w i l l be
achieved b y g i v i n g t h e S c o t t i s h Development Agency e x e c u t i v e r e s p o n s i b i l i t i e s
over a wide f i e l d .
I t h a s t h e r e f o r e been d e c i d e d t h a t " a p p r o p r i a t e f u n c t i o n s
of t h e NEB should be c a r r i e d out i n Scotland by t h e S c o t t i s h Development
Agency, and t h a t t h e Agency should be f u l l y a s s o c i a t e d w i t h t h e Board i n
c o n s i d e r a t i o n of m a t t e r s of r e l e v a n c e t o employment and economic growth i n
Scotland,
Comparable arrangements w i l l be made i n Wales and, a s a p p r o p r i a t e ,
i n Northern I r e l a n d .
14 ANNEX PLANNING AGREEMENT PROCEDURE
1.
A Planning Agreement w i l l n o t be a n agreement i n t h e sense of a c i v i l
contract enforceable a t law.
I t w i l l , i n s t e a d , r e f l e c t t h e outcome of
d i s c u s s i o n s between a company, t h e u n i o n s and t h e Government d u r i n g t h e
c o u r s e of which i t i s hoped t h a t agreement w i l l have been reached a b o u t t h e
shape and d i r e c t i o n of t h e company's p l a n s and t h e i r r e l a t i o n s h i p t o t h e
Government's economic o b j e c t i v e s .
The k i n d of i n f o r m a t i o n which each company
i s asked t o provide w i l l aim t o r e f l e c t t h a t company's own p l a n n i n g system
and i t s a c c o u n t i n g a r r a n g e m e n t s .
I n companies w i t h e f f e c t i v e c o r p o r a t e p l a n n i n g
arrangements t h e normal p a t t e r n i s f o r p l a n s t o be r e v i s e d a n n u a l l y and r o l l e d
forward f o r a f u r t h e r y e a r .
At t h e same time account i s t a k e n of t h e e x t e n t
t o which, t h e company has succeeded i n a c h i e v i n g i t s p l a n n i n g o b j e c t i v e s i n
the past y e a r .
2.
The Government have i t i n mind t h a t P l a n n i n g Agreements should t a k e
account of t h i s a p p r o a c h :
companies would be asked t o p r o v i d e t h e a p p r o p r i a t e
Government Department and u n i o n s with i n f o r m a t i o n of 3 main k i n d s .
First,
t h e r e would be i n f o r m a t i o n r e l a t i n g , p e r h a p s , t o t h e 2 or 3 y e a r s immediately
past.
I n t h e e a r l y s t a g e s , while e x p e r i e n c e of P l a n n i n g Agreements was being
b u i l t u p , i t would o b v i o u s l y be h e l p f u l i f t h i s m a t e r i a l could be provided
somewhat i n advance of i n f o r m a t i o n about f u t u r e p l a n s so t h a t t h e Government
1
Department concerned eould f a m i l i a r i s e i t s e l f w i t h t h e company s s i t u a t i o n i n
p r e p a r a t i o n f o r t h e forthcoming d i s c u s s i o n s , ,
3.
Second, companies might be asked t o p r o v i d e f o r e c a s t s r e l a t i n g t o t h e
t o p i c s t o b e covered b y an Agreement and l o o k i n g up t o 3 y e a r s ahead..
Thoy
could a l s o be asked t o give an i n d i c a t i o n of any l o n g e r term p l a n s which they
might have which would be l i k e l y t o a f f e c t t h e main development of t h e
company o r i t s p a t t e r n of i n v e s t m e n t , employment o r t r a d i n g a c t i v i t y .
Third,
t h e company v/ould a s a s e p a r a t e m a t t e r be asked t o keep t h e Department i n
touch w i t h any i n t e n d e d major d e p a r t u r e s from i t s p l a n s a s and when t h e y
arose,
4,
The p e r i o d t o which t h e Agreement r e l a t e d would a l s o r e f l e c t
circumstances of t h e i n d i v i d u a l company.
the
In some c a s e s t h e i n t e n t i o n s about
the f u t u r e may be s o f i r m , eg i n r e l a t i o n t o a major new development p r o j e c t ,
t h a t i t would be p o s s i b l e t o r e a c h agreement which might be expected t o
15 c o n t i n u e f o r 2 o r 3 y e a r s w i t h l i t t l e o r no need f o r change.
On t h e o t h e r
hand, and i t nay w e l l be more commonly, a company might have a s e t of p l a n s
about t h e . f u t u r e which were c o n s t a n t l y b e i n g r e v i s e d a s e x t e r n a l c i r c u m s t a n c e s
changed.
I n t h a t event i t might be more a p p r o p r i a t e t o have what would i n
substance be a r o l l i n g Agreement r e l a t i n g t o t h e 3 y e a r 'fcrward p e r i o d and
renewed a n n u a l l y w i t h whatever changes t o p a s t e x p e c t a t i o n s c i r c u m s t a n c e s
might be a g r e e d t o r e q u i r e .
5*
As p a r a g r a p h 2 of the White Paper d e s c r i b e s , Planning Agreements would
provide the c o n t e x t w i t h i n which t o determine t h e need for. s e l e c t i v e
assistance.
financial
Moreover, when an Agreement was concluded t h e p r o j e c t s t o vfoich
i t r e l a t e d would q u a l i f y f o r r e g i o n a l development g r a n t a t n o t l e s s t h a n
e x i s t i n g r a t e s f o r 3 years'.
If­
1 August 1974
16