(c) crown copyright
Catalogue Reference:CAB/129/178/14
Image Reference:0001
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 ' 5
GOVERNMENT
C(74) 89
COPY NO
1 August 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
T h e a t t a c h e d d r a f t i n t r o d u c t o r y p a r a g r a p h s of a W h i t e P a p e r o n
P l a n n i n g A g r e e m e n t s and the N a t i o n a l E n t e r p r i s e B o a r d w h i c h
h a v e b e e n p r e p a r e d b y 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 a r e
c i r c u l a t e d for c o n s i d e r a t i o n b y the Cabinet on 2 A u g u s t .
Signed
JOHN H U N T
C a b i n e t Office
1 August 1974
11111111; . / 111111
,
1
^
­
7 3
INTRODUCTION TO WHITE PAPER ON INDUSTRY Britain's wealth and' welfare "ultimately depends on all those who work in manufacturing industry.
The strength and structure of our industry is therefore a matter of great national concern. This white Paper proposes measures to encourage its re-equipment and expansion within the framework of a mixed economy, comprising public enterprise and a vigorous and successful private sec:tor' each of which has an important part to play. 2
Since the war Britain s record as a manufacturing nation 1
has "been one of disappointment.
Por social, economic and industrial reasons we have "been unable as a nation to harness tlie immense­
resources of skill and ability at all levels of society, and as a result have been falling further behind our competitors and doing far less well than we could have done and could do. Success or failure tends to be reinforcing and as the gap widens it can become progressively more difficult to bridge.
The
investment and new industrial relationships needed to sustain our living standards can become more difficult to secure. 3
In 1971?
investment for each worker in British manufacturing
industry was less than half that in Prance, Japan or the United
States and well below that in Germany or Italy.
In spite of
the measures to encourage investment taken since then it has
still lagged behind.
Moreover, when it comes to making effective
use of our manufacturing equipment we are less successful than
most of our competitors.
Investment at home on the scale required
has not taken place and funds which ought to have gone into our
own industry have been deployed elsewhere.
In the last ten years the rate of direct investment by British firms overseas has more than trebled and, even when allowance is made for. changes in the value of money, this represents a substantial ­
diversion of resources.
4
.
Successive governments have striven to correct these
deficiemesboth by general economic measures and by increasing
involvement in industry.
This experience is not unique to
this country; it has been shared by many other western democracies.
But all too often the involvement has "been a response to the
difficulties of particular companies rather than part of eJi
coherent industrial strategy.
The Government take the view
that.if we are to be successful in developing our mixed economy
we must evolve institutions that will bring about a closer
and better defined relationship between Government and industry.
5
The Government therefore propose to create two new
instruments: a system of Planning Agreements with major firms
and separately a National Enterprise Board to extend public
enterprise into the manufacturing sector of industry.
In
addition, the Government are coming forward with proposals for
the extension of public ownership based on the programme set out
in their election manifesto.
These include development land, the
establishment of the British National Oil Corporation, the.
nationalisation of the shipbuilding and aircraft industries, the
extension of the public sector in\'.. the road haulage industry and
construction industry and schemes for bringing commercial ports
.
\
and cargo handling-activities under public ownership and control. 6
The Planning Agreements system and the National Enterprise
Board have separate' and complementary roles- to play in achieving
1
the Government s objectives.
The basic aim of Planning
Agreements is to bring about a closer understanding between
companies,workers, and Government moving towards a harmonisation
of their plans.
The information which companies provide will
be used for this purpose only.
The National Enterprise Board
will provide the means for direct public initiatives in particular
key sectors of manufacturing industry.
The Board will in addition
to extending public ownership take over the ownership of shares
which the Government already hold in a number of companies; it
will be a new source of investment capital for state participation
in manufacturing industry; and it will act as the Government's
agent in the efficient restructuring of industry.
It will also
help companies in difficulties and will pay close attention to
regional development opportunities.
Por many of its activities
the Board.will be able to build on the experience of the former
Industrial Reorganisation Corporation.
7
The Government want to develop relationships which will
encourage improvements in the performance of the whole economy,
to promote a higher quantity and quality of investment and.to
achieve a better return on that investment.
1
This must be seen
1
against the background of the Government s social and economic
goals.
By. entering into explicit partnership with manufacturing
industry the Government expect to improve the quality of management, develop industrial democracy and move towards joint company planning within an orderly development of the economy. 8
These proposals for a National Enterprise Board and Planning Agreements will he presented to Parliament in a new Industry Bill and as the need arises, appropriate changes will also "be proposed in company law. 1 August, 1974*