In the City
The moral of ICL
Tony Rudd
The imminent collapse of this country's only mainframe serious contender in the world computer market, International Computers Limited, brings into focus yet again the most important unresolved question about this Government's attitude towards big business.
Viewed from the City, the Government appears to have two policies, both of course mutually incompatible. The first is that. espoused by right-wing Conservative backbenchers and from time to time by senior Ministers themselves, namely a reliance on the 'hidden hand': if a business can't support itself in the market place, then it is not the role of the government to come in with crutches to support it. Those holding this opinion were apparently deeply disturbed at the Government's decision to give guarantees to ICL's bankers recently to enable the Corporation to continue even on a short-term basis. They would now be in favour of letting the company be sold to the highest bidder or for it to be broken up into its constituent parts (if there are any) and sold off that way. The fact that this might mean ICL being sold into American hands is neither here nor there. The alternative view, namely that the Government has a more positive role, has of course been put by Mr Peter Walker. The fact that this Government has backed itself into helping a number of companies through their difficulties doesn't mean that Mr Walker's views are widely shared, even in the Government. Much of the intervention has been as a result of political exiiediency and has cut against the grain of those responsible.
But in one area, namely that of strategic exports, the Government does appear to be an active and willing participant in a forward policy which has very little to do with the 'hidden hand'. Perhaps the most Significant recent action by the Prime Minister, in the opinion of those working in the square mile, was her appearance on television during her tour of the Middle East gesticulating like any enthusiastic salesman at lumps of British military hardwear under the bemused gaze of a group of Saudi princes. She was busy doing exactly what the French have done for years, namely a naked promotion of British exports. Her involvement will have gone very much further than just promotion. Reassurance will doubtless have been given about financial terms, about British willingness to give continuing technical support and knowhow and indeed about the enthusiasm and capability of the companies concerned in continuing the good work. Mrs Thatcher will have spoken on behalf of the military, commercial and financial com plex in the United Kingdom which, acting in unison, will have to deliver against the promises that she had made.
Her dedication and effort on behalf of British exporters during this recent trip were rightly applauded, though thought by some to be overdue. If this country is to compete successfully for big contracts abroad it can only do so on these terms; all our international competitors have for many years now used every trick in the political and financial basket to bring home the commercial contracts. We are naive if we think we can do less. However, to considerable relief all round, we now appear to be learning the lesson. Or are we? It's no use going in for contracts abroad on a united front if at home there is disunity. The domestic base from which the contracts abroad have to be won must be secure. The co-operation between the three arms must be orchestrated in London. And if any one of these three fails to play its part then the other two are in trouble.
This is particularly the case if it is the commercial arm that is likely to fail. And this is where we come back to ICL. ICL is this country's major computer manufacturer. It's not just that we have to make mainframe computers, it is that the design of the necessary software to support modern military systems can only be done on the back of a major company. Indeed the accumulated technical expertise in software design must be regarded in this context as a national heritage. If it is lost, then a great deal of commercial effort which depends upon it will be lost as well. It will be impossible for part of the contracts which Mrs Thatcher has been helping to secure in the Middle East to be completed if this country doesn't have certainitechnical knowhow. The problem with the 'hidden hand' theory is that no allowance is made for factors of this sort.
There are those in the City who would point to the case of Ferranti. This excellent company, which plays such an important role in these fields of advanced technology, would have disappeared, wiped out by the 'hidden hand', were it not for the fact that the Department of Industry bought it in 1975 and allowed it to recover to prosper brilliantly later. Surely this must be the right approach.
And so it has turned out. Rather than giving the business to the Americans the Government has given ICL another chance, precisely because of its long-term importance in commercial terms, let alone national prestige. Giving the new management an opportunity to fight its way out of the recession is absolutely right. Current cash flow problems however may require further sums from the Government. Whilst there is no indication that any more support will be forthcoming, the logic of the situation seems to imply that if the new management's rationalisation plan leaves the group short of development funds some arrangements will have to be made either direct or at least with the Government in the background. So ICL's immediate future is probably a good deal more secure than it looks on the face of it.
It is encouraging that these moves take into account the obligations and undertakings which we've entered into abroad so that we can preserve our image in international markets and continue to win contracts of the kind that Mrs Thatcher was speaking about to her Middle Eastern audiences only a few weeks ago.
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