§ 6.17 p.m.
§ The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of INDUSTRY (Lord Melchett)My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
§ Moved, that the House do now resolve itself into Committee.—(Lord Melchett.)
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The Lord Strang in the Chair.]
§ Clauses 1 and 2 agreed to.
§
Lord CARR of HADLEY moved Amendment No. 1:
After Clause 2 insert the following new clause:
§ Duty of Corporation to provide information
§
". In section (14) (General financial duties of the Corporation) at the end there shall be inserted—
(8) Notwithstanding anything specified heretofore it shall be incumbent on the Corporation to provide such information as the Secretary of State may require for the purpose of laying before Parliament a Green Paper which shall be considered before any order is made under subsection (3A) of section 36 of this Act. Such information shall include (but shall not be restricted to)—
§ The noble Lord said: To explain the purpose of this proposed new clause I will briefly recapitulate the background. The overwhelmingly main purpose of the Bill is of course to increase the borrowing powers of the British Steel Corporation by £2,000 million, doubling it from its present £2,000 million to a prospective £4,000 million, a huge increase. In the Second Reading debate last week, I expressed the view on behalf of the Opposition that we felt that before Parliament was asked to approve such further huge provisions of public money—or potentially of public money—the Steel Corporation should be asked to give a somewhat fuller prospectus about its affairs: about the ways in which it proposes to use and raise the money, the return on it and the debt repayment and all such matters.
§ I expressed rather strong dissatisfaction on behalf of the Opposition that we did not feel that we had got a prospectus of the necessary rigour and detail. I went on to say, however, that in view of the time factor and the urgency of the need of the BSC, we would not wish to hold up the authorisation of the first tranche of this money—that is, raising the borrowing limit from £2 billion to £3 billion—in order to demand any further information about that, and that although we did not like it we were prepared, in view of the urgency, to allow that to go through.
§ I went on to point out that the second tranche—the second £1 billion—which raises the borrowing powers from £3 billion to £4 billion was not of anything like the same urgency. Indeed, we hope there is every indication that it will not be needed for 18 months, or at any rate for a year or for some considerable period. Therefore, we in the Opposition felt very strongly that we could and should demand a more detailed and more rigorous prospectus from the BSC before the Secretary of State came to Parliament—which in this case means another place only, not this House as well—to obtain an Affirmative Resolution for this second half of the extra borrowing powers which the Bill seeks to provide.
1419§ I said on Second Reading that we would be moving an Amendment to that effect, and that is what the new clause does. I think its terms are obvious and I need not explain them at length; essentially, what we are saying is, first, that it should be incumbent on the Corporation to provide the Secretary of State with such information as he may require and, secondly, that it should be incumbent upon the Secretary of State to lay before another place a Green Paper incorporating this information given to him by the Corporation, so that Parliament would have a chance to see the prospectus before it had to approve, or otherwise, the further extension of the borrowing powers from £3 billion to £4 billion.
§ Essentially, what we are saying in the new clause, apart from the procedure I have just outlined, is that the Steel Corporation should have to provide the Secretary of State with such information as he thinks necessary for this purpose. We then go on to say that, for Parliament's benefit, we believe that information should include the subjects which we list in paragraphs (a), (b) and (c) of the new clause. In paragraph (a) we say we believe that Parliament should be given some indication of the alternative financial arrangements considered for future investment schemes, including the possibility of joint ventures; so that Parliament knows the Corporation's thinking on that. Secondly, we say that Parliament should have the benefit of knowing what the Corporation has said in terms of the projected balance sheet, profit and loss account and the cash flow forecast for each of the succeeding five years. Thirdly, we say that the Corporation should provide, and the Secretary of State should pass on to Parliament, an outline of its intentions with regard to existing and future debt repayment.
§ We believe that those three paragraphs lay down what Parliament ought to regard as the minimum requirements before it is asked to vote a huge sum of money of this kind. As I say, we really believe that such requirements ought to apply to the whole of the extra £2 billion; but we are prepared to accept, as I said a few moments ago, that we should not demand it in relation to the first tranche, because of the urgency. However, having dealt with the point of urgency, we believe that it is important that Parliament 1420 should have that information before being asked to approve the second tranche. I believe that that sufficiently explains the purpose of the new clause and I beg to move.
§ Lord MELCHETTI am very grateful to the noble Lord, Lord Carr, for the constructive way in which he has moved the new clause and for his recognition of the urgency of the need for the initial tranche of money which is to go to the British Steel Corporation and which we dealt with at some length on Second Reading. May I say straight away that I have great sympathy with the objectives which the noble Lord is seeking to achieve with the new clause? I do not believe that there is any point of principle between us on this. I am advised that the clause has some technical deficiencies and it does, of course, overlap with provisions already in the Iron and Steel Act 1975.
Under Section 5(3) of that Act, the Corporation is required to supply the Secretary of State with such returns, accounts and other information with respect to their property and activities, and the property and activities of the publicly-owned companies, as he may from time to time require. This general power enables the Secretary of State to require information of the type specified in the Amendment, including any forecasts which BSC has available, and to submit it to Parliament. In practice, the Government's relationship with BSC is conducted on a voluntary basis, and it has not so far proved necessary to use the powers provided by Section 5(3) of the Iron and Steel Act 1975. I am myself sure that our relationship with BSC, if it is to be satisfactory, should continue to be on a voluntary basis, so I must say that it is my belief that any Government would be reluctant to resort to compulsion by requiring certain information from BSC, as is envisaged in the Amendment of the noble Lord, Lord Carr.
I recognise that there has been some dissatisfaction expressed in another place and in your Lordships' House with the amount of information provided for the passage of the present Bill. The only thing that limits the information which can be made available is the need to preserve commercial confidentiality. It is not that there are no forecasts being given to the 1421 Government by BSC, nor that the Government lack powers to require information. As I said at the Second Reading, I believe that noble Lords who are familiar with the accounts, reports and prospectuses of private sector companies will know that the extent to which they cover forecasts of the future is strictly limited. Few, if any, private sector companies would make publicly available a four-year forecast of their sources and applications of funds, as BSC has for the debates in another place, copies of which I have sent to the noble Lord, Lord Carr and the noble Lord, Lord Lloyd of Kilgerran, who spoke on Second Reading. The Corporation, as a responsible public body, is in the vanguard over disclosure, but there are limits to how far the Corporation can reveal information of a type not disclosed by its competitors without being put at a serious disadvantage.
So far as reporting the past is concerned, I believe that the Corporation's annual report and accounts compare very favourably with the degree of disclosure by private sector firms in their annual reports. Inevitably, the present Bill had to be brought forward before the Corporation published its report and accounts for 1975–1976, since a Bill in the next Session of Parliament could not meet BSC's financial requirements, as the noble Lord, Lord Carr, recognises. The Corporation has however made available its draft unaudited accounts, copies of which I have also sent to the two noble Lords who spoke in the Second Reading debate.
The proposed new clause does nothing to increase the amount of information which can be made available within the limits of commercial confidentiality. By seeking to lay down in advance the information which will be provided, it may, I suggest, introduce an undesirable element of rigidity. A requirement to publish profit figures for each of the five succeeding years could, in particular, be highly onerous. The profit made in any particular year depends on the timing of the economic cycle, which is extremely difficult to predict in advance and is liable to major fluctuation, since it depends on the difference between two very large quantities, the Corporation's revenue on the one hand and its costs on the other. I suspect that the Corporation might say 1422 that it would depend to a large degree on the extent to which particular Governments interfere in the Corporation's policies, but that is the Corporation's point of view. Firms in the private sector show some reluctance to forecast profits for even one year ahead, let alone five.
However, as I said at the outset, I do not believe that there is any point of principle between the noble Lord and myself and I am anxious to be as helpful as I can. Indeed, it is the Government's policy to make as much information as possible available to Parliament on the nationalised industries and in other respects. I can tell the noble Lord that the Corporation has given an assurance that it will provide information for the passage of any order for which the present Bill provides, and that this information will be not less than the information provided for consideration of the present Bill. The proposed new clause would be likely to require BSC to disclose commercially confidential information: in view of the Corporation's voluntary undertaking, on which I should be happy to enlarge if the noble Lord wishes, I very much hope that the noble Lord will be prepared to withdraw the Amendment.
§ 6.30 p.m.
Viscount LONGI have one or two points which I should like to bring up. I am very glad that the noble Lord, Lord Melchett, has a certain amount of sympathy with the Amendment moved by my noble friend Lord Carr, but I am sure that he will fully understand that, when enormous sums of money are to be borrowed, we on this side of the Committee must try to see how we can govern the situation. I feel that the noble Lord is really protecting the Corporation a little too much. Surely any company that has a balance sheet should be able to produce it, and I am sure that in cases of those who borrow money from Parliament, Parliament must be allowed to see what the conditions are.
The Amendment of my noble friend is asking only that, before the Secretary of State lays an order, we know what is happening. I am wondering whether in this case the noble Lord is hiding something from us. He is saying that it would be dangerous to divulge too much. What 1423 is wrong with divulging that the Corporation has made a profit? There is also the question as to whether or not moneys are being spent in the wrong direction of investment. Cannot the noble Lord give us more information, because I feel that at this stage we are rather lacking in it?
§ Lord MELCHETTI am certainly happy to give noble Lords opposite as much information as I possibly can, and I can assure the noble Viscount that there is certainly nothing on our side that we wish to hide. Indeed, if a nationalised industry is making a profit the noble Viscount can be assured that I will be the first to let him know about it.
My honourable friend the Minister of State in the Department of Industry has discussed with the British Steel Corporation the views presented in another place on this matter, because as I said earlier this disquiet was expressed when the Bill was before another place, in the same way as it has been in your Lordships' House. As a result of those discussions the Corporation has undertaken to provide the Secretary of State with a document containing such information as he may request for the purpose of Parliament's consideration of any order to increase the Corporation's borrowing limit under the provisions of the Iron and Steel (Amendment) Bill.
As I have said already, subject to the need to preserve commercial confidence where applicable, the information would include—and this is probably the point on which the noble Viscount is pressing me—the following items. First, information on the Corporation's investment plans and the expected trends in production and sales. Secondly, broad cash flow projections on BSC's sources and applications of funds. Thirdly, indications of sources of finance projected under the proposed increase in the borrowing limit, including planned borrowings from Community institutions and other overseas sources. Fourthly, an outline of the Corporation's intentions with regard to existing and future debt repayment, which I think is a matter particularly referred to in the Amendment of the noble Lord, Lord Carr. Lastly, information on the trends in the Corporation's financial results and capital employed so as to bring up to date the information in 1424 the latest annual accounts or half yearly statement of results.
I would stress that point because the Corporation is already committed to providing a great deal of information both in its annual accounts and in its half yearly statements, but should it be necessary to bring that information up to date the Corporation has undertaken to do so. I hope that with that very full assurance of the Corporation's future intentions the noble Lord will withdraw his Amendment.
§ Lord CARR of HADLEYI wish to thank the noble Lord because he has gone a long way to meet us. Speaking for myself, and I hope for my noble friends, we are not so concerned about getting something written in, in forms which I know can be awkward, as we are to have an assurance, specifically firm and detailed in its nature, to satisfy us that when another place has to consider the Affirmative Resolution it has the kind of information we are asking for. tried to listen carefully to the noble Lord and I felt that he had largely met our point.
I should like to ask him one question which perhaps he can answer quite quickly. It reverts to his first speech on this clause. He said that the British Steel Corporation had made a lot of information available, and I think that may be true. But from what I have read of proceedings in another place and from comments I have heard, I think that there was some feeling in another place that this information had to be asked for. One of the things we are seeking now is to be sure that the information is made available to another place before Members there get into the debates. This is particularly important in the case of an Affirmative Resolution because that will not involve a Bill with a Second Reading, a Committee stage and so forth, but only a single debate.
Of course I accept the point about commercial confidence. But if the noble Lord can assure us that the information, in the form which he has described—which I agree covers very largely what we are asking for in the Amendment—will be available in another place before they embark on their debate, so that there is reasonable time for another place to absorb the information, then I think I shall be able to please the noble Lord and ask leave to withdraw the Amendment.
§ Lord MELCHETTOf course the information would be made available in reasonable time for debate, as the noble Lord has said, and this is particularly important in the case of an Affirmative Resolution as opposed to a Bill. In the case of this Bill, for instance, I understand that information was made available at the Committee stage in another place and at Second Reading in your Lordships' House, and that gave Members of another place and Members of your Lordships' House time to consider it. In the case of an Affirmative Resolution the position would be different, and I can give the noble Lord the assurance he seeks.
§ Lord CARR of HADLEYI believe that the Committee has justified the time spent on this matter. I am most grateful to the noble Lord, and to the Government, for the undertaking, in view of which I ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 3 agreed to.
§ 6.36 p.m.
§
Lord CARR of HADLEY moved Amendment No. 2:
After Clause 3, insert the following new clause:
§ Limit on sums borrowed in a currency other than sterling
§
" . In section 16(3), at the end, there shall be inserted the words—
Provided any such sums borrowed in a currency other than sterling which are covered by Treasury Exchange Rate Guarantee shall not at any time amount to more than half the total borrowing of the Corporation."
§ The noble Lord said: This is another matter which I mentioned on Second Reading. In addition to the other, more specific matters about flow of funds and so forth, we were concerned about the extent to which the Corporation used its powers to borrow overseas in foreign currency terms. This is why we tabled this new clause. Perhaps the noble Lord can confirm that I heard correctly when, in the undertaking he just gave us, he said that among the information available would be the information about the Corporation's intentions regarding the extent to which it was proposing to make use of overseas borrowing. If the noble Lord can confirm that I heard correctly about that, I might be able on this Amendment to take similar action 1426 to that which I took on the last Amendment.
§ Lord MELCHETTI am delighted that we are making such good progress and I hope that it is an omen for the next Bill which the Department of Industry will be bringing before your Lordships—but perhaps it is not. I dealt at Second Reading with the importance of the Corporation's ability to borrow overseas, and again I do not think there is any difference between the noble Lord and me on that point. I should like to stress that no secret is being made of the extent of the Corporation's foreign currency borrowings. They are reported in the BSC's annual accounts. The Corporation has provided projections of its foreign borrowings for the debate on this Bill in another place and in your Lordships' House.
The noble Lord, Lord Carr, is quite right in saying that in the undertaking I gave when we were debating the previous Amendment I said that the Corporation has agreed to provide information on planned overseas borrowings again, when in due course a statutory order is brought forward, under the provisions in the present Bill, to increase the borrowing limit above the level initially set. With Parliament informed in this way, I do not believe that there can be any advantage in placing restrictions in advance on the Government's ability to offer exchange rate cover for reasons of national economic policy. I hope that the noble Lord will see fit to withdraw the Amendment, as he said he might.
§ Lord CARR of HADLEYI am very glad to hear the noble Lord say that. In view of what he said, I must assure him that the very rapid progress we are making this evening is largely due to his forthcoming response to our requests. If he were to remain as forthcoming when we get to the next legislation which he spoke about, after our holiday, then we might make equally rapid progress. But I should say to him that we shall come back greatly invigorated from our holidays, so that if he is not equally forthcoming then I am afraid we may not make such quick progress. However, sufficient unto the day is the good thereof, and in view of what the noble Lord has said I am delighted to seek leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Remaining clauses and Schedule agreed to.
§ House resumed: Bill reported without Amendment: Report received.
§ Then, Standing Order No. 43 having been suspended, pursuant to the Resolution, Bill read 3a, and passed.