§ Mr. David PriceI beg to move Amendment No. 2, in page 2, line 16, to leave out from 'efficiency' to the end of line 17, and to insert:
'having regard for the regional aspects of economic development'.1170 The object of this Amendment is twofold. First, it is to leave out from the Bill the vague phrase…assisting the economy of the United Kingdom or any part of the United Kingdom".Secondly, in its more positive rôle—that is, relating to the words which I wish to see inserted—it is to make it clear that in promoting mergers and amalgamations, and in rationalising the industry, the I.R.C. will not do anything which is detrimental to the development areas but will endeavour to bring about more economic growth throughout the United Kingdom.The House will know that this Amendment is somewhat different from the one which I moved in Standing Committee, in the sense that the second leg of my Amendment is new. It has been tabled as a result of an undertaking I gave in Committee when I moved the deletion of the words, which I again wish to see deleted, without the Amendment I now propose. I had hoped that the Government would themselves have tabled an Amendment along the lines which I am now moving, but, unfortunately, they did not see fit to do so, and I am doing the job for them. I think they will appeal to the House as a whole.
4.30 p.m.
The purposes of my Amendment are as follows. First, there is the proposed deletion. We believe that the words
…assisting the economy of the United Kingdom or any part of the United Kingdom…are unnecessary, in the sense that we are entitled to assume that the promotion of industrial efficiency and profitability by the I.R.C. will assist the economy of the United Kingdom. Indeed, if that were not on its basis, I do not know what the Bill would be about. We may, therefore, take that as read and, in that sense, the presence of those words is redundant.We therefore must assume that some special and extra meaning must be attached to these words—additional, that is, to the purpose of promoting industrial efficiency; and, I suspect, profitability, for which I look to a later Amendment, which I have no doubt the House will carry. What special reasons are to be attached to the words? What 1171 duty, beyond that of promoting industrial efficiency, is implied as a duty on the board of the Corporation?
That raises all sorts of questions and, in my opinion, we were never given a satisfactory reply in Committee. On this side, we do not believe, for instance, that the I.R.C. should be a positive instrument for promoting technology beyond that which is implicit in the concept of industrial efficiency and assisting catalytically the mergers of companies. It may be said, as was suggested on Second Reading by one or two hon Members opposite, that these words allow the I.R.C. to be an instrument for the promotion of the Government's regional development policy. We are in no way opposed to appropriate regional development policies, but we suggest that the I.R.C. should not be the positive instrument for the promotion of regional development.
The Government are extremely well equipped with other powers and instruments for fulfilling that desirable and—as I hope it will be agreed—non-partisan purpose, but I believe that the Corporation should have a clear and defined purpose. I believe that that purpose—and I am taking the Government entirely on their own terms, and being entirely friendly and helpful here—was defined quite clearly in paragraph 5 of the original White Paper, as being
…to search for opportunities to promote rationalisation schemes which could yield substantial benefits to the national economy.As I believe that to be the Government's purpose in setting up the Corporation, I do not think it right to have these additional words which raise all sorts of suggestions which, I may say, to be fair to the Government—or, the Minister of State may think, unfair—have certainly not been clarified at any stage of the Bill up to now.The second leg of my Amendment, which seeks to add the words on the Notice Paper, acknowledges that the Corporation, in fulfilling its duty to promote rationalisation schemes, should always be mindful of the needs of the regions, and should not promote schemes that would be harmful to the least-favoured regions. We all know of companies that have recently set up factories in, say, Fife, 1172 or Central Scotland or the West Country—in development areas—where one could conceive of mergers being such that the future of these factories might be prejudiced.
That is why I propose adding the words
'having regard for the regional aspects of economic development'.I am sure that the First Secretary, whom we are delighted to see with us now, will recognise those words, because they come from his predecessor's White Paper. I felt that it would be more agreeable to the Government if I used their own words.I therefore hope that my Amendment will commend itself not only to the back benchers on both sides, but to the Government, as being eminently reasonable and entirely in line with their own purposes, narrowing, as I believe, the functions of the I.R.C., but still lying well within the purpose outlined in the White Paper.
§ Mr. Geoffrey Hirst (Shipley)To be honest, if I had my way I would have neither the words used by the Government nor those proposed by my hon. Friend the Member for Eastleigh (Mr. David Price), but I entirely support the first leg of my hon. Friend's proposition to remove these words in the Bill as being redundant. If the purpose of this organisation—which I have never made any bones about disliking—is to have any object, the Government must believe that it is to promote industrial efficiency, but "industrial efficiency" is a complete phrase entity in itself and needs no clarification. Industrial efficiency is a criterion above anything else. It must be the first criterion. It cannot be governed, in my thinking, by the fact that it is beneficial in one region or another.
If, as I understand, one is in the uncomfortable position of only being able to accept one set of words or the other, I am inclined to those in the Amendment. At the same time, I think that it would be better left as being for the purpose of promoting industrial efficiency. Perhaps in a few years' time we will be able to judge whether that has been achieved. The words in the Bill rouse my suspicions. I am suspicious of the Bill in any case, but they have added to it. I was not a member of the Standing Committee, so I did not hear the words of wisdom 1173 its members had to say on this matter, but having read the OFFICIAL REPORT I must say that it did not seem to have been dealt with by the Government in any great way. I hope that we shall have an explanation. I shall be highly suspicious of the Government's intention if they do not meet the Amendment.
Mr. J. Bruce-Gardyoe (South Angus)I support the Amendment. I think that both sides agree that this body should not be used as an instrument of a regional policy per se. The Government have, or should have, plenty of other instruments—there was the well-tried system of industrial advances and free depreciation, which they have thrown aside. Those are the right sort of instruments to use. I do not think that the Industrial Reorganisation Corporation is the right instrument.
At the same time, I think that, in considering any proposals for rationalisation or for mergers that may come before it, it is not unreasonable that the Corporation should bear in mind the implications of such proposals for regional development, and should bear in mind, particularly, that such proposals should not militate against regional developments.
Let me give an example of what I have in mind. I believe that in Scotland we already suffer from an excessive dependence in our industrial structure on subsidiaries of foreign and English-based firms. My hon. Friend the Member for Shipley (Mr. Hirst) smiles, but any examination of the industrial structure in Scotland show this to be so. The result tends to be that some of the executive services for these firms—marketing, sales, research and administration—are very often concentrated in the headquarters of the companies outside Scotland, and the loss from Scotland of our most highly qualified graduates, which has been a worrying feature for many years, is thereby encouraged.
In Committee, the Minister of State had the nerve to say that all the Government's policies were aimed at developing the regions. I suppose that things like Selective Employment Tax—which will draw about £3 million out of the Highlands each year—were the considerations he had in mind. Most of the Government's policies, viewed from the point of 1174 view of the regions, seem designed to damage the prospects of regional development rather than to assist them. The Amendment is, therefore, desirable,
It was interesting to note that the examples given by the Minister of the ways in which the I.R.C. might positively assist the processes of regional development were all done by former Conservative Governments—for example, the establishment of Wiggins Teape, at Fort William, of B.M.C., at Bathgate, and of Rootes, at Linwood—in contrast to this Government, who set up a corporation and introduce a lot of deterrents to regional development. We would like to see from the Government not the elaborate bodies which they are seeking to set up, but active steps of the sort followed by former Conservative Administrations to help the regions with their special economic difficulties.
I welcome the Amendment because it is important for the I.R.C. to bear in mind that while it should not in any sense be an instrument of regional development, t should, in considering any proposals put to it or devised by its own initiative, bear in mind the needs of regional development.
§ Mr. John Nott (St. Ives)I support the Amendment because its acceptance would serve an admirable purpose in emphasising that the economics of industrial location should play some part in the advice which the I.R.C. gives to industrialists.
On Second Reading, some of my hon. Friends said that we would not have opposed the Bill had the I.R.C. been performing merely an advisory or persuasive function for industry and had merely been, as it were, encouraging the natural processes of the market. Similarly, some of my hon. Friends support regional policies because they hasten, encourage and advertise the economic potential of the regions which might otherwise go unrecognised for many years.
The regional aspects of economic development mean a strengthening of free market forces and not a substitution of them. If the Government deem it right to encourage regional development—and many of us have grave doubts on that score following the introduction of S.E.T., the reduction of tax incentives for the regions, the abolition of free 1175 depreciation and so on—then I believe that the I.R.C. can play a slightly more positive rôle than was mentioned by my hon. Friend the Member for Eastleigh (Mr. David Price).
Where the I.R.C. is engaged in helping and promoting the merger of two firms, those firms might wish to close down two out of date and redundant factories and merge them into one. In such a case, it would be unreasonable that, together with a host of other factors, the I.R.C. should have regard to the attractions of the outlying regions of the country. Likewise, where the I.R.C. sponsors a new process or sets up a new factory—and Wiggins Teape has been mentioned—the I.R.C. should bear in mind, together with a host of other factors, that in the regions there are large resources of unutilised labour and skill.
Where the I.R.C. can perform its rôle most adequately is in its activities in meeting a wide range of industrialists from every sector of British industry. It can persuade them of the advantages which the regions have; of the special tax concessions available in them and of the labour, skill and other amenities which exist in those parts of the country. I do not suggest that the £150 million being made available to the I.R.C. should be used specifically to finance industry in the regions. However, the I.R.C. could perform a useful advertising and persuasive function in helping industry to go to the regions.
I thought at one point that my hon. Friend the Member for Eastleigh was going to lapse into some Scottish nationalism. We in Cornwall would be delighted if the subsidiaries of English firms—even the subsidiaries of Scottish or American firms—would come to our part of the world. They would be welcome there, in spite of our Cornish nationalism, for we need more employment and we hope that the I.R.C. will advertise the county to the industrialists who seek its advice. I support the Amendment because it could help the I.R.C. to bear in mind the regional aspects of economic development when it is giving advice to industrialists.
§ 4.45 p.m.
§ Mr. Joel Barnett (Heywood and Royton)I cannot help feeling that hon. Gentlemen opposite are making heavy 1176 weather of this. If one had not read the Amendment and the subsection to which it refers one might see the need for hon. Members to have a chat about regional development, but one has only to study the Clause as drafted to see that the Amendment is unnecessary.
The hon. Member for St. Ives (Mr. Nott) contradicted himself because he said, on the one hand, that he wants the I.R.C.—which, I gather from his Second Reading speech, he supports with certain qualifications—to be set up and hopes that it will advertise the various tax incentives available in the regions. Then, on the other, he said that he was not particularly happy about the incentives available in the regions.
I do not see, considering the terms of the Amendment, that much scope is left for discussion because the proposal of hon. Gentlemen opposite is to delete from subsection (1) the words:
… and assisting the economy of the United Kingdom or any part of the United Kingdom…".and to insert the words:having regard for the regional aspects of economic development".I suppose that one could, from that, have a long debate about regional development, but I should have thought that any hon. Member who is genuinely interested in regional development would be satisfied with the Clause as it stands and could not believe that the Amendment would serve a useful purpose.
§ Mr. John Peyton (Yeovil)If consistency is a virtue, which I sometimes doubt, hon. Gentlemen opposite deserve a small measure of credit because I have constantly observed that they adhere to the doctrine that one should never use one word when several hundred may be used. In this case, subsection (1) refers to
… assisting the economy of the United Kingdom or any part of the United Kingdom…Why that is included I do not know. It adds absolutely nothing to the sense of the Bill. Although my hon. Friends and I have no great opinion of the Government's bona fides, we do not believe that even they, in this Measure, desire to do the reverse of…assisting the economy of the United Kingdom or any part of the United Kingdom…1177 I entirely agree with the wise words of my hon. Friend the Member for Shipley (Mr. Hirst). The words in the subsection are wholly unnecessary. I agree, also, in not wishing to add the words suggested by my hon. Friend the Member for Eastleigh (Mr. David Price). I find stress on Government assistance to everybody anathema. It could be that assistance would become interference. In this tremendously busybody Government some have the best intentions. I accept that all the representatives of this wretched Government now seated on the Government Front Bench do, on the whole, have quite decent intentions. I am being quite sincere and I make no reflection on the hon. Gentleman who will answer this debate. But there could come a time when the setting up of one more body to interfere, give advice and even give aid, could be a nuisance.We are already in danger of creative activity being smothered by far too many absolutely useless organisations. The trouble in this country is that we have too many midwives and far too few potential parents in the economy. The Government carry their habitual busybody, interfering attitude much too far. Although I realise that nothing I say will shake them from their determination to keep these stupid words in the Bill, I could not restrain myself from making a slight but very modest protest.
§ Mr. John Pardoe (Cornwall, North)It is becoming a little difficult to tell exactly who on this side of the Chamber is in favour of this Amendment and who is against. We have had two speeches against Government interference—or assistance, whichever word is used. I am in favour of the Amendment. On Second Reading my hon. Friend the Member for Orpington (Mr. Lubbock) said that we will support the Bill because of its regional possibilities. Because we want the Government to emphasise the regional possibilities of the I.R.C., I support it. We want the Government to aim to take investment to the regions and to use any instrument, even the I.R.C., to do this.
I dissociate myself wholeheartedly from any suggestion that Government interference is wrong. The purpose of the Government is to balance the economy between the regions. I hope that they will 1178 interfere until they do so. It may be that the Government will say that there is no need for the words in the Amendment to be written into the Clause because it should be obvious to all that this is the Government's intention. To those of us who live in Cornwall that is not manifestly obvious any longer, although it may have been at one time, It was spelled out in the White Paper, which said:
and will have regard to the regional aspects of the Government's policies for economic development.In virtually the same words this Amendment attempts to add such a phrase to the Bill.I hope that we shall have it spelled out again, whatever the Government's attitude to this Amendment, as a result of this debate that this is the Government's intention and that they intend to pursue it. There is a great danger in backsliding on the regional issue. That is why I hope we shall have this restatement this afternoon.
I could not disagree more than with the speech of the hon. Member for Shipley (Mr. Hirst) about efficiency. Efficiency is not a good enough purpose for any organisation of government. It is not the be-all and end-all of business nor the be-all and end-all of a properly run economy. It may be, as the hon. Member for St. Ives (Mr. Nott) pointed out, that if we are to have a merger between two firms one of which is in an underdeveloped region and one in the South-East, the merger will always tend to go towards the branch in the South-East. It is right that the Government should step into the ring to ensure that the merger does not go always the wrong way, although short-term efficiency arguments might dictate that it should.
I say to the hon. Member for Shipley and others who think like him that there are other purposes besides efficiency—purposes of social justice, the quality of life and development of a community as a whole. That is why I support the Amendment wholeheartedly.
§ Mr. John Biffen (Oswestry)My hon. Friend the Member for Eastleigh (Mr. David Price) in moving the Amendment, spoke in generous terms. He wished to appear as a Greek bearing gifts, to the Government. He said that he offered them in a friendly and helpful spirit. I 1179 do not mind saying that I am an economic Visigoth. [HON. MEMBERS: "Hear, hear."] I knew we would get a consensus of opinion at least on that limited point. I have no wish to assent to a certain amount of what seems fairly slipshod thinking about the issue of economic development, but I am encouraged to think that there may be hidden virtues in this Amendment before I consider it.
§
The Amendment, I understand, will result in Clause 2 reading:
Subject to the provisions of the next following subsection, the Corporation may, for the purpose of promoting industrial efficiency having regard for the regional aspects of economic development".
§ That is fine. Everyone who has spoken so far has assumed that as a result there will be still greater pressures than ever before to persuade people to put money into parts of the country to which they might not otherwise go under ordinary economic criteria, but why should we assume that that will be the interpretation given to the matter by the Industrial Reorganisation Corporation?
§ Might it not call evidence from people such as Dr. West and ask him to elaborate on the interesting article in Lloyds Bank Review, a short time ago, about the virtues which lay in further development of the Midlands and the South-East? Are not the Midlands and the South-East also regions, or have we new semantic distinctions which mean that the word "regions" applies only to the Celtic outer fringe with a fascinating number of highly marginal seats where a politically oriented slush fund might, find valuable results? Surely we are not thinking that that should mean regional development?
§ I am encouraged because my hon. Friend for St. Ives (Mr. Nott) spoke about the economics of industrial location. He must not assume that the economics of industrial location inevitably point to trying to rehabilitate the Highlands and Islands to some position which they held in the middle of the last century.
§ Mr. NottHas my hon. Friend read another article in Lloyds Bank Review by Colin Clark, who took precisely the opposite point of view? What does my hon. Friend think about his view?
§ Mr. BiffenI am only too happy to say that I also read the excellent article 1180 by Professor Colin Clark who, I think, is a member of the governing board of the Institute of Economic Affairs, which is a very desirable body. There are a range of opinions on this matter, but we must not assume and presume that the only judgment which Mr. Grierson and his associates will make is to try to divert industries to parts of the country where, because of the problems of communications and problems of indigenous labour, they would not otherwise go. I say with great respect to my Gaullist hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) that we must not assume that the pursuit of industrial efficiency would necessarily lead to the fragmentation of British industry round and about the Celtic periphery.
We must not assume that with the advent of the closer trade ties with Europe which seem to be developing and which one might presume would be consequential upon membership of the E.E.C. there would be deliberate attempts to steer industries away from the European-facing seaboards of East Anglia or the South Coast. We must not assume any of those things. Probably it was in the spirit of giving the widest possible interpretation to the question of the economics of industrial location that the Amendment was tabled. In that possibly personal interpretation of it, I am prepared to support it in the Lobby.
§ 5.0 p.m.
§ Mr. AlbuMy right hon. and hon. Friends have enjoyed the Second Reading debate if, with respect, Mr. Deputy Speaker, I may described it in that way, which the Opposition have been having among themselves. It has been, for us, extremely illuminating. I do not think that I have ever heard an Opposition, although quite small in number, so tear themselves to pieces over a fairly simple matter as hon. Members opposite have done on this occasion. I realise that most of the speeches were made with an eye on the local newspapers: they were constituency speeches.
The hon. Member for South Angus (Mr. Bruce-Gardyne) was in a very schizophrenic mood. He was not quite sure whether he was in favour of the Bill actually doing something for the regions or whether he was not. He was followed in that line by all his hon. Friends, except those who had nothing to say for the Bill. 1181 The hon. Member for Yeovil (Mr. Peyton) also has a constituency in the Celtic fringes, but he was entirely against the Bill and the Government interfering in any way with industry.
§ Mr. PardoeI remind the Minister that there is absolutely nothing Celtic about Somerset. I have lived most of my life there, but I am now the Member for Cornwall, North, and that is a Celtic constituency.
§ Mr. PeytonI had hoped that it would not be necessary for me to rise on this point, but the hon. Member for Cornwall, North (Mr. Pardoe), who endeavoured to teach the Minister of State his geography, evidently failed. I am obliged to allow myself to be in unusual company in reminding the Minister of State that Somerset has nothing to do with the Celts. Will he please digest that now?
§ Mr. AlbuNevertheless, the hon. Gentleman had something of the same sort of feeling about the development of the areas which he represents. This is what we are talking about. I do not think that one has necessarily to support the extreme nationalism of those speakers who come from the furthest Scottish areas.
I do not want to get into the argument about whether or not some parts of Scotland are too dependent on subsidiaries, of English firms, or whether we should support in Scotland industry or services. The hon. Member for South Angus was rather in two minds about this question. The Government have done many things for the development areas and will do a great deal more. They are certainly building more advance factories than were built under the previous Administration and have given much assistance—for instance, by doubling the rate of investment grants to these areas.
But let me leave this interesting Second Reading debate and turn to the Amendment. It is true, as we have said over and over again, that the Corporation is not primarily a body for regional development. But in doing its work it will certainly not only have to try to avoid, as some hon. Members have pointed out, damaging the economic prospects of 1182 development areas—for instance, when it creates some sort of merger and may want to close some factories—but it must also bear in mind, as we want it to, the possibility of strengthening the structure of industry in the less prosperous regions. It is important that the Corporation plays an active and not merely a negative or a passive rôle in this matter.
The hon. Member for Eastleigh (Mr. David Price) completely forgot that under Clause 2(1, b) the Secretary of State would be able to request the Corporation in exceptional circumstances to establish new industrial enterprises. This is intended for those cases—the case of Wiggins Teape has been mentioned; this is only one example—where it would be desirable to provide some assistance for the establishment of a factory in a development area.
This comes only at the request of the Secretary of State, because it is perfectly true that we want to keep this policy of regional development in the hands of the Government. This is not something to be left entirely to the Corporation's whim, as it were, even though under the general directions of the Government. It is something which the Government would want to keep to themselves, for the additional reason that we do not think that it would be right to ask the Corporation to set up a single new enterprise, except at the request of the Secretary of State.
§ Mr. Tam Dalyell (West Lothian)My hon. Friend will appreciate that not all hon. Members now present were on the Standing Committee. Will he confirm that in this instance the phrase "Secretary of State" includes my right hon. Friend the Secretary of State for Scotland?
§ Mr. AlbuYes, it does, because the phrase "Secretary of State" covers all Secretaries of State, as I think my hon. Friend knows. If the Amendment were accepted, it would remove the reference to the Corporation's responsibility for
assisting the economy of the United Kingdom".It is our view that this should be retained. It is an indication that the Corporation as a public corporation, backed with public money, has to conduct its affairs so as to assist the economy of the United Kingdom; and this does not necessarily mean 1183 making profits in the short term. It must develop and encourage efficiency and profitable enterprise, but its very nature is such that it will do things that would not be done if the free play of the market were left to have its full effect.It has, as the White Paper makes absolutely clear, the job of rationalisation and modernisation where good prospects of early returns in terms of increased exports or reduced imports would eventuate. That is the Corporation's job. If the Amendment were accepted, this instruction to the Corporation, which is now in the Bill, would be removed.
We think, too, that the words which the Opposition would prefer would give the Corporation a merely negative interest in regional development. We want it to
§ have a much more positive interest. For that reason, we cannot accept the Amendment.
§ Mr. David PriceI should have thought that those of my hon. Friends who support my proposed deletions, but who have doubts about my additions, will at least agree, having heard the Minister of State's speech, that though I may appear to my hon. Friend the Member for Oswestry (Mr. Biffen) to be a Greek I have a little Visigoth blood in my veins. I hope that my hon. Friend will support us on the Amendment, because the Minister of State's reply was thoroughly unsatisfactory.
§ Question put, That the words proposed to be left out stand part of the Bill: —
§ The House divided: Ayes 221, Noes 152.
1185| Division No. 202.] | AYES | [5.9 p.m. |
| Albu, Austen | Ellis, John | Jenkins, Rt. Hn. Roy (Stechford) |
| Allaun, Frank (Salford, E.) | Ensor, David | Johnson, Carol (Lewisham, S.) |
| Alldritt, Walter | Evans, Albert (Islington, S. W.) | Johnson, James (K'ston-on-Hull, W.) |
| Allen, Scholefield | Evans, loan L. (Birm'h'm, Yardley) | Jones, Dan (Burnley) |
| Archer, Peter | Faulds, Andrew | Jones, Rt. Hn. Sir Elwyn (W. Ham, S.) |
| Armstrong, Ernest | Fernyhough, E. | Jones, J. Idwal (Wrexham) |
| Ashley, Jack | Finch, Harold | Judd, Frank |
| Atkins, Ronald (Preston, N.) | Fitch, Alan (Wigan) | Kerr, Mrs. Anne (R'ter & Chatham) |
| Atkinson, Norman (Tottenham) | Fitt, Gerard (Belfast, W.) | Kerr, Russell (Feltham) |
| Bagier, Gordon A. T. | Fletcher, Ted (Darlington) | Lawson, George |
| Barnes, Michael | Floud, Bernard | Leadbitter, Ted |
| Barnett, Joel | Foley, Maurice | Lee, John (Reading) |
| Bellenger, Rt. Hn. F. J. | Foot, Michael (Ebbw Vale) | Lestor, Miss Joan |
| Bennett, James (G'gow, Bridgeton) | Ford, Ben | Lever, Harold (Cheetham) |
| Bidwell, Sydney | Forrester, John | Lewis, Arthur (W. Ham, N.) |
| Bishop, E. S. | Fowler, Gerry | Lewis, Ron (Carlisle) |
| Blackburn, F. | Fraser, John (Norwood) | Lomas, Kenneth |
| Blenkinsop, Arthur | Freeson, Reginald | Loughlin, Charles |
| Boardman, H. | Galpern, Sir Myer | Luard, Evan |
| Booth, Albert | Gardner, Tony | Lyon, Alexander W. (York) |
| Boston, Terence | Garrow, Alex | Lyons, Edward (Bradford, E.) |
| Braddock, Mrs. E. M. | Ginsburg, David | McCann, John |
| Bradley, Tom | Gordon Walker, Rt. Hn. P. C. | McKay, Mrs. Margaret |
| Bray, Dr. Jeremy | Gray, Dr. Hugh (Yarmouth) | Mackenzie, Gregor (Rutherglen) |
| Brown, Bob (N'c'tle-upon -Tyne, W) | Grey, Charles (Durham) | Mackie, John |
| Buchan, Norman | Griffiths, David (Rother Valley) | Mackintosh, John P. |
| Buchanan, Richard (G'gow, Sp'burn) | Griffiths, Rt. Hn. James (Lianelly) | MacMillan, Malcolm (Western Isles) |
| Butler, Herbert (Hackney, C.) | Hale, Leslie (Oldham, W.) | McNamara, J. Kevin |
| Cant, R. B. | Hamilton, James (Bothwell) | Mahon, Peter (Preston, S.) |
| Chapman, Donald | Hamilton, William (Fife, W.) | Mahon, Simon (Bootle) |
| Coe, Denis | Hamling, William | Mallalieu, E. L. (Brigg) |
| Conlan, Bernard | Hannan, William | Manuel, Archie |
| Corbet, Mrs. Freda | Harrison, Walter (Wakefield) | Mapp, Charles |
| Crossman, Rt. Hn. Richard | Haseldine, Norman | Marquand, David |
| Cullen, Mrs. Alice | Hattereley, Roy | Marsh, Rt. Hn. Richard |
| Dalyell, Tam | Hazell, Bert | Mayhew, Christopher |
| Davies, Dr. Ernest (Stretford) | Heffer, Eric S. | Mellish, Robert |
| Davies, G. EIfed (Rhondda, E.) | Henig, Stanley | Millan, Bruce |
| Davies, Ednyfed Hudson (Conway) | Hooley, Frank | Miller, Dr. M. S. |
| Davies, Ifor (Gower) | Horner, John | Mitchell, R. C. (S'th'pton, Test) |
| Davies, S. O. (Merthyr) | Howarth, Robert (Bolton, E.) | Molloy, William |
| Dell, Edmund | Howie, W. | Moonman, Eric |
| Doig, Peter | Hoy, James | Morgan, Elystan (Cardiganshire) |
| Driberg, Tom | Hughes, Emrys (Ayrshire, S.) | Morris, John (Aberavon) |
| Dunn, James A. | Hughes, Roy (Newport) | Moyle, Roland |
| Dunnett, Jack | Hunter, Adam | Murray, Albert |
| Dunwoody, Mrs. Gwyneth (Exeter) | Jackson, Colin (B'h'se & Spenb'gh) | Noel-Baker, Francis (Swindon) |
| Dunwoody, Dr. John (F'th & C'b'e) | Jackson, Peter M. (High Peak) | Noel-Baker, Rt. Hn. Philip (Derby, S.) |
| Eadie, Alex | Janner, Sir Barnett | Oakes, Gordon |
| Edwards, Rt. Hn. Ness (Caerphilly) | Jeger, Mrs. Lena (H'b'n&St. P'cras, S.) | 0'M alley, Brian |
| Edwards, William (Merioneth) | Jenkins, Hugh (Putney) | Orme, Stanley |
| Owen, Dr. David (Plymouth, S'tn.) | Robinson, W. 0. J. (Walth'stow, E.) | Wainwright, Edwin (Dearne Valley) |
| Owen, Will (Morpeth) | Rodgers, William (Stockton) | Walden, Brian (All Saints) |
| Page, Derek (King's Lynn) | Rogers, George (Kensington, N.) | Wallace, George |
| Paget, R. T. | Rose, Paul | Watkins, David (Consett) |
| Pannell, Rt. Hn. Charles | Ross, Rt. Hn. Wlliam | Watkins, Tudor (Brecon & Radnor) |
| Park, Trevor | Rowland, Christopher (Meriden) | Weitzman, David |
| Parker, John (Dagenham) | Rowlands, E. (Cardiff, N.) | Wellbeloved, James |
| Parkyn, Brian (Bedford) | Sheldon, Robert | Whitaker, Ben |
| Pavitt, Laurence | Shinwell, Rt. Hn. E. | White, Mrs. Eirene |
| Pearson, Arthur (Pontypridd) | Short, Mrs. Renée (W'hampton. N. E.) | Whitlock, William |
| Pentland, Norman | Silkin, Rt. Hn. John (Deptford) | Wilkins, W. A. |
| Perry, George H. (Nottingham, S.) | Silkin, Hn. S. C. (Dulwich) | Williams, Alan (Swansea, W.) |
| Price, Christopher (Perry Barr) | Silverman, Julius (Aston) | Williams, Clifford (Abertillery) |
| Price. Thomas (Westhoughton) | Stater, Joseph | Williams, W. T. (Warrington) |
| Price, William (Rugby) | Small, William | Willis, George (Edinburgh, E.) |
| Probert, Arthur | Snow, Julian | Winnick, David |
| Pursey, Cmdr, Harry | Spriggs, Leslie | Winterbottom, R. E. |
| Randall, Harry | Steele, Thomas (Dunbartonshire, W.) | Woodburn, Rt. Hn. A. |
| Rankin, John | Stewart, Rt. Hn. Michael | Woof, Robert |
| Redhead, Edward | Summerskill, Hn. Dr. Shirley | Yates, Victor |
| Rhodes, Geoffrey | Thomas, George (Cardiff, W.) | |
| Richard, Ivor | Thornton, Ernest | TELLERS FOR THE AYES: |
| Roberts, Albert (Normanton) | Tuck, Raphael | Mr. Gourlay and Mr. McBride. |
| Robertson, John (Paisley) | Varley, Eric G. | |
| NOES | ||
| Alison, Michael (Barkston Ash) | Griffiths, Eldon (Bury St. Edmunds) | Mott-Radclyffe, Sir Charles |
| Allason, James (Hemel Hempstead) | Gurden, Harold | Munro-Lucas-Tooth, Sir Hugh |
| Astor, John | Halt-Davis, A. G. F. | Nabarro, Sir Gerald |
| Balniel, Lord | Hamilton, Marquess of (Fermanagh) | Nicholls, Sir Harmar |
| Batsford, Brian | Hamilton, Michael (Salisbury) | Nott, John |
| Biffen, John | Harris, Frederic (Croydon, N. W.) | Onslow, Cranley |
| Biggs-Davison, John | Harrison, Brian (Maldon) | Orr-Ewing, Sir Ian |
| Blaker, Peter | Harrison, Col. Sir Harwood (Eye) | Oaborn, John (Hallam) |
| Bossom, Sir Clive | Harvey, Sir Arthur Vere | Osborne, Sir Cyril (Louth) |
| Boyle, Rt. Hn. Sir Edward | Hawkins, Paul | Page, Graham (Crosby) |
| Brewis, John | Heseltine, Michael | Page, John (Harrow, W.) |
| Bromley Davenport, Lt. -Col. Sir Walter | Hiley, Joseph | Pardoe, John |
| Brown, Sir Edward (Bath) | Hirst, Geoffrey | Pearson, Sir Frank (Clitheroe) |
| Bruce-Gardyne, J. | Hogg, Rt. Hn. Quintin | Peart, Rt. Hn. Fred |
| Bryan, Paul | Holland, Philip | Peyton, John |
| Buck, Antony (Colchester) | Hooson, Emlyn | Pike, Miss Mervyn |
| Bullus, Sir Eric | Hordern, Peter | Powell, Rt. Hn. J. Enoch |
| Burden, F. A. | Hutchison, Michael Clark | Price, David (Eastleigh) |
| Campbell, Gordon | Irvine, Bryant Godman (Rye) | Prior, J. M. L. |
| Cary, Sir Robert | Jenkin, Patrick (Woodford) | Pym, Francis |
| Chichester-Clark, R. | Jennings, J. C. (Burton) | Ridley, Hn. Nicholas |
| Clark, Henry | Johnston, Russell (Inverness) | Ridsdale, Julian |
| Clegg, Walter | Kaberry, Sir Donald | Rippon, Rt. Hn. Geoffrey |
| Cooke, Robert | Kerby, Capt. Henry | Roots, William |
| Cooper-Key, Sir Neill | Kershaw, Anthony | Royle, Anthony |
| Corfield, F. v. | King, Evelyn (Dorset, S.) | Russell, Sir Ronald |
| Costain, A. P. | Kirk, Peter | St. John-Stevas, Norman |
| Crawley, Aidan | Kitson, Timothy | Sharples, Richard |
| Crouch, David | Knight, Mrs. Jill | Shaw, Michael (Sc'b'gh & Whitby) |
| Cunningham, Sir Knox | Lancaster, Col. C. G. | Smith, John |
| Currie, G. B. H. | Langford-Holt, Sir John | Stainton, Keith |
| Dalkeith, Earl of | Legge-Bourke, Sir Harry | Steel, David (Roxburgh) |
| Dance, James | Lewis, Kenneth (Rutland) | Stodart, Anthony |
| d'Avigdor-Go'dsmid, Sir Henry | Lloyd, Rt. Hn. Selwyn (Wirral) | Stoddart-Scott, Col. Sir M. (Ripon) |
| Dean, Paul (Somerset, N.) | Longden, Gilbert | Summers, Sir Spencer |
| Doughty, Charles | Loveys, W. H. | Taverne, Dick |
| Douglas-Home, Rt. Hn. Sir Alec | Lubbock, Eric | Temple, John M. |
| Eden, Sir John | McAdden, Sir Stephen | Turton, Rt. Hn. R. H. |
| Elliot, Capt. Walter (Carshalton) | Mackenzie, Alasdair (Ross&Crom'ty) | Vaughan-Morgan, Rt Hn. Sir John |
| Elliott, R. W.(N'c'stle-upon-Tyne, N.) | Maclean, Sir Fitzroy | Walker, Peter (Worcester) |
| Errington, Sir Eric | Maddan, Martin | Wall, Patrick |
| Farr, John | Maginnis, John E. | Walters, Dennis |
| Fletcher-Cooke, Charles | Marten, Neil | Whitelaw, William |
| Fortescue, Tim | Mathew, Robert | Wills, Sir Gerald (Bridgwater) |
| Foster, Sir John | Maude, Angus | Wilson, Geoffrey (Truro) |
| Gibson-Watt, David | Mawby, Ray | Winstanley, Dr. M. P |
| Gilmour, Ian (Norfolk, C.) | Maxwell-Hyslop, R. J. | Wolrige-Gordon, Patrick |
| Gilmour, Sir John (Fife, E.) | Maydon, Lt.-Cmdr. S. L. C. | Worsley, Marcus |
| Glyn, Sir Richard | Mitchell, David (Basingstoke) | |
| Grant, Anthony | Monro, Hector | TELLERS FOR THE NOES: |
| Grant-Ferris, R. | More, Jasper | Mr. Younger and Mr. Eyre. |
| Gresham Cooke, R. | Morrison, Charles (Devizes) |
§ Mr. AlbuI beg to move Amendment No. 3, in page 2, line 16, after 'efficiency', to insert 'and profitability'.
1186 This again is in response to a request from the Opposition, although it does not entirely represent all they asked for. 1187 It is, however, in accordance with a promise I made in Committee. The Amendment makes clear that the Government are in no way hostile to the concept of profitability. Indeed, we are anxious to encourage the profitability of British industry, although we believe that the profit should be earned by the efficient use of assets and not by monopoly power or manipulation of the market. I am sure that right hon. and hon. Members opposite would agree with that.
I do not think that there is any need to say more on this Amendment. It does not very much change the instructions that the Corporation will receive under the Bill. It will still be its business to carry out work so as to improve efficiency and assist the economy of the United Kingdom as a whole.
§ Mr. BarnettDoes this mean that, where the Corporation wants to undertake, during the first year, a project which it thinks will be efficient but which will not, for a while, be profitable, it will not be able to proceed with the venture?
§ Mr. AlbuNo. The words refer to profitability in the United Kingdom economy as a whole and not to the profitability of any particular enterprise, but of course it will be the object of the Corporation to set up enterprises which in the longer term will be profitable, although perhaps not sufficiently so in the short term for the market to be willing to undertake the investment.
§ Mr. PeytonI rise only to say that I welcome this little conversion of the Government. I hope very much that their lip-service to profitability and the fact that they are prepared even to insert the word into a Statute will in some way colour their policies and that this good will will be translated into something more positive. I never expected to hear an Amendment proposed by a Socialist Government, even by so enlightened a member of it as the Minister of State, to insert "profitability" in such a context, and to have the hon. Member for South Ayrshire (Mr. Emrys Hughes) sitting without making a protest because this horrid word is being inserted. I have no wish to interrupt the conversation of the hon. Member for South Ayrshire.
§ Mr. Emrys Hughes (South Ayrshire)Whom is the hon. Gentleman insulting now?
§ Mr. PeytonFar from it. The hon. Gentleman knows that I would never in any circumstances insult him. I have the friendliest of feelings towards him. I was simply saying that I had never expected to arrive at circumstances in which a member of his own Government would be proposing to insert, in a respectable way, the word "profitability" without protest from the hon. Member. Times are changing, although I fear that some of the hon. Gentleman's less tolerant hon. Friends would be right down on the Minister of State if they were here.
§ Mr. HughesIs that all?
§ Mr. PeytonThat is all I have to say about the hon. Member.
§ Mr. HughesMerry Christmas.
§ Mr. PeytonI hope that the hon. Gentleman will accept that I am not being offensive in his direction. I have the greatest respect for him, but I fear that if some of his wilder hon. Friends were here, they would be forced to make some doctrinaire protest against the comparative liberalism of the Minister of State, meaning "liberalism" in a complimentary sense.
I hope that the Minister of State will translate this small token action into some positive policies at an early date. They are badly needed.
§ Sir H. Legge-BourkeI think that I am in favour of the Amendment, but it depends a little on what we mean by the word "profitability" and there is a considerable variety of view about what it should mean, how it ought to be brought about, where it becomes contrary to the social interests of the country and so on. What disconcerts me a little is that since the Second Reading of the Bill we have had the extraordinary speech of the future Chairman of the Corporation to an American audience in London, followed by one of the most fascinating series of articles in the Financial Times, not least that of Mr. Harold Wincott on 1st November and then the joint rejoinder on 8th November from Lord Campbell of Eskan and the retort to that by Mr. Wincott.
1189 It is perfectly obvious that as a result of this we now see that there is a considerable variation in the approach to profitability exhibited, first, by the future Chairman of the Corporation and, secondly, those who have studied what he himself has done for Courtaulds in the outside world. I am not for a moment suggesting that there is anything in the least dishonourable about what Sir Frank Kearton has done, but it is important that before the House includes this word, we should be very clear about what the Government mean by it. The Minister of State is not certain. However, he has said something which not all of his hon. Friends are apt to say at election times, that the Government are not averse to profits being made. That is something rather new coming from the Labour Party.
I have no doubt that there are many hon. and right hon. Members opposite who, if they could find a way of financing some of their hare-brained schemes without having to rely on the taxation which they get from the profits of industry, would gladly do it if that meant abolishing profits in the course of the exercise, but I am glad to know that the Minister of State is himself in favour of profitability in industry. In the light of what has been written outside and what Sir Frank Kearton himself has said, what we now require is to be clear about what the right hon. Gentleman means by the word.
If profitability is to be respectable only when the maximum pressure has been put on the company concerned to spend the money not as it thinks best, but as the Corporation thinks best, that would not be profitability as I would understand it. I believe that the right people to decide whether an industry is profitable are those who are running it and who are responsible for its day-to-day administration at all levels. It should be they rather than some outside body or the Government themselves who should decide. All I am asking is that we should know where the Government stand on this issue. We have to recollect the famous line of Professor Joad on so many Brains Trust programmes, "It depends what you mean by"—in this case—"profitability". Will the Government tell us what they mean?
§ Mr. BiffenI reinforce the remark of my hon. Friend the Member for the Isle of Ely (Sir H. Legge-Bourke). The Minister of State said that the reference was to the profitability of the United Kingdom economy. This is an interesting proposition and I wonder whether he can say that it now becomes part of Government policy to see a rising increase in the total level of industrial profits as recorded in the national income statistics. If so, he must be very concerned, because the movement is in exactly the opposite direction.
On the other hand, he may have put a different interpretation on profitability, and the point made by my hon. Friend the Member for the Isle of Ely is particularly significant in the light of the speech made by the Minister of Technology at Bristol last week, when he gave his definition of "profitability". A definition of "profitability" which would be very acceptable to my hon. Friends and myself would be that any of the enterprises to be assisted by the Industrial Reorganisation Corporation should have as one of its aims the maximum profit before tax, either on capital employed, or on turnover. Its measure of success would be indicated by the extent to which that percentage increased. We would welcome the Minister's confirmation that that is his view of how "profitability" should be interpreted.
§ Mr. Bruce-GardyneI agree entirely with my hon. Friend the Member for the Isle of Ely (Sir H. Legge-Bourke) and, on this occasion, my hon. Friend the Member for Oswestry (Mr. Biffen) that we need some indication from the Minister of what he means by this insertion. It is true that the Minister said that this was a reference to the profitability of the economy of the United Kingdom, but that is not precisely where the Amendment is supposed to be inserted. As I read it, the word is supposed to be inserted after "efficiency" so that the provision would read:
for the purpose of promoting industrial efficiency and profitability.5.30 p.m.There is obviously a certain amount of confusion here. On this occasion I entirely accept the definition of profitability given by my hon. Friend the Member for Oswestry. It would be 1191 interesting to hear what the Minister of State has to say. Like my hon. Friend the Member for Yeovil (Mr. Peyton), I must say that it is nevertheless welcome to see this word included. It has been dragged out of the Minister of State rather like some sort of obscenity out of a maiden aunt. It is said with a blush on the cheek and a note of defiance in the voice, but it remains a sordid and degrading word.
The trouble is that hon. Gentlemen opposite pay lip-service to profitability, provided that it is reasonable profitability, whatever reasonable in that context may be. They fail to see any contradiction between the pretence of the use of profitability as a yardstick of efficiency and the attempt, which they are making with every single fiscal proposal they introduce, to divorce managements from shareholders, who are the only people essentially concerned with profitability and the only people who will constantly remind managements of the need for profitability.
It is because of the increasing divorce between management and shareholders that neither in government nor, all too often, in management is profitability regarded as a serious yardstick any longer. I hope that the introduction of this word, bearing in mind the interpretation which the Minister of State may put upon it, will remind the I.R.C. that it is not to be used rather like a similar measure proposed in France in about 1958, which was described by the then Minister of Finance, M. Pineau, as a pair of crutches for helping lame dogs over stiles.
This is not what the I.R.C. should be and if the use of the word "profitability" will avoid that, then it is certain to be welcome. It is a belated admission that we have dragged out of the Government, but we are grateful for it, little as it is.
§ Mr. David PriceI welcome the half loaf that we have had from the Minister of State, and I have no cavil. I was interested, as were my hon. Friends, in the interpretation that he put upon the word "profitability", in the context of our discussions. In Committee I was quite clear that when we were arguing for the word "profitability" rather than the 1192 word "efficiency" it was because we thought that profitability was a more precise definition of industrial efficiency. It was to that end that we moved the Amendment, which was not successful in Committee. The Minister of State to some extent met us by saying that on Report he would introduce the word "profitability".
I am quite clear that profitability applies to the narrower context of the yardstick by which the I.R.C. will pursue its rôle of producing mergers and rationalisation. In this context I am tempted to assist the House by repeating the definition of the optimum term relating to profitability which I gave on Second Reading. This was a quotation from Professor Robinson and I should like to give it here, particularly for the benefit of the hon. Member for Heywood and Royton (Mr. Barnett), who asked a telling question. I believe that he will find the answer is included in this quotation which reads:
By the optimum firm we must mean that firm which in existing conditions of technique and organising ability has the lowest average cost of production per unit, when all those costs which must be covered in the long run are included.I would ask the hon. Gentleman to mark the words "in the long run".
§ Mr. Barnett rose—
§ Mr. PriceI will give way later. When I was arguing my preference for the use of the word "profitability" in Committee I made it clear that we were considering profitability over a reasonable number of years. There is nothing between the Minister of State and myself on that point. Anyone who suggests that it should be done on a quick profit term has had little experience of doing this because one knows that if one goes out for the quick profit the chances are in the long run that one does not remain in business, because one gets an extremely bad reputation.
I trust that whoever is to reply to this debate from the Government Front Bench will confirm the interpretation that I have put on the introduction of the word "profitability" which is I think what my hon. Friends want, namely that this will be, along with industrial efficiency—and I would prefer not to use these words—the major yardstick used by the I.R.C. 1193 in its calculated rôle of bringing about mergers. This is my interpretation of it and I think that this is what the Minister of State meant when moving the Amendment. I hope that it is and we are grateful for our half loaf.
§ Mr. HirstWe have had quite a long discussion, but since we cannot all be on these Standing Committees—thank goodness—we do not get the benefit of all the speeches which have been made on the subject. Several points have been raised to which I feel we must have answers. I do not think that I would have used the phrase which the Minister of State did, but I think that I know what he means, at least I hope so. If not, then there is every reason why we should have these discussions. He must mean the profitability of the nation and the sum total of the profitability of the enterprise. He must therefore have the same objectives as we have.
This doubt has been raised, possibly through a slip of the tongue on the part of the Minister of State. I have a high regard for him, but he has gone into a great deal of discussion which is on the record, and the Government owe it to the House to make their position quite clear and to show that they are on the same line of thought as we are, and that in using this word "profitability" there is no confusion of thought.
§ Mr. AlbuI should like to remind hon. Gentlemen opposite that the functions of the Corporation are not entirely those of setting up mergers. As I have said, there is Clause 2(1,b) which is rather different, and under which different considerations may arise. The main purpose of the Corporation is to assist the rationalisation of industry. I would agree with the hon. Gentleman the Member for Eastleigh (Mr. David Price) in his definition. Everyone has his own definition of profitability and accountants very rarely agree as to whether a firm is profitable. This can be judged only over a fairly long term.
What we are saying is that the object is that the Corporation shall go in for activities which other people have not seen as profitable for one reason or another, but, which, with its greater wisdom and insight into the needs of the economy, the Corporation will undertake. It is not intended that the Corporation 1194 should make a profit in as short a period as a commercial undertaking—as, say, a merchant bank bringing about an amalgamation—may expect to do.
It has a different function. I do not agree that its function is to promote any sort of profitability whatever. As I said in Committee, betting shops are now extremely profitable and have caused an inflation in wages. It is not proposed that the Corporation should set up betting shops or amalgamate them or make them more efficient. They will be completely outwith its purpose of assisting the economy. It will do this by carrying out the purposes in the White Paper and assisting the import-export balance of the country's industry, particularly in those areas where the Corporation feels that there is room for improvement. There is a difference between the simple example of the profitability of a body whose only concern is to make profits and the Corporation's task which, although it is to set up profitable enterprises, has to be considered in relation to enterprises which will assist the import-export balance of the economy.
§ Mr. Frederic Harris (Croydon, North West)The hon. Gentleman has muddled the situation even further; it has got worse and worse. Is he worried about the word "profitability"? Do the Government regard it as a dirty word?
§ Mr. HarrisQuite the reverse. Surely there is every desire to make profits from this enterprise. Surely that is the idea behind it. There should be no disgrace in that. The Government seem to be worried. They have used the word clearly enough in the White Paper issued today. Do not let the Government have any concern about this. We are with them if they want the Corporation to go in for private enterprise activities, which will produce a profit. They should not consider this to be a dirty word and the hon. Gentleman should not excuse himself for having to use it.
§ Amendment agreed to.
§ Mr. David PriceI beg to move Amendment No. 7, in page 2, line 24, to leave out 'or elsewhere'.
1195 This is a probing Amendment. We raised the question of the relevance of the words "or elsewhere" in Committee but as part of a wider Amendment. Today, I shall confine my remarks to this narrower Amendment.
I wish to put two questions to the Government. First, why insert these words at all? In the context of the operations of the Industrial Reorganisation Corporation, it seems to us that all that it may wish to do in terms of mergers can be done by operating within the United Kingdom. The Government will raise the question of British companies with overseas subsidiaries, but, as we said in Committee, we are satisfied that the Corporation will have all the legal powers necessary to deal with British companies with overseas subsidiaries because the parent company would be registered in Britain.
On the other hand, if it is suggested that by the introduction of these words the Corporation would deal with companies not of British registration, it raises the very serious matter of what jurisdiction the Corporation will have over foreign companies. It is possible that there is a penumbra of territories within the sterling area—colonies in various stages of development—where it could be said that it might have jurisdiction. It would be interesting to know what would happen in the case of Bermuda and the Bahamas.
§ Mr. F. A. Burden (Gillingham)Might it not be that the Government are assuming that they might accept the political decisions of the Common Market if they enter it and this Amendment might extend legislation to that? If so, it is a very dangerous thing to do.
§ Mr. PriceMy hon. Friend has anticipated my second point. These matters were gone into in Committee. I return to this argument because we were not satisfied with the Government's reply.
My second question concerns the new factor which has been introduced into our deliberations since we discussed this matter in Committee, namely, the announcement that the Government are seeking membership of the E.E.C. This raises questions at which my hon. Friend 1196 the Member for Gillingham (Mr. Burden) hinted in his intervention.
The possibility of inter-European company mergers was used by the Parliamentary Secretary in Committee in defence of the inclusion of the words "or elsewhere" in the Bill. He said that as a result of their inclusion the Corporation would be able where appropriate to create mergers with companies in other European countries. He went on to point out that I had referred on Second Reading to my view, to which I strongly adhere, that the structure of British industry may be too fragmented. It is on a European basis rather than purely on a United Kingdom basis that we should approach this problem.
I should like the Parliamentary Secretary or the Minister of State to say whether the Government will use the Corporation to bring about inter-European company mergers. If so, how will they use it? What will be its jurisdiction across the Channel? Will it, for instance, open an office in Brussels, Dusseldorf, Paris or possibly even in Zurich? How will it set about its business? Above all, what will be its relationship in such activities, first, to the Community authorities in Brussels, and, secondly, to the national authorities in the various countries in which it will operate? We are entitled to answers to these questions.
§ 5.45 p.m.
§ Mr. PeytonI thought I heard my hon. Friend the Member for Eastleigh (Mr. David Price) describe this as a probing Amendment. As long as by "probing" he means something offensive, I have no objection. The rest of his speech indicated that these words should be taken out of the Bill. I do not want to discover the Government's intentions about this. I am not frightfully interested in the Government's answer. I am sure that the words should be removed. The idea that this nasty monstrosity which the Government are creating should have the power to go perambulating all over Europe and anywhere else in the world it finds convenient is intolerable to me.
The Government have made their hostility to companies trading overseas absolutely clear. I should not wish any Government-created body to be given powers to go outside these shores. I would keep it tightly locked up here. 1197 We should be interested to hear the explanations, if there are any, and the answers which the Government may have to give to my hon. Friend. I thought that as he went on he made out an extremely cogent and challenging case. Like others, I did not have the doubtful privilege of serving on the Standing Committee, but the remarks which my hon. Friend quoted gave me the impression that it would be wholly wrong for these words to be left in the Bill.
I hope that the Government will not only answer my hon. Friend's questions but will yield to the unassailable logic of his arguments and will take the offending words out of the Bill.
§ Mr. J. T. Price (Westhoughton)I do not wish to be misled by taking up the argument of the hon. Member for Yeovil (Mr. Peyton) who has thrown a few new red herrings into the debate. On another occasion I might be sorely tempted to reply to him in my own way. He would have to accept that my view is as valid as his.
While the hon. Member for Eastleigh (Mr. David Price), who asked certain questions of the Government Front Bench spokesman, put his points reasonably, I cannot follow the logic of his argument. He asked in rather an interrogatory fashion why this new Government organisation should have the right to establish offices in Brussels, Rome or some other European centre when it may not have the right to enforce its jurisdiction within the sovereignty of other countries. This is remarkable coming even from an Opposition Front Bench spokesman. Surely, all the great corporations now operating in the private sector of industry—for example, I.C.I., Lever Bros., van den Berghs and Jurgens and Shell Transport; I could reel off the names of hundreds of them—are doing just this kind of thing.
§ Mr. David Price rose—
§ Mr. J. T. PriceI will not take a moment to say this. It was courtesy on my part not to intervene when the hon. Member was speaking. I wanted him to develop the point in the hope that it would be disposed of satisfactorily by the Government spokesman. I cannot understand this line of reasoning.
The hon. Member for Yeovil said that he would lock up these Government 1198 institutions within this country and prevent them going abroad. He would have a sort of Berlin Wall in reverse applying to this country, not to keep people out, but to keep them in. If the House of Commons were to restrict Government agencies which were established for the country's economic welfare and development, that would be stupid.
§ Mr. Peyton rose—
§ Mr. J. T. PriceI am not giving way. If the hon. Member comes here for controversy, this is the place where he is likely to get it. I put it to him seriously that this Government agency must have the same rights under international law to pursue its activities for the welfare of the country as private enterprise institutions have all along the line. If the hon. Member wishes to intervene, I have nothing further to say.
§ Mr. PeytonI find it gratifying that my short, modest intervention should have brought forward this tirade from the hon. Member, whose interest in the Bill has not, as far as I know, been tremendously strong until this moment. The hon. Member must not identify the large private enterprise concerns which he mentioned and which are self-financed with the sort of organisation which is now being set up by the Government, which is not self-financed but is financed by the taxpayer. At least in its early and formative years, it should be kept under strict control.
§ Mr. J. T. PriceI am obliged to the hon. Member. What he has said makes it quite clear that the division which exists in the House is a division not on common sense, but on doctrine and theology, on the kind of basis which is so dear to hon. Members opposite.
§ Mr. David PriceIs the hon. Member aware that the I.R.C. is not a trading corporation? If he cannot see that difference as compared with I.C.I., he can see nothing.
§ Mr. J. T. PriceI can see that very well.
§ Mr. BurdenThe remarks which have come as a result of the speeches of my hon. Friends the Members for Eastleigh (Mr. David Price) and Yeovil (Mr. Peyton) have made it clear that I was right to raise the point which I put to my hon. Friend the Member for Eastleigh. The passion 1199 with which the action of the Government is being defended shows more of a rallying to the support of the Government than an understanding of what and why we are probing.
These words in the Clause would give the Government, presumably through their own agency, tremendous powers. Let me indicate where the danger of all this might lie. We were told yesterday that the Government are sponsoring a merger in the aircraft industry between Hawker and the British Aircraft Corporation. It is known also that we are co-operating with the French on the Concord. We might be co-operating on other matters. The British Aircraft Corporation or the new Corporation might have no desire to go into anything closer than its existing accommodation and project planning.
I am fearful that the Clause would give the Government the power, or that they would have the power through the I.R.C. perhaps to instruct such a unit as is being set up to merge with a French corporation. This may or may not be in the best interests of the country. If the Government had this power, it would be tremendous and something that no Government has ever had before. This makes me very suspicious because the Government have shown in many ways their desire to get more and more control of the economy.
I am worried about this because the Government show such lack of being able to manage their own affairs. It is well known to those of us who sit on these benches and listen that there have been dynamic and vitriolic attacks from the Government benches on the financial and economic policy of the Government. Last night, indeed, they scrambled through after an important debate with a small majority because so many hon. Members opposite completely disagreed with them. They are fearful of the economic consequences of what the Government are doing.
We are equally right in being worried at the consequences of many of the things that the Government might do. Words such as those which we propose to leave out give such power to the Corporation that we are entitled to be not only sceptical, but fearful of the consequences.
We believe that the future management of industry generally is far better left in 1200 the hands of companies. I take the view, with the greatest respect to the Corporation and the Government, that companies are far better able to arrange their own mergers and to decide the companies with which they will merge so as to give benefit to their workers, improve their products and ensure that reasonable profits—which is difficult enough in present circumstances with this Government—which can be distributed to their shareholders are made. They are far better judges, because of their knowledge and understanding of their own industry, than a body set up by the Government and under Government control. I look upon this whole situation with the greatest mistrust, and I hope that the Minister will remove these words.
§ Mr. HirstI agree very much with what my hon. Friend the Member for Gillingham (Mr. Burden) has just said. Possibly we may have a good deal to say about mergers on a later Amendment, on which my hon. Friends will certainly have my support.
My hon. Friend the Member for Eastleigh (Mr. David Price), with his usual courtesy to the House, almost made a masterly understatement when he said that the Amendment had been put down as a probing Amendment. I was not a member of the Standing Committee, but I have read the debate and I have it all with me. In winding up discussion on a similar Amendment on 8th November, my hon. Friend said that the Government
have not been specific, and we must record our protest at the lack of thought, the lack of clarity and, above all, the lack of prifessionalism in the thinking that has gone into the way in which the I.R.C. should operate."—[OFFICIAL REPORT, Standing Committee E, 8th November, 1966; c. 158.]That was said when the Committee was discussing a similar Amendment.What the Government intend to do is in no way clear and is not at all professionalised. No doubt the Parliamentary Secretary did his best, but I was not very impressed with his speech or the examples he gave. We are right to view the position with considerable alarm.
The wording of subsection (2) is terrible. It states that
The Corporation shall have power to do anything whether in the United Kingdom or elsewhere which is calculated…".1201 It is colossal. The way that the House of Commons is now behaving horrifies me. If a few years ago, when the Conservative Party were in power, they had produced this sort of thing, the screams from the then Opposition benches would have been immense.
§ 6.0 p.m.
§ Mr. PeytonI am glad that my hon. Friend the Member for Shipley (Mr. Hirst) raises that point, because this sort of umbrella legislation is what the Government are always doing now. Indeed, the right hon. Gentleman the Minister of Power has described the Iron and Steel Bill as an "umbrella" Measure. That is what they always do. They use a series of squalid gamps under which later they produce their policies.
§ Mr. HirstI might say, "Some umbrella!". However, I had better not follow those remarks too far. I agree with the line of thinking of my hon. Friend the Member for Yeovil (Mr. Peyton), and it is very dangerous. If the Opposition query these matters, we are thought to be wasting time, or we are looked upon as being incredibly stupid or unpatriotic. But that is nonsense.
As my hon. Friend the Member for Eastleigh said, the proposed powers are far too sweeping. Any company incorporated in this country which has subsidiaries abroad is covered by existing legislation. Therefore, we want to know what the proposed powers are for. They must be put in for some sinister purpose, encroaching in some way or another in a very wide province outside that which the House had in mind when discussing the White Paper and on the Bill's Second Reading. It becomes worse when one accepts, as I do reluctantly, the Prime Minister's sincerity in his move towards the Common Market. I find that very hard to do, but, if one is disposed to accept his sincerity, this becomes a more dangerous form of legislation.
This is a matter for a clear-cut answer. It is a very dangerous experiment and not a desirable one, and certainly the House should not give powers to the Corporation to operate outside this country until we see how those powers are proposed to be used.
I am not altogether impressed with the influx of people to control this body, 1202 although I know some of them very well. They have very wide flung interests, some of them quite contrary to the interests which I hold to be the best in private enterprise in many instances. I do not feel any confidence in the set-up of the proposed directors or the chairman, whom I know and respect personally.
The scheme proposed under this Bill possibly goes far beyond that about which the House registered concern at the time of the White Paper, and, if my hon. Friends will forgive me for saying so, it is not a matter for probing but one of the highest possible principle.
§ Mr. PardoeThis is the second Amendment to have occasioned a great divide on the Conservative benches.
I, too, want to probe in the sense that I want to know whether this is about Europe. There have been many speeches from this side of the House criticising the hon. Member for Eastleigh (Mr. David Price) for using the word "probing". I want to probe, because I want to know whether the answer is Europe, and I hope that in the course of winding up this short debate we shall hear from the Government Front Bench what is the answer. If it is Europe, we should support the Amendment, and we shall certainly do so from this bench.
If we go into Europe, there will be a need—[Interruption.] In answer to that ribald laughter, may I point out that there is rather less than one-twelfth of the Conservative Opposition in the Chamber at present. When the Conservative Party begins to turn up and vote in this Chamber, it may get a few more votes in the country.
There will be a need for international mergers if we go into Europe. This will be a very important sphere of endeavour after we go in, always supposing that we do go in, as I hope. It is quite right that the I.R.C. should be involved, and therefore I hope that it is Europe that the Government mean.
I know that the Conservative Party does not like it, because it does not like the I.R.C. and therefore it does not like any extension of its powers. However, I like the I.R.C., and I am glad that it should be extending its powers beyond our shores. Here we have the Tory Party lining up with the Left-wing of the Labour Party, saving that our economy 1203 should be confined to these shores and that we should never have activities overseas.
§ Mr. BurdenIf the hon. Member for Cornwall, North (Mr. Pardoe) will forgive me for saying so, he is talking absolute rubbish. The Tory Party made a strong bid to go into Europe. The point which concerns me about the Clause is that the I.R.C. will have great powers to carry out mergers. It might carry out mergers which are not in the best interests of this country, and we should have no control over it. That is what concerns and worries me, and the Clause gives the present Government a weapon which they could use to a temendous extent before we know whether we are going into Europe.
§ Mr. PardoeIt is unlikely that this weapon could be used in Europe before we go in. It would be rather difficult to use it in that way.
If I may take up briefly the point made by the hon. Member for Gillingham (Mr. Burden), it was the Tory Party which removed our representatives from the original negotiations to set up the Common Market.
The Clause will bring about an extension of the field of activity which we are continually asking our embassies to get into. We are asking them to become the vanguard of our trade throughout the world, and we are asking them to become involved in this. Why should we not ask other Government agencies to become involved as well? It is an insular approach to set up an organisation and say that it should not be able to exercise its functions overseas. We are a trading nation, and, in the trading battle, our home front is where our markets lie. Therefore, I support the inclusion of these words and shall oppose the Amendment.
§ Sir H. Legge-BourkeI join with my hon. Friend the Member for Eastleigh (Mr. David Price) in seeking to probe by way of this Amendment. All the probing that I have been able to do up to date is to look at what the Parliamentary Secretary to the Ministry of Technology had to say about c. 150 of the proceedings of the Standing Committee considering the Bill, until he was interrupted and had to start again at the next meeting at c. 153. In that speech, he 1204 answered quite a number of the points which have been put to him today by the hon. Member for Cornwall, North (Mr. Pardoe).
It appears to be visualised clearly that European tie-ups may become necessary. I say as dispassionately as I can that whether finally we join the European Economic Community or are obliged to have some other arrangement with Europe, it will still be necessary for close relationships across the frontiers of this country and with others.
If we have a rooted objection to Government becoming involved in international exercises of this kind, we have to ask ourselves whether it is right once we accept such a Corporation to crib, cabin and confine it. I am trying to be fair-minded. I have never been an advocate of this kind of Corporation, but, if we have to have it, it is probably necessary to give it these powers.
Although it is much more slanted towards finance than towards industrial reorganisation, we have something of a comparison in the Commonwealth Development Corporation. To some extent, that conception is a precedent, though not a complete one. It is a body set up by Statute which does an immense amount of work overseas. No one who has come into contact with it will give it anything but the highest praise. If we could have that sort of approach to this matter, some of the misgivings would be less than they are.
When some new line of policy is propounded by a Government, it is always dangerous for them to anticipate by legislation what might be necessary if negotiations proved successful. To that extent, what the Parliamentary Secretary said at c. 150 of the proceedings on Committee stage could be interpreted as jumping the gun a little. The hon. Gentleman said that it might be important, on a European basis, to create mergers with companies in other European countries or elsewhere, but I think that this applies whether or not we join the Community. Indeed, it is happening, and I have never been nearly so worried as some about the economics of the Community. I have never visualised Europe putting up a gasholder over itself, with a tariff wall rising round, and being lidded-in, with no one being able to do business with her. I have never visualised 1205 that being the end of the exercise, and I am convinced that, whatever comes out of the present negotiations, we shall have to get closer and closer to Europe in bigger and bigger units.
If we are to have a Corporation like this, we must give it this sort of power. If it is going to arrange mergers with existing companies, we must remember that many of them will have subsidiaries or close associates overseas. We therefore cannot, while enabling the Corporation to carry out its job, suddenly say that these companies which have overseas links must divorce themselves from them to enable the I.D.C. in England to do what we want here. I am trying to be dispassionate about it, and without qualifying my original misgivings about having a Corporation of this kind, I think that if we are to have it we must give it this power overseas.
§ Mr. Frederic HarrisI intervene briefly to take up the cudgels against my hon. Friend the Member for the Isle of Ely (Sir H. Legge-Bourke). If we are opposed, as surely we are, to the existence of the Corporation as a whole, and we consider it wrong to create it, it cannot be good to extend its powers to make it even more embracing. I should have thought that that was a straightforward argument.
My hon. Friend referred to the C.D.C. There is no comparison between the C.D.C. and the Corporation proposed in this Measure. The C.D.C. did a first-class job of work, and is continuing to do so. Hon. Members on both sides of the House support it, and the work that it does in our overseas territories of the Commonwealth, and particularly in the Colonial Territories, and in the developing countries. It has done sterling work in Africa, and there is a vast difference between its work and what is proposed for the I.R.C. I am sure that on reflection my hon. Friend will appreciate that there are these tremendous differences between the two.
§ The Joint Parliamentary Secretary to the Ministry of Technology (Mr. Edmund Dell)I think that the attitude adopted by the hon. Member for the Isle of Ely (Sir H. Legge-Bourke) is right. I recognise the reservations which he has about the whole idea of launching a body like 1206 this, but, if we are to launch it, it is essential that it should have this power.
I agree with my hon. Friend the Member for Westhoughton (Mr. J. T. Price) and the hon. Member for Cornwall, North (Mr. Pardoe). The attitude of the Conservative Party is quite extraordinary. The disarray which they are displaying in connection with this Amendment is remarkable. They cannot even agree whether the Amendment is a probing or a substantive one.
The hon. Member for Eastleigh (Mr. David Price) asked why we should insert these words at all. We have to insert them because it may be necessary—and I believe that it will increasingly be necessary—for the promotion of international joint companies between this country and others—Europe certainly, and other parts of the world as well. I think that this tendency will increase as time goes on.
In an interruption in the speech of my hon. Friend the Member for Westhoughton, the hon. Member for Eastleigh said that the Corporation would not be a trading company. Of course it will not. Its object will be to promote rationalisation, and, it may well be, to promote rationalisation on an international scale as well as on a national scale. This will be true whether we go into Europe or not.
In moving the Amendment the hon. Member for Eastleigh questioned the example which I gave in Committee about the rationalisation of British Overseas subsidiaries. Does he not foresee the possibility that it may well be necessary to rationalise overseas subsidiaries of British and foreign companies? If they are jointly formed into international companies, they might establish overseas selling subsidiaries in third countries, which will increase overseas sales—
§ Mr. BurdenThe hon. Gentleman referred to rationalising subsidiaries in foreign countries. No action taken by the Government would give them power over foreign-owned companies overseas.
§ 6.15 p.m.
§ Mr. DellI shall come to that in a moment.
There is certainly an important aspect of these words "or elsewhere" in relation to Europe. If this country goes 1207 into the Common Market, it may be particularly necessary to establish companies on a European basis, and the Corporation might help in this respect.
The hon. Member for Eastleigh asked—and the question was repeated by the hon. Member for Gillingham (Mr. Burden)—what jurisdiction the Corporation would have over foreign companies. The answer is none, but it will have no jurisdiction over British companies either. It will have no compulsory powers whatever. It will have to work on a voluntary basis by obtaining the co-operation of British companies involved in rationalisation schemes, and also the cooperation of any foreign companies which may be involved in such schemes. There is no question of compulsory power or jurisdiction being involved by the use of these words.
The hon. Member for Eastleigh also asked what would happen when we joined, or if we joined, the Common Market. Obviously I cannot forecast what will happen, but the Corporation, in its international activities, if there are any, will have to proceed under the laws of the country concerned, just as it will proceed under the laws of this country. It will be a matter for the independent commercial judgment of the I.R.C. whether it sees rational opportunities of proceeding in this way overseas or not.
I was also asked whether it was the intention to open offices overseas. Currently, there is no such intention.
The attitude of hon. Gentlemen opposite to this Amendment casts doubt on the credibility of their attitude to Europe altogether. Are they Europeans or not? Do they want the development of Europeanism, or not? If they do, they cannot possibly oppose the inclusion of these words in the Bill. If, after all that has been said from the benches opposite, the Opposition press the Amendment to a Division, they will prove themselves to be the worst Little Englanders of all.
§ Mr. PeytonThe hon. Gentleman must not go into these misconstructions. He is attempting to cast doubt on the genuineness of the Conservative Party's intention to go into Europe. He has no ground for doing that. Our attack is on the wisdom of casting this new-found Government body into Europe. We think that 1208 it might do positive harm. We think that activities of the sort to which the hon. Gentleman referred are better left to industrialists and financiers who have some experience of the matter, rather than that we should throw in a Government body to try to do the job. What we are really attacking is the intense desire of the Government to interfere at every stage.
§ Mr. DellThe hon. Gentleman objects to what I am saying, but the development of international companies is essential if we are to solve our industrial and commercial problems. The question is whether hon. Gentlemen opposite see the future of this country that way, or not. If they do, I return to the point made by the hon. Member for the Isle of Ely. Hon. Gentlemen opposite may object to the establishment of the Corporation—though I believe that many of them do not—but if the Corporation is to be set up, it must be given these powers.
§ Mr. David PriceThat reply has not carried us very much further. When I introduced this probing Amendment, I was not aware that it would let lose such a long debate. The Parliamentary Secretary has not taken advantage of this opportunity to tell us how the I.R.C. will operate overseas. This is unsatisfactory. Nevertheless, in the interests of progress, I beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Mr. Peter Hordern (Horsham)I beg to move Amendment No. 8, in page 2, line 28, at the end to insert:
'subject to an affirmative resolution of a majority of the shareholders in the bodies corporate concerned, where the securities have not been purchased on a Stock Exchange of the United Kingdom.'I hesitate to say that this is a probing Amendment, but it is certainly a wounding Amendment, because in Committee the Minister of State's reply in connection with this matter was totally unsatisfactory. The Amendment is concerned with the acquisition by the Corporation of shares in companies. On a number of occasions in Committee we made it clear that we saw no reason why the Corporation should have power to acquire anything more than a limited shareholding in companies, but on this we were defeated.We have continued to probe the Government, and they still have not given 1209 us a satisfactory reply why it is necessary for the Corporation to take a significant shareholding in any company. If they can reply to that point now, it falls to us to point out that if they are going to try to take shares in companies it is likely that the only ones that they can amass in any quantities will be the shares of companies whose shareholders are only too happy to share with them. In Committee the Minister of State, referring to the activities of the Corporation, said:
It might, by taking up apparently weak and unprofitable companies, particularly by amalgamation with others and by putting in new and more scientific and sophisticated management, achieve great possibilities.This may or may not be so, but any one with experience of the Stock Exchange knows that if the Corporation is minded to take up shares in weak and unprofitable companies many of the shareholders of those companies will be delighted.In Committee we suggested that if the Corporation is to acquire shares this is the very worst possible basis upon which to enter negotiations for a merger. The Corporation could not be placed in a weaker position than to have a number of shares cast into its lap.
How, in these amalgamation or merger schemes upon which the Corporation is supposed to embark, is it proposed to buy shares in companies which have a small share capital and in which there is no market? There will be many occasions on which the Corporation will wish to merge small and successful companies with larger concerns, but the Minister gave no sort of reply to the question how he expected the Corporation to carry on its activities in this respect when there was no market at all for the shares concerned.
The Amendment seeks an answer to the question posed by the White Paper in the matter of buying shares outside the normal market machinery. In Committee the Minister of State attempted to deal with this point when he said:
Finally, I come to the question of the meaning of the words in the White Paper about close collaboration with the market. We have said that it is our intention that the Corporation shall, wherever possible, use the existing market machinery for the promotion of mergers. That is what this means. Wherever possible, the Corporation will leave the market to find any additional capital needed, but the purpose of providing the 1210 Corporation with funds is that it may be necessary from time to time for the Corporation itself to acquire shares and make loans."—[OFFICIAL REPORT, Standing Committee E, 8th November, 1966; c. 174.]From an examination it is clear that the answer given by the Minister bore no relation to the question posed by the White Paper. We must press the Minister to tell us precisely in what form the Corporation will work when it is buying shares in close collaboration with the market instead of through the market.My other question concerns the reference in the Amendment to an affirmative resolution of the majority of shareholders. My hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) drew attention to this point in Committee, but again we were given no clear answer. By resolution many private companies' shares may be sold only to existing shareholders. I believe that that is correct—or, at least, the shares have first to be offered to existing shareholders. How does the Corporation propose to acquire such shares?
The main question concerns the subject of the unissued but authorised capital of a company. By the rules of the Stock Exchange, in order to obtain a quotation for shares it is necessary for a company to give an undertaking that the issue of any shares beyond those which have already been authorised can be done only with the consent of shareholders. The shareholders have to be invited, at a general meeting, to give their consent to such a proposal. We want to have from the Government an undertaking that they will carry out the procedures laid down by the Stock Exchange and that the I.R.C. will not be in a position to acquire shares outside the Stock Exchange without the consent of the shareholders. If the Corporation does so acquire shares, we also want an undertaking that it will do so at the market price—neither less nor more. If it buys at a price higher than the existing market price for unissued shares it and the taxpayers will be badly dealt with. If the Corporation pays less it is bad for the existing shareholders. On all these points we want absolutely clear replies from the Minister of State.
§ Mr. AlbuThe hon. Member for Horsham (Mr. Hordern) covered a number of points in moving his Amendment. In fact, the first of his arguments was really directed not to the Amendment 1211 but to the way in which the Corporation will operate when it acquires shares in what may be weak or potentially strong companies. He seemed to imply that, somehow or other, the Corporation would be in a weak position if it took over shares "cast into its lap". He is presumably implying that the Corporation is so lacking in business judgment that it may pay above the market price. I can assure him that it is unlikely that the Corporation, as it will be constituted, will do any such thing. When it acquires shares in this way it will acquire them at a pretty good price.
The main purpose of the Amendment is to repeat the fears expressed by some hon. Members opposite that the Corporation has some compulsory powers. We thought that we had got that out of their minds. But even if some hon. Members opposite are satisfied about that they think that it will somehow go about its work in a dangerously conspiratorial and obscure way, against all the decent and honest principles of the Stock Exchange. I can assure hon. Members that it will not.
I want first to deal with the hon. Member's point about the small company for whose shares there is no market, or, presumably, no quotation on the Stock Exchange. The Corporation is in a position only slightly different from that of the private company. Obviously, it can acquire shares only with the agreement of existing shareholders and, by definition, there will be few in a small company, and presumably they will all know what is going on.
I turn now to the subject of the private company. The articles of association of most private companies lay down that some or all of the shares must first be offered to the other shareholders. If the other shareholders are not willing to part with their shares or wish to acquire the shares which are given up by their co-shareholders, the Corporation will not be able to take over the company. We have made it clear over and over again that we hope and believe that the Corporation will frequently be able to operate not by taking over shares but by drawing the advantages of mergers and rationalisation to the attention of many small businesses which may not have recognised this.
1212 It may be able to get one company to merge or take over others or several to merge, without the Corporation being required to put in any money at all. This is the way it will work. In doing all this, it will have no compulsory powers.
6.30 p.m.
Before I come to the final point, which is the crux of the Amendment, I would mention the case of the unissued but authorised shares raised in Committee by the hon. Member for Morecambe and Lonsdale (Mr. Hall-Davis). As I think the hon. Member for Horsham said, under the Companies Act, or certainly in the articles of association of most companies, shares cannot be issued and new capital cannot be created without a resolution of the shareholders. This has been so in the vast majority of cases.
There are very few cases where this does not apply, but that is no reason why in such cases the I.R.C., unlike any other company which might want to acquire another company or take shares in it, should be stopped from acquiring those shares and have to go through a time-wasting procedure. After all, the shareholders would be entirely free—I was going to say to vote with their feet, but the hon. Member will understand what I mean—to decide whether to accept or decline any offer which the I.R.C. made to them direct—
§ Mr. HordernThe point is not so much the authorised capital of the company, which of course the shareholders have to approve in any case, but the requirements of the Stock Exchange now are—and I understand that the requirements of companies in future will be—that the unissued shares of the authorised capital cannot be issued without the consent of the existing shareholders. It is this, the unissued shares, and not the question of the increase in the authorised capital on which we want an assurance.
§ Mr. AlbuIf the Stock Exchange Rules require a company to do this, it will do so and the Corporation will be unable to acquire shares unless the company has done it. But there is no reason to put the Corporation in a worse position than other companies. The rules of conduct are imposed on directors. We have made it clear that when the Corporation acquires shares in a company it 1213 will, of course, inform the directors and they, if they are operating in accordance with the codes of conduct laid down by Stock Exchange regulations, will, of course, inform their shareholders. We cannot in this Bill amend the Companies Act or impose conditions on companies or on the Corporation which are not in the existing companies legislation.
The Corporation must be in no better and no worse position than other companies. Further restrictions on the disposal of unissued shares may one day be necessary, but they ought to be imposed in legislation applying to companies generally and not to the I.R.C. alone.
I have made it clear that the directors of the Corporation will act in accordance with the principles which the Stock Exchange has laid down, particularly those in the notes on company amalgamations and mergers, published by the Issuing Houses Association, which are relevant in this case, though there are also general regulations of the Stock Exchange in regard to implementation. The Corporation will do that and, as it has no compulsory powers, the hon. Gentleman can be assured that there is no way in which, any more than any other company, it can go about its activities in a sort of secret and conspiratorial manner—
§ Mr. HordernI followed the hon. Gentleman with great care and he has given a specific assurance that the Corporation will be given no more favourable terms than any other public company. The only question with which he has not dealt—this seems to be a genuine case of misunderstanding: at least I like to think that it is—are the words in the White Paper, "close collaboration with the market". I feel that, because he does not appreciate how difficult it is to acquire shares at all on the Stock Exchange because of the difficulty of turnover, these words have a particularly sinister sound to some of us on this side, but that they are not so intended in fact. With that clear understanding given by the Minister of State, I should like to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.