HC Deb 29 June 1971 vol 820 cc315-8
Mr. Millan

I beg to move Amendment No. 40, in page 45, line 24, leave out 'subsidiary or joint subsidiary' and insert 'relevant body'.

Mr. Deputy Speaker (Miss Harvie Anderson)

With this Amendment, I suggest that it will be convenient to discuss the following Amendments:

No. 41, in line 27, leave out 'subsidiary or joint subsidiary' and insert 'body',

No. 42, in line 30, leave out 'subsidiary or joint subsidiary' and insert 'body',

No. 43, in line 32, leave out 'subsidiary or joint subsidiary' and insert 'body',

Amendment No. 44, in line 33, at end insert: (1A) In paragraph (c) of the preceding subsection 'relevant body' means—

  1. (a) any undertaking of which all the issued share capital is held, directly or through a nominee, by the Board or one of the corporations; and
  2. (b) any other undertaking which, if such of its issued share capital as is held directly or through nominees by each of the corporations and each such undertaking as is mentioned in the preceding paragraph were held by the Board, would be an undertaking falling within the preceding paragraph.

Mr. Millan

We have now arrived at the Clause which, among other matters, deals with the hiving-off powers of the Secretary of State. As we on this side of the House made clear on Second Reading and in Committee, we are opposed to the whole Clause and its concept in that it deals with hiving-off. No doubt my right hon. Friend and others who catch your eye on Third Reading, Mr. Deputy Speaker, will reiterate our distaste at the Clause.

The Amendment has a narrower but nevertheless important objective than the removal of all the offending provisions in the Clause. The Amendment which might have done that, unfortunately, has not been selected.

I drew attention to one objectionable feature of the Clause when I pointed out in Committee that it enabled the Secretary of State to require the British Airways Board to secure that any subsidiary or joint subsidiary discontinued or restricted certain activities or disposed of certain of its assets and property. I made the point that this was especially objectionable in the case of joint subsidiaries which are owned 50/50 with outside private interests. We on this side of the House object to the nationalised corporations getting these directions, in any case. But it also seems quite wrong in principle to say to the Board that it must in effect take certain action which will be detrimental not only to its own interests, which is bad enough, but also to outside private interests. In Committee the Secretary of State did not consider this a terribly good argument, but I have since had indications that he now realises the force of the argument which I then put forward.

9.15 p.m.

The wording of the Amendments is rather different from that of the Amendments I moved in Committee, but it has the same effect. The Amendments would direct subsection (1)(c) only to wholly-owned subsidiaries of the British Airways Board. In other words, where there were joint subsidiaries it would not be possible for a direction to be given which would act to the detriment of the private interest concerned. The Government's main power will remain under subsection (1)(b), which we consider offensive but are unable to do anything about at this stage, but the Amendment to paragraph (c) to a large extent effectively protects the interests of the Board and also of the outside people, whoever they may be, who in good faith entered into joint enterprises with the nationalised corporations, not expecting the Government to come along in future and, completely at their discretion, damage the joint enterprise which had been freely entered into.

Mr. Noble

The hon. Member for Glasgow, Craigton (Mr. Millan) put down similar Amendments in Committee with the intention of restricting the Secretary of State's powers under Clause 40(1)(c) so that they could be used only in relation to wholly-owned subsidiaries or joint subsidiaries in the way that these Amendments do.

In Committee I spoke against the Amendments mainly on the ground that minority shareholders in subsidiaries of the Airways Board or of the two Corporations had a degree of assurance from subsection (2), which requires the Secretary of State to satisfy himself that implementation of his directions will not impede or prevent the proper discharge of the Board's duties; and that the protection of the Companies Act would be available to minority shareholders in these companies in the same way as it is to such shareholders in companies where the controlling interest lies in the private sector.

These arguments remain valid. Nevertheless, I have been thinking about this problem. I accept that it might be more difficult to attract private capital into subsidiary companies of the public sector airlines if the Secretary of State were to be given the power in the present text of subsection (1)(c). I am therefore prepared to accept, and to recommend the House to accept, the Amendments, which would have the effect of restricting the Secretary of State's powers of direction under subsection (1)(c) to wholly-owned subsidiaries or wholly-owned joint subsidiaries of the Airways Board and the two Corporations.

I am grateful to the hon. Gentleman for putting down the Amendments, and I recommend them to the House.

Amendment agreed to.

Further Amendments made: No. 41, in page 45, line 27, leave out 'subsidiary or joint subsidiary' and insert 'body'.

No. 42, in page 45, line 30, leave out 'subsidiary or joint subsidiary' and insert 'body'.

No. 43, in page 45, line 32, leave out 'subsidiary or joint subsidiary' and insert 'body'.

No. 44. in page 45, line 33, at end insert: (1A) In paragraph (c) of the preceding subsection 'relevant body' means—

  1. (a) any undertaking of which all the issued share capital is held, directly or through a nominee, by the Board or one of the corporations; and
  2. (b) any other undertaking which, if such of its issued share capital as is held directly or through nominees by each of the corporations and each such undertaking as is mentioned in the preceding paragraph were held by the Board, would be an undertaking falling within the preceding paragraph.— [Mr. Millan.]

Mr. Millan

I beg to move Amendment No. 45, in page 45, line 42, leave out from 'Parliament' to end of line 45.

This Amendment is concerned with another matter which I raised in Committee and, indeed, on Second Reading. As the Clause is worded, it is possible to have a situation in which directions given by the Secretary of State on the hiving off of parts of the undertaking would conflict with the requirements of the Board under Section 51(2)(b) which deals with the financial obligations of the Board so to conduct its affairs as to secure that the revenue of the group is not less than sufficient for meeting charges properly chargeable to revenue account, taking one year with another. Where that happened, the directions were to override that obligation.

I said during the Second Reading debate, and in Committee, that it seemed to be thoroughly objectionable explicitly to say that hiving-off could be done, with detrimental effect to the Board's obligation to run its affairs efficiently, and not only to mean that in terms of the Clause but to say explicitly that where that happened the directions would override the financial duty. That seems to be allowing the political dogma of the Government to override the financial probity of the Board. It is to remove that offending phrase that I have tabled the Amendment, and I have had indications that the Government, very sensibly, have had a change of heart on this matter, too.

Mr. Noble

As the least dogmatic of all people, I am glad to be able to accept the Amendment. Even though I spoke against it in Committee, it was not from the point of view of dogma, and I am delighted to say that, having thought about it, I believe that the Amendment is right.

Amendment agreed to.

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