BRITISH AEROSPACE AND BRITISH SHIPBUILDERS

HC Deb 11 November 1976 vol 919 cc670-95

Lords amendment: No. 1, in page 2, line 6, leave out paragraphs (a) to (c).

4.2 p.m.

The Under-Secretary of State for Industry (Mr. Les Huckfield)

I beg to move,

That this House doth disagree with the Lords in the said amendment.

It will be convenient if we take together Lords Amendments Nos. 1, 2, 5, 6, 11, 17 and 22.

These amendments have one common denominator in that they seek to place restrictions either on the powers of my right hon. Friend the Secretary of State or on the future activities of both British Aerospace and British Shipbuilders. When we discuss the amendments I take it that Conservative Members will realise that many of the amendments go against their own legislation because many of the provisions with which another place disagrees already have been incorporated in measures such as the Gas Act 1972 and in many other nationalisation statutes.

Lords Amendments Nos. 1 and 2 restrict the powers of my right hon. Friend to provide for disclosure during board deliberations of board members' interest in contracts. In themselves these are logical extensions of the powers enshrined in the Gas Act. As the Bill now stands, and if their Lordships' amendments are unaltered, the powers of the Secretary for Industry are now so restricted that, I am informed, he would not have even the power to appoint a deputy chairman to the Corporation. As the amendments now stand, my right hon. Friend's powers have been severely curtailed far beyond the provisions made by the Opposition in their own legislation.

I turn to Amendment No. 5. Their Lordships seek to insert the provision that nothing in the legislation should preclude British Airways or any other airline registered in this country from buying elsewhere if they find that British Aerospace cannot provide the articles they want. Nothing in the Bill precludes what the amendment seeks to achieve and for this reason I submit that the amendment is unnecessary.

Amendment No. 6 removes the power of my right hon. Friend to adjust the duties of the two Corporations. From time to time my right hon. Friend might seek to adjust the duties of the two Corporations in line with their changing needs. As the hon. Member knows, this procedure already has been discussed both in Committee and on Report and in using his powers my right hon. Friend would be subject to the affirmative resolution procedure of this House and of another place. I suggest that it is not correct for hon. Members opposite to lament the possibly poor performance of the two Corporations if, before doing so, they seek to restrict their powers to respond to changed circumstances.

Both my right hon. Friend and I envisage that in many circumstances certain activities may well be pursued by the two Corporations which gradually become more central. To prepare for that contingency it would be advisable for my right hon. Friend to formalise that activity. That is what these powers in Clause 2 seek to do.

I want to stress to Conservative Members that there is nothing in these powers that would provide for public ownership, as they have mentioned in some of their accusations. Indeed, what we are trying to do in enabling my right hon. Friend to have these powers is to extend parliamentary surveillance of the activities of the two Corporations. The powers will enable Parliament to formalise the activities into which the Corporations may move.

I come now to Lords Amendment No. 11. Clause 3 deals with the powers of the two Corporations and their need to seek the consent of my right hon. Friend the Secretary of State. One of the things that my right hon. Friend is bound to take into consideration is other manufacturers—particularly domestic manufacturers—who may be affected by the powers of these two Corporations. As my right hon. Friend is already bound to take account of those considerations in his deliberations on this issue, I certainly do not think that what the Lords amendment seeks to do in extending that kind of consent to this House and another place is necessary.

If parliamentary approval were necessary and if parliamentary approval were to replace the consent of my right hon. Friend, that would represent an undue delay imposed upon the two Corporations in responding to changing economic situations. Once again, this is simply enabling the two Corporations to respond in exactly the same way that for example, the British Steel Corporation was enabled to respond to changing circumstances in the Iron and Steel Act 1967.

I turn now to Lords Amendment No. 17. Their Lordships seek to remove the Secretary of State's power to give such directions as he considers appropriate for securing that the management of the activities of the Corporation and its wholly-owned subsidiaries is organised in the most efficient manner. I am advised that this is a fairly standard insertion. It is in the Iron and Steel Act 1967, and if I may say so to Conservative Members it is in their own Civil Aviation Act 1971. It is also in our old friend, the Gas Act 1972.

What is intended by this standard insertion in pieces of nationalisation legislation is not interference in detail but merely a reserve power for my right hon. Friend. I certainly do not think that all the dreadful events which were forecast in another place would come about if my right hon. Friend had this general reserve power. After all, we have stressed, both in this House and in another place, that this is intended only to apply in general principle and not in minute detail.

Finally, and briefly again because I do not wish to delay the House, I wish to turn to Lords Amendment No. 22. The power which my right hon. Friend has—and which Amendment No. 22 seeks to take away—simply puts on a statutory basis the arrangements for forward planning which have existed in nationalised industries for some considerable time. Surely, once a corporate strategy has been drawn up by a nationalised undertaking, my right hon. Friend needs to have some kind of power to ensure that that corporate strategy is carried out. He also needs to have some kind of powers to follow it up.

I believe that the powers which this Bill seeks to confer upon my right hon. Friend are reasonable. The majority of them are in any case derived from previous nationalisation legislation and many of them are, in particular cases, derived from pieces of Conservative legislation. Having said that I believe that these are excellent reasons for disagreeing with all of these amendments and I urge hon. Members to do so.

Mr. Tom King (Bridgwater)

As we are starting out on a group of Lords amendments, which are the outcome of considerable detailed consideration by the House of Lords of this extremely controversial Bill, perhaps the House will forgive me if I say a few words about the way in which we shall have to tackle these amendments under the threat of the guillotine and the procedure that it imposes upon us. It is, of course, absolutely intolerable.

Their Lordships gave detailed consideration to the Bill, and if any hon. Members have taken the trouble to study the relevant issues of the House of Lords Hansard, there should be a clue sense of humility in this House with regard to some of the comments made about the quality of their Lordships' debating on some of these issues. Our opportunity in response will be a mere six hours of consideration. Eighty-two amendments have been made to the Bill and have to be disposed of one way or another by debate on a Thursday, with all the problems that that involves for a considerable number of hon. Members.

The Opposition find themselves in an almost impossible situation. Inevitably, we shall be unable to give considered replies on several important matters concerning amendments to which the Government object, purely because of the constraint of time. We shall be able to deal—I believe this to be the only responsible way in which the Opposition can act—merely with the absolutely crucial elements involved.

We confront that problem immediately on this group of seven Lords amendments, all on important points, and shall be able to seek to justify only one, because there is no alternative open to me. I make clear at the outset that that in no sense derogates from the importance and significance of the other amendments. We are in an intolerable position, and there is no alternative.

To those Government supporters who have gone out of their way to ridicule the Lords as an unelected unqualified Chamber—

Mr. Doug Hoyle (Nelson and Colne)

They are.

Mr. King

The hon. Member feels that that is a justification. May I point out to him a rather interesting contrast? I do not know whether he attended any of the debates in the House of Lords on this Bill, but the whole of this measure was carried through, in the main, by one Minister, an unelected, hereditary, old Etonian peer under 30, with no experience of the aviation, shipbuilding or ship-repairing industries. He has done all the work.

I hear hon. Members opposite saying that the whole problem with the House of Lords is that they are all unelected peers, and that it is all the Conservatives' fault. Then I see life peers with a lifetime in the aviation, shipbuilding and ship-owning industries, who have continuously contributed to those industries—not hereditary peers but people who have been appointed by virtue of their achievements—

Mr. Kevin McNamara (Kingston upon Hull, Central)

Like Lord Inchcape.

Mr. King

—by both parties, appointed to the House of Lords—[Interruption.]

Mr. Speaker

Order. Running interruptions from a sedentary position spoil debate in this House.

Mr. King

As was established in the Labour Act of 1949, all Members of the House of Lords are entitled, while the law still stands, to make their contribution. But if the Lords are to be attacked for doing so, Labour Members should get their facts right and realise on this occasion how appallingly weak is the ground on which they stand.

On Second Reading of the Bill in the other place, there was only one speaker from the Labour Benches behind the Minister during the whole debate. From all the appointments, all the recent creations and all the Labour life peers, there was one speaker, and even that one, Lord Shinwell, was opposed to the Bill. No one, by any stretch of the imagination, could call him a hereditary old Etonian backswoodsman Tory peer. Hon. Members will know from the speeches in opposition to the Bill from Lord Shinwell and from Lord Goodman from the Cross Benches that opposition to the Bill is widespread. It has very few friends.

In discussing these amendments we are faced with the difficulty of time. There is one particularly important amendment in this group. It refers to the powers of the Secretary of State to define any additional activities which he considers these corporations should carry out.

4.15 p.m.

We have complained, in Committee and on the Floor of the House, that already one of the difficulties of the Bill is the multiplicity of industries that it covers. Four completely separate industries are covered in the Bill. That has been one of the difficulties experienced by all hon. Members in trying to discuss the Bill. One hon. Member wants to discuss shipbuilding, another wants to discuss aircraft, another wants to discuss the ship repair industry and another is more concerned about marine engineering.

The Bill already contains a measure to nationalise four separate industries, and now it will contain this undefined and unspecified power to widen its scope into any related activities that appear appropriate to the Secretary of State. We sought to delete that power, but by virtue of the situation in this House we were not able to have our way. The House of Lords debated the issue and inserted this amendment, and we believe that it is absolutely right.

Hon. Members have said, and I understand the point, that there cannot be absolute rigidity of boundaries and frontiers within any industrial activity, but they must recognise the other side of the coin. If we are seeking to generate investment in this country—and if the Prime Minister were here I imagine he would say that the the primary purpose of the Government is to concentrate resources into industry and increase investment—we must realise that there will be no investment without confidence, whether it be investment by national or international investors. If all forms of additional powers of nationalisation in one form or another are left loosely lying around on the statute book, that will be one of the albatrosses that this country will have to carry.

Those who might be willing to invest in areas that may be related to aviation and shipbuilding are worried. They are made aware before they invest in that activity or create a new activity that they could become liable to these powers of the Secretary of State. When they become aware, too, that if the Secretary of State's eye lights on them they could be exposed to the same sort of terms of confiscation as are posed in the Bill, there is a major disincentive—[Interruption.]

If the hon. Member for Liverpool, Walton (Mr. Heffer) does not realise that, he is not getting around as much as he should among industrialists considering investment opportunities. He will know, from his time at the Department of Industry, that it is crucial that this country gets it fair share of international mobile investment. Investment can go in many different directions, particularly now that we are in the Community. The attractions of Germany, Belgium, Holland and France are all taken into account by people considering investment in this field. Often, quite small considerations are the final determinant. In the present situation, we are in no position to say that we can afford extra disadvantages over other countries.

Hon. Members may or may not accept this point, but they ought to think seriously about it if they are worried about employment in their constituencies. The hon. Member for Walton certainly ought to worry about this problem, and ought to give serious consideration to anything that is in the slightest way a disincentive to extra investment in this country, because we all understand and appreciate the appallingly difficult position that that part of the country faces. We ought to give serious consideration to anything that might be included in legislation—no matter how well meaning, even though it is not intended to be used in that way—which can be a threat of this kind. We must ensure that the opportunity for further nationalisation is strictly controlled. Their Lordships were right to make this amendment, and we shall do all we can to ensure that it is maintained.

Mr. Richard Wainwright (Colne Valley)

In the absurd timetable situation in which the House has put itself, I feel obliged, for the sake of brevity, to concentrate on one of the amendments, and I should like to explain briefly while I feel the necessity to do so.

In the first place, it is the belief of Liberal Members that when a Government insist on bringing before this House a measure to take over four extremely complicated, and some very sophisticated, industries, they play directly into the hands of the other place. Like most Liberals, I firmly believe that on matters of broad social, economic and foreign policy, the other place has very little title to consideration because of the way it is now composed, being entirely unelected.

I have to admit, however, as did the hon. Member for Bridgwater (Mr. King) in different terms, that when it comes to being obliged to debate matters of extreme specialisation such as we have before us this afternoon and have had before us all this year in this Bill, there is little likelihood that many hon. Members will be expert or well informed on four such complicated industries, whereas in the Upper House, composed as it is, there is every chance—as has been shown by its debates—that their Lordships will be able to show superior knowledge and have debates of much higher quality than those in which I took a very amateur part in Standing Committee.

If the Government want to show the other place in a good light and to focus upon it a flattering spotlight, they could not do more than bring forward Bills of this type, which put the House of Commons at a great disadvantage, because of the fact that its Members are not elected by virtue of specialised knowledge of this kind while the Upper House is likely to possess such knowledge.

Mr. Hoyle

The hon. Gentleman keeps talking about the breadth and expertise of the members of the other place, but would he not agree that, because of its composition, most of those who have the expertise have the expertise also to maintain the status quo because of financial interest in the industries that are being discussed?

Mr. Wainwright

No. Of course, I am not fully informed; so far as I am aware, their Lordships do not have a register of interests. But certainly the distinguished contributions from the Liberal Benches in the other place owed nothing, as far as I know, to financial interests, but stemmed from a lifetime's experience in allied industry, and it is because of the high quality of the contributions of some of my political colleagues there that I want to concentrate on Lords Amendment No. 5.

I should like to underline the point made by the hon. Member for Bridgwater, that to have six hours in which to deal with the fruits of some high quality debates on four separate industries of great complexity is an absolute parody of democracy. I only hope that the teaching profession will be able to keep alive in its pupils' minds the feeling that there is still some democracy left in Britain in spite of the appalling way in which we conduct proceedings in this House. I do not envy teachers their task of trying to convince children that they still live in a democratic country when the House behaves in this way.

I turn now to Lords Amendment No. 5, to which, reluctantly, I feel I must confine myself. The purpose of this amendment—and for the life of me I cannot see why the Government oppose it; they certainly did not make their opposition clear in the other place—is to put beyond any doubt that there must not be an incestuous relationship between the nationalised airlines of this country and the nationalised aircraft industry.

The history of nationalised industries in this country indicates that it is necessary that the statute should provide very clearly that there must not be incestuous relationships of this kind. There have been regrettable occasions in the past when pressure has been brought to bear upon one nationalised industry to confine itself to purchasing from another.

Here the risk is enormous. If, unfortunately, the new nationalised aircraft industry gets into great difficulty, there will be a tremendous temptation on any Government of whatever political colour, if they have the responsibility for maintaining jobs in the public sector, to insist that the nationalised airlines shall confine their purchases to the products of the Aircraft Corporation.

Therefore, to make quite clear that British airlines shall not be capable of being put under such obligation Lords Amendment No. 5 was agreed to by a substantial majority—more than two to one—in the other place. The Government's reply, urging their Lordships to reject that amendment, contained nothing whatever of substance. If there is some objection to the amendment, I hope that we shall hear better reasons from the Government Front Bench this afternoon.

I hope that consideration will be given to the amendment, if only to reassure the British public that the Bill will not produce yet another racket in high places where the commercial freedom and the enterprise of one organisation is crippled in the alleged interests of another.

Mr. Peter Walker (Worcester)

When the Minister was speaking on these amendments he rightly mentioned from time to time the various powers that this would give to his right hon. Friend. Let me make a comment upon that procedure as somebody who in the last Conservative Government—first, as Secretary of State for the Environment and then as Secretary of State for Trade and Industry—was the Minister referred to and who had responsibility for most of the industries that are currently nationalised. I say this in a constructive sense because I think there are fundamental problems with nationalisation. I found as Secretary of State in those Departments that I had considerable powers over those nationalised industries.

How can one exercise those powers in the best interests of the nation? I certainly do not think that anyone could accuse me during that period of being hostile to the nationalised industries. I introduced the Coal Industry Act 1973, which injected a great deal of capital into the industry. I approved the modernisation of the steel industry on a massive scale. I wanted both of those nationalised industries to succeed in exactly the same way as the Labour Party will want those two new Corporations to succeed.

What are the limitations that nationalisation imposes? First, there is the problem of recruiting the most able men to run the industries. The number of such men is limited. British industry in any sphere has great difficulty in attracting high-calibre management. The competition for high-calibre management is international, as we can see from any of the Sunday newspapers with their massive advertisements for jobs abroad and at home.

During the period when I was a Minister I had the task of replacing—not because I was sacking but because I was replacing—the chairmen of those nationalised industries. Some of them were not my first choice. One was my fourteenth choice because 13 had turned the job down. What one can offer higher calibre management is limited. The first difficulty is the quality of the nationalised industries in terms of top management because one is competing with the private sector where the offers are not limited.

4.30 p.m.

What does the Minister mean when he talks of his right hon. Friend's powers? If his right hon. Friend was going to exercise those powers positively and constructively, there would have to be one Secretary of State for each corporation. There is the support of the Civil Service. The hon. Member for Liverpool, Walton (Mr. Heffer) was also in this Department. I think that he would share my respect for the calibre of the civil servants in that Department.

But neither of us could say that they were the men that we would necessarily appoint to take decisions of great quality over the major industries. That is no reflection on them; they are highly able and dedicated men. What we ask under nationalisation is several layers of ability to make judgments, whereas in this country we have hardly enough people to provide one layer. Theoretically, there is the industry itself, then the sponsoring Department, and beyond that the little institution called the Treasury. If any major expenditure or capital investment comes up, the Treasury quickly takes an interest.

I told the chairmen whom I appointed that I would interfere with them as little as possible, but within hours of their appointment I was interfering because various policies—[An HON. MEMBER: "Oh."]. I had no desire to do so; it was due to the very basis of nationalisation itself. Because the Minister has responsibility on prices, profit margins and investment programmes which the country expects him to exercise, he is constantly called upon to interfere.

Mr. Arthur Palmer (Bristol, North-East)

This is a very interesting point. Is it not therefore important that in the statutes affecting the running of nationalised industries the Minister's intervention powers should be strictly defined so as to protect not only the Minister but the chairmen concerned?

Mr. Walker

I understand that but, no matter how strictly defined the Minister's role is, the very basics of investment programmes, wages and prices policy and appointment of managers are ultimately his responsibility. If all sorts of other spheres were limited but a nationalised industry were seemingly not performing very well, the first pressure on the Minister would he to get rid of that board and bring in some new able people.

Mr. Eric S. Helier (Liverpool, Walton)

What the right hon. Gentleman is saying is fascinating. He is right—this is a serious problem—but would he not agree that the time has come to throw away the book of the great and the good and begin to find able people in middle management who do not get the opportunities? Ministers have no idea of their existence. Should we not therefore consider revising the way in which we do this?

Mr. Walker

I have sympathy with that view. In appointments to nationalised industries and elsewhere, I tried to find a new list. Among other avenues, I asked trade union leaders for lists of talented people whom they would like to join Government bodies. But it is difficult to compose such a list.

One of the great problems with these powers is that the Secretary of State is a busy man with a range of considerable duties. The amount of time that he can concentrate upon any of these corporations is very limited. But with him rests a great deal of power; he faces the accusing finger when any of these corporations goes wrong. He is the person who is questioned in the House, has to answer debates and is criticised for bad appointments. I can understand the Socialist view that nationalisation is necessary in order to redistribute or direct wealth, but I genuinely believe—I say this in no partisan spirit—that our concept of nationalisation and Ministers' powers to date, which continues in this Bill, has proved basically ineffective even for the purposes of the Labour Party.

Therefore, to endanger potential investment at this stage—the transfer of nationalisation endangers investment in the industry itself—by going over to a system in which the Minister in reality has little power means that we are seeking three layers of interference in management when we find it difficult enough to obtain one. It is a tragedy to pursue this concept, and I hope that all hon. Members will think carefully and constructively about overcoming some of the basic weaknesses of the nationalisation system itself.

Mr. Hoyle

The hon. Member for Bridgwater (Mr. King) said that we should devote more time to the "considered" Lords amendments. These Lords amendments were not considered at all. They are amendments deliberately designed to wreck the Bill, to take the guts out of the Bill. [Interruption.] Hon. Members are muttering. Do they deny that if we accepted this amendment, the Bill would contain no date for taking the aircraft industry into public ownership and that we should not be able to take in warship building or ship repairing? If that is not disembowelling the Bill I do not know what is.

The hon. Member spoke as though the other place was a democratic Chamber when we know that its composition is roughly 300 active Tories, 40 Liberals, 170 Cross-Benchers and 140 Labour peers. It does not matter how much the Labour peers take part in debates, they know what the result will be. The other place has a built-in Conservative majority. Whatever Labour peers do, the result will be the same.

The hon. Member and the hon. Member for Colne Valley (Mr. Wainwright) said that the peers have a great deal of knowledge of these industries. The Conservative peers certainly have an interest in the industries concerned. Most of them have a financial interest, which they rightly admitted. They are not the right people to examine a measure like this. Their minds are already made up—not only because of their age but because of their experience and financial interest in these companies. Therefore, these matters are not being given the attention that they should have from people with no vested interest.

I was rather alarmed by the speech of the hon. Member for Colne Valley, whom I have always regarded as a fair and generous man. What he said about democracy being in danger does not help us at all. He knows that democracy is not in danger. But the constitution may be in danger because of those members of the House of Lords who are holding up the will of the Commons. The hon. Gentleman went part way to admitting that they are not elected, that they are there purely because they are hereditary or life peers.

Mr. Richard Wainwright

Does not the hon. Gentleman agree in the light of our proceedings last night that it is a little premature of him to assume what the will of this Chamber will be? Would he not permit himself a little doubt? Until the doors are locked and the votes counted, how can he know the will of this House?

Mr. Hoyle

It is always true that there may be some Pauls on the road to Damascus. I do not deny that. Nevertheless, last night was a strange reflection of democracy, because the two hon. Members concerned had the opportunity previously to do what they did last night. It is rather strange that they waited until the Bill came back from the unelected Chamber, when they knew the Government would be in difficulty. They both voted for it on previous occasions. But that is for them to answer, and, of course, they are free to do whatever they like.

The hon. Member for Colne Valley made great play with the Liberal amendment, which says that nothing should preclude British Airways and other British airlines from seeking supplies of civil aircraft, including engines and ancillary equipment from other sources. I do not think this amendment is necessary. Unfortunately, we have nothing to offer at all in this country in the way of long range aircraft. Maybe the blame should rest on this and previous Governments, or on our airframe and aeroengine manufacturers. In this Bill we are trying to ensure that we have an aircraft industry, either on its own or in co-operation with other countries, which can offer aircraft needed in the future. I do not think that it is necessary to write in an amendment like the Liberal one.

Very often in the past when the airframe industry and aero-engine industry, which were not publicly owned, were given large amounts of public money for ventures developed by the private sector, pressure was put on British Airways to order British. There was nothing wrong with that kind of pressure when a great deal of public money had gone into these ventures. These were fine aircraft and they needed a home market if they were to be successful in the world outside. But, having taken that into account, there should be a right for British Airways to buy foreign if this country cannot offer something suitable.

What really alarms me about the amendment is the restrictive nature of the kind of clamps which would be put on the corporations in their developments. They should be unrestricted to pursue developments to the end without going back to private enterprise. No restrictions at all should be put on them, because we want them to be viable and successful.

Other amendments were made in this direction by the Lords who, if they were not trying to disembowel the Bill, were certainly trying to place considerable restrictions on the corporations. That is not the right way to go about this. If these corporations are to be a success and we are to have a viable aircraft industry, this is the wrong way forward.

The Secretary of State is quite right to say that he cannot accept the amendments from the Lords because they are designed to put restrictions on the activities of the corporations and to hive off to private enterprise profitable sectors of the industry which should remain in the public sector.

4.45 p.m.

Mr. Gordon Wilson (Dundee, East)

In Committee there was some discussion about the future framework of the nationalised industries but I am not sure that at the end of the day we formed any coherent view. Some proposals before us today would give too much Government power over the range of activities of the nationalised industries. It is difficult for any Government to decide how much intervention should be made into organisations set up to be basically independent and capable of functioning on their own. If a Government interfere too much, this hinders opportunities for developing managerial and other talents to the full. If an organisation does not get the best people, its growth capability is lessened.

Lords Amendment No. 6 seeks to restrict the corporation from developing other lines of activity. There is some safeguard written into the Bill as it stands providing that the Secretary of State for Industry and the Department must give some general supervision of expansions of that nature. Private corporations have certain limitations on their operations written in to their memoranda or articles of association. But these are drafted so widely that the corporations concerned are quite capable of getting into other lines of activity, either directly or through subsidiary companies.

Therefore I think that Lords Amendment No. 6 is unduly restrictive, and its terms would fetter the two corporations. Accordingly it is likely that my hon. Friends and I will support the Government on that amendment if it comes to the vote.

The so-called Liberal amendment is, I believe, redundant. If there is to be any amendment here, is an amendment of the Aviation Acts to give certain additional powers to British Airways not to be tied to the British Aerospace Corporation in terms of purchasing requirements. I do not think that this sort of restriction should be written into the Bill. Even if the amendment were carried, I cannot see that it would be capable of being implemented.

As the hon. Member for Nelson and Colne (Mr. Hoyle) said, there are many limitations on the composition of the British aerospace industry at present. In future, whether it be in private or public hands, it may have to operate in combination with American or European firms. The Minister of State has spent considerable time during the last few months visiting French and ther European manufacturers and he has been in contact with the major American airframe companies. On these grounds, this particular amendment would meet with opposition.

It has been said that the House of Lords sought to disembowel certain Bills produced by the present Government. After last night, I think that it is more a case of the Government trying to commit hari kiri than anything else.

Mr. William Small (Glasgow, Garscadden)

The hon. Member for Colne Valley (Mr. Wainwright) spoke about incest in relation to these amendments. I do not know how much he knows about the lives of Dostoyevsky and Torgenev, but that was their favourite activity.

The hon. Gentleman was speaking about the extension of activities outside this country. These are meant to be home-spun activities and the members of the Corporations had better be home-spun men looking after the jobs, welfare and activities of the aircraft and shipbuilding industries of this country.

However, there is nothing to prohibit them, after consultation with the Minister, from going overseas for materials and engines if they must. It is not necessary to write that provision into the Bill. These industries do not require legal apostrophes to justify their right to take certain action.

Mr. John Cope (Gloucestershire, South)

My disagreement with the Bill flows from my concern that these industries depend for their lives on success against tough world competition. The Bill will result in their decisions being distorted by political considerations.

As an example, the hon. Member for Swansea, East (Mr. Anderson), speaking in an earlier debate on this Bill about Bristol Channel Ship Repairers and the concern about employment there, said: I am convinced also that the best guarantee for the continuance of the company at least at its present level is the political muscle of South Wales MPs. That has been demonstrated by the fight over the South Wales ports."—[Official Report, 28th July 1976; Vol. 916, c. 698.] Hon. Members from the Bristol area know about the political muscle of South Wales Members in relation to ports, and I do not want that sort of thing to extend to the aircraft industry on which we depend very much in our part of the country.

Much of this political distortion of decisions flows from the powers of interference of the Secretary of State. That is why I support my hon. Friends in opposing the Government's motion.

Mr. Palmer

The hon. Member for Gloucestershire, South (Mr. Cope) referred to intervention by Ministers and seemed to suggest that it was almost exclusively intervention by Labour Ministers. This is nonsense. The intervention by Conservative Ministers has been much deeper in many industries than that of Labour Ministers.

Mr. Cope

I did not mean to give that impression and I had the honour of working with my right hon. Friend the Member for Worcester (Mr. Walker) when he was Secretary of State at the time to which the hon. Member for Bristol, North-East (Mr. Palmer) is referring.

Mr. Palmer

The right hon. Member for Worcester (Mr. Walker) had a considerable reputation for intervention, though I am not sure that all his interventions were of the wisest kind.

I can understand the Opposition not liking nationalisation but, given the fact of nationalisation, why do they in their amendments here and in another place attempt to restrict the operations of nationalised corporations? Life changes and evolves and we must not fossilise industries by over-detailed legislative provisions at a particular time.

One of the difficulties with nationalised industries, especially my own—the electricity supply industry—is that they have been put in a straitjacket of legislation and have been unable to change fast enough with changing times and conditions. The Opposition's attempt to limit narrowly the operations of nationalised industries seems commercially very foolish.

However, I wish to add a few words to the cogent remarks made by the right hon. Member for Worcester based on his own experience. I agree that it is difficult to find the right people to run nationalised industries at the top. There are four ways in which it is usually done and patronage exercised.

First, there is the self-perpetuation method by which those who are retiring recommend their successors. This was done on a fairly wide scale in the past at any rate.

Secondly, Ministers consult civil servants and this means that ambitious men get to know civil servants, not in a corrupt sense, but to attract their notice so that their names may be mentioned to the Minister when a vacancy occurs.

The third source of patronage, and in many ways the most honourable, is the increasing tendency of Ministers to consult trade unions about appointments. Why not? The employee interest is fundamental. But here again the ambitious men get close to trade union leaders in the hope that their names if unknown will go before Ministers that way or be confirmed as suitable if known already.

Fourthly, there is the direct political appointment. A person who has given distinguished or often undistinguished service to the State or Government is whisked away and made chairman of a public corporation to everybody's astonishment. This is a very doubtful method and the right hon. Member for Worcester made one or two unfortunate appointments in that field. I shall mention no names.

Nearly all the Lords amendments are the wrong amendments. In my experience the only right amendments have been those which, from time to time, I have been bold enough to put down myself. I found those amendments very encouraging.

An obvious way of choosing someone to run a nationalised industry at the top—I do not know why it has not been tried—is to advertise the post in the newspapers and elsewhere. It would be easy to set up a selection panel of knowledgeable and disinterested people to interview applicants, who should be paid the going commercial or trade union rate for the job when they secure it. In that way we might get higher quality people and sounder, more welcome and better understood administration of nationalised industries.

Mr. Ron Thomas (Bristol, North-West)

It has rightly been said that Lords Amendment No. 6 is an attempt to put the Corporations into a straitjacket. Taken with all the other amendments, it is a clear attempt by the House of Lords to wreck the Bill completely. If the amendments were passed, there would be no Bill left.

We discussed in Committee the right of the aerospace and shipbuilding industries to diversify. A number of us tabled an amendment which would have given far more opportunity to the boards concerned to diversify and to utilise more effectively the skills and creative energy of those who work in the industries. We even felt that the way in which diversification was set out in the Bill was too restrictive. The Tories, understandably, wanted to restrict the activities of the Corporations. Having failed to do that in Committee, they have now got their Friends in the House of Lords to attempt to do the job for them.

5.0 p.m.

We argued that the British aerospace industry, under public ownership, must be allowed to diversify. This touches on what my hon. Friend the Member for Bristol, North-East (Mr. Palmer) said. The aerospace industry is kept going by public funds. But for subvention from public funds, it would have collapsed a long time ago.

Important research and development is taking place in the industry, financed out of public funds. One has only to look at the appendices to the Plowden Report to see the considerable amount of technological fall-out from that research and development. More often than not, the resulting new processes, ideas and materials, though paid for out of public funds, are exploited by private enterprise, or they are exploited not in this country at all but overseas.

Such an industry, receiving considerable public funds, undertaking research and development and standing at the frontier of technological advance, is always producing new ideas, projects, processes and materials. It should have every opportunity to exploit markets for its new ideas without being inhibited. Many of us feel that the Bill itself is too restrictive. But we know quite well that if the Tories had their way they would put these industries in a straitjacket.

Mr. Geoffrey Pattie (Chertsey and Walton)

The hon. Member for Bristol, North-West (Mr. Thomas) and I have crossed swords on this several times. En justifying the phraseology used in this part of the Bill, the Minister said that much of the drafting related to previous nationalisation statutes. Inevitably, we were reminded that the Gas Act was a Conservative enactment and that we would find similar clauses in the two measures.

The Government seem unable to grasp the difference between the types of industries subject to nationalisation in the past and the two industries that are now to be subject to nationalisation. There is a world of difference between virtual monopoly commodity industries, such as gas, electricity, coal and the railways, and those which the Government now wish to take into public ownership, such as the profit-making aircraft corporations. I see enormous differences.

The hon. Member for Bristol, North-West finds it difficult to appreciate the fears we have that this new Aerospace Corporation will be regarded as a cuckoo in the nest by the aerospace industry. All the avionics and components companies which have been making a tremendous contribution to exports for the United Kingdom will wonder exactly what a future Secretary of State will do if he invokes subsection (5) which states that activities which the Corporation and its wholly owned subsidiaries are to carry on, either in addition to the activities specified in subsections (1) and (2) above or in substitution for such of those activities as may be specified in the order". It means that the Secretary of State can decide to extend the activities. The hon. Member for Bristol, North-West has already said—he was disarmingly frank—that the subsection was too restrictive, and that he would like to see it much more widely drawn.

This only confirms that our fears and the fears of the avionics and components companies are well founded. Despite the protestations that the Minister is bound to make when he winds up the debate, when any difficulty occurs, such as the shortage of employment, the Aerospace Corporation's activities will be specifically extended.

My constituents who work in the BAC factory'in Weybridge are less worried'about diversification and more worried about the Minister of State's recent announcement, reported in an American publication called "Aviation Week", that the British Government have decided not to back the proposed BAC XII project, which involves BAC 111 technology. The Minister is quoted as saying that this was because it was too late in the day to he a collaborative venture. I hope that when the Minister replies to this part of the debate he will be able to reassure my constituents that the Government are still actively considering the BAC X11. My constituents are more concerned about that employment opportunity than about diversification.

The Under-Secretary of State for Industry (Mr. Les Huckfield)

This has been a short but interesting debate. The one thing that strikes anybody who has been associated with the Bill for some time is that most of the speeches from the Opposition are the same. To use economist's jargon, I would say that the long-run marginal cost of producing such speeches is near zero. They are nothing but hand-me-down speeches. They were made on Second Reading, in Committee and on Report here and again in another place. This part of the Bill could have provided an opportunity for another place to prove that it could be a revising Chamber and that it had a genuine role to fulfil. Unfortunately, we have had the same old tired arguments. They did not impress me any more today than they did when I first heard them.

Opposition Members and their Lordships have endeavoured to shackle the industries before they come into existence. They have tried to hem them in and restrict them even before they start. Having placed these restrictions around the new Corporations, they will then complain for ever and a day that the Corporations are not doing enough and are not efficient. It does not make sense. If the Corporations are to be successful and fluorishing they must be enabled to respond to new initiatives, challenges and economic developments in the same way as companies in the private sector.

Mr. Anthony Nelson (Chichester)

Will the hon. Gentleman give way?

Mr. Huckfield

The hon. Gentleman has only just come in, and I do not want to delay the House. I would rather make my own speech. What we have done is to find the most appropriate and the best legislative framework in which we can enable these two corporations to respond to new challenges and initiatives as they come along. That is what we are trying to do with this part of the Bill, and that is what these amendments try to prevent my right hon. Friend from doing. We want to enable the two new corporations to be able to respond flexibly and at the same time to have the appropriate degree of public accountability. I think that that is what we have done in these provisions.

Mr. Nelson

Will the hon. Gentleman give way?

Mr. Huckfield

It is a bit much to ask the House to listen to interventions by an hon. Member who has not been in the Chamber for this debate and who suddenly appears on the scene asking the Minister to give way.

Mr. Nelson

On a point of order, Mr. Deputy Speaker. May I draw it to your attention, at least, that I have been in the Chamber for about half an hour, although I have not been seated in my present position for the whole of that time? That may be an oversight on the Minister's part, and perhaps he will apologise.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

That is not a point of order. I was aware that the hon. Member for Chichester (Mr. Nelson) had been in the Chamber for a considerable time and had recently moved his seat.

Mr. Huckfield

I do not need my glasses for distance purposes, and I know that the hon. Member for Chichester (Mr. Nelson) came into the Chamber half an hour ago. However, this debate began one hour and 10 minutes ago.

The hon. Member for Dundee, East (Mr. Wilson) made the point that, in their memoranda and articles of association, companies in the private sector had pretty far and wide-ranging provisions. Of course, we feel that we need to enable these two corporations to be able to respond in the same way. As my hon. Friends the Members for Nelson and Colne (Mr. Hoyle) and Bristol, North-West (Mr. Thomas) said, we want to allow these corporations, when the occasion arises, to be able to respond flexibly in the same way that companies in the private sector can. However, we have to provide for accountability.

The hon. Member for Bridgwater (Mr. King) complained about statutes and clauses laying around all over the statute book. It is precisely because we want to provide for public accountability that we include provisions like this in the Bill. When the hon. Gentleman complains that there are powers left lying around all over the place, I hope that he recognises that we ought to have public acountability and that my right hon. Friend and this House should be able to talk about some of these activities of the two corporations. That is why we have these provisions in the Bill.

I think that we have got the right mix to enable a flexible response on the part of the Corporations while still enabling my right hon. Friend and this House to be able to monitor and adjudicate on the performances of these two corporations.

I am sorry that the hon. Member for Gloucestershire, South (Mr. Cope) does not seem to want us to discuss these matters at all. That is a little sad, because in many ways he played a valuable part in our Committee deliberations.

The hon. Member for Colne Valley (Mr. Wainwright) complained about the short time that we had. I recall the great pile of Committee debates which the hon. Member for Bridgwater brought into the Chamber earlier this afternoon. That in itself shows that this is one of the longest running discussions that we have had on any piece of legislation to have come before this House.

The hon. Member for Colne Valley talked about the relationship between British Aerospace and British Airways. He knows that British Aerospace will be a nationalised corporation. British Airways is a nationalised corporation. Both are or will be free-standing, nationalised statutory independent corporations, and they will have the arm's-length relationship which normally exists between independent free-standing nationalised corporations.

Mr. Richard Wainwright

Does the hon. Gentleman think that the epithet "free-standing" is appropriate when this Bill is littered with provisions for the Secretary of State to intervene and to give directions? Is that his concept of "freestanding"?

5.15 p.m.

Mr. Huckfield

The hon. Gentleman has read this piece of legislation. He should not interpret my right hon. Friend's powers in that way, bearing in mind the assurances given time after time in Committee.

There is no need for the insertion that the hon. Gentleman seeks to put into the Bill. There is no need for the amendment, because there is nothing in this piece of legislation that enables him to construe that the amendment which he seeks to retain is necessary. There is nothing in the legislation that would compel British Airways in the way that he thinks it would.

The right hon. Member for Worcester (Mr. Walker) made a very interesting speech. It reflected the long and substantial experience that he had as a Minister in my Department. It was a pity that he did not mention some of the newer forms of administration that have been developed, and I wish very much that he had touched more on industrial democracy, because we feel that the provision about industrial democracy in the Bill is a far-reaching and wide-ranging one, of considerable significance.

When the right hon. Gentleman talks about the relationship between the Secretary of State, his advisers, the chairman and the board, I hope that he will realise that in respect of these two Corporations the powers that these provisions will convey upon my right hon. Friend are no greater, and in many ways are smaller, than the powers that he himself had and which his predecessors acquired in respect of Rolls-Royce 1971, simply by becoming sole shareholder. In fact, the Companies Acts did for him in that case what in the case of a public corporation has to be done specifically in this legislation. I hope that he will recognise that what he says about these sections of this legislation applies to cases where he was involved, which did not apply to nationalisation in the same way.

Let me say again, as my hon. Friend the Member for Bristol, North-East (Mr. Palmer) said, that we do not want to place either of these two corporations in a straitjacket. My hon. Friend made some useful comments on the way that we want these two corporations to operate.

I end as I began. I think that we are enabling these two corporations to respond to changing economic situations and new initiatives in a flexible way. At the same time, we are providing for public accountability and providing in a reasonable way for my right hon. Friend to be able to exert his influence and to have his degree of control. For that reason, I hope that I can now ask the House to reject this Lords amendment.

Question put and agreed to.

Lords Amendment No. 2 disagreed to.