HC Deb 26 January 1977 vol 924 cc1492-512
The Secretary of State for Trade (Mr. Edmund Dell)

With permission, Mr. Speaker, I should like to make a statement on industrial democracy.

The departmental committee of inquiry, which was announced by my predecessor on 5th August 1975 and which came into being during December of that year under the chairmanship of Lord Bullock, submitted its report to me on 14th December. I am arranging for it to be published today and copies have been placed in the Library and the Vote Office.

The report of the Committee is not unanimous. There is a majority report signed by the chairman and six members of the Committee but with a note of dissent by one of the six. In addition, there is a minority report signed by the remaining three members. Nevertheless, I welcome the work that the Committee as a whole has done and I pay tribute in particular to its chairman, Lord Bullock, for the vast amount that has been accomplished in the course of 12 months. The Committee has greatly advanced the consideration of this complex subject by analysing the issues and clarifying the choices.

The majority of the Committee recommend the introduction of legislation to give employees a right to representation on the boards of companies employing 2,000 or more. This right would be triggered by an application from a recognised trade union, confirmed by a ballot of all employees. The reconstituted board would consist of three elements—that is to say, equal numbers of employee and shareholder representatives, who would co-opt a further small uneven number of directors. All directors would have the same duties and responsibilities. If the trade unions representing the employees, and the representatives of shareholders and management, agree that other arrangements to develop industrial democracy are more appropriate in their company, there is nothing in the majority report which would prevent the introduction of those arrangements.

The minority report favours the prior development of participation below board level and proposes that if employee representation is to be introduced it should be on a supervisory board in a two-tier system. The employee representatives would not necessarily be selected through trade union machinery.

The minority report also criticises the terms of reference of the Committee, which presupposed a commitment to employee representation on company boards. I should therefore make it clear that the Government are committed, as we were when we set up the Committee, to a radical extension of industrial democracy by representation of the work force on company boards and to the essential rôle of trade unions in this process. The minority report would not be consistent with this approach. It is the Government's view—a view widely shared in Europe—that arrangements for joint decision-making at all levels, including board level, will represent a fundamental change which should make a major contribution to an improvement in labour relations and industrial efficiency.

The Government now intend to undertake consultations with the TUC and the CBI in order that as much common ground as possible may be identified. Other organisations will be able to express their views to the Government. We shall consult on the general basis of the recommendations contained in the majority report and we shall bring forward legislative proposals this Session. I very much hope that the consultations can take place in a positive and constructive atmosphere and with recognition by both sides of industry of the need to seek a lasting settlement.

The terms of reference of the Bullock Committee were confined to private sector companies: the legislative proposals will also cover companies in which the Government have a shareholding. The Government have also been giving separate consideration to the development of industrial democracy in the nationalised industries and have decided that employees in these industries should be given the right to representation at board level. Consultations about this will take place in parallel with the consultations on the Bullock Report, and the Government's conclusions will be embodied in the legislative proposals to which I have referred.

Special considerations apply to the development of participation in central and local government. It is fundamental to the working of our democracy that elected representatives take decisions and act in the interests of the community as a whole. There are, however, many matters on which employees can legitimately expect to contribute their views. The Government have put in hand, and are continuing, a series of studies in consultation with the appropriate unions and management, into the scope for the extension of participation in the public services within the accepted principles which govern the operations of elected bodies.

The Government's aim is to see democracy extended from our political to our industrial life. That is an essential ingredient of the social contract. Just as political democracy has been accepted by all our people, so we believe that industrial democracy—at all levels from the shop floor to the board itself—will come to be regarded as part of the accepted fabric of our national life and open a new chapter in industrial relations and a continuing improvement in our industrial performance.

Mr. Nott

May I thank the Secretary of State for his statement and ask him the following questions? First, is he aware that my right hon. and hon. Friends share a commitment to extend the opportunities for people to participate in and influence the decisions of their own companies and the places where they work, so long as this involves all employees and not just the members of trade unions? It must, however, be part of an evolutionary process which is flexible between different companies and which stems genuinely from the shop floor up through companies rather than being imposed by legislation from the board down.

Secondly, is the right hon. Gentleman aware that, in our opinion, the majority report of the Bullock Committee is unrealistic and destructive? It is a political tract which makes a mockery of genuine democracy in British industry. Moreover, it would undermine most of the progress painstakingly made by the best companies over the last few years and will set genuine participation back by a decade.

Thirdly, is the right hon. Gentleman aware that the majority proposals would further destroy the authority and the confidence of junior and middle management who look to career prospects in their companies based on merit rather than on the patronage of a trade union?

Finally, we noted the Prime Minister's comments yesterday that soundly-based progress in this important area can be made only by agreement with both sides of industry. The statement, however, is a denial of this position since it commits the Government to legislative proposals on the general basis only of the majority report. Is the Minister aware that the process of consultation which is now to take place can mean nothing unless it goes far wider than the majority recommendation and the original terms of reference of the Committee, both of which we utterly condemn?

Mr. Dell

The hon. Member for St. Ives (Mr. Nott) has made the typical sort of exaggerated statement that precedes any major reform in this country which, when implemented, has been found, as has been found in Europe, to be a positive contribution to industrial relations and the efficiency of the operation of companies. It is particularly an exaggerated statement bearing in mind the emphasis in my statement on the need to find a lasting settlement. Nothing in my statement differs from or contradicts what my right hon. Friend the Prime Minister said yesterday in reply to a question about the need for agreement if we are to get a lasting settlement. The object of the consultation is to seek agreement if that is possible.

I noted the hon. Gentleman's reference to the commitment of his party. It seems to be a commitment which is likely to reach effectiveness over so long a period that, fortunately, it will not be left to him or his party to implement it.

As for the hon. Gentleman's remarks about trade unions, he will have observed that under the recommendations of the majority report no system of industrial democracy such as is recommended and about which we will consult can be implemented unless, first, there is a ballot of all employees of the company and, secondly, there has been a positive result supported by not less than 33⅓ per cent. of the work force. That is the minimum qualification and a safeguard which goes beyond that provided in much of European legislation to ensure a minimum commitment to this process.

As for the need to impose this system by legislation, in Europe it has always ben necessary to make progress by legislation. The majority report is not unrealistic and unconstructive. One of the valuable things about the Bullock Report is that, as a result of consultations and discussions within that Committee, there has been some approximation of views between the two sides represented there, which gives me confidence that it will be possible to secure a lasting settlement of this problem based on agreement.

Mr. Radice

Is my right hon. Friend aware that I and many of my hon. Friends consider that the Bullock Report is a well argued and constructive contribution to the debate and forms a basis for the Government's consultations? Does my right hon. Friend agree that, contrary to misleading leaks that have occurred over the past two weeks, Bullock is proposing an optional rather than a mandatory system—as my right hon. Friend has said, an optional system which must receive the support of the majority of employees in the company?

Does my right hon. Friend accept that we need a flexible system which makes room for participation agreements between managements and trade unions as well as providing for worker directors in both private and public industry?

Mr. Dell

I am grateful to my hon. Friend. One of the emphases of the Bullock Report is on the need for flexibility in this process, and, as I said, it would be possible within the proposals to develop flexible systems which, if necessary, would be short of representation of workers on boards of directors. Therefore, the sort of flexibility which my hon. Friend requires is provided for within the report.

Mr. Amery

Is the right hon. Gentleman aware that a number of us on this side of the House have argued the case for participation from the shop floor to the board room over a number of years—indeed, in a period when the trade union movement was strongly opposed to it, and in my own case as early as 1948–49? Does he agree that there is a very strong case for establishing the maximum consensus in this matter? Will he avoid committing the Government too strongly to any part of the detail of the Bullock Report, which is highly controversial, so that we may arrive at an agreed basis on which worker directors can be established?

Mr. Dell

I am grateful to the right hon. Member for those remarks. I remember that he himself welcomed the terms of reference when they were announced in the House. It is certainly our intention to achieve, if it is possible, the maximum consensus in developing this legislation. That is our view because we want a permanent settlement of this issue, not the sort of industrial relations legislation that was introduced by right hon. and hon. Gentlemen opposite.

Certainly we intend to consult on the detail of the majority report of the Bullock Committee. Our commitment is in the terms of reference, which I have repeated today—that is, to the radical extension of industrial democracy by the representation of workers on the boards of directors. That is our commitment, and we shall consult further about the matter in the majority report, as well as the minority report, to attempt to find agreement on the basis for legislation.

Mr. Penhaligon

The Liberal Bench wants to see an extension of industrial democracy and has done so for about 50 years—[HON. MEMBERS: "What is the question?"]—so the book tells us. Cannot the Minister appreciate that the idea of directors elected by trade union members only is simply not acceptable to the Liberal Bench? Could he let us know in detail why only three out of 337 submissions made to the Committee were considered? Also, what is the logic or the magic about the number 2,000 below which there will, apparently, be no democracy or hint of democracy at all?

Mr. Dell

It is for the Committee to say why it considers particular representations made to it. I am sure that it considered all the representations made to it, though, naturally, it does not refer to them all. As for the hon. Gentleman's suggestion that this process is confined to trade unions, I repeat that the system cannot be triggered without a vote to all the employees. As for the trade union channel which is recommended in the report, in that matter too it is obviously necessary for the Government to consult so that we can find a basis of agreement there, if it is possible.

Mr. Hayhoe

The right hon. Gentleman is reneging on the statement.

Mr. Dell

The hon. Gentleman says that I am reneging on the statement. That is obviously false. When he has studied the majority report, the hon. Gentleman may see that one of the suggestions made within the report is that the joint representation committee of trade unions might well decide that the appropriate way of selecting worker directors would be by a 100 per cent. vote of all the employees. That is one suggestion which is made as to a method by which that could be operated. This, too, is an area in which we shall have to consult.

Mr. Small

I accept the principle of the report. However, could the Minister enlighten me on the required alterations in the Companies Act in terms of existing company law and how this would affect the multinationals and the oil majors operating in the North Sea?

Mr. Dell

Some of the alterations in company legislation will affect the responsibilities of directors. Clearly, one point on which there was general agreement is that it is necessary to alter the responsibilities of directors to embody employees as well as shareholders. As to the effect of multinationals, the report makes certain proposals for the organisation of industrial democracy within multinationals. This is something that we shall have to consider, because, of course, we wish to continue to encourage inward investment in this country.

Mr. Madel

Is it a precondition of the Government's consultations to which the Minister has referred that industry and management must accept the statutory imposition of trade union or employee directors?

Mr. Dell

We have a commitment, and that commitment is justified not merely by the needs of this country but by experience elsewhere. So far as I know, every country which has developed along this course has found it necessary to do so on the basis of statutory provision.

Hon. Members


Mr. Henderson

Will the Secretary of State accept that the contribution which we have had from Tory Front Bench Members shows that, however many discussions they may have with the TUC, they have totally failed to understand working people, and will he take it that there will be support for his idea that there should be the fullest possible consultation on this matter? In addition to consulting the CBI, the TUC and numerous other outside bodies, will he give an undertaking to consult other parties within the House in the preparation of the legislation?

Mr. Dell

I shall be glad to consult other parties in the House. The House will obviously have the final word on the legislation; the House alone has the veto on it. Of course, we shall be prepared so to consult.

Mr. Sedgemore

Can my right hon. Friend give the House an assurance that the Government intend to stand firm against the industrial Luddites on the Opposition Benches? Will he call on the CBI and others who oppose these proposals to observe the decencies, the proprieties, the rule of law and the supremacy of Parliament during the coming clash?

Mr. Dell

We always resist the industrial Luddites on the Opposition Benches. We wish to enter into serious consultation with the CBI because we wish to find a consensus on the basis on which to make a lasting settlement of the problem.

Mr. Emery

Does the Secretary of State realise that he has used the term "commitment" a number of times in his answers? Does he realise also that there is a commitment from the Prime Minister and the Chancellor of the Exchequer, in order to get the country out of its financial and economic problems, to see a greater working together of the CBI, management, workpeople and the whole of industry? Does he realise that the report, if adopted in the terms of the majority report, will go a long way to undermining that co-operation?

Does the right hon. Gentleman realise that the last paragraph of the report refers to The fears expressed in the nineteenth century in face of proposals to give more people the right to vote"? In fact everybody, not just an exclusive few, was given the right to vote, which is immensely important.

Mr. Dell

It took a long time to persuade the Conservative Party in the nineteenth century of the need to give everyone the right to vote. I have already dealt with that point, and I have said that that will be an element in consultation. I believe that it is vitally necessary to reduce confrontation in industry. The development of industrial democracy will help so to do and thereby will help industrial performance. That is the reason why we are taking this legislation far more seriously than many Opposition Members seem to be taking it today.

Mr. Wigley

Will the Minister accept that Plaid Cymru regards the report as visionary in going to the heart of our industrial problems? Will he, however, accept that if there is discrimination, cutting out non-trade union employees, it could raise an unnecessary bogy since the vast majority are unionised anyway and, to that extent, it would be wiser to allow every employee to vote in any elections?

Will the right hon. Gentleman also accept that the threshold of 2,000 is much too high, implying that perhaps only 100 or so companies out of 3,000 in Wales will be affected, and compares with thresholds of, I believe, zero in Austria, 25 in Sweden and 100 in the Netherlands? Can the right hon. Gentleman give a commitment, in referring to legislative proposals, that the Government will bring forward a Bill to implement the report, or a revised Companies Bill, during the present parliamentary Session?

Mr. Dell

On the last point, our commitment, as was said in the Gracious Speech, is to bring forward legislative proposals in this Session. I certainly hope that it will be possible to do that in the form of a Bill. The hon. Gentleman will appreciate the time constraints. I note what he says about the system of representation which would operate to select worker directors. I have already indicated that this is a matter for consultation.

Several Hon. Members


Mr. Speaker

Order. In view of the large number of hon. Members standing up, it would be a very great help if those who were called would try hard to limit themselves to one question. That will increase the number that I shall be able to call.

Mr. George Grant

Few hon. Members will disagree with the objectives of industrial democracy, improved industrial relations, improved efficiency and improved productivity. Will my right hon. Friend take into account, however, the efforts of the previous Government to improve industrial relations? The message that I want to get across is that one can drive a horse to water but one cannot make it drink.

In the trade union movement there are many who want to retain the "them and us" attitude. On the employers' side and among industrialists there are many who do not want to know this. I have seen industrial democracy working in Germany. I appeal to my right hon. Friend to take into consideration the record of the previous Government. Let us aim for co-determination, but let us introduce it at a lower level and carry both sides of industry with us.

Mr. Dell

I entirely agree with my hon. Friend. On the other hand it would appear that the Opposition do not agree. We wish to seek a basis of consensus in this legislation.

As regards a lower level of participation, again the majority report emphasises the importance of that, and in a statement issued today Lord Bullock personally emphasised its importance. Nothing in the proposals of the majority report is inconsistent with that. The argument in the majority report is that, if these arrangements are made in respect of a board of directors, that will encourage the development of participation at lower levels within the company.

Sir D. Walker-Smith

Does the right hon. Gentleman appreciate that many who are on record as being in favour of employee participation believe that this can be satisfactorily achieved only by a two-tier system in companies, by a proper demarcation of function between the supervisory board and the board of management, and by the use of fully democratic procedures for the election of employee representatives?

Will the right hon. Gentleman undertake to give close and sympathetic consideration to the recommendations of the minority report in this regard—particularly those on pages 178 to 181—during the transitional period which is likely to be prescribed by the Fifth Company Directive of the Community, keeping in mind the goal of the two-tier system which that revised directive is almost certain to prescribe?

Mr. Dell

We shall certainly consider the two-tier system as one option in these consultations. We do not rule that out. On the other hand, if there is to be a two-tier system there will need to be significant responsibilities attached to the upper tier. The majority report, after consideration of a two-tier system, and for reasons that were explained in some detail, came out against it. The minority report was in favour of it. We shall consider that argument. There may be merit in it. This, however, is a subject for consultation.

Mr. Heffer

Is my right hon. Friend aware that the attitude adopted by the Conservative Party and by employers will be clearly noted among industrial workers? Does he agree that, as usual, the Conservative Party and, I am afraid, employers, have proved once again that their attitude towards industrial relations is in the last century and not this century?

Will my right hon. Friend take into consideration the point that not only should there be a ballot on the first basis for having such a system in any company but that the workers should elect their representatives to the management board? Further, will he ensure that in discussions with the trade unions we get the rôle of the trade unions correct? Trade unions are not in our society to run industry; they are here to protect the workers' interests. That must be taken into consideration. Finally, can we begin by introducing participation in the industries we already control—namely, the publicly-owned industries?

Mr. Dell

I am grateful to my hon. Friend for those remarks. He has no doubt noted what I said about industrial democracy in the nationalised industries. There is nothing inconsistent, and I do not think my hon. Friend thinks that there is anything inconsistent, in developments of this kind and the protection of workers' interests—quite the contrary. I note what my hon. Friend says about elections to the boards of directors. That is a matter for consultation.

Mr. Neubert

Does the Secretary of State agree that for a Labour Government representing less than 30 per cent. of the electorate to facilitate worker control by trade unions representing only 40 per cent. of the working people is scarcely democracy by any definition? How can he hope to achieve a genuinely democratic, lasting settlement involving such a fundamental change in time to introduce a Bill this Session?

Mr. Dell

Our intention is to have consultations with the CBI and the TUC to find out whether there is any basis of consensus on which we can build. I think there is, and I hope that we shall find it. I hope that the time constraints to which the hon. Gentleman appropriately refers will not prevent our introducing a Bill this Session. Certainly we are committed to introducing legislative proposals to the House this Session, and that is our objective.

Dr. McDonald

Will my right hon. Friend give the House an assurance that the legislation which the Government introduce will embody the principles of the majority report of the Bullock Committee—namely, to give employees through their worker directors the opportunity to influence the strategic decisions of the company and in such a way that capital and labour are on equal terms? Does he further agree that the opposition so far shown by hon. Gentlemen opposite and by the CBI to the majority report of the Bullock Committee show, on the one hand, that they are afraid of true democracy in the workplace and, secondly, that in trying to circumvent the trade union machinery in electing worker directors they showed that they do not understand industrial relations any better than they did when—

Mr. Speaker

Order. I ask hon. Members not to argue the case today but to ask their questions.

Mr. Dell

Certainly, the object of this process is to give workers an opportunity to influence strategic decisions of their companies. As for the proposal of the majority report that the constitution of the board of directors shall involve parity between worker and shareholder representatives, I remind the House that, in a sense, a proposal of a form of parity is equally to be found in the minority report. However, it is certainly open to the CBI or representatives of industry or to any other party to argue that parity is inappropriate in this case. That will be part of the consultations which we shall now undertake with a view to finding the consensus that we are seeking.

Mr. Maurice Macmillan

Will the Secretary of State in his consultations remember that the CBI does not fully represent the whole of industry? Will he also consult the institutions which own a large number of shares in quoted companies largely representing pension funds and other small shareholders indirectly? Will he show that he takes seriously the whole concept of industrial democracy by trying to link the recommendations of the Bullock Report, by an extension of industrial democracy, by encouraging through the tax system the ownership of shares by employees?

Mr. Dell

Of course, a number of companies encourage share ownership through various arrangements that they have made. Certainly, if institutions wish to make representations about the report they will be heard. There is no problem about that.

Mr. John Ellis

Would my right hon. Friend say a few more words about his thinking on the nationalised industries, and in particular steel? Would he also profit from past experience in the arrangements that are made? There is not the expectancy that there was in the past for all the worker representatives to have to break all their links with the trade union movement and, indeed, that there should be the right of recall for those representatives for the trade unions concerned.

Mr. Dell

The majority report suggests a system of recall for the whole system if it is once implemented and has been operating for five years. As for the nationalised industries, as I said in my statement the right to worker directors is equally to be extended to nationalised industries on a basis which we shall establish through parallel consultations.

Mr. David Price

Is the right hon. Gentleman aware that the terms of reference given to the Bullock Committee were so constrained and so loaded that the majority recommendation is hardly surprising? Is he, therefore, aware that the report carries little authority as a definitive statement on industrial participation?

Mr. Dell

The terms of reference raised the question of how industrial democracy, by which was meant the representation of workers on boards of directors, should be introduced in this country. It also raised the question of what the economic effects of so doing were likely to be. The question "How?" is the question that has been asked and answered in a whole series of European countries, and this was the appropriate question to which we had to ask the Bullock Committee to address itself because that is a relevant question at this time.

Mr. Atkinson

In preparing the White Paper, will my right hon. Friend acknowledge that the overwhelming opinion of the trade union movement is in favour of a single-tier board? Secondly, during that preparation will my right hon. Friend undertake also to consider any changes in company law that will facilitate the full concept of planning agreements being brought into being, because many of those who submitted evidence to the Bullock Committee did so on the basis that worker directors elected to a board should be so elected to enable effective planning agreements to be brought about?

Mr. Dell

Planning agreements are a matter for my right hon. Friend the Secretary of State for Industry. I do not know to what precise changes in company law my hon. Friend refers, but the intention has always been, and still is, that these should remain voluntary.

I note what my hon. Friend said about the overwhelming opinion of the trade union movement on the question of a single-tier board. I am not sure that the trade union movement is unanimous on that. Certainly trade union representatives on the Bullock Committee, as a result of the arguments advanced, seem to have changed their view on this subject. A single-tier board is plainly an option. It is well argued in the Committee's report that that should be the course to take. Nevertheless, at this stage I do not believe that we should rule out the possibility of a two-tier board.

Mr. Tebbit

Is the Secretary of State aware that his opening remarks were reminiscent of the remarks that preceded the Industrial Relations Act—that is to say, that he implied that there were a large number of non-negotiable parts in his consultation? Is he further aware that his subsequent remarks softened that impression? Which was the correct impression? Will the right hon. Gentleman undertake to ensure that the Bill in respect of the publicly-owned industries and that for the private sector are brought forward together?

Mr. Dell

When the hon. Gentleman has an opportunity to read my statement, he will see that I did not put down a long list of non-negotiable parts. What I did was to repeat the Government's commitment in respect of the process towards industrial democracy in the form of representation of workers on boards of directors and the essential rôle of trade unions in that process. That was what I repeated. My answer emphasised the importance of consultation on the subject, and in answer to supplementary questions I indicated that that consultation would cover many of the matters that have been raised during questions today.

The Government hope to be able to introduce the legislative proposals in respect of the nationalised industries at the same time as those dealing with the private sector.

Dr. Bray

Is my right hon. Friend aware that his statement reaffirming the Government's commitment to industrial democracy will be welcomed not only by the majority in the House but by the bulk of employees in the country, as revealed by a Market Research Society poll published in the newspapers this morning? Does he agree that it is a pity that the three company chairmen who signed the minority report did not follow their own plea that all should be prepared to abandon prejudice, pre-conception and dogma, and to weigh sectional interests against national imperatives"? In the spirit of that plea, will the Government try to direct the attention of all concerned to the content and not merely the form of the work of industrial representatives?

Mr. Dell

Yes, certainly. I note, too, what my hon. Friend said about the Market Research Society report. I suggest that one of the most important developments that we should look for now is a public debate on the issues raised by the publication of that report. That, too, will help to get agreement on the subject and to show that in this area the issue is reconcilable, just as in our history we have found many other difficult issues to be reconcilable.

Mr. Higgins

Why were the Government afraid to give the Committee terms of reference that did not prejudge the main issue? Does not the Secretary of State understand that a system in which a single vote restricts all subsequent votes to trade unionists cannot conceivably be regarded as democratic? Further, can he tell us whether he accepts the view that all directors must have the same legal rights and liabilities? Will he say whether that is the Government's view and whether that point will be open for discussion?

Mr. Dell

In my statement I laid stress on the point that the Bullock majority report emphasised the need for all directors to have the same responsibilities. I believe that that is right. That was the majority report's conclusion. We were not afraid to have the wider question discussed. The point was that we thought that the relevant question was how—not whether—this process should be implemented. It was a matter on which we thought it was right to make a commitment, and it was supported in the election. I have already indicated that there will be consultations regarding the procedures for selecting worker directors.

Several Hon. Members


Mr. Speaker

Order. In view of the interest in this matter I have allowed the debate to run for 40 minutes. I propose to allow another three questions from both sides. We will then have to come to a conclusion.

Mr. Clemitson

Would not my right hon. Friend agree that if industrial democracy is to develop there must be a favourable climate for it to do so, and does he agree that that climate will not exist as long as trade unions are forced into the defensive position of having to fight rearguard actions to safeguard their members' jobs rather than being able to develop a positive rôle which industrial democracy implies?

Mr. Dell

I note what my hon. Friend has said. I entirely accept what he said about the need for a favourable climate. That is why I should like to see an element of public debate on this issue, because I think that public debate would gather a great deal of support for industrial democracy of this kind.

Mr. Shersby

What changes in company law does the Secretary of State contemplate to encourage the other forms of employee participation to which he referred in his statement?

Mr. Dell

That is a matter that we can consider. However, the majority report says that forms of consultative mechanism lower than the board should not be established by enactment. It also says that such systems can be developed by companies by agreement. This is what the report says. Again, this is something that will have to be considered. It may be that other provisions are necessary. We will listen to arguments on that point. However, the majority report, after considering this question, came to the conclusion that the best way of encouraging participation at lower levels within the company was to develop representation of workers on boards of directors. I think it would be admitted throughout much of industry that, in the development of participatory processes below board level, this country has been unfortunately slow and that we need some encouragement of that process.

Mr. Ron Thomas

Will my right hon. Friend give us on this side of the House an assurance that in framing the legislation we start from the premise that we are committed to a fundamental and irreversible shift in the balance of power and that the minority report's proposals go nowhere near to meeting that? Indeed, they leave out any form of decision-making policy and so on. They also make clear that the organisation and structure of companies will remain exactly the same. Does my right hon. Friend also agree that the essential reason why trade union representatives only should be on these boards is that they are the only ones with the back-up service from an effective organisation to do the job that is required to be done?

Mr. Dell

The aspect of this that I should like to emphasise is responsibility. In my view, one of the objects of industrial democracy is to ensure that responsibility for the successful operation of companies is spread throughout the country and that it is not limited to people elected by the shareholders but it is spread to people who represent all the employees of a country. That is the object, and I hope that that is the object that we can achieve.

As for the reasons for the trade union channel, as it is described, this is a matter which is discussed in the majority report. I have explained the view of the Government on this subject. We shall consult about this issue.

Mr. Ridsdale

In view of what the Secretary of State has said about industrial democracy, can he say whether the Government will be giving a favourable passage to the Employee Investment Bill, which has its Second Reading on 4th February?

Mr. Dell

When I have found out what that Bill says, I shall contact the hon. Gentleman.

Mr. Greville Janner

As worker participation legislation is now absolutely inevitable, will my right hon. Friend advise industry not to wait for the legislation but to get cracking and provide industrial democracy in its own units now in its own good time?

Mr. Dell

There is nothing to prevent companies from developing the consultative and participatory procedures which they say in their public statements are necessary but which, unfortunately, have been too little developed within British companies so far. Nothing exists to prevent that from happening. We intend to give further encouragement to that process.

Mr. Prior

Is the right hon. Gentleman aware that the favourable climate that he and all hon. Members seek is not likely to be enhanced by the kind of statement he has made today? His remarks in answer to questions have been a good deal more helpful than the original statement.

How does the right hon. Gentleman reconcile the statement that we shall consult on the general basis of the recommendations contained in the majority report with what he has subsequently said about considering the minority report and the two-tier board? Will he confirm that consultations will allow full and open discussion of other methods of non-statutory imposition of consultative machinery? Will he also confirm that the Government are not committed to statutory imposition of worker directors, as he seemed to imply in his answer to my hon. Friend the Member for Bedfordshire, South (Mr. Madel)

Finally, will the right hon. Gentleman understand that this proposal, if carried through in the form proposed in the Bullock Report or anything like the majority report, is likely to set back industrial confidence and industrial investment for many years?

Mr. Corbett

The right hon. Gentleman is the expert on that.

Mr. Prior

If hon. Gentlemen opposite who for months and years said that the law had only a minor part to play in industrial relations order can now introduce legislation which is bound to be opposed by a great part of British industry, they are asking for all the trouble they are likely to get.

Mr. Dell

I have several times emphasised that our objective is to introduce legislation that will command consent. The right hon. Gentleman says that the process of consultation or the discovery of consensus will not be encouraged by the statement I made today and that he finds the statement irreconcilable with my answers. If he studies the statement, he will find nothing irreconcilable. The Government have a commitment, which I repeated, and we are prepared to consult beyond that commitment in order to find the basis of consent that we all wish.

The right hon. Gentleman appears to be a laggard, even behind some of the statements coming from industry at the moment. For example, he does not want any legislation at all. As I understand it, the CBI is prepared to have legislation provided that it deals with consultative machinery below board level. The right hon. Gentleman has not even caught up with that attitude.