ORGANISATION OF THE CORPORATION'S ACTIVITIES (Hansard, 15 July 1981)

§ The Under-Secretary of State for Industry (Mr. Michael Marshall)
I beg to move, That this House: doth agree with the Lords in the said amendment.

§ Mr. Deputy Speaker (Mr. Bernard Weatherill)
With this we may take Lords amendments 2 to 11.

§ Dr. John Cunningham (Whitehaven)
I have no objection to discussing the amendments together. I am sure that there are a number of hon. Gentlemen who would like to have a debate in some depth about the 21 amendments on the Amendment Paper, but I assure the House that I intend to be brief. I shall simply put a number of questions to the Under-Secretary which I hope that he can answer briefly.
In amendment No. 1 there seems to be a slight softening of the Government's position, in that the amendment seeks to allow some consultation before the Secretary of State may give a direction to the corporation to act in a way that he may determine. The Under-Secretary knows that we are not happy about the fact that he should give directions of that kind. However, we welcome the amendment if its intention is that these matters should be discussed with the corporation before any such direction is given. Amendments Nos. 2 and 3, as I understand them, are consequential drafting amendments following from amendment No. 1, so I have nothing to say about them.
Amendment No. 4—as I understand it; I hope that the Under-Secretary will confirm my understanding, so that we need not pursue the matter—seeks to ensure that the corporation shall have no choice other than to give effect to any direction that the Secretary of State may choose to give it. In other words, nothing is left to chance in amendment No. 4.
Amendment No. 5 seeks to omit subsection (6) of the clause which was introduced by the Government on Report. When I commented on this matter on 14 May, when we were considering the Iron and Steel Bill in the House, the Under-Secretary replied: The hon. Member made sport of subsection (6). Procedure is provided under that subsection to ensure that a direction is given and made known formally to the corporation. That is an integral part of making plain the formal position. It is part of the mechanism under which that direction will appear in the annual report. That is how the issue is made public. On reflection, the hon. Gentleman"— that is me— might appreciate the significance of that".— [Official Report, 14 May 1981; Vol. 4, c. 963.] We did not appreciate the significance at the time. Now that the provision has been removed altogether, I am tempted to have a little more sport. However, at this late hour I simply ask the Under-Secretary to say whether he thought that the sport that we had at the time was worth noting, or whether there is another purpose in moving the 1359 amendment to remove the subsection, which he said at that time was an integral part of making plain the Government's intentions.
I understand that Lords amendment No. 6 clarifies the situation. Amendment No. 7 involves the omission of a provision introduced by the Government on Report. It refers to the Secretary of State giving notice as soon as it is practicable to do so". That was the subject of criticism similar to that made of amendment No. 5, and it is to be removed. Why is it being removed? Does it mean that the Secretary of State will not give notice? Alternatively, will the notice be covered in some other way.
Amendments Nos. 8, 9 and 10 are drafting amendments. I assume that the Under-Secretary will reply before I ask more questions.

§ Mr. Michael Marshall
I am grateful to the hon. Member for Whitehaven (Dr. Cunningham) for the way in which he has responded. I can cover his questions about amendments Nos. 1 to 8 with a general answer because they are interrelated.
The purpose of Lords amendments No. 11 is to continue exemptions from stamp duty which currently are enjoyed under certain conditions by subsidiaries of the corporation. It replaces the amendment made by clause 2(4). It is a tidying-up amendment.
Lords amendments Nos. 9 to 11 are drafting amendments. The term "changes in organisation made" is an improvement on "organisation changes effected."
The substance of the hon. Gentlemen's remarks related to Lords amendments Nos. 1 to 8. I shall spell out precisely how the group of amendments apply.
The amendments remove the power of the Secretary of State to give direction direct to a publicly owned company to dispose of its property, rights, liabilities and obligations. In that sense it is a softening.
The passage in the Bill was designed to facilitate the imposition of restrictions in section 4A(7)(b), which clause 2(1) of the Bill inserts into the Iron and Steel Act 1975. Those restrictions enable the Secretary of State to maintain control of the nature and assets of a company that is formed as a result of his direction. The basis of the relationship between Ministers and the chairman and the board of the BSC, however, is that control of the corporation's subsidiaries should be in the hands of the corporation. It would be inconsistent with that view for the Secretary of State to take power to give a direction to subsidiaries that was not channelled through the corporation. That is an overriding consideration.
These amendments also have the advantage of shortening the clause.

§ Mr. Michael Marshall
I beg to move, That this House doth agree with the Lords in the said amendment.

§ Mr. Deputy Speaker
With this it will be convenient to discuss Lords amendments Nos. 17 and 19.

§ Dr. John Cunningham
Amendment No. 12 refers to compensation as set out in the Iron and Steel Act 1975. On page 39 the regulations are set out in some detail. I shall not bother to read them. As I understand the amendment, part of that is to cease to have effect. What is the purpose of the amendment, what materially will be changed by it, and if the changes are made will that leave people in the industry at a disadvantage? I hope that the Minister will clarify those questions.
I do not have any questions on amendments Nos. 17 and 19 because I understand them to be consequential drafting amendments.

§ Mr. Michael Marshall
As the hon. Gentleman said, amendments Nos. 17 and 19 are consequential to amendment No. 12. That amendment is largely consequential upon the introduction of clause 2 of the Bill and the related repeal of, among other provisions, sections 4(2) and 5(1) of the 1975 act. Those two subsections are referred to in schedule 4, paragraph 2, of the same Act, and the amendment will repeal that paragraph in its entirety.
The 1967 Act provided for regulations to be made entitling those employed at the time by the companies nationalised in that year to compensation payments from the British Steel Corporation. Such compensation would cover loss of employment, and loss or diminution of earnings or pension rights, as a result of the nationalisation itself, any subsequent directions made by the Secretary of State under what is now section 4(2) of the 1975 Act, or organisational changes following a review of the corporation's activities under what is now section 5(1). In 1968 one set of regulations of this sort was made by the Secretary of State. It is still in force, the BSC is still making payments under it, and the present amendment will leave it unaffected.
The hon. Gentleman will appreciate that we are speaking of a position that arose at the time of nationalisation and what flowed directly therefrom. It is clear that this is a historic position, which we are tidying up.
Although schedule 4, paragraph 2(1)(a), of the 1975 Act has maintained these provisions of the 1967 Act in force, their declining relevance in the lengthening period since nationalisation has been underlined by the fact that no other regulations have been made since 1968, apart from one small amendment in 1971. There are no regulations under schedule 4, paragraph 2(1)(b), which provides for some related types of compensation.
Reverting to paragraph 2(1)(a), it is by now almost inconceivable that further regulations will be needed to compensate employees for losses arising out of the original nationalisation in 1967. Moreover, section 4(2) of the 1975 Act, relating to directions given by the Secretary of State, is to be repealed by the present Bill, as is section 5(1), covering a formal review of the corporation's affairs. In those circumstances, it seems reasonable to conclude that the provisions of paragraph 2 of schedule 4 are no longer needed, and that is why the amendment proposes its repeal.
As I have already mentioned, the amendment at the same time leaves in force the regulations that have already been made. That meets the hon. Gentleman's concern to 1361 ensure that nobody is disadvantaged by the proposal. That ensures that those employees still receiving payments will continue to do so. On that basis I commend the amendment to the House.