HL Deb 18 June 1947 vol 148 cc956-88

2.52 p.m.

Order of the Day for the Second Reading read.


My Lords, we are in the middle of long and closely argued discussions on a Bill of fundamental importance in connexion with nationalization, and it may well be that your Lordships will welcome the opportunity of turning for a short time to a Bill which is concerned with the private enterprise side of industry. The private enterprise side of industry will, I am sure your Lordships will agree, continue to play a fundamental part in the organization of industry in this country, and it is obviously to the advantage of the whole community and to the advantage of all political Parties that it should become as efficient as possible. It should achieve zoo per cent. efficiency, if that were indeed humanly possible.

The object of the Bill which it is my good fortune to have the duty of commending to your Lordships this afternoon, is to provide machinery which will enable the private enterprise side of industry to bring itself up to date and to re-equip itself to meet the various demands which are already being made, and which will continue in the future to be made upon it, in connexion with reconstruction in this country. There is no one method by which this can be achieved. Industry will have to pursue simultaneously a number of different paths. The attainment of success along these lines will obviously be a great test of the initiative, enterprise, and open-mindedness of the captains of British industry. It is the object of His Majesty's Government to assist them, so far as lies within their power, and it is for the purpose of providing machinery which can assist them that this measure has been brought before Parliament.

There are obviously a number of different ways in which our industry—certain branches of it, at any rate—has fallen rather behind the times, and there are many ways in which it can be brought abreast of the requirements of the present age. If I might just take one or two illustrations, I should say that in the first place what strikes many people as being absent is an essential co-operation between the two sides in industry, the management and the workers. Over the last years, in a number of branches of industry, very considerable success has been achieved in various directions, more particularly perhaps, as your Lordships are aware, in relation to the agreement of wages and conditions of work. In some industries that success goes back a very long way, and in recent years, and especially during the war years, considerable progress has been made along those lines. But in a wider field there is still a very great deal of headway to be made.

There is still, I think your Lordships will agree, lack of a fundamental partnership in many branches of industry which, if it could be achieved, would undoubtedly lead to much greater progress being made. There is a lack of co-operation between management and workers, except perhaps in regard to these matters of wages and conditions which I have already mentioned. I think that Field Marshal Lord Montgomery's greatest contribution to military science has been his achievement in getting the ordinary soldier on the ground to appreciate the essential tactics of the battle in which he was engaged. It seems to me that in modern industry it is essential that the workers should achieve the same understanding of the task upon which they are engaged. In the working parties which my right honourable and learned friend, the President of the Board of Trade set up soon after his appointment to that office., a very great deal of success has been achieved, because in those working parties the two sides of industry have been represented. They have worked together, and they have produced a number of Reports which I am sure have commended themselves to your Lordships' House. They have indeed pointed the line upon which this Bill has been drafted, and upon which a good deal of the future of industry may welt work itself out.

Another difficulty winch I think strikes the detached observer about industry, is that many of our gloat industries are divided into watertight compartments to an extent which prevents their going forward as a whole, and which, if they could be enabled to see their problems in some sort of unified way, might very well lead to considerable advance. I was very much interested in a speech made by Sir John Barlow in the discussion on this Bill in another place, in which he referred to the work of the Cotton Board of which he was an original member, and, incidentally, paid a great tribute to the success which that Board has achieved. That Board may well be regarded as a prototype of the development councils which will be set up under this Bill. In that speech Sir John Barlow emphasized the astonishing ignorance of other parts of the industry of the representatives of the different sections in the cotton industry who came together to form the personnel of that Board, and how, working together, a much greater degree of unity had been achieved. The machinery which this Bill will set up, and in particular these development councils, should go a very long way to remove the kind of ignorances which have played such a great part in holding back the cotton industry in Lancashire.

There are numerous paths which will have to be pursued simultaneously if we are to get the industry up to the high level of efficiency which is essential if the great export drive on which we are engaged is to succeed. Your Lordships have no doubt looked at the First Schedule to the Bill, and you will have seen there a substantial number of which one might call paths to progress, so-called "functions" which may be assigned to development councils. It is not necessary, and would take too much time, for me to take them seriatim, and perhaps it will suffice if I take just one or two illustrations. Practically the whole of modern industry is built up on scientific research, but some of our industries are much more backward than others in this respect. Many of the discoveries on which modern industry has been built have been made by British scientists, and exploited, too often, by foreign industrialists. Bound up very closely with scientific research is the psychological side of industrial organization. There again, while in some industries great progress has been made, personnel management has been good, the workers happy and absenteeism remarkable by its absence, in other industries this approach has been neglected; the workers are unhappy, absenteeism is rife, and the interests of the community suffer.

Another of the subjects which the councils may have entrusted to them is the problem of marketing—in which the noble Lord, Lord Lucas, is very interested and on which I understand he intends to address your Lordships. Very often a great amount of work, intelligence and money is put into achieving an improvement in production, and all of this is thrown away because the marketing side of the industry may be Victorian or even Georgian in its outlook; and obviously a great deal of progress and a considerable amount of reconstruction are necessary in that regard.

Finally, I might perhaps take the subject of training, which is one of the matters which may be assigned to a development council. By and large the arrangements for training in most branches of industry are pretty much what they were about fifty years ago. In some respects recent progress has been made. This is a problem which affects not only the workers but even more the management. It is still, unfortunately, a widely-held belief that to set up in business it is sufficient to have a little practical experience and some natural aptitude. In the United States, which I think we all agree is the foremost industrial community in the world, a great deal of work for many years past, has been put into industrial administration and training for management. I have often wondered whether one of the main reasons for the great success of the Americans has not been the work which they put into this side of the matter.

I am quite sure that all the principles which are set out in the Schedule will recommend themselves to your Lordships. They have commended themselves to the most progressive leaders of British industry, and much of such progress as has been made is due to the initiative of the leaders in different branches of industry along the lines indicated by the Schedule. I am quite sure your Lordships would like to pay a tribute to the pioneer work which has been done by British industrialists in the past.

The problem, of course, is to bring all parts of our industry up to the standard achieved by the best sections; and in this regard one of the great difficulties is the problem of small-scale industry. So much of our industry is small-scale, and while the small workshop has certain advantages, in the conditions of modern history it has many more disadvantages. It is financially impossible for the small-scale unit to concern itself with scientific research, personnel management, special arrangements for training, and most of the other functions which are dealt with in the First Schedule. The only solution to this problem is to get a much higher degree of co-operation in the management of these small-scale units and to provide the machinery and afford facilities for attaining this co-operation is one of the main objects of this Bill.

The Government view, generally speaking, is that it can be achieved only by the setting up of development councils. Almost all of the Reports of the working parties which have so far been presented to my right honourable and learned friend recommend the establishment of development. councils. The main object of this Bill is to give the Ministers concerned the powers to set up development councils, and that is provided for in Clause I of the Bill. There are no fewer than eight Ministers who are in charge of what are often called the production Departments, who are concerned with the branches of industry in which it is thought that a useful purpose might be served by setting up such development councils; and therefore these eight Ministers have the power conferred upon them to set up councils of this kind.

The councils will, of course, have a general purview of the industries for which they are set up, and will in particular be concerned with keeping under continuous review the problems of the industries, with a view to the improvement of production methods and the attainment of as high a standard of efficiency as is possible. It is obvious that they will be successful only if they represent the main elements in the industry itself. A council must clearly be composed of management and work-people, and in addition, in the view of His Majesty's Government, it should contain a number of independent members who can bring to the work of the council expertise acquired in other branches of industry and indeed in other walks of life. It may be that an economist, an accountant or a professional man may be Found of the greatest value in connexion with the work of a council of this type; and all those who have studied the work of the working parties would pay a tribute to the value of the service which has been rendered by the independent members of those working parties. They are able to see the problems in a wider perspective than is possible to those who have perhaps spent the whole of their lives in the particular industry with which their deliberations are concerned.

Another very valuable function which these councils can and, it is hoped, will in fact perform is to keep industry in close touch with the Government, and to keep the Government in close touch with industry—to provide, in the popular modern word, "liaison." This, I am sure, will be to the great advantage both of the Government and of industry. We are, of course, very well aware that a great deal of work of this kind has already been done in the past—and we pay a tribute to its value—by trade associations and business organizations of one kind or another, and, on the labour side, of course, by the great trade unions. But it was the considered view of all of the working parties who have so far reported, with one exception, that some other organization, some organization other than these trade associations, was necessary for the carrying out of very many of the functions which are set out in the schedule. Trade associations in some branches of industry are very strong, but in others not so strong, and in any case it is not in the nature of organizations of this kind to carry out satisfactorily quite a number of the functions which are contained in the schedule. That does not, of course, mean that the trade associations and the trade unions and other bodies of this kind will not continue to play a very valuable part indeed in the working of industry. Obviously the development councils will keep closely in touch with them, and these bodies will work closely together.

I should, perhaps, mention at this stage, because there was a certain amount of misunderstanding about it, I think, in the discussions in another place, that the development councils not in any way concerned with wages and conditions of work. Those are expressly removed from the functions which can be conferred upon them by paragraph 19 of the First Schedule. The organization which exists for dealing with those matters is in most industries working reasonably satisfactorily, and it would be altogether wrong that the development council which is to be built up to do a quite different type of job should interfere with matters of that kind.

The success of these councils will, of course, depend very largely indeed on the personalities of the men who become members of them. The job of choosing them is left to the Minister concerned, but it has been made quite clear by my right honourable and learned friend that it is intended to make appointments only after very close consultation with industry, and that will be so not only in regard to the representation of management and workers, but also in respect of the independent members as well. Indeed, Clause 2, subsection (5), provides that the necessity for such consultations may, in fact, be made a condition of the order. There was a good deal of apprehension among some Opposition speakers in another place as to whether the independent members might not be used to over-weight the development council, and the Government are prepared, and intend, to put down an Amendment on the Committee stage here which will preserve the majority to the representatives of industry as opposed to the independent members.

It is not proposed to set up a large number of these development councils in a very short time immediately the Bill becomes law. The measure is an experimental measure and the councils will be set up as they are required in industry, and as experiment and the actual needs of industry show that they can be successfully used. The first one probably will be the Cotton Development Council, which will replace the present Cotton Board. That Board has been found to be very successful, and it will be necessary to replace it very quickly by a development council. Broadly speaking, it may be that those industries which have been investigated and reported on by the working parties will probably be the first industries to have development councils, but it does not follow that that will be so in all cases. One of the working parties, I think, does not regard such a development council as being very advantageous to the particular industry on which it has reported; and it may be that there are other industries, which have not been dealt with by working parties, in which development councils are necessary.

If any industry is anxious to have a development council, it is pretty clear that the Minister concerned will be very glad to make an order setting up such a development council for them. If in some particular industry the general attitude towards development councils is hostile, it is very unlikely indeed that a development council will be set up. It is quite true that under Clause I, subsection (3), of the Bill the matter is left to the final discretion of the Minister. It might possibly he that in some cases he would set up a development council although there was opposition from powerful elements in the industry, but it is not expected that that will be so, and the Bill does provide that before setting up a council the Minis- ter must consult the organizations representative of the industry concerned. Moreover, Parliament is given control in various ways. For example, before any order can finally be made it must be laid before Parliament and affirmed, and my right honourable and learned friend intends that before such an order is laid it will be published to the industry—at any rate during the earlier stages of the working of this machinery—so that criticism and discussion may take place and, if necessary, the order may be made as good an order as is obtainable before it is laid before Parliament. That, I think, will be a very valuable innovation, and it is one which we shall all watch with great interest.

This measure is almost entirely a voluntary measure, but there are two respects in which compulsory powers are given. One of those is in regard to the collection of statistics, which is dealt with in Clauses 3, 5, and 6. The development councils may have conferred upon them by the Minister the power to require the industry with which they are concerned to return statistical information and other information necessary to the working of the councils. The collection of such statistics and the use of them are very tightly controlled by the Minister, and Clause 5 contains stringent provisions to prevent any wrongful use—provisions of a punitory character. Your Lordships had a useful if short debate last week with regard to the importance of statistics in modern industry, and it is not necessary for me to say anything more about it this afternoon. The other matter on which compulsory powers may be taken is in regard to the levying of money for the purposes of the expenses of the development councils. How exactly those levies will be made will vary from one industry to another, because, obviously, the same method would not be satisfactory in all different types of industry. The Bill does lay it down that the Minister will be responsible for seeing that these levies are made on a basis which is fair to the particular industry concerned.

The First Schedule, to which I have referred from time to time and in which really, in a sense, is to be found the heart of the Bill, contains the recommendations of the working parties as to the lines on which they thought industrial progress could best be made. Those functions may to some extent be operated by the development councils themselves; in other cases they may best be operated by individual units in the industry. That will depend on discussion and will vary from one industry to another. In a number of industries, there are already in existence exceedingly valuable research organizations and other institutions doing valuable work of this kind, and it is not intended for one moment that they should cease their operations. Indeed, it is expected that the development councils will work in the closest contact with them, arid it may be that they will be able to assist them in one way or another to secure an even higher standard of work than they have achieved in the past, now that the whole of the business will be integrated.

It is not considered that the twenty or so functions set out in the First Schedule cover every conceivable type of progress which can be made in modern industry. It is inconceivable that, with technical and economic progress advancing at the rapid rate at which it is advancing at the present time, further useful methods will not, from time to time, be discovered; and it may well be that a development council would like to have some addition made to these particular functions, or to those of these particular functions which are conferred upon it, because it does not necessarily follow that all these functions will be conferred upon all development councils that are set up. A development council may well come to the conclusion that some addition to this list would in their particular industry be of great value. In that event Clause 8 provides that the council may request the Minister to add a new function to the list of functions conferred upon it, and the Minister may make an Order extending the functions. But before that is done, again the obligation of consulting with the industry and laying the new Order before Parliament must be fulfilled.

These are the main matters with which the Bill is concerned, and I have, I think, already drawn you Lordships' attention to the principal clauses in this important measure. Therefore, I will not take up any more of your Lordships' time, except to emphasize what I have already said: that this Bill is regarded as an enabling measure, a Bill to provide machinery which a number of very able men repre- senting a number of key industries, both on the management and the operative sides, regard as very important for the future of British industry. This machinery is machinery which industry will work or not as it thinks fit. The Bill has no value in itself except to set up this machinery, but if leaders of industry choose to take advantage of it it may well be that the passing of this Bill will be a landmark in the industrial history of this country. I beg to move that the Bill be read a second time.

Moved, That the Bill be now read 2a(Lord Chorley.)

3.25 p.m.


My Lords, this Bill secured a certain amount of support from all Parties in another place, and I have no intention of opposing it at this stage in your Lordships' House. Its prime purpose, as I understand it, is to legalize the position of the working party. The Government have had these working parties, and they have enjoyed the liaison between industry and Government which they offered; now the Government are anxious to make honest women of them. As happens so often in these cases, the name is changed, and they become development: councils. The Bill seems to me to be one of those well-meaning avuncular measures dear to the hearts of the Socialist Party, which, if it is well administered, can do little harm and may even do a certain amount of good. Many of its principal objectives are already being attained by voluntary associations in industry. And some of us wonder whether Government encouragement to those voluntary associations rather than powers of compulsion would have been more effective than the elaborate machinery of an Act of Parliament. The Government's intentions, as expounded. by the Minister, are of course, admirable. But, as we all know, "the road to hell is paved with good intentions." If by any mischance industry should finally reach the inferno, I can only hope that its torments will, perhaps, be somewhat mitigated by the appointment there of a Socialist Minister of Fuel and Power!

As drafted, the Bill does seem to leave loopholes for abuses should the country at any time be at the mercy of bad Ministers, or even of one bad Minister, whether at the Board of Trade, the Ministry of Supply, the Ministry of Food, the Ministry of Works, the Ministry of Fuel and Power, the Admiralty, the Ministry of Agriculture and Fisheries, or the Office of the Secretary of State for Scotland. I know, of course, that noble Lords on the Front Bench opposite cannot believe that we shall ever again have even one bad Minister in any office; but some of us are not quite so confident. For this reason, I think that we should look rather carefully at the loopholes which are left and see whether they cannot be stopped. In Clause I, as the noble Lord told us, power is given to any one of eight Ministers to establish development councils to whom functions may be assigned of a kind specified in the First Schedule. These are extremely wide and varied. As the noble Lord told us, no fewer than twenty kinds of function are set out. And the Minister need not even stick literally to those functions. He can even assign to one of the development councils "functions of a kind" so specified in the Schedule. On top of that, in Clause I (4), power is taken to enable the Minister to assign to the development council any incidental or supplementary matters which he deems necessary or expedient; and in Clause 8 (2) this is extended to. assigning further functions of a kind similar to those specified in the Schedule.

Surely this proliferation of functions is rather exaggerated. The twenty which are named ought surely to suffice without "incidental or supplementary matters," not to mention "similar functions." In connexion with Clause 8 (2), I am a little surprised that the Minister who mentioned the proviso excluding from the functions of the development councils questions relating to remuneration or conditions of employment, should not think it necessary to have a similar proviso in Clause I. By implication it may he it is covered by the statement in paragraph 19 of the First Schedule, but I should have thought it would really be safer to insert a provision of the same nature in Clause I if it is quite definitely clear, as I imagine it is, that these development councils are not to deal with conditions of employment or remuneration.

To return to the broader aspects of the Bill, noble Lords will observe what enormous power such a development council possesses. It may require persons carrying on business to furnish all such returns and information as it pleases. It may impose limitations of time within which such information must be given, however unreasonable the amount of information required or the limitation of time may be. It may impose compliance under pain of a term of imprisonment not exceeding three months or a fine of £50, or on conviction on indictment to two years or a fine of £100, or both, plus £5 a day for every day's delay. It may impose any charges it pleases on persons carrying on business in the industry or indeed on persons carrying on any business which is concerned wholly or partly with the production of or is dealing in any materials of the industry.


But I thought I had made it quite clear that these powers can only be exercised subject to an order of the Minister. They are under Ministerial control.


We come back again to the possibility that one day perhaps we may have a bad Minister. It seems to me that this sort of thing can be justified only if the great majority of the industry approve of the scheme. One fundamental principle of the British Constitution is that there should be no taxation without representation. As this Bill now stands any of these eight Ministers might impose all of these charges and obligations on any industry, the great majority of which or indeed all of which considered a development council totally unnecessary, perhaps even definitely objectionable. I think the Minister indicated it is common ground that these development councils can be useful only if they are desired by a substantial portion of the industry. I hope, therefore, the House will agree that it is essential that the Minister should assure himself, before making a development council order, that the majority of the industry desires such a development council. I know it is laid down in Clause 1 (3) that the Minister shall consult any organization appearing to him to be representative of substantial numbers of persons carrying on business or employed in the industry, but there is no duty upon him to give effect to their views or even inform Parliament of what their views were. I hope it may be possible in Committee to get this rectified.

I was glad to hear the Minister state there was no intention of overlapping with the existing organizations, provided they are doing their work well. For instance, there are very many extremely effective research associations in various industries, and I trust it will be made clear that when such an association exists and is doing its work well the development council will not put it out of business or duplicate all its work. Of course, the great excuse is that all these things are subject to an affirmative order by each House of Parliament, but the Houses of Parliament cannot consult either employers or employees in an industry, and therefore I was very glad to hear the Minister say there would be advanced publication of proposed orders so that it can be discussed by all parties and Parliament can be informed beforehand what the views of industry are. In my opinion, the Minister should be compelled to inform Parliament about what consultations he has held and what have been the answers given. I hope it may be possible so to amend Clause I (3) as to make it clear that no development council shall be imposed upon an industry against its wishes. I trust also that the Government may agree to insert words in Clause 3 (2) and perhaps in Clause 6 to avoid power being handed over to the development councils to impose on people in the industry the possibly grievous burdens of time limits for furnishing information however unreasonable and inflicting on these people very harsh punishments if they cannot or do not fulfil these terms within the given time.

Of course if you read some of these clauses literally you get quite absurd results. In Clause 4 (I) power is given to a development council to impose charges on any person or business producing or dealing in. any materials of the industry. A provision of that sort might be greatly abused. For instance, a development council dealing with the gramophone industry, simply because gramophones use steel needles, might demand all sorts of information from the iron and steel industry and indeed put a levy on them if they so desire. Clause 9 (I) goes even further. Apparently any one of our eight Ministers may make an order imposing a levy on persons carrying on business in any industry in which there is no development council, either for the promotion of scientific research, for the export trade or for the improvement of design. Of course that might lead to anything. The First Lord of the Admiralty or the Minister of Fuel and Power, for instance, might make a charge on the horticultural industry if either thought that might improve the design of sweet peas. He might even go further and impose a levy on the iron and steel industry because iron wire is used to support sweet peas.

Of course, the Minister will say that this sort of thing will not happen and I do not for a minute suppose it would; but surely it is not desirable to pass Bills in a form which gives such unlimited power to Ministers and trust to their good sense not to abuse them. Otherwise we might just as well pass an Enabling Act, as the Reichstag did for Hitler, giving the Government power to do anything they liked and trust to their good sense not to do anything foolish or unwise. Again we shall be told that our safeguard is the need for an affirmative Resolution in both Houses. Quite apart from the question of machine-made majorities, if may plagiarize the noble Viscount the Leader of the House—I am not quite clear why members of the hereditary Chamber who happen to be in a majority should be called machine-made as opposed to members of another pace where the Party machine had some say in the Election—these orders cannot be altered or amended and Parliament is faced with the disagreeable alternative of either throwing the order out altogether or accepting it in toto. I hope the Government will be able to do something, as I think was promised, to protect trade secrets. I think an Amendment to that effect was promised and I hope this Amendment, and any other Government Amendment, will be published as soon as possible so as not to cause unnecessary work and duplication if we have to put down Amendments as well.

Of course, trade secrets are very difficult and delicate matter, very hard to safeguard in the Bill. No doubt in the egalitarian inferno inhabited by angels, which the Socialist Party believe to be our ultimate goal, trade secrets will not exist. Competition will have vanished, and everybody's endeavour will be to help his neighbour to produce as efficiently and economically as he does himself. But we have not reached this stage yet. Even nationalized industries, if they have to compete abroad with the products of other countries, will find it highly inexpedient to publish to the world all the details of their processes. It is, therefore, extremely important that stringent steps should be taken to prevent leakage from a development council, which with its officials may consist of a large number of people, of trade secrets, which individual firms have been compelled to reveal. For this reason alone, apart from other possibilities, it does seem desirable that industry should have an appeal against a development council which it holds to be acting in a harmful way, or even if it is only wasting time and money to no effect. I hope some provision may be made for this in the Bill, and, at the very least, I hope the Minister will give an assurance that some appeal will lie to some outside independent authority for any party which considers it is aggrieved.

Finally, I should like to say a few words about the constitution and remuneration of these development councils. It is stated in Clause 3 that there shall be three classes of members—persons representing the interests of those carrying on the business, persons capable of representing the employees, and persons without financial industrial interests in the industry, who are called independent members. As the Minister stated, we are told in Clause 2 (2) that these people are to be appointed by the Board or Minister concerned. I am very glad to hear from the Minister that this will be done only after consultation with the interests or the persons whom these individuals are supposed to represent. So far as I can see, there is nothing to that effect in the Bill, but I trust something may be inserted or some assurance given in a form that is binding. In these democratic days, when we are always told that the elective principle is all-important, it would be an anomaly for the Minister to appoint persons, in the words of the Bill, "capable of representing the interests" of others, without giving these others some say in this election of those persons. I am very glad to learn that there is an intention of moving an Amendment laying it clown that the individual members cannot swamp the other members on these development councils. I hope there will be roughly the same number of independent members, or no more independent members than there are members representing either the industry or the employees. I hope that Amendment also will be put down early, so we can have a look at it and, I hope, agree about it. Again we are told that this danger is guarded against by the need of an affirmative Resolution, but it is really not much use in a case like this. It would be a great pity if the order for a development council, which industry wanted and which was unexceptionable in itself, had to be thrown out simply because one of the Houses of Parliament was not satisfied as to the number of persons in the three categories.

Another point which seems open to criticism is the wide, unregulated powers given in Clause 2 (7), to the Board or the Minister for the payment of all or any of the members of the council, and for the payment on retirement or death of any of the members, either to them or to others, of sums of money. This seems to open the door, if not to practices, at any rate to suspicions which we should all anxiously try to avoid. We have seen how difficult it is in the case of the Coal Board to discover what sums of money are being paid to the people appointed to the various bodies. If it is really impossible to regulate in any form the payments which are to be made to members of these councils or to others, I think, at any rate, we should lay down in the Bill that these payments must be published annually, so that no undue suspicion is aroused and so that Parliament can have some control over money which, as I have said, can apparently be levied by these councils at their own sweet will on all sorts of industries.

As I said at the outset, if administered sympathetically or merely only reasonably, these development councils may play a useful part in industry. As usual, the Bill as drafted appears to give unduly wide powers to the Ministers which, as I have said, could be abused in the most extravagant manner. I am sure the Government have no intention of doing this. I hope therefore that they will agree to such minor Amendments as may be necessary to safeguard this, and that they will be ready to give assurances which will satisfy the business community, so that we can accept the Bill with good heart, and feel we have not exposed the industries of the country to any danger by passing it.

3.48 p.m.


My Lords, I do not propose at this stage to attempt to submit this Bill to any meticulous examination, but merely to say that, so far as the noble Lords who sit On these Benches are concerned, we are, in general, in sympathy with the objects it is designed to promote. The noble Lord who introduced the Bill described it as "an enabling Bill." That is, within strict limits, true, but one has to consider for a moment what it enables. It enables one of a number of Ministers, if he so desires, to set up a development council for any industry. It is quite true, as the noble Lord who has just spoken pointed out, that there is a provision that he shall consult with a representative body of that industry, where such a representative body exists. But there is no duty upon him to carry out the advice given him by that body, and he is free in any industry, whether the industry so desires or not, to create a development council. It is a little difficult to call that merely an enabling Bill; it puts a great deal more power into the hands of the Minister than one would generally expect to find in what was merely an enabling Bill.

I do not propose to discuss at this stage whether it be right or wrong, but I think an enabling Bill is much too restrictive a term to apply to a Bill which contains powers of this kind. It may be well to have the powers if they are going to be used always and in every circumstance with good sense and with moderation, but the difficulty in these matters so often is that a Minister becomes intoxicated, metaphorically speaking, with what he considers to be the success of a particular method of dealing with a problem. Once having begun, he finds himself carried on by the momentum of his success, and he is quite unable to stop. The result is that, although you have this always somewhat illusory Parliamentary check in the background, you may, in the end, find that a Minister has gone much farther than considering provisions of this kind to be of value in certain circumstances, arid has proceeded to adopt them as a panacea suitable for every case that comes up for his consideration.

The noble Lord, in introducing this Bill, said that the Government relied on the open-mindedness of the captains of British industry. I think it is not irrelevant to remind the noble Lord that these development boards consist not only of the cap- tains of industry side, but also of the employees' side. if I may say so, intending no hostility of any kind to the trade union movement, it is just as important to produce an atmosphere of open-mindedness in the representatives of the employees who are going to work on these boards as it is in the representatives of the captains of industry.

There s a third class of persons represented on these boards—namely, the independent members. The noble Lord gave some indication that the kind of person the Government have in mind is an accountant, an economist or a professional man of that sort. The aspect of that with which I confess I am a little concerned is that in these Boards—these blue prints for the future of various industries, there seems to be extremely little room for the representation of that so frequently disregarded and long-suffering individual, the consumer. The employer is represented; the employee is represented; and I had hoped the noble Lord was going to say that these independent members, or some of them at least, would be selected so as to give some representation to the class of people who consume the particular type of goods produced by the industry under examination, and not merely some accountant or economist, who will bring a no doubt valuable but still partially theoretical mind to bear upon these very concrete problems.

Apart from those, I agree, relatively minor criticisms, I think it is quite possible that, used in moderation and with discretion, this Bill may provide valuable results, and although we may have criticisms to make of it in Committee, we are certainly, on Second Reading, prepared to give it support.

3.52 p.m.


My Lords, my purpose in addressing your Lordships this afternoon was simply and quite strictly to say a few words in support of the Bill. It has, however, been received, on the whole, in such a sympathetic way that I am not certain that even that is necessary. It is true that the noble Marquess, Lord Reading, in supporting the Second Reading of the Bill, made reservations on certain points of principle arid the noble Lord, Lord Cherwell, laid out, very properly, the ground which is likely to he covered on the Committee stage. But the reception of the Bill. as I understand it, is not unfriendly. However, it may still be worth while stating, very briefly, one or two of the reasons why I am very glad to see this Bill introduced.

It is common ground, I suppose, that there is room in British industry for altogether higher levels of efficiency. That is not to decry existing British business management or organization. The point was thrown up with great clearness in all the reports of working parties. The fact is that management science, be she goddess or hag, has disclosed many parts of which fifty years ago we were unaware, and it is more complicated than it was in the past for management to bring up the 9.15. The list in the First Schedule is very instructive in that regard: it outlines a number of aspects of industrial organization and management technique which are very modern, and many of them very difficult. The result of that is that if you take an industry where there are, besides a certain number of large and efficient firms, a number of medium sized and small firms, also perhaps efficient according to their own lights, you will find a considerable number of firms who have not access to these new reaches of management and organization, and who, even if they are aware of them, have not really the capacity or the resources within themselves to pull themselves up, so to speak, by their own boot straps. I could illustrate that very well by going through some of the items in the Schedule, but my noble friend Lord Chorley has covered some of that ground.

It does seem to me that this Bill, with its device of the development council, introduces a means of dealing with that problem which is at once well calculated to secure the object, and, at the same time well calculated to be acceptable to the industries concerned. On the one hand, it provides a body of, we hope, fresh-minded men—I think it is rather a point in favour of the Bill that they are to be appointed by a process of selection after consultation—with great freedom for organizing work on these various matters, and the necessary means for carrying out experiments, or setting up new services on a substantial scale. On the other hand, it cuts the development council quite clearly away from any interference with the ordinary business of the industry, or of the units in the industry, and very carefully ob- viates any interference with the policy, or what might be called the government of the industry. Therefore, I think it is a device of considerable merit. It is a body which will be a rallying point for the cooperative interest of the units in the trade, which is able to mount the inquiries in these various subjects, is interested solely in general efficiency, and does not interfere in any way with the actual operation of the industry.

It is a cardinal feature of this device, as set out in the Bill, that the development council in every case is tailor-made for the particular industry. There are some twenty possible functions. It is by no means suggested that every development council should take on all of them—and for very good reasons. There may, for instance, be in a particular industry a very good research association; and the technical interests may be well taken care of by some technical institute, or something of the kind. The functions actually taken on by the development council can be limited to the manageable number of functions which are desired, and at a later stage they can be added to, if the council is successful. Therefore, overlapping is avoided, and something which will be reasonable in cost, and calculated for the particular purpose, can be set up.

I suggest it is a good thing that the application of that device should be set in the framework of an enabling Bill, if I may employ that term. Whether that is the correct technical term, I do not know, but it is a Bill which enables the Ministers concerned to set up these development councils freely without much loss of time in a variety of directions wherever they may be needed, provided that they find, so to speak, there is a market for the development council in some particular direction. If, after preliminary consultation, it is found that there is the need and the demand, and if the design of the order can be agreed upon, then it can be set up promptly and can get working quite quickly. It seems to me that that set-up is a reasonable, useful and practical one. One always comes back to this, that where you are dealing with industries and private enterprisers they prefer flexible powers where there is room for discussion, where they can arrange the thing with the Ministers concerned, and get it on foot. They prefer that very much to a separate Act of Parliament, or more formal procedure.

It has been suggested—and I will not say too much upon it, because it is not my wish to be contentious in any degree—that this Bill gives very wide powers, and that if they come for exercise by anybody less than a perfect Socialist Minister they may be abused. Well, the powers are wide, but as I have already indicated they are rather narrowly marked off. There is no interference with the operation of business—there cannot be. While the powers are wide there are a number of safeguards—I can think of five straight off, and there may be more. First, there is one safeguard which is inherent in the design of the Bill. These development councils, on the footing on which they are proposed to be established, will be impotent and will fade away unless the industry is prepared to co-operate with them. Unless there is response on the part of the industry, believe me these development councils will be stillborn, arid that is an inherent protection against tyranny throughout the scheme.

Secondly, there is the prior consultation with the interested parties, of which we have heard, both as to whether they want it and how they want it. Thirdly, we come to one of the two formidable powers in the Bill, the power to make a levy. That again is strictly limited. It has to be agreed and approved by the Minister. Then there is the very real safeguard of which we have heard a good deal, that when this thing has been hammered out it has to be approved by the affirmative vote of both Houses of Parliament.

Finally I would say this. Suppose you get over all those hurdles and set up the council. In order to survive, it has still got to succeed, and it can only succeed by success. Unless in some way or other it can show results worth while to the industry, it will fade away; and the process of its fading away will be accelerated by the final safeguard in the Bill, which is that every development council, year by year, must give an account of its stewardship in the shape of an annual report.

I have had a good deal to do with private industry in one way and another, particularly the smaller-sized concerns in industry. Looking at this thing from their angle I must say that I welcome the Bill very much. There are a lot of first-rate men in British industry, and there is a lot of first-rate management. Even where you get concerns of a rather primitive type you will still find people doing a good job of work. But when you meet with trouble in business—and one meets with it every week and every day—in nine times of out of ten, or 99 times out of 100, there is some defect in the management. We have got to provide a background in which management can be improved, can be educated and can get the tools with which to work. For those reasons I am very glad to see this Bill.

4.5 P.m.


My Lords, I do not think that any one of your Lordships would deny that British industry is to-day passing through another industrial revolution, one fraught with more difficulties and dangers than any we have experienced in the past. The old answers will not satisfy the new questions to which we in industry have to address ourselves, and in our approach to our future problems there is all too little difference between a groove and a grave. Although as the noble Lord, Lord Cherwell, has said, the pathway to hell is paved with good intentions, the pathway to hell is also well sign-posted, and unless we have the common sense to read what is written on them, in company with his good intentions we are going to find ourselves there.


Keep to the Left perhaps!


That is always the safest rule of the road. Keep to the left and you are safe; keep to the right and you are bound to get into trouble. I welcome this Bill, because it does bring a new approach to our industrial problems. I welcome it for quite a number of reasons. I would join with the noble Lord, Lord Cherwell, and pay my tribute to the excellent work which has been done in the past by a number of trade associations, but he will agree with me that not only the labour but the expense fell upon the shoulders of the few, while the many reaped the rewards and the benefits. In this Bill the expense is shared and all will have to contribute. I also welcome the bridge that is provided in this Bill between the national joint in- dustrial councils and these development councils, because while I quite agree that you must not bring into these development councils the intricate mechanism of wage negotiation, it is impossible in industry of the future to divorce the economics of an industry from the wages and conditions of employment of the workers in that industry.

I want to devote the very brief time I shall allow myself to pointing out where I think this Bill falls short, where it fights shy and has an all too timid approach to one of the biggest problems which industry has to face to-day. We have been told that our exports now have to be increased still further than the 75 per cent. over pre-war, which was the target figure of twelve months ago. In that very good and challenging leading article in The Times on Saturday last, it said that this will never be achieved without more far-reaching joint activity by the Government and industry. It went on to say, "That British costs of production must be reduced is beyond dispute." I am disappointed that the question of the cost of distributing the products of industry has not received greater attention in this Bill. I will grant that in the First Schedule there are three occasions upon which distribution and marketing is mentioned. In paragraph 5 of the First Schedule there are permissive powers for promoting the production and marketing of standard products. In paragraph 12 there are permissive powers for promoting or undertaking research for improving arrangements for marketing and distributing products, and in paragraph 14 arrangements for co-operative organizations for supplying materials and equipment, for co-ordinating production, and for marketing and distributing products. But in the body of the Bill, in Clause 2, subsection (3), after having set out how the representatives of industry and the labour employed in industry and the independent persons are going to be appointed, goes on to say: and in a case in which it appears to the Board or Minister concerned to be expedient that the members of the council should include persons having special knowledge of matters relating to the marketing or distribution of products of the industry, persons of that category. That sounded to be as though the right honourable and learned gentleman, the President of the Board of Trade, had in mind that these councils were going to make an objective approach to this problem. But I was disturbed when during the Second Reading of this Bill in another place, on being asked to define "independent persons," he said: We could put in a distributor or a wholesaler, because he has no interest in the manufacture or production of the-goods of that particular industry. He is interested only in distribution and, therefore, there is nothing to prevent him, as a distributor, being an independent member. That to me, does not appear to be a right approach. Distribution is an integral part of industry. I am rather afraid that we are spending far too much time in cajoling productive industry to become even more efficient in the production of its products, and, as we have done for this last twenty-five years, see the resulting cost improvements lost in a wasteful and extravagant system of distributing those products. I took the opportunity, in speaking on the Second Reading of the Statistics of Trade Bill, to remind your Lordships of what the Committee over which the noble Marquess, Lord Linlithgow, presided, reported in 1922. That Committee said that distribution costs were a far heavier burden than society would permanently consent to bear. Successive Governments have burked this issue during those years, and there was only one working party, upon whose reports this Bill has been based, who really tackled this problem.

I would like, with your Lordships' permission, to quote a very relevant paragraph from the Report of the Cotton Working Party. In dealing with distribution the Report said this: An efficient producing industry may be pushed back into the red figures of loss if the services of distribution take too large a slice out of the retail price or raise that price to a level at which the ultimate consumer will not buy those particular goods. There is a strong feeling to-day amongst those engaged in this and other industries that the charges for wholesale and retail distribution take a disproportionate share of the price to the ultimate consumer, and that this matter deserves investigation as a question of national importance. About 50 per cent. of the price for any commodity in commerce to-day is taken up in costs of distribution and selling. Upon that very simple piece of arithmetic alone, this problem deserves as much attention as the costs of production. If your Lordships will forgive a personal reference, I have spent half my life in productive industry and the other half on the distribution side of industry. I can tell your Lordships that the production technicians spend hours and hours trying to shave farthings off operation costs, while sales departments squander pennies, shilling and pounds on grandiose sales promotion and expensive selling arrangements. Selling costs have multiplied throughout industry during all these years. When I was in productive industry we were always satisfied with a plain sales department. Now, in industry, you must have not only a sales department, but a sales promotion department, and a public relations department; and so you are building up the nonproductive costs in productive industry, and the whole burden has to be borne by the productive element.

I am very much afraid that when we come to this battle of industrial costs in the future, what we shall find is that our production quality will suffer, and the vast structure of expensive selling will go on. I hope that the noble Lord who is going to reply on behalf of His Majesty's Government will give me some assurance that this urgent question of distribution and selling costs is going to be tackled in a forthright manner, because it is useless our getting productive industry to the high state of efficiency which is necessary if we are going to fight this economic and commercial battle of the future, and see it all lost by carrying on the wasteful and extravagant selling structure which we have built through the false economy of these first years.

I would just quote one other extract which illustrates my point, from the Cotton Working Party Report. It says: A reduction in the spinning cost of ½d. per pound of yarn may involve revolutionary changes in production methods, and it is not unnatural for those doing this work to ask what total difference this ½d. per pound will make in the retail price, say, of a shirt weighing little more than eight ounces, and to compare their effort and its reward with the effort and charges of the distributors. That is the problem which I am afraid the Bill, as I read it, shirks or at least approaches all too timidly. Other than that, I think this is a very splendid contribution to a new approach in industry. I support it, I wish it well and I wish it to succeed.


My Lords, I do riot propose to detain the House very long, but I should like to put a question to the Minister who introduced this Bill, and also to ask him for an assurance. The matter with which I am concerned is the fixing of minimum prices. I cannot see anything in the Bill as it stands that would empower development councils to have anything to do with the selling prices—unless perhaps it can be found later in paragraph 14 of the First Schedule. I do not really think it is there, but I should like to have an assurance from the Government that they have no intention of dealing with the fixing of minimum prices any more than they intend to deal with the fixing of wages—in intention which has been disclaimed.

The, reason I put this question forward is that in the branch of the cotton trade in which I am interested—that is the finishing section—there are a number of people who were quite hopeful of getting the Government to fix prices in order that they might not have their prices undercut, whether by the people who produce more cheaply or by people who wish to get their trade anyway. There has also been a movement which appears to have been from the direction of a section of the finishing trade. There has been a combination of a number of subsections, if I may so call them. There are a great many different works in the finishing trade, doing not only different complete branches of the trade, like dyeing or bleaching or printing, but a good many of what I might call subsections dealing with different classes of fabrics and so on, and there have been price associations in these different branches.

About a year ago, I think it was, a confederation was formed for the purpose of maintaining prices. The object was to prevent some member of the confederation who might not happen to be in the particular section, but who had machinery which might be adapted to doing the work of that section, from taking any lower price than had been fixed by the particular section or subsection, or whatever you. might call it, regardless of the fact, of course, that he had no power, unless he joined that particular branch, of having any particular say in the price. It might be a ridiculous price or a reasonable price. At all events, the confederation was formed to bring these small subsections together with the object of having one price for one sort of product all the way through the trade. That fact has prompted me to ask this question. I think I am right in saying that this fixing of price was distinctly discouraged in the report of the Cotton Trade Working Party, but I should like the Government to tell us that they are absolutely opposed to anything of this sort and, as far as they are able, to see to it nothing will be left in the Bill which will allow such a thing to be done.

4.25 p.m.


My Lords, as an old industrialist, I listened to the speech of the noble Lord, Lord Cawley, in regard to the Bill, and regarded it almost as a little homily upon the conduct of industry by those who have had it in their charge in the past. Speaking as one who has been President of the Engineering Employers, President of the Motor Car Manufacturers, and President of the Aircraft Manufacturers, I have had some experience of all the various matters which are dealt with in this Bill. We have had research associations attached to the two latter industries, and they have done very excellent work. In addition to that, we have the scientific bodies attached to the engineering industry and really I fear that these so-called development councils will not aid these industries very much. I have in time past endeavoured to bring about various bodies to help in certain matters, and I have always found that troubles arise as between the very large men and the small men in industry. As in many other things, the common denominator, I generally find, does not elevate but rather proceeds on a middle course. I have always found that the great improvements in industry have come about through the efforts of an individual or an individual firm, and I very much fear that the effect of many of these new bodies will he rather in the nature of a levelling down than a levelling up. We find in other matters that certain people will take a very strong line of action, which seems to interfere with the conduct of other businesses, and this does not help co-operation.

Following the remarks of the noble Lord, Lord Lucas, I fully bear out what he says in regard to the dreadful effect of the cost of distribution upon the price of an article to the public. Lord Lucas and myself have belonged to the same type of business and we know how much waste takes place in this particular direction. As he truly says, you have your works organization trying to economize and reduce the cost of things, and then it is all blown away, so to speak, by these excessive costs of distribution. This is not a home-made trouble. It is competing with the world that brings this about. The extravagant methods which were adopted by the exporting countries, particularly the greatest exporting countries, in the way of distributing their goods led to this type of extra cost. I would like to support Lord Lucas in what he has said about the serious effect these charges have upon industry generally.

4.28 p.m.


My Lords, I think your Lordships will agree that we have had a very useful and interesting discussion on this important measure. Your Lordships have other work of some Substance before you after we have finished the discussion of this measure, and therefore I hope you will excuse me if I do not deal with all the valuable points which have been raised by noble Lords in the detail, as I should like to do. Lord Cherwell's support of the measure was, perhaps, rather tepid, but support coming from him is so unexpected that we are very glad to have it. He complained that the scope of powers conferred upon the development councils was going to be altogether too great to be safe, and in particular, he referred to subsection (4) of Clause I, which provides power to deal with supplementary matters. I can assure him that the legal effect of this is not to give anything wider than the functions which are set out in the Schedule. It is merely concerned with the ancillary matters which may be necessary—for example to raise a loan or something of that kind—and it does not in fact confer any wider powers than those which are conferred in the substantive clause of the Bill and the Schedule thereto. I think he agreed that the problem of wages and conditions was really sufficiently dealt with, but thought he might like to have something a bit more explicit. I do not personally think that anything more explicit is necessary, but we will, in fact, consider between now and the Report stage whether it would be useful to put in something.

The main burden of his speech, I think, was devoted to two problems, one being as to whether any development council ought to be set up unless the approval of the industry had first been obtained. I do not think that: I can give him any assurance on that point. In so far as the Bill is concerned, it is the Minister's intention not to set up, in any ordinary case, a development council unless he feels that the industry is behind them. But there are great difficulties in laying it down that such approval should be essential. To start with, the administrative difficulty of discovering the balance in any sort of legal way would be very serious. Again, any such provision if it were practicable would undoubtedly enable sections of industry which might be most backward and unprogressive sections to hold up the whole business during a vital period. I can assure the noble Lord that powers will not in fact be used in any sort of illiberal way, and I hope that he will he satisfied with that assurance.

Another of the main points dealt with by the noble Lord was that there might be abuses in the exercise of these powers, and, in particular, with regard to two parts of the Bill which confer compulsory powers—that is to say, the parts dealing with the taking of statistics and the levy for the expenses of the councils. I think that my noble friend Lord Piercy really dealt with those objections. The main safeguard against abuses, of course, is that these development councils are going to be composed of really representative members of the industries concerned. Surely we can rely on those people coming from the industries themselves, not to abuse their powers. If, however, there should be any sort of suggestion of their doing so there are other safeguards to which my noble friend has referred. In particular, there is the Minister himself, who is concerned to see that these councils work fairly and effectively. It is not possible to provide anything in the nature of a formal appeal, and I am sure that, on reflection, the noble Lord would hardly think that it is. But it is always open to any section of industry to approach any Minister. It is the job of Ministers to pay attention to representations from industry, and I can assure the noble Lord that so far as my right honourable and learned friend is concerned he would always be prepared to listen to any representations which a section of industry might have to make to him in regard to the way in which a development council was doing its job. Those I think were the main points which I noted in Lord Cherwell's speech.

The noble Marquess, Lord Reading, in an interesting and favourable contribution to the debate, also dealt with one or two points. He said that I have described this measure as "an enabling Bill." I still think that while, perhaps, it is not technically describable in that way it is a Bill which enables the Minister to deal with a situation along the lines of the Bill at a proper time and as the situation requires. Really, I was regarding it more as a Bill which gives certain powers to industry, which industry can use to bring itself up to date and make itself more efficient. It is really a Bill to enable industry to get on with the job of building up our export trade and, indeed, our trade of producing for home consumption, up to the old standards which prevailed when we led the world in the days immediately after the industrial revolution. The noble Marquess also referred to protection of consumer interests. It is not very easy to provide for representation of consumer interests in a general sort of way on these councils, but I think that my right honourable and learned friend indicated in another place that he would, in a proper case, be prepared to consider appointing someone who would represent consumer interests on me of these councils. It may well be that in connexion with a particular trade there may be a special type of consumer interest which ought to be represented on such a council. In that case, I can assure the noble Marquess that an appointment on lines of that sort will be made.

My noble friend Lord Piercy, for whose support for the Bill I am very grateful, put a number of points in a most delightful and persuasive way. He emphasized particularly the flexibility of these arrangements, which will enable each particular scheme to be moulded to fit the industry for which it is intended. He also stressed the fact that the personnel of the councils can be selected in such a way as to give the greatest benefit to the particular industries affected.

My noble friend Lord Lucas, whose refreshing criticisms are always most welcome to us, put his finger on what is really one of the cardinal matters in relation to the modern organization of industry— that is, the distributive problem. I can assure him that His Majesty's Government are very much alive to the importance of this problem. As your Lordships are aware, the proportion of the working population now engaged in distribution is substantially less than it was in the years immediately before the war, and it is the view of His Majesty's Government that It would be altogether wrong to allow the proportion to go back to what it was in the years before the war. They hope, at any rate, to keep it down to the present level or something, like it. But I think that the noble Lord has really misconceived the object of this Bill. It is not a Bill to deal with the economics of distribution, which is a much wider problem and quite a different problem from that with which this Bill deals. This Bill is concerned with the setting up in individual industries of development councils for the purpose of making those industries more efficient. It may well be that in the case of some particular industry there is a difficult distribution problem which is peculiar to that industry. In that event, the development council which is set up will certainly, under powers conferred on the Minister in Clause 2 (3), have special members appointed to it to deal with the marketing and distribution of products in that industry. As the noble Lord pointed out, in no fewer than three of the paragraphs in the First Schedule is the question of marketing and distribution dealt with. So it is quite clear that so far as the organization of individual industries is concerned, the Government are very much alive to the necessity of getting the most up-to-date marketing and distributive methods into operation in those industries.

Lord Kenilworth, whose contributions to our debates are altogether too rare, echoed the remarks of Lord Lucas, and I hope that what I have said with regard to my noble friend's points will apply also to his interesting speech. Lord Cawley asked me a specific question in regard to whether the development councils will have any power to fix minimum prices. I can assure him that they will have no powers of that sort. Not only will they have no such powers under this Bill, but it is not the intention of my right honourable and learned friend, or of His Majesty's Government, that such powers should be given to them. Indeed my right honourable and learned friend in his speech in another place—I think it was on the Second Reading of this Bill—made it quite clear that if any tendency towards restrictive practices was observed to be growing up in the development councils he would take immediate steps to see that it was nipped in the bud. I hope that that assurance will satisfy the noble Lord. I think that I have now dealt with the main matters which have been brought up in the course of the debate, and I ask your Lordships to give a Second Reading to the Bill.

On Question, Bill read 2a, and committed to a Committee of the Whole House.

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