§ 3.6 p.m.
§ Order of the Day for the House to be put into Committee read.
§ THE LORD PRIVY SEAL (VISCOUNT ADDISON)
My Lords, I beg to move that the House do now resolve itself into Committee.
§ Moved, That the House do now resolve itself into Committee.—(Viscount Addison.)
§ LORD MILVERTON
My Lords, I ask for your indulgence in order that I may make a personal statement con- 156 cerning this Bill. My intervention will be of the briefest nature. I cannot claim to any expert knowledge of the iron and steel industry and in the circumstances it might be asked why in that case I cannot maintain silence—especially since, as I say, I have no special knowledge to contribute. My reason is that a great deal more than iron and steel is destined for this particular furnace. I have for some time felt, with growing apprehension, that for lovers of freedom this Bill marks the parting of the ways. For the first time the State is to take over a key productive and competitive industry. There are principles involved which make it impossible for an honest dissentient to remain silent. I was born free, and I have spent the bulk of my life in teaching what freedom means to somewhat reluctant pupils in backward countries. I am very loath at my time of life to reverse this process and to help in selling the advantages of slavery to people who were once free.
Perhaps it is because my own experience in administration has shown me how unrestricted bureaucracy can strangle enterprise that I feel some doubts about the widening circles of Government controls. I have learnt much during recent months about the lack of administrative foresight and the destructive defects in administration of the National Health scheme and other nationalisation measures whose principles and purposes I accepted. There is, it seems to me, a wider gap than the dollar gap which threatens our national stability, and that is the gap between principles and performance in these schemes. If that were all, I might have kept silence, while regretting the decision to add still further to the national indigestion. But as I have listened to speeches in the debate upon this Bill I have grown more certain of three things: that this Bill is not necessary at the present time, if ever that it jeopardises the efficiency of our most vital industry; and, lastly, that the urgency with which it is pressed strengthens the apprehension of those who fear that control of this industry is itself the end and not the means to an end.
We have here, naked and unashamed, the time-dishonoured principle that they should take who have the power. The craving to be able to say "L'Etat, c'est moi" springs to life again whenever the desert soul of man is watered by power. 157 I suppose that is why the price of liberty is said to be eternal vigilance. And it is because I feel that even the present control over the whole of our national life, which is at present legally in the hands of Government, has reached dangerous proportions, especially if that Government itself is ever controlled by irresponsible, malicious or revolutionary persons—and, after all, the possibility of that looms only twelve months ahead—it is because I fear that, that I cannot acquiesce by silence in the passage of a Bill whose credentials are so dubious and whose effect on our national life will be so far-reaching and so unpredictable.
My Lords, like the ghost in Hamlet this Bill comes in such a questionable shape that it excites misgivings about its real cause. I have been told that I knew the Labour programme when I joined the Labour Party. That is true. I knew it in outline; but I did not, in joining, sign away my right to think; nor did I anæsthetise my conscience or my principles; nor, I hope, did I lose the power to learn. I had certain aims and ideals, and I thought that the Labour Party could, in vulgar parlance, "deliver the goods." I am now appalled at the type of goods which are being delivered under a false trade label—the national interest. I thought I was participating in a crusade, and I found myself a camp follower in a "rake's progress." I am one of a large number of people of independent minds who saw the merit of the Labour Party programme of social justice, but who are now beginning to feel uneasy about the lengths to which the rest of that programme is taking them. I have listened to the arguments in this House and I have read what has been said elsewhere on this Bill. I cannot find that a case has been made out for it.
In resigning from the Labour Party, I feel it my duty to make my protest in public, especially as I know there are many others of the Party who share my views. The road on which we are travelling leads to a precipice, at the foot of which clearly emerges the totalitarian State. We have heard at Blackpool a prominent Cabinet Minister bewailing the fact that the moral stature of the people has not proved equal to carrying out the measures introduced by this Government—in simple words, that human nature had not seen fit to change itself at his 158 behest. It is at least permissible to ask in reverse whether the moral stature of the Cabinet has proved worthy of the principles they proclaim. I suggest that the Iron and Steel Bill provides a ready answer in the negative.
The Minister of Health, in his new rôle as the moral leader of the Labour Party, has two aspects. I cannot regard either the intemperate and provocative language of the politician or the emotional appeal of the synthetic evangelist as a suitable substitute for the clear thinking and the calm judgment which the national interest demands. I speak for thousands of independent thinkers who voted Labour at the last election and who have a keen desire to see social justice, but who now begin to fear, as I do, that such measures as the Iron and Steel Bill will destroy the only possible basis of social justice, which is surely a prosperous and united nation. My Lords, in this House at least there is no excuse for failing to speak when conscience so dictates. I have no morbid desire to be a martyr and. I find it extremely difficult having to make a public confession that one has made a mistake, but I am unwilling to be a silent passenger on this sinister journey and I will certainly not betray the principles of freedom which have made this country great, nor will I help to forge a weapon which, in later and less worthy hands, may strike those principles dead. I therefore declare my opposition to this Bill and my resignation from the Party which supports it.
§ On Question, Motion agreed to.
§ House in Committee accordingly:
§ [THE EARL OF DROGHEDA in the Chair]
§ Clause 1:
§ The Iron and Steel Corporation of Great Britain
§ (2) The Corporation shall consist of a chairman and not less than six nor more than ten other members, and the chairman and all other members shall be appointed by the Minister from amongst persons appearing to him to be persons who have had wide experience of, and shown capacity in, the production of iron ore or iron or steel, industrial, commercial or financial matters, administration or the organisation of workers.
§ (3) Every member of the Corporation shall hold and vacate his office in accordance with the terms of his appointment and shall, on ceasing to be a member, be eligible for reappointment:159
§ Provided that any member may at any time by notice in writing to the Minister resign his office.
§ (6) A member of the Corporation who is in any way directly or indirectly interested in a contract made or proposed to be made by the Corporation, or in any contract made or proposed to be made by a subsidiary of the Corporation which is brought up for consideration by the Corporation, shall, as soon as possible after the relevant circumstances have come to his knowledge, disclose the nature of his interest at a meeting of the Corporation; and the disclosure shall be recorded in the minutes of the Corporation, and the member shall not take any part after the disclosure in any deliberation or decision of the Corporation with respect to that contract.
§ (8) The Corporation—
- (a) shall pay to their members such remuneration (whether by way of salaries or fees) and such allowances as the Minister may, with the approval of the Treasury, determine; and
- (b) on the retirement or death of any of their members as to whom the Minister may, with the approval of the Treasury, determine that such provision should be made, shall pay to or in respect of them such pensions as he may so determine.
§ 3.24 p.m.
§ LORD TEYNHAM moved, in subsection (2) after "matters" to insert "industrial or commercial." The noble Lord said: This Amendment raises the question of the composition and membership of the Corporation, and it is really designed to exclude from membership of the Corporation such people whose experience in administration, for instance, has been gained entirely outside industry and commerce. At first sight this Amendment would perhaps appear to debar the appointment of a civil servant or officer of the Services, but that is not so at all. It does permit the appointment of a civil servant or officer of the Services who has, in fact, had industrial experience, perhaps in the course of his career. One example would be service in a royal ordnance factory, or perhaps in a naval dockyard.
§ I have nothing but praise for the Civil Service as a whole, but Civil Service training is designed to ensure that mistakes are not made, and it is very difficult for civil servants to take risks. I would suggest that in the majority of cases the appointment of a civil servant as a member of the Corporation would not be a suitable one. The only purpose of the Amendment is to ensure that really 160 suitable people with wide experience of industry and commerce shall in fact be appointed to the Corporation. A similar Amendment was moved in another place and it was argued by the Minister that it would exclude the choice of a large range of civil servants and officers of the Services whose appointment would be helpful to the national interest. I would point out, however, that that is not so at all. The Amendment does not at all rule out the appointment of a civil servant or officer of the Services who has had industrial or commercial experience during the course of his career. I beg to move.
Page 2, line 7, after ("matters") insert ("industrial or commercial").—(Lord Teynham.)
I would like to support my noble friend on this Amendment, and first I wish to underline most wholeheartedly what he said—namely, that this was in no way an attack either on civil servants as such or on officers of the Services. Obviously, we all have the highest regard for both those types of servants in their proper spheres, but, as my noble friend has pointed out, the Amendment is not aimed at them. I would go rather further than what has been said, because I feel that this is not a matter merely of detail; I believe that the principle underlying this Amendment is fundamental. The question is this: Are productive industries, such as iron and steel, when nationalised, to be regarded as one more Government Department and therefore, to a large extent, immune from natural industrial competition; or are they to be regarded, as of course they ought to be, as industries that are still liable to competition from all spheres, both overseas and at home? If that is the criterion, then I am quite sure that when members are appointed to these higher positions in the Corporation, no possible suspicion should be allowed to arise that the appointment is made either in recognition of past services elsewhere or as a means of providing promotion to some individual in whose particular department the channels may be blocked.
My noble friend has pointed out certain instances where individuals such as those we are considering—eminent civil servants and officers of the Services—would not necessarily be debarred. But I would go a stage further and say that, as this 161 Amendment is now drafted, there would be nothing to prevent any senior civil servant or other person from being appointed to some lower position in the Corporation or the companies if it was thought that he would be valuable there; and then, if in the course of years he showed that he had the administrative sk ill to be able to compete in an industrial concern, he could, having proved himself, be eligible to be appointed to the Corporation itself. Of course, I admit that in certain cases that might mean that some of them would have to eat a certain amount of humble pie, as they would in a sense be reduced in position, but it would overcome the objection which the Minister made in Standing Committee in another place, when he said that this sort of Amendment would entirely debar many distinguished people from helping the country in the iron and steel industry. I do not think that that is necessarily so, but it means that they will have to serve an apprenticeship in a lower position in the industry before they can be actually appointed to the Corporation itself.
§ VISCOUNT ADDISON
This is an interesting Amendment. It had been in my mind that all the four Amendments on the first page of the Order Paper really relate to the same consideration, and I was going to address some remarks, if I must do so, comprehensively to the general idea which lies behind them so as not to repeat myself if and when the other Amendments are moved.
§ VISCOUNT SWINTON
If I may intervene, may I say that it would, of course, be very convenient to have the Leader of the House express his general ideas, but, with great respect, the three Amendments raise entirely different points. One point is whether people should have had administrative experience, apart from the Civil Service. Then there is an Amendment dealing with how many members there should be having knowledge of steel. I submit that that is a wholly different proposition which must be dealt with on its merits. After that we come to the question of whether there should be on this body, as there has always been—and with very valuable results—on the Steel Board, a consumer of steel. That again is quite a different proposition. The noble Viscount, I am sure, would not wish in any way to curtail the debate, and of 162 course it will be interesting to hear his general ideas.
§ VISCOUNT ADDISON
I welcome the intervention of the noble Viscount, and I think it would be appropriate that I should express my general ideas on the whole subject. What these Amendments do—including the one which has now been moved—is, so to speak, to prescribe to a certain extent the personnel of this Board. They are intended to do so, and they are intended to limit the freedom of action or of choice of the Minister as that is set out in Cause 1 (2) at the top of page 2, of which I will remind the House before I say any more. This subsection sets out that: "members shall be appointed by the Minister from amongst persons appearing to him to be persons who have had wide knowledge." Remember that: they must have had wide knowledge. The subsection also says that they must:have had wide experience of, and shown capacity in, the production of iron ore or iron or steel, industrial, commercial or financial matters, administration or the organisation of workers.
§ THE EARL OF DUDLEY
Will the noble Viscount allow me to point out a slight error which he has made? He has used the words "wide knowledge." The word "knowledge" does not appear in the subsection. It is not provided that these people should have knowledge of the industry.
§ VISCOUNT ADDISON
I see that the word "knowledge" does not actually appear, but how can a person have shown capacity in the production of iron ore or iron or steel and all the rest of it, unless he has some knowledge? That is just a foolish observation. Of course, he has to have knowledge.
§ VISCOUNT ADDISON
I am not going to give way to the noble Earl on this. The subsection is designed so that when the Minister constitutes the Board he shall be enabled to appoint people who have capacity in these matters; and that is so stated. The purpose of this Amendment—indeed of this group of Amendments—is to prescribe that the selection should be limited to this or that, or shall exclude this or that. This particular 163 Amendment says the Board shall not be this or that. As the Amendment stands, it would mean that the Minister would not be able to appoint to the Board anyone who he could not say had hadwide experience of, and shown capacity in, the production of iron ore or iron or steel, industrial, commercial or financial matters, administration or the organisation of workers.As the noble Lord confessed, it is intended to exclude from the possibility of choice by the Minister a large number of people who have rendered eminent and distinguished service, in the Civil Service, in other Services of the Crown and in various other ways. For instance, a man like Sir John Anderson would be ruled out. Large numbers of people like him would be ruled out, because before he was appointed Chairman of the Port of London Authority—a post which I am sure he fills extraordinarily well—he did not come within this proposed definition and would have been excluded by this provision. Mr. Churchill, too, would certainly be ruled out. So would Sir Arthur Salter, Sir Arthur Street, Sir Henry Sell and many others. There was, in fact, a distinguished civil servant on the Iron and Steel Board—Sir Alan Barlow. He would be ruled out. If he is to be ruled out from serving on this Corporation, why should he not be barred from serving on the Iron and Steel Board?
There are a number of noble Lords in this House—I see some in front of me now—who have been made directors of corporations because they have distinguished themselves in some branch of the public service. Some, for example, have served with distinction in the Army. It is right that they should receive these appointments—I am not complaining in the least. But if a private corporation which conducts business is entitled to look for men in the Civil Service, or anywhere else in the Services, why should the Steel Corporation be prevented from so doing? I want to use only Parliamentary expressions, but really I consider that this is a fatuous idea. Why should the Minister be excluded from doing this, for that would be the effect of the Amendment? I think it is a very mistaken Amendment. I will not pass to the other Amendments, if noble Lords would prefer that I should not do so, but I am sure that the right way to constitute a Corporation of this kind is to prescribe, as the Bill does, the 164 type of person who has shown capacity in this, that or the other, and then leave it to the Minister who is responsible to Parliament to make the best choice he can. To prescribe that the person chosen shall definitely be this or that will limit the choice of the Minister. And it will do something else which is much worse.
I am afraid that I must refer to the principle which is embodied in the Amendment which appears at the bottom of the first page of the Marshalled List. This sets out that… appointments shall be so made as to secure the inclusion of at least one person appearing to the Minister to have been engaged in the production of iron or steel otherwise than as ….a director or officer of a publicly-owned company or of any subsidiary of a publicly-owned company; ora director or officer of a company specified in the Third Schedule.…If you specify that particular persons who having been in this or that particular concern are to be on this Corporation then they become representative and not independent directors. What you want are independent-minded people, not people who are to represent an interest or a group of interests. It would be a wrong consideration to entertain, and I am sorry that we cannot accept any of these four Amendments.
§ VISCOUNT SWINTON
I would address one or two observations to the Committee first on the general idea and then on particular matters. I think, however, that it will be more convenient if I reserve what I have to say on some points to the time when we are discussing and, if necessary, voting upon specific propositions. First, with regard to the general proposition. The noble Viscount, Lord Addison, seemed to assume that the Corporation must necessarily be selected (I will come to the merits or demerits of civil servants in this connection in a moment) from people having particular kinds of experience of administration, descriptions of which he read out. There was, he suggested, to be one with this experience, and another with that experience and so on. Now that is not what the clause, as drafted, says. It is true that the clause sets out a list of qualities. It says…wide experience of, and shown capacity in, the production of iron ore or iron or steel, industrial, commercial or financial matters, administration or the organisation of workers.165 But—I speak subject to correction on this point—although the Minister could not appoint a person who had no sort of experience of one or other of these things, he is not in the least bound to give all that experience which is referred to representation on the Board. Provided he can bring the appointment within the letter of the collective words, he can appoint a Corporation entirely of people who know about administration, and he need not have anybody who knows anything about steel. That is so—well, I hope the noble Viscount will take legal advice on that. I may have been given the wrong legal advice, but that is the advice I have been given. It is very important that before we come to a decision on this Amendment we should know the true legal construction, and no doubt some legal members of the Government will tell us what it is. I am advised that the Minister would in fact be complying with the letter of the clause if he appointed a Corporation entirely of people who are experienced in financial matters or in administration or in the organisation of workers. I am supported in this view by an ex-Lord Chancellor, the noble and learned Viscount, Lord Maugham. I am very glad we have cleared this up, and the noble Viscount the Leader of the House has shown us that when he made his very interesting general observations he was under a misapprehension about the legal position.
§ VISCOUNT ADDISON
My Lords, I am under no misapprehension whatever. I am advised that the noble Viscount's interpretation is entirely incorrect. If the Minister were to do what the noble Viscount suggests he would not then have appointed a Corporation ofpersons who have had wide experience of, and shown capacity in, the production of …iron or steel.
§ VISCOUNT SWINTON
This is very important. After I have made my observations I am giving way to the noble and learned Viscount, Lord Maugham, and there are other noble and learned Lords in the House who may speak—another has arrived, I am glad to say. None of us should proceed under a misapprehension as to the meaning of the clause we are discussing. At present I am bound to say I proceed on the assumption that the noble Viscount the Leader of the House is wrong, and the noble and learned ex-Lord Chancellor is right. We 166 have two conflicting legal constructions. Whatever the House will say, at least there is a possibility that the noble and learned ex-Lord Chancellor might be right in law, and the noble Viscount the Leader of the House might be wrong. It is better so to draft the Bill that we have the matter clear. I am going to proceed on the assumption that the noble and learned ex-Lord Chancellor is right, and this means that the Milister could appoint a Corporation which contained not one single man who had knowledge or experience (and the two are not the same) of iron and steel. If that be so, it seems to me of great importance that we should insert an Amendment, or a series of Amendments, which will ensure that there will be representation on this Board—"membership," if you please; the noble and learned Viscount the Leader of the House dislikes the word "representation"—which reflects experience in the great monopoly they are called upon to conduct.
That does not fetter the Minister's choice—at least, it does not fetter the Minister's choice any more than the Minister's choice ought to be fettered. I say, most emphatically, that a direction should be given to the Minister that he should appoint a certain number of people who have knowledge or experience of iron and steel. We may as well speak frankly about this. I am not happy about some of the appointments that have been made to some of the Boards of nationalised industries, and I do not think the Government are; because there have been a series of resignations, in some cases by people who would much rather have stayed there but did not think that the thing would work, and in others because it was apparently mutually convenient that resignation should take place. I do not think it can be said that in every appointment which has been made, although I am sure it has been made in the best possible faith, the best people have been selected for the job. Therefore, I say that, with that experience behind us, it is perfectly reasonable that we shall lay down certain broad rules that the Minister will follow; and we should say that he should appoint at least one or two people who have this kind of experience. It will leave him a fairly wide choice: it will leave him with the whole of the steel industry from 167 which to pick. I do not think that is an unreasonable limitation to put upon the Minister.
Let me add that we are not dealing here with the boards of the ninety-six companies. When we come to them, I think a good deal will have to be said. I am not going to say it now, but I am very worried about the risk of centralisation and that the people on these ninety-six boards will not be independent. It is difficult to see how they can be given independence, but I am sure it is vital that they should be given it. What we are doing here is to appoint the Board of the complete monopoly, the people who are going to forge the policy of not only the whole steel industry of this country but also of dozens and dozens of other activities which are now swept into the net of this nationalised complex. It seems to me that Parliament will not be fettering the Minister's discretion and will not be doing its duty by the nation unless it makes sure, by whatever are the appropriate words, that people of real, essential experience are put into this position.
I come to the specific Amendment. It is true that this Amendment would not permit the Minister to appoint someone of administrative experience unless that administrative experience had been connected with business—not necessarily with the steel industry, but with business. That is the effect of the clause, and I think it cuts both ways. We may find a soldier or a public servant (and I can think of both) who, without having actually had business administrative experience, has proved himself to be an extraordinarily competent business administrator on entering into business. Frankly, I should be sorry to cut out such a person. On the other hand, Civil Service training, of which I have the highest possible regard, does not fit a man for business. I have worked with civil servants as a Minister, on and off, for thirty years, and have even been a civil servant myself, and I think they are second to none on their job; but that job is not, and ought not to be, the running of a business. They have an utterly different training, and I would go so far as to say that they ought to have an entirely different training and a different mentality.
168 From time to time you will get a man of such universal ability that he is equally good in almost any job into which you put him. The noble Viscount cited Sir John Anderson; I could cite others. But I can think of a large number of civil servants who have been very good civil servants but who, put into the direction of a business, were wholly unsuited for that purpose, and it would have been better if they had returned to the Civil Service where they would do magnificent work. Frankly, if I were involved in the appointments to this Corporation, which is to comprise not more than ten and not less than six persons, and I had to take the choice between the possibility of excluding some very good soldier or civil servant who would make a first-class business administrator, or take the risk of having a number of civil servants, all admirable in their own job, put into the direction of this vital industrial monopoly, then I am bound to say that I think the balance would come down in favour of exclusion rather than inclusion.
§ 3.51 p.m.
There are, I think, two strong points which have not yet been made on behalf of this Amendment. By and large it excludes from this Board almost all civil servants. I submit that there are at least three very strong reasons why civil servants, by and large, should be kept off this Corporation and any other of these public boards. In the first place, I do not believe their duty lies there. Their duty lies in their Departments, which to-day are heavily understaffed, and where their training best suits them to do their work. A further and very cogent reason, I believe, is that there should be no suspicion that a civil servant should ever be in a position to give advice as to nationalisation of an industry in which he may afterwards find an exalted post. At the moment, as regards the first two considerations, the whole of the Civil Service is suffering from overwork. The life of a senior civil servant is a dog's life: he works himself to death, or else he sees an accumulation of files growing ever larger on his desk. The temptation is to take any possible relief. But getting out means that he is going away from his duty, and he brings nearer the day when administration may break down. I would like this temptation to be kept firmly out 169 of his reach. The other point is that I believe it is utterly wrong, constitutionally, that a senior civil servant should be in a position to advise a Minister about what should or should not be included in a nationalisation proposal, and afterwards step into the job of running that nationalised industry. That is a principle which is so strong that I feel we ought to insert this Amendment into this and every other nationalisation Bill.
§ VISCOUNT ADDISON
I am advised that, owing to the fact that the word "or" occurs three times, the Minister, if he were so crazy, could in fact, by taking advantage of all those words, do just what the noble Viscount has suggested. Therefore, I will not contest that point; I agree that the noble Viscount is correct there. I would, however, add this. Clearly, all these things are put into the clause in order to indicate the kind of people the Minister should select. I cannot imagine that any Minister who is fit to be a Minister, or who is fit to be outside a lunatic asylum, would appoint a Corporation consisting exclusively of people who have been civil servants.
§ VISCOUNT MAUGHAM
I am glad the noble Viscount has said what he has, because I should be loath to be at issue with him, even on a question of law. May I also say that I do not like to be referred to in a matter of this sort as an ex-Lord Chancellor, because I have known—in the past, of course—Lord Chancellors whose occupation of that position was due rather to political eminence than to a knowledge of the law? For my part, if I have any claim to tell your Lordships my opinion on the meaning of this clause, it is that I have spent a life at the Bar and on the Bench, and my opinion has nothing to do with politics at all. I have on various occasions expressed my opinion as to the construction of a difficult clause in an Act of Parliament, and so far as I can remember I have never yet been corrected either by a Lord Chancellor or by any other lawyer. In my opinion what this means is that the persons among whom the selection is to be made by the Minister arepersons who have had wide experience of, and shown capacity in"—and all the different things are subject to those words—the production of iron ore or iron or steel,170 and, secondly,industrial, commercial or financial matters …I would observe there that possibly the Chancellor of the Exchequer, whose name has been bandied backwards and forwards as a person who would be excluded by these words, is, in my opinion, a person who has shown capacity—though I do not ask noble Lords on opposite Benches to take the same view—in a financial matter. He has made speeches which I should have thought would persuade most people.
§ VISCOUNT MAUGHAM
The words are there. Taking the whole lot one by one, it says:… wide experience of, and shown capacity in, the production of iron ore or iron or steel, industrial, commercial or financial matters "—that is where I think my friend the ex-Chancellor would come in.
Then it is suggested that the words "industrial or commercial" should be added to qualify the word "administration" which follows, and rule out whether rightly or wrongly, the Admirals or Generals, most of whom have had great experience of one kind of administration. Then the subsection ends with the words:or the organisation of workers.Those things, I think, are separate, and they are all things which the Minister may look at one by one to see whether a particular person he wishes to appoint to this Corporation is within one or the other category. Obviously the person in question need not be an expert in all these matters, but he has to be an expert in one of them. That being so, I feel there is no great difficulty, because the word "or" is a word which w ill cover every one of these separate matters, and the Minister can choose.
I am not going to inflict a long speech upon your Lordships, but perhaps I may say one word and throw out a suggestion to the noble Viscount who leads the House. Does not this clause make rather a mistake in referring, as a sort of definite rule, to every one of the members of the Corporation? Would it not carry out the intention of both sides of 171 the House if, when we consider the appointment of a chairman and six, or not more than ten, other members, this clause were to make it clear that under all ordinary circumstances the majority of the members of the Board would be people who are iron and steel experts, or experts in one of the other matters which are mentioned in the last couple of lines? For my part, I would not be shocked if there were six experts and two persons who had a large experience in some other branch of human economy. I personally should be quite content, but I do not presume to do more than to throw out a suggestion for the consideration of the Government.
§ THE EARL OF DUDLEY
I hope that your Lordships will insist on this Amendment, because it is a matter of considerable importance. As I told your Lordships during the Second Reading debate, my experience in business has always been that a business succeeds or fails largely on the question of control. In these Amendments we are discussing the constitution of the Corporation which will control—if it ever comes into existence, which I sincerely hope it never will—the whole of this vast and complex industry, the most important industry in our national life; therefore this matter is of very great importance. It is the hand at the helm that counts. I am not going to pursue the question of the civil servant, which has been ably dealt with by the noble Viscount, Lord Swinton, and the noble Lord, Lord Hawke, but I think almost all your Lordships will agree that by and large—of course, there are exceptions—the civil servant is not the type of person who is fitted to run an important business like the combined nationalised iron and steel industry. I may say that I yield to nobody in my admiration of the Civil Service as a body. The noble Viscount the Leader of the House said just now that he considered it fatuous, childish and ridiculous (I think they were his words) to prevent persons with no knowledge whatever of administration in financial business going on the Corporation—
§ THE EARL OF DUDLEY
—when there were a great many such persons serying on the boards of private companies and 172 joint stock companies. That is what the noble Viscount said. He said that there were many such persons on the boards of private companies, and why should they not serve on the Steel Corporation. There is all the difference in the world. There are a great many admirals and generals, and persons who have had no previous business experience, serving on the boards of private companies. Some of them gain experience and do extremely well; some of them are complete passengers, because they have had no previous experience and knowledge. But you would not dream of putting those people on the executive of a large company of this sort. I speak from experience. We have a great many such persons on the boards of private companies in the iron and steel industry, but we do not select them when we are making up the personnel of the executive committee of the Iron and Steel Federation. We put on that committee the men of wide experience and knowledge. We select them, and we would not dream of putting on that executive committee a man who had no previous business knowledge. Surely, exactly the same principle applies to the Steel Board. I am not going to stress the matter further, but I am sure your Lordships will take a very strong view in this matter and will press the Amendment to a Division.
I am sorry that the noble Viscount in charge of the Bill feels that he is unable to accept the Amendment, but his refusal to do so makes the following Amendments on the Order Paper all the more important. I would suggest that if appointments are to be made contrary to the provisions of this Amendment—I speak merely to the Amendment which I have moved—perhaps the Minister concerned will consider the suggestion made by the noble Lord, Lord Rochdale, and the noble Earl, Lord Dudley: that the appointments in the first place should be made lower down the scale; then, when the members had proved themselves, they might perhaps rise to executive positions. In view of the important Amendments to follow, I do not propose to press this Amendment and I beg leave to withdraw it.
§ Amendment, by leave, withdrawn.
§ 4.7 p.m.
LORD RENNELL moved, to add to subsection (2):
The initial and subsequent appointments shall be so made as to secure the inclusion of
at least three persons appearing to the Minister to have had wide experience of and shown capacity in the production of iron ore or iron or steel.
§ The noble Lord said: This Amendment is considerably more important than it was before, the first Amendment having been refused. I moved a similar Amendment in the course of the recent Bill on the coal industry, and the noble Viscount the Leader of the House said on that occasion that he did not like it; and he was good enough to warn me that he did not like this one. I may say that I find a curious reluctance on the part of Ministers in the present Government to be obliged to include experts on these boards. I had precisely the same argument with the noble Lord, Lord Macdonald, on the Coal Industry Bill. I wonder what is at the back of this antagonism to being obliged to include experts on a Board which requires expert knowledge?
This clause says—I take it that we are now agreed upon what the wording of the clause really says—that the Minister need not appoint anybody with any knowledge of either iron or steel. We claim that at least three of the Corporation should have knowledge of iron and steel, and we claim that in particular for the following reason. The noble Viscount, Lord Addison, in speaking to the last Amendment, referred very rightly to the sort of composition that he and his friends had in mind for this sort of Board. He said, if I followed him rightly, that he did not want to have a functional Board in which one director took one subject and another director took another, but that the Board as a whole should control the operations of the group as a whole. With that sentiment I personally could have no quarrel at all, and I doubt whether any noble Lord on this side of the House could have any quarrel with it.
Let us examine for a moment what the position will be if the Minister chooses to appoint, in a Corporation consisting of not less than six or more than ten members, one from each of the categories that are described in the clause. If he were minded to appoint one each from people with knowledge and experience and capacity in "the production of iron ore or iron or steel, industrial, commercial 174 or financial matters, administration or the organisation of workers," you would get precisely what may be called a functional Board, with one director of each sort who would inevitably have "put on his plate" at the meetings of that Board the particular subject with which he was supposed to be familiar. In other words, if you had only one expert director in iron and steel, all matters of technical importance in the manufacture of iron and steel would inevitably come to him more than they would to any other member of the Board. One of the principal vices of the present Railway Executive is that it is a functional board, and that is one of the reasons why I think a great many disappointing and unfortunate developments are going to take place.
It is in order to avoid having one of each class on the Corporation that we have said that it should consist of not less than three directors having a knowledge of iron and steel in order that no one of them should have all the technical matters "put on his plate." I am all the more surprised at the advance information that the Leader of the House has given us about his attitude to the Amendment because it has been one of the more frequent and ignorant gibes by members of the Party forming the Government, that at the present moment the boards of very many of our principal industrial companies do not contain experts in that particular industry. As a matter of fact, that happens not to be true, but it: is frequently said—not, of course, by the noble Lord the Leader of the House, who knows very much better. But if there is this feeling abroad amongst the members of the Labour Party that there are not enough experts on the boards of many of our industrial companies, why should there be antagonism to an obligation to put a number of experts on a Board of this sort? It is for that reason, and in order to safeguard the technical direction of this industry in matters of iron and steel, that we are of the opinion (and I am very strongly of the opinion) that not less than three members should have had experience of and shown capacity in that industry.
For those reasons I beg: to move the Amendment which stands in my name.
Page 2, line 8, at end insert the said words.—(Lord Rennell.)
§ 4.13 p.m.
I particularly commend to your Lordships the argument of my noble friend, Lord Rennell, on the way a functional board develops. That particular line of thought had not occurred to me, but I am absolutely certain he is quite correct, and the one thing we have to avoid is a functional board such as those which are killing the coal and transport industries to-day, and possibly other industries also. Your Lordships might think that the noble Lord and myself, in putting down this Amendment, are turning towards syndicalism; but even though that was rather fashionable, I believe, at Black-pool, we are not yet converts to the creed. In putting down our Amendment providing that these people should be experienced in iron and coal, we do not mean that people should be taken from the bottom, without any administrative and managerial experience, and be put on the Corporation, which is, in effect, what syndicalism would demand. We maintain that this Amendment would provide and ensure that there is a proper ladder from the bottom to the top, so that a young man may go into the steel industry, after we have amended this Bill, knowing that if he shows enough initiative and hard work he can perhaps become one of these three people on the board at the top. If we do not put this Amendment in the Bill, the only way he can be certain of getting to the top is by becoming a trade union official and making his living by his tongue rather than by hard work and initiative. We believe it is essential that this Amendment should go to the vote.
§ VISCOUNT ADDISON
I shall not make a long speech, because, as the noble Lord who moved the Amendment anticipated, I hope you will not put this Amendment in the Bill. The noble Lord who spoke last said at the beginning of his speech that he had not given sufficient thought to something or other; well, he has not given sufficient thought to the life of an average trade union official. If he saw the way those men work he would modify his opinion. However, we will pass from that and I will come to the main argument. If this Amendment were inserted, persons who at present hold important positions would not be able to take appointments 176 on the Corporation. I have in mind Sir Andrew Duncan, who is the President of the Iron and Steel Federation. He was, I think, a solicitor.
§ VISCOUNT ADDISON
We could not have said that he was a person of experience of steel or of commercial experience.
§ VISCOUNT ADDISON
However that may be, I find that a number of our distinguished Treasury officials, for example, would not qualify, nor would, for instance, the Chairman of the Prudential. The point I am making is, Why should a person such as that be in a worse position than any others?
§ VISCOUNT ADDISON
But the purport of the speeches was, quite frankly, to exclude people of that kind because they had not been properly instructed. However, the only point with which I am dealing is, Why should this Corporation be in a worse position than the others? I come to the point of the Amendment I am sure that neither the mover nor I would suggest for a moment that any sensible Minister would dream of appointing a Corporation for this purpose that had not at least three people on it with knowledge of the iron and steel industry. I should think myself that the chances are that the number would be larger. I am objecting to its insertion, however, because once you begin to put in this particular classification I should be committed to the other Amendments which make further classifications, and so at the end of it the poor Minister would 177 have been left with no freedom of choice at all. That is not the right thing to do. I object to the principle of classifying this or that, apart from the general instructions which the clause enjoins upon the Minister: that the members should be people who have experience of and show capacity in this, that, or the other, and iron ore or iron or steel. I think it is a wrong principle entirely to fetter the Minister by specifying, as these Amendments would (and this is the first of them and the best of them, I agree) that a certain number should be this or that. I am quite sure that there will be certainly three who have had that experience and the number will probably be more; but, for all that, I think it is wrong to specify the composition of the Corporation in the clause itself. I hope therefore that the House will not proceed with this Amendment.
§ 4.19 p.m.
§ THE MARQUESS OF SALISBURY
I am sorry to hear the speech just delivered by the Leader of the House. With regard to the first Amendment which was before your Lordships' House I think a certain argument could be made. It could have been said that the Amendment we proposed might unduly limit the choice of the Minister. I do not know that I would hold that view, but at any rate I see that a colourable argument could be advanced to that effect, and it was partly for that reason that we did not press that Amendment. But my Lords, surely this Amendment is harmless, and might be adopted. What is it that the Government are in fact refusing? They are refusing to agree that Parliament should lay down that three members out of a board of ten should have some knowledge of the subject with which they have to deal—the Leader of the House shakes his head, but that is what he said. After all, we in Parliament have a responsibility. We are constantly told that it is no longer a matter of private interests, that we are the shareholders now, and that we are the people who have to decide. Well, we want to decide. And we want to see that we have on this Corporation competent and not incompetent people. The noble Viscount is always fobbing us off with what he would have us believe to be the perfection and omniscience of Ministers. I do not trust Ministers at all. I think there are at present some very capable and experienced Ministers in His 178 Majesty's Government and some extremely incompetent Ministers—that is so of most Governments. But a Minister may be biased, and he may be definitely incapable. We have had a case recently of a Minister who said that everybody who did not agree with him was "vermin." It is not to be supposed that he would put "vermin" on the Board. That might exclude some of the most important experts—including, perhaps, most of the people who know anything about the subject!
For these reasons and because I think Parliament has a definite responsibility I would beg the Government to think again. Surely this is not a very extreme proposal, that three people out of the ten on this Corporation should know something about the subject—or, in the words of the Amendment should:…have had wide experience of and shown capacity in the production of iron ore or iron and steel.Surely, three members of the Corporation ought to have that knowledge, and if that is so I cannot see why it cannot be provided in the Act. I suggest to the Government that they are on very weak ground here. What they are trying to do, apparently, is to keep the power of the Minister completely unfettered. But we do not want the power of the Minister unfettered. We think Parliament ought not to do this. Parliament should see that this Corporation represents the interests of the nation and contains experts on the subject with which the Corporation have to deal. I do not thank we can fail to divide on this Amendment. We believe it to be an important one; we think the Government's attitude is completely indefensible, and we must press the matter to a Division.
§ VISCOUNT ADDISON
Before the Division I want to correct one point in the noble Marquess's speech. He must not represent me, or the Minister, or the Government, as objecting in the least to the idea that there should be on the Corporation three persons who have a knowledge of the industry. As a matter of fact, it is more than likely that there will be considerably more than three. What I am objecting to is specifying in a series of Amendments the ingredients of the Corporation.
§ THE MARQUESS OF SALISBURY
If that is the view of the noble Viscount he should accept this Amendment.
§ THE MARQUESS OF SALISBURY
Yes, because the argument the noble Viscount used just now is an argument for and not against the Amendment.
§ VISCOUNT SWINTON
If the noble Viscount is really right, that he objects to this Amendment because it fetters the Minister's discretion, why have we this clause about qualifications at all? Why
|Resolved in the affirmative, and Amendment agreed to accordingly.|
§ does not the Bill say, in effect, that the ten people the Minister appoints shall be whomsoever he likes?
I do not intend to withdraw the Amendment. If this industry is going to be nationalised I for my part do not want to risk seeing a repetition of the creation of a functional board, such as we see at present mismanaging the railways of this country.
§ On Question, Whether the proposed words shall be there inserted?
§ Their Lordships divided: Contents, 98; Not-Contents, 21.179
|Richmond and Gordon, D.||Monsell, V.||Hatherton, L.|
|Ridley, V.||Hawke, L.|
|Aberdeen and Temair, M.||Samuel, V.||Hindlip, L.|
|Cholmondeley, M.||Simon, V.||Hutchison of Montrose, L.|
|Exeter, M.||Swinton, V.||Kenilworth, L.|
|Reading, M.||Layton, L.|
|Salisbury, M.||St. Edmundsbury and Ipswich, L. Bp.||Llewellin, L.|
|Townshend, M.||Lloyd, L.|
|Willingdon, M. [Teller.]||Mancroft, L.|
|Amherst of Hackney, L.||Mendip, L. (V. Clifden.)|
|Buckinghamshire, E.||Ashton of Hyde, L.||Middleton, L.|
|De La Warr, E.||Baden-Powell, L.||Milverton, L.|
|Dudley, E.||Balfour of Burleigh, L.||Monk Bretton, L.|
|Fortescue, E. [Teller.]||Balfour of Inchrye, L.||Monkswell, L.|
|Gainsborough, E.||Beveridge, L.||Moyne, L.|
|Howe, E.||Brassey of Apethorpe, L.||Polwarth, L.|
|Iddesleigh, E.||Carrington, L.||Rennell, L.|
|Lindsay, E.||Cherwell, L.||Ritchie of Dundee, L.|
|Munster, E.||Clanwilliam, L. (E. Clanwilliam.)||Rochdale, L.|
|Onslow, E.||Roche, L.|
|Perth, E.||Clydesmuir, L.||Rotherwick, L.|
|Radnor, E.||Courtauld-Thomson, L.||Sandhurst, L.|
|Selborne, E.||Cromwell, L.||Sherwood, L.|
|De L'Isle and Dudley, L.||Somers, L.|
|Allenby, V.||Digby, L.||Stamp, L.|
|Bridgeman, V.||Ellenborough, L.||Stanmore, L.|
|Buckmaster, V.||Forester. L.||Strathcarron, L.|
|Cowdray, V.||Foxford, L. (E. Limerick.)||Strathcona and Mount Royal, L.|
|Davidson, V.||Gage, L. (V. Gage.)|
|Falmouth, V.||Gifford, L.||Templemore, L.|
|FitzAlan of Derwent, V.||Grantley, L.||Teviot, L.|
|Harcourt, V.||Grenfell, L.||Teynham, L.|
|Lambert, V.||Hankey, L.||Tweedsmuir, L.|
|Long, V.||Hardinge of Penshurst, L.||Wardington, L.|
|Margesson, V.||Harlech, L.||Wolverton, L.|
|Jowitt, V. (L. Chancellor.)||Ammon. L.||Lucas of Chilworth, L. [Teller.]|
|Chorley, L.||Macdonald of Gwaenysgor, L.|
|Addison, V. (L. Privy Seal.)||Crook, L.||Morrison, L. [Teller.]|
|Darwen, L.||Nathan, L.|
|Hall, V.||Foley, L.||Pakenham, L.|
|St. Davids, V.||Henderson, L.||Shepherd, L.|
|Holden, L.||Strabolgi, L.|
|Adams, L.||Kershaw, L.||Winster, L.|
§ 4.33 p.m.
LORD TEYNHAM moved to add to subsection (2):
The initial and subsequent appointments shall be so made as to secure the inclusion of at least one person appearing to the Minister to have had wide experience as a consumer of iron or steel for industrial purposes.
The noble Lord said: The object of this Amendment is to ensure that at least one member of the Corporation shall have had experience of consumer problems. It is true that every effort has been made in the Bill, as your Lordships will see, to render effective the Consumers' Council which is to be set up, but it is obvious that this Council can operate only after the event has occurred. But this event may adversely affect the consumers. I would suggest that it is essential that the consumers' interests should be safeguarded at the policy level. What is the policy level? It must be at Corporation level. An Amendment was moved in another place seeking to provide that the Minister should include the nominee of the principal steel-using organisations. It was argued by the Minister that he did not wish members of the Corporation to represent sectional interests. I would point out that my Amendment leaves in the hands of the Minister concerned the choice of the individuals. It does not imply that the persons so appointed should represent the consumers; it provides merely that at least one member of the Corporation shall be experienced in the problems of the steel consumers.
§ We have already had instances of the importance of this. There was an instance where the National Coal Board took action without any regard to the consumer. For example, to take one case, without prior consultation of any kind the price of coal was raised—I believe, by 6d. a ton. I think it is true to say that experience has already shown that redress in matters of this kind cannot be obtained through the Consumers' Council. I suggest that it is absolutely essential that the consumers' interests should be considered at policy level, and that must be at Corporation level. I do not think it can be Cone in any other way. There must be on the Corporation a member who has had experience as a consumer of steel for industrial purposes. I beg to move.182
Page 2, line 8, at end insert the said words.—(Lord Teynham.)
§ VISCOUNT ADDISON
The House will be acquainted with the reasons for which I object to this Amendment. It is another of the "ingredient" type of Amendment which is thoroughly bad. A Consumers' Council is set up with great elaboration—we shall come to that presently. I cannot imagine that any Corporation manufacturing iron and steel will not take account of the advantageous sale of its products, the needs of its consumers or the kind of price fiat they can pay. What in the world else are they going to do? That is their business. So that to ignore the interests of the consumers, as the noble Lord seems to suggest will be the case, would be far removed from the policy of this body. In any case, in order to safeguard the whole position the Bill sets up with considerable elaboration the Consumers" Council, to which we shall come presently. I am sure that that will be a much more effective body in representing the interests of the consumers than one person out of ten on the Corporation. But, apart from that, and for the reasons I have already given, we object to this Amendment.
§ VISCOUNT SWINTON
One way of conducting a case is to pronounce judgment before the case has been argued. That is what the noble Viscount did at an early stage in the proceedings. The more we argued, the more he remained of his opinion, although I think he now understands what his own clause means, because when he was denouncing us and giving judgment against us he was doing so upon a complete misinterpretation of his own clause. However, let him be under no misunderstanding as to what this provision is, although he has entirely misconceived the purpose of it. He thinks that this is in order that some consumer may go and make a complaint—
§ VISCOUNT SWINTON
Then what else is it? What is the point of bringing in the argument about the Consumers' Council. The Consumers' Council is to be set up. So far, I do not think that the Consumers' Councils have been very effective bodies. In the coal industry, where we persuaded the Government to 183 agree to having two Consumers' Councils—one industrial—they have not been of the least use. The price of coal has gone steadily up, by 5s. a ton in one jump, and 4s. in another; and without consultation. The Industrial Consumers' Council was not consulted over that. And what is the good of making a complaint after that has been done? Again, without any consultation, I believe there is an example where the price of coal was raised to a particular industrial consumer (one of these steel companies) by two or three shillings a ton, as against its ordinary competitors. I suppose that the company could have gone to the Consumers' Council. I do not know whether they did, probably they did not, because they no doubt thought it would not be any good. What the Coal Board would say is "Look at the losses we are making. The losses get larger and larger, and our only alternative is to put up the price." The noble Viscount asked us to be practical. We are being practical. Many steel companies have found it invaluable to have on their boards a man who is not there as a complaining consumer, but as a representative of one of the great steel-consuming industries, in order to give advice as to how the company can best meet the requirements of its consumers.
Against the Iron and Steel Board, which worked admirably, there has never been a complaint, and we shall presently come to an Amendment which I hope the House will carry for re-establishing the Prices Board. But what was found essential on that? No doubt the Leader of the House is not aware that on the Iron and Steel Board it was found essential to have a consumer representative—he was one of the great shipbuilders. He was there in the policy-price fixing body. The noble Viscount's own Government continued it. They felt it essential to have that representation on the Steel Board. Why are we not to have it here?
§ VISCOUNT SWINTON
It does not say that, but all the arguments that have been advanced are to the effect that the Minister might appoint somebody. We want to be sure that he does. But listening, to the arguments of the noble Viscount to-day the betting seems to be very much 184 against his doing this, because the noble Viscount himself said "I cannot see that this is the right place to have a consumer. The right place to have a consumer is on the Consumers' Council." If that is the way in which the matter is to be arranged I do not think there is much chance of the Minister taking the view we think he should take. I suppose the Minister has some idea of the sort of Corporation he is going to set up. Perhaps we might be taken into these secrets. It would be of interest to the Committee, in debating this clause, to know. But if we are not to be allowed to know, then it is the duty of Parliament to make sure that it is within his very wide range of choice.
There is no question of a nominee here; the Minister can take anybody who has this knowledge, and put him on the Corporation. It is on the Corporation, the policy-making Board, that the practical steel consumer ought to be represented when policy is framed. It is no good coming with complaints afterwards. I think it was absolutely necessary to have the last Amendment, to ensure that people who knew about the steel industry were there. I believe it to be so on the proved evidence of the experience of the steel companies and, above all, of the Government's own acceptance of the need for them on the Steel Board. We are told that the Steel Prices Board is now unnecessary, that we need not have one because this is the Corporation which will fix the price, which is to be so wise, which will have everybody's interest at heart, and which, with the assistance of the Minister, we are to trust. If the Corporation is going to take the place of the Steel Board then it ought to have the same sort of constitution as the Steel Board, and it certainly ought to have this representative consumer. I hope that my noble friend will divide the House.
I think there is one point about this Amendment which is of the greatest importance—namely, that in the case of this industry the term "consumer" does not necessarily mean the person who buys the finished product. It is not the case of a person who uses transport, or consumes electricity or gas, or even who buys coal. A large number of consumers are people who buy steel products, processed to a certain stage, which they themselves 185 must process further. A large section of the finishing part of the industry is left out of the Bill, and many of the decisions taken on the type of plant to be installed by the steel-making industry itself, and on the type of products to be rolled and so on, would have a great effect on the part of the industry that is left out. It seems to me entirely proper that the decisions taken on the planning and organisation of production of these products should be done with the help of someone who knows intimately the needs and requirements of the next stage of the processing of these products.
Similarly, it has always been noticeable, as the noble Viscount has said, that most steel companies have on their board somebody who is intimately connected with one of the large steel-consuming industries, either shipbuilding or engineering, or similar industries. That, I think, is done for a definite purpose—namely, that the steel companies themselves should have a close and intimate knowledge net only of the ordinary commercial arrangements under which they sell steel in different forms to the consumer. Through this kind of relationship, having an experienced person on the board, the companies are able to keep fairly close contact with the general lines of policy behind the consuming industries. It is important that we should see that that policy is continued under this system.
We have a difficult arrangement to look forward to under this Bill, when we consider the relationship between the Corporation and the companies themselves. It would be very useful if, so far as is possible, we could see that the type of membership of the boards of the companies is largely repeated in this Corporation—that is to say, that there are on the Corporation, as the responsible members, people who have the same kind of outlook and experience as the directors of the companies that they are to own, and with whom they have to have working arrangements. If the Bill is to work, the relationship between the Corporation and the companies must be flexible, sensible and friendly, deriving from mutual understanding. There is no mechanism in the Bill (and I do not see how there could be) to set up any direct chain of responsibility or control as between the Corporation itself and 186 the companies which it owns. That relationship must depend on mutual good will, understanding and the intention to work together, so that the more it is ensured that the Corporation consists of people who are familiar with the same kind of problems, and who approach things in the same kind of way, the better chance there is of the industry being successful.
§ 4.50 p.m.
§ THE EARL OF DUDLEY
I am afraid that members of the Labour Party appear to be so distrustful and suspicious of each other that they do net understand that it is possible for men of diverse interests to sit together on the board of a company and work together in harmony for the common weal of that company. This is what the Minister said about this matter during the Committee stage in another place:It seems to me inevitable that if a man is called a representative of the users or is nominated by the users, in point of fact he will feel hound to work on the Corporation for the people who have nominated him…I am wholly against having anyone on the Corporation who has a divided loyalty and who feels that he is there either wholly or partly to represent some special interest. As my hon. Friend said yesterday, if we do that, we get away from the team spirit, and if a representative of one side raises a case, there is bound to be a representative on the other side who has an equally good case, and I think that we shall get a bad sort of Corporation.That, really, if I may say so, is a dreadful representation of human nature. As the noble Viscount has; said, on nearly all steel boards at the present time there are representatives of the consuming interests—of the interests which consume the products which we fabricate. I happen to be a director of Richard Thomas and Baldwins Limited, and on the board of that concern we have two very large consumers, Sir Robert Barlow, chairman of the Metal Box Company Limited, and Sir Andrew Agnew, managing director of the Shell Transport and Trading Company Limited. The concerns with which these eminent gentlemen are connected are very big users of our product—namely, tinplate—and the contributions which these gentlemen make to the policy and welfare of Richard Thomas and Baldwins is invaluable. They do not look to their own sectional interests. Their knowledge of the consuming side of the industry is invaluable to us in 187 making up our policy, deciding on sales and so on.
I hope the noble Viscount the Leader of the House will not allow this Corporation to fall into the difficulties which face the National Coal Board. We are anxious to avoid the difficulties which have arisen between the Coal Board and its consumers. Problems have cropped up which could easily have been avoided if matters connected with the consuming side had been more closely considered, and if there had been someone on the Board who thoroughly understood them. Some of these difficulties, it is only right to say, have been subsequently put right as the result of representations by consuming interests. But they have left a nasty taste in the mouths of consumers. There have been such matters as sending unsuitable and costly coal to important consumers over great distances without previous consultation. Other instances of what has happened have been given by the noble Lord who moved this Amendment. Now we are faced with an administrative service charge, which varies all over the country and which is really nothing more than a means of "raising the wind" further without putting up the price of coal. I hope that if this Corporation is to be brought into being it will be an effective one. I trust that the Committee will support this Amendment.
§ VISCOUNT ADDISON
I desire to interject only a few remarks with regard to one matter which the noble Viscount seemed to have in mind. I recognise the great importance, indeed the vital importance, of the Corporation, in their deliberations, having before them information as to the needs of consumers. Suggestions from great consumers of the Corporation's product may well be of immense value. All I am saying is that I object to the specification of particular sets of persons in the Bill because it will thereby inhibit the freedom of the Minister to secure the best people. It is the principle of which I am speaking, because this is one of a serious of Amendments to which the principle applies. I have not the least objection to the kind of knowledge and experience which has been mentioned being represented on the Corporation, and I have no doubt that it will be, for we must believe that the Minister will have some sense.
§ VISCOUNT SWINTON
No, with great respect I cannot say that I altogether believe that. As I have already said, judging by appointments which have been made to Boards in other nationalised industries I have no reason to trust the great knowledge of Ministers. This argument which is used by the noble Viscount is extremely embarrassing—tot homines, and so on. It is extremely embarrassing to the Committee for him to say: "Look at my eminent colleague. Do you think that he is altogether a—well, a not very adequate Minister?" That is not at all a good argument. I do not mean that some Ministers are not better than others, but that is not the way to legislate or to legislate for all time. What you ought to put into an Act of Parliament, if you are to have an Act of Parliament, is what you think ought to be done. You really only strengthen the case for doing that when you get up and say: "No one who is not a complete fool would do anything except what is proposed." If that is so, had we not better ensure, if we can, that if by any mischance we had someone who was a fool, of more or less completeness, he did not do what the Leader of the House says it would be very unfortunate if he did do. The issue between us is quite simple. Apparently, we both think it is the right thing to do to have this representation. There can be no question of limitation of choice. On both sides of the Committee, we think that this representation ought to be on the Corporation. Our view is that if we think so, it is our duty to say so in the Act of Parliament. The Leader of the House says: "If that is your view then it is your duty to refrain from saying so in the Act of Parliament." I leave it at that, and I will add only that I strongly counsel your Lordships to take steps to make effective what you believe to be right.
I am afraid that I cannot feel I am in any way satisfied by what has been said on this matter by the noble Viscount who is in charge of the Bill. I think the noble Viscount, Lord Ridley, made a very important point which perhaps I did not make, and I would like to emphasise it again. Lord Ridley said that some companies have on their boards directors who have knowledge of consumers' interests, such as shipbuilding and engineering. I am sure it is right that a similar association 189 should be continued by this Corporation. Surely it is better that consumers' interests should be considered at Corporation level, and that there should not be delay until some event which is adverse to the consumers has occurred and is left to be dealt with by the Consumers Council. Consideration of consumers'
§ Resolved in the affirmative, and Amendment agreed to accordingly.
§ 5.7 p.m.
LORD TEYNHAM moved, at the end of subsection (2), to insert:
The initial and subsequent appointments shall he so made as to secure the inclusion of at least one person appearing to the Minister to have been engaged in the production of iron or steel otherwise than as:—
§ problems should start at Corporation level. I feel that I must press this Amendment.
§ On Question, Whether the proposed words shall be there inserted?
§ Their Lordships divided: Contents, 93; Not-Contents, 21.189
|Aberdeen and Temair, M.||Margesson, V.||Harlech, L.|
|Cholmondeley, M.||Maugham, V.||Hatherton, L.|
|Exeter, M.||Monsell, V.||Hawke, L.|
|Reading, M.||Ridley, V.||Hindlip, L.|
|Salisbury, M.||Samuel, V.||Kenilworth, L.|
|Townshend, M.||Simon, V.||Layton, L.|
|Willingdon, M.||Swinton, V.||Llewellin, L.|
|Trenchard, V.||Lloyd, L.|
|Bessborough, E.||Mancroft, L.|
|Buckinghamshire, E.||Amherst of Hackney, L.||Mendip, L. (V. Clifden.)|
|De La Warr, E.||Ashton of Hyde, L.||Middleton, L.|
|Doncaster, E. (D. Buccleuch and Queensberry.)||Baden-Powell, L.||Milverton, L.|
|Balfour of Inchrye, L.||Monk Bretron, L.|
|Dudley, E.||Barnby, L.||Moyne, L.|
|Dundonald, E.||Belstead, L.||Polwarth, L.|
|Fortescue, E. [Teller.]||Blackford, L.||Rennell, L.|
|Howe, E.||Brassey of Apethorpe, L.||Ritchie of Dundee, L.|
|Iddesleigh, E.||Carrington, L. [Teller.]||Rochdale, L.|
|Lindsay, E.||Cherwell, L.||Rockley, L.|
|Munster, E.||Clanwilliam, L. (E. Clanwilliam.)||Sandhurst, L.|
|Onslow, E.||Somers, L.|
|Radnor, E.||Clydesmuir, L.||Stamp, L.|
|Rothes, E.||Cromwell, L.||Stanmore, L.|
|Selborne, E.||De L'Isle and Dudley, L.||Strathcarren, L.|
|Stanhope, E.||Digby, L.||Strathcona and Mount Royal, L.|
|Allenby, V.||Forester, L.||Templemore, L.|
|Bridgeman, V.||Foxford, L. (E. Limerick.)||Teviot, L.|
|Buckmaster, V.||Gage, L. (V. Gage.)||Teynham, L.|
|Davidson. V.||Gifford, L.||Tweedsmuir, L.|
|Falmouth, V.||Grantley, L.||Waleran, L.|
|Harcourt, V.||Grenfell, L.||Wardington, L.|
|Lambert, V.||Hankey, L.||Wolverton, L.|
|Jowitt, V. (L. Chancellor.)||Ammon, L.||Macdonald of Gwaonysgor, L.|
|Chorley, L. [Teller.]||Marley, L.|
|Addison, V. (L. Privy Seal.)||Crook, L.||Morrison, L.|
|Foley, L.||Nathan, L.|
|Hall, V.||Henderson. L.||Pakenham, L,|
|St. Davids, V.||Holden, L.||Shepherd, L.|
|Kershaw, L.||Strabolgi, L.|
|Adams, L.||Lucas of Chilworth, L. [Teller.]||Winster, L.|
- (ii) a director or officer of a publicly-owned company or of any subsidiary of a publicly-owned company; or
- (iii) a director or officer of a company specified in the Third Schedule to this Act or of a subsidiary of a company so specified."
§ The noble Lord said: The object of this Amendment is to ensure the inclusion in the Corporation of a member drawn from the independent steel-producing undertakings which, of course, are not to be nationalised. There are a considerable 191 number of them. I suggest that it is important that the Corporation should include someone experienced in the problems of the small firms who will be outside the Corporation, particularly those who will be operating under licence, as laid down in the Bill. It should be remembered that nearly 400 firms are not to be taken over, and of these some fifty will be subject to licence. I think it is essential to have someone on the Corporation to safeguard their interests at the policy-forming stage; and again that stage must be at Corporation level. I should like to draw the attention of your Lordships to the fact that outside the Corporation and their subsidiaries there will be independent production of such articles as bright steel bars, steel castings, steel forgings and steel wire in excess—and I particularly stress this—of the production of the Corporation on the basis of their present activities. Therefore, I suggest that it is of the utmost importance that these large independent interests should be represented at Corporation level.
§ Again, in the case of light sections and bars, steel tubes and fittings there will still be independent production of those articles, but not by any means as great by the Corporation and its subsidiaries. But I feel sure your Lordships will feel that an important minority such as this should be safeguarded. This Amendment would ensure that the independent units of production which I have already mentioned, which will be outside the Corporation, will be represented at Corporation level. I beg to move.
Page 2, line 8, at end insert the said words.—(Lord Teynham.)
In supporting my noble friend on this Amendment I do not want to stray unduly into Clause 3, but I feel that this Amendment must take note of a subsequent Amendment that is to be moved to that clause. Your Lordships will no doubt have noticed that Clause 3 lays upon the Corporation the duty of promoting the efficient and economical supply of certain products. But that duty relates only to the Second Schedule products. It goes without saying, I think, that in practice this duty will have to be exercised with regard to all the principal activities of the publicly-owned com- 192 panies. That is what the subsequent Amendment to which I have referred seeks to ensure. If that is so, it seems to me, coming back to the present Amendment, that the position will require the most careful and thorough deliberation by the Corporation when they are considering the policy for these other principal activities, as my noble friend pointed out. All this simple Amendment seeks to do is to see that when the Corporation are settling their broad policy there shall be somebody with them who can speak with first-hand experience from the point of view of these smaller firms, who are responsible for such a high proportion of activities other than those mentioned in the Second Schedule.
§ VISCOUNT ADDISON
I do not want to weary the Committee with a long discourse. The same principles apply here as to the earlier Amendments, but this is rather more absurd than the others. The noble Lord urged that large interests should be represented at Corporation level. There, if I may say so, he gives away his case. We want this Corporation to be composed of independently-minded people who do their best for consumers, the users of iron ore, and so forth. They will not be there as representing any particular outside interest; that is the wrong way to constitute a Board of this sort, vet that would be the cumulative result of the last two and other similar Amendments. Why should we specify that the Minister should be compelled to go outside the general sensible instructions of subsection (2), to see that he chooses persons who represent large interests outside at Corporation level—to use the noble Lord's own words. It is entirely wrong, and I hope the Committee will not divide on this Amendment. If they do, we can only insert it. All I have to say is that it will be discreditable to the Committee to do so.
§ THE EARL OF DUDLEY
The noble Viscount describes this Amendment as absurd. I think it is disgraceful that the Government should have such a lack of sympathy and understanding that they deny representation to a minority of firms who will be entirely under the thumb of this Steel Board.
§ VISCOUNT ADDISON
I hesitate to interrupt the noble Earl, but we are not denying representation to anybody who 193 will bring to bear on the subject a disinterested mind and experience. We do say, however, that the Board should not be constituted of people who are frankly on it to represent large interests outside.
§ THE EARL OF DUDLEY
I cannot follow the noble Viscount's method of reasoning. We insist, if something is right, that it should be put in the Bill; and this is something which we feel is right and justified. The Third Schedule to this Bill has been drafted in such a curious way that there will be an independent majority of production by certain sections of the industry, with a strong publicly-owned minority; and, conversely, a strong independent minority in other sections, which otherwise are owned by the Government. For example, there will be an independent majority, but a publicly-owned minority, in the following products: bright steel bars, steel shaftings, steel forgings, wire, wrought iron, and iron castings. And there will be a strong independent minority in light sections and bars, alloyed bars and sheets, cold rolled strip, steel tubes, pipes and fittings. It is important in regard to all those sections that they should work together and in harmony. That cannot be achieved unless they have a representative on the Corporation in close moment-to-moment touch with the policy that is being framed. The Corporation will be in the position to dictate and enforce all prices. Therefore, in that respect the independent minority will be entirely tinder their heel. It is only fair and businesslike that these independent firms should have representation and some say in such matters as price policy, wages, hours of work and so on. Otherwise, unfair conditions will be imposed. Indeed, in view of the fact that there is this curious difference, of independent minorities in some cases and independent majorities in other cases, the firms remaining as an independent majority might, if they were not working harmoniously with the Corporation, create conditions which were very disadvantageous and inconvenient to the Corporation. Therefore, in the interests of the Corporation it is most essential that they should work together. I hope the noble Viscount will give more thought to this, and will agree that it is important that these independent people should be represented on the Corporation.
THE MARQUESS SALISBURY
I imagine that it was no great surprise to any of us that the Leader of the House did not see his way fit to accept this Amendment, for the Government seem quite to have made up their minds that Parliament is to place no limitations to the powers of the Minister under this new scheme. I am sorry that is so. I think that from their own point of view they would have been wise to give it more serious consideration. It is not, after all, an unreasonable thing that there should be on the Corporation some representative to look after the interests of these smaller firms, who be faced with great competition from this immense new monopoly which is being created. Indeed, one would have thought that even from the point of view of general principle there was something to be said for representation of minorities. In this case the argument is a stronger one because, as my noble friend Lord Dudley has pointed out, in certain products which he mentioned these smaller firms are in fact producing the majority of the total products of the country. Therefore, it is particularly important that a fair balance should be ensured between their interests and the interests of this immense new Corporation that is being created.
It is generally admitted as being important—in fact, it is a general principle of British law—that not only should justice be done, but that justice should be seen to have been done. One would have thought that anything which ensured that, and was a reassurance to the general public that such a thing was happening, was of advantage—even from the point of view of the Government, in recommending the scheme to the British population which is by no means convinced that it is a desirable innovation. I am not going to advise my friends to divide on this Amendment. We have divided on two which we believe to be of great importance—arid I expect we shall have to divide on others—and perhaps there are limitations which we must set ourselves. But I regret, and I believe that the Government will ultimately regret it, that they are determined to bring in this scheme which I do not believe has the support of the majority of the people of this country. The least they can do is to see that it appears to be a completely equitable one. As I say, I cannot advise 195 my noble friend Lord Teynham to press the Amendment, but I regret deeply that the Government could not see their way to accept it.
I, too, am sorry that the noble Viscount in charge of the Bill cannot accept the Amendment, but in view of the arguments which have been put forward from this side, and especially by the Leader of the Opposition, I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ 5.22 p.m.
LORD WOLVERTON moved, in subsection (2), to omit all words from the beginning to the proviso and to insert:
The term of office of the Chairman of the Corporation shall be five years and the term of office of the other members of the Corporation shall be three years and one third of the members, or where the total number of the members is not divisible by three, such number as represents one third of the highest number less than the total number of members which is divisible by three shall retire in each year on the anniversary of the constitution of the Corporation excepting that in each third year all such members as have held office for three years since their last appointment shall retire on the said anniversary:
Provided that of the first members of the Corporation one third of their number, or if such number shall not be divisible by three, one third of the highest number less than the total number of the members which is divisible by three, shall be appointed for one year until the first anniversary of the constitution of the Corporation and shall then retire, one third of such number as aforesaid shall be appointed for two years until the second anniversary of the constitution of the Corporation and shall then retire, and the remaining members of the Corporation shall be appointed for three years until the third anniversary of the constitution of the Corporation and shall then retire.
A person who has held the office of Chairman or member of the Corporation shall be eligible for re-appointment to that office or for appointment to the other of those offices.
§ The noble Lord said: This Amendment is an important one. Its object is to ensure that a system of rotation of membership of the proposed Iron and Steel Corporation takes place. In the Amendment I have been careful to ensure that there should be continuity of management, which I am sure your Lordships will feel is necessary. As the Bill is now drafted, no rotation system is provided for, although after the Amendment which was moved in another place and negatived, the Minister, resisting the Amendment, said that his objection to it was that it 196 did not give sufficient continuity of management. He said that he would look into the question that members should not serve longer than five years, but nothing to that effect appears in the Bill as it is now presented to your Lordships' House.
§ The Amendment now before your Lordships has been modelled on the Bank of England Act, 1946. Under the Second Schedule of that Act—which was accepted by your Lordships' House in 1946—the Governor and Deputy Governor of the Bank of England are appointed for five years, and the other sixteen directors rotate on a four-year cycle, four retiring every year. Under this proposed Bill there is to be a chairman and not less than six nor more than ten members. In this Amendment, which is rather complicated to explain, we have attempted, I think with success, to put a cycle of three. It will not quite work out at a cycle of three if the full number of ten are appointed May I give your Lordships one example, because I think it is very important? The chairman will remain for five years, and if there are a chairman and ten members it will work out on this basis: after the first year, three members out of ten retire and are eligible for re-election: after the second year, three members of the remaining seven of the first appointments go and are also eligible for re-election after the third year the number has to be made one more, four, and they also are eligible for re-election.
§ If it is decided to appoint only a chairman and six members, it would work out on the rotation of one-third. The chairman would be appointed for five years. After the first year two members would retire, eligible for re-election, two more the next year and two more the third year, By that means I think we have met the objection which the Minister had to the Amendment moved in another place, that there was not sufficient continuity of management. We feel that this is a very important Amendment, because in all big public companies directors come up for re-election after two, three or four years, according to the Articles of Association, and we feel that the Minister should have that provision and that members should not be there indefinitely. By this method, which is rather complicated, there will 197 be complete continuity of management. I beg to move.
Page 2, leave out lines 9 to 12 and insert the said new words.—(Lord Wolverton.)
This Amendment has been fully explained by my noble friend Lord Wolverton, and I will add very little. It seems to be a sensible and reasonable arrangement, and one which is almost universal in companies and banks; that is to say, that the directors or members of the Corporation should retire after stated periods—in this case three years for the ordinary members—and at the same time be eligible for re-election. I think it is a desirable safeguard against the Corporation being saddled for a prolonged period with some member who has not been a success. I think it is also right, as is proposed in the Amendment, that the chairman should be given a longer period, because obviously you do not want to change your chairman too freequently if you can possibly avoid it. I hope the noble Lord opposite will accept the Amendment because I think it is a very desirable and sensible one.
Unless this Amendment is accepted, if my reading of the Bill is correct, there will be no limitation whatsoever upon the term for which the Minister can appoint the members of the Corporation. In all the other nationalisation Bills which I remember, I think there was some sort of limitation put in. At any rate, His Majesty's Government, when they bring these nationalisation Bills before us, are extraordinarily careful to make provision that where directors of private undertakings enter into long contracts for themselves or their employees which might be considered to be imprudent, the Government can repudiate them when they take over the industry. We are merely giving tit for tat. We are proposing that where possibilities exist of the Minister appointing people to this Corporation for a longer term than we feel would be justified, a limit should be put on his power. For that reason, I think we ought to support this Amendment.
§ VISCOUNT DAVIDSON
I hope the Government will accept this Amendment. It is not only reasonable but, from some angles, very necessary that an opportunity should be available to remove the mem- 198 bers of the Corporation if it became desirable. If this Bill ever reaches the Statute Book, iron and steel is going to be a nationalised industry. Changes of Government do occur and I think that that alone is a reason for accepting this Amendment. I suggest that Governments of all complexions would probably wish to make changes, if appointments are on political grounds, as they have sometimes been in the present nationalised industries.
§ LORD MORRISON
This is a long Amendment and the noble Lord, Lord Wolverton, who moved it, has argued very reasonably that members should be appointed for a reasonable period and should retire in rotation. With the spirit of that proposal the Government are in agreement, but unfortunately I am not in a position to accept the Amendment because the Government take the attitude that there should not be any statutory rigidity in this matter and there must be room for flexibility in the length of the appointments. I do not think that the noble Lord, Lord Hawke, was being as reasonable as he usually is when he suggested that Ministers might appoint people for life.
§ LORD MORRISON
I think you went further than that, and that is why I am endeavouring to add my small contribution to this discussion. Let us, so far as this discussion is concerned, try and keep perfectly calm, because we are in danger outside in the country of starting an era of wham. I call "bladder and stick" speech—speeches which make a loud noise but are a little remote from the facts. I therefore start by telling the noble Lord, Lord Wolverton, that, whilst we agree with the spirit, we regret that we are unable to accept his Amendment because the Government cannot accept any statutory rigidity in the matter. There must be room for flexibility in the length of the appointment. One of the main reasons for establishing independent boards is to ensure that the industry for which they are responsible can be planned on a basis of the steady pursuit of a longterm policy, and this might well require that the normal run of full-time appointments should be for a longer period than 199 three years—for most nationalised boards the normal period is five years.
I must add that I think the second paragraph of the Amendment is completely unsatisfactory. It proposes that a fixed number shall retire each year. In making the appointments any Minister is bound to try to get a sufficient "stagger" to avoid a complete reappointment in five years. The older men normally would be appointed for a lesser period. I suggest also that some of the people whom the Minister would wish to attract from the Corporation (and this point has not been mentioned) might not be willing to accept full-time appointments for so short a period as three years if that meant severing their connections with their existing business at the age of fifty and finding, say, in the middle fifties, that they were no longer required on the Corporation and had reached the age at which their services would not be sought after in other directions. If that argument is sound, and I think it is, to ask, as the Amendment does, that one-third should be appointed for one year and one-third for two years seems to me to be going a little too far. I cannot conceive that any responsible person invited to accept an important appointment like this, and realising that he might not be reappointed at the end of one year, would be prepared to give up all his important interests to take up this post.
§ LORD WOLVERTON
May I interrupt? They are all subject to reelection, and if they are satisfactory after one year and are re-elected they go on for three years.
§ LORD MORRISON
But the noble Lord knows it is not very satisfactory to have only one year's service on a task of this sort. In any case, I regret for the reasons I have given that I am unable to accept the Amendment.
I do not understand what the noble Lord who has just sat down has in mind. He talks about "statutory rigidity" but it does not seem to have any bearing at all on the Amendment proposed by Lord Wolverton. This is the commonest of all provisions in appointing and electing directors to statutory companies: a person who retires by rotation is subject to re-election 200 if he is suitable. If there is no question of statutory rigidity about a man being appointed for five years and then having to resign, a fortiori there is none in regard to a man appointed for one year and then having to submit to re-election. The purpose of this Amendment is to secure that certain gentlemen who have been appointed to the Board shall retire in such a manner that there will always be a certain number retiring each year and, if they are willing to go on, offering themselves for re-election, and being re-elected if they are suitable. That has nothing to do with statutory rigidity. It is entirely the opposite. There is no statutory rigidity at all. On the contrary this gives the maximum possible flexibility.
Moreover, this Amendment enables the Minister or the Government, without causing a row and asking for somebody's resignation or sacking him from the Board, to drop a person who either has not proved his worth or has proved that he is not so good as somebody else who subsequently comes along. It is the most convenient of all methods of effecting a change without having a row in the newspapers and other difficulties, a great many of which have already come across the path of various Ministers in His Majesty's Government. In their own interests I must beg the noble Lord to reconsider this Amendment. If he will look back over appointments made in the last few years, he will see how much more convenient it would have been to have a certain gentleman retiring by rotation and to ask him not to offer himself for re-election, than to say, "Look here, old chap, you have got to go," and have every newspaper in the country kicking up a row and saying "So and so is being asked by the Government to go."
I must ask the Minister to reconsider this proposal because it is the simplest, most practical and most efficient form of securing the rotation to which the Minister referred in speaking of staggering the retirements. He said he wanted the appointments made for such a period as would avoid all the people retiring or coming to the end of their appointment at one time. What we are seeking to do in this Amendment is to do precisely what the Minister said he wanted to do but which he is unwilling to bind himself to do; that is to say, he is unwilling to bind 201 himself that people shall retire by rotation so that he can re-elect them if he wishes.
The Amendment gives everybody complete freedom. It gives the director who does not agree with the policy of the company freedom to go without embarrassing the Government. There are a great many public-spirited people who feel that a policy decided by their Corporations is not one with which they are in agreement, but they do not want to embarrass the Government by resigning and have every newspaper in the country saying, "Why did you not go on? Did not you agree with the policy?" It is simpler to say, "I have come to the end of my three years," or six or nine years, and fade out of the picture. I hope it is not because it is an Amendment proposed on this side of the House that the Minister is unwilling to hind himself. This is an Amendment entirely in the Government's own interest, and it seems to me entirely in the spirit of what the Minister said in Standing Committee.
§ LORD BALFOUR OF INCHRYE
I hope that the noble Lord will reconsider his rejection of this Amendment. He took refuge behind a smokescreen of statutory rigidity—those were the words he used. As I understand it, he means that the Government (and perhaps he will correct me if I am wrong) are unwilling to accept fixed terms of office and fixed terms of rotation for the chairman and for the other directors. That is as I understand it.
§ LORD MORRISON
The Government desire that there should be some flexibility, for the reason, among others, that some would be part-time and some would be full-time.
§ LORD BALFOUR OF INCHRYE
But this dislike of a fixed term and retirement by rotation does not bear examination. If noble Lords will refer to the Second Schedule of the Bank of England Act—a product of this Administration—they will see that it lays down almost exactly what this Amendment is proposing to do. It says:1. The term of office Governor and of the Deputy-Governor shall be five years.2. The term of office of the directors shall be four years, and four of them shall retire each year on the anniversary of the appointed day.…202 I feel that the noble Lord ought to come with a better defence for the rejection of this Amendment than to say that the statutory rigidity of the Government is such that they now reject something which they have accepted in another of their own nationalisation measures. I hope that between now and the Report stage the Minister will undertake to consider what his own Government have done in other nationalisation measures and that at a later stage he may be able to put down an Amendment on the lines of that moved by my noble friend to-day.
§ LORD MORRISON
I do not know that I can add anything to what I have said. I know that the term of office, so far as the National Coal Board is concerned, is five years and that that is also the period for the Transport Commission—that is for a full-timer. The term for a part-timer is three years, and in the British Electricity Authority, two years. I know that the term in the Bank of England is five years for a Governor, and four years for the other directors, a quarter of whom retire annually. What I said, or meant to say, to the noble Lord was that the Government, while agreeing with the spirit underlying the Amendment, desire that members should be appointed for a reasonable period and should retire in rotation. The Government find themselves in agreement with that, but are unable to accept this Amendment. I endeavoured to explain that, in the opinion of the Government, the Amendment is unduly rigid. Three methods have been adopted in the appointment of the boards of nationalised concerns. First, by a provision in the Statute itself; secondly, by regulations made under the Act; and thirdly by specification in the letter of appointment. That was the method adopted in the Transport Act. The Government are of the opinion that this would perhaps be the better method. I am sorry that I am unable to respond to the request of the noble Lord, but I have no instructions to do so and must leave the matter there.
§ THE MARQUESS OF SALISBURY
I think we all understand the difficulty in which the noble Lord, Lord Morrison finds himself, and in which everybody must find himself who is not speaking for his own office and has not therefore the elasticity which is sometimes so necessary. But he did say at one stage that 203 he thought that three years was too short. A man might respond to an invitation to give up ordinary employment to take on a job for three years and find himself at the end of that time obliged to leave, the job having come to an end. He may be in a position of great difficulty. I think we all appreciate that sort of position. We are not tied down to the terms of this Amendment. If the Government and ourselves are in favour of the spirit of the Amendment it does not seem impossible that some compromise may be found. I suggest to the Government that if we agree not to press this Amendment to-day they might, without committing themselves in any way, consider the matter a little further in consultation with the Minister before the Report stage. If at that point they find that they cannot meet us we can then see what we shall have to do. But I do not think that in this instance, when we are so near together in spirit, we on this side should go to extreme lengths. Therefore I suggest to my noble friend Lord Wolverton that he may desire not to press this Amendment at the present stage, on the understanding that Lord Morrison will discuss the matter with the Minister and let us know the result of the discussions. We can then put down an Amendment again on Report stage if that appears to be the appropriate course.
§ LORD MORRISON
In response to the noble Marquess, I have no objection to the conversations he suggests, and I will certainly take part in them in the hope of seeing whether it is possible to devise any words that will meet what we want. At the same time the noble Marquess will appreciate that I am not in a position to undertake any commitments.
§ LORD MORRISON
I appreciate that the noble Marquess has with his unerring instinct put his finger on a difficulty. There must be some elasticity. But I must ask the noble Marquess to understand clearly that I am not entering into any definite commitments. On that understanding I must leave the matter.
§ LORD WOLVERTON
I thank the noble Lord for what he has said, and in 204 view of his remarks I beg leave to withdraw my Amendment.
§ Amendment, by leave, withdrawn.
VISCOUNT BRIDGEMAN moved to add to subsection (2):
Provided also that if the Minister is satisfied that a member:—
§ The noble Viscount said: This Amendment has a good deal in common with the last one, the principal feature of the similarity being this. We on this side are concerned to see that where there are provisions which apply to ordinary companies—provisions that have stood the test of time and have been incorporated in the Companies Act—we should follow the same procedure in regard to the nationalised Corporations. I think that is a very good principle, and I do not believe that the noble Lord opposite will disagree with me. We now come to another case. As your Lordships know Table A is the model Articles of Association under the Companies Acts. It contains a standard clause under which it is possible to get rid of a director if he does things which are not usually considered creditable in business and would not be considered creditable in nationalised Corporations—such as becoming, bankrupt or of unsound mind, and so forth. This is an ordinary provision in Table A and we seek in this Amendment 205 to apply its provisions to Clause 1, subsections (5) and (6), so as to provide that a member of a Corporation shall vacate his office for contravention of those provisions which deal with disclosure of interest, a matter which is referred to in Clause 1.
§ There are one or two reasons why we put this forward. I hope that if the noble Lord, Lord Morrison, has no instructions to accept this Amendment, he will nevertheless perhaps stretch a point and look at this in connection with the last Amendment, because it is closely connected with it. I should like to sum up the case for this Amendment on three grounds. First that it has its parallel in the Companies Act, and is therefore something which for nearly 100 years has been found a suitable and necessary provision in the Articles of Association of companies. Secondly, there are similar provisions in the Bank of England Act and the Civil Aviation Act. I ought to say here that in the Coal Act and the Gas Act, as the noble Lord opposite probably knows, the matter is dealt with by regulation. But we think that the counterpart of Table A is the right thing to have here. Thirdly, I believe I am right in saying that on the Committee stage in another place an undertaking was given that this matter would be looked at before the Report stage there, although I do not think that anything emerged from that. The guillotine fell and there was no time for discussion. So we brine forward this point now. We do not think that there is any real difference in spirit. We suggest that this is the right way to handle it. I hope that the noble Lord opposite will think that this is a reasonable and sensible way to deal with the matter. I beg to move.
Page 2, line 14, at end insert the said proviso.—(Viscount Bridgeman.)
I should like briefly to support the Amendment moved by my noble friend, because I think it is essentially a reasonable Amendment. All it asks is that the rules (if I may call them that) which apply to every company in this country—I do not think there is any company which does not have provisions of this kind in its Memorandum and Articles of Association—shall apply to the Corporation. I am going to add only one word to what has been said. The 206 Government, as the noble Lord pointed out, started off, as so many of us do in life, with good intentions—that is to say, they wrote such provisions into their first nationalisation Bills. Since then I think they have been slipping a little. First, they compromised by putting these provisions in regulations, and then in more recent Acts they did not bother to do it at all. I feel it is important in this particular instance because in this Bill, more than in any other, we are for the first time dealing with an industry that has been split, where there is private enterprise and public enterprise—at least we hope it is "enterprise." I feel that what is sauce for the goose must be sauce for the gander. I do not see any reason why, if an ordinary company has this provision in its Memorandum and Articles of Association, the Corporation should not have a similar kind of provision. I hope the noble Lord will not consider this a "bladder and stick" speech but as a reasonable point to make, and that he will accept the Amendment.
§ LORD MORRISON
I can assure the noble Lord that I carefully avoid making "bladder and stick" speeches, and I hope I always shall. A similar Amendment was discussed in another place and, so far as I could gather, the debate became much more confused than it usually does here. It is true that recent precedents have dealt with the termination of appointments in three entirely different ways. In paragraph 4 of the Second Schedule to the Bank of England Act, reasons for disqualification include the fact of being an alien; and in the Civil Aviation Act in the First Schedule, paragraph 5 disqualifications include:is otherwise unable or unfit to discharge the functions of a member.In the Coal, Gas and Electricity Acts the matter was dealt with by regulations, as the noble Lord said. Then in the Transport Act, as in this Bill, it is dealt with by specification in the letter of appointment. I suggest to the noble Lord that experience may have shown that the earliest precedents involved rather too great rigidity, and that if the disqualifications are embodied in the Statute itself, it is difficult to amend them in changing circumstances. Embodiment in regulations loosens the position a bit, but it is strongly felt that the sensible means is to embody in the letter of appointment the circumstances which, at the date when 207 the appointment is made, would be regarded as disqualifications.
Noble Lords who have supported this Amendment seem to be aware that there is something in this point by including in their Amendment sub-paragraph (i):has acted in breach of any of the terms of his appointment.This is a kind of sweeping-up provision which clearly renders the previous eight paragraphs unnecessary, because it includes the whole of them. I am aware that they correspond in some respects to the provisions of the Companies Act, 1948, but applied to this Bill they are far from water-tight. For example, under paragraph (a) a full-time member of the Corporation who made a contract with, say, the B.B.C. to appear in "Twenty Questions" or to give a series of talks on his hobby—and in neither case was there any interference with his duties as a member of the Corporation—would apparently lose his job if he accepted the usual fee of a few guineas. One could give other examples but, to sum up my short point: Any catalogue of disqualifications—and this is a catalogue of disqualifications—must inevitably be lengthy; alternatively, it must contain an "escape" provision such as that in paragraph (i) which renders the remainder meaningless. In this Bill, the Government wish to improve upon former precedents, and a careful letter from the Minister to those he desires to appoint should meet the circumstances as between sensible people. The potential appointee will know what the conditions are, and it is up to him to make his choice whether or not he accepts.
There is one point in connection with that which might be referred to—that is, that this Corporation is not really a parallel of any of the earlier nationalised undertakings, because, according to its description in the Bill, it is in essence a holding company, although capable of certain operations of research and organisation and so on; and it has to deal directly with operations carried out by other companies. The people in charge of the other companies are subject to the various provisions of the new Companies Act, including the Table A referred to. I think it is certainly in the interests of the members of the Corporation that the directors of the publicly- 208 owned companies should realise, and it should be openly known, that the people responsible for giving them their instructions and working with them are subject to the same kind of regulation or control. As to the particular point mentioned, I think there is no doubt that there should be some discussion as to how these regulations should be worded, or whether in this case there should not be some alteration. In view of the relationship of the Corporation with the publicly-owned companies and the rather undefined machinery for co-operation between the two, it is important that there should be confidence established between them. It would help if it were clearly known and understood that they were both expected, and known to be expected, to conform to certain standards of conduct. It is possible for the Minister, in his letter of appointment, to lay down conditions which would be reasonable and proper. In the special circumstances of this Bill compared with earlier Acts, it seems to be important not only that they should be so laid down, but also that it should be publicly known what they are. And the Bill seems to be the best place to have them.
§ THE EARL OF DUDLEY
There seems to be an extraordinary idea that you cannot catalogue by Statute all the crimes for which a man can be sacked, but that you can catalogue them in a private letter when you invite him to join. The Minister of Supply in another place said the same thing:It is impossible to put in statutory form all the conditions under which a Minister might properly desire to sack a member. The sensible thing to do—it was done in the Transport Act—is to leave the conditions to the Minister to set out in his letter of appointment to the individual. If the individual does not like the conditions, he will say, 'you must find someone else. I will not accept those conditions.' The individual is not compelled to accept them.I do not quite know how the letter would set out all these "crimes." Would it say Dear Johnny, How about your joining the Steel Corporation? But I must warn you, that if you go 'nuts,' get drunk and disorderly, go bankrupt, go to 'quod,' become a 'bookie,' go absent without leave or in any way misbehave yourself, you will get the sack." I should have thought it would have been much better, in the ordinary businesslike way, to write into the Constitution of the 209 Corporation the list of offences of which a member must keep clear. It is done in ordinary everyday business. Why not write it into the Constitution of the Corporation and have the thing clear and concise? I hope the Minister will accept this Amendment.
I think the noble Lord is under a misapprehension here. He said it provided under paragraph (a) that if a certain person entered into a contract with the B.B.C. for a few guineas to take part in "Twenty Questions" he would be disqualified. But that is not what the Amendment says. The Amendment says:Provided also that if the Minister is satisfied that a member:
- (a) being a whole time member holds another office of profit; or
- (d) holds a financial or other interest prejudicial to the exercise or performance by him of his function as a member of the Corporationthe Minister may declare his office as a member of the Corporation to be vacant.But it does not follow that he shall. If the member accepted a fee to broadcast about matters concerning the steel industry I should think the Minister would declare his office vacant. But it does not say the Minister must; it says he may. As to the cataloguing of all these vices of which the noble Earl has spoken, I wonder how many people in the acquaintance of the noble Lord or of the noble Viscount would accept any appointment if the Minister wrote to them and said, "You can have this appointment, subject to. …" Let us bring a little reality into this discussion. How on earth is the Minister going to get anybody appointed if he says, "If you go to prison you get the sack." The thing is positively absurd. This question will arise again, and my friends and I on this side of the House will try to relate the operation of this Bill to the practice of the new Companies Act that this Government were responsible, and rightly responsible, for introducing into the commercial world. Let us use the Companies Act so far as it is applicable to this Corporation, and not depart from it in order to make a special code consisting of writing rude letters to prospective appointees.
§ VISCOUNT SWINTON
May I ask the Minister two questions on this matter? 210 Frankly, I entirely agree with what has been said by the two previous speakers in regard to listing into the letter offences which you know no decent man is going to commit, and I ask the Minister how he proposes in those letters to set out these things for which the appointee will vacate his office. That is a perfectly easy question to answer. The second question I would ask is: Are the conditions which are to be laid down in the letter to be uniform for each member of the Board, subject to this: that if a man is a whole-time member the conditions would vary from those for a part-time member—I am speaking of the condition that he must give the whole of his tine to the business of the Corporation. Subject to that, are the conditions to be identical for every appointee? If not, why not? It is going to be rather curious if certain favoured people are to receive one set of conditions and other less favoured people are to receive another. Or are you going to say that certain people will require more strict ministerial supervision, for fear that they should do things which one or two members of some boards have, I believe done?
These are not just hypothetical questions. They are really very practical questions to which I am sure the noble Lord can give an answer, and I hope he will give an answer. If he cannot give a definite answer, then he renders himself or leaves his Minister open to all sorts of misunderstandings and misinterpretations. I would respectfully submit that if the Minister says that if a man is to be bound by conditions, those conditions must be in the letter, then his answer must be: "We are going to put into the letter all the conditions on which he will vacate his appointment." If his answer is also, as I hope and trust it must be, that the conditions for all whole-time members will be uniform, and the conditions for part-time members will also be uniform, then let him tell us what those conditions are.
If there is to be that simplicity and uniformity, would it not be much less embarrassing to the Minister and to those he approaches if the more obvious and glaring cases were set out in the Bill? We who are directors of companies do not engage in all these odd practices. Under the present disposition some of us may be lucky not to go bankrupt, but the other things I hope we shall avoid 211 doing. We do not regard it as an insult that the Companies Act lays down that if we offend against the "Ten Commandments" we shall vacate our posts as directors of companies. We think that a very reasonable provision. But if my noble friend, Lord Dudley, wishing me to accept an appointment, wrote me a letter of this kind, I know what my answer would be. The Minister has had plenty of time to consider this matter, and I hope he will give us an answer to these questions.
§ LORD MORRISON
The noble Viscount is having a most enjoyable time and I am a little envious of him because I am in rather a quandary in my own mind. For two days I sat through the Second Reading debate in this House and heard the speeches. Every speaker on the other side of the House said that this was by far and away the worst Bill that this Government had introduced—and that was saying a lot! They said it was quite impossible to amend this Bill or to make it better; that it was a thoroughly bad Bill. I am in difficulties at the moment in that I am trying to puzzle out in my somewhat poor way, whether noble Lords opposite are now trying to amend a Bill which is so bad that it could not possibly be amended, or whether they are attempting what I ventured to say on Second Reading—namely, to destroy it by the "death by a thousand cuts." The noble Viscount has put questions to me: I put that one to him. Is this series of Amendments an attempt to amend the Bill? Only the other day the noble Viscount, who is one of the Leaders of the Conservative Party, made a speech in which he said that if his Party were returned at the next election, they would see that this Bill did not come into force. If it had been passed and was on the Statute Book, they would repeal it. What I am endeavouring to find out, and what it would be helpful to us to know—after all if we are going to start a questionnaire on this business it is as well that questions should come from both sides—is whether the Opposition, in this long series of speeches which has now begun and in this long series of Amendments which is being put forward, are really trying to make the Bill into a Bill which will work—I do not hear any response.
§ VISCOUNT SWINTON
I am waiting for the noble Lord to sit down. He will certainly get a response when he does.
§ LORD MORRISON
It will be interesting to know whether the Opposition are trying to amend this Bill in such a way as to make it into a workable measure, or are trying to make it absolutely unworkable.
To come to the particular point which the noble Viscount has raised, I made it clear, I hope, that there had been three different methods for determination of appointments—by Statute as in some of the earlier nationalisation Acts by regulations, under some later ones—coal, gas, and electricity—and by specification in the letter of appointment. The last applies under the Transport Act, and now similar provision is made in this Bill because experience up to now has suggested that earlier precedents embodying conditions for termination of employment under Statute or Regulation involve a certain amount of rigidity and that if the disqualifications are embodied in the Statute itself it is difficult to amend them in changing circumstances. When important Bills are passed, the House cannot always be engaged in making amendments whenever the rapidly-changing circumstances of the twentieth century make that necessary. That is what I endeavoured to explain, and that is the position which I still take up. The noble Viscount, of course, can make great play with what I have said, as if it were something entirely new for a Minister to write to someone offering him a post and outlining the terms. I do not think that there is anything very original or new in that. I am sorry I am not able to add any more, because I have no authority, either in the way of taking this matter back or accepting the Amendment. If noble Lords are dissatisfied with my reply or my attitude, they must do what they think wise and prudent.
§ 6.13 p.m.
§ VISCOUNT SWINTON
I should not have intervened but for the extraordinary speech which we have just heard from the Minister who is temporarily in charge of this part of the Bill. I can give him a perfectly plain answer. I should have thought that as a popular and respected member of your Lordships' House he knew the answer quite well, without ask, ing for it. The answer is this: this is a 213 bad Bill, and it is a Bill which we say has never been submitted to the people of this country. We shall presently come—I do not want to anticipate the debate now—to an Amendment which will ensure, if your Lordships carry it, that the Bill will not be brought into effect until the people of this country have had an opinion of expressing their opinion upon it. If the Bill were to pass and we were returned, as I trust and believe we shall he, at another Election, we should certainly repeal it. We are not in the habit of giving thoughtless pledges before an Election, and that is a pledge to which every leader of the Party to which I belong is fully committed and in which everyone in the Party which is associated with us on this measure would concur.
We have an equally clear duty, a duty which in the Second Reading debate the noble Viscount the Leader of the House impressed upon your Lordships, when he said that the most careful consideration should be given to the provisions of this Bill. This House has a duty—it is a duty which I am certain your Lordships will discharge—and although, in principle, we think that this is a bad Bill, yet if it is to go on the Statute Book it is essential that it should go on in a form which, if the principle of it is accepted by the country, will yet make it a workable measure. I am answering the question which the noble Lord, Lord Morrison, put to the House. Perhaps he will do me the courtesy of listening to my reply. I have been closely associated with my noble friends in the preparation of these Amendments, and I deeply resent the suggestion made by the noble Lord—if it came from some quarters I should not care about it, but I regret it coming from hint—that these Amendments are put down frivolously. I have had the privilege of acting as Leader of the Opposition in this House on all nationalisation Bills which have come forward. I have received the tribute of the Leader of the House and of the Lord Chancellor that the whole of that business has been conducted thoroughly, conscientiously and with dispatch. There is not an Amendment which stands on the Order Paper to-day 'which is not worthy of discussion.
And I say this—it will not make much difference whether the noble Lord is 'present in the House or not, but I give him this first firm assurance—every Amendment which stands on the Order 214 Paper will be fully and fearlessly discussed on its merits in this House. We shall not unduly prolong debate. If we receive a satisfactory answer we shall accept that answer as satisfactory. We have never dealt unfairly with the Government in that respect. If we do not receive a satisfactory answer or if, as unfortunately appears to be the case now, we fail to get an answer at all to perfectly legitimate questions which are conscientiously put, we shall take such action as seems right to us. Because someone makes a joke that does not mean that he is not perfectly scrims and sincere in what he puts forward. I know that on the other side of the Border certain views are held as to the sense of humour of Southerners, and that people on this side have ideas about the Scots sense of humour. Personally I have always bad a rather better appreciation of what Scots consider to be their sense of humour. I think it has its funny side now and again, but the noble Lord really must not think that because a speaker may speak in a slightly humorous way he is not regarding his subject seriously. The noble Lord took us to task on this Amendment, and I felt it necessary to say what I have just said. The speech of the noble Lord to which we have listened is one which I am sure that he, on reflection, will regret. I trust that that is the last time we shall have that kind of speech in this debate.
I come now to the Amendment which I hope he is going to treat seriously, because it is seriously put forward by us. What is proposed here is to put in this Act an exact provision taken out of the Companies Act, a measure which was dealt with very thoroughly in your Lordships' House, and of which the Lord Chancellor said, in commending it to another place, that it was one of the most perfect pieces of legislation ever carried through and an example of what this House as a model of legislative Assembly could do. We carefully revised the Companies Act to insert these clauses, which are applicable to all companies. We have repeatedly been told, in connection with these nationalisation Bills, that it is the intention of the Government that these Corporations shall conform in all respects to the best company practice. It may be the wisest thing to apply to these Corporations many of the provisions of the Companies Act, but the Government, in 215 their wisdom, have not so done in the structure of these Bills. We accept that, but where it is convenient, surely it is the right thing to write into the Bill, either by reference or directly, these provisions of the Companies Act? Is not the sensible thing to do what has been found wise in respect of every other company? The noble Lord himself said the Government were feeling their way, and that there were various ways of doing this—by including it in the Bill or by regulation. I think the latter is a suggestion well worth considering. If it were considered possible to do it by regulation, we would accept that, and I would not press this Amendment. I agree that we cannot provide for everything, but that is not a reason for not providing for anything.
I feel that the noble Lord has not studied the matter, because the last provision here is that the Minister shall be able to add such other conditions as may be appropriate. This is exceedingly important and I beg the noble Lord to treat it seriously. I dislike nationalisation and he likes it, but whether we like nationalisation or not, it is very important that what is done by the Minister in charge of a nationalised industry, or by the Corporation running it, should be open and above board. I am not saying that the Minister is going to do wrong things, but if we hedge him all round with letters written to this man and something else sent to that one, we shall only make trouble for ourselves. It would be much easier for the Minister to reconsider the Bill. If he thinks it wiser that this should be done by regulation, we will not insist on having it in the Bill. I am sure it would be wiser to reconsider this matter, and we can come back to it again on the Report stage. It may be that the right compromise will be to do this by regulation, but merely to leave it to the Minister to write a letter leaves it open to every possible objection that can be raised.
§ LORD MORRISON
The noble Viscount must understand that I have no authority to accept this Amendment in its present form.
§ LORD MORRISON
Secondly, as to whether it could be accepted in the modi- 216 fied form the noble Viscount now suggests, I can say only that I am not able to commit the Government even to that modified form. But, of course, if an Amendment in the modified form now suggested should appear on the Order Paper on Report stage it would naturally receive the consideration of the Government. I am afraid that is as far as I can go.
§ THE MARQUESS OF SALISBURY
Would it not be possible for the Government to go a little further, and consider this with us between now and Report stage? We can put down an Amendment in a modified form in Report stage, but surely it is better, if there is any chance of agreement, for us to discuss it before Report stage; then if we reach no agreement it will still be possible for us to put down our Amendment and press it or not, as we think best.
§ LORD MORRISON
If the noble Marquess means that when we have got through the Committee stage our relations will be such that it will still be possible for us to indulge in what I call back stage conversations, and reach some kind of agreement before coming back to the Floor of the House, I would say, "Yes, certainly."
§ THE EARL OF DUDLEY
I would remind the noble Lord that on Committee stage in another place, the Minister was impressed by the arguments of the Opposition, and said he would give consideration to them before the next stage of the Bill. But he did not do so. I hope the same thing will not happen in your Lordships' House.
§ VISCOUNT BRIDGEMAN
Nearly half an hour ago, when I first moved this Amendment, I made an appeal to the noble Lord opposite to consider this matter in the light of the arguments I produced. I am glad to find that at long last he has done so. Before I withdraw my Amendment on the understanding we have reached, I would like to say one or two things. First of all, my name was put to this Amendment and I would not have put my name to an Amendment which is of a somewhat technical character if it had been made in a frivolous and reckless frame of mind. I ask the noble Lord to accept that. 217 Secondly, I am still puzzled as to why one Department of the Government—the Ministry of Supply—sought to improve on the very good precedent which another Department of the Government—the Board of Trade—inserted in the Companies Act. However that may be, I think we shall find it possible to reach a compromise on the lines suggested by my noble friend, Viscount Swinton, and that that arrangement will be very much better. The terms contained in this Amendment are common terms, and a great number of companies have them. I myself, and many noble Lords, have worked under conditions of this sort, and we have found they are perfectly workable. I hope there is no need for me to say more. On the understanding that discussions will take place on the lines that I think the noble Lord opposite agreed with my noble friend, I beg leave to withdraw my Amendment.
§ Amendment, by leave, withdrawn.
§ 6.28 p.m.
§ LORD LLOYD moved, in subsection (6) to leave out "the disclosure" (where those words occur a second time) and insert "the relevant circumstances have come to his knowledge." The noble Lord said: Perhaps I had better begin by saying that this is a serious Amendment. It is meant to make the subsection do what we all would wish to see it do. The object of the subsection is to ensure that a member of the Corporation should not take part in deliberations on an occasion when a contract in which he had an interest is being discussed—a very proper provision with which your Lordships will all agree. But when we look at line 40, we see that the member is only debarred from taking part in those deliberations after the disclosure of his interest. My noble friends and I consider it would be better to make it an obligation that the member should not take part in the deliberations as soon as it comes to his knowledge that he has an interest in the contract. This is little more than a drafting Amendment and I cannot understand why the Minister made such a fuss about it in another place, but he did. He said it would have most dangerous legal consequences and was impracticable. We have not been told what the dangerous legal consequences will be, and if there are dangerous legal consequences, perhaps the noble Lord 218 will explain them now. This seems to me to be a very reasonable drafting Amendment and I hope noble Lords will accept it. I beg to move.
Page 2, line 40, leave out ("the disclosure") and insert the said new words.—(Lord Lloyd.)
§ 6.30 p.m.
§ VISCOUNT MAUGHAM
I would like to add a few words on this matter. Really I think this is only a drafting question. The middle part of subsection (6) relates to an obligation that a person directly or indirectly interested in a contract shouldas soon as possible after the relevant circumstances have come to his knowledge disclose the nature of his interest. …That recognises the fact, which all of us know, that with the complications of modern finance, ale may become interested in a particular contract and yet not know it. There are any number of big companies in which people do not really know their interests. If I may mention what happens in the Law Courts, I would point out that a judge is not entitled to try a case if he is interested in the business concerned. But again and again you find judges rising, after a case is opened, and saying that they are not quite certain whether, owing to their holdings in a particular company, they are interested in the subject matter of the action, and therefore they think they should disclose that possible interest. I mention that only to show that one does not always know until some later date that one is interested.
The end of the subsection contains these words:and the disclosure—which the member has to make—shall be recorded in the minutes of the Corporation, and the member shall not take any part after the disclosure in any deliberation or decision of the Corporation with respect to that contract.The suggestion is that he is not to take any part in deliberations of the Corporation, as the subsection says, "after the disclosure." But he must know it. Therefore, the words that my noble friends Lord Lloyd and Lord Hawke want to put in here are:after the relevant circumstances have come to his knowledge.In that case he knows that he is interested, and then his mouth is closed. It cannot be closed before he knows that 219 he is a person who must close his mouth. Whether this Amendment meets the ideas of a scrupulous company law draftsman, I do not know. It may be that what is sought to be achieved here could be done in a simpler way. I do not say whether that is so or not, but I do say that there is a necessity for not making a man close his mouth altogether on a particular matter before he knows that he ought so to close it by facts being brought to his attention which show that he is really an interested party.
Curiously enough, I was going to suggest to your Lordships that you would probably like to hear the views of my noble and learned friend Lord Maugham on a problem I was going to put before the Committee arising out of this Amendment, but not the one with which he has just dealt. It looks to me as if our intentions are precisely the same as those of His Majesty's Government: we all want to secure completely disinterested members of the Board at all times. It seems to me that there has been a flaw in the drafting in some way. As I read it, the members of the Corporation, who in many cases will be full-time members fulfilling a day-to-day function, may somehow or other become interested in some contract, whereupon they are to declare that interest at the next meeting of the Corporation. Meanwhile, they are continuing their executive functions and possibly making decisions, and so on, in a matter in which they are not disinterested. I wonder whether the Government are aware of this and, if so, whether they would not accept something like the Amendment that we have put down. It may well be that I have misread the legal position, and that "deliberation" may be an act that can be performed only by a full Board. But, as a layman reads the clause, at the moment it would be perfectly possible for an executive member of this Corporation to act and make a decision eventually binding the Corporation on a contract in which he was still an interested party.
§ LORD MORRISON
As the noble Lord, Lord Lloyd, said, this is a serious Amendment. The noble Lord quoted something that the Minister said in another place. I am advised that since the Minister said that, he has had important legal consultations, with the result that 220 my advice is that if this Amendment were accepted important legal complications might arise. The position is that the Amendment cannot be accepted, because it might give rise to an irregularity in the proceedings of the Corporation. Noble Lords will understand that I am making a strictly legal reply in regard to this Amendment. Subsection (6) provides for members of the Corporation disclosing their interest in certain contracts, and it goes on to say thatthe member shall not take any part after the disclosure in any deliberation or decision of the Corporation with respect to that contract.In effect, the interest of a member of the Corporation in a particular item of business amounts to a temporary disqualification so far as the business is concerned, but it ought not to invalidate the proceedings of the Corporation affecting, that business. This is secured by subsection (6) as drafted, because the disqualification will arise only after the disclosure of the member's interest. If the proposed Amendment were adopted, and the member failed to disclose his interest—not necessarily in bad faith—doubt about the validity of the Corporation's proceedings would arise. An honest man will, of course, disclose his interest at the first opportunity, and the rest will follow. If, however, a man is prepared to evade the duty of disclosure, he will be equally prepared to evade the duty of not taking part in the proceedings. That is the legal information I have received, but I would desire to say this. In view of the opinion expressed by the noble and learned Viscount, Lord Maugham, with his great legal knowledge, which I followed as closely as I could, I am quite prepared that some further examination of this matter should be made.
§ VISCOUNT SWINTON
I feel it is very desirable that it should be looked at further. I do not think there is any difference between us. On the other hand, there are three things of which we want to make sure. First we want to make sure that there is a disclosure by a member of the Board who has an interest. That should be a duty put upon the member of the Board. That is a duty which is, of course, cast upon the ordinary director of a company by the Articles of Association of every company—indeed, I think that is so by a clause in the Companies Act; I think it is in whatever is the equivalent to 221 Table A. However, as the Companies Act does not apply automatically to this Corporation, we have, I suppose, to put some provision into the Bill which imposes on the directors of the Corporation the same duty, or an analogous duty, as that imposed by the Companies Act and by the Articles of Association of a company upon a director of a company. That is the first thing which has to be done: the duty of disclosure has to be put upon the person.
While saying that, as the noble and learned Viscount, Lord Maugham, pointed out, you have to safeguard the member of the Board against an absolute duty which he may fail to discharge, not by any neglect but because he just does not know about it. Therefore, it seems to me that you have to introduce words which, while imposing the duty of disclosure upon him, will yet say that that duty of disclosure shall be exercised as soon as the facts come to his knowledge. If you have done that, you have made the thing just and fair, vis-à-vis the member of the Board. But are you, in fact, doing that under the clause as it stands? Are you not putting upon him, either directly or by implication, an absolute duty of disclosure as soon as the fact arises? The way it would come up would be this. The Corporation is meeting, a contract or proposal comes up for consideration and the member has an interest. It is then his duty to disclose that interest at once and say: "I take no further part in the discussion," and his disclosure is recorded in the Minutes. But what happens if he does not know, and only realises later on that he has this interest? I am not sure that you have in fact safeguarded him in that respect, and I think it should be looked at from the point of view of the member of the Board.
It is then said that you must look at it from the point of view of the party with whom the contract is made. Obviously, we are not dealing here with what I may call a corrupt case, the sort of case at which the original provision of the Companies Act was directed, that a director shall not take part in a discussion about a contract which is going to benefit himself personally or some company in which he is directly interested. What is in fact the legal position? I am not very clear about this. When a contract, not so much 222 directly affecting a director, but a contract in which he has some remote interest, comes up for consideration—he may merely be a shareholder in the company—a most extraordinary situation arises as between these great Corporations. Suppose you are buying coal, and the director happens once to have had a share in a coal mine and has some stock—"Hyndley's" I suppose it is called on the Stock Exchange—and the poor fellow, not having received a dividend, has forgotten all about it and does not disclose an interest. I am not sure that an extraordinary situation may not arise, where a number of people happen to have this Government stock and there will be only about two members of the Board who can deliberate about coal. And as there is only one company from whom you can buy coal, it cannot be obtained in any other way. But as it is between two friendly Government companies, I presume you would not have a row about a matter like that!
This, however, is a case where third party interests are affected. It is said that if the man failed to make his disclosure the contract could be upset. It would not automatically be upset, because who could upset it? The third party ought to have a right to upset it if the thing is being done to his disadvantage. On the other hand, I do not think the contract would come automatically to an end, because it could only come to an end if either the law makes the contract completely frustrated or because one party seeks to set aside the contract. If the party has been damnified, I should have thought he ought to have a right to set aside the contract. If, on the other hand, he would be damnified if the contract were set aside, then the setting aside of the contract would have to be set on foot by the Corporation themselves, and surely they would not be in a position to take advantage of a third party merely because a member of the Corporation had failed to disclose his interest. I speak with a good deal of hesitation about this legal aspect, but I doubt whether there is that danger and risk to the third party. I would like to know what is the case in an ordinary company where a director has inadvertently failed to disclose an interest and yet a contract is made.
§ VISCOUNT MAUGHAM
May I help my noble friend there? There is a special 223 section, either in the Act of Parliament or in the Articles of Association, which deals with that precise point, so no question arises in the case of an ordinary company if a director has inadvertently voted on the proposal before the board and yet was a person interested.
§ VISCOUNT SWINTON
I am much obliged; I thought that was so. But if that is so, how is it that where the contract is made by the Steel Corporation under this Bill, there is great legal danger and the contract becomes vitiated and goes by the board, whereas it does not do so in a contract made by an ordinary company?
§ VISCOUNT MAUGHAM
May I interrupt again? I think the point which the noble Viscount has made—although it does not arise in the case of an ordinary company—may well arise in the case of this Corporation, and the matter ought to be looked into before the Report stage.
§ VISCOUNT SWINTON
I will not pursue it, but I think I have said enough to show that we have uncovered a very curious legal anomaly as between these nationalised Corporations and ordinary corporations. I do not know whether it can be done in this Bill, but I would have thought that should be set right, because the whole idea was that a nationalised Corporation should have both the rights and duties of an ordinary public company. If its directors are, by inadvertence, put into a wholly different position from that of the directors of ordinary companies, then I think the whole matter wants looking at from the point of view of the directors, of the Steel Corporation and of everybody interested in it.
I am grateful to the noble Lord for his assurance. I think we are trying to cover the same point, and on that understanding I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ 6.50 p.m.
LORD RENNELL moved to add to subsection (8),
Provided that the provisions of Section 38 of the Finance Act, 1948 shall apply in respect of allowances paid to members of the Corporation under the provisions of this Act.
§ The noble Lord said: This Amendment is in some ways analogous to the last one, and Lord Morrison's remarks earlier have some application. In this Amendment the Companies Act is not affected as it was in the case of the other two. Here it is a question of another Act, the Finance Act. The object of the Amendment is fairly clear, and I do not think it needs much explanation. It is to ensure that members of the Corporation shall furnish to the Inland Revenue the same proofs of their allowances as an ordinary company director would have to do in the ordinary course of his duties. The proviso which I am moving fits in with the clause dealing with the remuneration of members by way of salaries or fees and the provisions for their pension on retirement that the Minister may, with the approval of the Treasury, decide should be made.
§ As we have been told by the noble Viscount, Lord Addison, and the other spokesman of the Government that it is the Government's desire that the national Corporations should be treated in the same way as other companies (although they do not come under the Companies Act) it seems only fair that provision of this sort should be inserted. I do not think there is very much difference of opinion on this, because the Chancellor of the Exchequer, in reply to a question in another place, said that the officials of nationalised industries would be dealt with in exactly the same way as directors and employees of ordinary public companies. If that is so, I imagine that the Amendment proposed will probably be accepted from the Government Benches. I think it is desirable in the public interest, and also from the Government's own point of view, that it should be down in black and white, so that people will have no feelings that a different régime is going to govern. I beg to move.
Page 3, line 5, at end insert the said proviso.—[Lord Rennell.]
§ LORD WOLVERTON
My name appears in support of the Amendment which has been ably moved by my noble friend Lord Rennell, and I would like to say a few words on it. I feel certain that as His Majesty's Government have said they wish nationalised industries to be model employers they would wish to have this in the Bill and treat the people 225 in no different way than public companies are treated under the Companies Act. I hope His Majesty's Government will see fit to accept this Amendment and so bring the Steel Corporation into line with public companies.
§ LORD MORRISON
The noble Lord who has moved this Amendment says that it is perfectly clear. His purpose is to ensure that any expense allowance made to members of the Corporation shall be subject to the same scrutiny by the Inland Revenue as the allowance made to directors of ordinary business concerns. My reply, briefly, is that I am advised that this Amendment is unnecessary, because it is already covered by Section 38 of the Finance Act, 1948, which provides that any sums paid by a body corporate to any of its directors, or to employees earning more than £2,000 a year, are to be treated as taxable remuneration, subject to any deduction which may be due under Rule 9 of Schedule E of the Income Tax Act, 1918, for expenses incurred "wholly, exclusively and necessarily" in performing the duties of the office or employment.
Perhaps the noble Lord put down his Amendment rather because he wanted the public to know, and wanted assurances given, that the expenses paid to members of the Iron and Steel Corporation will be dealt with by the Inland Revenue in the same way as the expenses of ordinary business undertakings. This assurance I am authorised to give—indeed, it was given in another place, if the noble Lord will allow me to quote what happened. On Clause 37 of the Finance (No. 2) Bill, 1948, which is now Section 38 of the Finance Act, 1948, the right honourable gentleman, Mr. Stanley, said this:We on this side would like to have a categorical answer by the right honourable gentleman that all directors and employees of nationalised industries will be treated in exactly the same way as he has laid down for those engaged in private industry.My right honourable friend the Chancellor of the Exchequer replied:I hope to meet the right honourable gentleman's desire for information by saying that all nationalised industries will be dealt with under Rule 9.226 As recently as January 18, this year, Mr. Norman Bower asked the Chancellor of the Exchequer why officials of nationalised industries are not called upon to make detailed justifications of their expense allowances to the Inland Revenue authorities in the same way as employees of private firms. Sir Stafford Cripps replied:The honourable Member is misinformed. Officials of the nationalised industries will be dealt with in the same with as directors and employees generally.When Mr. Bower asked:Will they have to make individual returns of their expenses in exactly the same way as employees of private concerns?",Sir Stafford Cripps replied:In exactly the same way.I hope that that assurance will satisfy the noble Lord.
I am obliged to the noble Lord for his clear statement, and I would like to ask only one question—though the answer is perhaps implicit in what he has said: Do "bodies corporate" which are referred to in Section 38 of the Finance Act include the Iron and Steel Corporation?
§ Amendment, by leave, withdrawn.
§ Clause 1 agreed to.
§ House resumed.