COMMONS AMENDMENT (Hansard, 27 July 1967)

§ LORD HUGHES
My Lords, with Amendment No. 33, I wish to associate Amendments 45, 52 and 130. I beg to move Amendment No. 33.

§ LORD DRUMALBYN
My Lords, does the noble Lord wish to give an explanation of the series at this point, or to wait till we come to No. 45?

§ LORD HUGHES
My Lords, I shall be quite happy to do it at this time. I understood that this was one on which the noble Lord changed his mind and agreed to permit it to be dealt with formally. Amendments Nos. 33, 52 and 130 are incidental to No. 45. The purpose of the new clause in Amendment No. 45 is to require disclosure in a directors' report of numbers employed and the total wages and salaries bill. The requirement is, however, limited to companies employing more than 100 people. I think that the best way in which I could give information on this matter is to repeat what my right honourable friend the President of the Board of Trade said in another place on Second Reading. He used these words: I must also advise the House that I have decided in the course of the Bill's passage that, in the interests of industrial efficiency and modernisation generally, we ought to add one more item of disclosure to those in the Bill; that is a record of the total manpower employed by the company concerned, and of 1177 the total wages and salaries bill. In the National Conference on Productivity held by the Prime Minister last September, the view was strongly expressed from both sides of industry that such disclosure would be a further spur to industrial efficiency; and the C.B.I. supports this. I therefore intend to move an Amendment in Committee to this effect, but to limit this obligation to companies employing more than 100 persons, so as again to avoid imposing excessive extra paper work on small companies where the information might be of least public value."—[OFFICIAL REPORT, Commons, col. 364; 14/2/67.] The clause as it now appears before us in Amendment No. 45 gives effect to that intention expressed by my right honourable friend on Second Reading in another place.

§ LORD ERROLL OF HALE
My Lords, I am naturally grateful to the noble Lord for his explanation of the key Amendment No. 45, which is preceded by the paving Amendments on which this debate is now about to take place. Both I and my noble friend, Lord Drumalbyn, will have a great deal to say on this subject, because in our opinion it is a ridiculous, useless and unnecessary addition to the Bill. Furthermore, if it had been necessary it could have been put in when the Bill was originally presented in this House, but it was introduced at a later stage. We happen to know that the Board of Trade themselves did not want it; that it was forced upon them by the Department of Economic Affairs, and that it will not help national efficiency or anything else. It was merely said in another place that at a Prime Minister's Conference on Productivity both sides agreed that this would be an aid to national efficiency. We know how these conferences are arranged and rigged so that agreement is obtained over a wide field of related matters. This one is slipped in, and the feeling is, "It is not worth having a row over this particular one, because it is time to get away at the end of the day "—and so on. No case has been made out that this information is necessary in the interests of national efficiency.
Then we are told that it should not apply to companies having fewer than 100 employees, because of the additional paper work that it will impose upon them. But, of course, the additional paper work is just as burdensome to larger companies, 1178 pro rata to the number of their employees, as it is to the smaller companies. This idea that because a company is big it can just take on any amount of additional paper work is ridiculous. I congratulate the Government on at least realising that they are imposing an additional burden of paper work. This is not a contribution to national efficiency at all. Far from it. It provides for a series of out-of-date, generalised figures which will be of little use to anybody in any Department of Government or in private life. The Government have not made out a case for it at all. It is not relevant to company legislation. The whole thing could have been obtained by means of an order under the Statistics of Trade Act 1947, which they have conveniently forgotten for this purpose.
The Government are going to have great difficulty in extracting all the information and collating it when they get it, because all the directors' reports will be presented at different times of the year, in different forms, by the various chairmen of the companies and stored away in Companies House; and it will have to be extracted individually, case by case, because it cannot be computerised. Therefore the information will not be made use of at all. But this great mass of material has to be collected and the paper work done, which is admitted by Her Majesty's Government to be a severe burden on small companies. This paper work will have to be carried out year after year, simply at the whim of a few old boffins in the Department of Economic Affairs. That is what it amounts to. No case has been made out for this, and for the Government's saying that they must have the Royal Assent to this Bill to-night we should have divided on this Amendment and sent the clause back to the Commons for re-examination. What we object to is that there has been no proper consideration of this clause in your Lordships' House, and we have no time to consider it now properly, or to amend it—and by that I mean the power to amend. We are deprived of the power to amend this clause.
We have been treated to a most flimsy explanation, merely a quotation from what a Minister said in another place. No clear justification has been given for this ridiculous unnecessary imposition upon companies in this country. We 1179 deplore it; and were it not for the greater issue at stake, namely, the need for the Royal Assent to-night, we would have thrown this ridiculous clause out and sent it back to the Department of Economic Affairs, where it properly belongs.

§ LORD CHORLEY
My Lords, the noble Lord, Lord Erroll of Hale, with typical truculence, if I may be allowed to say so, has condemned out of hand this important provision in the Bill. He speaks for himself and some of his noble friends behind him, but after all it was agreed at a very important conference at which business interests of great moment were represented, and the Prime Minister himself was present, and it is in accordance with the whole trend of modern company law, which has been directed more than anything else to the disclosure of important information, not only about the actual affairs of companies, but of information which is of the very greatest value to those on whom we have to rely—the economists.
SEVERAL NOBLE LORDS: Oh ! The economists.

§ LORD CHORLEY
It is all right for noble Lords opposite to laugh, but the whole government of this country, and not only of this country but of every country in the modern civilised world, is to a large extent based on the advice of economists. The science of economics is one of the great modern sciences. It is all very well for noble Lords opposite to laugh out of hand, but they know perfectly well that when they are in power they consult economists. The control of the country's industry and economic affairs is to a very large extent based on the expert advice that the Government receive from the economists, and I deplore this quite gratuitous attack upon this important class of experts, coming from the Benches opposite, which is based on nothing but prejudice and ignorance.

LORD HAWKE
My Lords, I think the noble Lord is under some misapprehension. The figures which the economists want in order to run the economy of the country are already contained in the Statistical Digest. Presumably they get those figures from some authoritative source, and therefore I do not see that it is necessary to have this particular clause in the Bill. I have no doubt that the 1180 noble Lord will find it valuable in his particular academic studies, but I do not think it will be the slightest use to any Government Department.
Among other things, a half-time person counts as one. It is impossible to compare the output per employee, for instance, between two businesses, one of which is run by half its employees on half time and the other all on full time. It would be a statistical distortion, and would merely add to the work of the persons in the firm. What is more, it will add to the work of the auditors, who are already in terribly short supply in this country. Everything in the director's report has to be verified by the auditors, and this will amount to many thousands of man hours by chartered accountants and will be an appalling wastage of time.

§ LORD DRUMALBYN
My Lords, I wonder whether I might put this point to the noble Lord, Lord Chorley. I am quite certain that if he made more careful inquiries he would find that the language used by my noble friend in regard to this clause was nothing to the language used by some of those on his own side about it. There is of course a place for information of this kind. As my noble friend Lord Hawke has said, this information is available, but not necessarily from company to company.
What are we being asked to do? We are being asked to put in accounts figures that have to deal purely with the number of employees. It has nothing to do with accounts. In addition to that, of course, there has to be added the figure of the total wages, presumably with the object that you then divide the one into the other and say that over the year there have been 363.567 employees on average and you divide those into x, x being the total amount of the wages. What sort of figure are you going to get out of that, and what on earth is the use of it? This is why we are objecting to this. It is a perfectly useless figure to put in. I should not have thought that it will give a great deal of trouble, but it is totally out of place, with no importance and no significance. If this is to be done at all, it should be done in the "Neddies". They should make comparisons, as they do, not necessarily by companies, so that comparisons can be made of total wages costs in certain 1181 given activities. Here again I hope the noble Lord will have a very close look at this. These figures may be used for facile and totally irrelevant and misleading comparisons. I hope the Department will look to see how misleading these comparisons can be and when the new Bill comes forward they will abandon them.

§ LORD HUGHES
My Lords, I am not convinced that the noble Lord, Lord Erroll of Hale, was as truculent as my noble friend Lord Chorley thought he was, because it seemed to me that in spite of his violent language he was not able to keep the smile from his face. He has an advantage over me. My experience of Prime Ministers is confined to the present one, so when he claims he has knowledge of the way Prime Ministers' Conferences may be "rigged", he at least had experience of a number of them, and the breadth of his experience I must concede. When he went on to talk about his inside knowledge that this came from the D.E.A., and that the Board of Trade did not wish it, again I must concede that his contacts with the D.E.A. are closer than my own. He may or may not be right; I am not in a position to argue. But I can argue when he misuses the way in which I quoted my right honourable friend.
The noble Lord said the President of the Board of Trade had admitted that this was excessive extra paper work putting an additional burden on people. What I did say, in quoting the President of the Board of Trade, was that this obligation was limited to companies employing more than 100 persons, so as to avoid imposing excessive extra paper work on small companies, where the information might be of the least public value. He completely ignored the last part of the statement. It may be justified to ask people to do additional work if the results which come from it are justified in the public interest. I admit that in these matters it can only be a matter of the opinion of the Government of the value of the information they are getting, against the opinion the noble Lord expressed of its lack of value. If he is right that the D.E.A. are the power behind the throne in this matter, and if he and his noble friends are equally right that the statistics which the D.E.A. are seeking 1182 are already there in information available to the Department, it makes me wonder whether his source of information is as reliable as he thinks it is. I doubt whether the D.E.A. would go to all this bother to get the Board of Trade to do something it did not want to do in order to provide the D.E.A. with information they already have. I doubt it very much.

§ LORD POLWARTH
My Lords, may I submit two points on this? First, there is the one put by my noble friend Lord Hawke, concerning the additional burden on auditors which is being added to the many already imposed by this Bill and the previous recent Statutes on taxation. Secondly, I am entirely in favour of the provision of adequate and accurate statistics in the right form and in the right place. I submit that the companies' accounts are not the right place. Nor can a figure which, for example, lumps in one average every salary in the company, ranging from the general manager to the lady who makes the tea, be of any conceivable value statistically.

§ LORD ERROLL OF HALE
Are we to have a reply?

§ LORD HUGHES
My Lords, with respect (and the noble Lord, Lord Polwarth, knows the respect in which I hold him), except for the reference to chartered accountants he has not raised a point not already raised by the noble Lords, Lord Erroll of Hale and Lord Hawke. He sought to reinforce the point made by Lord Hawke. But as the value or otherwise of the criticism depends on the value we place on the information, and I have already admitted there must be a difference of opinion as to what that value is, I do not think I can usefully add anything to what I have already said.

§ LORD BRECON
My Lords, would the noble Lord not agree that companies already make voluminous reports to the Board of Trade every year, and if this information is not already given there could it not be asked for in future reports and let the Board of Trade collate these, rather than give it in the annual report.

§ LORD HUGHES
My Lords, it is true that the Board of Trade have at the present time samples of this information, but not in the comprehensive form which this Amendment will make possible.

LORD HAWKE
My Lords, is it not correct that an enormous proportion of the trade of the country is carried on by companies employing less than 100 persons. They are not to get information from these. Surely the information from 99 companies employing 100 persons is just as valuable as the information from one company employing 9,900 persons.

§ LORD HUGHES
My Lords, in the light of experience the Government might arrive at the conclusion that the noble Lord, Lord Hawke, is right, and if so we should lower the figure.

§ LORD CHORLEY
My Lords, might not a sensible man deduce from the fact that as the Board of Trade already have samples of this information, now that they want it comprehensively it shows they think it is of great value to them.

§ LORD DRUMALBYN
My Lords, an ex-cathedrâ statement has been made by the President of the Board of Trade that this is in the interests of industrial efficiency and modernisation. May I ask a simple question: how is it?

§ LORD HUGHES
My Lords, the noble Lord, Lord Drumalbyn, like his noble friend Lord Erroll of Hale, has had experience of the Board of Trade, and I am quite certain that there must have been many cases, when they were at that office, on which they would have been quite unable, without notice, to get up and say the particular use to which the information they had obtained might be put at any given time. But I do suggest, as a general answer to his question, that it is bound to be of value in the attempts to improve the economy to have the maximum amount of information on employment in the country with the minimum of inconvenience to the individual companies concerned, because the efficiency of this country depends more and more on the extent to which its manpower is put to the best possible use.