HL Deb 27 May 1968 vol 292 cc996-1008

4.47 p.m.

LORD SHACKLETON

My Lords, I beg to move that the Report of Amendments be now received.

Moved, That the Report be now received.—(Lord Shackleton.)

On Question, Motion agreed to.

Then, Standing Order No. 41 having been suspended (pursuant to the Resolution of May 21):

LORD SHACKLETON

My Lords, I beg to move that this Bill be now read a third time. We had some interesting debates on this Bill on the Committee stage. It may not have been convenient, I fear, for certain of the noble Lords opposite who are interested in this Bill to be present at this time. I know that the noble Lord, Lord Erroll of Hale, said that he would not be able to be here. Nevertheless, I do not think we are going to run into any difficulties, because I do not think noble Lords opposite need worry about the absence of their particular champions on this occasion.

I would say that I am grateful to them for the way in which they have debated the Bill. It started off with a certain amount of, not exactly fury but activity, but after the initial controversy has subsided I hope that noble Lords opposite will at least give the benefit of the doubt to the Government's intentions and will regard this as a useful, I was inclined almost to say a modest, measure, but it could be of very considerable importance. Although it was also novel, and to that extent contentious, I think the pattern that it will establish of a partnership between Government and industry will come to be generally accepted and that the controversy will die away. I think there is general agreement on all those Rails of the Bill which deal with particular projects: the finance of particular projects, the Concorde, additional finance for the National Research and Development Corporation, and so on.

I should very briefly like to deal with some of the points which noble Lords raised about other parts of the Bill, if only to show that we have listened carefully to the noble Lord, Lord Drumalbyn, who always comes up with interesting, sometimes esoteric, points, but always points that need proper consideration. We have considered them carefully. There was one question in particular which I think the noble Lord, Lord Hawke, who is not here, asked, and I know that the noble Lord, Lord Drumalbyn, was concerned about. That was whether the words in Clause 2(3), particularly in the latter part of the clause, could be clarified. It was not clear to some whether the words "and no such scheme" in Clause 2(3) referred to any industrial development scheme or only to one for a shipbuilding undertaking after the dissolution of the Shipbuilding Industry Board. I have looked at this clause again, and although this subsection contains rather a miscellaneous bundle of exceptions I am quite certain that the noble Lord, Lord Drumalbyn, after looking at it again, will agree that the words "and no such scheme" can refer back only to the words "an industrial investment scheme". Therefore, the relevant limb (which I understand is the correct word) of the subsection means what we intend, and contains a general requirement for consent of an existing company to the acquisition of its shares under any scheme.

I have also looked at the rather important point which the noble Lord, Lord Drumalbyn, raised on this subsection, about the absence of any provision that the Government must obtain the consent of a company participating with the Government in establishing a new company "pursuant to a scheme". I stated during Committee: I do not see how you can form a joint company with another company unless it consents. That still seems to me to be clear; but if it was not clear—and perhaps it was ambiguous—may I say that I mean that the Government could combine with an existing company to form a new company pursuant to a scheme only if the existing company agreed to do so. The need for that consent to be obtained, therefore, does not have to be provided for in the Bill.

I have also looked at the points raised by the noble Lord, Lord Drumalbyn, on the question of the approval by Parliament of industrial investment schemes. I was myself concerned at the arguments he put forward, which seemed to me, on the analogy of other measures, to have some force. I said in Committee: Here we are proposing to have Orders which are primarily intended to provide money. We accept that such measures are traditionally not subject to rejection by your Lordships' House. I commented on Second Reading that a time might come when perhaps, if the reform of your Lordships' House goes through, the question of Commons financial privilege could be argued again. But clearly this is not the moment for me to raise that point.

The argument that the noble Lord, Lord Drumalbyn, used was that there was respectable precedent to show that the setting up of an industrial board should be the subject of an Affirmative Resolution of both Houses. He cited the Cotton Reorganisation Scheme and schemes under the Industrial Organisation and Development Act. My recollection of those, although not absolutely clear, was clear enough for me to express the view that they were not on all fours, and I find this to be so. Schemes under the Industrial Organisation and Development Act and the Cotton Reorganisation Scheme were essentially regulatory and did not provide authority for the expenditure of Government money. Of course, the provisions here go a great deal further than anything contemplated under industrial investment schemes.

There will be no powers in relation to the Bill to do the sort of thing that could be done under the Industrial Organisation and Development Act For instance, a development council could provide for the imposition of a levy by the Council on persons carrying on business in the industry concerned and in this connection could empower the Council—I am sure the noble Lord will follow these words, as they have a familiar ring—to require such persons to keep records, produce returns and give the Council access to their books. I am most grateful to the noble Lord for raising the matter, if only because it provides a slight touch of nostalgia of the days when we debated these matters in another place. Of course there are enforcement provisions, including penalties. A Cotton Reorganisation Scheme could similarly provide for the imposition of charges and penalties to be imposed if information requested by the Cotton Board was not furnished. Therefore it is clear that this is altogether a different point, and that the setting up of an Industry Board scheme will not be significantly different from others. Of course its form is already provided for in Schedule 2 to the Bill.

I should like to turn briefly to one change in the Bill made by your Lordships' House. Although it is possible to go through it again I do not think it would be correct for me to argue it at great length, but I rather agree with an article I read in the Spectator, that too much attention has been paid by the Conservative Opposition to the theoretical objections to the acquisition by the Government of equity shares in companies. I personally regret that this Bill now leaves this House prohibiting sponsoring Ministers from taking equity under a scheme. I have given arguments why a company concerned may feel that this is an appropriate form of support in a particular case, because it avoids the burden of fixed interest payments. But, again, I do not want to make too much of that because I do not think it is a major part of the scheme.

I must say that I am bothered that we should have dropped this method. There would, of course, be the advice of an independent advisory committee, and a Government shareholding would provide the best possibility of a proper return on the taxpayers' investment, including an equity investment. But, as the Bill stands, if changes are not made it will be necessary to have special legislation before the Government can participate in the financing of the new computer company which we announced and explained in your Lordships' House, International Computers Limited, which is in the process of being set up, with the full consent of the companies concerned. The financial arrangements have been worked out to give both the new company and the taxpayer a fair bargain. One particular fear expressed in the context of Government purchase of equity was that the Government might, unless the Bill were amended, use its provisions to acquire majority shareholdings in companies. I have already said that generally it will not be the Government's intention to acquire majority share- holdings in companies under industrial investment schemes. It would nearly always be a minority interest. If a scheme envisaged a majority interest it would have to be laid before Parliament.

I was, however, a little concerned as to the possibility of the Government's achieving this by stealth in some way, knowing of the anxiety of noble Lords as to what Governments, if not this Government, might get up to. Here, it is worth pointing out that if, after acquiring a minority interest under a scheme, the Government were offered a further holding and wished to accept that offer, a new Order varying the original scheme by seeking to increase the finance available under it would have to be laid before Parliament; and of course, it would have to be approved in another place. That would be equally true whether or not the additional share acquisition would give the Government control.

I hope that this assures noble Lords opposite that there will be no possibility of the Government's trying to acquire control over companies without informing Parliament. I have already made it plain that this is not our intention; it is not the object of the particular exercise. I have stressed that the aim is to give assistance to industry, selectively and speedily. The computer merger is one example of the need for speedy action. It is not our aim to gain control over private industry, but rather to further partnership between the Government and industry. The Bill lays down clear criteria for Government financial assistance for industrial projects and constitutes an important improvement in constitutional arrangements. It means that, in future, action can be taken more rapidly, under more direct Parliamentary control of individual projects and within more clearly defined limits than has often been the case previously. I believe that is as it should be. We at all times are having to combine in Government the obligation to move quickly and decisively and, at the same time, retain the proper Parliamentary control and the proper scrutiny of the Executive. I believe that this measure will make a contribution, and a by no means minor contribution, to Britain's competitive position in the world. I beg to move.

Moved, that the Bill be now read 3a. —(Lord Shackleton.)

5.2 p.m.

LORD DRUMALBYN

My Lords, I am sure your Lordships will be extremely grateful to the noble Lord, and I certainly am, for the way in which he has proposed this Motion. I am particularly grateful to him for his efforts to allay some of our misgivings about the Bill and for dealing with certain points that we raised in the course of the Committee stage. The first thing I would say about this Bill is that I do not think anyone could have accused your Lordships of delaying it in any way at all. Indeed, in Committee we discussed only the most important general clauses of the Bill, as distinct from the clauses dealing with the financial support for particular undertakings or ventures, the Concorde, the "Queen Elizabeth II", and the Beagle aircraft, and the replacement of certain temporary provisions in the Supplies and Services (Transitional Powers) Act by permanent powers.

The main reason why we did not have to ask questions about those provisions was because the Leader of the House kindly provided us with explanatory memoranda. His courtesy in doing this undoubtedly saved the time of the House, and I hope that Ministers will follow this excellent example—one which perhaps might have been one of the matters mentioned in your Lordships' debate last week on the procedure of the House. I am sure that if the Government were willing to provide explanatory memoranda on clauses on appropriate Bills in advance of the Committee stage the time taken over the Bills could be reduced, and I, for one, should at least feel more confident that I know what a Bill is about—at least, I should hope so. I perhaps ought to add that of course the noble Lord would expect us to look at the explanatory memoranda at least as critically as he himself does.

The noble Lord has referred to the one change we have made in the Bill—

LORD SHACKLETON

Its one blot.

LORD DRUMALBYN

—which we quite recognise is unwelcome to the Gov- ernment. That is the omission of the provision which, under an industrial investment scheme, could authorise a Minister to subscribe for or purchase shares in an undertaking with its agreement. If this embarrasses the Government all I can say is that the Government have only themselves to blame. The practice of anticipating the approval of Parliament, virtually taking it for granted, seems to be becoming the rule rather than the exception. It is particularly objectionable when what the Government seek to achieve could have been achieved in some other way—as I believe in the particular case of I.C.T., it could have been achieved through the Industrial Reorganisation Act. Also, according to the Press, there are other schemes ready, or nearly ready, to be presented to Parliament, but Parliament has still not been told about them.

The coyness of the Government in this respect gives cause for concern about the extent of Parliamentary control over schemes provided for in the Bill. This is another point to which the noble Lord the Leader of the House referred. Some schemes, of course, may involve comparatively small amounts of financial support, but others, particularly those involving an entire industry, or indeed a section of an industry, may be both costly and of great importance to the national life.

The noble Lord pointed out the differences that exist with the sort of scheme that will be brought in with this Bill and the schemes made under the Cotton Industry Act 1959. I think it is regrettable that in the Bill the Government have seen fit to treat all schemes alike, whether they are concerned with, say, a single promotion in a small company or assistance to a vast industry, or with support for possibly the improvement of efficiency in a whole industry. As the Bill stands, each scheme is simply to be laid before both Houses of Parliament, and will be subject to approval of the Commons by Affirmative Resolution. No opportunity is to be given in either House to amend the scheme, and this is the essential difference that exists between what is proposed in this Bill and what has been done in the past.

My Lords, the use of the Affirmative Resolution is, of course, a common enough device. I may be wrong, but I cannot remember an Affirmative Resolution being defeated, or even withdrawn for reconsideration, in my time in the Commons, so this means little more, after all, than rubber-stamping what has already been arranged behind the scenes. I am sure that we all appreciate the need for confidentiality in negotiations in many cases, but it seems to me that if the work under this Bill is to command full public support it is desirable that we should be told well in advance of schemes that are likely to be laid before both Houses of Parliament.

I recognise that in the case of the I.C.T. scheme some advance notice was given and that was even, of course, before the Bill was passed. But I should like the noble Lord to tell us how he envisages that this will work in practice. Will everything be done, so to speak, in the preparation of the investment schemes behind closed doors until the time comes to lay the draft Resolution before the House, or will Parliament be kept informed of the kind of schemes that are under consideration, so that opinion in Parliament, and among the public, upon these particular schemes can be formed in advance of the presentation of the draft Resolution?

What worries me most, however, is the doubt I feel about the way in which this Bill is going to be used. This is a very difficult thing to talk about, because we naturally accept entirely what the noble Lord says about the intentions of the Government in respect of the use of this Bill. He spoke of what some future Government might do. But my doubts arise not so much from what the Ministers responsible for the passage of the Bill have said, as from what other members of the Government and of the Labour Party have said.

One of the things which I think has caused the conflict between the two sides of the House on this matter is that when the Government first presented the Bill its aim appeared to be to promote industrial expansion—indeed, that is what the Long Title of the Bill says. It was also in the name of the White Paper. The Government were to provide financial support, as set out in the Long Title: for industrial projects calculated to improve efficiency, create, expand or sustain productive capacity or promote or support technological improvements". They were to do this where and only where a project could not be expected to go ahead solely on the basis of finance from existing sources. But when the Bill was published the schemes for such technical support were not described as industrial expansion schemes, but as industrial investment schemes. The emphasis was changed from Government support to Government investment.

Although in the debates in this House, we on this side were considering the provisions of the Bill from the Point of view of co-operation in industrial expansion, noble Lords opposite were making speeches about it from the point of view of State investment. Indeed, the noble Lord, Lord Hirshfield, seemed puzzled and rather grieved, I thought, that we did not share his viewpoint. He spoke with great experience as a financier, but we on our side were thinking in terms of production and industrial efficiency. This epitomises the difference which has arisen between the two sides of the House on this Bill.

The real danger of this measure is that, having the powers to seek Commons' confirmation of schemes prepared behind the screen of confidentiality, the Government will find that there are few worthwhile projects which cannot obtain in the market sufficient capital for development, and will accordingly be tempted either to promote expensive schemes unwisely, or else to invest for the sake of investing. These seemed to be the lines on which the noble Lord, Lord Hirsh-field, was suggesting that they should proceed. They may even be tempted to invest in order to get control of a company or of an industry.

The noble Lord, Lord Shackleton, today disclaimed any such intention, and said that in effect if they started by taking a minority share in an industry they would have to come back to Parliament before they could increase that share to a majority share. That is no doubt so, but the fact remains that they could come back to Parliament to increase it to a majority shareholding. The difficulty, as I see it, is that all that is needed is for the Government to declare that, in the opinion of the Minister there is no likelihood that sufficient capital will be forthcoming from other sources to promote technological improvements which, again in the opinion of the Minister, are needed. I thought it desirable to show to the House the reasons why we have felt misgivings about the Bill and why we have pressed to a Division and carried the Amendment to which the noble Lord referred.

There is one further question I should like to put to the noble Lord. The noble Lord will be well aware of the help which the Government can give to industry setting up in development areas. One consequence of the Bill could be—I do not say that it will be—that the Board of Trade influence over the location of industry will be weakened. I would ask the noble Lord, the Leader of the House, for an assurance that where new industrial development is involved the competent authorities, before promising financial support to any company, will consult the Board of Trade on the question of location so as to continue to make sure that, if at all practicable, the development takes place in a development area.

While we shall not oppose the Bill, we are not certain that the powers given in this Bill are either necessary or desirable. I, for one, believe also that at least in regard to schemes for an industry or sections of an industry there is insufficient Parliamentary control. Our suspicions have been aggravated by the way in which the emphasis in the Bill has been clanged from "industrial expansion" to "investment". This is a Bill which offers too much scope for misuse. I can only hope that it will not be misused. It will probably do some good, but I doubt very much that it will do as much good as the Government expect.

5.17 p.m.

LORD SHACKLETON

My Lords, the noble Lord is still a little suspicious. I wish I could cure it. I think that he is no longer suspicious of me. I am not sure whether he is suspicious of the Government or of people he is afraid might be in the next Labour Government; but he obviously is a little suspicious. I should like to try to distinguish for him the use of the word "expansion" as opposed to "investment". The way in which this Bill is intended to operate to achieve industrial expansion is by providing industrial investment. It seems to me to be logical to have as the Title of the Bill "Industrial Expansion"— An Act to authorise the provision of financial support, pursuant to schemes laid before Parliament, for industrial projects to improve efficiency … One does this by providing for additional investment where in fact it will not be forthcoming in satisfactory form, or in large enough form, through the existing channels of investment. It seems to me clear that the case has been made by the particular projects which are directly mentioned in the Bill. The difference is that in future, instead of having to bring a Bill to Parliament each time this is done there may be a greater need for more rapid action.

I do not disagree with the noble Lord as to the undesirability of Government moving in on a large scale and taking over majority control of independent businesses. To my mind, there is every possible objection to doing so. This is not to suggest that there are not appropriate cases, as previous Governments have endorsed, where industry should be brought under public ownership. We are in fact having to do so in the case of Beagle Aircraft, but it was only after a number of efforts had been made to leave it, either jointly or with a majority control, in the hands of private industry. The purpose of the Bill is simply to ensure that, where it is necessary or desirable to achieve for reasons which were set out in the White Paper a particular expansion in a certain area of industry, one does so by means of an investment scheme. The noble Lord said there would be few worthwhile occasions for doing so. There may not be many, but the few in which this practice will he carried out are those in which it is thought to be worth while. Computers are an example.

The noble Lord asked whether in fact a number of projects were coming along about which the Government were being secretive. The noble Lord likes to have it both ways. He complained because the Government went ahead with the computer arrangement and hoped to tie it on to the Bill, and announced it in advance. He now complains because we have not announced to Parliament something in advance. But we have not got them yet. They have not reached the stage of being clear investment schemes. Indeed, I know of no specific one at the moment, and I do not know whether there are any particular projects coming forward.

The noble Lord made an interesting point as to how far Parliament would be given advance information. I think this must depend on the circumstances. But I very much take his point that the moment an agreement has been negotiated—and it may be necessary to negotiate that agreement in private, if only because of the effect it could have on share markets and so on—it will be desirable to give the maximum notice to Parliament. The speed with which the Order is laid must, of course, depend on the urgency of the particular measure, but I take the noble Lord's point fully, and the more notice Parliament is given the better. Let me also say, again to the noble Lord, Lord Drumalbyn, that before the Government of the day can introduce such a scheme they will almost certainly have had the advice of their Advisory Committee, and in the case of an industry board there will again have been some preliminary inquiries.

I do not doubt that it would have been possible to tie up the Bill very much more tightly; but there is a balance in these matters and we do not want to make it unreasonably bureacratic. However, we want to provide reasonable Parliamentary control and, above all, to ensure that the purposes are clear enough for any abuse of the intentions of the Bill—and this is why I think the Parliamentary role is important—to be brought to light. I have no qualms about anything at present, although the noble Lord is quite right in saying that we are always legislating far ahead. However, I believe that adequate control is provided.

He asked me one question about the location of industry. I hesitate to give him a precise answer without consultation. Clearly, this is a matter which will be considered, but how it will be weighed in the particular circumstances I cannot say with any precision. There is already a degree of Parliamentary and ministerial control. The interests of the Board of Trade are bound to be recognised and, of course, there will be Treasury control over such measures, which will have to take into account whatever Government policy may be in regard to the location of industry. But I will go into that matter, and if there is anything useful that I can give to the noble Lord I shall write to him, or perhaps we can even arrange for a Question to be asked in the House.

I do not expect we have seen the last of this Bill. On the equity question I must say to noble Lords that I still think they are making far too heavy weather of it. I understand their reasons, but I cannot, for the life of me, see why, in a measure which commends itself to the industries concerned—one of which, as I explained on Second Reading, was not considered appropriate for the I.R.C. for reasons which I shall not repeat—we should deny freedom to an individual company to allow the Government to take some equity, provided it is not under duress. I suspect that noble Lords' views are really rather hostile to the concept of free competitive enterprise.

On Question, Bill read 3a, with the Amendments.

LORD SHACKLETON

My Lords, I beg to move that this Bill do now pass—and may I say that there was nothing offensive for the noble Lord in my last remarks.

Moved, that the Bill do now pass.—(Lord Shackleton.)

On Question, Bill passed, and returned to the Commons.