HL Deb 08 August 1972 vol 334 cc1030-45

7.2 p.m.

THE MINISTER WITHOUT PORTFOLIO (LORD DRUMALBYN)

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Lord Drumalbyn.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD DERWENT in the Chair.]

Clauses 1 to 8 agreed to.

Clause 9 [Industrial Development Advisory Board]:

On Question, Whether Clause 9 shall stand part of the Bill?

LORD ROBERTHALL

I feel I should first make an apology for not having mentioned on Second Reading that I had some doubts about this Clause. Unfortunately, I was prevented from being here in time to hear the opening speeches and I felt it would be discourteous to your Lordships' House to speak in a debate when I had not heard the beginning of it. Like other noble Lords who spoke then I welcome the Bill and wish it a speedy passage, but I have some misgivings about how it is going to operate. Those misgivings were not allayed by the Second Reading debate. I thought therefore that we ought to consider the matter a little further.

Part II of the Bill provides, in Clause 7, for financial assistance in assisted areas to help the employment situation, and in Clause 8 for assistance generally. Clause 8 is drawn very widely: to benefit the economy of the United Kingdom, or…in the national interest… It is therefore clear that the Secretary of State can do anything he thinks fit so long as he gets the consent of the company and does not actually acquire a controlling interest. I was in agreement with most of the speech of the noble Lord, Lord Boyle of Handsworth; he said that some powers of this kind are necessary in a mixed economy. I welcome the recognition by the Government that such powers are needed. To my mind the question is not whether there should be such powers but how best they should be exercised. In common with a number of speakers both in your Lordships' House and in another place I regret the loss of the I.R.C. as a chosen instrument for this purpose. Perhaps, as the noble Lord, Lord Boyle, said, it was politically necessary to move the exercise of these powers to the Department, but I think it was a retrograde step.

Selective assistance to industry is something which, by its very nature, must be discriminatory. It requires a judgment which is like a commercial judgment; that is, what is the best bet. That means willingness to take a risk, and a hope not of success in a particular case but that you will have more successes than failures. It is far from aiming at a record with no failures, especially where the price of that is no successes. In my experience, this kind of judgment is very different from the kind of judgment which civil servants so often have to make, where one failure can easily prejudice a man's career and where successes, if they benefit the career at all, will only do so indirectly. It is for this reason that it is desirable that there should be an insulating layer between Ministers and the taking of commercial or quasi-commercial decisions. That is the reason why Ministers do not have to defend in detail the regular decisions of the nationalised industries; the same purpose was served by the I.R.C. The I.R.C. is water under the bridge and the question is, how can we make the best of what we are getting?

I was very glad that the noble Lord, Lord Drumalbyn, reminded us that Mr. Tindale, who was the general manager of the I.C.F.C., is going to be the director of industrial development. I was also glad to read in recent advertisements, if I understood them aright, that the Department is advertising for a staff for the director and that the requirements for that staff are very like those for the staff of the I.R.C. I hope that the Secretary of State will make it clear to the director and his staff that he is prepared to defend them when he acts on their advice and comes under criticism. The criticism will undoubtedly be that if he is doing this for company A why does he not do it for company B and company C. That is the whole characteristic of the Parliamentary process. The only real answer is that he thought that company A was the best bet and that, as he read the Act, that was how he ought to exercise his judgment.

Where does the Advisory Board come in? It is an illusion to suppose that an Advisory Board is going to help him much. I thought the noble Viscount, Lord Simon, was too much concerned about being in a position to reply to detailed criticism and that both he and the noble Lord, Lord Tanlaw, who pressed for a wider range of qualifications for members of the Advisory Board, shared what I call the illusion that a big board with a lot of different people on it will improve the quality of the decisions which the Secretary of State has to make. The Advisory Board is almost certain to be made up of successful and busy men who are accustomed to delegating as much work as possible.

I do not think it is contemplated that they will have their own staff of industrial and commercial experts. In a number of cases, particularly I have often thought in Parliamentary Committees, it would be desirable for the committee to have its own staff, but I do not think that is contemplated here. So they will either have to accept the analysis of the director and his regional assistants or refer matters back for further inquiry. No doubt the Board may be able to give useful general advice, but in exercising powers of approval or rejection they will act much more like the board of an ordinary commercial company who lay down broad rules and then have to trust and back their staff to do the work and not try to do it for them. Few successful men have the qualities which will enable them both to keep dogs and to bark for them; and if they try to do this is part-time members of the Advisory Board I think so much the worse for all concerned. The point I am trying to make is that I regard this Board as a piece of window dressing, and not altogether a good piece. The dangers that I see in the whole process of selective assistance are not that they will make mistakes but that they will not have enough successes; and if the Board is too active it will only slow everything up and sow the seeds of doubt and uncertainty in the minds of the staff on whom in the end the Secretary of State is going to have to rely.

These doubts were much reinforced in my mind by the objections which the noble Lord, Lord Boyle of Handsworth, took to Clause 9(4) which gives the Board power to ventilate any differences of opinion that they may have with the Secretary of State in a statement before Parliament. I hope that this power will not have any effect, but if it does I am afraid it will be to make everybody concerned look over their shoulders all the time in order to keep the record straight, to see that they have an answer to everything that happens: that is to say, to slow up the whole process of selective assistance. But in a matter of this kind, in aid to industry, the timing of decisions is very important—an integral part, really, of the decisions. So I think on the whole it is a mistake to establish a statutory Advisory Board with statutory powers.

I certainly do not wish to delay the passage of this Bill and I do not want to press this matter to a Division, but I hope that the Secretary of State will consider very carefully the way in which he wishes to operate his new powers. We all hope that they will have a beneficial effect—and I am sure that he hopes that; that he is not regarding this machinery as just a device for putting things off. But in that case his objective must be that there should be as little delay as possible and that he should steel himself against criticism of particular decisions and aim to have a balance of more successes than failures.

7.13 p.m.

LORD DRUMALBYN

I am grateful to the noble Lord, Lord Roberthall, for raising this question which goes to the heart of the whole of the administration of Clause 8 and, to some extent, Clause 7. This particular clause was put into the Bill, as the noble Lord will probably be aware, owing to pressure in another place. I do not mean to say that the Advisory Board itself was born of pressure in another place—that, of course, was done in the White Paper. But the inclusion in the Bill itself is due to pressure in the Commons. I was sorry that the noble Lord was not present at the Second Reading. I am accustomed to his extreme courtesy but I do not think anyone would have resented it if, in spite of the fact that he was not here at the start, he had intervened.

LORD ROBERTHALL

May I say that I was here for most of it. It was the start that I missed.

LORD DRUMALBYN

In any event, we are happy to hear the noble Lord speak now and, in the light of his great experience of these matters, we take the most careful note of what he has said.

Any kind of mechanism of this sort is bound to have its dangers. The noble Lord suggests that the dangers here are dangers that there will be over-caution and that the need for obtaining advice will slow up the machine seriously. He will have noticed that the clause contains no detail of the circumstances in which the Secretary of State must refer matters to advisory boards. It is well also to remember that the advisory boards will exist at two levels. It is only at the national level that we have a statutory requirement for the appointment. But your Lordships will be aware that it is also intended that there should be regional industrial development advisory boards helping there. What is envisaged is that most of the matters arising in the regions will be dealt with in the regions and, where appropriate, will be referred to the advisory boards. It is not expected that the advisory boards will be advisory only on individual cases or even on individual industries. It will also be for them to express their view as to what needs to be done and to be able to suggest courses of study that need to be taken up so as to identify the kind of cases in industry as a whole, or in individual industries, where assistance might be beneficial.

I was glad that the noble Lord welcomed the appointment of Mr. Tindale. This gives a pointer to the kind of organisation we expect to have. There will of course be a Permanent Secretary at the top and Mr. Tindale will be working very closely together with him. There will also at national level be the development unit which will be looking at the kind of strategy we have to follow. But, once all that is done, I hope the noble Lord will agree with me that what we need is great knowledge of not only the market, not only individual industries, but also personalities.

We envisage a very much closer working between industry, on the one hand, and Government, on the other, than has emerged so far. One of the ways in which we expect to be able to have our tentacles out, so to speak, in this matter is through the use of these advisory boards. We believe that they will be of considerable use in reinforcing the judgments of the Regional Controller, who will have to prepare the case where there is an application and may not of himself be able to feel confidence in the viability of a company if it gets the aid. By obtaining the advice of the Advisory Board on this, it is very likely that a much better result will be achieved and that the money will be better used. I do not think it can be said that the use of the Local Employment Acts Financial Advisory Committee resulted in failures. There have been successes and failures as a result of that; and no doubt there will be successes and failures as a result of the machinery that we are establishing here. But I personally would attach great importance to this knowledge of the market and to the knowledge of people and, as I say, one of the main benefits of the Advisory Board will be to assist the industrial advisers—the industrial directors, as they are called—and also the regional controllers of the Department of Trade and Industry in sifting out those cases which are likely to give good results.

The noble Lord raised the question of subsection (4) and queried whether it was a good idea, where the opinion of the Board is over-ridden by whoever is taking the decision, whether it is the Regional Controller or the Department of Trade and Industry. Here I do not really agree with the noble Lord that this will lead to a great deal more caution. It seems to me that this is a necessary safeguard for the Secretary of State (and for the Advisory Board) when he comes to be criticised, and obviously he will have to stand up to criticism; on the one hand he can say, " I consulted the Advisory Board and they agreed with me ", or, on the other hand, he will be able to say that he differed from the Advisory Board, and he will be able to state his reasons where that is so. In any case I think this would be bound to arise. This is perhaps why we did not put down the provision in the first place, because we think that with the normal Parliamentary process of the challenging of decisions all along the line it is highly probable that this kind of situation would have arisen through the ordinary Parliamentary processes.

I do not think it would be right to expect that in every case where there was a different sort of opinion the Board would ask that their difference of opinion should be recorded. Matters of judgment on particular applications, for example, as to whether, on balance, this is worth supporting or, on balance, a grant or a loan should not be given, and so forth, I would not expect to be the subject of a Statement made before Parliament, unless of course it was of really major importance in terms of funds. But where, on the other hand, the clause is being used with a view to bringing in some scheme of assistance for a whole industry and there is a difference of opinion there, I should have thought that in the circumstances it was right for Parliament to be made aware that there was a difference of opinion. I do not think it really goes much further than that.

I hope I have said enough to allay at least some of the fears of the noble Lord, Lord Roberthall. Perhaps I might sum up what I was saying, that this structure of advisory boards at the top level and at lower level will give a very much wider spread than could possibly have been given by the Industrial Reorganisation Corporation, and it will get the benefit of people with a much wider range of experience to advise the Secretary of State, either locally or centrally. In the kind of rapid movement that we are experiencing just now, and the rapid economic changes that are going on, I think this kind of inter-penetration between Government and industry is important. In my view it would be well to give this structure a chance to work, and I hope it will prove successful.

7.24 p.m.

LORD DIAMOND

I intervene briefly only to make it clear to the noble Lord, Lord Drumalbyn, and to the Government that although the name of the noble Lord, Lord Roberthall, is alone attached to this Amendment, what: he has said has the full support of all of us on these Benches.

The noble Lord, Lord Roberthall, made it clear that he would have preferred something in the nature of the I.R.C.; it need not necessarily be a precise reproduction of the I.R.C. but something at some distance from the Government. That is the essential point, and what the noble Lord, Lord Drumalbyn, has said about inter-penetration as between industrial experience and the Civil Service is very wise and sensible but need not be affected at all by having a different kind of organisation—one which would be in a sense more free to rely on its own judgment, to stand on its own feet, and to make its own decisions within the general policy laid down by this Bill.

Of course this machinery will result in fewer decisions to help industry than would otherwise be the case. Where an advisory board is consulted and the decision is a marginal one then that advisory board, like any solicitor, any counsel, any doctor, anybody who is asked for advice, will err on the side of caution. Everybody does, naturally, where it is a marginal matter. Where it is clear that you want to give advice one way or the other you give that advice; but where the arguments are equally balanced you will tend, as the adviser, to say, "I am not taking the action; I am giving the advice and therefore I must err on the side of caution". Therefore, without doubt there will be cases where help to industry within the policy of the Act would be given but for the advisory board. It is necessary to have somebody at some distance from the Government to use independent judgment. With the greatest respect, the only way that I have been able to work out how to achieve what the Government want to do, and what we wanted to do, and to avoid the liabilities of creditors and others which come from that kind of action, is to have somebody acting at arm's length from the Government, because they can do as a banker what the Government cannot do, namely, intervene without having attached obligations and commitments.

So there are several reasons why the I.R.C. type organisation would be a better one. The reasons why there is no I.R.C. (let us be frank about it) is because as soon as the present Government came into office they killed the I.R.C. and it is difficult for them to go back on that; and because, as they have made clear from time to time, the Government, and particularly Government supporters, did not like the way the I.R.C. intervened in the City. There was one particular occasion when the I.R.C. gave considerable offence in the way in which it intervened. Perfectly clearly that can be avoided. If that is what you do not want, being a Conservative Government—and you are entitled to your views as a Government—then you could have organised it in a way in which history would not have repeated itself. So I do not think the reasons given for not having an I.R.C. type of body are good enough and the reasons for having one, as the noble Lord, Lord Roberthall, explained, are very strong.

What can one do about that situation? Not very much, except to ask the Government to be good enough to watch carefully the way in which the implementation of this part of the new Act is carried out. Watch it carefully, knowing that there is a great deal of informed opinion—and there are few in your Lordships' House who would have greater information than the noble Lord, Lord Roberthall, drawing on his enormous experience in Government—and bearing in mind that there are many with informed views who really believe (not on political grounds at all, but in order to enable this Bill, when it becomes an Act, to work in a way in which the Government want it to work) that it would be better to do it at some slight distance from the Government instead of having it within the machinery of Government. Perhaps the noble Lord will be good enough to see that his Department watches this point with great care.

7.30 p.m.

LORD TANLAW

Without wishing to detain the Committee, I will take up briefly a few points raised by the noble Lord, Lord Roberthall. I appreciated his references to the contribution made by the noble Viscount, Lord Simon, and myself. I agreed with almost everything he said and his remarks represented a valuable contribution to the passage of the Bill, which has our full support. We on these Benches are pointing to the necessity for such boards to draw on all the specialist expertise that is available. This does not necessarily mean having a very large board. Boards of a very large size do not work in Government or commerce. For example, in Scotland when any money is applied for under the Bill for oil development we should ensure that there is an oil man on the board to direct matters. We support, at any rate in a lukewarm way, the Government's principle that an Advisory Board of this kind is a necessary counterbalance to the welter of advice that comes from Government Departments whenever taxpayers' money is at stake.

I like one element about this Advisory Board and that is the element of devolution which will occur under the Bill. The Government have at last recognised the need for devolution in development matters. These boards seem rather like a merchant bank with a board of directors, but which does not have power to distribute money. I feel that for regional development in the areas where it is most needed, we need not a Board but a Development Bank, and I hope that this Bill represents one step in the process of the Government's adopting this kind of thinking. The Government are now thinking in terms of devolution towards areas where assistance is necessary by giving more control and decision-making outside Government Departments. I welcome this. The next step for the Government may not be far off and it will certainly be in our manifesto for the next General Election. I hope that before then the Government will agree that a Development Bank is the necessary vehicle to give maximum stimulus to the points where growth is most needed.

LORD BOYLE OF HANDSWORTH

Anyone who was a Treasury Minister during the years when the noble Lord, Lord Roberthall, was economic adviser will understand what authors mean when they say in their prefaces that what is good in their books is due to the advice they received from some of their friends and that the faults are due entirely to themselves. Those of us who were fortunate to have the noble Lord as economic adviser will appreciate the force of that statement. The noble Lord, Lord Roberthall, has done a service tonight by reminding us that selective assistance cannot always be successful. Of its nature, some examples will succeed while others will fail. The important thing, as the noble Lord said, is that selective assistance should have a reasonable proportion of successes.

One aspect that always bothers me about our attitudes to Government today is the unspoken assumption that in all the important aspects of Government policy it is reasonable to expect 100 per cent. success. In fact, some of the most important aspects of Government policy are those where no Government can succeed for more than a proportion of the time. For reasons which some of us gave on Second Reading, I believe that a Bill of this kind is needed as a permanent feature of our mechanism for economic policy. However, we must bear in mind that Government selective assistance cannot be successful for more than a proportion of the time.

That brings me to the issue which the noble Lord, Lord Roberthall, has raised in his Amendment: the Advisory Board. I was greatly reassured to hear what the Minister said about the importance of inter-penetration between Government and industry. Here, more almost than anywhere else, is an example of what one witness to the Fulton Committee called the importance of "mutual involvement" between Government and the outside world. Far more Government Departments than we realise are mutually involved with the outside world in the pursuit of their policies. The reason why I regret the decision to make this a statutory board is simply that there are bound sometimes to be disagreements—sparks will be struck, as it were—between the Advisory Board and the director and the Development Unit within the D.T.I. But the more that this can happen without any statutory process being involved the better.

When I think of the number of times the partners in the education service have disagreed, and the outcome of that disagreement has proved fruitful, I feel certain that I am right. If there had to be an elaborate statutory process, a less valuable result would have occurred. For this reason I rather regret the decision to make the Board a statutory one. The Minister put his finger on the essential point when he said that the Board should essentially be concerned with rendering assistance. My plea is that assistance should always be preferred, wherever possible, to public confrontation. Of course there could be an extreme case, concerned perhaps with the redevelopment of some major industry, where it might be right for a Parliamentary statement to be made; but I hope that public confrontation between the Board and the Secretary of State's Department will be reduced to a minimum, because I cannot believe that advantage will often come from flaring headlines about the disagreements which are bound to occur from time to time.

I hope the Minister will agree that it would be particularly unhappy if the Board became, as it were, the watchdog not only of the C.B.I. but of Back Bench Members of Parliament. whereas the Development Unit and the director remained the principal source of advice to the Minister. That is the sort of confrontation between Parliament and the Executive which, as I said on Second Reading, would not be conducive either to speedy and effective decision-taking or to help for the regions. We must learn from experience and there must be mutual involvement between Government and industry. The greater the number of decisions that can be arrived at through discussion and argument, without headlines about disagreements, the better for those in the regions who most need assistance.

LORD ROBERTHALL

I need not detain the Committee for long. I am grateful to noble Lords who have spoken to the Amendment and for the kind remarks they have made about me. I particularly thank the noble Lord, Lord Boyle of Handsworth. In his closing remarks the noble Lord, Lord Diamond, put in a nutshell what is concerning us, which is that this is a difficult and tricky business, the implementation of which is worrying us all. The remarks of the noble Lord, Lord Drumalbyn, about the way in which he hoped the Advisory Board would work seemed admirable. I only hope that his prognostications prove correct. When he said that a very useful thing they could do was to give opinions about the character of people, I could not agree with him more because that is where the staff of the director are going to be in some difficulties. In that context I ought to say that the regional advisory boards are more likely to be really useful than the national one.

The other point is that I had noticed that Clause 9. subsection (4) referred to the request of the Secretary of State. I did not mention it because I thought it would be a hit blatant to suggest that he should not offer very many requests. I think the noble Lord went rather near in pointing this out to me. If the advice he seeks is rather general advice and not advice on particular matters that does go quite a long way towards meeting my points.

LORD DRUMALBYN

I welcome very much all that has been said. There is room for a difference of opinion here but I should like to thank the Opposition for the way they have accepted that difference of opinion and for their willingness to see how the matter works out. Certainly for our part we shall be watching this very closely. It is as well to remember that there are safeguards. There is the safeguard that projects exceeding £5 million can only proceed with the authorisation of Parliament. 'That is important. I take entirely the point of my noble friend, Lord Boyle of Handsworth, on the question of the relationships between the Board and the Secretary of State. Obviously this would have to be on a basis of confidentiality or it would not work at all.

If the Board felt so concerned about a decision of the Secretary of State, then at its request—and it is very important that it is only done at its request—a statement on the matter would be laid before Parliament. But if that were to happen often the whole system would break down. Of course this must be entirely an exceptional system and a last fall-back; it would probably occur not in a case of individual aid but as to how to treat a whole industry or sector of the economy, or possibly a whole region. Those are the sort of problems that would arise. I am grateful for the good wishes that this Bill has received and I hope that, supported by them, it really will work.

Clause 9 agreed to.

Clauses 10 to 19 agreed to.

Schedules agreed to.

House resumed

Bill reported without further Amendment; Report received.

Then, Standing Order No. 44 having been suspended (pursuant to Resolution):

LORD DRUMALBYN

My Lords, I beg to move that this Bill be now read a third time.

Moved, That the Bill be now read 3a.—(Lord Drumalbyn.)

7.45 p.m.

LORD HOY

My Lords, I regret having to detain your Lordships at this hour and on this particular Bill at this late stage, but your Lordships passed the first eight clauses in two minutes, which is rather more quickly than you are dealing with the European Communities Bill. I want to raise a point on Clause 3(2) which is much more mundane than the questions so ably discussed by noble Lords on the last Amendment. It is important to a particular industry.

After the Bill had been passed in another place one of my colleagues, Mr. Deakins, came to me and told me that the agricultural aspects of the Bill had been a little overlooked and that as a consequence slaughterhouses which were eligible for assistance would be left out. I found this a little surprising, but on Monday morning I received a letter from the National Farmers' Union and they have this great fear, too. They said that it might be dealt with in one of two ways: either under Clause 2 or under Clause 3(2). It would seem a great pity if this were in fact the case because this particular part of the agricultural industry has had a rather checkered career, and it was only at a very late stage that it was included for these benefits.

I understand that under Clause 3(2) it would be possible for the Minister to make an Order which would make slaughterhouses eligible as they have been up to this present time. This is extremely important for the industry and I do not hesitate to raise it even at this late stage. I have submitted the correspondence to the Minister and I am certain that he is only too anxious to get up and tell us all that he is going to meet the request of the National Farmers' Union and my noble friends from another place.

LORD DRUMALBYN

My Lords, I was grateful to the noble Lord for letting me see this correspondence and it may have made matters a great deal easier. I should just perhaps explain the background a little bit here. We are dealing with the position of slaughterhouses under the regional development grant scheme which is to be established under Part I of the Industry Bill. The wholesale slaughtering of animals for human consumption is classified in Order 23 of the Standard Industrial Classification while the regional development grant scheme, with relatively minor exceptions, is, as noble Lords are aware, confined to Orders 2 to 20. The classification of this activity—the wholesale slaughtering of animals—does present difficulty since in some respects slaughterhouses have characteristics of a manufacturing industry and in other respects the charac- teristics of a distribution industry. A complication is that sometimes the slaughtering of animals and the preparation of meat for retail sale are conducted on the same premises.

Under the Local Employment Act building grant scheme some slaughter-house projects qualified for grants but by no means all were able to satisfy the employment criteria and other requirements under that Act. The position at present, as far as regional development grants are concerned, is that representations on this matter have been made to the Minister for Industrial Development, who is consulting with agricultural Ministers. Clause 3 of the Industry Bill as drafted provides that the coverage of the regional development grant scheme may be extended by statutory instrument—I confirm that this is so—so there would be no difficulty in bringing this activity within the scope of the scheme if it was decided that it was appropriate to do so. With that explanation I hope the noble Lord will leave the matter at present, in view of the talks that are going on between the Minister for Industrial Development and the agricultural Ministers.

LORD HOY

My Lords, if I may be allowed to say so, I am grateful to the Minister for what he has said and I am prepared to leave the matter there.

On Question, Bill read 3a, and passed.

[The Sitting was suspended from 7.51 p.m. until 8 p.m.]