Lords Sitting of 6 August 1975

Preamble
The House met at half past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Southwark.

THE LORD CHANCELLOR: LEAVE OF ABSENCE
THE LORD CHANCELLOR (LORD ELWYN-JONES): My Lords, this may be an opportune moment, before the House proceeds to the principal business of the day, for me to acquaint your Lordships with the fact that with the Queen's approval I have accepted an invitation to attend as the representative of Her Majesty's Government the Centenary Celebrations of the Supreme Court of Canada to be held in Ottawa on 26th and 27th September. I have also been invited to pay a number of official visits within Canada, and I hope that your Lordships will agree to grant me leave of absence for the week beginning 22nd September.
Several Noble Lords: Hear, hear!
Lord HAILSHAM OF SAINT MARYLEBONE: My Lords, I think the only thing I can say is, "Lucky you!"

TRISTARS ON BELFAST SERVICE
2.36 p.m.
Lord O'NEILL of the MAINE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are aware that the new TriStar service to Belfast is still unsatisfactory.
Lord WINTERBOTTOM: My Lords, I am aware of the difficulties experienced by passengers following the introduction of the TriStar on to the London—Belfast route. I understand that the greater part of the problem is at Heathrow and that urgent action is in hand to ease this situation.
Lord O'NEILL of the MAINE: My Lords, is the noble Lord aware that the service is even worse than I forecast in this House two months ago? The earliest I have been is one hour late; the latest I have been is four hours late; and there was one alarming day when the automatic brake came on as we were travelling at 70 mph down the runway. Do the Government appreciate that on a route where security is, quite rightly, extremely strict, this is not a suitable 'plane for running that service?
Lord WINTERBOTTOM: My Lords, any change in technology, of which this is one, brings with it problems. The traffic volume between London and Belfast is very large, and it was an obvious choice for a wide-bodied jet with a medium-range capability. In the long term, I am certain that this new and successful aeroplane will serve Northern Ireland very well.
Lord O'NEILL of the MAINE: My Lords, I wonder whether the Minister is further aware of this fact. It may give my Scottish colleagues great pleasure to know that the reason for the introduction of the TriStar on the Belfast route was to supply sufficient Tridents for the shuttle service to Glasgow. Nevertheless, the forecast by the Northern Ireland Tourist Board is that, shuttle or no shuttle, the fare from London to Glasgow, Edinburgh and Belfast next autumn will be £60 return.
Lord WINTERBOTTOM: My Lords, that is another question. If the noble Lord would put down a Question about the economics of the flight, I will try to answer it.
Lord NUGENT of GUILDFORD: My Lords, is the noble Lord aware that I recently had a comfortable flight to Belfast in a TriStar? But perhaps I was not discriminated against on privilege grounds, as I am not an ex-Prime Minister.
Viscount GOSCHEN: My Lords, is it not a fact that the TriStar, travelling at the speed which my noble friend said, is capable of stopping by the reverse thrust, anyhow, without the use of the brakes?
Lord WINTERBOTTOM: My Lords, that is a technical question on which the noble Viscount is more expert than I am.

TRADE UNION LEADERS AND MARXISM
The EARL of ARRAN: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will seek the advice of the Law Officers of the Crown as to whether a prosecution should be initiated for sedition or treason against those Trade Union General Secretaries who are self-avowedly Marxists.
The LORD CHANCELLOR: My Lords, if the noble Earl has any evidence of sedition or treason, he should inform my right honourable and learned friend the Attorney General, who will no doubt refer it to the Director of Public Prosecutions if he thinks that course necessary.
The EARL of ARRAN: My Lords, does the noble and learned Lord who sits on the Woolsack seriously believe that Mr. Mick McGahey, the Communist President of the Scottish National Union of Mineworkers, and Mr. Arthur Scargill, the Marxist leader of the Yorkshire miners, are loyal to the Sovereign, and that their loyalties do not lie elsewhere?
The LORD CHANCELLOR: My Lords, it is not for me, sitting on the Woolsack as head of the Judiciary, to comment on any particular case. If any of these matters are seriously contended to come within the domain of the criminal law, I have indicated the course that should be followed.
Baroness GAITSKELL: My Lords, may I ask my noble and learned friend the Lord Chancellor whether it would be true to say that one of the greatest strengths of our democracy—and I have had to stand up and spell this out—is that we allow people the human right, which is, after all, in the Charter, of joining a political Party of their choice, unless it is a Party which incites people to violence?
The LORD CHANCELLOR: My Lords, the maintenance of such liberties is of course an essential part of our freedoms; but the exercise of all liberties
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must be contained within the parameters of the law, if I may coin a phrase.
Lord SLATER: My Lords, is my noble and learned friend aware that I still classify myself as a coal miner? Is he further aware that two of the greatest Secretaries of the National Union of Mineworkers have been two individuals who were supposed to be Communists—Mr. Arthur Horner and Mr. Will Paynter? They did yeoman service and gave good leadership to the people they represented, and they acknowledged their allegiance so far as the Monarchy of this country was concerned.
The LORD CHANCELLOR: My Lords, if I may say so, I knew both gentlemen well and I think the first of them had the distinction of being born and bred near the town of Llanelly.
Lord TAYLOR of MANSFIELD: My Lords, would the noble and learned Lord agree that if the noble Earl, Lord Arran were to confine himself to the welfare of badgers and to the proposals of the Ministry of Agriculture, he would be better employed?
Lord LEATHERLAND: My Lords, may I ask my noble and learned friend who sits on the Woolsack whether the noble Earl, Lord Arran, has evidence of sedition or treason in respect of any citizen of this country? May I further ask whether, if having such evidence, a citizen does not disclose it to the authorities, he renders himself liable to prosecution for aiding and abetting?
The LORD CHANCELLOR: My Lords, that is an interesting question which again should be directed at a source other than the Government, who have no responsibility for initiating prosecutions of any kind.
Lord KINNAIRD: My Lords, may I ask the noble and learned Lord, since I know nothing about law, whether he would agree that the trade union leaders are elected to look after the trade unions and not to meddle in politics? May I also ask the noble and learned Lord whether, if they do meddle in politics we should not perhaps consider changing the law?—because we all know where they are heading.
The LORD CHANCELLOR: My Lords, the day when we prevent a British

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subject from meddling with politics will be a dark day for this country.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, may I ask whether we have not meddled with legal subjects long enough this afternoon?
The Earl of ARRAN: My Lords, one last question: may I ask Her Majesty's Government whether, once again, they are funking this issue?

OVERSEAS AID POLICY
2.45 p.m.
Lord BARNBY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government, with regard to published total annual overseas aid for the last three years—

(a)what is now the policy with regard to diminishing the totals of untied aid, and

(b)what is the current yardstick of measurement for determining future allocations of aid.

Baroness LLEWELYN-DAVIES of HASTOE: My Lords, there is no specific policy to diminish untied aid. There is also no simple formula for allocating aid, because the changing needs of the developing countries require a flexible policy. Our priorities are to meet the reasonable needs of our Dependent Territories; to give assistance to the poorest countries; to help the poorest sections of the community in those countries; and to further rural development and food production.
Lord BARNBY: My Lords, may I say that that Answer was helpful in parts and disappointing in others. Would the noble Baroness not agree that as regards financial reliability the poorer countries must be the worst risk, and that this would therefore be a greater reason for transferring more of the aid from being untied to tied, in the hope that this would lead eventually to banking supervision? With regard to the first part of the Answer given by the noble Baroness, surely the uncertainty and instability that exists in Africa is, anyhow, a reason for reviewing downwards the allocations of aid?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, in answer to the first part of the supplementary question put by the noble Lord, aid is allocated according to need in the first place, but wider British interests always come into it. As regards instability, I should have thought that where instability exists more aid is even more necessary.
Lord BLYTON: My Lords, would my noble friend not agree with me in the hope that this country will not become so uncharitable that it will not help the poorer nations?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, as always, I entirely agree with my noble friend.

"BABIES FOR BURNING"
Lord HOUGHTON of SOWERBY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what action the Director of Public Prosecutions has decided upon arising from the allegations of criminal actions in the book Babies for Burning.
Lord WELLS-PESTELL: My Lords, the Director of Public Prosecutions has decided that the evidence is not sufficient to justify proceedings against any person arising from the allegations of criminal actions in the book, Babies for Burning.
Lord HOUGHTON of SOWERBY: My Lords, is my noble friend aware that the reply he has just given adds to the mounting evidence of the unrealiability of this book? Is he aware that two doctors who were named in this book, and who were reported by the authors to the General Medical Council, have both been cleared by that body as having no case to answer? Will my noble friend kindly advise his colleagues in the Government that this book should he put aside as a respectable and reliable index to the truth of events?
Lord WELLS-PESTELL: My Lords, I will take note of what my noble friend has said, and will see that my right honourable friend is acquainted with his comments and observations. I have answered the Question in relation to the

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action of the Director of Public Prosecutions, and I do not think it would be proper for me to go beyond that.

GOVERNMENT STATEMENT
Baroness LLEWELYN-DAVIS of HASTOE: My Lords, with the leave of the House, at a convenient moment after 3.30 p.m., by noble friend Lord Beswick will repeat a Statement on the Steel Closure Review.
EMPLOYMENT PROTECTION BILL
Brought from the Commons earlier this day and printed pursuant to Standing Order No. 48; read 1a.

HOUSE OF LORDS OFFICES
2.49 p.m.
The CHAIRMAN of COMMITTEES (The Earl of Listowel): My Lords, I beg to move that the Fourth Report from the Select Committee be agreed to.
Moved, That the Report be agreed to.—(The Earl of Listowel.)
The Report was as follows:
1. PEERS' WAR MEMORIAL FUND
The Committee accepted a recommendation from the Administration Sub-Committee that the balance remaining in the Peers' War Memorial Fund should be added to the Fund already at the disposal of the Sub-Committee. They recommended that the combined fund should continue to be used, like the Administration Sub-Committee's Fund, for the provision of entertainment and staff amenities. In addition, however, it should be used to make grants, in cases of personal hardship, to members of the staff of the House and their dependants and, for this purpose, it should be administered by the Chairman of Committees, the Clerk of the Parliaments and Black Rod.
2. GENTLEMAN USHER OF THE BLACK ROD
The Committee were informed of the wishes of the Administration Sub-Committee to retain the services of Black Rod, Sir Frank Twiss, as their Agent after his present appointment expires on 31st December 1975.
They recommended that Sir Frank Twiss should continue as Agent of the Administration Sub-Committee until the end of 1977 and that thereafter the appointment should be on an annual basis subject to the wishes of both the Sub-Committee and Sir Frank.
The Committee wish to place on record their appreciation of the services of Sir Frank Twiss
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both to them and to the House during the past five years.
3. PARLIAMENT OFFICE
The Committee agreed to the regrading of one Senior Clerk to Chief Clerk in the Committee Office; one Higher Clerical Officer to Higher Executive Officer in the Printed Paper Office; and to the restructuring of pay scales for Clerks. They authorised the rates of pay for the posts affected.
The Committee re-considered the staffing requirements of the Select Committee on European Communities and authorised an additional post of Legal Assistant.
The Committee agreed to a new post of Assistant Archivist in the Record Office.
The Committee were informed that the overall complement of the Parliament Office remains unchanged because there will be a coincidental reduction of two Clerical posts.
The Committee also authorised additional provision for temporary secretarial assistance in the Parliament Office.
4. HANSARD REPORTING STAFF
The Committee authorised—

(a) increased charges under the agreement with Haynes Secretarial Services for the supply of typists for the reporting of debates;

(b) revised rates of pay to permanent Reporters acting as Editors for Select Committees on Public Bills; and

(c) the application to Temporary Reporters of revised attendance fees as set out in General Circular GC/89 dated 26th June 1975.

5. OFFICIAL SHORTHAND WRITER
The Committee approved an increase in the fees payable to the Official Shorthand Writer.
6. DEPARTMENT OF GENTLEMAN USHER OF THE BLACK ROD
The Committee authorised the appointment of three additional Housemaids on the staff of the Gentleman Usher of the Black Rod and Serjeant-at-Arms.
7. REVISED SCALES OF PAY
The Committee confirmed the application of the following Civil Service Code Memoranda:

(a) CM/4 dated 28th April 1975—Civil Service Pay Agreement, 1974—Revised rates of pay;

(b) CM/S dated 28th April 1975—Proficiency Allowances;

(c) CM/7 dated 15th May 1975—Security Officers;

giving revised rates of pay to applicable staff of the House of Lords.
8. SUPERANNUATION
The Committee sanctioned the payment of the following superannuation awards:

(a) Revised pension and lump sum to Mr. R. W. Hill, CBE, Judicial Taxing Clerk (and

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former Accountant), who retired on the 1st June, 1975;

(b) Pension and lump sum to Mr. T. H. Bass, MBE, Higher Clerical Officer, who retired on 21st May, 1975;

(c) Supplementary Death Benefit to Widow of J. S. Cloves, deceased, former Attendant, who died on 16th April, 1975;

(d) Preserved pension and lump sum to Mrs. J. M. Wise, Personal Secretary, who resigned on the 30th April, 1975;

(e) Preserved pension and lump sum to Mr. R. G. J. Morrison, Doorkeeper, who resigned on the 4th May, 1975;

(f) Short service gratuity to Miss C. M. Dunford, Personal Secretary, who resigned on 30th April, 1975;

(g) Short service gratuity to Mr. P. D. Green, Reporter, who resigned on the 9th May, 1975;

(h) Revised pension and lump sum to Mr. S. G. Farrar, MBE, DSM, Registry Clerk, who retired on the 1st February, 1975;

(i) Revised pension and lump sum to Mr. F. C. R. Deacon, MBE, who retired as Higher Executive Officer, on the 24th March, 1975;

(j) Revised pension and lump sum to Mr. M. Wager, who retired as Second Principal Doorkeeper on the 18th March, 1975.

The LORD PRIVY SEAL (Lord Shepherd): My Lords, before the House expresses a view on this Report, may I draw your Lordships' attention to paragraph 2, regarding the Gentleman Usher of the Black Rod. The House will see that the Offices Committee were informed of the wishes of the Administration Sub-Committee to retain the services of Black Rod, Sir Frank Twiss, as their Agent after his present appointment expires on 31st December 1975.
My Lords, we see much of Black Rod, We see him in his ceremonial function, but there is a great deal more behind what he does for your Lordships' House. Much of our convenience, the way in which the House runs, is due to Sir Frank Twiss. I know that I speak on behalf of all noble Lords when I say how pleased we are that he has agreed to continue to serve your Lordships' House; that we are eternally grateful to him for all that he has done in the past, and we look forward to many more years of happy co-operation together.
Lord CARRINGTON: My Lords, this is hardly the moment to pay tribute to somebody from whom we expect to have a great deal more service. Let me just say that there could be nobody in your Lordships' House who, having known
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Black Rod, would wish to change the senior Service for any other Service.
Lord BYERS: My Lords, from these Benches we too would like to add our appreciation of everything that Black Rod has done for us and for other Members of the House in his term of office so far.
The Earl of LISTOWEL: My Lords, on behalf of the Committee, I should like to thank all the noble Lords who have spoken for their tributes to Black Rod. I need not convey them because he is here in person to hear them.
On Question, Motion agreed to.

GREATER GLASGOW PASSENGER TRANSPORT ORDER CONFIRMATION BILL
The MINISTER of STATE, SCOTTISH OFFICE (Lord Hughes): My Lords, I beg to move that the Bill be now considered on Report.
Moved, That the Bill be now considered on Report.—(Lord Hughes.)
On Question, Motion agreed to.
Then, Standing Order No. 44 having been suspended (pursuant to Resolution), Bill read 3a, and passed.

INDUSTRY BILL
2.52 p.m.
The MINISTER of STATE, DEPARTMENT of INDUSTRY (Lord Beswick): My Lords, I beg to move that this Bill be now further considered.
Moved, That the Bill be now further considered.—(Lord Beswick.)
On Question, Motion agreed to.
Clause 14 [Notices to extend vesting orders to other holdings]:
Lord CULLEN of ASHBOURNE Lord CULLEN of ASHBOURNE had given Notice of his intention to move Amendment No. 44:
Page 13, line 22, after ("capital") insert ("and on the holders of any outstanding securities convertible into, or of any options to subscribe such share capital").
The noble Lord said: My Lords, during the Committee stage of this Bill I moved an Amendment on this matter at the instigation of the London Clearing Banks Association, and the noble Lord,

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Lord Beswick, said that he would return to it on Report. The noble Lord has fully met the case which I presented by putting down his own Amendments, for which I am most grateful. I hope this augurs well for a similarly co-operative spirit over further Amendments, particularly those of a technical nature.
Lord BESWICK Lord BESWICK moved Amendment No. 45:
Page 13, line 22, after ("vest") insert ("and on any other persons who to his knowledge have a present or prospective right to subscribe for share capital of the body corporate").
The noble Lord said: My Lords, I beg to move Amendment No. 45 standing in my name. I am grateful for what the noble Lord, Lord Cullen of Ashbourne, has said because Amendment No. 45, with which I hope we may consider Nos. 46 and 48, was intended to meet the point which the noble Lord made. I am glad to hear that these Amendments in fact achieve that purpose. May I also as a matter of interest say that one reason why we thought that the Amendments which I have tabled were superior to the noble Lord's was that his wording was in some respects defective in that I learnt—and one learns odd bits of information in odd ways—that convertible loan stock is not in fact convertible. It is exchanged for equity and not converted into equity. But the words I am employing are what I think we both require, and I beg to move.
On Question, Amendment agreed to.
Lord BESWICK: My Lords, I beg to move Amendment No. 46.
Amendment moved—
Page 13, line 25, after ("capital") insert ("or rights").—(Lord Beswick.)
On Question, Amendment agreed to.
Lord BESWICK: My Lords, I discussed Amendment No. 48 with No. 45. I beg to move Amendment No. 48.
Amendment moved—
Page 13, line 29, after ("capital") insert ("or rights").—(Lord Beswick.)
On Question, Amendment agreed to.
Clause 15 [Parliamentary control of orders]:
Lord DRUMALBYN Lord DRUMALBYN moved Amendment No. 49:
Page 14, line 10, leave out ("(b)") and insert ("(a)").
The noble Lord said: My Lords, the purpose of this Amendment is to link up with Clause 13. Under Clause 13,
"If it appears to the Secretary of State—

(a) that there is a serious and immediate probability of a change of control of an important manufacturing undertaking; and

(b) that that change of control would be contrary to the interests of the United Kingdom, or contrary to the interests of any substantial part of the United Kingdom,"

then the Secretary of State may make a prohibition order. Subsection (2) goes on to specify three sets of cases in which the Secretary of State may make a vesting order. The clause we are dealing with here, Clause 15, provides in subsection (4) that:
"A draft of a vesting order shall not be laid before Parliament—
"(a) in a case such as is mentioned in paragraph (b) of subsection (2) of Section 13…after the end of a period of three months from the making of the prohibition order, and—
in the same way—
"(b) in a case such as is mentioned in paragraph (c) of that subsection"
after the same time. But it says nothing about paragraph (a) of subsection (2) of Clause 13, which means, it seems to me, that the Secretary of State can dispense entirely with the making of a prohibition order and proceed right away, if he likes, to make a vesting order.
There may be good reasons for this but they are not apparent, and it is for that reason that I have put down here an Amendment which would then read, if I may read subsection (4)(a):
"in a case such as is mentioned in paragraph (a) of subsection (2) of section 13 above, after the end of a period of three months "
and then "from the date"—this is Amendment No. 50—
"on which the Secretary of State gave notice to the person carrying on the undertaking of his intention to lay a draft order".
Then it continues:
"in a case such as is mentioned in paragraph (b) of that subsection",
and then it reads on. The purpose of this is to find out how the Secretary of State is to proceed in the set of cases referred to in Clause 13(2)(a). I beg to move.
Lord MELCHETT: My Lords, we accept entirely the case that the noble Lord has made for his Amendment. However,

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I am wondering whether he would be prepared to withdraw his Amendment at this stage so as to allow the Government to introduce one at the next stage. This is because we should like to draft the Amendment in slightly broader terms, The noble Lord will see that we have put down, as an Amendment for Clause 16(6), Amendment No. 57, which will provide for notice of the Government's intention to be served on the relevant person, whether a holding company or the person carrying on the business. We should like to adopt the same broad terms in this case. With that assurance, I hope that the noble Lord will withdraw his Amendment.
Lord DRUMALBYN: My Lords, we can look forward, then, to an explanation of the Amendment which the noble Lord intends to introduce when he introduces it. I am much obliged to him and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 16 [Contents of vesting orders]:
3.1 p.m.
Lord MELCHETT: My Lords, the purpose of this Amendment is to make a more accurate reference to the supplementary and incidental provisions attached to a vesting order. I beg to move.
Amendment moved—
Page 14, line 30, leave out ("(1) and").—(Lord Melchett.)
On Question, Amendment agreed to.
3.3 p.m.
The Earl of BALFOUR The Earl of BALFOUR moved Amendment No. 52:
Page 14, line 42, at end insert ("in the United Kingdom")
The noble Earl said: My Lords, in connection with Clause 16 may I remind your Lordships that this clause comes into effect only if there is a change of control. By subsection (2) of Clause 16 a vesting order may include such provisions as the Secretary of State considers necessary or expedient to safeguard the capital or assets described in paragraphs (a) and (b) of subsection (2). I think it is important that the words "in the United Kingdom" should be inserted at the end of line 42. In my opinion, this Amendment is required to remove any possibility of ambiguity. Without the Amendment, the clause could be construed as meaning that the foreign assets
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of a United Kingdom company would be included within the provisions of this clause, a situation which could be damaging to the interests of United Kingdom companies which are operating overseas. Even if a United Kingdom company is totally vested, there is no reason why its subsidiaries overseas cannot continue. I believe that there is no reason for a vesting order to cover the overseas side of the business. Also, there is the foreign confidence implication. It would discourage joint ventures in overseas subsidiaries. This is clearly contrary to the purpose of setting up overseas subsidiaries.
In his reply for the Government at Committee stage, the noble Lord, Lord Melchett, failed to appreciate that the Amendment is aimed at safeguarding the foreign assets of United Kingdom companies and concentrated instead upon the business of a foreign company in the United Kingdom. I am sure that a satisfactory clarification of this point would be welcomed by anybody who might be involved in this procedure. I beg to move.
Lord MELCHETT: My Lords, as the noble Earl recognises, there are two possible situations. The first is where we have a United Kingdom business owned by a foreign company. I believe that I replied to both points, but the noble Earl says that I concentrated on that point at Committee stage. The fact is that his Amendment would not alter the position in that situation.
The other situation is where there is a business owned by a British company which has assets overseas. In that case, it would be possible to vest the shares of that company. Safeguarding provisions in the vesting order would cover all the assets of the company both in the United Kingdom and overseas. It might not be possible actually to recover dissipated assets which were overseas and thus outside United Kingdom jurisdiction, but any improper dissipation of such assets could be met by seeking compensation from the British company which was being vested and which had instigated the transaction, or from the company's directors. If the proposed Amendment were accepted, the overseas assets of a British company could be dissipated without any redress. In our view, this would represent an unacceptable loophole in the safeguarding provisions.
The Earl of BALFOUR: My Lords, I must press this matter a little further. To return to Clause 12 of the Bill, a vesting order can be made if a mere 30 per cent. of the votes are controlled by somebody overseas whom the Government consider is undesirable. I feel that this is just the kind of thing which could discourage any company which wished to enter into a joint venture with a British company. Perhaps the Government do not like joint ventures with overseas companies. So long as the Government make that perfectly clear, there is no point in pressing further the Amendment. However, I feel that it is discouraging foreign investment from joining an industrial undertaking here because of the risk that the Government may step in and slap on a vesting order if they happen to dislike the person who intends to carry on this business. If that point can be cleared up, I shall be pleased.
Lord DRUMALBYN: My Lords, may I ask the noble Lord what would be the situation if a British company had an overseas subsidiary in a country whose legislation would make it impossible for the change—such as a change to British ownership, or ownership by the Secretary of State, or whatever—to take place?
Lord MELCHETT: My Lords, may I ask the noble Lord a question? I am not sure that I understand his point. Is he talking about a country where it is impossible for a British company to own any assets, or about a country in which it is impossible for the National Enterprise Board or the Secretary of State to own any assets?
Lord DRUMALBYN: My Lords, there are two separate problems here. It is a question of a change of control but it might also involve the law of a country which itself places restrictions on a change of control. If the change of control were being made in a way that the other country considered was inappropriate, what then? This would apply whether the assets were to pass from the Secretary of State to the National Enterprise Board or to some other body. The point is that we seem to be legislating beyond our capacity to enforce—or if we try to enforce we shall be doing a manifest injustice.
Lord MELCHETT: My Lords, by leave of the House may I reply to the points which have been put to me? So far as the points mentioned by the noble Earl are concerned, I have now explained on two occasions why we believe that this Amendment would open up an unacceptable loophole in these provisions. Of course, the Government do not have any objections to British companies going in for joint ventures, and I think the noble Earl will accept that both I and my noble friends have said to him on several occasions that we see absolutely no reason for any of these provisions to discourage investment from overseas in this country, and I do not really think it would be worth our going over all that ground again.
As I understand it, the noble Lord. Lord Drumalbyn, raised the question of the position of a British-owned company which owns assets in a country overseas, should the country overseas have a law which says that those assets may not he transferred from the British company to the Secretary of State, the National Enterprise Board or some other body. As I said when I originally replied to the Amendment, it may not be possible to recover assets which are dissipated overseas in breach of these orders, but we would be able to seek compensation from the British company for any improper dissipation of assets.
I should have thought that the phrase "improper dissipation" quite clearly would not include the case where the directors of a British company in England were forced by the laws of a country overseas to relinquish their hold on assets in that country. So I do not think there would be any question of anybody being taken to task for dissipating assets when the laws of the country abroad said that they had to do so. We recognise the realities of the situation, and that it may not be possible to recover assets in certain situations where they are dissipated because of the laws of the country. I do not know whether the noble Lord has any particular countries in mind, when he says that there might be a law saying that the National Enterprise Board should no longer own the assets. I think it is slightly unlikely, although I bow to the noble Lord's

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experience in these matters. I think that what I have already said shows that there is no intention of chasing after people if they are merely obeying the laws of a foreign country.
Lord DRUMALBYN: My Lords, before the noble Lord sits down may I ask him a question, because I am not certain that he has grasped my meaning and I do not think I made it quite clear to him? It might well be that a British subsidiary was sharing with, say, Nigeria. a Nigerian holding there and the Nigerian company might wish the British company to retain its present arrangements. I think that the Government are getting into rather deep waters when they insist on interfering in matters of overseas holdings, which may be quite complicated and may be very much linked up with arrangements in the State in which the investment was made.
Lord MELCHETT: My Lords, I am sure that I should be trying the patience of your Lordships' House if I allowed myself to be dragged any deeper into the deep waters. I have said that this provision is a necessary safeguard to the assets of a British company, and I have also said that if it is not possible to safeguard those assets we accept the situation. I really do not think there is anything more I can add.
Lord CARRINGTON: My Lords, it is not the patience of the House that the noble Lord is trying. But I think this is an occasion on which your Lordships might be reminded, with the greatest possible respect, that we are on the Report stage of a Bill and not on the Committee stage, and if in the guise of asking questions noble Lords make several speeches and, as a result, the Minister also makes several speeches, it really means that we are having another Committee stage and not a Report stage, which will result in this Bill taking a very long time. Apart from that, it is quite contrary to the usual procedure in your Lordships' House.
Lord MELCHETT: My Lords, I entirely agree. The noble Lord, Lord Drumalbyn, rose and said, "Before the noble Lord sits down may I ask him a question", and spoke for several minutes. I tried on several occasions to say that I had nothing further to say to noble Lords opposite.
The Earl of BALFOUR: My Lords, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
3.14 p.m.
Lord LOVELL-DAVIS Lord LOVELL-DAVIS moved Amendment No. 53:
Page 15, line 16, leave out ("if he fails to recover them").
The noble Lord said: My Lords, this Amendment is designed to increase the effectiveness of the safeguarding provisions attached to a vesting order. It would allow the person seeking compensation for an improper transfer of property, made in defiance of the safeguarding provisions, to seek compensation as an alternative to trying to recover the property, or even when there has been recovery, though it goes without saying that any compensation in such a case would be limited to compensation for the costs of recovery, and would not include the value of the asset recovered. We believe that this will improve the deterrent effect of these provisions and that it will therefore never be necessary to invoke the powers.
As the subsection is now drafted, the person seeking compensation must first fail to recover the property. However there may be circumstances in which recovery is simply not possible; for example, the sale of assets to overseas purchasers or the dissipation of liquid assets through excess payment of dividends to all shareholders. Here it would be reasonable to seek compensation with out there having been an attempt—which would be doomed from the start—to recover the assets. The Government believe that this Amendment will strengthen the safeguarding provisions, and make it less likely that assets will be improperly transferred. This will be to the advantage of the Government, in that the national interest will be better protected, and to the benefit of third parties since it will make all the more unlikely the setting in train of a series of events which might lead to the need to set aside transactions, with the result that limited problems might arise. My Lords, I beg to move.
Lord ELTON: My Lords, i am obliged to the noble Lord for his explanation of this, on the whole, helpful Amendment which meets some of the points which we raised at Committee stage. However, I wonder whether he would go

1667
a little further in his explanation, because the source of the compensation remains slightly obscure to the layman. I accept that the removal of the qualification of a struggle having taken place is entirely, beneficial. It is possible to obtain compensation without making a forlorn sally upon an entrenched position. But I should like to know what is the machinery of recovery if the setting aside procedure, which was mentioned during the Committee stage, is put in train; and whether, if that machinery is used, it is still necessary for the parties who have received the assets—whether they are stocks and shares or other assets—at two or three removes from the source, each to have recourse against the other, or whether there is a short cut which would avoid this. That is the first question, and the answer to it may be that the source of compensation is some Government fund which has not been unveiled to us.
The other matter on which I should like guidance is this. What will be the situation when a bank is directly involved, if the purchaser of the asset which we are considering has been advanced money against it by his banker, and entering into an all monies security for that purpose? Then, if subsequent advances are made by the bank to its customer, the bank will retain a right over the asset in question, notwithstanding the fact that the original advance in respect of that asset has been repaid under the seining aside procedure. By virtue of the all monies security, the bank will be entitled to refuse to release the asset in question until all the additional borrowing by its customer has been repaid. This may not be possible in the circumstances, in which case it therefore appears that the setting aside procedure will break down. I accept that the noble Lord has said that the occasions on which this will arise will be reduced considerably by the helpful Amendment which he has tabled, and which we support. But it seems to me that there is here a loophole which it might be beneficial for his Department to examine and perhaps stop up before the Third Reading.
Lord LOVELL-DAVIS: My Lords, by leave of the House, to answer the noble Lord's first question the source of compensation
1668
would be the parties to the original transaction. So far as the second question is concerned, which was rather lengthy and complicated, I should like to consider it further. I will certainly write to the noble Lord and, if it seems proper, draw it to the attention of my right honourable friend.
On Question, Amendment agreed to.
3.20 p.m.
Lord DRUMALBYN Lord DRUMALBYN moved Amendment No. 55:
Page 15, line 21, after ("after") insert ("the making of a prohibition order or the date on which").
The noble Lord said: My Lords, I beg to move Amendment No. 55. The purpose of the Amendment is to make clear that the transfers about which we have just been talking refer to transfers made before the draft of the order is laid before Parliament, but after the Secretary of State has given notice of his intention to lay a draft order, or the making of a prohibition order. I am not clear why the prohibition order should not be in here. I would think that in itself this was in place of, at any rate the Secretary of State giving notice to a person of his intention to lay a draft order. I beg to move.
Lord MELCHETT: My Lords, as the noble Lord, Lord Drumalbyn, says, this follows a brief debate we had on the subject in Committee. The noble Lord, Lord Beswick, may not have made the position clear about this subsection, and I will endeavour to do that now. The purpose of Clause 16(6) as drafted—and as the noble Lord knows this was as a result of the initiative of the Opposition in another place—is to give the public at large notice that safeguarding provisions apply. The Amendment that the noble Lord has moved would change this: either notice would be given, or a prohibition order would have been made. If this Amendment were accepted neither the public nor any company would know whether any transaction entered into by a company after it had been made subject to a prohibition order might subsequently be set aside by a later vesting order. This would cast doubt in the minds of those who dealt with any company made subject to a prohibition order, and is clearly undesirable.

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Most prohibition orders will not lead to a vesting order; they will simply prohibit certain transactions, and that will be the end of the affair. If this Amendment were passed, however, any time a prohibition order was made the public would be left in doubt as to whether any subsequent transaction with the company concerned would be set aside without further warning. This would be damaging to the company and harmful to business confidence. A prohibition order might be in force for years, and this Amendment would then authorise retrospection for that whole period.
The reason for our concern about the Amendment is not that it confines the Government; personally, I think it leaves the Government greater freedom, since it confers a greater element of retrospection into safeguarding, in that under the Amendment safeguarding could apply to transactions before the company concerned has been warned of the proposed vesting. It is precisely because it widens the powers of the Government in this way that we do not think the Amendment is acceptable.
Lord DRUMALBYN: My Lords, I am grateful to the noble Lord, Lord Melchett, for that answer. I take it that the notice referred to will be given as a separate operation after the prohibition order, if it is intended to make a vesting order, and that it will be given within a period of three months which should normally elapse between a prohibition order and a vesting order. What seems a little alarming is the concept of a prohibition order continuing indefinitely, even though it is simply related to a particular proposed transfer to a particular company or individual. This is rather more than I expected of a prohibition order. Perhaps the noble Lord would confirm that that is the intention, otherwise it is difficult to follow how the thing will work. I do not think that any noble Lords on this side of the House were aware that a prohibition order could continue indefinitely. If that is so, it rather changes our view of the Bill. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord LOVELL-DAVIS Lord LOVELL-DAVIS moved Amendment No. 56:
Page 15, line 22, leave out ("carrying on the undertaking") and insert ("concerned").
The noble Lord said: My Lords, Amendments Nos. 56 and 57 are designed to ensure that the person who will be affected directly by the safeguarding provisions in a vesting order is the person to whom notice will be given that a vesting order is to be made. As the Bill stands, the notice is to be served on "the person carrying on the undertaking". On reflection, however, we do not think this is either wide or precise enough. It meets the case when assets of a business, or when shares of a company which directly carries on business, are to be vested. But it does not cope with the case when shares of a holding company, which does not itself carry on the business, are to be vested. In general we believe the person affected by the vesting order should be the person to whom notice should be given. Therefore, we seek to bring forward Amendments to provide that when shares in a relevant body corporate are to be vested, the notice should be served on the body corporate; and when assets of a business are to be vested, the notice should be served on the person carrying it on. I beg to move.
On Question, Amendment agreed to.
Lord LOVELL-DAVIS: My Lords, I beg to move Amendment No. 57.
Amendment moved—
Page 15, line 23, leave out ("and the") and insert—
("(7) In subsection (6) above "the person concerned" means—

(a) in the case of an order such as is mentioned in paragraph (i) of section 13(2) above, the relevant body corporate, and

(b) in the case of an order such as is mentioned in paragraph (ii) of that subsection, the person carrying on the undertaking.

(8) The").—(Lord Lovell-Davis.)
On Question, Amendment agreed to.
3.27 p.m.
The Earl of BALFOUR The Earl of BALFOUR moved Amendment No. 58:
Page 15, line 31, at end insert ("or a vesting order")
The noble Earl said: My Lords, in Clause 17(1) we read:
"No criminal proceedings shall lie against any person on the ground that he has committed, or aided, abetted, counselled, or procured the commission of, or conspired or attempted

1671
to commit…any contravention of a prohibition order."
I feel that a person should have the same right in the case of a vesting order. At this stage may I say that while I think Amendment No. 58 is appropriate, I am not so sure about Amendment No. 59. I think that would be inappropriate. We see that a vesting order may prohibit or set aside the transfer of any such capital or assets, so no criminal proceedings can lie against any person who has committed or aided any contravention of a prohibition order or a vesting order. I think it is only right to give the person the safeguard if he does try to preserve his own interests. I beg to move.
Lord DRUMALBYN: My Lords, may I just add to that in a very short sentence. The real question is whether criminal proceedings are to lie against contravention of a vesting order. If they are not to lie, surely that should be in the Bill. I understood they were not to lie. There will be ambiguity otherwise.
Lord MELCHETT: My Lords, as the noble Earl, Lord Balfour, pointed out, these subsections are confined to the prohibition order, and they are related to the question of how it is to be enforced. The answer they embody in statutory form is that breach of a prohibition order is not to be a criminal offence, but that civil proceedings may be brought; in other words, the Secretary of State, if he believed a person to be acting in a manner contrary to a prohibition order, could seek an injunction from the court preventing him from so doing. Any actions taken in the face of such an injunction would be deemed to be contempt of court, thus making liable to committal to prison the person guilty of the contempt. This provides a proper and adequate means of ensuring that prohibition orders are respected and criminal proceedings are, therefore, unnecessary.
There are no comparable procedures associated with the central purpose of a vesting order. Certain property is vested, and except in relation to the safeguarding provisions of a vesting order there is no question of an instruction being disobeyed. The vesting order does not issue a prohibition or instruction, as does a prohibition order, but transfers ownership. Only in respect of the safeguarding provisions
1672
of the vesting order is there any question of prohibition comparable to that in a vesting order.
The Bill makes specific provision for dealing with contraventions of these safeguarding provisions, either through the setting aside of the transactions or through the recovery of compensation from the persons involved in the improper transfer of assets which constituted the breach. We recognise that there is a difference, in that the breach of prohibition orders by virtue of Clause 17 cannot result in a criminal offence, whereas the same restriction does not apply to vesting orders. A breach of the prohibition provisions in the safeguarding part of the vesting order might therefore be a Common Law offence. We accept this, and it is intentional since we believe that it is right that the safeguarding provisions in a vesting order should have the maximum deterrent effect. I hope, with that explanation, that the noble Earl will see fit to withdraw the Amendment.
The Earl of BALFOUR: I should like to thank the noble Lord for his explanation. I think this is a great help. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 18 [Territorial scope of orders]:
3.31 p.m.
Lord MELCHETT Lord MELCHETT moved Amendment No. 60:
Page 16, line 10, leave out subsection (2) and insert—
("(2) For the purposes of this Part of this Act a body corporate shall be deemed not to be resident in the United Kingdom if it is not incorporated under the law of the United Kingdom or of a part of the United Kingdom.")
The noble Lord said: My Lords, noble Lords will recognise that the Government have introduced several technical amendments to Part II of the Bill. Throughout, our aim has been to establish with as much certainty and clarity as possible what is meant by the various terms used in this Part of the Bill and with this Amendment we are dealing with the words "body corporate not resident in the United Kingdom". At the moment Clause 18(2) provides that a company's residence depends on where central control and management is exercised. I recognise that the phrase "central control

1673
and management" occurs elsewhere in legislation but nevertheless it appears to us to lack the objective clarity which we are seeking.
To establish that a company in America which had made a bid for an important manufacturing undertaking was not resident in the United Kingdom on the existing provision of subsection (2) we should have to examine the ownership of that company, the way in which its management is exercised, where its board meetings are held and so on. This we believe to be unnecessarily complex, and we therefore propose the simpler test of whether or not the company is incorporated in the United Kingdom. We believe this will make this part of the Bill clearer and more comprehensible. I beg to move.
Lord ELTON: My Lords, this is an interesting Amendment and one that comes somewhat late in the day. I cannot see it presaged—if that is the word—earlier in another place or in this House. As the noble Lord says, it is changing the definition of "a body corporate". While, perhaps, it makes for clarity, there is a further clarification which I should like at this stage. It seems that the effect of the Amendment to Clause 18(2) in its new form will be to direct it against companies covered by Part X of the Companies Act; that is to say, companies registered abroad but operating in the United Kingdom and having branches controlled within the United Kingdom. I should like to know whether this Amendment does not now exclude companies incorporated in the United Kingdom but with management decisions taken, for instance, in Leichtenstein. It is difficult to give examples, but would IOS, for instance, fall within this definition or not. One recognises the sort of thing Her Majesty's Government are trawling for, but I should like to establish whether they have the right net. It would be a help if the noble Lord could say whether or not this will be the effect of the Amendment.
Lord DRUMALBYN: My Lords, there are certain European Instruments which envisage the setting up of European companies and some of the joint ventures may be registered in any of the Community Member States. Is it not likely that this clause will provide a severe discouragement to that type of company being registered
1674
in the United Kingdom? In other words, will not people prefer to register them in another Member-State with a consequent loss of revenue to this country?
Lord MELCHETT: My Lords, I understand that the answer to the noble Lord, Lord Elton, is that if the company is registered overseas it would be outside the new definition. I think I have that right, but if not I will certainly write to him about it. I am not sure that I know the answer to the point raised by the noble Lord, Lord Drumalbyn, and if I may I will write to him about it. I was receiving a message about the earlier point when he was putting his question.
On Question, Amendment agreed to.
Clause 19 [Compensation orders]:
Lord MELCHETT Lord MELCHETT moved Amendment No. 61:
Page 17, line 7, leave out from ("if") to end of line 8 and insert ("for the words "may by notice given in the prescribed manner, withdraw the order or may" there were substituted the word "shall" ").
The noble Lord said: My Lords, in Committee the noble Lord, Lord Elton, pointed out that the Amendment proposed in Clause 19(5) of the Bill to Section 6 of the Statutory Orders (Special Provisions) Act 1945 was perhaps not sufficiently binding on the Government. Section 6(2) of that Act allows the Government, if it is thought inexpedient, to proceed with an order as it has been amended by the joint committee, either to withdraw the order or to submit it as a Bill. It would clearly be wrong for the Government to withdraw a compensation order since this would be for those whose property has been vested without compensation.
We therefore propose in Clause 19(5) to amend the relevant Section of the 1945 Act to make it impossible for this to happen. The noble Lord, Lord Elton, pointed out that although this has been done by the Government it was still, in theory, possible for the Government not to proceed with an order and that a further Amendment was required so that the Government must either proceed with the amended order or submit it as a Bill. The present Amendment achieves that result and I hope it will be acceptable.
Lord ELTON: My Lords, it is indeed gratifying to have accepted not merely the spirit but the verbatim text of an Amendment.
On Question, Amendment agreed to.
Clause 21 [Financial assistance under Industry Act 1972 for bodies corporate which make planning agreements]:
3.37 p.m.
The Earl of BALFOUR The Earl of BALFOUR moved Amendment No. 62:
Page 17, line 34, leave out ("may be not") and insert ("shall not be").
The noble Earl said: My Lords, I said at the Committee stage that I would return to this. Clause 21 of the Bill reads at the moment:
"When a body corporate has made a planning agreement—the amount of grant under…the Industry Act 1972…may be not less than—the percentage…"
which would have been given, so far as I am concerned, where a planning agreement has not been made. Unless for the words "may not be" there is substituted the words "shall not be" what on earth is the point of any company making a planning agreement? I should like to quote a few words from the Committee stage where the noble Lord. Lord Beaumont of Whitley, said:
"In that case will the noble Lord please inform us what is the purpose of this clause as it stands? It seems to me to make absolute nonsense if it does not say shall".—[Official Report, 24/7/75; col. 568]
My Lords, I must admit that my drafting was wrong. You cannot substitute the one word "may" for "shall", but I have returned to this. Furthermore, I should like to take this opportunity of asking again the question which I asked at Committee stage and which was never answered. The preamble to the Bill referring to what was then Clause 16, and which is now Clause 21, stated,
"No power to increase expenditure will be conferred by Clause 16"—
that is now Clause 21—
"unless there is a reduction in the rates of regional development grant currently payable. The Government is not at present considering any such reduction."
At Committee stage I asked the question: are Her Majesty's Government now considering a reduction in the regional development grant? I feel I have a right
1676
to an answer to that question. Also, I think we must have a very much more satisfactory answer to explain what is the advantage of a planning agreement unless the company entering into that planning agreement gets the same grant as they would have got under the Industry Act 1972 without making a planning agreement. I beg to move.
Lord DRUMALBYN: My Lords, before the noble Lord replies, may I just mention to him that the reason why I feel that we should have "shall" and not "may" is because of the terms of the White Paper, The Regeneration of British Industry. May I give the noble Lord two quotations. In paragraph 11 it is said:
"A planning agreement will not be an agreement in the sense of a civil contract enforceable at law. It will, however, be given on sufficient recognition by Statute to enable the company concerned to rely on assistance promised under it."
You may say that "may" would leave it open as to whether the assistance will be promised or not. Let us take the next paragraph, paragraph 12:
"In order that companies shall have greater certainty in making and carrying out their plans the Government intend that once an agreement has been concluded regional assistance for the projects which it covers will during the currency of the agreement not fall below the rates in force at the time of the agreement."
In view of that, I do not see how the noble Lord can possibly fail to make this Amendment.
Lord CAMPBELL of CROY: My Lords, could I just add to what my noble friends have said. One of the aims of a planning agreement is to look ahead with more certainty, and the duration of the agreement, reading the White Paper from which my noble friend Lord Drumalbyn has quoted, is to be three years, which can then be continued. Clause 21 of the Bill would enable the regional grant to be at a constant rate during that period, and it is not a very long period considering that changes in the status of assisted areas occur only infrequently. But it would be a sensible element in assisted areas for planning agreements to have this in them. We agree with the Government on that. But we think that it should be the same for all companies in assisted areas who decide to enter into a planning agreement.

1677
The noble Lord, Lord Lovell-Davis, when he was replying to this point at Committee stage said that it would detract from the Minister's bargaining power, because he could not insist on particular conditions with each company when negotiating planning agreements. But, surely, if this Amendment were made it would increase the bargaining power of the Minister vis-à-vis all companies in assisted areas who were contemplating, however remotely, making a planning agreement. They would know that there would be certainty of the rate of regional grant, for a period of three years, or perhaps more, if they made an agreement, but they would be less interested in entering into negotiations with the Minister if they know that during the negotiations the Minister could rule that out. I quote one remark of the noble Lord, Lord Lovell-Davis, at Committee. He said:
"You are forced to pay this level of grant irrespective of whether the other party has fulfilled its obligations under the existing level of grant."—[Official Report, 24/7/75; col. 568.]
This is a strange explanation, and it is one of the reasons why we asked the Government to look at this again and to clarify the position. Surely that kind of situation would not arise. Once an agreement has been signed, perhaps for a period of three years, the Government could not, in any case, alter that agreement during the period: the rate would be settled for that period even if the Government might not be completely satisfied with the company's performance.
As for the more serious matter of fulfilling obligations, if the company were failing to carry out commitments under the agreement presumably there would be arrangements in that agreement which would determine whether the agreement had automatically terminated because one party to it failed to carry out commitments. In that event, if the agreement automatically terminated because one party failed to carry out commitments, then, of course, the Government would become free to take any action and would no longer be bound by the agreement. So we did find the noble Lord's words very strange, making it look as though the Government could react during the course of a planning agreement's duration and seeking to keep the power with the Minister to make changes irrespective of
1678
whether or not the planning agreement was being kept.
Lord LOVELL-DAVIS: My Lords, as noble Lords have already said, we discussed this Amendment at some length in Committee and my noble friend Lord Beswick undertook to look at this clause again, and in particular at the word "may". It has two effects. First, it reflects the wording of Section 1 of the Industry Act 1972. The noble Lord, Lord Drumalbyn, will recall, since he took that Bill through the House, that Section 1 says "The Secretary of State may make a grant…" I understand these words were included in that Act so as to permit the Secretary of State a certain flexibility for administrative action, and for that reason alone the permissive form ought to be copied in this Bill. In saying this, I would emphasise that that does not mean that the Secretary of State may be capricious about how he exercises his discretion. On the contrary, he has a duty to exercise it in a reasonable and not in an arbitrary way. This is how it is exercised under the 1972 Act and how it will be exercised when the same discretion applies under this Bill. But in the context of planning agreements there is a further reason for the Secretary of State to have discretion. A planning agreement will, as I explained in Committee and as the noble Lord, Lord Campbell of Croy, has just reminded us, have at least some element of a bargain. Each party will, quite properly, be looking for concessions from the other. This does not affect the agreement ultimately made. The noble Lord, Lord Drumalbyn, has quoted our White Paper and used its words to support this Amendment. But it says "at the time of the agreement". I will come to that matter again later.
Each party will, quite properly, be looking for concessions from the other while they are trying to reach this agreement. The Secretary of State will wish to achieve the maximum benefits for the economy, for regional development or export promotion or whatever goal he is pursuing, without undue cost to the taxpayer. For this reason he needs to have the flexibility to decide whether a project should receive the benefits conferred by this guarantee. There may be

1679
times when there are some projects which merit additional certainty, in that this will persuade the company to advance them, whereas other projects would anyway proceed without the additional benefit. The Government believe that the Secretary of State should be able to use his discretion and not be committed to giving the benefits of increased certainty for all projects whether or not they require them. Equally, the Secretary of State should be free to impose conditions upon which the guarantee would hang. As drafted, the Secretary of State would be found to pay the guaranteed level of assistance even if the company failed to carry out its side of the planning agreement, a very real point which I made during Committee. For all these reasons the Secretary of State must have the flexibility of the word "may".
But let me make it quite clear what the word "may" does and does not mean. It means that the Secretary of State has discretion as to whether or not he will offer the guarantee of assistance, but once the offer has been made it will be firm and binding. The word "may" does not mean that the Secretary of State, having entered into an agreement, may, or alternatively may not, honour his promise. It means—and I hope this will reassure the noble Lords, Lord Drumalbyn and Lord Campbell of Croy—that he may or may not make a promise in respect of a financial guarantee, but once a promise is given it will be a firm commitment within the terms agreed.
May I say finally to the noble Earl, Lord Balfour, who said I did not answer his question on Committee, that I attempted to answer it. I can only repeat it now. So far as I am aware, the Government are not considering any reduction. The Noble Earl should not draw consulsions from this matter. I hope that what I have just said, the explanation I have given, will satisfy the noble Earl, and that he will decide to withdraw the Amendment.
Lord ABERDARE: My Lords, I must say that I have not understood what the
noble Lord has said. He said that the discretion of the Secretary of State should subsist before he made the planning agreement. But once he had made an agreement and a planning agreement existed, then he would be firmly bound. This clause reads:
"When a body corporate has made a planning agreement—"
Therefore we are considering a case where the Secretary of State has entered into a planning agreement. How can there then still be any discretion from the noble Lord's own words? He has said that the Secretary of State will then be bound by the planning agreement. I cannot understand his reason for objecting to this Amendment.
Lord BESWICK: My Lords, may I clarify that. If, as part of the planning agreement, this advance is to be made, that will be made firm; that will be a firm agreement. It does not necessarily follow that because one has a planning agreement one enters into other commitments, but if they are entered into they will be firm.
The Earl of BALFOUR: My Lords, I have considered this carefully. Although it says in the beginning of the Industry Act 1972:
"The Secretary of State may make a grant to a person…"
it goes on to say in Section 1(2) of that Act:
"The amount of a grant under this section shall be the prescribed percentage of the expenditure in respect of which it is made".
I feel that this could be such a case. The Secretary of State can hold a sword over the head of the Company, and say that unless they go ahead and make a planning agreement he will withhold perhaps some regional development grant that they might have got without it. In view of this, and in view of the answers I have had before, I am still not satisfied.
3.54 p.m.
On Question, Whether the said Amendment (No. 62) shall be agreed to?
Their Lordships divided: Contents, 88; Not-Contents, 58.

CONTENTS

Aberdare, L.

Balerno, L.

Berkeley, B.

Airedale, L.

Balfour, E. [Teller.]

Bourne, L.

Alport, L.

Barnby, L.

Bridgeman, V.

Ashbourne, L.

Belstead, L.

Byers, L.

Camoys, L.

Grimston of Westbury, L.

O'Neill of the Maine, L.

Campbell of Croy, L.

Hankey, L.

Onslow, E.

Carrington, L.

Hayter, L.

Porritt, L.

Clancarty, E.

Hornsby-Smith, B.

Rankeillour, L.

Clwyd, L.

Hylton-Foster, B.

Rathcreedan, L.

Coleraine, L.

Inglewood, L.

Redesdale, L.

Cowley, E.

Kilmany, L.

Rochester, L.

Crathorne, L.

Kimberley, E.

Sackville, L.

Cullen of Ashbourne, L.

Kings Norton, L.

St. Aldwyn, E.

Daventry, V.

Kinnaird, L.

St. Davids, V.

Denham, L.

Lauderdale, E.

Sandford, L.

Deramore, L.

Lloyd of Kilgerran, L.

Sandys, L.

Drumalbyn, L.

Long, V.

Somers, L.

Dundee, E.

Lyell, L.

Stamp, L.

Effingham, E.

Mackie of Benshie, L.

Strathclyde, L.

Elles, B.

Macleod of Borve, B.

Strathcona and Mount Royal, L.

Elton, L.

Massereene and Ferrard, V.

Emmet of Amberley, B.

Merrivale, L.

Sudeley, L.

Erskine of Rerrick, L.

Monck, V.

Tenby, V.

Falkland, V.

Monson, L.

Terrington, L.

Fraser of Kilmarnock, L.

Mowbray and Stourton, L.[Teller.]

Thomas, L.

Gladwyn, L.

Thurlow, L.

Glendevon, L.

Newall, L.

Tranmire. L.

Glenkinglas, L.

Northchurch, B.

Vickers, B.

Goschen, V.

Nugent of Guildford, L.

Vivian, L.

Greenway, L.

Ogmore, L.

Young, B.

Grenfell, L.

NOT-CONTENTS

Arwyn, L.

Gaitskell, B.

Popplewell, L.

Aylestone, L.

Gordon-Walker, L.

Raglan, L.

Balogh, L.

Hale, L.

Rathcavan, L.

Beswick, L.

Henderson, L.

Ritchie-Calder, L.

Birk, B.

Houghton of Sowerby, L.

Royle, L.

Blyton, L.

Hughes, L.

Rusholme, L.

Brockway, L.

Janner, L.

Shinwell, I..

Bruce of Donnington, L.

Kirkhill, L.

Slater, L.

Burton of Coventry, B.

Leatherland, L.

Snow, L.

Castle, L.

Llewellyn-Davies of Hastoe, B.

Stedman, B.

Champion, L.

Lloyd of Hampstead, L.

Stewart of Alvechurch, B.

Chorley, L.

Lovell-Davis, L.

Stow Hill, L.

Collison, L.

McLeavy, L.

Strabolgi. L. [Teller.]

Crook, L.

MacLeod of Fuinary, L.

Summerskill, B.

Crowther-Hunt, L.

Melchett, L.

Taylor of Mansfield, L.

Davies of Leek, L.

Milford, L.

Wallace of Coslany, L.

Douglass of Cleveland, L.

Paget of Northampton, L.

White, B.

Elwyn-Jones, L. (L. Chancellor.)

Pargiter, L.

Winterbottom, L. [Teller.]

Evans of Hungershall, L.

Phillips, B.

Wynne-Jones, L.

Fisher of Rednal, B.

Resolved in the affirmative, and Amendment agreed to accordingly.

STEEL CLOSURE REVIEW
4.3 p.m.
Lord BESWICK: My Lords, with permission, I will now repeat a Statement being made in the other place by my right honourable friend the Secretary of State for Industry. The Statement is as follows:
"Following his Interim Report of 4th February on the proposed closures of steelworks by the British Steel Corporation, my right honourable and noble friend Lord Beswick has now completed his review of the proposed closures in Scotland.
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"His Report was made available to Members of the House this morning and will he printed in the Official Report.
"The Government have accepted his recommendations. This leaves outstanding only the proposed closures at Shotton, and of the Hartlepool and Consett plate mills. We have not yet reached a conclusion on Shotton.
"In the case of the plate mills, my right honourable and noble friend is awaiting the outcome of discussions between the BSC and the workforces about alternative proposals which would preserve the future of these mills.
"The Government accept that the Scottish plants using the obsolescent open hearth process should close once

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alternative supplies of steel become available from modern and more efficient plants in Scotland. Ravenscraig is already being expanded as a bulk producer.
"The BSC now propose to build electric are plants at Hunterston and at Ravenscraig and to increase the capacity at Hallside. This will bring their capacity in Scotland to 4·2 million tonnes a year, perhaps more, a major step towards their target of 4½ million tonnes a year capacity by the early 1980s.
"With the closure of the open hearth plants there is no alternative to the eventual closure of the Clyde Iron Works and certain primary and product mills. The Clyde Iron Works closure will be no earlier than 1980. But the BSC propose to build at Hunterston two direct reduction units for making iron.
"Following the review, BSC now propose to maintain into the 1980s the special steels facility in Scotland represented by the Hallside and Craigneak mills about which there has been much concern. This will save 1,250 jobs. BSC propose to develop and expand the Craigneuk steel foundry. For this to be a success, the operations at Toll-cross will have to be transferred to Craigneuk but the BSC will give preference to the workers at Tollcross in filling the 300 new jobs at Craigneuk.
"The BSC also propose to expand their capacity in Scotland for producing threaded pipe for oil and gas well casing. This latter proposal will give a net gain of 450 jobs.
"The previous Administration's White Paper of February 1973 on the BSC's 10 year Development Strategy said there would be a net loss of 6,500 job opportunities in Scotland over the period. The changes I have outlined will cut this figure to 2,100 and some of these are deferred.
"This is, of course, still serious given the general employment situation in West Central Scotland and the Government will strengthen their attack on the industrial and environmental problems there the Scottish Development Agency will play an important role.
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"The Cambuslang project announced by my right honourable friend on 30th June is a good example of the co-operation between the Government, the local authorities and the BSC. A determined effort will be made to attract new industry.
"As a result of this review, I believe that the Scottish steel industry will be more balanced and eventually emerge stronger and more competitive and so contribute to the British economy."
My Lords, that ends the Statement.
Following is the Report referred to:
"My Interim Report on the review of the British Steel Corporation's proposed closures of steel plants was published on 4 February The Report noted that I still had to complete my review of the proposed closures in Scotland and of the closures of the Hartlepool and Consett plate mills consequential on the BSC's proposal to build a new plate mill at Redcar, considered also that further study was needed of the economics of modernised steelmaking at Shotton and its implications for BSC's proposals elsewhere.
2. "I have now completed the review of the proposed closures in Scotland and my conclusions are being announced immediately so as to reduce the present uncertainty. Consideration of the proposed closures at Shotton is not covered here. Consideration of the closures of the Hartlepool and Consett plate mills, which are associated with the proposed plate mill at Redcar, is awaiting completion of the discussions between the BSC and the work forces at Hartlepool and Consett on alternative proposals which would preserve the future of their mills.
3. "I first visited all the plants concerned in Scotland to get a feel of the situation. I then held formal tripartite discussions with the BSC and the TUC Steel Committee. I have also had several meetings with the Scottish TUC, including one during the Prime Minister's visit to Glasgow on 27 February and I have met the constituency MPs affected. As elsewhere I have been immensely impressed by the positive and constructive attitude of management, trade unions and workers at all levels. The Minister of State, Scottish Office, has been closely involved at all stages and agrees with my recommendations.
4. "Because of the close intercommunication which exists between the Corporation's plants in Scotland, I have had to consider not only the individual closure proposals but also how those proposals or variants on them would affect the Corporation's wider plans for developments in Scotitsh steelmaking. Arising from my review, the Corporation have revised their proposals for closures and have come forward with fresh proposals for new investment. I welcome these changes and recommend their acceptance. I deal first with the proposed closures. A table showing the number of jobs involved and summarising the recommendations is annexed.
ORE HANDLING
General Terminus Quay
5. "I recommend that the closure should be confirmed in view of the development of the much larger and more efficient Hunterston ore terminal.
IRONMAKING
Clyde Iron
6. "There is in my view no alternative to the ultimate closure of the Clyde Iron works once the open hearth furnaces (see paras. 7–8 below) have closed and adequate new supplies of iron are available in Scotland. The BSC have agreed that the final closure date will not be before 1 January 1980 and they will ensure that the closure is managed in an orderly way so as to maximise the opportunities for the employees affected to obtain alternative jobs. The eventual closure will also facilitate the Government's plans for general industrial development in the Cambuslang recovery area, inter alia, by removing a source of pollution.
OPEN HEARTH STEELMAKING
6. "I have concluded that the BSC have made out their case for closing open hearth steelmaking at Clydebridge, Dalzell, Lanarkshire, Ravenscraig and Glengarnock once alternative supplies of steel for the related product mills have become available from more modern and efficient plant in the area. The submerged injection process as proposed by the workers at Clydebridge would not improve the economics of the open hearth process sufficient to justify its retention there.
8. "However, following the review, the BSC propose to close these works later than originally intended. The position is as follows:

Date initially proposed for closure

Deferred date now proposed

Clydebridge

1976–77

July 1977–January 1978

Dalzell

1976–77

July 1977–January 1978

Ravenscraig

1977–78

July 1977–January 1978

Lanarkshire

1977 or earlier

July 1977–January 1978

Glengarnock

Not before 1978–79

Not before 1st January 1980

The new closure dates remain dependent on the Ravenscraig expansion project being commissioned in 1977 and thus ensuring that the Corporation is adequately equipped with low cost capacity to feed the product mills when demand has strengthened again. The 1980 closure of Glengarnock steelmaking will depend on steel for its mill becoming available from a new electric are furnace at Hunterston (paragraph 16 below). The timing of all these closures would be carefully phased in consultation between the BSC and the Unions.
PRIMARY ROLLING
9. "I consider that the BSC have made out their case for the closure of the Clydebridge slabbing mill in view of the proposed installation of a third slab caster at Ravenscraig.
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Similarly, primary rolling at Glengarnock will have to cease once blooms are available from new capacity elsewhere.
PRODUCT MILLS
10. "I accept that the Dalzell light section mill and bar mill will have to close with the closure of the Dalzell open hearth plant, i.e., in the period July 1977/January 1978.
Hall Side Billet Mill/Craigneuk Bar Mill
11 "I have been impressed by the arguments advanced by local MPs, local authorities, trade unions and the workers themselves for the retention of these "special steel" facilities which the BSC had proposed to close in 1976/77. The BSC have reconsidered their position and now propose to keep these mills in operation into the 1980s. The Corporation will undertake the necessary capital expenditure (estimated roughly at £1 million) to secure the best performance from these mills, obsolescent as they are in some respect. The BSC have also undertaken to increase the capacity of the electric are furnace at Hallside to about 250,000 tonnes a year so as to maintain supplies from the Hallside billet mill to the Craigneuk bar mills as well as steel for other mills in Scotland as desired. All this will retain an identifiable special steel facility in Scotland into the 1980s.
FOUNDRIES
Hamilton
12. "Following my discussions, the BSC are reviewing the potential market for the products of this small iron foundry. Therefore, the closure of the foundry should not be confirmed now. When their review of the market is completed, the Corporation will discuss the future of the foundry with the Unions through the normal procedures.
Tollcross
13. "I welcome the BSC's proposals for the redevelopment and expansion of the Craigneuk steel foundry; this is in line with the Government's policy for the ferrous foundry industries as incorporated in the new scheme for financial assistance under Section 8 of the Industry Act 1972 (for which the BSC will be eligible). For the new investment at Craigneuk to succeed, I have found no alternative to BSC's proposal to concentrate the Craigneuk and Tollcross operations on the Craigneuk site. I recommend therefore that the closure of the Tollcross steel foundry be confirmed. The Corporation have undertaken that, in recruiting for the new 300 job opportunities arising from the development at Craigneuk, preference will be given to the workers from Tolcross, half of whom live between Tollcross and Craigneuk which are less than 10 miles apart. This will, inter alia, retain within the Corporation people with the special skills of foundry work.
NEW INVESTMENT PROPOSALS
Direct Reduction Plants at Hunterston
14. "Following the announcement last year of the Corporation's intention to build a plant at Hunterston for the manufacture of iron by the direct reduction process, the Corporation

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have now decided to proceed with the construction of two 400,000 tonne units there; the total investment in both plants is estimated at £55 million (at current prices), providing about 150 jobs from 1978; priority in filling these jobs will be given to workers becoming redundant from steel plans affected by closure.
NEW STEELMAKING PLANT
15. "The Corporation, like the Government, are committed to a target of 41 million tonnes of steel capacity in Scotland by the early 1980s, including up to a million tonnes of new electric are capacity. I have carefully considered the many representations made to me that 3.2 million tonnes is too optimistic a target for output from the expanded plant at Ravenscraig. I am very conscious of the need for new plant in Britain to match up to the efficiency of similar plant overseas if we are to have an internationally competitive steel industry in the 1980s; there is a responsibility on both management and workers to cooperate in achieving this. However, whilst the Corporation must continue to aim at an output of 3.2 million tonnes at Ravenscraig, it would be more prudent to use a figure of 3 million tonnes when assessing supplies to the product mills in Scotland.
16. "The Corporation have not hitherto determined where they wish to locate new electric are capacity and various sites for this were suggested to me by MPs, local authorities and workers' representatives as a way of mitigating the social effects of the proposed closures and of providing a more secure supply of steel for Scottish product mills. I have discussed these proposals with the Corporation. The Corporation now propose to build an electric are plant at Hunterston of about 250.000 tonnes capacity which will produce continuously cast blooms for rolling at Glengarnock. This would, inter alia, provide evidence of their intention progressively to develop the Hunterston site. The closure of the open hearth furnaces and primary rolling at Glengarnock will be phased to the availability of steel from Hunterston. The cost of the new electric are and continuous casting plants is estimated at £35–40 million at current prices, providing about 280 new jobs.
17. "The Corporation are also prepared to uprate the capacity of the electric are furnace at Hallside from 150,000 tonnes to about 250,000 tonnes at a cost of to £2 million (see para. 11 above).
18."I also concluded that there are good reasons for constructing a new electric are plant in the Motherwell area inter alia to help offset the social effects of the closures of the open hearth furnaces. Following our discussions, the Corporation propose to build a new electric are plant of about 250.000 tonnes capacity at Ravenscraig. They consider this the most suitable site in the Motherwell areas as the plant would be well integrated with other facilities at Ravenscraig and would still have ready access to the Dalzell and Lanarkshire product mills. The cost of this plant is estimated at up to £20 million and it should provide an additional 50 jobs in the Motherwell area.
19. "These developments will provide an additional 600,000 tonnes of electric are capacity in Scotland, bringing BSC's steel capacity in Scotland to 4·2 million tonnes, easily maintaining the Scottish share of BSC's steel production in the United Kingdom. I have agreed with the Corporation that it is premature to consider at this stage where the balance of electric are capacity in Scotland should be sited. This can best be examined in the light of production and market developments over the next few years.
PIPE PRODUCTION
20. "The Corporation propose to expand their capacity for producing threaded pipe for the casing of oil and gas wells by new investment of £25 million at Clydesdale works near Motherwell and at Imperial Works in Coat-bridge. This will provide 550 new job opportunities at Imperial but a reduction of about 100 job opportunities at Clydesdale, ie a net gain of about 450 jobs. It will yield a better balanced and more economic operation and will enable the Corporation to continue to supply the major proportion of the North Sea market for casing.
EFFECT ON JOBS
21. "The White Paper of February 1973 on BSC's 10 year Development Strategy gave a net reducation of about 6,500 jobs in Scotland over the period of the strategy. The Corporation subsequently predicted a gross loss in job opportunities (including Clyde Iron and Glengarnock open hearths) of about 7.000 to be partially offset by 2.400 new job opportunities, giving a net job loss of about 4,600. My recommendations would result in the saving of 1,350 jobs and the deferment of most of the remaining job losses by 1 or 2 years. The Corporation's proposals for new investment provide for 3,525 new jobs, thereby reducing the net job loss to about 2,100.
22. "These losses are inevitable if we are to phase out obsolescent processes for steelmaking and provide a modern and thriving steel industry in Scotland giving secure employment to those remaining in the industry. The success of that industry will hinge on its ability to supply steel to using industries both at home and abroad, at internationally competitive prices and qualities. This in turn will require steel plants—whether already in existence, now being built or newly planned following the review—to be run in accordance with international standards of operational practice and manning; otherwise the prospects for British steel, including Scottish steel, remaining competitive in the 1980s may be grim.
ALTERNATIVE EMPLOYMENT
23. "As noted in my Interim Report (paragraph 16), it is the policy of the Government to ensure that everything possible is done to provide alternative employment in areas affected by closures. During my visits to plants in Scotland proposed for closure, I assured the workers concerned that certainly no less would be done for them than we undertook to do in the case of closures in England and Wales confirmed in my Interim Report. However, it is difficult to provide for alternative employment while uncertainty exists

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as to whether a closure will take place and if so, when.
24. "The redundancies in the steel industry must be taken in the context of the general employment situation in West Central Scotland. The Government's efforts, therefore, must be directed at maintaining and enhancing the attack on the industrial and environmental problems of the region as a whole. The areas affected by the steel closures are all closely linked and all, with the exception of Glengarnock, within the Scottish Special Development Area. The full range of regional policies is already brought to bear to attract new employment. There has been some success in the past—between 1959 and 1973, mobile

ANNEX

Proposed Closure

Number of Lost Job Opportunities

Original Date of Closure

Recommendation

General Terminus Quay

60

1974–75

BSC proposal agreed.

Clyde Iron Works

1,220

1978–79 or later

Closure deferred until 1st January 1980 at earliest.

Clydebridge (OH Furnace, Primary Mill).

1,000

1976–77

Closure deferred until July 1977–January 1978.

Dalzell (OH Furnace, Primary/Bar and Section Mills).

1,030

1976–77

Closure deferred until July 1977–January 1978.

Lanarkshire (OH)

390

1977 or earlier

Closure not until July 1977–January 1978.

Ravenscraig (OH)

460

1977–78

Closure during July 1977–January 1978.

Hallside (Primary and Billet Mills).

450

1976–77

Plant to be retained into 1980s.

Craigneuk (Bar Mills)

800

1976–77

Plant to be retained into 1980s.

Clydesdale (OH)

600

1975–76

BSC proposal agreed; already replaced by new electric arc.

Glengarnock (OH Furnace and Blooming Mill).

530

1978–79 or later

Closure deferred until not before 1st January 1980, dependent on steel from Hunterston electric arc.

Tollcross (Foundry)

350

1975–76

BSC proposal agreed because of expansion of Craigneuk and job availability there.

Hamilton Foundry

100

1977–78

Closure not confirmed pending outcome of market survey.

Number of lost job opportunities as initially proposed

6,990

Less Hallside/Craigneuk Mills and Hamilton Foundry

1,350

Number of lost job opportunities now agreed

5,640

New Investments

New Job Opportunities

Hunterston—

Ore Terminal

190

Direct Reduction Plants

150

Electric Arc

280

Hallside Electric Arc Expansion

Negligible

Ravenscraig—

BOS Expansion

1,500

Electric Arc

50

Clydesdale Electric Arc

400

Clydesdale/Imperial Tubes

450 (net)

Dalzell—

Plate Mill

100

Beam Welding

105

Craigneuk—Foundry

300

Total

3,525

Therefore, net job losses = 5,640 less 3,525

= 2,115

Lord CAMPBELL of CROY: My Lords, may I thank the noble Lord, Lord Beswick, for repeating the Statement made in another place? We have been
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industry created some 35,000 new jobs in Scotland; nearly 8,000 further jobs are in prospect. The slowing down in the creation of new employment recently has been largely due to the general economic situation.
25. "BSC is already pursuing a number of policies aimed at attracting new industry to the area. The Cambuslang project, announced on the Minister of State at the Scottish Office on 30 June provides a good example of cooperation between Government, local authorities and BSC. A determined effort will be made to attract new industry to this site in conjunction with land reclamation and the development of new factories by the Scottish Development Agency once it is established.
waiting for such a Statement on Scotland, having heard one on England and Wales some months ago. Is the noble Lord answer that we on this Bench recognise

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that modernisation and some closures are necessary if the steel industry is to be competitive, and that, in steel, modernisation usually means fewer jobs though production capacity may be increased? In particular, is the noble Lord aware that to retain the obsolescent open hearth furnaces indefinitely would be against the longer term interests of the industry in Scotland. Do the Government none the less agree that the consequent redundancies will be more difficult to cater for in the coming months when unemployment generally is, unfortunately, expected to be very high?
With his mention of a 4½ million tonnes capacity a year in Scotland, can the noble Lord confirm that it is still the intention that the production capacity of the steel industry in Scotland should be increased by about 25 per cent. in the current 10 year plan, as was decided over two years ago? Is the noble Lord also aware that I welcome the confirmation that the contemplated developments at Hunterston are to go ahead, especially as this follows a difficult planning decision which noble Lords from Scotland will particularly remember I had to take for that area, which was the subject of considerable controversy at the time. As regards Shotton, we recognise that this is a difficult decision and we have sympathy with the noble Lord, who is personally carrying out this survey, in having to take such difficult decisions. However, can the noble Lord indicate when the announcement concerning Shotton is likely to be made?
Lord ROCHESTER: My Lords, we on these Benches should also like to thank the Minister for having repeated the Statement. One or two of the decisions to which the Statement refers must have been painful for the Government, remembering the high unemployment in Scotland to which the noble Lord, Lord Campbell of Croy, has already referred. Nevertheless, we support the Government in the action which they contemplate, because it shows recognitioin that the interests of the steelworkers themselves are likely to be best served in future by employment which is productive and investment which is profitable. Like the noble Lord, Lord Campbell of Croy, we, too, sympathise with the Government
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regarding the dilemma in which they find themselves over Shotton. There is a working community there with wonderful traditions dating back to the time of John Summers, and it is right that before a decision is finally taken, and before that very fine working community is broken up, there should be very careful consideration.
There are two questions which I should like to ask the Minister. First, does the policy in this Statement represent an agreed policy between the Government and the British Steel Corporation? To the extent that it does not, is the Minister prepared to tell us anything about the views of the Corporation in the matter? The second question does not arise directly out of the Statement, but it is perhaps relevant to it. Various estimates have been made as to the likely loss of the Corporation in the current financial year. Can the Minister give any authoritative estimate as to the extent of the likely loss? For the rest, we would simply like to encourage the Government once more in spending such money as is available in trying to find new jobs and to train the displaced steelworkers for those new jobs, rather than spending money, as we see it, in an unprofitable way in, for example, further nationalisation measures.
Lord BESWICK: My Lords, I thank the noble Lord, Lord Campbell of Croy, and the noble Lord, Lord Rochester, for the way in which they have received this Statement. As they were kind enough to say, compiling the Statement was not altogether an easy task. The noble Lord, Lord Campbell, is absolutely right: modernisation means fewer jobs, mostly, but this is not a great consolation to the man who loses his own job. It will be difficult in the coming months to find alternative work. But if the noble Lord will look at the details of the closure dates, he will find that in all cases there will not be redundancies in the coming months arising from this review. I hope that with the upturn in trade next year it will be rather less difficult than at the present time.
I confirm that the plan is that there will be an increase of productive capacity in Scotland of 25 per cent. or a little more. It is also true, as I have said

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and as the noble Lord himself has indicated, that Hunterston will go ahead in the next phase, the next 10-year strategy. What I have said about the direct reduction plants, the ore terminal and the are furnace is an indication that Hunterston will be one of the most modern complexes in Europe when it is completed. As for Shotton, I am grateful to both noble Lords for the understanding which they show. I agree with what was said by the noble Lord, Lord Rochester, that here we have a community with an absolutely splendid record. It would be a terrible thing to break into their productivity unless there were absolutely overriding considerations. This is bound up, of course, with development in other parts of Wales, and it is that other development that is causing a slight further delay. But I hope that a decision will be taken within the next two or three months.
I was asked about the agreement or otherwise of the BSC to what we have put forward in this Report. The BSC would, no doubt, in certain particulars have done things differently, but everything there has the Corporation's agreement. I saw the Scottish steelworkers at a meeting this morning, and although, obviously, there were some men, who face the loss of jobs who expressed disappointment, overall I was thanked for what had been done, and there was general agreement. The retraining programme is something about which the BSC feels very strongly, and certainly the Government will co-operate with the Corporation to the maximum in ensuring that there are new jobs for these men who are displaced.
Lord SLATER: My Lords, I wish to refer to what my noble friend said in the course of his Statement and in replying to the two noble Lords representing the two other Parties. So far as the Northern region is concerned, this is a very sad day, particularly for the Hartlepools. The new South-East Durham Steelworks were erected only a few years ago, in an area which I had the privilege of representing in the other place for so many years. That new plant cost a lost of money and provided employment in an area—the Hartlepools—which had been subject to neglect for so many years, and which was in close proximity to the area which was represented by my noble friend Lord
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Shinwell. I am sure that had he been here he would have had a comment to make about this. My noble friend Lord Beswick has been in the area, and I saw on television that he had visited the works. Now he has come back with this Report—
Several Noble Lords: Question!
Lord SLATER: What I have to say arises from my noble friend's Statement. I hope that noble Lords will be patient for just a moment and let me develop my argument in regard to the situation. What about Consett? Consett, with a modern plant, has been in existence for quite a long time. There has been development there and it covers a very extensive area. Village after village in the Consett area will be severely hit by the action which the Government are taking in Consett, and in the Hartlepools. Those are the two specific places to which I wish to refer. I feel that on this issue the Minister for the Environment, if he is responsible, or the Minister for Technology, if he is responsible, has taken the wrong line of approach, and many people will be placed on the dole.
Lord BESWICK: My Lords, possibly my noble friend might read the Report and he will see that the points he made are not really relevant to what I said. It is true that there are to be some changes in the North-East. There are great developments taking place on the North-East coast—
Lord SLATER: Where?
Lord BESWICK: In Redcar. In the case of Hartlepool, Consett and Redcar, discussions are now taking place between the workers and the BSC about the best siting for the new plate mills. A decision on that has not yet been reached, and I am waiting for proposals to be put before me.
Lord WYNNE-JONES: My Lords, I congratulate my noble friend the Minister on the enormous efforts he has made in this matter—very often with great success. I wish to ask him this question. Is it always wise to close down the smaller concerns within the British Steel Corporation, on the grounds of ultimate efficiency? I should like to call my noble friend's attention to what has been done elsewhere. If we have only those concerns which at the moment are of perfect and

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absolute efficiency, there is nothing to fall back upon in times of great demand for steel. Furthermore, if everything is kept at exactly the same level there is no possibility of advancement, either. Would my noble friend not agree that it should be an important part of the policy of the British Steel Corporation both to continue in operation such places as Shotton, and to allow certain expansion of plants which are quite uneconomical and are beyond the range of immediate technology, but which would be of benefit in the future?
Lord BESWICK: My Lords, the argument about the small plant against the big plant is one with which I am familiar, and on occasion I have advanced the claims of the small plant. The fact that there are electric are furnaces being erected at Ravenscraig, and there is the enhancement at Hallside indicate that the BSC is not putting all its eggs—in Scotland, at any rate—in one large basket.
Lord MACKIE of BENSHIE: My Lords, will the noble Lord say how many steel workers in Scotland will be redundant and whether the retraining facilities available there or elsewhere can cope with these men in the near future? Perhaps he might also care to indicate what areas of expansion in Scotland he expects in that area which would take up the employment of these men.
Lord BESWICK: My Lords, I indicated that there will be an expansion within the period under review of some 25 per cent. to 27 per cent., and that the net job loss will be 2,100 jobs. The retraining facilities there and the question of new factories new job opportunities, in other industries is one into which maximum effort must be made.
Lord LLOYD of KILGERRAN: My Lords, may I echo the words of the noble Lord, Lord Beswick, when he said, referring to Shotton, that it will be a terrible thing to break into the productivity of this fine, efficient and cooperative community. May I ask whether or not he would agree, having regard to the conditions in North Wales, that to deal drastically with Shotton in the way that has perhaps been mentioned from time to time would be catastrophic
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to the employment conditions there; and that in regard to Shotton the social effects of modernisation must loom larger in North Wales perhaps than in other areas?
Lord BESWICK: My Lords, the noble Lord should have given the remainder of the quotation. I went on to say "unless there are overriding considerations". The social considerations I have fully in mind. There would be 6,000 jobs lost out of a workforce of 37,000 in that travel-to-work area. That is something that one must take into account. The noble Lord will agree—and it has been put very forcefully from those Benches by Liberal spokesmen—that we must have regard for the national effort, for the Welsh effort and the United Kingdom effort; and the eventual solution must be one which increases the possibility of this country and of Wales getting the maximum share of the steel market.
Lord MACKIE of BENSHIE: My Lords, might the noble Lord perhaps answer the point I made about whether he is satisfied that there are sufficient retraining facilities in Scotland for the men out of work?
Lord BESWICK: Yes, my Lords, there is no question but that the retraining facilities will be there. Unfortunately, in certain cases within my experience there has been some difficulty in filling the retraining posts; but the facilities will be there. The greater task will be to get jobs for the trained men to go to.
Lord ROBBINS: My Lords, now that he has nearly accomplished this tremendous task, is the noble Lord in the position to make any estimate of the comparative productivity per head in the whole area of the Steel Corporation's operation in relation to productivity per head in the leading competitors in the rest of the world?
Lord BESWICK: My Lords, I could give figures but I have not got them with me. I suspect that the noble Lord has certain figures in his head already. They do not compare very favourably as of now. There is no doubt about that. One outcome of this review must be that we do increase productivity per head. So far as Scotland is concerned, there

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will be more steel produced with fewer men. There is no doubt about that. If the noble Lord wants the figures I will send them on to him.
Lord ROBBINS: My Lords, I am greatly obliged to the noble Lord. I had no arrière pensée.
Lord BESWICK: My Lords, possibly the noble Lord might have read the Financial Times.
Lord AVEBURY: My Lords, why so late in the day has it been decided by the British Steel Corporation to produce threaded pipe for oil well casing? Is this not something which should have been considered many years ago so that we should be producing that casing for use in the North Sea now?
Lord. BESWTCK: My Lords, with hindsight many other decisions might have been taken some years ago. I am talking now about an increase in production.

INDUSTRY BILL
Report stage resumed.
Clause 22 [Extension of powers to give selective financial assistance under Industry Act 1972]:
4.25 p.m.
Lord ELTON Lord ELTON moved Amendment No. 63:
Page 18, line 26, leave out paragraph (a).
The noble Lord said: My Lords, your Lordships may recall that at the Report stage I said that a fuller statement was needed on the Government apologia for the evisceration of Sections 7 and 8 of the Industry Act 1972. I tabled a series of Amendments which would give occasion for this explanation and also an opportunity for the Committee to express our views thereupon and an opportunity for Her Majesty's Government to say why these Amendments should not be pressed. I gave notice privately earlier today in the interests of dispatch—which I think your Lordships will agree should be pursued—that I would group these Amendments together and I propose now to speak to Amendment Nos. 63, 64, 66, 67, 68 and 70. Interleaved with these Amendments are others designed to ameliorate the functioning of the Bill if these Amendments prove not to your Lordships' taste.
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I will deal with those in another manner later.
The group to which I am now speaking refers to that part of the Bill which applies to Sections 7 and 8 of the Industry Act 1972. The distinction between these two sections in the 1972 Act is that Section 7 deals exclusively with assisted areas and Section 8 with all areas generally. The effect of the clause we are now considering in toto, Clause 22, is to remove the limits set on the action of the Secretary of State, not as they are set out in the Bill but as they are set out under another piece of legislation. The character of that piece of legislation is fundamentally altered thereby. There were, in fact, five different kinds of safeguards and limits placed on the activities of the Secretary of State. The first of these is as follows: formerly, in the 1972 Act as it stands, the Secretary of State could acquire loan or share capital only if that is the only way in which he could assist the company. If it is not the only way, he cannot do it.
As amended by this Bill, he can acquire that loan and share capital whether or not appropriate alternatives exist which may or may not be preferable. It may help your Lordships if I say that in the assisted areas this point is covered by Section 7(4) of the Act and Amendment 63 on the Marshalled List and in the general section it is covered by 8(1)(c) and 8(3) and the Amendments in that case are Nos. 66 and 67. The effect of the Bill as it stands will be that the giving of selected financial assistance in this manner will no longer be a matter of last resort, and it can be used in preference to grants, loans and even vesting orders.
The second group of Amendments, Nos. 64 and 68, relate to Sections 7(5) and 8(4) of the 1972 Act. As that Act now stands, the Minister is required to dispose of the loan or share capital that he has acquired as soon as appears to him reasonably practical. Under the Act as this Bill seeks to amend it, he will be able to retain them in perpetuity. This opens up the whole of British industry to consumption by the Secretary of State and converts the Act, as it were, from something in the nature of a sanatorium for sick industry into something in the nature of a shark. One enters a sanatorium in order to be cured one enters a shark in order to be digested.
The third safeguard was that the Secretary of State under the Act as it now stands can run the scheme only until the end of 1977, though honouring contracts later. I refer to Section 8(5) of the Act and to Amendment No. 70. This relates to the general area only, it is not limited to the assisted areas. It means that the Secretary of State is in charge of a machine that can run forever for as long as the funds hold out. We should like to be told why this limit has been removed. The only limit now remaining is that of the availability of cash.
Finally, in the Act as it now stands in Section 8(3)(b) the Secretary of State cannot acquire more than half by nominal value of the share capital of a company unless it is in an assisted area. He can now acquire all of it. This acquisition must be, it is admitted by consent with the company; but the choice placed before the company is the stark one of allowing itself to be taken over in part or in toto, or lose control, permanently as against temporarily. Taken together these Amendments mean the Secretary of State can buy membership or control of any company in any part of the United Kingdom and retain it for as long as he wishes, and retain it into a period of profitability. This is relevant to the point which I raised that the only limitation now is that of the existence of sufficient funds. The Secretary of State can run an empire which will be self-regenerating, and he will be able to go on purchasing his way into British industry for as long as he wishes, all of this outside the Bill we are discussing but inside the Industry Act 1972.
At the Committee stage of that Act, in another place, the right honourable Member for Bristol. South-East, Mr. Wedgwood Benn, said:
"We believe that the arbitrary nature of the Bill is likely to strain relations between Government and industry given the massive range of powers which the Secretary of State has and the large sums involved."
If Members of your Lordships' House on the other side agreed with that then, what can they think of the Act as it will be when we have finished ripping out the safeguards which even then they regarded as inadequate? Those are the questions that I should like noble Lords opposite to answer in a group in order that we may
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decide what to do with these Amendments.
4.33 p.m.
Lord LOVELL-DAVIS: My Lords, we are prepared to answer these Amendments in a group. If I may, I will talk to Amendments Nos. 63, 67, 64 and 68, and my noble friend Lord Melchett will speak to Amendments Nos. 66 and 70. There has been no concealment of the Government's intentions to make the changes to which these two paragraphs give effect. The basic principle underlying our proposed repeal of the restrictions in Sections 7(4) and 8(3) was set out in the Labour Party Manifesto of October 1974, which said:
"Whenever we give direct aid to a company out of public funds we shall reserve the right to take a proportionate share of the ownership of the company".
While the term "appropriately" assigns the Secretary of State discretion, these parts of Section 7(4) and Section 8(3) of the Industry Act 1972 arbitrarily accord assistance in the form of share participation a lower priority than other forms of assistance. This limitation is therefore being repealed in order to honour our Manifesto commitments.
The original Bill tabled by the previous Administration made no reference to the provisions that we propose to delete. The introduction of the present wording of this part of Section 7(4) and Section 8(3) of the 1972 Act was specifically introduced by amendment to limit the Government's freedom to provide assistance in the form of loan or share capital. Its effect is to give priority to forms of assistance other than equity participation, and it is for this reason that we are proposing its deletion, and in effect a return to the 1972 Bill as originally tabled.
Quite simply, we believe it wrong that when the Government is offering assistance to a company, it should be denied the opportunity of taking a share in that company unless this is the sole, or the sole appropriate, means of providing the assistance. If we provide assistance under Section 7 or 8, we believe we have a right to take a share in the equity of the company so assisted, and that this right should not be subordinated as these subsections of the 1972 Act make them subordinate.

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In the case of the disposal of shares or stocks, under the terms of the 1972 Act the Secretary of State must dispose of shares or stock as soon as it seems to him reasonably practicable to do so, and that, before so disposing of them, he may consult the company. The Government believe that when assistance takes the form of shares or loan capital, the Government should be able to retain their stake and earn a proper return on it. I was glad to note in our debate at Committee stage that the noble Earl, Lord Onslow, accepted this principle. I note the noble Earl is not in his place at the moment. It is a principle which seems to me to be in conflict with this Amendment.
There should therefore be no restriction of the sort imposed by Sections 7(5) and 8(4) of the 1972 Act to require Government to sell the shares they have acquired in this way. We believe it proper that Government should be free to enjoy the benefits of share ownership, and not be confined in the way that has previously occurred. That deals with our answer to Amendments Nos. 63, 67, 64 and 68. I will leave it to my noble friend Lord Melchett to deal with Amendments Nos. 66 and 70.
The Earl of BALFOUR: My Lords, these Amendments are highly technical because, among other things, we are amending the provisions of another Act which is always difficult to follow. What gives me considerable concern are some of the words in the 1972 Act that are being repealed at the moment. Let me take selective financial assistance in Section 8 of the 1972 Act and just give you an example of some of the words which are being taken out:
"The Secretary of State, in giving financial assistance…shall not acquire more than half, by nominal value, of the equity share capital of any company."
These words are being deleted. I can see the Government's idea that where they give financial assistance, they feel they should have a share of the stock capital; they are dealing with public money. This I accept, but if the Bill as it is now drafted stands, then they can, in giving financial assistance, with the Secretary of State's approval of course, acquire 51 per cent. of the holding.
This is not the provision that I feel will encourage investment in British industry. Furthermore, unfortunately,
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once a director of a company knows that the Government are holding 51 per cent. of the shares, he will perhaps not be so keen to look after the overall financial interests of the company in the same way as he might have done where the Government held only 30 per cent. This is unfortunately just one of the facts of life. Furthermore, I feel very strongly that the Government, having used public money, invested it in Company A, and helped it to get back on its feet, they should then be in a position to sell their shares in that company—I would hope at a considerable profit—and perhaps put the money into some other company that is not perhaps quite so healthy. There is a limit to capital, even if it is Government money, and among the words being repealed are these:
"Where financial assistance is given by acquiring shares or stock in a company the Secretary of State shall dispose of the shares or stock as soon as, in his opinion, it is reasonably practicable to do so; and before making the disposal the Secretary of State shall consult the company".
I believe it would be worth while preserving those words from the 1972 Act or at least to use words which enable the Secretary of State to dispose of share capital which he may have acquired. I put down Amendments at Committee stage which were probably much milder than those which have been nut down now; but I am sorry that the Government appear to have decided that once they have acquired shares in a company they will hang on to them, almost regardless of what happens.
Lord MELCHETT: I think the Amendments which my noble friend Lord Lovell-Davis has already dealt with illustrate a deep-rooted political divide between noble Lords opposite and ourselves. We believe that the people of this country ought to be able to reap the benefit of any investments which they make in comanies by taking equity in those companies. I am frankly surprised that Amendments Nos. 66 and 70 should have been lumped in, as I understood it from what the noble Lord, Lord Elton, was saying, with these other Amendments because they seem to raise very different points; and I did not entirely understand from the noble Lord, Lord Elton, what his justification was for either Amendment No. 66 or Amendment No. 70.

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Amendment No. 66 deals with Section 8(1)(c) of the Industry Act, which has provided an impediment to the contribution that Section 8 was expected to make towards industrial investment. This was predicted by Members of my Party when in Opposition in another place. By deleting this restriction we hoped to promote further use of Section 8. As noble Lords know. £550 million were set aside up to 1977 for Section 8 financial assistance. Of this, only some £125 million has so far been paid out or committed on schemes of a positive nature designed to encourage new investment or greater efficiency. This includes the £45 million for the ferrous foundry and machine tool industries announced yesterday; so before yesterday it was rather less. The rest of the £262 million paid or committed to date has arisen from unforeseen emergency action to save key industrial capability from being lost. It cannot possibly be argued that this use of Section 8 has fulfilled the objectives described in the 1972 White Paper on Industrial and Regional Development, in particular the words:
"to stimulate industrial and regional regeneration through new national and regional investment incentives."
If I may say so, this sanatorium which was set up by noble Lords opposite, has opened its doors but has not found many willing patients. The Government are therefore seeking to make Section 8 more effective for the purposes for which it was devised by noble Lords opposite. The Industrial Development Advisory Board, in their commentary on the year ended 31st March 1974, particularly noted this condition:
"…in effect that assistance cannot be provided unless found to be unavailable from private sources of finance on suitable terms and conditions"
was one of the principal reasons why few applications for assistance under Section 8 have been made by individual companies. It is this restriction we seek to delete in this Bill and which Amendment No. 66 would leave in the Industry Act. While applicants will normally be expected to ensure that the greater cost of a project is provided for outside the public sector, deletion of the present restrictions will remove the necessity for an elaborate process of checking all available potential sources of finance.
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The noble Lord, Lord Elton, also spoke about Amendmhent No. 70, and I propose to deal with this rather more briefly. This Amendment would remove the removal, if I may put it like that, of the time limit in Section 8. The Government believe that the powers of Section 8 of the Industry Act, after they have been developed and extended in the way in which Clause 22 provides, can make a considerable contribution to overcoming some of the deep-rooted industrial problems which our White Paper referred to. These problems have persisted over many years. The Government therefore believe it would be totally unrealistic to suppose that the need for Section 8 assistance will have disappeared by 1977 or 1980. We are therefore completely opposed to limiting the life of Section 8 in the way that Amendment No. 70 would do.
Lord ELTON: My Lords, I have listened with close attention to what has been said by noble Lords on the other side, and I cannot confess myself to be greatly encouraged by what it amounted to. The noble Lord, Lord Lovell-Davis, said in effect, "We said we were going to do this; we want to do this; and we are going to do it." I accept there is a political division here, and at this stage it would not be proper to divide the House on the principle which he adduces, though it is proper to say that we absolutely dissent from his interpretation of the economic and directorial relationship between industry and Government. In the second part of the answer, the noble Lord, Lord Melchett, elaborated on this and said that in the view of his colleagues and himself it was proper that benefits reaped from the infusion—which we believe should be temporary—of cash into private industry should be reaped on a permanent basis by society as a whole.
There are respectable arguments in favour of this, but there are pragmatic arguments against it. I believe, and I think my noble friends agree, that the benefit to the community would be far greater if, instead of subsuming the expected dividends and profits into the Consolidated Fund, we had as a far greater asset in this nation a healthy, independent and therefore diverse industry, which would make profits for the

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whole of the community and not merely reduce the expenses of administration, as it is now intended should be the case. On the time limit, I was anxious to hear what noble Lords had to say about it. On this point we have been told that the benefits of the 1972 Act—an Act which was so widely deplored by noble Lords opposite when it was brought into being and is now so improved that these benefits will last for a great time—Does the noble Lord wish to interrupt?
Lord MELCHETT: My Lords, I am grateful to the noble Lord for giving way. I did say "as improved by this Bill will last for a long time".
Lord ELTON: My Lords, that is also what I was attempting to say when the noble Lord came to my aid. He believes that, as "improved" by this Bill, the benefit will be everlasting. I would point out to the noble Lord that the Act is now under Parliamentary review as a result of this Bill. As it stood, had they left the time limit in, it would automatically have been subject to Parliamentary review and renewal in 1977 or, under a later Amendment, in 1980. That is a process which I thought would have been salutary. If it was working well it would take little Parliamentary time, and if it was working badly it would deserve a great deal of Parliamentary time. But Parliamentary time in August is at a premium. Therefore, beyond expressing profound discontent at what I have heard and reserving the right to return on Third Reading to this matter if I am not satisfied, with my persual of Hansard, with some Amendment, I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
Lord ELTON: My Lords, may I refer your Lordships to the list of Amendments I gave at the beginning. I do not intend to move Amendments Nos. 64 to 73. I am not moving these Amendments in order to save time. One of them relates to a point which is substantially covered and can be raised under Amendment No. 74 by my noble friend Lord Drumalbyn, and I may again take part in the discussion on that Amendment.
4.51 p.m.
Lord DRUMALBYN Lord DRUMALBYN moved Amendment No. 74:
Page 19, line 10, at end insert—
("(3) Notwithstanding subsections (1) and (2) above, where any share capital or stock has
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been acquired by the Secretary of State in a company under the provisions of subsection (3) of section 7 or subsection (3) of section 8 of the Industry Act 1972, the Secretary of State or, if the share capital or stock is transferred to the National Enterprise Board under section 5 of this Act, the Board, shall dispose of the share capital or stock as soon as, in the opinion of the Secretary of State or of the Board, as the case may be, it is reasonably practicable to do so; and before making the disposal the Secretary of State or the Board, as the case may be, shall consult the company.")
The noble Lord said: My Lords, I beg to move the Amendment standing in my name on the Marshalled List. The purpose of this Amendment is quite clearly to secure that when before the passage of this Bill money has been advanced under Sections 7 or 8 of the Industry Act the terms on which that money was advanced should be observed. One of the terms under which financial assistance was given—and the financial arrangement, let us bear in mind, was bilateral—was that the shares should be disposed of and the loan repaid as soon as possible. Normally the recipient enters into obligations and the Secretary of State also makes undertakings in these circumstances. As I understand it, in this case Parliament is being asked to vary unilaterally one of the obligations on the part of the Secretary of State, and a very important condition on which the recipient agreed to accept assistance in exchange for shares. It is one thing to change the statutory terms on which future arrangements may be made; it is quite another to change what are virtually contractual arrangements determined by Statute which have already been made. What the noble Lord is doing is asking Parliament to authorise his right honourable friend to go back on the word of Her Majesty's Government.
I think the noble Lord said that only £125 million had been advanced out of the £550 million which would have been available under the previous Act, and in fact still is available. That is quite a considerable sum in itself. Even the £252 million which has been advanced was presumably subject to the same restrictions. These are bilateral arrangements. One cannot get away from that, and it is quite wrong for them to be varied by one side. Parliament, it is said, can do anything; but Parliament is not expected to do that kind of thing because it is a sort of repudiation.
The question that is very much in my mind in dealing with this kind of arrangement—the noble Lord was talking about the future—is exactly what is the status he envisages of these arrangements that are to be made. We have been told time and time again that all arrangements, all acquisitions of shares, are voluntary and can be dealt with only by voluntary consent. Does this not apply to Section 3 as affected by the provisions we are now discussing? The noble Lord was saying that there had not been very many willing occupiers of the sanatorium—I think he put it in that way. What reason has he to suppose there will be many more willing occupiers if he makes the terms very much stiffer? Admittedly, he will make it easier to acquire a shareholding, because he will probably not propose anything else. It is an odd form of voluntary agreement. It seems to be, "Here's the money. We want your life." If they acquire more than 50 per cent. of the shareholding they are taking away the whole of the control of the enterprise. That is by the way, because of course up until this time it is not germane to this immediate Amendment. But I should, all the same, like the question answered, because the noble Lord, Lord Beswick, promised to answer it when I spoke at the end of the third day on what was then Clause 17. The main purpose of this Amendment is to secure that we can hold up our heads and say that we have observed the arrangements which were made at the time when these terms and conditions were fixed. My Lords, I beg to move.
Lord MELCHETT: My Lords, I accept that the noble Lord, Lord Drumalbyn, has made a point which has some theoretical validity and it is, as he said, a point which he made at the Committee stage. I do not, however, think that this is a point about which we need to be concerned in practice. The noble Lord, as I understand it, is concerned on behalf of some companies. But the Government's plans to change the terms of the 1972 Act in this way have been public knowledge now for six months, and to the best of my knowledge none of the companies affected, none of the companies in question, has advised the Secretary of State of any
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disquiet. If they have expressed such disquiet, or if they have asked the noble Lord to speak on their behalf, I should of course be very ready to consider particular cases with the utmost seriousness. But if the noble Lord is merely raising a matter on a theoretical basis, which I assume he is, when those directly affected are not in practice concerned, I do not think that we ought to detain your Lordships' House on the matter any further.
Lord DRUMALBYN: My Lords, I have not been briefed by particular companies to speak on this point. But, then, it may be that at the present moment none of the companies is anxious that this condition should be observed; but if, as we hope, things change and pick up in this country then they may very well be strongly interested. Not all of them follow legislation as closely as all that, and they may be surprised at the end of the day when they find that the terms on which they entered into these arrangements have now been changed. I see no reason whatever to change them. Whether or not it is theoretical, the point is that this facility, this safeguard, should not be removed. It should stay as it is. It is a safeguard. It is only a safeguard, if one likes to put it that way; but that it should be taken away, that the conditions should be varied, is not acceptable. I cannot see any advantage in doing it this way. If the time comes when the companies are able to stand on their own feet and can get on without the assistance that was given and has not yet been redeemed in one way or another, then I am sure they would prefer it in that way. Any company would prefer it in that way, and we ought not to remove that safeguard now.
I have an Amendment down for later on which would require the disposals when they are made to be returned to the Treasury—I think to the Consolidated Fund; and I think this is absolutely right. Once the purpose for which the financial assistance was given has been achieved, then it is right that the money should be paid back to the Consolidated Fund and be available to assist other enterprises in the same way or for other useful purposes. There is no useful purpose to be served by the shares remaining in the hands of the Treasury, or the Secretary of State, or the National Enterprise Board or whoever may be holding them. No

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useful purpose can be served by that and there is this very pressing necessity for the reduction of debt in this country.
On Question, Amendment negatived.
Clase 27 [Persons to whom duty to disclose information applies]:
5.3 p.m.
Lord ROCHESTER Lord ROCHESTER moved Amendment No. 75:
>Page 21, line 3, leave out from ("and") to ("with") in line 4 and insert ("employee representatives").
The noble Lord said: My Lords, we come now to the important clauses which deal with the question of the disclosure of information. Those of your Lordships who were present at the Committee stage of the Bill will recall that my noble friend and I then put down an Amendment in similar terms to Amendment No. 75. In the end, we did not move that Amendment because there seemed to be a possibility of finding common ground between a number of noble Lords who spoke—notably, the noble Lord, Lord Campbell of Croy, the noble Lord, Lord Houghton of Sowerby, and the noble Earl, Lord Balfour. Unfortunately, the hopes that a number of us then had that such common ground might be found have not materialised, except in one particular that I very much welcome; namely, that the noble Lord, Lord Campbell of Croy, and the noble Lord, Lord Drumalbyn, have joined my noble friend Lord Beaumont of Whitley and me in lending their names to Amendment No. 75 and, indeed, to a number of other Amendments which your Lordships will see on the Marshalled List, in more or less the same wording, which are consequential upon Amendment No. 75.
These Amendments all seek to ensure that the arrangement, whereby a manufacturing company which is making a significant contribution to the economy of the United Kingdom may eventually be required to disclose information to representatives or authorised representatives of relevant trade unions, should be altered, so that the legal rights to information go to the representatives not of trade unions but of employees generally. Turning to Amendment No. 83, which stands in the names of the noble Lord, Lord Houghton of Sowerby, and the noble Lord, Lord Bruce of Donington, which seeks to define the term "relevant trade
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union" and the Amendments which stand first in the names of the noble Lord, Lord Campbell of Croy, and the noble Lord, Lord Drumalbyn, and, secondly, in the names of the noble Lord, Lord Beaumont of Whitley, and myself, which seek to define the term "employee representative", it is fair to say that all of us have felt obliged to go our separate ways.
I do not know how your Lordships wish to deal with this matter, but since the noble Lord, Lord Houghton of Sowerby, agrees that if Amendment No. 75 is carried his Amendment, No. 83, falls to the ground, it may be convenient to the House in general that we should now have a general debate which covers not only Amendments Nos. 75 and 77, to which I shall refer in a minute, but also Amendments Nos. 78 and 83 which deal with the definitions to which I have just referred.
When I have finished speaking, the noble Lord, Lord Campbell of Croy, may wish to follow me and it may then be convenient if the noble Lord, Lord Drumalbyn, and the noble Lord, Lord Houghton of Sowerby, spoke to their respective Amendments. I understand that this suggested procedure is acceptable. In the hope of saving time, I shall also assume that your Lordships are familiar with the arguments which were advanced at Committee stage against the Government's proposal that legal rights to information should go exclusively to the representatives of the relevant trade unions, and that your Lordships are also familiar with the arguments in favour of the various proposals that were put forward at the Committee stage. For my part, I shall endeavour, so far as possible, not to go over the same ground again, but there are a few points which I must repeat in order to remind your Lordships why it is that we on these Benches feel that legal rights to information should not go to trade union representatives alone as the Bill prescribes.
In those companies in which trade unions are strongly represented—here may I reiterate that I should like trade unions to be strongly represented throughout British industry—employee representatives on works councils and bodies of that kind will themselves be trade union members. In those cases the information will go, as the

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Government desire, to trade union representatives. But in those many companies in which trade unions are not strongly represented—where the employees who are trade union members are in a minority or where, in some cases, trade union members are almost non-existent—we see no reason why legal rights to the information should be withheld from employees. In each case, we think that the position will be adequately covered if the rights are given to employee representatives. In our view, there is no reason for any reference in this Bill to trade union representatives.
At the Committee stage, the noble Lord, Lord Beswick, stressed that there is nothing in the Bill to prevent companies from giving information to employees or their representatives. I acknowledge that that is true, but in our view it does not adequately explain why these reserve statutory powers in the Bill, which oblige companies to disclose information, should favour certain privileged groups and not others. I will not labour this point, because in the debate at Committee stage, a great deal of support for this general proposition came from all parts of the House.
May I now refer your Lordships to Amendments Nos. 77, 78 and 83 in which three different proposals are put forward as to how to define those to whom information is to be disclosed. It is fair to say that these Amendments have at least one thing in common. They seek to break the monopoly position of trade unions. We on these Benches think that the recipients of information should be employee representatives, and in Amendment No. 77 we have defined that term as,
"…employees of the undertaking to which such information relates (being an undertaking employing more than 50 persons) who are the duly elected representatives of all employees in that undertaking)".
I hope that that definition will speak for itself for the moment, but I shall return to it briefly later.
I am in the difficulty that I cannot anticipate what the noble Lords, Lord Drumalbyn and Lord Houghton of Sowerby, will say in favour of their Amendments but, nevertheless, I should like to try to explain why, in my view, Amendment No. 77 is to be preferred to
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either of the other two Amendments, and it will then be for your Lordships to decide between them.
Referring first to Amendment No. 83, I had hoped, from what the noble Lord, Lord Houghton, said in Committee, that he might accept that legal rights to information should be given to representatives of trade unions, works councils, staff committees or other representative consultative bodies, and I stress the words "or" and "consultative". As I understand the Amendment tabled by the noble Lord, Lord Houghton, in his view the information should be given to representatives of both trade unions and these other bodies where they are present in the same firm, provided that these other bodies are recognised by the employer for the purposes of negotiation alone.
There are several reasons why my noble friends and I are not happy about these proposals. There is, first, the reason I have already given, that we see no reason why in this Bill there should be any reference at all to trade unions. Next, we think that information should not be disclosed exclusively to bodies which are recognised for negotiating purposes only, but rather that it should be made available to those bodies which are recognised for consultative purposes. Thirdly, we think that because, according to Clause 27 of the Bill, the information would be required for purposes not of negotiation but of planning and consultation, there is no need for the information to go to anybody who is not employed by the company concerned.
Finally, we are a little troubled, because although under Amendment No. 83 a company might be required to furnish information or to grant rights and facilities to representatives both of trade unions and other bodies where they are present in the same firm, there appears to be nothing in the Amendment explicitly to prevent the Minister under later clauses in the Bill from dealing with representatives of the body or bodies of his choice, rather than with representatives of all the bodies to which, under the Amendment, information would be disclosed and rights and facilities granted.
As regards the Amendment standing in the names of the noble Lords, Lord Drumalbyn and Lord Campbell of Croy, although this comes closer at a number of points to what we have in mind, we feel

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that it suffers in degree from at least one or two of the disadvantages to which I have referred. We have noted, also, that shop stewards' committees are included among the bodies mentioned in the definition of "employee representative" in this Amendment, whereas they are not specifically referred to in the Amendment tabled by the noble Lord, Lord Houghton. He is not here this afternoon, but at the Committee stage the noble Lord, Lord Cooper of Stockton Heath, who speaks with great authority on these matters, said that some shop stewards' committees are very difficult indeed and that they tell—these are his words—"the relevant trade union where to go". I would only add that, particularly in the case of some shop stewards' committees which cross company boundaries, they are also quite capable of pointing management in the same direction.
I hope I am not making too heavy weather of this, but I can conceive of circumstances where companies, in the words of Amendment No. 78 may be "accustomed to consult" with such committees but where they do this reluctantly. I would much prefer that these committees were not specifically referred to at all in the Amendment, particularly since they are not qualified, as are works councils and staff committees, by the word "recognised".
I think, also, that the wording of Amendment No. 78 may reflect certain fears that if what I may call the "Liberal Amendment" is passed, and is incorporated into the Bill, it may become necessary for certain companies making a significant contribution to the economy of the United Kingdom to set up, for the first time, representative consultative bodies simply in order to fulfil their obligations under this Bill. On that point, I should like to make two points. First, I should be surprised if the great majority of the companies have not already established works or staff councils or committees, or other similar bodies. To the small extent that that may not be true, as I said in Committee we wish postively to encourage progress by companies in this direction, and in so doing to help bring the practice within British industry more closely into line with that of the countries in the European Economic Community.
I have already said that this proposal is in no sense made in opposition to trade
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unions. Rather is it aimed at helping to promote a sense of true partnership between management and employees within individual firms in this country. At the Committee stage the noble Lord, Lord Popplewell—and I am sorry that he, too, is not here—put to me a very pertinent question on this point, and I fear that on the spur of the moment I did not answer it as fully as I should have done. He asked me who would be the employee representatives on bodies like works councils; how would they be elected and who would elect them? He cearly feared that they would be unrepresentative, unauthorised and unorganised. In my experience in the companies of which we are speaking, they are nothing of the kind. In the case of the undertaking for which I worked until recently, I think I am right in saying that all the representatives on the works committee are now shop stewards. In the words of the definition proposed in Amendment No. 77, they are the representatives duly elected at elections held on company premises and in the working time of all the employees in the undertaking, and they are recognised as such by both management and men. What could be more authorised, representative and organised than that?
I am sorry to have spoken for so long, but it seemed to me that I could best help the House in initiating what will no doubt be quite a comprehensive debate if I first sought to set the scene as fairly as I could for succeeding speakers, and if I then tried to establish to the best of my ability the merits of the Liberal Amendment in preference to the others to which I have referred. That I have sought to do. My Lords, I beg to move.
5.20 p.m.
Lord CAMPBELL of CROY: My Lords, my noble friends and I, in tabling this Amendment with others, are aiming to help the Government to revise this Part of the Bill concerning disclosure of information, and to convert it to a better and more reliable system. We wish to encourage the maximum of voluntary disclosure to employees, and where it is compulsory—that is, where this Bill is making provisions—there should be a simple system which safeguards confidential information, is fair, and where industry can have confidence, including foreign firm investing here or joining in ventures

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with British firms. The Government have tried to amend the original proposals in the Bill by patching at the Report stage in another place at short notice. The result has been that a large part of the disclosure clauses were hastily considered in another place, and some were not examined at all, owing to the guillotine.
My Lords, at the discussion on Committee stage of this subject, we had various options before us. We considered the different situations in different kinds of company. Not all employees will be members of unions, and although the union representatives recognise that for collective bargaining they may, in many cases, be appropriate representatives for the purposes of receiving information under this Bill, we do not think that the representatives should be restricted to those union representatives. So that the first important point is that the representatives in the Bill should not be trade union representatives only.
The second point is that we believe the information should be transmitted within a company: that it should be disclosed to persons who are employees of the company. As the Bill is drafted at present, the appointed trade union representatives could be persons not employed by the company. There was considerable agreement in Committee among your Lordships on these two points. Although I and my noble friends were proposing some slightly different wording—although some of our amendments were exactly the same as those proposed in Committee by the noble Lord, Lord Rochester—we have now been able to combine wording which we believe should be acceptable to a majority of your Lordships, and which we also think will be easier for the Government to accept. It was with a view to making it easier for the Government to absorb this into the machinery they have already provided in the Bill that I did not use wording which I tabled at the Committee stage. There are some variations, and I entirely agree with the noble Lord, Lord Rochester, that it is useful to discuss the three different definitions before us in this debate.
My Lords, as I understand it, the aim of the definition in the name of the noble Lord. Lord Drumalbyn, is to enable as apt a representation as possible to be provided, given different circumstances, in
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the cases of different companies, but no doubt the noble Lord will explain his wording later. The alternative of the noble Lord, Lord Rochester, is there for us to consider in his Amendment, and it does not seem greatly different from that of my noble friend. Then there is the third Amendment. No. 83, in the name of the noble Lord, Lord Houghton of Sowerby. That appears to me to seek to cover rather different representation, but it certainly has the same purpose of not restricting the representatives to members of the trade unions.
I would remind your Lordships that the disclosure with which this Bill is concerned is for national economic policies; it is not for collective bargaining. Clauses in a Bill about to come to us, the Protection of Employment Bill, are headed "Disclosure of Information" and it is clear from the text of that Bill that they are concerned with information for the purposes of collective bargaining; so that will be dealt with separately by your Lordships on another occasion. The employee representatives proposed by the Amendment—and there is a whole group of subsequent Amendments if this one is accepted by the House—are acceptable, we believe, both as recipients of the information at the end of the procedure, as well as being participants in the screening procedure when the screening procedure is needed.
My Lords, in tabling this Amendment and the others associated with it, we hope that the Government will see that this is improving the Bill, and making it acceptable not only in Parliament but, we believe, over a wide range of persons concerned outside Parliament.
Lord HOUGHTON of SOWERBY: My Lords, I suppose it will be convenient for us to discuss all these Amendments together.
Lord DAVIES of LEEK: That is what I should like to know.
Lord HOUGHTON of SOWERBY: My Lords, I think it is a little difficult to deal with one Amendment separately from the others. I do not quite know in what order we shall dispose of them, but at any rate for the purpose of the debate it will be convenient for us to cover all the ground so that we know what the options are and what the arguments are in support of each of them.

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My Lords, the only thing that the Amendments proposed from the Benches opposite have in common is that they all want to get rid of the relevant trade union and replace it by employee representatives. If your Lordships will look at Amendment No. 75, we see a combination, a kind of coalition, between the Liberal and Conservative Benches in favour of replacing the term "relevant trade union" by the term "employee representatives". From that point on the coalition divides, and we see one version in Amendment No. 77, and another version in Amendment No. 78.
The noble Lord, Lord Rochester, said a moment ago that his Amendment and associated Amendments were not in opposition to the trade unions. I am sure that it true, but all I can say is that if they are not in opposition to trade unions, they scarcely go along with trade unions. Indeed, the principal aim seems to be to delete trade unions, or at least to put the trade union in a secondary position, to lump it with other committees, councils or bodies. This reflects a difference of approach. Where trade unions are representative, they should be given the opportunity of representing the staffs concerned and receiving this information. I fully agree with the noble Lord, Lord Campbell of Croy, first, that we are dealing with compulsory disclosure, the most awkward form of disclosure and secondly, that we are dealing with matters normally within the scope of collective bargaining.
We should bear in mind, however, that in dealing with compulsory disclosure, probably in circumstances where a trade union organisation is not as tidy as it should be, or not as complete as it might be, there are dangers of disturbing industrial relations, normally possibly fairly good, by this trouble over disclosure of information of the kind provided for in this Bill. I want to avoid that. I would therefore recommend the House to reject Amendment No. 77 for this reason. Amendment No. 77 reads:
"'employee representatives' in relation to information…means employees of the undertaking to which such information relates…who are the duly elected representatives of all employees in that undertaking".
Has the noble Lord, Lord Rochester, considered the kind of shambles that could be created immediately by trying to operate
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his proposal, riding over the heads of the relevant trade unions, over the heads of recognised staff committee and staff councils.
There must be, as it were, a compendium of consultation. It must be comprehensive, it must go to the ultimate of universal suffrage. This may be all right as an idealistic concept, but it is not practical in the conditions in which this clause would have to be implemented I am sure that there would be a lot of trouble if the Amendment of the noble Lord, Lord Rochester, came to be applied in many conditions. It would be folly, if I may say so with the greatest respect to the noble Lord, to approve his Amendment.
I know that the noble Lord, Lord Drumalbyn, has not moved or spoken to his Amendment, and it would be presumptuous of me to give my views in detail upon it before we have heard the argument. I am in that little difficulty. I was hoping that the noble Lord would have risen straight away to expound on his Amendment No. 78 so that we could come to mine and deal with all the three Amendments together, the principal speeches having been made. But I am in the difficulty now that I cannot ignore Amendment No. 78 and must come to my own, and try to do that without injustice to the noble Lord who has still to move and speak to Amendment No. 78.
I will therefore try to deal with my Amendment in the general context. In my Amendment I have tried not to depose the relevant trade unions. This is important. It is Government policy to give emphasis to the position of trade unions in all conditions of industry today. When we come to the Employment Protection Bill we shall find this element again written into a compendious piece of legislation. We saw it very literally written into the Trade Union and Labour Relations Act 1974 and the subsequent amending Bill which has still to complete its progress through this House. Government policy, rightly in my view in present circumstances it to emphasise the role of the recognised trade union and to give it prominence, to allow it to flourish and to assume responsibility, not to have its position eroded or questioned or doubted by erecting alternatives to it unless they are

1719
part of the harmonious relationship between staff and employer or management.
My Amendment recognises that the relevant trade union is there and should stay there. The other two Amendments do not do that; they say that the relevant trade union should go and that the elected representative or representatives should succeed the relevant trade union. All that my Amendment does is to extend in draft statutory form the comments I made on the Second Reading of this Bill and later in the Committee stage.
There are circumstances in which it is not satisfactory or complete to relate only to the relevant trade union. In some instances trade unions may be fully representative on staff councils or committees and they provide a comprehensive representation as such, but there are sectors in many companies where for many reasons—and I gave some of them when I last spoke on this matter—trade union organisation is not fully complete throughout all grades and classes of the organisation Trade union organisation may be strong at one level, weaker at another and even non-existent at another, but for the sake of getting representative employee opinion for negotiation and other purposes it is frequently the case that there is a staff council or committee where all come together and, in my opinion, there is no purpose for which they could better come together than for receipt of information under the Bill. It is not collective bargaining; it is to receive information.
But I am anxious not to disturb any more than is necessary the relationship of unions within an organisation. I am anxious to avoid giving some sections of staff a feeling that they are left out in the cold because they are not classified as the relevant trade union. I am anxious also that the relevant trade union should share its position with other representatives of the staff where there is recognised machinery for that purpose. That is why my Amendment—if I may say so—is so neatly drawn. I extend the definition of "the relevant trade union"—I do not get rid of it—and I extend it only so far as is necessary to embrace the periphery of trade union organisation in certain companies and bodies to enable a recognised staff committee or council to receive this information.
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In order to meet the point made to me by some of my trade union friends in your Lordships' House that many irresponsible bodies might form themselves into committees in order to receive this information—"Trots" and Internationals, Socialists, Maoists and God knows who!—and might say, "Here is a chance of getting hold of the secrets of this firm and selling them off to Moscow; let us form ourselves into a committee and get in", my Amendment shuts them out and says that they must be recognised by the employers for the same purposes as are defined in this clause for the relevant trade union. Those purposes are to be found in Section 29(1) of the Trade Union and Labour Relations Act 1974 which you will see set out at the top of page 23 as being the condition of a relevant trade union. In contrast to the extreme looseness of Amendment No. 77 moved by the noble Lord, Lord Rochester, in my Amendment it is all tied up. I will content myself by one comment on Amendment No. 78. If my Amendment is examined in the context of what I have just said, I think it will be seen that it is a better version of what your Lordships should try to do than is Amendment No. 78.
My concluding words are these. We must face the fact that this is a Government Bill. It has gone through another place and has come to us for final consideration. All these matters have been gone over in another place—perhaps not as fully as they should have been because of the guillotine. Nevertheless, if we are talking of a Revising Chamber, which your Lordships' House claims to be, we must have regard to the policy considerations underlying what is contained in the Bill.
This is not just drafting, this is policy; and it is, as I explained at the beginning of my remarks, policy to maintain, to uphold and to promote the position and the powers and responsibilites of trade unions. Therefore, I think we are doing a disservice in all sorts of directions if we do anything in this House which will subtract from the position of responsibility of trade unions. It is no good saying you are not against trade unions and then doing something which is harmful to them, which depreciates their position, which reduces their role and makes them feel less important, and maybe less

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responsible. Everything we do should seek to promote a sense of responsibility in the unions, because that is where the damage can be done.
I beg of your Lordships to regard this as a very important consideration. I think if you reflect on that you will come to the conclusion that my Amendment is the way to do it. I do not think the Bill by itself accomplishes what it is desirable to do, as in my Amendment, and that is why I regard it as of importance. I sincerely hope that my noble friend will be able to accept it in due season on behalf of the Government.
Lord GEORGE-BROWN: My Lords, oddly enough, I think my noble friend's Amendment is probably the best of those before us. But the longer he went on with his argument the less did he encourage me to think so. The argument that we must build up, reinforce and establish, the trade unions really does not carry in this day and age. I speak as a trade union official of at least as long a period as my noble friend, and in a much rougher area than my noble friend ever operated in. There comes a time when power moves from one set of barons to another. My noble friend must permit me to say, with great respect for his older years and longer experience, that it has happened, and trade unions considered as an organisation can be as mean, as nasty, horrible to individuals, as any other power bloc has ever been. Jimmy Hoffa in the United States would have qualified, in the term of the speech my noble friend has just made. Yet, I imagine, neither he nor I would have actually defended him there. So there is nothing special about trade unions. They can be harsh and mean and nasty. They can constitute power blocs like anybody else.
Why my noble friend and I and others of my noble friends here, joined together, the reason that made us try to establish trade unions when the going was rough, the reason that made us establish the Labour Party, was that we were for individuals; it was for the right of individuals to be able to express themselves. What bothers me about my noble friend's speech is that each of these Amendments—I repeat that I think I prefer his to the others but it is a matter of taste—is trying somehow to open the door, so that the individual who does not want to belong and might have very good reasons
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for not wanting to belong, to the Teamsters affiliated or whatever, should nevertheless be able to be represented and be heard and be consulted. We will get this again on another Bill which I gather is coming to us a little later on. Tonight I only want to say, for heaven's sake, let those of us who are trade unionists, who know what is happening in our trade union movement stop being—I was going to say lily-livered, but that may be an offensive remark; let us stand up and recognise that our outfits, too, can become affected by power: power corrupts; absolute power corrupts absolutely. If, as my noble friend says, you put it only into the hands of the relevant trade unions that is absolute power that will corrupt absolutely. If I may remind my noble friend, had that been the doctrine 30 years ago his outfit would never have come through because it would not have survived that doctrine.
What is the relevant trade union at any given moment? Some people have to fight to bring another one through. Mr. Law's trade union in Birmingham is trying to control the whole thing. You could decide that is the relevant trade union. So I beg my noble friends on my side, involved with me, who are trade unionists, to recognise that we, too, can become the victims of power, and it is good for us to be available for others to challenge us. We are democratic institutions. We were born, or we created ourselves, to fight power and corruption. Do not, for heaven's sake, let us end up by taking on ourselves the very thing we set out to destroy.
Which of these Amendments we adopt is in a sense not terribly important. I happen, I think, to prefer the one my noble friend has just moved. What I want to make quite clear is that whatever we adopt, whatever we are doing, we are saying to the Government in another place, that the fact that you are described as a trade union does not give you a right, any more than any other organisation, to behave as though you have special privileges that used to belong to the barons.
5.50 p.m.
Lord DRUMALBYN: My Lords, perhaps I may now be allowed to speak to my Amendment. I am sorry that I did not speak before, which would have given the noble Lord, Lord Houghton, an

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opportunity of discussing my Amendment at the same time. On the other hand, I wanted the advantage of hearing what he had to say, and it was the turn of that side of the House to speak, so I hope he will not resent my having listened to him first.
To a large extent all these Amendments are after the same objectives. All of them have at the back of the minds of the drafters the idea that everybody in the organisation is entitled to information that is to concern their own destinies. The question, therefore, is one of the correct means of communication. Probably in a case like this it is almost impossible to avoid all risk of disturbing relations if one is to achieve that objective. What we have to consider is devising a means of ensuring that the information that is required to be passed by the Act will go through to employees unadulterated, and to devise a means whereby they will get the information in the best possible form. I think that this is what we are aiming at.
One could put it in this form. So far as my Amendment and I think Lord Rochester's Amendment are concerned, we are talking about a company as a unit and of their employees, meaning all their employees and only their employees. I am not quite certain whether the noble Lord, Lord Houghton, is entirely with us in this because I know that the representation of the trade union is a little difficult in this case. So far as my Amendment is concerned, I set out to define what an employee representative is within the meaning of this Bill so as to be able to make it as comprehensive as possible. In other words, we are dealing with companies which may range from practically a single union closed shop company, right down to companies which have a huge diversity of unions, some very large, others very small.
It is not going to be easy to get the proper form of representation. I should like to see it as close to the employees themselves. I had in mind in drafting my Amendment that it would probably be better to have it on a part basis rather than on a company basis as a whole, but complete latitude is left in my Amendment as to which form of representation is adopted. I say:
"employee representative' means a person who is elected to represent employees or any
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group or class of employees of the company…"
That covers whatever it may be, trade unions, plants, or the whole of the company. I suggest in my Amendment that the right way to approach this matter is that the people to be elected as the employees' representatives, and the people to whom this information is to be passed, should be those—
"whom the company or companies are accustomed to consult on matters"
which are passed down from above; the communication from the management at the top level down to the grass roots, if you like.
I know there are some who think that that should be identical with the machinery that passes collective bargaining matters from the bottom to the top, but it is not necessarily so. Those of your Lordships who are accustomed to the works of Lord Brown—I do not mean the noble Lord, Lord George-Brown, who is with us today—will know that he devised means of separating these two channels, and recognised that there are certain circumstances in which the company has a right to speak to everyone in its employment. I do not necessarily mean physically speak to, but to be in contact with them.
The Amendment goes on to say absolutely, non-exclusively who may be included. It is not a comprehensive definition of those from whom these representatives should be drawn, but it simply says who may be included:
"a person elected to represent members of a trade union, a recognised works council, a recognised staff committee and a shop stewards' committee."
The noble Lord, Lord Houghton, will recognise the words that he himself used during the debate. I do not think that this Amendment appeared on the Marshalled List first, but it was certainly one of the first to be drafted, and I set out to achieve a formula which would enable us to agree on the sort of channel of communication that we want to achieve.
May I now deal with the point of the noble Lord, Lord Rochester? He is aware that I had some fears that it might be regarded as going too far to expect any company which was required to disclose information, and which did not already have a works council, to set one up. That

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is one of the reasons why I devised my Amendment in the widest and most comprehensive terms. What we are doing here is feeling our way to something upon which we can all agree. I think that this is possible. We could not reach agreement on simply one channel of communication. This would not be possible. I am not suggesting for a moment that my Amendment is perfect, but I hope that it will be greeted today in the spirit in which it was drafted; that is, as a genuine attempt to reach a wide consensus about the way in which we should deal with what will undoubtedly be a very important but very sensitive problem.
5.57 p.m.
Lord PARGITER: My Lords, seldom have I heard, from this side of the House at any rate, advocates for company unions, which is what I have heard this evening. It is true that that does detract from the recognised trade union as such; it merely adds certain bodies which, in some cases, would be anathema to the trade unions concerned. I speak with some knowledge of trade unions. I have been a member of a union for 60 years, and have therefore had some experience of shop floors, and of the attempts that have been made to establish bodies of this sort from time to time, with which employers would rather deal than with the trade unions. They have usually failed in the long run. The employers have recognised that the trade union is the best body to deal with.
The present position is perfectly simple with a trade union representative. A trade union representative for this purpose could be the chairman of the works committee. He need not necessarily be from outside the works, although he could be. There are certain advantages in having some knowledge outside a certain factory or establishment. A trade union official, properly versed in these matters, would very often be able to advise the people inside the works as to the sort of information which they might very properly expect, and the information which they might extract from that which is given to them. When it is said that these things are removed from collective bargaining, of course I am prepared to accept that they are removed from direct collective bargaining. But when you get the forward planning of a company and
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what they propose to do, and when the workers look at it to see how it affects them, the matter is not entirely removed from the avenue of collective bargaining, and I do not think one can entirely separate them.
What I am concerned about is that the more we proliferate, the more difficulties we are likely to create. It is simple issue as it is at the moment. There are the representatives of the relevant trade unions, and there may be half-a-dozen of them. If all the good words that are being said by noble Lords opposite, about desiring good trade union representation in all companies and so on, mean anything, this is surely the way in which it can be done. The trade unions will not readily accept that bodies other than those which are properly constituted trade unions should receive the information. If they do, there will probably be a battle between the trade unions and these company unions or staff associations. But whatever you call them, they are company unions, in effect.
During my lifetime, I have engaged in some battles against company unions and if I were still in industry I should continue to do so because I believe that they are an anachronism and that they create uncertainties and difficulties where we really want understanding of what people are, what they stand for and what they do. Therefore, I strongly oppose all the Amendments and I feel that the Bill as it stands is right and that "the relevant trade union representative" is the appropriate person. He may well be the chairman of the works committee or he may possibly be somebody from outside the works, but even if he is outside the works it is not much good unless the information is transmitted to the workers in the works. Therefore this certainly has to have a basis of the people in the works, however it is done. I suggest that the Bill is better left as it is rather than incurring all the complications which will ensue whichever of the Amendments is chosen.
The Earl of BALFOUR: My Lords, I should like to clear up one or two points here. There is no intention on the part of any noble Lord on this side of the House to reduce the trade union position. What we feel, however, is that all employees should be on the same footing,

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regardless of whether they are members of a trade union. The Government have argued—certainly they did so at the Committee stage—that in the present Bill the disclosure of information must be made to a trade union representative, even if the trade union in question represents a very small proportion of the workers in the company concerned; and that it may of course be given to anyone else. There is a fundamental difference between the Government and this side of the House. It lies in the definition of a "worker". The Government seem to regard workers as those persons who are members of a trade union. We on this side of the House extend the definition of worker to a much wider range and regard a worker as being any employee, regardless of whether he belongs to a trade union.
Of the Amendments before us, the one which I feel best meets the position and which at the same time is absolutely fair to all sections of industry, to those firms which have a closed shop union and to those firms which may be weak in representation as well as those firms some of whose members belong to various unions and some of whom do not, is Amendment No. 78, which stands in the name of my noble friend Lord Drumalbyn. Such is his expertise in this field that the Amendment that he has drafted has many advantages over the other Amendments and I accordingly ask your Lordships to support Amendment No. 78.
Lord PANNELL: My Lords, it would be far better if the Bill were left as originally drafted. The trouble is that the debates last week and today have confirmed an impression which I have always had about this House which is that any noble Lord on the other side who rises to speak regards the words "trade union" with half-hostile eyes. It is all very well to talk about the information which will be handed on. That information which will be given to the great trade unions will not be earthshaking. There is no question about that. Imagine this sort of Amendment being brought forward in the context of the mining industry, for instance. Would the miners stand for it? Of course they would not. Noble Lords should recognise that the trade unions are now one of the estates of the realm. They are so in that they can give or withhold supplies. Mr.
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Heath found that out. Clearly, they have now come to maturity and they must be given their proper place. Whatever is said in this House—and I hear it continually from the other side—is devoid of reality.
I have been in the trade union movement almost as long as my noble friend Lord Pargiter and I have tilled the same sort of jobs. Of course I do not need the noble Lord, Lord George-Brown, to tell me that there are probably bad men in the trade union movement and that the excesses of power show themselves there. After all for 12 years I was Secretary and he was the Chairman of the Trade Union Group of the Parliamentary Labour Party. Consequently, we travelled a long road together. The sort of speech he made this afternoon would not have gone down in those days. Therefore, I believe that it is far better to leave the Bill as it is and to speak about "the relevant trade union".
Baroness HORNSBY-SMITH: My Lords, no one on this side wants to deny—
A noble Lord: My Lords—
Baroness HORNSBY-SMITH: My Lords, the noble Lord does me an injustice and perhaps he will allow me to conclude the brief remarks which I wish to make. No one wants to deny the right of trade unions to their full representation under the Bill but, in taking the example of the mineworkers, where there is a closed shop, the noble Lord, Lord Pannell, was completely missing the wider consideration that members of both sides of the House have given to the fact that there are many industries and undertakings where a minority of the employees are in what he would call a recognised trade union. For example, there are great retail establishments with highly successful staff associations which have far greater consultation at this time with their boards of directors than applies in factories with a closed union shop. There are 14 million people who are not in trade unions and for noble Lords to say that it is democracy that these people must be denied because they are not in a registered trade union is not doing justice to the Amendments which my noble friend has put forward.
Lord BRUCE of DONNINGTON: My Lords, I wish I could take as simple a

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view of the problems raised in this debate as has been taken by my noble friends Lord Pargiter and Lord Pannell. Unfortunately, I cannot. Nor, at the same time, can I give any support to noble Lords opposite who, in emasculating the Bill so far and who in their rejection of the term "the promotion of industrial democracy", have already forfeited the right to take part in a discussion which deals with the democratic dissemination of information.
A Noble Lord: My Lords, that is the stupidest thing I have ever heard in my life.
Lord BRUCE of DONINGTON: My Lords, if this part of the Bill had been concerned with the strengthening of collective bargaining, I should have found myself in immediate agreement with my noble friends Lords Pargiter and Lord Pannell and, indeed, when we come to discuss the Employment Protection Bill and arrive at Clause 17, I shall be prepared to resist any Amendment from noble Lords opposite which has for its main purpose the extension of the definition included in that clause. However, we are not dealing with that information. We are dealing with a Bill which, when it returns from another place, will serve its purpose in helping to promote the efficiency of British industry, to promote industrial democracy and to bring about all those policies which were originally incorporated in the White Paper which dealt with the regeneration of industry.
This is a matter of industrial democracy applied at works level. I will not weary the House by repeating the arguments I used in Committee, but it seems to me, particularly after yesterday, when my noble friend announced the formation of a committee to study the whole question of the industrial—democracy and this is a committee which is bound to produce conclusions which will have a profound effect on the whole structure of British companies—in those circumstances and until the findings of that committee are published, it would surely be unwise for my noble friends to adopt a restrictive phrasing in this clause which would run counter to the findings of their committee when those are made known in 18 months' time.
If information is to be given inside a company which is concerned with the
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promotion of its fortunes, concerned with increasing the ability to make some assessment of the role which that company can play within the economy, concerned with effecting improvements—bearing in mind the restricted amount of information that is required under another clause of the Bill—surely it is far better that that information can be made freely available within the whole range of the company's employees. Employee's as my noble friend Lord Pargiter will know perfectly well, are not by any means confined to the works floor of the factory. There are other people who are fundamentally concerned with the whole future of the enterprise in which they work.
This is not intended to be comprehensive, but I have in mind, for example, sales representatives and those in the lower sections of management who are not always informed by their directors as to what is happening in their firms. I also have in mind others such as production controllers, progress chasers and even inspectors, who are not always informed by their employers of what is happening in the company. These people, even though they may not yet be members of trade unions—although one hopes they will be—are capable of producing some constructive contribution to the future of their company, and of giving some value to any estimate that is made of the role of that company in the economy and in the promotion of the industry generally.
Therefore, I hope that my noble friend will look at this matter again. It is not my purpose, and it has never been my purpose in the whole of my political life, to do anything that would damage the British trade union movement, but there are wider issues here. Other people are involved, particularly at firm level, and therefore I hope that this matter will be looked at again.
Lord DAVIES of LEEK: My Lords, I wish to speak briefly on this matter, without being pedantic and without boring the House. My noble friend Lord Houghton of Sowerby tried to evolve a formula which was worth while. Let us look at what we are really doing. We are not dealing with collective bargaining as such. We are asking in a new system of society—which is moving bang into State capitalism—that persons should get information about policies on

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the national outlook of manufacturing. Whatever Government may be in power—Liberal, Labour or Conservative—those policies may often mean handing millions of pounds to groups of industries. That is what we are dealing with at this juncture. At the moment, when we are dealing with that broad canvas of public money, often moving—because it has to come in the system of society in which we are living—into these manufacturing industries, a constructive approach to all representatives in a factory, or in industry, should be made.
My two noble friends who have put down this Amendment, have made a constructive contribution to the debate. We are not interfering with collective bargaining, which is another argument. We are dealing with the position as it is at present. I am very glad that we have cleared up all the Amendments. So much has been heard about this matter, and I sincerely hope that noble Lords will keep in mind that it is not so much a Party political point but a constructive approach to the question of what we are to do in manufacturing industry to put Britain first. In putting Britain first, all people in a specific industry should be approached. A formula which does not damage the trade union movement at all, but which enhances its constructive position, has been evolved by my noble friends Lord Houghton of Sowerby and Lord Bruce of Donington. If I speak any longer I shall merely be reiterating arguments that have been brilliantly put from this side.
Lord DOUGLASS of CLEVELAND: My Lords, I do not wish to reiterate any arguments, but merely to express astonishment that the noble Lord, Lord Drumalbyn, has moved an Amendment of this character. As I understand this debate, from the very beginning the Opposition's objection was that confidential information would be disseminated through the trade unions to a particular extent. I now find that the Opposition want to disseminate that information not only to the trade unions, but to every group which cares to call a strike in any industry and which, as a consequence, has a talk with the management. Such groups then come within the ambit of this Amendment and are entitled to all the information which in the past it
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was sought to deny to the trade unions. Furthermore, such groups would be able to use that information in all the ways about which the Opposition earlier expressed fear. I shall not object to this Amendment, but when the time comes that confidential information about private companies is disseminated throughout the bodies which have an animosity to our democratic system, I will then charge the Opposition with passing an Amendment which has provided an opportunity for the subversives, whom they constantly condemn, to get the information which the Opposition have constantly tried to deny them.
6.16 p.m.
Lord LOVELL-DAVIS: My Lords, I gladly accept the challenge to reply to all the Amendments listed. I make it that there are 26 Amendments associated with Amendment No. 75, which has been moved by the noble Lord, Lord Rochester, and his associates; and there are also Amendments Nos. 78 and 83 to consider. I have listened very carefully to the arguments advanced by noble Lords in favour of their respective Amendments. I hope, however, that I may be excused, in the interests of the House as a whole, if I do not cover every point raised or try to adjudicate as to the merit or lack of merit of these Amendments which are being proposed. Instead I shall endeavour to present the Government's case.
When this point was debated in Committee—and it was debated very fully—I think it became clear that the Government's formula for identifying those to whom information is to be disclosed is probably the most viable. Noble Lords drew attention to the different ways in which employees are represented in different concerns. But my noble friend Lord Houghton of Sowerby, who today again outlined the difficulties in a clear and concise manner, rightly stressed that the best way to provide for the disclosure of information was to representatives of the relevant trade unions, and that the position of trade unions should not be eroded. But although he drew attention to the different ways in which employees are represented in different companies, he and other noble Lords did not perhaps appreciate the degree of flexibility which

1733
the Bill currently provides, against a background in which the responsibilities of the company concerned are as clearly defined as possible, without the extension he has proposed in his Amendment today.
The Bill specifies that information should be made available to trade union representatives; it does not specify whom they should be. This gives the company considerable discretion as to which representatives of unions should be furnished with information. It may be union representatives at the level of the plant, for example shop stewards within the company, or it may be district or national officials of the union. As my noble friend Lord Pargiter said, there can be advantages in getting the outside view. The choice has been left deliberately to the company, so that it can make arrangements for disclosure that match its established arrangements for consultation and collective bargaining. The Bill thus provides a considerable measure of flexibility, to match the particular circumstances of a company.
Moreover, the Bill in no way prevents employers from disclosing information to non-union representatives; they can continue or extend existing voluntary arrangements. It is not, as my noble friend Lord George-Brown—who seems to have made his usual intervention, and departure—has said, a case of unions acquiring absolute power. It will be open to the company to provide information by other means. A company will be completely free to provide the information it is required to furnish to trade union representatives and to other employees; for instance, works councils, staff associations where these exist or direct to all employees. We in no way wish to prevent this, and the Bill will in no way hinder it. In addition, it is open to all employees to join trade unions, and open to trade unions to seek recognition from an employer in order to benefit from the statutory requirements of the information disclosure clauses.
What the Government do not accept is that there should be a statutory duty for information to be disclosed to representatives of workers other than union representatives. The noble Lord, Lord Campbell of Croy, implied—and my noble friends Lord Houghton of Sowerby and Lord Davies of Leek repeated this
1734
implication—that collective bargaining was not involved. The noble Lord, Lord Campbell of Croy, said that this was for national reasons; but Clause 27(1) says:
"to form or to further national economic policies, or needed for consultations between Government, employers or workers on the outlook for a particular sector of manufacturing industry, including the outlook for the major companies in that sector…"
Consultations and information disclosure are inescapably—
Lord CAMPBELL of CROY: My Lords, I pointed out that a Bill will be coming to us tomorrow to be discussed, several clauses of which also deal with disclosure of information and which is specific information for collectve bargaining. What the noble Lord has just read out has really confirmed the difference.
Lord LOVELL-DAVIS: My Lords, I agree; but you cannot dissociate this Bill from collective bargaining. This is the point I am making. Consultations and information disclosures are inescapably linked with collective bargaining. Collective bargaining must involve consultations, and collective bargaining is the responsibility of the trade unions. Any attempt to separate them, so that unions dealt with collective bargaining and other representatives dealt with consultation, would be likely to result in misunderstanding and confusion, as my noble friend Lord Pargiter has pointed out. We are concerned to accept that unions have a role, and to take the steps necessary to ensure that there will be strong and responsible unions to discharge their powers and duties. This we view as a step towards our goal of having unions play a full and constructive part in collective bargaining, in consultations and in industrial democracy.
The noble Lord, Lord Rochester, said that he saw no reason for reference to trade union representatives. We believe that the trade unions are the proper means through which workers can have an effective say in management decisions which affect their working lives and the most effective and reliable for management, too. We made this clear in the White Paper when we spoke of "trade union representations from the firm" and of "union representatives to companies" as the means of disclosure.

1735
I must point out to noble Lords how unsatisfactory is the definition of "employee representatives" which has been proposed. Disclosure would be made only to persons "who are the duly elected representaives of all employees in the undertaking." As my noble friend Lord Houghton of Sowerby pointed out, this is simply not practical and will be bound to lead to trouble. In many organisations, there are no persons who are duly elected as representatives of all the employees. What is more, these reserve powers are to be used only in those cases where the employer refuses to make satisfactory voluntary relationships. This is just the kind of employer who is least likely to have in existence a system for electing representatives of all employees. Yet, if there are no such duly elected representatives, the requirements of this Bill will not touch that employer. There is, therefore, a considerable danger that this Amendment will make this Part of the Bill a dead letter. Noble Lords have criticised the Government's proposals, but the Government's proposals are eminently practical because they build on the representational arrangements that now exist. They are also the safest way of ensuring full and fruitful co-operation.
6.26 p.m.
Lord ROCHESTER: My Lords, we have had an excellent debate and if it is appropriate for me to do so I should like to thank noble Lords who have contributed from all sides of the House. I was very disappointed in what the noble Lord, Lord Lovell-Davis, said on behalf of the Government in response to the debate. It seems to me that he made very plain once more the point that there is nothing in the Bill to stop employers giving information to people other than trade union representatives; but he seems again to have missed entirely the point made from all sides of the House, that what we object to is these reserve statutory powers binding a company to give this information solely to trade union representatives and to no other.
He made the point also that, according to Clause 27, the information was needed for collective bargaining. I cannot accept that for a moment. Clause 27 specifically says that the information may be needed, "to form or further national
1736
economic policies" in general planning, or needed for consultations.
Lord LOVELL-DAVIS: My Lords, I did, I hope, make clear that you could hardly have consultation without its leading to collective bargaining.
Lord ROCHESTER: My Lords, I feel that if this information were really intended for collective bargaining and negotiation, that should have been made clear in the Bill. As the noble Lord, Lord Campbell of Croy, said, we are tomorrow morning to debate the Employment Protection Bill which makes it plain that information for collective bargaining purposes is covered by that Bill, rather than by this one.
Although he is not here, I should like to thank the noble Lord, Lord George-Brown, for what it seemed to me was some negative support. I realise that, marginally, he came down in favour of an Amendment other than my own, but he seemed to agree that what is proposed by the Government in the clause as it now stands is unacceptable. The noble Lord, Lord Houghton of Sowerby, felt that we on these Benches were seeking, as he put it, to ride over the heads of the trade unions. I had hoped I had made it plain that we were trying to do nothing of the sort. I specifically said that I want to encourage a state of 100 per cent. union membership throughout British industry. He felt that where there were unions represented, it was through the unions that this matter should be dealt with. I agree, but it is not through unions as such that the matter should be dealt with; but rather through union people, in so far as they sit on these representative consultative bodies. He said nothing to make me feel that employee representatives rather than representatives of the relevant trade unions should be the test to be applied in this clause, and in the light of the debate I feel justified in pressing Amendment No. 75.
I am a little less sure whether, when the time comes, I should seek also to press for the adoption of Amendment No. 77. I do not know what the noble Lord, Lord Drumalbyn, may have to say about this, but I like the modest way in which he said that his definition was put forward with the intention of simply helping. My own feelings, for what they are worth,

1737
are that we might both be wise to give a little further consideration to the precise definition of the terms "employee representatives" before the Third Reading. I hope that in the light of the criticisms I have felt obliged to make of his definition he might agree. So far as Amendment No. 75 is concerned, I feel
Resolved in the affirmative and Amendment agreed to accordingly.
obliged, in the light of the debate, to press it to a Division.
6.30 p.m.
On Question, Whether the said Amendment (No. 75) shall be agreed to?
Their Lordships divided: Contents, 90; Not-Contents, 58.

CONTENTS

Aberdare, L.

Erskine of Rerrick, L.

Newall, L.

Amherst of Hackney, L.

Ferrers, E.

Nugent of Guildford, L.

Amulree, L.

Fraser of Kilmorack, L.

O'Hagan, L.

Atholl, D.

Gainford, L.

Pender, L.

Auckland, L.

George-Brown, L.

Pike, B.

Balfour, E.

Glenkinglas, L.

Platt, L.

Banks, L.

Goschen, V.

Rankeillour, L.

Barnby, L.

Gough, V.

Rathcreedan, L.

Beaumont of Whitley, L.

Gowrie, E.

Redesdalc, L.

Belstead, L.

Grenfell, L.

Reigate, L.

Berkeley, B.

Grimston of Westbury, L.

Robbins, L.

Bessborough, E.

Hailsham of Saint Marylebone, L.

Rochester, L. [Teller.]

Birdwood, L.

St. Aldwyn, E.

Bourne, L.

Hanworth, V.

St. Davids, V.

Brooke of Cumnor, L.

Hayter, L.

Sandford, L.

Byers, L.

Hornsby-Smith, B.

Sandys, L.

Campbell of Croy, L.

Hylton-Foster, B.

Sempill, Ly.

Carrington, L.

Killearn, L.

Somers, L.

Chelwood, L.

Kilmany, L.

Strathclyde, L.

Coleraine, L.

Kinnoull, E.

Strathcona and Mount Royal L.

Colville of Culross, V.

Lauderdale, E.

Cowley, E.

Lloyd of Kilgerran, L.

Sudeley, L.

Craigavon, V.

Long, V.

Terrington, L.

Cullen of Ashbourne, L.

Lyell, L.

Teviot, L.

Daventry, V.

Mackie of Benshie, L.

Tranmire, L.

de Clifford, L.

Macleod of Borve, B.

Trefgarne, L.

Deramore, L.

Massereene and Ferrard, V.

Tweedsmuir, L.

Drumalbyn, L. [Teller.]

Merrivale, L.

Vickers, B.

Elles, B.

Monck, V.

Vivian, L.

Elton, L.

Mowbray and Stourton, L.

Young, B.

Emmet of Amberley, B.

Netherthorpe, L.

NOT-CONTENTS

Arwyn, L.

Gaitskell, B.

Pitt of Hampstead, L.

Balogh, L.

Gordon-Walker, L.

Popplewell, L.

Beswick, L.

Goronwy-Roberts, L.

Raglan, L.

Birk, B.

Hale, L.

Ritchie-Calder, L.

Blyton, L.

Henderson, L.

Robertson of Oakridge, L.

Boyle of Handsworth, L.

Houghton of Sowerby, L.

Shannon, E.

Brockway, L.

Hughes, L.

Shepherd, L. (L. Privy Seal.)

Bruce of Donington, L.

Jacques, L. [Teller.]

Shinwell, L.

Burton of Coventry, B.

Janner, L.

Slater, L.

Castle, L.

Kirkhill, L.

Stedman, B.

Champion, L.

Leatherland, L.

Stewart of Alvechurch, B.

Chorley, L.

Llewelyn-Davies of Hastoe, B.

Stow Hill, L.

Collison, L.

Lovell-Davis, L.

Strabolgi, L. [Teller.]

Crook, L.

McLeavy, L.

Taylor of Mansfield, L.

Crowther-Hunt, L.

MacLeod of Fuinary, L.

Wallace of Coslany, L.

Davies of Leek, L.

Melchett, L.

Wells-Pestell, L.

Douglass of Cleveland, L.

Pannell, L.

White, B.

Elwyn-Jones, L. (L. Chancellor.)

Pargiter, L.

Winterbottom, L.

Peddie, L.

Wynne-Jones, L.

Feather, L.

Phillips, B.

6.38 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY Amendment No. 76:
Page 21, line 7, at end insert—
("Provided he has satisfied himself that the company or companies concerned have not undertaken so to provide any such information within a reasonable time.")
The noble Lord said: My Lords, we can now propose improvements and simplifications to the procedure in the Bill, having heard explanations for it by the Government at Committee stage. In particular, the noble Lord, Lord Beswick, on Friday 25th July at column 637 of Hansard said:
"This Bill is concerned with only a few cases and they may never arise."
I understood perfectly what he meant. He was making it clear he expected most of the information of the kind in question to be passed on by companies voluntarily, and so do we on this side of the House. The procedure in the Bill is only to be activated when a Minister has concluded that it is important that employees' representatives should have certain information, and the company object because they believe it should remain confidential.
At present there is nothing to indicate a first request has been made and not been complied with by a company. I am sure the noble Lord, Lord Beswick, will agree that there is no point in initiating this procedure if a company is ready to pass on information as required in a reasonable time. For example, the preliminary notice under the procedure in the Bill requires the company to give a notice to employees' representatives within 14 days. That is superfluous if the company is ready to furnish the information itself within one day without objection. I believe that it should be made clear in the Bill that none of this procedure is to be started until the company have been given full opportunity to act voluntarily.
There is a later Amendment in my name to which it may be now convenient to make reference. This is to omit subsection (3). At present the first notification a company would receive would be finding that its name had been submitted to Parliament. That is a heavy-handed way of dealing with this situation. We should like an asurance by the Government that a company would certainly have been asked to pass information voluntarily, and would have indicated
1740
that it was not willing to do so before this machinery was activated. If my words are not the best, I am sure the Government can provide something at the next stage. It should be clear that voluntary opportunities should be given first and we believe it would be satisfactory if it were in the Bill. I beg to move.
Lord MELCHETT: My Lords, as the noble Lord says, it is common ground between both sides of the House that this will be a procedure which we hope will never have to be used because companies will act responsibly and provide information voluntarily in all cases. It is therefore also a matter of common ground that the Minister would not embark on the first stage of the compulsory system and the issuing of a preliminary notice if the company had already undertaken to provide the information. Not only would such a step be contrary to the policy of the Government, which both my noble friend and I have outlined, but it would also be a step which would lead nowhere, since the Bill already makes clear in Clause 27(6) that the next step—the making of an order—cannot be taken unless it appears to the Minister that the company will not provide the information voluntarily.
Therefore the only effect of the Amendment would be to lay down in the Bill that the Minister should use his common sense and find out whether the company is providing information voluntarily before he takes the first formal step described in the Bill. I would suggest to the noble Lord that in view of the fact that we are merely writing into the Bill that the Minister should use his common sense, the Amendment is not strictly necessary and that there is really nothing between the noble Lord, Lord Campbell of Croy, and ourselves on this point.
Lord CAMPBELL of CROY: My Lords, I am glad to have the assurance from the noble Lord that the Government would not expect this machinery to be activated until a request had first been made to a company to furnish information to its employees voluntarily and had indicated that it did not wish to do so. But I think there can be misunderstandings because when we were discussing the last Amendment, the noble Lord, Lord Douglass—and I am glad to

1741
see that he is here for this discussion—was speaking on the situation under this compulsory system where confidential information would be provided to representatives of trade unions. He had failed to recognise that it is under the voluntary system, which does not include this procedure at all, where sonic confidential information may be given by a company to such employees as it chooses.
The Government have already accepted at the Committee stage that information which gets through the screening machinery—and therefore has been accepted as not causing injury or any breach of confidence—is not confidential. That is the sort of reason why I feel it would be better to have something written into the Bill, because it is not easy for those who have not been absorbed in drafting or discussing this Bill for many days and nights, as some of us have—indeed it is not easy even for some of us—to recognise quickly what the machinery is for. It certainly may not be obvious to those coming fresh to this Bill that the machinery will start only when a company has been invited to furnish information voluntarily and has stated that it does not wish to do so. I do not know whether the noble Lord, Lord Beswick, wishes to say anything?—I am sorry, I thought perhaps he did. In view of the categorical statement made by the Government that this machinery for disclosure of information, starting at Clause 27, will not be initiated until a company has been asked voluntarily to furnish information, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord DRUMALBYN Lord DRUMALBYN had given Notice of his intention to move Amendment No. 78:
Page 21, line 22, at end insert—
(""employee representative" means a person who is elected to represent employees or any group or class of employees of the company or companies concerned and whom the company or companies are accustomed to consult on matters affecting their operations or the well-being of their employees, and includes a person elected to represent members of a trade union, a recognised works council, a recognised staff committee and a shop stewards' committee.")
The noble Lord said: My Lords, I am inclined to share the view of the noble Lord, Lord Rochester, that it would probably be better to leave this for further
1742
consideration. Obviously we need a definition of "employee representative" but perhaps this might be dealt with on Third Reading. This would seem to be the most appropriate course to follow at the present time, because clearly insufficient people have had time to study the Amendments in detail. I shall not move Amendment No. 78.
Lord ROCHESTER: My Lords, I beg to move Amendment No. 79.
Amendment moved—
Page 21, line 32, leave out from second ("to") to ("he") in line 33 and insert ("employee representatives")—(Lord Rochester.)
On Question, Amendment agreed to.
Lord ROCHESTER: My Lords, I beg to move Amendment No. 80.
Amendment moved—
Page 21, line 36, leave out from ("give") to ("a") in line 37 and insert ("employee representatives")—(Lord Rochester.)
On Question, Amendment agreed to.
Lord ROCHESTER: My Lords, I beg to move Amendment No. 81.
Amendment moved—
Page 21, line 42, leave out from ("of") to ("to") in line 43 and insert ("employee representatives")—(Lord Rochester.)
On Question, Amendment agreed to.
Lord ROCHESTER: My Lords, I beg to move Amendment No. 82:
Amendment moved—
Page 21, leave out from beginning of line 45 to ("and") in line 5 on page 22.—(Lord Rochester.)
On Question, Amendment agreed to.
Lord HOUGHTON of SOWERBY Lord HOUGHTON of SOWERBY had given Notice of his intention to move Amendment No. 83:
Page 22, line 9, at end insert—
("( ) Whatever reference is made to the "relevant trade union" in this and in subsequent sections of this Act, the company or companies concerned shall furnish the information, and grant all the rights and facilities prescribed for the relevant trade union in this Act, to the authorised representatives of employee members of a works council or staff council or other body recognised by the employers for the same purposes as are defined in this section for a relevant trade union.")
The noble Lord said: My Lords, it seems to me that my Amendment No. 83 falls, because the words "relevant trade union" have already been taken out of

1743
the Bill. Therefore there is no point in my moving this Amendment.
6.49 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 84:
Page 22, line 10, leave out subsection (3).
The noble Lord said: My Lords, this is the Amendment to which I referred a few minutes ago. I beg to move this Amendment to leave out subsection (3). The Government have given us the assurance we sought just now, that the compulsory procedure would not be initiated until the company have been given the opportunity to act voluntarily. When the procedure is first started, the Minister serves a preliminary notice. Why is it necessary to inform Parliament of that first stage in the procedure? Parliament is informed of a great many things as it is and this does not seem to be necessary, because Parliament is to be informed at the next stage, if that proves necessary. An order will be laid and either House can Pray against that order. That is surely the moment when compulsion becomes necessary. Compulsion does not become necessary before that.
The order which comes to Parliament at a later stage simply applies the provisions of the Act and it engages the procedure. It does no more than that, but it gives Parliament the information and the opportunity to discuss the order. I think that by providing Parliament with the name of a company at this stage, the impression could be given that a company was being difficult or recalcitrant, when it may be ready to provide the information speedily. It may be that on the first request it had some doubts, but once this preliminary notice had been served the company could well be providing the information. It seems unnecessary and strange that Parliament should need to be informed at that first point.
May I also remind your Lordships that Parliament is going to be kept pretty fully notified of what is happening in these matters, because elsewhere in the Bill, in Clause 21(3)—we have already discussed that clause—it is provided that when a planning agreement has been concluded with a company Parliament is informed of that. That, again, is something significant which it is reasonable for Parliament to be informed about.
1744
But I suggest that it is not necessary at the very first stage for Parliament to be informed of names of companies.
Lord MELCHETT: My Lords, I am glad that the noble Lord, Lord Campbell of Croy, has acknowledged the very full way in which the Government are intending to keep Parliament informed of the workings of the Bill. But I am surprised that he should wish to delete this significant provision from the Bill. Since a preliminary notice is the initial trigger for the subsequent use, if necessary, of the compulsory purchase powers for disclosure of information, it is important, in our view, for Parliament to be informed when the use of the power is contemplated. A preliminary notice will make the first formal step by the Government towards the possible use by them of the powers of compulsion—although, as I have indicated, the Secretary of State would have first established whether or not there were satisfactory voluntary arrangements. In the interests of confidence on both sides of industry in the fair and open use of these powers, and of proper Parliamentary accountability over a matter which the Government take seriously, and which indeed noble Lords opposite take seriously, it seems appropriate to us that Parliament should be informed when a preliminary notice is issued. I hope that with that in mind the noble Lord will not seek to delete this subsection.
Lord CAMPBELL of CROY: My Lords, I thank the noble Lord again for giving an explanation of why it should be necessary at this stage. We shall continue to seek explanations on further parts of this machinery, but certainly I have no intention of pressing this Amendment. The provision seemed unnecessary at this stage. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord ROCHESTER: My Lords, I beg to move Amendment No. 85.
Amendment moved—
Page 22, line 23, leave out from second ("to") to end of line 24 and insert ("employee representatives").—(Lord Rochester.)
On Question, Amendment agreed to.
Lord ROCHESTER: My Lords, I beg to move Amendment No. 86.
Amendment moved
Page 22, line 26, leave out from ("and") to ("an") in line 27 and insert ("employee representatives").—(Lord Rochester.)
On Question, Amendment agreed to.
6.54 p.m.
Lord BESWICK Lord BESWICK moved Amendment No. 86A:
Divide Clause 27 into two Clauses the first (Persons to whom duty to disclose information applies) consisting of subsections (1) to (9) and the second (Disclosure of information by Government) consisting of subsection (10).
The noble Lord said: My Lords, I wonder whether with Amendment No. 86A we might take No. 86B as well. I moved an Amendment rather similar to Amendment No. 86A at the Committee stage. Noble Lords will remember that it was not agreed because it was thought that it might have the effect, either of altering in some way the obligations of the Government to disclose information, or of making them less prominent. I assured the House then, and I do so again, that this arrangement has no effect on the Government's obligations. To make clear that there is no question of the obligations being made less promine4 my Amendments now make clear both that the new clause which will result from the division will have the clear marginal reference "Disclosure of Information by Government", and that it is to become the first clause of Part IV of the Bill, where it will have greater prominence than it now has in subsection (10) of Clause 27.
Having made clear that the adverse consequences which some noble Lords feared at Committee cannot arise, I would repeat very briefly the positive reasons in favour of these Amendments. The present Clauses 27 to 33 are, with the exception of subsection (10) of Clause 27, concerned with a system of disclosure of information to the Government and to employees about the affairs of manufacturing undertakings. The obligations placed on the Government are separate from this system, and it will make it easier for those who in years to come apply this Bill if the separate obligations of the Government and of manufacturing business are set out in separate clauses. I am seeking to achieve greater clarity, and it is for that reason that I ask noble Lords to
1746
accept these two Amendments. I beg to move.
Lord CAMPBELL of CROY: My Lords, I know that the noble Lord, Lord Beswick, is concerned about this matter. He was good enough to write to me about it a few hours before this debate. This gave me an opportunity of considering his objective, which I understand is editing and also clarity, which is now confirmed. But his proposal would completely separate the Government's part in supplying information from the responsibility of companies as required in these disclosure of information clauses. This matter was discussed at considerable length in another place, both in Committee and at Report stage; and that is in contrast to large chunks of the rest of this Part of the Bill which, as I mentioned earlier, were not discussed at all or else were discussed only briefly.
However, it is clear from debates in another place that Members of Parliament considered it important that there should be a direct link between the disclosure of information by the Government, for their part, and the disclosure required by companies, for their part. Both are expected to make their contributions to this operation. This is clear from the way that the two operations are included in one clause at the moment, and there can be no ambiguity about it. I hope that the noble Lord will not pursue this Amendment. I spoke about it at Committee stage. I would have spoken a little more lengthily at that stage, but unfortunately the Question was put as I was rising—my fault for being slow. But I take this opportunity now of pointing out that, although the noble Lord is thinking in terms of editing, the effect of this change would probably be to throw some doubt on the Government's part in their contribution in disclosing information. I would advise your Lordships, therefore, on something which may seem to be a small point, none the less to leave the Bill as it is.
Lord BESWICK: My Lords, I hope that the House will not accept the advice of the noble Lord, Lord Campbell of Croy. I think I understand the difficulty that faces him. There was a discussion in the other place. It was not, if I may say so, conducted in an atmosphere in which matters were being considered

1747
entirely on their merits. There was a good deal of suspicion as to what was involved, both on the part of the Government and on the part of the Opposition. Since that discussion in the other place there has been a good deal of clarification both of intentions and indeed, of wording in Schedule 4. What I am asking for now is sound common sense. It is based on the best advice I have from Parliamentary draftsmen. I assure the noble Lord that there is nothing in the arguments which he has picked up from the other place, and had they had more time—does the noble Earl wish to interrupt?
The Earl of BALFOUR: My Lords, I am sorry to interrupt the noble Lord, Lord Beswick, but I should like to ask one question. Why does he not alter Amendment No. 86B to make subsection (10) stand as Clause 27A, between Clauses 27 and 28? I am wondering whether Clause 26 will be at the beginning of Part IV of the Bill or whether it will be at the end of Part III. I hope that the noble Lord, Lord Beswick, has followed my point.
Lord BESWICK: My Lords, I am afraid that I have not.
The Earl of BALFOUR: My Lords, may I begin again. If Amendment No. 86B is accepted, Clause 27(10) could be put at the end of Part III but I do not feel that this is the right place to put it. What would be the effect if Amendment No. 86A, which divides Clause 27 into two clauses, resulted in subsection (10) of Clause 27 coming between Clauses 27 and 28? I cannot make it any plainer than that.
Lord BESWICK: My Lords, I am sure that other noble Lords are much clearer about the noble Earl's point than I am. If my Amendment is accepted, the new clause would be the first clause in Part IV of the Bill. I have tried to explain that the Amendment which I am moving is drafted on the best professional advice. Those who have to refer to these matters tell me that it is much better if it is set out in this way and I hope that the noble Earl will accept this advice. Without wishing to raise the temperature of the House, after a certain amount of crosstalk the original decision was taken without proper consideration and advice. I
1748
am now saying that after proper thought this is the best division that we can devise. The noble Lord is wrong when he says that this differentiates between information to be given by the Government and information to be given by companies. We were not talking about the obligation of companies to give information. We were talking about the procedure by which they should give information. This is a quite separate procedure. I am talking about an obligation, and because it is a new obligation that we are placing upon Government for the first time in history we think that it would be better to place it in a separate clause. I hope that the House will accept my explanation.
The Duke of ATHOLL: My Lords, before the noble Lord sits down may I ask him a question. I sat for two years on the Renton Committee on the preparation of legislation, and one of its recommendations was that in the interests of clarity clauses should be much shorter and that there should be more of them. Therefore, I support entirely the noble Lord in his endeavours in this regard. Can the noble Lord give the House an assurance that his colleagues in another place will not try to alter what is now Clause 27(10) if we agree to his suggestion to separate it and move it to the beginning of this part of the Bill? If the noble Lord is able to give the House that assurance, I should be quite prepared to agree to his suggestion.
Lord BESWICK: My Lords, on the understanding that I am still making one speech and have given way to an interruption, I will continue. This is what I was hinting at when I said that there was a certain atmosphere in the other place. It was thought that there was some kind of trickery about it. I can give the noble Duke the assurance for which he asks. If this Amendment is accepted, the Government will make no attempt to change it in the other place. On that understanding, I hope that the House will accept my Amendment.
7.4 p.m.
On Question, Whether the said Amendment (No. 86A) shall be agreed to?
Their Lordships divided: Contents, 61; Not-Contents, 49.

CONTENTS

Arwyn, L.

Douglass of Cleveland, L.

Massereene and Ferrard, V.

Atholl, D.

Elwyn-Jones, L. (L. Chancellor.)

Melchett, L.

Banks, L.

Feather, L.

Pannell, L.

Beaumont of Whitley, L.

Gaitskell, B.

Pargiter, L.

Beswick, L.

George-Brown, L.

Pitt of Hampstead, L.

Birk, B.

Gordon Walker, L.

Popplewell, L.

Blyton, L.

Goronwy-Roberts, L.

Raglan, L.

Brockway, L.

Granville of Eye, L.

Ritchie-Calder, L.

Bruce of Donington, L.

Hale, L.

Rochester, L.

Burton of Coventry, B.

Henderson, L.

St. Davids, V.

Byers, L.

Hood, V.

Shepherd, L. (L. Privy Seal)

Castle, L.

Houghton of Sowerby, L.

Slater, L.

Champion, L.

Hughes, L.

Stewart of Alvechurch, B.

Chorley, L.

Jacques, L.

Strabolgi, L. [Teller.]

Collison, L.

Kinnaird, L.

Taylor of Mansfield, L.

Craigavon, V.

Leatherland, L.

Wallace of Coslany, L.

Crook, L.

Llewelyn-Davies of Hastoe, B.

Wells-Pestell, L.

Crowther-Hunt, L.

Lovell-Davis, L.

White, B.

Cudlipp, L.

Mackie of Benshie, L.

Winterbottom, L. [Teller.]

Davies of Leek, L.

MacLeod of Fuinary, L.

Wynne-Jones, L.

Aberdare, L.

Elles, B.

Northchurch, B.

Amherst of Hackney, L.

Elton, L.

Pender, L.

Atholl, D.

Ferrers, E.

Rankeillour, L.

Auckland, L.

Gainford, L.

Rathcreedan, L.

Balfour, E.

Gowrie, E.

Redesdale, L.

Barnby, L.

Hanworth, V.

Rochester, L.

Belstead, L.

Hornsby-Smith, B.

St. Aldwyn, E.

Bourne, L.

Inglewood, L.

St. Davids, V.

Campbell of Croy, L.

Killearn, L.

Sandys, L.

Carrington, L.

Kinnoull, E.

Strathcylde, L.

Chelwood, L.

Lyell, L.

Strathcona and Mount Royal, L.

Colville of Culross, V.

Mackie of Benshie, L.

Cowley, E.

Macleod of Borve, B.

Sudeley, L.

Cullen of Ashbourne, L. [Teller.]

Massereene and Ferrard, V.

Terrington, L. [Teller.]

Merrivale, L.

Trefgarne, L.

de Clifford, L.

Mowbray and Stourton, L.

Vickers, B.

Deramore, L.

Netherthorpe, L.

Young, B.

Drumalbyn, L.

NOT-CONTENTS

Arwyn, L.

Elwyn-Jones, L. (L. Chancellor)

Ritchie-Calder, L.

Beswick, L.

Gaitskell, B.

Shepherd, L. (L. Privy Seal.)

Brockway, L.

Goronwy-Roberts, L.

Stewart of Alvechurch, B.

Bruce of Donington, L.

Llewelyn-Davies of Hastoe, B.

Strabolgi, L. [Teller.]

Castle, L.

Lovell-Davis, L.

Wallace of Coslany, L.

Champion, L.

Melchett, L.

White, B.

Collison, L.

Pannell, L.

Winterbottom, L. [Teller.]

Crowther-Hunt, L.

Peddie, L.

Wynne-Jones, L.

Davies of Leek, L.

Pitt of Hampstead, L.

On Question, Amendment agreed to.

Aberdare, L.

Elton, L.

Mowbray and Stourton, L. [Teller.]

Amherst of Hackney, L.

Ferrers, E.

Auckland, L.

Fraser of Kilmorack, L.

Netherthorpe, L.

Balfour, E.

Gainford, L.

Northchurch, B.

Barnby, L.

Gowrie, E.

Rankeillour, L.

Belstead, L.

Grenfell, L.

Redesdale, L.

Bourne, L.

Hailsham of Saint Marylebone, L.

Reigate, L.

Brooke of Cumnor, L.

Sandys, L.

Campbell of Croy, L.

Hornsby-Smith, B.

Strathclyde, L.

Carrington, L.

Inglewood, L.

Strathcona and Mount Royal, L.

Chelwood, L.

Killearn, L.

Coleraine, L.

Lauderdale, E.

Sudeley, L.

Colville of Culross, V.

Long, V.

Terrington, L.

Cowley, E. [Teller.]

Lyell, L.

Tranmire, L.

Cullen of Ashbourne, L.

Macleod of Borve, B.

Trefgarne, L.

Deramore, L.

Merrivale, L.

Vickers, B.

Drumalbyn, L.

Monck, V.

Young, B.

Elles, B.

Resolved in the affirmative, and Amendment agreed to accordingly.
7.13 p.m.
Lord BESWICK: My Lords, I beg to move Amendment No. 86B.
Amendment moved—
Transpose clause (Disclosure of information by Government) to after Clause 26 in Part IV.—(Lord Beswick.)
Lord BESWICK: My Lords, if it commands the agreement of the House I think this might be a good time to break, and I move that we adjourn consideration of the Report stage until 8 o'clock.

SOCIAL SECURITY PENSIONS BILL
7.14 p.m.
Lord WELLS-PFSTELL: My Lords, I beg to move that the Commons Reason for disagreeing to one of the Lords
1750
Amendments and Commons Amendments in lieu of certain other of the Lords Amendments be now considered.
Moved, That the Commons Reason for disagreeing to one of the Lords Amendments and Commons Amendments in lieu of certain other of the Lords Amendments be now considered.—(Lord Wells-Pestell.)

COMMONS REASON FOR DISAGREEING TO ONE OF THE LORDS AMENDMENTS AND COMMONS AMENDMENTS IN LIEU OF CERTAIN OTHER OF THE LORDS AMENDMENTS
[References are to Bill (228) as first printed for the Lords. Commons Reason and Amendments are printed in italics.]
[Nos. 1 and 2]

LORDS AMENDMENT
Clause 14, page 7, line 32, at end insert—("(2) Regulations may—

(a) provide for an invalidity pension to be payable to a pensioner who, whilst continuing to be incapacitated for normal full-time

1751
work, becomes capable of undertaking light work in circumstances which satisfy prescribed conditions;

(b) prescribe the amount such a pensioner may earn before his pension is affected in any way; and

(c) prescribe the effect any earnings additional to the amount referred to in paragraph (b) above will have on a pensioner's entitlement to invalidity pension.")

The Commons disagree to this Amendment for the following Reason:
Because it would be inconsistent with the purposes for which invalidity pension is provided under the Social Security Act 1975 and would tend to the imposition on the National Insurance Fund of a burden which it should not be made to accept at the present time.
Lord WELLS-PESTELL: My Lords, I beg to move that this House doth not insist on their Amendment No. 1 to which the Commons have disagreed for the following reason: because it would be inconsistent with the purposes for which invalidity pension is provided under the Social Security Act 1975 and would tend to the imposition on the National Insurance Fund of a burden which it should not be made to accept at the present time.
I do not wish to burden your Lordships by going over all the previous ground that our debates on this Amendment have covered. Your Lordships will know that we have covered this ground on a number of occasions and perhaps with your permission I could take it fairly briefly. I think we are all fully aware of the arguments, both from the Government side and from the Opposition. I should simply say that the Amendment could have been left on the Statute Book and the regulation-making power it contained not used, and it would be a very simple way of dealing with the situation. The view of the Government has been that the proper course to take was to seek to reverse the decision which your Lordships had previously taken. The fundamental reason for this view is, as your Lordships will know, that there can be no compatibility between, on the one hand, benefits which are made available to some 10 million claimants a year because the claimants are incapable of work, and on the other hand an earnings rule on the lines of the retirement pensions earning rule related to the performance of part-time or light work.
We have covered this ground on a number of occasions. I find it extremely difficult to put it in another way and as
1752
your Lordships will know the so-called therapeutic earnings limit is designed to deal with a very small category of beneficiaries who can be accepted as being incapable of work despite the fact that they have been able to perform a minimal amount of work but in strictly prescribed circumstances.
I want to emphasise what I have said on previous occasions, the therapeutic allowance is not really designed to enable those who are totally incapacitated to earn money, but it has done so under a medical certificate under medical guidance and approval because it is felt that for many reasons, not least among them psychological reasons, it is desirable, and of therapeutic value, to help the person perhaps to feel that he or she is in a position to do something to earn some money.
In conclusion I think I should refer once again, as my honourable friend did in another place, to an undertaking which the Government have given, and I want to emphasise this undertaking because perhaps it is something new. We have not dealt with this matter lightly. I know it will not meet with the approval of everybody in your Lordships' House, but we have given a great deal of attention and thought to it, and what I want to do tonight is to repeat an assurance which my honourable friend gave in another place. We will study the problems of the disabled person who is capable of some work, and in this study we will draw on the experience of those who are professionally and personally involved.
We recognise that there may well be a number—perhaps a substantial number—of people who have been designated as totally incapacitated for work but who may be able to do some work. Obviously, in their interests, in the interests of the community, let alone the interests of the Government, it is desirable that they should be encouraged to do it but at the moment—and I want to emphasise this—we are dealing with total incapacity. We have to do some rethinking about this. We want to make a study of the problems of the disabled person who is capable of some work, and in this study to draw on the experience of those who are professionally and personally involved. I am happy to repeat this undertaking in your Lordships' House in order to assure your Lordships that without

1753
any commitment as to the outcome—and it would be wrong for me to put it in any other way—the Government will take full account of the views expressed not only in your Lordships' House but in other places. I hope that, with that assurance, your Lordships will feel able to accept the view of another place on this matter. I beg to move.
Moved, That this House doth not insist on their Amendment No. 1 to which the Commons have disagreed.—(Lord Wells-Pestell.)
7.20 p.m.
Lord SANDYS: My Lords, the House will be grateful to the noble Lord, Lord Wells-Pestell, for explaining the reasons given by another place on this Amendment. Your Lordships will remember, of course, that a great deal of time was spent on this Amendment both on Committee and on Report. I think I should take the opportunity of thanking the noble Lord for taking a great deal of trouble to listen to the case on this, and for communicating with both his right honourable friend and his honourable friend who dealt with this point in another place.
My Lords, the House will be glad to hear, and I am quite sure that colleagues in the welfare sphere outside the House will also be glad to hear, that a study of therapeutic earnings is to be undertaken by Her Majesty's Government, which follows up exactly what was said in another place. But there is one point on which we disagree. We disagree with the statement of the honourable friend of the noble Lord, Lord Wells-Pestell. If I may quote his exact words, he said:
"…to sum up, we disagree with the Lords Amendment because it envisages radical changes which cannot be adopted without a great deal more thought and examination of complex conditions. Those changes would bring into invalidity benefit many people not now entitled to it and add several millions of pounds to present costs without any rehabilitation gain."—[Official Report, Commons, 4/8/75; col. 38.]
Those last few words, "without any rehabilitation gain", are ones which we have contested throughout because we have felt that it would be a positive gain to include certain categories. The noble Lord has met us on this point because he has said that a study is to be undertaken to review the condition, the situation
1754
of a person defined in the term "incapable of work". This is so fundamental, and I should like to thank the Government for having taken action on this matter.
My Lords, the noble Lord, Lord Wells-Pestell, will remember that he was good enough to communicate with me on this definition in February of this year. I thank him for his reply, but I should like to stress once again that we are not totally satisfied, and look forward to hearing the results of this exploration of the field.
7.26 p.m.
Baroness HORNSBY-SMITH: My Lords, the noble Lord, Lord Crawshaw and the noble Baroness, Lady Darcy De Knayth and Lady Masham of llton, are very concerned that they have not found it possible to be here today, and would wish to apologise for that, and for the fact that they were unable to hear the statement of the noble Lord, Lord Wells-Pestell, on Amendments that they proposed, and on which they attained a majority in your Lordships' House a couple of weeks ago. The Amendment of the noble Lord, Lord Crawshaw, would have been of enormous help to a group of people whom the noble Lord, Lord Wells-Pestell, admitted were very few in number. It would have given them the opportunity of achieving even a limited measure of independence.
For my own part, I think this is a lamentable decision and if I may say so, it runs counter to all the efforts of the noble Lord, Lord Wells-Pestell. I dislike disagreeing with him because I know where his heart is in relation to these people. Indeed, he has given us some hope with this inquiry, for which I am grateful, that a new look will be given to this. But all the efforts of the last 20-odd years during which I have been in one or other Chamber of Parliament have been devoted to getting away from the idea that someone handicapped was isolated and away in a hospital or a home, sometimes a young person in a geriatric unit because there was nowhere else to put them. Over the past few years, all efforts have been towards endeavouring to rehabilitate the disabled, or those who appeared to be permanently handicapped; and all the efforts of medical specialists and social workers in recent years have been directed not to writing-off these people but to enabling the disabled to use every scrap of their

1755
mental and physical capacity to the utmost advantage in order to see whether there was some way of getting that prime achievement and that bit of financial independence. Those covered by the Amendments are a very small minority of a minority of totally handicapped people. Their spur is their desire to contribute by their own efforts, in order not to have to take everything from the family and the State.
My Lords. I believe that this miserably low level of £7 is a shocking deterrent to remunerative occupational therapy which can, for some handicapped people over the years, with all the new methods and appliances and new treatments, become the channel through which those people, a very small number, may graduate to full employment and financial independence. To limit the amount which the invalided pensioner incapable of full-time employment can earn to £7, and if they do a modicum of part-time or light work and earn more than £7 then they lose their entire pension, is unfair and short-sighted. Take the accountant who has lost all the facility to write but still has his mental faculties. He is standing or sitting over a little local shopkeeper who does not begin to know about PAYE or VAT and the accountant can tell him how to do it. He is a man who was a professional and quite rightly he is giving the shopkeeper good advice and help. The shopkeeper writes down what the wage packet and the PAYE should be and the accountant, to his great joy, is pursuing as best he can his former profession, although he may no longer be able to hold a pen or travel to and from the office.
As I said in a previous debate there are some who are knitting garments, some are addressing envelopes. I think we should take into account wages as they have risen in this last year. Accepting that this is only part-time work, if these people did two or three hours a day, five days a week, to keep within that £7 and not lose their pension, they would have to be paid less per hour than we have to pay a charwoman who comes in to wash up or make the beds. Most of these people were stricken through no fault of their own. I think we should salute their merit and courage. We should improve their situations by allowing them, if they
1756
are capable, to earn just a little more, and make this modest concession.
I fully accept the parlous economic state and, indeed, the cuts that have to be made in the Social Services and other Departments. But the reason we were given for the rejection of this Amendment was that it would impose on the National Insurance Fund. I can tell the Minister how he can meet this money. If the Minister for Social Security more actively pursued those who abuse the services and benefits we grant, and defaulting husbands who leave their families to be looked after by the National Assistance while they seek remunerative employment away from their own abode, then I believe we could more than save the very modest amount of money that would be required to set a higher limit on what these people could earn without losing their invalidity allowance. This is modest aid for these very courageous citizens who want to stand on their own feet and who reflect all the attributes which everyone on both sides of this House most admires. I speak for our absent colleagues, some with personal knowledge of physical handicaps, who asked me to speak on their behalf this afternoon. I know that they will be saddened by this position, as indeed I am myself.
Lord BANKS: My Lords, I also regret that this Amendment has not been agreed to in another place, particularly as it was so drafted as to be permissive and not mandatory. In discussion of the Amendment in another place, the Minister put the argument which has been put again tonight by the noble Lord, Lord Wells-Pestell, that the invalidity pension is paid only to those who are incapable of work. If they do light work then they are not incapable of work and if they can earn £7 a week, as they may at the present moment, then they are surely not incapable of work either. We are told, of course, that these are therapeutic earnings, but it seems to me that there has been no satisfactory answer to the question why should the limit of therapeutic earnings not be higher, and why should the invalidity pension not be tapered off as the earnings rise?
In the course of his remarks in the debate in another place, the Minister appeared to be saying that he was prepared to consider both those propositions.

1757
That is why I find it a little difficult to understand why the Government had some objection in principle to the Amendment as it was worded. The other point mentioned in the Commons Reason is the question of immediate expenditure, and it is said that the Amendment,
"would tend to the imposition on the National Insurance Fund of a burden which it should not be made to accept at the present time".
But the fact that the Amendment was permissive and not mandatory meant that it was not necessary to activate it at the present time in the immediate crisis, if this was felt by the Government not to be possible, but the structure was there to do so whenever they felt that it could be implemented.
It was significant that in the discussion in another place there was no Back-Bench speaker who supported the Government's point of view, although of course a majority supported it in the vote. But I would not be at all surprised if the supporters of the present Government were in opposition instead, if they voted the other way. It seems to me, as far as they are concerned, that it is a question of saying with St. Paul,
"The good that I would I do not; the evil that I would not, that I do."
I welcome the fact that there is to be a study of the therapeutic earnings. I am quite sure that we shall come back to this proposal at some time in the future and that eventually it will be adopted.
Lord WELLS-PESTELL: My Lords, I think I have the right of reply. I do not really want to exercise it but the noble Lord, Lord Banks, tempts me to do so. I can assure him that one of the things a Government want when in office is as few Members of their own side to speak, because there are so many on the other side who wish to do so. In matters of this kind, if any business is to be achieved at all, the fewer people who speak on the Government side the more desirable, having regard to the fact that there will always be a large number on the Opposition.
I do not want to go over the ground again. The noble Lord, Lord Sandys, talked about the question of rehabilitation.
1758
There will be no rehabilitation in respect of those who are already working full-time in sheltered employment. I think this is what the Government had in mind when they said that there will be no rehabilitation. All that the noble Baroness, Lady Hornsby-Smith, has said only goes to indicate how important it is that we should have a study. I do not want to go over the ground again about the totally incapacitated. To me it is so simple that I find it extremely difficult to understand why noble Lords cannot grasp the fact that if a person has been held to be totally incapacitated for work he or she should be able to earn money. It is so simple to me that I cannot understand how other people cannot see that.
Lord ABERDARE: My Lords, if I may interrupt for one minute, we all understand that very well, but if the noble Lord was over on this side he would not understand it either.
Lord WELLS-PESTELL: Obviously, the noble Lord and I will have to get together at some later stage. Some of us have experienced total incapacity; some of us have been in the position where we have needed some encouragement to use our hands and our limbs and the therapeutic allowance has been a tremendous psychological advantage, because we have been told that we cannot do anything at all. This is the whole purpose of the therapeutic allowance. I do not think it would be helped by making it £13, £14 or £15. We have to be able to assess the ability of each person who is in receipt of an invalidity pension, and it may well be that we shall come to the conclusion that it is the wrong term. It may well be that we shall have to look at it more as a long term sickness benefit. Perhaps that would be the better way of dealing with it. The Government are grateful for everything that has been said tonight. It only reinforces the view to which we have come, perhaps belatedly, that we must look at this matter, we must have a study, and I give the assurance of the Government on this matter. I hope that noble Lords will accept this and that they will accept the Commons view of this matter.

LORDS AMENDMENT
[Nos. 3, 4 and 5.]
Clause 35, page 27, line 25, at end insert—
("or
(c) such fixed compound rate for each relevant year after that year as may be in force at the time when contracted-out service is terminated and which is, in the opinion of the Government actuary,—

(i) equal in value to an increase of 5 per cent. plus the further increase secured by the premium calculated in accordance with section 43; and

(ii) consistent with other assumptions made as to increases in earnings.")

The Commons disagree to this Amendment but propose the following Amendments in lieu—
Page 36, line 26, after ("unless") insert ("either—
(a)")
>Page 36, line 28, after ("above") insert ("or
(b) those provisions conform with such additional requirements as may be prescribed").
Lord WELLS-PESTELL: My Lords, I beg to move that this House doth not insist on their Amendment No. 3 to which the Commons have disagreed, and agree with the Commons Amendments Nos. 4 and 5 in lieu thereof. When the Bill left your Lordships' House after the Third Reading, it had been amended by the inclusion of an Amendment moved by the noble Lord, Lord Byers, the essence of which was that an employer would be able to re-value the guaranteed minimum pension of an early leaver by, if I remember correctly, a set percentage in the region of 8 per cent. and without need to pay a premium. As I indicated at the time, this was not a proposition which the Government felt able to support, for reasons partly of complexity but largely of cost.
Since then, as I think the noble Lords, Lord Byers and Lord Aberdare, know, further meetings have been held with the pensions interests at which the whole matter was discussed at length. Let me be quite frank in saying that the Government have been unable to abandon their view of the difficulties presented by the Amendment put forward by the noble Lord, Lord Byers. Indeed, the Government are not convinced of the necessity for an additional provision. Nevertheless, they recognise the continuing unease among those concerned with occupational
1760
pension schemes, and I hope the noble Lord, Lord Byers, will feel that we are going some way along the right road as regards the effects of the provision made for the pensions of early leavers on the volume of contracting out. For this reason the Government are prepared to continue discussions with the pensions interests. I am sure that I am not telling the noble Lord, Lord Byers, something that he does not know; I think he does know that the Government are prepared to continue these discussions. An Amendment was put forward in another place by Mr. Paul Dean, as a substitute for the Amendment introduced by the noble Lord, Lord Byers, which would enable the discussions to continue. It would also provide a means for making any change if the Government were persuaded that a change was necessary. This Amendment was supported by the Government in another place and appears now as the Amendments in lieu.
The Amendments in lieu which are now proposed should, I hope, find at least one supporter in your Lordships' House, for they are for practical purposes indistinguishable from the proposition which stood in the name of the noble Lord, Lord Aberdare—and I hope to goodness he is going to come to my rescue tonight—when we were last dealing with the Bill, but in the event it was not moved. I should like to think that it is now possible for all noble Lords to give their support to the Amendments in lieu. I hope they are going to meet with the approval of the noble Lord, Lord Aberdare, and that I can persuade the noble Lord, Lord Byers, that it is the right thing to do.
What the Amendments in lieu do is to leave the way open for further discussion. The Government can give no commitment—again I must be honest about this—that the power will be used or will be used in any particular way. If discussion did persuade the Government that further measures were necessary, I must make it clear that they would feel bound to hold the balance of fairness as between those contracted-out and those fully in the State scheme, and in so doing to avoid adding to the burdens of the National Insurance Fund.
I think the noble Lords, Lord Byers and Lord Aberdare, know that the Government, and particularly my noble friend the Minister of State for Social Security,

1761
have gone out of their way not only to listen to the occupational pensions interests but to try to meet them. They are prepared to continue the discussions, and are prepared to be convinced on this matter. But, as I say, there is in the background this one matter, that they feel bound to hold the balance of fairness as between those contracted-out and those fully in the State scheme. I am hoping that on this basis I can commend to your Lordships, and that you will accept, the Amendments in lieu. I beg to move.
Moved, That the House doth not insist on their Amendment No. 3, to which the Commons have disagreed, and agree with the Commons in their Amendments Nos. 4 and 5 in lieu thereof.—(Lord Wells-Pestell.)
7.44 p.m.
Lord BYERS: My Lords, when the noble Lord, Lord Wells-Pestell, refers to continual unease, I hope he will subject this continual unease to a tapering-off process, which we have been discussing under the first Amendment. Naturally I am disappointed that the Government have rejected the Amendment made by this House to deal with this problem of early leavers. But I am glad that something has been salvaged from the wreck, in that the Bill now allows the Secretary of State to deal with this problem, if he considers it right to do so, by way of prescription or regulation. I believe that in the end something along the lines we proposed may have to be adopted if employers are to be encouraged to contract out.
I should like to comment briefly on the arguments against the Amendment which were put forward by the Government in another place, some of which were repeated by the noble Lord tonight. The background to this is that where a person leaves a contracted-out scheme before retirement the employer has to ensure that the pension he has earned to that date is revalued up to the time of his retirement. I am in favour of that. That is not in dispute. What is in dispute is not the principle but the method of paying for the revaluation. Under the Bill the employer can take on a completely open-ended liability to revalue according to changes in national average earnings. That is one option. As the second option, he can take on a
1762
complex alternative of revaluing at 5 per cent. a year so long as he pays a premium in addition to that to the State at the date of the man leaving his job. Those are the two options. This could be very onerous, very embarrassing, when major or minor redundancies occur in small firms. I proposed this third alternative, which would enable an employer to provide for the required revaluation within the employer's pension fund instead of having to pay this premium to the State. This would cost no more and no less. That is why I do not understand this business of its putting a cost on the State. It enables the employer to make continuing provision to meet his liabilities instead of having to meet an immediate demand for cash to be paid to the State at a given date.
The Government's objections are threefold. They say, as the noble Lord said, that the Amendment is complex. It is no more complex, probably less so, than the present provision in the Bill. It would require that the contracted-out pension should be revalued at a rate determined by the Government Actuary, which is in practice equivalent to the premium which the Actuary would have to calculate in any event. So I cannot see that it is any more or any less complex. It was said, secondly, that it introduces uncertainty. The answer to this, surely, is similar to the first answer. Some fixed rate has to be assumed in order to calculate the premium. That is the starting point. That is what the Government Actuary has to do. The same fixed rate would be used in the alternative I have proposed. Of course, the rate would change from time to time, but only for those leaving service thereafter; and in any event the premium in the Bill will have to be recalculated, and there is no more or no less uncertainty.
Then I come to this point, which I still do not understand. We are told a potential cost is involved to the National Insurance Fund. That has never been demonstrated. It has never been proved. It has only been asserted. The Government just say it will cost money to the National Insurance Fund. I do not understand that, because this new State scheme is not a funded scheme; it works on a pay-as-you-go basis. The ability of the State to pay benefits does not depend upon the amount of interest earned on

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the contributions that are paid in at the earlier stage. It is quite a different system. It is not an occupational scheme.
If the Government are now saying that to finance part of their scheme they need to earn interest on these premiums, then this is a new assumption, and nowhere has that assumption been spelled out in all these long discussions we have had. I cannot see how a cost to the National Insurance Fund arises, because my alternative removes from the State the liability for revaluation and houses it within the employer's scheme. Furthermore, the suggestion of a premium was made at a relatively late stage in the Bill. It was not included in the White Paper when the scheme was first published. Consequently, any income from premiums or interest on premiums cannot be fundamental to the financing of the new State scheme, because it was not envisaged in the White Paper; it was put in only as a result of a suggestion of some section of the pensions industry. I ask myself, is it that the Government have seen a fortuitous source of profit that they are now unwilling to relinquish? Have they suddenly seen that they can get a premium paid into the State scheme, and by golly! they are not going to let go of that? In fact it may well be that this is the deterrent which makes it more difficult for an employer to decide to contract out.
Not one of these three arguments seem to me to bear investigation. For this reason, I thought it right to place these comments on the record, because I find the Government's arguments quite unconvincing, and so, I think, do all the organisations in the pensions industry. They have supported the Amendment in letters to the Press and in other ways. This House supported the Amendment, and the other place rejected it. It has been described in different parts of the Press as an important Amendment. I believe that if contracting out is to be made attractive something like it will eventually have to be introduced, and therefore I welcome the fact that at least out of this we have got the Amendments in lieu, and I particularly welcome the statement of Lord Wells-Pestell that the Government will continue to discuss this matter with the pensions industry. I do
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not think we have solved this yet, but I felt it right to put on record what I believe to be the proper answer to the Government's contentions.
7.51 p.m.
Lord ABERDARE: My Lords, as the noble Lord, Lord Wells-Pestell, rightly foresaw, I can do nothing but welcome this Amendment, which reproduces in almost the exact form the Amendment I had down at Third Reading. This is only natural as the mover of the Amendment in another place, Mr. Paul Dean, was a valued colleague of mine at the Department of Health and Social Security. Like the noble Lord, Lord Byers, I think that his Amendment had a great deal of merit in it, and I am sorry that it has not been adopted rather than this fallback Amendment, which I only put down and did not move at Third Reading because I thought that the noble Lord's Amendment was preferable.
However, this at least has the great merit of keeping the door open for further consideration and is therefore very valuable even at this late stage. It has a drawback for those on this side of the House who are usually unanxious to give the Secretary of State more powers to make regulations, and we should not normally have considered that this was the right way to do it. But, in the event, at the very late hour of this Bill's existence before becoming an Act, it has the merits of giving the Secretary of State flexibility and keeping the options open.
We have throughout sought to find agreement with the Government to establish a balanced partnership between Government pension schemes and the occupational pensions field, and I should like to congratulate the noble Lord, Lord Wells-Pestell, and his right honourable friend on their willingness to continue to receive representations from those who are interested in the occupational pensions schemes, which have been very helpful. May I also with due respect congratulate the noble Lord, Lord Byers, on his immense persistence, which in the end has been so valuable in helping the occupational pensions industry to put their points over to the Government. I hope that the further discussions which will take place may arrive at a mutually satisfactory result both to the Government and to those whose only interest and

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anxiety is to establish a successful private sector in occupational pensions. For obvious economic reasons we should be doing all that we can to encourage personal savings, and this is best done through occupational pension schemes. Therefore, I am content to accept the noble Lord's proposition.
Lord WELLS-PESTELL: My Lords, I am grateful to the noble Lords, Lord Byers and Lord Aberdare, for their comments and observations. Let me say, because I can say this quite truthfully, that I know that my right honourable friend the Minister of State has a great respect for the knowledge which the noble Lords, Lord Byers, Lord Banks, and Lord Aberdare, bring to this field. We are not unmindful that we are dealing with experts in this field, and we recognise this because it happens to be true. In the last analysis we are only concerned with having the best possible scheme, and this also is the goal of the noble Lord, Lord Byers, and the other two noble Lords.
It may well be that along the road we are going to differ at various points, but the door is still open. Discussions can continue. I do not think that there is anybody who is more receptive to ideas than my right honourable friend the Minister of State for Social Security. I could say to the noble Lord, Lord Byers—but it probably is not a great deal of help—that this subject is so complex that I do not think that I can deal with it adequately myself, and it is no good pretending that I can. I can take advice from my right honourable friend the Minister of State and write to the noble Lord, Lord Byers, and this I am happy to do. He may feel that he would like to make his own overtures, and this I would accept. But if the noble Lord wants me to raise this with my right honourable friend the Minister of State, I shall do so. He knows that the door is open. He knows that my right honourable friend the Minister of State is always accessible.
Lord BYERS: My Lords, I appreciate that very much.
Lord WELLS-PESTELL: Perhaps he would prefer me to leave it there, and for him to make his own overtures. This applies also to the noble Lord, Lord Aberdare, as he knows only too well. I do not think that I can usefully say
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anything more, and I hope at this stage noble Lords will feel able to accept the Commons' view on this matter.
7.56 p.m.

LORDS AMENDMENT
[Nos. 6, 7 and 8]
Schedule 4, page 71, line 33, leave out paragraph 50.
The Commons disagree to this Amendment but propose the following Amendments in lieu—
Page 13, line 29, at end insert—
("(3A) In the tax year 1976–77, and thereafter in each subsequent tax year, the Secretary tart' of State shall consider whether the rate of mobility allowance should be increased having regard to the national economic situation as a whole, the general standard of living and such other matters as he thinks relevant.")
Page 71, line 33, leave out from ("Act") to end of line 35 and insert ("for paragraph (a) there shall be substituted—
"(a) Parts I, IV and V of Schedule 4 to this Act and paragraphs 1 to 3, 4 and 5 of Part III; and"")

Lord WELLS-PESTELL: My Lords, I beg to move that this House doth not insist on their Amendment No. 6 to which the Commons have disagreed, and agree to the Commons Amendments Nos. 7 and 8 in lieu thereof. I hope that the noble Lord, Lord Sandys, will feel that it is proper for me to do so, but as both he and I have been over this a good many times, and I think there is no new ground that is left for us to explore, perhaps I could take this fairly briefly. The Amendment requires the Secretary of State—and the Amendment is set out on the Paper—in each tax year commencing with the tax year 1976–77 to consider whether the mobility allowance should be increased having regard to the national economic situation, the general standard of living, and any other matters he thinks relevant. The related Amendment—that is the Amendment which deals with page 71, line 33—is to Section 125 of the Social Security Act 1975. In the light of the first Amendment above, its effect is to exclude mobility allowance from the list of benefits subject to annual review and automatic uprating in the light of the general level of earnings and prices under Section 125 of the Social Security Act 1975.
These Amendments were introduced by the Government in another place in

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response to the Amendment carried by noble Lords at the Report stage, an Amendment which, though apparently aimed at guaranteeing annual reviews, would require annual upratings in line with earnings. I think I am right in saying—and I know that, if not, the noble Lord, Lord Sandys, will put me right—that the intention of the movers was to secure an annual review and not necessarily an annual uprating. This means that we have to separate the two. The two Amendments introduced in another place have the effect together of requiring an annual review of mobility allowance, but leave the decision on any uprating to be taken in the light of the national economic situation as well as other relevant factors. This is exactly the same provision for review which will apply, as the noble Lord, Lord Sandys, knows only too well, to child benefit. For mobility allowance, the Government cannot accept a commitment requiring automatic annual uprating.
I hope that the noble Lord, Lord Sandys, will accept this because I believe this was not the original intention of the movers. However, we accept that it is right to provide for an annual review, with power to decide in the light of the review what priority can and should be given to extra expenditure in this area. I will go so far as to say that we have met what was needed on this point. We have said that we will look at the need for uprating, taking into account all relevant matters, but we must be free to determine whether it is possible to devote scarce additional resources to this allowance at any given time. We have introduced this benefit at a time when—as I am sure the noble Lord will agree—we are experiencing great economic difficulty. We have already increased the weekly rate from £4 to £5 since it was first announced and even before the first payments have been made. It will be a help to many of the most severely disabled who up to now have received no help with their mobility problems simply because they cannot drive.
I do not feel that any useful purpose will be served by my going any further. I believe that we have met the spirit of the wishes of our noble friends who are not here tonight. Amendment No. 8 is consequential, and I believe the
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noble Lord, Lord Sandys, will be of the opinion that there is no need for me to dwell at any length upon it.
Moved, That the House doth not insist on their Amendment No. 6 to which the Commons have disagreed, and agree to the Commons Amendments Nos. 7 and 8 in lieu thereof.—(Lord Wells-Pestell.)
Lord SANDYS: My Lords, I feel that this was our greatest disappointment in reviewing the situation when we received the Message from the other place. I am sure that the noble Lord, Lord Wells-Pestell, will agree with me that the noble Baroness, Lady Darcy de Knayth, who has persisted throughout with this Amendment has received only a small consolation. She is not here this evening, but had she been here I feel sure that the lash of her tongue would have been quite considerable.
Instead of an annual review, we are faced with the promise of a periodic review, which is a very different matter. A suggestion was made to Her Majesty's Government on 4th August in the following terms:
"Will the Minister make it clear whether, so far, we have an undertaking that in the annual review statement which is normally made around Budget time, there will be a specific reference to the question of the mobility allowance?"—[Official Report (Commons), 4/8/75; col. 87.]
This was a suggestion in reply to which the noble Lord's honourable friend said that he would not necessarily make that commitment. We know full well why he was not able to do so, but I am quite sure that it would be very helpful if the noble Lord would pass on to his honourable and right honourable friends the need to remind the Treasury of the great needs of the disabled people who will suffer from taxation. After all, this is a taxable allowance and it would be a reminder for the Treasury, and for those working on the drafts, if possible to have it in the annual review document. I do not wish to speak long at this stage since the House has much further business before it; but I should like to thank the noble Lord, Lord Wells-Pestell, for giving so much time and effort. I hope he will keep an open door for the disablement income group and colleagues in that category.
Lord BANKS: My Lords, I should like to say briefly that I, too, regret that there is not to be an annual uprating but only an annual review. I find it very unsatisfactory that we have a social security system in which some benefits are to be uprated according to the increase in earnings or in the cost of living while others depend entirely—though those factors are taken into account—upon whether it is felt that anything can be done at a particular time. That can but lead to a situation in which some benefits are not uprated for very many years. So I regret that there is not to be an annual uprating. But I am glad that there is to be an annual review. It is not so satisfactory and it is part of a hotch-potch system, but it is nevertheless a step in the right direction
Lord WELLS-PESTELL: My Lords, I am very grateful to both noble Lords. We are now committed to an annual review. We are not committed—and we have been perfectly frank and honest about it—to an annual uprating. But it must be clear in the very nature of things that one cannot give an allowance and, in a period of inflation which may go on for several years, let it go on and on year after year without being uprated at some stage. While we give no guarantee that we can do it annually, clearly there must come a time when all benefits will be considered, outside those which, for a variety of reasons, are subject to annual up-ratings.
It should not be necessary for me to point out to your Lordships that we must do the greatest amount of good for the greatest number of people. We are spending a tremendous amount of money. I have told your Lordships on two previous occasions that our 26 major benefits cost £9,000 million a year. There must come a time when we shall have to look at the mobility allowance, which is a new idea introduced to benefit 100,000 people. This is the provision we are making at this stage. We will give it an annual review, and if we can uprate it regularly we shall be happy to do so. But we cannot give an assurance that we shall be able to do so automatically.

INDUSTRY BILL
8.9 p.m.
Report stage resumed.
Clause 28 [Meaning of "representative" and "authorised representative"]:
Lord ROCHESTER: My Lords, I beg to move Amendment No. 87.
Amendment moved—
Leave out Clause 28.—(Lord Rochester.)
Clause 29 [Duty to give information to Minister]:
Lord BESWICK Lord BESWICK moved Amendment No. 88:
Page 23, line 28, after ("the") insert ("business in the United Kingdom of the").
The noble Lord said: My Lords, this is an attempt to meet a point made in Committee by the noble Lord, Lord Campbell of Croy. I undertook to bring forward an Amendment to confine the scope of the information disclosure provisions to the United Kingdom activities of an undertaking. I hope that the Amendment meets the wishes of the noble Lord and of the House. I beg to move.
Lord CAMPBELL of CROY: My Lords, I recognise this as a response to the point we put forward at Committee stage and I am grateful to the noble Lord for having done this.
Lord BESWICK Lord BESWICK moved Amendment No. 89:
Page 23, line 43, at end insert ("by the undertaking").
The noble Lord said: My Lords, in Committee the noble Earl, Lord Balfour, pointed out that the requirement for information in Clause 29(2)(i) might allow information to be required from a company about exports other than those which it made itself. This would clearly impose a burden on the company, and we have therefore brought forward the present Amendment to limit the information to information about exports made by the undertaking. I am sorry that the noble Earl is not here to welcome the Amendment, but I hope that it will be welcomed by the rest of the House. I beg to move.
Lord CAMPBELL of CROY: My Lords, this Amendment provides clarification and better drafting of the Bill. I expect that my noble friend Lord Balfour, who has been very busy all day and has just joined us, will want to comment favourably on this Amendment.
The EARL of BALFOUR: My Lords, I gather that the noble Lord, Lord Beswick, has very kindly said that he is prepared to consider this matter, for which I am very grateful. I am sorry that I was late in arriving. I beg to move.
Lord BESWICK: My Lords, I am quite happy for the noble Earl to move the Amendment, but it has already been moved.
The DEPUTY CHAIRMAN of COMMITTEES (Lord Amherst of Hackney): My Lords, I should warn the House that if Amendment No. 90 is agreed to, I cannot call Amendments Nos. 91 and 92.
8.10 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 90:
Page 24, line 17, leave out subsection (4).
The noble Lord said: My Lords, I think it would be convenient and would save time if Amendment No. 91, which is in my name, was also discussed with this Amendment. Here we are trying to help the Government again by simplifying and clarifying this procedure, which is bound to be complicated for those who will use it. Amendment No. 90 proposes that subsection (4) should be left out. I remind your Lordships that having received the information from the company under Clause 29, the Minister decides whether it should be furnished to the employee representatives and, if so, how much of it. That is a provisional decision taken by the Minister and he sends a further provisional notice, under Clause 30(1)(a), telling the company what he considers should be sent to the employee representatives. At the same time, he informs the employee representatives of this action—that is, at a later stage than the one we are now considering. Therefore there is no point in bringing the employee representatives in before that stage. That is why I suggest that subsection (4) should be omitted.
There is one positive disadvantage which I should like to draw to the noble Lord's attention. Perhaps he has a reply to this point, in which case I should be glad to hear it. The disadvantage is that in deciding what information should be furnished, the Minister eliminates information which he believes should not be furnished for reasons of national policy. He has these two criteria: one is reasons of national policy, and the other is special reasons. The reasons of national policy are not referred to the advisory committee, and the noble Lord, Lord Beswick, confirmed this at the Committee stage. The advisory committee is brought in only on the special reasons. Therefore, the employee representatives have no voice in whether or not, for reasons of national policy, that information should be furnished. Therefore, why bring them in before that stage? It could cause unnecessary frustration.
Let us suppose that the Minister decided that all the information for which he asked should not, once the company had explained the reasons to him, be furnished for reasons of national policy, as under subsection (2) of Clause 30. The employee representatives would have already been told, under subsection (4)—quite unnecessarily at that stage—that the information had been requested from the company. Later they would discover that nothing was to be passed to them, and that they had no opportunity of referring to the advisory committee.
Naturally there would be some frustration that they were being kept in the dark. They would be told that information was coming, but later they would be told that for reasons of national policy that information was not coming; and they would have no opportunity to query this with the advisory committee. I suggest that where a Minister has the right reserved—and reserved to him alone—to decide that information should not be divulged for reasons of national policy, it is surely clumsy to have a procedure under which a group of people are informed before that stage of the description of the information and that it has been requested for passing to them. I suggest that this is administratively faulty, and it may not be necessary to have subsection (4) at all, which is what is proposed in Amendment No. 90.
I should like to suggest an alternative—which is in Amendment No. 91—although it is not as foolproof. If the employee representatives are brought in at all at this stage—rather than at a later stage—it should be at the Minister's discretion whether or not he does so. Therefore, I suggest the word "may" instead of "shall". In any case, that would be equivalent to "may" at the beginning of the clause, which opens by saying that the Minister "may" take action under the clause. But if he decides to do so, then under this subsection he also has to inform the employee representatives.
If there were a matter of national policy involved which, for instance, affected defence contracts or something similar, perhaps in relation to national security, surely there would be no point in having informed a group of people that information was coming and then later telling them that it was not. If the Minister could be quite certain that the subject matter had nothing to do with national policy—that reasons of national policy could not be involved—he could take action under this subsection, and that is the purpose of having the word "may" instead of "shall". To make it obligatory for him under this subsection, before he has even taken the decision on reasons of national policy, is administratively clumsy. With the best of intention of trying to help the Government to simplify this procedure so as to avoid the kind of situation I have described, I hope that they will consider this point, even if they do not accept either of the Amendments tonight.
Lord BESWICK: My Lords, I can only tell the noble Lord that he has not simplified it in my mind, but has contrived to introduce a lot of complications which I did not think exist, and which, indeed, I do not believe exist. The situation is this. The Minister may ask a company for certain information. If the company says that it does not wish to supply that information, the Minister then invokes his powers and requires the company to provide certain information. It is open to either the company or the trade union to appeal to what I call the advisory committee—and what the noble Lord likes to call the appeal committee—for a hearing. The trade union may wish to refer this to the advisory committee—
Lord CAMPBELL of CROY: My Lords, I am sorry to interrupt the noble Lord, but there is an important point here. At the Committee stage, the noble Lord told us that that reference to the advisory committee could take place only where there were special reasons, but that there was no reference to the advisory committee when a decision under questions of national policy was involved. Therefore, if the Minister decided at this stage that all the information, or a large part of it, should not be divulged for reasons of national policy, then the representatives have no resort to the advisory committee.
Lord BESWICK: My Lords, there may be special reasons why the company does not wish to give information. I am saying that the trade unions may wish to have this information for special reasons. For example, it may be because the information is about new developments in other parts of the country; or it may be connected with matters which, as my noble friend said, play a part in the unions' consultative processes. The unions may wish to say that this is a matter which should be referred to the advisory committee. But unless the unions know in general what type of information is being asked for, they cannot decide whether they should press for it to go to the advisory committee.
We are trying to deal here with both the management side and the trade union side on equal terms. That is all. Obviously, the trade union will not know what is involved unless it is given some information from the Minister. The union will not get anything in detail, but it will have a general indication as to what is at stake and will then be able to make up its own mind whether it thinks that it is a matter which ought to be given, even though the company, and indeed the Minister, may say that he does not want to press it further.
Lord BEAUMONT of WHITLEY: My Lords, I do not know if the Government and the Departments concerned have really considered the point which the noble Lord, Lord Campbell of Croy, is putting forward. I quite agree that in a large number of these cases, probably far the greatest number, it would be for special reasons. It may be that neither of Lord Campbell's Amendments are, for

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various reasons, acceptable; because I see that there is a strong reason for saying that the trade unions should get copies of notices when they are dealing with matters which may be special circumstances. But I think we ought to have the division between special reasons and the national interest at an earlier stage. I cannot think that it is acceptable in matters of national security to put up enormous signposts saying, "Here is a matter of national security which it would be dangerous if it was revealed". You send notices to people saying, "Here is an area which is a matter of national security." It seems to me that here there must be an area which has not been adequately considered. I should have thought the noble Lord, Lord Beswick, could take this away. He may know that this has been considered in detail; but the reply that he has given so far shows no indication of his really taking the point that the noble Lord, Lord Campbell of Croy, is making and that I am trying to follow up about national security. I think it could be looked at again. We have one more chance before the Third Reading. I hope the noble Lord will look at it again.
Lord CAMPBELL of CROY: I am endeavouring to help the noble Lord with the machinery. I am afraid he did oversimplify it in his reply. "Special reasons" is a term of art in this Bill and, in fact, one of the Government Amendments is to put in a definition of what "special reasons" means in this Bill. Then, "reasons of national policy" is a separate consideration which the Minister must take into account and where the employee representatives do not have a say.
What the noble Lord said just now is all done under Clause 30; because subsection (1)(b) is the point where the Minister sends a notice to the employee representatives, telling them about the information which he is asking the company to provide. What I am saying is that it is unnecessary, therefore, for the Minister to have sent a copy of a notice at an earlier stage in Clause 29. That is the subsection (4) which I am now seeking to delete. At that stage the Minister has not yet himself taken the decision. If his decision is one affecting reasons of national policy and not special reasons
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—which, as I say, is a term defined for the purposes of this Bill and is distinguished from "reasons of national policy" because the unions, the employee representatives, have their opportunity of going to the advisory committee—then because the Minister has not yet taken that decision it is too early for that notice to go to the employee representative. It may end by the Minister saying: "Half of the information cannot be passed and I cannot give you the opportunity of going to the advisory committee about it because it is for reasons of national policy which the advisory committee do not come in on."
In this complicated procedure, I am suggesting that the Minister has oversimplified by referring to what happens under Clause 30, which is going to happen anyway. I am pointing to an unnecessary duplication in Clause 29 at an earlier stage. I suggest that the Minister should not be required to send a copy of the notice under subsection (4) unnecessarily at that stage before he has even taken a decision about national policy. I will not press this now. It is a complicated matter. I sympathise with the noble Lord who has been dealing with steel closures as well as with this Bill, but I hope that before the next stage it will be possible for him and his officials to read what I have said, and look closely at the Bill, and they will see there is a point here.
Lord BESWICK: I shall certainly read what the noble Lord said. I would have done that in any case and I will see whether there is something I overlooked, but I think that the noble Lord and his friends are making difficulties where none exist. If one looks at Clause 30(5) one finds:
"A Minister shall not serve a notice under subsection (1)—without giving—to the company or companies concerned, and…to the authorised representative of each relevant trade union, an opportunity of making representations to him."
That is simple enough. Either side has the opportunity of making representations before the Minister comes to a decision.
I do not see why the noble Lord is bringing in the business of national reasons or special reasons. That has not necessarily arisen at this point. He is sending a preliminary notice and, before

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he sends it, he gives the opportunity to both sides to make representations to him. His ultimate decision will be in the light of the representations he has received. What I said is that the company will know what information has been asked of them. They will know whether to require it to go to the advisory committee; but the trade unions will not know whether it ought to go to the advisory committee unless they know what it is all about. They will not know unless they are told. I think that, unwittingly, the noble Lord is saying they should not be told. We think they should.
Lord CAMPBELL of CROY: I do not want to waste the time of the House. I regarded the noble Lord as interrupting my winding-up speech. I was about to withdraw the Amendment but he was so keen to speak that I gave way. I intend to withdraw it and do not wish to detain the House. But I would say that what he referred to in subsection (5) in Clause 30 I do not disagree with. That all comes later, long after Clause 29(4) which is what I am dealing with now. It brings us back to something which the noble Lord must explain again, either tonight or at the next stage. I wish I could lay my hands on the column in Hansard now; but when I was speaking at an earlier stage in the debate on this Bill and spoke of the advisory committee dealing with a subject which the Minister had decided should not be divulged for reasons of national importance, the Minister himself said—and it is in Hansard—the advisory committee does not deal with matters of national importance. It only deals with special reasons. These are two terms of art for the purposes of this Bill.
If that was a mistake or a misunderstanding, what I am saying does not arise. If I am right—that the noble Lord was confirming what we understood, that it is only when something is at issue for specal reasons as defined in this Bill that the advisory committee come into it and the Minister alone takes a decision on reasons of national policy—then we think that the Minister, having that right reserved to him, should take that decision before the information is sent (as it will be under subsection (5)) and therefore there is no need for it to be done under Clause 29, a previous clause.
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Having again indicated why this comes up because of what the Minister explained at an earlier stage and pointed to a difficulty, I will not pursue it now. I hope the Government will look at it. I think it is going to make it more difficult for the Minister later. It is the Minister who will find this difficult when he has to decide, for reasons of national policy, that the whole of, or a large part of, the information should not be divulged. He has already arranged for the employee representatives to be informed that information is coming. It would have been unnecessary at that earlier stage for this to have been done; for specal reasons, yes. When he has taken his decision and decided that for special reasons certain information cannot be divulged, then the advisory committee system comes in. The employee representatives can appeal on that if they think that they ought to have that information. Having explained the point—I hope now exhaustively—I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.31 p.m.
Lord ROCHESTER: My Lords, I beg to move Amendment No. 92.
Amendment moved—
Page 24, line 18, leave out from ("to") to end of line and insert ("employee representatives").—(Lord Rochester.)
Lord ROCHESTER: My Lords, I beg to move Amendment No. 93.
Amendment moved—
Page 24, line 32, leave out from second ("to") to ("within") in line 33 and insert ("employee representatives").—(Lord Rochester.)
Lord TERRINGTON Lord TERRINGTON moved Amendment No. 94:
Page 24, line 33, after ("union") insert ("and to the members of the company or companies").
The noble Lord said: My Lords, this Amendment, together with Amendments Nos. 120, 128 and 133, form a group and, as I explained in Committee, their sole purpose is to ensure that by law any information which the Bill already requires to be given to trade unions shall also be given to shareholders. I also explained in Committee that the Stock

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Exchange—of which I declare membership—attaches considerable importance to this legal obligation, and it is for this reason I am raising this matter on Report. The noble Lord, Lord Beswick, in his reply to my previous Amendments, was kind enough to say that he recognised my point but, at the same time, he felt it was a matter for separate legislation in connection with the Companies Acts. In normal circumstances, I would certainly agree with him; but I submit, as I did in Committee, that the circumstances surrounding the disclosure clauses in this Bill are not normal and therefore require closer examination.
If I might say so, I think the noble Lord, Lord Campbell of Croy, put his finger on the crucial issue when he said, speaking to his Amendment: it is not so much a question of the rights of shareholders as an entirely new problem; and the new problem is the burden for boards of companies having to deal with certain information in a different category from that to which they have been accustomed under the voluntary system. The noble Lord, Lord Beswick, also said in Committee he would be glad to consider any new points I cared to bring forward as a result of discussions with my Stock Exchange colleagues, and I will now try to meet this requirement as briefly as possible. I think the first and most important point to recognise is that the Bill has unfortunately created a new class of "insider"—namely, trade union representatives—and, at the same time, it has considerably extended the area in which directors of a company have to decide whether or not any items of information are price-sensitive so far as the Stock Exchange is concerned. There are of course any number of examples as to how this area has been extended, but perhaps I might be allowed to give just one or two by way of illustration.
To begin with, the information required to be disclosed under Clause 29(2) of the Bill includes information that, on the face of it, may not be at all price-sensitive. But if after release to trade union representatives, it leaks out in some way to the world at large, it could have a construction put upon it that might well cause a movement in the market price of the company's shares. Indeed, the information, if leaked, might become so distorted in the
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process that a market movement is caused by false rumours rather than by the nature of the information originally released. In that way the information could turn out to be extremely price-sensitive, not because of its inherent nature but simply because of the unauthorised hands into which it had fallen.
An illustration of this point could be information disclosed under Clause 29(2)(a) of a small and insignificant reduction of employees which, if leaked, and subsequently distorted, might become magnified out of all proportion. There is little doubt a rumour that large numbers of employees were being laid off would cause a totally unjustified and severe fall in the company's share price, possibly to the detriment of capital raising for a new investment project. I should now like to turn to paragraphs (d) and (e) of Clause 29(2) and refer to "intended disposal" and "intended acquisition as these are important disclosure requirements. Supposing a company had recorded at a board meeting its intention to make approaches to another company, but as yet has taken no steps in pursuance of its intention, it seems reasonable to presume that it would have to disclose this information under the head of "intended acquisition" under paragraph (e). This is where the difficulty begins since the directors might well not regard the revelation of that fact as price-sensitive, particularly as they might receive a complete rebuff from the other company after the initial approach.
So you can see, my Lords, the kind of difficulties that could arise when legislation becomes involved in such a delicate area as price-sensitive material, unless full regard is paid to the interests of all the parties concerned. I have probably given enough examples of what could happen in certain circumstances, and I should now like to make three specific points to underline my case. First, I should like to refer to the introduction to the Stock Exchange Listing Agreement which states:
"Directors should not divulge price-sensitive information in such a way as to place in a privileged position any person or class or category of person outside the company and its advisers".
Secondly, I would stress that, as it is the Bill which has imposed a burden on directors, it for the Bill also to ease

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it by requiring information released under it to be disclosed to shareholders.
Thirdly, it would be entirely inappropriate for the Listing Agreement to include such a provision since the whole tenor of that Agreement so far as disclosure is concerned is based on the price-sensitive nature of the information to be disclosed. The Stock Exchange is not concerned with information that is not price-sensitive, and furthermore it would be inconsistent with the rest of the Agreement for there to be incorporated in it a reference to a Parliamentary Statute not strictly being company legislation. Quite apart from all this, if the provision for disclosure to shareholders is to await the next Companies Bill, I must ask how long is the waiting period to be? It really would be a most unsatisfactory situation if we were confronted with a period of delay and uncertainty extending to many months on a matter of this importance.
Furthermore, the Stock Exchange authorities would still have to examine the actual wording of any provision for disclosures in an eventual Companies Bill before committing themselves to supporting such a method of dealing with the matter. I would therefore conclude by repeating what I said in Committee; namely, that my simple Amendments would in no way interfere with the proposed disclosure of information to trade union representatives; but they would ensure that this matter of disclosure to shareholders was dealt with now in a manner acceptable to the Stock Exchange authorities and without further delay. I therefore hope that the noble Lord, Lord Beswick, who said in Committee that there can be absolutely no question of having a restricted number of insiders, will be able to look more favourably on my group of Amendments. I find it difficult to see how my Amendments can be objected to, bearing in mind that it is the Stock Exchange Council which is responsible for the operating of these disclosure clauses in the best interests of the investing public. I beg to move.
8.40 p.m.
Lord CULLEN of ASHBOURNE: My Lords, the more I have thought about this matter, the more surprised I have become that the Government have not accepted the need to make it compulsory
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for directors to disclose to shareholders information which the Minister has compelled them to give to employee representatives. I fully support the case which has been made clearly and cogently by the noble Lord, Lord Terrington, and I can see no reason why the Government should not accept these Amendments. This is no Party matter; it is purely intended to prevent trouble and difficulty. I realise that the Government wish for greater disclosure to all employees in cases where at present it is inadequate. What the Bill would do, if unamended, is to upset a system which works.
I wonder whether the Government are aware of what happens in practice. As is well known, some companies take great trouble to keep all their employees informed not only to make their jobs more interesting, but also to contribute to the general efficiency of the company. But owing to the listing agreement with the Stock Exchange, the company would be bound to pass to its shareholders any such information that was price sensitive. That being so, the company might well decide to withhold from both its employees and its shareholders any such price sensitive information which might cause a movement in the company's shares. In fact, the management of the company uses its discretion to ensure that it puts no person or group of persons in a privileged position regarding price-sensitive information, while supplying its employees with as much information as possible.
So far so good, but the Government will say—and they will not say it alone—that there are other companies which do not behave in this exemplary manner; and this is no doubt the reason for these disclosure clauses. So the Government legislate in order that the Secretary of State can compel the management of a recalcitrant company to disclose information over a very wide front to employee representatives. At this point, discretion would be taken away from the management and assumed by the Secretary of State. It is he who would now decide what information had to be disclosed. The Bill, therefore, as the noble Lord, Lord Terrington, said, creates a new class of insider. It could well be that part of the information was of such a nature that the management would not have contemplated disclosing it for a

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number of reasons, one of which might be that it was price sensitive. Here it is important to take note that a particular item of information might be harmless in itself when taken in isolation, but could well become price sensitive in combination with other apparently equally harmless items. It must not be forgotten that investment analysts spend much of their time piecing together any information they can glean, in order to assess the profitability and future potential of a company.
In conclusion, this is a technical and not a Party matter. The purpose of the Amendment is to ensure that the orderly working of the Stock Exchange is not adversely affected by this Bill. It is not a satisfactory reply for the Government to say that the matter will be dealt with by a new Companies Bill. We have no idea when this will be forthcoming or what provisions it will include. I sincerely hope that the Government will accept this Amendment, which, as the noble Lord, Lord Terrington, says, has the full support of the Stock Exchange.
Lord CAMPBELL of CROY: My Lords, I should like to say just a word or two, having drawn attention to this point at Committee stage. The noble Lord, Lord Terrington, and my noble friend Lord Cullen have described the new situation which could arise under this Bill. They are both members of the Stock Exchange and know very well the present rules and how they could be affected. I understand the rules of guidance cover all the situations that can now arise, and the aim of the rules and guidance and the listing agreement is to obtain a fair market and to preserve confidence in it—something which I am sure your Lordships would wish to see. These disclosure clauses would create a new situation. Besides the criteria in the Bill governing whether information is to be passed to employee representatives—namely, national policy, breach of confidence or causing injury—there is the additional point, which is not necessarily caught by the machinery of the Bill, that the information might be price sensitive in the Stock Exchange sense.
In a voluntary system which exists at present, companies' boards can decide, if it is price sensitive, whether or not to disclose information. If they decide
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to disclose it, then it has to go to all the shareholders. But under the Bill as now drafted, the board may decide against disclosure but be over-ruled by the Minister or the advisory committee. In such a situation there is now no code to regulate what happens. If it is disclosed to employee representatives, there is no guarantee that it will be made generally public or be made known to the shareholders. Of course, there is nothing to stop the board informing the shareholders, but there is also nothing to make them do so. This could be a kind of situation which the Stock Exchange would clearly wish to avoid—a case where the board may have been unwilling, anyway, to disclose information which was both price sensitive and which, in their view, would cause injury. If they were over-ruled they might well not wish to circulate the information more widely than they need. In a voluntary system that information would not have been disclosed at all, because to do so would have been against their judgment.
The noble Lord, Lord Beswick, when replying to this matter after I had raised it in Committee stage, said that this was not the time to consider the rights of shareholders; and I quite agree that that is not what this Bill is intended to do. He said that this was a matter to be tackled in a Companies Bill. We are not here considering the rights of shareholders, but we are considering a difficult situation which could upset the present system of keeping the Stock Exchange a fair and efficient market. The fact that the clauses create this situation is not provided for in the present listing agreements and codes of practice. With the best intentions in the world, it will surely be a year or two before a Companies Bill can be before us. Therefore the problem is: what is to happen in the intervening period? I hope that the Government will take on board the fact that this is a real problem, as it has been put to us tonight by two noble Lords who are experts in this field.
Lord BESWICK: My Lords, we had the case put before us, and we considered it. The noble Lord, Lord Terrington, was kind enough to send me a note of the discussions he had had, and on the basis of the information he gave to me we looked at the problems again. But I honestly fail to understand the difficulties

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that it is said arise as a result of this Bill. I have said that giving additional information to shareholders, and the question of getting them to take a more positive line in relation to the direction of their respective companies, is something which is important and which should be encouraged. It was in that context that I said that a new Companies Bill would be relevant. But here the noble Lords, Lord Terrington and Lord Cullen, are saying that difficulties will be created by this Bill and I have tried very hard to understand the nature of this difficulty.
In the first place, they appear to be saying that we are creating a difficulty for the companies by way of extra administrative work—the phrase used by the noble Lord was "an additional burden". I cannot see that that burden, if it be a burden, would be eased by saying in a Bill that they must give to all shareholders any information which is given to the trade union representative. They are quite free now to give to all their shareholders any information which they give to trade union representatives, or indeed any other information which they do not give to trade union representatives. If we compel them by law to send out a notice every time they give some information to their trade union representatives, then we will certainly be putting an additional burden upon them. But the noble Lord appears to think that a compulsory burden is less onerous than a voluntary one.
Lord TERRINGTON: My Lords, if I might just make my point clear, the burden is taking the decision, not having to do work in preparation for taking that decision. It is the difficulty of the decision taking. I thought that my subsequent remarks and the problems that could arise had made that point clear.
Lord BESWICK: My Lords, that was not quite what the noble Lord said and it is not what the noble Lord wrote, but I have dealt with the burden as an administrative problem and I am saying that there can be no additional burden by compelling them to give information. Indeed, I should have thought that if we compelled them it would create more work, some of it conceivably of no value at all because by its nature some of the information given to trade unions would
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not be of significant interest to the shareholders.
Lord CAMPBELL of CROY: My Lords—
Lord BESWICK: My Lords, this is Report stage. Then, it is suggested that if information gets into the hands of trade unions, which of itself it is not necessarily price sensitive, it could become so if it leaks out in some manner and a distorted version of the information gets into the hands of some elements in the City. I recognise that. If that was a danger, I should have thought that the way to overcome it would be for the company to state fully, clearly, frankly what the true position is. That would completely obviate any danger from distorted information. That can be done now.
On the other point about price sensitive information getting into the hands of trade unions and possibly not into the hands of shareholders if the company decide not to circulate that information, if it is price sensitive to the extent that it could affect dealings on the Exchange and could create damage for the companies concerned, this would be a point, surely, that the company itself would know and would put to the Secretary of State as being a special reason for not giving information in the first place. It would be perfectly possible for them to say: "No. We really do not think it would be right to give that information to trade unions. It might well get out. It could affect delicate negotiations. The price of the shares on the market would he affected, and it could do damage to our company." That would be precisely one of the special reasons which the advisory committee would have to consider. I should have thought that that was a better way, and that that would be dealt with by the Secretary of State's not requiring the information to be given to the trade unions.
Then, I am going to deal again with the burden on the directors on the board as a matter of decision-taking. I have no doubt the noble Lord put this point in a serious way, but I myself frankly cannot see that this is something very onerous for them to decide. It is a decision they have to take, and I know decisions can be wearing. It would not be a decision they would have to take very often. If

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they are not capable of taking a decision of that kind they really do not justify their position on the board.
The other point I would make is this. If this Amendment were to go into the Bill, I feel that we should have discussions with, say, the Confederation of British Industry on the point. The noble Lord is looking at it from the point of view of the Stock Exchange, quite rightly. The noble Lord, Lord Campbell of Croy, enthusiastically supports it. I do not know whether he has the backing of the CBI for this. I do not know whether they would require compulsion on companies to give every bit of information to shareholders in this way. I doubt whether it would be welcomed by them, but if the noble Lord can tell me when he comes to reply—
Lord CAMPBELL of CROY: My Lords, this was the very point on which I was trying to intervene earlier because, being Report stage, as the noble Lord has said, I can speak again only with leave. I hoped I might say a word when he was on this point. He was saying that this would compel companies on a large scale to give information to shareholders. But that is not so because this would affect only the companies which came through this procedure of compulsory disclosure under the Bill. The noble Lord himself has said he expects these to be only rare cases—"there may not be any", were the words he used. So it is not a general compulsion on companies. Under the voluntary system, as I have now explained twice, the directors have to take this decision themselves as to whether or not to disclose, but under this provision they may be compelled against their judgment to do something. I am not in close touch with the CBI on these matters, but my general understanding is that this is something which they recognise as a problem, too.
Lord BESWICK: My Lords, if they do we will take it into account. But the fact still remains that here is a case where we should by law be compelling companies to circulate to all their shareholders information which may well not be relevant or of interest to the shareholders at all. If it were relevant, if it were of interest, there is absolutely no reason why the company should not distribute that
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information. They do not require the sanction of law: they are quite free to do it.
If the noble Lord, Lord Terrington, is speaking about the need for shareholders to have information which is of value, then I refer him to Sections 16 to 20, and in particular Section 16(1)(f), of the Companies Act 1967, which already requires the directors' report to contain—and I quote:
"particulars of any matters"—
other than those specifically listed elsewhere—
"so far as they are material for the appreciation of the state of the company's affairs by its members".
There is that legal obligation upon companies now in respect of important information. If the information is not of importance, I really do not think that the business community, in the main, would welcome an obligation to have to circulate it.
8.57 p.m.
Lord DRUMALBYN: My Lords, I wonder whether I could get one point made crystal clear. As I understand the Bill, until the information is disclosed to trade union representatives it remains confidential. As I read Clause 32 of the Bill, this is the situation. As soon as it reaches the trade unions it ceases to be confidential, for the very good reason, no doubt, that trade unions are expected to pass it on to their members and therefore it is divulged. If that is so, the whole matter seems to be one of timing and co-ordination. It might be better—and I think this is what my noble friends have in mind—to put an equal obligation on as a matter of mechanics, more than anything else: as soon as it is disclosed to the trade unions it would equally go out to the shareholders—
Lord ROCHESTER: Employees' representatives, my Lords; not trade unions.
Lord DRUMALBYN: Employees' representatives, we have now—I am much obliged. But apart from that, the point here seems to be that, subject to the right to withhold disclosure, this Bill lays an obligation to disclose to trade unions in certain circumstances. Some of that information may be information of a kind that would not have been required to be

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disclosed to trade unions or anybody else but for the Bill. This seems to me to be the fact. This is the point and the central issue here. Therefore, it creates a different situation. Information is to be disclosed which would not otherwise be disclosed, certainly at the time when it is disclosed. It might be disclosed later on in a company report, but at the time it would not be disclosed. I should have thought that, with regard to future prospects, projections of one kind and another, it probably would not be disclosed in the company report in any case. So that being the case, a new situation is created, as my noble friend Lord Terrington has said, and the question is how best to meet the question of timing and to see that nothing is done which conflicts with the Stock Exchange rules.
The way to do that, I should have thought, would be to make a common obligation to disclose to shareholders at the same time as disclosure is made to the trade unions—and then no doubt the Press would get it at the same time, and all the rest of it. In this way there could be no cutback whatsoever. With disclosure to trade unions the danger is that there could well be an interval between the time when one discloses to the employee representatives and the time when it is made generally known. Will the noble Lord kindly hoist that in because this is what we are talking about.
The Earl of BALFOUR: My Lords, will your Lordships consider this matter further. Clause 30(1) begins by saying that subject to the rest of this clause:
"…the Minister may serve—(a) a further notice on the company or companies concerned provisionally requiring them to furnish"
to the employees whatever information is required.
Subsection (2) says that:
"A Minister shall not require information to be furnished if he considers that reasons of national policy or special reasons apply."
Subsection (3) deals with national policy and subsection (4) deals with special reasons, et cetera. All of these conditions have been included.
If the employees of a company are to be furnished with information which is price-sensitive, I feel that this Amendment should be accepted. The information which is to go to employees goes to them as of right. This is the Minister's
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direction. If he compels an employer to disclose this information to his employees, that information should also be disclosed to shareholders. After all, they have put their money into the industry.
9.2 p.m.
Lord BESWICK: My Lords, I can only say to the noble Earl that I agree with him. Why do they not send the information to the shareholders? There is nothing to stop them from doing so. I look at the noble Earl on the Back-Benches and I picture him defending the rights of free enterprise to do as it likes. Time and time again he has complained about bureaucrats. Time and time again I have heard the noble Earl opposite say that we are compelling companies to do this, that or the other; yet here they are trying to put upon them another burden and I cannot understand it.
When we reach the question of decision-making which the noble Lord, Lord Terrington, says would be such an onerous burden for these poor directors, they can easily get over it by saying that everything that they send to the trade unions should also go to the shareholders. There is no reason why they should not do that. Nobody will stop them. I think that an element of sifting is of value both to the shareholders, who would not wish to have too much paper pushed through the door, and to the directors who would not wish additional costs to be put upon their company, especially at present postal rates.
The noble Lord talked about a new situation which would arise because there would be new information. There is no new information; not a single scrap of new information has arisen. It has always been with the company and it has always been perfectly possible for them to tell both the trade unions and certainly the shareholders. If it is important information, they should have told the shareholders, anyway, under the provisions of the Companies Act 1967. There is no new information here. It is simply that now the Secretary of State may wish to say that, in certain circumstances, this information should go to the trade unions. If he requires that to be done, certainly the information may be sent to the shareholders also. However, I do not think that we should put it into

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the Bill like this. If we have a new Companies Act and can look in a comprehensive and constructive way at how to feed information to shareholders and get shareholders to take a more positive interest in their companies, we should do so, but not by an Amendment to this Bill.
Lord TERRINGTON: My Lords, I have listened very carefully to what has been said by the noble Lord, Lord Beswick. I recognise that this is a difficult problem. I can only say that I
Resolved in the affirmative, and Amendment agreed to accordingly.
9.15 p.m.
Lord ROCHESTER: My Lords, I beg to move Amendment No. 95.
Amendment moved—
Page 24, line 38, leave out from ("on") to end of line 39 and insert ("employee representatives").—(Lord Rochester.)
The EARL of BALFOUR The EARL of BALFOUR moved Amendment No. 96:
Page 25, line 14, after ("would") insert ("be likely to")
The noble Earl said: My Lords, this Amendment is a genuine effort to try to
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have looked at it very carefully and have had several discussions with the Council of the Stock Exchange who would not idly press for this requirement. However, they feel sufficiently strongly about it to regard it as a necessity. Quite frankly, I feel that I must test the opinion of the House on this matter.
9.7 p.m.
On Question, Whether the said Amendment (No. 94) shall be agreed to?
Their Lordships divided: Contents, 50; Not-Contents, 27.
help the position of the Minister in dealing with the special reasons covered in subsection (2). It is very difficult for a Minister to consider that the disclosure of information would cause injury to the undertaking, or that its disclosure would cause injury to a substantial number of employees of the undertaking; or, on the other hand, just to make it a little wider, for the Minister to express an opinion, as I think he should, that the disclosure of the information would be likely to cause either injury to the undertaking or injury to the employees of the undertaking. It is nothing more than this.
I realise that on Committee the words "could cause injury" had rather a different meaning, and I accepted what was

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said. But I have thought about this very carefully. I have thought particularly of what the noble Lord, Lord Wigoder, said as reported on the last page of the Official Report for Friday, 25th July. The noble Lord there said:
"…what should the Minister do if his conclusion is not that he is certain that substantial injury might be caused, but that there is a strong probability of it?"
The noble Lord, Lord Melchett, then said:
"There is a strong possibility that that would be covered by the word 'would'. The noble Lord, Lord Wigoder…is shaking his head as well as the noble Lord, Lord Drumalbyn. In that case, I shall certainly seek advice on the matter and let the noble Lord, Lord Wigoder, know."—[Official Report; 25/7/75; col. 705.]
Hence the reason for this Amendment being put down again. I hope that the noble Lord, Lord Melchett, has had an opportunity to think about this again and to think about what I am putting down now. I beg to move.
Lord MELCHETT: My Lords, I explained why we arrived at the present term when, as the noble Earl, Lord Balfour, says, a comparable Amendment was debated in Committee. Since then, we have very carefully considered the term "would" and have thought of Amendments on the lines of those now proposed by the noble Earl. After consideration, however, we decided that these Amendments would be objectionable since the original objection which I gave on Committee stage would remain; that is, these Amendments would replace what is a question of fact to be determined by reasonable judgment—will disclosure harm the business or its workers?—by assessments of probabilities.
The noble Earl reminded me of the point raised by the noble Lord, Lord Wigoder, at the Committee stage, when he asked me what would happen if the Secretary of State thought injury was very likely, but not certain. We have also given this point careful and lengthy consideration. I think that in practice a sensible Secretary of State would not indulge in hair splitting of this sort. However, if the Secretary of State should find himself in a position of uncertainty, but feels that there was a serious danger of injury, then, of course, he could exercise discretion, which Clause 30(1) would give him, not to require the information to be passed
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on to the representatives. I hope that answers the question which the noble Earl has raised and that he will see fit to withdraw his Amendment.
The Earl of BALFOUR: My Lords, it is the Minister who has to deal with this matter, and provided he is not placed in an embarrassing position—and the noble Lord, Lord Melchett, has gone into this—I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
9.20 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 97:
Page 25, line 15, after ("undertaking") insert ("or one or more of its subsidiaries")
The noble Lord said: My Lords, I beg to move Amendment No. 97, and I think it would be convenient if we could take at the same time Amendment No. 101 which covers a similar point. When we discussed this matter at the Committee stage the gist of the Government's reply was, first, that an injury to a subsidiary company would automatically constitute an injury to the company and, secondly, it could be regarded as a third party, and that there would be Ministerial discretion in looking after third party interests in the handling of this Bill.
Having studied that reply, and not feeling entirely satisfied, I should like again to bring to the Government's attention an important point. May I give an example? I know of a large company, a well known household name, in electronics. Many miles from any of its main bases, it has a subsidiary which employs fewer than 100 persons and makes coin slot-meters—a product not directly related to its main business. Few people realise that it is a subsidiary; even those living nearby would not recognise it as such. If some injury were to be caused to that small subsidiary company it would virtually make no difference to the large company, particularly as the subsidiary might well not be making a profit. It might cause no injury to the main company. Are the Government satisfied that that kind of example would be covered and that disclosure of information concerning the slot machine subsidiary which might cause that injury would be taken into account? As the Bill is drafted it looks as though only the large company, the subject of the disclosure notice, would be considered. I

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would ask the Government to look at this again. That is the purpose of this Amendment. The Minister says that there will be Ministerial discretion, but we can see no machinery in the Bill to deal with that kind of case.
Lord LOVELL-DAVIS: My Lords, en passant I should point out that the Amendments are technically defective. Subsidiaries are owned by persons—natural or corporate—rather than by undertakings, but the purpose is clearly to cover subsidiaries of "the company or companies concerned" rather than "the undertaking". I take the noble Lord's point.
The noble Lord, Lord Campbell of Croy, asked in Committee how the Government would convince him that the interests of subsidiaries are covered. I provided a reply then which I hoped would convince him and which remains as the Government's position. I think, however, that the Amendment may be based on a misunderstanding of what is the effect of paragraph (b) of Clause 30(4). It speaks of injury to the undertaking. This means, in simple terms, injury to the owners of the undertaking. Therefore it is immaterial whether the undertaking—that is, the business—is carried on by the company directly or through subsidiaries. Injury to the undertaking would affect them both and would be covered by the phrase "injury to the undertaking".
As I mentioned in Committee, the only situation not covered by paragraph (b) of Clause 30(4) is a more special, and we believe inherently unlikely, case. One would have to postulate two businesses, as the noble Lord has done. He has taken a large electrical company with a subsidiary making coin slot meters which he admits that few recognise as a subsidiary of the main company. We would have to postulate these two businesses, one run by a company and the other by one or more of its subsidiaries. Business A is asked to provide information and there is no question of harm arising to business A or its employees; but somehow information disclosure would prove harmful to business B or its employees. I find that somehow farfetched as a postulation, and my reading of the point made in Committee does
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not really suggest that this is precisely what the noble Lord had in mind, although he has quoted this example. All other situations are covered. I find it hard to see how information which was not harmful to the large electrical company could possibly be harmful to the small slot meter manufacturing company. Perhaps the noble Lord can enlighten me.
I will not rehearse my argument about the discretion of the Secretary of State; the noble Lord is obviously aware of this. I have endeavoured to set out our argument, in Committee and again now, so that noble Lords who support the Amendment can see why, after thought, we have decided not to recommend its acceptance. The principle of safeguarding third party interests is not at stake; we accept that. Rather we are concerned how it should be done. We believe, as I explained in Committee, that a change from Ministerial duty to Ministerial discretion in Clause 30(1) affords a simple and proper way to achieve what I believe to be the common objective of all noble Lords.
Lord DRUMALBYN: My Lords, I find the noble Lord's answer very puzzling. I can see no difficulty at all in conceiving circumstances in which the only unit involved would be that small subsidiary and nothing else. It might quite easily happen. Yet, if we had this paragraph (b) as it was originally, because it was a small subsidiary the undertaking would not suffer substantial damage. So that shows how right we were to take out the word "substantial". The undertaking would suffer damage very definitely because of the effect upon the small subsidiary. Whether or not that means that we need to make the Amendment I do not know. I am merely putting up counter argument to the noble Lord's argument, which seemed to me quite fallacious.
Lord CAMPBELL of CROY: My Lords, the noble Lord said that this was a farfetched kind of situation. It is our business to look at situations even if they are not going to be very common. The noble Lord, Lord Beswick, rightly said that he expects a very small proportion of companies ever to go through this procedure at all, so we have to provide for this kind of situation. I chose the example simply because what the subsidiary manufactures in this case is very

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far removed from what the main company does, which is very sophisticated equipment. Therefore, what would affect the company would be very different from what would affect the subsidiary. Having brought this again to the attention of the noble Lord, in the light of study of his earlier remarks, I hope the Government will take this kind of situation into account. He has given us the assurance that the word "undertaking" covers subsidiaries, and I therefore beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
9.29 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 99:
Page 25, line 16, after ("a") insert ("significant").
The noble Lord said: First, can I point out that we are now on the subsection which spells out the special reasons. I said earlier that special reasons are defined for the purposes of this Part of the Bill. There are three given: breach of confidence, injury to the undertaking, injury to employees. From what the noble Lord, Lord Beswick, said in an earlier debate, it looks as though there ought to be another paragraph added here about price-sensitive information, because he said that the Minister or the advisory committee could decide whether something was price-sensitive in Stock Exchange terms under special reasons. I will not go into that. I just point out that special reasons are set out and defined in this subsection. One of the worries is that they are fairly restrictive, and do not cover price-sensitivity in the Stock Exchange sense.
Lord BESWICK: My Lords, what I said was that the company could decide whether it was price sensitive, and quote that as an example of damage done to them.
Lord CAMPBELL of CROY: My Lords, it might not be an injury to the company. It might be something, as the noble Lord, Lord Terrington, said, which puts somebody else into an insider situation but does not necessarily affect that company. It may mean that they have an advantage over other people in the Stock Exchange because of knowledge, but not the sort of knowledge that will cause injury to the company.
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We are invited at this stage to return to the point about the word "substantial", and it would be convenient if Amendment No. 100 were discussed with Amendment No. 99. At the request of the noble Lord, Lord Melchett, I did not press the taking out of the word "substantial" as a consequential Amendment at Committee stage, although we had taken it out twice elsewhere, because he pointed out that different factors apply. This is the question which we hope the Government will reply to, because it affects the wording here. The noble Lord, Lord Melchett, indicated that without the word "substantial" it would mean that injury to two or more employees was a reason for not disclosing information, and it could be a firm with 15,000 employees, and he asked whether we meant that if there were injury to two or more that should be enough reason for not disclosing.
The kind of injury which people have in mind in this context is the loss of a job, redundancy, without the prospect of another job in the near future. It is important that we should separate two points. First of all, the information itself may involve redundancy. For example, proposals for modernisation could involve redundancies, because fewer men would be needed. But that is not what is being considered here, because the second point we are considering is the question whether the disclosure of that information would in itself, if it became public, cause jobs to be lost, and whether the reaction to the information being disclosed (perhaps reaction by a competitor or by customers) would mean that jobs would be lost earlier, or additional jobs would be lost. In that example it is difficult to visualise that that would happen, because modernisation plans normally promote confidence. So although the proposal might be to reduce jobs, disclosure would not in itself necessarily cause injury or more jobs to be lost, and it would create confidence in the undertaking.
Do the Government consider that if disclosure would cause injury to two or more employees—the disclosure itself and not the information itself, which may involve redundancy—that is enough reason for the information to be withheld, or not? If they say "No", I shall quite understand it. If they say, "It depends

1799
on the size of the company", then what proportion of the company will be injured? Would it be 1 per cent., 5 per cent., 10 per cent.? The word "substantial", as I said at Committee stage, passes the buck very neatly to the advisory committee if it goes to them for advice.
It has been suggested that the word "significant" might be more helpful to the Government. Therefore, in order to be constructive, I put down an Amendment suggesting that. Any adjective here is difficult. We have already decided that "substantial" is vague; "significant" might be better. But the real question is: do the Government consider that injury to two or more employees arising from the disclosure of information is enough? If so, then there is no need for the word "substantial".
Lord MELCHETT: My Lords, I am grateful to the noble Lord, Lord Campbell of Croy, for his attempts to be helpful, but we made it clear at Committee stage that we felt there was a need to retain the word "substantial". That remains our intention. To return to something which the noble Lord said about price sensitivity, I had always assumed that if certain information was likely adversely to affect the price of a company's shares on the stock market, that was felt not to be in the interests of the company. Therefore, I feel that price sensitivity is probably subsumed within the generality of damaging the interests of the company. That was the point which my noble friend was making to the noble Lord earlier on.
As I said, we have made our attitude on this wording clear. As the noble Lord pointed out, any adjective is going to create difficulties. I believe that this was acknowledged on all sides when we debated this at Committee stage. There was a great deal of disagreement about what various adjectives meant and nobody seemed entirely sure one way or the other. Having looked at this very carefully, we remain of the opinion that what should be the test is whether substantial injury will be caused. I regret to say that, despite the noble Lord's very kind attempts to be helpful, that remains our view.
Lord DRUMALBYN: My Lords, perhaps the noble Lord would take a look
1800
at the Employment Protection Bill, where the word "significant" is used in similar circumstances.
Lord CAMPBELL of CROY: My Lords, I should like to deal with one point straight away. The noble Lord, Lord Melchett, spoke of a case where the disclosure of information meant that the price of a firm's shares went down, but what is more important is when the information about the firm's future plans makes those shares go up. The whole point of what we were talking about earlier on concerned a certain group of people having inside information which was not necessarily detrimental to the company. Of course the type of information being sought here, if it leaked out at a certain stage, might be the sort of thing which would put the shares up because it created more confidence in the firm.
I did not pursue this matter at the last stage and I hope the Government will accept this as consequential. However, I do not intend to spend more time on it and I therefore beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
9.39 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 102:
25, line 17, at end insert—
("or
( ) that this disclosure of the information would infringe the contractual rights or duties of the undertaking or any of its subsidiaries or the contractual rights of third parties or would render the undertaking or any of its subsidiaries in any way liable in damages at law;")

The noble Lord said: My Lords, this also was a point on which the Government replied at the Committee stage and we have had an opportunity carefully to consider the Minister's statement. I have also had the benefit of a legal eye—that of Queen's Counsel—to examine the position, and I have received some advice concerning the situation in England, Wales and Scotland. The Government's answer was that it would not be possible for a company to be sued and that it was therefore not necessary to insert a provision into the Bill to protect companies from damages at law for a breach of confidence, because they would be carrying out a statutory obligation. I think that it was the noble Lord, Lord

1801
Beswick, who gave us the assurance that because a company was carrying out something contained in an Act it could not successfully be sued by a third party which considered that it had been injured.
However, I am advised that this Part of this Bill does not automatically require a company to do something. Therefore, this does not apply, because whether or not the company discloses information is not a matter stipulated in the Bill, but is left for a Minister's decision. The Minister decides whether or not the company should disclose. I am advised by eminent legal persons that this means that it is very doubtful whether a company could, as a defence, state that this was a statutory obligation, because information which was confidential had been disclosed by the company in question to the detriment of some third party. I shall not pursue this matter at this late hour, but the Government ought to know that, having taken advice and having carefully considered the reply given at the Committee stage, I believe that there is this considerable doubt left, and I hope that the Committee will look at this. My Lords, I beg to move.
Lord BESWICK: My Lords, on the narrow question of whether an action would lie, the noble Lord has had advice and I, too, have taken advice. My advisers can envisage only one circumstance where a legal action might be possible. This would occur when company A gave information to company B in confidence, and company B was then asked to disclose it. In these circum, stances, company B would, and should, claim that the special reasons defined in the Bill applied, on the basis that it was information furnished in confidence to it. If company B failed to make this claim company A might be able to bring a legal action, on the grounds that company B had negligently failed to protect its interests as the law permitted. If however company B makes proper use of its right to require a reference to the advisory committee, and is still required to disclose information, there is, I am advised, no question of legal action succeeding for a breach of confidence.
There is a technical deficiency in the noble Lord's Amendment, but leaving that aside, I have told him what, to the
1802
best of my knowledge and in the light of the advice given to me, suggests that there is no need for the Amendment. If the noble Lord would be good enough to let me have the basis of his other advice, certainly I shall consider it.
Lord CAMPBELL of CROY: My Lords, as your Lordships know, I am not legally trained and I do not wish to pursue an argument now, having brought the matter to the Government's notice. But I am told that it would be open also for an employee—not only a company—who felt that he had been injured by a breach of confidence, to bring a case, not only against the company but against the Government. Therefore, I hope that the Government will look at this matter again. At this stage I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
The CHAIRMAN of COMMITTEES (The Earl of Listowel): Before I call Amendment No. 102A, I must point out that if this Amendment is agreed to I cannot call Amendment No. 103.
9.43 p.m.
Lord DRUMALBYN Lord DRUMALBYN moved Amendment No. 102A:
Page 25, line 20, leave out from ("concerned") to end of line 22.
The noble Lord said: My Lords, at the Committee stage, I suggested that the procedure regarding references on appeal was unnecessarily elaborate. I said then that I would do my best to simplify the procedure and put the matter before your Lordships, and this is now done in a series of Amendments, Nos. 102A, 106A, 109A and 115A. Amendment No. 102A removes the need for the Minister to give each representative of a trade union—I know that this has been changed now—the opportunity to make representations to him about a further notice to a company to make information available to them. This seems unnecessary at this stage, because the trade union representatives, or the employee representatives, will have an opportunity at a later stage to make representations to the appeal committee or the advisory committee—I am afraid that this is getting rather complicated—on whether or not information should be disclosed to them.
That is the effect of Amendment No. 102A. Amendments Nos. 106A and 109A

1803
together have the following effect. Subject to the first few words being left out the subsection would start:
"Where the Minister proposes to require them to furnish information under section 30 above and they claim that it should not be furnished for special reasons…"
We then go on to Amendment No. 109A.
Amendment 109A says:
"they may, within 28 days of the service of a notice by the Minister on them, under section 30, serve on him a counter-notice requiring him to make a reference to an appeal committee, and the Minister shall make a reference accordingly".
The effect is to dispense with the right of the representative of the trade union to make representations to the Secretary of State and, if he does not accede to their wishes, to appeal to the advisory committee. The reason is that the employee representative would not know what he is appealing about at that stage, as he would have nothing more than an inkling of the nature of the information that the company does not want to be disclosed. At that stage and for that reason, the employee representatives could only appeal on principle. They could not appeal about the substance of the information. I am sure that the appropriate time for the trade union representatives to weigh in would be when the company appeals against the Secretary of State's willingness to accede to a company's objections against the disclosure of information.
My Lords, I must make it clear that I am not moving this out of any disregard for the interests of the trade unions, but to provide a more practical and less cumbersome procedure. It seems to me reasonable to leave the issue as to whether the Secretary of State is to insist on disclosure between the Secretary of State and the company in the first instance. If the Secretary of State does not insist, that will be the end of the matter. If he does insist, the trade unions should have the right to try to influence the appeal committee to require disclosure if the company applies to the appeal committee. I am using the words "appeal committee" because this is the subject of an Amendment which is to come. It is "advisory committee", if you like.
That is the substance of this matter
Amendment 115A completes the picture by arranging for the Minister to:
"inform each relevant trade union's authorised representative that he has referred to the appeal committee his proposal, or the proposal of the company (or companies), as the case may be, that some or all of the information shall not be furnished to them, and shall where, the proposal relates to some of the information, indicate, without disclosing their substance, which parts it is proposed should not be furnished to them."
It gives a complete system at any rate and cuts out two of the possible processes so far as the trade unions are concerned. The reason for doing that is because the trade union representatives will know what they are appealing about, and it is not until the last stage that it will be sensible for them to intervene, if they want to, to try to persuade the advisory committee (or the appeals committee) to have the information disclosed to them. I beg to move.
Lord LOVELL-DAVIS: My Lords, may I clarify first of all that the noble Lord, Lord Drumalbyn, was taking Amendments Nos. 102A, 103A, 106A, 109A and 115A. With his permission, I will take them all together. I accept that the noble Lord's intentions are as he has set them out; but the information disclosure provisions and safeguards are designed to present a fair balance between employer and employee. In particular, we believe that the present provisions in Clause 31 allowing both sides to require reference to be made to the advisory committee—and I think the noble Lord is anticipating things by using the words "appeal committee"—and the provisions of Clause 30 enabling this to happen, are necessary for a fair balance.
The Amendments he has proposed would alter this balance and tilt the provisions in favour of the company or companies concerned. I take the point he is trying to make. Instead of either the employer or trade union having the right to initiate a reference to the advisory committee, it would be confined to the company. This would inevitably mean that the committee's considerations would be concerned with looking at cases where there appear to be grounds for disclosure of less information than that proposed by the Minister. Cases in which there appeared grounds for disclosure of more information would not be brought before

1805
the Committee. This would inevitably bias the Committee's work, however impartially they carried it out, since the Committee would be asked to consider only one set of cases. The Government believe that this change in the balance is wrong. The Amendments we are here concerned with bring about this change. I would prefer it if noble Lords considered this principle, for it is the principle of a fair balance between the companies and their employees which is at issue.
Lord DRUMALBYN: My Lords, this is extremely arguable. I fully recognise the Government have set out to create a fair balance. What they may have forgotten is their own intentions of bringing employees onto the boards of industries so that there will be representation very much earlier in all likelihood in the future. They have been talking about looking forward and industrial democracy, but they may have forgotten this aspect of it. I doubt whether this is necessary. Once this happens I think they will adopt our Amendments and introduce them as a simplification. Perhaps until then it may be premature. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
9.52 p.m.
Lord ROCHESTER: My Lords, I beg to move Amendment No. 103.
Amendment moved—
Page 25, line 21, leave out from ("to") to end of line 22 and insert ("employee representatives")—(Lord Rochester.)
Lord ROCHESTER: My Lords, I beg to move Amendment No. 104.
Amendment moved—
Page 25, line 28, leave out ("authorised") and insert ("employee")—(Lord Rochester.)
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 105:
Page 25, line 29, leave out from ("whether") to end of line 31 and insert ("the Minister proposes to require the company or companies concerned to furnish all the information furnished to him by them or, for reasons of national policy or special reasons or both, part only or none of that information.").
The noble Lord said: My Lords, very briefly, the group of Amendments of my noble friend Lord Drumalbyn not having found favour with the Government
1806
although they would have been proved as part of the Bill, I am now suggesting in this Amendment that subsections (7) and (8) of this clause should be clearer. According to what the noble Lord, Lord Beswick, has told us on a previous occasion, the Minister's decision is based either on reasons of national policy or what are called special reasons. These are both defined in subsections (3) and (4) of this clause. Under subsection (7) it is clear the Minister is taking a decision about whether or not the information should be divulged, and he could take that decision for reasons of national policy or for special reasons. When it comes to subsection (8) we are only dealing with special reasons—line 37. I follow the intention of these two subsections, that is to say, under subsection (8) the advisory committee can be brought in only if it is a matter affecting special reasons. But if the Minister decided that all or a large part of the information should not be disclosed for the reasons of national policy, then that is the end of the matter. I suggested earlier that it was not necessary for the employee representatives to be informed until the Minister had taken this decision, and I think subsections (7) and (8) could be redrafted—not necessarily in the way I suggest, but that would make it clearer—to confirm what the Minister told us before. I hope he will confirm it now, having checked that the Minister is able to take decisions to withhold information for reasons of national policy, but that when he takes that decision it is not then referable to the advisory committee. My Lords, I beg to move.
Lord LOVELL-DAVIS: With the greatest respect, my Lords, I am advised that the effect of this Amendment would be negligible. The Bill already provides that trade union representatives are to be informed when the Minister decides that not all the information furnished to him should be disclosed to them. If the reason for the information being withheld is that special reasons are considered to apply, the trade union representative would, under subsection (8), be given an indication of the nature, but not the substance, of the information being withheld. This is essential to ensure that they have an equal right with the management of the company to demand a reference to the advisory committee.

1807
On the other hand, when they are not informed of the nature of the information to be withheld, they will know it is being withheld either as a result of the exercise of the Minister's discretion under Clause 30(1), or for reasons of national policy, and consequently they have no right to demand a reference. The provisions relating to notices of a Minister's intention regarding the disclosure of information are designed to ensure that both parties concerned are in a position to require reference to the advisory committee if they feel that their interests are threatened by the Minister's proposed action. The Government consider that the clause as it now stands fully ensures that this is the case. I hope that this will satisfy the noble Lord.
Lord CAMPBELL of CROY: My Lords, I am grateful to the noble Lord, because he has confirmed categorically what we had understood, that there is no reference to the advisory committee if a decision has been taken for reasons of national policy—and I see the noble Lord, Lord Beswick, nodding his head. This entirely confirms our interpretation of this clause. The noble Lord said that our Amendment would make a negligible change, but I might point out that I said that it was intended not to change the sense but to try to clarify the position for those who will have to operate these provisions in the future. The noble Lord has now confirmed our understanding of how this would operate and I commend to him the fact that, although the Bill is no doubt well drafted from the draftsman's point of view, making some change of this kind could make the matter a good deal clearer to those who will operate the Bill. However, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord ROCHESTER: My Lords, I beg to move Amendment No. 106.
Amendment moved—
Page 25, line 32, leave out ("authorised") and insert ("employee").—(Lord Rochester.)
Lord MELCHETT Lord MELCHETT moved Amendment No. 107:
Page 25, line 42, after ("notice") insert ("served within the period specified in that notice").
The noble Lord said: My Lords, this is a technical Amendment which simply provides that the period for requiring a reference to the advisory committee is that specified in the notice served under Clause 30. Paragraph (a) of Clause 30(1) provides that the period must be reasonable and not less than 28 days. I beg to move.
9.59 p.m.
Lord BEAUMONT of WHITLEY Lord BEAUMONT of WHITLEY moved Amendment No. 108:
Page 25, line 43, leave out ("advisory") and insert ("appeal").
The noble Lord said: My Lords, this introduces a series of Amendments on an important topic which was fairly fully discussed at a previous stage, and perhaps it would be to the convenience of your Lordships if we discussed Amendments Nos. 108, 113, 117, 123, 131, 136, 145, 146, and 148 together.
This is the Part of the Bill which provides for an appeal—and I use that word in a loose sense at this moment—from the first decision of the Minister on this question of revealing information which, for special reasons, it is claimed should not be revealed. I think it is absolutely common ground within the House that there should be such safeguards. The noble Lord, Lord Beswick, in dealing with this matter at the Committee stage, at column 789 of the Official Report, dated 28th July last, stated:
"a most elaborate system of safeguards has been erected".
It is our case that the system is, first, much too elaborate and at the same time not very effectual. The system which the Government are proposing is that there is an advisory committee which advise the Minister on cases referred to them, and then it is up to him to make the final decision. If he overrules their recommendations he then has to make an order which he lays before Parliament, and then there is an opportunity for a Negative Resolution of either House to reverse his decision.
Our suggestion is that the Committee themselves should act as an appeal court, and that their decision should be final; the Minister has a wide discretion to make the original decision, but when that is challenged the matter should go to an independent body. The reason for

1809
this are, first, that it is a much simpler procedure. Secondly, there is the whole problem of the difficulty of debating such matters in the House. This point was ably put forward by the noble Lord, Lord Wigoder, at the Committee stage, when he pointed out that for Parliament to start discussing whether or not matters which were confidential, and which therefore they did not know about, should be revealed was an absurdity. I do not think we received an answer to that point, and it still seems to me an absurdity that Parliament should be put in this position of trying to debate whether or not something, which they are not allowed even to know, should be revealed.
There is also difficulty in arranging a debate. There is difficulty in another place, as everyone knows, in getting Motions under the Negative Resolution procedure; and even in this place it may not always be easy. I do not see why this matter should be a burden on Parliament.
That brings me to my next point. It seems to me that we are making a political judgment out of something which at this stage is not political at all. The decisions which the Advisory Committee are asked to judge upon, and which according to the Government proposals the Minister is meant to give his final decision on, concern the truth or otherwise of the special reasons which a company is putting forward as to why matters should not be disclosed. This is a question, not of political judgment, but it seems to me of fact. I do not see why, therefore, it should be up to Members of Parliament to start raising such an issue as a political matter in either Chamber. Nor do I think it is a matter which should be left to the Minister, or needs to be left to the Minister. I am all for Ministers being responsible for making political judgments and taking political decisions, and I do not think we should pretend that matters are not political when they obviously are. But, equally, we must not do the wrong thing the other way round. It seems to me entirely wrong to burden the whole political decision-making machinery with something which in its essence is a matter of fact as to whether or not damage would be done, or whatever the other clauses are.
My Lords, that is the extra argument I wish to introduce at this stage. But I return in my main argument to the first
1810
two points that I put forward. The solution that we are putting forward is much simpler and more effective; it guarantees more rights. The elaborate method which the Government are putting forward is a great smoke-screen. I am not saying it is intentionally a smoke-screen; but it looks as if it is a wonderful appeal procedure whereas, because of the way Parliament works and because of what these decisions are about, it will be totally ineffectual. Then there will be no appeal whatsoever from the Minister's decision. I beg to move.
Lord CAMPBELL of CROY: My Lords, surely a Minister should not be the judge in the court that is deciding a case in which he is a party. That is essentially what lies behind this Amendment. At the Committee stage of this Bill we discussed possible systems instead of the Government's proposal of an advisory committee. Then my noble friends and I favoured a judicial body which would interpret and apply criteria to the cases which came before them. I recognise that that system was considerably removed from the Government's advisory committee. The alternative was an appeals committee which we are now proposing, with the power of final decision. In this way the Government's provisions would be altered as little as possible, while making the basic change concerning the Minister's overruling powers. It meets that point and I join in commending it in the hope that the Government will find it easier to accept this group of Amendments. Certainly it will alter the Bill much less than my previous proposals at the Committee stage.
May I remind the noble Lord, Lord Beswick, that in the Employment Protection Bill which is to be debated by your Lordships tomorrow there are four clauses which are headed, "Disclosure of information. Information needed for collective bargaining". However, in that Bill the Government have not attempted to insert the Minister's overruling judgment when there is a dispute of this kind. In this group of Amendments the system of appointments to the appeals committee is unchanged, although we should have preferred that they should not be appointed by the Minister. We believe that all this can be tolerated if the Government will alter the main point about the Minister having overruling powers.

1811
This is the defect of the proposals contained in the Bill. Besides making possible a proper appeal from the Minister's judgment, as the noble Lord, Lord Beaumont of Whitley, has just pointed out, it would also enable the Government to drop their totally incongruous device of Negative Resolution procedure in Parliament. I quite understand that the Government had to think up quickly a procedure for introduction at the Report stage in another place, but they have now had time to consider that procedure carefully and to make revisions and I hope that on reflection Ministers will realise that as a check on the Minister's new power the Negative Resolution procedure is absurd in this context. As the noble Lord, Lord Beaumont of Whitley, pointed out, it would be discussing whether information should be revealed without knowing what it was.
Let us imagine how the debate ordained in subsections (12) to (15) would take place. There would be an order before your Lordships' House containing the nature but not the substance of the information. The House would know that the advisory committee had opposed disclosure for special reasons under Clause 30(4)—that either it would be breaking confidence or causing injury. The company would no doubt confirm to your Lordships and also to the Members of another place that one or other of these special reasons applied but at that stage they could not say more without revealing what had to be withheld. In starting this debate the Minister would no doubt make a short speech which would run more or less along these lines: "For reasons that I cannot divulge, the advisory committee are against furnishing information which of course I cannot disclose, but I, the Minister, think that it should be disclosed". What possible debate can then take place? The Minister might just as well be communicating in mime. It could be a new panel game in the style of "What's My Line?" All your Lordships could do would be to ask more questions about the nature or the reasons, and if the information were to be protected very little more could be vouchsafed to your Lordships, if anything.
Therefore, I ask the Government to look at this Amendment again. They will get great credit if they are prepared to
1812
change this from an advisory to an appeals committee. After the debate at Committee stage we have gone out of our way to combine with others to produce what we think makes the important change and results in the least amount of alteration to the Bill.
Lord BESWICK: My Lords, I really do not feel that I can add very much more to the discussion. We had a fairly lengthy discussion on this at Committee stage and absolutely no new point has been brought forward. I accept that the Liberal Party and the Conservative Party have got together in a very constructive way, and they have produced an Amendment which is better than the collection of Amendments which we have before us today. So there is an issue on which a Division—if a Division is required—could more easily take place.
The Government have gone a long way to meet the criticisms that were made in the Committee stage in another place. In the first place, as the noble Lord knows, there was no question of any appeal at all; it was to have been the Minister's judgment. Then we brought in this series—this sieve, as the noble Lord has said—of protections to companies. We think this goes all the way required. The noble Lord said that this is a matter of ascertaining facts. That is not the question at all. There is no question of ascertaining facts; it is a matter of judgment. The facts will be quite well known to the company and there will be no dispute as to fact. What will be at issue is what effect those facts, if known, will have on the affairs of the company. This will be a matter of judgment. In most cases the Minister, who has the best interests of the company at heart, will be in a better position to make a judgment on this. But if it is thought that an advisory committee should look at it, then we have brought that in and made provision for it.
I am a little surprised that noble Lords on the Liberal Benches should say that it should go to a separate committee with no appeal at all. I can well imagine that had we made this provision ourselves we should have had heated complaints from the Liberal Benches that we were putting things in the hands of a bureaucracy, and that there should be democratic control over these affairs. I have somewhere in the back of my mind cases where

1813
we have had this argument brought forward, and we have been told that there should be an appeal from the decisions of these committees; that we should not give to these non-elected bodies decision-making powers without any appeal at all. But here we have arrangements which we think do give protection and I am sorry if they do not commend themselves to noble Lords opposite.
Lord BEAUMONT of WHITLEY: My Lords, I will not quibble about what is or is not a fact. It still seems to me to be a question of fact as opposed to a question of a political decision or a question of law.
Lord BESWICK: My Lords, the noble Lord insists upon importing this word "political"; there is no political question in this at all. If anything, it would be a financial decision as to what impact on the company's affairs certain information would have.
Lord BEAUMONT of WHITLEY: My Lords, I was saying that I thought it was a question of fact and not a political question. I said it was not a political question. I have not imported the idea of a political question. It is the noble Lord who is introducing a political question when he says that it should come to Parliament, and that it is noble Lords and Members of another place who should be raising this matter. That is where it becomes political. I am saying that it is not political; I am saying that it is a matter of fact as to whether damage is done to a company or whether it is disclosing

CONTENTS

Aberdare, L.

Elles, B.

Pender, L.

Atholl, D.

Elton, L.

Rankeillour, L.

Auckland, L.

Ferrers, E.

Redesdale, L.

Balfour, E.

Gainford, L.

Rochester, L.

Beaumont of Whitley, L. [Teller.]

Gowrie, E.

St. Aldwyn, E.

Hanworth, V.

St. Davids, V.

Belstead, L.

Hornsby-Smith, B.

Sandford, L.

Byers, L.

Killearn, L.

Sandys, L.

Campbell of Croy, L.

Long, V. [Teller.]

Strathcona and Mount Royal, L.

Carrington, L.

Lyell, L.

Colville of Culross, V.

Mackie of Benshie, L.

Sudeley, L.

Colwyn, L.

Merrivale, L.

Terrington, L.

Cowley, E.

Mowbray and Stourton, L

Thomas, L.

de Clifford, L.

Netherthorpe, L.

Trefgarne, L.

Deramore, L.

Northchurch, B.

Vickers, B.

Drumalbyn, L.

confidential information. That is a matter of fact which should be decided as matters of fact are decided—by an appeal body of some kind—and I entirely agree that there must come a moment when appeals stop. It seems to me that if the Minister has the right to make a decision, then an appeal from the Minister's decision lies with this body and that is perfectly adequate and that is where the whole matter should stop.
What slightly distresses me is that the Minister has not yet, either at this stage or at the previous stage, answered the very trenchant criticisms of the Negative Resolution procedure as produced by the noble Lord, Lord Campbell, now and the noble Lord, Lord Wigoder, at the Committee stage. I maintain that it is inappropriate, not just because it becomes political, but because what we are talking about, if it is to be an appeal at all, is an appeal by the company. And if it is an appeal by the company, how can it possibly happen in your Lordships' House, where, for instance, noble Lords, by convention and honour, are speaking entirely for themselves, and the company itself will not be represented in Parliament? It seems to me totally inappropriate, and I am afraid that this is a matter which we must press to a Division.
10.16 p.m.
On Question, Whether the said Amendment (No. 108) shall be agreed to?
Their Lordships divided: Contents, 44; Not-Contents, 25.

CONTENTS

Aberdare, L.

Elles, B.

Pender, L.

Atholl, D.

Elton, L.

Rankeillour, L.

Auckland, L.

Ferrers, E.

Redesdale, L.

Balfour, E.

Gainford, L.

Rochester, L.

Beaumont of Whitley, L. [Teller.]

Gowrie, E.

St. Aldwyn, E.

Hanworth, V.

St. Davids, V.

Belstead, L.

Hornsby-Smith, B.

Sandford, L.

Byers, L.

Killearn, L.

Sandys, L.

Campbell of Croy, L.

Long, V. [Teller.]

Strathcona and Mount Royal, L.

Carrington, L.

Lyell, L.

Colville of Culross, V.

Mackie of Benshie, L.

Sudeley, L.

Colwyn, L.

Merrivale, L.

Terrington, L.

Cowley, E.

Mowbray and Stourton, L

Thomas, L.

de Clifford, L.

Netherthorpe, L.

Trefgarne, L.

Deramore, L.

Northchurch, B.

Vickers, B.

Drumalbyn, L.

NOT-CONTENTS

Arwyn, L.

Gaitskell, B.

Ritchie-Calder, L.

Beswick, L.

Goronwy-Roberts, L.

Shepherd, L. (L. Privy Seal.)

Brockway, L.

Llewelyn-Davies of Hastoe, B. [Teller.]

Stewart of Alvechurch, B.

Bruce of Donington, L.

Strabolgi, L. [Teller.]

Castle, L.

Lovell-Davis, L.

Wallace of Coslany, L.

Champion, L.

Melchett, L.

White, B.

Collison, L.

Pannell, L.

Winterbottom, L.

Davies of Leek, L.

Peddie, L.

Wynne-Jones, L.

Elwyn-Jones, L. (L. Chancellor.)

Pitt of Hampstead, L.

On Question. Amendment agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.
10.25 p.m.
Lord LOVELL-DAVIS Lord LOVELL-DAVIS moved Amendment No. 109:
Page 26 line 4, leave out ("it should not be furnished for special reasons") and insert ("the Minister's final decision ought to be that it should not be furnished because special reasons apply ").
The noble Lord said: My Lords, if I may, in moving Amendment No. 109 I should like to speak to Amendments Nos. 112 and 115. These are essentially drafting Amendments. The Bill is intended to provide a definition of "special reasons", and to give the company the right to require a reference to the advisory committee so that they can make a case that these special reasons apply to particular items of information. As the Bill is at present drafted, however, special reasons apply in the words of Clause 30(4) "if the Minister considers" that disclosure would cause injury, et cetera. A company which made a case to the committee would therefore strictly have to argue that the Minister considered that disclosure would cause injury, et cetera.
This Amendment deals with this drafting difficulty by spelling out more exactly what it is that the company will wish to convince the committee of. It states:
"…that the Minister's final decision ought to be that it should not be furnished because special reasons apply."
It thus sets out more accurately what was intended in the Bill as it now stands. The further Amendments to which I am also speaking are consequential, and ensure that the way special reasons are referred to is consistent throughout the Bill. I beg to move.
Lord CAMPBELL of CROY: My Lords, I think the noble Lord will realise, from the Amendments I moved and my comments on them earlier on, that I welcome this step, and indeed had referred to the fact that the Government were
1816
intending to move these Amendments which try to define even more clearly special reasons for this part of the Bill. We have no objections.
Lord ROCHESTER: My Lords, I beg to move Amendment No. 110.
Amendment moved—
Page 26, line 6, leave out from ("by") to ("where") in line 7 and insert ("employee representatives").—(Lord Rochester.)
Lord ROCHESTER: My Lords, I beg to move Amendment No. 111.
Amendment moved—
Page 26, line 9, leave out from ("to") to ("for") in line 10 and insert ("employee representatives").—(Lord Rochester.)
Lord LOVELL-DAVIS: My Lords, I beg to move Amendment No. 112. I discussed this Amendment when I spoke to Amendment No. 109.
Amendment moved—
Page 26, line 10, leave out ("for special reasons") and insert ("because special reasons apply").—(Lord Lovell-Davis.)
Lord BEAUMONT of WHITLEY: My Lords, I beg to move Amendment No. 113.
Amendment moved—
Page 26, line 11, leave out ("advisory") and insert ("appeal").—(Lord Beaumont of Whitley.)
Lord ROCHESTER: My Lords, I beg to move Amendment No. 114.
Amendment moved—
Page 26, line 13, leave out from ("to") to ("for") in line 14 and insert ("employee representatives").—(Lord Rochester.)
Lord LOVELL-DAVIS: My Lords, I beg to move Amendment No. 115. This Amendment was discussed with Amendment No. 109.
Amendment moved—
Page 26, line 14, leave out ("for special reasons") and insert ("because special reasons apply").—(Lord Lovell-Davis.)
Lord ROCHESTER: My Lords, I beg to move Amendment No. 116.
Amendment moved—
Page 26, line 17, leave out ("each relevant trade union's authorised representative") and insert ("any employee representatives").(Lord Rochester.)
Lord BEAUMONT of WHITLEY: My Lords, I beg to move Amendment No. 117.
Amendment moved—
Page 26, line 20 leave out subsections (6) to (9) and insert—
("(6) The appeal committee shall consider any representations made under subsection (5) above, shall give a direction whether or not all or any part of the information which is the subject of the reference shall be furnished to employee representatives and shall make a report to the Minister giving their findings.
(7) Where there has been a reference the Minister shall notify:

(a)the company or companies concerned;

(b)the employee representatives from such company or companies;

of the direction of the appeal committee; and in accordance therewith a notice under this subsection shall be treated as requiring the information specified in the direction to be
furnished to employee representatives.
(8) Where there has been no reference to the appeal committee, the Minister may notify the company or companies concerned and each employee representative, at the end of the period specified in his preliminary notice under section 27 above, that this notice is to be treated as final.
(9) This section will apply with appropriate modification in any case where only part of the information furnished to the Minister falls to be disclosed to employee representatives ")—(Lord Beaumont of Whitley.)
10.29 p.m.
Lord MELCHETT Lord MELCHETT moved Amendment No. 118:
Page 26, line 20, leave out from ("shall") to end of line 23 and insert ("make a report to the Minister after the close of their consideration of the reference, giving their findings of fact and their recommendations, and after considering any representations made under subsection (5) above.").
The noble Lord said: My Lords, I beg to move Amendment No. 118. With this Amendment, if I may, I should like to speak to Amendments Nos. 124, 126 and 130. Here we are concerned with clarifying the procedure of reference to the advisory committee and its treatment of references. These Amendments are intended to make three points clearer. First, in considering a reference the committee must consider any representations made to it; that is Amendment No. 118. Second, if a notice requiring reference is withdrawn the Minister may act as if no reference had been made; that is Amendment No. 124. Under Amendments Nos. 126 and 130 the Minister may not issue a notice declaring that his provisional notice under Clause 30 is to be treated as a final decision until the time for requiring reference to the committee, which by virtue of Clause 30(1)(a) must be at least 28 days, has elapsed. These are marginal improvements designed to make the clause simpler to understand. My Lords, I beg to move.
Lord CAMPBELL of CROY: My Lords, I should like to point out that it may be necessary to make a consequential Amendment to this one at Third Reading, because it refers, for example, to "recommendations", whereas we have adopted the system of an appeals committee where it would be a finding rather than a recommendation. With the qualification that there might have to be some adjustment at Third Reading, in order that the text of this Amendment should fit in with Amendments we have already approved, I suggest that we approve this Amendment.
The Earl of BALFOUR: My Lords, I do not think the noble Lord can move this Amendment. If your Lordships look at Amendment No. 117, you will see that we have left out this part of the Bill from what was originally written, and I think that Amendment No. 118 falls.
The LORD CHANCELLOR: My Lords, Amendment No. 117 having been agreed to, I cannot call Amendments Nos. 118 to 122. Therefore, with the leave of the House, we move to Amendment No. 123.
A Noble Lord: What about Amendment No. 119?
Lord ROCHESTER: My Lords, I think that Amendment No. 119 must have fallen. It referred to subsection (8).
The LORD CHANCELLOR: My Lords, if I may make any observations apart from putting formal Questions from this place, I apprehend that Amendment No. 117 having been agreed I cannot call Amendments Nos. 118 to 122. If there is any contrary view, I shall sit down and hear it discussed. Amendment No. 123.
10.31 p.m.
Lord BEAUMONT of WHITLEY: My Lords, I beg to move Amendment No. 123.
Amendment moved—
Page 26, line 30, leave out ("advisory") and insert ("appeal").—(Lord Beaumont of Whitley.)
Lord MELCHETT: My Lords, I beg to move Amendment No. 124. I spoke to this with Amendment No. 118, and I hope the technical difficulty of No. 118 will not stop your Lordships' approving this Amendment. I beg to move.
Amendment moved—
Page 26, line 41, after ("committee") insert ("or a reference has been withdrawn ").(Lord Melchett.)
Lord ROCHESTER: My Lords, I beg to move Amendment No. 125.
Amendment moved—
Page 26, line 42, leave out from ("and") to ("at") in line 1 on page 27 and insert ("employee representatives".)—(Lord Rochester.)
Lord MELCHETT: My Lords, I beg to move Amendment No. 126.
Amendment moved—
Page 27, line 1, leave out from ("representative") to ("is") in line 2 and insert ("that his provisional notice under section 30 above").—(Lord Melchett.)
Lord ROCHESTER: My Lords, I beg to move Amendment No. 127.
Amendment moved—
1820
Page 27, line 6, leave out from second ("to") to end of line 7 and insert ("employee representatives").—(Lord Rochester.)
Lord TERRINGTON: My Lords, I beg to move Amendment No. 128. This is a consequential Amendment.
Amendment moved—
Page 27, line 7, at end insert ("and to the members of the company or companies concerned.").—(Lord Terrington.)
Lord LOVELL-DAVIS Lord LOVELL-DAVIS moved Amendment No. 129:
Page 27, line 7, at end insert ("within such reasonable time as may be so specified.").
The noble Lord said: My Lords, with this I shall also speak to Amendment No. 134. These Amendments are intended to bring greater certainty to the information disclosure provisions by establishing that a notice requiring a company to provide information may state that this information must be furnished within a reasonable period, specified in the notice. The Amendments are intended to make the operation of this Part of the Bill more clear.
I would draw the attention of noble Lords to the fact that the time must be a reasonable time. This is not something for the Minister to decide in any arbitrary manner. If the company thought the period specified in the notice was not reasonable, it would have the option of simply not complying with the requirement within the period. The Minister's eventual recourse would have to be to bring a prosecution, in which the company could claim that the period allowed in the notice was not reasonable, and hence that it had a reasonable cause for failing to provide information. In this way, the question of what is a "reasonable time" would be answered by the courts. I beg to move.
Lord MELCHETT: I beg to move Amendment No. 130.
Amendment moved—
Page 27, line 7, at end insert—
("(11A) No such notice shall be given before the end of the period specified in the provisional notice.")—(Lord Melchett.)
Lord ROCHESTER: I beg to move Amendment No. 131. In moving this Amendment, I feel I should point out that, so far as I can see, if your Lordships agree to the Amendment—as I hope you will—Amendments Nos. 132, 133, 134 and 135 cannot be called.
Amendment moved—
Page 27, line 8 leave out subsections (12) to (16).—(Lord Rochester.)
Clause 32 [Confidentiality]:
Lord ROCHESTER: I beg to move Amendment No. 136.
Amendment moved—
Page 27, line 38, leave out ("advisory ") and insert ("appeal").—(Lord Rochester.)
Lord ROCHESTER: I beg to move Amendment No. 137.
Amendment moved—
Page 28, line 9, leave out from ("to") to ("under") in line 10 and insert ("employee representatives").—(Lord Rochester.)
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 138:
Page 28, line 13, leave out ("(a)") and insert ("(b)").
The noble Lord said: My Lords, this is a matter about which the Government stated at the Committee stage that there had been a mistake in the Bill. Of course, it made a great difference to the sense. As the Government do not appear to have put down an Amendment and as, of course, it could not be corrected as a misprint, I put down the Amendment. I hope that it will be a help to the Government. I am also glad to be here to move it at the right moment. I beg to move.
Lord LOVELL-DAVIS: My Lords, in Committee, the noble Lord, Lord Campbell of Croy, in one of several eagle-eyed interventions and from noble Lords opposite, pointed out that the reference to paragraph (a) of what is now Clause 33(1) was odd. The Government acknowledged the error. We are grateful for this Amendment to correct it.
Clause 33 [Offences]:
10.40 p.m.
Lord LOVELL-DAVIS Lord LOVELL-DAVIS moved Amendment No. 139:
Page 28, line 22, leave out ("section 29 or 30 above") and insert ("this Part of this Act ").
The noble Lord said: My Lords, in Committee, my noble friend Lord Melchett acknowledged that there was a mistake in what is now Clause 32, in that the reference should have been to what is now Section 33(1)(b), not to Section 33(1)(a). The noble Lord, Lord Campbell of Croy, has already moved an Amendment to Clause 32 to correct the reference in that clause. The second of these Amendments is intended to correct a comparable error in Clause 33. In both cases, the reference should be to paragraph (b). The daily fine for which subsection (2) makes provision should clearly apply to the main offence of failing to furnish information, rather than to a failure to serve a notice.
We also wish slightly to broaden the offence of refusing or failing without reasonable cause to provide information through the use of the words "in this Part of this Act". This will cover the case when the requirement to provide information has been made by way of a notice issued under Clause 31, for example, under subsection (8) of that clause. I beg to move.
Lord CAMPBELL of CROY: My Lords, before we agree to this Amendment I must point out that we have had a very good explanation of Amendment No. 140, and I do not think that we will ask for that explanation to be repeated when we reach Amendment No. 140. But so far we have not had an explanation of Amendment No. 139.
Lord LOVELL-DAVIS: My Lords, I am sorry that I forgot to point out that I was speaking to both Amendments, Nos. 139 and 140.
Lord MELCHETT: My Lords, I beg to move Amendment No. 140.
Amendment moved—
Page 28, line 30, leave out ("(a)") and insert ("(b)").—(Lord Melchett.)
Lord MELCHETT Lord MELCHETT moved Amendment No. 141:
Page 31, line 14, at end insert ("mining and quarrying").
The noble Lord said: My Lords, this Amendment was brought to our notice at the Committee stage by the noble Earl, Lord Balfour, and I am happy to acknowledge his assistance with this Bill. I beg to move.
The Earl of BALFOUR: My Lords, I am most grateful.
Schedule 2 [Financial and administrative provisions relating to Board]:
Lord DRUMALBYN Lord DRUMALBYN moved Amendment No. 142:
Page 39, line 38, at end insert—
("(6A) The Board shall pay into the Consolidated Fund the proceeds of the disposal of any securities or other property acquired by them under this paragraph.")
The noble Lord said: My Lords, the purpose of this Amendment is to secure that the proceeds of the disposal of any securities or other property acquired by the National Enterprise Board under this paragraph shall be paid into the Consolidated Fund. I have referred to this at an earlier stage, but it seems right that in relation to the matters referred to, such as security transfers, matters arising "under section 3"and "under a vesting order", if the securities are realised by the Board they should be paid into the Consolidated Fund. This is the purpose of the Amendment. I beg to move.
Lord BESWICK: My Lords, I could not accept this Amendment. The Board will have a debt to pay to the Secretary of State and it would be inappropriate to pay over the money to the National Loans Fund. If the noble Lord wishes to press the matter further and to ask me what happens from that point, I shall consider it, but I could not accept the Amendment.
Lord DRUMALBYN: My Lords, as I understand it, the noble Lord is saying that the Amendment is in the wrong form. I thought this was the common form. I recognise that the money comes to the Board through the Secretary of State,
1824
but I thought that all these monies were eventually passed into the Consolidated Fund. Therefore, I considered that it was only reasonable that they should be paid straight into this Fund. But if it is more appropriate that they should be paid back to the Secretary of State, I should be happy to substitute "Secretary of State" for "Consolidated Fund", either now or on Third Reading.
The Earl of BALFOUR: My Lords, I should like to take this matter slightly further. I refer your Lordships to page 38 of the Bill. Sub-paragraph (5) states that monies shall be paid into the Consolidated Fund. In drafting this Amendment, we felt that this was appropriate. I should like to take the matter a step further, and refer to paragraph 6:
…upon any acquisition the Board shall assume a debt to the Secretary of State."
What I think we are arguing here is that if they have acquired money or borrowed money from the Secretary of State for any purpose, then, if they dispose of any securities, however they may be held—on behalf of the Crown or even under Section 3—that money must be paid back to the person from whom they borrowed the money or put back into the Exchequer and not put into their own coffers. I hope we have made our point.
Lord BESWICK: My Lords, they have made a point, but whether it is one that supports the Amendment moved is a different question. The fact of the matter is that I said I would look at this, but I have not had sufficient time to follow it through. If the noble Lord wishes to put down an Amendment on Third Reading I will consider it.
Lord DRUMALBYN: My Lords, I am grateful to the noble Lord. I should also be grateful if, before then, he will let me know which is the appropriate Amendment to put down. If he is virtually accepting it, in principle, I should not like to put down the wrong Amendment on Third Reading.
Lord BESWICK: My Lords, I am not certain the noble Lord can appropriately put down any Amendment. But I will write to the noble Lord.
Lord DRUMALBYN: I am grateful to the noble Lord, but in writing I hope he will say what would be the appropriate body to repay the money to, if he has agreed to repay it. If he does not agree, I hope he will still tell me which was the appropriate body to pay it to. It would be fantastic. It would simply mean that we should have to put down two Amendments instead of one. It would simplify things to do it the first way. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Schedule 3 [Arbitration. Part I—General. Part II—Proceedings]:
The LORD CHANCELLOR: My Lords, Amendment No. 143. Lord Beswick.
Lord BESWICK: My Lords, I think it would be gracious of me to allow the noble Lord, Lord Elton, to move this.
Lord ELTON: My Lords, I was going to thank the noble Lord for the honour he did me of putting his name to the Motion and for the consideration of putting his name in front so that he would be moving it. I spoke to this at an earlier stage. It is thought that in a body which discharges a function which is a judicial function, dispensing large assets of considerable value, the person named in the Bill should be of experience comparable with that of a similar judicial function. That is why we have suggested that he should be of at least seven years' standing. I beg to move.
Amendment moved—
Page 41, line 35, after ("solicitor") insert ("of at least seven years standing).—(Lord Elton.)
Lord BESWICK: My Lords, I had down an Amendment on the same day and mine happened to come before the noble Lord's.
Lord ELTON: My Lords, if honour may be satisfied, I am grateful to the noble Lord.
Schedule 4 [Provisions relating to the macro-economic model]:
Lord BESWICK Lord BESWICK moved Amendment No. 144:
Page 46, line 8, leave out ("aforesaid").
The noble Lord said: My Lords, this is an Amendment to a Schedule which stimulated a lot of suspicion on the Benches opposite. I gave an undertaking that I would not amend it further, except for one word. I hope that the one word will not give rise to the kind of suspicion that noble Lords expressed earlier when we were considering the same matter. I beg to move.
Schedule 5 [Advisory Committees]:
Lord BEAUMONT of WHITLEY: My Lords, I beg to move Amendment No. 145 formally.
Amendment moved—
Page 46, line 29 leave out ("advisory") and insert ("appeal").—(Lord Beaumont of Whitley.)
Lord BEAUMONT of WHITLEY: My Lords, I beg to move Amendment No. 146.
Amendment moved—.
Page 47, line 8 leave out ("for the purpose of advising him").—(Lord Beaumont of Whitley.)
10.50 p.m.
Lord BEAUMONT of WHITLEY: My Lords, I beg to move Amendment No. 147.
Amendment moved—
Page 47, line 18, leave out from ("by") to ("that") in line 19 and insert ("employee representatives").—(Lord Beaumont of Whitley.)
Lord BEAUMONT of WHITLEY: My Lords, I beg to move Amendment No. 148.
Amendment moved—
Page 47, line 28, leave out ("settle its advice") and insert ("give a direction").(Lord Beaumont of Whitley.)
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 149:
Page 47, line 30, leave out ("it") and insert ("in").
The noble Lord said: This is simply an error which has been continued in successive prints of the Bill. I suggest it be now removed. I beg to move.
Lord LOVELL-DAVIS: My Lords, we acknowledge our debt to the eagle eye of the noble Lord, Lord Campbell of Croy, for observing the switch with which to eliminate paragraph 6 in the Schedule.
Lord BESWICK Lord BESWICK moved Amendment No. 150:
Page 47, line 37, at end insert—
("9.—(1) The Secretary of State may by statutory instrument make regulations as to the consideration of references by advisory committees and the making by such committees of reports to the Minister concerning such references.
(2) Without prejudice to the generality of sub-paragraph (1) above, the regulations may prescribe the time within which representations are to be made.
(3) A statutory instrument containing regulations under this paragraph shall be subject to annulment in pursuance of a resolution of either House of Parliament.").
The noble Lord said: My Lords, this Amendment ensures that a proper procedural framework can, if necessary, be laid down for advisory committees which will consider references on the question of whether the Minister should consider that special reasons apply to prevent the disclosure of information to trade union representatives. It arises from suggestions made to the Department by the Council on Tribunals.
The Amendment makes clear that the regulations could cover the time to be allowed for representations to be made to the committee by the company concerned and the trade union representatives. This will enable regulations to be made which would have the effect of preventing persons requiring references to be made to adopt delaying tactics. Regulations could prevent this by laying down a fixed period within which representations must be made, but giving the committee power to extend this period if satisfied by the party making the representation in question that further time is really needed.
Recently we amended the Bill and the references to a committee will be in-appropriate. There may be further Amendments, but the substance of the Amendment still stands and I hope it will be accepted. I beg to move.
Lord CAMPBELL of CROY: As the noble Lord indicated, if there had been more time we should have suggested Amendments at this stage, simply to bring this into line with Amendments which your Lordships' House has adopted. As there is to be a Third Reading later, that will be the convenient moment for us to look at this to seek the minimum of changes which may be suggested to bring it into line with an appeal committee.

LONDON TRANSPORT BILL
Returned from the Commons with the Amendments agreed to.