INDUSTRY BILL

HL Deb 06 August 1975 vol 363 cc1770-828

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 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 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 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 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 —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 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.

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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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.

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 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 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 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 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 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 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 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 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 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 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. 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 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 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 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 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. 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 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 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 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 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:

1. (a)the company or companies concerned;
2. (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 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— 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 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 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 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 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 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, 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 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 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 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.