§ 3.18 p.m.
§ Lord BESWICK
My Lords, I am especially pleased to be able to introduce this Bill to this House. I hope we shall look at it, examine it and maybe criticise it, but always in a constructive spirit. Not since the 1945–50 Parliament has one Bill been so clouded with unnecessary controversy. I hope that in this House we can lift that cloud and see more clearly that this Bill is not designed to hit or hurt anybody. It is intended to help—to help industry and all who work in it. It will help by providing new investment; by securing a higher productivity on a given investment; by establishing a new pattern of co-operation between Government and industry and a pattern which more fruitfully involves the workforce at all levels. The Bill seeks to improve efficiency in individual units of industry, but it also aims to create, or help to create, an overall economic climate within which all useful industries in both public and private sectors can more readily develop.
We have discussed before in this House the post-war industrial performance of this country compared with competitors, and I doubt whether any of us deny the need for some action to regenerate sections of our industry. I have quoted figures before but if there are still those who say, "We were all right before—let things be ", let me give this series of figures relating to 1972—that is, before the explosion of oil prices, before the previous Administration had that argument with the miners and before the present Administration took over.
912 In 1972 investment per employee at current prices was £759 in the United States of America, £623 in France. £537 in Germany, £364 in Italy, £599 in Japan. In the United Kingdom that same year it was £273. Or take another, and maybe even more significant, set of figures. In 1972, again, extra output per unit of new investment, taking Japan as 100, was 67 in the USA, 98 in France, 130 in Germany, 75 in Italy and in our country, 51. I know that all figures relating to economics must be accepted with caution but, making all allowances for strict non-comparability, it cannot be claimed that the market economy in this country has produced or can produce the result we want.
The policy behind this Bill reflects that fact. It is a policy to which much study has been given and to which the Government are clearly committed and which they set out clearly in two General Elections. Having said that, the Government have been, and are, willing to consider arguments advanced in debate and to make amendments to meet points that can be reconciled with policy.
The Government have already made such amendments to the Bill. A new clause has been introduced, Clause 8, to set clear boundaries to any involvement by the National Enterprise Board in newspapers and broadcasting. The NEB might indirectly acquire an interest in a media company as part of a larger acquisition, but it will be required to divest itself of the interest, unless this would clearly harm the media company. A second new clause, Clause 15, establishes that those affected by a vesting order will have an automatic right to arbitration on any dispute concerned with the vesting and compensation, and further amendments unambiguously provide for compensation to all those affected by a vesting order.
Important changes to the Bill relate to Clauses 22 to 25, dealing with the information disclosure powers. The basic principle remains unaltered: the Government should be able, where necessary, to require companies of particular importance to our manufacturing industry, to provide information to Government and to the companies' workforce about their plans in relation to matters central to their future development. The need for this reserve power is a basic principle 913 behind this part of the Bill. The Government have, however, already made considerable changes to the specific provisions for the use of these powers, to take account of criticisms that have been advanced. These changes demonstrate clearly the Government's conviction that in such matters voluntary arrangements are much to be preferred and should be encouraged. Stemming from this, the amendments emphasise that the compulsory powers are only to be used when an opportunity has been given for voluntary action, and when the voluntary approach has proved ineffective.
Secondly, amendments were made which recognise that the Government and workers in a company may have interests in different categories of information, and in such cases the Minister is enabled to exercise his discretion about what information should be furnished to trade union representatives. In addition, a series of changes has been made to limit more precisely the scope of the powers. The purposes for which they may be used have been spelled out, the limitation to manufacturing industry has been made clearer, and the fact that the list of subjects set out in Clause 23(2) is a complete list of the matters on which information may be required removes any cause for doubt.
These changes are important: they underline the Government's desire for voluntary arrangements, and the Government's determination to confine the powers to reserve powers. They also indicate our willingness to meet criticism and to consider changes which will make the powers more practicable and more flexible.
May I now invite the House to consider the Bill as amended? The first major section—Clauses 1 to 9—provides for the establishment of the National Enterprise Board. In Clauses 10 to 15, the Bill provides for reserve powers to prevent key manufacturing industries from passing into unacceptable foreign control. In Clause 16, it provides for guarantees of the level of financial assistance for firms entering into planning agreements. Finally, after a series of miscellaneous provisions, it provides for reserve powers to obtain information from companies.
Taking the NEB first, this body will have five main functions. It will under 914 take the role of the old Industrial Reorganisation Corporation to reorganise and rationalise industry, but only with the agreement and consent of the existing owners: the NEB has no compulsory powers not possessed by every other company in the land. In recent debates, noble Lords on all sides have acknowledged the good work of the Industrial Reorganisation Corporation and its sacrifice on the altar of Selsdon Man was deprecated by many noble Lords.
Secondly, the NEB will be a source of investment capital for private industry, particularly manufacturing industry. It will have borrowing powers of up to £1,000 million for this and other investment purposes. The investments will often be by way of equity capital; this is no different from the policy of a merchant bank. The NEB will often be faced with the prospect of high rewards at some risk, and it is right that the nation should participate in the rewards that come from the use of the NEB's capital.
Thirdly, the NEB will be able to develop completely new enterprises and participate in joint ventures with private firms. Public ownership will be extended into profitable areas, but in determining its priorities in this field, it will attach particular importance to moving into areas of high unemployment. Next, the NEB will act as a holding company for the State's interests in companies which are already wholly-owned by the Government, such as Rolls-Royce (1971), or in which there are substantial shareholdings, such as International Computers Limited. I feel it will be agreed that this method of holding and monitoring the managerial and financial expertise of the NEB will be invaluable.
Finally, the NEB will be responsible for promoting industrial democracy in the undertakings it controls, and I shall have something more to say on this theme. In carrying out these functions the NEB will apply its commercial judgment to ensure that the ventures which it supports are those whose viability can be assured. As Sir Don Ryder has said: "The NEB will not be a soft touch". There is no question of its financial discipline being undermined through support for uneconomic projects. Where the Board is required by the Government to 915 give assistance to a company which it would not support of its own volition, it will be provided with compensation by the Government under the provisions of Clause 3 of the Bill. In that event, its accounts would show such projects separately.
I want to emphasise that the NEB will have no powers, apart from the provisions of the Companies Act 1948 which apply to all companies, of compulsory acquisition. The NEB is not exempt from any law and its companies will be bound by the Companies Acts and the fair trading legislation, and will comply with the rules of good practice, such as the City Code on Takeovers and Mergers, and the Stock Exchange Listing Regulations, where these are relevant. In particular, I should like to assure the noble Viscount, Lord Watkinson, who made representations to me on the matter, that the NEB will in no circumstances engage in "warehousing"—building up a major shareholding in secret by acting through a number of separate associates. The NEB will be subject, too, to the provision in the Companies Act 1967 which requires anyone securing a 10 per cent. equity holding to declare the fact. Upon the NEB will fall an especial responsibility of setting right the unsatisfactory position on investment and productivity to which I referred earlier.
My Lords, before leaving the NEB, and for the particular attention of noble Lords on the Liberal Benches, may I quote what was said by the late Lord Beveridge 30 years ago in his treatise on Full Employment in a Free Society. He said:We need now a great expansion of investment, that is to say of expenditure on means of production But this expansion of investment should take place steadily, not by fits and starts and with fluctuations, such as have marked private investment in the past. To ensure that, we must secure that investment whether in private industry or in public industry, is looked at and planned as a whole and expanded steadily. There is needed for this purpose, as an essential new organ, a National investment Board.I do not think I can improve on that.
§ Lord BARNBY
My Lords, may I interrupt the noble Lord for a moment? Remembering that period well, I recall 916 that the emphasis put by Sir William Beveridge was on the essential need of good profitability to encourage investment.
§ Lord BESWICK
Yes, my Lords. That is a point I made earlier in my speech. I turn now to the section of the Bill dealing with planning agreements. These agreements are offered by the Government as a basis for a new partnership between Government, management and workers. Our intention through the planning agreement system is to provide a forum within which there can be joint discussions about a company's strategic plans for a number of years ahead. These discussions will cover such issues as investment, employment, prices, product and processed development, productivity and matters of concern to consumers. They will also provide for an exchange of views about prospects for the sector of the economy concerned, for the national economy, and for world trade in which it will be for the Government to contribute views and forecasts. Although planning agreements are dealt with in a single clause of the Bill, this in no way reflects their potential importance. It reflects the fact that, again, planning agreements will be voluntary and will not be regulated by Statute.
Many of the larger companies which might be invited to conclude agreements already have a good working relationship with the Government, and I hope that they will see an advantage for them, for their workers, and for the nation, as well as for their shareholders, in seeking the closer partnership that planning agreements offer. For their part the Government will be concerned through planning agreements, not only to seek benefits for the national economy and for society as a whole, but to increase the effectiveness of British companies which of course all go to make up that society. This will come partly through the creative use of the powers provided under various Statutes to support desirable industrial investment and innovation, partly from the improvement in the quality of decision taken by Government in formulating their economic and sector policies that can follow from greater involvement in industry; and partly, and importantly, through the opportunity planning agreements afford for the workers to have a greater part in policy making.
917 As I have said, planning agreements are to be voluntary, but the addition of Schedule 4 to the Bill in another place introduced an element of compulsion. In part, the purpose of this Schedule is, as I recognise, to give statutory effect to the undertakings which the Government gave in the White Paper on the Regeneration of British Industry to provide Government projections, and there has never been any question that the Government would not give effect to those undertakings. But the formulation of the Schedule in relation to this and other matters will require some amendment if it is to provide a practicable basis at an acceptable cost to industry and to the Exchequer.
My Lords, the last major section of the Bill deals with the provision of information to the Government and to workers through statutory powers. I emphasise that these powers are reserve powers and will not be used where voluntary arrangements have been made. Maybe there has not been complete understanding on this point. Perhaps the fault lies with the Government, but it should be made clear that the Secretary of State may not use his statutory powers where he finds, after consulting the company and its workers through their trade unions, that adequate arrangements exist.
Having said that, perhaps I might explain very briefly how these reserve powers would operate. First, the Minister is required to issue a preliminary notice to the company which would empower him, after an interval of at least three months, to invoke the powers if at the end of this period satisfactory voluntary arrangements did not exist. In issuing this preliminary notice he would lay a Statement before both Houses of Parliament. If satisfactory voluntary arrangements were reached, that would be the end of the matter.
If the Minister felt, after consulting both company and unions, that there was no alternative at the end of the preliminary period but to proceed formally under the Statute to require information to be provided, he must lay an order before both Houses of Parliament under the Negative Resolution procedure. The Minister, having received the information, would then decide on the extent to which it should be disclosed to workers through 918 their trade unions. Before coming to a final decision he must give an opportunity to both sides to make representations to him, and either party can require him, before taking a decision, to seek the advice of an independent committee, whose chairman would be legally qualified. If the Minister decided to overrule the advice of this committee by ordering the disclosure of information to the trade unions contrary to the committee's advice, he would again be required to lay an order before both Houses subject to the Negative Resolution procedure.
In these ways, a number of important safeguards have been incorporated in the Bill to guard against the disclosure of information which would cause substantial injury to companies. Proper Parliamentary control has also been provided. But should voluntary arrangements prove impossible, we have provided powers to enable the Government to require the provision of information for the purposes set out in Clause 20 of the Bill.
There have been criticisms of our proposals for planning agreements and the disclosure of information, on the grounds that they will damage industrial competitiveness. But let me remind the House that to a very considerable extent we are behind our main industrial rivals in the amount of information we pass on to workers and in the facilities they have for taking part in decision-making. Much was said yesterday by certain noble Lords about how much more competitive some of our European trading friends were. Yet in France, Belgium, Holland, West Germany and Sweden there are arrangements—either through legislation or through binding agreements between employers and employees—which allow for the disclosure of information to employees in stated policy areas.
These cover finance, company prospects, competitive position of companies, personnel and production matters, scientific research and major changes in location. In Sweden, for example, the employer must provide information in such a way that the works council can form sound ideas of the firm's financial situation and future prospects. Such information must include business prospects, profit and loss and results of the business. The works council, which is appointed by the trade unions, may appoint a committee which has the right 919 in principle to complete access to information in economic matters. Why should we fear catastrophe when prosperity reigns in Sweden?
I do not quote these as models; they are not. Nor do I say that we are all behind other countries. Some of our companies would compare with any in the world in their arrangements for consultations with workers. But across industry as a whole we have fallen behind, and I am therefore delighted to see that the Confederation of British Industry has been increasingly active in securing improved standards of performance, wholly in line with the tone which the noble Viscount, Lord Watkinson, has used in this House when he has addressed us. As many of your Lordships will know, it has recently prepared and circulated draft guidelines to firms, whose fundamental premise is that workers expect to receive information on a wide range of subjects affecting their firm, and which sets out some recommendations to company managements for achieving this.
My Lords, the argument that increasing the rights of workers will have adverse effects on industry is not a new one. Exactly 150 years ago, a Select Committee, reporting to another place in 1825 on the laws affecting combinations of workers, prophesised unadulterated doom if these rights were extended. That Select Committee said:If the spirit of dictation now manifested be suffered to prevail among the working classes, if the application of capital is to be controlled, and every improvement by machinery or otherwise, admitted or rejected at their discretion; the necessary consequence must be, that capital will be withdrawn or transported and the whole labouring population of the country confined to distress and misery …Viewed in the context of 150 years of history, is there anyone who would seriously suggest that such an attitude was defensible? Is it not possible that in another 150 years' time we shall equally condemn those who now seek to deny workers substantially greater powers of decision-making over their working environment and over their own employment prospects; indeed, over their whole livelihood and future? Moreover, this development of industrial democracy which we visualise is not simply justified on the score of justice to individuals; it 920 is more than justified by the returns it can yield to our economy by way of increased productivity.
My Lords, I said at the start of my speech that I thought this Bill represented an historic step forward. I recall the Prime Minister saying it was the most significant change in economic thinking since Keynes. In the years to come, I believe we shall all recognise that this judgment is the right one. My Lords. I beg to move that this Bill be now read a second time.
§ Moved, That the Bill be now read 2a. —(Lord Beswick.)
§ 3.45 p.m.
§ Lord ABERDARE
My Lords, we are very grateful to the noble Lord, Lord Beswick, for having explained to us the provisions of this Bill. May I begin by declaring an interest in that I am a director of a small industrial company in the North-East of England. As the noble Lord acknowledged at the beginning of his speech, this is a highly controversial Bill. It took up a tremendous amount of time in another place; there were some 40 Sittings of the Committee; there was a complete change in the entire Ministerial team; and at the Report stage a number of Amendments were introduced to the Bill which the noble Lord has explained to us.
§ Lord BESWICK
My Lords, before the noble Lord perpetuates this myth, may I say that I am still there?
§ Lord ABERDARE
My Lords, I am delighted to know that the noble Lord is still there. I hope he is not there for very long. The point I am trying to make is that there have been many changes in this Bill, especially at the Report stage, and many changes affecting the clauses concerned with the disclosure of information which the noble Lord explained. They are very difficult and detailed changes and we had available to us the final printed copy of this Bill only on Tuesday. It really is very difficult for the Opposition to work effectively when this happens. As the noble Lord and other noble Lords on the Front Bench know, our task in Opposition is always difficult for we do not have a lot of help. When we do not have the proper time to consider a Bill it is even more difficult. But nothing is beyond the capacity of my noble friends and I 921 am sure that we shall have an excellent debate on this Second Reading.
The point that I want to make is that if we are to do what noble Lords would wish to do—that is, to consider this Bill constructively—we must have the proper time throughout the rest of the stages of the Bill. Then we are prepared to be constructive and hope, on the other side of the coin, that the Government will be flexible; for unless they are flexible there is no point in our being constructive. We dislike this Bill. We are totally opposed to the extension of the public sector of industry that is implicit in it and we do not believe that the proposals in the Bill are the right way to further our economic development. We are pledged to repeal it when we return to Office.
The Bill is intended to implement the proposals in the White Paper, The Regeneration of British Industry. Yet its proposals have been strongly criticised by the leaders of the industry that it is intended to regenerate and by the organisation that speaks for them, the CBI. Is this not an extraordinary way to go about regenerating industry by antagonising all those you seek to help? The Government are giving the impression that they are saying to industry, "You have failed the country. You do not know your business; so we, the Government, will set up our own industrial conglomerate to show you how it should be done." That industrial conglomerate is the National Enterprise Board. It has powers to buy control of profitable companies, subject only to the agreement of the Secretary of State; it has powers to set up new companies, wholly owned by itself; and it has powers to operate companies that are already in public ownership. For these purposes, it is given £700 million or, with the Treasury's consent, £1,000 million.
§ Lord BESWICK
My Lords, I am sorry to interrupt the noble Lord again, but this is important. He said it had power to acquire profitable companies only with the agreement of the Secretary of State. That is not correct. It must have the consent of the owners of those companies.
§ Lord ABERDARE
It has the powers to buy the shares of profitable companies for which it has £700 million at its disposal.My Lords, it will be a large, 922 amorphous, miscellaneous conglomerate, owning a mixture of totally unrelated companies, some previously nationalised, some lame ducks, some profitable, some acquired from the private sector and some specially established by the Board itself in competition with the private sector. It has been given no financial target, and it is seemingly free to throw its weight around as it pleases within the industrial scene. No wonder that it is viewed with anxiety and suspicion by private industry! We have been promised guidelines which we are told will modify our view about the National Enterprise Board, but the guidelines have not yet been seen, and the noble Lord did not mention anything about this in his speech. I specifically and urgently ask the noble Lord who is to wind up for the Government to give us an absolute assurance that these guidelines will be available to your Lordships before the Bill leaves your Lordships' House—in fact I hope at the Committee stage.
Why is it proposed to set up the National Enterprise Board? What are the Government's reasons for bringing this large, nationalised conglomerate into being? I am talking now of the economic reasons. I am discounting and ignoring for the moment any political reasons which may be behind the Bill, such as an extension of public ownership. The nub of the problem lies in paragraph 3 of the White Paper. I should like to quote two sentences from the White Paper. I think I am right in following on what the noble Lord, Lord Beswick, said. The White Paper says:In 1971 investment for each worker in British manufacturing industry was less than half that in France, Japan or the United States.It goes on to say:In the last ten years the rate of direct investment by British firms overseas has more than doubled.It is on the lack of investment that those who advocate this Bill, including the noble Lord, Lord Beswick, base their argument. I think we must look at the truth of this matter. There are one or two points which should be made.
In the first place, the real rate of growth of British economy per head has been faster on average since the end of the last war than at any time since the mid- 923 19th century. Secondly, it is true variations in rates of growth in different countries can been influenced by a large number of factors. This is shown, for example, in the transfer of labour from agriculture to industry which occurred in the 1950s and 1960s in France and West Germany. Then we have to take into account that our total investment, as a proportion of our gross national product, has been increasing and, in the case of manufacturing investment, has been broadly stable.
The noble Lord, Lord Beswick, gave us some figures for investment. I can quote some more. He said you can prove anything with figures, but these figures happen to come from his present colleague, Mr. Gerald Kaufman, the Parliamentary Under-Secretary of State at the Department of Industry. On 23rd June 1975 Mr. Kaufman said:The economists in the Department of Industry have undertaken a considerable amount of work comparing investment in manufacturing in the United Kingdom with that in other major industrial countries. They have concluded that in relation to manufacturing output and growth in the United Kingdom, manufacturing investment has not been low by general international standards.The noble Lord went on to say:How can we maintain that a market economy can provide the necessary investment in the United Kingdom?I cannot see how he can argue that when he is comparing our figures with the figures for other countries such as France, Germany, Japan and the United States, who themselves operate a market economy. We have not been operating our market economy correctly, and the reason why there is insufficient investment lies in falling profitability in industry.
An interesting inquiry was conducted by the Investors' Chronicle. It was called "The City and Industry". It came to the conclusion that the record of industry over 20 years shows an alarming decline in real profitability, and that returns are now too low to stimulate substantial new investment in a period of heightened risk. This decline has been caused by a number of factors, in my opinion more political than economic. There is no lack of funds for investment in industry given an adequate level of profits, and there is no lack of will on the part of boards of 924 directors given some assurance of a period of economic stability. But it is just that confidence in economic development free from political interference has been lacking. High taxation, controlled prices and dividends, spiralling inflation—that is no climate for encouraging investment. This Bill will only add to its burdens. Better and more stable industrial relations are also essential for sustained economic growth.
The trade union movement has a vital contribution to make towards a less desstructive situation in industry. Strikes, restrictive practices and overmanning are incompatible with economic growth. This Bill is not the right vehicle for this, but I doubt if some of its provisions will do very much to help. What we need to do is to learn the lessons from those countries with which the noble Lord has compared our performance, the industrial stability of France, West Germany and the United States of America. We should be aiming at taking industry out of politics, not discouraging the dialogue between industry and Government, which is essential and could well be increased, but letting industry get on with its job without constant legislative interference.
The National Enterprise Board is not the right solution. That is to move in the opposite direction towards more State control and the State-dominated economies prevalent in Eastern Europe. The history of nationalised industry in this country is not exactly reassuring, and we should remember, as was made clear in the debate yesterday, the private sector accounts for about 95 per cent. of the nation's exports. The one essential factor in an effort to improve our industrial performance is confidence. When I used to study very elementary economics I was taught that business confidence, and the lack of business confidence, were major factors in the so called trade cycle. We still have trade cycles, and confidence and lack of confidence are still major influences. The Bill, however, coupled with other Government actions, has caused the loss of confidence in industry, and to launch the National Enterprise Board in their midst is hardly the way to restore that confidence.
Let me make it clear that that is not what we desire. We want to see the maximum co-operation between the Government and industry, but we believe it 925 is best encouraged by mainly voluntary methods rather than by direct State interference. When in certain circumstances shares in private enterprise are acquired by a Government Agency, they should be sold again as soon as is practicable and reasonable. In my opinion, a much better way forward to better national economic planning would have been to develop the use of the NEDC. It exists, it brings together Government, employers and unions; and it has a sector organisation in the "Little Neddies" that could be far more effective in sector planning than the direct planning agreements between individual firms and the Government which are envisaged in the Bill. It provides familiar machinery and it enjoys the support and good will of both sides of industry. It would have been far better to have built upon this established foundation than to scare off businessmen with talk of planning agreements and compulsory powers of disclosure.
We are firmly opposed to the provisions for compulsory disclosure contained in Clauses 22 to 26 of the Bill. We support the principle of disclosing information both to Ministers and to employees—and I stress "employees" whether they be members of trade unions or not—but in both cases the best results are more likely to be achieved by encouraging voluntary disclosure than by the whole panoply of legal requirements in this Bill. The type of information which is of use to a Minister for national economic planning is often quite different from that which is of use to the firm's employees. The sort of information that a Minister requires is often highly confidential. In many cases it has in the past been readily produced on a voluntary basis and there has been no leak between the firm and the Minister. But if that same information has to be given to the representatives of all the trade unions that may be interested in a particular firm, then confidentiality is bound to come into question. I am not seeking to cast any slur on members of trade unions, but the fact of the matter is that one company may deal with a very great number of trade unions and the more widely spread is information of this particular confidential nature, the greater the likelihood of leakage. Obviously the trade union representative to whom this information is divulged 926 will not be doing his job unless he passes on the information to all his members.
Statutory requirements of this sort often have the reverse effect from that which they are designed to achieve. I very much doubt whether any firm has ever refused to divulge information requested by a Minister. This was put to the Government in another place and so far as I know was never denied. But now that they may be compelled to disclose information and the Minister may make such information available to trade unions, surely a firm may be more inclined to stick to the minimum disclosure which is required by law, with the result that they will disclose less than they would have done voluntarily before. The same is true of disclosure to employees. Again, we are entirely in favour of maximum disclosure of relevant company information to the employees. This is, after all, only good industrial relations and there are many firms where this already happens. But once make it statutory and specify that it should be divulged to a trade union or to a trade union representative, then you may get a far less satisfactory situation. Employees as a whole may suffer by being excluded from the process of information-giving, and the company may seek to restrict to a minimum the information given to trade unions. In other words, once again a trend in the wrong direction has been set in motion as a result of heavy-handed legislative provision.
The Bill has been recently amended, as the noble Lord told us, in respect of the disclosure of information but, with all its complications, it is the Secretary of State who in the final analysis decides. Admittedly, if he decides against the advice of his advisory committee, he has to make an Order subject to the Negative Resolution procedure; but such a procedure is not well suited to a decision of this sort and could be debated only with great difficulty and in ignorance of what the particular information was. Again and again over recent weeks we have heard Government spokesmen claiming that it is more democratic for decisions to be taken by the Secretary of State as he is answerable to Parliament. That may be true in general. It is true that he should be answerable in matters of policy, but it is surely equally true that 927 the interpretation of the policy and the law should be left to judicial or quasi-judicial bodies. If the theory that it is more democratic for decisions to be taken by the Secretary of State because he is answerable to Parliament is carried to its logical conclusion, then I would suggest that the courts would become unnecessary. In the case of commercially sensitive information, I should have thought that an independent tribunal would have ensured justice and would have been greatly preferable to the elaborate machinery at present in the Bill, together with an advisory committee that can be overruled by a Minister.
As I said at the beginning, I believe that British industry has suffered, in comparison with its foreign competitors, from excessive Government interference and an unstable political situation. This Bill does nothing to improve that situation. It does exactly the opposite: it provides for increased Government interference and a further load of bureaucratic regulations. This is not the way to foster the confidence which is so necessary in industry; nor is it the way to encourage overseas firms to invest in this country. We shall seek to improve the Bill in detail, but it is a bad Bill and the only real remedy is to repeal it.
§ 4.8 p.m.
§ Lord ROCHESTER
My Lords, we on these Benches thank the noble Lord, Lord Beswick, for his clear exposition of the purposes and provisions of this Bill. As we see it, this is really three Bills in one. There are the provisions relating to the National Enterprise Board; there are those concerning planning agreements; and, finally, there are those having to do with disclosure of information. We would much have preferred the Bill not to have sought to deal with all these matters at once. However, it does deal with them in that way, and so, if I may, I should like to deal with each section in turn.
I should also like to respond, so far as I can, to the lead given by the noble Lord, Lord Beswick, when he suggested that in this debate we should be as constructive as possible. Therefore let me begin by acknowledging that we feel there is a need for such as the recent British Leyland case to be handled in a rather bettter way than has occurred under the 1972 928 Industry Act. We recognise that the National Enterprise Board could provide an orderly framework within which this could be done in future; but with the example of British Leyland fresh in our minds we feel that a statutory duty should be laid on the Board to prepare an inventory of the likely major needs of those firms and industries which are known, or thought, to be especially vulnerable. As we see it, this would afford some protection to Parliament from the process under which in the past Parliament has suddenly been told that it must vote almost overnight millions of pounds to help some ailing firm, otherwise hundreds of thousands of people would be thrown out of work.
We should also like the Board to be given the responsibility for administering the assistance provisions of the 1972 Act, and, in this way, to take that task away from Ministers and see that it is given to a body which is less political in its complexion. Perhaps the noble Lord who is to wind up the debate would be able to give us some indication of the Government's thinking on these points. Among the purposes and functions of the Board described in Clause 2 of the Bill there are some about which we have considerable reservations. There is the one which seeks to extend public ownership into profitable areas of manufacturing industry.
It is not only the powers themselves with which we are concerned, but the way in which those powers can be exercised. I realise that in Clauses 7 and 9 of the Bill financial limits are set on the powers of the Board for acquisition, but so far as I can see—and I am, of course, subject to correction on this—the first step towards the acquisition can be taken by the Government without any precise indication of purpose, without prior knowledge on the part of the firm concerned and without any rights for it to object. Management are rightly criticised when employees are inadequately informed or consulted, but I suggest that management are equally entitled to be consulted by the Government before such radical steps are put in train.
Another stated purpose of the Board is,the provision, maintenance or safeguarding of employment ".That sounds fine and I noted what the noble Lord, Lord Beswick, had to say 929 about the words of Lord Beveridge in the past. But if that employment is unproductive or brings with it no trading benefits, if it involves overmanning or the preservation of jobs simply for the sake of preserving jobs rather than creating new jobs and training people for those jobs, then it will conflict with another purpose of the Board which we would likely heartily to endorse; namely,the promotion …of industrial efficiency and international competitiveness ".The question is whether the establishment of the National Enterprise Board in the form proposed in the Bill will in practice lead to an improvement in efficiency and in the competitiveness of British industry. Experience surely shows that nationally-owned undertakings and large miscellaneous conglomerates do not normally perform well in the matter of giving an adequate return on the capital invested, or in other ways. The Board combines the two undesirable characteristics. We should therefore like some consideration to be given to a more sectionalised or regionalised structure for the Board. I hope the noble Lord, Who is to wind up will comment on these aspects of the matter. So much for the National Enterprise Board.
May I turn now to the question of Planning Agreements. Clause 16 is devoted to these and it may be significant that in contrast to the treatment which Planning Agreements received in the White Paper they are dealt with in this Bill in only one clause. I have little to say about Planning Agreements as such. There must be many large companies who in recent years have voluntarily disclosed to the Government information in a planning connection. In the ordinary way I think this interchange might well develop into a Planning Agreement were it not for the provisions in the Bill concerning disclosure of information. It is to these that I should now like to turn.
I endorse what the noble Lord, Lord Aberdare, said just now, and would say that we on these Benches favour the disclosure by management to employees of the maximum amount of relevant information which is consistent with commercial security. But we have noted that, in Clauses 23 and 24 of the Bill—where a duty may be laid on a company to disclose information, first, to the Minister and, secondly, to representatives of rele 930 vant trade unions—the information to be disclosed is in general the same in each case. Surely, my Lords, there is some confusion here. Why should it be thought that the information which is needed by the Government for the purposes of economic planning is the same as that required by trade union representatives for other purposes?
I know from my contact with industrialists, particularly those in international companies, that they are greatly and sincerely troubled on this score. They feel that an industrial undertaking which becomes a party to a Planning Agreement should not then be obliged to submit to mandatory further disclosure of information to other people. They also feel that the procedural arrangements for dealing with the matter—as outlined by the noble Lord, Lord Beswick, and appearing in Clause 25 and Schedule 5 to the Bill—will not adequately protect information that is commercially sensitive. It is surely true—and I noted what the noble Lord, Lord Beswick, had to say—that no other country handles its industry in quite the same way as is proposed in the disclosure clauses of this Bill. If it is passed, will not our business partners overseas, on whom such a large part of our trade depends, go in fear that the obligation of British companies to disclose information may also affect their business? Will this not damage our relationship with them and make it harder for new trading links to be forged in future?
Our view on these Benches is that, if the Government nevertheless persist with this part of the Bill and Ministers decide to serve a notice on a company to furnish information to representatives of relevant trade unions, the committee to which a reference may be made in certain circumstances by the company—composed, as the Government have in mind, of an employer, a trade unionist and a lawyer—should not merely advise the Minister (as is proposed in the Bill) but should itself take the decision in the case. I know that it has been suggested—and I am not quite sure whether that is what the noble Lord, Lord Aberdare, had in mind—that such a body should be composed of lawyers and act in a judicial capacity. We think that, in this very sensitive area, that would not be practicable. We think instead that it would be better for there to be an appeal committee.
931 I do not want to develop this point further because it is a Committee point. Suffice it to say that by means of this decision-making appeal committee that we have in mind the Minister would be prevented from acting as judge in his own cause and Parliament would be prevented from acting inappropriately, as we see it, through the Negative Resolution procedure to which the noble Lord, Lord Beswick, referred as the final court of appeal.
If information disclosed to the Minister has ultimately to be passed on, then the question arises whether the legal rights to that information should belong, as is proposed in the Bill, to representatives of relevant trade unions who may, as I understand it, not even be employees of the company concerned, or, on the other hand, to employees or their representatives. We think that the information should be given in a quite clear-cut way to works councils; and at the Committee stage we propose to introduce an Amendment with that object in view. That is not to say that the information should be withheld from trade unions. It is rather to cover those companies in which trade unionists are in a minority or in some cases almost non-existent. In companies where there is a large trade union membership, employee representatives on works councils will themselves be trade union members. In the company for which I used to work they are now all shop stewards. That is fine. In such cases the information would therefore go to employees who were union members.
In earlier debates in this House I have made it plain that in my view 100 per cent. union membership is strongly to be encouraged. I adhere to that view. But the fact remains that there are many sections of British industry where union membership is small. We see no reason why in those cases employees or their representatives should be denied the legal right to that information. Before I leave this question of disclosure of information may I refer to the point which was made, indirectly I think, by the noble Lord, Lord Beswick, that in its original form there was in the Bill no obligation on the Government in turn to disclose information to companies with which they might make a planning agreement. That omission was remedied in Committee in 932 another place, but at Report stage the Government sought to delete the relevant Schedule, now Schedule 4. I hope that the noble Lord who is to wind up this debate will find it possible to give us a categorical assurance that the Government will not in this House seek to reintroduce that Schedule.
Finally, I should like to soliloquise for a moment about the philosophy which it seems to me underlies at least part of this Bill. I am more than ever convinced —and the last few weeks have served to confirm this conviction in my mind—that if our national economic and industrial problems are to be solved the policies put forward by Government, any Government, must have the support of all Parties. If they do not, the next Government will reverse them and we shall be back where we started. The noble Lord, Lord Aberdare, says that if this Bill becomes law and the Conservatives are returned to Government it will be repealed. What better example could we find of what I am saying? I do not believe that this Bill satisfies the criterion to which I have just referred. And so far from being, as the Secretary of State put it in his peroration at Third Reading of the Bill in another place, a dynamic instrument for the regeneration of British industry, I think that for the reasons I have given it will fail in its purpose.
Of course, there is need in British industry today for better planning, more profitable investment, and improved productivity. But these desirable things will not in my view be brought about by means of legislation; they will be achieved only through the willing co-operation of management and employees. The Bill imposes quite a heavy burden on management as regards the provision of information, but no corresponding obligations are laid on trade unions. A sense of true partnership between management and employees is surely unlikely to result from an Act of Parliament which imposes on one party compulsion and on the other nothing at all.
In the same way, the Bill seems to ignore the substantial progress which has been made by a number of large companies in recent years in the matter of consulting with their employees. I know something about this matter at first hand and I fear that the Government's new approach may have the effect (I am sure 933 it is unintended) of undermining what has been achieved in that respect. For example, the threat of compulsory disclosure to trade union representatives, without provision for any protection of confidential items thereafter, may well tend to inhibit the voluntary provision of information to employees. That can grow healthily only in an atmosphere of mutual trust and confidence. Like the noble Lord, Lord Aberdare, I am sorry to say that we do not feel that this Bill does anything to promote that atmosphere of trust and confidence. So, for the reasons I have tried to give, my Lords, we think that in many respects this is a bad Bill and we shall therefore initiate or support Amendments designed in the ways I have outlined to improve it.
§ 4.28 p.m.
§ Lord PEDDIE
My Lords, I welcome this Bill and applaud the objectives that it sets out to achieve. When listening to the noble Lord, Lord Aberdare—I listened to him with great care and attention—I hoped that I should hear critical and at the same time constructive comment. But, instead of that, apart from opening with the statement that he disliked the Bill, which is understandable, he proceeded to introduce a series of strange contradictions. He applauded the principles the Bill contained so far as information was concerned, and agreed with the need for closer co-operation with the Government, yet he condemned the Bill. Then he went on to make the positive statement that he and his Party were pledged to repeal the Bill if they secured power. That is a pledge to repeal given before final consideration of the Bill has taken place. Before he has seen even the guidelines—and he criticised the fact that he had not had the opportunity of seeing them; and I join in that criticism—he makes a positive statement that his Party would repeal the Act. I suggest that that is an indication of utter political irresponsibility. I can only think—
§ Lord ABERDARE
My Lords, may I interrupt the noble Lord. He must realise that this Bill has been through another place and was considered in great detail there, and my Party have given their considered judgment on it, so I am not merely speaking for myself.
§ Lord PEDDIE
My Lords, the noble Lord places very little confidence in his 934 own capacity and the capacity of his Party in this House to effect some variation in the Bill. I am really amazed at that, because I always thought that the noble Lord, Lord Aberdare, had tremendous confidence in this House and its capacity to make impartial judgment on Bills of this kind. But in finding some explanation for this statement, I can only speculate that he made it because he was quite convinced that there will be little prospect of ever implementing that pledge.
In opening my comments on this Bill, I anticipated that there will be no division of opinion on the seriousness of the economic situation today. I appreciate, of course, that there will be some variation in the views concerning the cause of the present economic situation. One can understand that and one can appreciate it. There is a recognition—or at least I thought there was—that inflation is a serious evil confronting the country and successive Governments have adopted a variety of plans to deal with the situation. I was amazed that the noble Lord, Lord Aberdare, seemed to be making out a case in order to justify his condemnation of the Bill; that is, that things were reasonably good in this country, that the attitude that was expressed by my noble friend in introducing the Bill was one of undue criticism of the economic situation today. I am amazed at that point of view, because I thought that there was general recognition that this country's record fell far short of what we would hope it might be. I speak with some measure of experience, with six long years at the Prices and Incomes Board where we had the opportunity to study in some detail the capacity of British industry to meet foreign challenge. There came the realisation that there was need and justification for tremendous Encouragement to secure greater efficiency.
We talk today about inflation. At the moment, the Government are busy, like previous Governments, considering a variety of measures, even gimmicks, to deal with the situation, but the answer to the problem of inflation is simple—so simple that nobody does anything about it. The answer is higher productivity; higher productivity not merely in terms of producing more goods but producing more goods at lower cost, developing a capacity to earn what we consume. My 935 support of this Bill is occasioned by the fact that I believe it makes at least some contribution towards bringing about a greater measure of efficiency within British industry.
It is accepted that Britain has a record of low investment. I do not think that can be challenged by anyone. It has been recognised that over the past decades —never mind years—Britain's relative position has steadily worsened in comparison with any other Western industrial nation. But, in addition to the seriousness of the situation with regard to capital investment—we may all be entitled to our different views as to why capital investment is low, and I shall not enter into those arguments now, but I shall enter into the argument concerning the deployment of existing capital—bad deployment of capital is a major factor bringing about inefficiency in the operation of British industry. Even in the days of "We never had it so good ", when the Party opposite was proudly proclaiming its great stimulus to industry, there were more Bingo halls going up than there were factories. That was a bad deployment of capital. For decades, British industry has been falling behind and I believe the major cause is our inability to adjust our economy to changing conditions.
I believe—and, again, it is a reason for my support of this Bill—that there is also a recognition on the part of industrialists of the need for Government intervention in certain areas. No one can reject the right—indeed, the dire need—to some measure of public intervention. Again, the Party opposite will recognise that the old philosophy of laissez-faire is now out of date; as dead as the dodo. Indeed, during the period of the Conservative Administration I read a Statement made in another place that their own direct subsidies to industry during their period of Office ran to the extent of £2 million a day. There is a recognition of the need for a mixed economy; I accept that and I believe that a form of mixed economy is right. But a mixed economy cannot be maintained unless there are in existence sound guidelines on which the industrial mixture can be maintained.
I have already mentioned the current state of the economy. What is it intended to do about that? To my mind, the Bill 936 has three basic elements. It provides a vehicle for effective and constructive cooperation between Government and industry. No one can deny the need for that. No one, regardless of his political prejudice, could possibly support a viewpoint that would deny the necessity for close co-operation between the Government and industry, and the instrument is provided in the National Enterprise Board. It is true that the real benefit that may flow from it will be determined by the quality of the people who are running it, and it will also be dependent to a large extent upon the guidelines. But no one can deny that the potential of such a Board is considerable. The objects are laudable. According to the Bill, they are to assist the economy, to promote industrial efficiency and international competitiveness, providing, maintaining or safeguarding employment in the United Kingdom.
So far as safeguarding employment is concerned, I should have preferred the words "generating employment". I hope the object is not expressed in terms of safeguarding jobs, because of necessity with a developing economy there must be a certain degree of mobility of labour. But if there be mobility of labour in the interests of industry, it is wrong to expect, as has been the case in the past, that it should be the worker who bears the full cost of those changes. At least, here we have an instrument whereby the mobility of labour could be encouraged without the present inevitable pressures upon labour itself.
Secondly, it seeks to encourage the flow of information. We have heard repeatedly of the necessity of improving the channels of communication between management and staff, and from long experience of 20 years as a director of one of the largest manufacturing and commercial wholesaling organisations in this country, I can say that we have found tremendous benefit from dealing not with one, two or three, but with more than 40 trade unions, constantly bringing them into consultation and giving them the maximum of information relative to the conduct of our business, and in our industrial record we compare favourably with any other organisation in this country.
My noble friend has already indicated that planning agreements of the character indicated here are already in existence in 937 France, Italy, Japan and other countries, and have worked well. May I say this in supporting the general concept? The long-term strategy of industrial companies is of national significance. I would challenge noble Lords opposite to indicate any circumstances in which a large-scale company can embark upon long-term plans, unless it is in a position to secure the co-operation of either local authorities or Government. It is dependent upon public participation for roads, houses, education for training, telecommunications, and so on. Therefore, it is idle to talk about being able to get along without Government intervention in the development of agreements of this character.
But I agree that we need effective guidelines. I believe there will be a need for a greater measure of union commitment and union negotiation on these matters, maybe at the national level; but union participation must be at plant level. Of course, that is a problem we shall have to discuss at Committee stage. It is easy to say that we will have union participation, but in what way, at what level, and with what unions or group of unions? These are questions which might well be discussed at Committee stage. But I would remind the noble Lord opposite that they do not justify the complete condemnation of the Bill merely because we have not hammered out those guidelines.
My Lords, the Bill offers a prospect of far more co-ordinated development and better use of our capital assets. The capital assets of this country are not the sole property of some company in whose balance-sheet they may be recorded. In some measure, they are also the property and responsibility of the nation at large, and their ill use can be detrimental to the whole nation. Therefore the Government, in representing the people, have a right to proceed along those lines in order to make sure that we make the best use of such assets, and are justified in doing so.
I would utter one word of warning. Planning agreements must be concerned with long-range planning. I am sure that my trade union friends, with whom I have had negotiations in years past, will recognise that we must avoid the creation of another pay negotiation process within these planning agreements. I may also argue that these planning agreements need 938 Government co-operation. One can have a situation where manufacturers of, shall I say, television sets, having agreements for long-term development, suddenly find tremendous increases in VAT which completely distort the pattern of demand. In addition, we need greater co-ordination between Government Departments. I am informed that the operation of planning agreements in other countries has been most successful where there has been an effective exchange of long-term views, which have helped industry in obtaining greater knowledge of Government projections.
A great deal of the value of this Bill can be lost when it becomes an Act, if there is lack of co-ordination between one Government Department and another —the Treasury and those Departments of State which are concerned with the development of industry. But I am sure that those are points which will emerge in further discussion on this Bill. I am absolutely convinced that this Bill marks a really significant step forward in the determination of that form of association between industry on the one hand, and the people on the other, which can be for the benefit of both. Therefore, I give full support to the Bill.
§ 4.45 p.m.
§ Lord ORR-EWING
My Lords, I am always glad to follow the noble Lord. Lord Peddle; I agree so often with so much that he says. Like him, I am in favour of a mixed economy; I think every realist is. I see the need for an efficient public sector and a very competitive and efficient private sector, but I do not go along with the Bill because I feel this is not the right time to further extend the public sector. We in this country have gone very much further than any other Western European country in the nationalisation process. Some 20 of our basic industries are nationalised. One has only to think of the performance of British Rail, of the steel industry, or of the announcement this morning by the Post Office of price increases, to realise that they are not by any means perfect. There is much work to be done within those industries already nationalised, without spreading this process any further. The tests one applies to business are profitability, return on capital and the like; but if you measure these tests against almost any one of our 939 nationalised industries, they fall very far short of the perfect on profitability, return on capital, manning, productivity, flexibility, or on the service they give to consumers or industry.
I was interested to hear the opening remarks of the noble Lord, Lord Beswick. His speech was made with his usual dedication and moderate approach. I was interested to hear that there will not be support for uneconomic companies. I hope this will be so, because one has only to look hack to see what happened to the Meriden motor-cycle outfit when they were offered a loan of £3.9 million of public money. It was stated at the time that this sum would not make it a viable operation, and now we have been told that a further loan of £15 million is necessary if they are to continue in business. So if this is to apply to the future, I can only say that it does not appear to have applied in the past under, I concede, not the present Industry Bill but the 1972 Industry Act. I am glad he said it, and I hope it will be endorsed. Perhaps we could write it into the Bill at a later stage so there is no question of transgressing that principle.
My Lords, I am also against further extension because, as the noble Lord, Lord Aberdare, said in his remarks, the National Enterprise Board will become an industrial conglomerate. About 15 or 20 years ago, these were glamorous bodies and were all the rage. I was always sceptical, as one who has grown up in the engineering industry, whether they made financial, economic and managerial sense, and now some of those doubts are coming home to roost. Clearly, industrial conglomerates are out of fashion, and this will be an industrial conglomerate.
I also condemn it because I do not know where these very talented people will come from who will man the National Enterprise Board. We are told that industry is short of talent and experience. Presumably they will come from industry, be taken away from industry, in order to pass judgments which apparently will be much wiser on where investments should be made, on what products should be produced, on what long-term research and development should be undertaken. This seems to be the snag. Industry is people. It is the judgment 940 and leadership of these people and the integrity of the people in the new body which will count. We are short of the type of people needed. I would condemn it, therefore, on that further score.
My Lords, thirdly, I condemn it on size. This is the sort of body which will grow, like Topsy. I was one of those who supported the IRC. One of the reasons I did that was because it was a relatively small body, and if it made acquisitions to help a company get over a difficulty, it was obligated to sell the shares back to investors before it made other acquisitions. This seemed sensible, because one could help a company, then dispose of the shares and go on to acquire other companies, should they need assistance. But this is not so with this new body. It is going to grow and grow and grow. I think the one lesson of recent industrial events is that size does not make for efficiency and flexibility. In some companies with which I am concerned we have been at pains to break up our companies into autonomous units of about 600 people. That allows you a single layer of management, it allows you to keep in touch, and communications are much better. It allows you to control your finance and your plans with understanding and efficiency. I have a feeling that this great amorphous body will grow in size, and as it grows in size it will grow less and less flexible.
§ Lord BESWICK
My Lords, when the noble Lord breaks up these companies, to whom is the subsidiary company responsible?
§ Lord ORR-EWING
My Lords, to a holding company, normally; they report to a central holding company. The holding company in my case employs less than ten people, and they look after the group finance, budgets, and matters of that sort. They are still, of course, ultimately responsible to a holding group, but there are a very small number of people there. All the day-to-day decisions, the local budgets, the monitoring, are taken at the periphery. I think this is sensible. I do not want to develop this theory for too long, but I think it is not without interest that 600 has been a manageable unit size since Roman days; it was the size of the Roman battalion. Incidentally, it is the size of some of our more successful schools as well. Perhaps there is a lesson here to be applied to 941 industry. I have a horrible feeling that this organisation is going to be all too big and therefore all too inefficient.
The noble Lord, Lord Beswick, went on to say that it was going to deal with the unsatisfactory position of productivity. I hope so, and good luck to it if it is going to do that. Certainly Governments have not been able to face up to this in the recent past. In the last few months we have seen Sir Monty Finniston desperately trying to shed 20.000 surplus people in our nationalised steel industry and not being allowed to do so. Apparently this body is going to be allowed to do so; it is going to be able to reduce overmanning, and, hope, the demarcation problems. I am afraid that I feel that this is an overstatement, that it may not in fact come into effect.
I am tremendously in favour—and my noble friends Lords Aberdare and Lord Watkinson have made the point so ably —of the maximum amount of participation and information between management and those on the factory floor, but I think we have to remember that a great many of the industrial companies in this country arc very small indeed; they are very important to the total wealth-creation of our country; they are the sub-contractors and the sub-sub-contractors to bigger firms. Many of these companies are not trade unionised at all; either they have no unionists or they have a handful. It seems to me unrealistic, in regard to the small and medium sized company, to lay down in an Act of Parliament that it should pass this information to a handful of trade unionists and not to the great majority of the firm. This seems to me to be a fault in the Bill which I hope will be put right.
I think the Bill was improved as it went through its long process in the House of Commons but again I find fault, even in its changed form, with some of the information which may have to be provided. It says in Clause 23—we will discuss it in detail later on—that information is to be provided on any intended disposal of assets. If one is trying to get rid of an uneconomic portion of one's business one does not want it known high, wide and handsome that it is uneconomic; one would have much less 942 chance of selling it. It also says in the next phrase that you must announce intended acquisition of fixed capital assets which are going to be used. Equally, if you are trying to acquire a company which you hope will add to your strength and competitiveness, surely the last thing you want is to have it known that you are on the acquisition path; otherwise the price goes up and everything becomes more difficult.
Lastly, it says that knowledge of expenditure on research and development programmes should be made available. My Lords, I have been involved in high technology engineering all my industrial life. This is the one area which you really have to keep very close indeed to your chest. Nowadays, the period of gestation of a sophisticated product is often five years and may be seven or even ten. If you are making announcements on your research and development expenditure, that will become knowledge among your competitors all too quickly—and I may say that there is industrial espionage and the like and this may already become knowledge. I do not see why that information should be made available; it may be very detrimental to the business.
I was pleased to hear the noble Lord, Lord Beswick, say that the NEB will abide by the City Code. I think it is going to be very difficult to abide by the City Code. If you are going to provide that information to the trade unions, are you going to provide it also to all your shareholders? If not, you are giving privileged information to insiders—those working in the factory. Can we be sure that none of that information will filter across to those responsible for investing trade union pension funds? These invest very heavily in industrial undertakings. I admire the noble Lord's principle, but I hope he will look at this. Perhaps we could have the City Code written in, if this is to be the code by which the organisation will control iteself.
Then I turn to the question of fair competition. It is said that there is to he fair competition between the NEB and normal free enterprise. I think again it is going to be very difficult indeed—and I shall make a constructive suggestion later. When you are seeking finance —and I concede that it has to be on 943 market terms if you are getting it from the National Enterprise Board—if you are becoming a Government firm, you have the Treasury standing behind you. Have we seen any instances of Government firms allowed to go bankrupt? If we have, they certainly do not come readily to my mind. More often one sees that pressure comes for Government orders, for defence orders to be put here, to be put there, to be put to Harland and Wolff, where unemployment was so serious. I feel that fair competition is going to be very difficult to achieve, both in finance and in Government orders. So if we are to set up an appeal tribunal of some sort—and the noble Lord, Lord Rochester, made this point concerning information—I should like to see it available to give advice not only on whether the information the Minister is seeking is justified but also whether the competition is fair. There must be some person to whom private industry can appeal when trying to compete with a Government organisation.
I take the view that for 16 months this Government, for reasons that we all understand in this House, have had to appease the trade union demands, particularly those from the more militant and difficult trade unions, and many of those in the nationalised industries. Now we are about to receive a package. I believe it was to be published tonight, then I heard it was Friday, and now I hear it is Monday. We are going to learn just what the nation is going to be asked to do in order to control inflation, an inflation which in this country is running at two to three times the rate of our competitors in Western Europe. The Government are going to need the support of people of all Parties and no Party in this House and in another place. I would ask them whether this measure—which I acknowledge has some good points in it, but which has some highly objectionable points—is really essential, in our desperate economic climate. Do we have to push ahead with this confrontation between Government and industry? If it is to go ahead, I hope it will be radically amended, so that we can give another place time to look at it again in the light of our present economic conditions and perhaps to make further changes and improvements.
§ 4.59 p.m.
§ The Lord Bishop of WORCESTER
My Lords, I too, am grateful to the noble Lord, Lord Beswick, for his elucidation of this Bill, and indeed I am honoured to follow the noble Lord, Lord Orr-Ewing, after all that he has said. I find myself reflecting for a moment on the foundations of industry, on the fact that it rests very heavily on the ingenuity and initiatives in the nature of our indigenous workpeople, and on their responsibilities in smaller groups rather than larger. I reflect upon the fact that for years our industry has had very remarkable objectives beyond itself—of standards, of consumer needs, going out to meet the requirements of the Third World. It is not surprising, therefore, that when we are asked to consider a new Industry Bill there are very strong reactions. On the one side, this Bill could destroy the free enterprise system. On the other side, as was said by Len Murray himself, we urgently need a body along the lines of the National Enterprise Board to provide a public capability to assist in strengthening Britain's manufacturing industry.
So one turns to three issues, the first of which is the establishment of the National Enterprise Board. One has noted its constitution, its purposes and its functions. We note that there are certain restrictions on it, financial and otherwise. But I would ask one or two basic questions about the establishment of this Board. Can there be written into the Bill a reconciling of the conflicting purposes of maintaining and safeguarding employment on the one hand, and promoting industrial efficiency and international competitiveness on the other?
The National Enterprise Board has certain financial limits imposed upon it, but are there appropriate Parliamentary safeguards imposed upon its extensive freedoms? Do we want to create a situation where the ethical and social responsibilities of smaller or larger firms are replaced by cash flow? Is it not time that we looked not so much at prices and wages, but at values and services? Here I would endorse what the noble Lord, Lord Orr-Ewing, said about size. The purposes and functions of the Board have been mentioned, but it must be pointed out that the sum of money involved is small in relation to the known purposes. To regenerate industry, or to 945 have a considerable impact on the 100 or 150 companies that have been named, would require a great deal more; as, for example, in the case of British Leyland. If the other purposes of the Board, such as the encouragement of industrial democracy, can be pursued only after the purchase of a financial stake in a company, it is reasonable to suggest that the development of these objectives will be very slow.
As regards the introduction of planning agreements, one would ask for certain questions to be considered. What are the conditions under which money will be allowed to flow? If accountability is to be increasingly towards the State, will this not seriously upset the balance of free initiatives within industry? These free initiatives produce any success that we know about. One could also ask whether the arrangements for planning agreements envisaged by the Bill, whereby companies with agreements obtain assistance at a guaranteed level, would lead to unfair competition? I have a feeling that there are real anxieties on that point. But let me say that one does not want to see a new Industry Bill founder, or be too dependent on guidelines.
Because money will flow to companies through this arrangement, it is necessary to bear in mind the mixed objectives of the Bill. For instance, a company has to take on board new social objectives, maintain employment, involve workers in its planning, and entrust confidential information to union representatives. The arrangement could be thought to be a kind of wedding between Government and the two main industrial parties, to promote industry both nationally and regionally. Many people query the amount of money which would be necessary to sustain this marriage and/or maintain its economic objectives. Others of us would be unhappy if the disclosure of information clauses were not much more closely tied to the planning agreement clause. Moreover, it has to be remembered that behind all the variety of industrial democracy with which we are experimenting today, there lies the principle of giving workers and unions responsibilities to match their power. I do not see sufficient of the concept of responsibility matching rights.
Lastly, one looks for a moment at the section on the disclosure of information. 946 Again, I find myself asking some basic questions. To what extent should the element of compulsion be applicable in the disclosure of information regarding company affairs? In this whole concept of compulsion about disclosing information, should employees and shareholders have equal rights of access to information regarding company affairs? Should information about a company be disclosed to the officials of the relevant trade unions, for possible use in matters not directly concerned with that company? These points have already been outlined by noble Lords who know a great deal more about them than I do.
I also find myself asking whether information sharing will alter relationships, or change behaviour patterns to the good or the bad? There is no guarantee that the sharing proposed will change behaviour patterns for the better. In commenting on such questions as the need for a voluntary agreement as to how information should be disclosed, so that it may not be necessary to invoke the Act, I should say that a voluntary agreement on disclosure is much better than enforcement. The mandatory disclosure of information, as in Clause 21, has been changed and I do not need to refer to it, but the independent committee to which companies may appeal on disclosure will act as an advisory body. I think it must be pointed out that the Minister will be subject to the Negative Resolution procedure in either House, if he resists the advice of this committee. This we feel to be a very important Amendment.
Industry has been worried about disclosure, because unscrupulous people might use the information for personal gain, inside-dealing, et cetera. The present state of education and training within trade unions makes it doubtful whether they could process the new information that would be made available. It is to be recalled that trade union research departments are usually staffed by ideologists and activists, usually with inadequate facilities. This causes a good many companies anxiety. In most cases, it would be essential for a company to train and educate workers, and perhaps officials, as to how to use the information properly, and all the more so when a policy of industrial democracy is introduced. The disclosure of information to union officials is consistent with the Government's 947 avowed aim of strengthening the power of unions. May it not also lead to a strengthening of their responsibilities? But the greatest worry about disclosure of information is that people will treat forward planning too seriously and take up positions.
I would point out in closing only that the Hudson Report, which I think was a Report given to the Bank of England, was rather disquieting the other day when it claimed that the City prefers to nourish foreign enterprise, rather than to renew our badly depleted infrastructure. If this is a fact, it has also to be remembered that investment has become the major concern of commercial institutions, and that the individual relies more and more on them, rather than on his personal investment acumen. By and large, they have taken a passive attitude to investment, ensuring the largest return for their policyholders. We recognise the dangers of this situation. In these circumstances, it is not surprising that Government seek a way to protect their national economic objectives and to provide a channel which will provide money to maintain them.
Finally, the critical question to ask of the Bill is whether it will do these things of itself, or create the opportunities for industry to regain its lost confidence. That strikes me as being the acid test. The Government are of the opinion that the National Enterprise Board will tackle the investment problem on a commercial basis. How it will operate depends on the guidelines that are produced. In very general terms, I am in support of this Bill. But I doubt whether the doctrinal basis of the proposed legislation will permit the Bill to achieve its objectives. It has certain very good objectives, and we recognise that fact, but it attempts to embrace too many of the industrial issues facing the nation all at one time.
§ 5.10 p.m.
§ Lord SAINSBURY
My Lords, your Lordships will not be surprised when I declare that my views on this Bill are scarcely those of a dedicated Marxist. I consider the class-war oratory of the extreme Left as nursery talk. I have long believed that the mixed economy is best for Fritain and best for the continued growth and development of its industry. I therefore concur wholeheartedly with 948 the White Paper, The Regeneration of British Industry, when it says in paragraph 1:We need both efficient publicly-owned industry and a vigorous, alert, responsible and profitable private sector working together with the Government in a framework which brings together the interests of all concerned—those who work in industry, whether in management or on the shop floor, those who own its assets and those who use its products and depend upon its success.My attitude to public ownership is pragmatic and not ideological. Our failure since the war to achieve a growth comparable to our major industrial competitors is due to many causes. The first is under-investment, which is the fault of management and which is vividly illustrated in paragraph 3 of the White Paper:In 1971 investment for each worker in British manufacturing industry was less than half that in France, Japan or the United States, and additionally it was significantly less in 1972 and 1973 than in 1970.The second is over-manning in parts of industry, which is the fault of both unions and management for letting it continue for so long in both the public and private sectors. And the third is of course our utterly dismal record of industrial relations, for which both management and unions share responsibility and which has resulted in the loss of so much valuable production through strikes and go-slow processes.
The National Enterprise Board is the chosen instrument for correcting some of these basic faults, particularly that of under-investment, and, in the enterprises it controls, by involving the employees in decision-making at all levels to achieve better industrial relations. But management must continue to have executive responsibility and be given the necessary scope for applying their skills efficiency must not be sacrificed. The opposition that the National Enterprise Board has aroused seems to me to be founded on hasty and excessive fears. In my opinion the Board is more of a bogey than a menace and it is nonsensical for the CBI to infer that it is the Government's intention to destroy the private sector of the economy as we know it.
It should be borne in mind that with the relatively modest purse of £1,000 million its impact on the economy is clearly limited. For example, if the National Enterprise Board used all its funds on one company it could just about 949 afford to buy ICI at current prices. Thus, if the Board is to be effective over a number of industries and companies it will need the co-operation of the private sector and is likely to mean full-scale ownership of relatively few concerns. The White Paper underlines this need for co-operation in paragraph 4, when it says:Industry and the Government should also be partners in the pursuit of the objective which spells success for industry and prosperity for this country. This requires a closer, clearer, more positive relationship between Government and industry.One thing the Board has to avoid is becoming a crutch for industry's lame ducks, or, to use Lord Ryder's words:…the biggest hospital in the country for sick industries.At this point I wish to express regret at the Tories' hasty and unjustified action of winding up the former Industrial Reorganisation Corporation. Things might have been very different today if that ideological act had not taken place. It is perhaps a little easier to understand industry's reaction to requirements relating to the disclosure of information, particularly to trade unions, concerning the present and future activities of a United Kingdom manufacturing undertaking; but I should have thought that the disquiet among industrialists would have been greatly lessened by the Prime Minister's recent statement to the effect that the powers requiring disclosure are reserve powers and give a clear opportunity for voluntary arrangements to be worked out before there is a resort to compulsory powers.
To speak from my own experience, when I joined the family business over 50 years ago secrecy was carried to incredible lengths. For example, only senior members of the family were allowed to know the total turnover of the firm; and, incidentally, I was not at that time a senior member of the family. What a contrast to the present planned disclosure to all grades of employees of the most detailed information concerning present and future plans and financial results! This is now a common practice among progressive firms, of which we still have many in the United Kingdom. The age of autocratic management techniques is over. It is accepted by most people that the disclosure of information is part of good industrial relations and it is clear 950 that, if consultation is to be effective in the interests of employees, union representatives must also be provided with the necessary information. Of course there must be safeguards, and Clause 25 of the Bill ensures the right of a person to apply for a direction releasing him from the obligation on grounds of breach of confidence. There is also an appeals procedure which can be invoked if the information is felt to be prejudicial to the company's interest. Clause 26 deals with confidentiality of information given to a Minister.
In my opinion, the Bill will fail in its purpose of helping the regeneration of British industry—something which we all desire in the national interest—unless employers and their spokesmen inside and outside Parliament cease their opposition and show a new spirit of constructive co-operation with the Government and the trade unions for the benefit of the people of our country.
§ 5.22 p.m.
§ Viscount WATKINSON
My Lords, I shall always listen with the greatest respect to anything which the noble Lord, Lord Sainsbury, says and I hope he will not mind if I say that, as he based most of his arguments on the White Paper and as one of our complaints about the Bill is that it does not, despite assurances from very senior Ministers, follow the White Paper, he will no doubt support the Amendments which some of my noble friends will be putting down to bring the Bill back into line with the White Paper. Also, I cannot resist saying how pleased I was to listen to my old friend the right reverend Prelate the Bishop of Worcester. I felt that he very delicately dismembered the Bill, and I hope that the noble Lord, Lord Beswick, was listening carefully to his criticisms. What I really want to say, and I say it with great sincerity, is that many of us will remember the right reverend Prelate for his many years of very distinguished work in the industrial field at St. George's House.
I speak for myself in this House, as we all do; but I feel that it is only proper that I should disclose an interest—if that is what it is called—as chairman of the Companies Committee of the CBI and as Deputy President of that body. I very much regret that the House has to deal with this measure at this time. Despite 951 what the noble Lord, Lord Beswick, said about it in his normal disarming and factual terms, this is a very divisive measure which is brought before us at a time when, above all, we want unity in the face of economic danger greater than we have ever faced. I feel that it is very sad that we have to deal with this measure at this time and that the Government have brought it here instead of postponing it as they should have done. However, we must deal with it as best we may.
I believe that it is perhaps not only the Bill that is important but the wider issues which it has raised. As my noble friend Lord Orr-Ewing said, few of us would challenge the concept of the mixed economy today. But I believe that most people wish the mix to represent a fair balance between State control and free enterprise. It is in the maintenance of that balance that there lies the real heart of the matter for industry so far as the Bill is concerned. Even the present Government have on many occasions made it plain—for example, in speeches by the Chancellor of the Exchequer and by the Prime Minister to the CBI—that they wish to see a vigorous and profitable free enterprise sector of the economy. We all know that such an attitude is nothing but common sense because free enterprise still provides nearly all the exports by which we pay our way in the world—something about which the Bill says not one word. Yet despite the assurances which the Government have given about wanting to maintain a fair balance in the mix, the Government have introduced what I really feel to be a rather sordid little measure. We all know that, in the words of the Bill's more activist supporters, both in another place and outside Parliament, it is designed not to regenerate British industry but to hand it over lock, stock and barrel to the State, without a single right of appeal.
Despite the protestations of the noble Lord, Lord Beswick, the main criticism which industry has of the Bill is that it makes no contribution to the increased efficiency and productivity which our nation needs at this time. Yet—and I do not think that this can be challenged, though, if it can, perhaps the noble Lord, Lord Lovell-Davis, will do so when he winds up—it certainly has within it the capacity and the legal right to do major 952 damage to the whole concept of free enterprise. That is inherent in the purpose of every clause. Though I do not speak for the CBI as such, the CBI and industry oppose it, and not for doctrinaire reasons but because it will be capable of doing this lasting damage. I do not charge the noble Lord with wanting to do it, nor some of his colleagues, but we are not dealing with that situation. We are dealing with an Act of Parliament which can be operated by any Minister at any time. I say again that it has the purpose within it to do lasting damage to the very sector of the economy by which we all live. I do not believe that even noble Lords opposite would challenge the statement that if we remove free enterprise and the profit motive which sustains it from this nation, we shall cut away its very sinews. The British have always had to live by their wits but the natural wit of our entrepreneurs does not last very long under the stultifying effect of State control, as we shall see in the NEB, if it ever operates.
Nor is the Bill in any way justified, as some noble Lords have sought to suggest, by vague and untrue statements that the free enterprise sector has in some mysterious way failed the nation. We were regaled with a number of statistics about 1972. The factual answer to those is that, in the only recent period when British industry was allowed to make a little more profit and saw the chance of expansion once again—that is, around the year 1973—investment immediately leapt up. It will do so again immediately the State gets off the back of free enterprise and gives it a chance to operate within the disciplines of a free economy. Nor has the City of London failed the nation. We have not heard anything this afternoon from the Government Benches about the fact that, since the beginning of this year, the City of London has provided over £600 million of extra equity capital, more than half devoted directly to manufacturing industry. So there is no claim that in some mysterious way free enterprise or the City of London have failed the nation. They have done nothing of the sort, though they have been curtailed, cajoled, knocked over the head and then expected to provide better results.
§ Lord BESWICK
My Lords, I invite the noble Viscount, if he is going to tell 953 us about the improvement which took place in 1973, to disclose whether that investment went into manufacturing industry or property, and I ask him to tell us what was the Budget deficit this year and what was the deficit on our balance of payments.
§ Viscount WATKINSON
My Lords, all these figures are well known and I need not waste the time of the House with them. However, what I will say to the noble Lord is that a group of leading industrialists with which I was involved towards the end of last year set out its considered alternatives to the Industry Bill. I do not suppose for a moment that the noble Lord has bothered to read a book called Industry and Government. If he had, he would have found in it a complete answer to everything that has been said today, both about the so-called failures of British industry and about the so-called lack of investment, although my noble friend answered most of those criticisms anyway. It is totally untrue that British industry has done a bad job over recent years, if one takes account of the fact that over all those years it has been hampered and curtailed by one Government after another—and I do not make a Party point about that.
In trying to produce this statement we endeavoured to be constructive, and I must formally say that on this basis industrialists like myself oppose the Bill in principle and we shall continue to do so, taking very serious acount of the pledge which the Opposition have given to repeal it in due course, if it eventually arrives on the Statute Book. If I may say so in defence of my noble friend, he is perfectly right, and constitutionally right, to indicate at this stage that if the Bill should reach the Statute Book, the Opposition in another place and here are pledged to remove it as soon as may be. We in industry welcome that, and we rely upon it.
After all that, as pragmatic people, we have to live with the Bill as it goes along. I have said what our long-term strategy is. Obviously, our short-term strategy must be in the national interest to make it as workable a measure as we can; and one that will do the minimum of harm to the free enterprise system by which we all live, including noble Lords opposite. Thanks to the efforts of the Opposition in another place, and to representations 954 made by the CBI and others to the Prime Minister and other Ministers, we have at least made the Bill a little less bad. I hope that the very great experience that your Lordships' House can bring to these matters will improve it further; and that must be our immediate objective.
I now turn, my Lords, to just two matters which I think are the heart of the Bill. No doubt there are those who believe that the National Enterprise Board has a key role to play in the economy, and that the Bill is necessary for this purpose alone. Of course, the National Enterprise Board can be a lender of last resort. Nobody challenges that, because if it is not there, the Government themselves have to be the lender of last resort; and nobody challenges that. It can also, of course, be a custodian of Government shareholding in existing companies —nothing wrong with that, if one wants a particular institution just to do that job. These could be useful functions. But as for the Board's takeover role—and that is what it is—particularly so far as profitable ongoing industry is concerned, my advice to those industrialists who feel that possibly their cash needs may outrun their bankers' willingness to lend (because they no doubt would be the first applicants to the NEB) is, first, to seek the advice of Sir Henry Benson, industrial adviser to the Bank of England, and then to go to Finance for Industry for funds; and only at the very last desperate resort go to the NEB, if, in the end, we have to face this particular body.
As these alternative sources of advice and financial recourse are available, in my view and in the view of many other industrialists, it is quite improper to allow the NEB, with public money, to buy packets of shares through nominees, or to go playing the market by what is known as "warehousing". I was very glad that the noble Lord gave the pledge this afternoon—which some of his colleagues had also given—that the Board will not be allowed to do this. We shall look with great interest for the appropriate Amendment on the Marshalled List, because I am afraid I must say that assurances in this area are not good enough. I ask noble Lords please to note that I do not mean that in any unpleasant way to members of the present Administration. It is our job 955 —if this Bill is to be an Act of Parliament —to leave it as fool-proof as we can for the long-term future for any Minister. Therefore. I am afraid that assurances from existing Ministers do not really cut any ice at all; they have to be written into the Bill.
Let me give one final example of criticism of this measure. This concerns a subject very near my own heart—the participative operation of British industry. Two years ago the Company Affairs Committee set up by the CBI under my chairmanship published its final report. In it we said:The board"—meaning any board—has to forge closer relationships with its employees towards a common purpose. This must be to secure a wider participation in the processes of decision-making on the part of all employees.Because I do not think you should ask people to do things that you are not prepared to do yourself, I tried to make my own large company, of which I was then chairman, the test bed for this concept of wider participation in decision making. Thanks largely to the initiative of some of our leading trade unionists—some of whom, I think, the noble Lord may know—and to the support of our largest leading union, the Transport and General Workers' Union, and its senior officers, we made participation work. Since then many other leading companies have gone down this road, and a greater degree of participation—and it is only fair to say that the noble Lord said this—is one of the major objectives of CBI policy. We have just taken another step in this direction by publishing the document which the noble Lord mentioned, The Provision of Information for Employees.
We have put in an enormous effort in this area, and many companies have done it before—ICI is a notable example. Now what will the Bill do? Clauses 22 to 26 will, as noble Lords on this side have said, negative nearly all the good work that has been done, because participation of the right kind rests on an organised voluntary policy; discussed on the shop floor, in the board room, and on every level. Once you apply legislative rules—I must not seek the support of the right 956 reverend Prelate, but I listened rather carefully to what he said about this—and once you try to institutionalise this, you will ruin the whole concept. I know that the noble Lord will say that the powers are at the discretion of the Minister and that companies who conduct these affairs in a good and sensible way will not be made subject to the rules of compulsory disclosure. To be fair, the noble Lord has been more than courteous to me and has tried to explain all of this to me, and I am very grateful to him for that. Again, to be fair, so did Mr. Varley and other Ministers.
I am afraid I must stick to the point that this could have been made a much more simple operation. All this cumbersome apparatus of appeal could have been removed. This area should be subject to rather more simple amendment; it could not be more simple. I admit that for a want of something better we have to leave it to Ministerial discretion —unless the wit of my noble friends can find a better way—and say quite plainly that where the Ministers, or his advisers, are satisfied that any company is giving a proper degree of information to its employees and to those trade unions with whom it deals in the processes of collective bargaining, then this part of the Bill does not touch them at all. I must say to the noble Lord that if this is not done, then in the end more harm than good will be done in this very sensitive area upon which the good relations of British industry in the future largely depend.
There are many other aspects of the Bill to which I object, but I do not wish to detain your Lordships' House for long. I want to try, if I can, to end on a somewhat more constructive note, and return to the background to the Bill, rather than the details of it. I assume that this Bill must be seen in the context of Government policy as a whole, and industrial and political pressures, with the onset of even harder times, have brought the Government (I hope, at least) to a more central stance. If this be so, then, my Lords, this is much to be welcomed and encouraged, and I hope that this will be shown by the Government's further conduct of this Bill. I must say—and if I believe anything I believe this—that our country will not solve its great difficulties 957 unless men and women are determined to work together to solve them, although in this process they do not in any way have to abandon their beliefs, political or otherwise.
This Bill was designed to meet a largely illusory crisis in British industry, a crisis fudged up by those who invented it in order to provide a Bill to solve it. Now we are faced with a real crisis of greater magnitude than anything that this nation has faced before. I should at this moment be visiting another place to find out what are some of the solutions, but I felt that I would rather speak in this House. I feel passionately about this issue. I feel that the Government are making a very serious and damaging mistake, and I pray that they will try to listen when we attempt to rescue them from some of the things they are doing wrongly.
I end by saying this: we face the greatest crisis we have faced in industry. We shall only solve it together, brushing on one side those relatively few people—and I think that here I share the views of the noble Lord, Lord Sainsbury—like Communists who want no agreed solution, other than the totality of their own doctrine. Therefore, I hope that both sides might compromise on the further stages of this measure. Much more important, I hope that the Government will now, by wide consultation and fair and balanced policies, seek to draw the nation together to win the battle against inflation. It is only fair to say that the course of the past few weeks encourages me to believe that perhaps they are beginning to do this. It will not be easy after so much that has been bitterly divisive, but it is the only course that can save us from domination by our foreign creditors—which I do not think we shall like very much. This is how industry will seek to face the issues behind the Bill and the much more important pay and prices measures which I think are to come upon us. If they are fair, if they call for the maximum collaboration from all sides with as little legal interference as possible, then, without in any way abandoning our beliefs, we will do our best to co-operate with the Trades Union Congress and the Government in this Bill or in anything else to see our country through to better times.
§ 5.41 p.m.
§ Lord HOUGHTON of SOWERBY
My Lords, although I have sat through this debate so far, I regret that I shall probably have to leave this House before the debate is concluded owing to an unavoidable engagement. The noble Viscount, Lord Watkinson, regretted that this Bill comes before us at this time. But this is the time for this Bill, and indeed the Government, I think rightly, regard it as of some urgency so that the National Enterprise Board and the other provisions of the Bill may go into action to relieve the financial difficulties of many firms which are awaiting the kind of help which was given under previous Industry Acts, and which will be given under this one.
I was rather sad to hear the noble Lord, Lord Aberdare, speak of repealing this Bill. It is certainly within his constitutional right to do so; but I think that there are far too many forward pledges being made in politics today. Had previous Governments, including the present one, been a little more cautious about the pledges they gave only months ago in conditions of rapid and dramatic change, their political difficulties might have been smaller than they are. I think that it is a great mistake if Parliament after Parliament is to be a repeal Parliament; often on the narrowest electoral margin, one Parliament undoing what a previous Parliament has done. This will be bad for politics and bad for Parliament, with a real danger of creating recurring situations of uncertainty and doubt. I hope that this bold promise to repeal this Bill will at least be muted until there has been an opportunity of seeing what it does in practice.
This is an attempt, I think long overdue, to bring into positive contact and co-operation the three elements in our industrial affairs—managements, trade unions and the State. I can make a similar appeal in my peroration to that just made to the House by the noble Viscount—from a somewhat different standpoint but with the same aim and the same emotion to achieve the same result. I think we have to bear in mind that we are perhaps divided by our means but united in our intention, and we have to try to get the conciliation necessary to achieve that common pur- 959 pose in common accord. I think this is an essential part of this Bill, as of other measures at the present time.
The most contentious and excitable part of the trinity that I have mentioned is the State. A lot of industrial managements look upon the role of the State with distrust. They dislike it. They call it interference. The noble Lord, Lord Aberdare, used that word; the noble Viscount a few minutes ago used the same word—"interference" or, at least, "intervention". But bear in mind, my Lords, that there are a number of firms who have come to the State in recent months for the means to continue their business, for the means to avoid the serious collapse of their affairs. It was not regarded as interference then it was regarded as ready and welcome aid. Let us get a better understanding of the terms we use.
It is true that under all Governments of recent times, including Conservative Governments, there has been a suspicion between industry and Government; and Mr. Heath when he was Prime Minister did not enjoy the full confidence and good will of industry which he might have expected. Britain cannot afford, within this most vital sector of our economy, distrust and ill will and something must be done to get rid of those two disadvantages in our present relationships. As my noble friend Lord Beswick said, in Europe they have got rid of it; and unions and management have found a closer identity of interest than we have. One might go over there to try to find out why. In France, Italy and the Netherlands, for example, planning agreements are a recognition of mutual self-interest between Government and industry. There is evidence that a consensus policy can work. There is really nothing new in this. It seems to me that in present conditions it is common sense.
My Lords, why has there been so much fuss about this Bill? It is probably because those who were sponsoring it and those who have had to comment on it have become too excitable and too articulate about what it would do. This Bill has undoubtedly suffered from the kind of atmosphere in which it was debated in the earlier stages, and we have to try to subdue whatever we feel about that. We are dealing with a Bill whose practi- 960 cal aspects have been applied with considerable success in other parts of Europe.
I believe that sectional antagonism in this country has continued for far too long. Like my noble friend Lord Sainsbury, I am a firm believer in a balanced, mixed economy. I think that we all have to try to arrive at what that balance is and what changing conditions may require in adjusting the balance to different times. We have not only to concern ourselves with the prudent management of industry, but we have now to concern ourselves with the prudent management of the nation's affairs. Do any of us believe that private enterprise, either individually or collectively, can take the overall view of the national interest? Governments must have that responsibility and their judgments must be subject to debate and appraisal. But in these complicated conditions we have to concede to Government more than we have done before in the role of guidance for our economy and assistance to particular sectors of it to stimulate production, to show new initiatives and to encourage growth points in our industry and in our exports.
The State cannot be dismissed from the scene. No future Government of whatever political complexion will be able to fold their tents and go away, however much some people hope they will. Those days are gone. I believe that major gains can be obtained from closer relations and not from more distant and antagonistic ones between industry, financial aid and Government-sponsored planning, Government commitments on industrial investment and the like. I think we should welcome the involvement of Government in industry, provided that they know what they are about and provided also that they respond to the mood of the nation, of industry and of the trade unions in finding what the Prime Minister constantly reiterates, which is consent and consensus. That, I think, is the object of this Bill and it would be a mistake to read into it anything to the contrary.
I admit that a good deal of suspicion —which has turned out to be unnecessary—attaches to the use of the words:The extension of public ownership into profitable areas of manufacturing industry.Both the noble Lords, Lord Aberdare and Lord Rochester, referred to these words 961 in the Preamble and the Bill itself as being part of the functions of the National Enterprise Board. I can tell your Lordships from personal knowledge that this is pure manifesto, every word of it. I do not think it is any longer justified by the contents of the Bill. It is a piece of political doctrine—and who can blame a Labour Party and a Labour Government for putting in any measure of this kind an indication of its ideological objective? But I believe it has to be kept strictly under control for the sake of gaining the confidence of private enterprise which is indispensible to our economic recovery. As has been said, we must treat them as reserve powers for use only when that kind of initiative is essential.
Regarding the National Enterprise Board, we must welcome the fact that it will not be merely another merchant bank. It will have powers of initiative. It will have powers of looking into the structure and management of companies. It will be able to look at the industrial relations in enterprises where it might have to go. The Secretary of State remains fully accountable. The powers of the National Enterprise Board are limited, and the Secretary of State has to account for what is done in this particular direction. It is important to assure industrial undertakings that co-operation with the Government and the National Enterprise Board will not put them in an exposed position or in danger of a takeover by the State for political reasons. I think that should be done only when there is no other way of ensuring the greater certainty of industrial success.
Subject to all that, industry will find that planning agreements with sponsoring departments will expand and improve prospects and free industry from some of the irksome features of going to the joint stock banks for finance. It will help to make employment more secure, not necessarily in the particular enterprise, but perhaps in the same area in another and more profitable enterprise, one with a future. And this is another great problem at the present time—the way in which we tend to keep alive redundant industries, afraid to let them run down fearing the social consequences of redundancy and unemployment, but unable in present circumstances to provide the alternative to that industrial tradition 962 of particular areas. There is a great deal which needs to be said about the constructive effort and enormous possibilities for good that can come from this Bill.
The benefits of the Bill will come in when the politics of it go out and when we can get down to the practical work of utilising the powers which the Bill provides. I believe that the Government Departments have a duty to understand their wider role and responsibilities as well as industry. It will take time to reap anything like the full benefit from this Bill, and we are desperately short of time. We are an industrial nation heavily dependent upon industrial earnings, and we have neglected the very sector of our economy which matters most. We have elevated the slick financiers, the speculators, the asset strippers, to the eminence of pop-stars, while goading successful industrialists into a feeling of guilt. The nation has its values upsidedown, and it is outrageous. On the question of exchange of information, I hope that the Government will be content to retain in the Bill those provisions of Schedule 3 which were put there by another place although the Government did not like them. I think they should be there and the Government should acknowledge their responsibility to provide information to industry, as well as for industry to provide information to them.
Now I want to say something about the trade unions. I was glad that the noble Viscount referred to these, because I will do the same. I do so as a former member of the General Council of the Trades Union Congress. I was a member for ten years. For over 30 years I was secretary of a public service trade union. I am not a union "basher" but I claim the right to speak to the trade unions about trade unions. I believe faster progress is needed now in formulating the British model of industrial democracy. The trade unions should get on with it. Also, the CBI should play their part in looking at what is happening in Europe and at what is contained in the new proposals coming from the Commission, and generally informing themselves on how our successful rivals managed their industrial relations.
I believe nothing reveals the failure of both sides of industry to develop that relationship to meet the challenge of this 963 Bill more than the constant rather puny and pathetic reference in the Bill to consultation with the relevant trade union. My noble friend Lord Peddie referred to this, and there is an interpretation clause on page 28 of the Bill, Clause 30, which tells us what a "relevant trade union" is. What is the relevant trade union of British Leyland? What is the relevant trade union at the Ford Motor Company? What is the relevant trade union in Fleet Street and the printing industry? I could mention dozens more. In Europe they would be referring a Bill like this to the works committee or the works council and referring, if need be, to the supervisory board. I believe that greater opportunities, not to mention additional responsibilities, will be offered to unions in this Bill, and in my judgment they are not yet equipped to accept them, to utilise them fully and make the fullest use of the information they may seek and get.
Where is the machinery, the willingness, the ability to fulfill this new and responsible role? When I looked at Mannesmann Steel Works in Dusseldorf, I saw the works council on a vast block in the industrial complex with 11 members of the works council released full time for works council duties. Into that office block was going a constant stream of information from every part of this vast enterprise from the board room and so on. Nothing like that, so far as I know, exists in this country. British trade unions, with their own history and traditions based upon conflict, and having in many cases a political hostility towards the capitalist system, will have a very big adjustment to make if they are to play their industrial role envisaged by the Bill. This is the imperative, and only this Bill can be put behind this imperative. This will require the reconciliation of conflicting interests and the need to reach out for the community of interest within agreed procedures for participation.
The trouble is that at present trade union demands are all too frequently made in an atmosphere of discord. This Bill must surely envisage that they should emerge as mutual benefits from a more harmonious relationship resting upon a fuller understanding. I think trade unions will have to develop a much more sophisticated approach to that which they are 964 seeking to achieve for their members. Participation and co-operation in decision-making must replace protest and narrow sectional interests. The unions will have to develop their educational training schemes enormously to be fit for this job. In Denmark a small trade union centre there—smaller than the largest trade union in Britain—has eight educational centres for their shop stewards, for the members of the works council who are trained to understand the problems of management, its finances, its organisation, its export problems and the rest. This is the way to get full co-operation.
By this Bill trade unions and shop stewards are given a one-third share in the planning of the nation's growth, and I do not think it is impertinent to suggest, with some humility, that it is their duty to make themselves fit for it. This Bill cannot draw upon any firm expectation that the workers and the unions can play their part unless these things are done. I believe that the whole Bill needs underwriting speedily by agreed forms of participation, changing company law if need be. The European models in Western Germany, Holland and Denmark are there, working models every one. Those countries cannot believe how disorganised we are, considering the multiplicity of our unions, the overlapping of membership, the demarcation squabbles and all the rest. This contrast, as I have told your Lordships before, is absolutely unmistakable. There are former members of the General Council of the Trades Union Congress in your Lordships' House, as I am myself, and I hope I am not presuming if I say that I probably speak for them, too, in saying that we want to see those who work in the productive sections of industry to pull their weight on both sides in the supreme national effort which is urgently awaiting us all.
§ 6.2 p.m.
§ Lord CULLEN of ASHBOURNE
My Lords, I understand there has been some criticism recently that the views of those who work in the City are infrequently heard in your Lordships' House on such matters as we are debating today. Therefore, although there are many of your Lordships better qualified than I, I decided briefly to try to remedy this situation. I must first declare my interest, 965 as a member of the Stock Exchange. As one who is going through an extremely gradual metamorphosis from a backwoodsman to a Back-Bencher, I seem to have selected a very complicated Bill on which to speak.
I am entirely in favour of voluntary planning agreements between Government and industry. The closer the liaison, the less likely it is that well-intentioned Government policies will turn out to be disruptive rather than helpful. The three major Parties are all committed to the maintenance of a mixed economy, though the constituents of the mix may vary. So the more the Government know about the problems and aspirations of industry and commerce, the better. What I regard as being extremely unwise and potentially very dangerous is the colossal responsibility and power that it is proposed to place in the hands of one Minister. Personally, I am in favour of a more traditionally conservative conception of Government, where the Government are responsible for the defence of the Realm and the keeping of the public purse—responsible in effect for providing a solid foundation on which industry and commerce can build the wealth of the nation and a steady economic environment in which long-term plans can be made with reasonable confidence. Since, however, intervention by Government seems to occur more and more, whichever Party is in power, it would be unduly optimistic to expect a return to the system which was in force when we were a very great nation. If, therefore, one assumes that intervention is, at any rate for the present, to be the order of the day, let us try to make it work as well as possible. Let us amend this Bill so as to make it sensible and effective, and remove anything which would cause reasonable men and women to withhold their co-operation.
I agree with so much of what the noble Lord, Lord Houghton, has just said. It is not only the present Government which have criticised industry for not spending more on re-equipping or on modernisation, and the City for not providing the necessary funds. That some industrial companies have insufficient capital investment is manifest, though there are very many of them who have invested very fully over many years. I do not accept that the blame lies either with in- 966 dustry or with the City for such failures as have existed. I place the main blame fairly and squarely on the radical and abrupt changes of fiscal policy caused by U-turns of the Government in power and the differing policies of successive Governments. I refer of course—and here I am paraphrasing what has been said by the City and Capital Markets Committee—to such things as stop-go, nationalisation, denationalisation, re-nationalisation, threats of nationalisation, frequent changes in tax rates, alterations in grants and allowances, varying controls, prices, wages, margins, dividends and so forth. Worst of all is the knowledge that legislation brought in by one Government will in all probability be repealed by their successor. In that connection, I hope we shall so amend this Bill that the future Government will not have to repeal it. How, in all conscience, can industry expect to plan ahead with confidence, against such a constantly changing background as I have tried to outline?
The same argument applies as regards the role played by the City. So far as I am aware, though there may have been instances between the autumn of 1973 and the autumn of 1974, no worthwhile capital projects have been held up in the last 10 years because City institutions have failed to provide funds. It may not be sufficiently well known that, as the noble Viscount, Lord Watkinson, mentioned just now, the amount of capital already raised in the City, mainly for British industry, during the last six months totals £765 million, of which £637 million were rights issues of equity capital. Noble Lords may be interested to have a breakdown of that latter figure. It is as follows: capital goods, £121 million; consumer durables, £23 million; consumer non-durables, £124 million; other industrials (chemicals, oils, et cetera), £108 million; financial, £197 million; and commodities, £61 million.
Considering the financial uncertainties during that period, this was by any standard a very remarkable achievement and it is clear proof of the financial support which the City—and, may I emphasise, also the much maligned shareholder—has given towards the expansion and modernisation of our industry. The 967 oft-repeated accusation that institutions are more concerned nowadays with speculation rather than with long-term investment is very wide of the mark. The actual position is that the inconsistencies of Government make long-term investment so hazardous as to be virtually impossible, and fund managers and other serious investors are forced to take a much shorter view than they would like. By the same token, stockbrokers greatly prefer economic conditions where investment can be planned well ahead with reasonable confidence, instead of being dependent on the will-o'-the-wisp character of speculation.
One extraordinary omission from the Bill is any reference to shareholders—who are, after all, the owners of the companies in the private sector. Most shareholders are not millionaires but ordinary hard-working people of every type and group of our country, including many individual trade unionists and trade unions. Clauses 20 to 24 deal in detail with the subject of disclosure of information to the Minister which, it is proposed, he may obtain by compulsion and pass on to representatives of trade unions without any compulsion on the company concerned to pass that information to shareholders at the same time. The Government's views about insiders are well known, and I should have thought that insiders with union cards would be no more popular than those without them. In accordance with the Stock Exchange listing agreement companies quoted on the Stock Exchange are obliged to disclose publicly all information that has been privately disclosed, which directors consider might be price sensitive. In my opinion, and I am authorised to say in that of the Stock Exchange Council, it would be far better if all companies, whether officially quoted or not, were compelled by law to publish all information disclosed to union representatives. This provision would have the advantage of removing from directors the onus of deciding whether or no information given under the terms of the Bill was price sensitive. This also covers the case of companies not listed on the Exchange.
There are many other aspects of Clauses 20 to 24 which cause concern in the City. These are, briefly: the nature and extent of the information requested, 968 the danger of leaks within Government, the apparent advantage to small undertakings over larger ones and of foreign competitors over United Kingdom undertakings. There is also the danger that foreign companies may prefer to set up their European headquarters elsewhere than in this country. These are important matters.
I consider that one of the most alarming features of this Bill is the licence given to the NEB to make substantial investments in companies against the will of those companies. Whereas the noble Viscount, Lord Watkinson, said that this really amounted to an ability to carry out takeovers, the noble Lord, Lord Beswick, said that that was not the case; so I am not quite clear on this point.
§ Lord BESWICK
When the noble Lord says that that power is given to the NEB, will he say to which part of the Bill he is referring?
§ Lord CULLEN of ASHBOURNE
My Lords, I think it is Clause 9 of the Bill, but I am saying that from memory. As far as I understand it, under Clause 9 the Board can go up to 30 per cent. Is that correct?
§ Lord CULLEN of ASHBOURNE
I thank the noble Lord very much for putting me right on that. Obviously, I have got it wrong.
Finally, my Lords, I should like to say how grateful I am to the noble Lord, Lord Beswick, for having given us the assurance that the NEB will be subject to the provisions of the City Code and to those of Section 33 of the Companies Act 1967 relating to notification to a company of the acquisition of a substantial stake in its equity. To me this Bill has all the appearance of the curate's egg. Let the bad parts be excised or we shall all be poisoned when the whole Bill is finally swallowed.
§ 6.14 p.m.
§ Lord STRANGE
My Lords, I must apologise for getting up at the right time which is the wrong time, or the wrong time which is the right time—I am not sure which. The point is that I do not see very well and I thought there was another speaker before me, but now I 969 know and I apologise. I shall not make a speech; that would be wrong. It is often said that this is the finest debating society in the world, and it is so good that I agree it could almost be described as that. Through no fault of my own, because of flight delays and one thing and another, I arrived very late in the day, so I missed all the leading speakers. Therefore, I have nothing to debate, and all I could do is launch off on my own, which might be quite funny but not necessarily a very good speech. I will read the Report of the speeches and form an opinion about the Bill tomorrow. I think that is the only fair thing to do. I thank your Lordships for listening to me so far.
§ 6.15 p.m.
§ Lord RHODES
My Lords, may I apologise in advance for having to leave to catch a train North in a short time? I used to regard it as an unpardonable offence not to stay until the end, and I hope that the Front Bench does not have that opinion now. I never thought I would hear again of an attempt to repeal a Bill of this description. Over the last few years we have become sick and tired of undoing other people's work, simply because we have never been able to get down to what the Prime Minister has asked for for so long—a consensus as to how to run a mixed economy. It would need only a few basic principles to do just that.
About 12 months ago, the Government published a White Paper, The Regeneration of British Industry, which was a first-class job. Its declared object was to ensure a vigorous, alert, responsible and profitable private sector, and investment was to be the means of achieving this. We were told we had a job to do. We were told how France, Japan, Germany and even Italy have beaten us in the investment field. Any intelligent or successful manufacturer who knows his business will tell you that the pre-requisite for investment is confidence in the economic environment. If he does not have that, he shies like a horse at a blowing piece of paper. I think we are on the wrong tack with this demand for investment. Surely in this day and age we should know precisely what each industry needs to make, to be able to renew on the basis of technological advance, or to be able to install equipment for additional pro- 970 duction. I went into that at some length on Tuesday, and if anybody is interested he can read the report of my speech, so I will not reiterate what I said.
The question arises: does this Bill give more confidence or less? I should say quite categorically that, as it stands, the Bill gives less confidence. But we have it in our power to amend it, and my reasons for saying that are these. The Bill is not a true reflection of the White Paper. I sincerely believe that industry assumed that the White Paper was not only informative, but consultative as well. This is important. I believe, too, that industry in general assumed that it must plan on having to carry out its main provisions. Industry had decided that, as the White Paper laid great emphasis on better planning between Government and industry, it was reasonable to assume that this would be the main burden of the Bill when it appeared. But there are grave omissions.
The subject of planning agreements took up 12 of the 32 main paragraphs in the White Paper, but in the Bill it is reduced to one clause and a few minor references. Having had a good look at the Bill's Preamble, I do not believe it is mentioned there at all. Why is the subject of planning agreements so unimportant now, in comparison with the situation 12 months ago? The White Paper emphasised a full exchange of information between industry and Government as an essential part of planning agreements. When the Bill came out there was little mention of the information to be expected from Government. The Commons rectified this in Committee by Amendments, but when the Bill reached Report stage the Government proposed to delete them. Fortunately, Labour Back Benchers rallied and put back the Amendments and they are in the Bill in the terms of Schedule 3. Labour Back Benchers restored one of the most valuable Schedules to the Bill. But the question remains, and I ask it: Why are the Government unwilling to participate in the planning process?
The White Paper said that information provided by industry for planning purposes would be used solely for planning agreements, but that assurance does not appear in the Bill. I think a little more confidence would be given to industry if it were put in the Bill. Why not? Why 971 the reluctance to give that assurance when, by so doing, we could obtain co-operation on a scale we have not had before? We cannot blame industry for being suspicious and apprehensive and fearing the worst if that assurance is not forthcoming. The White Paper said that the Act would provide only reserve powers regarding disclosure of information; and the Bill as amended at Report stage hardly acknowledged this. There was an attempt to remedy that situation. Whether the Bill preserves the voluntary element specifically mentioned in the White Paper, I doubt very much. If we could have a guarantee that this was so, I think the Bill would have an easy passage; the Government would rally support to the philosophy lying behind the Bill.
Since the war every Government have had their own pet agency for industrial and economic affairs. Often when there was a change of Government the agency was dismantled and an almost similar one elected in due course under another name by the new Government. More often than not, it was created by a powerful political figure given his head by the Prime Minister to keep him quiet. Those who have been in politics as long as some of us have, know this to be so. We could recognise these figures throughout the years and do not need telling about them. There was, of course, no better instrument for all these purposes than the old Board of Trade. They really understood the customers. It is sad that it is not envisaged to use the services of NEDC, an organisation which has planning objectives and where Government, industry and unions are already working together. I do not think there is any doubt that we could get a first-class service for this very job from that organisation—in particular, as the noble Lord, Lord Aberdare, mentioned, in the sector of planning; it could be pursued much more quickly and effectively through NEDC committees than in any other way.
No board that we set up can take the place of willingness to work and national pride in what we make. The sooner we get away from this idea that it is easier to make money by spivery than by hard work, good company management and loyalty to good company management, the better it will be. Until there is a 972 sense of national urgency to keep promises made and deliveries on time, any new board that is set up will be largely a waste of time. I urge the Government to pursue the principles set out in the White Paper. Remember, my Lords, it was a good White Paper. Its proposals should be examined in the light of all that has been said here and elsewhere about it.
I want to leave your Lordships with the picture of a man who had been a working lad and went to night school, became a first-class engineer, innovator and creator of first-class machines for a particular industry. Now in his forties, he is recognised throughout the world as an expert and pre-eminent in his line. A month ago he returned from a successful trip to East Germany. He arrived at Cologne and they laughed at him and said: "Oh, you are going to have difficulty. They are on strike again at Manchester Airport." He managed to get to Manchester airport on the Saturday afternoon, but he was supposed to be off to Madrid on the Monday morning on a plane which flew there direct from Manchester. He was selling our stuff, doing what noble Lords were talking about yesterday; he was actually on the job. But what was he told? "There's no plane from Manchester. You see, we are on strike." That was the second time it had happened. If he was not in Madrid on the Monday morning, a German firm was going to get the order. My Lords, where are we on this issue? This man took a car down to Heathrow and flew from there to Zurich, and then from Zurich to Madrid and arrived on the Monday morning. Is that the proper way to treat a chap who is out to get business for this country? What the noble Lord, Lord Hawke, was addressing himself to concerning the unions should be hammered home in every guild and every workshop because, sooner or later, if we do not take notice of what some of our men are suffering from at the present time, by God, we shall regret it!
§ 6.29 p.m.
§ Lord DRUMALBYN
My Lords, the noble Lord, Lord Rhodes, almost represents consensus in himself. If we could only gather round him and listen to his wise words, amend this Bill as we think it ought to be amended, and get it generally accepted so that we could all work together, we should be working for the 973 objective we ought to achieve. I am going to say one or two hard things about it, because if they are not said the case would appear to go by default or people would say that we were too ready to accept what is in the Bill. The Bill was, of course, heralded by a White Paper The Regeneration of British Industry, page 1 of which has been quoted at various times. I shall quote again what has already been quoted. It attributed Great Britain's ills, despite the efforts of successive Governments, to too little investment and to our making less effective use of our manufacturing equipment than other countries make of theirs. What is needed, the White Paper said, is a closer, clearer and more positive relationship between Government and industry, and to construct that relationship requires the development of new institutions.
When we were in Government, we tried to bring industry and Government closer together and I believe that we were graduallly getting closer, using institutions such as the NEDC and, above all, working patiently to improve relations not only between Government and industry, but also within industry. My noble friend Lord Watkinson has drawn attention to what has been done to build up methods of participation and consultation in industry—not everywhere in industry, but the pace-setting has been done and is going ahead. The question is whether this Bill will do anything to bring industry and Government willingly together, and a great deal of the debate has centred around this point. For that, there must be mutual confidence. Even if the two come closer together, higher investment will not necessarily result. Industry will invest in modernisation if, and only if, it is permitted to derive the benefits of productivity and the profit that should result. It is in the interests of industry and the public to invest in productive assets, and indeed in a period of inflation it is better to have productive assets than anything else.
We all know how difficult it has proved to persuade trade unions in many industries to allow these benefits to accrue. The noble Lord, Lord Houghton of Sowcrby—who is not now with us—dwelt on this and pointed out how in Germany this aim has largely been accomplished. But it is only if agreement can be reached on the more economical and flexible use 974 of manpower, on continuity of effort rather than erratic stoppages of production, that we can reap the benefits of modernisation, improve productivity and get a better return on investments.
I take the view that the White Paper was wrong in making the first priority the setting up of new national institutions. Even this Government have recognised that the primary need is for a change in attitudes, and this is something that we all know can come about only slowly, by a gradual penetration of the new approach. Will that be brought about by the Bill? What can a National Enterprise Board contribute to a nationwide change of attitude on the part of trade unions and management? In so far as it engages in production, the National Enterprise Board and its subsidiaries will be like other employers, the Coal Board, the Steel Board, British Airways and their subsidiaries—or indeed, like Reid International. It is to be hoped that it will follow the best existing practices, but it is idle to suppose that it is needed as a pacemaker. The pacemakers are already there.
I grant that the Bill is littered with good intentions, although not all the intentions are equally good. But the question is: will they be there? For example, the purposes for which the National Enterprise Board is to exercise its functions are commendable, though we on this side doubt whether it is really possible for a Board of this kind itself to provide employment in a manner which will win the confidence of industry. We are not talking about joining and providing it, but itself providing it. Certainly, if it can find profitable tasks in which industry is unable or unwilling to engage, then by all means let it get on with them—and they must be profitable or the National Enterprise Board will fall foul of the Treaty of Rome. But what reason is there to suppose that there are such tasks about? Have they been identified? If so, what are they? In any case, would it not be much better for the National Enterprise Board to help industry to take them on?
If there is a shortage of capital for profitable investment, by all means let the National Enterprise Board prime the pump. But with interest rates at their present level, the prospects are not encouraging. If the National Enterprise 975 Board is to compete fairly, it should be permitted to borrow money at no less than current rates. And where will it get the money—by even heavier taxation of existing industry and of those who work in it, by further borrowing at a time when the Government are already having to borrow such fantastic sums, or simply by the Government's printing the money, which hardly seems compatible with the overriding need to curb inflation?
I come now to a question which I should like to ask the noble Lord who is to reply to the debate, because I am not certain that in this respect I have read the Bill correctly. Is it the case that the limit of the resources at the disposal of the National Enterprise Board is £700, to be raised to £1,000—
§ Lord DRUMALBYN
My Lords, £700 million. I am obliged to my noble friend. Does that include any shares that are transferred to it from the public sector? What happens to them? What happens also to the money which the Secretary of States advances to it in implementation of Sections 7 and 8 of the Industry Act 1972? If shares are transferred from the public sector—that is to say, shareholdings in private industry held by the Government at the present time—will not the National Enterprise Board be able to use the dividends itself; and, as I read it, will that not be additional to the £700 million and not something to be deducted? Therefore, Parliament has a right to know what is the amount of the assets that the Government propose to transfer to the National Enterprise Board, and what is the amount of the dividends that they are receiving from those assets at the present time.
In the same way, I should like to know how much of the £250 million that could be used under Section 8 of the Industry Act—if it has been increased; I am not certain that it has—is left, and how much will be available for the Board to buy shareholdings in the companies which it is enabled under that Act to assist, and which it will be assisting under the direction of the Secretary of State? We ought to know these facts, and that brings me on to my next point. Someone has been talking about a marriage between the two sides, but 976 it seems to me that this may well appear to be a kind of dowry that the National Enterprise Board is receiving. If I am right about this, the dividends will be lost to the, Exchequer, which will then have to make up the loss by taxation or other means. So we want to know what it will cost the taxpayer to make this dowry. As for the National Enterprise Board, it will be able to spend the dividends on setting up undertakings in competition with other businesses.
That brings me to the point of how the Government will ensure that that competition is fair. We understand that there are to be guidelines, and no doubt the Secretary of State can give directions if the National Enterprise Board fails to comply with the guidelines. I would reinforce the plea made this afternoon for the guidelines to be made fully known before Parliament parts with the Bill. I remember in days gone by, when discussing the Industrial Relations Act, great pressure was brought to bear for the Code to be fully available for discussion before we parted with that particular Act, so I think I am entitled to ask the Government to make known these guidelines before we part with the Bill.
My Lords, in addition to what I have been saying, as I understand it—and I hope the noble Lord will forgive the only word that occurs to me—the National Enterprise Board is to be given a free hand, at least within certain limits yet to be finally fixed, to "weasel" its way into profitable enterprises, without even having to consult those enterprises. No good reason for this has been given in the debate. Does anyone believe that, for example, the trades unions will exercise more restraint in an undertaking run by the National Enterprise Board than in any other undertaking?
§ Lord DAVIES of LEEK
My Lords, I always listen with great interest to what the noble Lord has to say, and I apologise for interrupting, but I do not like the word "weasel". We now have a bench mark in the history of capitalism. We are moving straight into one of the most horrid systems of State capitalism where we privatise the profits and socialise the losses. This is happening throughout the world. Here is an honest endeavour to find an answer to the acquisitive society, also with freedom, 977 and the mixed enterprise. Therefore, "weaseling" is not correct when we have helped industry when it has asked for help in the past.
§ Lord DRUMALBYN
My Lords, I use the word advisedly, because I am talking about the use of nominees to buy shareholdings without consulting a company, which I understand it will be able to do up to the limit of £1 million.
§ Lord BESWICK
My Lords, I said that this body would have the same powers, no more no less, than any other company in the country. If the noble Lord, Lord Drumalbyn, thinks other companies in the country are "weaseling" they way ahead, he should say so.
§ Lord DRUMALBYN
My Lords, I think it is certainly right for the National Enterprise Board to consult with any company before it starts using the taxpayers' money to buy into a profitable enterprise. I believe this to be right. If other companies wish to buy shareholdings as investments, that is fine. If they wish to buy shareholdings with a view to taking over a company, then they are bound by Stock Exchange rules. I accept the point of the noble Lord that the National Enterprise Board will be expected to abide by Stock Exchange rules. But that is not what I am talking about.
My Lords, I am talking about the clandestine use of public money in order to enable the National Enterprise Board to buy itself into profitable enterprises. I must say that I am well aware, of course, that this has been in successive Manifestos. It was understood that the Labour Party were going to do this, but it is no answer at all to say that this Bill must be enacted because it embodies ideas in the last two or three Labour Party Manifestos. This Bill was carried in another place by 13 votes, a majority representing less than two-fifths of the electorate—only about a quarter of it, if you take the total electorate. Is that what the Government call a consensus? Is it not reasonable to ask that the Government should seek a more broad consensus than that? In this House, our task should surely be to try to achieve something like a consensus.
978 My Lords, there are parts of the Bill introduced on Report in another place which have not been debated at all. For example, there is Clause 8, to which my noble friend referred, which deals with the National Enterprise Board and the media. There are other parts of the Bill for which there was inadequate time for debate in the other place. There are extraordinary provisions about the disclosure of information to representatives of trade unions, and it seems that these representatives are not intended to be employees of companies concerned. This is something we must look at in Committee. I believe those provisions could do immense damage to the interests not only of the companies, but of the nation. They could do great harm to the extent of participation and consultation that has already been established. As they stand, they are bound to create confrontation between management and other workers, because the workers, the trades unions, are almost certain to appeal against any application on the part of the companies not to disclose information. It is wrong to do anything to increase confrontation at a time when there is a crying need for better understanding.
My Lords, there is the whole question of the accountability to Parliament of the National Enterprise Board. This is particularly important because it seems, as has been said, that the National Enterprise Board will grow to gigantic proportions, and will go on growing until it is directed by the Secretary of State to stop, or else its powers are repealed. I would say just this. We are at least as anxious as the other side to see the modernisation of plant and equipment, to see new enterprises based on the latest technology set up, enterprises which will give new employment and produce goods we now have to import, and goods which we can export, and so improve our balance of payments. But to set up a National Enterprise Board is not the only, and certainly not the best, way to achieve these ideas.
When we come to the Committee stage, we shall seek to improve the Bill, but for the moment our task is to remove some of its worst blemishes. This is something, I regret to tell the noble Lord, that cannot be achieved hurriedly. I hope noble Lords opposite will enter the discussions in Committee with the intention of meeting the points we have to raise, and of 979 achieving the consensus that is so important at the present time.
§ 6.48 p.m.
Lord CAMPBELL of CROY
My Lords, this has been a serious and constructive debate on what is probably the most controversial Bill in this Session. As was the hope expressed by the noble Lord, Lord Beswick, in the course of his helpful introduction to the Bill, we have had a factual and analytical discussion unclouded by purely political responses. I trust this will continue during the later stages of our examination of the Bill. Those noble Lords from all sides who have taken part in the debate make special contributions on these subjects from their own experience and achievements.
My Lords, this debate takes place at a crucial moment in our country's battle against inflation. I do not think the Bill can be supported within that context. My noble friend Lord Watkinson called attention to the stark reality of the present crisis. He suggested that an earlier, bogus crisis had been invented to provide the pretext for this Bill; but in the present crisis with which we must now be concerned, I hope the Government will consider carefully, and accept, the wise advice given to your Lordships by my noble friend Lord Watkinson, notably his assessment of lasting damage that will be inflicted on private enterprise by this Bill in its present form, for today the Government appear to be presenting an extraordinary picture of conflicting policies. At last they accept that they have allowed the nation to drift into great danger.
We understand that the Cabinet today have been considering urgent measures to deal with this. The Government are desperately trying to keep the economy afloat, but they have still not cut it away from the leaden weights of their nationalising Bills. There is no single action, I believe, which would be more likely to help our economy and sterling than an announcement by the Government that this Bill is to be dropped; and for good measure the Petroleum Bill and the Community Land Bill could also be discarded, making the tonic for sterling abroad even stronger. This is a time when Britain can least afford to spend hundreds of millions of pounds on grandiose schemes of 980 nationalisation, and the rest of the world knows this. The party is over, to quote words of the Secretary of State for the Environment, but it is over for the Government as well as for local authorities.
The two most objectionable features of this Bill are, first, the irrelevant and excessive powers of the National Enterprise Board arbitrarily to extend public ownership into private industry; and, second, the compulsory disclosure of sensitive information by companies to trade union representatives who are not employees and who could inadvertently, or perhaps deliberately, pass it on to competitors. These provisions would be destructive in their effect on private industry and divisive in upsetting the many good arrangements now existing for the transmission of information within companies. Unhappily, they would also be a strong deterrent to foreign investment. At this critical time in our history this Government seem obsessed with tormenting British industry, upon whose efforts our recovery will depend. There is even to be an inquisition, though the grand inquisitor has been replaced and the system somewhat modified. Indeed, all three Ministers who were originally in charge of this Bill in another place were moved out of the Department before the Bill arrived here. I hope the noble Lord, Lord Beswick, will personally prove more durable.
The Bill as it stands is likely also to lead to unfair competition, and there is great concern in industry about this, as the right reverend Prelate the Bishop of Worcester pointed out.
§ Lord GEORGE-BROWN
My Lords, if I may intervene, I am following the noble Lord in his argument and I happen to agree with much of it, but may I ask him what is his answer to the fact that in Holland, in Sweden and in Germany the employers, as he calls them, take the workers, if that is the right term, fully into account and share the boardrooms with them? The noble Lord is knocking down what the Government are putting up. Would he take the Dutch, the Swedish or the German alternative, because it works there?
Lord CAMPBELL of CROY
My Lords, I know that the noble Lord has interested himself at times in this impor 981 tant subject, but if he had been here earlier—and I do not think he was—he would have heard my noble friend Lord Watkinson speaking about participation of employees in decision-making in firms, and particular methods which have been employed in this country and which he has employed himself. We know that other methods are being employed elsewhere, including the countries the noble Lord mentioned. That is one of the subjects we propose to go into, I hope at considerable length, at Committee stage. I promise the noble Lord that if he will come then—and we are being allotted a lot of time, I understand—we will certainly develop the important point he has raised.
I was just dealing with the matter which the right reverend Prelate the Bishop of Worcester pointed out; namely, that there is concern about the unfair competition which could result from this Bill as it stands. Considering the powers and functions of the National Enterprise Board, the most obnoxious of these is the egregious role prescribed in Clause 2 for extending public ownership into the profitable areas of manufacturing industry, the NEB being armed with powers for taking over and holding securities and property of companies with no provisions for releasing them. How is the NEB to choose the areas of industry in which it is to extend public ownership or the individual companies to nationalise?
We are told that there are guidelines foreshadowed, but according to statements in another place that is weeks ahead. I hope that the Minister who is replying tonight will be able, in response to the request by my noble friend Lord Aberdare, to tell us that these guidelines will be available by the Committee stage at least. Otherwise we shall not know whether it is to be left to the whim of the NEB or to the dictation of the Government of the day whether particular firms or sections of industry are to he taken over. When they come, the guidelines themselves may bring in significant changes. The Minister in the other place in referring to them said that they also would be subject to changes from time to time after they had been issued. Apart from the expense and upheaval, which as a nation we cannot at present afford, these proposals will antagonise and unsettle industry at a time when its full 982 co-operation is needed by the country and by the Government.
The paradox here is that, except for the passages on nationalising profitable industry to which I have just referred, virtually all the powers needed for the NEB are already in the hands of the Government under the 1972 Industry Act; for example, special assistance to industry under Section 8 of that Act, and also operations to help if firms are in difficulties; these operations can be carried out now. This Bill could be simply three or four non-controversial clauses updating as appropriate certain legislation on industry. With their Parliamentary programme so seriously congested, as it is, in the worst economic crisis since the war, it seems madness on the Government's part to try to force so much through Parliament at present. There is an explanation; that is, that it is an effort to placate the Left Wing of the Labour Party.
The noble Lords who spoke today, I think all of them, Lord Sainsbury, Lord Houghton and others, made it clear that they approve of a mixed economy, but we know that there are others elsewhere in the Party who have quite different views. It seems to many that the proposals for the NEB owe their existence more to divided opinion within the Labour Party on how much more should be nationalised, if any, than to any positive concept of the NEB's role and scope. My noble friends have pointed out during this debate that Ministers change, Governments change. It is the Act, the Bill which eventually becomes an Act, which matters. My noble friend Lord Watkinson pointed out to those who were approving of a mixed economy that in Britain it is not just a mixed economy that is important; it is the balance.
British industry knows that there is an especially difficult period immediately ahead of us, whatever the Government announce as counter-inflation measures within the next few hours or the next few days. Some companies may find themselves in difficulties in meeting new requirements on pay or prices, or both, and in facing possible strikes. If they are in trouble, they are likely to be a prey for the NEB to consume, whereas in normal times they might not find themselves in that position. But there is not much consolation for those who get 983 through this period without major problems. Any of them in profitable areas can also be targets for take-over by the NEB. This present uncertainty, unless it can be ended by changes in this Bill or by precise guidelines, could be most damaging to the economy in the next three or four years.
Now I come to the disclosure of information by companies. This is provided for in clauses now numbered 22 to 26 in the Bill. We on this Bench are in favour of a flow of information within companies, with a common sense attitude about the treatment of very confidential information. But this part of the Bill is a cause of great concern to industry. I think that this has been accepted by all sides of the House. Some changes in the Bill were made at the Report stage in another place, but they have not met the principal objections. The noble Lord, Lord Beswick, described the new procedure fully for us, but he confirmed that the original principle has been retained. This means disclosure to trade union representatives who may be outside the company in question, not employees; disclosure of information, including sensitive information which would be damaging if it reached rival firms. Another problem is that an individual company may be dealing with many unions who are represented among its employees. The system in the Bill now is not linked to the proposed system of planning agreements as the White Paper originally indicated. We intend to examine this part of the Bill in great depth at the Committee and Report stages, and the Government should be prepared to consider further changes, especially in the light of the great anxiety in industry on these clauses.
Although there is now an independent advisory committee—several committees, if necessary—when there is a dispute, the Minister still has the final decision, though in certain circumstances it is subject to Negative Resolution procedure in both Houses of Parliament. But situations would then arise where the discussion, whether in your Lordships' House or in another place, would be taking place without any of the Members of either House, except the Minister, knowing the nature of the information which was the subject of discussion, because of course what the argument is about is 984 whether it should remain confidential. We will be examining very fully how such a procedure can really be a safeguard when the Minister is being given absolute discretion to take the final decision. We believe that such a complicated procedure as proposed is inappropriate and unnecessary. It strikes at the roots of good relations now existing in many companies. It is unnecessary because we know of no occasion when a company has failed to provide information to the Government in conditions of confidentiality which are respected. I do not know whether the Minister who is replying can answer this tonight, but I ask the Government to tell us whether there have been any cases of refusal by a firm to provide to the Government information which was needed for important national reasons.
I should like to refer briefly to Clause 11, which was touched on by the noble Lord, Lord Beswick. This concerns prohibition and vesting orders. These are to enable the Minister to take control, or make directions to a company, if, in his opinion, its being taken over by a foreign company is unacceptable. It has not yet been satisfactorily explained why existing controls, especially the Exchange Control Regulations, are not adequate to prevent objectionable takeovers. There is a danger that these provisions will deter foreign investment in this country that they will also discourage joint ventures with foreign companies expected to be of benefit to Britain.
On Clause 11, I would draw attention to the matter on which this House has already achieved a change before the Bill reached us. I think that this is a good augury for later stages. Originally this clause would have cut out completely the traditional procedure, when an Order is of a hybrid nature, of referring it to a Committee for the purpose of receiving petitions. I referred earlier this year in your Lordships' House to this matter when the Bill had just been published and when we were examining a similar provision in the Offshore Petroleum Development Bill. This House then strongly expressed a view against the Government. The Government accepted this view and introduced an alternative which gives twenty-eight days for this Committee procedure. That alternative was included in the Offshore Petroleum Development Bill. I am glad to say, 985 because the House felt strongly about this at the time, that the Government saw fit to introduce a similar Amendment at the Committee stage of another place on this Bill. Some of your Lordships may not think that the urgency in the Industry Bill would be so great as it was under the Offshore Petroleum Development Bill, and they will no doubt raise this later; but we in your Lordships' House can feel some gratifying responsibility for this considerable improvement already made in this constitutional matter.
The main reasons given by the noble Lord, Lord Beswick, for this Bill were related to industrial investment. The pretext for wholesale nationalisation and Government intervention is that investment in British industry has been flagging. They have misread events and their diagnosis is wrong. Investment could no doubt have been greater in recent years, but the main deterrents have been too much Government intervention, not too little, and too frequent changes in Government policies. My noble friend Lord Cullen of Ashbourne gave examples of these, so I will certainly not list them.
The enemies of investment have been uncertainty and inflation. At the beginning of this debate, the noble Lord, Lord Beswick, made comparisons with the United States, Germany, France and Japan, and my noble friend Lord Aberdare immediately pointed out that the unfavourable comparison was meaningless, because the other countries were market economies also. I would also add that he was giving figures which were related to each employee; they were figures for new investment per employee. That, again, does not give a complete picture of the total investment, because, unfortunately, the countries he cited have much higher productivity, certainly the United States, than we have in this country.
That brings us to another of the obstacles to new investment, because indeed it has been a resistance—and it is quite understood—to reduction in labour forces which has made some new investment more difficult. I would remind the noble Lord, Lord Beswick, whose personal business it is, that in the steel industry, public and private, there is the problem that modernisation and new investment means a considerable reduc- 986 tion in jobs, and that in itself has been a cause of resistance to change and new investment. Far from improving conditions for investment in industry, this Bill will add to the uncertainty and to the likelihood of frequent Government intervention in future.
We do not propose to divide your Lordships' House on Second Reading. This is in accordance with our normal custom that when the Government Party put forward something which was in their Manifesto and has come from another place, we do not divide at this stage. We have already made some important improvements to the Scottish Development Agency (No. 2) Bill and the Welsh Development Agency (No. 2) Bill. We intend to show the Government, if they persist with this Bill, the major improvements that can be made with the object of helping British industry. We regret that in its present shape the Bill is now discouraging to industry, and that if it is put into effect it will be gravely damaging to it.
§ Lord GEORGE-BROWN
My Lords, I hope that the Minister will allow me a few minutes before he rises to reply to the debate.
§ Lord BESWICK
My Lords, when I say it is not normal, I mean it is not normal for another noble Lord to intervene, apart from the Minister, after the Opposition winding-up speech.
§ Lord GEORGE-BROWN
My Lords, I am sure I can speak after the Minister has spoken, but would it not be more sensible if I spoke now, before the Minister has replied?
§ 7.10 p.m.
§ Lord LOVELL-DAVIS
My Lords, I agree with the noble Lord, Lord Campbell of Croy, that this has been a constructive and informed debate. The hour grows late and I hope not to detain your Lordships for too long. I hope that noble Lords will forgive me, therefore, if I am unable to cover all the contributions 987 which have been made to the debate. I feel that I must start by saying something about the much vexed question of the disclosure of information. The noble Lord, Lord Aberdare, emphasised that his Party favour the disclosure of information to employees in principle. The words "in principle" were his own and they are the crux of the matter. The noble Lord, Lord Campbell of Croy, said that he was in favour, too. We are all agreed that a wider disclosure on a voluntary basis is desirable and should be encouraged. What this Bill is concerned with, however—and this was made clear by my noble friend Lord Beswick—are measures to ensure that there is wider disclosure in practice on those regrettable occasions when the fine words "in principle" have not yet borne fruit.
The noble Lord, Lord Rochester, asked what would happen if our competitors do not have to disclose information and we do. Shall we not be under a disadvantage and will it not damage us? My noble friend has made the point that in fact the position in most of our competing countries is precisely the reverse; there is much greater disclosure of information there than there is here. The noble Lord, Lord Rochester, then asked why it was assumed that the needs of the Government and employees for information were the same. There is indeed no such assumption and the changes already made to meet this point were also explained by my noble friend, and the Minister is able in such cases to exercise his discretion. Several noble Lords, including the noble Lord, Lord Rochester, and the noble Lord, Lord Aberdare, raised fears that voluntary disclosure of information might be discouraged by the Bill. I find it hard to relate this fear to the very clear statements made by my noble friend Lord Beswick that the powers in the Bill are reserve powers to be applied only where voluntary action is not forthcoming. Where voluntary action is already satisfactory, there is no question of the powers being used. This has been made clear by my noble friend and is made clear in Clause 22(6).
The noble Lord, Lord Orr-Ewing, referred to the disclosure of information and the City Code and suggested that information disclosure would create a privileged group who might use the 988 information they obtained for dealing in the company's shares. I do not believe that this need occur. First, the company will be able to argue—and seek the advice of the committee established under Clause 25—that disclosure of the information to trade union representatives would cause it or its employees substantial injury. I would expect that much price-sensitive information would be excluded by this safeguard, but I accept that some information that is price-sensitive may be required to be disclosed. If this occurs, however, there is no conflict with the company's obligation under the requirements of the Stock Exchange; it will be required under its listing agreement to publish price-sensitive information made available to trade union representatives. There is nothing in the Bill to stop this.
Indeed, I hope that one effect of the Bill will be to stimulate wider disclosure in general to the benefit of shareholders as well as workers. In this respect, the noble Lord, Lord Cullen, expressed surprise that in the Bill there was no mention of shareholders. He might ponder on the successive Companies Acts which have made no reference to employees. I believe that all concerned in a company, employees as well as shareholders, have rights to information about the company and I make no apology for restoring the balance. The noble Viscount, Lord Watkinson, asked that the Bill should say that the powers should not be applied to a company which was already making satisfactory disclosure to its employees and unions. I must read out Clause 22(6) which says with great clarity:A Minister shall not make such an order unless it appears to him that the company or companies concerned will not voluntarily furnish the information to him and to a representative of each relevant trade union.I think an impartial observer would be bound to say that that subsection says emphatically what the noble Viscount asked that it should say. The noble Lord, Lord Campbell of Croy, asked whether I knew of any case where a company has refused to provide information. I must say personally that I know of none, but this surely means that there will be no need to use the reserve powers. Finally on this matter, the noble Lord, Lord Rochester, asked for an assurance that the Government will not seek to reintroduce Schedule 4 to the Bill which 989 requires disclosure of information by the Government. I think he meant that the Government will not seek to delete the Schedule. My noble friend Lord Beswick made it clear that the Government would not seek to delete the Schedule but that some amendment was needed to make it practicable and at acceptable cost to industry and to the Exchequer.
The question which I think most of those who have opposed the Bill in one way or the other have failed satisfactorily to answer is what solutions they would adopt, if any, to deal with our present industrial problems. The National Enterprise Board and the planning agreements system will have a vital role to play in dealing with our deep-rooted regional problems. Already the Government have a powerful system of regional incentives to attract private industry into the underdeveloped regions. After a short period of trying to dispense with such measures altogether, the former Conservative Government played their part in further developing and strengthening these incentives under the Industry Act 1972. But can anyone say that, as a result of these incentives, our regional problems have been solved? The fact is that there is still a great disparity in unemployment levels in different parts of the country; and it is in periods like the present, with its rising tide of unemployment, that the full force of these inequalities is felt in the regions in the North and West of this country. Unlike previous attempts, the Industry Bill is not merely one of sharpening the old weapons for further use; it actually provides us with a complete array of new weapons to use in our attack on the regional problems.
Under the planning agreements system, we shall, for the first time, be able to ask firms directly in our discussions with them over their plans, "What exactly are you doing to provide investment in the regions?" Together with them, we shall be able to go through their main projects for investment and ask them in each case whether or not they would be appropriate for the assisted regions. We shall be able to explain, face to face, the precise financial and other incentives that we can provide and, where discussion shows this to be necessary, offer them additional help in the form of selective assistance.
The right reverend Prelate expressed anxiety about planning agreements. I 990 share with him his concern about the difficulty of ensuring that where public money is invested in private industry, the interests of the taxpayer and the interests of the company are both properly protected. However, I doubt whether his fears are properly directed to planning agreements under this Bill. The object of the planning agreement system will be to try to secure that the interests of Government and company, both management and employees, are better harmonised so that both can work more closely together and towards a common aim. It is easy to say this, but it will be more difficult to achieve. But it is an aim so laudable and so necessary and so much in line with the views expressed from all quarters in this House that I hope the fears of the right reverend Prelate will prove groundless.
The noble Lord, Lord Rhodes, complained that only one clause in the Bill refers to planning agreements. My noble friend Lord Beswick referred specifically to this in his opening speech and pointed out that it reflects the fact that, although vitally important, planning agreements will be voluntary and will not be regulated by Statute. But the really significant and novel departure in our attack on regional problems lies in the National Enterprise Board. Through this instrument, for the first time, a public body specifically set up for the purpose will be able to move directly into the problem areas and establish its own new investment projects. Since the Industry Act 1972, the Department of Industry has stepped up its efforts to attract private industry to the development areas; but they could make a long list of the frustrations they have experienced when, having picked out localities which looked ideal from all points of view for particular types of investment, they find that, try as they may, private industry simply cannot be induced to invest in those sites —and this may be due to nothing more than prejudice perhaps on the part of the managing director or his wife.
The noble Lord, Lord Rochester, asked whether there would be a more section-alised or regionalised structure for the National Enterprise Board. Such questions of the reorganisation of the National Enterprise Board are at present being considered by the organising committee, but in order to assist its work in the regions 991 the National Enterprise Board will be establishing branch offices in the North-East and the North-West. This will enable valuable contacts to be built up in those regions. In Scotland and Wales, as the House will know following the debates we have had on the subject, functions akin to those of the National Enterprise Board will be carried out by the Scottish and Welsh Development Agencies. That is why, if the English developing regions are not to be left behind, it is important that comparable powers should be available to the NEB in those areas of England.
It might be appropriate if at this point I explained the position of Northern Ireland with regard to the Bill. Noble Lords will have noted that the Bill extends to the whole of the United Kingdom. Its powers therefore extend to Northern Ireland. It is important that this should be so for, if the National Enterprise Board were to take into public ownership a company with subsidiaries in Northern Ireland, or if the Government were to enter into a planning agreement with such a company, it would be important that those subsidiaries should be included in the overall national plan for the company. In such cases, arrangements will of course be made for liaison with the Northern Ireland authorities. However, we must remember that a future Northern Ireland Administration will almost certainly have wide devolved powers in the industrial field. I want to make it clear that it would not be my right honourable friend's intention to exercise the powers of the Department of Industry under the Bill in relation to matters which are clearly internal to Northern Ireland.
On the subject of the National Enterprise Board, the noble Lord, Lord Rochester, asked that the National Enterprise Board should prepare an inventory of the likely needs of vulnerable sections of industry, so that the need to give support will not come as a surprise. I can give an assurance to the noble Lord that the National Enterprise Board will not merely react to problems as they arise, but, as my noble friend Lord Sainsbury indicated, will form strategic plans so that its intervention can be orderly and deliberate.
992 The noble Lords, Lord Aberdare and Lord Orr-Ewing, took up the doctrinal opposition to State intervention in industry and to State ownership of industry which has characterised the attitude of the Conservative Party, at least when in Opposition. Of course in Government they found from Upper Clyde Shipbuilders to Rolls-Royce that it was not expedient to practise what they preached. I was sorry that they chose to approach the Bill in so doctrinaire a way. I shall not follow their arguments in detail, but it has never been clear to me nor to my noble friend Lord Houghton of Sowerby why they believe that the State should be allowed to own only industry which is in trouble, and feel that it should be obliged to return such industry to private hands as soon as the difficulties have been solved.
The noble Lords, Lord Aberdare and Lord Drumalbyn, have asked for guidelines for the NEB to be made available to this House. This I can guarantee, but I am sorry to tell the noble Lord, Lord Campbell of Croy, that I cannot indicate any expectation that this will be done before the Committee stage. It is the Government's view that the guidelines should not be part of the Bill, so there will be flexibility to amend them as occasion demands without need for further legislation.
§ Lord ORR-EWING
My Lords, before the noble Lord leaves that point, he must be aware since the Social Contract that the word "guidelines" has unsatisfactory connotations, and that we never saw them. We are therefore anxious to see these guidelines before the Bill passes this House. If they cannot be ready for the Committee stage, which I understand, perhaps we could have them by Report or Third Reading. Could we have something down about the guidelines, because otherwise it seems to me to leave the possibilities wide open and undebated?
§ Lord LOVELL-DAVIS
My Lords, I take the noble Lord's point. We certainly want to get the guidelines as quickly as possible, too, and shall take whatever steps we can to ensure that they are before your Lordships' House as soon as possible.
993 Several noble Lords, including the right reverend Prelate and the noble Lord, Lord Rochester, referred to overmanning as being a consequence of the NEB's purpose of safeguarding employment. But this is the very type of problem—to which, presumably, the alternative is unemployment—to which the NEB can address itself, possibly by providing alternative sources of employment in other companies and industries.
To answer the financial questions raised by the noble Lord, Lord Drumalbyn, the financial limits of the NEB do not cover the value of shares transferred from the Government; nor should they. If the Government transfer their shareholdings in Rolls-Royce (1971) to the NEB, that does not involve any new public expenditure. I am afraid that I cannot, without notice, say what is the total dividend received by the Government on all the investments which it is intended to transfer to the NEB, but I can say that no dividend has yet been received from Rolls-Royce, which is by far the largest investment. The noble Lord also asked about the £250 million in the Industry Act 1972 and I can say that this is additional to the limits in the present Bill. The noble Lord also asked how much money is still available under Section 8 of the Industry Act 1972. The initial funds available under that section were £150 million, and there was provision for successive further tranches of £100 million to an ultimate limit of £550 million. So far one of these tranches has been provided, though not yet fully utilised. Three further tranches of £300 million altogether remain to be withdrawn.
It has been asked in this debate: "Why must we have these powers to fetter private industry? Why can we not simply let it do its job unimpeded? "I can only point to the record of our industry over the last 20 years or so—that is, under all types of Government, as my noble friend Lord Peddie emphasised. Levels of investment and productivity have been and remain well behind those of our main industrial rivals. This is not to put all the blame on industry. The noble Lord, Lord Aberdare, said that we had put the blame on the private sector, but that is not so, as I said before.
On the other hand, private industry cannot, in all conscience, lay all the blame 994 for its own shortcomings on political intervention as he, the noble Viscount, Lord Watkinson, and the noble Lords, Lord Campbell of Croy and Lord Cullen of Ashbourne, were so ready to say. I am aware of the difficulties caused to investment by factors such as our present high inflation and interest rates, and by our uncertain growth prospects. However, by allowing the Government to discuss our economic forecasts with industry, planning agreements should enable those companies to plan their investments with a much greater knowledge of the kind of key economic assumptions which everyone in progressive management knows, as my noble friend Lord Sainsbury so graphically stressed, are so important to the development of sound, long-term investment policy.
My Lords, I was sorry to hear the noble Viscount, Lord Watkinson, use what I considered to be extravagant language in opposing the Bill. To take only two examples, he said that every clause was damaging to industry. But Clauses 10 to 15 are specifically designed to protect our national industry from foreign takeover. He talked about powers in the Bill to hand over the whole of British industry to the Government lock, stock and barrel.
§ Viscount WATKINSON
My Lords, I am sorry to interrupt the noble Lord, but if he is to quote me he should do it correctly. On that point, I said that we could draw our conclusions from what has been said about the Bill by members of the noble Lord's Party in another place and outside. Those were conclusions that I was drawing. So far as the Bill as a whole is concerned, certainly I agree with what he said. It is totally inimical to free enterprise.
§ Lord LOVELL-DAVIS
My Lords, I will turn to the fact that the noble Lord also talked about a power to hand over the whole of British industry to the Government lock, stock and barrel. I think that is a correct quotation.
§ Viscount WATKINSON
I am very sorry, my Lords, but we must have it right on the Record. I said that, if one draws the conclusion from what the noble Lord's own friends have said in another place, that is the conclusion one would come to.
§ Lord LOVELL-DAVIS
My Lords, the impression he gave is clear in my mind and the noble Viscount should draw his conclusions from the Bill, not from what is said in another place. My noble friend Lord Sainsbury had already made it clear how far from true that wild assertion was.
My Lords, a few weeks ago in this House we were debating a Motion put down by the noble Viscount, Lord Watkinson, which called for a united approach to our economic and industrial problems. As my noble friends Lord Sainsbury and Lord Peddie pointed out, the strategy proposed in the Industry Bill is such a united approach. By means of this Bill we are harnessing the joint effort of those who have most to contribute, in order to develop a programme for this country's economic and industrial recovery. As the noble Lord, Lord Orr-Ewing, pointed out, industry is people. The contribution which this Bill enables workers to make is clear—particularly through their rôle in planning agreements.
I should like to congratulate my noble friend Lord Houghton of Sowerby on his most thoughtful speech about the responsibilities that this Bill will impose on unions, and the changes which they will need to make to be able to take up and fully discharge them. I feel that the perspective which his speech lent to the debate did much to balance the previous speeches, and gave a reply to the question put by the noble Lord, Lord Drumalbyn. But let it not he thought that we have either neglected the contribution that businessmen can make, or even that the Bill represents an entirely one-way traffic system of control passing to the Government.
In Sir Don Ryder, the National Enterprise Board will be chaired by a businessman of great experience at the highest levels, and of proven business ability. The same high standards will be required of other appointments to the Board, whether from businessmen or from trade 996 unionists. The establishment of the NEB will enable shareholdings in companies previously held direct by the Government to come under the control of these people, with their wide industrial experience in running companies. Planning agreements and the National Enterprise Board should be seen as forerunners of the kind of co-operation that we must develop if, as I firmly hope, we are to put our industrial performance once again at the top of the international table, where it belongs and where it has to be.
I therefore ask this House to give the Bill its support.
§ The DEPUTY CHAIRMAN of COMMITTEES (Earl Cathcart)
No, my Lords, the Question is, That this Bill be now read a second time.
§ Lord GEORGE-BROWN
If you wish it that way, have it that way, but it is foolish of you.
On Question, Bill read 2a, and committed to a Committee of the Whole House.