Lords Sitting of 21 July 1975

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

BOARD OF FILM CENSORS
Lord BRUCE of DONINGTON: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will state the precise legal status, composition, powers and sources of finance of the British Board of Film Censors.
Lord WELLS-PESTELL: My Lords, the British Board of Film Censors is an independent body for which Her Majesty's Government have no responsibility. I understand that the Board is composed of a president, a secretary and four examiners, and its expenses are met from the fees paid by those who submit films for examination. It has no statutory powers.
Lord BRUCE of DONINGTON: My Lords, while thanking my noble friend for his reply, may I ask him to take note
2
of the fact that, as there are certain matters sub judice regarding the Board at the present time, I do not propose to ask any further questions? Would my noble friend also take note that I intend to return to the whole question on some convenient future date?
Lord WELLS-PESTELL: My Lords, I am much obliged to my noble friend. The answer to his questions is, "Yes", in both cases.

PORTUGAL AND DEMOCRATIC RIGHTS
2.38 p.m.
Lord GORE-BOOTH: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what steps they have been able to take to lend encouragement to those in Portugal who are seeking to uphold the democratic institutions and the rights of the individual in that country.
The PARLIAMENTARY UNDERSECRETARY of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, while taking care not to intervene in the internal affairs of another country, Her Majesty's Government are promoting contacts with political and military leaders in Portugal in which we explain our view of the importance and relevance of democratic freedoms. At the same time, we

3
hope that our offer of technical assistance to Portugal and advocacy of a forthcoming policy towards Portugal in the European Community will encourage those in Portugal who wish to follow the path of freedom and democracy, and will demonstrate our support.
Lord GORE-BOOTH: My Lords, in thanking the Minister for his reply, may I ask him whether he is aware that, since a policy of complete passivity was open to the Government, many people will be glad that they are taking an active line? May I further ask whether, in arguing the case, Her Majesty's Government feel able to say that there are only two alternatives in Portugal if you are pro-revolutionary? One option is ignobly to use the revolution, to exploit it, in order to make it a transient passage from one form of totalitarianism to another; the other one is to stand up and fight for those democratic institutions which clearly more than two-thirds of the Portuguese people desire.
Lord GORONWY-ROBERTS: My Lords, my noble friend puts the position admirably.
Baroness ELLES: My Lords, since the one public voice from this country is from the BBC, can the Minister say what steps have been taken to ensure that the voice coming on the overseas broadcasts to Portugal represents the democratic views of this country, and is not tainted with any Left-Wing political colour?
Lord GORONWY-ROBERTS: My Lords, I agree entirely with the purpose of the question, and I can assure the noble Baroness that steps have been taken by the BBC themselves to put the matter right.

RHODESIA: BRITISH SUBJECTS'TRIAL
Lord BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government, in view of the successful efforts made by them to secure the release of Mr. Hills by the Ugandan Government, what efforts they have made to secure
4
the release by the Rhodesian Government of the three British subjects, John Mutasa, Moven Mahachi and Maurice Nyagumbo, at present on trial for their lives in Rhodesia where Her Majesty's Government have a considerably greater responsibility.
Lord GORONWY-ROBERTS: My Lords, we have repeatedly made clear our views on these detentions to the Rhodesian authorities. In the Government's view all executions in Rhodesia are illegal, and they are particularly repugnant when they are a result of mandatory death sentence provisions. The problem in Rhodesia is, and always has been, that our responsibility for events there is not matched by power to influence them on the ground. The best hope of assisting these people lies in achieving a just settlement of the political and constitutional problems of Rhodesia and our main effort is to this end.
Lord BROCKWAY: My Lords, I thank the Minister for that Answer. First, may I ask whether he would agree that these men are not charged with murder, for which a death sentence might be more appropriate? Secondly, is my noble friend aware that some of these men are known to us as men of high character and good record? Thirdly, would he agree that if death sentences are carried out they will exacerbate the position, make guerrilla activity more likely, and cause some prejudice against the Constitutional Conference which all of us are seeking?
Lord GORONWY-ROBERTS: My Lords, I agree with the noble Lord's observations, and in particular with the last part of his supplementary question. Any action of this kind can only exacerbate the situation in Rhodesia and make even more difficult the attainment of a just and durable settlement.
Lord BARNBY: My Lords, may I ask the Minister whether it would be right to understand from his Answer that the trial has occurred, because the impression exists that these individuals, held on criminal charges for assisting terrorism, have not yet come to trial. This is therefore the normal procedure. At the same time, would he say whether it would be rather irregular to equate the detention of an individual on a frivolous

5
charge by an unstable dictator, with these men who have been held on criminal charges, not defined, for assisting terrorism? The Minister will know well the brutal atrocities which are carried out by terrorists against Rhodesians, black and white alike.
Lord GORONWY-ROBERTS: My Lords, I imagine that detention without trial by whomever promoted, would be equally repugnant to us in this country. As to the circumstances of these cases, I can only repeat what I said in reply to my noble friend. Any action such as is possible in these cases, judging from experience of the past—and the not so remote past—could only embitter an already difficult and dangerous situation in Rhodesia.
Lord BROCKWAY: My Lords, is the Minister aware that the charges in this case are not of participating in guerrilla activity? Is he further aware that the charges are only of not reporting to the illegal authorities in Rhodesia the presence of guerrillas in their village? Does the noble Lord regard that as an occasion for a sentence of death?
Lord GORONWY-ROBERTS: My Lords. I do not regard any political charge in Rhodesia as an occasion for a sentence of death.
Lord BARNBY: My Lords, may I ask the Minister whether he can make any comment on the statement in the Financial Times on Friday of last week, to the effect that 57 members of ZANU have been detained since March and have not yet come to trial? If he is not able to comment, would he write to me?
Lord GORONWY-ROBERTS: Clearly, my Lords, if I have to consult the Financial Times I must write to the noble Lord.
The Earl of ONSLOW: My Lords, would the Minister agree that if people cannot get what might be regarded as a just settlement in Rhodesia, this will tend to drive them into extremism and violence which everyone in this House must deplore?

ICELAND: FISHERY LIMIT
2.45 p.m.
Lord CAMPBELL of CROY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is their policy towards the unilateral claim by Iceland to a 200-mile fishery limit.
Lord GORONWY-ROBERTS: My Lords, Her Majesty's Ambassador in Reykjavik has made it clear to the Icelandic Government that we regret this claim to a 200-mile fishing limit. However, I welcome the assurance that the Icelandic Government have given that they are prepared to discuss the application of their proposed new regulations with us. We are pressing for the opening of talks at the earliest possible moment.
Lord CAMPBELL of CROY: My Lords, I am grateful to the noble Lord for his statement. While such unilateral action by Iceland is unfortunate, though not unexpected, is the noble Lord aware that there is now almost unanimous agreement, in principle, in the world on a 200-mile economic zone, but that the signing of a treaty is being delayed by matters other than those concerned with fishing? Because of the urgency of this matter for the fishing industry, will the Government now seek to sponsor regional arrangements in the North-East Atlantic area for fish conservation, with the 200-mile zone in prospect, as suggested from this Bench in the debate on 9th June?
Lord GORONWY-ROBERTS: My Lords, I take note of the noble Lord's suggestion that a regional arrangement might be discussed. We shall certainly engage as soon as possible in bilateral discussions with the Icelandic Government, with whom we are on the very best of terms and have no dispute, apart from an occasional dispute about this industry which is vital to them and to many communities in this country. The fishing industry is of great importance to many communities in Britain. I shall not comment at the moment on the regional proposal made by the noble Lord, except to say that I personally find it attractive.
Lord KENNET: My Lords, would the Government bear in mind in developing their policy on this matter that what has been done by Iceland is likely to be done, before the year is out, by the United States, Canada and Norway, and that the entire British fishing industry would like Her Majesty's Government to do the very same as far as we ourselves are concerned?
Lord GORONWY-ROBERTS: My Lords, it is a fact, as was mentioned earlier, that there is a practical consensus that a 200-mile limit should be formalised in due course as a result of the deliberations at the United Nations Law of the Sea Conference. On the other hand, as my noble friend has said, not only Iceland but other countries as well are moving ahead of the formalisation of this consensus, and it behoves us to do what we can to expedite bilateral and, possibly, regional discussions on this matter.
Lord SLATER: My Lords, may I ask why the noble Lord, Lord Campbell of Croy, has raised the question of regionalism? I was always under the impression that we sought to act as a nation in regard to this dispute which has been with us for so long. If we are to drift into regionalism, we shall not be able to achieve what we first set out to do.
Lord GORONWY-ROBERTS: My Lords, I am grateful to my noble friend for underlining the importance of the bilateral approaches—and he is quite right about this—which we must make to our Icelandic friends. In finding the possibility of regional action attractive, I can assure him that this is simply a canvas of a possible solution for the North Sea area, on the basis of bilateral satisfaction between various countries. For instance, we are not the only European country which is in difficulty with our Icelandic friends on this matter, and the Federal Republic of Germany has an outstanding, and so far unresolved, problem in this connection. No doubt they, too, will seek in due course a bilateral solution, but it is additionally helpful to think in terms of a composite regional arrangement for the North Sea area.
Lord LLOYD of KILGERRAN: My Lords, may I ask my noble friend the
8
Minister, in fairness to the Icelandic Government, whether it is not right, in view of the happy relations between the United Kingdom and Icelandic Governments, that the Icelandic Government have in fact offered some sort of licence—provisional, no doubt—to the United Kingdom fishing industry to fish within this 200-mile area?
Lord GORONWY-ROBERTS: My Lords, I could not confirm precisely what the noble Lord has said about the issue of a licence in that area. The 1973 Agreement was designed to restrict the catch by specifying closed areas for certain periods of the year, and also placing certain limitations on the size and type of craft. The licence, if I understand the noble Lord precisely, was embodied in the Agreement which was signed in November 1973. But if I have not got the noble Lord's question aright, perhaps he will enlighten me after Questions.
Lord PAGET of NORTHAMPTON: My Lords, can the noble Lord give us any indication as to whom, at the end of these negotiations, the English Channel is likely to belong?
Lord GORONWY-ROBERTS: My Lords, I hesitate to reply to my noble friend, except to say that everything he says is very carefully listened to by me.
Lord GLENKINGLAS: My Lords, will the noble Lord bear in mind that in the past when these negotiations have taken place with either Iceland or Norway, the British Government have tended to come into line (if that is the right expression) perhaps a year later, by which time a great deal of damage has been caused by foreign fishermen inside our own, at that time, territorial limits. In this case, will the noble Lord please ensure that whatever is arranged, whether bilaterally, regionally or in any other way, operates simultaneously for foreign boats fishing in our waters and our boats fishing in theirs?
Lord GORONWY-ROBERTS: My Lords, there is great point in what the noble Lord has said. These arrangements must be reciprocal and also coincidental, chronologically and in every way. I take the point.
Lord KENNET: My Lords, when the Government are planning the North Sea

9
regional arrangement, of which my noble friend so wisely spoke, will they make sure that it really is an arrangement among North Sea States and pay close attention to the question where the Russian fishing fleet, which as they know catches far more than any other fleet in the world, will go to maintain its catch level after the 200-mile EEZs are established all around both sides of the North Atlantic?
Lord GORONWY-ROBERTS: Yes, indeed, my Lords. It is partly what all of us have in mind when we think in terms of a regional arrangement. Not only the immediate European coastal States are involved; there is a Russian interest and intervention.
The Earl of ONSLOW: My Lords, are the Government aware that these difficulties of conservation and increase of fishing limit zones point inexorably to the need for a greater use of factory-farmed fish in our own areas and in other areas?
Lord GORONWY-ROBERTS: My Lords, I am sure the Government are aware of all the implications of this, I hope, small difficulty which we have with our Icelandic friends.

NORTHERN IRELAND
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, with the leave of the House, at a convenient moment after 3.30 p.m. my noble friend Lord Donaldson of Kingsbridge will repeat a Statement on Northern Ireland.
FINANCE (No. 2) BILL
Brought from the Commons on Friday last and printed pursuant to Standing Order No. 48; read 1a.
GREATER LONDON COUNCIL (MONEY) BILL
Read 2a, and committed to the Committee on Unopposed Bills.

INDUSTRY BILL
2.55 p.m.
The MINISTER of STATE, DEPARTMENT of INDUSTRY (Lord Beswick): My Lords, I beg to move that this House do now resolve itself into Committee on the Bill.
Moved, that the House do now resolve itself into Committee.—(Lord Beswick.)
On Question, Motion agreed to.
House in Committee accordingly.
[The EARL OF LISTOWEL in the Chair.]
Lord BESWICK: I was hoping we might start off in complete agreement. I beg to move the Amendment standing in my name, No. 1. It is common form and it will help towards easier consideration of and reference to the Bill.
Amendment moved—
Page 1, line 4, at end insert ("PART I").—(Lord Beswick.)
On Question, Amendment agreed to.
Clause 1 [The National Enterprise Board]:
Lord ABERDARE Lord ABERDARE moved Amendment No. 2:
Page 1, line 6, leave out ("National").
The noble Lord said: I wish I thought that all these Amendments could be moved as succinctly and with such a measure of agreement as the noble Lord has achieved in his first Amendment. Amendment No. 2 is a probing Amendment. My noble friend Lord Drumalbyn has indicated that, if it is for the convenience for the noble Lord opposite, we can discuss Amendments Nos. 2 and 3 together. At first sight it might appear that this Amendment was designed to start a discussion on the Title of the Bill, but that was not what was in my mind although it may have been in my noble friend's. I have indicated to noble Lords on the Front Bench opposite that the object of this Amendment is to explore further and in more detail the exact relationship between the National Enterprise Board and the two Development Agencies in Wales and Scotland.
All three, the Board and the two Agencies, have functions in common and it is obviously important that there should

11
be no overlap between them in dealing with different industries in different parts of the country. There should surely be some form of agreement on their different spheres of action. There are many examples, especially in the development areas, where a subsidiary company is established by another company of national importance which, for example, has its headquarters in London. How is this to be dealt with so far as the NEB are concerned? Will they be dealing with the whole company through the company's headquarters in London or will they delegate the subsidiary company's activities through the appropriate Agency?
When we were discussing the Welsh Development Agency Bill, at any rate, the noble and learned Lord on the Woolsack took great pride in saying that the Welsh Development Agency was an independent body and spoke for the whole of Wales. Therefore, it is a key matter that we should have some assurance that the National Enterprise Board in turn recognise the Welsh Development Agency as their agent in Wales and that Agency will have full responsibility for those tasks they are allocated within Wales—and the same, of course, goes for Scotland. It also occurs to me to ask what happens if there is a company in Wales which is a subsidiary of another company which is seeking some help? If it goes to the Welsh Development Agency and its request is turned down, can it then go to the National Enterprise Board? Another point which arises on this exploratory discussion also arises on another Amendment by my noble friend Lord Balfour. Should there be overlapping membership between the National Enterprise Board and the two Agencies, or indeed, as he suggests, the Northern Ireland Finance Corporation?
The National Enterprise Board of course have some functions that the Scottish and Welsh Development Agencies do not have. One to which we shall be coming later, and of which we entirely disapprove, is that of extending public ownership. How will this operate in Scotland and in Wales? Will the National Enterprise Board be buying up companies in Scotland and in Wales without reference to the Welsh and the Scottish Development Agencies which do
12
not have this particular and unpleasant duty?
The opposite side of this coin is that the Scottish and Welsh Development Agencies have various additional functions. For example, they are responsible for providing sites and premises for industry; they have various environmental responsibilities for improving the environment; and they have other responsibilities in respect of derelict land. But seemingly there is no Agency in England to carry out these duties. The Scottish and Welsh Development Agencies are responsible in their regions, but the National Enterprise Board is not responsible for these three functions. Therefore, there is no equivalent body in England to carry out this very important task of providing industrial sites, improving the environment and reclaiming derelict land. This is where we are still a little in the dark in trying to see where the exact relationship lies between the National Enterprise Board, the two Development Agencies and the rest of England where there are certain functions that apparently are not to be carried out by any Agency. I beg to move.
Lord LLOYD of KILGERRAN: In regard to the general observations of the noble Lord, Lord Aberdare, so far as they relate to the Welsh Development Agency, I am not going to pursue the argument any further at this stage. However, I should like to remind the noble Lord of the speech of the noble and learned Lord the Lord Chancellor when he introduced the Welsh Development Agency Bill. He emphasised the independence of that Bill in relation to the activities in Wales. As the noble Lord, Lord Aberdare, has indicated, there are very great differences between industrial matters in Wales and in other parts of the United Kingdom, and I should like to support the general observations on this matter of the noble Lord, Lord Aberdare.
Lord DRUMALBYN: I should also like to support what my noble friend on the Front Bench has said. I put down my Amendment first of all to question the appropriateness of the name, and secondly to consider the implication of the name in relation to Scotland and Wales.
In his Second Reading speech, which I am sure we have all studied with care,

13
the noble Lord, Lord Beswick, quoted Lord Beveridge in support of his argument that the Bill is designed to improve investment per employee. But the Government are not proposing a National Investment Board. They are proposing a National Enterprise Board, which is a quite different thing—a Board which may invest in private enterprise but which may also compete with private enterprise. In so far as they compete they are no more national than the companies with which they are competing. It is public enterprise versus private enterprise, and that is why I put down the Amendment to substitute the word "Public" for "National".
The duality of the Board's functions—to assist private industry and to compete with it—seems to me to make undesirable the use of the word "National". I think that the Government should take quite seriously the baptismal rites of their offspring. The Board are bound to be called "NEB", and I do not think that is a very pretty word it has several connotations which the Government may not like. Like any other parent, the Government should consider this point seriously before subjecting their child to mockery. I suggest, therefore, that "Public" is a much more apt and suitable description than "National", but I would agree to the omission of the word "National" without anything being substituted if the Government prefer my noble friend's Amendment.
There is also the relationship with the Scottish Development Agency and the Welsh Development Agency to which my noble friend referred. So far as the administration of Sections 7 and 8 of the Industry Act 1972 is concerned, I understand that the Secretary of State for Scotland and the Scottish Development Agency are taking over responsibility for Scotland, and that the Secretary of State for Wales and the Welsh Development Agency are taking over responsibility for Wales. I quite understand that in some places there may be a certain amount of overlapping, but one hopes that this will be minimal. This again illustrates that the word "National" is not an appropriate name.
So far as the participation of the Board in the two Agencies outside the limited scope of Sections 7 and 8 of the Industry Act is concerned, the position is far
14
from clear. On the Third Reading of the Scottish Development Agency Bill, the noble Lord, Lord Hughes, said this:
"Perhaps the greatest difficulty to be resolved is how to express the dividing line between cases in Scotland which are to be financed by the NEB and those which are to be financed by the Agency…. The point is that there will be no rigid demarcation between some companies or undertakings in Scotland which are the concern of the Agency and others which are reserved to the NEB."—[Official Report; 24/6/75, col. 1298.]
It appears that in Scotland and Wales both the National Enterprise Board and the Agencies will be in touch with undertakings which are based in Scotland or Wales. I appreciate that most of these undertakings will be trading in England and may have subsidiaries in England. Nevertheless, it is unsatisfactory that they should have to spend time dealing with two separate bodies. The respective responsibilities of the Board and the Agencies should be defined at least in regard to the firms concerned and not left at large. Even where the Board are considering giving help to an entire industry they should work through the Agencies in obtaining their information about the needs and viewpoints of the undertakings in Scotland and Wales.
I think that my noble friend said that the Agencies should act as agents for the Board. This is a point to which I shall be reverting later in our discussions. I am not certain that that would really be desirable. Some kind of arrangement has to be made to make them at least representative. If arrangements of this kind are made they should be reflected in the name of the Board so that there will be no misunderstanding. This would not prevent undertakings in Scotland and Wales from making representations on their own initiative to the Board, but it would prevent them from being bothered unnecessarily by two Government Agencies. Also it would mean that in Scotland, once the Scottish Assembly had been established, there would be much less danger of "crossing the wires", with all the possibilities of breakdown or even explosion.
Even if it proves impracticable to make the kind of definitions of responsibility that I am suggesting, there would still be a strong case for calling the Board "Public" rather than "National" which inevitably conveys the impression that

15
somehow the Agencies are subordinate to the Board. Finally, the word "NEB" is offensive to a great number of undertakings which have proved themselves to be by no means lacking in enterprise. The Board will have no monopoly of enterprise. Therefore, I suggest that the word "National" is inappropriate and that the word "Public" should be substituted.
Baroness WOOTTON of ABINGER: Rather surprisingly, I find that I am in favour of the Amendment of the noble Lord, Lord Drumalbyn. The term "Public Enterprise Board" suggests that the function of the Board will be to develop public enterprise, which is how some of us regard it.
Lord SLATER: I am rather surprised at the observations and comments of the noble Lord, Lord Drumalbyn. He was a Minister in the Conservative Administration. Why did he defend, for example, the National Coal Board which covers the whole of the United Kingdom? These are two forms of enterprise which would operate in a similar way to the way in which the National Coal Board operates. We have the section operating in regard to Wales, there will be the particular section operating in regard to Scotland. Therefore they will have a voice by which they will be able to express and put forward to the national Board that is to be set up under this Bill various proposals relative to their own areas.
Lord DRUMALBYN: If the noble Lord will allow me, I am sure he is aware that the Scottish Development Agency, unlike the Scottish Region of the National Coal Board, are responsible to the Secretary of State for Scotland and not to an English Minister.
Lord SLATER: The same principle applies. So far as the mining industry in Scotland is concerned what has to be done there has to receive the consent of the Secretary of State for Scotland, and I cannot see any cause for complaint by the noble Lord. I should have thought he had had so much experience in the offices he has held and the arguments that he has had to put forward on behalf of his Government that he should not take
16
exception at the beginning of the Bill on this particular issue.
Lord TAYLOR of GRYFE: I welcome this discussion because it raises a matter of fundamental importance, namely, the relationship between the Scottish Development Agency and the National Enterprise Board. While it is difficult to draw the exact lines of demarcation at this stage it should be recognised that the economy of Scotland is very much interlinked with the economy of the United Kingdom. If we look at the number of Scottish-based companies of importance operating out of Scotland it will be found that there are no more than a dozen, and they in turn are closely linked with the economy of the United Kingdom. Indeed the major part of the investment of these companies is in England.
While I realise that no rigid lines of demarcation can perhaps be drawn and in the course of development they may iron out the areas of their special responsibilities, it would be useful at this stage if the Minister could indicate what is in his mind in this regard. For example, let us take the fact that both the Scottish Development Agency and the National Enterprise Board have limited resources and probably have substantial calls on those limited resources, and, as has been said before, the SDA have responsibilities in the whole area of the environment as well as in industry. I think there could be cases where the National Enterprise Board would willingly regard it as important that the responsibility for promotion and investment in industry should be transferred to the SDA.
There are serious problems here. We recently had Government intervention in the case of Ferranti Limited. In some people's minds there was, in the Ferranti organisation, a case for taking the Scottish operation of Ferranti out of the total complex. This represents a rather special Scottish interest in a national concern. So the situation is extremely difficult. Many of the companies who will come to the National Enterprise Board for guidance and assistance are often in serious financial straits, and it is important that they should have a direct line rather than a succession of discussions and negotiations with a variety of organisations responsible to different Ministers, and even different agencies

17
because there is some discussion now about the SDA being responsible to the new Assembly. So I think we are looking at a major industrial development, and in any sensible industrial development you establish your lines of demarcation and responsibility at the beginning, otherwise you fall into extremely unfortunate practices in running the industry. Therefore I very much welcome the opportunity for the Minister to make clear the thinking of the Government in this particular case.
Lord LOVELL-DAVIS: First, I should like to echo the sentiments expressed by the noble Lord, Lord Aberdare. This second Amendment does not seem to me to be an entirely auspicious start to what lies before us. If I may, I will take both these Amendments together, dealing first with Amendment No. 2 standing in the name of the noble Lords, Lord Aberdare and Lord Campbell of Croy.
This Amendment would change the name of the National Enterprise Board to the Enterprise Board. As the noble Lord, Lord Aberdare, has explained, the purpose is to probe the relationship of the Scottish and the Welsh Development Agencies, and I should like to thank the noble Lord on behalf of my noble friend Lord Beswick for this morning letting him know that this was so. The National Enterprise Board will operate on a national basis even though certain of its functions will be exercised in Scotland and in Wales by the Scottish and Welsh Development Agencies respectively. The name, which was first proposed in 1973, has now been in general use for several months and it would be confusing to change it without compelling reasons for so doing.
So far as the relationship with the Development Agencies is concerned, the separation of responsibility as between the NEB and the Development Agencies has been made quite clear by the Government Bills to establish the Agencies as well as in all the stages of the Scottish Development Agency and the Welsh Development Agency Bills in this House and in another place. The functions of both the Scottish and the Welsh Development Agencies in regard to the environment, to derelict land, to promotion, the acquisition of land and their relationship
18
basically to the Secretaries of State for both Scotland and Wales, have been made quite clear.
The noble Lord, Lord Aberdare, referred to derelict land clearance in England. The local authorities have been responsible for this and they are already doing an excellent job, as acknowledged by noble Lords on all sides of this House in a recent debate. Therefore, the environment function so far as derelict land is concerned will remain as it is at the moment. It would be misleading to pretend that the economic development of England is completely separate from that of Scotland and Wales. Many industries are organised on a United Kingdom-wide scale and the NEB must have United Kingdom-wide powers if they are to make an effective contribution to the work of regenerating British industry. In Scotland and Wales the NEB will exercise three functions: first, the promotion of schemes for the reorganisation or development of an industry throughout the United Kingdom; secondly, the extension of public ownership into profitable sectors of United Kingdom industry; and, thirdly, the State holding company task.
The Government have made it clear that they have no intention that the NEB should detract in any way from the responsibilities of the Scottish Development Agency or the Welsh Development Agency. The Government will expect the NEB, in formulating any scheme or proposal affecting a sector of industry which is significantly represented in Scotland or in Wales, to consult fully with the Scottish Development Agency or the Welsh Development Agency about their plans. But by the same token the NEB will expect the Agencies to keep them fully informed of any plans for action in their respective countries which could affect undertakings in the rest of the United Kingdom.
The noble Lord, Lord Drumalbyn, raised the matter of companies which would find themselves going to either the Welsh or Scottish Development Agency and to the NEB and asked what would they do. There would not be any question of this: they would simply decide which body they were going to deal with and then they would deal with that Agency, and as my noble friend Lord Taylor of Gryfe said they would establish

19
a direct line with the relevant agency or with the NEB.
I am very glad that my noble friend was able to put into perspective the matter of the Scottish companies which operate out of England and their very close links with the life of Scotland and their close links with the economy of England and their investment position so far as England is concerned. This is a problem which could easily be settled. Companies will fall into one area or the other. The noble Lord raised the matter of Ferranti. This will fall within the province of the National Enterprise Board. The arrangements for co-operation between the three bodies, in short, will be set out in a formal understanding, but this cannot be determined in detail until the National Enterprise Board, the Scottish Development Agency and the Welsh Development Agency are in existence. The Government are confident that informal working relationships will develop between all three bodies, which will be possessed of a full and sympathetic understanding of the needs, aspirations and problems dealt with by the others. It is the Government's intention that relationships of the Scottish Development Agency and the Welsh Development Agency to the Secretaries of State for Scotland and Wales will be similar to that between the National Enterprise Board and the Secretary of State for Industry. Appropriate provision to this effect is made in the legislation establishing the Agencies.
Obviously, consideration will need to be given to the relationship between the Agencies and the Scottish and Welsh Assemblies respectively, but this will have I to be settled in conjunction with the general proposals on devolution to be announced in due course which, if anticipated by this Bill, would be inappropriate. It is intended that the Secretary of State for Industry will be responsible for the National Enterprise Board, but where he exercises his functions in a way which can affect any operations by the National Enterprise Board in Scotland or Wales, he will consult the Secretary of State for Scotland or Wales as appropriate.
I turn now to Amendment No. 3 in the name of the noble Lord, Lord Drumalbyn. I should perhaps start by pointing out that the noble Lord said that the National Enterprise Board would be called "Neb"
20
and that this sounded silly. Perhaps I can remind the noble Lord that when the Party of which he is a member set up what is now the Department of Trade and Industry, they named it "Dotty"!
The effect of the Amendment of the noble Lord, Lord Drumalbyn, would be to rename the NEB the Public Enterprise Board. It is our contention that the name "National Enterprise Board" gives a good indication of the powers and responsibilities of that Board, as well as being the name used in the White Paper, and now in common use. It reflects the Board's role of promoting more and better investment in industrial activity and the Government's underlying aim in the Bill of entering into active partnership in industry. It is called "National" because its responsibility will be to the nation as a whole, and it will exercise its powers and functions in the national interest. This is clearly brought out in the statement of the purposes for which the Board are to exercise their functions in Clause 2(1).
Paragraph 30 of the White Paper indicates the intention of the Government that:
"The National Enterprise Board will be the instrument by which the Government will ensure that the nation's resources are deployed to the benefit of all."
To call it the Public Enterprise Board would be wrong, because the National Enterprise Board are not solely concerned with public enterprise. They will also act as a source of new investment capital for private manufacturing industry, and private firms will be able to seek the advice of the National Enterprise Board on financial and managerial issues. Clause 3 specifically enables the National Enterprise Board to act as a channel for Government assistance to private companies. I hope noble Lords will accept that the National Enterprise Board have a national role to play, that their name is now in common use, and that they will decide to withdraw their Amendment.
Lord ABERDARE: I am grateful to the noble Lord, Lord Lovell-Davis, for having gone to some trouble to try to explain to us what the arrangements are to be. I am not sure that I was really convinced that they produced the clear lines of demarcation that the noble Lord, Lord Taylor of Gryfe, was asking for. He mentioned at least three specific areas in

21
which the National Enterprise Board would be operating in Scotland and Wales. First, there was the case of companies with United Kingdom coverage. I accept that that probably is the right area for the National Enterprise Board to be responsible. With regard to the other two areas mentioned by the noble Lord, one was in respect of the extension of public ownership, and the other was in respect of taking over existing State-owned companies. This seems to me to be an area where the National Enterprise Board should transfer their interests to one or other of the Agencies, if those Agencies, as we were told throughout the debate on them, are to be as fully responsible within their own countries as they should be. However, as I said, this was a probing Amendment. We have had a useful discussion, and I beg leave to withdraw the Amendment.
Lord DRUMALBYN: Before the noble Lord, the Chairman of Committees, puts the Question, may I make one point? I understood the noble Lord, Lord Lovell-Davis, to say that the companies themselves would decide with which body to establish links. That rather conflicts with what was said by the noble Lord, Lord Hughes, when he said that it would be part of the responsibility of the Agency to develop contacts with the whole of Scottish industry. They would be able to enter into discussions with any Scottish-based company, or the management of any Scottish undertaking, to see how that company or undertaking might best contribute to the general good of the Scottish economy. I am sure it is what people in Scotland in general would want, but it does not indicate that the statement of the noble Lord, Lord Lovell-Davis, that a company can decide whether to deal with the Scottish Development Agency or the National Enterprise Board has been fully thought out.
Lord LOVELL-DAVIS: I am sorry if I have confused noble Lords; it was unintentional. I did in fact say that. It depends really where the initiative comes from.
The Earl of ONSLOW: What happens if a company goes to the Welsh Development Agency or the Scottish Development Agency and gets turned down for assistance? Can it then go back to the National Enterprise Board? I did not hear the
22
noble Lord, Lord Lovell-Davis answer that question.
Lord LOVELL-DAVIS: In fact, I did not answer it. There would be nothing at all to stop that company approaching the National Enterprise Board, or making its case to them.
Amendment, by leave, withdrawn.
3.29 p.m.
Lord DRUMALBYN Lord DRUMALBYN moved Amendment No. 4:
Page 1, line 11, leave out ("six") and insert ("eight").
The noble Lord said: Page 1, line 10 of the Bill reads:
"The Board shall consist of a chairman and not less than six nor more than sixteen other members."
For such an enormous enterprise, six would be a very small number indeed—or seven if you count the chairman. One has only to consider the kind of people we would hope the Government intend to appoint. For example, one would expect there would be representatives of local authorities, that there would be a representatives of the trade unions, and certainly I would hope that there would be representatives from the Scottish Development Agency and the Welsh Development Agency. There will have to be some representation of industry as a whole, so that the Board will know what it is talking about. I should imagine also that a counsel would be a useful person to have on the Board.
We have already passed the number of six, and I cannot see any circumstances in which such a small Board of six members would be appointed. Even if there were a desire to have a very small Board, one has to bear in mind that a Board of that description would not have the links throughout the country which a Board of this character ought to have. They would tend to be too much of a cabal and, indeed, would have only one member more, if you leave out the chairman, than the original cabal. I think we want a Board that is broadly representative of various interests, and able to bring a wide range of opinion to bear on the various problems that they have to face. Six is too small, and eight is the absolute minimum. I beg to move.
Lord ORR-EWING: I should like to support this Amendment. The Minister

23
has said that the National Enterprise Board are to have responsibility, to some extent, for companies which are also operating in Scotland and Wales. If we look at the make-up of the Scottish Development Agency and the Welsh Development Agency, we find it is now agreed as a result of Amendments made in this House that there should be a chairman and six members in Scotland, and a chairman and deputy chairman and six in Wales. There is much more responsibility on the National Enterprise Board. Not only are they representing, as it were, 55 million people, but they have a capital which starts at £700 million and can go up to £1,000 million.
As my noble friend has rightly pointed out, one starts to think who is likely to be represented on the Board—certainly, presumably, the TUC; certainly the CBI; no doubt, after the long debates we have had in recent days on sexual discrimination, there will be the statutory woman, perhaps even two; there is bound to be some industrial representation, and I hope very much that there will be some financial expertise on this Board. Six is a very small number. I do not know of a public company in either the public or private spheres, which operates with a minimum as low as six. I very much hope that early in the proceedings on this Bill the Government will be in a mood to accept the very reasonable Amendment very logically moved by my noble friend.
Lord HAWKE: I should like to support my noble friend Lord Orr-Ewing. I know of no company of a corresponding size in commercial life that has a board as small as six. As the Government have not the slightest hope of running this Board with six people, cannot they accept a minimum of eight and show a little good will?
Lord LOVELL-DAVIS: The situation here is that the National Enterprise Board, unlike most public corporations which inherit a whole existing agency, will build up their activities progressively from a base of existing Government shareholdings, including Rolls-Royce and BLMC. Provision has deliberately been made for the possibility of a relatively small Board at the beginning, which will build up progressively as they take on further responsibilities and expand their
24
activities. In another place, it was suggested that the Board should consist of an initial number of eight members. Our original proposal was 6 to 15. At that stage we accepted a change in the numbers and although the minimum remained at six we increased the potential number. I think this is relevant to the point made by the noble Lord, Lord Drumalbyn, when he talked of the representation of different expertise on the Board.
I should like to pre-empt a later Amendment by going further into the matter of representation on the Board. The fact remains, however, that as the Board's activities increase the number can be built up to 18. I think that is a very adequate Board, and certainly it is on the general line of other nationalised organisations, such as the 1RC, which is 7 to 15, the British Steel Corporation 7 to 20, British Airways 8 to 15, and so on. The fact is that in this case there is nothing to stop the Board's appointing eight members at the start, if they feel they need to do so, and I have no doubt they will do so. At the moment, the NEB's organising committee seems to be functioning very satisfactorily with an initial group of five people under the noble Lord, Lord Ryder. We are keen, therefore, that we should stick to this limited number, confident in the knowledge that it will build up as the activities of the Board increase.
The noble Lord, Lord Orr-Ewing, raised the matter of representation; I think he started to raise the matter of representatives of industry in Scotland and Wales. Perhaps I may refer him to the next Amendment which refers specifically to the two Agencies. I should hope that in due course, as the Board expands, they will have more than the statutory woman member. I do not think I can say any more than that. As I say, they are not in the situation of a public corporation taking over a large existing industry, but they will progressively build up and call in such members as they need, with the expertise required as they develop.
Baroness SUMMERSKILL: In view of the fact that a third of the workers in industry in this country are women, could my noble friend say at this stage, because he rather implied that they have been thought of, how many women will be on the Board?
Lord LOVELL-DAVIS: No, I am very sorry. I should like to assist my noble friend Lady Summerskill, but I cannot. I am simply expressing a personal and general hope in today's conditions.
Baroness WOOTTON of ABINGER: Could it be made clear to the noble Lord, Lord Orr-Ewing, that the whole purpose of the Sex Discrimination Bill is to destroy the concept of the statutory woman?
Lord DRUMALBYN: I should not like to enter into that controversy now. I am a little surprised at the way in which the noble Lord has defended this position. It may be true that in the initial stages the assets to be invested, and so on, will be relatively few, but the Board will have the responsibility right from the start and will have to reach decisions. It is in the exercise of that sort of task that they need the right range of expertise. I should not like to pursue this further, but I wonder whether the noble Lord would think this over before the next stage, in the light of what I have said. I am certain that as we go through the Bill we shall find more and more things which the Board will be called upon to do—probably pretty soon.
Lord BESWICK: If the noble Lord is asking us to consider this I shall do so, without of course giving any commitment at all. In part, I feel it will depend upon when this organisation is launched. Had it been launched at the end of this month, which conceivably might be the case if the Bill is finished, six would be ample if it went on to October, it is conceivable that they may want more. The point which the noble Lord has made about the range of expertise is well taken. There is nothing at all to prevent the Secretary of State from appointing the necessary number. It was simply that we did not want at the beginning, when the responsibilities were minimal, to have too many or an unnecessarily large number.
The Earl of ONSLOW: I had the impression from the noble Lord, Lord Lovell-Davis, that the Board are not to take in a large responsibility. He went on to say that they will take over the Government's shareholdings in British Leyland and Rolls-Royce. I should not have thought that either of those was a
26
small responsibility. Also, Rolls-Royce certainly have factories in Scotland. Surely, the point the noble Lord, Lord Orr-Ewing, made, that there should be a representative of the Scottish Development Agency on this Board, is very valid. Furthermore, if such a representative is not there initially he will push off somebody who should be there, in the event of the Government's not appointing more than six people to the original Board.
Lord LOVELL-DAVIS: I should like to refer the noble Earl, Lord Onslow, to the next Amendment so far as Scotland and Wales are concerned. He raised the matter of Rolls-Royce. The NEB are not going to be administering Rolls-Royce; Rolls-Royce has a separate board and it is a separate organisation. There is one other point I should like to make which I omitted earlier. We must bear in mind that although the number of members of the Board is six, there is the Chairman as well so there are in fact seven members. There is also another point to be borne in mind; that is, that any chief executive of the Agency need not necessarily be a member of the Board. Therefore, one could be in the position of starting with eight members who were fully operating the NEB.
Lord DRUMALBYN: I am grateful for what the noble Lord has said. We shall consider these matters carefully. Would he also bear in mind the need to constitute a team from the start? It is disruptive to go on adding the odd one or two members from time to time, especially in the formative time. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
3.40 p.m.
The Earl of BALFOUR The Earl of BALFOUR moved Amendment No. 5:
Page 1, line 11, at end insert—
("(2A) Among the persons appointed to the Board specified in subsection (2) there shall be one person appointed under each of the following enactments—

(i) the Scottish Development Agency Act 1975,

(ii) the Welsh Development Agency Act 1975,

(iii) the Northern Ireland Finance Corporation Order in Council.").

The noble Earl said: Again, to a great extent, this is a probing Amendment. If

27
I have the Northern Ireland Finance Corporation Order in Council wrong, forgive me, but I do not know very much about Northern Ireland legislation. I took the trouble to ring up the Northern Ireland Office to ask whether that was the correct way of putting it down. The purpose of this Amendment is to try to create a situation where the Board have representation from a fairly wide area of the United Kingdom. The noble Lord, Lord Lovell-Davis, said that a company would know where to go. I am not sure about this. In the Scottish Development Agency (No. 2) Bill—it may have been changed now—Clause 5 said:
"The powers conferred by the Secretary of State by section 7 of the Industry Act 1972 may be exercised by the Agency."
Then Clause 3 in this Bill says:
"…where it appears to the Secretary of State that the powers conferred on him by section 7 or 8 of the Industry Act 1972…may direct the Board to exercise them;".
It is extremely important that in anything like this the Agency know what the Board are doing and that the Board know what the Agency are doing.
I have perhaps not drafted this Amendment very well, but for the purposes of the Board and here is where I should like to support my noble friend Lord Drumalbyn in the previous Amendment—it might be of great advantage if England was split into provinces of some sort so that we have fairly wide representation covering the whole country. This is particularly important if you go further into the Bill where it says, for example:
"The purpose of the Board may be to assist a part of the United Kingdom."
It would be a pity if, in assisting that part, some other part suffered.
I do not want to make a long speech. I hope that some of these points can be answered by the Minister. In particular, I should like to say that it will be difficult for an individual industry in, for example, Scotland, Wales, and Northern Ireland, to know which body to go to. Equally, if there is that doubt then there must be co-operation between them. Furthermore, as has been mentioned, you could have a problem with an industry which has a subsidiary in Scotland although its headquarters are, say,
28
in England. Forgive me if I have the drafting wrong, but I hope that this Amendment meets with some sympathy.
Lord LOVELL-DAVIS: The purpose of this Amendment is to provide that of the members of the National Enterprise Board one should also be a member of the Scottish Development Agency, one a member of the Welsh Development Agency, and one of the Northern Ireland Finance Corporation. The Government are very well aware that it will be essential for the Scottish and Welsh Development Agencies and the NIFC to keep closely in touch on matters of common concern since the functions of the NEB, the SDA, the WDA and the NIFC are similar in many important respects. This consultation and co-operation, however, can best be accomplished by establishing close and amicable working relationships within the framework of a formal understanding arrived at between the Boards.
As the noble Earl has said, it is essential that the NEB and the Agencies know what the others are doing. It might on occasion, therefore, be desirable that a member of one of the Agencies, or the NIFC, should sit on the NEB and vice-versa, and there is nothing in any of the establishing measures to prevent this. However, the nature of the relationship between the NEB and the other bodies is not such that it is essential for interlocking membership to be established by Statute. There is no reason to suppose that the presence of an SDA and WDA or NIF member on the NEB would be a crucial factor affecting the degree of consultation and co-operation that would exist between the Agencies and the NEB. To be effective this must be established at the executive working level. It will not be a matter of resolving difficult issues of principle but of avoiding conflicts in day-to-day practice.
Lord DRUMALBYN: I note what the noble Lord has said, but I am sure that he would recognise that there would be a very strong expression of opinion indeed if there were no Scottish representative on the Board—and I dare say the same is true of Wales. I know that this is different from having a member of the Agencies on the Board, but I hope that we are to take from what he has said that there will be a Scottish and Welsh representative on the Board.
Lord LOVELL-DAVIS: I assume there will. There is absolutely nothing in the Bill that prevents a Scot or a Welshman sitting on the NEB.
Lord LEE of NEWTON: Can we be assured that there will be room for one Englishman?
Lord ABERDARE: I should like to back up what has been said by my noble friend Lord Drumalbyn. As the NEB have specific responsibilities under the Industry Act 1972 in the development areas, I do not think that the Welsh, and equally the Scots, would accept it for a minute if there were not a Welsh or Scots representative on this Board. If there is to be, what more natural and more effective and helpful than to have cross-membership with the relevant Agencies?
Lord ROBBINS: I venture to express the hope that Her Majesty's Government will not give an inch on this Amendment. I say nothing about what is already the law of the land, the setting up of these regional Development Agencies, although I confess that I regard them with the deepest suspicion. But I should have thought that it was common opinion that if this Bill, of which many of us have grave suspicions, is to have rationality at all, it is to increase the efficiency of industry in this Island as a whole, and to pack the Board with regional representatives seems to me to be an absolutely sovereign recipe for inefficiency.
Lord BESWICK: I wonder whether we might accept advice from the noble Lord, Lord Robbins. It is wise advice, not for the first time, coming from him. We have later on another Amendment which refers to the need to have recognition of administrative capacity, technological capacity: a whole string of them, another six different definitions of types of people. I do not know whether we would have a Scottish technologist and a Welsh technologist, or whether we are to have a Welsh administrative man and whether he might find himself at cross-purposes with a Scottish technologist. I think it would be a great mistake to have this Board divided up. They ought to be a Board with the united purpose of serving the United Kingdom as a whole. I would be surprised if we did not find someone of Scots extraction upon the Board—that
30
is just taking the law of averages—but I do not think there should be statutory provision for it.
Lord DRUMALBYN: May I say to the noble Lord, Lord Robbins, that he has been quite deliberately provocative on this and I have no intention of rising to his bait. But I am quite certain Scotsmen can find some perfectly good men capable of running this country as they have always done.
The Earl of BALFOUR: I should like to say one more word on this. Perhaps the Board might have one of their representatives in the regions. I wonder whether the Government might think about this. From all that has been said, I would very much appreciate if the Government would again look at Amendment No. 4 in the name of my noble friend Lord Drumalbyn. This might he an even more important point. Although some of us may have great knowledge in certain fields of industry, many of us may not necessarily know the situation that exists in individual areas of the United Kingdom. Very few of us have both a geographical knowledge and an industrial knowledge of the whole country. Therefore, in choosing members for this Board I would suggest that regard be paid to where they are domiciled, as well as obviously complying with the next Amendment, Amendment No. 6. However, I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
Lord BESWICK: I wonder whether it would be for the convenience of the House to resume at this point to take a Statement from my noble friend Lord Donaldson of Kingsbridge.
House resumed.

NORTHERN IRELAND: FORKHILL EXPLOSIONS
3.54 p.m.
The PARLIAMENTARY UNDERSECRETARY of STATE, NORTHERN IRELAND OFFICE (Lord DONALDSON Of KINGSBRIDGE): My Lords, with the permission of the House I will repeat a Statement which my right honourable friend the Secretary of State for Northern

31
Ireland has made in another place this afternoon. He said:
"I will, with permission, Mr. Speaker, make a Statement.
"On Thursday, 10th July, in South Armagh near the border village of Forkhill, the Security Forces saw what appeared to be a suspect device possibly containing explosives. This was kept under observation until Thursday 17th July, when an Army patrol went to deal with it. As they approached, an explosive was detonated from a distance. Four soldiers were killed and one was seriously wounded. A man has been arrested and has appeared in court charged with murder. The House will join with me in expressing sympathy for the relatives of the dead and injured.
"The Crossmaglen Provisional IRA claimed responsibility. They have used the excuse that they were avenging the death in Bessbrook on 4th June of one of their members and the death of a man in Belfast on 13th July. These are specious justifications. In the Bess-brook incident a man was shot by the Security Forces while trying to throw a bomb into a crowded bar. The Crossmaglen Provisionals had set up their ambush at least three days before the Belfast incident.
"Overall there has been a substantial reduction in the violence attributable to the Provisional IRA. It has never ceased completely, and particularly in the South Armagh area shootings and booby traps have continued, although less frequently and less successfully. The Government are very conscious of the desire—indeed the longing—of the people of Northern Ireland from all parts of the community for peace and a return to normality. The Government have, therefore, responded sincerely to the reduction in activity by the Provisional IRA by a very substantial lowering of activity by the Army but without lowering its guard. In normal circumstances violence should be dealt with by the police, and by bringing criminals before the courts and not by detention. So far in 1975, the police have charged 640 persons with security type offences including 66 with murder and 59 with attempted murder. Already, as I have said, a man has
32
been charged with the murder of one of the soldiers killed last Thursday.
"Accusations have been made of so-called Army harassment. I pay tribute to the good will and restraint shown by the Security Forces in carrying out our policy of maintaining a level of Security Forces activity related to the level of violence. They have done neither more nor less than this. They have my full support.
"As I have said before, I want an end to detention. But this will depend on the progress towards the cessation of violence and on the continued success of the police in bringing criminals before the courts. It will, however, clearly be necessary to retain for some time to come the power to detain people, and I will not hesitate to use this power if I am satisfied that it is needed.
"In the light of all these factors, I must under the law exercise my own judgment on releases. I have to make the judgment on each individual case balancing the right of the community to be protected against the right of the individual to his freedom. Decisions are difficult, but I will not shirk them. I do not know whether the Provisionals from Crossmaglen want to see detainees released, but I will not be deflected from what I think is right. The big questions I have to ask myself are: whether the leaders of the Provisional IRA are able to control their followers, for example, in South Armagh; whether such actions do not make the ceasefire meaningless; and whether they will not provoke reactions in retaliation against innocent Catholics. With every incident and each new Provisional statement such as the one they have made today, there is speculation about the end of the ceasefire or changes in government policy.
"The Government's policy is clear and has been explained fully in this House. It is that we are looking for a lasting and permanent peace and for a genuine and sustained cessation of violence which would create a new situation and make further progress possible on the basis of the statements I have made. The Provisional's political aims as restated today are well-known. Provisional Sinn Fein is free

33
to pursue them by peaceful and legitimate means. I must make it clear that the Government have not entered into any agreement.
"I have already informed the House of the changing nature of violence in Northern Ireland in recent months. All those who engage in violence in Northern Ireland should be considering their position. The British Government want peace in Northern Ireland as do most of the people there. What is needed is a positive and continuing response from the Provisional IRA and from other groups involved."
My Lords, that concludes the Statement.
Lord BELSTEAD: My Lords, I am grateful to the noble Lord for the information contained in that Statement and I think it is right that the Statement has exposed the false claim of the Provisional IRA that this crime was intended to avenge the death of one of their members. Indeed, the premeditated nature of this crime was more than usually brutal. It is repellent to think of terrorists setting up a milk churn filled with explosives and surrounded, as I understand, by explosives and then leaving their dreadful refuse to claim its victims. Certainly we on this side of the House join with the Government in sending our sympathy to the families of the four soldiers who died in these circumstances.
My Lords, I have three questions which I should like to put to the noble Lord: first, how do the Government now set the future of the ceasefire which, after all, affects not only Northern Ireland but the whole of the United Kingdom? Of course, the level of violence has reduced since the ceasefire began and for this we are all thankful. However, as the Statement said, this is one of a series of terrorist acts which have been going on for three or four months. The Secretary of State has said in another place that the level of activity of the Security Forces will be related to the level of violence. Can the noble Lord give an undertaking that the Security Forces—both the Army and the police—will be enabled to spare no effort to prevent such actions and to seek out those who are guilty of crimes of this sort?
34
Secondly, it is inconceivable to me that this trap was not known about by quite a number of people locally. If I am right in that supposition, it means that the familiar evil of intimidation was part and parcel of the outrage. I very much welcome the news in the Statement that one capture has been effected and that the man concerned is to be charged before the courts with murder. However, may I ask whether it is right to understand from the Statement that, if others who are thought to be responsible are captured, and it is not found possible to get the necessary evidence to charge them before a court, the Secretary of State's current policy would not preclude detention proceedings being brought against such men?
Finally, may I ask a question about the Criminal Jurisdiction Bill? The village where the explosion occurred is very near the Border and, if the search becomes too hot, these terrorists may seek shelter in the Republic. It was precisely to prevent this that legal representatives from Great Britain, Northern Ireland and the Republic agreed on a system of extra-territorial jurisdiction which has been put into the Bill which has gone through this House and is now in Committee in another place. When is this legislation to become law on both sides of the Irish Sea, so that terrorists of this sort can no longer easily evade the consequences of their heartless crimes?
Lord BEAUMONT of WHITLEY: My Lords, I, too, should like to thank the noble Lord for repeating the Statement and to express with the noble Lord, Lord Belstead, sympathy for the relatives of the murdered men and to pay tribute to the Security Forces for their courage, perseverance and forbearance during a long and difficult period. I believe that all quarters of the House will support the Government in the attitude which they are taking, and will applaud their refusal to give way to any kind of blackmail. It is cheering to hear from the Statement that there appears to be considerable progress in the apprehension of possible criminals. That is something that will go a very long way towards solving the problem. We must hope that the Provisional IRA will heed the words of the Secretary of State. We should particularly like to express our

35
support and sympathy for the very difficult job, and for the very difficult choices of Ministers in the Northern Ireland Office. We know that their burden must be very severe in these times. I feel that the Statement is self-explanatory. There are no questions that I want to ask, but I felt it right to express to the Government the support of noble Lords on these Benches in the task which they have to perform.
Viscount MASSEREENE and FERRARD: My Lords, may I also express thanks to the Minister for the Statement, and associate myself with the expressions of sympathy for the bereaved which we have heard? May I ask whether the Minister has any evidence that when, during the last three of four months, crimes such as we are discussing have been perpetrated and the criminals arrested, any of these men have been detained on some former occasion under the Emergency Powers Act?
Lord DONALDSON of KINGS-BRIDGE: I am grateful for the general support which my right honourable friend's Statement has received. The noble Lord, Lord Belstead, asked me about the future of the ceasefire. I believe we cannot say too often that the ceasefire is a unilateral effort on the part of the Provisional IRA, to which my right honourable friend has repeatedly said he will respond according to the level of violence. He has also repeatedly said—and the statistics of the RUC's successes prove this—that this does not, and never could, involve holding back on the prosecution of crime. I feel that it is impossible to say more than that. We believe that the ceasefire has saved lives and, as long as it remains on the one side, we shall respond to it in exactly the way my right honourable friend has said; that is, according to the level of violence and the safety of the public.
The noble Lord, Lord Belstead, also asked whether, if people were arrested with very good evidence against them which could not be proved in court, my right honourable friend would revert to the practice of signing ICO's. The answer is that he actually says so in the Statement. Nobody wants to do this, but he is absolutely clear that if he can combat an increase in violence only by
36
so doing, he will do so. His hands are in no way tied.
The Criminal Jurisdiction Bill is awaiting its Third Reading in another place, and we may take it as read that it will go through there as easily as it went through this House. The complementary Irish Bill is in Committee in the Senate at the moment. A good deal has been completed in Committee and it is worth noting that the Dublin Parliament have no system of losing Bills if they are uncompleted during a Parliament. So there is no immediate sign of failure there, though I hesitate to put a date on it. I am grateful to the noble Lord, Lord Beaumont, for what is said. I am trying to remember what the noble Viscount, Lord Massereene and Ferrard, asked me: I am ashamed to say that I cannot read my own note.
Viscount MASSEREENE and FERRARD: My Lords, I asked whether the noble Lord had any evidence that the perpetrators of these crimes had been formerly detained for other crimes and then released.
Lord DONALDSON of KINGS-BRIDGE: My Lords, the answer at this moment is, No. But I will check this again and, if there is any change, write to the noble Viscount.

INDUSTRY BILL
4.9 p.m.
House again in Committee.
Lord ABERDARE Lord ABERDARE moved Amendment No. 6:
Page 1, line 13, at end insert—
("( ) The members of the Board shall he appointed from among persons who appear to the Secretary of State to have wide experience of, and to have shown capacity in industry, technology, commercial or financial matters, administration, or the organisation of workers.")
The noble Lord said: This Amendment is self-explanatory, but it is one to which we attach a great deal of importance. It follows once again, as do so many of our Amendments, the precedent of the Scottish and Welsh Development Agency Bills which in many respects provided a rehearsal for this Bill. In both those Bills, there was included a subparagraph similar to the present one listing the various qualifications which

37
should be necessary for those who are to be selected to serve—in that case on the two Agencies.
I hope the noble Lord, Lord Robbins, will feel that this is not the type of Amendment to which he is opposed, because it in no way tries to pack the Board with representatives of any specific type. It says simply that members of the Board should be people with certain qualifications to serve on the Board. In the case of the two Agency Bills, the drafting was slightly different but the qualifications and experience required included some knowledge of, and capacity in, industry, banking, accountancy, finance and the representation or organisation of workers. In the case of the Agency Bills, there were added qualifications because those two Agencies have additional duties in respect of the environment, but these are not appropriate to the National Enterprise Board.
Moreover, when this Bill was introduced in another place this very subsection was included in it, no doubt following the precedent of the Act setting up the Industrial Reorganisation Corporation. It was only at the Committee stage in another place that it was removed on an Amendment moved there by Left-Wing Members of the Labour Party, who are always anxious to strengthen the hand of the Secretary of State. But as the Bill stands at present the Secretary of State is free to appoint anyone he wishes to the Board, regardless of any qualifications or any capacity in these different fields that we have suggested. To us this is unacceptable. A major criticism which we have been making, and will be making, in the course of its passage is that the Secretary of State has far too much power throughout the Bill. I do not believe it is right or justifiable to give him carte blanche on the appointment of members of the National Enterprise Board, especially when his colleagues, the Secretary of State for Scotland and the Secretary of State for Wales, have sensible limits placed on their power of appointment to their two Agencies; and, in my view, it is all the more important that we should have a restriction of this type in the case of the National Enterprise Board, who have such sweeping powers.
One of the points we were seeking to make to the Government during the Second Reading of the Bill was that it
38
is absolutely essential to restore industrial confidence. It is not the right way to set about that by giving the Secretary of State carte blanche in the appointment of members of the Board. On Second Reading, the noble Lord, Lord Beswick, invited us to put forward constructive Amendments. Surely this is a constructive Amendment, and one which the Government could well accept because they themselves put it into the Bill originally. It appears in both the Scottish and Welsh Development Agency Bills and, so far as I know, there has been no effort by the Government to put an Amendment down in another place to either of those Bills. Therefore, it appears to us to be a thoroughly sensible Amendment, and one which could help in restoring industry's confidence in the Board and in the Government. I beg to move.
Lord ROYLE: Would the noble Lord, Lord Aberdare, help the Committee by telling us what types of individuals he has in mind who might be appointed by the Secretary of State, apart from the categories contained in his Amendment? It it obvious that the Secretary of State, without any Amendment at all to the Bill, will concentrate on that type of person to carry out this task.
Baroness GAITSKELL: The noble Lord, Lord Aberdare, said that this Amendment was self-explanatory. I maintain that it is not only self-explanatory but also unnecessary. On reading the Amendment, can one imagine that the Secretary of State would appoint someone who had very small experience of and had shown no capacity in,
"industry, technology, commercial or financial matters, administration, or the organisation of workers"?
Viscount MASSEREENE and FERRARD: I do not at all agree with the noble Baroness. I support the Amendment. If this Amendment is not included in the Bill, tremendous powers of political patronage will be placed in the hands of the Secretary of State. I can think of one or two people appointed to nationalised boards who had no experience at all of the industry with which the board to which they were appointed was concerned. We do not want a lot of old political hacks to be appointed to this Board. It is to be called the National Enterprise Board, but if this Amendment

39
is not included, and if there are not men of very wide experience appointed, then it must be called the "NB"—the National Board—and we might as well leave out the word "Enterprise", because NEB would mean nothing at all.
As I said, I fully support the Amendment. I also wish to restate what my noble friend Lord Aberdare said. At the moment, industry does, of all things, require confidence. A noble Lord mentioned the other day that investment in industry in England is only £253 per capita of workers. Of course this is a wrong basis to take, as we have great overmanning compared with other countries. But I fully support the Amendment and completely disagree with the noble Baroness who has just spoken.
Lord HEWLETT: I wish to support the Amendment on the grounds just mentioned. Unless we set down certain criteria it is all too possible for a Committee or Board to be formed of, frankly, ex-politicians of this House or of another place. If we are trying to get new life and new energy into enterprise, the worst possible thing would be to appoint those people who have had a totally different career. They may have had most laudable careers, giving excellent public service, but they may never have had the experience of running any unit or sector in industry. I should like to say as a Life Peer emanating from Lancashire, that in the North-West of England there has been far too little representation on boards of a national character in order to reflect the enormous volume of gross national product actually produced. I am not talking about servicing, or financial services, or marketing, but purely about the manufacturing element in industry in the North-West of England where there has been far too small a representation on boards. During discussions of an earlier Amendment, my noble friend Lord Balfour, made reference to this disproportionate approach. "Over-metropolisation" of this country is one of the greatest bugbears in industry at present. Practically every decision has to be made by some manner in or around London. We all know that two nations are developing; the wealthy nation in the South-East and the far less wealthy in the rest of England.
40
If the calibre of a nominee for these appointments is as specified for both Scotland and Wales, surely it is not too much to ask that England should have similar safeguards. As to the reply given earlier that the chief executive should not necessarily be a member of the constituted Board, since it has already been pointed out that the existing investments taken over by Government are to be run by the boards of the companies themselves, for the life of me I cannot imagine what the chief executive can do if he is not a member of the Board. I am sorry, but I am totally unconvinced by what has been said so far. I think that the Amendment put forward by the noble Lord, Lord Aberdare, is reasonable, sensible and self-explanatory, and should command the support of the Committee.
Lord BIRDWOOD: While I entirely agree with the motives of the Amendment, there is still sufficient subjective interpretation in the words "who appear to" possibly to bring it into the camp of the noble Baroness opposite. After all, in this instance the Secretary of State can make a case for almost anybody appearing to him to have whatever qualifications he desires for appointment to the Board.
Lord STRATHCLYDE: I wish to support the Amendment. I do so because of experience I had while serving in the Scottish Office. Time and again names were laid before me with the suggestion that the persons concerned were suitable for appointment to one kind of Board or another, and that my views were desired before the names were submitted to the Secretary of State. In my opinion some of them were quite unsuitable; so far as I was concerned they had no qualifications or special experience that made it advisable or probable that they could be of assistance to the Board.
When I asked the official who put forward the names to give me evidence of some purpose that this gentleman or this lady might serve, I received the answer: "Minister, you know that we have to keep a political balance on the Board." I did not want any political balance; I did not care what the person's political views were but that he or she could do a useful job on the Board. I am afraid that time and again political balance won the day. The noble

41
Baroness opposite who said that Secretaries of State do not do such things must know what the Secretary of State for Scotland has to do. He has something to do most of the day and night. It is not he who picks out people to put forward; they are put forward from below by people who think that they have someone to do a useful job. If we are to get a capable Board, with members of experience and character, then, before the officials lower down the scale put forward any names we must have in mind such qualifications as are laid down in this Amendment. For that reason I support it.
Lord LEE of NEWTON: The weakness of this kind of Amendment is that you preclude any other type of person than those mentioned in the Amendment. Like the noble Lord who has just spoken, I have had the job of selecting people to sit on such Boards. I do not agree that you need necessarily accept the names. People who have had experience of industry know competent people.
The question of political hacks was raised. That is a matter of opinion. I should have thought that, in reverse, we have gained enormously in some of the Departments of Government in having industrial hacks with us. Perhaps the noble Lord will cast his mind back to certain of the types he mentioned. There was Oliver Lyttelton, who came into politics from industry and served the nation well, and, on the other side, the political Andrew Duncan who became an eminent indstrial who also served the nation well. It is not right to list in an Amendment four or five types of people, thereby to exclude every other type and, say you can obtain a competent Board.
This is a more desirable type of Amendment than the first one. I thought the first one was setting up a kind of pressure group from different parts of the nation. That would never do. On this, I would ask the noble Lord to consider that when you get a number of eminent gentlemen round a table you may need a psychiatrist, anyway; and there is no such provision in this Amendment. With my noble friend Lady Gaitskell I should have thought that any Minister who was considering proposing people for a Board and who did not include the type of person mentioned had no right to be a Minister. At this stage
42
no one can foresee the type of person who may be essential to the success of the Board, and to accept this Amendment would tie the Minister's hands so that he precludes people who would probably be desirable—not to him but to the nation.
Lord ROBBINS: The noble Lord, Lord Aberdare, to my surprise seemed to express some apprehension lest from my humble position on the Cross-Benches I should be opposed to this Amendment. May I assure him I am not. I am definitely opposed to geographical discrimination at this level; but that there should be some broad indication of functional qualifications seems to me to be good sense. I can completely understand the tincture of scepticism which seems to be introduced into the debate by the noble Lord who spoke recently in the terms that he appeared to have shown wide experience and capacity in this, that and the other.
The Amendment involves a certain degree of ambiguity but it is the sort of ambiguity one cannot legislate against. It may be that under these rubrics a certain number of bogus people may in the next century obtain Office, but I cannot see any legislative way of excluding such accidents. On the other hand, it seems to me in commenting on what was said by the last speaker that the terms of reference are pretty widely drawn. If one believes at all in the functional principle in this respect, the functions of industry, technology, commercial or financial matters, administration or organisation of workers does include a very substantial proportion of the area from which such persons can be drawn. Possibly you might add some qualification of superlative wisdom in conducting public affairs; but I should hardly have thought that appropriate in a Bill of this sort. To draw the functions more narrowly and introduce competence in music and Egyptology would also be otiose. On the whole, the Amendment seems to make good sense.
Lord BALFOUR of INCHRYE: I support this Amendment because I think that the description of the broad qualifications are just what a nationalised Board requires, and that unless this Amendment or something like it goes into the Bill there is no undertaking at all

43
that people of the qualities that are required and are specified in this Amendment will be included in a Board. I had the privilege of serving on one of the nationalised Boards—British European Airways—for approximately ten years; not, I trust, as an old political hack, but perhaps as someone who had a good deal of experience and many years in aviation. I sat next to the non-executive directors appointed. In every case that I recall they were men of great experience in different directions of industry and finance, and their contribution has been absolutely invaluable in cross-examining, in checking, in supporting the executives of the Corporation. I feel strongly that these are the men required. The noble Lord on the Back-Benches said that if this Amendment were passed we should be excluding many categories of men of experience which are desirable. But the Amendment mentions those with experience of administration or organisation of workers, and I would say that that includes a good many people who have served in political life and in trades union life. I do not see that the broad terms of the Amendment should exclude anyone; but I believe that the broad terms of the Amendment include those very men who are essential for success.
Baroness WOOTTON of ABINGER: The difficulty about this Amendment is that it is very restrictively drawn. It says:
"The members of the Board shall be appointed from among persons…"
If it were to say: "The members of the Board shall include…" it would be a different matter. That would leave the door open for a wider range of members.
The Earl of ONSLOW: This Amendment seems to say who the members of the Board should be; it also seems to say that they are the right members whom we should name for the Board. So if the Government are resisting this Amendment, perhaps they do not want to put these people on the Board, and therefore, there could he less faith in the National Enterprise Board than we already have. If they want to put these people on the Board, why do they not agree to the Amendment anyway?
Lord ORR-EWING: These categories are listed in the Welsh Development Agency and the Scottish Development
44
Agency. The noble Lord, Lord Lovell-Davis, made it clear that the Welsh and Scottish Development Agencies should have—as he termed it—" close and amicable working arrangements." So much the better then, that the people chosen to serve are in the same categories as the Scottish and Welsh Agencies. This clause was in the original Bill—this is what was so surprising. Why, if it was good for the original Bill, has it been agreed that it should be deleted from this important Bill at this stage? Mr. Gerald Kaufman, the Under-Secretary of State at the Department of Industry, for some reason that he did not give, accepted an Amendment which was supported by a number of Labour Members as well as Tories, and, without giving any reason, accepted that these categorisations should be deleted from the Bill. If it is right for Scotland and for Wales, why is it not right for this national agency as well?
Lord BERNSTEIN: I can see that we shall have a field day today. It is rather like wartime with the representatives of three Services, plus a liaison officer from the US and Canadian Forces, to agree a signal—it is hopeless. We can go on and on until we have to adjourn. What surprises me is the phrase, "to have shown capacity…" At what date is the Secretary of State supposed to decide that they have shown this capacity? Look at the failures in the travel, shipbuilding, banking and property business. At what date would these people be declared to have shown capacity in financial matters, technology or organisation? I suggest it would be better to leave it to the Secretary of State, with the advice he will get from his staff, than try to settle now who are the people who have shown capacity in their jobs.
Baroness WARD of NORTH TYNESIDE: I support this Amendment. Will not the Secretary of State, if he has full powers, be in the hands of the civil servants? I have nothing against civil servants, but sometimes they are too narrow in their choice of people to be put on these boards. That is why it is important to have this Amendment, because it gives a much wider direction. If the Amendment is agreed to, and the Opposition are not satisfied with the operations of the Secretary of State, they can then raise the matter over a much

45
wider field. Curiously enough, I have had a lot of experience in the past with people on nationalised boards; I remember very well during the war one unfortunate but delightful woman who was appointed to 37 boards which made it impossible for her to attend more than one. Therefore, quite apart from the advantage of having this Amendment, which allows a very wide field of people to be appointed, we do not then leave the Secretary of State in the hands of the civil servants.
I do not wish civil servants to have the power to set before a Minister a list of people to be appointed. I do not think there is any reason to suppose that the Secretary of State will know very much about the people who are being put forward by the Civil Service. I do not think Secretaries of State have all that knowledge, and so the Amendment is sound. I hope it will be accepted by the Government.
4.35 p.m.
Lord LEATHERLAND: I want to oppose the Amendment. The noble Baroness referred to the woman she knew during the war; that must have been a very versatile person. I have lived through two wars and it has never been my good fortune to meet such a woman. She also seems to think that Secretaries of State are pliable people who can be twisted and moulded by the hands of their civil servants. But the noble Baroness can take it from me that a good many Secretaries of State are rather tough guys. I want to oppose the Amendment. That may make me, as noble Lord, Lord Aberdare, said, a Left-Wing member of the Labour Party; there may be some slight doubt about that. Or it may make me, as the noble Lord on the Liberal Benches said, an ex-politician. I deny that one firmly.
The noble Viscount, Lord Massereene and Ferrard, suggested we might be putting people on these boards who knew nothing about the industries. There is such a person in this country—often neglected, I agree—known as the consumer. It is wise that we should have some ordinary people on these boards as well as the specialists. We have heard much about the virtues of these financial and industrial specialists. We have also heard in the past few months of the rather shameful collapse of a number of big companies in this country. Every one of those companies had its board of directors
46
manned by the people who are specified as ideal in this Amendment. I have had quite considerable experience in my short life on public boards and authorities. I always felt it very dangerous to pack these boards and bodies with specialists. They have a tendency to look at a problem out of one particular eye; their other eye is blind. What we want are people who can take a broad view of the whole picture that lies before the functions and requirements of this board.
I agree that there is much virtue in people who show capacity in industry and technology, commercial and financial matters, administration and the organisation of workers; but surely we will have all those virtues embodied in the staffs of officials who will serve these boards. We want some ordinary citizens, men of ability who can look at the broad picture with both eyes, not merely with the one eye of the specialist. Moreover, the list of six, which is specified in the Amendment, harmonises exactly with the number of members of the Board, which is six, as mentioned in the Bill. It would be a pity if the preliminary appointees to these boards, six of them, consisted solely and entirely of specialists.
The list of specialists, if we accept the desirability of having specialists, is far from complete. Why should there not be a man learned in the law? This is to be an important question. Why should there not be somebody learned in physical science and the science of metals? Why should there not be a professor of logic to teach them how to think straight? I am not arguing in favour of a certain Member of the other place. Why should there not be a geographical representation, as has been suggested from several quarters? Why should there not be somebody experienced in transport? The life blood of British industry consists of transport. Let us forget about packing this board with specialists. Obviously, the Secretary of State, if he is worth his salt, will appoint some people who have some knowlege and experience of these various specialist matters, but we need Boards which will take a broad view and will bear in mind the welfare of the country. For that reason, I suggest we need some ordinary, experienced, educated people, who know what life is about, what industry is about, and what industrial relations are about. I do not

47
think we should stipulate, as the Amendment does, that membership should be confined to the specialist mentioned.
Lord BEAUMONT of WHITLEY: Perhaps I might raise a Liberal voice, since the Liberal Benches have been accused of speaking but have not in fact done so. It seems to me we are spending a great deal of time upon a rather minor point, and I hope we shall not burden the Committee unduly with points such as this which are really as small as this. Of course, one has great sympathy with the thoughts behind the Conservative Amendment, because the main idea is that we want to get as good people as possible on this Board—people who are competent to do the job they will be asked to do. But I am afraid I cannot support this Amendment, because it seems to me that although the objective here is entirely praiseworthy, the result would be to inhibit what it is sought to achieve.
This is a limiting Amendment, and if we really want to get the best people for the job, we should not limit it in this way. If we are to give powers to the Secretary of State to appoint people, we should give these powers and trust his judgment in getting the right people. If we want the best people, we shall not get them by limiting the categories of those who can serve on the Board. I have every sympathy with the intentions behind the Amendment, and indeed I hope that the Secretary of State and the Government will take to heart a great deal of what has been said from the Conservative Benches during our debate this afternoon. But I do not think the Amendment, as it stands, is right.
Lord HEWLETT: I am delighted that the noble Lord, Lord Beaumont, has disowned me. He is only just ahead of me in saying that I am not, and certainly am never likely to me, a member of his Party. The noble Lord, Lord Leather-land, referred to the failure of certain companies in free enterprise. I really do not think we can have this kind of special discussion. It is easy to "knock" free enterprise, but what are the conditions which industry currently faces? It is almost impossible to be prosperous, successful and to have a high degree of investment. One would not exactly call the nationalised industries the
48
quintescence of efficiency or prosperity either, so I do not think that any good end is served by the noble Lord, Lord Leatherland, attacking free enterprise.
The conditions in which any enterprise has to operate very largely depend upon the wisdom of Governments. A Government create the conditions in which industry can prosper, in which the value of money will be preserved—and if possible enhanced—and certainly not allowed to drift, as has happened so recently. Therefore, I regret that the noble Lord, Lord Beaumont, makes an untypical and illogical comment in saying that we must have the best people, but must not specify the categories. By the very nature of the debate, this is precisely a subjective judgment. The Cross-Benchers have given their opinion as to what they think would be best, and many from these Benches have also given their opinions on this. But there has been no comment from the Government side excluding any of the categories mentioned in the Amendment—that is, with the exception of the noble Lord, Lord Leatherland, as not being the type of person who would be suitable for appointment to the Board. I am sorry, but I consider the Amendment is not a trivial matter as the Liberal Party would appear to make out. It is a matter of great substance and importance for the future trust that I hope the people of this country will have in this Board if ever they are set up.
4.45 p.m.
Lord LOVELL-DAVIS: As the noble Lord, Lord Beaumont, pointed out in his helpful contribution, we have spent a great deal of time on this Amendment and have given it a good airing. The deletion of the list of qualifications for membership of the NEB was discussed and carried in Committee in another place, as has been pointed out. The Government believe there is little point in including such a list. My noble friends Lord Royle and Lord Leatherland, raised interesting and relevant points here. What about the other categories? The alternative would be to have a huge list; otherwise there would be a limitation of the Secretary of State's choice to the categories shown in this Amendment. As my noble friend Lord Lee and my noble friend Lady Wootton pointed out, the

49
alternative of a longer list would be so general as to be no more than a statement of the obvious, while there was a general desire for the restrictive implications of the original wording to be done away with.
The noble Lords, Lord Aberdare and Lord Orr-Ewing, referred to the Scottish Development Agency. This has come up several times, but may I point out that the qualifications in that case include many things such as banking, industry, accounting, finance, and so on; and then it says
"…or in any other field of activity which the Secretary of State considers is relevant to the discharge of the functions of the Agency."
The list is not exclusive. It enables the Secretary of State to appoint anyone he considers is suitable. The same situation applies to the Welsh Agency Bill. This, again, is not exclusive; so your Lordships have already passed situations where the Secretary of State has a great deal of freedom and can appoint those he considers to be suitable.
The basic point is the Government's intention to make available a wide range of relevant experience for the National Enterprise Board. It would be of prime importance neither to secure "dead-beat politicians", as the noble Lord, Lord Hewlett, feared nor to maintain, as the noble Lord, Lord Strathclyde, did, that political balance would be important; what is important is to secure top-quality industrial expertise and a significant trade union presence. I should like to refer to the organising committee as it stands at the moment under the noble Lord, Lord Ryder. There are two representatives of unions; David Basnett and Harry Urwin; and there are two representatives of industry; John Gardiner and Michael Edwards. The important point is to get initially top-quality industrial expertise and a trade union presence. However, as the debate in another place made clear, it is desirable, especially as the NEB develop and expand, for a broader spectrum of experience to be represented. The importance of the views of people concerned with consumer affairs, for example, was urged in another place, and good arguments were also put forward in support of the proposition that there should be no doubt about the power to appoint people with other backgrounds and experience which might be relevant in the future, such
50
as administration, economics or relevant disciplines in the social sciences.
Although the Scottish and Welsh Development Agency Bills contain statutory lists of qualifications, the Industry Bill is in line with recent precedents for nationalised industries as expressed in the Post Office Act 1969, the Civil Aviation Act 1971, and the Gas Act 1972. In making appointments to the NEB, the Secretary of State will follow the normal practice of consulting both the Prime Minister and the Chairman of the Board. I should like to refer to the fears expressed by the noble Lord, Lord Aberdare, which were well answered by my noble friend Lady Gaitskell; the Secretary of State will appoint anyone, with no reference to the needs of the Committee. I cannot imagine him doing this; I cannot imagine a situation where the Secretary of State would appoint with reference to the Chairman, for instance. My noble friend Lord Leatherland pointed out that Secretaries of State are tougher and more responsible people than noble Lords opposite seem to find them. Perhaps their fears reflect their consideration of a possible future time when they might be in power.
I hope I have made the point, concerning the Scottish and Welsh Agency Bills, that there is no reason why they and the Industry Bill should follow the same line on the appointment of members. Each body has been designed to serve different purposes and to cater for different needs, and has different areas of responsibility. The Government are committed to the principle of devolution, and one of the inevitable consequences of devolution is that legislation will in practice be increasingly less rigidly consistent over the whole of the United Kingdom.
I hope I have answered most of the points that noble Lords have raised during the long debate on this Amendment. I hope they will feel that the NEB are putting themselves in a position to secure people of great experience and expertise and that this Amendment would only be restrictive. I hope, therefore, that the noble Lords concerned may decide to withdraw the Amendment.
Baroness WOOTTON of ABINGER: Did I understand my noble friend to say that this Amendment is not restrictive? It says that members shall be appointed from such-and-such categories.

51
which presumably means that they shall be appointed from only those categories and from no others. The Amendment does not say that those categories shall be included, which I think would be acceptable to many of us on this side.
Lord LOVELL-DAVIS: I assure my noble friend. I hope I made the point that I consider this Amendment extremely restrictive.
Baroness WOOTTON of ABINGER: It is restrictive? And no other category can be included?
Lord LOVELL-DAVIS: This is so, as I understand the Amendment.
Lord DRUMALBYN: That plainly is not so, and it never has been. I have sat through any number of debates like this ever since 1945. I do not know whether the noble Lord has done the same. The Amendment does not say that they must not have had any other experience except this; it merely gives a number of categories of which they must have had experience. That is a very different matter.
Lord ABERDARE: There is a very deep division of opinion on this matter between the two sides of the Committee. I do not want to delay the Committee, but I think we should resolve this matter and I intend to press the Amendment. But I would say just three things. First, to those who have criticised the wording of this Amendment, these are the Government's own words: these words were taken from the original Bill, and I can do no better. I am not wedded to these words. But I hope we shall put them into the Bill, and if the Government do not like them or want to modify them in some way we can return to the question at a later stage. But certainly these are the Government's own words.
Secondly, may I say to the noble Lord, Lord Beaumont of Whitley, who spoke on behalf of the Liberal Party, that those who spoke for the Liberal Party in the case of the Scottish and Welsh Development Agency Bills raised no objections to the inclusion of these qualifications in those two Bills. I do not understand why now, at this stage, he is objecting to the same Amendment in the case of the National Enterprise Board. Finally, I
52
would repeat what I said at the end of my speech in introducing this Amendment. We are trying to be helpful. We are trying to put forward constructive Amendments. This is an Amendment which would help to give some confidence to industry in believing that the Government are trying to be constructive and helpful. This Amendment is one way by which we could help to restore some confidence in industry, in this Board, and in the Government's handling of the Industry Bill. I do not wish to withdraw the Amendment.
Lord BESWICK: Before the noble Lord decides to press the Amendment to a Division may I put to him that, although it is perfectly true that the words in the Amendment were originally in the Bill, it is a fact that those words were challenged on both sides of the Committee in another place. It was in an endeavour to be helpful to both sides that the words were deleted. The noble Lord, Lord Orr-Ewing, who suggested there was something suspicious about it, was finding suspicion where there was no cause. The case was simply that once those words were inserted on both sides of the House honourable Members wanted to add to the list, and when the list became so long that it was clearly meaningless the general feeling was that it would be better to leave the provision out altogether. That is why the original wording was changed. The situation is the same as one finds in the Conservatives' Gas Act, in the Civil Aviation Act, and in the Post Office Act. I should have thought there was no reason to put the words back in the Bill. If we put them in again. I would guarantee that when it comes to Report stage noble Lords on both sides will want another Amendment to lengthen the list.
Lord ROBBINS: May I appeal to the noble Lord, Lord Beswick, and to the noble Lord, Lord Aberdare? Would not all differences be resolved if the suggestion of the noble Baroness, Lady Wootton, was accepted and the words "shall include" were inserted? If the Government would consider that Amendment it seems to me that the substance of what is desired on the Opposition Benches would be met. There would be a list which, despite all the scruples which have been expressed on one side of the Committee and the other as regards

53
the exact wording, would be widely illustrative of the intention behind the Amendment.
Lord BESWICK: It is a helpful point but I do not think it would add anything because once it is said "shall include", room is left for all the political hacks of which the noble Lord, Lord Hewlett, is fearful. But it is a suggestion which we should consider and I undertake to do so.
The Earl of BALFOUR: If the words:
"or any other field of activity which the Secretary of State considers is relevant to the discharge of their functions",
which come directly out of the Scottish Bill, or some such words, were included, I feel the Bill would be improved. Otherwise, I am very grateful that this point has arisen. Anybody who reads Clause 2 will realise how important is this qualification and how desperately we need people of this kind on the Board.
4.57 p.m.
On Question, Whether the said Amendment (No. 6) shall be agreed to?
Their Lordships divided: Contents, 85; Not-Contents, 100.

CONTENTS

Aberdare, L.

Elton, L.

Porritt, L.

Alexander of Tunis, E.

Emmet of Amberley, B.

Rankeillour, L.

Alport, L.

Goschen, V.

Redesdale, L.

Amory, V.

Grenfell, L.

Reigate, L.

Auckland, L.

Gridley, L.

Renwick, L.

Balfour, E.

Grimston of Westbury, L.

Robbins, L.

Balfour of Inchrye, L.

Hawke, L.

St. Aldwyn, E.[Teller.]

Barnby, L.

Hereford, V.

St. Helens, L.

Belstead, L.

Hewlett, L.

St. Just, L.

Berkeley, B.

Home of the Hirsel, L.

Sandys, L.

Bledisloe, V.

Hornsby-Smith, B.

Savile, L.

Boyd of Merton, V.

Inchyra, L.

Selkirk, E.

Campbell of Croy, L.

Killearn, L.

Sempill, Ly.

Cathcart, E.

Kilmany, L.

Sharpies, B.

Clitheroe, L.

Kinnaird, L.

Somers, L.

Cowley, E.

Long, V.

Strathcarron, L.

Craigton, L.

McFadzean, L.

Strathclyde, L.

Croft, L.

Man croft, L.

Strathcona and Mount Royal, L.

Cullen of Ashbourne, L.

Massereene and Ferrard, V.

Daventry, V.

Merrivale, L.

Sudeley, L.

de Clifford, L.

Monck, V.

Tenby, V.

de Freyne, L.

Monson, L.

Terrington, L.

Denham, L.[Teller.]

Mowbray and Stourton, L.

Teviot, L.

Deramore, L.

Nelson of Stafford, L.

Vickers, B.

Donegall, M.

Newall, L.

Vivian, L.

Drumalbyn, L.

Northchurch, B.

Wakefield of Kendal, L.

Ebbisham, L.

Nunburnholme, L.

Ward of North Tyneside, B.

Elles, B.

Onslow, E.

Young, B.

Elliot of Harwood, B.

Orr-Ewing, L.

NOT-CONTENTS

Allen of Fallowfield, L.

Champion, L.

Henderson, L.

Amherst, E.

Chorley, L.

Henley, L.

Ardwick, L.

Collison, L.

Hoy, L.

Arwyn, L.

Crook, L.

Hylton-Foster, B.

Aylestone, L.

Crowther-Hunt, L.

Jacques, L.

Bacon, B.

Darling of Hillsborough, L.

Janner, L.

Balogh, L.

Davies of Leek, L.

Kilbracken, L.

Beaumont of Whitley, L.

Delacourt-Smith of Alteryn, B.

Leatherland, L.

Bern stem, L.

Donaldson of Kingsbridge, L.

Lee of Newton, L.

Beswick, L.

Douglas of Barloch, L.

Llewelyn-Davies of Hastoe, B.

Birdwood, L.

Douglass of Cleveland, L.

Lloyd of Hampstead, L.

Birk, B.

Elwyn-Jones, L. (L. Chancellor)

Lloyd of Kilgerran, L.

Blyton, L.

Evans of Hungershall, L.

Longford, E.

Brockway, L.

Gaitskell, B.

Loudoun, C.

Bruce of Donington, L.

Gardiner, L.

Lovell-Davis, L.

Burntwood, L.

Gladwyn, L.

Lyons of Brighton, L.

Burton of Coventry, B.

Gordon-Walker, L.

McLeavy, L.

Byers, L.

Hale, L.

Maelor, L.

Caradon, L.

Hanworth, V.

Mais, L.

Castle, L.

Harris of Greenwich, L.

Maybray-King, L.

Melchett, L.

Rhodes, L.

Stow Hill, L.

Meston, L.

Ritchie-Calder, L.

Strabolgi, L. [Teller.]

Morris of Grasmere, L.

Robson of Kiddington, B.

Summerskill, B.

Norwich, V.

Rochester, L.

Taylor of Gryfe, L.

Ogmore, L.

Royle, L.

Taylor of Mansfield, L.

Paget of Northampton, L.

Rusholme, L.

Wallace of Coslany, L.

Pannell, L.

St. Davids, V.

Walston, L.

Pargiter, L.

Segal, L.

Wells-Pestell, L.

Peddie, L.

Shannon, E.

White, B.

Phillips, B.

Shepherd, L. (L. Privy Seal.)

Wigoder, L.

Pitt of Hampstead, L.

Slater, L.

Winterbottom, L. [Teller.]

Platt, L.

Stamp, L.

Wootton of Abinger, B.

Popplewell, L.

Stewart of Alvechurch, B.

Wynne-Jones, L.

Rathcreedan, L.

On Question, Amendment agreed to.

5.5 p.m.
Lord DRUMALBYN Lord DRUMALBYN moved Amendment No. 7:
Page 2, line 1, leave out ("or more").
The noble Lord said: With the permission of the Committee, I will speak to Amendments Nos. 7 and 8 together. Possibly the easiest way to deal with this Amendment is simply to ask the Government to explain the principles whereby they propose to decide whether to appoint any deputy chairmen—two, four, six or eight deputy chairmen, or whatever the number may be. This is a very loose clause and it would be desirable to know why the Government want to appoint more than one deputy chairman, the point being that it may give an indication of the kind of organisation within the Board that is contemplated. I beg to move.
Lord BESWICK: I appreciate the noble Lord's interest, but may I put it to him that we are considering a body who are somewhat different from other public corporations. The scale of their activities will depend upon their success. I have emphasised before that we are very anxious that they should not begin in any grandiose way but that they should acquire experience, and the idea of having one or more deputy chairmen is a reflection of the need for flexibility. In the first place, there will probably be one deputy chairman, but if it seems to be sensible there will be scope for two later on. If there is the development of an almost separate line of business we believe it may be suitable to have a deputy chairman with special responsibilities for that section of the Board's enterprise. I am sure that on reflection the noble Lord will think that it is a wise precaution
56
to take and that there is nothing extraordinary about it. For example, it follows the practice of the Steel and Gas Corporations. It works there and it could work in this case.
Lord DRUMALBYN: I can see that there is some point in the noble Lord's argument that it is a wise precaution to give this option. I had it in mind to obtain from the noble Lord an assurance that this would not become a kind of hierarchy—in other words, that the collective responsibility of the Board would remain and that there would not be a tendency to break up the Board into more or less permanent sub-committees dealing with separate subjects under separate deputy chairmen. When we are dealing with a Board with responsibilities of this kind I think this would be a bad development. The exercise of collective responsibility by the whole Board is most important, and for that reason I doubt whether more than one deputy chairman is necessary.
Lord BESWICK: I accept that there must be collective responsibility for the actions of the Board, but for the executive responsibilities it may well be useful to have more than one deputy chairman. I am sure that on the Benches opposite there are those who can point to private industry where there is more than one deputy chairman. I have given the precedents of the Steel and Gas Corporations where there are two deputy chairmen and where the practice seems to be useful and efficient in the administration of those enterprises.
Lord DRUMALBYN: I am quite content to leave it there, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.10 p.m.
The Earl of BALFOUR The Earl of BALFOUR moved Amendment No. 9:
Page 2, line 3, leave out subsections (5) and (6) and insert—
"(5) The Secretary of State, after consultation with the chairman or chairman-designate of the Board, shall make the first appointment of chief executive of the Board and thereafter the Board may, with the approval of the Secretary of State, make subsequent appointments to that office.
(6) The chief executive shall ex officio be a member of the Board."
The noble Earl said: This is a case where I ask the Committee to look at the actual wording of the Bill as it stands. Subsection (5) says that the Board may approve a chief executive or joint chief executives of the Board, and it goes on to say that the chief executive of the Board may be either a member of the Board or a person who is not a member. I feel strongly that the chief executive of the Board should ex officio be a member, as is covered by the second part of this Amendment.
Furthermore, I feel that only the chief executive should be really considered, otherwise we run the risk, as we can see from Amendments Nos. 10 to 15 tabled by my noble friends Lord Aberdare and Lord Campbell of Croy (and there is serious thought on this side of the Committee that it might so happen, because of the Government's wording) that there could be more executives on the Board than actual Board members. I am sure that that is not the intention of the Government. I have taken this wording from the Scottish Development Agency Bill and I have always admired the drafting of Scottish legislation. The Scots usually get the matter right.
I sincerely hope that the Government will consider having only the chief executive as a member of the Board. The first appointment obviously should be with the approval of the Secretary of State, but otherwise I believe it should be delegated to the Board to manage from then on. I hope that I have not struck a matter that is too controversial. I beg to move.
Lord ORR-EWING: I should like to support this Amendment because I do not know of any Board with which I have been associated all my working life where the chief executive is not a member
58
of the Board. There is a nice balance between the non-executive members and the executive members on the Board, and there are people who believe that there should be a small majority of non-executives over executives. In my view it is unthinkable that your chief executive should not be automatically a member of the Board. There would be bound to be a division between those who need to manage the company and those who are Board members, and this would be most undesirable in any board especially one as large and as powerful and important as the one we are trying to set up under this Bill.
Lord ABERDARE: I do not know whether it would be convenient to discuss my Amendments Nos. 11 to 15 at the same time, as they cover very much the same points. I should like to support what has been said by my noble friend Lord Orr-Ewing and Amendments Nos. 12 to 15 make it clear that the chief executive shall be a member of the Board. For the same reasons as my noble friend has advanced, we think it would be invidious were the chief executive not to be a member of the Board.
To revert to those two other Bills which have been quoted so frequently already, the Scottish and Welsh Agency Bills, in both cases the chief executive of those Agencies is a member of the Board. So I hope the noble Lord will be able to give us some satisfaction on that point.
My Amendment No. 11 is also a probing Amendment to discover why there is a proposal to have joint chief executives. So far as I am aware, this is wholly unknown in an organisation of this sort although there may be good reasons for it, just as the noble Lord has good reasons for making it possible to have more than one deputy chairman. But somehow it seems rather easier to have two deputy chairmen rather than two chief executives, which I should have thought might be awkward, especially if there is some question as to whether or not they are members of the Board. It would be highly invidious were one to be a member of the Board and the other not to be.
I should like to put to the noble Lord these two sets of Amendments, first

59
asking why there is provision for two joint executives, and secondly asking that the chief executive shall be a member of the Board but shall not hold the appointment of chairman or deputy chairman.
Lord NELSON of STAFFORD: I should like to support these two Amendments. I agree very much with my noble friend Lord Orr-Ewing. There is very little experience in industry of chief executives of any calibre not being on the board of the company which they serve. I stress the words "of any calibre", because I think it is vitally important that this Board should have a chief executive of the highest possible quality. He does not in any way want to appear as a second-class citizen right from the start by not being a member of the Board on which he is invited to serve. I cannot myself envisage a situation where he would stay in office and not be prepared to share the collective responsibility with his colleagues on the Board. That would be a quite unthinkable state of affairs. Also, I think he should be part of the collective body taking responsibility for the decisions which he is going to be charged with executing.
I should also like to support Amendment No. 11. I have seen many cases of joint chief executives and unless the chairman is going to be absolutely full time and in fact the chief executive himself, this is not going to work. There must be a chief executive in charge and below that you can separate functionally in whatever way you want to. To start off with a part-time chairman, a part-time Board and two joint chief executives is a formula for disaster and I support these two Amendments.
Lord BRUCE of DONINGTON: Before my noble friend replies, I should like to ask him whether subsections (5) and (6) have in any way been brought to the attention of the chairman designate. The reason why I ask is because the organisation envisaged in these two subsections seems to be singularly at variance with the practice which has been followed by the noble Lord, Lord Ryder, in the reconstruction of Leyland. There seems to be something a little odd about this structure. I agree with the noble Lord,
60
Lord Aberdare, that it is certainly an unusual practice to have joint chief executives. In my experience it is not something that works well and I wonder whether my noble friend can give some further explanation, particularly as to the attitude of the chairman designate towards them.
5.17 p.m.
Lord BESWICK: On the first point asked by my noble friend as to whether the chairman designate is aware of subsections (5) and (6), the answer is, Yes; he is very much aware, as indeed he is very much aware of everything in the Bill. It has been discussed with him and to the best of my knowledge he has no objection to the wording that now appears in the Bill.
I found myself very much in agreement with what the noble Lord, Lord Nelson of Stafford, said about the chief executive being of the stature and calibre we need on the Board, and I cannot myself easily see that he will not be on the Board. On the other hand, the noble Lord, Lord Nelson, said that he agrees with these two Amendments. I wonder which two Amendments he is talking about. There are quite a number of Amendments before us, and I doubt very much whether he is in agreement with the first Amendment moved by the noble Earl, Lord Balfour. I think every noble Lord who has spoken has emphasised the importance of the chief executive and most of us would agree that the chief executive, being an important post, would be appointed by the chairman with the approval of the Secretary of State. But the first part of that Amendment standing in the name of the noble Earl, Lord Balfour, would amend the Bill so that the approval of the Secretary of State was not required. I doubt whether he would wish to see that position reached. I cannot think that he is wholly in favour of that Amendment.
When we come to the other Amendments in the names of the noble Lords, Lord Aberdare and Lord Campbell of Croy, even if one accepted the proposition that the chief executive should be on the Board I do not see why we should rule out the possibility of the deputy chairman also being a chief executive. It is not an unusual thing; in fact, it is quite common. If we accepted all the Amendments in the name of the noble

61
Lord, Lord Aberdare, it would have the effect of making it impossible either for the chairman to be chief executive, which again is not beyond expectation, or for the deputy chairman to be a chief executive.
Then there is the point of the joint chief executives. The noble Lord, Lord Nelson of Stafford, says that he does not know of a situation where there are two joint chief executives. I would not pit my experience in this sphere against his, but I cannot think of any case readily, though further research might reveal some. I was asked by the noble Lord, Lord Bruce of Donington, what the argument is here. The general argument is one of flexibility. Let us see how we go on in something which is virtually a new type of organisation, and fit the appropriate structure as we progress. It may be that the noble Lord, Lord Aberdare, and others, might like to think again.
I am sure that the Amendments now on the Marshalled List are inadvisable. I am sure that most of us would not want a situation where the Secretary of State was not called upon to approve the appointment. That is the situation which would arise if we accepted the Amendment of the noble Earl, Lord Balfour. I am not certain we would want a situation where it was possible for the deputy chairman to be chief executive. But if the noble Lord would take the Amendment away and think about it again, and maybe come up with a rationalised Amendment on Report stage, I would look at it.
Lord DRUMALBYN: It seems to me that Amendment No. 9 provides for the approval of the Secretary of State. I think that perhaps the noble Lord, Lord Beswick, is under some misapprehension. In fact, it says:
"The Secretary of State,…shall make the first appointment…and thereafter the Board may, with the approval of the Secretary of State, make subsequent appointments to that office."
Lord BESWICK: The word "shall" is used on the first occasion, but there is no requirement after that.
The Earl of BALFOUR: May I read the Bill? As it stands at the moment, the Bill says:
62
"The Board, with the approval of the Secretary of State, may appoint a chief executive…".
In other words, at the present moment the Board could set themselves up without a chief executive. My Amendment says:
"The Secretary of State, after consultation with the chairman…shall make the first appointment of chief executive of the Board and thereafter the Board may, with the approval of the Secretary of State, make subsequent appointments to that office."
With all respect, I think that my Amendment is much more specific. The noble Lord, Lord Beswick, has not quite got it right.
Lord DRUMALBYN: If I may continue what I was saying, I agree with what my noble friend has said. My second point was simply this. From an earlier remark of the noble Lord, Lord Beswick, it seemed that the structure of the Board and what they were going to do, was already in such an advanced state that it was hoped to bring it into operation almost within a matter of clays, certainly within a very short time. If that is so, it seems to me extraordinary that the Secretary of State and the chairman designate should not have made up their minds between them what they want to do in this matter, and whether or not they are going to have a chief executive. Why should the matter still be open to doubt? A chief executive may he appointed only with the approval of the Secretary of State. Surely they must have made up their minds whether or not they will have a chief executive, or indeed, whether or not they will have more than one. It seems to me a most extraordinary state of affairs. We ought to be able to clarify it before we dispose of the Bill.
Lord BESWICK: I apologise to the noble Earl, Lord Balfour. He is quite right. His Amendment does provide that there shall be approval by the Secretary of State. But he has not provided in his Amendment that the Board in the first place should make the proposal with regard to the chief executive for the approval of the Secretary of State. I got it wrong. It would be a good thing for the Board to make the nomination, which is then approved by the Secretary of State. That is the position as it now stands. All this is rather complicated,

63
but as I understand it the noble Earl is saying that approval shall be by the Secretary of State in the first place, and not subsequently.
The Earl of BALFOUR: If I may come back to the point yet again, until the Board really get going, or at least until the Bill becomes an Act, strictly speaking I do not think the Board have any money. The chief executive, even though he may be appointed and doing something, may not receive any pay, unless the Secretary of State appoints him in the first instance. I am thinking of the position of this chief executive. I feel that the Secretary of State has some finance behind him to give a salary to this chap, whoever he might be; whereas at the present moment, in the wording of subsection (5) of the Bill as it stands, the Board merely "may appoint a chief executive". I am not too certain that the words here are satisfactory. The more I think about it, the more I am beginning to think that my Amendment is the right one.
Lord ORR-EWING: I should like to endorse the second part of this proposal, because I have been thinking that we were on Amendment No. 9. I have personal experience of this, and feel strongly that it would be unwise to have two chief executives. The only company I have served with which had two chief executives got into a great muddle; it would have been much better not to have two chief executives. The "buck" must stop somewhere, and it usually stops at the chief executive. When there are two, one has divided responsibility. One has people trying to get a decision from one chief executive when the other is away, and it is all thoroughly undesirable. It is unsound organisation. Like my noble friends, I am trying to be constructive. We want this to have a sound basis, with sensible administration. That the chief executive must be a member of the Board is a sound principle, followed in every instance of which I know, and certainly in every subsidiary company. The second principle is equally important. I very much hope that the Minister can take this away to see whether we can get something to safeguard these principles. Perhaps at the moment we have not got the right wording. We need something
64
which makes this a sensible and sound organisation. Perhaps we could come back to this matter on Report.
Lord BESWICK: Certainly I will look at it. I cannot think that the Amendments which have been put down on the Marshalled List are the right answer. I must emphasise that it is necessary in this case to have the maximum degree of flexibility. The noble Lord, Lord Orr-Ewing, says that he is being constructive and helpful, and I am sure he is. It is most helpful to us to have expressions of opinion. Personally I am very glad to have them, and I promise they will be considered. However, the question is whether we want to get this tight requirement into the Bill, or whether, as experience develops, and as the operation of the Board develops also, we want to implement the advice given. That is the real difference between us. However, if we could leave it at that, we will look at it again.
Lord ABERDARE: If the noble Lord will undertake to look at it again—there are strong feelings on this side that there should be only one chief executive and that he should be a member of the Board—I will withdraw my Amendments, and I hope my noble friend will withdraw his.
The Earl of BALFOUR: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.31 p.m.
Lord MELCHETT Lord MELCHETT moved Amendment No. 16:
Page 2, line 9, leave out from ("as") to first ("the") in line 11.
The noble Lord said: These Amendments improve upon a Government Amendment dealing with the constitutional position of the National Enterprise Board made at Report stage in another place. It subsequently appeared that the blanket provision that the Board are not to be regarded as the servant or agent of any Government Department went rather too wide and could have been unduly restrictive. It might have been held to prevent the NEB acting as agents of the Department of Industry in conducting an examination of an industry or company; the sort of work, for example, undertaken by the IRC, and recently by the noble

65
Lord, Lord Ryder, in his Report on British Leyland.
The Amendment which was made in another place was directed towards clarification of the position of the NEB when it gives selective financial assistance under Clause 3 at the direction of the Secretary of State by exercising the Secretary of State's powers under Sections 7 and 8 of the 1972 Industry Act. The Government now propose to achieve the same end by adding a new subsection to Clause 3 which specifically relates to the special situation envisaged under that clause. The new subsection ensures that when the Board give assistance under Clause 3 they will do so in their own right. Therefore, if any dispute arises it will be the responsibility of the NEB to deal with it themselves and not the responsibility of the Secretary of State. This is to ensure that the NEB will have every incentive to act efficiently when they act as a channel of assistance.
The Amendment to Clause 3 also clarifies the point that the Board are not acting as the agent of the Secretary of State when providing financial assistance under Clause 3, and that they will, therefore, not be subject to investigation by the Parliamentary Commissioner for Administration. I think I should have said that I was hoping, with your Lordships' permission, to speak to Amendments Nos. 17 and 41. I hope I have not thrown noble Lords into confusion by speaking to those three Amendments without making it plain at the beginning. I beg to move.
The Earl of BALFOUR: Again may I say that I am not altogether happy here. Subsection (7) will now read:
"It is hereby declared that the Board shall not be regarded…as the servant or agent of the Crown…"
Fair enough, but then you go on, if we accept the next Amendment, to leave out the words "or any Government department". I would have thought that the Board must be responsible to somebody, and I am not very happy with the wording as it appears.
Furthermore, as the noble Lord is speaking to Amendment No. 41 (that is, page 5, line 27), may I ask your Lordships to look at page 29, Clause 30(3), the interpretation clause. It says:
66
"Securities and other property are publicly owned for the purposes of this Act if they are held (b) by a company all of whose shares are held by or on behalf of the Crown; or…(c) by any corporation constituted by or under any enactment…"
That, surely, could be the NEB. I feel, with all due respect, that Amendment No. 41 seems to contradict that part of Me Bill, and certainly I wondered whether it contradicted Clause 1(7) as it is worded at the moment. Very briefly, I must question Amendment No. 41 at this stage—or perhaps it can be raised later; I do not mind—and I certainly must equally question Amendment No. 17.
Lord MELCHETT: On the first point which the noble Earl has raised, the NEB are responsible to the Government, but they are not acting as the agent of the Government.
The Earl of BALFOUR: I am sorry—"servant or agent"; I feel both words must be included.
Lord MELCHETT: What I was doing was pointing out what the position would be if your Lordships saw fit to accept the Amendment I am moving. I was not trying to tell the noble Earl what his own opinion about the Bill was. The position of the NEB—that they are not to be regarded as the servant or agent of the Crown, and their property is not Crown property and they do not enjoy any status immunity or privilege of the Crown—is in line with the standard provisions for public corporations; for example, the Post Office, the British Airways Board, and the former Industrial Reorganisation Corporation. I hope that might reassure the noble Earl in his doubts.
This provision which I am hoping your Lordships will accept will make it quite clear that the NEB are not entitled to any Crown privilege, and that they are, therefore, on the same footing as private industry with regard, for instance, to criminal law and civil litigation. This is something I would have thought would be very acceptable to noble Lords on all sides of the House, and I hope noble Lords will see fit to accept the Amendment.
Lord MELCHETT: I beg to move Amendment No. 17.
Amendment moved—
Page 2, line 12, leave out ("or any Government department").—(Lord Melchett.)
Lord DRUMALBYN Lord DRUMALBYN moved Amendment No. 18:
Page 2, line 15, at end insert—
("( ) The Board shall be subject to all restrictions contained hi the Companies Acts of Great Britain or of Northern Ireland as the case may be (save for those restrictions which relate exclusively to the relation between a company or the directors of a company and its shareholders) as if the Board were a company registered under the Companies Acts of Great Britain or of Northern Ireland as the case may be and as if its members were the directors of such a company.")
The noble Lord said: In view of what the noble Lord has just said, I am not really certain that it is necessary for me to move this Amendment, certainly not at any length. If the Board are to be subject to exactly the same criminal provisions and civil provisions as any other person, which I think is what he said, that includes companies, and this Amendment is plainly not necessary, because then they are automatically brought under the Companies Acts. The Companies Acts use the word "persons" very freely to cover a wide range of restrictions. We shall he dealing with one or two of the points in particular later on. This is really an exploratory Amendment. I wonder whether the noble Lord can tell us what the position of the Board will be, whether or not they will be subject to the restrictions contained in the Corn-panics Acts. I beg to move.
Lord MELCHETT: I feel it might be possible to take this quite briefly. My understanding is that the NEB are not a company, but are a person for the purposes of the Companies Acts. Therefore, anywhere in the Companies Acts where a provision applies to a person it will apply to the National Enterprise Board; for example, Section 33 of the 1967 Act, which requires any person who acquires an interest of 10 per cent. of the capital of the company to inform the company, and Section 332 of the 1948 Act which covers any person who is knowingly a party to fraudulent trading by a company. Since these sections apply to any person, they automatically apply to the National Enterprise Board as they would to any other legal person. The
68
only other point it might be worth making at this stage is that, of course, any of the National Enterprise Board's subsidiaries which are companies will be covered by the Companies Acts as companies. I think that answers the noble Lord's point.
Lord DRUMALBYN: I am grateful to the noble Lord; I think it does cover the point. It is quite plain that the Board as such will not be treated as a company because they have no shareholders, and therefore could not be covered by all restrictions which relate to shareholders. But I should like to look at what the noble Lord has said to see whether all other relevant restrictions, other than those relating, to shareholders, are covered. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.40 p.m.
Lord BESWICK Lord BESWICK moved Amendment No. 19:
Page 2, line 19, leave out ("Board") and insert ("Secretary of State").
The noble Lord said: I beg to move Amendment No. 19, and perhaps the Committee will agree to take with it Amendments Nos. 20, 290, 291 and 292. Subsection (9) was inserted in the Bill at the Commons Report stage. The Amendments to Clause 1 transfer responsibility for keeping the register from the Board to the Secretary of State and provide for appropriate modifications. The Amendments to Schedule 2 provide for a copy of the register of interests, as amended from time to time, to be annexed to the Board's Annual Report which has to be laid before both Houses of Parliament by the Secretary of State. There are also two minor drafting Amendments which do not alter the substance of the Schedule. These are relatively minor Amendments to the provisions for registering Board members' financial interests which were inserted during the Report stage in another place.
The Government feel—and I think the Committee would probably agree—that it is more appropriate for the Secretary of State to maintain the register than the Board themselves since it is the Secretary of State who has to satisfy himself under the provisions of paragraph 1 of Schedule 1 that members have no financial interests likely to affect prejudicially the performance of their functions as

69
members. It also seems appropriate that the register of interests should be made available to Parliament each year and so there is provision for a copy of it to be annexed to the Board's Annual Report which must be laid before both Houses of Parliament by the Secretary of State. I hope that this is regarded as being reasonable. I beg to move.
Lord WIGODER: My noble friends on these Benches regard subsection (9) as of considerable importance. It was included in the Bill as a result of an Amendment put forward by the Liberal Party in another place, and my noble friends and I are happy to support the consequential Amendments put forward by the noble Lord, Lord Beswick.
Lord BESWICK: I beg to move Amendment No. 20.
Amendment moved—
Page 2, line 23, at end insert ("any such resolution being construed, in its application to members of the Board, with appropriate modifications").—(Lord Beswick.)
Clause 1, as amended, agreed to.
Clause 2 [General purposes and functions]:
5.43 p.m.
The Earl of BALFOUR The Earl of BALFOUR moved Amendment No. 21:
Page 2, line 25, leave out subsection (1) and insert—
("(1) The purposes for which the Board may exercise their functions are the assistance of any industry or any undertaking of that industry—

(a) by improving the economy of that industry in any part of the United Kingdom;

(b) by retraining personnel and contributing towards the best type of machinery and working conditions;

(c) by obtaining information by Market Research concerning international competitiveness.")

The noble Earl said: Your Lordships can read this Amendment, and I shall just say a few words to it. This Bill sets up a Board to provide finance without investigating the real problems that exist in industry today. I ask your Lordships to cast your minds hack to the end of the last war, when a great deal of money was spent in retraining and rehabilitating ex-Service personnel. Although there were
70
a few war casualties which were never listed the results were most impressive, and surely it is much better to use money to retrain people than just let them go away with redundancy pay.
I ask your Lordships to look at how much industry has changed since 1945. I am not thinking of the changes from war to civil production but of how much our lives have changed. Gas mantles, oil lamps, cast iron, household coal, trams, steam trains, to mention but a few items, are all obsolete, yet we now have many remarkable electric gadgets in our homes, plastics, terylene, new metal alloys, and a host of items which were only dreams in 1946. If an industry is not developing, time is leaving it behind. High taxation, inflation, wages, materials, insurance and rates leave far too little money for any industry to develop new fields, let alone retrain its workers. The men who cast iron yesterday need to be retrained to cast plastics today.
Money needs to be found for a time and motion study, market research, and, more important than anything else, inspection. If this was the field that the National Enterprise Board was to study and invest in, it would give confidence to the workers, to management, and to investment, and how I would then welcome this Bill. Unfortunately, the Bill, as it stands, is merely an extension of Government control of the Industry Act 1972, but neither that Act nor this Bill go to the real roots of the problem. There is no use in maintaining employment without doing market research. There is no benefit in maintaining an industrial enterprise without investigating its production methods. No confidence will be gained in the pound by extending public ownership into profitable industries without first making the nationalised industries profitable. This will only sacrifice quality for quality of a lower standard. Let the nationalised industries introduce worker participation with worker directors and participation at all levels before the Government give the NEB instructions on industrial democracy.
As a brief illustration of market research it is worth taking a glance at British Leyland. Shortly after the Leyland and BMH merger in 1968, Lord Stokes turned down a mini-Mini designed by the brilliant engineer Sir Alec Issigonis and chose the present Marina because it

71
was more profitable. This mini-Mini had a 750 cc engine with greater space, I think four inches longer than the current model. Although British Leyland up until now held about one fifth of the fleet sales, it is the free market private motorists who have gone elsewhere, and the big sellers today in Britain are the small Renault, the small Volkswagen, and the small Fiat. I must emphasise that market research is vitally important and I am rather disappointed that so little is mentioned about it in the Bill.
Lord MELCHETT: As I understood it the noble Earl said that he felt that Clause 2(1)(a), (b) and (c) were merely extending the 1972 Act into greater areas of public control. I find it hard to see how paragraphs (a), (b) or (c) do that at all. The overall effect of the noble Earl's Amendment would be to narrow the purposes for which the Board may exercise their functions. The Government believe that the Board must have the necessary flexibility to cope in appropriate ways with the broad range of industrial problems which they will face. The purposes set out in the Bill are comprehensive and straightforward, and the Government's view of priorities for achieving these purposes were set out in the White Paper.
The Amendment shifts the emphasis of the Board's purpose from assisting the economy of the United Kingdom to assisting particular industries or enterprises. This must be wrong. Indeed, the noble Earl mentioned the importance of investigating the general problems of British industry today. That is our view, too, and it is our view that his Amendment would stop the Board doing this. The Board need to take the wider view of overall benefits to the economy as a whole. The Amendment mentions the retraining of personnel. As the noble Earl knows, this is already a function undertaken by the Government at Government Training Centres. While it may well be appropriate for the NEB to assist with the retraining of personnel in certain circumstances, and it will undoubtedly be "contributing towards the best type of machinery and working conditions", these are matters of detail and, in our view, they are inappropriate for inclusion in the broad purposes of the Board.
72
It is intended that the Board should be able to direct any of its functions towards the promotion of international competitiveness, not just by obtaining information by market research as suggested in the Amendment. The modernisation of productive capacity or the development of technology may be other necessary steps to international competitiveness. The proposed Amendment neglects altogether the Board's purpose of providing, maintaining or safeguarding employment in any part of the United Kingdom, except to the extent, as I understood the noble Earl, that he felt that market research would enable the Board to do this. However, our view is that the Amendment would mean that the Board could no longer be an instrument for promoting action to remedy regional imbalance in employment. Scotland and Wales have been able to do this through their own Agencies, according to the Bills passed by your Lordships' House, but the English assisted areas would have no comparable facilities. In view of what I have said, I hope that the noble Earl will see fit to withdraw this Amendment.
The Earl of BALFOUR: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.51 p.m.
Lord ABERDARE Lord ABERDARE moved Amendment No. 22:
Page 2, line 27, leave out ("assistance") and insert ("further development").
The noble Lord said: This is a small Amendment, but once again it is an endeavour to help the Government with their drafting. This is the first purpose in this clause for which the Board exists, and the words, "the assistance of the economy of the United Kingdom" are very weak. They suggest that the most important purpose of the Board is to rescue "lame ducks", and I should have thought that this was very far from the Government's intention. This would seem to me to be giving the Board a very negative role, whereas the Government wish to make it a Board which will give positive encouragement to economic development.
There is no such weakness in the drafting of the Welsh Development Agency Bill. There the purposes of the Agency

73
are "to further the economic development of Wales". These are stronger and much more positive words. Similar words appear in the Scottish Development Agency Bill. My only purpose in proposing this Amendment is to strengthen the wording of this first purpose of the Board. I do not necessarily suggest that "further development" is the best possible term, but I think that to put the first purpose of the Board as "assistance of the economy of the United Kingdom" is very weak and sounds as if the United Kingdom industry is in rather a worse state than it is.
Lord DAVIES of LEEK: I hope that my noble friend will accept that Amendment. I agree that it seems to strengthen the wording and I believe it would be worth while for the Government to consider it.
Lord BESWICK: We have considered it, but I do not think we could accept it—not that there is a great point at issue. When the noble Earl talks about the purposes of the Board I think it would be fair to take (a), (b) and (c) together. They read:
"(a) the assistance of the economy of the United Kingdom or any part of the United Kingdom;
(b) the promotion in any part of the United Kingdom of industrial efficiency and international competiveness; and
(c) the provision, maintenance or safeguarding of employment in any part of the United Kingdom."
We thought that "assistance" was rather more comprehensive than "further development". There may well be a case where it is a matter of giving assistance. In Section 8 of the 1972 Act there is reference to assistance being given if it is likely to benefit the economy of the United Kingdom. "Assistance" is the word used there, and there will be a requirement on the Board, acting on the directive of the Secretary of State, to implement under Clause 3 that provision of the Industry Act 1972. In that case where selective financial assistance is being given it is covered by the present wording and that does not mean to say that when giving assistance you are necessarily thinking of some static organisation. One would hope that it would lead to further development.
I recognise that the noble Earl is trying to be helpful, and in some respects the
74
word "development" might refer to assistance, but bearing in mind that the range of activities of the Board will include selective financial assistance, I hope that the present wording will be accepted as more suitable.
Lord NELSON of STAFFORD: I am very much in agreement with this Amendment and I think it is a pity that it is being turned down. I should like to make the point that "assistance" rather implies that no return is envisaged. As has been made clear, in many cases the object of the Enterprise Board is ultimately to get a return, although in the first case they are helping out in a particular situation. "Further development" implies that this is in order to move forward. "Assistance" rather implies helping out and goodbye to the money and God bless you! That is not the intention of the Enterprise Board. The word "assistance" is not really interpreting in its proper sense the purpose of the National Enterprise Board.
Lord DAVIES of LEEK: I do not wish to press the point too hard, and I would not support a Division. Nevetheless, the connotation of "assistance" does not go down well with "further development". I think it is only a matter of drafting and I do not see why there is a great deal of verbiage about it. I think that "further development" is positive, whereas "assistance" has the connotation of the kind of help of walking around on cast-iron crutches instead of the golden opportunity that they should be walking around on.
Baroness WARD of NORTH TYNESIDE: Having regard to what the Minister has said, and as it would seem that there are two sides, why cannot we have "assistance and further development"?
Lord LEE of NEWTON: One is at first inclined to agree with the Amendment, but when one looks at the words "further development", it pre-supposes that there has already been some development. One tries to consider this in the context of the development areas themselves. Both parties have subscribed to the attempt to improve economic conditions in large parts of Britain, the development areas. While one agrees that one does not always want to look at

75
it in the connotation that the noble Lord, Lord Melchett, gave to "assistance", nevertheless he knows very well that had it not been for the assistance rendered in the North of England, Scotland and parts of Wales, those areas would now be practically derelict. As their traditional industries contracted, they would never again be able to employ the numbers they would wish to employ. Unless there was an element of assistance they would have been in a very poor state indeed. In many instances "further development" would not cover those cases.
One can recall that the special development areas were established with greater assistance than was given for the development areas. They were confined to areas in which there had been huge closures of coal mines and there was very little alternative employment for the former coal miners. There was no question there of rendering anything but assistance. There was no question of further development; there had been no development. The only development there had been was the coal industry and they would have been completely bereft had the proposals for assistance not obtained. Would the noble Lord look at this again and perhaps leave out the word "further". "Development" sounds rather better than "assistance". When you couple the words "further development" you prescribe a great deal of the work which has already been done in development areas.
Lord ABERDARE: I do not want to spend a lot of time debating these words, but I do not think I agree with the noble Lord, Lord Lee of Newton. The word "assistance" in terms of the Development Agencies brings to my mind the activities of the Supplementary Benefits Board and the unemployment benefit. What I see as economic development is the setting up of new industries to absosrb those men who can no longer be employed in the declining industries. That is the reason why I put down the Amendment. I am sorry that the Government do not like it. It was based on the Welsh Development Agency Act, which uses the words,
"To further the economic development of Wales",
which I put into this context as the Amendment suggests. I used the words
76
"further development". However, I do not think that it is worth spending a lot of time upon this. I prefer my own words, but I am quite willing to withdraw the Amendment.
Lord BESWICK: That would be very helpful. May I just indicate to the noble Lord the example which comes to my mind when I am inclined to agree about the wording suggested by the noble Lord, Lord Aberdare, or with the arguments put forward by the noble Lord, Lord Nelson of Stafford? Take the case of British Leyland. That is an important case. Would the noble Lord say that the words "further development" would be entirely appropriate in the case of British Leyland? Is it not more a matter of "assistance"? Although the noble Lord, Lord Aberdare, was very scathing about the word "assistance", I am told that it was taken from a Bill which was passed by a Government of which he was a member—the Industry Act 1972. I should have thought that that assistance included development. I believe that the noble Baroness put forward the most helpful suggestion when she said that it should be "development and assistance". Probably we could have a look at that.
Lord ABERDARE: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.1 p.m.
Lord DRUMALBYN Lord DRUMALBYN moved Amendment No. 23:
Page 2, line 30, at end insert ("by encouraging the improved working of the market economy and where necessary facilitating the improved allocation of resources;")
The noble Lord said: The Amendment would add to subsection (1)(b), which reads:
"The promotion in any part of the United Kingdom of industrial efficiency and international competitiveness",
the words on the Marshalled List. I should like here to draw attention to the thought rather than to the actual drafting, because I think that that is important. Incidentally, talking for a moment of drafting, the trouble about the drafting of the purposes described here is that I should have thought that if one were describing the aims, purposes and objectives, one would say "to" do something rather than using these awful, flat, undynamic

77
substantives. Can I leave that thought with the noble Lord and the draftsmen?
The point I had in mind is this: I think I can say that successive Governments have expressed their desire to encourage the market economy to work better. For example, the Monopolies and Restrictive Practices Act was introduced by a Labour Government, the Restrictive Trade Practices Act was introduced by a Conservative Government. Those Acts have since been improved and extended and the Retail Prices Act has been enacted. The aim has been to improve fair competition so that the market economy will work better. The market economy involves consumer and customer choice as the determining factors in the allocation of resources. There are clear dangers in establishing bodies with access to public funds in competition with undertakings which have to rely on private investment. Quite simply, if a limited liability company fails to produce the right goods at the right prices, it goes out of business, whereas a publicly-financed body is able to cut prices or to hold them down and so make losses year after year and yet remain in business. I appreciate that it is the hope of the Government that they will be able to bring about improvements in the way some companies are run and to provide funds for investment in up-to-date machinery and so on.
Subsection (1) sets out the purposes of the Board and the questions which they are to ask themselves whenever they are about to take a decision on the outlay of public money. They must ask themselves whether this or that project will assist the United Kingdom economy, promote efficiency, lead to international competitiveness. I suggest that they ought also to ask themselves whether the project will help to improve the market economy or will lead to the distortion of competition and so to undermining that market economy. They must ask themselves whether it will lead to a better allocation of resources. I recognise that there are subjective elements in that sort of question. I know how difficult such questions can be, for I have had to deal with the Distribution of Industry Act. It may be right to persuade a company to go to an area of high unemployment, even if initially the costs of production and distribution are higher, but it has always been recognised that, eventually, the plant must be competitive
78
and must stand on its own feet. From some pronouncements of Ministers, it appears that if the Board cannot persuade an undertaking to set up in a particular area, the Board will do so even though the evidence is that it is bound to prove uneconomic to do so, certainly unless the Board are able to negotiate prior and binding agreements concerning the costs of production and distribution.
I do not quarrel with the purposes set out in subsection (1), nor with the questions which the Board must ask themselves. However, the noble Lord, Lord Melchett, said that the purposes which were set out were comprehensive. That is what I am taking leave to doubt. I doubt whether they are comprehensive enough. If the Government want to go towards a different kind of economy in which exports are treated purely as a means of obtaining foreign exchange, they should say so. If they do, they will be committing themselves to a much higher price structure in the home market and we shall all become poorer than we are now. I am not saying that we should not press for exports, but one must work for exports within the context of a market economy. If, on the other hand, the Government want the Board to contribute towards a general raising of standards, they should make it clear that one of their purposes should be the encouragement of the market economy, not only in the United Kingdom but in the EEC and much wider. I beg to move.
Baroness WOOTTON of ABINGER: I find this rather an odd Amendment. I feel that it contains an internal inconsistency. On the one hand it says that we should encourage the improved working of the market economy, and on the other hand it says that, where necessary, the Board should facilitate the improved allocation of resources. The market economy—of which, as I believe some of your Lordships are aware, I am not a great admirer—is, as I understand it, a purely independent, self-regulating mechanism, and the one thing that cannot be done to it is to improve it from outside except by removing obstacles. Removing obstacles, possibly in the way which the noble Lord, Lord Drumalbyn, has mentioned, by preventing the construction of monopolies and so forth, is

79
all right, but one cannot improve it otherwise. If one subsidises anything, one distorts the market economy and it goes all wrong and, in its own view, does not perform its proper function. Above all, the market economy claims that it has the ideal capacity to distribute resources and that, if the Board were to come in and allocate resources otherwise than the market economy would, they would be destroying the proper function of the market economy. I do not believe that the noble Lord can have it both ways. He can have his market economy if he wants it, or he can allow the Board to allocate resources if he wants, but he cannot have both.
Lord DRUMALBYN: If we were making a model, what the noble Baroness says would be completely true; but we have been trying for a long time to improve the market economy and, at the same time, we have been allocating resources to the regions, especially the development areas, with a view to pump priming, but always with the object of establishing industry there which will be viable and which will assist the market economy. One cannot have perfection in these matters—it is the objective one is aiming at which is important.
Lord LEATHERLAND: It seems to me that the germ at the heart of the Amendment consists of the two words "market economy". The noble Lord, Lord Drumalbyn, has paid tribute to the virtues of the market economy. As I understand it, the market economy is based on the law of supply and demand. That law cannot be restricted to one aspect of the economy. It must apply also to wages and there must be a free-for-all for wages. Just as the market economy encourages a manufacturer to get the best possible profit for his goods, so it encourages the worker and sets him free to get the best possible pay for his labour. That may be admirable in normal circumstances, but at the moment it seems rather dangerous to do as the noble Lord is doing and encourage the idea that we want an economic free-for-all, including wages. For that reason alone, I believe that the Amendment is misguided.
Lord ORR-EWING: I wish to support the Amendment. It does not put the
80
position quite as drastically and succinctly as the noble Lord who has just spoken suggests. It says:
"by encouraging the improved working of the market economy—".
This seems a very sensible thing in a country of our size, which is so deeply dependent on its competitive position in the international markets. It also adds what is already in the Bill—"industrial efficiency and international competitiveness"—and takes consideration of the market economy. This is sensible. Had we been working within those terms of reference, I doubt whether the Meriden motor cycle firm, which was never viable, would have been justified in getting £3·9 million of public money to assist it; and now it is in real trouble and wants another £15 million to carry on.
We have to have a yardstick. Including these extra terms would mean that the Board would think: "Are we backing something which can, in the foreseeable future, play a part in the competitive world and at the same time help the industry and those working in the industry?" This Amendment makes the position better; people would be more careful and would not make the mistakes which I believe were made in the case of Meriden.
Lord BERNSTEIN: Would the noble Lord suggest that the winding-up of British Leyland. and the end of the motor industry, would have helped the market economy?
Lord ORR-EWING: That intervention does not do justice to the noble Lord's knowledge of industry and the great successes he has made there. There are always occasions—and Rolls-Royce was another classic occasion—where something is so important for the future of this country that one cannot consider just the market economy. But I instance a small motor cycle firm at Meriden. I do not think it is fair to take the example of British Leyland, which is the only British motor car firm—I am sorry, there is one other motor car firm, the Reliant Company. There are only two British motor car firms in this country, and I think that it would be unthinkable for any Government, of any complexion, to let British Leyland sink beneath the waves. It had to be helped, just as I

81
believe Rolls-Royce had to be helped for similar reasons.
Lord BRUCE of DONINGTON: I wish to ask your Lordships to reject this Amendment on the grounds that it ties the hands of the Board much too restrictively. The Bill refers to,
"The purposes for which the Board may exercise their functions…"
Paragraph (b) refers to,
"the promotion in any part of the United Kingdom of industrial efficiency and international competitiveness…".
while the Amendment says,
"by encouraging the improved working of the market economy…."
This is entirely limiting. If the Amendment were passed, the National Enterprise Board would not be able to use their own initiative in promoting industrial efficiency. While listening to some of the speeches on this Amendment I was amazed that there are still people alive who believe that British industry, or even substantial sections of it, are functioning even efficiently. Anybody with any connection at all with British industry knows perfectly well that in quite wide sections of it—not all—for the past 25 years at least, all the workings of the market economy and international competitiveness have not induced industrial efficiency.
I have in my hands a report issued only recently by the West Midlands Economic Planning Council. It has been out for only seven or ten days, but it could have found its way into your Lordships hands had the British national Press given prominence to it. It has been published as a result of studies, including a comparative productivity analysis of 40 engineering and metal working firms, extending over the years 1968 to 1972, and a series of case studies of 45 selected companies during the period 1970–74. It cannot be claimed that over those years ordinary market economy conditions have not prevailed. Indeed, it can be claimed that during those years British industry—very wide sections of it—have been given every conceivable type of aid and encouragement from successive British Governments, including very substantial tax concessions by means of which since March 1972 they have been able to charge 100 per cent. of their capital expenditure for corporation tax purposes. They have been given every conceivable encouragement. What happens? In
82
respect of these companies in this case study, we find that, if the materials' throughput time from beginning of batch production to the end is taken at a figure of 100, only 20 per cent. of that time has been used as productive time.
The report comes to the conclusion that without the allocation of any extra financial resources, without even the provision of any extra capital equipment or aid, British industry itself, at this time, in the areas covered by the report, could increase its productivity by 100 per cent., by means of proper organisation of the work inside the factories concerned. The report reveals that on average some 10 per cent. of production time is spent on materials handling. It is known perfectly well throughout the whole of the management consultancy profession that any management consultant on entering into any company can always at least cover his first years fee by recommending changes in materials handling. This is well known. This does not need any extra stimulation to the market economy, or any extra stimulation of international competitiveness. It needs decent management. This report indicates that avoidable waiting time amounts in some areas to as much as 70 per cent. of the material's throughput time in the factories concerned. This is what the report says—
Lord HENLEY: Is the noble Lord not in danger of getting rather far away from this Amendment?
Lord BRUCE of DONINGTON: No, I do not think so, because I want to illustrate what has happened, and to show the abysmal depths to which the situation has fallen under ordinary market economy conditions. Unless the Government or the National Enterprise Board have powers to encourage the improvement of efficiency, without the restrictions imposed on them by this Amendment, then the Board cannot possibly succeed.
Lord DRUMALBYN: Would the noble Lord allow me to intervene? This Amendment refers to:
"…encouraging the improved working of the market economy…".
We are concerned here with exactly the obstructions and difficulties which the noble Lord has been speaking about. This is one of the matters the Board should have an eye to.
Lord BRUCE of DONINGTON: The noble Lord may care to correct me. If he looks at paragraph (b), he will see that it refers to:
"…the promotion in any part of the United Kingdom of industrial efficiency…".
His Amendment suggests a way to do this. I do not want the Government or the National Enterprise Board restricted in the way that the noble Lord suggests the matter should be approached.
Lord ABERDARE: I should like to support my noble friend. It underlines the tremendous difference in approach between the two sides when I hear what has been said by the noble Lord, Lord Bruce of Donington. We do not see that this is the way to put these things right: to have a Board which interferes with what are, basically, matters which function well under a free economy. Look, for example, at France, Germany, America and Japan. Here are free enterprise economies which work satisfactorily. The noble Lord said that British industry has been given every aid and encouragement. It has been given a certain amount of financial aid but only to induce it to go into development areas where employment was required. I do not agree at all about encouragement. It has been subject to terrible political interference, threats of nationalisation, taxation, control of prices and dividends. I do not agree with one word the noble Lord has just said.
Lord BRUCE of DONINGTON: In that case, will the noble Lord read the words of the former Leader of the Conservative Party to whom he owed his allegiance at one time and who was making precisely the same complaints that I am making now?
Lord HEWLETT: Is it not possible for this House, if perhaps not for another one, to stop lambasting British industry? Enormous numbers of people, in management, directors or on the shop floor, are endeavouring to help pull this country round from the pitiful state it is in. With respect to the noble Lord, Lord Bruce, I can only say of the bitter attack that he has made as a result of a report of which I do not have a copy, that part of the complaint may be justified. But is he seriously suggesting that overmanning is not one of the major problems in industry today and that
84
restrictive practices by the trade unions and by extremists, not necessarily members of trade unions but members of political Parties so far to the Left that they want to overthrow the existing order of society and the organisation of industry, are not perhaps the very people who are the major difficulty at the present time? It is not going to do any good to industrialists or to people on the shop floor in the West Midlands to heap this tirade of abuse on to them.
My noble friend Lord Aberdare is right. Conditions have not been those of a free economy—whether we refer to the three-day week; to Phase one, two or three; whether to the new White paper of the £6 limit and the restriction of dividends, high taxation, sur-taxing on corporation tax itself and enormously high insurance contributions; it has been anything but a free market economy. With the greatest possible respect, such comments as are made by the noble Lord are not only highly damaging to the prestige of British industry and its feelings in this country but, worse still, they help in selling Britain short abroad.
Lord MELCHETT: Perhaps it would help if I returned to the Amendment. The noble Lord, Lord Drumalbyn, may remember that some time ago he complained that the wording of this clause was flat and undynamic. Certainly it provoked some far from flat and undynamic responses. In regard to the reaction to Clause 2(2)(c) in particular, if the wording of that subsection is flat and undynamic one would hesitate to think what would have been the reaction of noble Lords opposite had the Government introduced that particular subsection in dynamic and high-flown language. However, I must say that I shared with my noble friend Lady Wootton the feeling that the Amendment contained an internal inconsistency. I was hoping that the noble Lord, Lord Drumalbyn, might help by explaining exactly what the Amendment was designed to achieve.
Having listened carefully to everything said. I am still very much in the dark. I think my noble friend Lord Leatherland hit the nail on the head when he said that the key to this matter was what was meant by "market economy" and whether noble Lords opposite want to encourage a free for all. The noble Lord,

85
Lord Aberdare, leapt to defend the market economy of some countries overseas without mentioning the rate of unemployment in Germany, France and U.S.A., to take three countries he mentioned. I had wondered whether the noble Lord, Lord Drumalbyn, was thinking of encouraging some facets of market economy that we have seen in recent years. I understand that between 1970 and 1974 the financial institutions, the insurance companies and the pensions funds in this country collected £11,000 million in savings, incidentally a sum to be compared with the amount of resources which are going to be available to the National Enterprise Board. Of that £11,000 million raised in four years, nearly a half, 46 per cent. of it, went into non-industrial investment of three kinds: short-term holdings in the money market, property and personal loans. I wonder whether the noble Lord, Lord Drumalbyn, when he comes to speak in a minute or so, will tell us whether this is an aspect of the market economy that he wants the National Enterprise Board to support and encourage. I think that he would agree in the light of happenings to some merchant banks in recent weeks that it may be that some workings of the market economy, which at the time may seem to give best return on the capital, turn out in the long-term to be in the interests neither of the people of this country nor of the people who invested the money.
Baroness HORNSBY-SMITH: Would the noble Lord not agree that many councils, and not least the Labour-dominated ones, have been putting forward far more advantageous terms for people and pension funds that would lend them money than private enterprise has been allowed to give in dividends?
Lord MELCHETT: I am not quite clear whether the noble Baroness supports my contention that the market economy should be controlled or that we should let it rip. I am left in the same position of confusion. One of the things I want to say (which I think arose as a confusion in the minds of some noble Lords) is on the question of financial control on the National Enterprise Board and the question of assistance under the existing Industry Act. The noble Lord. Lord On-Ewing, raised the question of the Meriden works. The assistance
86
given to that firm was given under the existing Industry Act. The National Enterprise Board, when they are deciding on what grounds they will invest, will take into account the functions which are laid on them under the clause we are now considering. If noble Lords turn to Clause 5(3) of the Bill they will see that it will be important when the Board undertakes these duties to see that, taken together, their investments result in an adequate return on the capital employed by the Board. This is something that I shall deal with later; but the Board will be undertaking two separate functions. They will be acting under the direction of the Secretary of State under Clause 3 to give assistance under the existing Industry Act and there they may be asked to assist things which are clearly not commercial ventures but there will be a separate function; and there an adequate return will be required overall.
Lord ORR-EWING: I am grateful that the noble Lord reminded us of the 1972 Industry Act; but under that Act too it must be economically viable. The Chief Accounting Officer, the Permanent Secretary, Sir Anthony Part, was ill; but it was Mr. Peter Carey, acting Accounting Officer, who said to the Secretary of State, Mr. Wedgwood Benn, that this was a non-viable operation. He made that public statement as he had to; so if he was acting under the Act of 1972 he was acting irrationally and incorrectly. We hope that this will not happen under this Act.
Lord MELCHETT: I think we are probably splitting hairs over "nonviable" and "non-commercial". Perhaps I may now answer the points on the Amendment itself. I agree with much that was said by my noble friend Lord Bruce of Donington and, in particular, when he drew attention to the effect of the Amendment. The effect of this Amendment would be to qualify the National Enterprise Board's object of promoting industrial efficiency and international competitiveness. We should not circumscribe the ways in which the Board are to promote industrial efficiency and international competitiveness. On many occasions the National Enterprise Board may do so by assisting the market economy but they should be free to do so by assisting public enterprise and by

87
deliberately altering the allocation of resources. The example I gave of the amount of money invested in the property market in previous years is a good example where it will be important for the National Enterprise Board to be in a position to take some part in the reallocation of resources where desirable, away from congested areas, for example, and to those areas of the country where valuable resources of skilled working population are particularly seriously underemployed at the present time.
Lord HEWLETT: I heard the noble Lord say he largely supported what the noble Lord, Lord Bruce of Donington, had said. Do we understand the noble Lord to say that he supports the attack made against the West Midlands engineering industry? This is of material importance in getting not just the normal support, but the wholehearted support of this country and of industry in every region. We should know whether or not the Minister who is guiding this matter through your Lordships' House feels so virulently against the West Midlands industry. I am not a West Midlander, I am a Lancastrian.
Lord MELCHETT: I am doing my best not to be virulent and to be as reasonable as I may. I am also doing my best to stick to the Amendment which the Committee are discussing. It was regarding the effect of the Amendment that I said I particularly agreed with my noble friend. I was going to try to help noble Lords opposite by demonstrating some ways in which the National Enterprise Board will in part encourage the improved allocation of resources in the economy as I find it difficult to answer in detail an Amendment which I do not fully understand. For example, it is clear that the market economy has failed to generate a level of investment in industry which is adequate for the country's needs.
Whatever else is between noble Lords on each side of the Committee, I think all would agree with that statement. By providing a further source of investment capital, and by stimulating joint ventures with private industry, the Board will help to improve the performance of the economy. The White Paper made clear that the list of priorities for the Board in providing such capital would include
88
the promotion of industrial efficiency and sponsoring investment intended to offset the effect of monopoly—in other words, to improve the working of the market economy, as I have always understood the term.
But it is clear that in some fields the allocation of resources by the market economy does not suffice, even when it is encouraged by large amounts of selective assistance from Government. It has failed to bring sufficient new enterprises to the old industrial areas of the country to make up for the rundown of old industries, resulting in a loss of potential capacity through unemployment. Only those who have a political objection to publicly-owned industry will fail to accept that public initiative can contribute to industrial efficiency, the improved allocation of resources and a more rapid rate of economic growth.
I should also like if I may to draw noble Lords' attention to some ways in which the NEB specifically will be of assistance to the private sector of the economy. The NEB will be a new source of investment capital for manufacturing industry. They will take equity, which is the normal commercial practice, and they will enable joint ventures to be undertaken with the private sector. Thirdly, they will compete with the private sector. I hope that that is something which noble Lords opposite will welcome warmly. Lastly, they will assist the private sector in giving aid to sound companies which are in short-term management or financial difficulties, and by providing a very high quality of managerial advice.
I hope that I have underlined the way in which the National Enterprise Board, as we see it, will be assisting the working of the market economy while at the same time telling your Lordships why we do not think the functions of the National Enterprise Board should be limited to the extent and in the way the noble Lord is asking for in this Amendment.
Lord DRUMALBYN: I am grateful for the temper in which the noble Lord replied to my Amendment, though I do not agree with much that he has said. I may not have made myself clear; but if the noble Lord will look at what I said on Second Reading he will have the background to interpret what I said on this Amendment. I do not think that it

89
is reasonable to compare investment institutions, whose jobs it is to maintain the value of the savings with which they are entrusted to get the best possible return, with what the Board are supposed to be doing. That is a totally invalid comparison.
Lord MELCHETT: Is the noble Lord saying that these large investment institutions which are investing money are not part of the market economy and are therefore not included in the terms of his Amendment? I read with great care what the noble Lord said on Second Reading. The only part which stuck in my mind was his description of normal commercial practice of buying shares as "weaseling". I do not think I gained a great deal more from what was said in his Second Reading speech.
Lord DRUMALBYN: I am glad that the point about weaseling sunk in—we will return to that later. I am sorry if that is the only point which stuck in his mind. I do not think he read the speech with as much care as he may have thought. The point about the Amendment is that it must be a guide to the Board that this is the direction in which they go. They have got to get our economy working again. If they are to succeed they will do so by getting our economy working again on the basis of a market economy. We are bound to recognise that we are never in a position of perfect competition or anything of that sort. Broadly, we have to decide whether we are going in the direction of the Eastern European economies. They strive hard for efficiency, they strive hard for international competitiveness; but because they are not striving also towards the market economy they are not all that successful. We have to work in that direction. This is the objective.
There was no intention of limiting the purposes of the Board. I am not saying that the Amendment may inadvertently have done so. That is why I prefaced my remarks by asking the noble Lord to direct himself to the ideas behind this rather than the actual wording. I hope that I have directed the attention of the Committee to the ideas behind the Amendment. Having done that—if I have done that—I have achieved my purpose and beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.38 p.m.
Lord NELSON of STAFFORD Lord NELSON of STAFFORD moved Amendment No. 24:
Page 2, line 31, after ("and") insert ("subject thereto").
The noble Lord said: This Amendment is similar to that which follows, and the proposers of that Amendment, No. 25, have suggested that the Committee might like to take that Amendment at the same time. I hope that my Amendment does not leave the Committee in quite so much confusion as some Members are in as a result of the discussion we have just had. This is a simple Amendment to insert two words, "subject thereto". This is in order clearly to define what are the purposes of the National Enterprise Board. This is set out in Clause 2(1). It is important that it is clear that the requirements under paragraph (c) are secondary to those in paragraphs (a) and (b). Without this, there will be great confusion and division of opinion within the Board, which will be very unfortunate.
On Second Reading, the noble Lord, Lord Beswick, emphasised the importance of this National Enterprise Board towards the objective of improving industrial efficiency and competitiveness. Many noble Lords on Second Reading and again during the course of this Committee stage emphasised this objective. It is absolutely imperative that this stands clearly in the Bill when it is finally passed by this House. Many noble Lords, like myself, who have had experience in industry, will know that from time to time most organisations are placed in the unhappy position of making a decision on disposing of labour, adjusting labour to changing conditions in order to safeguard the long-term efficiency and viability of the enterprise.
I feel sure your Lordships will agree that this is always a soul-searching and vital question. I would say from my experience that in these circumstances it is vital that those who have to make these decisions are quite clear in their minds as to where their duties and responsibilities lie. The interests of the minority under these conditions, every possible step having been taken to ameliorate their position, must take second place to the interests of the majority and the long-term viability of an enterprise.
This is not clear in the Bill because paragraph (c) stands equal to paragraphs (a) and (b), and I consider it should be made quite clear in the Bill that paragraph (c) is secondary to paragraphs (a) and (b). Several noble Lords referred to this matter during our Second Reading debate. Your Lordships may recall that at column 944 of the Official Report for 10th July the right reverend prelate the Bishop of Worcester asked:
"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 noble Lord, Lord Peddie, said at column 936 on that day:
"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…".
I hope your Lordships will agree with me that the members of this National Enterprise Board, when they come to tackle the very difficult matters they will have to deal with—and they are going to be very difficult—will all have quite clearly in their minds what are the responsibilities and priorities. I have particularly in mind members of that Board who may be specifically charged with the problems of employment in various industries which are being dealt with by the Board. I think it will be helpful to them to know exactly where they stand regarding the priorities of these three objectives in paragraphs (a), (b) and (c). I believe that if the words "subject thereto" were inserted between paragraphs (a) and (b) and the third objective, which is paragraph (c), it would be made quite clear. It is for this reason that I move this Amendment, which I hope will he accepted by the Government. I beg to move.
Baroness ROBSON of KIDDINGTON: I think the Amendment I shall shortly propose to your Lordships has exactly the same aim as the one just proposed by the noble Lord, Lord Nelson of Stafford. It is significant that we are having quite a number of Amendments to discuss in Clause 2, referring to the general purposes of the Board. One of the most important things, if we are to set out on this new enterprise, the creation of the National Enterprise Board, is to make certain that
92
we have our terms of reference right so that we know the Board are going to achieve what we hope to achieve. Some Members of my Party in another place attempted to put in a much longer Amendment to the Bill, clarifying in greater detail the purposes of the NEB. This was not successful. While agreeing with their intention, we came to the conclusion that perhaps we should propose an Amendment of a much more limited nature but which in many ways would have the same effect.
I believe the Amendment we are now proposing is tremendously important because, as it is at present worded, Clause 2(1)(c) could be interpreted as perpetuating some of the worst results of actions taken by the Secretary of State under the powers of the Industry Act 1972 and some of the worst practices that exist in British industry at the moment. Of course we are all deeply concerned about employment and the right to employment in this country, but this Bill is one which we all hope, when suitably amended, will contribute towards the regeneration of industrial investment and improvement of the performance of British industry. At all costs, the National Enterprise Board must avoid putting job security before industrial efficiency.
There is ample evidence now in front of us all in the Ryder Report on British Leyland, in statements made by the chairman of the British Steel Corporation and by the chairman of the printing and publishing industry about overmanning in British industry. The noble Lord, Lord Beswick, said that there is more unemployment in other countries than in our own. I would doubt whether that is absolutely correct because a great deal of unemployment could be hidden by an enormous amount of overmanning and under-employment of the greatest asset we have in this country; namely, our capacity to work. It is only by using that capacity to its best advantage that we shall recover our industrial efficiency. We on these Benches are tremendously concerned about the problem of increasing unemployment, and we know what it does to the human spirit; but you cannot maintain and safeguard employment along a pattern which was fixed perhaps many years ago. Times change and the patterns of industry change. At the same time as a large number of our industries

93
are overmanned, newer industries are screaming for skilled labour. The emphasis surely should be on the streamlining of our resources—
Lord DAVIES of LEEK: I apologise for interrupting the noble Baroness, but I am a little adrift. I beg her pardon. Has it been put that we are speaking on Amendment No. 25 as well as Amendment No. 24?
The PRINCIPAL DEPUTY CHAIRMAN of COMMITTEES (Baroness Tweedsmuir of Belhelvie): We are speaking on Amendment No. 24. That Amendment has been formally moved. It is possible to speak to Amendment No. 25, which will afterwards have to be moved or withdrawn.
Lord DAVIES of LEEK: I am very grateful, and I beg the noble Baroness's pardon.
Baroness ROBSON of KIDDINGTON: The emphasis should be on streamlining our resources, through increased investment in plant and machinery, coupled with really viable schemes of retraining and redeployment of the labour force. It is only by using the creation of the National Enterprise Board in this way that in the long term we could hope to effect the recovery of our economy. We shall not do that if we use the resources that are available to the National Enterprise Board for short-term saving of jobs for their own sake. I think that is very important: and both the Amendment submitted by the noble Lord, Lord Nelson, and the one I shall shortly have the honour to move, attempt to do the same thing. I think we could well learn from some of our European neighbours, both inside and outside the European Economic Community, and particularly from countries such as Sweden, which the noble Lord, Lord Beswick, quoted with great relish on Second Reading of this Bill. We need to know more about the retraining and redeployment of labour because without that, despite the influence of the National Enterprise Board, we shall fail to catch up with our neighbours. We have to do the two things, and if the NEB are designed to regenerate investment in industry, let us make them stick to doing that.
Lord BESWICK: I hope that I have misunderstood the noble Baroness, but
94
she came very near to advocating unemployment—
Several Noble Lords: No!
Lord BESWICK: I have absolutely no doubt that is not what she intended, but she came very near to saying that we had to go through a period of unemployment and that we should be prepared to accept unemployment as a penalty in the course of achieving the higher productivity I know that we all wish to see. I would say to the noble Baroness and to the noble Lord, Lord Nelson, that if they read what they have said, that is the implication of certain passages. I beg of them not to allow an impression to be given that we are at all carefree in this pursuit of efficiency at the expense of the employment of our fellow citizens. It may well be—and the noble Baroness mentioned the case of the—
Baroness ROBSON of KIDDINGTON: I am sorry, but I am certain that what I said did not imply that I was encouraging unemployment. I am tremendously concerned that if we do the wrong thing at this moment we shall create in the future unemployment of much greater proportions. I am trying to prevent unemployment from becoming worse.
Lord BESWICK: That is something we have in common. I have indicated the impression the noble Baroness created on me. There are those who too readily accept the possibility of unemployment in the pursuit of industrial efficiency. The noble Baroness mentioned the British Steel Corporation. It is almost fashionable now to say that they are overmanned and there has to be ruthless discharge of labour. I had a little experience of this. I do not accept criticism of the kind some people make of the situation in the British Steel Corporation. They are overmanned in certain respects. We have to change that situation, but it is a change that must be made gradually. It cannot be done precipitately. The economics of discharging labour have to be taken into account. I have gone into this matter carefully and speak strongly about it. There are cases where, if redundancy payments and unemployment pay are totted up, and there is a general reduction in activity in a particular area, it is found that the economic cost to the country of offloading labour is much greater than

95
carrying it for a time until there are alternative sources of employment, or other equipment elsewhere in the country, to which labour can probably be encouraged to move.
So I do not apologise at all for the fact that we have in this Bill a reference to a function of the Board being the provision, maintenance or safeguarding of employment in any part of the United Kingdom. I would say to the noble Lord, Lord Nelson of Stafford, if he thinks we are being unduly soft in this direction, that the wording is taken from the 1972 Act of which Section 7(1)(a) refers to financial assistance likely to provide, maintain or safeguard employment. That is one of the provisions of the National Enterprise Board. In those cases where there is the provision, maintenance or safeguarding of employment in an assisted area, and it is done at the direction of the Secretary of State for special reasons, and the return is not adequate, that will be an activity which is separate from the rest of the accounting of the National Enterprise Board. It will be shown separately and will be something which is undertaken for specific social objectives.
For the rest of the National Enterprise Board's activities, there is the provision in Clause 5, to which my noble friend Lord Melchett referred, by which there must be an adequate return on capital invested. Although I appreciate, understand and sympathise with what the noble Lord, Lord Nelson of Stafford, said about the need to have proper financial disciplines, if he reads this part of the Bill, together with Clause 5, he will find that that requirement is laid down. There has to be an adequate financial return on investment made by the National Enterprise Board. We, no less than lie, and no less than the noble Baroness, Lady Robson, have in mind the fact that we shall achieve permanent full employment only if we have a genuinely efficient economy. The purpose of the NEB is to facilitate movement towards that efficient economy. I can say only that, if one takes the Bill as a whole and reads it together with Clause 5, it will be seen that proper financial disciplines are provided for in the Bill.
Viscount MASSEREENE and FERRARD: The Minister appears to be
96
arguing against himself. He appears to be arguing for non-productive employment, on the one hand, for social reasons. There may be many instances where that may be necessary. On the other hand, he also said that the National Enterprise Board must show a good return. I do not see how we can have both. When the noble Lord was at school learning his economics I am sure he was told that the object of production is to produce wealth. I was always taught that the more wealth a country produced the richer all its inhabitants would eventually become. Although it may be necessary to streamline an industry and get rid of people, the very fact that real wealth is being, produced will help those employees through other means. But it is dangerous to back up with subsidies non-productive employment. If that is to be done on a big scale, we are on the road to ruin. I have some small experience of this. I have experience of overmanning and of not being allowed by a union to use machines because they were too efficient. In that event, one is on the road to ruin. It is very difficult to get non-productive employment and at the same time to get production of wealth.
Lord DAVIES of LEEK: I have always listened fascinated to the noble Viscount's speeches. He is a man of scholarship. Will lie do me a favour and, tonight in his study, open Ruskin's famous essay, "Unto this Last"? He will find there the dictum that there is no wealth but life.
6.57 p.m.
Viscount AMORY: I believe that in a minute or two we are going to break off and then I shall be able to read Ruskin's essay before we meet again. With regard to what the noble Lord Lord Beswick, said, I think this illustrates how very difficult it is to discuss overmanning without sometimes appearing to be insensitive to unemployment. I personally have no objection to employment being brought into this Bill, but we must underline that the best chance of continuing a high rate of employment, and a higher rate than we have at present, is by doing everything we can to ensure that British industry will be efficient. In doing that one of the things we must find some way of dealing with is our present tendency to overman.

97
In the days when I ran a group of small companies I was always very sensitive to anything that resulted in some people being thrown out with no job to do. I always did my utmost to find some other employment for them. I sometimes chose developments involving capital expenditure which I thought would provide the additional employment I wanted. What I have to confess with hindsight is that almost every one of those projects that I selected because they would give employment did not turn out to be efficient enough to continue. Several of those ventures have since failed and the result has not been less unemployment but more unemployment than I had figured. There may be many reasons. I may not have chosen the projects aright. However, what I would emphasise is that, when one chooses a new development solely from the point of view of providing employment, often a bad choice is made and projects are chosen which are not going to survive.
What must be emphasised is increased efficiency of British industry. If we go for that, maximum employment is something we shall stand a better chance of achieving. I hope that will be the theme running through this Bill. It seemed to me the theme that my noble friends were emphasising in proposing and supporting this Amendment.
Lord BESWICK: I agree wholeheartedly with the noble Viscount. While listening to him my mind went back to something which was said by Stanley Baldwin when I was a little boy: that when people became too old to work in his own establishment he allowed them to sit around on the handles of a wheelbarrow. That was the attitude which I think the noble Viscount said he displayed at one period, but those days have gone. I accept that, if it is to guarantee secure employment, industry must be competitive and efficient, but I wonder whether this argument, which is almost going against full employment, is not falling into a trap.
The noble Viscount said—and I agree with him—that the only way to guarantee full employment is by having an efficient industry and that is what the Bill says. Paragraph (b) of Clause 2(1) deals with:
"…the promotion in any part of the United Kingdom of industrial efficiency…"
98
and paragraph (c) deals with:
"the provision, maintenance or safeguarding of employment…"
The way through to the provision, maintenance or safeguarding of employment will be by the promotion of industrial efficiency. We accept that, but what I do not accept is that we should put one underneath the other. The two are parallel. That is what I understood the noble Viscount to say and in so far as he said it I agree wholeheartedly with him.
Lord WINDLESHAM: I have followed what the noble Lord, Lord Beswick, has said with interest, but I wonder whether he could help the Committee with one point of fact. Could he say whether the wording of Clause 2(1)(c) was discussed with the Trades Union Congress?
Lord BESWICK: I cannot give the noble Lord a guarantee that that wording was discussed with the TUC, although I imagine that it probably was. There have been discussions with both the TUC and the CBI, but whether this subsection was discussed I could not say.
Lord WINDLESHAM: The point I am interested in is whether this clause originated with the TUC and the Government accepted it or whether it originated with the Government and was then the subject of further discussion in the normal way?
Lord BESWICK: I thought I said that the wording comes from a Bill that was taken through Parliament by the Government of which the noble Lord was a member.
Lord WINDLESHAM: There is nothing whatever to be ashamed of; the noble Lord need not be touchy about it. I am seeking to establish a matter of fact and I have not yet had the answer from the noble Lord. Perhaps he will let me have it later.
Lord BESWICK: There is no need for the noble Lord to be touchy because I tell him that something in this Bill was first put into an Act of Parliament by the Government of which he was a member. Why should he get touchy about that?
Lord WINDLESHAM: I must not interrupt again, but the noble Lord

99
appeared to be using it as a debating point.
Lord BESWICK: The noble Lord should not confuse a debating point with a matter of fact. While I am on my feet, may I say that his noble friend who is sitting behind him said that I was arguing against myself at one time. With respect, I was not doing that, but was pointing out that there are two different Parts to the Bill, one of which is different from the other. Clause 3 of this Bill makes provision for the implementation of the provisions of the Industry Act 1972 by direction of the Secretary of State. In those cases the criteria will be different, and in those cases where the criteria are different I am saying that the financial results of any enterprise into which they put money must be shown separately. However, the National Enterprise Board, which will not be operating under the narrow requirements of Clause 3, will have to ensure that they obtain an adequate return on their capital.
Lord NELSON of STAFFORD: I am very grateful to the noble Lord, Lord Beswick, for his reply, especially for drawing attention to the fact that he had the impression that I was implying I am in favour of increasing unemployment. I shall read very carefully exactly what I said, but the noble Lord has given me the opportunity to say that that was in no way my intention—in fact, exactly the reverse. I was saying that the National Enterprise Board and any board of management in industry are concerned with maintaining employment. They can maintain employment only by maintaining efficiency, and in so doing sometimes they have to face up to these very difficult, short-term questions. When they do so, it should be quite clear to them where their duty lies.
The debate which we have had on this Amendment shows exactly what I mean. I can well understand the directors of the National Enterprise Board going through exactly the same exercise as that which we have gone through in this House, with perhaps somebody implying that a member of the Board is advocating unemployment. If I may say so, this emphasises my point. I want to ensure that when they begin the work which they have got to do and on which great emphasis is being placed, the National
100
Enterprise Board should begin on a really sound basis—not with division at the top about their objectives. If any Member of this Committee has worked in an organisation where there is division at the top, he will know that that division goes right the way down. Many of us are working night and day with representatives of trade unions and work people to try to solve this problem and better the position. That is what the National Enterprise Board themselves want to do and that is what I am advocating.
Lord BESWICK: May I ask the noble Lord whether he can say that, if one takes this provision in Clause 2 together with Clause 5, there can be any doubt about the financial requirement of the National Enterprise Board?
Lord NELSON of STAFFORD: I hope not. I would not have moved this Amendment if I did not think it was better expressed in the way I am advocating. However, the noble Lord has explained that the intention is that it should be done in this way and that, coupled with Clause 5, this is the intention. If that is so, it meets my point and I am very happy. I shall watch with great interest whether it works out that way, and all I can say is that I hope it does. With that thought, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Baroness ROBSON of KIDDINGTON Baroness ROBSON of KIDDINGTON moved Amendment No. 25:
Page 2, line 32, after ("of") insert ("productive").
The noble Baroness said: I beg leave formally to move Amendment No. 25. Although I am tremendously heartened by the assurance of the noble Lord, Lord Beswick, that his aims and purposes are the same as ours on this side and that taken together with Clause 5 the purpose of the Amendment we are moving is fulfilled, I think that it is very important that it should stand among the three general purposes of the National Enterprise Board. The basic purposes of the Board should be pointed out very clearly so that nobody can misunderstand them. Therefore, I shall press my Amendment to a Division.
7.9 p.m.
On Question, Whether the said Amendment (No. 25) shall be agreed to?
Resolved in the affirmative, and Amendment agreed to accordingly.
7.14 p.m.
Lord STRABOLGI: It may be for the convenience of the Committee if we break now for 45 minutes, that is until 8 o'clock. I beg to move that the House do now resume.
House resumed.
Their Lordships divided: Contents, 85; Not-Contents, 50.

CONTENTS

Aberdare, L.

Emmett of Amberley, B.

Rankeillour, L.

Alexander of Tunis, E.

Gainford, L.

Redesdale, L.

Amherst, E.

Gladwyn, L.

Reigate, L.

Amory, V.

Goschen, V.

Renwick, L.

Atholl, D.

Gowrie, E.

Robson of Kiddington, B. [Teller.]

Auckland, L.

Grenfell, L.

Balfour, E.

Gridley. L.

Rochester, L.

Balfour of Inchrye, L.

Hawke, L.

St. Aldwyn, E.

Banks, L.

Henley, L.

St. Davids, V.

Beaumont of Whitley, L.

Hereford, V.

St. Just, L.

Belstead, L.

Hewlett, L.

Sandford, L.

Berkeley, B.

Inchyra, L.

Sandys, L.

Brougham and Vaux, L.

Killearn, L.

Savile, L.

Campbell of Croy, L.

Kimberley, E.

Seebohm, L.

Cathcart, E.

Kinnoull, E.

Selkirk, E.

Colville of Culross, V.

Lindsey and Abingdon, E.

Sempill, Ly.

Cowley, E.

Lloyd of Kilgerran, L. [Teller.]

Strange, L.

Craigavon, V.

Long V.

Strathcarron, L.

Cullen of Ashbourne, L.

Lucas of Chilworth, L.

Strathclyde, L.

de Clifford, L.

Macpherson of Drumochfer, L.

Sudeley, L.

de Freyne, L.

Massereene and Ferrard, V.

Terrington, L.

Denham, L.

Merrivale, L.

Trefgarne, L.

Deramore, L.

Monck, V.

Vickers, B.

Donegall, M.

Monson, L.

Vivian, L.

Drogheda, E.

Nelson of Stafford, L.

Ward of North Tyneside, B.

Drumalbyn, L.

Northchurch, B.

Wigoder, L.

Effingham, E.

Orr-Ewing, L.

Windlesham, L.

Elles, B.

Porritt, L.

Young, B.

Elton, L.

NOT-CONTENTS

Bernstein, L.

Henderson, L.

Popplewell, L.

Beswick, L.

Houghton of Sowerby, L.

Rhodes, L.

Bruce of Donington, L.

Hoy, L.

Ritchie-Calder, L.

Burton of Coventry, B.

Jacques, L. [Teller,]

Robertson of Oakridge, L.

Castle, L.

Leatherland, L.

Rusholme, L.

Champion, L.

Lee of Newton, L.

Segal, L.

Collison, L.

Llewelyn-Davies of Hastoe, B.

Shepherd, L. (L.Prvy Seal.)

Crook, L.

Lovell-Davis, L.

Slater, L.

Crowther-Hunt, L.

Lyons of Brighton, L.

Southwark, Bp.

Darling of Hillsborough, L.

Maelor, L.

Stewart of Alvechurch, B.

Davies of Leek, L.

Melchett, L.

Stow Hill, L.

Elwyn-Jones, L. (L.Chancellor)

Milner of Leeds, L.

Strabolgi, L. [Teller.]

Morris of Kenwood, L.

Taylor of Mansfield, L.

Evans of Hungershall, L.

Pannell, L.

Wallace of Coslany, L.

Fisher of Camden, L.

Peddie, L.

Wells-Pestell, L.

Gordon-Walker, L.

Phillips, B.

Wise, L.

Harris of Greenwich, L.

Platt, L.

Wootton of Abinger, B.

Moved accordingly, and, on question, Motion agreed to.

ECCLESIASTICAL OFFICES (AGE LIMIT) MEASURE
7.15 p.m.
The Lord Bishop of MANCHESTER The Lord Bishop of MANCHESTER rose to move, That this House do direct that, in accordance with the Church of England Assembly (Powers) Act 1919, the Ecclesiastical Offices (Age Limit) Measure be presented to Her Majesty for the Royal Assent. The right reverend Prelate said: My Lords, it is now some four and a half years since I began my connection with work upon this Measure,

103
as also upon the next Measure which follows upon the Order Paper, as chairman of the Terms of Ministry Committee of the General Synod. The terms of reference which that Committee inherited from the Church Assembly included the words:
"To provide for an age beyond which the continued employment of a clergyman shall be by mutual consent."
I think it is important to make clear at the outset that these words form the moral basis of this Measure and that they relate specifically to the tenure of freehold offices within the Church of England.
The ministry of a priest is not a profession from which retirement is, or can be, mandatory, and to describe this Measure as a compulsory retirement measure for clergy would be to commit a serious inaccuracy. Those who are obliged to relinquish freehold offices at the age of 70, which is the age prescribed in the Measure, still have the possibility of continuing to minister (though not of course in the same place) under the Bishop's licence or with his permission to officiate. Indeed, there are not a few who already do so, and I think it is true to say that many of them—and certainly many of their wives—are glad that it is possible to lay down the burdens of administrative responsibility in diocese, cathedral or parish and to devote the remaining years of their ministry to a freer exercise of those spiritual functions for which they were ordained. The point, however, lies in those words "by mutual consent". The occupant of a freehold office is by definition sole judge of his fitness or otherwise to continue in that office until death or serious infirmity do them part. It is this unfettered right which the General Synod has clearly indicated its wish to curtail.
It should not be thought that this constitutes a major problem for the Church in terms of numbers. At the 31st December, 1973, the number of clergymen holding offices listed in the Schedule to this Measure were: age 70 and over, 295; 75 and over, 71; 80 and over, 28. We are not, of course, speaking today of those particular clergymen either, since the rights of "sitting tenants" are in any case protected under Clause 1(4)(d) of the Measure. I simply quote these figures in order to show that the percentage of those
104
clergymen likely to be affected is a very low one and, indeed, probably it will have diminished further by now. For the reduction to 65 of the age at which retirement on full pension is permissible has meant the great majority of clergymen are retiring in fact between the ages of 65 and 68, and that comparatively few are perservering in offices of major responsibility to the age of 70 or beyond.
My Lords, it is not necessary for me to speak at length on the various clauses of the Measure already submitted to the Ecclesiastical Committee, and found expedient. I simply draw attention to the scope of the Measure, which is comprehensive; that is, it includes all dignitaries of the Church from Archbishop downwards, as well as incumbents of benefices, vicars in team ministries and vicars of the London guild churches. Two exceptions to the provisions of the Measure are those who hold office in Royal Peculiars, or those who hold a professorship in a university in conjunction with a deanery or residentiary canonry, as at Christchurch, Oxford. I am advised that no serious problem of excessive longevity in office is likely to arise in either of these cases. The greatest exception is of those actually holding office at the date of commencement of the Measure. In this respect, the General Synod followed the normal constitutional practice in respecting the rights of existing holders of office, and sought to legislate for the future rather than for the present of the Church's ministry.
My Lords, I also drew the attention of your Lordships to the possibilities of extension of office by mutual consent, which are listed in Clause 3 of the Measure. Of course, it was urged in the General Synod that there are exceptions to the rule, men who on their 70th birthday resemble Moses in that "their eye is not dimmed, nor their natural force abated". The General Synod while maintaining the general principle, did not wish to make the date of retirement absolute and inflexible, and therefore provided for a possible extension period, with the agreement of the authorities concerned in each case, of one year maximum for a dignitary and two years maximum for an incumbent. In the latter case, the consent of the parochial church council concerned is to be obtained. This seemed to us an important condition.
In the process of careful scrutiny which this Measure has received hitherto, one objection has appeared the most weighty, and has received much sympathetic consideration from the General Synod and the relevant authorities, which in this case means the Pensions Board and the Church Commissioners. I refer to the question of housing for the clergy on their retirement which, in days of inflated prices, is bound to be a serious matter for those who have spent all the years of their ministry in tied houses and have had little chance of saving against their retirement. This is a matter on which continuing care and forethought are required of the dioceses as well as of the clergy themselves. It is one in which the sympathy of lay people may well be engaged.
Meanwhile, it is important to say that the conditions for loans to obtain mortgages have been steadily improved by the Pensions Board, with the help of the Church Commissioners, during the years in which this Measure has been under discussion. We are not aware that any considerable number of clergymen, though no doubt there are a few, could be held back from retirement at the age they desire through lack of housing available to those of their financial capacity. But in any case we do not think a proper solution of this difficulty lies in the extension of permission to live, very often, in large and unsuitable vicarages without regard to the health of the clergy or, indeed, to the rest of their ministry. The proper remedy lies along the line of providing as generous terms as possible, whether financial or in actual provision of housing, so as to render retirement feasible at an age which on other grounds is deemed to be the right one. To this not insuperable task, when we consider the numbers of those affected, the Church of England is continuing to give careful attention. I beg to move.
Moved, That this House do direct that, in accordance with the Church of England Assembly (Powers) Act 1919, the Ecclesiastical Offices (Age Limit) Measure be presented to Her Majesty for the Royal Assent.—(The Lord Bishop of Manchester.)
Lord HAWKE: My Lords, may I ask the right reverend Prelate whether he can confirm a point for me? The Report of the Legislative Committee says that any incumbent retiring under this Measure
106
would be eligible to be the priest in charge. Would the right reverend Prelate confirm that the incumbent could be made the priest in charge, although he had just relinquished the incumbency? This is of some importance to some of the country parishes. In the future they may only get an elderly clergyman to be their incumbent. They may well feel that the ancient one knows is better than the ancient in the bush. Perhaps the right reverend Prelate could confirm my point.
The Lord Bishop of MANCHESTER: My Lords, in reply to the question of the noble Lord, Lord Hawke, we were not anxious to encourage what might be called episcopal sharp practice in this matter. The question is really whether the priest in question is deemed to have retired or not. Unless he has retired he will not be in receipt of retirement pension.
My Lords, the other question which arises concerns the patronage of the living. Obviously it would be a question for the patrons of the living, an incumbent having resigned, as to whether they wished to present someone else for the incumbency. If these two conditions were satisfied, there is no objection under the terms of this Measure to the possibility of a former incumbent becoming priest in charge, provided he did so as a retired clergyman.
On Question, Motion agreed to.

INCUMBENTS (VACATION OF BENEFICES) MEASURE
7.37 p.m.
The Lord Bishop of MANCHESTER The Lord Bishop of MANCHESTER rose to move, That this House do direct that, in accordance with the Church of England Assembly (Power) Act 1919, the Incumbents (Vacation of Benefices) Measure be presented to Her Majesty for the Royal Assent. The right reverend Prelate said: My Lords, the history of this Measure is similar to that of the one I have just moved. As long ago as 1966 the Convocation of Canterbury, that is to say, the clergy themselves, passed a resolution affirming their confidence in the Ecclesiastical Jurisdiction Measure for discipline cases, but declared there was a need to provide a means whereby, when it was in the interests of himself or his parish, an incumbent could, after due

107
inquiry, be removed from his benefice, and could be offered a suitable post elsewhere. There were some highly unsatisfactory cases in the late 1960s, and the dissatisfaction arising from such cases led to a request from the Church Assembly that a new procedure should be devised to provide for the dissolution, under certain circumstances, of the pastoral relationship between an incumbent and his cure.
My Lords, the present measure is based on proposals presented to the General Synod in 1972. In 1974 it passed all the necessary stages in the General Synod without a division. It is to be distinguished from the Ecclesiastical Jurisdiction Measure which remains in force, in that this Measure does not cover legal proceedings against offences of a criminal nature. It has been understood throughout to be legislation of an essentially domestic and pastoral character, while at the same time care has been taken to permit legal representation where required, and not to deny the claims of natural justice, particularly to those whose livelihood may be at stake.
This Measure deals in its first Part with those cases of serious pastoral breakdown which may be attributable to faults or disagreements on the side of an incumbent or of his parishioners or both, and to this subject I shall return later on. The second Part covers cases of disability of incumbents, arising from age or infirmity of mind or of body, and since it subsumes the earlier provisions of the Incumbents (Disability) Measure 1945 the latter is thereby repealed. Two other Measures relating to dignitaries, the Church Dignitaries (Retirement) Measure 1949 and the Bishops (Retirement) Measure 1951, since they contain certain special features, were, however, left in force. The scope of this Measure, therefore, applies to rectors or vicars with cure of souls; it does not apply to non-beneficed clergy, such as assistant curates or even curates in sole charge, since in their case a licence granted by the Bishop is also terminable by him at any time.
I think it will be evident to your Lordships that the phrase "serious pastoral breakdown" is one that is hard to define with any kind of precision. The General Synod has endeavoured to see that its terms are not drawn so widely as to enable any disgruntled group of
108
parishioners to use this Measure as an instrument for attacking an incumbent whose only offence may be that he is a prophetic Christian, or even that he has shown too much zeal for innovation at the beginning of his ministry in that parish. So it is provided in Clause 1 that the only parties who may make request for an official inquiry under the Measure are the incumbent himself (if he deems himself sufficiently aggrieved by the conduct of some or all of his parishioners), the Archdeacon, or a majority of the lay members of the parochial church council, that is to say, those who have direct responsibility for the affairs of the Church in that Parish. The option is not open to any chance group of disgruntled parishioners, and the Measure further stipulates that the Bishop may refuse an inquiry, if he thinks fit, where the incumbent has held his Office for less than three years. In these ways the Synod has sought to safeguard the Church against a spate of frivolous or hasty charges which might arise, for example, during a time of drastic pastoral reorganisation.
It may be asked—and indeed it was asked more than once in the General Synod—whether such a Measure as this is really required at all, and, if so, whether its provisions need to be quite as elaborate as they are. To the first question I would reply very readily that I hope this is a Measure that would very rarely be used. Where cases of serious pastoral breakdown occur, it is often, though not always, the right solution that the incumbent should place his resignation in the hands of the Bishop. Since he has the freehold, he is not obliged to do so, but sometimes the very existence of this Measure and the prospect of an inquiry being set on foot might persuade him that resignation was the best course. In that case, he would still be eligible for another appointment, or, if none were forthcoming, he would be entitled to some compensation in the same way as one who resigns after the result of such an inquiry.
The answer about the elaborate nature of the Measure's provisions is that if it is once decided that such a Measure is desirable at all, it is not good enough for it to be the bluntest kind of sledge-hammer for cracking a nut. In order that justice may be seen to be done, and in order

109
that categories of jurisdiction may be kept clear, the Measure has distinguished between diocesan committees of inquiry and provincial tribunals, bodies which have different degrees of legal participation, so to speak, according to the nature of the case. In the less formal cases it will suffice for a diocesan committee of inquiry to be formed, consisting of three clerical and two lay members, and this committee shall have power to appoint a barrister or solicitor to advise it. But, if the incumbent concerned feels that his rights will be insufficiently safeguarded when appearing before such a committee within his own diocese, he will be entitled to opt instead for what is called the provincial tribunal, and the latter body is to consist of five persons appointed by the Vicar-General of the province concerned and is to have as its chairman either the chancellor of a diocese or a Queen's Counsel who is also a communicant member of the Church of England.
I shall not weary your Lordships by entering into any greater detail regarding these two options, which are set out clearly enough in the Schedule to this Measure, but I think it proper that I should pay some attention to one point of criticism which was made by the Ecclesiastical Committee concerning Clauses 18 and 19. These clauses give the General Synod power to amend the rules governing the constitution and proceedings of the committees and tribunals to which I have referred. I confess that we were in some difficulty here. The General Synod has often been advised that it should not take up Parliament's time with Measures which deal with comparatively minor points, but that we should confine ourselves to matters of broad principle. We were, therefore, advised that if changes in incidental matters need to be made in future, it should be possible to make them by way of Statutory Instrument subject to annulment in either House.
I can say only that we have no present intention of using this power, and I should like to give the House the strongest possible assurance that we shall not seek to use it to limit or curtail the rights of those individuals, whether clerical or lay, who may have to appear before these committees or tribunals. Rather do we see this power as a means of giving added protection and safeguards, should we find
110
that this is necessary, when the committees and tribunals are actually at work; and it needs to be remembered that they have not yet been seen in operation.
I hope that I have already said enough in my speech to convince your Lordships that in framing the Measure we have provided considerable protection for the rights of individuals, and I for one shall be surprised if any further protection proves to be necessary. Your Lordships may find it a little strange that a Bishop speaking about this Measure should have made no reference at all to the part which the Bishop may be expected to play in cases of serious pastoral breakdown. Must he not exercise supreme responsibility in the resolution of such cases within his diocese? The answer is that this is indeed his pastoral responsibility, but that he must exercise it, so far as possible, as a pastor and not as an amateur lawyer or as a combination of judge and jury. For this reason, the Bishop in this Measure is kept in the background at the stage of initiation of an inquiry, in order that he may be as free as possible to play an impartial role in the work of reconciliation which may make an inquiry superflous.
On the other hand, where an inquiry has taken place and a report has been made by a committee or tribunal to the Bishop, it is clearly improper that he should ignore their findings or simply do nothing thereafter. Clause 10, therefore, sets out in detail the options that are open to the Bishop, which range from the declaring of a benefice to be vacant (but this only if the report so recommends and if four out of five members of the committee or tribunal support that recommendation) to the milder measure of rebuke to incumbent or to parishioners or both. It may be argued that rebuke is not a term of much legal force, particularly where lay persons are concerned who are not for most purposes under episcopal control. Nevertheless, it seemed to us that without this provision the Measure might seem to be weighted excessively against the clergy; for here, as in matrimonial cases, there are very frequently faults to be found on both sides. My Lords, with the reservation about Clause 18 to which I have already referred, the Ecclesiastical Committee found this Measure to be expedient, and

111
I beg to move the Motion standing in my name.
Moved, That this House do direct that, in accordance with the Church of England Assembly (Powers) Act 1919, the Incumbents (Vacation of Benefices) Measure be presented to Her Majesty for the Royal Assent.—(The Lord Bishop of Manchester.)
On Question, Motion agreed to.
[The Sitting was suspended from 7.40 p.m. until 8.0 p.m.]

INDUSTRY BILL
House again in Committee.
Lord ABERDARE Lord ABERDARE moved Amendment No. 26:
Page 2, line 35, leave out ("establishing")
The noble Lord said: I beg to move Amendment No. 26, and it would probably be convenient if we considered at the same time Amendments Nos. 36 and 88, because of these three Amendment No. 36 is really the key Amendment to which this is merely a paving Amendment; and should we carry Amendment No. 36. Amendment No. 88 is consequential on it. These Amendments follow on similar Amendments that we moved in the course of the Scottish and Welsh Development Agency (No. 2) Bills, when we argued that it was highly undesirable for those Agencies, or indeed for the National Enterprise Board, to set up companies of their own in competition with privately-owned companies.
Just before we broke off the Committee stage, the noble Lord, Lord Melchett, said that no doubt we were delighted to hear that the NEB were going to set up companies in competition with privately-owned companies. We are not in the least pleased about that, and in fact we do not think that this kind of competition is likely to be fair or to have the effects that we should like to see in stimulating the economic climate of industry. We must view this matter against what is, after all, the basic, underlying problem that we are trying to tackle, the question of insufficient investment in industry, and ask ourselves how this provision that the National Enterprise Board should set up companies of their own will help increased investment.
If we accept that existing companies are not investing sufficiently in new plant and equipment, then there are two ways in which we can tackle the problem. The first, which is the way that appeals to us, is to engender an economic climate in which free enterprise can flourish and in which investment will be self-generating. It can be done. It has been done in Germany, France, the United States and elsewhere. When the Government wish to point to the fact that we are not doing as well as our rivals, they point to these countries in evidence that we are not investing as much as we should; but when we point out to them that these are free enterprise countries, all they then say—or the noble Lord, Lord Melchett, says—is that we have not taken account of the fact that they have unemployment in these countries. That may be so, but I would only say to the noble Lord that we have mounting unemployment in this country, and I fear that our unemployment is going to outstrip and to last for much longer than in those countries where they have encouraged their free enterprise systems and where they are already beginning to master their inflation problems.
I would counsel the Government that they should study the example of these countries with whose success in economic development they are prone to compare ours and to draw the lesson which I draw, that in planning industrial investment for the future there is much more scope in building on the sort of arrangements that we already have within the NEDC and its Little Neddies than anything of the nature of the National Enterprise Board, which is their alternative way. Apparently in this Bill their alternative is to establish companies sponsored and set up by the National Enterprise Board that will vest themselves and compete with privately owned companies. I find that the wrong concept, and I am sure that it will not work in fair competition. A new company coming into the field with massive money behind it, able to invest in the most up-to-date plant and equipment and only having to engage a work force that will be sufficient to man the enterprise efficiently, will surely have immense advantages over an old-established firm which may be short of cash at the present moment, with plant and machinery that is not all of the latest design, and unable to cut down on

113
its labour force without industrial action. This is what we really mean by unfair competition. Nothing will be gained except to drive the private firm out of business, with consequent loss of employment.
In the next Amendment we shall be arguing that it is quite wrong for the National Enterprise Board to have as one of their functions the extension of public ownership into profitable areas of manufacturing industry: this power that we are now considering to set up companies of their own is equally objectionable. We do not think that the Board should seek to extend public ownership by acquiring private companies, nor do we think that they should have open to them the alternative of establishing their own companies to compete with the private sector in a particular part of the market. A company formed by the National Enterprise Board will almost by definition be in a stronger competitive position than its rivals in the private sector. Those of your Lordships who have studied the example of the IRI in Italy will know that there it has been shown that those who provide finance tend to be biased towards a State-backed firm, which obviously has greater financial security than a private firm.
These are some of the reasons why competition will not be fair. There are others. For example, the companies owned by the National Enterprise Board will be part of a single conglomerate. We are all aware of the difficulties that arise from a miscellaneous conglomerate of this sort, especially when in this case the whole outfit will have been put together partly by misfortune, partly by deliberate acquisition. I have no doubt that the noble Lord, Lord Ryder, and his team will do their best to overcome this difficulty by seeking to encourage a corporate feeling between the various companies they control. I am sure that every effort will be made for these companies to get to know each other. There will no doubt be a group magazine and an annual dinner. I dare say that there will be no overt discrimination, but undoubtedly there will be strong influences for companies that have been established by the National Enterprise Board to deal with each other and with other nationalised industries.
Again I revert to what I have been saying in respect of other Amendments
114
today: this is a provision in the Bill that cannot be expected to give any confidence to those who work in private industry. They are having a very hard time at the moment. In many cases their cash flow position is extremely serious, not only because of the general worldwide recession but also very largely because of the Government's policy hitherto of controlling prices and not wages. Now they see in this Bill a threat of competition from a State-owned, State-backed rival with large capital resources behind it. The subsection we are considering, which contains powers to establish companies by the National Enterprise Board, is quite irrelevant to increasing British industry. We shall seek to remove the clause, as we did successfully in the case of the Scottish and Welsh Development Agency Bills. I beg to move.
Lord BIRDWOOD: If there has ever been an enabling word in an enabling Bill, it is this word "establishing". In the original construction of the Industry Bill the definition of "industrial undertaking", was, I think, "manufacturing". I should be interested to know whether that has been enlarged into any form of commercial enterprise. May I most emphatically add my voice to that of my noble friend that is, that it cannot have been part of the reasoning behind the Bill that any Government should be given carte blanche to start anything through a single word.
Lord LEE of NEWTON: I thought that the noble Lord, Lord Aberdare, was unduly despondent. Indeed, at one stage he seemed to reach the point of saying that if some cannot be efficient it would be a great tragedy if any of them were. He also made a sort of black and white "Neddy" as distinct from the NEB. I should have thought that the two complement each other. If it was the case that the NEB were simply favouring—if that is the right word—the firms which they set up, I should have thought there would have been an unholy scream about it—and certainly I should be one who was doing some of the screaming. As I see it, the conception is to enthuse British industry as a whole. "Neddy" is doing a job in that respect, and I should have thought it would be very wrong if the NEB were to be prohibited from setting up an organisation

115
which they felt was to be of substantial benefit to the nation, and, indeed, making that firm or firms as highly efficient as they could.
In these days, competition in a great many industries is not waged so much on a national as on an international basis. If we are now to be afraid of efficiency—which at times the noble Lord seemed to be—we can hardly expect to see our balance of payments put to rights when those with whom we are in international competitition are leaving us behind by the very volume of their investment. While one sees the point of which the noble Lord is afraid, I think it is unduly pessimistic to believe that the word "establishing" gives a kind of elite, a favoured section, against which none in Britain can possibly compete. I do not know whether the noble Lord had in mind any particular industry. Let me take the very genesis of engineering production, the machine tool industry: I should have thought, without any political connotations, we would agree that it is in a rather bad state.
Until we can get the NEB to set about producing highly efficient segments of the machine tool industry then in my opinion we can never hope to recapture those markets which traditionally we held years ago. For example, Herberts, as they are now in machine tools, are losing ground. Their investment has not been anything like the amount we should wish to see. But what are we to do? Are we to say: "How pitiful it is; what a shocking business"? If we want to increase the efficiency of British industry, the first thing we must do is to incur a huge import payment for foreign machine tools. The only alternative is that we should have investment, through the NEB, in sections of the machine tool industry. I quote that only as a case in point. Without that, no matter what noble Lords on either side of the Committee wish to see, you cannot have efficiency throughout much of the British engineering industry.
The job of the NEB is to take those sections which are badly in need of resuscitation and of far higher investment than we have seen for years, and to ensure that they can begin the process of producing highly efficient machine tools in order to give manufacturing industry the opportunity
116
of getting production levels up. Whether one is a Tory, a Liberal or a Labour man, what is wrong about that? It is not the case that there has simply been a falling away of investment levels since this Government came to power. Ever since the end of the war the level of investment in British industry has been disgraceful. It is no good hoping that in some way or another suddenly we shall be able to increase our levels of investment. Given world events as they are, I believe that the NEB is the only hope of ensuring a resuscitation of many of the key sections of British industry. I hope the noble Lord will not go on arguing that simply because they are being given certain powers in this Bill which he feels could be abused, but which I do not believe this Government or the people of this nation would permit to be abused, therefore we must be negative in our approach to it.
Lord BIRDWOOD: Would the noble Lord not agree that there is a fundamental meaning attached to the word "establish" which implies that this Bill is giving powers to the Board to create entirely new entities and not to support existing ones in one way or another?
Lord LEE of NEWTON: That is why I mentioned in passing one particular industry. I have a long memory so far as the machine tool industry is concerned. I remember the time when the Attlee Government tried to inaugurate a fairly substantial arms programme. I was then in a very humble capacity in the Treasury. Before we could even begin the programme we had to incur a huge import bill for American machine tools. I want to see the Board given the power so that we do not meet that situation again.
Lord TREFGARNE: I wonder what it is about a public body like the NEB that is to guarantee success in any new enterprise they seek to set up? What shining example among the existing nationalised industries would suggest that new enterprises set up by this Board will be more successful than private enterprise? I cannot think of a single one. The steel industry and the coal mines are losing money; the railways are losing a fortune.
Lord LEE of NEWTON: Can we think of any private enterprise organisation in Britain which can compare in

117
increased productivity with industries such as coal, gas or electricity?
Lord TREFGARNE: We are talking of efficiency not only from the point of productivity but from the point of view of cash results. We have to bear in mind the astronomic losses incurred by the State Corporations—for example, the Post Office. The noble Lord, Lord Lee of Newton, asked, "What about America?". The Bill we are now considering does not apply to America; it applies here. The examples we have to go by are the public enterprises set up very largely under the Government of which the noble Lord, Lord Lee, was a distinguished member. I can think of none that is successful or that is making a profit. I admit that times are hard and that many private enterprise businesses, including big ones, are making losses as well. But what is it that makes us believe that new enterprises will do any better than the public corporations which we have now? I cannot think of anything. Surely a better solution would be to use such funds as may be available—and no doubt they will be substantial—to improve proficiency and to increase investment in existing private enterprise businesses.
Perhaps it may be right for corporations which take public money to yield some element of their control to the Government. However, that is a seperate issue and we are not discussing it now. The question we have to consider is whether we should agree that the NEB should establish new industries. I submit that that should not be allowed because the record of public enterprise is not adequate to suggest that new businesses will be any more successful.
Lord RITCHIE-CALDER: The noble Lord talks about the Post Office and other such bodies, but what does he know about establishments like Dollis Hill, which is leading ITT and everybody else in research and development? This is one of the things in relation to which we keep underselling ourselves. The amount of enterprise initiated by Government establishments is far beyond anything which the noble Lord comprehends. If he turns that into the state of the Post Office, he is looking at a different set of circumstances, but if he is talking about initiative, he should not underestimate what is done by public enterprises.
Lord TREFGARNE: With the permission of the Committee, I will answer that point. The noble Lord is referring to research and development, which is quite different. I am not against public funding of research and development. I am against the public funding of basic commercial enterprise, which is something quite different.
Lord RITCHIE-CALDER: May I ask the noble Lord whether, in terms of research and development, he would agree to the establishment of State enterprises on the basis of Dollis Hill?
Lord BELSTEAD: I have listened carefully to my noble friend Lord Trefgarne, and the point he is making is that the cash results of the nationalised industries are not such as would lead him to the establishment of further nationalised industries. The noble Lord, Lord Ritchie-Calder, mentioned Dollis Hill. It just so happens that I live a mile and a half from where, at a huge capital expenditure—at a time when I should not have thought the Post Office could afford it—Dollis Hill is being completely replaced at Martlesham aerodrome in Suffolk. Is this really a sensible thing to be doing in 1975?
Lord BESWICK: If we are to discuss the Post Office in that kind of depth, I feel that we had better set aside another day for a special debate. The Amendment would prevent the National Enterprise Board from establishing concerns. The noble Lord, Lord Birdwood, is absolutely right. That is precisely what it intends to do. The National Enterprise Board will be able to function in a number of different ways. They could operate by making finance available, by taking an equity interest in a company, by having a joint enterprise with a private company, or by themselves establishing a completely new enterprise. It seems that the noble Lord, Lord Aberdare, is saying that they do not mind the Board making money available or possibly taking a minority interest, but that they do mind if it comes to establishing a new company. This is where we part company quite cleanly. Occasionally, the noble Lord gives us a little homily about dropping doctrinal arguments, but here he is advocating something on purely doctrinal grounds. There is no economic argument for what he is advancing. He

119
is just against a publicly owned company, even though it could be said that a publicly owned company might be performing a useful function. It is not the case that the Board will establish new enterprises up and down the country. That is not at all the intention. They will have certain constraints upon them, not least of which will be the amount of money at their disposal.
There may well be cases in which we are importing certain articles which we should be making ourselves, but where no private company is prepared to invest money in that kind of import saving. The National Enterprise Board might say that this was a matter which they should take up in the national interest and establish a company which would save imports. They might feel confident—and they would have to make their case, of course—that they could provide an adequate return on the investment. If the provision was knocked out of the Bill, the Board would be unable to do that.
One might have another case in an assisted area in which it might be socially advisable to have a new enterprise. It is possible that the NEB would be able to help. I was asked a short time ago by the noble Baroness who sits on the Liberal Benches about the overmanning in the British Steel Corporation. One of the things which we are trying to do is to get that manning down, but we are also trying to establish new industries in the areas where the labour will be made available. It is conceivable that no private enterprise will wish to come in, and the NEB would be in a position to invest some money and start up. Here is a case in which I should have thought it would be in the national interest to do this, but I think that that would be stopped if the noble Lord had his way and this word were knocked out.
Again, though the noble Lord is so keen about the market economy, it is a fact that there are certain areas where market forces have moved over-much towards monopoly. I could give a long list of cases where that is so. Again, it might be useful to have a British company challenging monopoly forces. I am not saying that I have any particular case in mind, but that is the sort of thing we should provide for. If the Board have the power to establish a new
120
company, then it would be possible to move in on that count also.
There are other examples I could give, one of which is the export business. It may well be possible in certain cases for a new company to earn foreign currency with a new enterprise in a field where the private sector does not wish to enter. The noble Lord, Lord Trefgarne, was very fairly asking what it is about a public enterprise that indicates that it can do well where the private sector cannot. I will tell him. Up to the present time it has been the almost invariable practice for the public sector to be established in cases where the private sector had failed. One thinks of coal, of the railways, of steel and of gas, which were not areas in which private enterprise would invest new capital. They could not have done it if they had wanted to. They were disintegrating. There was a feeling on both sides of the House that the public sector had to move in. The public sector moved in, but now the noble Lord says that they are making losses. In certain cases, those losses were made deliberately because, to some extent the Government of which I have been a member, but to a large extent in the particular case between 1970 and 1974 the Conservative Government of the day had restricted prices and deliberately incurred deficits in the public sector for the purpose of keeping a better RPI at the time and also, incidentally, to subsidise the private sector.
I will not go through the figures, but it is possible to quote a figure of the amount of indirect subsidy made available to the private sector which has been enjoying services—transport and energy in particular—at a subsidised rate because of the policy of the Opposition when in Government. For the reasons I have indicated—it may be import saving, it may be export development, it may be an assisted area, or perhaps to challenge a monopoly—we say that it would be desirable to have a new company. In that case there is power in the Bill, as it now stands, to enable the NEB to establish a new company. The noble Lord, Lord Aberdare, allowed his imagination to roam around the dances they may organise, or the dinners they may have between them, or, I suppose, the occasional cricket match or darts

121
match. He seemed to think that this is where between them they would hatch up unfair competition. It would not be the first time in the private sector that a certain amount of business had been conducted at a social occasion. I should not deny that.
But I say to the noble Lord that when it comes to competition it is not the intention to put the NEB in any position more favourable than the private sector. They will have to raise money, show a return on that money, and they will not be enabled in any way to cut prices. They will not be given any favouritism by the Government in any procurement policy. There will be fair competition. As I understood the noble Lord in his earlier speech on the market economy, he was wholly in favour of fair competition. Why should he be against fair competition when one of the competing companies happens to be owned by him and I and the rest of us here? Why should he be against that kind of situation? I cannot think that any argument can be mounted against the wording as it stands, except on the narrowest, old-fashioned, doctrinal grounds—
Viscount MASSEREENE and FERRARD: Is it fair competition? No, it is not fair competition. By means of taxation the Government are taking the wealth produced by private industry and using it to build up another industry in competition. The noble Lord said that it is fair competition, but of course it is not fair competition. By using taxpayers' money the Government can, if they wish, undercut ad infinitum to destroy the private industry. It is extremely unfair competition. No one objects to public bodies if they act completely fairly and do not make a loss. Can anyone point to a public body which does not make a loss? I understand that the British Steel Corporation is balancing its books this year—although perhaps I am wrong about this. If it does it will, I think, be the only time it has, and it will certainly not balance its books next year—
Lord BESWICK: I should like to tell the noble Viscount that one day last year I took home a cheque for £26 million which I paid into the Treausry. It had been handed over to me by the British Steel Corporation.
Baroness WARD of NORTH TYNESIDE: Before the noble Lord sits down, will he kindly tell me whether the National Enterprise Board will be able to give a substantial grant for the fish quay at North Shields? The Government have just said that they cannot give the grant which they originally promised. I agree with the Amendment moved from my side of the Committee. A number of statements have been made by the National Enterprise Board, but I should like to know what are the advantages of the Board. I should like an assurance that if an application is submitted at the first possible moment after this Bill is passed we can have a grant for a new fish quay for our trawlers and our fishing industry. We are not to get the grant that the Government originally promised. Perhaps the noble Lord will leave this money with us so that we can have our new fish quay, without even going to the National Enterprise Board.
Lord BESWICK: I am aware that the noble Baroness feels very strongly about the fish quay. I cannot remember the answer I gave her when she put down a Question. But my impression was that she persuaded people up and down the land to vote for staying in Europe. She gave them to understand firmly that if they voted for staying in Europe she could get a loan for her fish quay.
Lord BIRDWOOD: I am sorry that it is necessary for me to rise again, but it is a measure of the importance that I personally attach to the word "establishing". I consider it to be one of the hinges of the whole Bill. Putting himself into the position of the chief executive of a substantial private enterprise organisation, would not the noble Lord concede that the retention of the word "establishing" can be interpreted as carte blanche for the Government to do anything they wish to do? The noble Lord referred earlier to fair competition. He rattled off a list of areas in which this competition would exist: purchasing, financing, return on capital. I am simply sceptical—when these mechanisms are being applied by the Government themselves, of whatever colour, using Government machinery, and where the self-disciplines occur—about the Government going to the Treasury and saying: "Can I please have this—let's not bother with

123
any of the nonsense about return on capital. This is a really good idea." This word "establish" means "can be done". I do not in principle feel that much of the Bill is most desirable.
There is a fundamental question as to whether we should now rubber stamp the ability of this Government, or any Government in the future, to go ahead and start whatever they wish on the basis of a single word in a single Bill.
Lord BESWICK: The word "establish" means what it says. The noble Lord can have no argument about the word as such. It means the power to set up a new company. It does not mean that the Board have the power to do anything they like. They will be constrained in several ways. The Bill provides in Clause 5 that the Board will have to show that they have every expectation of an adequate return on the capital invested. They will be bound by the law of the land. They will have to conform to the fair trading practices. They will be bound by the provisions of the Companies Acts. I suspect that the noble Lord has in his mind that there are some additional powers; he spoke himself about a Governmental power. This will not be a Governmental power. They will not be acting as a Governmental agent, although they may be directed by the Secretary of State to act under the provisions of Clause 3
There will be all sorts of restraints on them. To the best of my knowledge there is no particular case that they have in mind at the moment. But there may well be a case for the very good reasons that I established, that private enterprise is not fulfilling a particular service, or not carrying out a certain function, or not providing certain goods. In that case it would be possible under this Bill for the National Enterprise Board to act. I should have thought that it would be unwise to prevent them from so doing.
Lord BIRDWOOD: I wish to raise one last point. How does this particular word relate to any provisions in EEC legislation?
Lord BESWICK: Like any other company in the country they will have to conform to EEC regulations.
8.39 p.m.
Lord ABERDARE: This has been a very interesting debate. I listened with the greatest of interest to the noble Lord, Lord Lee of Newton. On each of the two occasions he spoke in this debate he made much good sense. He spoke early in his remarks about enthusing industry. That is the very thing that we are desperately anxious to do, and that is where we think the Government are falling down completely. They are not enthusing industry at all; they are frightening industry. Everything that we have been debating has been an endeavour to try to persuade the Government that industry wants to help, and that private enterprise and free enterprise, and these companies that are existing have been having an awful time ever since the war. We know that they have not been able to invest all that they should have invested, but they have not had the confidence to do so.
We are not afraid of efficiency. The noble Lord suggested that we were; but we are not. We want to encourage efficiency; but many companies in many sectors have been finding it difficult to organise themselves efficiently because of the difficulties of introducing laboursaving machinery and of solving their problems of manpower and the like. The noble Lord spoke of investment in the machine tool industry; he knows far more than I about that. But for my money I would agree with what my noble friend Lord Trefgarne said, that the way to help the machine tool industry is through the machine tool industry and not by setting up a rival company backed by the National Enterprise Board with all their money and strength and new tools. That is not fair.
Lord BESWICK: The noble Lord is setting up bogeys. There is no intention of setting up new companies. There is an intention to assist Alfred Herbert, as the noble Lord knows.
Lord ABERDARE: I am sorry, but the Bill says, "to form bodies corporate". That is what I am arguing about. I say that it should not have the power to do that. The noble Lord, Lord Beswick, says that it should have this power in certain circumstances. I do not agree. I am quite sure that in the circumstances he was envisaging, in import savings (which I think is a good thing) and in

125
breaking monopolies, there are other ways of doing that than by setting up Government-owned companies. There are plenty of people involved in private enterprise who will set up any number of companies in association with the National Enterprise Board, with all its money and strength. We are anxious to enthuse industry. That is one provision
Resolved in the affirmative, and Amendment agreed to accordingly.
8.51 p.m.
Lord ABERDARE Lord ABERDARE moved Amendment No. 27:
Page 2, line 40, leave out paragraph (c).
The noble Lord said: This Amendment deletes the purpose which the Board at present have to extend public ownership into profitable areas of manufacturing industry. This is a red rag to John Bull.
which will not do so; and we are wholeheartedly opposed to it.
8.42 p.m.
On Question, Whether the said Amendment (No. 26) shall be agreed to?
Their Lordships divided: Contents, 74; Not-Contents, 42.

CONTENTS

Aberdare, L.

Emmet of Amberley, B.

Robson of Kiddington, B.

Alexander of Tunis, E.

Exeter, M.

Rochester, L.

Amory, V.

Gainford, L.

St. Aldwyn, E.

Atholl, D.

Gowrie, E.

St. Davids, V.

Auckland, L.

Grenfell, L.

St. Just, L.

Balfour, E.

Gridley, L.

Sandford, L.

Balfour of Inchrye, L.

Hawke, L.

Sandys, L.

Balniel, L.

Hereford, V.

Savile, L.

Beaumont of Whitley, L.

Hewlett, L.

Selkirk, E.

Belstead, L.

Hornsby-Smith, B.

Sempill, Ly.

Berkeley, B.

Inglewood, L.

Strange, L.

Birdwood, L.

Kinnoull, E.

Strathclyde, L.

Campbell of Croy, L.

Lloyd of Kilgerran, L.

Strathcona and Mount Royal, L.

Cathcart, E.

Long, V.

Colville of Culross, V.

Lucas of Chilworth, L.

Sudeley, L.

Cowley, E.

Massereene and Ferrard, V.

Terrington, L.

Cullen of Ashbourne, L.

Merrivale, L.

Trefgarne, L.

de Clifford, L.

Monck, V.

Vickers, B.

de Freyne, L.

Mowbray and Stourton, L. [Teller.]

Vivian, L.

Denham, L. [Teller.]

Wakefield of Kendal, L.

Deramore, L.

Northchurch, B.

Ward of North Tyneside, B.

Drogheda, E.

Pike, B.

Wigoder, L.

Drumalbyn, L.

Rankeillour, L.

Windlesham, L.

Effingham, E.

Renwick, L.

Wise, L.

Elles, B.

Robertson of Oakridge, L.

Young, B.

Elton, L.

NOT-CONTENTS

Ardwick, L.

Fisher of Camden, L.

Popplewell, L.

Balogh, L.

Gordon-Walker, L.

Rhodes, L.

Bernstein, L.

Harris of Greenwich, L.

Ritchie-Calder, L.

Beswick, L.

Henderson, L.

Rusholme, L.

Birk, B.

Houghton of Sowerby, L.

Segal, L.

Blyton, L.

Jacques, L. [Teller.]

Shepherd, L. (L.Privy Seal)

Bruce of Donington, L.

Lee of Newton, L.

Stewart of Alvechurch, B.

Castle, L.

Llewelyn-Davies of Hastoe, B.

Stow Hill, L.

Champion, L.

Lovell-Davis, L.

Strabolgi, L.

Collison, L.

Lyons of Brighton, L.

Taylor of Mansfield, L.

Crowther-Hunt, L.

Melchett, L. [Teller.]

Wallace of Coslany, L.

Davies of Leek, L.

Milner of Leeds, L.

Wells-Pestell, L.

Delacourt-Smith
of Alteryn, B.

Morris of Kenwood, L.

Winterbottom, L.

Elwyn-Jones, L. (L.Chancellor)

Platt, L.

Wynne-Jones, L.

So far as I have read from the proceedings of another place, it is totally unjustified by the Government. I hope that if there is any case to be made we shall hear a more convincing argument from the noble Lord, Lord Beswick. Certainly in our view it is unjustifiable, except possibly to those whose ultimate aim is Marxist and a State-run economy.
The object of the Bill is the regeneration of British industry. Not everybody agrees how this should be done, nor

127
indeed do they agree on the reasons why it is necessary at all, if we read the debate we had on Second Reading. But what is essential—and I make no apology for returning to it once again—is the confidence of industry. This is really of the utmost importance. The great majority of people in positions of authority in industry are not Party political; they want to get on with the job of producing the goods this country needs for its very survival, and they are perfectly willing to work in co-operation with any Government. This is essential in modern economic conditions, and especially in the case of large multi-national corporations. There is no lack of will to co-operate. But to deliver the goods industry must have stability and must be free to manage its own affairs. It is this stability and freedom which have been lacking since the war; and I do not only blame the Labour Government, I blame all Governments for this, although the Labour Government are more deeply to blame because of their policy of State control.
This subsection will do more than anything else in this Bill to destroy confidence in the National Enterprise Board and in Government policy towards industry. At one time it looked as if the Labour Party were moving away from further nationalisation. It has been manifestly seen not to be the panacea for our economic ills that it once was thought to be. Industries now nationalised have not been examples of success in terms of profitability, investment or industrial relations; yet this Government have come forward with a Bill to nationalise both the ship-building and ship-repairing industry, and the aircraft construction industry. Mercifully, that Bill has been postponed to next Session. It is still hardly likely to inspire confidence in the Government on the part of those who believe in free enterprise.
Even if we can swallow the pill of further industrial nationalisation after due Parliamentary process, it is still impossible to stomach a provision such as this which speaks of extending public ownership into profitable areas of manufacturing industry. I wonder what the underlying reasons are, other than those one might describe as "political". One is surely entitled to ask the Government
128
what are their economic reasons for this subsection.
In my endeavour to find what those reasons really were, I went back to the White Paper. The White Paper gives two reasons. The first is to forestall the danger of a company passing into unacceptable foreign control. That is covered by Clauses 10 to 15 of this Bill and is a different subject which can be dealt with separately. This is not a necessary provision for that end. The second reason given is the stimulation of competition in a sector where that is weak. I would ask the noble Lord to expand on that. If that is the main reason for buying into profitable companies, will he give an example of such a sector? What is meant by it? Which sector would it be in, and what kind of action could the NEB take in taking over a profitable company which would indeed stimulate the competition that is lacking? Presumably there are instances in mind; it cannot just be a vague thought as to where the NEB are expected to buy a profitable company and stimulate competition within that sector. I should like to hear whether there is such an example that the noble Lord can give. I should like to think that it might be a way of stimulating competition, but I am very sceptical.
The White Paper goes on to say that, although the NEB will be principally concerned with profitable companies, they may on occasion be called upon to take over an ailing company. So what we are concerned with is this: is the National Enterprise Board's main concern to take over profitable companies? I expect the noble Lord, Lord Ryder, already has his shopping list ready. The noble Lord, Lord Beswick, stressed on Second Reading that there was need for more investment in British industry. Let us accept that objective. How will this subsection help to that end? It seeks to regenerate British industry; but surely successful firms do not require regeneration. Why should firms making profits require any help from the National Enterprise Board? Or is it supposed that, once taken into public ownership, they will make even greater profits? It seems highly unlikely to me. If it is intended that the National Enterprise Board should provide further funds for investment by profitable firms, surely this is unnecessary and wholly undesirable. Such profitable firms can

129
obtain their finance from the market and would be most unwise to sacrifice their freedom to a take-over by the National Enterprise Board.
If investment is our main problem, which we all seem to think it is, the National Enterprise Board should concentrate on providing investment funds for companies that need them, not for those that do not. I have no doubt the noble Lord will tell me that the National Enterprise Board have no compulsory powers, and will have to operate within the Companies Acts and the City Take-over Code. That is true, but even without compulsory powers, their influence will be enormous. They are backed with large sums of Government money at a time when other companies face a cash flow problem. They have the power and prestige which come with a Government Agency. They will have under their umbrella a number of other firms which do business in the private sector and can exert pressure on them. What is the point in having this subsection in the Bill unless the Government think it lies in the power of the National Enterprise Board to fulfil it?
I do not believe that there is any economic justification for this subsection. It certainly does not appear in either the Scottish or the Welsh Development Agency Bills, and I believe it is totally unnecessary and, worst of all, I believe once again it is the one major provision which will do nothing to recreate condence in British industry, quite the reverse, it will do all the damage that we are so anxious to seek to avoid if the Government's purpose of stimulating industry is to be fulfilled. I beg to move.
9.0 p.m.
Lord BALFOUR of INCHRYE: I should like most strongly to support the Amendment moved by my noble friend. I think this is by far the most dangerous of the several proposals to which we object in this Bill. It gives enormous power to the Government through Clause 6(1) of the Bill, where there are provisions for the Secretary of State to give directions to the Board which the Board must carry out. The noble Lord, Lord Aberdare, pondered upon the purpose of this proposal. He postulated a possible extreme political purpose. I believe there is another purpose, which is the hope of the NEB to obtain profitable enterprises
130
in order to prop up the growing deficiencies in those enterprises which are showing losses. It is really a blank cheque, drawn on grounds of industrial advantage which the NEB hope to obtain, or on political grounds.
I would ask the Committee to think of these powers which are proposed, not as clearly stated in the Bill, but referring again to Clause 6(1) which makes the Board virtually a puppet for political purposes, if necessary, of the Secretary of State at any particular time if a Secretary of State and his Party have certain political ambitions. I can see no advantage to anyone resulting from this, but much personal disadvantage would be entailed to people engaged in private enterprise who will have this sword hanging over them, which can descend at any time if they are too profitable. It is a despicable proposal which I hope we shall reject.
Lord ROCHESTER: As I tried to say during the Second Reading of the Bill, we on these Benches are concerned not only about this power to extend public ownership into profitable enterprises and sections of manufacturing industries, but also about the way in which the power can be exercised. As the Bill now stands, it appears that the first steps towards acquisition by the Government of a manufacturing company can be taken without any precise indication of purpose, without prior consultation with the company concerned and without any right for it to object. I recall that on Second Reading the noble Lord, Lord Houghton of Sowerby, gave us to understand that our fears in this direction were unfounded because this clause of the Bill was, as he put it, "All manifesto".
The Bill includes this provision and, as I say, we are concerned not simply with the power which is given but about the way in which it can be exercised. I hope that, at the very least, the Government will find it possible to give us an assurance that no such radical steps as those proposed in this subsection will be taken without the Government stating in each case exactly why they propose to take these steps, and to do so without prior consultation with the company concerned. Otherwise, we shall certainly feel that it is preferable, as proposed by this Amendment, for the subsection to be eliminated altogether from the Bill.
Lord LEE of NEWTON: It seems to me that the noble Lord imagines that this subsection means that the NEB would be taking over a private company which was profitable. I do not read it in that way at all. It talks in terms of expanding public ownership into the profitable areas of manufacturing industry. On the last Amendment noble Lords opposite were crying on each other's shoulders about the great losses sustained by the nationalised industries. In this one they are prohibiting them from ever being profitable at all. It would seem to me that there is ample scope for new enterprises in profitable areas of manufacturing industry. For instance, I should have thought that one of the great problems—and perhaps some noble Lords opposite would agree with me—that we have faced in our international trade, particularly since the war, has been delivery dates. In some areas they have become even more vital than prices, it could well be that in some areas of manufacturing industry there is a shortage of capacity and no opportunity for those firms which are operating in this particular field to expand their own capacity. Therefore, we could be in danger of losing out on our international trade because of our inability to meet delivery dates.
If time permitted, I could give your Lordships chapter and verse of periods in which we lost out to the Germans on shipbuilding because of our inability to match them on delivery dates. Would it therefore be such a crime for the NEB to decide that, where there is such an area of manufacturing industry and where we were in fact losing much good business by our lack of capacity, they should extend their own activities into a particular area? Indeed, we have been in agreement to some degree about the effects of the shortage of investment in our industries. This implies, does it not, that there is a very decided shortage of capacity in quite a number of manufacturing industries.
I would not believe for one second that the noble Lord, Lord Ryder, and his colleagues are going round looking for areas of manufacturing industry which are profitable simply to increase the capacity for the very healthy. In other words it would not make sense to invest their supplies of public money in areas
132
of that type which could not yield the returns which they are asked to yield under the provisions of this Bill. Therefore, again I feel we are looking for bogies. British manufacturing industry now is in great need of increased capacity in certain areas; I gave instances on the last Amendment. I would ask noble Lords not to frighten industry by stories of the type we have been listening to: that Lord Ryder and his colleagues are simply looking for some kind of juicy manufacturing industry to try either to take it over or so to increase the capacity as to make both their own investment and the investment of the private company insolvent anyway. That is surely not the way in which we should interpret the Bill.
I hope that noble Lords opposite will think again. We have seen in the last few years, under both Governments, certain events. I suppose that Rolls-Royce was at a certain period one of the most profitable industries in this nation. Had it not been for the action of the Party opposite in nationalising it, who knows?—the greatest name in British industry might be no longer in existence. Therefore, surely it is not a question of this grim prospect of people coming along to snatch at a profitable industry. I do not know whether noble Lords opposite believe there is any substantial proportion of people in this Party who stand for that nonsense. I know there are arguments that some people want to see our society go under in favour of a totalitarian State. That idea exists only in the feeble imagination of Daily Telegraph leader writers. I hope that the Party opposite will face this question in a realistic manner, as we are trying to do.
The Duke of ATHOLL: Before the noble Lord sits down, can he tell us whether, in the examples which he said he could have given us had he had time but did not, the German companies concerned were nationalised or part of a German equivalent of the National Enterprise Board?
Lord LEE of NEWTON: They were like the British shipbuilding industry, in private hands.
9.10 p.m.
Lord BESWICK: May I reply to some of the questions that have been raised. The noble Lord, Lord Aberdare, and

133
indeed one or two of his noble friends, appear to be under some misapprehension about what is involved here. He became a little angry when he contemplated successful firms being taken over. He asked: why should successful firms need regeneration? The answer to that question is that successful firms will not be taken over; successful firms, if they do not need regeneration, will not receive the kind of regeneration provided for in this Bill. If the private sector is performing satisfactorily no one will be more pleased than the present Government. But there are areas where the private sector has not been working satisfactorily. If the noble Lord wants examples of that, I can refer him to British Leyland, Ferranti, Alfred Herbert, Kearney Trecker Marwin, and a number of others—
Lord STRATHCLYDE: The noble Lord has just told us that successful firms would not be nationalised. Was it not the intention of Her Majesty's Government to nationalise Yarrow Shipyards in Glasgow where they had invested over £7 million in recent years; where their assets are valued at over £10 million, and where I understand the Government have offered compensation of £4 million? Was that not taking over a company with a full order book which has been eminently successful over all the years?
Lord BESWICK: I ought to remind the noble Lord, Lord Strathclyde, that we are dealing with another Bill. We are dealing with the Industry Bill. The Bill concerned with shipbuilding is another Bill completely and will be discussed at the appropriate time. I am now dealing with the powers in the Industry Bill, and am saying that there are no powers in it to take over successful firms and indeed—
The Earl of BALFOUR: May I—
Lord BESWICK: There are no powers in the Industry Bill to take over anyone or anything, excepting by agreement. I hope noble Lords will get that point firmly fixed. The noble Earl should not shake his head like that; he will have trouble with it. I tell him that there is no power in this Bill to take over anyone, successful or unsuccessful, except by
134
agreement. Let us have that firmly fixed in our mind.
Lord ORR-EWING: May I ask the noble Lord to understand why we are a little suspicious. Paragraph 32 of the White Paper which is the foundation of this Bill states:
"although the NEB will be principally concerned with profitable companies".
That is, successful firms. If a company is not successful it is not making profits. That statement is there in black and white and this Bill is founded on that White Paper. The noble Lord will understand why we are doubtful of the assurances we are being given.
Lord BESWICK: The noble Lord should read the Bill. I am coming to the conclusion that noble Lords opposite have not even bothered to read it. If they went through the Bill with the finest of fine toothcombs they would find they could not dredge up any clause which gives any power to the National Enterprise Board to take over anything without agreement. That is the first point and I suggest that we should keep it firmly in the forefront of our minds.
The noble Lord said that private enterprise needs confidence. Where they have confidence and are successful, that is fine; but there will be areas where assistance is needed and also areas where extra activity should be generated, and those will be areas in which the National Enterprise Board will have an interest. The noble Lord, Lord Aberdare, said that there are only two examples in the White Paper of where the National Enterprise Board may move into profitable ownership. More than two examples are given in the White Paper. The Board may move in where they have given assistance under the Industry Act 1972; they may move in where there is need for a joint venture: they may move in when there is participation in reorganisation; they may move in where there is need to create employment in a certain area or to create new industrial capacity; they may move in when it is necessary to prevent a British company from passing into unacceptable foreign ownership. When I come to that point I should make a reservation about what I said regarding compulsory powers. I am sure we all agree that if there is any question of a

135
British company passing into foreign ownership and it is thought undesirable that that transfer should take place, there should be the exercise of compulsory powers of purchase. Otherwise there are no powers of compulsory purchase so far as British companies are concerned.
I am surprised that the noble Lord wants to press this Amendment after the unseemly majority on the previous Amendment, but he has seen fit to do so. I should have thought that the noble Lord. Lord Trefgarne, would have kept out of the Chamber while we were discussing this Amendment in view of the great speech he made on the previous Amendment. Then the noble Lord chastised us for saying that the public sector is non-profit-making. That is what the noble Lord said and he made a great case for it, but now that we are saying there will be cases where public investment will be in a profitable area, he complains.
Lord TREFGARNE: I hope your Lordships will allow me to intervene. The noble Lord, Lord Beswick, has mentioned me specifically. My fear is that having taken over profitable enterprises, very soon they will make them unprofitable.
Lord BESWICK: They could not do much worse than they have done in the unprofitable sectors which they have taken over. Let us be fair about this. In fact, they have done much better. The areas which have been taken into public ownership were those where private enterprise avowedly was unable to make the necessary investment.
Several Noble Lords: What about steel?
Lord BESWICK: Certainly steel, and also railways and mines. I should have thought that was common knowledge. The noble Lord, Lord Aberdare, who makes such a great case for the private sector, asked me why we need to take these powers. Let me remind him of the sobering fact that since 1963 imports of manufactured goods have accounted for almost three-quarters of the rise in our visible imports. That is because the private sector has failed us; it has been unable to compete with foreign imports. This is a fact but we do not gloat over
136
it; I should not have mentioned it but for the line which the noble Lord, Lord Aberdare, has taken. If the noble Lord insists on thrusting the virtues of private enterprise down our throats, it is also a fact that the private sector has been receiving subsidies of £2 million a day.
I said earlier that by virtue of the transfer of goods and services from the public sector at a price kept artificially low by Government intervention, the indirect subsidy to the private sector amounts to very many hundreds of millions of pounds. This is so. All we are saying is that in certain circumstances—and I defined those circumstances—the National Enterprise Board should now be allowed to go into areas where there is every expectation of making a profit. I must remind noble Lords that when we were discussing the functions of this Board they insisted over and over again that there should be a proper return on money invested. They said that money should not be invested by the National Enterprise Board until there was an adequate return. Another name for an adequate return is a profit. Now they have this extraordinary Amendment to the effect that we should not go into a profitable area. How can we show an adequate investment if the National Enterprise Board are not operating, in a profitable area? Can the noble Lord. Lord Aberdare, explain that contradiction to me now? He cannot explain it.
Lord ABERDARE: If the area is a profitable one, the profits are being made already by private industry. We do not need any National Enterprise Board.
Lord BESWICK: Will the noble Lord answer my question: how can the National Enterprise Board show an adequate return on an investment unless they are operating in a profitable area?
Lord ABERDARE: They can invest in private industry and make a profit in association with private industry by helping private industry where money is required for further investment. There are plenty of ways in which they can operate.
Lord BESWICK: Is the noble Lord really telling the Committee, all of us British subjects and potential shareholders, that he does not mind our money going into companies provided we do

137
not have any share in the return? Is that what he is saying? I really think we should try to shake off this inheritance of the past, when we thought that a public body should not engage in an industry where it is possible to make a profit. Let us get rid of that idea. All I am saying is that there will be proper control, proper financial disciplines on the body; they will only operate in those cases where it is thought that in the national interest there should be an intervention and in those cases I think we should support it and wish it well.
Baroness WARD of NORTH TYNESIDE: I should like to ask the Minister one question in order to get my mind straight. If I understood him aright, he said that regeneration would not be necessary in profitable industries. I understood that it was the intention of Her Majesty's Government to nationalise shipbuilding. I am not going into that in any great detail but I do want to ask this: on Tyneside, Swan Hunter and Wigham Richardson, of their own accord, after very hard work all over the world to get orders, are making a profit. So if it is a fact that this industry does not need anything to be done to it, am I now right in asking for an assurance that Swan Hunter will not be nationalised under any circumstances, as it does not need anything at the moment, either from the National Enterprise Board or from the Government? If it is a fact, as I think the noble Lord said, that nothing was needed to regenerate (I think that is the word he used) a profitable industry, I should like to point out that we do not need regeneration in Swan Hunter. We have done extremely well—the directors, the management and every now and again the workers in the industry, when they do not happen to go on strike.
Several Noble Lords: Oh!
Baroness LLEWELYN-DAVIES of HASTOE: Shame!
Baroness WARD of NORTH TYNESIDE: But even so, we have made a profit, so they have really co-operated. What I want to know is this: if the profitable industries are not to be touched, what is to happen to the Government's avowed policy of nationalising
138
shipbuilding? In the speech made by the noble Lord in answer to my noble friend's very important Amendment, with which I am in complete accord, can I have an assurance that Swan Hunter will not and need not be nationalised under the terms put by the noble Lord this afternoon?
Lord BESWICK: I can give the noble Baroness, Lady Ward of North Tyneside, an assurance that the Industry Bill we are dealing with will not be used for any action towards Swan Hunter. I hope that satisfies the noble Baroness.
Baroness WARD of NORTH TYNESIDE: Could the noble Lord say it a little louder? The question of shipbuilding was brought into the debate by a noble Lord opposite, and I always take advantage of anything that comes my way.
Lord BESWICK: I am sorry that I was not following the example of the noble Baroness and speaking up sufficiently. Shipbuilding will be dealt with by a separate Bill. This Bill does not refer to the shipbuilding or aircraft industries. There will be a separate argument there, and it will be dealt with separately. I look forward to the contribution of the noble Baroness on that Bill. There is one qualification to what I said just now about the powers of the National Enterprise Board. I think this ought to be on the record. There is one tiny exception in Schedule 1, paragraph 19, where the National Enterprise Board are given powers under Section 209 of the Companies Act 1948, a power held by other companies to acquire. These are powers held by the courts and apply to all companies. Any company registered under the Companies Act enjoys the same power, but it is restricted by the courts.
The Earl of BALFOUR: The noble Lord, Lord Beswick, said that there was nothing in this Bill which would allow the Board to extend public ownership without seeking permission from the companies concerned. With the greatest respect, in what will become Part I of this Bill, which takes us to the end of Clause 9, I cannot find anywhere in this Part where the Bill says that the Board must seek the support or consent of the company which they are to take over. May I

139
refer to the words in Clause 2(2), where it says:
"The functions of the Board shall be…extending public ownership into profitable areas of manufacturing industry;".
This could not be more plain. It will have an incredibly damaging effect on investment in British industry. I am quite certain it will do nothing whatever to support the pound. May I ask your Lordships to have a quick glance at Clause 9, where up to £9,999,999 can be invested, or 29·9 per cent. of the shares of a company, without even the approval of the Secretary of State. There is nothing whatever mentioned about the consent of the company.
Lord DAVIES of LEEK: Would the noble Earl give way?
The Earl of BALFOUR: There is nothing here which says
Lord DAVIES of LEEK: But there is. It is no good going on like that. Clause 2(5) says:
"For the avoidance of doubt…."—
then in plain English it says—
"nothing in the said provisions shall be construed as authorising the disregard by the Board of any enactment or rule of law."
There is no possibility of peremptorily taking over even profitable areas.
Lord BESWICK: May I add to that, since the point was raised to me separately and privately. It was pointed out that there was nothing in this section which requires consent to be obtained. But as my noble friend says, there is nothing here which says the Board shall have power to acquire or consent. The Board will be governed by the law of the land, and the law of the land makes it impossible for anyone to take over a company just like that. It is not necessary to say in this clause that the company shall not commit adultery; that is not governed by law, but there is no positive restriction placed upon it and there is no positive power given to it. There is, therefore, all the power of the law of the land which makes it impossible for the Board to take over without consent.
Lord TREFGARNE: Is this not a bit naive? Is it not possible for the Board to buy shares on the Stock Exchange?
140
Surely one can buy shares in a company on the Stock Exchange.
A Noble Lord: Free enterprise.
Lord TREFGARNE: But not with public money, as my noble friend reminds me. Is it not possible for the NEB to acquire shares, indeed to acquire a controlling interest in a company by buying shares, on the Stock Exchange without any approval of the company at all?
Lord BESWICK: I am not sure what the noble Lord means by approval by the company. The shares of a company are vested in the ownership of the shareholders. The NEB will not be able to acquire the shares of a shareholder without the consent of the shareholder concerned.
Lord HOUGHTON of SOWERBY: I was about to ask a question to follow up some of the doubts which have been expressed on the other side of the Committee. Would my noble friend kindly explain whether Clause 6 has any relationship to the part of Clause 2 that is now under discussion. What I am anxious to find out is whether a direction by the Secretary of State to the National Enterprise Board could involve the compulsory acquisition of a private company and thereby relieve the National Enterprise Board of any other obligations which they might have under this Bill. I think it is desirable, if I may say so, to clear up that point of doubt. May I ask at the same time, if Clause 6 does have a relationship to Clause 2 in this particular context, then when the Secretary of State lays a copy of his direction before both Houses of Parliament, what happens then?
Lord BESWICK: The straight answer to the noble Lord is that the Secretary of State will have no power to direct the NEB to do anything illegal, and he cannot direct it to acquire shares or a corporate body compulsorily.
Lord DRUMALBYN: One of the things that puzzled me about the reply of the noble Lord, Lord Beswick, as to the kind of circumstances in which the NEB would extend public ownership into profitable areas of manufacturing industry, was that he raised the question of setting up factories, starting up businesses. But we have already excluded

141
that from the Bill, so that does not arise. I think the point we have to recognise is that all the ways in which the NEB would be likely to extend public ownership into profitable areas are already available under paragraph (a):
"maintaining or developing, or promoting or assisting the establishment, maintenance or development of any industrial undertaking."
They are there already. The only way that I can see that this could be done is through the acquisition of shares, through speculative buying of shares in profitable industry.
I would not have thought that this was a proper way in which to use money borrowed from the Treasury, or even, for that matter, public money that resulted from money borrowed from the Treasury. This is our case. We do not think it is the right thing for the National Enterprise Board to do. I see only these three ways of doing it. One is the way we have already removed from the Bill. The second can already be done under the Bill, and we would regard as wholly desirable, helping existing industry to get better; and the third we do not think is desirable at all. Therefore, we shall remove this subsection from the Bill.
9.35 p.m.
Lord STOW HILL: My noble friend Lord Beswick intimated that privately he had been made aware that one Member of your Lordships' House was a little uncertain as to the exact effect of Clause 2 in relation to this question of consent. I think that I was the noble Lord to whom he was referring, simply intervene at this stage for the following purpose: the question as to whether consent under the terms of this Bill has to be obtained before the Board can acquire shares, either 100 per cent. or less than 100 per cent., in a concern, whether profitable or unprofitable, has obviously become a major controversy. I am sure that the Committee will agree that it is of the greatest importance that Clause 2, which is the relevant clause, should make that clear without any possible doubt.
The doubt I had when I read it—and I am prompted to intervene because of what my noble friend Lord Davies said—was that one asks what are the powers of the Board. One begins by Clause 1 and one finds that by Clause 1(1) the
142
Board are set up with certain functions. The word "functions" is not defined. I am not quite sure what a function is. One goes to Clause 2 and finds that Clause 2(1) sets out the purposes. Subsection (2) sets out again the functions. One then asks: what are the limit of those functions, whatever functions means? Does "functions" mean powers or something different from powers? Apparently it does not mean "powers", because in subsection (4) one finds the expression "power" used in terms. It says, "the Board shall have power". So that we start off with this very indeterminate word "functions".
I honestly do not know what a function in that context is. I have looked at the definition clause, but that does not define "functions". It is a term which, I should have thought, is imprecise in connotation and not very desirable in this context. Then one goes to subsection (5), and it is pointed out that the last three lines say:
"…nothing in the said provisions shall he construed as authorising the disregard by the Board of any enactment or rule of law."
I gather from what my noble friend Lord Beswick said that he relies upon that as producing the effect that the Board can no more take over shares, whether 100 per cent. or part of the shares of a company, without the consent of that company or the persons who own the shares, than any other company, or body, or person in this country.
So far so good. One then looks back, however, to subsection (3). That is a very wide subsection:
"The Board may do anything, whether in the United Kingdom or elsewhere, which is calculated to facilitate the discharge of the functions specified in subsection (2) above or is incidental or conducive to their discharge."
I have made some research into this.
I am quite aware that wording in the form used in subsection (3) is to be found in a whole number of Statutes going right back, for example, to the Coal Nationalisation Act 1946. I hasten to point out not quite in the same terms, but I agree very closely allied to that subsection in the terms used.
Equally, there is plenty of precedent for the wording in subsection (5). But if one reads subsection (3) together with subsection (5) what is the result? Subsection (3) seems to give unlimited power,

143
"may do anything". The previous precedents generally have the phrase, "has the power to do anything". This phrase is, "may do anything". That is an extremely wide phrase. It extends to almost every conceivable activity and, unless modified in some way, would seem to make consent unnecessary.
There seems prima facie to be some sort of conflict between subsection (3) and subsection (5). I have made a long and dreary lawyer's speech, for which I apologise because it is late. All I am asking my noble friend to do is to look at this again between now and Report stage to see whether he does not think that that wording should be reconsidered in order to make it clear that consent is absolutely necessary.
Lord BESWICK: The noble and learned Lord's experience demands that I look at it again, but what I said earlier I said after taking advice. I am a little surprised that my noble and learned friend has this difficulty in understanding the Statute. It seems fairly clear to me. His first difficulty was knowing what a function was, and he said that it is not defined. In fact in this particular case it is defined as,
"taking over publicly owned securities and other publicly owned property, and holding and managing securities and property which are taken over."
That is the definition of a function.
The noble and learned Lord went on to comment on subsection (3) which reads:
"The Board may do anything, whether in the United Kingdom or elsewhere, which is calculated to facilitate the discharge of the functions…"
That is to say, the Board may do anything which enables them to do what I have read out in subsection (2)(e). The noble and learned Lord then goes on to subsection (5). I should have thought that subsection (5) governs subsection (3), for as the noble and learned Lord used to teach me when we looked at Bills together, "They must be read together". I think that is the term he usually employs. If I read those together I find that for the avoidance of doubt what it is said they can do in subsection (3) can only be done provided it is not disregarding any enactment or rule of law. I should have thought that that was
144
fairly clear, but as my noble and learned friend suggests, I shall ensure that other legal authorities look at it again. Certainly if it is necessary to emphasise the point that I have made, then that ought to be done in this Bill, but I am advised that it is not necessary.
I was asked another question by the noble Lord, Lord Trefgarne about shares. He spoke with some indignation that it would be possible for the National Enterprise Board to acquire shares. And the noble Lord, Lord Aberdare—or was it the noble Lord, Lord Drumalbyn?—even spoke about speculation. I do not like the use of the word "speculation" in the buying of shares. I should have thought that it was possible to buy shares without speculating in them. Of course it will be possible for the National Enterprise Board to buy shares, but they will be subject to certain restrictions to which I referred in the Second Reading and which I shall emphasise again in the appropriate part of the Bill.
Lord ABERDARE: It is quite clear that there is a complete gulf between us on this matter. The noble Lord, Lord Beswick, accuses us of being doctrinal. I would say that we are rather nearer to what is practical and realistic, and I would say that it is the noble Lord who is doctrinal in putting this kind of subsection in the Bill. We believe in British industry, and we do not think it serves any purpose to criticise British industry. We believe that there are plenty of ways in which the Government and industry can co-operate. I have already instanced the very interesting example of France which indicates what can be done by cooperation. There is no question there of a National Enterprise Board extending public ownership into profitable areas of manufacturing industry. We do not believe it right to extend public ownership into profitable areas of manufacturing industry. It is only liable to excite all kinds of suspicion in industry when coupled, as I and my noble friend Lord Orr-Ewing have pointed out, with a sentence in the White Paper which states that the NEB will be principally concerned with profitable companies. That is something we cannot agree to. I must press the Amendment.
9.50 p.m.
On Question, Whether the said Amendment (No. 27) shall be agreed to?
Their Lordships divided: Contents, 71; Not-Contents, 37.

CONTENTS

Aberdare, L.

Elton, L.

Rochester, L.

Amory, V.

Emmet of Amberley, B.

St. Aldwyn, E. [Teller.]

Atholl, D.

Exeter, M.

St. Davids, V.

Auckland, L.

Foot, L.

St. Just, L.

Balfour, E.

Gainford, L.

Sandford, L.

Balfour of Inchrye, L.

Gowrie, E.

Sandys, L.

Balniel, L.

Hawke, L.

Savile, L.

Beaumont of Whitley, L.

Hereford, V.

Selkirk, E.

Belstead, L.

Hewlett, L.

Sempill, Ly.

Berkeley, B.

Hornsby-Smith, B.

Strange, L.

Birdwood, L.

Inglewood, L.

Strathclyde, L.

Campbell of Croy, L.

Lloyd of Kilgerran, L.

Strathcona and Mount Royal, L.

Cathcart, E.

Long, V.

Colville of Culross, V.

Lucas of Chilworth, L.

Sudeley, L.

Cowley, E.

Massereene and Ferrard, V.

Terrington, L.

Cullen of Ashbourne, L.

Merrivale, L.

Trefgarne, L.

de Clifford, L.

Mowbray and Stourton, L.

Vickers, B.

de Freyne, L.

Northchurch, B.

Vivian, L.

Denham, L. [Teller.]

Orr-Ewing, L.

Wakefield of Kendal, L.

Deramore, L.

Rankeillour, L.

Ward of North Tyneside, B.

Drogheda, E.

Redesdale, L.

Wigoder, L.

Drumalbyn, L.

Renwick, L.

Windlesham, L.

Effingham, E.

Robertson of Oakridge, L.

Wise, L.

Elles, B.

Robson of Kiddington, B.

Young, B.

NOT-CONTENTS

Balogh, L.

Fisher of Camden, L.

Popplewell, L.

Bernstein, L.

Gordon-Walker, L.

Rusholme, L.

Beswick, L.

Harris of Greenwich, L.

Segal, L.

Birk, B.

Henderson, L.

Shepherd, L. (L.Privy Seal.)

Blyton, L.

Houghton of Sowerby, L.

Stewart of Alvechurch, B.

Bruce of Donington, L.

Lee of Newton, L.

Stow Hill, L.

Castle, L.

Llewelyn-Davies of Hastoe, B.

Strabolgi, L. [Teller.]

Champion L.

Lovell-Davis, L.

Taylor of Mansfield, L.

Collison, L.

Melchett, L.

Wallace of Coslany, L.

Crowther-Hunt, L.

Milner of Leeds, L.

Wells-Pestell, L. [Teller.]

Davies of Leek, L.

Morris of Kenwood, L.

Winterbottom, L.

Delacourt-Smith of Alteryn, B.

Peddie, L.

Wynne-Jones, L.

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

Resolved in the affirmative, and Amendment agreed to accordingly.
House resumed.

SALMON AND FRESHWATER FISHERIES BILL [H.L.]
Returned from the Commons agreed to.
House adjourned at five minutes before ten o'clock.