INDUSTRY BILL (Hansard, 21 July 1975)

HL Deb 21 July 1975 vol 363 cc36-102 36

§ 4.9 p.m.

§ House again in Committee.

§ 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 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 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 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 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 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 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 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 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 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 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.

101

§ 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.

102

§ Their Lordships divided: Contents, 85; Not-Contents, 50.

101

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.