HL Deb 24 June 1975 vol 361 cc1277-302

2.48 p.m.

The MINISTER of STATE, SCOTTISH OFFICE (Lord Hughes)

My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Scottish Development Agency (No. 2) Bill, has consented to place Her prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament, for the purposes of the Bill. My Lords, I beg to move that this Bill be now read a third time.

Moved, That the Bill be now read 3a—(Lord Hughes.)

On Question, Bill read 3a.

Clause 2 [General purposes and functions]:

Lord CAMPBELL of CROY moved Amendment No. 1: Page 2, line 45, leave out paragraph (f). The noble Lord said: This Amendment is consequential upon the decision taken at the Report stage in your Lordships' House on Thursday last. For convenience, I would remind your Lordships that that decision was that it was preferable to describe briefly what the Agency should aim to do in the field of industrial relations rather than to use the ambiguous term "industrial democracy ", which had found few friends in any part of the House during our discussion. I indicated on Thursday that there would be at least one consequential Amendment today at the Third Reading stage, and this is it.

Lord HUGHES

My Lords, I agree that this Amendment is consequential but not that it is desirable.

On Question, Amendment agreed to.

2.50 p.m.

Lord DRUMALBYN moved Amendment No. 2: Page 4, line 2, after (" construed ") insert (" (a)"). The noble Lord said: My Lords, this is a paving Amendment for Amendment No. 3, and with the leave of the House I will discuss the two together. These Amendments are the same as Amendments I moved in Committee when the noble Lord, Lord Hughes, said he thought the principal Amendment, No. 3, was unnecessary and he implied that it was fully covered by subsection (8) as it now stands. He said that the Agency would be subject to fair trading legislation and that they would also be automatically subject to the Monopolies and Mergers Act. I take it that by "automatically" he meant that by being automatically subject to the law, they would not be subject to investigation by the Monopolies Commission. The noble Lord said he would look at the point, and no doubt he would also have satisfied himself that the Restrictive Practices Division of the Office of Fair Trading could look at any restrictive agreements to which the Scottish Development Agency were a party. My noble friend Lord Campbell of Croy also suggested that the noble Lord might look at the monopolies and mergers provisions regarding newspapers, and the noble Lord agreed to do so. This may be a convenient moment for the noble Lord to indicate to the House what progress he has made in his examination.

Lord HUGHES

My Lords, as the noble Lord, Lord Drumalbyn, indicated, this matter has been before us already in the form of an Amendment which was tabled in Committee, and the noble Lord then sought an assurance that the provisions of the Restrictive Trade Practices Acts of 1956 and 1968, the Monopolies and Mergers Act, 1965, and the Fair Trading Act, 1973, would apply to the Agency. In the interval that has elapsed I have had an opportunity of looking into the matter in more detail than was possible when I was talking to these Amendments, and I am now able to give an assurance which I think will meet completely the noble Lord's point. For that reason I am grateful to him for tabling these Amendments again, which he has done largely I think to enable me to have this opportunity of getting this matter into the Official Report of your Lordships' proceedings.

The terms of the Restrictive Trades Practices Acts automatically apply to the Agency, as they do to any other person or body. All agreements which the Agency make with outside firms will therefore be required to be registered with the Director General of Fair Trading, as in the case with any private firm. The Monopolies and Mergers Act 1965 was repealed by the Conservatives' Fair Trading Act 1973. I agree with the noble Lord that the Fair Trading Act, unlike the Restrictive Trade Practices Acts, does not automatically bite on the Agency. However, it is the Government's intention, as we have said before, that the SDA will be in exactly the same situation with regard to merger references as private sector companies. I can therefore assure the noble Lord that we will require the SDA to consult the Director General of Fair Trading before engaging in any activity, or making any offer, which would involve the Agency in a transaction likely to result in a situation qualifying for reference to the Monopolies and Mergers Commission under the Fair Trading Act. I hope that this assurance fully meets the points which the noble Lord has raised again today, that he will find that the purpose has been served by tabling the Amendments and that he will find it possible not to press them.

Lord DRUMALBYN

My Lords, I am grateful to the noble Lord. I rather thought at one point he referred to monopolies and mergers when he might have said restrictive trade practices. However, I think that what he has said fully covers what I asked for and in fact quite plainly brings the whole matter under subsection (8), which says: … it is hereby declared that nothing in this Act is to be construed as authorising the disregard by the Agency of any enactment or rule of law. As they all appear to be covered, and as he has given the further assurance as to the practice it is intended to follow, unless the noble Lord wishes to add anything further—

Lord HUGHES

My Lords, perhaps I might interrupt the noble Lord just to add, as the noble Lord referred to the position of newspapers, that I would prefer to defer that matter until the remarks which I propose to make on the Motion, That the Bill do now pass. I have a reference in my notes to the newspaper and television position, which I undertook to speak to on the last occasion; and I mention this now because I did not refer to it when I was speaking a moment ago.

Lord DRUMALBYN

My Lords, I am obliged to the noble Lord and I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 4 [Power of Secretary of State to give Agency directions]:

2.57 p.m.

Lord DRUMALBYN moved Amendment No. 4:

Page 4, line 18, at end insert— (" ( ) The Secretary of State shall lay before each House of Parliament any direction given under this section as soon as may be after giving it.").

The noble Lord: Again, this is an Amendment which I tabled in this form in Committee because the noble Lord was good enough to say on that occasion: It is the Government's intention to lay directions before Parliament as soon as possible after they are made."—[OFFICIAL REPORT, 10/6/75; col. 219.] But he went on to indicate that there were circumstances in which the Government might wish to have a discretion not to lay them immediately—for example, where it appeared to them not to be in the national interest to do so—and he cited as an example a direction to acquire shares in other property. He further said that to announce the direction too soon might cause the price of the shares or the property to go up so that the Agency would have to pay more for them.

I think it right to draw attention to the fact that this raises a difficult question of principle. There is no very obvious reason why the Agency should be in a more favourable position than any other undertaking or individual who seeks to obtain a dominating position in a company. For example, are the Agency not to be subject to any rules about disclosure of the extent of holdings in a company when they have reached a particular extent or about buying through nominees? Do the Government really want the Agency to go bargain hunting and to purchase shares at below their real value when they happen to be undervalued for the time being on the Stock Exchange? Is it really intended that they should be in a privileged position of this kind? If the noble Lord thinks that it would be in the national interest to behave like that, I beg leave seriously to question that. I do not believe, and I hope the noble Lord will confirm this, that it is in the national interest that the Agency should enjoy any privilege of this kind. Having said that, I would concede that there may well be occasions of a different character when it might not be in the interest of national security or the public interest to publish a direction immediately after it is made.

I have not attempted to frame a suitable Amendment to cover this contingency as I had hoped that the noble Lord would himself have put down an Amendment. He knows as well as I do that Parliament is always happy to have assurances. We are even happier, however, if those assurances are put into legislation. In these circumstances, I hope the noble Lord will at least be able to give an assurance, if he cannot accept this Amendment, which I fear will be the position, that the Government will put down an appropriate Amendment in another place.

Lord HUGHES

My Lords, as the noble Lord knows, on more than one occasion when making a comparison between the Agency and other companies, I have emphasised the extent to which the Agency will be obliged to conform to the City Code on these matters. I feel that this makes it clear that there is no desire on the Government's part that the Agency should be in a privileged position. I indicated that we ought not to go in the other direction arid put the Agency in an unprivileged position, and that we should as far as possible allow them to act in exactly the same way as an ordinary company. I confirm that that is the position.

In relation to the Amendment, as the noble Lord, Lord Drumalbyn, has said, I promised at the Committee stage to look at a similar Amendment to see whether it was possible to incorporate a wording in the Bill to oblige the Secretary of State to inform Parliament immediately after directions had been given, except in cases where there were clear reasons in the national interest why that should not be done. This is one of the provisions in this Bill which is identical to the Industry Bill. I am informed that the latter Bill will be amended in another place to meet this point. I therefore ask the noble Lord not to press the Amendment, on the understanding that, when the Bill again comes before this House, it will have been amended in a way which meets his point. That is the assurance for which the noble Lord asked at the conclusion of his remarks. Therefore, I hope that I have completely fulfilled my undertaking in the matter.

Lord DRUMALBYN

My Lords, I do not expect the noble Lord to guarantee that the Amendment will please me when I see it, but I appreciate his willingness to have an Amendment moved in another place which will go a long way to meet what I have in mind. I am grateful to the noble Lord and I beg leave to withdrawn the Amendment.

Amendment, by leave, withdrawn.

Clause 10 [Powers of entry]:

Lord CAMPBELL of CROY moved Amendment No. 5: Page 9, line 29, leave out ("48 hours'") and insert ("5 days' ").

The noble Lord said: My Lords, I think it would be for the convenience of the House if this Amendment were considered with Amendment No. 6. Both these Amendments seek the Government's views today on the question of notice to be given by the Agency when using their powers of entry. Powers of entry on to property are provided in Clause 10. However, the amount of notice laid down is very small in relation to the likely episodes and the likely use of these powers by the Agency. I shall not rehearse the reasons and examples which I gave at the Committee stage. I would only point out that, however important some operations may seem, they are unlikely, in the activities of this Agency, to be urgent. We do not foresee instances where the Agency would need to act so quickly as to require the short notice which is provided in the Bill. When this point was discussed at Committee stage the noble Lord, Lord Hughes, was good enough to say that the Government would look at it and we have tabled these Amendments to see whether the Government are ready to accept them or something like them. I beg to move.

Lord HUGHES

My Lords, when we were in Committee, I said that these Amendments seemed perfectly reasonable. My only doubt was as to whether they could have any repercussions in other directions. I have since taken advice on the implications for other similar legislation, and I am informed that there would be no serious consequences if we accepted these two Amendments. I am therefore happy to agree to them.

Lord CAMPBELL of CROY

My Lords, before the Amendments are put to a decision, may I thank the noble Lord for having looked at them and for having decided to accept them? I recognise that it has possibly meant setting a precedent in other cases, though I do not believe that there is any other example which would be exactly the same as this Agency. However, I must express the satisfaction of this side of the House that the Government recognise the point which we were making.

On Question, Amendment agreed to.

Lord CAMPBELL of CROY

My Lords, I beg to move Amendment No. 6.

Amendment moved— Page 9, line 30, leave out (" 7 ") and insert (" 14 ").—[Lord Campbell of Croy.]

On Question, Amendment agreed to.

3.6 p.m.

Lord HUGHES moved Amendment No. 7: Page 10, line 11, at end insert (" except that appropriate Minister "includes the Secretary of State for Industry in relation to the Post Office and "statutory undertakers" includes the Post Office.")

The noble Lord said: My Lords, this is a drafting Amendment to include the Post Office among the statutory undertakers whose operations are safeguarded against the exercise by the Agency of the power to search and both conferred by subsection (4). I beg to move.

On Question, Amendment agreed to.

Clause 13 [Finances of the Agency]:

Lord HUGHES moved Amendment No. 8: Page 12, line 20, after (" Agency ") insert (" (other than payments made by virtue of paragraph 1(3) of Schedule 2 to this Act)").

The noble Lord said: My Lords, the purpose of the Amendment is similar to that of Amendment No. 9, tabled by the noble Lords, Lord Campbell of Croy and Lord Drumalbyn. The Amendment makes it clear that payments by the Agency to the Secretary of State in consideration of receiving public dividend capital (paragraph 1(3) of Schedule 2) are not to be deducted from the sums paid to the Agency from Parliamentary monies which count towards the financial limit. The payments in question are the equivalent of dividends and should therefore not count as capital repayments.

I must admit that when I looked at the two Amendments my preference, as a layman, was for that tabled by the noble Lords opposite. It seemed to indicate quite clearly what is meant, as opposed to the rather roundabout way in which we have worded it to read, other than payments made by virtue of paragraph 1(3) of Schedule 2 to this Act ". However, I am informed that, legally, this is the correct way of dealing with the matter because there could be a situation where a declared dividend and the amount required to be paid were not necessarily the same. For instance, the Secretary of State might decide to leave the Agency with part of the dividend, perhaps to make up for a loss in another direction. I can assure noble Lords that what is in this provision accomplishes exactly what they have in mind, even though, the ways of draftsmen being wonderful, it is not as obvious as it would appear at first glance. I beg to move.

Lord CAMPBELL of CROY

My Lords, we had assumed that Amendment No. 8 in the name of the noble Lord, Lord Hughes, was to meet the point which we had discussed at an earlier stage, and to which I returned with Amendment No. 9 with my noble friend Lord Drumalbyn. I quite accept what the noble Lord has said. The Government must have drafted their Amendment in a technical way, because it is not obvious to the non-drafting expert. I am perfectly ready to accept the Government's Amendment which meets our point.

On Question, Amendment agreed to.

Lord HUGHES moved Amendment No. 10: Page 12, line 24, at end insert (" and loans guaranteed by a wholly owned subsidiary of the Agency ").

The noble Lord said: My Lords, at present, sums outstanding on loans contracted by private borrowers with the backing of an Agency guarantee count towards the Agency's financial limit, because they represent a contingent liability on the Agency's resources. However, depending on their articles of association, wholly-owned subsidiaries of the Agency may also be in a position to guarantee borrowing by other persons, and sums outstanding on such a borrowing would create an equivalent contingent liability on the funds of the Agency. The effect of this Amendment is to ensure that that is so.

My Lords, this Amendment fulfils the commitment I gave when speaking to Amendment No. 76 put forward by the noble Lord, Lord Campbell of Croy, when we discussed the matter in Committee. My Lords, I beg to move.

Lord CAMPBELL of CROY

My Lords, I had recognised that this was a response to the discussion we had on an Amendment of mine at an earlier stage, and it meets the point which was raised.

On Question, Amendment agreed to.

Clause 19 [Assistance to persons providing air services serving the Highlands and Islands]:

3.10 p.m.

Lord HUGHES moved Amendment No. 11: Page 15, line 31, at end insert ("; and he may dispose of such shares or stock ").

The noble Lord said: My Lords, I beg to move Amendment No. 11. This Amendment allows the Secretary of State to dispose of shares and stock required under Clause 19 and it fulfils, in part at least, an undertaking given by me when I was speaking to Amendment No. 68 put forward by the noble Lord, Lord Campbell of Croy. As it stands Clause 19 does not allow the Secretary of State to dispose of shares which he acquires in an air transport company. This Amendment, which I think will be acceptable to noble Lords opposite, rectifies the omission.

Lord CAMPBELL of CROY

My Lords, we are grateful to the noble Lord for having put down this Amendment. It does not meet all the changes to Clause 19 that we were suggesting during the Committee stage, but we know that that is another matter, that decisions are being taken on the Industry Bill, and that therefore this Bill must await Amendments made to that parent Bill in the form of words to be used. But this point arose in our discussions and the noble Lord appears to have dealt with it in this Amendment.

On Question, Amendment agreed to.

Lord HUGHES moved Amendment No. 12: Page 15, line 36, at end insert (" except that the Secretary of State may thereafter hold or dispose of shares or stock acquired under subsection (3) above").

The noble Lord said: My Lords, I beg to move Amendment No. 12. As the Bill stands, it is not clear that the Secretary of State may hold and dispose of shares acquired under Clause 19(3) after the expiry of the five-year limit imposed by subsection (5). This Amendment makes it clear that he may do so. Putting forward this Amendment fulfilled the second part of the undertaking which I gave to the noble Lord, Lord Campbell of Croy, in Committee.

Lord DRUMALBYN

My Lords, I wish to raise a point. The matter is perhaps a little curious. The clause gives to the Secretary of State power to assist persons who provide or propose to provide … services to the Highlands and Islands, and to make either a grant or loan … to any such person as aforesaid. Is there any reason why the Secretary of State, once the power to give this assistance is ended, should continue to hold shares or stock of these companies? If he is not involved otherwise, why should he do this?

Lord HUGHES

My Lords, I am not at all certain that there is a very great likelihood that there would be any acquisition of shares or stock in a company. It is a possibility; it may in fact be the best way of dealing with it. It might not be in the interests of either the Secretary of State or the company that any shares or stock, if they had been acquired, should automatically have to be disposed of at the end of a five-year period. Obviously, if there were such holdings, the disposal should be in the best interests of all concerned. Unless there was a provision of this kind it might not be possible to have regard to the best way of dealing with the matter. This is all that is required.

Your Lordships will be able to imagine circumstances in which if the Agency, holding shares in what after all would not be a large undertaking, were obliged automatically to dispose of the shares at a particular time that might have a very depressing effect on the shares of the company generally. Therefore it is reasonable that there should be a certain amount of flexibility in the matter, and this Amendment enables that to be achieved.

On Question, Amendment agreed to.

3.16 p.m.

Schedule 2 [Financial and Administrative Provisions relating to the Agency]:

Lord DRUMALBYN moved Amendment No. 13:

Page 24, line 23, at end insert—

"Disposal of Securities

4A.—(1) Before agreeing to pay money to the Agency under paragraphs 1 or 2 or to lend money to the Agency under paragraphs 3 or 4 of this Schedule the Secretary of State shall consider whether and to what extent any of the money to be paid or lent, as the case may be, could be raised by disposing of any securities issued by any company, and acquired by the Agency in exercise of the power conferred on them by subsection 4(a) of section 2 of this Act or transferred to them under section 16 of this Act, and if in consequence of such consideration and after consulting the Agency and the company he is of the opinion that such disposal can be effected without detriment to the exercise by the Agency of their functions and without detriment to the interests of the company, he may, after consulting the Agency, direct them to dispose of the securities in such manner as may be agreed between the Agency and the company.

(2) Nothing in the foregoing sub-paragraph shall be construed as limiting the power of the Agency to dispose of securities which they have acquired or which have been transferred to them, but before disposing of any securities which the Secretary of State has directed the Agency to acquire or has transferred to them, the Agency shall obtain the approval of the Secretary of State."

The noble Lord said: My Lords, I beg leave to move this somewhat lengthy Amendment. We had fairly lengthy discussions both in Committee and on Report regarding the disposal of shares acquired in businesses. Your Lordships will find these discussions reported at column 187 of the Committee stage and at column 1026 of the Report stage. Our object was to secure that the provision in Section 7(5) of the Industry Act 1972 was retained in this Bill in whatever form was appropriate. I wish to remind your Lordships that that subsection reads: Where financial assistance is given under this section by acquiring shares or stock in a company, the Secretary of State shall dispose of the shares or stock as soon as, in his opinion, it is reasonably practicable to do so; and before making the disposal the Secretary of State shall consult the company.

The noble Lord said during an earlier discussion that it would be out of keeping with Government policy on public holdings in industry to require that they should be disposed of as soon as reasonably practicable. This has generally been understood to mean as soon as the company no longer needed that kind of support, and the shares could be disposed of to the public without loss to the Government or the Agency. The noble Lord went on to indicate that it would not be desirable to allow control of a Scottish company to pass into the hands of a company outwith Scotland, if only because that company might close down the Scottish company, and with that we should certainly agree.

However, at the Report stage the noble Lord did not give the impression that it was the Government's intention to build up an enormous permanent holding in Scottish companies, whether with the controlling interest or as a mere investment. We argued that the total amount that the Government could afford to invest was necessarily limited, unless it was to be financed by inflationary creation of money. In other words, the available funds should he on a revolving basis, the Government coming to the aid of companies which, for one reason or another, needed capital and were unable to obtain it elsewhere; and that when the company no longer needed Government support, the securities should be disposed of and the funds realised and invested in companies which did need support.

Therefore, my Lords, this Amendment lays on the Secretary of State the duty of constantly keeping under review the requirements of companies in which the Agency have invested, with a view to disposing of them, in order to make money available for the functions of the Agency. In this way the calls on the public purse will be kept under closer control. I dare say that the noble Lord will say that the Amendment is much too restrictive, and that it is burdensome to place the obligation on the Secretary of State to see what holdings could be disposed of every time the Agency needs more money or when the Secretary of State thinks that they should have more money for a particular scheme of his. To that I should reply: not at all. Surely it is desirable that the Agency should keep the Secretary of State informed of how their investments are going and of which companies are becoming viable. After all, this is going to be an Agency. With such information kept regularly up to date, the Secretary of State should have no difficulty in deciding whether to let the Agency have a fresh infusion of funds, or to say "No" and indicate how they can obtain the money from their own resources. We talk about money being generated from their own resources, and perhaps this is one of the ways by which this can be done in the case of the Agency.

I do not for a moment suppose that this rather complicated Amendment is acceptable in its present form, but I should like to hear the noble Lord say that, in principle, the approach outlined in the Amendment is one which will he considered when the Secretary of State prepares the guidelines for the Agency of which the noble Lord has told us. I think your Lordships will accept the fact that the Agency should be of real help to Scottish industry; that they should not attempt to bite off more than they can chew, and that the amount of public money they use should be deployed to the best advantage and with due regard not not only to the purposes of the Bill as set out in Clause 2(1), but to the need to contain public expenditure. I have rather pressed my remarks on this Amendment, but I hope I have made my meaning clear and I beg to move.

Lord HUGHES

My Lords, I mast congratulate the noble Lord, Lord Drumalbyn, on yet another attempt—and I must admit a highly ingenious one—to write into the Bill a provision which will convey the impression that it is desirable, other things being equal, for the Agency to dispose of shareholdings. The noble Lord has set an admirable example of brevity which I would wish to follow, so, like him, I will not rehearse again the arguments we have already discussed. However, there is a difference of approach in principle. At the risk of over-simplifying, noble Lords opposite think it undesirable that shares should be held and we do not adhere to that view. However, I am not in total disagreement with the noble Lord, because, obviously, it could be frustrating to the purposes of the Development Agency if too much of their funds was tied up in enterprises which were successful and in circumstances where, by having resource to those funds, they could add to their success by making the money available in other directions. This will obviously be part of the operations of the development agency, so when we talk about a rolling "fund of money" we are on much more common ground.

Having first indicated that there is a difference of approach between the Government and the Opposition in this matter, I have also got on to the point where, if we are not on common ground, we are approaching it. I therefore go on to talk about the Amendment, not on grounds of principle but as to why we consider it inappropriate, and the noble Lord will not be surprised when I add that it is unnecessary. First, under Clause 4 the Secretary of State is already empowered to direct the Agency to dispose of a particular shareholding if he considers it necessary to do so. The point which the noble Lord made was that if on being notified of the holding the Secretary of State thinks that it is much better to sell certain shares rather than get fresh money, he is empowered to do so under Clause 4.

I almost thought that by some mischance the noble Lord had been able to lay his hands on my brief, because he has read almost word for word the next paragraph. But I am now satisfied that he had not done so, because he did not read the last paragraph which I will do. As the noble Lord anticipated, we think that the idea of requiring the Secretary of State to review the Agency's entire portfolio of shareholdings, with a view to identifying realisable assets every time they went to him for funds would be wholly impracticable in terms of the administrative burden which this would impose on the Secretary of State, apart altogether from the objections to such a procedure which I and the Government have on the grounds of principle.

Lord DRUMALBYN

My Lords, may I intervene for a moment? I rather anticipated that the noble Lord would say that, but it seems easy for the Secretary of State to have a list of items of investment ripe for disposal.

Lord HUGHES

The noble Lord should wait until I get to the last paragraph! The Amendment is also more restrictive on the Agency than those which were tabled last week, in that it would give to the Secretary of State and not to the Agency themselves the power to decide whether disposal of a particular shareholding would be consistent with the attainment of their objectives.

I now come to the paragraph which the noble Lord has not seen. I am a little amused, almost amazed, at the ambivalent attitude which Amendments tabled during the proceedings have in relation to the Agency and the Secretary of State. In this Amendment, the Secretary of State is seen as a benevolent influence with the interests of the private sector at heart. But when we were considering Clause 4 in Committee, noble Lords opposite wanted to remove the power of the Secretary of State to give specific directions to the Agency, the one which would enable him to do exactly what the noble Lord wants. At that point, they appeared to look upon him as a sinister figure intent on directing the Agency to do this, that or the other undesirable thing which they would not have wished to do of their own accord. In a matter of this kind, either the Secretary of State will always be benevolent, or he will always be malevolent. He will not be both at the same time.

Lord DRUMALBYN

My Lords, may I intervene again? Some Secretaries of State are more sinister than others. The point here is quite clear. I was envisaging this not as being in the interests of private industry, but as being in the interests of the taxpayer and of the economy in putting constraint on the total amount of money that has to be lent.

Lord HUGHES

My Lords, the noble Lord's ingenuity did not end when he drafted the Amendment; he can bring it to bear in arguing for it. I think it would be time wasting for me to continue much longer on this matter. I think the power in Clause 4 enables the Secretary of State to do exactly what this Amendment seeks. Obviously, the sort of occasions when he is likely to do this are what I have described as the common ground which the noble Lord and I have reached, when this is obviously the best way of making money available. After all, the Agency do not have access to unlimited funds; they have access to generous funds—£200 million in the first place, and if Parliament so decides the figure can go up to £300 million. Within that figure one wants to make certain that the money is being used in the best way. There will be occasions, possibly not once but time and time again, when the best way of dealing with a successful operation is to bring it to an end and move on in other directions. But we cannot say that that will always be the case. There will be times when the best interests of the taxpayer of the Agency and of private enterprise will lie in holding on to such an interest. We think that by relying on the specific powers given in Clause 4 the Secretary of State can do exactly what the noble Lord, Lord Drumalbyn, is asking for when this becomes desirable.

Looking back on my experience of Secretaries of State over quite a number of years, I do not think that I would have applied the word "sinister" to any of them. All that I would say, without disrespect to the noble Lord, Lord Campbell of Croy, is that some of them seemed to me to be better than others—but the ones that I regarded as being good might not be so necessarily in the opinion of noble Lords opposite. So far as the general public of Scotland is concerned, I do not think that any of them would ever have been regarded as being particularly sinister or particularly benevolent.

Lord CAMPBELL of CROY

My Lords, I am glad that the noble Lord has acknowledged the ingenious further attempt by my noble friend at drafting, in order to include in the Bill something which we felt necessary—although the noble Lord, Lord Hughes, indicates that in the last resort the Government do not consider it so. Lest there has been any misunderstanding from what he said about our attitude to Clause 4, I want to remind the noble Lord that when we had an Amendment at Committee stage seeking to eliminate the words "or specific" before "directions" it was in order to draw attention to what is virtually a new departure in Government legislation and to seek an explanation from the noble Lord. We did not press that Amendment, but the noble Lord, Lord Hughes, in replying to our point admitted that in this complex of the Industry Bill, to which I have referred before, it was a new departure that Ministers should be able to give specific directions as well as general directions. Having sought thus to explain and to listen, we did not press it. We were not at that stage considering whether the Secretary of State of the day was going to be benevolent or malevolent. We wanted merely to draw attention to it. I am sorry that the noble Lord is unable to accept this Amendment to the Schedule which my noble friend has tabled, but I hope that it will be possible for the Government to consider this matter further when the Bill reaches another place.

Lord HUGHES

My Lords, I should not be totally surprised if it did not emerge again in another place.

Lord DRUMALBYN

My Lords, may I thank the noble Lord for his explanation of the Government's attitude on this subject? I think that in the course of this Bill we have come a lot closer together in considering the various aspects. We have been able to get the noble Lord to say that, at least as far as he is concerned—and I hope that he was speaking fully for the Government—the full rigours of the Bill, so to speak, that we envisaged were not likely to be applied. This is a great gain in this particular case. He has dispelled the idea that the Scottish Development Agency will operate as a vast investment holding company in the interests of the nation and that sort of nonsense. He has said that it will concentrate on doing the particular job it is supposed to do, which is to promote the economy of Scotland. This is all to the good. I can only express my gratitude to the noble Lord for the consideration he has given to these matters and for the courageous way in which he has stated the answers. I see that the noble and learned Lord is about to put the Question. Perhaps I should have indicated my intention to do so earlier; but may I now beg leave to withdraw the Amendment?

Amendment, by leave, withdrawn.

Lord HUGHES

My Lords, in case the noble and learned Lord who sits on the Woolsack short-circuits me again in his anxiety to get on to the Welsh Development Agency Bill, I beg to move the Privilege Amendment.

Moved, That the Privilege Amendment be agreed to.—(Lord Hughes.)

On Question, Privilege Amendment agreed to.

3.34 p.m.

Lord HUGHES

My Lords, I beg to move that this Bill do now pass. I had indicated that in so doing I would take the opportunity of replying to a number of points which came up during the earlier discussions. First was the question of the confidentiality that the Agency would have to abide by. I was asked what arrangements would exist to ensure that members of the Agency respected the confidentiality of information given to them in the course of their activities. Basically, there are two types of information to be considered: information which members and officers of the Agency gain access to by virtue of the powers in the Bill; and information given voluntarily to them by companies, authorities or individuals with whom they have dealings in the normal course of their duty. I would emphasise that the greater part of the information which the Agency obtain will fall into the latter category of information freely supplied to them since their powers to obtain information are very limited. Where information is supplied freely the Agency will, of course, be expected to safeguard any confidences given to them as a matter of good and honourable commercial practice. It is entirely reasonable to expect them to do so; but if, by any chance, there were a breach of confidence where damaging consequences were alleged this would be actionable in the courts in the normal way.

Where the Bill enables the Agency to obtain access to information, it provides ample safeguard against the unauthorised disclosure of sensitive matter. I will deal with the relevant provisions in turn. Clause 11(1) gives the Agency a very limited power to obtain information about interests in land. This is well precedented in planning legislation, raises absolutely no question of confidentiality, either commercial or personal, and thus creates no need to provide penalties for disclosure. Clause 11(6) gives the Agency access to certain information collected under the Statistics of Trade Act 1947. This information could scarcely be described as commercially sensitive, consisting only of the name and address of establishments, their number of employees and the nature of their business. None the less, un-authorised disclosure of this information carries a penalty of a fine of up to £400, by virtue of Section 4(5) of the Employment and Training Act 1973. Finally, Clause 10, which provides powers of entry on land, makes explicit provision for the possibility that the Agency might gain access to confidential information about commercial processes in entering premises; and it makes unauthorised disclosure of such information subject to a penalty of up to £400 and/or imprisonment.

My Lords, we gave very careful consideration to the range of topics which it would be proper for the Agency's information powers to cover. We decided as a matter of deliberate policy to make these much more limited than the corresponding powers of the Highlands and Islands Development Board, since we recognise that the Highlands and Islands Development Board's wide powers to obtain information about businesses as well as land for any purpose reasonably connected with their functions might be regarded as excessive in view of the active entrepreneurial role which the Agency are intended to play. The denial of these powers to the Agency removes any need to copy the special penalties on disclosures which are contained in the Highlands and Islands Development (Scotland) Act.

On the subject of newspapers, the noble Lord, Lord Campbell of Croy, asked on 10th June whether the Government envisaged the Agency taking up shares in newspapers or television companies; and he raised in this context the implications of any such action for the freedom of the Press. The position is that the Bill empowers the Agency to acquire a holding in any industrial undertaking where this is in furtherance of the Agency's objectives. "Industrial undertaking" is defined to include any description of commercial activity and therefore certainly includes newspapers or broadcasting companies. One of the Agency's objects is to provide, maintain or safeguard employment, and as the noble Lord said on 10th June, we have had recent experience in Scotland of Government financial assistance being given to a newspaper company on employment grounds. These are the only grounds which would justify the involvement of the Agency in a mass-media concern. The need for such assistance is, to put it mildly, unlikely to be a frequent occurrence, but it cannot be ruled out completely. What the Government have in mind is that the Agency should only be able to invest in such a company when acting under a direction from the Secretary of State under Clause 5. In such a circumstance we should provide that the Agency would not interfere with editorial freedom. The Secretary of State's powers of direction already enable him to achieve these objectives, but we think it would be desirable to make our intentions clear in the Bill and we shall be tabling Amendments to this effect when the Bill goes to another place.

There was the question of the guidelines on the relationship between the Agency and the National Enterprise Board. When we were discussing Clause 14 I gave an undertaking to the noble Lord, Lord Campbell of Croy, to say something at this stage about the Government's thinking on the guidelines which we have in mind to issue to the Agency and to the Board covering their respective operations in Scotland. I may not be able fully to satisfy your Lordships' natural interest in these matters at this stage, but I hope that what I have to say will he helpful.

First, the final guidelines will not be issued until both the SDA and the NEB are in being, because it is right that both bodies should have an opportunity to discuss their contents. The guidelines are not something to be imposed on them from outside without consultation. This is in keeping with the provision in the Bill requiring the Secretary of State to consult the Agency before issuing any direction to them. As I said on Second Reading, the guidelines will be made widely available since it is right that Parliament, and essential that industry, should be fully aware of the arrangements which exist. We have yet to decide, however, exactly what form publication should take. It may not be appropriate for the guidelines to have the formal status of directions, since some of the points covered might not be instructions so much as general guidance on matters which leave a good deal of discretion to the Agency and the Board. The annual reports of the Agency and the NEB would be one possible vehicle for publication, but something quicker than that might be thought appropriate and we are considering all the possibilities.

As to the contents of the guidelines, among other things they will deal with the exercise of those functions of the NEB in Scotland which are not devolved to the SDA. These are the functions of extending public ownership into profitable sectors of industry; promoting schemes for the reorganisation or development of an industry at national level; acting as a holding company for State holdings in industry; acting as a channel of selective assistance to companies with branches in Scotland which need to be assisted on a United Kingdom basis; and acting, where appropriate, as an additional source of investment finance to such companies.

I repeat, these are not functions which are to be devolved to the Scottish Development Agency. Whenever the NEB formulates or promotes a scheme affecting an industrial sector which is significantly represented in Scotland it will consult the SDA during the formative stages of its plans, whether or not these include the acquisition of an interest in Scottish undertakings in that sector where it proposes to acquire an interest in a United Kingdom company significantly represented in Scotland (and especially where it seeks a controlling interest) it will consult the SDA and will thereafter keep the Agency closely informed about the company's progress and about plans for its future. Where appropriate it might employ the Agency as its agent in dealing with the Scottish end of the company, for example, in providing management assistance and other advisory services.

Perhaps the greatest difficulty to be resolved is how to express the dividing line between cases in Scotland which are to be financed by the NEB and those which are to be financed by the Agency. We shall be working out these details. We propose to consult the CBI and the STUC. Broadly we intend to adopt general principles whose applications will be determined, fairly pragmatically, on a case-by-case basis. The point is that there will be no rigid demarcation between some companies or undertakings in Scotland which are the concern of the Agency and others which are reserved to the NEB. It will be part of the responsibility of the Agency to develop contacts with the whole of Scottish industry. It will be able to enter into discussions with any Scottish-based company, or the management of any Scottish undertakings, to see how that company or undertaking can best contribute to the general good of the Scottish economy. If proposals emerge from such discussions which point to action by the NEB, as well as the SDA, for example, assistance to, or acquisition of, an interest in holdings in England, the Agency may make proposals to the NEB to that effect. There is absolutely no question of the Agency's own activities being limited to small locally-owned companies, as some misguided Press comment might have indicated. As a corollary of the arrangements which the NEB will adopt for consulting the SDA, the Agency will likewise be expected to keep the Board informed of any plans which it has in mind for the development of a sector of industry in Scotland which could affect undertakings in the rest of Britain, and of any interest it proposes to take in companies with branches elsewhere in the United Kingdom.

On the subject of the guidelines, my statement is fairly lengthy, perhaps not necessarily easy to take in completely by merely listening to it. I believe, however, not only that noble Lords opposite are interested in hearing for themselves part of the Government's thinking but that there should be something on the record which could be read by people outside your Lordships' House, for example, by the industry concerned, so that at least, whatever their fears about the effect of this Bill on industry generally in Scotland, they need not labour under unnecessary fears. The more the Government are able to put this matter on the record in the House the more opportunity those people will have of reassuring themselves on certain aspects.

The Bill leaves us in a different form from that in which it was first introduced in another place. I cannot pretend that all the changes which have been made in the Bill are ones which the Government would consider advantageous to the economy of Scotland. But, even though I regret that certain major changes have taken place and which I am certain another place will wish to reverse, it would be wrong if I did not take this opportunity of thanking noble Lords in all parts of the House, but particularly noble Lords on the opposite Benches who have taken the leading part in considering the Bill. I express my pleasure for the way in which, in general, they have considered it, and for the points which have been raised and which have enabled the Government to accept Amendments which have been tabled or, alternatively, have allowed the Government to table Amendments at various stages to meet certain points. Therefore, with complete sincerity, I can say that in some respects the Bill goes to another place in a better form than that in which the Government first presented it to your Lordships. I hope that when the other place have finally disposed of the matter the Bill will be somewhat better from the Government's point of view than it is at the present time.

Moved, That the Bill do now pass.—(Lord Hughes.)

3.50 p.m.

Lord CAMPBELL of CROY

My Lords, we are grateful to the noble Lord, Lord Hughes, for having taken the opportunity at this stage of making statements on some of the points on which he told us he hoped to inform your Lordships' House: for example, confidentiality and the rules for disclosure of information by firms; on the question of whether the SDA could take shares in the Press and television—and we were interested in the noble Lord's proposal that there should be Amendments in another place to regulate such a situation; and lastly, what I acknowledge to be the important statement which he has made on guidelines to be issued to the National Enterprise Board and the Agency. That, it is clear from the length of his statement to which he referred, is by no means a simple matter to resolve.

Regarding the Bill as a whole, the noble Lord and I disagree about the principal Amendments which we have made to Clause 2. Those Amendments are to three subsections which repeated parts of the Industry Bill, and those changes have been welcomed by representatives of Scottish industry whom the Agency are to assist, and with whom the Agency are to work. The Industry Bill itself, we understand, is shortly to undergo changes in another place at the hands of the Government. According to Press reports, an announcement on this is expected at any moment. The present intention of the Government therefore to reverse our principal Amendments in another place may be felicitously overtaken by the Government's second thoughts on the Industry Bill because, as I said, the Amendments refer to parts of this Bill which are reproduced in the Industry Bill. I would add that no single action of the Government is more likely at the moment to restore the confidence of British industry than an announcement by the Government to make the necessary and relevant changes to the Industry Bill. I hope we have assisted the Government's very tight Parliamentary programme by anticipating some of these changes in the Scottish Bill.

Besides those Amendments, there have been a number of other points where the Government agreed to make changes, and we are grateful to the noble Lord for the Amendments which he has accepted or replaced by Amendments from the Government side dealing with the same points, some of them made today. He has also indicated that, because there was not enough time available in your Lordships' House during the passage of the Bill, he is proposing other Amendments should be tabled by the Government in another place, and we can expect to see some results from our labours emerging in the form of Government Amendments there. The noble Lord referred today to the code, in guidelines, which are to prescribe the relationship between the NEB and SDA. Their fields of activity will certainly need to be clearly defined and separated if collisions and confusion are to be avoided.

There are, none the less, still all the makings of bureaucratic muddle since there will also be other agencies operating in Scotland. I draw attention to this because the guidelines affect only two of the agencies. There is also the proposed National Oil Corporation with somewhat similar powers which will presumably carry out much of its activity in Scotland. In addition, in the North and West there is already a development agency responsible to the Government—namely, the Highland Development Board. Consequently, in the North and West of Scotland there are no less than four agencies at large, and I suggest the proposed code will need to be extended to clarify the roles and relationships of all four bodies in that area, and certainly of three bodies in the rest of Scotland.

Lastly, I should like sincerely to congratulate the noble Lord, Lord Hughes, on again handling this Bill single-handed. This has meant long, continuous sessions dealing with different points, most of which have been put from this side of the House. Because the Scottish Bill was taken first at each stage. we have in our debates been paving the way for similar points to be raised in the Welsh Bill, and the burden therefore of dealing with these points for the first time has again fallen heavily upon the noble Lord, Lord Hughes, who has borne it with his usual good humour. May I also thank my noble friends for the part they have played in the extended Committee and Report stage debates in helping what we consider to be improvements to be made to the Bill and which I am glad to say in a number of cases both sides of the House consider and agree to be so. I should especially like to thank my noble friend Lord Drumalbyn for the tremendous amount of work he has put into the Bill and the drafting of Amendments.

3.57 p.m.

Lord DRUMALBYN

My Lords, may I make two small observations? First, as we made progress with this Bill so I came to like it a little more than I did to start with; but I am afraid the noble Lord's closing remarks today have caused me to dislike the prospect of the Industry Bill even more than I did before. My noble friend talked about a "bureaucratic muddle". But that will be nothing whatever like the political muddle which will ensue when we have Scottish Assembly. The noble Lord may think there may be a broad division of the Scottish Development Agency which will be the responsibility of the Scottish Assembly, but I doubt whether it will be easy going, if the responsibility for the Industry Act—as it may then be, although I hope it will not—lies here at Westminster. There are going to be some sticky problems ahead. Having said that, I wish the noble Lord well with this Bill.

On Question, Bill passed, and sent to the Commons.