INDUSTRY BILL

HL Deb 16 October 1975 vol 364 cc1024-70

4.17 p.m.

Third Reading resumed.

Clause 3 [Exercise by Board of powers to give selective financial assistance under Industry Act 1972]:

Lord LOVELL-DAVIS moved Amendment No. 5: Page 4, line 36, at end insert ("and incidental to").

The noble Lord said: My Lords, this is a technical Government drafting Amendment which is designed to avoid any possible confusion. I am afraid that today I cannot repeat my bargain offer of yesterday on the Petroleum and Submarine Pipe-lines Bill when, over-generously, I gave the noble Lord, Lord Campbell of Croy, the chance to withdraw my own Amendment. When the Board acquire property (and this normally means a shareholding) as a result of a direction by the Secretary of State to give selective financial assistance, the Secretary of State is required by subsection (9) of Clause 3 to reimburse the consideration given for the acquisition and the costs and expenses of acquiring it. These sums of money then count towards the Board's capital debt under the provisions of paragraph 6(5) of Schedule 2.

Owing to an oversight, the wording in Schedule 2 is at present slightly different. It refers to costs and expenses of and incidental to the acquisition. The fuller formulation is correct. Since the clause and the Schedule are, of course, intended to refer to the same sums of money, it is desirable that the wording should be the same so that there is no possibility of their being interpreted as having different legal meanings. It would clearly be absurd for the Board to assume a debt for expenses which had not been reimbursed by the Secretary of State. My Lords, I beg to move.

On Question, Amendment agreed to.

Clause 7 [General power of Secretary of State to give Board directions]:

4.20 p.m.

Lord ABERDARE moved Amendment No. 6: Page 7, line 24, leave out ("(3)") and insert ("(4)").

The noble Lord said: My Lords, to repeat the words just used by the noble Lord, Lord Lovell-Davis, this is a purely technical Opposition Amendment designed to try to avoid confusion, and we hope that what seems to us to have been a misprint in the Bill could prove to be the subject of one Amendment which, after a great deal of effort, we can actually get accepted. I beg to move.

Lord LOVELL-DAVIS

My Lords, I am most grateful to noble Lords for tabling an Amendment to remedy this cross-referencing error, which we are very glad to accept. We had in fact spotted it ourselves and intended to table an Amendment.

On Question, Amendment agreed to.

Clause 10 [Upper limits on Board's powers]:

Lord DRUMALBYN moved Amendment No. 7: Page 10, line 1, at beginning insert ("Subject to subsection (1A) of this section").

The noble Lord said: My Lords, we discussed Amendment No. 9 on Report and the noble Lord, Lord Beswick, then said that by including the words: or in accordance with any general authority given by the Secretary of State"— and I now quote what he said: it was not the intention to make it possible for the Secretary of State to circumvent the requirement here with regard to a 30 per cent. holding or to the investment of £10 million."—[Official Report, 5/8/75; col. 1570.] We are here concerned with a clause which says: Neither the Board nor any of their subsidiaries shall acquire any of the share capital of a body corporate except with the consent of the Secretary of State"— and then the words— or in accordance with any general authority given by the Secretary of State. Broadly speaking, the acquisition would give the Board control, if the cost of the acquisition would be over £10 million. The trouble is, of course, that whether or not it was the intention to do so, this is precisely what the clause does and I think it would be impossible to deny that. I believe the noble Lord, Lord Beswick, is himself inclined to think that the clause went rather too far and he outlined to us the sort of case that the clause, as amended in another place, was designed to cover. As I understand the position, when this clause was dealt with in another place it did not originally consider subsidiaries at all, and it was represented—I think from the Opposition—that subsidiaries should have exactly the same restraint put upon them as the Board. Then, because it was felt, as I understand it, that this might mean, in the case of subsidiaries, recourse to the Secretary of State for his consent in a number of minor cases, the words at line 3 on page 10 of the Bill: … with the consent of the Secretary of State or in accordance with any general authority given by the Secretary of State…", were added to the Bill, thus making it possible for the Secretary of State to adopt either procedure in any case at any time. It is left entirely to his discretion.

The noble Lord, Lord Beswick, was good enough to say: … we have in Clause 10 a system of executive control which provides that the Secretary of State has to approve the making of a large investment or the acquisition of a 30 per cent. holding. That is what we should all like, I believe."—[Official Report; 5/8/75, col. 1570.] I heartily concur with that, but there can be little doubt that the alternative procedure of giving a general authority would very considerably relax that general provision. It could be construed as meaning that a company may, by general authority, invest £10 million, as the noble Lord said—Ithink he really meant up to £10 million—in each of a number of different sales outlets. He instanced the example of British Leyland wanting to acquire a number of sales outlets in different parts of the country. This would be what I have described in my Amendment as a series of acquisitions.

Of course, the simple way of dealing with this problem would be to omit the words that I have quoted, and that would be the effect of Amendment No. 9. There would then be only the one way in which the Board or the subsidiary would have to go to the Secretary of State for consent in every case where acquisition would give the Board control or the consideration would exceed £10 million.

The Amendments to which I am speaking, namely, Nos. 7, 8 and 10, if, with the leave of the House, we may consider them all together, would in effect enable the Secretary of State to give a general authority to the Board to acquire a controlling interest in companies in the circumstances envisaged by the noble Lord, Lord Beswick, subject to two conditions. The first condition is that in their application the Board either specified en bloc the companies they propose to acquire, or else—and more likely, I should have thought—they specified the class of companies they propose to acquire, that being, in the example given by the noble Lord, Lord Beswick, sales outlets for certain products. The second condition is that no single acquisition covered by the general authority shall cost more than £250,000, and that the total value of the series of acquisitions shall not exceed £10 million.

The noble Lord may think that the figure of £250,000 which I have inserted for a single acquisition is too restrictive. He may also think that the general authority should permit the total cost of the series of acquisitions to exceed £10 million. If so, it would be possible for the amounts to be amended in another place. Even apart from the amounts mentioned—that is the £250,000 and the £10 million—I do not suppose that the wording of my Amendment will be wholly acceptable to the Government; but we are now at the Third Reading and there is no opportunity apart from this of putting the clause right before the Bill goes back to another place. Therefore, we have three choices in this matter: we can leave the Bill as it is, and that means giving the Secretary of State power, if he so chooses, to disregard the requirement for his consent to be given in every case where the Board or one of their subsidiaries propose to acquire a controlling interest, however much the acquisition is to cost.

When I say "disregard", I mean to choose the alternative course, giving a general consent. He could proceed simply by way of a general authority. I am not saying that he would do so; I am saying that he could do so, and I think I am entitled to feel greatly reinforced by what the noble Lord, Lord Houghton of Sowerby, said at an earlier stage of these proceedings. He said we must be constantly challenging the powers of bureaucracy with which he included—not, perhaps, to the liking of the noble Lord, Lord Beswick—the National Enterprise Board. He also said that the powers to which the noble Lord, Lord Raglan, was referring, provided by one Government, are used for purposes for which they were never intended. So the powers exist. With respect, I think it is not open in this case for the noble Lord to say that they cannot be used, and would not be used, more widely if they are left as they are. So much for the first course.

My Lords, the second course is that we can accept my Amendments, knowing full well that they may need to be amended in another place, but accepting the principle that it is unnecessary for the Secretary of State to give his consent for each of a series of acquisitions when the policy of buying up a number of companies in the same class, or a number of specified companies, has been approved. What I do not think your Lordships should be asked to do is to dispense with the requirements for consent in cases where the Board propose to take a controlled interest and give a general authority enabling the Board, or any of their subsidiaries, to acquire individual bodies corporate, provided that the value of the consideration does not exceed £10 million. I do not think that this is in line with the original intentions of the Government. I do not think that it would be right at this stage to give power to do that. That is why I have limited the Amendments which I am proposing to the kind of case that the noble Lord, Lord Beswick, was suggesting, which really involved a series of purchases in implementation of an agreed policy.

My Lords, the other choice is for your Lordships to approve Amendment No. 9 and give the other place the opportunity to specify what they think the limits of any general authority should be, and the circumstances in which it should be given by the Secretary of State. I would urge very strongly that we ought not to leave the clause as it is. It does not make sense to stipulate the circumstances in which the Board have to obtain the consent of the Secretary of State, and then, in the same breath, to say that that requirement can be dispensed with at any time and in any circumstances simply by means of a general authority given by the Secretary of State. I beg to move.

Lord ABERDARE

My Lords, briefly I should like to add my voice in support of what has been said by the noble Lord, Lord Drumalbyn. It seems to me that there is a very strong case for an Amendment of this kind. The clause puts limits on the powers of the Board in terms of both the 30 per cent. or more of the votes, and in terms of the £10 million in respect of their acquisitions. It does not really seem sensible that there should also be the words, in accordance with any general authority given by the Secretary of State", which could allow those limits to be exceeded in certain circumstances.

My Lords, I think my noble friend is much to be congratulated on having produced an Amendment which, on the face of it, certainly seems to accomplish what we have in mind. We know that the noble Lord, Lord Beswick, has considered this matter very carefully, because he said he would on Report stage. I hope that he will be able to give us some encouragement, either by accepting this Amendment, or in giving an undertaking to amend further the Bill before it finishes its passage.

4.35 p.m.

Lord BESWICK

My Lords, I was expecting the noble Earl, Lord Balfour, to rise, as I know he felt very strongly about this matter, too. A little earlier on, I had occasion to criticise noble Lords opposite for raising yet again on Third Reading matters which had been thoroughly ventilated during the earlier stages of the Bill, but I quite recognise that in this case my arguments do not apply. The noble Lord, Lord Drumalbyn, is quite right, and so is the noble Earl. I gave an undertaking to look at this. I quite understand their reasons for bringing forward these Amendments. Perhaps I may just state the position and the background.

When the Bill was under consideration in another place, the Government accepted that the need for Ministerial approval for acquisitions of shares costing more than £10 million, or where more than 30 per cent. of the equity was involved, should be extended from acquisitions by the National Enterprise Board and their wholly-owned subsidiaries to include all the Board's subsidiaries. This had the effect of considerably widening the impact of control. It brought into the scope of the Bill the business activities of com panies in which there might be substantial outside shareholders. It was to avoid the potentially wasteful and frustrating extension of Government oversight that this idea of the general consent came into being.

The noble Lord, Lord Drumalbyn, said something about the bureaucrats. He said that we did not want to extend the power of the bureaucrats, but that argument cuts both ways. We want to enable the National Enterprise Board or their subsidiaries to operate in a commercial way without continual frustration from, and interference by, the Government. Therefore, it was thought proper that there should be power in the Bill for the Secretary of State to give general consent in a certain category of cases. I do not believe that noble Lords opposite and I differ about this need for a general consent and I hope, therefore, that they will not press Amendment No. 8, which would have the effect of ruling out altogether the possibility of a general consent.

But when we come to the question as to how we can ensure that the general consent provision is not abused, we then get into more difficulty. As I have said, I understand—and I have expressed this understanding before—the wish for a limitation in the general case as well as in the particular case. But when one sets out to accomplish that, we are faced with certain problems. The fact is that unless we build a quite elaborate legislative pattern, it is impossible to cover every eventuality in matters of this kind. It is necessary to recognise that the proper operation of legislation depends upon observance by the Government and the National Enterprise Board of the spirit of the legislative provisions as interpreted by the Government and Parliament, and subject to the sanction of the ability of Parliament to call the responsible Minister to account for the discharge of his responsibility. I do not conceive that it is possible, even if we do not have the Amendment of the noble Lord, Lord Drumalbyn, that the National Enterprise Board, under a general consent, would invest £9,999,000 in particular companies every Friday afternoon. I do not think anyone in the House would expect this kind of abuse to follow.

If we try to limit the amount by Act of Parliament—and I understand the; motive behind the feelings of noble Lords opposite—we get into difficulties. I should have thought that £250,000 would be too restrictive. There may be a general consent which would involve an investment of £250,000 and altogether, under the general consent, it may be not more than £250,000. I do not think that that kind of interference is what the noble Lord would wish to see. Therefore, I cannot recommend the House to accept the Amendment which he has so well moved.

Lord DRUMALBYN

My Lords, if I may first comment on the reference to the bureaucrats, of course I was quoting there the noble Lord, Lord Houghton of Sowerby. I was careful to avoid saying that this was the opinion of the noble Lord, Lord Beswick, or, indeed, that it was mine in this case. We agree that if we are to have the National Enterprise Board they should work in a commercial way. We are in a real difficulty here. My advice to your Lordships would be to carry this Amendment with its imperfections. As I said, I am not sure that £250,000 was not too restrictive. I am inclined to think that a total for a series of acquisitions of £10 million would be all right; I was tempted to add at the end words to allow the Secretary of State to extend that, but this was taxing my drafting abilities rather hard and I thought we had better leave that for another place.

I think it is right to give the other place another chance to look at this, and I hope, therefore, the noble Lord will accept the Amendment in this spirit. I think if he does so it will make it possible for the other place to look at the series of Amendments in a way that they would not otherwise do. I am really asking him, in a sense, to do something which is rarely done, and that is for the

Government themselves to agree that this is something that should be looked at further at this stage. If the noble Lord cannot do that, I think he will understand if we say that we think we ought to test the opinion of the House in the Division Lobbies.

Lord BESWICK

My Lords, the fact is that I cannot give an undertaking as to what the other place might do if we pass this Amendment.

Lord DRUMALBYN

My Lords, that was not quite what I asked. I was asking whether the noble Lord would let the Amendment go through without a Division, which would be an indication from this House to another place that there was some feeling, probably in all parts of the House, that this is a matter that could well be looked at again. I will understand it if the noble Lord cannot do that, but I hope he will.

Lord BESWICK

My Lords, I have given an assurance that there is no intention that the provisions of this general consent would be abused. I would expect that the NEB would operate within the general spirit of the law that we are enacting. I am afraid that I cannot give the undertaking the noble Lord has asked for.

Lord DRUMALBYN

My Lords, I would accept the noble Lord's assurance in regard to the NEB as originally constituted under this Government, but that cannot bind the Government forever or the NEB forever. In those circumstances, I feel that we must press this to a Division.

4.43 p.m.

On Question, Whether the said Amendment (No. 7) shall be agreed to?

Their Lordships divided: Contents. 94; Not-Contents, 59.

CONTENTS
Aberdare, L.	Camoys, L.	Denham, L.
Airedale, L.	Campbell of Croy, L.	Digby, L.
Alexander of Tunis, E.	Carrington, L.	Drumalbyn, L. [Teller.]
Alport, L.	Cathcart, E.	Eccles, V.
Amherst of Hackney, L.	Clifford of Chudleigh, L.	Effingham, E.
Armstrong, L.	Clwyd, L.	Elles, B.
Auckland, L.	Cork and Orrery, E.	Elton, L.
Balfour, E. [Teller.]	Cornwallis, L.	Emmet of Amberley. B
Barnby, L.	Cottesloe, L.	Erskine of Rerrick, L.
Berkeley, B.	Cowley, E.	Falkland, V.
Birdwood, L.	Cromartie, E.	Ferrers, E.
Brooke of Cumnor, L.	Cullen of Ashbourne, L.	Fortescue, E.
Brooke of Ystradfellte, B.	Daventry, V.	Glasgow, E.
Caccia, L.	Davidson, V.	Goschen, V.
Grenfell, L.	Monck, V.	Sandys, L.
Gridley, L.	Mowbray and Stourton, L.	Somers, L.
Harvington, L.	Newall, L.	Stamp, L.
Hayter, L.	Northchurch, B.	Stanley of Alderley, L.
Henley, L.	Nugent of Guildford, L.	Strathclyde, L.
Hylton-Foster, B.	Ogmore, L.	Strathspey, L.
Ironside, L.	Orr-Ewing, L.	Sudeley, L.
Kimberlely, E.	Porritt, L.	Terrington, L.
Lauderdale, E.	Rankeillour, L.	Thorneycroft, L.
Long, V.	Rhyl, L.	Trefgarne, L.
Loudoun, C.	Robson of Kiddington, B.	Vickers, B.
Lyell, L.	Rockley, L.	Vivian, L.
Mackie of Benshie, L.	Ruthven of Freeland, Ly.	Wakefield of Kendal, L.
Macleod of Borve, B.	St. Aldwyn, E.	Ward of North Tyneside, B.
Mancroft, L.	St. Davids, V.	Wigoder, L.
Mansfield, E.	St. Helens, L.	Wise, L.
Merrivale, L.	Sandford, L.	Young, B.
Meston, L.
NOT-CONTENTS
Arwyn, L.	Gaitskell, B.	Phillips, B.
Aylestone, L.	Geddes of Epsom, L.	Pitt of Hampstead, L.
Balogh, L.	Goronwy-Roberts, L.	Raglan, L.
Beswick, L.	Greenwood of Rossendale, L.	Sainsbury, L
Birk, B.	Hale, L.	Segal, L.
Briginshaw, L.	Hall, V.	Shepherd, L. (L. Privy Seal)
Brockway, L.	Harris of Greenwich, L.	Shinwell, L.
Burton of Coventry, B.	Houghton of Sowerby, L.	Stedman, B.
Champion, L.	Jacques, L.	Stewart of Alvechurch, B.
Collison, L.	Kirkhill, L.	Stow Hill, L.
Cooper of Stockton Heath, L.	Leatherland, L.	Strabolgi, L.
Crook, L.	Llewelyn-Davies of Hastoe, B.	Summerskill, B.
Crowther-Hunt, L.	Lovell-Davis, L.	Wallace of Coslany, L.
Darling of Hillsborough, L.	Lyons of Brighton. L.	Wells-Pestell, L.
Delacourt-Smith of Alteryn, B.	McLeavy, L.	Willis, L.
Douglas of Barloch, L.	Maybray-King, L.	Wilson of Radcliffe, L.
Douglass of Cleveland, L.	Melchett, L. [Teller.]	Winterbottom, L. [Teller.]
Elwyn-Jones, L. (L. Chancellor.)	Pannell, L.	Wootton of Abinger, B.
Evans of Hungershall, L.	Pargiter, L.	Wynne-Jones, L.
Fisher of Camden, L.	Peddie, L.

On Question, Amendment agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.

4.51 p.m.

Lord DRUMALBYN

My Lords, I beg to move Amendment No. 9.

Amendment moved— Page 10, line 3, after ("or") insert ("in the circumstances described in subsection (1A) of this section").—(Lord Drumalbyn.)

Lord DRUMALBYN

My Lords, I beg to move Amendment No. 10.

Amendment moved—

Page 10, line 12, at end insert— ("(1A) The circumstances referred to in subsection (1) of this section are that the Board has applied to the Secretary of State for a general authority for one of its subsidiaries to make a series of acquisitions of the share capital of specified bodies corporate, or bodies corporate of a specified class, some or all of which acquisitions would entitle the Board to exercise or control the exercise of 30 per cent. or more of the votes at any general meeting of the respective bodies corporate; provided that in the case of no such acquisition shall the value of the consideration exceed £250,000, nor would the total value in the series of acquisitions exceed £10,000,000.")—(Lord Drumalbyn.)

Clause 12 [Meaning of change of Control]:

Lord LOVELL-DAVIS moved Amendment No. 11:

Page 10, line 37, leave out from beginning to ("only") in line 4 on page 11, and insert— ("(1) There is a change of control of an important manufacturing undertaking for the purposes of this Part of this Act").

The noble Lord said: My Lords, Part II of the Bill is somewhat complex, as noble Lords will recognise. I apologise at this stage in the Bill's progress for coming forward with Amendments that may appear somewhat greater than those normal at this stage, but I hope to be able to explain their purpose and the need for them. Quite simply, we are here concerned to close two gaps which we have unwittingly introduced into our powers, either of which could represent a serious weakness. The first arises from the present drafting of Clause 12(2), which provides that when an important manufacturing undertaking is carried on by a body corporate, there is a change of control of it only if particular events happen in relation to that body corporate. However, we have now recognised that this would prevent us from acting if a change of control of an important manufacturing undertaking arose not from a change in relation to the body corporate carrying on the undertaking, but quite simply through the sale of the undertaking—that is to say, the sale of the business. This might occur through the undertaking being sold by the body corporate to a foreign company. As the Bill is now drafted, we should be unable to prevent it. This is clearly wrong, and we seek to remedy this by providing that there is a change of control if a person not resident in the United Kingdom acquires the whole or part of an important manufacturing undertaking; or if a person carrying on such an undertaking ceases to be resident in the United Kingdom. This is achieved by paragraphs (b) and (a) respectively in the new subsection (2).

This covers the sale of the undertaking to a foreign person or foreign company. It does not, however, cover the sale of the undertaking to a British company that is controlled by a foreign company. Yet it would be an obvious loophole if the powers could be circumvented through the sale of the business to a company which, although incorporated in the United Kingdom and hence resident here, was controlled—perhaps 100 per cent. owned—from abroad. We therefore propose an Amendment to make it quite clear, through the addition of paragraph (c) to Clause 12(2), that this is covered.

The Amendments which we propose are important—and I should have asked, first of all, whether I could speak to Amendments Nos. 11, 12 and 13 together—in that they close loopholes which would detract from the main purpose of the Bill. They do not, however, introduce any new principles to the Bill. They restore effects which were in the Bill when it was introduced into another place, and which were accidentally removed by other Amendments in the other place. They preserve the essential purpose of these subsections, of stating clearly and exhaustively those circumstances which enable the powers to be used. My Lords, I beg to move.

Lord ELTON

My Lords, I am obliged to the noble Lord for his explanation, which was certainly needed, of the purposes behind this group of Amendments, closely followed by Amendments Nos. 14 to 19. I am grateful to him for making this exposition which, I hope, being on the record will be of assistance to others outside this Chamber who have similarly been somewhat in the dark as to what the final motive of this was.

I should like to register a mild protest at the manner in which this shoal of Amendments has arrived on our desks. I think that the noble Lord is familiar with the difficulties which this has posed of actual interpretation, because of the scissors and paste work. Later in the day his Department was kind enough to give us a draft of the clause, as amended. This was helpful. It might indeed have been the correct way to proceed from the beginning. With those thanks and observations, I shall conclude.

The Earl of BALFOUR

My Lords, I am once again sorry to be on my feet reading. I am somewhat concerned about Amendment No. 13, and I gather that these Amendments are being moved together. It says:

1. (b) "a person not resident in the United Kingdom acquires… part of the undertaking;
2. (c) a body corporate resident in the United Kingdom but controlled by a person not so resident acquires… part of the undertaking;"

I feel that if we had "a substantial part of the undertaking" this might be all right. But, so far as I can see, because it is just "part of the undertaking" the person might hold just a small part and allow for a change of control from the point of view of acquisition under the provisions of this Bill.

Lord LOVELL-DAVIS

My Lords, we are talking about change of control of a company. If the part was so small, this would not arise at all. It would have to be, by its very nature, substantial enough to affect the control of the undertaking, of the body corporate, so it could not in fact be small. No action would need to be taken.

Lord LOVELL-DAVIS

My Lords, I beg to move Amendment No. 12.

Amendment moved—

Page 11, line 4, after ("of") insert ("a relevant event. (2) In subsection (1) above "relevant event" means").—(Lord Lovell-Davis.)

Lord LOVELL-DAVIS

My Lords, I beg to move Amendment No. 13.

Amendment moved—

Page 11, line 5, at end insert— ("(a) the person carrying on the whole or part of the undertaking ceases to be resident in the United Kingdom; (b) a person not resident in the United Kingdom acquires the whole or part of the undertaking; (c) a body corporate resident in the United Kingdom but controlled by a person not so resident acquires the whole or part of the undertaking;").—(Lord Lovell-Davies.)

4.58 p.m.

Lord BESWICK moved Amendment No. 14: Page 11, line 8, leave out ("that body corporate") and insert ("a body corporate carrying on the whole or part of the undertaking").

The noble Lord said: My Lords, I wonder whether we can take Amendments Nos. 15, 16 and 17 with Amendment No. 14. These Amendments are consequential upon those which we have just agreed. In the earlier Amendments the words, "where the person carrying on an important manufacturing undertaking or part of an important manufacturing undertaking is a body corporate", now in lines 1 to 3 on page 11, were removed. This leaves the references to "that body corporate" in lines 9 and 13, and to "it" in lines 10 and 15, without antecedents. It is therefore necessary to spell out that the body corporate is one "carrying on the whole or part of the undertaking"; and that it refers to "such a body corporate". These are verbal Amendments, and do not change the meaning from that which we have just agreed. I beg to move.

Lord BESWICK

My Lords, I beg to move Amendment No. 15.

Amendment moved— Page 11, line 10, leave out ("it") and insert ("such a body").—(Lord Beswick.)

Lord BESWICK

My Lords, I beg to move Amendment No. 16.

Amendment moved— Page 11, line 13, leave out ("that body corporate") and insert ("a body corporate carrying on the whole or part of the undertaking").—(Lord Beswick.)

Lord BESWICK

My Lords, I beg to move Amendent No. 17.

Amendment moved— Page 11, line 15, leave out ("it") and insert ("such a body").—(Lord Beswick.)

Lord BESWICK moved Amendment No. 18: Page 11, line 18, leave out ("one body corporate is in control of another if it is") and insert ("a body corporate or individual").

The noble Lord said: My Lords, it might be for the convenience of the House if, with this Amendment, we took Amendment No. 19. Amendment No. 18 provides a wider definition of control, in that it extends the definition of control to the case when an individual is entitled to cast 30 per cent. or more of the votes of a body corporate. The Bill as it stood was confined to the case when a body corporate was entitled to cast 30 per cent. of votes. The extension to individuals is necessary to make quite clear the position in paragraph (c) of subsection 11(2), where the person not resident in the United Kingdom may be either a natural person—that is, an individual—or a body corporate. The Amendment therefore brings certainty of definition to this case.

Lord BESWICK

My Lords, this Amendment is consequential upon Amendment No. 18. I beg to move.

Amendment moved— Page 11, line 20, leave out ("the latter") and insert ("a body corporate is in control of that").—(Lord Berwick.)

Clause 13 [Power to make orders]:

Lord LOVELL-DAVIS moved Amendment No. 20:

Page 12, line 2, leave out from ("and") to ("that") in line 4, and insert— ("(a) prohibit").

The noble Lord said: My Lords, there is a slight printing error in the Amendment as it appears on the Marshalled List. In Amendment No. 20 the words to be inserted should read ("(i) prohibit") and in Amendment No. 21 the words to be inserted should start ("and (ii) prohibit"). This substitution of (i) for (a) and (ii) for (b) is necessary because subsection (1) already contains an (a) and a (b).

I will, with permission, speak to both Amendments Nos. 20 and 21. These Amendments seek to make a prohibition order simpler and more effective. As the Bill is at present drafted the Secretary of State is entitled to make an order to prohibit actions which "in his opinion" would constitute or lead to a change of control. It would clearly be unsatisfactory simply to make a prohibition order saying that anything that the Secretary of State thought led to a change of control was prohibited; to enable those affected to know what was prohibited, the order would have to list the things which he thought would have that effect. This has the considerable disadvantage that the order would have to be very long and spell out the specific actions prohibited, and its purpose could be defeated if the person concerned took an action clearly designed to achieve a change of control, or perhaps even achieving that change of control, but which was not so specified in the prohibition order. This could come about either because he took some action not foreseen by the Secretary of State; or because he took an action which, although very close to an action specified in the order, was sufficiently different to avoid the specific prohibition.

We wish to deal with this problem by enabling an order to be completely objective; if an order simply says, "I prohibit that change of control", it will allow the Secretary of State, if an action is taken to bring about a change of control, to stop that action without the specific action having been listed in the prohibition order. There will be no question here of the Secretary of State's opinion; the question whether an action did or did not bring about a change of control would here be one in the last resort for the courts. This would be in addition to the power of the Secretary of State, as before, to specify in his order particular actions which in his opinion would constitute or lead to a change of control, so that he could still specify particular actions which must not be taken. That power may be needed to deal with people acting in collusion, or through men of straw, where a change of control may be concealed behind some facade. The clause after amendment as we propose will be very similar to the powers in the Fair Trading Act 1973.

The Amendments proposed here will, I hope, appeal to the common sense of your Lordships' House. It would be wrong for the intentions of a prohibition order to be clearly and incontrovertibly breached simply because a specific action enabling this to happen had not been listed in the order. The Amendments are designed to make the order workable without widening the power and discretion of the Secretary of State in any way.

Lord ELTON

My Lords. I think that at this late stage we must take the noble Lord's word for it that the intention of this Amendment and consequently the uses to which the Amendment is put will simply be to enable the Secretary of State to make clear what the aims of the prohibition order are, and to prevent the evasion of those aims by the inadvertent omission of one possible route of avoiding that aim being taken; provided that is the only implication which can arise from it, we are satisfied.

Lord LOVELL-DAVIS

I beg to move Amendment No. 21, which is consequential upon Amendment No. 20.

Amendment moved—

Page 12, line 4, after ("control") insert ("and (b) prohibit or restrict the doing of things which in his opinion would constitute or lead to it;").—Lord Lovell-Davis.)

Lord BESWICK moved Amendment No. 22: Page 12, line 44, after ("which") insert (", at the time that the draft of the order is laid before Parliament under section 15(3) below,").

The noble Lord said: My Lords, this is another Amendment which is intended to remove doubt. As the Bill stands it is not clear whether the shares appearing to the Secretary of State to be involved in the change of control were those which so appeared when the order was laid in draft or when it was made. By necessity, of course, the order when laid would refer to the shares as they were identified on the date when it was laid. If, however, the order could vest shares which he owned only when the order was made, it would be open to the foreigner, through some marginal sale of shares, to alter his holding before the order was made, without in any way altering his control, and thus make the order invalid. Since an order cannot be amended, any such change would require the order to be withdrawn and a new one tabled. This process could be continued indefinitely and to avoid this we wish to specify that these are the shares involved when the order is laid. This is a question of removing doubt. It is more simple and I hope noble Lords opposite will have no difficulty in accepting it.

Lord BESWICK moved Amendment No. 23: Page 13, line 2, leave out ("under the law of the United Kingdom or of a part of") and insert ("in").

The noble Lord said: My Lords, with the leave of the House, I will speak at the same time to Amendments Nos. 24, 36 and 37. On Report we promised to bring forward an amendment to meet the point raised by the noble Earl, Lord Selkirk, about how to refer to the law under which a company is incorporated. These drafting Amendments do, I hope, take full account of the point he made so well on that occasion and I am grateful to him for that help.

Lord CAMPBELL of CROY

My Lords, I know that my noble and learned friend will appreciate that the Government undertook to make these Amendments. I am not learned in the law as he is but, as a fellow Scot, I am grateful to the noble Lord for having taken the trouble to put down these Amendments.

Lord BESWICK

My Lords, I beg to move formally Amendment No. 24.

Amendment moved— Page 13, line 7, leave out ("under the law of the United Kingdom or of a part of") and insert ("in").—(Lord Beswick.)

Clause 14 [Notices to extend vesting orders to other holdings]:

Lord LOVELL-DAVIS moved Amendment No. 25: Page 13, line 41, after ("capital") insert ("or rights").

The noble Lord said: My Lords, this is a simple drafting Amendment to ensure that those who have a prospective right to subscribe for share capital are covered in this subsection, as they are already in subsections 14(1) and (2).

Clause 15 [Parliamentary control of orders]:

Lord LOVELL-DAVIS moved Amendment No. 26:

Page 14, line 18, at end insert— (a) in a case such as is mentioned in paragraph (a) of section 13(2) above, after the end of a period of three months from the service of a notice under section 16(6) below of the Secretary of State's intention to lay the draft before Parliament;".

The noble Lord said: My Lords, on Report my noble friend Lord Melchett gave an undertaking that the Government would introduce an Amendment which would achieve the effect of an Amendment which had been moved by the noble Lord, Lord Drumalbyn. This was to provide that a vesting order could not be laid more than three months after the Secretary of State had given notice of his intention to lay such an order. This Amendment is intended to discharge that undertaking. The principle having been agreed on Report, I will not detain the House by describing it further.

Lord LOVELL-DAVIS

I beg to move Amendment No. 27.

Amendment moved— Page 14, line 20, leave out ("subsection (2) of section 13 above") and insert ("that subsection").—(Lord Lovell-Davis.)

The DEPUTY CHAIRMAN of COMMITTEES

I should inform your Lordships that Amendment No. 28 has been misprinted by the omission of the words "of that subsection" after "(c)"and before the word "exist".

5.10 p.m.

Lord BESWICK moved Amendment No. 28: Page 14, line 22, after ("order") insert ("unless such circumstances as are mentioned in paragraph (a) or (c) exist at the time when the draft of the order is laid before Parliament under subsection (3) above").

The noble Lord said: My Lords, as the noble Lord has told us there is a slight misprint here. I am grateful to the noble Lord, Lord Elton, for identifying it and I am again in his debt.

This Amendment has two aims. First, we wish to place beyond doubt the effect of the limitation on when a vesting order may be made after a previous prohibition order. As it stood, paragraph (a) of Clause 15(4) could be interpreted as meaning that once a prohibition order had been made in respect of a company, if a vesting order was not made within three months, no vesting order could thereafter be made in respect of that company. But it would clearly be wrong if, simply because a prohibition order had been made in respect of a bid for a company by foreigner A, we were on that account six months later powerless to act when it was acquired by foreigner B. We wish to make clear that the three months' time limit applies only to a vesting in relation to the prohibition order, and does not rule out a separate vesting order being made to prevent a threatened change of control, or to deal with a change of control that has already occurred. In terms of Clause 13(2), this particular time limit is confined to paragraph (b), and does not affect vesting orders made in respect of (a) and (c).

Secondly, we wish to ensure that if at any time a prohibition order is for some reason ineffective, so that a change of control takes place or is threatened, notwithstanding that a prohibition order is in force, then a vesting order can still be made. This is not, perhaps, a very likely case, but it could come about as the result of actions taken outside the jurisdiction of United Kingdom law, and it is a possibility which we should provide for. I beg to move.

Clause 16 [Contents of vesting orders]:

Lord LOVELL-DAVIS moved Amendment No. 29:

Page 15, line 11, at end insert— ("(1A) A vesting order which provides for the vesting of assets employed in an undertaking may prohibit or set aside any transfer of assets so employed or of any right in respect of such assets.").

The noble Lord said: My Lords, with this Amendment I should like to speak to Amendments Nos. 30, 31, 32 and 33. These Amendments close a potential loophole in the safeguarding provisions. As the Bill stands, Clause 16(2) allows a vesting order to safeguard capital or assets "which will vest" under the order. But if assets were disposed of after the intention to make a vesting order had been announced but before the order came into force, they would no longer be employed in the undertaking. Consequently, they would not vest and could not be made subject to any safeguarding provisions. To prevent this occurring, the new subsection proposed will enable transfers of assets which are covered by a vesting order, and which take place after notice has been given of the intention to make the vesting order, to be set aside. This is on the same basis as the existing provision in Clause 16(6), and introduces no new principle. It merely removes an unintended disparity between the safeguarding powers which apply when a vesting order vests assets, and the powers which apply when a vesting order vests share capital. I beg to move.

Lord LOVELL-DAVIS

My Lords, I beg to move Amendments Nos. 30, 31 and 32 en bloc.

Amendments moved— Page 15, line 15, leave out ("or assets") Page 15, line 24, at end insert ("a transfer of") Page 15, line 25, leave out ("(2)(a)") and insert ("(1A)").—(Lord Lovell-Davis.)

Lord BESWICK

My Lords, I beg to move Amendment No. 33.

Amendment moved— Page 15, line 34, leave out ("subsection (2) above refers") and insert ("this section applies").—(Lord Beswick.)

Lord LOVELL-DAVIS moved Amendment No. 34: Page 15, line 36, leave out ("given notice to") and insert ("served notice on").

The noble Lord said: My Lords, with permission I shall speak to Amendment No. 35 with this Amendment. These are drafting Amendments, to refer here as elsewhere to the "serving" of notices rather than the "giving" of notices. This brings these references into line with the rest of the Bill, and particularly with Clause 35 which defines how notices may be served. I beg to move.

Lord LOVELL-DAVIS

My Lords, I beg to move Amendment No. 35.

Amendment moved— Page 15, line 47, leave out ("given") and insert ("served").—(Lord Lovell-Davis.)

Clause 18 [Territorial scope of orders]:

Lord BESWICK

My Lords, I beg to move Amendments Nos. 36 and 37. These Amendments are consequential on Amendments Nos. 23 and 24.

Amendment moved— Page 16, line 17, leave out ("under the law of the United Kingdom or of a part of") and insert ("in") Page 16, line 28, leave out ("under the law of the United Kingdom or of a part of") and insert ("in").—(Lord Beswick.)

Clause 20 [Arbitration of disputes relating to vesting and compensation orders]:

Lord BESWICK moved Amendment No. 38: Page 17, line 30, leave out ("any dispute which arises in connection with") and insert ("a dispute which arises out of").

The noble Lord said: My Lords, with this Amendment, I shall speak to Amendments Nos. 42 and 43. These Amendments are designed to clarify the relationship between the courts and the arbitration tribunal provided for in Schedule 3. As the Bill now stands, any dispute arising in connection with a vesting or compensation order must go to the arbitration tribunal. It is possible that this could be construed as meaning that the question of whether an order was ultra vires would have to be considered by the tribunal, and could not be considered by the courts. We think it quite wrong to prevent the courts dealing with the vires of an order, and this Amendment is designed to ensure that this unintended construction is not put on the Bill. I beg to move.

Lord LOVELL-DAVIS moved Amendment No. 39: Page 17, line 33, after ("corporate") insert ("the whole or part of")

The noble Lord said: My Lords, this Amendment provides that a dispute may be considered by the arbitration tribunal if a company, the whole or part of whose shares had been vested, is a party to it rather than this being confined to a company the whole of whose share capital had been vested. This is a simple consequential Amendment. As a matter of logic, the arbitration tribunal should be able to consider a dispute if a body corporate only part of whose share capital is being vested is a party to it. As the Bill is drafted, this would not be possible unless the whole of its share capital is vested. This is to be widened by the Amendment. I beg to move.

Lord BESWICK

I beg to move Amendment No. 40. This is a misprint which should read "either of them" not "either or them".

Amendment moved— Page 17, line 34, leave out first ("or") and insert ("of").—(Lord Beswick.)

Lord BESWICK moved Amendment No. 41:

Page 17, line 34, at end insert— ("(a) if the provisions of the order require it to be submitted to arbitration; or (b) if one of the parties wishes it to be so submitted;").

The noble Lord said: My Lords, with this Amendment we are to take Amendment No. 62. This brings up the possibility that all those who are parties to a dispute arising out of an order would prefer to see it settled in the courts—which may be quicker and cheaper—rather than by the arbitration tribunal. The courts are, of course, already in existence whereas a tribunal might need to be specially constituted. As the Bill stands, it is not possible for a matter to be dealt with by the courts: all disputes must go to the arbitration tribunal. This we wish to amend, to ensure that there is automatic recourse to the arbitration tribunal if any party to a dispute arising out of the order wishes to take the question to arbitration, but leaving open the possibility of resolving the question in the courts. This in no way prevents a party to a dispute taking the matter to the arbitration tribunal, but it allows the parties—if all are unanimous—to resolve the matter in the courts. I beg to move.

Lord BESWICK

My Lords, I beg to move Amendments Nos. 42 and 43 together. I spoke to these Amendments with Amendment No. 38.

Amendments moved— Page 17, line 35, leave out ("in connection with") and insert ("out of") Page 17, line 37, leave out ("in connection with") and insert ("out of").—(Lord Beswick.)

Clause 22 [Extension of powers to give selective financial assistance under Industry Act 1972]:

Lord ELTON moved Amendment No. 44: Leave out Clause 22 and insert the following new Clause:

Extension of powers to give selective financial assistance under Industry Act 1972

"22. The provisions of Part I of Schedule (Amendments to Part II of Industry Act 1972) to this Act shall be made to the Industry Act 1972 and accordingly Part II of that Act shall have effect as set out in Part II of the Schedule."

The noble Lord said: My Lords, with this Amendment I should like to speak to Amendment No. 63. These are technical Amendments whose function is to deal with Clause 22. I should say, since I appear to be carrying Clause 22 with loving and careful hands from one end of the Bill to the other, that I am not at all well disposed towards what it does and would not wish to be regarded as having fathered it in any way. That aside, it seemed to me and my colleagues that it would be to the public interest if it were presented in such a way that it could be understood by the layman without too much recourse to legal advice. Therefore, with considerable help—for which I am grateful—from the Public Bill Office, I resorted to the device of a Keeling schedule which repeats in Clause 63 the substance of the sections in the 1972 Act as they will appear after they have been amended, as well as putting down the Amendments as they are printed at present in the body of Clause 22. It is a simple operation in appearance, but it is a delicate operation. I hope that it will be to the convenience of the users of the Bill, as well as to the House, that this Amendment should be carried.

Lord BESWICK

My Lords, I certainly do not intend to saddle the noble Lord with the responsibility for the Bill or for this clause of the Bill. But I commend his action in making its wording clearer, and I am glad to accept the Amendment.

Lord ELTON

My Lords, it would be greatly amiss not to acknowledge my personal debt to the noble Lord, not only for his accession to that point of view, but also for pointing out two verbal slips in the drafting of the Amendment.

Clause 27 [Disclosure of information by Government]:

Lord LOVELL-DAVIS

My Lords, I beg to move this Amendment, which is simply a drafting Amendment, in order to refer to "the" Treasury. God does not need the definite article, but for the time being the Treasury does.

Amendment moved— Page 21, line 4, after ("and") insert ("the").—(Lord Lovell-Davis.)

Clause 28 [Persons to whom duty to disclose information applies]:

5.22 p.m.

Lord CAMPBELL of CROY moved Amendment No. 46:

Page 22, line 6, at end insert: (""employee representative" means a person who is employed by the company or companies concerned and who is elected to represent employees, or any group or class of employees, of the company or companies concerned.").

The noble Lord said: My Lords, I think that with this Amendment it would be convenient to consider Amendment No. 69 which is the consequential Amendment to the long Title of the Bill. The House has had opportunities for full discussion at the Committee and Report stages of the Bill of the various possibilities at this point of the Bill, and this Amendment is tabled after having taken fully into account all that was said on those occasions from both sides of the House. The Amendment completes a group of amendments which the House has already made to the Bill. I commend the Amendment as the most suitable description for the purposes of this Part of the Bill; that is, the wording at the beginning of the subsection.

The Government set themselves a problem, which all of us who have been considering this Part of the Bill have also had, when they embarked on a system of compulsory disclosure. It raises the question of indicating the categories of person who can be the representatives of the workforce of a company. There are many different situations in the circumstances of different companies. Where information is being satisfactorily disclosed now under voluntary arrangements, companies use the system thought to be best and most suitable in each case.

Let us consider the Government's original proposal which was relevant to trade union representatives. That raised at least two objections. I remind your Lordships that it would not necessarily have meant employees of the company. That was the first objection. The second objection was that it would have been unsatisfactory when companies had a large proportion of their workforce—or even a majority—who were not members of trade unions; and there are tens of thousands of employees in manufacturing industry who are not members of unions.

We do not need to go into that again, but I wish to remind the House of the reasons behind our arguments in the previous debates. We have to cater for the different situations in various companies. Of course, we could have put forward another kind of Amendment to cover every possibility. That would have been a very long Amendment. It would not have been easy even then to be sure of covering every situation which exists in every company; some have works councils while others do not, and so on. But I also submit that it is not necessary to try to cover every possibility for this purpose. Certainly the Government did not undertake to do that in their original version; nor have we. If the original wording in the Bill as the Government presented it had been retained, it would not then have been clear which trade union representatives were to be designated under this Part of the Bill; for example, in some large companies there are many unions—l5 or more—whereas there is only a handful of representatives presumably expected to act in this role under this Part of the Bill. Therefore the company had the task of deciding who were the relevant ones, to use the original words. Under this Amendment it will still require common sense and reasonableness in the light of the situation of each company, and so what was recognised in the original version of the Bill also applies here.

There is a possibility, which those of us who have been concerned about getting right the wording in this Part of the Bill have recognised, of an extremist group—anarchists or whatever you like—deciding to get together inside a company and to elect a representative. I believe that that situation existed anyway. Unfortunately, extremists can do the same within trade unions as well as outside trade unions. Under the Bill as it stands at present it is still a matter for the company concerned to select the representatives for the purposes of this Part of the Bill.

The Amendment has been left to this stage, the Third Reading, in order to gain the benefit of all the previous debates on this subject, and I hope that the noble Lord, Lord Beswick, will recognise this. There is no intention of inconveniencing the Government by leaving this Amendment to this stage. We simply wanted to take account of the views which have been put on all sides of the House, and I and my noble friends, as well as the Liberal Party, now put forward this as being what we believe to be the best Amendment for this Part of the Bill, to complete the group of Amendments that have already been passed. We think that it is necessary guidance, that it should be in the Bill, and that it conforms with the Amendments already made. I beg to move.

Lord WIGODER

My Lords, the issue as to whether disclosure should be to employee representatives or trade union representatives has been debated many times in your Lordships' House, and it is quite unnecessary to go over the ground again at this stage. There was a substantial body of opinion in the House that in this Bill the appropriate term was "employee representative" and my noble friends on these Benches supported that view. This Amendment is really the interpretation clause for that particular term "employee representative", and on behalf of my noble friends I wish to commend the Amendment to the House.

5.26 p.m.

Lord BESWICK

My Lords, as the noble Lord, Lord Wigoder, said, we have had a good many discussions on this point. I believe that noble Lords opposite have been wrong in the Amendments they have made to the Bill hitherto. I say that although I recognise fully the kind of doubts and anxieties they have about the wording which the Government had in the Bill. But if anything emphasises the fact that noble Lords opposite are wrong, it is this Amendment. It discloses the weakness of the case they have hitherto put forward. I seriously ask them to think again as to whether they want a situation in which employees of a company, who freely of their own decision have a professional to represent them—a trade unionist, a trade union official—and to put forward their case, find in this Bill a provision which would make it impossible for this man to represent them. Surely that is entirely wrong?

I put it to the noble Lord, Lord Wigoder, that that would be as illogical as to have an Act of Parliament which stated that no citizen of this country shall be represented in the courts by a member of the legal profession. The trade union official stands in the same relation to the employees as does the lawyer to his client—

Lord WIGODER

My Lords, I am sure the noble Lord will agree that there is nothing in this definition clause which prevents a trade union official from being the employee representative?

Lord BESWICK

The Amendment says that an: employee representative' means a person who is employed by the company or companies concerned …", But many trade union officials—and indeed in larger companies almost all trade union officials—are not employees of the companies concerned. If there were a serious case which the employees wished to have considered, and where they had hitherto relied upon a trade union official, this provision would make it impossible for them to call upon him. I put it quite seriously to the noble Lord that it would be a mistake to have this type of definition in the Bill. I say, as I have said before, that, having sympathy for the general approach that noble Lords opposite have displayed on some of these matters, it is not in their interest to have this kind of Amendment made to the Bill.

On the other point, the other Lord has already indicated that this is a weakness in the Amendment. It would be possible for any group of persons, whether responsible or irresponsible, to demand the right to have the information given to them. Any group or class of employees—not a trade union group; not a registered trade unionist responsible over a period of years who has had a position in the company; not such people but some other group—could demand that they be so treated. I would say, looking at it from the point of view of the management of a company, that if they had to conform to the law as the noble Lords opposite intend to amend it, the managers would be in considerable difficulty. I will not say I beg of noble Lords opposite because I am sure that another place would put this right, but I suggest that this is not an Amendment which they should press.

Lord DRUMALBYN

My Lords, perhaps I could comment on the noble Lord's two points. First, so far as professional trade union representation is concerned, one has to bear in mind that one is dealing with major manufacturing undertakings in this case. This is what Clause 28 is all about. It says: … including the outlook for the major companies in that sector, that Minister, if it appears to him that one of the following conditions is satisfied … may serve a preliminary notice on the company or companies concerned". In the major companies it is to be expected that the elected trade union representatives would have considerable experience; and, indeed, the elected representatives of other employees would also have experience.

My Lords, I gather from the further observations made by the noble Lord that he is under some misapprehension about this. We are not saying that trade union representatives should not be chosen by the employer as among the people to whom to give the information: and let the noble Lord bear in mind that, as he will see if he reads the Bill carefully, whether or not it is intended, it is the employer who chooses the people to whom he is going to give the information, and he passes that to the Secretary of State. Obviously, in a closed shop he has no option: quite obviously, he chooses the trade union representatives in the closed shop. Where there are a number of trade union representatives, then I should think he will choose those from the number of trade unions involved; if there is a works council as well he will probably choose them, too; or if there is such a variety that the works council is a better instrument to use, he will choose representatives of the works council. But the whole glory of this is the flexibility, the ability to adjust to the needs and circumstances of the particular company.

This is what we think participation and democracy is about. It is about variety, not about straitjackets and particular formulae devised, prescribed and prefabricated by a Government. This is what we are concerned with here; and I really think there is nothing here that would force an employer to choose some militant minority group. As the noble Lord said, they could demand representation, but I should be very surprised indeed if they got it, if they were chosen as employee representatives in those circumstances. Obviously, you are not going to have representatives of any conceivable kind of group. You could have groups of all kinds within a company for different purposes. What we are concerned with are the groups which are in contact collectively with the management and are those which are negotiating with the management those which are recognised by the management in some form or other, as the noble Lord, Lord Houghton of Sowerby, has said before. Whatever their status—whether they are staff associations, whether they are works councils, whether they are trade unions or whatever—everybody can be represented with the purpose that all employees in that organisation are represented in some way or other. This is the really important thing, that they should all be represented, and not just those who happen to belong to trade unions.

Lord CAMPBELL of CROY

My Lords, I am sorry that the noble Lord, Lord Beswick, has not greeted this Amendment. Though he did not like the other Amendments where "employee representatives" were inserted in the Bill, I had hoped that he would be able to congratulate us on having found the right formula at this point in the Bill. I think the objection he has raised is that there could be some trade unionists who might be the representatives but who, because they are not employed by the manufacturing company in question, would not be eligible for this operation. But in those circumstances, surely where a company had a large part or a considerable part of its workforce as members of trade unions, there would also be trade unionists who were employees.

This is not information for collective bargaining. I think it is important that I should re-emphasise this. The purposes of the Bill are to provide information in the manufacturing area involving certain companies, and it is very much an individual company matter. On Monday I was supporting an Amendment to the Employment Protection Bill in the section of that Bill on the provision of information for collective bargaining purposes. That is another Bill before this House and there is a whole section of it dealing with the provision of information for collective bargaining purposes where it is quite appropriate for trade union representatives to be acting in the normal way. But in this Bill, as we see it, it is a matter for each individual company. The information is being provided to the Government and then the Government decide, with the help of an appeals committee, what information should also go to the employee representatives of that company. It is not to be confused with the provision of information for collective bargaining purposes, which of course is where trade union representatives would come in on a wider scale.

As my noble friend, Lord Drumalbyn has pointed out, in some cases this enables very large groups, perhaps the majority of employees in a company who are not members of a union, to be represented. In any case, as the Bill was originally drafted—because this has not been changed—in line 24 on page 22 of the Bill, the choice of the employee representatives is with the employer. The company has to decide, under the original version of the Bill, on the relevant trade union representatives. As I indicated earlier, if a very large company has 20 trade unions who cover membership of the employees, that could be quite a difficult choice. If there were tens of thousands of employees and there were only about a dozen people in one union, presumably that would not be a relevant trade union representative. So the choice still lies with the employer, and as my noble friend Lord Drumalbyn pointed out, the employer is most unlikely to choose the representative of a small group which might be formed in the circumstances mentioned by the noble Lord and which represented some extremist view. But I must repeat that that danger would have applied also to the original trade union representation because, unfortunately, we know only too well that there are some trade union leaders who are Communists and whose declared aims are to destroy the structure of what they call the capitalist system that is to say, private industry. So one could as probably get a representative of a very small minority whose interests were not the same as the interests of the company within the trade union system as outside it.

I recognise that the noble Lord has pointed out that this could mean that a trade unionist who was not employed by the company would not be included, but we do not believe that for the purposes of this Bill that matters. He is involved in other things—collective bargaining, and so on. This formula gives a much wider representation and it enables other employees who are not members of a union also to have representation in the very different circumstances which one finds in different companies throughout the country. I hope the Government will accept this, even though I recognise that it does not fit in with the general proposals which they put before us at the beginning.

Lord BESWICK

My Lords, if I may say so, I was appalled at the noble Lord's attitude in certain parts of his speech. When he said that this is not a matter for negotiating pay and conditions, and therefore it does not concern the trade unionists, that showed an attitude of mind—

Lord CAMPBELL of CROY

My Lords, the noble Lord has misunderstood me. I did not say that it did not concern the trade unionists, but that the information here was of concern within the company. The Bill that I was speaking about on Monday—I do not know whether the noble Lord was here then when I spoke at some length on the Employment Protection Bill—is to deal with information for collective bargaining. The wider representation of the unions, not necessarily restricted to an individual manufacturing company, would be relevant where it would not be relevant here.

Lord BESWICK

My Lords, if the noble Lord reads the Report of what he has said, I think he will find that I did not misrepresent him. He said that this is not concerned with collective bargaining, and therefore we need not bring the full-time professional union official into it. That is the case that he has been making: because this has nothing to do with pay and conditions of service. But this is contrary—and here I am ranging widely—to the whole of the thinking over recent years. Surely noble Lords opposite want to get trade union officials thinking of something broader than simply pay and conditions of service. What a state of affairs we should be in at the present time if Mr. Jack Jones had concerned himself only with pay and conditions of service. Think of the contribution now being made in various bodies by trade union officials, because they are looking rather more widely than hitherto, rather more widely than pay and conditions of service.

I read—and I ask noble Lords to look at it—the document which the Transport and General Workers' Union circulated about a month ago, when they said that it is no longer enough to think about pay and conditions of service, and that they have to think about a fair society. They are trying to educate their people to consider social and national considerations as a whole. Noble Lords should welcome this, instead of saying that because it does not affect negotiating matters, they need not be brought in. Let us look at what the Bill says. It says: … which is needed to form or to further national economic policies, or needed for consultations between Government, employers or workers on the outlook for a particular sector of manufacturing industry, …". These are broad considerations. These are matters on which the trade union officials should be consulted. I think that the noble Lord is going backwards if he is trying to exclude them from matters of this sort.

He mentioned—and allowed himself to expose fears which he really ought to keep hidden a little more—that some of the trade union officials may be Communists. Of course they may; but I

know of far more cases where the trade union official is not a Communist, and where there have been groups of Communists in the company concerned which the trade union official has done his utmost to try to restrain. Let us not think that because a trade unionist is an official and full-time member, he is not a responsible person. In my experience, they are among some of the most responsible people in the community. I think it would be wrong to legislate for their exclusion. I hope that the House will reject this Amendment.

On Question, Whether the said Amendment (No. 46) shall be agreed to?

Their Lordships divided: Contents, 84; Not-Contents, 48.

CONTENTS
Aberdare, L.	Emmet of Amberley, B.	Northchurch, B.
Alexander of Tunis, E.	Erskine of Rerrick, L.	Nugent of Guildford, L.
Alport, L.	Falkland, V.	Pike, B.
Amherst of Hackney, L.	Ferrers, E.	Rankeillour, L.
Amulree, L.	Glasgow, E.	Rhyl, L.
Armstrong, L.	Goschen, V.	Robson of Kiddington, B.
Auckland, L.	Grenfell, L.	Rockley, L.
Balfour, E.	Gridley, L.	St. Aldwyn, E.
Boothby, L.	Grimston of Westbury, L.	St. Davids, V.
Byers, L.	Halisham of Saint Marylebone, L.	Salisbury, M.
Caccia, L.		Sandford, L.
Campbell of Croy, L.	Halsbury, E.	Sandys, L.
Carrington, L.	Harvington, L.	Seear, B.
Cathcart, E.	Henley, L.	Selkirk, E.
Clifford of Chudleigh, L.	Hylton-Foster, B.	Somers, L.
Clitheroe, L.	Kimberley, E.	Stanley of Alderley, L.
Colwyn, L.	Lauderdale, E.	Strathspey, L.
Cork and Orrery, E.	Lindsey and Abingdon, E.	Sudeley, L.
Cottesloe, L.	Long, V.	Terrington, L.
Craigton, L.	Loudoun, C.	Trefgarne, L.
Cullen of Ashbourne, L.	Macleod of Borve, B.	Vickers, B.
Daventry, V.	Mancroft, L.	Vivian, L.
Davidson, V.	Mansfield, E.	Wakefield of Kendal, L.
Denham, L. [Teller.]	Merrivale, L.	Ward of North Tyneside, B
Digby, L.	Meston, L.	Wigoder, L.
Drumalbyn, L.	Monck, V.	Windlesham, L.
Eccles, V.	Mowbray and Stourton, L. [Teller.]	Wise, L.
Elles, B.		Young, B.
Elton, L.	Newall, L.
NOT-CONTENTS
	Elwyn-Jones, L. (L. Chancellor.)	Lyons of Brighton, L.
Arwyn, L.	Evans of Hungershall, L.	McLeavy, L.
Aylestone, L.	Feversham, L.	Mais, L.
Beswick, L.	Gaitskell, B.	Melchett, L.
Birk, B.	Greenwood of Rossendale, L.	Pannell, L.
Brockway, L.	Hale, L.	Phillips, B.
Burton of Coventry, B.	Hall, V.	Raglan, L.
Champion, L.	Harris of Greenwich, L.	Sainsbury, L.
Chorley, L.	Hough ton of Sowerby, L.	Segal, L.
Colison, L.	Jacques, L. [Teller.]	Shepherd, L. (L. Privy Seal.)
Cooper of Stockton Heath, L.	Kirkhill, L.	Shinwell, L.
Crook, L.	Leatherland, L.	Stedman, B.
Crowther-Hunt, L.	Llewelyn-Davies of Hastoe, B.	Stewart of Alvechurch, B.
Delacourt-Smith of Alteryn, B.	Lovell-Davis, L.	Stow Hill, L.
Douglas of Barloch, L.
Strabolgi, L. [Teller.]	Wells-Pestell, L.	Winterbottom, L.
Wallace of Coslany, L.	Willis, L.	Wynne-Jones, L.

On Question, Amendment agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.

5.52 p.m.

Lord CAMPBELL of CROY moved Amendment No. 47:

Page 22, line 32, at end insert— ("( ) A Minister shall not serve such a preliminary notice unless it appears to him that the company or companies concerned will not voluntarily furnish the information to him and to employee representatives.").

The noble Lord said: My Lords, I have put down this Amendment because we expected the Government to have given further thought to this point and to have put down an Amendment or Amendments themselves to simplify the procedure in this part of the Bill on the disclosure of information by compulsion. If one looks at Part IV of the Bill, a company could be excused if they were to consider that it was unduly complicated. They could well conclude, as we do, that there are more stages, and more action required at the various stages, than are really necessary. I have raised this matter on the Committee and Report stages and have been in touch with the noble Lord, Lord Beswick. I accept his reply that the Government have looked at this again and indicated that they do not want to make changes or try to shorten or streamline the procedure. I must make it clear we still think it is more complicated than necessary and that more action is necessitated than is required. More hoops than are needed have to be jumped through at various stages.

Surely the procedure should not be started unless it is clear that a company are not prepared to produce the information voluntarily. The noble Lord, Lord Beswick, said at an earlier stage that it was the Government's intention not to engage this machinery in the Bill unless the Minister had already satisfied himself that a company were not prepared to provide the information voluntarily. We cannot understand why this should not be in the Bill at this point. It is provided in the Bill at the next stage. If your Lordships turn to page 23 of the Bill, you will see the same wording as in my Amendment. That is at the stage where a Minister is going to make an order. It says: A Minister shall not make such an order unless it appears to him that the company or companies concerned will not voluntarily furnish the information …". At the earlier stage of serving a preliminary notice, the names of the companies are to be submitted to Parliament. It is not as if it is some early private note to a company. This is engaging the machinery and providing the names of companies to Parliament. It could well be that the appearance of a company's name on a list before this House and in another place could give an impression that the company was laggard or backsliding in the provision of information, or indeed they could be regarded as transgressors—as having failed to provide the information—unless it is clearly written into the Bill that the Minister is of the opinion that they are not willing to provide it voluntarily.

As I said, the noble Lord, Lord Beswick, indicated this was the way the Government intended to operate. I should like to have his assurance on that and, if so, we cannot think why this should not be written into the Bill so that it is perfectly clear. When a company's name is submitted to Parliament, everybody will know, including those outside Parliament who are following these things, that the Minister has already asked the company to provide the information and, at the first reaction, the company are not prepared to give it. I hope that the Government will accept this Amendment. I beg to move.

5.56 p.m.

Lord BESWICK

My Lords, I was asked whether I would confirm that it is the intention that this information disclosure should be a voluntary arrangement. As I have said previously, and I say again, we believe there should, and will in the overwhelming majority of cases, be a voluntary arrangement. Undoubtedly that is the best way of getting the necessary confidence and cooperation in any company. The noble Lord asked why we did not therefore put it in the Bill again in the form of words he has selected. The assurance I have repeated—which has been given in the other House as well—is incorporated in the Bill. May I draw your Lordships' attention to paragraph (b) of the definition of a preliminary notice on page 22 of the Bill. This establishes that an order will be made only, if the Minister is not satisfied that information … will be given voluntarily both to him and to employee representatives". I would also draw your Lordships' attention to subsection (6) of Clause 28, which firmly and explicitly states that no order may he made unless it appears to the Minister that, the company or companies concerned will not voluntarily furnish the information to him and to employee representatives".

Lord CAMPBELL of CROY

Would the noble Lord give way? That was the part I quoted. It is because it is written in the Bill at that stage that I cannot understand why it is not also included in the earlier stage, when the preliminary notice is to be given and the names of the companies submitted to Parliament.

Lord BESWICK

That is because I am suggesting it is not necessary. It is a voluntary arrangement and these powers are not invoked unless it is seen that the voluntary arrangements are inadequate.

The question raised by the Amendment is therefore not whether the power to require information by order will be used when voluntary arrangements are adequate: the Bill already rules this out. It is rather the narrower question—and this is what the noble Lord is getting at—of whether a further provision is necessary, to prevent a preliminary notice being issued if voluntary arrangements would be adequate. But why would a Minister make a preliminary notice in circumstances where there could be no question of an order being made? It would be an absurd and pointless exercise, leading to and achieving nothing. I therefore believe that this Amendment is simply unnecessary, since the real point—that the power to require information by orders should not extend to occasions when voluntary arrangements are acceptable—has already been fully and explicitly met in the Bill.

Lord CAMPBELL of CROY

I am afraid that the noble Lord, Lord Beswick, has not fully understood the point of my Amendment. This Bill has been spread over weeks, indeed months, and I do not know whether he remembers that at an earlier stage he stated categorically that the preliminary notice would not be served until a Minister had satisfied himself that a company was not prepared to disclose the information voluntarily. The part which he and I have quoted from the Bill is from a later stage, where the Minister does not make an order unless he has so satisfied himself. What I am saying is that the Minister also gave the same undertaking—it is recorded in Hansard—concerning the preliminary notice. Having been given that undertaking, I was suggesting that this ought to have been in the Bill so that it is clear to everybody that what applies at the top of page 23 in subsection (6) also applies, as the noble Lord the Minister has said it would, to the preliminary notice which is served earlier.

Lord BESWICK

My Lords, I am sorry to interrupt; and I do so only in order to ask a question. Why should a preliminary notice be given at all if it is quite obvious that the voluntary arrangements are working?

Lord CAMPBELL of CROY

My Lords, because we think the Government should have put to a company a request for certain information. I must remind him again—I do not want to go over ground that we covered during the last debate and resume the small controversy we had on that occasion—that it is the Government in the first place who are asking for information, for economic reasons and not for the purposes of collective bargaining. It is the Government who ask the company for information in the first place, and then, later, the question of the disclosure of that information to the unions is considered. In the meantime, it is possible that the company is carrying out very satisfactorily the ordinary communication of information to its employees, but because one of the purposes of this Bill is to obtain information for certain national economic reasons, the Government will ask a company to provide a certain item of information. We hope that in most circumstances the company would say "Yes", because it would be the kind of information which the Government would expect to receive and which the company ought to give; but the company, knowing that that information may also become public later if passed to union representatives or employee representatives, might disagree. At that stage the Government serve a preliminary notice.

On a previous occasion—which I fear the noble Lord may have forgotten, quite understandably, because there have been so many Bills before this House spread over so many weeks—the noble Lord stated that the preliminary notice would not be served unless the Minister had asked for the information and the company had made it clear they were not prepared to supply it. We accepted that if in fact the company did not refuse but just took a long time to supply the information, that would be a reasonable case for a preliminary notice; but we also thought that the wording—and it was not wording which I thought up: it was wording from the Bill at a later stage—should be put in here because it simply carries out the undertaking and the explanation of the Bill which the noble Lord, Lord Beswick, gave at an earlier stage.

I realise that at this stage of the Bill, by leave of the House, I can speak twice, but no more, so that I am quite ready to give way to the noble Lord the Minister if there is anything more that he wishes to add on this. But it will be important for it to be understood, when this Bill comes into operation, that the preliminary notice, according to what the Minister said at an earlier stage, is served only when the Minister has satisfied himself that he has asked for certain information, which at that stage is not going to the trade unions but meanwhile the supply of information within the company to employees is being carried out under other arrangements. either voluntary ones or in connection with requirements which are already enacted or which will be required under the Employment Protection Bill, which covers the question of information needed for collective bargaining purposes. So we could have the situation where a company has a very satisfactory system of supplying information to its employees, yet when the Government ask for some major piece of information connected with economic planning the company fails to respond favourably. Only then is the preliminary notice to be served and the name of the company submitted to Parliament.

That is what the Minister said on an earlier occasion, and this Amendment would have the effect of carrying it out. I do not know whether the Minister wishes to say anything more?—I am sorry, but it appears that he is not going to say anything more at this stage. I certainly do not intend to press this Amendment, but I would tell him that it is exceedingly important that companies should know that the Minister has said at an earlier stage that a preliminary notice would not be served until the Minister was satisfied that the company was not going to supply the information voluntarily. Under this Bill, that has nothing to do with the system of supplying information within the company, which operation may be going on quite satisfactorily on other subjects.

Lord BESWICK

My Lords, I certainly confirm that undertaking, but there is really nothing more I can add to it.

Lord CAMPBELL of CROY

My Lords, in that case I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Clause 29 [Duty to give information to Minister]:

Lord LOVELL-DAVIS moved Amendments Nos. 48 and 49: Page 24, line 5, leave out ("or") Page 24, line 8, leave out ("under paragraph (c) above is to be construed") and insert ("which is made, wholly or partly, in relation to a future specified date or a future specified period, is to be construed, to the extent that it relates to that date or that period,").

The noble Lord said: My Lords, I think it will be for the convenience of the House if I take both Amendments together. The purpose of these Amendments is quite straightforward. We wish to make it clear that we may require information under one, or two, or all three of the descriptions given in paragraphs (a), (b) and (c) of subsection 29(3). As it was drafted, the word "or" might have been read as suggesting these were alternatives, and that would clearly be wrong. We wish to be able to ask for information about both the present and the future, not just the present or the future.

We therefore propose two Amendments: the first is simply to delete "or", and thus remove the suggestion that paragraphs (a), (b) and (c) are alternatives. The second Amendment, although more complex in its drafting, is designed to remove the suggestion that a requirement for information would necessarily fall under one, and only one, head. The phrases, "wholly or partly", and, "to the extent that it relates" are intended to make it quite clear that information may be required about the future only, or that information about the future may be only a part of the information required. I beg to move.

Clause 30 [Information for trade unions]:

6.8 p.m.

Lord BESWICK moved Amendments Nos. 50 and 51: Page 24, line 27, leave out from ("companies") to second ("the") in line 29. Page 24, line 32, at end insert ("and any notice served under this subsection shall specify a reasonable period, which shall not be less than 28 days, as the period within which references may be required under section 31(1) below.").

The noble Lord said: My Lords, Amendments Nos. 50 and 51 hang together, and it may be for the convenience of the House if I speak to then) together. The Amendments are designed to clarify a confusion about timetables which exists in Clauses 30 and 31. As the Bill reads at present, there is some confusion between the time limit provisionally set for the provision of information by Clause 30(1)(a), the time within which a reference can be required to the independent committee under 31(1), and the time limit definitively set for the provision of information. That is the kind of thing that could arise as the Bill is at present drafted.

The notice under Clause 30(1)(a) would set a time limit within which information was provisionally required, and Clause 31(1) would make it clear that at any time up to the end of that period a reference may be required to the independent committee. Clause 31(10) and (11) envisage that once the time for requiring reference to the committee is past, a new time limit will be established within which the information must be furnished. The Amendments remove this confusion and set up a clear timetable. The notice under Clause 30(1)(a) will inform the company that they arc provisionally required to provide the information to employee representatives and will tell the company how long they have to exercise their right to require a reference to the committee under Clause 31(1). If this time expires without a reference being required, under Clause 31(10) and (11) the Minister will tell them that the provisional requirement has become final, and will set the date by which it has to be carried out.

I said that I would clarify the confusion. I am not absolutely sure that I have succeeded immediately, but I think that if noble Lords read my words they will see that what I have said does set things right.

Lord CAMPBELL of CROY

My Lords, having been able to look beforehand at the changes the noble Lord is proposing I would say that this is a clarification which is helpful. As I indicated in my earlier remarks, we were hoping that there would be even more clarification and simplification, but this certainly is helpful. May I at this point indicate something which we were not able to do by Amendment but which requires a change before the Bill is reprinted to go to another place. The marginal rubric does of course need to be changed in view of both Clause 30, which we are considering now, and the following clause: it is no longer "trade unions" but "employee representatives". I hope that will be noted so that that change, which cannot be dealt with by Amendment, is carried out as a further clarification before the Bill leaves us.

Clause 36 [Interpretation]:

Lord BESWICK moved Amendments Nos. 52 to 55:

Page 29, line 29, after ("means") insert ("subject to subsection (1A) below,")

Page 29, line 30, leave out ("March") and insert ("December")

Page 29, line 32, leave out ("March") and insert ("December").

Page 30, line 16, at end insert— (1A) The Secretary of State may direct that any accounting year of the Board shall end on a date before or after that on which it would otherwise end.

The noble Lord said: My Lords, Amendments Nos. 52, 53, 54 and 55 might with convenience be taken together. I would be quite ready to accept criticism from noble Lords opposite if they say that we have taken a long time to come to these Amendments, but it is a fact that there are sound arguments which have become apparent for making the change I am suggesting. Under Section 153 of the Companies Act, the directors of a holding company must ensure that, except where in their opinion there are good reasons against it, the financial year of its subsidiaries coincides with the company's own financial year. Since the NEB will be required to adopt the best commercial standards in accounting matters, it follows that the NEB and their subsidiaries should have the same financial year.

In the early years the NEB's principal financial subsidiaries will be the Rolls-Royce Company and British Leyland. The Rolls-Royce financial year already ends on 31st December and British Leyland's at present ends on 30th September and arrangements are being made to change it to 31st December so that they will all coincide. I am sure one would agree that it is advantageous and in accordance with the best practices, and I beg to move.

Clause 38 [Citation etc.]:

6.13 p.m.

Lord ELTON moved Amendment No. 56: Page 31, line 11, after ("Act") insert (", not being enactments to which section 22 applies,").

The noble Lord said: My Lords, it may be for the convenience of the House if I speak also to Amendment No. 67 at the same time as to No. 56. Both Amendments are in effect consequential on Amendment No. 44. Clause 38, to which this Amendment relates, gives effect to minor amendments to the 1972 Act consequential upon the enactment of this Bill. It is proper therefore that all such Amendments that fall within that part of the 1972 Act to which the Schedule incorporated in the Bill by Amendment No. 63 applies should appear in that Schedule. The parts of the Act affected by the Schedule and recapitulated therein are Sections 7, 8 and 9. This Amendment is therefore a signpost to Amendment No. 67 in which consequential Amendments to those sections of the 1972 Act are removed from Schedule 6 and placed in the new Schedule after Schedule 3, thus enabling all alterations to the 1972 Act to be seen at a glance in one place. My Lords, I beg to move.

Lord BESWICK

My Lords, as the noble Lord says, this Amendment is consequential on No. 44, as indeed would be Nos. 63 and 67, and they all effect improvements which we are glad to accept.

Schedule 1 [The National Enterprise Board]:

Lord LOVELL-DAVIS

My Lords, this is purely a drafting Amendment. The present wording of paragraph 4 of Schedule 1 implies that the Board can have only one deputy chairman, whereas subsection (4) of the first clause of the Bill states specifically that the Secretary of State may appoint one or more of the Board's members to be deputy chairman or deputy chairmen. This very small Amendment remedies the anomaly and brings paragraph 4 into line with paragraphs 3 and 5. My Lords, I beg to move.

Amendment moved— Page 32, line 24, at end insert ("a").—(Lord Lovell-Davis.)

Schedule 2 [Financial and administrative provisions relating to the Board]:

Lord BESWICK moved Amendments Nos. 58 and 59:

Page 36, line 15, at end insert— ("(4) References to borrowing in this paragraph do not include borrowing under section 3 above.")

Page 36, line 18, after ("borrow") insert ("from him under paragraph 1 above").

The noble Lord said: My Lords, Amendments Nos. 58 and 59 are intended to correct a somewhat obscure technical deficiency in the Bill which has come to light. Clause 3 of the Bill enables the Board to exercise under the direction of the Secretary of State's powers to give selective financial assistance under the Industry Act 1972. The Secretary of State must however reimburse the Board with the cost for providing such assistance. Thus under subsection (11) if the Board makes a loan to a company the Secretary of State must make a loan of the same amount to the Board. The difficulty arises because, as the Bill stands at present, loans by the Secretary of State to the Board come from the National Loans Fund under the provisions of paragraph 2 of Schedule 2. Selective financial assistance loans are normally at concessionary rates of interest, but loans from the National Loans Fund are not allowed to be at concessionary rates: interest must cover the cost of Treasury borrowing. Obviously, we want the NEB to be able to give concessionary loans against reimbursement when acting on behalf of the Secretary of State in the same way as the Secretary of State is able to give concessionary loans when acting directly. I am sure this is the right provision to make and I beg to move.

Lord LOVELL-DAVIS moved Amendment No. 60: Page 39, line 14, after ("Board") insert ("(other than interim statements under subparagraph (4) below)").

The noble Lord said: My Lords, the Government accepted a Liberal proposal in another place that, in addition to producing annual accounts and statements of accounts, the Board should also produce an interim statement after the first six months of each accounting year. There is provision in the Bill for the annual accounts to be audited, but it was never the intention that the interim accounts should be audited. This is not entirely clear in the Bill as presently drafted and this Amendment is intended to make the provision quite unambiguous. The Government envisage that the NEB's half-yearly interim financial statements will be similar to those which companies quoted on the Stock Exchange are required to produce under the Rules of Admission of Securities. It is not the normal practice for these brief interim statements of financial results to be audited. The Bill provides however for the NEB's interim statements to be laid before Parliament. My Lords, I beg to move.

Lord LOVELL-DAVIS

My Lords, this minor technical Amendment puts right an anomaly in Schedule 2. Throughout Schedule 2, with one exception, the term "accounting year" is used and it is defined in Clause 36. The term "financial year" has, however, crept into paragraph 7(3). This is not defined although it was intended to mean the same as "accounting year". It is clearly desirable that the same term should be used throughout the Bill and this Amendment seeks to remedy this anomaly. My Lords, I beg to move.

Amendment moved— Page 39, line 30, leave out ("financial") and insert ("accounting").—(Lord Lovell-Davis.)

Schedule 3 [Arbitration]:

Lord BESWICK

My Lords, we discussed this Amendment with Amendment No. 41. I beg to move Amendment No. 62.

Amendment moved— Page 40, line 22, at end insert (", at a time when no proceedings relating to it have been commenced in any court,").—(Lord Beswick.)

Lord ELTON

My Lords, we discussed Amendment No. 63 with Amendments Nos. 44 and 56, and therefore my longest Amendment will have my shortest introduction. I beg to move.

Amendment moved— After Schedule 3, insert the following new Schedule:—