HL Deb 27 July 1976 vol 373 cc1290-310

8.26 p.m.


My Lords, I beg to move that this Bill be now read a second time. In a period of great monopolies, both private and public, and indeed at a time when we see the great international companies, with their huge economic power, coming more and more into our daily lives, it is a pleasure to me to be able to invite the House to review the activities of the small common ownership enterprises, numbers of which are now making a small mark in British industry. When my honourable friend Mr. David Watkins, the Member for Consett, introduced his Industrial Common Ownership Bill in another place he went to some pains to explain that a common ownership enterprise is a self-governing association productively engaged, and in which the association exists to enhance the quality of life of its working members and to serve the wider community. After payment of taxation and making provision for reinvestment, the remaining profits are used to provide a bonus for the working members or indeed for such purposes as they themselves desire.

The number of these firms has grown fairly rapidly in recent years. Some of them have been started as common owner ship enterprises while others have been converted from conventional small companies to common ownership companies. The Industrial Common Ownership Movement itself stemmed from the example set by a few owners of businesses who acted on their belief that control and ownership should be exercised by the people who work in this type of enterprise. We then had those who converted existing undertakings, or started new worker-owned ones, and this led to the name Common Ownership being adopted in, I think, 1971.

The pattern of these enterprises is extremely interesting. They vary enormously from those containing three or four members to the comparatively large Scott Bader Commonwealth Limited, which I understand now has 430 workers. I submit to your Lordships that of its very nature the common ownership idea contributes to a very high state of industrial democracy, and indeed to very good industrial relationships. When we consider these matters in their wider context, perhaps we could look at the examples we get in these small common ownership enterprises.

Noble Lords may be aware that there have been considerable changes in this Bill since it was first introduced. The original Bill, as introduced by Mr. Watkins, had among its aims that of providing financial help and encouraging enterprises to convert themselves to common ownership by simplifying the process for companies limited by shares, and by eliminating tax deterrents for shareholders by allowing reliefs in the event of their being converted. As I understand the position, the original aims of the sponsors were modified because of the understandable reluctance of the Government to change the existing principles in the Companies Acts affecting creditors' interests. The changes suggested were accepted by the sponsors. I believe that the changes made between the two Bills are only marginally significant in view of the existing facilities which come under the Friendly and Industrial and Provident Societies Act. For my part, I welcome very much the provisions which appear in the Finance Bill itself. These will give relief from capital transfer and capital gains tax in the event of a transfer of ownership to an employee trust.

I believe that the Bill, if it becomes an Act, will serve to stimulate the growth of such enterprises, and indeed will help in the establishment of an advisory service about the organisation of worker-controlled enterprises. I was at this stage going to go into a lot of detail about the clauses themselves. In view of the lateness of the hour I will refrain from doing that, especially as I do not doubt that noble Lords can read the Explanatory and Financial Memorandum as well as I can; so if we can take that part as read it may save all of us our patience and perhaps we can get to bed a little earlier.

I noticed in my review of the Committee stage in another place that one Government Amendment which attracted discussion was the one for statutory trade union representation on the body as a condition for receiving Government funds. Indeed, it was argued in Committee that this was unnecessary and would give the trade unions a privileged position. I have been in the trade union movement a long time, and I have never yet managed to find a privileged position. But the view of the Government, with which certainly the sponsors are in complete agreement, is that trade union representation is necessary in order to ensure that proper consultation takes place with the trade unions representing the workers in or affected by an enterprise seeking financial help from the body; and when one considers it, and considers perhaps the immature state of many of these companies when they make that application, I suggest to the House that it is not a bad thing to have on the body which will determine loans, and so on, representation of the appropriate trade unions whose members are expressing themselves by trying to form this kind of company. I hope that on balance the idea will commend itself to noble Lords.

Despite this, as I went through the Committee stage proceedings I felt that the contents of the Bill, the guts of the Bill, were really quite non-contentious. I felt, and still feel, that in all parts of the House, certainly in all parts of that Committee, they were very welcome. I believe from my readings of these industrial matters that certainly the three Parties represented here tonight have welcomed the development of this kind of enterprise. It seems to me, as I began by saying, that in this day and age, when we see the rather soulless kind of developments in our industry which are quite inevitable with the rise of huge combines, it is all to the good that men of ability lacking capital, as many of them do, can be provided with the facility to utilise their brains and their abilities in this way. It is also the case, of course, that in a great many areas these small associations, first, have been responsible for maintaining jobs when a company would otherwise have gone out of existence and, secondly, in a number of instances, have indeed succeeded in increasing quite substantially the number of people employed in the company as against the number previously employed.

My Lords, I have made reference to the time, and I will not trespass any further on your Lordships' patience. I hope that the House will agree that this is a very useful small measure which is very well worth our support and encouragement. I beg to move that it be now read a second time.

Moved, That the Bill be now read 2ª.—(Lord Lee of Newton.)

8.37 p.m.


My Lords, I should like to start off by congratulating the noble Lord, Lord Lee of Newton, on introducing this Bill so ably, and also state that we welcome the Bill although, rather naturally, we have a number of reservations, which I shall go into in some detail later. In another place the Second Reading debate took four hours; and with not such a large House, and in an area where so much emphasis has been laid on the fact that small is beautiful, I think that perhaps tonight the emphasis should be on "brief is beautiful".

I started off by saying that we welcome this Bill. The reasons why, in general, we welcome it are that there have been a number of successful practices, as was detailed in another place—in fact they were detailed at great length; every single example seems to have been discussed during the Second Reading debate—and on the Continent there have been even more successes. Most of these organisations started out in adversity, as has been said, but they fought their way through. Not all of them have come right through; some of them have considerable troubles to this day, and doubtless more that are set up will go through this same phase. But there is one matter that I feel we ought to look at, and that is that few of them have actually started from enthusiasm. They have been born out of necessity. I hope that this Bill will perhaps start more such enterprises on the basis of enthusiasm. They help the workforce to have a greater understanding of business principles and of what commerce is all about. As soon as one of these organisations is set up, the people concerned have an intimate knowledge of cash flows, like the rest of us.

In another place the debate ranged over the merits and demerits of the capitalist system. I think this is an excellent scheme when it works within the capitalist system. It also helps to break down the "them" and "us" situation which does exist, and has existed for a number of years, between workers and management, because when these operations are running they are all "us". But there are a number of points on that to which I shall return later.

Having dealt with the good news, I feel that one should also talk about the bad news. My reservations are these. These enterprises should not be used as an excuse for perhaps an over-idealistic Minister to waste public money on impractical ideological exercises; nor should they result in unfair competition with normal commercial concerns which do not have similar access to public funds for subsidies. I should like, if I may, to cover that point later.

The Industrial Common Ownership Bill itself still needs a great deal of scrutiny for two main reasons. These are that, first, it had only one effective stage in the Commons which was its Committee stage. Being denied a further Report stage because of a procedural device being used on the preceding Bill, in fact it had only a formal Third Reading. The second is that it was in any case substantially rewritten by the Government in Committee. Six clauses were deleted altogether and one, Clause I, was rewritten. At the Second Reading great play was made of the fact that Clause 1 is often the heart of the Bill. The Government carried out some major open-heart surgery on this Bill by totally rewriting it. I am not saying this is a bad thing. I think it is probably an excellent thing, but it was totally rewritten and, because of the Third Reading, we must look at it carefully when it comes to the Committee stage. We will move a number of constructive Amendments. These will he designed primarily to tighten up Parliamentary control, to lay down proper commercial criteria, to alter the Bill's provisions for assets on dissolution and to allow an enterprise maximum freedom and flexibility, particularly regarding voting rights. I should like to come to these points separately.

On Clause 1, I spoke about normal commercial terms and the criteria laid down. It would be quite wrong if these organisations were given unfair advantage over normal commercial operations. They will both probably be mainly small and therefore an advantage by a grant will be that much greater an advantage over the small commercial organisation. I wanted also to talk about the tightening up and, in Clause I as it stands in the Bill at the moment, the "relevant body" as it is referred to. If a grant to the body is made for its own expenses it does not appear to have to come before Parliament to justify this. This is an area in which something should be done at a later stage. Again, I do not think we should talk about grants and loans; we should talk about loans as in most organisations. Especially in view of the current expenditure cuts, I think this should be taken very seriously. There is another point in subsection (1) which states: grants made in pursuance of this subsection in any year shall not exceed £30,000. Well, £30,000—if that is being put up—as these organisations will mainly operate with closed shops, perhaps the unions ought to match in areas this sort of money; because we are talking about two aspects, the advice section and the grant section.


My Lords, I am grateful to the noble Lord for giving way. I am listening very carefully. I do not follow from where he gets the idea that the enterprises will necessarily be closed shops. I would welcome the fact that they were, but I believe there is nothing in the Bill about that.


My Lords, I rather understood this from wading through the stages in the other place. That was the impression I gained. I am not saying it is in the Bill, but I understood that this was what the practice would be. It leads me on to another point further on where subsection (5) states: to include among its members one or more representatives of trade unions. Presumably that would be the representatives, if they were closed shops—not necessarily, I am the first to agree; but this is the impression I gained. Perhaps I am wrong. It would be interesting to know what the noble Lord has to say on this subject.

To revert to Clause 1, I talked about normal commercial terms and I was a little alarmed by the phrase in subsection (1) where it refers to the Secretary of State and what he may give: on such terms as he thinks fit". This area is, I think, a little loose and could do with tightening up. When we come to the point about "relevant body" I am somewhat concerned that "body" is so loosely defined. I think it could at a later stage be defined more closely exactly what it is going to be. I appreciate that flexibility was probably shown as an advantage, but I think that this is too much flexibility.

I mentioned the point about trade unions being on the body. Frankly, I do not think it is necessary to lay down that they have to be there. I think that for the body to be functioning properly, it does not have to have by right members of trade unions on it; especially as one or two points came up in the other place where the trade unions, on occasions, may not be too much in favour of one of these organisations. This was stated on Second Reading as the noble Lord is, no doubt, aware. Therefore there are two sides to this case.

There is another aspect which worried me in Clause 2(1)(b): the point about deciding what the qualifications are. It states: other factors of any description". This is another aspect to which I think a certain amount of consideration should be given later. Basically, as I said, brief is beautiful—and I will not go on too much longer. We will wish to bring in a number of these items.

I should be grateful for a little clarification on a few simple points. I could not see why in one part we talk about common ownership and in another part co-operative ownership. I do not see why we could not use the same phrase throughout. It would be consistent. The other point is about the role of the Registrar, where the Secretary of State does one thing and the Registrar another. I should have thought that the Registrar could act in both cases. There is also the question of limited guarantee. This is an area also at which we ought to look closely. I think there could be different meanings of "limited guarantee"—who is guaranteeing, and so on. Why has reference to the commencement been removed from the last clause of the Bill? It was in it in the original state. Perhaps this was an oversight. I do not know. There may be a good reason for it. I should be grateful if the noble Lord could tell us why.

We all from time to time must suffer from extraordinary Parliamentary ease, if that is an acceptable word. When we come to page 3, line 40, it has a distinctly Harry Lauder flavour when a body meets a body. The phrase there reads: for the purposes of this section a body is a subsidiary of another body if it is a subsidiary of the other body for the purposes of the Companies Act". I do not think this quite comes up to the Guinness Book of Records and the ground nuts scheme which I think is immortalised there. Finally, on a more serious note, I query whether this is just a preliminary measure opening the door for a further major piece of legislation.

8.50 p.m.


My Lords, we on these Benches should also like to thank the noble Lord, Lord Lee of Newton, for the clear way in which he introduced this Bill. Like the noble Lord, Lord Redesdale, we are in broad support of the principle underlying it. I must confess that until last weekend I knew very little indeed about the Bill. I am glad however to have done my homework because in reading the Official Reports of the Second Reading and the Committee stage of the Bill in another place, I learned a great deal about the basic concept of common ownership and to admire what was done by those who initiated the first enterprises in this field, and also about the devotion of the present members of the industrial common ownership movement to that cause.

A Member in another place had said that in his view it was not only imperative for the Government to support the Bill—that, incidentally, was when the Bill was in its original form—but if the Government did not go further, by introducing legislation in the next Session of Parliament which would establish a co-operative development agency, he and a number of his friends would seek to take all possible action to bring pressure to bear where it would hurt most. I wondered whether that threat related to the body politic or physical. Indeed, I felt some relief that I was not more closely associated with the co-operative development. if that is how it operates in practice.

I should like to hasten to assure the noble Lord who is to speak for the Government that my noble friend—only one is present at this moment—and I have no action of this kind in mind. I was glad to note that members of the co-ownership movement in another place were most appreciative of the interest which had been displayed by the noble Lord in their movement. It may be therefore that in this respect at least the distinction between the co-operative development and common ownership will now be a little clearer to the noble Lord, Lord Redesdale.

I have already said that we on these Benches support the principle of common ownership, although we do not see it having much application—and neither does the noble Lord, Lord Lee, as I understood it—to large scale manufacturing industry. Relating the matter, as he did, to the question of industrial democracy and employee participation, now under such close examination by the committee chaired by the noble Lord, Lord Bullock, my feeling is that, subject only to enough money being available for this purpose, nothing but good can come from experimenting in the initiation of common ownership enterprises and the voluntary transfer of existing enterprises to common ownership as envisaged in the Bill.

Having said that, one is bound to question whether, given all the controversial legislation which your Lordships will shortly be having to consider, and the pressing need, as my noble friend Lady Seear was emphasising in the debate on the Finance Bill this afternoon, for the nation to achieve the best possible return on the capital it invests, this is the most opportune moment for the Government to require that valuable Parliamentary time should be spent on a Private Member's Bill of this kind. I believe that technically it still is a Private Member's Bill; but effectively the Government have taken over the Bill and have substantially redrafted the main clauses, as the noble Lord, Lord Redesdale, pointed out, and the noble Lord, Lord Lee of Newton, acknowledged.

This leads me to say that we on these Benches would think more highly of the Government if—I say this without dis-respect—they would state clearly what are their overall objectives and where their priorities lie in making money available to industry, whether under the Industry Act 1972, through the National Enterprise Board, or by means of Bills such as this one, rather than, as it appears to those not in the "know", that they should suddenly, as it were, take it into their head to dole out a few hundred million pounds to some car manufacturing company or make available small amounts, as in this Bill, in supporting causes that are no doubt worthy, such as common ownership.

Why is it apparently considered better to spend a few hundred thousand pounds on helping small common ownership enterprises in preference to other small companies which are based on some equally respectable form of ownership? That was a point on which the noble Lord, Lord Redesdale, touched. There are a few other questions that I have about the Bill on which I should welcome replies either from the noble Lord, Lord Melchett, or the noble Lord, Lord Lee of Newton, if only because, depending on their answers, my noble friends and I may wish to initiate or support certain Amendments at Committee stage. I will put these in interrogative form. To some extent the ground has been covered by the noble Lord, Lord Redesdale.

What are the precise criteria which will determine the amounts of grant and loan to be made by the Secretary of State to relevant bodies for the purposes set out in Clause 1 of the Bill? In particular, on what basis will the amount of £250,000, referred to in Clause 1(2), be made available, sometimes as a grant and sometimes as a loan? Why should not the money invariably be lent? Secondly, do the Government have in mind encouraging an experiment in common ownership in a field over which they already exercise a considerable degree of control and, if they have their way will soon exercise more, namely nationalised industry? For instance, will they soon be suggesting that some shipbuilding or shiprepair yard should be handed over to those employed in it?

Finally, I come to the point which has already been mentioned by the noble Lord, Lord Redesdale, though I should like to elaborate on it a little. This is a question which certainly troubles us a good deal. We should like to know why under Clause 1(5) the "relevant body" must always have on it not a few members of trade unions, but "one or more representatives of trade unions". One must ask: why representatives only of trade unions? Why not of employers or of consumers? Why is there this exclusive statutory requirement in the case of only trade unions? Who will appoint these representatives and under what precise procedure? What will be the ratio of trade union representatives to others on the relevant body? Why should not the body be self-constituted, with or without trade union representatives, as it sees fit?

I feel keenly on this question because, as the noble Lord, Lord Melchett, may recall from exchanges in our discussions on the Industry Bill a year ago, I sincerely wish to encourage as many people as possible to join trade unions, provided that they do not have to do so if they have conscientious objections against them. As I understand it, this requirement that the relevant body should include among its members one or more representatives of trade unions was not in the Bill when it was first moved in another place.

In the past, as the noble Lord, Lord Redesdale, has said, trade unions do not appear to have been notably enthusiastic supporters of common ownership, and the naughty thought has entered my head that support of the trade unions has now been obtained for this Bill by the expedient of tacking—and I am sorry, particularly after today's debate, to employ that word—these words onto the end of Clause 1. I hope that the noble Lord, Lord Melchett, will be able convincingly to dispel this suspicion, and indeed that the noble Lord, Lord Lee, will, on reflection, agree to amend the Bill by excluding these offending words.

What this country needs above everything else at the present time, if we are to overcome our economic and industrial problems, are policies to be followed by the Government of the day which command the broad support of the other Parties, and here is a glorious opportunity to make a move in that direction. I assure noble Lords opposite that it really does not help people like me, who are supporters of trade unions, to defend our position among our colleagues if this kind of thing is done. Therefore, I appeal to the Government and to the noble Lord, Lord Lee, at least to give very earnest further consideration to the point before the Committee stage. I hope that they will do that. May I, in conclusion, simply repeat that we on these Benches support the principle underlying this Bill, although we have doubts about it which we hope will be dispelled either now or in Committee.


My Lords, I do not rise to make anything as long as a speech, but simply to ask the sponsor of the Bill, the noble Lord, Lord Lee of Newton, when he comes to reply, to let us know a little more what is in his mind about what is called the "relevant body". Does he have in mind new organisations, or organisations which exist today? If he has in mind any new body which is not described in the Bill, may I ask him why, considering that most of these industrial common ownership ventures will be small, with many in rural areas? What is wrong with the Development Commissions, with their experience and organisation for channelling help to different kinds of small industrial enterprises, taking over this work? It is generally a mistake to set up new organisations when we have organisations in the country which can broadly do the job. So I think that the noble Lord might tell us a little more about what is in his mind, because that is a very important part of the Bill and at the moment it is entirely obscure.

9.5 p.m.


My Lords, like the noble Lord, Lord Redesdale, and the noble Lord, Lord Rochester, I should like to give this Bill a warm welcome on behalf of the Government. As has been made clear in another place, the Government warmly welcome the provisions of this Private Member's Bill. However, it is in no way a preliminary measure, as the noble Lord, Lord Redesdale, implied it might be, for some other Government legislation. It is a Private Member's Bill, introduced without any prompting at all on the part of the Government. It has nothing to do with our own legislative programme, but we, when the Bill was presented to the House of Commons, were quite happy to give it our full-hearted support. There are, of course, commitments in this Govern ment's Election Manifesto, as noble Lords, will know, about the Co-operative Development Agency, which was referred to in the debate in another place. While in some sense, this Bill covers the same ground as the Co-operative Development Agency, it is in no way a substitute for the Development Agency which will, after all, be considered in large part with the retail co-operative movement which this Bill, based on industrial co-operatives, does not touch on at all. So I really do not think that the CDA is particularly relevant to discussions on this Bill.

I have some sympathy with the noble Lord, Lord Rochester, and the noble Lord, Lord Redesdale, who have obviously read the Report of the Second Reading debate in another place, some of which I listened to. The proceedings in another place are a mystery to those of us who have not been there, but I have a feeling that the length of time taken over this Private Member's Bill may have had something to do with one of the measures which was immediately to follow it, rather than the merits or demerits of the Bill itself, and that may be one of the reasons why the debate at that time ranged very widely indeed.

The noble Lord, Lord Rochester, made one remark which I should like to correct about the Government requiring your Lordships and another place to spend legislative time on this measure. Of course, this measure and the legislative time that is spent on it has nothing to do with us. This is a Private Member's Bill and, whatever the Government's legislative programme, I am sure noble Lords on all sides of the House will welcome the fact that it is still possible for Private Member's legislation to be taken through to the Statute Book. The Government can occupy a great deal of time or very little, but Private Member's rights to get Bills into law are very important and are preserved, whatever happens. So I do not think the noble Lord, Lord Rochester, would suggest that the fact that we have a heavy legislative programme before us in the autumn is a reason why Private Member's legislation should not continue to be discussed by this House or by another place. This is a Private Member's Bill. I will in a moment say something about the redrafting which took place in Committee.

I was glad that the noble Lord, Lord Redesdale, made the point that on the Continent a great deal more has been done than in this country. I am sure that is the case. We have a great deal to learn from our European partners, in particular France, so far as the development of cooperatives, particularly producer cooperatives, are concerned. While I agree with him that not many of the existing enterprises have been started through enthusiasm as opposed to the owner of the business deciding to change the structure himself or herself voluntarily, this is not entirely true. There are a number of common ownership enterprises, some of which I have had the privilege to visit, which have been started as a result of people's idealism and enthusiasm. Sunderlandia, a building firm in Sunderland, springs to mind where somebody set up the enterprise to give work to people in the building industry and in particular to provide training for apprentices. There are others. A number of producer cooperatives which were started around the turn of the century were set up when the retail co-operative movement was in its early days. Many of those enterprises still continue very successfully, particularly in some of the traditional industries like textiles, printing and footwear. However, I agree with the noble Lord, and certainly it is my hope that the passage of the Bill to the Statute Book will enable people with enthusiasm to start up new enterprises from scratch and provide much needed jobs in many areas.

Jobs are needed not only in rural areas—that may be the answer to the point made by the noble Lord, Lord Inglewood, about the Development Commission—but also in many areas of the country and it might be right to have a national body to disburse funds. However, perhaps I may come back to that point in a moment. The noble Lord, Lord Redesdale, suggested that this might be a waste of public money at a time when expenditure is under restraint. I can assure the noble Lord that the funds which the Government wish to make available under the Bill will come out of the existing budget of the Department of Industry. The sums are small compared with the total sums of money that the Department of Industry spends on private enterprise and nationalised industries, but it is no easy matter to get small sums of money out of any Department.


My Lords, I am grateful to the noble Lord for giving way. I made the point about grants, and if they are loans it does not matter so much.


Yes, my Lords, I was going to turn to that point in a moment. However, I should like to make the point that the Government give a massive amount of assistance to private industry in this country. Particular cases, such as Chrysler and the large investment programmes of the nationalised industries which we have discussed recently in your Lordships' House, sometimes mask the vast sums of money that are made available to private industry in the form of regional incentives, in particular the regional employment premium and the other standard regional incentives, and also in the form of tax concessions of one kind and another. The major tax concession recently has been stock appreciation relief.

One reason why we were happy to provide a very small amount of money compared with our total expenditure on private industry—a tiny amount of money, if one is being frank about it—to co-operatives is that they have considerable difficulty in making use of existing sources of finance for two reasons: first, because, as small enterprises on the whole, they are not eligible for much of the money which goes to private industry and they will not even be eligible in the future, because one of the characteristics of many co-operatives and common ownership enterprises is that they tend to remain at a certain size. This is very true of the enterprises which were started at the turn of the century—the producer co-operatives.

I went round one shoe manufacturers' which has been employing 70 people for the last 70 years, very successfully making a profit and providing very good shoes for many people to wear. There is no criticism that they have stayed at the same size, but at least a private company which is growing, looking to capital expansion and an eventual quotation on the Stock Exchange, sees itself as one day being eligible for a great deal of Government assistance for which small companies are not even eligible. And even in the case of those forms of assistance for which they are eligible, very often it is not practicable for a small enterprise to take up the assistance because of the amount of information that the Government must have at their disposal before they give away any public money even as a loan. Therefore, there cannot be any criticism that we are favouring one section of the economy in particular as opposed to another. The fact is that private industry gets a great deal of money; co-operatives on the whole do not receive any money from public funds except for one or two examples of larger enterprises recently: Meriden and Kirkby. However, on the whole the common ownership enterprises we are talking about have not received any public money to speak of.

The noble Lord also raised the question of grants and loans. The grants from the Government will be used only to pay the administrative expenses of the advisers who will be employed to give advice on setting up these enterprises: to provide people with advice on running them efficiently. That is the only form in which the grants from the Government will go direct to the advisers. Afterwards the Secretary of State has power to make grants or loans to the body who are then empowered only to on-lend to particular enterprises. Therefore enterprises receiving public money will get it only in the form of loans. The terms and conditions of those loans, as the noble Lord pointed out, quite usually are subject to the conditions laid down by the Secretary of State. Those will have to be brought before Parliament in a regulation, when both Houses will have a chance to discuss them—or at least another place will have a chance to discuss them, because I think financial matters would not come before your Lordships' House.

This is a perfectly normal arrangement which is provided for in many other Bills. There is nothing unusual in it. As I have said, the enterprises receiving money will only get the money in the form of loans. Of course public money is made available to industry on very favourable terms and often with interest-free periods of up to 18 months or more; so loans can be given on quite favourable terms, and already in many cases are so given to private industry.

Noble Lords have raised the question that this Bill was rewritten by the Govern ment in another place. I think that is a rather uncharitable suggestion. Only two major changes were made to the Bill between the Second Reading and the end of the Committee stage. One was that the provision for tax relief was dropped because the provisions of the Finance Bill achieved the same end. The other was to meet a point made by the noble Lord's colleagues on the Opposition Front Bench in another place who were concerned—as were the Government—with the conversion provisions for the extinguishment of shares in the enterprise.

Quite rightly, the Opposition in another place expressed concern about creditors' rights and liabilities and that, I am glad to say, with the sponsors' agreement was dropped from the Bill. Otherwise I think noble Lords will find that although the Bill was redrafted—which is quite usual with a Private Member's Bill—by Parliamentary Counsel who is responsible for the repetition of the word "body", no other major changes have been made.

Noble Lords may feel that the inclusion of the trade union representative on the body is a major change, but I honestly do not think it is, because it is quite obvious to anyone that there would have been some representative of the trade unions on the body whether or not the Bill laid down the fact that there should be. So I hope we can get away from the idea that this is either a Government Bill or something that the Government have dramatically altered between one stage and another in another place.

There is, of course, nothing in the Bill about the enterprises having had a closed shop. I understand that most common ownership enterprises do not have a closed shop, although some do. I welcome the fact of those who do, and I hope that more will in the future, but there is nothing in the Bill as to whether there has to be a closed shop or not and whether that makes it more or less eligible for the public money available.

The body which will he disbursing the funds has, quite deliberately, been left loosely defined in the Bill. I am myself extremely anxious that we should not find ourselves in the position of having to set up some new body. Here I agree with the noble Lord, Lord Inglewood, that we have enough bodies doing enough things already. In particular, there is already the Industrial Common Ownership Fund disbursing money to common ownership enterprises, and I think it is the Government's wish—which is shared by the sponsors of the Bill—that we should build on that Fund and the trustees of that Fund in disbursing the extra money that will become available under the Bill. The terms have been left loose because it is up to the Industrial Common Ownership Movement and others involved in producer co-operatives to present the Secretary of State with their own body of people. The Government do not want to lay down the people who should be on it. I should have thought that would be welcomed by noble Lords on all sides of the House as well. We do not envisage setting up a completely new body but making use of the existing resources of the Industrial Common Ownership Movement and others involved in producer co-operatives.

I should like briefly to say something about the distinction between common ownership enterprises and co-operatives, which the noble Lord asked me about. The point is that the Bill, sponsored as it is by the Industrial Common Ownership Movement, defines common ownerships in a particular way in Clause 2. It was the wish of everyone involved that the public money should go not only to people who were actually in common ownership enterprises but also to other producer co-operative industrial properties registered under the Industrial Provident Societies Acts. As I have said, some of those have been in existence since before the beginning of the century, and we saw no reason to exclude them from eligibility under the Bill.

So, in a way, Clause 2 contains a two-limb definition: first, of common ownerships and, secondly, that of other co-operative enterprises. Although the definition may seem a little vague, as there are in effect only about 20 common ownership enterprises and 20 other producer co-operatives, I do not think that a little vagueness does any harm. It would be a great pity to exclude one or two of the small number of enterprises currently existing because of some technical definition contained in the Bill. I think from what is in the Bill it is quite clear just what is meant, and that is after all the important thing.

The noble Lord asked me a question about companies limited by guarantee. This is a normal form of existence. I understand that all golf clubs—although I am not a member of one—are companies limited by guarantee and it is something that appears in the Companies Act. I am surprised that the noble Lord, whom I suspect of being a golfer at least, has not come across this before.

My Lords, I think I have spoken long enough, particularly as I have to answer the Unstarred Question to come. I have been asked other questions, and, if there is anything I have not dealt with clearly, I should like to write to the noble Lords, Lord Rochester and Lord Redesdale, before we come to Committee stage. In conclusion, may I briefly pay tribute to David Watkins, the Member who introduced the Bill in another place, and, indeed, to all those outside the Houses of Parliament who have played a considerable role in promoting Private Members' Bills of this sort. They do an enormous amount of work, all unpaid, and largely unacknowledged by those of us who legislate. A great deal has been done on the Bill and credit should go to those who have done the work.

I have had the pleasure of visiting several producer co-operatives and common ownership enterprises, and it was a fascinating experience. Possibly on further stages of the Bill I will have a chance of telling your Lordships something about that. But there is no doubt about the dedication and often farsightedness of those involved in these enterprises, and those who have seen fit to convert their own private company into a firm controlled by everyone working in it. Personally, I feel that one day in the future, not too far ahead I hope, people will look back on the firms and the organisation of companies, both large and small, in our society now, in much the same way as we look back on the terms and conditions of employment in Victorian times, with children down the mines, which seems so odd to us nowadays, whereas it did not then. I daresay one day in the future people will look back and see as a very odd thing indeed companies with the people working in them having no say at all. The Bill seeks to work by common consent, and I hope your Lordships will give it a speedy passage.

9.22 p.m.


My Lords, may I thank both noble Lords opposite for the constructive way in which they have dealt with the measure. There has been some slight controversy as to the part played by the original sponsors as distinct from the Government. As my sponsorship is of comparatively recent origin, and I was neither an original sponsor nor a member of the Government which suggested changes, I can pronounce with complete impartiality and neutrality that the Government were right to move the Amendment, and the sponsors were a thousand times right to accept it.

My Lords, there was also a little suspicion as to whether or not this is to blossom into something enormous. Indeed, I think the noble Lord, Lord Rochester, went so far as to wonder whether we were going to be handing over the shipbuilding industry to its employees. Quite frankly, I do not know any body of employees at present to whom I could sell the shipbuilding industry in its present form.


My Lords, if I may intervene, for the record, may I assure the noble Lord that my reference was to a small shipbuilding or shiprepair yard rather than to the total industry.


My Lords, I believe there is a little controversy going on about shiprepair yards and so on, but I will not venture into that. There was also the point that the granting of public moneys to this kind of enterprise seemed to be favouring them as against other forms of enterprise. I think my noble friend answered this one very well indeed. One of my Ministerial jobs in days gone by was in the Northern region. I would not care to tell your Lordships how much I spent on private enterprise up there, and the various ways in which one was distributing public money, which was money well spent. I am trying to show that the small amounts involved in this legislation are infinitesimal as compared with the money which both Parties in their periods in Government—very rightly in my opinion—have expended on trying to bring employment to areas which otherwise may have been quite derelict by now.

My noble friend answered the point made by the noble Lord, Lord Rochester, on the relevant body. Clause 1(5) goes into the detail of what the Bill means by "relevant body". The question of unequal voting rights was mentioned. I think the whole philosophy of common ownership is at variance with that kind of thing. Indeed the sponsors would argue that there could be a point at which a common ownership firm could be sold out for personal gain by those who had the advantage of unequal powers in that respect. I think my noble friend dealt very well indeed with practically all the questions asked, and as I understand that some of them may well be repeated in Committee I will not go any further. I merely conclude by thanking the House for the way in which it has received this Bill, and by saying I am sure the spirit in which all of us have approached this cannot fail to do a lot of good to a very young and enterprising movement.

On Question, Bill read 2ª, and committed to a Committee of the Whole House.