Lords Sitting of 1 November 1976

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

LOBSTER STOCKS
Lord DERWENT: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether the committee which has been investigating the decrease in lobster stocks has yet come to any conclusion.
Lord STRABOLGI: Yes, my Lords. A Report by the Ministry of Agriculture, Fisheries and Food on the Lobster Fishery was issued in March 1975. One of its main recommendations was that the minimum landing size for lobsters, which was an overall length of 9 inches, should he replaced by the equivalent length of the carapace. This recommendation was brought into effect in March this year, when the minimum landing size became a carapace length of 80mm, approximately 3·2 inches, as your Lordships will be aware.
Lord DERWENT: My Lords, I am very grateful to the noble Lord for that amusing Answer, but what are the enforcement provisions? I know that an order has been made, but how is it to be enforced?
Lord STRABOLGI: My Lords, it is being enforced by the local Sea Fisheries Committees, which are responsible to local government. There are certain penalties under the order. There can be a fine of £100 on the first offence, going up to £200 for a subsequent offence.
Lord DERWENT: My Lords, have there been any prosecutions yet and is the
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noble Lord quite certain that the enforcement is adequate?
Lord STRABOLGI: My Lords, data indicate that in 1976 there has been a fall in the number of undersized lobsters landed, but there is still room for improvement.
Lord CLIFFORD of CHUDLEIGH: My Lords, is the noble Lord aware that this problem, so far as the South-West is concerned, was brought out in the debate on the problems of the South-West over seven years ago and that there has been continual poaching by the French in our area over many years, they having fished out their own stock? Would not this be a good opportunity to get the median line fixed once for all so that we can be saved not only from the French but also from the Scots and the Russian fishing fleet hoovering the Channel?
Lord STRABOLGI: My Lords, any foreign vessel—and here I exclude the Scots—within the limits is subject to the enforcement orders.
Lord HAWKE: My Lords, is it not a fact that not only are the French poaching but among our own people amateurs are putting down their own pots and aqualung fishermen are stealing the lobsters out of the pots of professional fishermen?
Lord STRABOLGI: My Lords, one of the proposals in the Edwards Report was that there should be licensing of fishermen, but it is not the Government's intention to take away the freedom of access to sea fishing from one particular group of fishermen in order to reserve it for others. We think that the new enforcement orders and the new length of the carapace should substantially reduce the number of lobsters taken.
Lord DERWENT: My Lords, does that freedom of access apply to other people's lobster pots?
Lord STRABOLGI: No, of course not, my Lords. Each fisherman has his own lobster pots which are labelled.

SPORT AND RECREATION COUNCILS: GARDENING
2.40 p.m.
Lord WALLACE of COSLANY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether recreational gardening interests will be represented on the proposed Regional Councils for Sport and Recreation.
Baroness STEDMAN: My Lords, it has been for the voluntary organisations concerned with outdoor recreation to elect their representatives on the councils from among themselves. Although recreational gardening organisations have not in the event secured direct representation, their interests will be taken into account and they could be co-opted on to the committees.
Lord WALLACE of COSLANY: My Lords, is my noble friend aware that, from that Answer, I conclude that the Government are in favour of the representation of recreational gardening interests on such bodies? Can she also tell me why the gardening interest does not appear under Clause 18 of the Local Government (Miscellaneous Provisions) Bill?
Baroness STEDMAN: My Lords, the Government are in favour of recreational gardening as part of the leisure activities of this country and, indeed, the National Society of Leisure Gardeners welcomed the proposal to join the new councils and promised that they would contribute positively and constructively to the work of the proposed regional councils. In so far as the constitution of these bodies is concerned, that was laid down in Circular No. 4776 issued by my Department and comes under outdoor recreation or countryside conservation—it can get in under either section—for representation on the councils.

U. K. ARMED FORCES: GENERAL BROWN'S COMMENTS
2.42 p.m.
Lord VAIZEY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what steps they intend to take to express to the Government of the United States the widespread surprise of the British people at the comments made by the Chairman of the United States Joint Chiefs of Staff on the efficiency and morale of Her Majesty's Armed Forces.
Lord WINTERBOTTOM: My Lords, in view of the clarificatory statement made by General Brown on 18th October, in which he expressed, "the greatest admiration and respect for Her Majesty's highly professional Armed Forces", Her Majesty's Government consider that no further steps are necessary.
Lord VAIZEY: My Lords, I thank my noble friend for that reply, but I wonder whether he is aware that many of us on this side and, indeed, all sides of the House are extremely proud of our Armed Forces and particularly of their services in Northern Ireland and do not like to have them denigrated by people who are alleged to be our friends and allies.
Lord WINTERBOTTOM: My Lords, I believe that my noble friend is taking too gloomy a view. I am sure that this is a classic case of misquotation. General Brown was having a private talk in, I think, April, with Mr. Ronan Lurie, who is a contributing editor and cartoonist of Newsweek International. Suddenly, this statement cropped up in October.
Lord SHINWELL: My Lords, is my noble friend aware that, if a fuller and more satisfactory Answer to this Question is required, the Supreme Commander of NATO, General Haig, is addressing a meeting of the House of Lords Defence Group on Wednesday this week at 5 p.m. Members of your Lordships' House will be able to come there and get the answer.
The Earl of CLANCARTY: My Lords, are the noble Lord and Her Majesty's Government aware that the American General George Brown was speaking the absolute truth? He was not criticising our Defence Forces for their traditional bravery or fighting abilities. He used the word "pathetic" in his description of our Forces. However, an article, which some of your Lordships may have seen, in the

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Sunday Telegraph—not yesterday, but the Sunday before—assessing the General's supposed outburst, commented that the General's only error was in using the word, "pathetic", but that actually it would have been more appropriate if he had used the word, "dangerous" in regard to our security situation.
Several noble Lords: Speech, speech!
The LORD PRIVY SEAL (Lord Peart): My Lords, the noble Lord must ask a question.
Lord WINTERBOTTOM: My Lords, following this curtailed report in October of what General Brown said, I should like to quote what he actually said. General Brown said:
"Remarks concerning the Armed Forces of the United Kingdom were spoken out of compassion and understanding. I said we would miss them in the Middle East, where they were withdrawing their Forces, because of their long experience. Americans understand and sympathise with the current economic difficulties the British people are going through. We also know their gallantry. There are no braver people. I have the greatest admiration and respect for Her Majesty's highly professional Armed Forces."

COST OF LIVING AND THE SOCIAL CONTRACT
2.46 p.m.
Lord ORR-EWING: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they accept the figures published in the Digest of Statistics (Table 170) showing that the average basic weekly wage rate in manufacturing industry increased by 18·1 per cent. in the year ending July 1976 when the cost of living increased by 13 per cent.: and why Ministers claim that under the Social Contract it is wage earners and not salary earners who have made the greatest sacrifices.
Lord JACQUES: My Lords, the figures are correct, but the 18·1 per cent. represents the increase in minimum entitlement, not the increase in earnings. The best available indicator is the index of average earnings, which showed a rise
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of 13·9 per cent. for all industries covered for the year to July 1976. The £6 pay policy protected the lower paid. It sought to ensure that sacrifices were made according to ability to bear them.
Lord ORR-EWING: My Lords, is there not an increasing case for restoring the differentials in British industry, particularly in British manufacturing industry and among those who bear more responsibility and wish to work a little harder than others? At the moment they have not been able to increase their wages, and inflation has etched away at the real take-home pay. They are much more handicapped than those who have been able to bargain and have achieved the results that their earnings have rather more kept in line with the rise in the cost or living, whereas the managers at all levels have not been so placed.
Lord JACQUES: My Lords, the Government have made clear their recognition of a number of pay problems, but in the present circumstances there have to be priorities and things, which, however desirable, have often to be deferred.
Lord ORR-EWING: My Lords, will the noble Lord bear in mind that the Minister for Industry, in a speech to the Society of Motor Manufacturers and Traders on 19th October, said:
"It is the trade unions and their members who have made a disproportionate and lopsided sacrifice of income they could have gained."
Would he bear in mind when considering the future that we need differentials, and strong differentials, at all levels if people are to be encouraged to use their skills to the maximum? Is it not a sad fact that British industry today is producing less than it was even during the three-day week at the beginning of 1974? Is this not a reflection of a lack of incentive which exists at so many levels?
Lord JACQUES: That calls for two answers, my Lords. First, what Ministers have claimed in general is that the TUC showed courageous leadership when it recommended its members to accept a pay increase, which at that time was about one-half of the inflation rate for the preceding 12 months, and I doubt whether anybody could deny that. Secondly, whenever there is an attempt

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to get some measure of equity, or equality, by protecting the lower paid, the margins of difference are inevitably affected. I think that the situation portrays what has been obvious for some time: that the better paid do not mind talking about protection of the lower paid, but do not like to do it.
Lord MURRAY of GRAVESEND: My Lords, is my noble friend aware that it was the Society of Motor Manufacturers and Traders which gave a rather ill-mannered reception to one of our Ministers at the opening of the Motor Show? Is it not a fact that the TUC ought to be congratulated on its efforts within the Social Contract: and is it not time that we heard from the Conservatives their alternative to the Social Contract?
Lord JACQUES: My Lords, I cannot answer for the Conservatives. I am aware, of course, of opinion on the reception which the Minister for Industry got at the Motor Show, but I think this is far from the Question which is under consideration at the moment, and I do not care to comment.

CROMARTY HARBOUR ORDER CONFIRMATION BILL
Considered on Report.

AIRCRAFT AND SHIPBUILDING INDUSTRIES BILL
2.50 p.m.
The MINISTER of STATE, NORTHERN IRELAND OFFICE (Lord Melchett): My Lords, I beg to move that this Report be now received.
Moved, That the Report be now received.—(Lord Melchett.)
Lord HARMAR-NICHOLLS: My Lords, before we move on to Report stage formally, there is a submission that 1 should like to make to your Lordships and particularly to the noble Lord the Leader of the House and to the noble and learned Lord the Lord Chancellor. I think it may be more to the satisfaction of the rules of this House and of Parliament generally if the point I wish to submit is taken into consideration now. It
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relates to the alleged hybridity of the ship repairing section of the Bill which it is now suggested should be considered at Report stage. The rules under which we work are well known to your Lordships—and if there is a part of Parliament which ought to adhere strictly to the rules it is your Lordships' House. It is the final court of appeal, and it is our well-known n impartiality and objectivity by way of adherence to the rules that causes people, even those outside the boundaries of this country, to accept judgments which come from your Lordships' House.
I submit that on the ship repairing section of the Bill, which it is now suggested should be considered at Report stage there is the necessary doubt which our rules insist should be there before a Bill is deemed to be a hybrid Bill and, as a consequence, special consideration is given to it. Your Lordships will be aware that the ruling on this is very firm and is clearly understood. It is that if any Public Bill is submitted with the idea of its eventually becoming legislation and it can be shown that, as it is framed, there is a possibility that one section of the community or one person may be discriminated for or against, then they can ask that the Bill be looked at by Examiners with a view to its being deemed to being hybrid so that they will not be robbed of the procedures which we have laid down under our rules to see that their interests are properly and fairly looked at. I believe that, so far as this Bill is concerned, such a doubt unquestionably exists in so far as it affects the ship repairing industry.
The reason I am making this submission in these terms now, before we go on to Report stage, is this. Eventually, it would be your Lordships, by their voice and their vote, who would have to decide whether the doubt exists and whether this Bill should be treated as a hybrid Bill—and I think that would be rather sad. I repeat, my Lords, that the rules are there and we have an obligation to adhere to them; and if it is that the rules are being infringed it would be infinitely better if, instead of your Lordships making the decision by debate and vote—perhaps I could have the attention of the noble Lord the Leader of the House, because it is particularly to him that I am submitting this point—it were dealt with now. I submit it would be healthier and better, as well as being more satisfactory

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from every point of view, supposing it can be shown that the doubt does exist, if the Government were to take the lead in saying that they would withdraw it in its present form and send it to the Examiners. That would be better than trying to decide what is an intricate matter by formal debate and, eventually, an overall vote in your Lordships' House. So if I can impress upon the noble Lord the Leader of the House, with perhaps the concurrence of the noble and learned Lord the Lord Chancellor, that such a doubt exists, it may well be that even at this stage he would prefer to move that this section of the Bill he sent to the Examiners.
Perhaps I can substantiate the main point. Is it necessary to show only that there is a doubt? The Record of 10th December 1962 shows clearly what was said by the then Clerk of Public Bills to the Select Committee on Hybrid Bills, 1948. On page 52 of the evidence he was asked:
"Is the principle, then, that when there is any doubt at all the bill must go to the Examiners?"
The answer given was:
"I should say so, yes."—[Official Report, Commons, 10/12/62; col. 37.]
According to that evidence, which was accepted, any doubt, however small, means that there is a doubt. Later on that same day, the 10th December, Mr. Speaker ruled on that—and these are Mr. Speaker's words:
"I do not think that I need quarrel at all about definitions with the honourable and learned Member. I accept the true position to be this, that if it be possible for the view to be taken that this Bill is a Hybrid Bill it ought to go to the examiners. There must not be a doubt about it."—(col. 45.)
That is clearly the basis upon which the rule is framed; and the question I quoted was put by a learned Member of the Labour Party, who was obviously speaking officially for that Party at the time he put that question. Mr. Speaker's reply, in confirming that any doubt, however small, means that it is to be treated as a hybrid Bill, makes it very clear where our duty lies.
Now if it is established that any doubt, however small, is sufficient for it to be sent to the Examiners, we then have to ask: Are there doubts? I have in my hand a suggested Petition prepared by the Bristol
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Channel Shiprepairers Limited, paragraph 4 of which says:
"Your Petitioners submit that the Bill is a hybrid and, if it is passed into law as it low stands, your Petitioners will be prejudicially and unfairly affected and that the Standing Orders of your Right Honourable House, framed for the protection of private interests, are applicable to those provisions of the Bill relevant to shiprepairing companies".
My Lords, there is someone who feels that a discrimination to their detriment is included in this Bill. They claim that the doubt which is necessary to show it as a hybrid Bill exists, and they are ready to submit a Petition. At this stage t hey have not done so, and there will be no need for them to do it if the Government, as I hope they will, face up to the paint that the doubt is there and that evidence of that doubt exists.
It may well be that the noble Lord the Leader of the House will say that the view that a doubt exists, expressed by 3omeone who claims that they would be discriminated against, is perhaps a biased view; that they have an interest which quite naturally has reflected itself in their preparation of that Petition. I could therefore well understand the Government and their advisers thinking that that claim by people affected would not in itself be sufficient. But, my Lords, there is infinitely stronger evidence as to there being more than a casual doubt. My noble friend Lord Colville of Culross submitted a whole series of questions to the Government which reflected the fact that, on soundly-based legal grounds which he clearly set out in detail, he had very grave doubts indeed.
Those questions were submitted to the Government, and they were answered on the 14th October. A record of that exists in the Official Report of this House. When I raised this question in a general way at an earlier stage of this Bill I was told that all the evidence in the possession of the Government was contained in the answers that they gave. We therefore have to decide this. Did the answers giver to my noble friend Lord Colville of Culross remove the doubts? I submit to your Lordships and to the noble Lord the Leader of the House that, far from removing the doubts, the words which they used, which clearly set out the r case, added to them.

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I say that because the Petitioners to whom I have referred passed the replies and the original Question on to learned counsel. I think that no one would deny that, as distinct from the Petitioners themselves thinking they are being discriminated against, if an objective and impartial counsel's Opinion is submitted and that establishes a doubt, then that clearly removes any thought that the suggestion that there is a doubt which brings it within the rule which would send this Bill to the Examiners is a frivolous one. I quote from counsel's Opinion. May I say to the noble Lord the Leader of the House that I shall be happy to hand him counsel's Opinion. I repeat to the noble Lord the Leader of the House—
Lord PEART: I hope that the noble Lord who is a good friend of mine will not assume that I am behaving disrespectfully. I am listening very carefully and taking notes.
Lord HARMAR-NICHOLLS: My Lords, of course, the respect which the noble Lord the Leader of the House and I have for each other is real and deep. There is no question that he would deliberately not pay attention to an important point; but I feel that I have a duty to make certain that this part of my submission is heard by the noble Lord. He may possibly have missed a vital point and I do not want any vital points missed at this stage.
I quote from counsel's Opinion on the reply given by the Government, which is their case to try to show that a doubt does not exist. In paragraph 31 counsel says:
"The proposition set out in para. 1(c) of the Written Answer is, therefore, one from which I dissent. In some circumstances it may be correct. In others it is not. In the particular case of the Cammell Laird company it provides the answer which it is intended to provide; and in my considered opinion that is the wrong answer."
Later on in his Opinion, he says:
"In my opinion the conditions in Schedule 2 Part II paras.3(1)(a) and (b) were satisfied in the case of B.P. Tanker Co. Ltd., and its exclusion from the list of companies in Schedule 2 Part I is therefore a mistake which can therefore be explained only by oversight or by defective formulation of the policy and principles embodied in the Bill."
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I break off to say that I suggested at an earlier stage of this Bill that this mistake was an inadvertent one. No one is suggesting that the Government have deliberately framed this Bill in a way which brings it within the rules I am now trying to argue are the correct ones. Then counsel says:
"It would appear to be a straightforward and obviously correct proposition that, until the end of March 1973 Clyde Wharf, and from the end of March 1973 Sugar Line, was engaged in the same business of repairing … ships'".
"I do not find it possible to disagree with that obviously correct proposition. The Government's dissent from it is, as I think, illogical and wrong."
He then went on in paragraph 39 to say:
"I can deal shortly with paragraph 8 of the Written Answer. The Government is satisfied that a company is not engaged in the business of … maintaining ships if the only ships which it maintains are its own. The Government is mistaken."
Then, in paragraph 44:
"My considered opinion is, therefore, that the Government's policy and intention are not expressed in the Bill; and that, as the Bill is now drawn, the Government's expressed views about its interpretation—and application to the matters discussed in the Written Answer—are unsound and wrong. At the very least the fact that my views differ so markedly from those expressed in the Written Answer indicate that there is grave doubt about the correctness of the Government's views and room for further investigation and enquiry before the Government's views on these important questions are accepted and acted upon."
I do not think that anyone who reads the ruling given by the Clerk to the Select Committee and confirmed by Mr. Speaker in 1962, that all you have to do is to show that there is a doubt however small, will fail to accept that as a basis of the way we have to proceed. Furthermore, we must recognise the Petition drawn up by this company who truly feel that they are being discriminated against and, added to that, this impartial and objective counsel's Opinion upon what was the Government's defence as to there being a doubt existing. If all those things are taken together, I am convinced that your Lordships will have to come to the view that, however accidentally it may have been done, however inadvertent was the inclusion of this clause in the Bill, it has put us in a position where we must of necessity insist upon the rules being observed.
I submit that if we allow it to pass on this occasion where the case is clearly on

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record and should be understood, then the power of this rule, which was inserted for the protection of private individuals, will atrophy, and it will be a convention that this protection for the individual no longer applies. And we will be doing this at a time when so much legislation is being put on to the Statute Book which is likely to affect individuals in a discriminatory way. I believe we have a special responsibility to adhere to the rules. Rather than have to cajole the Government into adhering to the rules, I am arguing that it would be better if at this stage the Government recognise the existence of a doubt and themselves suggest that this clause of the Bill be referred to the Examiners.
May I say to my noble friends that this in no way affects the principle involved. I make my position clear. If it goes to the Examiners and if the Examiners give it a clean bill of health, I would still oppose this on the grounds of principle. The principles are strong apart from adhering to the rules. This in no way overlaps or should give us a conscience for pursuing our defence of what we think is right on a matter of principle apart from the rule. That being my position, if it has to be brought into effect by my voice or vote after it has been to the Examiners, I am now standing firmly and solely upon the proposition that if ever there was an Assembly in the world which had a special responsibility and a special duty to keep to the rules when private freedoms and private discrimination is involved, this is the Assembly which must do it. It ought not to have to be done by using the Whip or by using any sort of argument. It ought to be done by the Government of the day, in the protection of its own power and standing, recognising that a doubt exists, that the rule is being infringed and that they recommend the matter be sent to the Examiners for their impartial decision to be in front of your Lordships when they get to the point of arguing the principle.
3.9 p.m.
Lord PEART: My Lords, I am rather surprised that the noble Lord, who was a colleague of mine, did not do me the courtesy of letting me know about this. It is an important legal matter. I do not
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pretend that I know the law. I do not think he knows it either. My short link with the law was at an Inn before I went into the Army. That was all the connection I have had with the law. I do not pretend to be a legal man. All that I would say is that we have down a Question by the noble Viscount, Lord Colville of Culross, which will be answered today, and I am prepared to see that he has the text of this. The noble Viscount, Lord Colville of Culross, raised this matter some time ago and a reply was made in my name.
This question of hybridity is a very difficult one. If anybody is dogmatic about it, then he must be a strange person. I am not and I do not think that anyone should be dogmatic. From all the evidence and all the legal advice that we have had, we are in no doubt that what we are doing is right. The noble Lord is entitled to raise this matter in debate. There is an argument about whether ship repairing is going to be deleted from the Bill. In view of the fact that the noble Viscount, Lord Colville of Culross, has put down a Question which will be answered, the text of which I will see is available to everyone, we should proceed with the Bill now. I think this is right.
Lord HARMAR-NICHOLLS: My Lords, if the noble Lord feels I have been remiss in not giving him details, I apologise; but I did not have all the evidence, myself until this morning and I did not have a lot of time to do that. In terms of being remiss, I apologise. But I should like an undertaking from the noble Lord the Leader of the House that he will give a clear and unambiguous ruling (a) whether in the light of the evidence I have produced a doubt is raised, and (b) whether or not with that doubt existing he would be prepared to recommend that this matter should go to the Examiners. If not, perhaps he will tell us why he will not adhere to the ruling.
Lord PEART: My Lords, I will certainly look at what the noble Lord has said. There is no question about that.
Lord WIGODER: My Lords, will the noble Lord agree—as I am sure ho will—to receive and study a copy of this Opinion,

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which is by a distinguished and experienced Queen's Counsel, and consult with his colleagues—perhaps in particular the noble and learned Lord the Lord Chancellor and his advisers—with a view to seeing if any further steps are necessary?
Lord PEART: My Lords, of course. That is right and proper on an important matter like this. I accept this, especially where legal opinion is necessary.
Lord CARR of HADLEY: My Lords, perhaps it might help if I say a word as we see the situation from the Opposition Front Bench and the conduct of this Bill. We have been holding off—if that is the right phrase—any action on this point while waiting to see the matter pursued on the basis of the information which we gave on the Second Reading of this Bill which has been followed up by questions by my noble friend Lord Colville. We are awaiting an answer to the latest of his questions. I am glad to know that that will be available today. Our object in doing this has been to establish in our own minds whether we believe that there is a degree of uncertainty which would qualify as a doubt. That would then place upon the House a duty of submitting the whole matter to the Examiners. I am sure the Government will agree that all through we have been making available to them, and also making public, the knowledge we had in order that this whole question could be pursued openly and not in any way sprung as a surprise on anybody at an inconvenient moment. We have not been making it a matter of political tactics but have been trying to deal with the issue in a responsible way.
On industrial grounds we believe that ship repairing ought not to be included in the Bill. We shall be arguing that on industrial grounds which have nothing to do with hybridity. If we were to convince the House on industrial grounds that ship repairing ought not to be included, then by the removal of ship repairing from the Bill all doubt about hybridity would also be removed. I thought it might be helpful to the House if I made that brief explanation.
On Question, Report received.
3.15 p.m.
Clause 1 [British Aerospace and British Shipbuilders]:
Viscount SIMON Viscount SIMON moved Amendment No. 1:
Page 1, leave out line 10.
The noble Viscount said: My Lords, I beg to move Amendment No. 1, the effect of which is to remove the aircraft industry from the scope of this Bill. There are a large number of consequential Amendments and I will not waste the time of the House in reading them out unless I am asked to do so. The consequential Amendments are easily identified because they are in the names of myself and my noble friends Lord Kimberley and Lord Amherst. We have been careful not to put down any other Amendments except those which are consequenital to Amendment No. 1. I moved this Amendment in Committee and we had an interesting discussion. At the end I withdrew the Amendment partly because the noble Lord, Lord Carr of Hadley, pointed out that if we were to press it successfully, it would have shut the door on a number of discussions regarding the aircraft industry which the Committee might have wished to have.
I do not want to make a long speech again or the same speech again, but I must explain what lies behind this Amendment. So far as the aircraft industry is concerned, our belief is that the objects which the Government are seeking to achieve by nationalisation can be achieved without nationalisation. The noble Lord, Lord Kirkhill, explained very clearly on Second Reading what the industrial case for nationalisation was; namely, what was required was a structural reorganisation involving a merger of the two big groups, BAC and Hawker Siddeley. I am not entirely clear where Scottish Aviation comes in, but I assume if the Government could be persuaded to accept the Amendment, that question would not arise.
It is an undisputed fact that the merger of the two groups has been considered for some time but it has failed to come about. In making that statement the noble Lord. Lord Kirkhill, was perfectly fair. I do not think that he was so fair when he went on to say that there was no sign that it ever would be achieved. The noble Lord, Lord Melchett, later,

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during the Committee stage, asked us to say why private enterprise had not succeeded in achieving this result. I suggested that perhaps under the shadow of nationalisation it was not easy to achieve it. The noble Lord, Lord Carr of Hadley, gave me great help by reminding the Committee that there had been in the early 1960s a number of amalgamations and it would have been foolish to have attempted a merger of these two big groups a few years after that. Amalgamations must be given time to get settled.
In the early 1970s there was a revival of interest in the merger between the two big groups. That went on until they were politely asked to drop it because of the advent of nationalisation. My noble friend Lord Kimberley knows more about that than I do, and he will be able to tell us more when he speaks. Whatever difficulties there have been in the past, we are now assured, thanks to the noble Lord, Lord Melchett, that the two groups are working together in real co-operation under the aegis of the noble Lord, Lord Beswick. This is good and encouraging news. Not having been a classical scholar, I am not sure what an aegis is. If I might express it in terms more familiar to me, the noble Lord, Lord Beswick, has been an excellent catalyst.
In this industry the Government will always be deeply involved, not only because they have to provide very large sums of money but also because they are purchasers through various agencies in a large scale. I would have thought that if a merger could be achieved—as we believe it can in the near future—that it would be very reasonable for the Government, in the light of having provided all the finance in the past—and probably they will be asked to provide finance in the future—to have directors on the board.
In fact if one thinks of mergers between two very lively and go-ahead companies like the BAC and Hawker Siddeley, one can imagine that there might perhaps be a little personal difficulty at the top, and it might well be that one of the Government directors should be chairman of the company. Personally I think that would he an excellent idea. It would enable the chairman to have contact with the Secretary of State without having the Secretary of State sitting on top of the company with statutory rights and duties.
We were reminded that at the present time important discussions and negotiations are going on with our friends in Europe, and I hope I am right in assuming that all the parties concerned—and two groups, the Organising Committee and the Government—are fully informed of what is in the wind. I do not see that there is great practical difficulty in whatever is being done now being carried forward without a hitch. I think I am right—and I am sure I shall be corrected if I am wrong—in saying that the Organising Committee is a non-statutory body and while negotiations are going on the Organising Committee could continue its role until the merger is completed.
There is one other matter to which the Government attach considerable importance; that is the attitude of the workforce. The noble Lord, Lord Kirkhill, said again on Second Reading that they were moved by the belief that people will find greater satisfaction in working for industries which belong to them and which contribute to the wealth of the nation. I wonder whether the noble Lord has correctly analysed the factors which go to make up job satisfaction. I should have thought it was just as likely that job satisfaction comes from being in a happy work place, having good industrial relations and, above all, being in a work place which was producing satisfactory results and, particularly in the case of the aircraft industry, making an enormous contribution to British exports. I should have thought that in that way the work people could be proud of the fact that they were contributing to the wealth of the nation. I think the noble Lord, Lord Melchett, agreed with me that while it is right to take the views of the workforce into consideration, they cannot be paramount.
I should like to say one other thing on this aspect. We are told—and I know it to be true—that the work people, through their trade unions, have expressed a wish for nationalisation. Would I be stretching my imagination too far if I suggested that the impetus for this came originally from the Labour Party through the trade unions, that it came from the trade unions to the shop floor and was faithfully reflected on the shop floor? I find it difficult to believe that this suggestion for nationalisation started at the work bench. Naturally, I have no evidence and I am

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only expressing a view in the light of the way people think, but I cannot believe that the average workman thinks about that sort of thing at all.
My Lords, there is an important passage in the Bill, to which I know the Government pay great attention, and that is in regard to industrial democracy. I have already expressed my dislike of the phrase but we can come back to that later. We on these Benches are fully in agreement with what is suggested there and with the proposal of writing into the Bill the need for industrial democracy to be developed in this industry, but I do not see any reason why it should not be developed just as successfully in the private sector as in the public sector. I do not think experience in the past suggests that the public sector is ahead of the private sector in this field.
On those grounds we feel that the situation would not be worsened if this industry was taken out of the Bill and if the projected merger was allowed to go ahead. But it would not be just the same. There are two great advantages: one is that the industry would be free from interference by the Secretary of State. In Committee we limited the interference by the Secretary of State but it is still there, and who knows what may happen to the Amendments which we have sent to another place! Above all, it would be free from the necessity to pay compensation. At an early stage we were blinded with science and told that it would not cost any money at all, that it arose through a transfer of resources; but I think many of us found it very difficult to understand that, because if stock which is redeemable is issued it may be that the debt is postponed but it certainly has to be paid.
I have a feeling that the Government have moved slightly away from that view, because I observed that during discussion on the compensation terms first the noble Lord, Lord Winterbottom, on 25th October in regard to some proposition that the compensation might be increased, said:
"… it is the taxpayers' money that is being shifted to compensate the individual or the company."—[Official Report, 25/10/76; col. 126.];
and a little later on, in the early hours of the next morning, at column 210 the noble Lord, Lord Melchett, referred to some
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propositions put forward from this side of the House as—
"Heads the shareholder wins, tails the taxpayer loses."
Therefore it would seem to me that the Government have given up the idea that it does not cost money to nationalise this industry.
That brings me to my last point. Our reason for moving this Amendment, which I think is well justified in itself, is largely to enable the Government to think again on this question when the Amendment goes back to another place. As I said before, I know that the Government in this House cannot possibly agree—and I do not expect them to—but if the Amendment goes back to another place the Government will have an opportunity of considering whether they could not make this admittedly painful gesture of giving up something which I know they are very keen about. By abandoning this proposal they would show the country, whom they are urging to stand behind them in the difficult times ahead of us, and our foreign creditors, that at this moment an amount of money—I have heard £300 or £400 million quoted—could be saved without any loss to the country. I do not want anybody—and I include the Government—to feel that they were being forced to do this. I would simply give them the opportunity of their own free will to go to the country and to our foreign friends—they are still friends, thank goodness!—and say that to meet this difficult situation they are prepared to give up this thing which they treasure very greatly. I beg to move.
3.30 p.m.
Earl FERRERS: My Lords, considering the enormity of the subject, the noble Viscount, Lord Simon, has moved this Amendment in as gentle and as courteous a way as he could. I am bound to say that I have a great deal of sympathy for the views he has expressed. That is simply because we have come to the stage where, by this Bill, we are nationalising this huge industry and we have not yet heard any reason why it is alleged such a process will enable the country to be better off, or the industry to be better off or will enable the industry to serve the country any better at all. Indeed, I think it would be right to say that, having gone through the Committee stage, we are even

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more depressed because we then sought to introduce a number of Amendments and to find out the Government's view on a number of points. We sought to introduce Amendments which contained a number of constructive ideas. But the extraordinary part is that so often we were unable to elicit the information that not only we wish to know but other people in the country would like to know; nor did we succeed in getting any reasonable Amendments of substance accepted.
I understand the first difficulty, in so far as noble Lords opposite are in the difficult predicament, of speaking for Departments with which they are not intimately involved. We accept the difficulty that that can produce and we acknowledge they have struggled manfully with the problem. We are grateful to them for what they have done; but, on the other hand, in the Committee stage we had a vast quantity of Amendments put forward and only those of the most modest size have been accepted. For example, I can think of one in which the words "in relation to" were replaced by the words "in respect of". I am glad to say that was an Amendment moved from this side of the House, but it did not of course alter the nature or the substance of the Bill.
When the noble Viscount, Lord Simon, says he has heard sums of £300 million and £400 million being put forward as the cost of this nationalisation and that he cannot see how that will benefit the industry, I am bound to say I agree with him entirely. Even if, on the merits of the case, there were justification for nationalising this particular industry, I should have thought that the particular timing of it would cancel out any argument for so doing. The noble Viscount, Lord Simon, referred to the expression "transfer of assets". Of course, it is infinitely more than that. If the Government are going to have to pay out £400 million and to service the loan of £400 million, that is direct expenditure which I would venture to suggest is not in any way a mere transfer of assets.
At this time, when the country is in such an economic mess, one really wonders how one can justify the expenditure of such a sum of money—and for what? It is not that the industry is going to be any better or is going to make aeroplanes
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cheaper or more efficiently; it is not going to compete any better or help to improve the balance of payments. There is not one argument we have heard which in effect says: "If we can do this the industry really will be more profitable in the future." Indeed, it is very difficult for it to be more profitable when it happens already to be extremely successful and when it produces exports of £800 million a year. It is difficult, as I say, to see how that will be improved upon; but the real danger, I would suggest, is that when this industry is nationalised, however much Government Ministers may say that they want to let the industry run itself and to let British Aerospace run itself under aegis of the noble Lord, Lord Beswick, it will be the civil servants who will badger the thing to death. It will be the inevitable prying into and involvement of civil servants that will do all the harm—I say that not in an offensive individualistic way but in a collective sense. It is the involvement of the civil servants and all the paraphernalia that brings which will remove the cutting edge of this industry. That is the real danger, as I see it, and I would only say that one wonders whether one dare risk it.
If the Bill goes forward as the Government wish, that is a risk we shall be taking. I personally think it is a risk that the country as a whole cannot afford to take and indeed should not take. I would see the effect of this legislation as a removal of the huge incentive and the sharp cutting-edge which at the moment is so evident in the British aircraft industry. I have a great admiration for that industry, which I think all your Lordships in this Chamber would share. If this Bill were to go through as it is, I should like to think there would be the possibility of an improvement in the aircraft industry, but I just do not believe it.
Lord ORR-EWING: My Lords, I should like to support the views put forward by my noble friend from the Front Bench. I do so on two scores. First, I believe the aircraft industry has proven itself and I shall seek to show that by the results in the civil and military fields. Secondly, the cost, at a time when our pound is so desperately weak, and the lack of confidence this action will implant in our creditors overseas will be further detrimental to our ability to pay

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our way and for the pound to sustain its value. The Minister of State, speaking in a Commons Standing Committee, gave the facts away when he said:
"What we want from the Bill is an extension of Socialism."
It is an extension. There are in fact in the Society of British Aerospace Companies some 300 companies and this Bill seeks to nationalise four of them: two Hawker Siddeley companies, one BAC company and Scottish Aviation. No doubt under another clause we shall be discussing a point I have always worried about, in other words, the other 300 members, because they naturally feel they may be swallowed up and drawn into the vortex of this huge nationalised concern. I hope that we may be able to have some assurances about that during this stage of the Bill.
So far, if I remember rightly, we have spent eight hours in deliberating on the first Committee day, eight hours on the second Committee day and 12 hours on the third Committee day, which makes 28 hours. We shall be spending eight hours today and five hours on Wednesday. We also intend to have another five hours on Friday, or something of that nature, and I hope that at least we may receive some understanding from the Government Front Bench that we have been trying to put a case which is constructive in many ways. We have not had that so far, which I think must be a disappointment to everyone sitting on the Cross-Benches, the Liberal Benches, on this side and to many on the other side. That is why I, and many others, are concerned. I do not know whether we shall or shall not wish to divide the House, but I hope we shall have something which is a little more forthcoming than hitherto, because although we have argued our case and on a number of occasions the Government have said "Yes, we concede there is something there", we have a horrible feeling that written across every brief in respect of Amendments put from the Opposition Front Bench is, "Resist", "Resist", "Resist". That is not democracy, and I hope that in the hours that remain for discussion of this Bill we shall sec, "Agree", "Agree", "Agree".
I say it is not democracy because it is a minority policy with a minority Government
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imposing it upon this House. Also, many objective critics from overseas, when looking at the sad position of British industry—and this is something which has been said also by the Prime Minister—believe that the serious nature of our problems is brought about by the fact that 60 per cent. of the gross domestic product is already in the hands of the Government and only 40 per cent. in the private sector. This will swing the balance even further; so we shall have a diminishing private sector trying to support an immense and unprofitable public sector.
Looking at the figures, in 10 years BAC and Hawker Siddeley have provided to the public purse more tax from their pockets than all the nationalised industries put together: I repeat, all of them. That is not a bad performance; so on performance one would not wish to see this great aerospace industry nationalised. Looking at the recent results, in 1975 BAC's profit before tax was £27 million out of a sales turnover of £300 million. That is a 9 per cent. return before tax—not very great, but adequate. Hawker Siddeley, with two companies, had £20 million profits from £220 million sales; that is, equally, 9 per cent.
If you compare those results with the nationalised industries, you get the most stark results. In the 18 years to 1975, the net return on assets in the nationalised industries varied between 2 per cent. and 6 per cent., while in the private sector it was 19 per cent. In BAC in 1973 it was 26 per cent., and in Hawker Siddeley in the same year it was 30.8 per cent. What a marked difference! This is not unique. The nationalised industries of this country are in no way unique. If you look at the results of Western Europe, the picture is very much the same. If you take Aerospatiale, which is the most successful of the European aircraft firms, that lost £40 million last year. So you have only to nationalise and you turn profits into losses.
One of the arguments—and I am not going to deal with the participation argument—is that this Bill is needed to restructure. I personally do not believe that it is necessary. I have said before that the 1972 Industry Act would allow one to restructure. We know what has already been done under that Act, including £1,400 million promised, but not yet given, to British Leyland, which,

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of itself, is an immense sum of money. If the Government can do that under the 1972 Act, why can they not proceed under that same Act without this piece of legislation, if they have to?
When I came back from the Royal Air Force in 1945, there were 12 British airframe companies, and by 1959, under Harold Macmillan's Government, we had come down to BAC and two Hawker Siddeley, with much smaller ones not in the top league. By 1973, Michael Heseltine, who was then the Minister responsible, had agreed with Hawker Siddeley, and with GEC and Vickers, who were the shareholders of BAC, that there should be a voluntary coming together of those companies. Here, again, that was possible without nationalisation, just as the restructuring up to that stage had been perfectly possible, without antagonising people working in it at any level; they were very happy to do so. I mention the managers in particular, because if this goes ahead, and the Government are convinced that they must carry out this minority policy, then I am afraid that they will lose some of the most able and dedicated managers who do not wish to work in a large and amorphous body, and who wish to retain their individuality and the loyalty of the company which they have served.
Why have these mergers come about? It is because the increasing cost of developing, launching and building aircraft has gone up and up. I saw the latest estimate for the Hawker Siddeley 146, which is a short-range airliner, and if it goes ahead it is estimated that it will cost £200 million, which will obviously take 10 or more years to recover. Very few private companies can afford that. That happens not only in this country but all over the world, so that Governments throughout the free world have helped private industry cover this risk by loans which they regain from royalties paid. The market is tremendous. I saw that even the Labour Party and the TUC acknowledged this, when they said that by the 1980s the value of civil and military aircraft was likely to exceed £6,000 million. So that the market is there.
I now come to the cost, and this must be very much in everyone's mind at present. It is estimated that it will cost between £300 million and £400 million
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for the take-over. I believe that when the Tribunal has finished its work)it will be more. It is estimated that we shall have to provide borrowing powers for each of the Corporations of £300 million. It is also estimated that they will need working capital amounting to £1,200 million over three years; and, of course, there is the renewal of machine tools and the restructuring of the companies which will need still further money. So that on every score the taxpayer—and I am glad it is now acknowledged that it is the taxpayer, and that this will not be just a transfer of resources—will he clobbered.
If the Government allow this Amendment to go forward, it will not only encourage the taxpayers, because they will know that they are not going to have to meet these tremendous demands in the future, but it will certainly encourage the IMF who will shortly be arriving on our shores, and, if what we read is correct, will ask us for some rather punishing measures to be taken, belatedly. It will certainly encourage our creditors who continue to lend us money as the borrowing goes round and round; and last, and perhaps most important of all at this juncture, it will help sustain confidence in Britain and in the pound sterling, which is more necessary than anything else. So I urge the Government, even at this late stage, to think again to see whether they can use other methods of achieving their object, such as the 1972 Act and a lot of voluntary restructuring, and not use this desperately blunt and inefficient weapon to achieve it
Baroness PHILLIPS: My Lords. before the noble Lord sits down, may I say that I know him not to be unfair or unjust, and indeed to be compassionate. But would he not agree that it is unfortunate to use the words, "unprofitable public expenditure"? Were I still teaching small children, or were I a fireman, a police-man, a doctor or a nurse in the service of the community, the costs of which are met from public expenditure, I would not think my labour was unprofitable. I would think it was yielding a very real profit which is quite comparable to anything yielded by the private sector. It is very unfortunate that it will go on the record on this day, when we are to have these visitors who will bring us money to borrow, that we are considered to have unprofitable public expenditure.
Lord ORR-EWING: My Lords, if I said that, I can only say that I did not intend to do so. What I was saying was that these nationalised structures—and I do not count the educational services—are services which can be maintained in our country only if we have a large enough private sector to earn the profits to make them possible, and we shall not have an educational service, a welfare service or anything else if we make the private sector smaller and smaller. That is why I joined the Conservative Party rather than the Labour Party when I was at Oxford, and that is why I now sincerely believe that the best way of achieving what is wanted is through private enterprise and not through nationalised industries. That is why I am pleading the case.
3.47 p.m.
The Earl of LAUDERDALE: My Lords, I do not want to detain the House for very long, but since we sat through the Committee stage I think it has been suggested that each of us should study the other's arguments, and I have paid some attention to the arguments that were used by the noble Lord, Lord Melchett, when he answered the debate on this Amendment in Committee. He was then fresh, and I hope he is fresh now for a further fairly long session. He looks fresh, and we certainly do not want to make him unduly weary. Because we have been looking as carefully as we can, and with what objectivity we can still muster, at the arguments, I myself should like to express great sympathy with this Amendment, but we shall listen with great interest to the reply and consider whether or not we want to divide.
I was very interested in one remark made by the noble Lord, Lord Melchett, in Committee. He said:
"Under the aegis of my noble friend Lord Beswick and the Organising Committee, the British Aircraft industry is working in real co-operation and speaking with a single authoritative voice."—[Official Report, 11/10/76; col. 34.]
Perhaps he can tell me straight away—and I will gladly give way to him—whether he was referring to the airframe manufacturers only, or to the airframe manufacturers and the engine manufacturers. I draw attention to that, because he had been saying how necessary it was to have, as it were, a single voice in the industry,
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so that the British aircraft industry could talk to foreigners, and he mentioned that the French had announced the partnership with McDonnell Douglas, the Italians were talking with Boeing, and so on.
The simple fact is that so far as the aircraft engine manufactures—which really means Rolls-Royce—are concerned, we do not have to do anything more to Rolls-Royce to enable them to talk with Boeing, with Douglas or with anyone else. Here is one of the major aero-engine manufacturers in the whole world, of unparalleled quality and skill, and, as has been made clear many times in many places, they are quite capable of taking care of themselves where it is a matter of standing up to foreign competition or negotiating with others.
So there appears to be a slight ambiguity in what the noble Lord has said and perhaps he can clear it up when he replies. Certainly the case that may be made by the airframe manufacturers will be very different from that made by the aero-engine manufacturers. It is a great pity not to refer now to an old phrase:
"I do not mind lying but I hate inaccuracy".
I am sure that the noble Lord will agree with me about that and will make the record quite clear.
While answering for the Government on this Amendment the noble Lord said at col. 31 that,
"Workers expressing their views through their unions have made it clear that they wish the industry to be taken into public ownership."—[Official Report, 11/10/76; col. 32.]
No doubt they have done so, but the noble Lord is equating the trade union members with the industry as a whole. Surely that cannot be strictly correct.
Lord MELCHETT: My Lords, like the noble Earl, I dislike inaccuracy. I think that the noble Earl is referring to something that I said in col. 32 rather than in col. 31.
The Earl of LAUDERDALE: My Lords, I beg the noble Lord's pardon. I am very happy to be corrected at any time and I will take correction with a smile, just as the noble Lord, Lord Melchett, always takes it with a smile, too. The suggestion here is that the voice of the industry is determined or determinable by the voice of the trade

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unions. Nobody is going to say that the trade unions are unimportant. Equally, it is untrue to say that they represent the whole of the industry. The noble Lord has said that,
"Workers expressing their views through their unions have made it clear that they wish the industry to be taken into public ownership"
Are the people who belong to trade unions the only workers in the industry? Surely the noble Lord would not claim that. If he does, we would challenge him because the workers in an industry are all those who labour whether by hand or by brain, whether on the shop floor, whether in supervisory grades, whether in management—indeed, whether they are shareholders. All of them are participators in the industry. It seems to me that the noble Lord's reply, which tripped off the tongue very readily when he made it, was not at the time a quite satisfactory answer to the Amendment to which he was replying.
The noble Lord did not answer a point which was put by my noble friend Lord Ferrers, who asked:
"Is it or is it not the case that the fusion of the several companies concerned will involve a reduction in jobs?"
The noble Lord, Lord Melchett, is very agile and we have learned increasingly to respect his agility, but he ducked that question very quickly indeed. The fact is that either the rationalisation which the noble Lord speaks about will lead to lower unit and labour costs, which can only mean a reduction of the labour force, or it will not. I say quite frankly that this will kill so many hundred or a thousand jobs. Let us not hide the matter. Indeed, the noble Lord will be interested to hear that when the Government gave evidence to a Select Committee of this House on the future of the aircraft industry in Europe, a Committee over which I presided only a matter of months ago. the Minister made it absolutely clear that what mattered to the Government in the aircraft industry was the jobs that it provided. We did not think that it was a very worthy approach to the strategic problems in the industry but that was the line which the Minister took. Here we are being promised a fusion for the sake of rationalisation which, if it means anything at all, can mean only a reduction in jobs, contrary to the Government's stated policy elsewhere.
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Then we read that the great means for obtaining accountability at what is known as the strategic and corporate level is again by nationalisation. In the old days we used to say, "Tell it to the marines", but I say tell it to Sir Richard Marsh, to Sir Monty Finniston, to any of the unhappy people who have presided over nationalised industries in the past 25 years. We know very well that account-ability means a lot of niggling interference from civil servants. Sir Richard Marsh's comments on the way he has been treated by successive Governments—by our Government just as much as by thz! Government of the other side—speaks for itself. My goodness! accountability is simply exposure to interference from people who do not always know very much about the industry to start with.
Then there is the question of cost which has been alluded to by the noble Viscount, Lord Simon. Is this the week in our history when we want to speak casually about another £400 million of public money being spent? All I can say is that this Bill is singularly relevant to a radical Government in that a radical is a man with both feet planted firmly in the air.
Lord THOMAS: My Lords, I wonder whether I could make three points. I cannot understand the mania for massive nationalization. When I first came into the civil aircraft industry there were three Corporations: British South-American Airways, the British Overseas Airways Corporation and British European Airways. Now we have one Corporation. Is that Corporation any better? Is it providing any more jobs? Is it making more revenue? No, I do not think so. The mania for massive expansion does not help.
The noble Earl, Lord Ferrers, mentioned the influence of civil servants on nationalised industries. My experience has been that as a manager one is much quicker off the mark in the private sector than one is in a nationalised industry, as the noble Earl, Lord Lauderdale, has instanced in the case of Sir Richard Marsh and Sir Monty Finniston. You are much more agile as a manager when you are running a show under private enterprise. When one turns to international business, noble Lords may not know that under the present system every Boeing 747, 737 and 727 has its inboard flap actuators made in

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this country by private enterprise. If that is not good industrial relations in getting export business I do not know what is.
3.58 p.m.
Lord MELCHETT: My Lords, I confess that one thing which the noble Earl, Lord Ferrers, said slightly upset me. He said that he simply had not heard put the industrial case for public ownership of the aircraft industry. I had felt that I had at least made an attempt to put the case for public ownership of the aircraft industry several times in your Lordships' House: at Second Reading, and possibly several times during the Committee stage. I hope that the noble Earl will accept that while he may not have been satisfied by what he heard, and that is a matter entirely for him, at least those of us on this side of the House who have had to answer the many points which have been raised have done our best to do so. I accept, of course, that our answers may not have been entirely satisfactory. However, we believe that there is an economic and industrial case for public ownership. As I say, I believe that that case has been made many times both here and in another place and I will, of course, make it again this afternoon.
The need for structural reform of the aircraft industry has, I believe, long been recognised. Over 10 years ago the Plowden Committee of Inquiry concluded that the benefits from competition between the two main airframe manufacturers did not bring sufficient benefits to be worth preserving. Indeed, the honourable Member for Henley, Mr. Heseltine, when he was Minister for Aerospace tried to effect a merger between the two companies. The noble Lord, Lord Orr-Ewing, said that he had tried to achieve that merger but that he did not succeed in the period when he was there.
As I understand it, noble Lords opposite have attempted to argue that while they accept the need for structural changes these could be brought about without public ownership. In support of that contention they point, as the noble Lord, Lord Orr-Ewing, did during the Committee stage, and again today, to the reorganisation that resulted in the creation of BAC. If they are right, how can they
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explain the fact that over a period of ten years there was a growing consensus that there should be only one major airframe manufacturing company and yet there are still two companies left in private ownership? With this record I believe there is some justification, to put it no higher, for our believing that the changes will not be made so long as the companies remain in private hands.
The noble Earl, Lord Lauderdale, and I, a moment ago discussed briefly column 31 or 32 of an earlier debate during the Committee stage. The noble Earl knows that I was talking about the airframe manufacturers in the context in which he quoted me, but if I heard him aright he went on to say that Rolls-Royce can already speak with a single voice. Of course he is right. In 1965 the Plowden Committee recommended that there was a case for combining the two main engine firms into one group, namely Bristol and Rolls-Royce, and at the same time the Plowden Committee recommended that the two main airframe firms should be combined. The Bristol/Rolls-Royce merger took place voluntarily, which was something I am sure we all welcomed; the airframe merger did not take place, and hence the argument that is still going on between them.
The Earl of LAUDERDALE: My Lords, I am grateful to the noble Lord for giving way. I only want to make it clear that when he is speaking about standing up to negotiations with companies in other countries, Rolls-Royce as engine manufacturers can stand up to any other firm in the world and negotiate with them on equal terms, which may or may not be true of the airframe manufacturers. That was the point I was trying to make, but when the noble Lord said in his answer during the Committee stage that the industry was speaking with a single voice, do I now understand that he was really referring to the airframe manufacturers?
Lord MELCHETT: Yes, my Lords, I think in the context in which the noble Earl saw the word, without having had a chance to refer to it because I was most anxious to listen to what he said, as I know he is apt to criticise me if my attention even appears to wander while he is speaking; so I have not spent a long time reading the report of the Committee

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stage again, but I think that would be my answer.
It is now more important than ever that we should have a strong and united industry if we are to compete successfully in world markets. The scale of investment in projects has been such that for many years it has been too great for the resources of a single company. It is now growing beyond the resources of a single country. At the present moment, as I have told noble Lords, the British companies through the Organising Committee for British Aerospace are deeply engaged in discussions on future projects with manufacturers, both in Europe and in the United States of America. As I said during the Committee stage debates (and at least two noble Lords have repeated it this afternoon) under the aegis of my noble friend Lord Beswick, the British aircraft industry is for the first time working in real co-operation and speaking with a single authoritative voice. This should help to ensure that this country will be able to play its full and proper part in a world aircraft industry where there is increasingly little scope for competing companies from the same country.
Noble Lords opposite have also suggested that the fine record of the industry is itself an argument against public ownership. I do not accept that argument. The aircraft industry is in many ways a successful industry. It earns a good return, though not without a secure and profitable home base in defence procurement and a degree of support on the civil side. It makes big exports—though the figures claimed by the SBAC are sometimes misrepresented. The level this year and last has in fact fallen in real terms as the official statistics, when adjusted for inflation, show.
I do not make these comments in any destructive way but I think the record of the aircraft industry has been misrepresented as part of an argument that change could only disrupt what is working perfectly. I do not believe that it is working perfectly. There has been no major new project started for many years, with or without Government launching aid. The industry has in effect reached the end, or nearly the end, of its civil projects. It needs to make commitments very soon indeed which will shape the industry's workload for two decades ahead,
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in a world industry and a market increasingly dominated by giants. The United Kingdom industry cannot—and I think this is now generally acknowledged—do that effectively and successfully as two separate and competing groups which vie, as in the past, for Government support. While we may differ about the method of restructuring—and I do not expect that difference to be healed this afternoon, or indeed possibly for some time in the future—I do not believe that the objective is in serious doubt between either side of your Lordships' House.
In any case, the Government reject wholly the argument that public ownership should be restricted to industries with a poor record in private ownership. This is a point I have made at many stages during the debates on the Bill. What matters is whether the record can be maintained in divided private ownership or whether, instead, it can he improved in public ownership, as we believe. We believe that public ownership will help to release the energies and enthusiasm of those working in the industry, and thus improve its performance. It will allow the public accountability essential to an industry so dependent on public purchasing and financial support to be carried out more effectively and less onerously at the Corporation instead of the detailed factory-floor level.
We have never claimed that the Government's role as principal customer and provider of launching aid is in itself a sufficient argument for public ownership. But it reinforces and consolidates the case which is made out on the other grounds I have described. All in all, we believe that the case—a pragmatic one related to the needs and realities of this industry and this market—is overwhelming. As I said when I started, and to the noble Earl, Lord Ferrers, in particular, noble Lords have heard all these arguments before, but I assumed that in tabling this Amendment noble Lords on the Liberal Benches at least wanted to hear them again I do not imagine that I have convinced them, but I hope that at least they will accept, as the noble Earl, Lord Ferrers, obviously had not accepted, that we have a strong case to make for including these companies in the Bill.
The Earl of ONSLOW: My Lords, there are three points I should like to

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make on this Amendment. First, the most successful aircraft companies in the world are in private enterprise hands. I think that goes without saying. Secondly, the public opinion polls and all objective data that has been produced shows that nationalisation is unpopular in this country and it is really the last refuge of idealogues. Those are just two comments.
Now I come to my two questions. As a result of the nationalisation of the aircraft industry will productivity per man—or production per man—go up? If it goes down, not only is it a waste of money at a time when we cannot afford it—a futile waste of money because we shall have spent some money; or, to use that marvellous term "transference of resources"; I wish I could transfer somebody else's resources into my pocket—but this transference of resources will have made the industry less efficient unless the Government can show without doubt that the productivity per man will increase. Above all, how much is it going to cost? Figures have been bandied about, but we have never had a Government statement. How much is it going to cost in transference—oh, how I love that expression!—of resources from one pocket to another? How much will the taxpayer have to pay?
4.9 p.m.
The Earl of KIMBERLEY: My Lords, when my noble friends Lord Simon, Lord Amherst and I tabled this Amendment, we wanted to make ourselves completely clear as to the reason why, and quite honestly I think there is little that I can add to what noble Lords on this side of the House have already said this afternoon in explanation of this Amendment. If anything, the noble Lord, Lord Melchett, has helped our case. He has done his best to present his case, but to my way of thinking much of the material he used for building the edifice is not very sound.
My Lords, your Lordships have been accused of wrecking Bills which have been approved in another place. We all know in our hearts that most of those accusations invariably have been put forward by a minority group, either in another place or in certain rather militant unions. It makes no difference what they are called: it does not matter whether
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they are the Tribune Group, Marxists, or whatever else they may be.
Secondly, if we go into it very carefully, the case put forward for public ownership, or nationalisation—whatever word you want to use—was that it was included in the Labour Party Manifesto. Let us face the fact that this was put in to satisfy the Left-Wing element. Let us not forget that, in the so-called democracy which we have in another place, it is not in fact a true democracy, but a minority. We have had the statistics. Only 39 per cent. of the total electorate voted Labour. That leaves 61 per cent. of the people who did not vote Labour; who are against nationalisation. If you take again the figure of 39 per cent., you will find, I am sure, that a not inconsiderable amount of those voters today do not want nationalisation. They voted Labour out of loyalty to their Party—some may say misguided loyalty. But when the figures come out for the by-elections on Thursday, I would bet any money you like that my arguments will be all the more forceful.
My Lords, for many years the aerospace industry has suffered untold Government interference. It really is a miracle that it has survived, and is still remarkably healthy and well. We must remember that two big companies do not want to he nationalised, and who could blame them? If one looks around and sees the disasters that have befallen other nationalised industries, it is not surprising. The other day, the chairman of one of the big companies said to me, "It would be all right if only there was just one example of how a nationalised industry was a success". I do not wish to have Rolls-Royce thrown up at me, because that is a completely and utterly different story. These two companies want to be left alone to go about their business, which they, more than anyone else, know how to run successfully. Should they want or deem it necessary to make some form of merger in the interests of aerospace and of Britain, I would have a very large bet that they will do this. If the worst should come to the worst, as the noble Lord, Lord Orr-Ewing, said, the Government could always use the 1972 Act, but I do not think that this will be necessary.
Perhaps the noble Lord, Lord Melchett, will ask me why these two companies

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have not got together before. I think he knows the reasons only too well. They tried very hard, and, in racing parlance, they were warned off, or so I have been given to understand.
Lord MELCHETT: My Lords, that is fascinating information. Could the noble Earl, Lord Kimberley, tell us who warned whom off what?
The Earl of KIMBERLEY: My Lords, I was given to understand that when nationalisation appeared imminent and that it was going to be in the Manifesto, they were told that they could stop their negotiations with each other.
Lord MELCHETT: My Lords, I thought the noble Earl was talking about the period when the Conservative Government were in power. That was when a great effort was made by Mr. Heseltine to get the two companies together. I was not aware that that Government were going to nationalise them.
The Earl of KIMBERLEY: My Lords, that was in December 1973 or January 1974. However, that is what I was given to understand, and if I am wrong I apologise to your Lordships.
My Lords, the cost to the taxpayer will he minimal at £400 million as has been stated earlier, which, give or take a little, is the money that the four civil aerospace projects that we need to build would cost us right now in conjunction with Europe. I refuse to believe that wise men, men of integrity and business acumen, will not do what is right for the industry, provided they are left alone. When we first tabled this Amendment on the Committee stage, I will admit, as I said the other day, that it was probably the wrong time to table it. But having listened to I do not know how many hours of so-called reasons as to why the aircraft industry should be nationalised, I am still not convinced and I have not heard one good, solid or logical argument put forward by the Government. I am sure that most noble Lords will agree with me.
I do not want to go into all the details—we have been over them again and again. Suffice it to say that the Concorde project, which is virtually the nationalised part of the industry, is no criterion. The track
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record of the Concorde management board is appalling. The noble Lord, Lord Beswick, may say that under the British Aerospace Corporation he will not tolerate interference and he will run it. But I do not think any man alive today is capable of running a nationalised industry without being hogged down by the Secretary of State, the Civil Service and red tape.
My Lords, one of the elder statesmen of the Labour Party, J. B. Priestley, summed up the situation very aptly. He wrote:
"While public ownership begins to look like elaborate imbecility it is proposed we should have more of it. Sixty years ago, when I was a young Socialist, I used to bring the Post Office into my arguments. I do not know wham common sense left the Post Office for ever, but it has certainly vanished never, I feel, to return in my time".
He goes on:
"When authority is guided by common sense touched with compassion, it takes trouble to discover what people in general want or do not want. This is real democracy. What is false democracy comes from ideology, the fanatical worship of a theory and a system far more important than people. With common sense disregarded we are, at the present time, the constant victims of ideology, busy imposing a stamping process on us, without regard to our thoughts and feelings. We have Ministers who are going to do us good even while we run screaming. We can discover them day after day without a glimmer of common sense between them. Sometimes I feel we are already half way to Moscow".
Mr. Priestley finishes by saying:
"We are commanded to depend more and more on a Government that has offered us no example of common sense in all its operations and transactions".
Here is wisdom, and look from whom it cometh. Can any of your Lordships think of a better way to help stop the pound from sinking than to scrap the nationalisation of the aircraft industry? Just think of the different attitudes that foreign investors immediately would adopt towards Britain. Just imagine how confidence in Britain would be restored, and imagine the confidence restored in our visitors from the IMF in two days' time. Let us begin by putting our country before ideological and nonsensical Party politics. I appeal to your Lordships this afternoon, on all sides of the House, to see reason. If we divide which, alas! I feel will come to pass, I hope that your Lordships will consult your consciences to the full and very deeply before deciding where you should go. I beg to move.
Lord HARMAR-NICHOLLS: My Lords, I was very relieved indeed that the noble Earl, Lord Kimberley, said he had not remembered an occasion where a clear explanation had been given by the noble Lord, Lord Melchett, or anyone else, as to why this is being done. I thought perhaps I had been rather slow on the uptake when, with such confidence, the noble Lord, Lord Melchett, said that he had already explained it in detail on Committee and was merely repeating it. What the noble Lord did was to state two things which I think had truth; that is, that this particular industry has now reached the stage where it is very difficult for small units to operate it in a way that will be successful. One accepts that. Because of the expense, because of the intricacy of the research that has to be done, it has to be bigger units. The noble Lord states those things as a fact and then immediately tags on to that, "Therefore we nationalise; therefore we have to have public control." I think it was the poet Blake who said:
"A truth that's told with bad intent
Beats all the lies you can invent".
I am not suggesting that the noble Lord, Lord Melchett, has told the truth with bad intent, but he has certainly told the truth with wrong intent. If he is going to say "Therefore, we have got to nationalise, because we need big units", he is coming to a conclusion for which he has no support at all in terms of hard clear evidence.
I was very impressed with what my noble friend Lord Thomas said: when you nationalise or take under central control, of necessity you are bringing in an element of Civil Service control. It is not a civil servant's duty to be quick; it is not his duty to take risks. A civil servant, representing what is virtually a monopoly, has to be ultra-careful that he is being fair, that he is taking everything into account and that he is not risking something that does not belong to him. Civil servants have to go into that sort of detail. But if you can leave an element of private enterprise ownership you have various strands to take these various risks; they can be quicker because they have not got on their shoulders the burden of the whole industry, or the whole weight of an idea that may be involved in any move they take. So I suppose the first thing we have to do is to try to alter the outlook of noble Lords who speak for the Government,
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and indeed all Socialists who hold authoritative positions. They have been able to point out weakness in the present system. But they have not yet been able to establish that to replace the present system by a nationalised method is likely to be better.
There is ample evidence, as my noble friend pointed out, that where you have nationalised you have interfered with efficiency and interfered with the results. The thing that bothers me more than anything else is the absolute honesty of the noble Lord, Lord Melchett; he really thinks he has given an explanation, he truly believes he has given a good explanation. The truth of the matter is that he is undermining any chance this country has of regaining the world confidence which is essential. Even if the noble Lord could establish that his form of central control, nationalisation, was going to be marginally more efficient, he could not overcome the fact that nobody outside this country has any faith in it at all, and I would say a good half of the people within the country have got no faith in it at all.
So while we are not going to turn the world around by voting on this particular Amendment, I do hope that we can at some time impress our argument upon the noble Lord, Lord Melchett. He is a young man, he is going to be here for a long time and his influence is going to spread over a good many years. By all means have regard to the weaknesses that he sees in the present system, by all means try and find an alternative which will give greater efficiency and better results for this country, but please let him make up his mind on all the evidence in front of him that nationalisation and more centralised control is not the way. If, by voting on this Amendment, we can hammer that home and go some way towards achieving a transformation of thinking, it may be a vote well worth casting. It is in hope for the future rather than for any immediate gain that if it is put to a vote I shall go into the Lobby and support it.
4.25 p.m.
Lord GEORGE-BROWN: My Lords, if the noble Lord who is going to wind up will allow me, may I just say what staggers me about the whole approach to this issue. We approach it ideologically each way. We use the word "nationalisation" in the loosest and to me the

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most non-understandable way. You do riot, you never have, nationalised an industry. You change the names on the share certificates; that is all you do. The fellows who run an industry are the managers and the managed. I want to ask the noble Lord, Lord Melchett, who is the third or fourth generation of a family that began as managers, why, if you change the name on the certificate, do you suddenly get a better lot of managers or a better relationship between the managers and the managed? I knew his grandfather. He knew how to manage. I do not think it mattered much whose name was on the share certificates. Courtaulds can go wrong and be privately owned; the Coal Board can go wrong and be publically owned. What I should like to hear is an argument as to why it matters, why we commit vast sums of public money just to change the names on the certificates. Why does that matter and how does it change how the job is done?
The answer is, it does not at all. This is the total irrelevance of what the noble Lord, Lord Harmar-Nicholls, calls nationalisation. It is totally irrelevant to what goes on in the industry. No miner now believes that the coal mining industry is run more in his concern, or that he has more to do with the way in which it is run since Lord Shinwell put up that beautiful flag which meant it is now run in the name of the people. No miner believes it; no gasworker believes it; no electrician believes it. And nobody will believe it, if I may say so to the noble Lord, Lord Melchett, if you just change the names on the share certificates in the aerospace industry. It is totally irrelevant. It adds to our borrowing requirement. It complicates all our finances. But it does absolutely nothing whatever for the running of the industry.
The reason I shall vote for the Amendment, which I hope will be pressed, is that. It is not really for the reasons that the noble and reverend Lord, Lord Beaumont, gave. I think he got ideologically involved, too. It is not a matter of ideology. I want industries to be run between those who manage them and those who are managed in them because they care about them. I think you can do it without bothering your head very much about who has his name on the shares. It costs oodles of millions now to invest in plant
914
and machinery. If you are lucky you start to get a return in three years. If you arc very lucky you get 5 per cent. return after five years. You have to be very lucky to do that. In the meantime you are paying 18 per cent. for the money to do the job. That is the issue in British industry, not the name which is upon the share certificate. With great respect to the grandson and great-grandson of the fellow I I new, that is what managers should be about. In my view that is what trade union leaders and Socialist leaders should be about.
How do we make it easier to run an industry and to invest in it? How do we make it easier for the fellows who work on the floor to co-operate with the fellows who are in the offices and the drawing offices trying to work out what happens next year? I repeat, my Lords, this is not an ideological Bill calling for rejection; it is just ideologically and in every other way irrelevant. As I come towards the end of a long career as a representative of the managed and now myself a manager, I simply say that this has nothing whatever to do with it.
Perhaps I might remind the noble Lord, Lord Melchett—who is a rather later Socialist that I am—of something that we older Socialists always knew: If anybody ever makes more than he should out of the industrial effort, then that is what we have the Treasury and the Chancellor of the Exchequer for, that is, to tax it back from him. What you do not do is to deny him the opportunity to do it. Let us get it done. This is the most irrelevant Bill and—I forget who actually said this but the noble Lord, Lord Shinwell, will remember—it should have its throat cut.
A noble Lord: Winston said it.
Lord GEORGE-BROWN: Winston, was it? I think he actually said if should have its throat slit before we sent it upstairs. I ask the noble Lord, Lord Melchett, to remember that his grand-father and his whole family knew that it is the running of a business that natters; it is making it effective and efficient; it is making people think it is their show and enabling them to work together; and, I repeat, the name which is on the share certificate has little to do with that. I

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hope the Amendment will be pressed and certainly I will vote for it.
4.34 p.m.
Lord SLATER: My Lords, on the Amendment on nationalisation which is before the House on this particular occasion, I have listened to the speeches of the two noble Lords, Lord Harmar-Nicholls, who came from the other place, and the noble Lord, Lord George-Brown, who held high office in the other place, and to the upbraiding, more or less, of the noble Lord who is in charge of the Bill at this juncture, my noble friend Lord Melchett, as to how he ought to reply to the debate. Unfortunately for: he two noble Lords who have spoken, neither of them has worked within a nationalised industry. They have never experienced it. They do not know anything about it.
Lord GEORGE-BROWN: Oh come off it!
Lord SLATER: Never mind about the come off it". The noble Lord has had his say. He has very often had his say and is very often wrong. He has never worked within the mining industry and never worked in a nationalised industry. He is supposed to be attached to the Transport and General Workers' Union, but I never knew that he had a PSV licence whereby he could drive the buses around London if they were to be nationalised.
One could go on and on drawing examples of what has come out of nationalisation. The men working in the mining industry at this moment are better off than we ever were. I went down the mines at the age of 14 on leaving school and I was down there for 30 years. I know something of what we had to put up with under private enterprise, the punishment that we had to endure, the conditions that prevailed and how the prices were arrived at. But when nationalisation took place and a new form of conciliation machinery was drafted between the two parties, the National Coal Board and the National Union of Mineworkers, great benefits came to our people. We even got holidays with pay. They have now got so many days time off within the year, and their holidays have extended beyond what they were. One could go on to elaborate on the conditions that now prevail which
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never prevailed before and which have been of great benefit and of great service to those inside the industry.
One thing I took particular notice of was that neither of the two noble Lords who spoke made any reference whatever to the conciliation machinery about which both of them know something and ought to know something as ex-Ministers; that was the machinery which operates on behalf of the Civil Service inside Her Majesty's Government—the Whitley machinery. In my opinion you have a machinery set up which ought to have been redrafted and brought into line with the conciliation machinery that operates within nationalised industries today. If such were to be done, then you would not have the upheaval and the distrust in the Civil Service, whose members are not able to speak for themselves on the Floor of the House. Only those who have had experience of them, and have had to depend upon them for advice and for assistance when faced with problems in regard to policies which the Party in power was prepared to lay down, are prepared to speak on their behalf.
My noble friend Lord Melchett, therefore, has nothing to apologise for in regard to the Amendment that is before the House for consideration. Never for one moment believe what these two noble Lords have had to say in regard to nationalisation. Nationalisation has done tremendous good for this nation. Noble Lords will remember that on one occasion 1 spoke of one noble Lord—who is not here now but has been followed by a successor, his son or his grandson—the noble Marquess, Lord Londonderry, who said that the best thing that ever happened to the mining industry was when we took them over. Nationalisation was able to put money into their pockets that they would never have been able to achieve if they had had to work the industry under private enterprise for any longer. They did not have the capital to inject into the industry to buy new machinery to bring it up to standard. It was left to Her Majesty's Government to nationalise the mining industry. I, for one, benefited while I worked within the industry from that nationalisation that took place. We were proud of the flag that was on every pithead when at the end of every week we were able to break the production target that had been set for us. Every miner who

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worked at the coal face accepted his individual responsibility, as he still accepts it, in seeking to produce from Mother Nature.
In closing, I want to say one thing: when you talk about nationalisation and you look at the mining industry, remember that every time a miner goes down the pit he is engaged in a battle with Mother Nature, just like the soldier on the battlefield. He has to look after his own safety. Nobody can look after it for him. Things can happen down a mine; the miner can deal with this only by experience, beginning with the form of apprenticeship that he starts off with when he goes down in the first place up to the time when he finishes at the age of 65, when he comes to retire. May the day soon come when the retiring age for a miner and those working in other forms of industry is lowered from 65. Why should not the same case be presented on their behalf as is presented on behalf of the police, the nursing profession and other professions? The door ought not to be closed. Therefore, I hope and trust that my noble friend Lord Melchett will stand his ground, irrespective of what has been said and of the appeals that have been put forward by the other side.
4.41 p.m.
Lord CARR of HADLEY: My Lords, I do not want to get involved with the noble Lord, Lord Slater, in an argument about the nationalisation of coal mines at this juncture. Of course it was right and absolutely necessary that improvements should be made in the working conditions in the mines and, indeed, in many other industries, but I really do not think that an examination of industry as a whole indicates that it was necessary to have nationalisation in order to get, for instance, holidays with pay, better welfare provisions, shorter working hours and the like. When the noble Lord sings the praises of the nationalisation of the mines, he must not forget the really lamentable industrial relations record in the mines in approximately the first decade after nationalisation. If he will refresh his mind about the really appalling record of unofficial strikes under the nationalised Coal Board for about the first decade—it may have been a little more, it may have been a little less—it is far from obvious that nationalisation brought that peace
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and satisfaction which the noble Lord claims as its fruits.
Turning to the remarks of the noble Lord, Lord George-Brown, I agree with a great deal of what he said and I hope that we can argue this and similar matters on a practical, realistic basis, and not just on an ideological basis. However, though I agreed with much of what he said, I did not agree with all of it because I am afraid that experience has shown me—though, of course, everything looks different to each one of us—that nationalisation is rather worse than irrelevant. When one changes the name on the share certificate and alters it to "the State", experience shows that it becomes more difficult for managers to manage, not less difficult or even the same as before. One of the reasons for that is that even if in some industries prior to nationalisation there was too much detailed interference by the State for the good of management and the success of the industry, it is true that the record proves that that interference becomes far worse after nationalisation. The number of people who crawl over an industry after nationalisation is far greater than those who crawl over it prior to nationalisation, and they crawl more frequently.
I want to return to what seems to be my particular job in this debate. As I sense that the discussion on this Amendment is moving to an end, I have to express some view about the merits of the Amendment as seen by the Conservative Front Bench and to give some advice to my noble friends as to what they should do if the Amendment is pressed to a Division. In order to do so, I must go back to what the noble Lord, Lord Melchett, was saying, because he began by suggesting that the Government have been constantly accused of not having argued the industrial case for the nationalisation of the aircraft industry. I am afraid, however, that I must say to him with respect that, once again, he has not really argued the case today because he has once again made a number of assertions. For instance, he has repeated his assertion that a merger between the two great corporations was necessary and that only nationalisation could bring it about. I think that a case has to be made for the merger. On balance, personally, I am prepared to accept that now that case is probably

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made, but it is by no means an open and shut case and I have not really heard the Government argue at any stage the case for and against the merger, nor draw up a proper balance between the arguments. However, as I say, I am inclined to accept that, at the present moment in time there is probably, on balance, an argument in favour of the merger.
However, if there is such an argument and if it were to be accepted, the case still has to be made as to why it is necessary to nationalise in order to bring about this merger. I really do not believe that that case has been made at all. It is true that the merger had not taken place by February 1974, and it is obvious that it would not have taken place since then simply because the Government had this commitment to nationalise tied round their neck.
Lord PARGITER: My Lords, has the noble Lord no regard for the amount of public money that is being poured into these two companies?
Lord CARR of HADLEY: My Lords, I have spoken of that before and I was about to come to it again. I believe that, although the merger had not been brought about by February 1974, there is no reason to suppose that a Government which really believed that it should take place could not have persuaded the companies to bring it about. The Government could have acted in their double capacity as the most powerful and demanding customer of the industry and as wielder of the powers, the persuasions and the help that the Industry Act and other legislation give them. So I do not believe that a case has been made, first, for the merger, or, secondly, given that case, that nationalisation was necessary to achieve it.
It is true that, if the Government put in a lot of public money, they must exercise strict control in the interests of the public. It is also true that, if that money becomes risk-money, the Government should look to get some return for the taxpayer in any success that accrues to the industry as a result of being fructified by the taxpayers' money. I shall come to that in a moment. Before I come to that, however, I must tell the noble Lord, Lord Melchett, that he has not attempted to argue the case that I have put forward
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on a number of occasions and which has been made by many other people in this House and outside—that is, what is the proper relationship between a dominant customer and his monopoly supplier? There are many people—not just Tory Peers—who believe that there are dangers in the major customer owning the monopoly supplier. There are very substantial arguments here, and on no single occasion, to my knowledge, in another place and certainly in this House, have the Government attempted to deal with that argument.
Again, the case is not an open and shut one. I have called this an incestuous relationship and it is one which I strongly feel, and have felt for many years, is against the public interest. I recognise that there are people who take a different point of view. However, there really is an argument here and, once again, the Government have at no stage attempted to meet the criticism that it is against the public interest for the dominant customer to own the monopoly supplier. Therefore, I must repeat to the Government that they have still not answered these first two points of industrial strategy, and in a moment, after I have given way to the noble Lord, I will come to the third point.
Lord WYNNE-JONES: My Lords, I thank the noble Lord for giving way. I should like to ask the noble Lord whether he remembered that argument when he supported European Ferries taking over the Felixstowe Dock, European Ferries being the major user of the Felixstowe Dock?
Lord CARR of HADLEY: My Lords, I certainly took that argument into account. As I said, all the arguments in the case have to be taken into account, and I agree that that was one argument. Another was that one had to balance against that, in the case of Felixstowe, the other loss of competition which would have occurred had the port fallen into the same ownership as the 19 other ports—I think it is 19—owned by the British Transport Docks Board. On balance, since I am a believer in competition as an economic motivator, as a protector of the public and as a way of achieving the best possible economic services for the public, and indeed services other than purely economic ones for the public, I believe that on the whole competition is better served by keeping that dock as a private enterprise dock. But I quite

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agree; the noble Lord has made a fair point. It is a factor which ought to be taken into account and I can assure him that I did take it into account.
As I have just said, the argument is not an open and closed one to which there is an absolute right answer and an absolute wrong answer. It is a substantial argument, but the Government at no stage have addressed themselves to it at all, and have given no reasons why they believe that the argument in this case is answered as they are answering it in the Bill. It is to make the dominant customer the owner of the monopoly and indeed sole supplier in this country—
Lord LEATHERLAND: My Lords, I thank the noble Lord for giving way. Of course that point about the relationship between the dominant customer and the supplier is a very powerful argument, but exactly that situation prevailed in the case of Rolls-Royce, and the noble Lord's own Government nationalised Rolls-Royce.
4.53 p.m.
Lord CARR of HADLEY: But there was a difference there, my Lords, if I may point it out to the noble Lord. I was a member of the Cabinet that had to deal with that matter. I know that the way we dealt with it is itself open to argument. No doubt the longer we look back on it and the more wisdom we have from hindsight, the more the matter can be questioned; but the question which we had to face, as it presented itself to the Cabinet at that time, was that within about 48 hours or not much longer we had to decide either to nationalise Rolls-Royce—the aero engine part of it—or allow it to go out of existence.
This is not the case here. I am glad to say that the British Aircraft Corporation and the aviation part of Hawker Siddeley are both flourishing, are both doing extremely well. There is no force majeure decision of the kind which the Cabinet, of which I was a member at that time, felt was thrust upon it with only two or three days for it to make up its mind. As we saw it, there really was not the choice on the information we had before us at the time. I can assure the noble Lord that had we felt that there had been a real choice we would have taken it.
The third point I want to come to in this industrial argument is that neither
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the noble Lord, Lord Melchett, today, nor other Ministers at any other time, have taken on board the arguments of the Plowden Committee. This happens to be an industry which has had a high-powered inquiry set up actually by a Labour Government under the chairmanship of the noble Lord, Lord Plowden. If 1 remember correctly the Plowden Committee must have reported about 10 years ago, and it specifically did not recommend nationalisation. The Plowden Committee recommended, or a majority of it recommended, some shareholding by the Government, but that is very different from nationalisation. The Committee took the view—and I think that this is fairly summarising chapter 37 of the Committee's Report—that, on the one hand, the Government have power in the industry through major strategic decisions but have no responsibility for the consequences, and, on the other hand, the industry has full responsibility for the business including the effect on industrial relations of the changes in defence policy which were going on at that time, but lacks much of the decision-making authority.
The Committee therefore wanted to achieve a solution that would, first, lift the heavy weight of detailed financial and technical control exercised by the Government as a result of their dominant role in the industry which was preventing efficient and dynamic management and which caused in many cases a duplication of effort; a solution which would, secondly, permit the Government to make financial contributions without interfering in the day-to-day management; a solution which would, thirdly, retain the advantages of private enterprise while recognising the Government's dominant position as customer and financier; and a solution which would, fourthly, involve the Government in the management of the economic consequences to the industry of the decision they inevitably have to take in connection with major projects in the industry.
That was the kind of solution which the Plowden Committee was looking at. But it specifically rejected nationalisation because it felt that it would divert senior managements from the material business of the industry, would provoke controversy and uncertainty that would harm the industry, and would make it more difficult to devise the best solutions of the immediate problems of the industry. The

923
Committee also felt that nationalisation would remove the valuable contribution of private investment as an incentive to and a measure of efficiency and profitability. So the only substantial report the country has, after an investigation of the industrial strategy in this industry, while coming down in favour of some public share-holding, specifically came down against the solution recommended by the Government in the Bill. When we say to the Government that they have never tried to deal with the industrial case for nationalisation, that is what we mean. They are specifically denying the findings of the Committee which a previous Labour Government themselves set up, and giving not a single reason for doing so.
We on this side might have grave doubts—indeed, a minority of the Plowden Committee did have grave doubts—about the wisdom even of public State ownership, of the State having some shareholding. But the Committee as a whole, all the Committee, were in no doubt that nationalisation, as proposed in this Bill, was not the right answer for this industry, for the reasons which have been given. Those were not ideological reasons. Those were hardheaded, common-sense reasons argued in that Report. I do not believe that anybody could have accused the Plowden Committee of arguing from an ideological point of view, least of all an ideological point of view which was prejudiced on the side of the sentiments which we on this side of your Lordships' House take on these matters.
So I am afraid that I have to say to your Lordships that this case has not been proved on industrial grounds, and I am afraid that I go on to say to your Lordships that the case runs absolutely at odds with the recommendations of the only substantial study that has ever been made of this problem. When on top of that one looks at the record of other nationalised industries, one is bound to ask, why pick up by the roots one of the few industries in this country which at the moment is being as highly successful as it is? The noble Lord, Lord Melchett, said that some of the figures they gave were rather misleading in their favour. I was rather surprised to hear him say that, because I remember my noble friend Lord Selsdon producing to your Lordships last week, or the week before, the notes
924
produced, I think, by the Treasury for the benefit of speakers when they speak in other countries abroad, and "bullpoint number one" on the notes, he told us, was what a wonderfully successful aircraft industry we have and how wonderfully it was doing.
It is one of the first laws of common sense that one does not pull up by the roots something that is working as successfully as this industry is. I could add to that by drawing attention to the cost; I have done it myself, and many noble Lords have done it again this afternoon. I could add to it the argument which has also been raised this afternoon: at a time when foreign confidence is of greater importance to this country than it has ever been before, why persist in something which even the Government must know is a weakening factor in foreign confidence? I must ask the Government: Why persist in doing something which there is absolutely no evidence to suggest is wanted by the majority of people who work in this industry?
So, my Lords, I think I have made clear, and I hope not just for partisan reasons or reasons of prejudice, that this Amendment is one which in my view should be accepted by the Government. But they have made clear that they are not going to accept it, so I have to address myself to what advice I should give to my noble friends about voting on it. On the Second Reading of this Bill I said on behalf of my Party that, with very great reluctance, we had come to the conclusion that we ought not to break the established convention of your Lordships' House that we do not vote out lock, stock and barrel a major proposition which was contained in the Election programme of the Party holding the elected majority in the other place. When we came to this Amendment on Committee stage I said that I felt that to remove half of this Bill—it is, after all, the Aircraft and Shipbuilding Industries Bill—was really tantamount to a Second Reading vote and that, therefore, with great very reluctance, I had to continue to advise my noble friends not to vote against it. That, I am afraid, is the advice I must maintain today.
I know, of course, as the noble Viscount, Lord Simon, said in moving this Amendment, that in voting it out we should not in fact he thwarting the will of the people;

925
we should be giving the Government an opportunity to reconsider. It is a pity that the Prime Minister and some of his colleagues do not admit this, too. Of course the majority in the other place can have their will whenever they like and with only the minimum of delay, and it is doing no good to unity in this country or to serious consideration of the issues in this country for the Prime Minister and other Ministers to suggest that we in this House can thwart the will and the authority of the elected Chamber, because we have not got the powers to do it. The only powers we have are those given to us by a previous Labour Government in an Act passed when the late Lord Attlee was Prime Minister.
However, although I agree with the noble Viscount, Lord Simon, that that is the fact of the matter, all of us have to face the fact that in the neurotic state in which the present Government of this country exist they would not reconsider the matter. They would explode a huge emotional volcano and hope that, in all the dust and cloud, the real issues would be obscured from the public; and most of all would they do that if they could run their favourite line that this crisis had been brought about by the inbuilt Tory majority in your Lordships' House—something I have noticed them talking about quite a bit in recent days, wholly forgetting the fact that, so far as I know, certainly every important Amendment dealt with at Committee stage of this Bill was supported by noble Lords on the Cross-Benches and by noble Lords on the Liberal Benches as well. So it is nothing to do with the inbuilt Tory majority. All that is noticeable is the lack of Labour Peers to support their own measure, even to the extent, sometimes, of keeping the minimum number required to allow the House to continue and to carry the Bill through.
Lord JACQUES: My Lords, that is grossly unfair. The number of Labour Lords who could attend this House is very much smaller than that on the Conservative side, and I challenge you to contradict—
Lord BYERS: Not "you"—"the noble Lord"!
Lord JACQUES:—that there is a higher proportion of Labour Peers who
926
can attend who in fact attend and vote than there is on the Conservative side.
Lord CARR of HADLEY: My Lords, I am not going into that sort of statistical argument with the noble Lord at this stage, but I think he fails to take account of a number of things. First, he fails to take account, for example, of the number of hereditary Peers (who are all said to be Tories, although I am not sure that this should necessarily he taken for granted) who have leave of absence from this House and who therefore never attend it. I think that is one very big matter which ought to be taken into account. I think the noble Lord ought also to look at the position of those of us who, like himself and myself, are Life Peers. I think he ought to look at the number of Life Peers who have been appointed on to the Benches of his Party, and consider what proportion of them attend as compared with the proportion of other Life Peers who attend. After all, his Party is the Government. This, we are told, is their major measure of this Session, and yet they appear unable sometimes even to have the thirty here that are required as the minimum quorum to get this first-priority Bill, so we are told, through this House. So I do not think the Labour Peers, or their friends in the other place, are in any position to say the sort of things they are saying.
My Lords, it is just because they are behaving like this, and because I fear they are wishing, as I say, to blow up this great emotional volcano and, in the dust and fog that that would create, to obscure the real issue, that I do not want to advise my noble friends to vote on this Amendment. I want the Government to be forced to consider some of the many other Amendments which we have produced to the substance of this Bill, which are very important and which certainly do not begin to raise any confrontation over the major political purposes of this Bill; and I do not want to give the Government the opportunity to get away from that consideration by creating this volcanic smokescreen which I believe they would do if I advised my noble friends to support this Amendment in the Lobby. I can, of course, only advise my noble friends what I think it is wise to do. That is why, with even greater reluctance than on previous occasions, I advise my noble friends not to

927
vote on this Amendment but to concentrate on our own Amendment, which is to postpone the vesting date for the aircraft industry until after the electorate of this country has had another chance to express its view upon it—and I have no doubt what that view will be.
5.7 pm.
Lord WIGODER: My Lords, noble Lords will all want to congratulate the noble Lord, Lord Carr of Hadley, on just running a brilliant race. It is a great pity that he collapsed shortly before reaching the tape. He put the case perfectly clearly in favour of this Amendment, and then ventured to put forward grounds, which I would suggest do not stand up to examination, for advising his noble friends on the Conservative Benches not to support it. Indeed, when the noble Lord, Lord Carr of Hadley, comes later in the Report stage of this Bill to move an Amendment to remove ship repairing from the Bill and no doubt to advise his noble friends on the Conservative Benches to support him, I venture to hope that nobody will then quote back at him the words he has just used. Because there is no difference in principle between removing the aircraft industry and removing the ship repairing industry from this Bill: there is a difference in degree, but there is no difference in principle.
My Lords, I do not want to go over again the grounds as to the merits of this Amendment and as to the demerits of the Government's proposals to nationalise the aircraft industry. At a time when no doubt almost all noble Lords express their faith in the mixed economy, at a time when it is recognised that some 60 per cent. of the country's resources are already tied up in the public sector, it is no doubt generally agreed that any move by the Government to extend the field of nationalisation is one where the case has to be proved by them up to the hilt. It has been clear—and we have all listened with the greatest care to the noble Lord, Lord Melchett, doing his best at the various stages of this Bill—that no overwhelming case has been made out to suggest that the efficiency of the aircraft industry can be increased by its being taken over by the State. In those circumstances, I say nothing more about the merits of the Amendment which is moved from the Liberal Benches.
928
I want to address myself to one other matter which is of great importance in the light of what the noble Lord, Lord Carr of Hadley, has just said; that is as to whether there is a case at this stage for voting the way we believe; whether there is a case for inviting the other place to reconsider the decision that they took on 29th July—and this will, indeed, be the very last opportunity that your Lordships' House will have to invite such reconsideration.
Might I suggest that there were two facts on 29th July that we ought not to forget. The first is that on that date sterling was worth 1.79 dollars; today it is worth 1.59 dollars. That means a totally different economic and financial situation against which this Bill must come to be considered. That means that those in the IMF and elsewhere who are seeking to be generous towards us might find themselves encouraged if the strain on the public resources which would be occasioned by this Bill were now to be gracefully abandoned by the Government. At the very least, that is a matter that the other place should be asked to reconsider in the light of quite different circumstances that exist today.
The other fact about the 29th July is simply this: on Third Reading in another place, the Government had a majority of three. There are three by-elections pending this Thursday. One of those is in a seat where the retiring Member was unable, for various reasons, to vote on the 29th July; the other two were Government seats. No one knows what will happen on Thursday, but if by any chance the Government lose either or both or all three of the seats on Thursday, it may well be that when this Amendment is reconsidered in the other place it will be reconsidered with a totally different result from the result that obtained last time and the result might be more in keeping with the up-to-date wishes of the electorate than prevailed last time.
I hope it is not an exaggeration to venture to suggest to noble Lords who sit on the Conservative Benches that if they follow the advice given them by the noble Lord, Lord Carr, this afternoon and abstain from voting, their sitting in their places might well be misinterpreted by members of the public as indicating that they themselves have no confidence in

929
their Party's electoral prospects on Thursday of this week.
Finally, I want to make it clear that the Liberals do not by this Amendment seek any confrontation with another place. All that we are seeking to do is to exercise the powers which were repeatedly given to us—repeatedly once again given to us by a Labour Government in 1949—of saying to the other place, "Have another look at this proposal in the light of the changed circumstances since it was last
considered. "It is our view that in the situation that exists today there is every reason for inviting the other place to do so and that we can do that with complete constitutional propriety.
5.13 p.m.
On Question, Whether the said Amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 62; Not-Contents, 65.

CONTENTS

Airedale, L.

Foot, L.

Norwich, V.

Aldenham, L.

Gainford, L.

Platt, L.

Amherst, E.

George-Brown, L.

Robbins, L.

Ampthill, L.

Gladwyn, L.

Romney, E.

Amulree, L.

Gore-Booth, L.

Ruthven of Freeland, Ly.

Avebury, L.

Granville of Eye, L.

Sackville, L.

Banks, L.

Gridley, L.

St. Davids, V.

Barrington, V.

Grimston of Westbury, L.

Saint Oswald, L.

Beaumont of Whitley, L.

Hampton, L.

Simon, V.

Belhaven and Stenton, L.

Harmar-Nicholls, L.

Slim, V.

Bethell, L.

Hylton-Foster, B.

Stamp, L.

Bledisloe, V.

Ilchester, E.

Strathcarron, L.

Boothby, L.

Inchyra, L.

Strathclyde, L.

Byers, L.

Kimberley, E. [Teller.]

Strathspey, L.

Clifford of Chudleigh, L.

Lloyd of Kilgerran, L.

Swaythling, L.

Clwyd, L.

Merrivale, L.

Tanlaw, L.

Cottesloe, L.

Mersey, V.

Vickers, B.

Cullen of Ashbourne, L.

Meston, L.

Wade, L. [Teller.]

De Freyne, L.

Monson, L.

Ward of North Tyneside, B

Emmet of Amberley, B.

Mottistone, L.

Wigoder, L.

Erskine of Rerrick, L.

Northchurch, B.

NOT-CONTENTS

Allen of Abbeydale, L.

Fulton, L.

Pannell, L.

Ardwick, L.

Gordon-Walker, L.

Pargiter, L.

Aylestone, L.

Greenwood of Rossendale, L.

Peart, L. (L. Privy Seal)

Birk, B.

Hale, L.

Philips, B.

Blyton, L.

Harris of Greenwich, L.

Popplewell, L.

Brockway, L.

Henderson, L.

Shinwell, L.

Bruce of Donington, L.

Jacques, L. [Teller.]

Slater, L.

Buckinghamshire, E,

Kirkhill, L.

Snow, L.

Castle, L.

Leatherland, L.

Soper, L.

Champion, L.

Llewelyn-Davies of Hastoe, B.

Stedman, B. [Teller.]

Chorley, L.

Lloyd of Hampstead, L.

Stewart of Alvechurch, B.

Collison, L.

Longford, E.

Stone, L.

Cooper of Stockton Heath, L.

Lovell-Davis, L.

Stow Hill, L.

Davies of Leek, L.

McCluskey, L.

Strabolgi, L.

Davies of Penrhys, L.

Maelor, L.

Taylor of Mansfield, L.

Delacourt-Smith of Alteryn, B.

Maybray-King, L.

Wallace of Coslany, L.

Donaldson of Kingsbridge, L.

Melchett, L.

Wells-Pestell, L.

Douglas of Barloch, L.

Morris of Grasmere, L.

Wigg, L.

Douglass of Cleveland, L.

Murray of Gravesend, L.

Winterbottom, L.

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

Noel-Buxton, L.

Wootton of Abinger, B

Evans of Hungershall, L.

Northfield, L.

Wynne-Jones, L.

Fisher of Rednal, B.

Oram, L.

Resolved in the negative, and Amendment disagreed to accordingly.

5.21 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 3:
Page 2, line 2, at end insert ("from among persons who appear to the Secretary of State to have wide experience of, and to have shown capacity in, the activities specified in section 2(1) or (3) below or in industry, technology, commercial or financial matters, administration or to the organisation of workers.").
The noble Lord said: My Lords, on behalf of my noble friend, I move Amendment No. 3. This is an Amendment which we discussed at the Committee stage. We are seeking in a number of these similar Amendments to take the line that if we have to have these Corporations, we want to ensure they get on and do their job as well as possible, although I accept that we may not always agree about the best way of achieving that.
At the Committee stage, I suggested that this was a common sense Amendment which referred back to many previous Statutes. We are simply saying here that those who are appointed to the boards of these Corporations ought to have some relevant experience. The noble Lord, Lord Kirkhill, gave us a rather strange reply. I thought it worth exploring whether, possibly in the light of further consideration, the Government may have seen the light. We know that unfortunately the noble Lord, Lord Kirkhill, has lost his voice so we understand that the Government are speaking through another medium now; I am sure it is equally authoritative.
The noble Lord said that all the appointments that had been made so far had been of people with the kind of experience that we suggest is relevant in this Amendment. But he did not say why he did not think that the Amendment was a good one. The noble Lord however said that the Amendment was so widely drafted that it gave complete discretion to the Secretary of State. Of course that has been said fairly frequently, and usually the Government mean that since it gives complete discretion to the Secretary of State, this is a good policy.
What we have been seeking to do is merely to confine slightly the Secretary of State's discretion. Our complaint has been—and I hope that this is not going to be another long night—that the Ministers find themselves confined by rather a
932
narrow brief while claiming on the one hand that they need flexibility for some of what we regard as the potentially meddlesome powers the Minister gets. Yet, when we invite them to show some flexibility by accepting what they admit is in line with practice, unfortunately they find themselves confined by a narrow brief because it is not in their department. So I can fairly claim here that I am inviting the Government to show some flexibility in responding to this Amendment.
There are a number of perfectly good reasons why it makes sense, as the noble Lord conceded, that people should have the relevant experience before joining the Corporations. But it goes farther than that. We have read in the newspapers about the power of patronage of Governments, and Prime Ministers in particular. It is surely generally being conceded now that public corporations should not be used as pastures on which they can pension out their old political war horses. Having said that, I must be careful not to mention any names, but one can think of a number of Corporations to which this argument could be applied. In some cases I am making an oblique reference to Members of this House. We have seen the staffing of the British National Oil Corporation, which is not beyond criticism, and we have seen the staffing of Cable and Wireless, which is not beyond criticism, on rather the same lines as we are seeking to avoid in this Amendment. So I invite the Government to reconsider what I hope they will agree is a sensible Amendment which merely codifies what they agree they are doing and they intend to do.
My Lords, it has been called to my attention that there is a misprint in the Amendment. It should read: "Line 3" and not "Line 2". Having corrected that, I beg to move the Amendment.
5.27 p.m.
The Earl of LAUDERDALE: My Lords, we spent a lot of time on the first Amendment and so one does not want to spin out discussion on the third Amendment. But it is because there have been complaints of unwarranted delays by your Lordships' House that one must refute some of them before launching on this Amendment. The whole point is that we have deployed arguments and we have

933
had some very bad answers. Those answers have not been to the credit of the Government, let alone to the credit of a Parliament. Indeed, they have been rich in their irrelevancy. Lest anyone should think that I am talking just to delay, I have looked back at the answers given on the Committee stage to this Amendment. If we are going now to have the same replies again then one can picture this stage dragging on and even the Third Reading being a very slow affair with still more Amendments.
The noble Lord, Lord Kirkhill, began very promisingly, as he always does, when he said on patronage, and Government patronage (and this is at col. 54 of Hansard of 11th October) that the overall level of political patronage is one to which any Government, no matter what their political complexion, must have considerable and careful regard. That is an unexceptionable sentiment. We thought that this was in the right direction. The noble Lord went on to say that it did not matter in that case because the people who had been appointed for service in the Aerospace Organising Committee were very desirable. But, my Lords, that argument, which really has no bearing on the first one, was set out at col. 55.
Then the noble Lord, Lord Kirkhill, said that in the future any Government must have regard to this matter. Indeed, in column 56 he said:
"This is a question which it falls to the Government of the day to assess for themselves."
So first of all it matters, and then it does not matter because he has done all right, and then it may be a matter in the future for other people. If I may say so, that is somewhat below the standard of logic which we have come to expect, and also to enjoy, from the noble Lord. I can understand that he was not feeling very comfortable with the argument, but it was the best he could do with the brief before him.
Then we were told in column 57, when the noble Lord went on to a further argument:
"The central point of the Government's position here is that the members of these boards will have to declare their interest in exactly the same way as, for example, a Member of Parliament."
That has nothing whatever to do with the argument. We are proposing that members should be appointed only when they
934
have the right qualifications. The answer to that proposal seems to be, "Well, you see, they have to declare an interest." But that certainly does not mean to say that they have the right qualifications. I should also like to point out that the interests which it is now normal and proper for an MP to disclose are in no sense related to the kinds of professional qualifications which would be relevant to appointments of this kind. It is simply a non sequitur, and non sequiturs are not what we have come to expect, prior to this Bill, from the noble Lord, Lord Kirkhill.
The noble Lord said: "We have done all right: we have appointed very good people and their qualifications are excellent." But what about what may happen tomorrow? We all agree that all Governments are bad—at least I think they are, and I should like to see them abolished. I am sometimes called an anarchist because I should like to do away with Governments of either Party. All Governments are bad, all Governments are corrupt: they are corrupted by their power, and all Governments get more and more corrupted by more and more power. That applies to all Governments, irrespective of Party. Some of these people will die: we are not all immortal. They may even die premature deaths—and I should not be at all surprised—but when they come to be replaced at a time when perhaps another Government may be in office, whatever their colour, that Government will want to ensure that the people appointed are suited to the job they have to do.
The difficulty one faces now is that although the Government are preening themselves on a wide selection of people, they are not really above suspicion, because it is within very recent memory that the Government made a most appalling hash-up in another nationalised industry—and I understand that in our discussions on this Bill we can talk about mining or anything else that relates to nationalisation. What about the BNOC? We pleaded all through that weary Committee stage that oil men should be appointed to the Board and we pleaded for an oil man to be chairman. Did they find one? No. We appealed for an oil man to be managing director. Did they find one? No. They had not got any oil men. They did not appoint a single oil

935
man. The nearest they got to it was to appoint a man who was county clerk of the Shetland Islands County Council. He was considered to be "an oil man" because he never saw one oil company alone but always saw them two at a time and therefore was never tripped up.
The example of British National Oil Corporation is so terrifying because it shows what this Government, who are behaving quite well in their current appointments, can do when they are in a corner or lose their heads or when they are guided by the noble Lord, Lord Balogh, who is a friend of mine. So to insert into this Bill a requirement that suitably qualified persons should be appointed is not really a very harsh requirement. We are not asking the Government for any great level of goodness but merely for ordinary prudence. The case was put very well by the noble Lord, Lord Somers, who is not in his place at the moment, towards the end of the debate during the Committee stage when he said these words:
"Can the noble Lord tell me one thing? … The Government have introduced this Bill, which is apparently very close to their hearts. Why is it that they seem so unwilling to have it really well done?"
That question was never answered. All right: it is superfluous to put in this qualification at this time for these appointments, but surely it is prudent for the future—for the Government's own performance in other respects underlines the objection, that, as I have said, they have not answered that very simple question put by the noble Lord, Lord Somers. In other words, if they want this Bill so much, why not make it as good as possible instead of as bad as possible?
Lord ORR-EWING: My Lords, what is surprising is that these words, as put down in the Amendment, have not been accepted previously. I would not have thought they were very controversial. Indeed, in all previous nationalisation Bills they have been there. So one must ask oneself why have they been left out of this Bill. I wonder whether it is because this board of governors, if I may use that term, is there to undertake a hatchet job". The Secretary of State said in another place that there would have to be considerable reductions in personnel.
936
It can be argued that if you appointed people who know the industry, have a feeling for it and have grown up with it, they may be greatly affected and unable to do the kind of "hatchet job" that the Government want done. Perhaps the bluntest axe of all was the Geddes axe; but when I look back on it I must say one understands that once one starts discriminating about which part should or should not be closed down one gets into such difficulties with politics, economics and pressure groups that perhaps it is better in the end just to take 10 per cent. across the board. And you are more likely to get that result if people are used who know nothing about the industry and feel no affiliation to any of the firms concerned. Of course, it may be because one wants ex-politicians in there, and one must confess that some of the recent appointments have been somewhat surprising.
I shall not mention anyone from this House: my noble friend has just referred to one beloved debater from the other side who unfortunately is not seen here so much now that he is deputy chairman of BNOC. But the more recent case of Mr. Edward Short was a rather surprising one, because Cable and Wireless is a fairly technical and international undertaking, and it was rather surprising when Mr. Short left another place at very short notice to become chairman of that outfit. One remembers also a number of questions raised in another place by, I think, Philip Holland and David Price, drawing attention to the fact that some 188 powers of appointment are held by the Prime Minister of the day. He has those at his beck and call. That power of appointment is getting so large that I would have preferred to see some criteria set down in this Bill which would at least make sure that those who were appointed knew something about the tasks they had to undertake, which are highly technical, particularly in the aerospace field, and which are highly sophisticated, involving a lot of electronics, avionics and the like. I should prefer to see criteria written down for such appointments, and particularly in this case, because this is probably the most highly sophisticated industry of all of those which have been proposed for legislation.
I am rather tempted to follow the non sequitur referred to my noble friend

937
about the Royal Commission, because I wanted to be a member of the Royal Commission which considered members' interests very thoroughly. I see the noble Lord, Lord Allen, sitting in his place and as I believe we are going to discuss the registration of members' interests—I refer to members of public bodies and of everything else—at the beginning of December, I shall not seek to take up more time by referring to that subject now. The registration of public interests is very thoroughly dealt with, together with the question of who is to be concerned in local authorities, nationalised industries and the like. I think the matter is probably better dealt with there than in any other public document I have seen.
I hope the noble Lord will not shut his mind to accepting what is after all a very reasonable Amendment, which tries to ensure that people who have a knowledge of the business and of industry, and particularly of aerospace, shipbuilding, and, if possible, of marine engine building, should bring that knowledge to the administration of these very important Corporations.
Lord TREFGARNE: My Lords, like my noble friend Lord Lauderdale I am worried about what will happen when the present appointments come up for renewal. I am quite prepared to accept that those who have been appointed so far are splendid people. The appointment of the noble Lord, Lord Beswick, was criticised in some quarters, though not by me. I think he was quite the best person among the Labour Party who could be found for the job. But when these people retire they will have to be replaced, and there will be no other aircraft industry in the country from which they can be recruited. They will have to be either people from within the industry, the nationalised Corporation itself, or people from outside, who must perforce have no experience of the industry for which they are being recruited. This is one of the serious problems that apply to all monopolistic industries, not only nationalised monopolies but other monopolies as well. For that reason I think that the Amendment put forward by my noble friend will serve to concentrate the mind of the Secretary of State when he comes to make these appointments and will be very helpful.
Viscount SIMON: My Lords, I support this Amendment. I particularly noted what the noble Earl, Lord Lauderdale, said that as this is common form in nationalisation Bills; it is rather distinctive if it is left out. People want to ask why it is left out. I hope that when the noble Lord comes to reply, if he cannot give the Amendment to the noble Lord, Lord Strathcona, he will give us some help and guidance on that. May I ask Lord Strathcona when he replies to the debate if he will tell us what the word "to" in the last line means. It looks to me as if it ought to be "in".
The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey): My Lords, on this occasion the Government are said by the noble Lord, Lord Strathcona and Mount Royal, to be speaking through a different medium and I hope t,) make a spirited reply—but that word has rather spiritualist overtones. May I turn to the points that have been made. Of course it is conceded that there are arguments both ways in relation to this matter but it is wrong to say, as the noble Lord, Lord Orr-Ewing, said, that these words which are suggested to be put in here have been contained in all previous nationalisation Bills. They are not to be found in other Statutes which are a precedent here, for example, the Civil Aviation Act 1971, the Post Office Act 1969 or the Industry Act 1975, so there are precedents both ways.
If one looks at the Amendment one finds that the criteria there set out are so widely drafted that it would be virtually impossible to appoint somebody who did not fulfil one or other of the qualifications. I tried to think who would be excluded and I came to the conclusion that it might just be lawyers at whom this Amendment was aimed, but he would be a poor lawyer indeed who had no experience in commercial or financial matters so I assumed that it must he clergymen. I cannot imagine that that is the real purpose of the Amendment. The Government's point is that rather than accept these criteria, which are absolutely wide and would allow anyone to be appointed, it is better to be honest and to leave the clause in its present terms.
There is no disagreement here as to the proper purpose. It is desirable and necessary to get the best man for the job, and we would submit that noble Lords opposite are deceiving themselves if they

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consider that the proposed Amendment would help to ensure the appointment of better men. It has been suggested that this Amendment does not take matters very far and that it would be possible for the Government to accept it. May I remind noble Lords that when the Industry Act was being debated last year there was endless debate about qualifications and criteria, and in the end it was decided that the best way out was to remove them altogether. I do not think it makes for good legislation to lurch first one way, then another, according to the vagaries of debate on successive Bills. I hope therefore that noble Lords will not think me perverse or obstinate in resisting this Amendment. The reason for doing so is an honest and non-Party one and I hope that noble Lords will not support this Amendment.
Lord STRATHCONA and MOUNT ROYAL: My Lords, as the noble and learned Lord promised, he has indeed made a very spirited reply. At least we are in agreement with what we are trying to do. I am disappointed that he does not feel able to say, "Yes, we see what you are trying to do, though we think you are being rather verbose in your attempts to do it "—I hope not in the moving of it. Incidentally, following the remarks of the noble Viscount, Lord Simon, I would be inclined to agree that the changing of one word in the drafting of our Amendment would have improved it. However, since we are not about to insist on this Amendment we can safely leave to those who are more interested in the niceties than we are, the question of whether "in" or "to" in the last line would be better. I still believe that there would be a case for saying that we should accept some degree of restriction on the kind of people we appoint. The noble Lord did not in any way attempt to deal with the problem of patronage. It may well be that this is not the moment to deal with it.
The only thing I should like to say on that point is that throughout this Bill we have gone rather further than in previous cases in the way in which a nationalised corporation can be administered from the centre. When we find that here we are resisting any degree of restriction on the kind of people who are going to be asked to carry out these onerous tasks inevitably
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one feels troubled. I think the noble Lord himself agreed that there was a case to answer. If I may say so, he answered in the sort of way that I would have expected it to be answered by someone who had taken the trouble to think about it. I remain unconvinced, and I feel that this is true of most noble Lords behind me, but the fact remains that we have a long way to go tonight and perhaps the proper thing to do is to consider what the noble Lord has said, to thank him for his reply and, whether or not it is properly phrased, to beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
5.50 p.m.
Earl FERRERS Earl FERRERS moved Amendment No. 12:
Page 3, line 11, leave out subsection (9) and insert—
("(9) Each Corporation shall maintain a register of interests disclosed pursuant to regulations made under subsection (3) (a) above.").
The noble Earl said: My Lords, we went through this Amendment at the Committee stage and we wish to put it down again because I still do not feel entirely happy with the situation. I am also in some confusion over the reply which the noble Lord, Lord Kirkhill, gave me. The object of this Amendment is to remove from the Bill the provisions which require members of the Corporation to disclose their interests in the same way as do Members of another place. May I say at the outset that I think it is wholly right that there should be disclosure of interests. It is quite right that people should know of the interests of folk who serve on public bodies, in the same way as people who serve on private companies have to disclose their interests, and records of them are kept by the companies. Everyone can inspect those records on application, or they can go to Companies House and inspect them there on application. My view is that the same degree of disclosure should apply to people serving on these Corporations.
What I do not see, first, is the reason why the Secretary of State should be required to keep a register of interests, and why it should be he who has to see that the interests concerned are published in the annual report. I should have thought the right course was for a Corporation to

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keep a register of the interests. It is entirely right that the Secretary of State should be seized of the information, that he should have access to it, and that lie should know of the interests of people whom he proposes to select for membership of a Corporation. But I do not believe it is right that he should keep the register. Nor do I believe it is right that these interests should be published, because it may well be that a member of a Corporation has directorships in four companies, he may be the managing director of a fifth and chairman of a sixth. I do not see why it is necessary to publish that information, provided that it is available. One of the drawbacks of publishing it may be that potential candidates for membership of a Corporation will be reluctant to come along. I should like to emphasise, again, that, in my view, this is not a curtailment of the disclosure of interests, but a curtailment of the publication of interests, because I believe that such publication would be wrong.
Secondly, I do not see why the interests which it is suggested should be published should be synonymous with those interests which Members of the House of Commons are required to produce. I cannot see the correlation between them. Disclosure of interests of any type should be tailored to the people concerned, and the influence of Members of the House of Commons, and their involvement in public affairs of all kinds, call for a totally different requirement from that of a person in a nationalised Corporation. As my noble friend Lord Hawke asked at the Committee stage: What happens when, in 30 or 40 years' time, the rules of the House of Commons as regards the disclosure of interests are altered? Why should the fact that the House of Commons alters its requirement about disclosing interests automatically affect the members of the British Aerospace Corporation or of British Shipbuilders? I hope that the noble Lord will feel it is reasonable that there should be disclosure of interests, but not in quite the way suggested in the Bill.
I would draw your Lordships' attention to the fact that under subsection (3)(a) the Secretary of State may by regulations,
"… make provision with respect to the disclosure by members of the Corporation of any interest … in contracts"
which a member may have. It is wholly
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right that members of a Corporation who have interests in other companies should disclose them when contracts are made, but I hope that the noble Lord will feel kindly towards this Amendment.
Unfortunately, I have not given the noble Lord, Lord McCluskey, advance warning, but 1 should be grateful if he could clarify—and I realise that he may not be able to do so—the answer which the noble Lord, Lord Kirkhill, gave me because the more I read the report of what he recently said, the more complicated it becomes. What he said in relation to a similar Amendment—
Lord MELCHETT: My Lords, if the noble Earl is going to read from Hansard, can he tell us the column number?
Earl FERRERS: It is in col. 133 of Monday, 11th October. At the top of that column, the noble Lord said:
"This Amendment could create practical difficulties because, as the noble Earl, Lord Ferrers, said, Clause 18"—
which is now Clause 19—
"requires it to be annexed to the annual report. It might, for instance, be possible to discover from the information disclosed under the suggested provisions in the annual report, both the nature of projects considered by the Corporation as well as the names of companies which had failed to land contracts with the Corporation. I do not believe that noble Lords opposite would really support a system which could, unintentionally, reveal (or at least hint at) decisions which would normally be commercially confidential and where disclosure could be damaging to the interests involved."—[Official Report.]
If that is the effect of these Amendments, I can assure the noble Lord that it is not my desire to expand the nature of the disclosure, and I entirely accept that there are items which have to be, and are, commercially confidential and which should not be disclosed. But I do not see that it is necessary for the requirements of the House of Commons, in regard to the disclosure of interests, to be the same as those for members of these two Corporations. Nor do I see that it is necessary for the interests in other companies to be detailed in the annual report, although it is quite right that records of them should be held by the Corporations. My Lords, I beg to move.
5.57 p.m.
Lord HAWKE: My Lords, there appear to me to be three combined types of interest set out in the Bill in subsections

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(3)(a) and (9). First, there is the ordinary interest in contracts. That is a perfectly simple matter and is covered at a board meeting by a person saying "I have an interest. I am not going to vote on this", and that is recorded in the minutes. Paragraph (a) of subsection (3) goes on to say that there should be disclosure of:
"… any other matter whatsoever which falls to be considered by the Corporation".
Those words are extremely difficult to interpret in practice, because I imagine that a Corporation will have a memorandum of association which is very wide, just like an ordinary company, and will be allowed to do almost everything. It looks to me as if the members of a Corporation will have to disclose almost everything they can conceivably think of.
On the other hand, if it is desired that members shall make a full disclosure of all their financial interests, as in subsection (9), I cannot see that the rules of the House of Commons in future years are particularly relevant. If it is desired that they should conform to those rules today, then think that subsection (9) should say so; in other words, "if they were Members of the Commons in 1976", or words to that effect. I should have thought that subsection (9) was entirely unnecessary, and that the whole situation was covered by the two types of interest set out in paragraph (a) of subsection (3), though I admit that the second part of that paragraph will make it extraordinarily difficult for any man to conform.
The Earl of ONSLOW: My Lords, we must be extremely careful here, in that we on this side of the House must not appear to be advocating any form of cover-up. I am absolutely convinced that we are not. The reason that I say this is that there are now instances of corruption which would have been totally and completely undreamed of 10 years ago. I think I am right in saying that then certain people in the National Coal Board bought shares in a company which had had a big contract awarded to it. That cannot be right. There has been widespread corruption in local government and in planning offices and there have been hints of corruption in, of all places, the Bank of England. Today we hear that there is a case of corruption in British Leyland. There have even been hints of corruption in
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another place. When I was growing up I just did not believe that these were the kind of' things which happened in England. This may have been a very naive or just a plain ignorant view, but—
Baroness SEEAR: My Lords, is it not true that these are only allegations of corruption, not corruptions which have been established?
The Earl of ONSLOW: My Lords, I am very happy to be corrected by the noble Baroness. If I have given the wrong impression I will certainly withdraw what I have said and insert the word, "allegations". I stand corrected.
Lord STRABOLGI: My Lords, may I also remind the noble Earl that it is not proper for him to mention the other place.
Baroness SEEAR: Why not?
The Earl of ONSLOW: Why not, my Lords? These allegations have been made. We all know that 15 or 20 years ago this kind of thing was totally undreamed of in this country.
Lord WIGG: My Lords, surely one of the troubles is that the noble Earl is rather young. Has the noble Earl forgotten the Marconi scandal?
The Earl of ONSLOW: My Lords, if I may be so bold as to say so, that came from the Liberal Party, as did the "flogging" of Peerages, and it is a slightly different kind of argument. However, there have been allegations of corruption and we must be very careful not to give any hint of a cover-up. The point I am trying to make is that the Parliamentary way is not the right way to do it. One can certainly say that the demands on the honesty of those who run nationalised corporations should, if anything, be higher than the demands on the people who run private enterprise. That is because the people who run nationalised corporations are servants of the State. Noble Lords should not think that in this Amendment we are arguing for any form of cover-up. All we are saying is that the method of doing it is wrong.
Lord ORR-EWING: My Lords, I am afraid that I have to mention the House of Commons and I must ask the noble Lord,

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Lord Strabolgi, why he thinks that it is wrong to mention it. The Bill says that members of the Corporations are to register their interests, just as they would if they were in the House of Commons. I cannot see how we can even discuss this matter if we are not to mention the House of Commons. Can the noble Lord explain that point to us?
Lord STRABOLGI: My Lords, the Standing Order says that it is undesirable that any Member of the House of Commons should be mentioned by name or otherwise identified for the purpose of criticism of a personal nature. I realise that the noble Earl did not mention anybody by name but 1 think I am right in saying that it is usually undesirable that criticism of this kind should be levelled at another place. If, however, I went farther than the Standing Order, then I apologise to the noble Earl.
Baroness PHILLIPS: My Lords, is there a Standing Order that the Members of the other place, who seem constantly to be calling us rather harsh names, should not do so?
Lord ORR-EWING: My Lords, the noble Baroness does very well to draw attention to the fact that it is a one-way, not a two-way movement at present! I have in my hand a copy of the register of Members' interests in the House of Commons. In view of what has been said, I will not refer to any particular Member but I wonder whether the criterion of "as mentioned in the House of Commons register of Members' interests" is a good one, because there will be changes. This was the first cockshy. It may be that it is too general, or it may be that it is too detailed. Without mentioning the name, it says that from 10th to 14th May, 1976, this Member visited Los Angeles as a guest of British Airways. I do not know whether that will get one very far. It may be that it is too detailed. It says that he is the chairman and managing director of a company bearing his name. That is another interest. I should not have thought that a register of interests is a good criterion.
My second point is that it should be done for the individual companies. Under Schedule 2, 39 individual companies will be nationalised. It seems to me that, as
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with other companies, you declare your other directorships. This declaration is then put into the company reports and is registered at Companies House, and anybody who wishes to go there can see it for himself. Therefore I do not quite see why the Secretary of State should have a separate list for himself, nor do I see why he should publish it; it can always be reached by those who have doubts about it. That is why I wonder, with other of my noble friends, whether we have the right formula now and whether we ought not to amend it along the lines which we have suggested.
Lord WIGG: My Lords, I will not keep the House for more than a moment, nor will I enter into the merits of the Amendment. When I interrupted the noble Earl, Lord Onslow, to mention the Marconi case, it was not in my mind to make a political point. I have been in public life for half a century and 1 do not believe that standards today are any worse than they were at that time. Things have always happened and will continue to happen in the kind of world in which we live. However, the organs of publicity here are much more inquiring. Perhaps they have different standards. However, if one looks at the political life of all Parties in this country, I do not believe that many people whose life work starts in the House of Commons and which even brings them to this place get very rich out of it. At a time when it is a hobby—perhaps a hobby which is being overplayed by the Party opposite—to denigrate everything in our national life in the hope of scoring a few political points, I do not want to play that particular game.
6.7 p.m.
The Earl of LAUDERDALE: My Lords, we can all see the general purpose that the Government have in mind in this part of the Bill. The language is puzzling at points, but the general purpose is clear enough to us all. There is to be a body which will be controlling and purchasing at the same time and it is very proper that all members of the Board who might have an interest in any of the transactions should dispose of it. Nobody would challenge that. We are for maximum rather than minimum disclosure, particularly when it comes to contracts. However, what is obscure is that we have

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not had an answer to the question why the disclosure should be analogous in any way to the disclosures made by Members of Parliament whose disclosures serve a particular purpose in a particular context. It seems to me that this is irrelevant.
Perhaps I may refer to the answer of the noble Lord, Lord Kirkhill, at the bottom of col. 132 on 11th October, for it was curiously obtuse. I do not expect the noble Lord, Lord Kirkhill, to be obtuse, any more than I expect the noble Lord, Lord McCluskey, to be obtuse. However, now that the text is before the noble Lord, Lord Melchett, I will draw his attention to the penultimate paragraph of col. 132 where the noble Lord, Lord Kirkhill, said:
"The classifications under which they may be expected to notify their interests will be broadly the same as for the Members of another place—particularly share holdings if these exceed 1 per cent. of the issued share capital, directorships, paid overseas trips, payments from abroad or details of land or property held. The Amendment"—
this was the same Amendment as we are discussing now and I am afraid we may discuss it again at Third Reading if we do not get a better reply tonight—
"would reduce the range of financial interests which would have to be disclosed by members of the Corporations solely to those which might be considered directly or indirectly related to the work of the Corporations".—[Official Report, 11/10/76; col. 132.]
What is the matter with that?
If we are really to have a list of all possible interests one would get the most extraordinary and irrelevant interests. I know that there is no danger of I myself ever being appointed to the Aerospace Board, but supposing I were, I should be obliged to disclose (among other things) the following interests: I am a director of a firm of developers; I am the director—indeed the chairman—of a firm that wants to promote a private hospital; I am a director of a firm concerned with the development of natural resources in the Highlands of Scotland; I am the director of a firm involved in the sale of motor cars; I am the director of a firm concerned with underwater structures for the oil industry; I am the director of one or two charities and I am the director of a company that sells linen goods. What relevance could those possibly have to the British Aerospace Corporation? Yet
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if a member of the Aerospace Corporation is to disclose the same sort of interests as a Member of Parliament he would have to disclose such haphazard interests as those.
It is not that anyone does not wish to declare them; I have declared them now—in fact I have missed out one; I am the chairman of a company interested in developing some land opposite Felixstowe Docks, an interest which I declared before the vote the other day—but such interests would not be in the slightest degree relevant to the operations of the Corporation. Somebody's appointment might be proposed and his interests might be as diverse as my own. For all those interests to he declared publicly in the annual report is just sheer nonsense. It would be taking up space in the annual report. Anyone taking up a directorship lists the directorships he already holds and that is on record at Companies House so that there can never be any doubt as to any conflict of interest should one arise. That is one thing, but to list all this irrelevant nonsense in the annual report for the benefit of the public does not make any sense.
We are not saying that matters which are relevant should not be disclosed. On the contrary, we are saying that relevant matters should be disclosed and we are also saying that we should get the best people we can for the Corporation. This kind of thing could very well discourage them. I do not think there is a matter of high principle here. As noble Lords know very well, we are trying to make this a better Bill, if we cannot kill it, and it is in the interests of trying to make it a better Bill that I stress this point.
Baroness WARD of NORTH TYNESIDE: My Lords, I have listened to all the arguments as to how this subsection should be put into the Bill and, although I do not really mind how it is done, I have been interested to note that not a single speaker has said that the disclosure of interest may in fact be a protection to individual members, whether they are Members of another place or of your Lordships' House. The noble Lord, Lord Wigg, said how long he had been in public life but in fact he has not been in public life quite as long as I have, and when one is in public life naturally some people like you and some dislike you and a great

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many things are said which are quite untrue. I think it is important that members of whatever Party should have a protection of this sort because of the kind of things that can be said about what individuals own or do not own or the companies with which they are connected.
Viscount SIMON: My Lords, like my noble friends I feel generally in sympathy with the Government in regard to the retention of subsection (9) and in resisting this Amendment. I believe that the members of public boards of this kind should have a higher degree of interest to declare than people who are on the ordinary boards of companies. I have had the opportunity of looking at the register of interests of Members of another place and, as the noble Earl, Lord Lauderdale, said, it is very interesting and rather long, but my real objection to using it is that if we put it in the Statute that the interests declared shall be in accordance with the Resolutions of the House of Commons—which is what we say here—then surely we are legislating in such a way that the legislation can be amended by the action of one House without it coming to the other House at all, and I question whether that is a constitutional provision. I should have thought the case would be met by spelling out what it is that Members of the House of Commons are required to declare, and then if the other place decides to amend its Resolution it might be just a question of having a brief amendment to the Act if it was thought necessary.
Turning to the Amendment, I cannot help feeling that it has somehow gone a little astray. It refers to the Corporation maintaining a register of interests disclosed pursuant to subsection (3): those are the interests to be declared at a board meeting when a member of the board says, "I declare my interest in this contract that we are discussing", and those are just the interests which certainly ought not to be published. So what is the point of the Corporation maintaining a register. The facts should be recorded in the minute book and that is the end of it. I do not see much point in maintaining a register which in any case nobody can see. If anybody on the board wants to see the interests concerned they can look back through the minutes, so with great respect to noble Lords on my left it seems to me
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that in any case the Amendment is misconceived.
Lord McCLUSKEY: My Lords, first I should like to say that I am grateful for the support which the noble Viscount, Lord Simon, has just given me. That is entirely appropriate as this clause was inserted in response to a suggest, on made by the Liberal Party in another place. I am also indebted to the noble Baroness, Lady Ward of North Tyneside for the helpful comment that she made, because we want to get this clause right. I am grateful, too, to the noble Earl, Lord Ferrers, because at least we are all agreed that there should be some disclosure.
Dealing with the particular points which have been raised, the first one of substance is, why should one make the comparison with Members of Parliament? We all believe that it is fair and reasonable that particulars of relevant financial interests (whatever that may mean) should be available for the public record. I do not think that for public servants it is an undue invasion of privacy to require this to be done. So the question remains: Is it right to look at the requirements laid down for Members of another place? We accept, of course, that the character of the work may be different, and to some extent the interests may be different, but the essence of the matter is that the public concern is the same.
If one looks at the publication which contains the requirements of the register in another place (and the noble Lord, Lord Orr-Ewing, was the first speaker to refer to this) one will see the contents and on page iii paragraph 4—this is a general point which would apply to these Corporations as well—it says:
"But the member"
that is, the Member of the House of Commons—
"is also a private individual and entitled to a proper degree of privacy. For that reason, the House placed limits on the extent of disclosure required. The Member has to disclose the source of any remuneration or benefits he may receive, but not the amount. So far as land and property is concerned, it is the general nature of the interest rather than a detailed list of holdings that is required",
and so on. The point made here, which I would repeat, is that a provision of this kind requires a Member in another place, or a member of the board, to declare his general interest rather than his particular

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interest. I will come back to that in a moment when I deal with the point raised by the noble Earl, Lord Ferrers, in relation to the difficulty spoken of by the noble Lord, Lord Kirkhill, on Committee stage.
I invite noble Lords opposite to look at paragraph 8 of this same document, where they will find that the matters required to be disclosed are matters it is perfectly proper should be disclosed—remunerated directorships of companies, remunerated terms of office, remunerated trades, professions or vocations, the names of clients where the interest referred to included personal contacts by the Member, financial sponsorships as a Parliamentary candidate, overseas visits where the cost of any such visit has not been wholly borne by the Member, and so on. These are all matters which are regarded by the public as benefits conferred on the member of the Board, and public concern about corruption requires to be met.
I turn, then, from that matter to the next question, which is the role of the Secretary of State. In my submission it is right that the Secretary of State should know of an interest immediately it is acquired. As the noble Earl, Lord Ferrers, will appreciate, if the Secretary of State does not know of it immediately it is acquired, he will not discover it necessarily until the publication of the annual report. There could be quite a long gap, and that gap could give rise to concern. The most effective way of ensuring this is to specify that the Secretary of State himself should maintain the register.
The noble Earl also referred to col. 133 of the Official Report, where my noble friend Lord Kirkhill explained the difficulty that could arise if one accepted the Amendment now before the House. The Amendment would create this difficulty, if I could try to explain it in my own words. Under Clause 19(5) it is required to be annexed to the annual report. It might be possible to discover from the information disclosed in the annual report under the suggested provisions both the nature of the projects considered by the corporation and the names of the companies which had failed to land contracts with the Corporation, or who might still be negotiating with them. Let me put it this way. If one takes the
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Amendment which is proposed and a member of the Board is required to register an interest which he has in a contract or in a matter in which the Corporation is interested, he may have an interest in company A and the Corporation is negotiating with companies A, B, C and D. By looking at the register and finding that between the last annual report and the present one he has disclosed an interest in company A, one can determine that the Corporation is in fact negotiating with company A. That may be a matter which is confidential.
Your Lordships may think that in fact the spirit of that Amendment, therefore, and the result of it, are not really consistent with the spirit of the Amendment we are coming to later, No. 58, to Clause 6(5). I would draw this distinction—that the requirement contained in the Amendment requires persons to be quite specific about their interests, whereas the clause as it now stands requires a general disclosure, and therefore does not give rise to this particular difficulty.
The noble Viscount, Lord Simon, made one criticism, that the requirement can be altered by the other House without any control by this House. But 1 think that it is hardly unconstitutional to put into a Statute some later possible alteration in the law by delegated legislation or some other form of delegation. I ask your Lordships not to consider that point as one that is decisive, and in the circumstances I invite noble Lords to withdraw the Amendment.
6.27 p.m.
Earl FERRERS: My Lords, I am grateful to the noble and learned Lord, Lord McCluskey, for having explained his reservations over this Amendment, in particular for having explained the part about which I was worried after the explanation of the noble Lord, Lord Kirkhill. On hearing him, I think that our Amendment is probably deficient in this respect in so far as it might enable people to disclose things which properly should he kept as of a confidential nature. But I am hound to say that I did not find it convincing that the general interests of members of the Corporation nevertheless should have to be disclosed in the annual report. Here, there is nothing between us over the general items of disclosing

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interests. Of course they should be disclosed. It is merely a question of whether they should be published.
The description of my noble friend Lord Lauderdale of his own particular directorships—and one can imagine all the others of other potential members of the Corporation—was fairly graphic of the kind of material that would "gum up" an annual report. I should have thought it was not necessarily appropriate. Nor am I still convinced that it is appropriate to subject members of the Corporation to the same type of disclosure as Members of another place, because, after all, they have different responsibilities. It is rather like saying that cheese requires to be mellowed for six months; therefore, so also does butter. The only common denominator is the fact that they are both of milk.
Lord McCLUSKEY: My Lords, if the noble Earl, Lord Ferrers, will allow me to intervene, owing to my inexperience I failed to draw the attention of noble Lords to the final three words of Clause 1(9)—"with appropriate modifications". So it is not exactly the same information which may be required from a member of the Board as may be required from a Member of the other place.
Earl FERRERS: My Lords, if I may say so, that merely serves to complicate the issue even further. Because what we have here is the fact that it is the requirement of the Members of the House of Commons—and then we come back to the point referred to by my noble friend, Lord Carr of Hadley, that the Secretary of State has huge powers. Apparently he has now powers to alter not only what the House of Commons says is for their Members, but he can alter it from the point of view of the two Corporations. What the Members of the House of Commons elect to do about this disclosure of interest is what I might describe as an in-House arrangement. They have decided what to do about their own membership.
The point raised by the noble Viscount, Lord Simon, who regrettably has just vanished, was a very valid one that here we arc passing a Bill saying what interests should be disclosed. If in fact another place alters their arrangements in the next 10, 20 or 30 years that alteration will come
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about with the approval of only one House, not two. The noble and learned Lord, Lord McCluskey, says, "Let's not worry too much about that", but 1 think we ought to worry about that. What is more worrying is that he then says, "Oh yes, we can have what the House of Commons say they require, but then, of course, the Secretary of State can alter that on his own just by regulation". I ask the noble and learned Lord to be kind enough to think about this; further, because there really is not what one might call partisan feeling over this at all. It is merely to try to get the correct thing put into an Act of Parliament. I cannot believe that it is right to put into an Act of Parliament that people should disclose interests which the House of Commons happen to disclose and which can be altered by the House of Commons altering their own in-House arrangements, and still less that it should be able to be altered by the Secretary of State without the approval of both Houses.
Lord McCLUSKEY: My Lords, may I respond to that. This has been looked at very carefully. It has been decided hitherto that it is not intended to change the matter. Perhaps I may be allowed to make this reply.
Earl FERRERS: My Lords, I invited the noble and learned Lord to break the rules and I am sorry for having done so. He has made it crystal clear that he has no intention of thinking about this again. I do not think it is correct that we should divide on this, and so I beg leave to withdraw the Amendment.
Lord HARMAR-NICHOLLS: My Lords, this is not a matter of realness, but I should have thought that for sheer neatness' sake one ought to know what "appropriate modifications" means. It is not common sense to expect people to move in the dark. But there is more than neatness in this. The House of Commons do not know what their requirement is. This is "appropriate modifications" of something that is already very hazy. Even in relation to the declaration of interests in the House of Commons certain people are not adhereing to it, and they do not know whetter they are wrong, whether they are infringing rules, or what happens. The whole thing is hazy.

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What makes this very important is that we are living in a time when people's reputations and standing are judged by newspaper headlines, by all sorts of comment mixed up with corruption. People must know where they stand, otherwise you are going to drive from public life people who ought to be contributing to the way these things are done. To leave it as hazy as this is not fair; innocent people, inadvertently, because of sloppy language, are put in a position where they can be pilloried and have headlines made about them in two or three years' time because they did not adhere to some declaration, some register. I believe that this has to be spelled out in terms so that people can understand what they are committing themselves to; otherwise this country will be denuded of the talents of people who ought to be taking part in the general debate that goes on over what is supposed to be the new way of life. I hope that this will be looked at from the wider point of view and not just the narrow one of what three or four actual words mean.
Lord CARR of HADLEY: My Lords, I apologise to your Lordships in that I have not heard the whole of the debate on this Amendment. I have, however, heard quite enough to know that the Amendment we have put down is not apt in itself; I fully agree with my noble friend, Lord Ferrers about that. I would hope, however, that the Government will give this some thought. I think that disclosure is of the greatest importance; I have felt so for a long time, and so have most people. In the atmosphere in which we are living at the moment, when, unfortunately, increasing suspicion is resting on people in public life—and I think those who work for nationalised corporations nowadays come into that category—full disclosure is of great importance.
I hope that the Government will realise that there is no difference between us about the need for full disclosure in these matters, but there really is a doubt in our minds, and I do not think it is an unreasonable doubt. This describes what is needed in terms of what happens at the moment in the House of Commons, which, as my noble friend Lord Harmar-Nicholls said, is not really understood properly by the Members of the other place. I must
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confirm, as a fairly recent Member of the other place, that I was far from sure what it was I should put in the register; I had to seek advice about it and hope that I got it right in the end.
I think it is unsatisfactory to write into this Statute a reference to a Resolution of the other place which was designed for Members of the other place rather than for members of a nationalised corporation, and which can be changed by Members of the other place at any time merely by Resolution. What is designed, and quite properly designed, to meet their needs and requirements as Members of Parliament may not be appropriate for members of a corporation.
In pressing this point, as we have, on Report stage as well as Committee stage, I repeat that it is not because we are trying to have less disclosure; it is because we genuinely think that defining disclosure by reference to this rather indeterminate Resolution of the other place is not the right way to do it. T know that it is late in the progress of the Bill, but I believe that if Ministers turned their minds to it they could still introduce other yardsticks which would achieve the purpose which I again assure Ministers we all want to see, but do it in a way more appropriate to an Act of Parliament.
Baroness PHILLIPS: My Lords, the noble Lord, Lord Harmar-Nicholls, raised the point about Members of the other place not understanding what disclosure is about. I feel sure that he, like me, must have listened this afternoon to some of the debate in the other place. Certainly one Member—I suppose we must not mention names—was very clear in his mind; he thought it was in order that you could have only one job to one person. Listening to the noble Earl's recitation of his activities, I should not have thought that anybody with that amount of activity had the time to be a member of a corporation. Certainly if they came before me, as an employer, I would say, "You have enough to do and you cannot be expected to give your attention to it". We have heard about corruption, but this is another angle which I do not think has been brought in. I take the point that it is difficult to know what to disclose, but if in doubt put it all in and let the kernel be taken out of that.
Lord SHINWELL: My Lords, I am inclined to support the view which has been expressed by the Opposition. It seems to me that the position of a member of one of the corporations is quite different from the position of a Member of the House of Commons. A Member of the House of Commons is responsible not only to the House itself and to the country but to his constituents, whereas in the case of a member of a corporation it is quite adequate in my opinion if he discloses his interests; that is to say, how many shares he possesses, whether he has had shares and disposed of them, whether he is associated with some subsidiary corporation, and so on. There is quite a substantial difference. I would advise my noble friends on the Front Bench to give the matter consideration. This is a matter which can be dealt with before we come to Third Reading.
Lord MELCHETT: My Lords, this was something which we considered very carefully after the Committee stage. Either I or one of my noble friends said then in response to the noble Lord, Lord Carr, that we agreed that this might not be an ideal thing to put in this particular Bill, but it seemed to us very difficult to come up with any alternative. I said that I would certainly give it some thought; I have done that, and my advisers have, and we have not been able to think of anything better. Judging from the Amendment put down by noble Lords opposite, I assume that they have found it just as difficult as we have when it comes to thinking of alternatives.
The noble Earl, Lord Ferrers, and the noble Lord, Lord Harmar-Nicholls, mentioned particularly subsection (9), which, of course, relates the register of interests of members of the corporations to that of Members of another place, yet allows for "appropriate modifications". The noble Earl said that this was even more worrying. He was worried about it before, but this was even worse. I understand that the effect is not quite so disastrous as he may have feared and that if a resolution in another place put any new obligation on its Members and it was plainly irrelevant to membership of the Corporations, the Secretary of State could remove this obligation from members of the Corporations as it would be inappropriate. During the Committee state the noble
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Lord, Lord Carr of Hadley, gave some examples of a position which he feared. I cannot remember exactly, but he gave some examples of terrible nonsense arising, and that would be avoided by these particular words in subsection (9).
I should say in response to the fears expressed by the noble Earl that appropriate modification refers only to making exceptions of irrelevancies are not to modifying, in the sense of reducing, the obligation. We think that with this qualification the cross-reference to resolutions in another place is acceptable. We have all given a good deal of thought to this matter and would certainly be happy to consider any further suggestions which noble Lords cared to make, though I could not honestly say we would be likely to come up with anything ourselves at this late stage.
Amendment, by leave, withdrawn.
Clause 2 [General duties of the Corporations]:
6.42 p.m.
Earl FERRERS Earl FERRERS moved Amendment No. 16:
Page 3, line 30, leave out ("economical") and insert ("profitable").
The noble Earl said: My Lords, we come here to the duties put upon British Aerospace and British Shipbuilders where they are obliged to "promote and secure the promotion" of the "efficient and economical design, development, production, sale, repair and maintenance", and at the Committee stage we had a slight discussion about exactly what those words mean. I was particularly worried' at that juncture as to what the word "efficient" meant because it seemed to be rather vague. I now suggest—and this is meant to he helpful—that possibly the word "economical" is too vague.
When we discussed the word "efficient", I asked the noble Lord, Lord Melchett, exactly what was meant by it. In reply he said that I had gone into a long string of things which I said "efficient" could mean and severa' other things which I said it could mean but which "for the life of me", said the noble Lord, Lord Melchett, "I cannot see how it could possibly mean" and various

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other things which he did not think it would mean. He then went on to say:
"efficient' means all the good things that he said it means and I hope that is an efficient explanation of it."
Quite frankly I do not think it was. It still left the word, "efficient" very uncertain. Equally, this word, "economical" leaves a great deal of uncertainty. That is why we have suggested in this Amendment that the word, "economical" should be replaced by the word, "profitable" and then everyone will know what it means.
If one uses the word "economical", it could mean that the Corporations should be run with a view to economy, with a view to cheapness, or possibly with a view to parsimony. I do not know whether that is the intention; I doubt that it is. But I am not quite certain what it means if it does not mean that they should be run profitably, because if they are run profitably they are presumably run economically. Therefore the object of this Amendment is to find out whether the Government would agree to the word, "profitable" being put in place of the word, "economical"; if they do not agree to that, if they are not the same thing, would the noble Lord be kind enough to say what the difference is. I beg to move.
Lord SHINWELL: My Lords, it appears to me that whoever was responsible for drafting this piece of legislation must have had a remarkable vocabulary at his disposal. I cannot understand why we should be so tautological. Obviously we have the word, "efficient" here and I should suppose—though I am open to correction by any intellectual who happens to be present and there are quite a number present—that the term, "efficient" would embrace the term, "economical" and "profitable", also. I would suggest that the Amendment should be withdrawn but that the Government should agree in turn to effect a compromise by withdrawing the word, "economical" and contenting ourselves with the word, "efficient".
Lord ROBBINS: My Lords, I must take issue with the noble Lord, Lord Shinwell, in what he has just said. I can think of all sorts of aeroplanes and guided
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weapons which may be efficient but are not economical or profitable. I suppose no one would dispute the efficiency of the Concorde, that marvellous piece of technology, yet there seems to have been a good deal of public debate—and I do not take sides in this matter, not being an expert—as regards its profitability or indeed the economic wisdom of its undertaking.
On the other hand, I must appeal to the Opposition Front Bench by saying that the term "profitable" surely is unduly narrowing the operations of the Corporations. It might well be public policy that particular instruments of one kind or another should be produced under sub sidy, in which case they could not be said to be profitable and yet at the same time it would be completely conformable to the dictates of public policy that they should continue to be produced. On balance, I certainly regard the word "economical" as being preferable to the word "profitable", but I certainly would not eliminate "economical" and "profitable" in favour of the suggestion made by the noble Lord, Lord Shinwell.
The Earl of LAUDERDALE: My Lords, just before we part with this matter, may I ask whether it is not a pity that we do not take this opportunity to hail, salute and honour the word "profit"? We know that profit is sometimes a rather embarrassing concept to noble Lords and honourable Members on the other side, because it is thought to be a dirty word. I understand that the Marxist word for profit is "rentability".
Surely we are in a state of development where we have all learnt a certain amount about nationalisation. On the whole the lessons have been unpleasant ones, but we have been learning as we have gone along. There was a time when this Party opposed all nationalisation willy-nilly. Now it is not so. We accept that there is a need for a mixed economy and that it may have its place. But what shall be the purpose? When you use a term like "efficient, "it is capable of many different meanings according to the nuances of a person's political position." Efficient "may mean merely socially efficient or it may mean merely what carries out the policies of the Goverment of the day efficiently, well, without at the same time being commercially satisfactory.

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The reason we could come back to the word "profit" is that the Minister of State as far back as 22nd January gave it his blessing, and surely nothing can be better than that. On the 22nd January a Back-Bench Member of the Party opposite criticised the term "efficiently" as being straightforward capitalist economics. Perhaps that is a very good thing, but he thought it was bad. The Minister of State replied—and this is well worth noble Lords opposite taking on board—
"… they could only justify their socialist advance in terms of its efficiency and its profitability."
The reference is to Hansard for 22nd January, column 353. So the case for using "profit" or "profitable" has sound Socialist endorsement. It has the imprimatur, the nihil obstat from the other side, so it is surely worth considering on those grounds. What we really have to be quite sure of is that "efficiency" means "economic efficiency", that it means "commercial efficiency", and that if means "profitability" and, because of that, means "to the general advantage", not merely "social efficiency".
Lord MELCHETT: My Lords, at the Committee stage, as the noble Earl said, we debated a somewhat similar Amendment to delete the words "efficient and". I believe that this was moved by the noble Lord, Lord Carr, and I got into some trouble with noble Lords opposite for taking the matter seriously and answering as if they had really intended to delete "efficiency", which they told me they did not. I can assure them that I have looked at the Amendment very carefully and seriously and I accept that, as the noble Earl, Lord Ferrers, has said, the Amendment is moved in a genuinely helpful spirit.
I do not believe there is any issue of substance between us on this Amendment. It boils down, I think, to two points: First, that the phrase "efficient and economical" is, in the context of nationalised industries' duties, very thoroughly precedented and well understood, and I do not think we should change these standard phrases without careful thought and very compelling reason.
My noble friend Lord Shinwell said some polite or, depending upon how one views it, impolite things about the person who drafted the Bill. Unfortunately, I have not had time to check, but I am fairly
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sure that this is well precedented in that the words appeared in the Coal Industry Nationalisation Act. They certainly appeared in the Gas Act. As I say, they are well precedented and it may be that the draftsman was not drawing on any great skills of his or her own but was simply following precedents in previous legislation.
A second point arises on the Amendment. It is that though "profitable" has an air of precision, it is not in fact precise. There are many ways in which profit figures can be altered up or down by varying accounting treatment. For example, if a corporation is financed—as many are—entirely by interest-bearing loans, it could be making a good return yet still not show a profit because much of the return would be in the form of interest payments. However, if that corporation had a substantial element of public dividend capital, instead of some of its interest bearing capital and the same return on capital employed, it would be showing a considerable profit. There are of course other ways in which profitability can be affected by simply altering the book-keeping, if that is not an impolite way of putting it. An example would be the revaluation of assets.
For those reasons, I do not feel that "profitable" is necessarily any more helpful than the words in the Bill at the moment. I accept that this is simply a matter of exhortation. There is no particularly precise meaning attached to these words, or, rather, there are several meanings which different people might attach to them. It seems reasonable, however, as there are very clear difficulties in putting in other words, and as these words are very well precedented in previous legislation—though of course I have hesitated to mention any Conservative legislation in case I was thought to be jibbing at noble Lords opposite "which I should not want to do—that we should leave the words in the Bill as they are.
Earl FERRERS: My Lords, the noble Lord is so kind that we could not possibly take offence if he said that the worst thing any Conservative Government had done was to put in the words "efficient and economical" into a Bill. I am bound to say that I was glad that the noble Lord, Lord Shinwell, agreed with us that this was not a very appropriate expression

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to insert. If the noble Lord's argument is that these words are well precedented and well understood in terms of the nationalised industries, I find that rather frightening because most people would think that the last thing the nationalised industries were was either efficient or economical. Yet this is the obligation that we are intending to put on these two new Corporations.
In a more serious vein—and I do not mean by that that I was being flippant before—I think it undesirable to put into the Bills which will, after all, become Statutes which will be challengeable in the courts, words that are imprecise and as to whose meaning nobody really knows anything other than that they have already been used before and that their having been used before has resulted in their meaning being totally reversed and in their not being carried out. We would have hoped that the noble Lord, Lord Melchett, would have been able to explain the difference between "economical" and "profitable". I quite see that using "profitable" could result in somebody altering the books and revaluing assets and so on hut, as a general direction to a corporation, I should have preferred to see something considerably more specific. However, this is apparently to be used only as a form of exhortation rather than as a legal obligation and, if that is so, I should not wish to press the Amendment. I therefore beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord STRABOLGI: My Lords, this may be a convenient moment to adjourn the Report stage until a quarter to eight in order to take other business. Subject to that other business being completed by then, I beg to move that further consideration on Report be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.

SUPPLEMENTARY BENEFITS BILL [H.L.]
6.58 p.m.
The LORD CHANCELLOR (Lord Elwyn-Jones): My Lords, I beg to move that this Bill be now read a third time. It
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is, I believe, the last consolidation Bill that will go through the House in this Session of Parliament and I should like to take this opportunity to say a word of appreciation to the noble and learned Lord, Lord Simon of Glaisdale, who I regret to see is not with us in the Chamber and who retires at the end of this Session as Chairman of the Joint Committee on Consolidation Bills.
Mr. Gladstone said on one occasion when he introduced a budget that he did not call the task Herculean because Hercules could not have done it. Lord Simon and his equally dedicated Committee Members must have felt the same in approaching the consolidation of, for instance, the Social Security Benefits Bill, which had to take account of no less than five amending Bills in the same Session. The consolidation of Statutes in respect of which we owe so much to the Law Commissioners is extremely useful and important, but it is also heavy, difficult and unglamorous work, as we saw in the recent Land Drainage Bill.
This present Supplementary Benefits Bill is no exception. We have reason to be particularly grateful for the fact that, after the Bill was recommitted to the Joint Committee, the Committee proceeded to deal with it very efficiently and quickly in order to enable this valuable measure of consolidation of a branch of the law which affects millions of our citizens to get through in the present Session. The House is indeed greatly indebted to the Joint Committee and in particular to its Chairman the noble and learned Lord, Lord Simon, who has borne so much of the burden of the work of the Committee. He followed a distinguished line of recent chairmen in the noble and learned Lord, Lord Morris of Borth-y-Gest, whom I am delighted to see in the Chamber, then the noble Lord, Lord Upjohn, the noble Viscount, Lord Colville, and the noble and learned Lord, Lord Diplock; and it is gratifying to know that the noble Lord, Lord Russell of Killowen, has agreed to take over from the noble and learned Lord, Lord Simon of Glaisdale.
During the period of nearly four years since he became chairman we have depended a great deal on the expertise, the advice, and the immense conscientiousness of the noble and learned Lord, Lord

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Simon of Glaisdale, and I am sure that I speak for all your Lordships when I say how grateful we are to him. He may not have heard this, but I hope that in the fulness of time he will read it. I beg to move.
Moved, That the Bill be now read 3a.—(The Lord Chancellor.)
On Question, Read 3a, and passed, and sent to the Commons.

INSOLVENCY BILL [H.L.]
7.1 p.m.
Lord ORAM: My Lords, I beg to move that the Commons Amendments be now considered.
Moved, That the Commons Amendments be now considered.—(Lord Oram.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[References are to Bill 52 as first printed for the Commons]
[Nos. 1 to 3.]
Clause 1, page 1, line 11, leave out subsection (2) and insert—
(2) The Secretary of State may by regulations increase or reduce any of the sums for the time being specified in the provisions amended by subsection (1) above.'
Clause 1, page 1, line 15, after 'increase' insert 'or reduction'.
Clause 1, page 1, line 18, leave out from 'and' to end of line 20 and insert no such regulations shall be made unless a draft of them has been approved by resolution of each House of Parliament.'
Lord ORAM: My Lords, with the leave of the House I beg to move that this House doth agree with the Commons in their Amendments Nos. 1 to 3 en bloc, and with the leave of the House 1 will also speak to Amendments Nos. 25 to 47 inclusive. Amendments Nos. 1, 2 and 3 will have the effect of empowering the Secretary of State by regulation to vary (that is to increase, further increase, reduce or further reduce) the monetary limits specified in Part I of Schedule I, and of subjecting the draft of any such regulations to approval by Resolution of each House of Parliament. Amendments Nos.25 to 47 inclusive in the main give effect to a number of specific changes in the monetary limits in Part I of Schedule I. These changes were proposed as a result of discussions which took place after the Bill was published in its original form. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Oram.)
Earl FERRERS: My Lords, we are grateful to the noble Lord, Lord Oram, for explaining exactly how these Amendments come about and to what they refer.
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 4.]
After Clause 3, insert the following new clause:
Extension of time for complying with bankruptcy notice
'. In section 1(1)(g) of the Bankruptcy Act 1914 (act of bankruptcy if debtor does not comply with bankruptcy notice within seven days) for the words "seven days" there shall be substituted the words "ten days".'
Lord ORAM: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 4. This clause extends the time limit imposed in Section I(1)(g) of the Bankruptcy Act 1914 for compliance with a bankruptcy notice from seven days to 10 days. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Oram.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos.5 and 6.]
Clause 5, page 4, line 17, at end insert; and in determining whether to make an order the court shall have regard to all the circumstances of the case including, in particular,

(a)whether the debtor has made a full disclosure of his affairs;

(b)whether he has been adjudged bankrupt on a previous occasion;

(c)the number and nature of his debts;

(d)whether his bankruptcy would for any reason be a matter of public concern; and

(e)such other matters as may be prescribed for the purposes of this subsection by rules made under section 132 of the said Act of 1914.'

Clause 5, page 4, line 19, at end insert but the power of the court under section 108(1) of the said Act of 1914 to review or rescind any such order may be exercised either on the application of the official receiver or on the application of the debtor, a creditor or the trustee.'
Lord ORAM: My Lords, with the leave of the House I beg to move that this House doth agree with the Commons in their Amendments Nos.5 and 6 en bloc.

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The purpose of Amendment No. 5 is to set out certain criteria to guide the court when considering whether to make an order dispensing with the public examination in a particular case. The effect of the Amendment would be that in determining whether to make an order dispensing with a public examination, the court would have regard to all the circumstances of the case, including in particular: whether the debtor has made a full disclosure of his affairs; whether he has been bankrupt before; the number and nature of his debts; whether his bankruptcy would for any reason be a matter of public concern; and any other criteria as may be prescribed by rules.
The purpose of Amendment No. 6 is to remove any doubt as to whether persons, other than the Official Receiver, can have recourse to Section 108(1) of the Bankruptcy Act 1914 in respect of an order dispensing with a public examination. The Amendment would have the effect of ensuring that the court's power to review or rescind an order dispensing with a public examination, may be exercised on the application under Section 108(1) of the debtor, a creditor or the trustee, in addition to the Official Receiver. I beg to move.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Oram.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos.7 to 9.]
After Clause 5, insert the following new clause:
Automatic discharge of bankrupt.
'(1) Where the court makes an order—

(a)declaring that a debtor's examination under section 15 of the Bankruptcy Act 1914 has been concluded; or

(b)dispensing with his examination under that section,

the court may, if it thinks fit, make an order directing that subsection (2) below shall have effect if he is or has been adjudged bankrupt in the proceedings; and in determining whether to make such an order the court shall have regard to all the circumstances of the case, including in particular, any such facts as are stated in section 26(3) of the said Act of 1914 and whether the debtor has committed any offence under that Act or any other offence connected with his bnakruptcy.
(2) Where the court makes an order under subsection (1) above, then, if the debtor is or
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has been adjudged bankrupt in the proceedings and—

(a) is not discharged in respect of the adjudication under section 26 of the said Act of 1914 before the fifth anniversary of the date of the adjudication; and

(b) the adjudication is not annulled before that anniversary under section 21(2) or 29 of that Act,

the same results shall ensue as if the court had on that anniversary granted him an absolute order of discharge in respect of the adjudication under the said section 26.
(3) Section 108(1) of the said Act of 1914 (power to review, rescind or vary an order) shall not apply to an order under subsection (1) above, but the court may on the application of the official receiver or the trustee rescind the order at any time before the fifth anniversary of the date of the adjudication.
(4) Where a person has been adjudged bankrupt more than five years before the coming into force of this section and—

(a) has not been discharged in respect of the adjudication under section 26 of the said Act of 1914 before the relevant date (that is to say, the coming into force of this section or the tenth anniversary of the date of the adjudication, whichever is the later); and

(b) the adjudication has not been annulled before the relevant date under section 21(2) or 29 of that Act,

the same results shall ensue as if the court had on the relevant date granted him an absolute order of discharge under the said section 26.
(5) In subsections (2)(a) and (4)(a) above references to discharge are references to discharge by an absolute order of discharge or by the expiration of the period, or satisfaction of any requirement, specified by a suspended or conditional order.'
Clause 6, page 4, line 38, at end insert—
(a) the court has not made an order under section (Automatic discharge of bankrupt) (1) above in relation to the adjudication or any such order has been rescinded; and'
Clause 6, page 4, line 42, leave out to apply to the court for a review ' and insert make an application to the court in respect'.
Lord ORAM: My Lords, with the leave of the House I beg to move that this House doth agree with the Commons in their Amendments Nos.7 to 9 en bloc, and with the leave of the House I will also speak to Amendments Nos. 22, 23, 24 and 48. The new clause would have three effects. First, it will empower the court at the time it makes an order concluding the public examination or dispensing with one, to make another order directing that the bankrupt shall have an absolute order of discharge on the fifth anniversary of the date of the adjudication. Secondly, it will empower the Official Receiver or the trustee where such an order has been made,

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to apply to the court to rescind the order at any time before the discharge becomes effective; that is, before the fifth anniversary of the date of the adjudication. Thirdly, it will grant an absolute discharge on the coming into force of this section, or on the tenth anniversary of the date of adjudication, whichever is the later, to all bankrupts who were adjudged bankrupt more than five years before the coming into force of this section.
Amendment No. 8 has the effect of excluding from the review for the purpose of discharge, cases where the court has made an order granting absolute discharge on the fifth anniversary of the date of the adjudication, and such order has not been rescinded. Amendment No. 9 has the effect merely of changing the description of the procedure under which bankruptcies will be reviewed for the purpose of discharge.
Amendment No. 22 provides that the new clause provided for in Amendment No. 7 shall have effect as if contained in the Bankruptcy Act 1914. Amendment No. 23 has the effect of delaying the coming into force of the Act until such date as may be specified by the Secretary of State by order made by Statutory Instrument. The purpose of Amendment No. 24 is merely to reword the subsection in the interests of clarity without changing its effect in any way. I beg to move.
Moved, That this House doth agree with the Common in the said Amendments—(Lord Oram.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 10 to 16.]
Clause 7, page 6, leave out lines 4 to 9 and insert—
'(i) is or has been a director of a company which has at any time gone into liquidation (whether while he was a director or subsequently) and was insolvent at that time; and
(ii) is or has been a director of another such company which has gone into liquidation within five years of the date on which the first-mentioned company went into liquidation; and'
Clause 7, page 6, line 16, after 'period' insert beginning with the date of the Order and'.
Clause 7, page 6, line 18, leave out from '(2)' to 'is' in line 19 and insert 'In the case of a person who is or has been a director of a company which has gone into liquidation as aforesaid and'
Clause 7, page 6, line 44, leave out 'this section' and insert 'subsection (1) above'.
Clause 7, page 7, line 18, after second 'company' insert '(wherever incorporated)'.
Clause 7, page 7, line 23, leave out from 'of' to 'if' in line 24 and insert' this section a company goes into liquidation'.
Clause 7, page 7, line 31, at end insert—
'(9) Subsection (1) above does not apply unless at least one of the companies there mentioned has gone into liquidation after the date of the coming into force of this section; and the conduct to which regard may be had under paragraph (b) of that subsection does not include conduct as director of a company that has gone into liquidation before that date.'
Lord ORAM: My Lords, with the leave of the House I beg to move that this House doth agree with the Commons in their Amendments Nos. 10 to 16 en bloc. The purpose of Amendments Nos. 10, 13 and 15 is to make clearer the original intention of the clause; namely, that for the conditions of Clause 9 (1) (a) to be met, first, the person concerned must be, or have at some time been, a director of at least two companies; secondly, the companies must have gone into liquidation within five years of each other as a result either of a winding-up order made by the court or of the passing of a resolution for voluntary winding-up; and, thirdly, the companies must be insolvent at the date of the winding-up order or resolution for voluntary winding-up.
Amendments Nos. 11, 12 and 14 are also merely drafting Amendments to make clear the original intention of the clause concerning the commencement of the period of disqualification, the jurisdiction of the court where one of the companies is in compulsory liquidation, and the applicability of the clause to foreign companies. The purpose of Amendment No. 16 is to specify the extent to which the clause has retrospective effect. My Lords, I beg to move.
Moved, That this House cloth agree with the Commons in the said Amendments.—(Lord Oram.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 17.]
After Clause 7, insert the following new clause:
Advisory committee on bankruptcy and winding up rules
'(1) There shall be a committee appointed by the Lord Chancellor to keep under review the rules for the time being in force under—

(a) section 132 of the Bankruptcy Act 1914 (bankruptcy rules); and

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(b) section 365 of the Companies Act 1948 (winding up rules);

and to make recommendations to the Lord Chancellor as to any changes in the rules that may from time to time appear to the committee to be desirable.
(2) The Lord Chancellor shall consult the committee before making any rules under the provisions mentioned in subsection (1) above.
(3) Subject to subsection (4) below, the committee shall consist of—

(a) a judge of the High Court attached to the Chancery Division;

(b) a circuit judge;

(c) a registrar in bankruptcy of the High Court;

(d) a registrar of a county court;

(e) a practising barrister;

(f) a practising solicitor; and

(g) a practising accountant.

(4) The Lord Chancellor may appoint as additional members of the committee any persons appearing to him to have qualifications or experience that would be of value to the committee in considering any matter with which it is concerned.'
Lord ORAM: I beg to move that this House doth agree with the Commons in their Amendment No. 17. The purpose of this new clause is to establish a committee which will be under a statutory duty to keep the bankruptcy and winding-up rules under review and to make recommendations to the Lord Chancellor as to any changes in the rules which the committee considers to be desirable. In addition, the Lord Chancellor will be obliged to consult the committee before exercising his existing powers to make bankruptcy or winding-up rules. The committee will comprise four members of the judiciary, two members of the legal profession and an accountant, all of whom are to be appointed by the Lord Chancellor, and such additional members as the Lord Chancellor might appoint. My Lords, I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Oram.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No.18]
Leave out Clause 8.
The LORD CHANCELLOR: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 18. This Amendment would
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take out of the Bill the clause which extends the power of the county court to make administration orders against judgment debtors. In advising the House to accept the Amendment, I should like, however, to make a few observations. An administration order requires the debtor to make regular payments, and provides for their distribution rateably among the creditors. It is a means of doing distributive justice, on the one hand between the creditors and the debtor and on the other between the individual creditors. At present, these orders can be made only where the total indebtedness is stated not to exceed £1,000, but that figure can be increased by Order in Council.
The main purpose of Clause 8 was to facilitate the making of administration orders against self-employed debtors, who, if I may say so, are very hard to get at. At present, an administration order can be made only, first, where the debtor applies for it or, secondly, where a judgment creditor applies for an attachment of earnings order. The clause enables the court, whether or not there has been an application of the kind I have mentioned, to make an administration order if the judgment debtor has other debts which ought to be dealt with together. The clause has, however, been criticised severely, perhaps surprisingly having regard to its limited scope, by representatives of the legal profession and by honourable Members in another place. The Government tried to meet these criticisms by Amendments, but their efforts did not succeed in carrying the other place.
My Lords, I doubt whether this opposition would have been so vehement had it been possible to include the clause in a Bill unconnected with bankruptcy, for the clause has won a fair measure of support both from the county courts and from practising lawyers. However, opinion has been divided, and in my view it would not have been prudent to persevere with the clause against such strong objection from representatives of those who would have been involved in, or affected by, its practical application. What is needed now is a pause for reflection and reconsideration in the light of the various arguments which have been advanced for and against the clause.
I believe that the clause has served a useful purpose, however, by helping to crystallise

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the arguments and by focusing attention on the administration order procedure, which I am sure could be used more frequently with advantage to creditors and debtors alike. I should like to stress two points. First, even with the omission of Clause 8 the administration order procedure is considerably strengthened by this Bill, for Clause 9 imposes the sanction of bankruptcy for non-compliance with an administration order, whatever the amount of indebtedness. Secondly, the arguments over Clause 8 have brought into prominence the existing power of the court to make an administration order where a creditor applies for an attachment of earnings order.
This power is of great importance where the debtor has a number of liabilities. The court may make the order of its own motion, even where it does not grant the application for attachment of earnings. This power, backed as it will be by the sanction of bankruptcy under Clause 9, is worthy of attention. Since the court can take the initiative by imposing an administration order upon an employed debtor, there seems no reason in principle why it should be precluded from taking a similar initiative against the self-employed.
My Lords, I hope that these remarks will suffice to satisfy the House that, although the idea behind Clause 8 is sound and sensible, it would be better to omit the clause from the Bill in order to give further time to seek agreement on the improvements needed to strengthen the machinery for enforcement against self-employed debtors. I hope that, with the co-operation of those concerned, it will he possible to take the earliest available opportunity to legislate for this purpose. Having made that commercial, I now beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(The Lord Chancellor.)
The Earl of GOWRIE: My Lords, I would just say that we on this side are very grateful to the noble and learned Lord the Lord Chancellor for his remarks. He said, if I may quote him, that what is needed is a pause for reflection and re-consideration in the light of the arguments which have been raised against the clause. As one who has not been
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heavily involved in this Bill but who has been involved in many other Bills, would that the noble and learned Lord's words had been uttered in the light of some of the other legislation we have been considering! But we must not be ungrateful for hearing these sentiments wherever we can, and so I would simply repeat our thanks for them.
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 19]
Clause 9, page 9, line 14, leave out from first 'of' to end of line 17 and insert 'section 132 of the said Act of 1914 (power to make rules) this section shall be treated as if contained in that Act'.
Lord ORAM: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 19. This Amendment merely makes clear the original intention of this clause to provide under subsection (7) for the power to make rules under the Bankruptcy Act 1914 to be extended to rules required under this clause.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Oram.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No.20]
After Clause 9, insert the following new clause:
Administration order rules.
'.—(1)The power to make rules under section 102 of the County Courts Act 1959 (county court rules) shall include power to make rules for the purposes of Part VII of that Act (administration orders), section 4 of the Attachment of Earnings Act 1971 and section 9 above.
(2) Section 156 of the said Act of 1959 (administration order rules to be made by the Lord Chancellor) shall cease to have effect; and in section 20(3) and (6) of the Administration of Justice Act 1965 for the words "section 156" there shall be substituted the words "section 102".'
Lord ORAM: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 20. The effect of this Amendment is to tranfer from the Lord Chancellor to the County Court Rule Committee the power to make rules relating to Administration Orders. Subsection (1) extends the scope of Section 102 so as to cover all cases where at present the specific power conferred by Section 156 is applicable and also to cover

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Clauses 8 and 9 of the Bill. Subsection (2) provides for the repeal of Section 156 and also makes consequential Amendments.
Moved, That this House doth agree with the Commons in the said Amendment. (Lord Oram.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 21]
After Clause 9, insert the following new clause:
Other provisions about administration orders.
'.—(1) Section 21 of the Administration of Justice Act 1965 and section 4(3) of the Attachment of Earnings Act 1971 (under which an application for an administration order and the making of an order requiring the debtor to furnish a list of creditors with a view to the making of an administration order constitute an act of bankruptcy) shall cease to have effect.
(2) In section 4(1)(a) of the said Act of 1971 (power to make administration order on application for attachment of earnings order) for the words "an order should be made for the administration of his estate" there shall be substituted the words "an administration order should be made".'
Lord ORAM: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 21. With the leave of the House, I would also speak to Amendments Nos.49 and 50. The effect of Amendment No. 21 is as follows. Section 21 of the Administration of Justice Act 1965, whereby an application for an administration order by the debtor under Section 148(1) of the County Courts Act 1959 is an Act of bankruptcy by the debtor, is repealed. Section 4(3) of the Attachment of Earnings Act 1971 whereby the making of an order requiring the debtor to furnish a list of creditors with a view to the making of an administration order constitutes an act of bankruptcy, is also repealed. The simple term "administration order" has been substituted for the description of an "order should be made for the administration of his estate" in Section 4(1)(a). Amendments Nos. 49 and 50 are consequential upon the new clause inserted after Clause 9 by Amendments Nos.20 and 21.
Moved, That this House doth agree with the Commons in the said Amendment—(Lord Oram.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 22 to 24]
Clause 9, page 9, line 23, after '5' insert '(Automatic discharge of bankrupt),'
Clause 9, page 9, leave out lines 29 and 30 and insert—
'(5) This Act shall come into force on such'
Clause 9, page 9, line 35, leave out 'sections 2, 3, 5, 6, 8 and 9 do not' and insert 'only sections 1, 4, 7 and this section and Schedule 1'.
Lord ORAM: My Lords, with the leave of the House, I beg to move that this House doth agree with the Commons in their Amendments Nos.22 to 24 en bloc. I have already spoken to these Amendments.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Oram.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos.25 to 47.]
Schedule 1, page 10, line 9, leave out '£300' and insert £200'.
Schedule 1, page 10, line 10, at end insert—

Section 79.

Maximum amount which trustee can retain without banking.

£100.'.

Schedule 1, page 10, line 26, leave out '£120' and insert £50'.
Schedule 1, page 10, line 32, leave out '£300' and insert '£200'.
Schedule 1, page 10, line 46, leave out '£600' and insert '£800'.
Schedule 1, page 10, line 49, leave out '£600' and insert '£100'.
Schedule 1, page 11, line 9, leave out '£120' and insert '£50'.
Schedule 1, page 11, line 38, leave out 'winding up on grounds of insolvency' and insert 'service of statutory demand'.
Schedule 1, page 11, line 38, leave out '£300' and insert '£200'.
Schedule 1, page 11, line 40, leave out '£600' and insert '£100'.
Schedule 1, page 12, line 3, column 2, leave out from 'for' to end of line 5 and insert 'service of statutory demand in case of unregistered company'.
Schedule 1, page 12, line 3, column 3, leave out '£300' and insert '£200'.
Schedule 1, page 12, line 8, leave out '£600' and insert '£400'.
Schedule 1, page 12, line 20, at end insert—
'2. No reduction in any sum specified in—

(a) section 174 or 175(6) of the said Act of 1913;

(b) section 105(1) or 129 of the said Act of 1914; or

(c) section 218(3) or 220(3) of the said Act of 1948,

shall affect any case in which the proceedings were begun before the coming into force of the reduction.

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3. No increase or reduction in the sum specified in section 38(2) of the said Act of 1914 shall affect any case in which the date of the receiving order occurred before the coming into force of the increase or reduction.'
Schedule 1, page 12, line 21, after increase' insert 'or reduction'.
Schedule 1, page 12, line 24, after increase' insert or reduction'.
Schedule 1, page 12, line 25, after 'increase' insert 'or reduction'.
Schedule 1, page 12, line 26, after '(c)' insert 'or 50(3)'.
Schedule 1, page 12, line 31, after 'increase' insert 'or reduction'.
Schedule 1, page 12, line 32, after increase' insert 'or reduction'.
Schedule 1, page 12, line 36, after increase' insert 'or reduction'.
Schedule 1, page 12, line 37, after increase' insert 'or reduction'.
Schedule 1, page 12, line 41, after 'increase' insert 'or reduction'.
Lord ORAM: My Lords, with the leave of the House, I beg to move that this House doth agree with the Commons in their Amendments Nos.25 to 47 en bloc. I have already spoken to these Amendments.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Oram.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 48.]
Schedule 2, page 13, line 1, leave out ', (2)'.
Lord ORAM: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 48. This has already been dealt with.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Oram.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos.49 and 50.]
Schedule 3, page 14, line 15, at end insert—

'7 & 8 Eliz. 2. c. 22.

The County Courts act 1959.

Section 148(5). Section 156".

'1965 c. 2.

The Administration of Justice Act 1965.

Section 21.'

Schedule 3, page 14, line 18, at end insert—

'1970 c. 31.

The Administration of Justice 1970.

Section 29(5)(b).

1971 c. 32.

The Attachment of Earnings Act 1971.

Section 4(3). Section 27(2).

Lord ORAM: My Lords, with the leave of the House, I beg to move that this House doth agree with the Commons in their Amendments Nos.49 and 50 en bloc.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Oram.)
On Question, Motion agreed to.
[The Sitting was suspended from 7.25 p.m. till 7.45 p.m.]

AIRCRAFT AND SHIPBUILDING INDUSTRIES BILL
Further considered on Report.
Earl FERRERS Earl FERRERS moved Amendment No. 21:
Page 4, line 18, after ("promote") insert ("omnibus").
The noble Earl said: Now we return to the problem of industrial democracy. At the Committee stage we had a fairly formidable debate on industrial democracy and the part that it should play. We had a considerable discussion as to what was meant by industrial democracy as such, and what was meant by the phrase in the Bill as to whom those people who should take part in the consultations should be. There was a difference of opinion over this. We were anxious to find out what was meant by "industrial democracy" and we discovered it was indefinable. To repeat the words of the noble Lord, Lord Melchett, we know in general what is meant, although we may disagree in particular what is meant. It: is wrong that we should put words on the Statute Book which are indefinable.
We had a long debate about who was to take part in industrial democracy and, in the process of discussion, how industrial democracy should come about. The Government had it firmly in their minds that the people who should be consulted would be the relevant trade unions. We pointed out that this was too restrictive a measure because there ought to be consultation with all employees in industry. We accepted the fact that in consultation you do not negotiate with a lot of individual people but with some bodies of people. We pointed out that one of the

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troubles with the Bill, as it then existed, was either you encourage a lot of people into trade unions, often against their will, or you excluded from the negotiations a lot of people who wanted to be included and who had a right to be included, who were concerned about the future of their industry and had the right to be approached in these matters.
The Committee stage saw an Amendment moved into the Bill allowing this consultation to go further. We believe it is wholly right that all sections of the industries should be consulted on how industrial democracy is going to come about. Obviously industrial democracy should be for everyone. It may be that the Government feel the correct people with whom to carry out discussion are only the relevant trade unions. I know that noble Lords opposite will accept that, whoever is going to be consulted, industrial democracy is going to apply to all people, otherwise the very word "democracy" is absurd. I hope the Government will also agree that, if industrial democracy is going to be undertaken, it should be undertaken by all the people.
In order to underline this point, we have put down this simple Amendment which puts the word "omnibus" in front of the words "industrial democracy". Subsection (6) will read:
"In carrying out its functions under this a Act, it shall he the duty of each Corporation to promote omnibus industrial democracy".
Your Lordships may feel that that seems a funny word to put in the Bill. It is not; it is a simple word that explains exactly what we mean. It means it should be for all people, not just trade union people or shopfloor people, but managers, executives, accountants, designers and everyone. The noble Lord, Lord Melchett, will be perfectly aware that the word "omnibus" comes from Latin, and the Latin ablative form means "by all the people". If you are going to have industrial democracy by all the people this must be a reasonable suggestion. It is possible that the noble Lord, Lord Melchett, may say, "We cannot accept that because, in the Government's view, we do not want industrial democracy to be by all the people, but only by all the relevant trade unions. If we put in this word this might be too restrictive."
I would only suggest that he then turns to the dative form. "Omnibus" is the same in both the dative and the ablative. If he turned to the dative he would realise that it meant "for all the people". There cannot be any dispute that industrial democracy should be for all the people. I would hope that the noble Lord would accept the word "omnibus" as meaning that it should be both for all the people and by all the people. If we put in this simple word it clarifies the whole issue succinctly, so that everyone will know what industrial democracy means and to whom it should apply. I must, of course, tell the noble Lord that that simple word had nothing to do with what one of my noble friends suggested when he saw this Amendment—that is, one of those familiar objects we sometimes see and which was planted in memory by those nice words of Michael Flanders and Donald Swann when they referred to—
"The 30 foot long by 10 foot wide,
The monarch of the road,
The observer of the Highway Code,
The big six-wheeler, scarlet-painted,
London Transport, diesel-engined,
Ninety-seven horsepower
Omnibus"
As I say, it has nothing at all to do with that. It is just a simple word that makes it clear that "industrial democracy" should be for all the people and by all the people. My Lords, I beg to move.
7.52 p.m.
Lord MELCHETT: My Lords, I am not sure whether the noble Earl has left me very clear about whether he actually wanted the ablative or dative form in the Bill. It seems that we might have to qualify "omnibus" to make that clear at least—
Earl FERRERS: Both, my Lords.
Lord MELCHETT: Then I think it probably ought to be made clear in the Bill that it is both, as the noble Earl has now told me. On first seeing this Amendment I had marvellous visions of organically run omnibuses charging all over the place. I accept that there might he some justification for the insertion of the word "organic" in the Bill, but "omnibus" is not necessarily a great deal more helpful than that word: indeed it is possibly less so.
As the noble Earl explained, the word "omnibus" is apparently intended to qualify the words "industrial democracy"

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as they appear in the Bill. Though, as I say, I am not at all sure that the Amendment makes clear exactly what its meaning would be, I can see that it is consistent with the approach noble Lords opposite have taken throughout our discussions on industrial democracy. In particular, it is consistent with the approach adopted in Amendment No. 22 to which we shall come very shortly. As the noble Earl said, I regret to say that we do not think the Amendment is necessary. Indeed, I would go further and suggest that it might be positively harmful. I should have thought the lack of clarity, in itself, would not he particularly helpful. Also, as the noble Lord has said, we have taken a consistent view, on which I shall expand when we come to Amendment No. 22, as to the role the relevant trade unions should play in carrying forward industrial democracy in these two industries. I would hope that we might be able to have a substantive debate on that issue when we come to the later Amendment.
It seems to me, as the noble Earl said, that this is a small word but it raises bigger issues which we have covered in great detail during the Committee stage and which no doubt will continue to occupy our attention throughout the considerable number of Amendments which have still to come. I should be quite happy to go into those substantive issues now but, if I did so, it might not leave me anything to say on the later Amendments. Therefore, having given the noble Earl some idea of my difficulties over the word which, to be fair, he himself appeared to share, perhaps we could agree that while it might possibly give some people a better idea of what was intended by the Bill, it would confuse just as many as it helped.
The Earl of HALSBURY: My Lords, I must apologise to the House for not having heard the first words of the noble Earl, Lord Ferrers. I made my way back to my seat as closely as I could calculate to 7.45, but found the House already busy on this subject. I must say that, although I have gone into the Division Lobby with the Opposition on a number of occasions connected with this Bill, this is one occasion when, if the House is divided, I shall certainly follow the Government. It seems to me that the noble Lord's Amendment turns nonsense into still obscurer nonsense. The whole concept of industrial
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democracy is utterly undefined in the sense that the "cracy" in "democracy"—I am now making a translation from the noble Earl's Latin into my own rather archaic Greek—means the way in which you exercise absolute power.
Democracy is one of the ways in which you can do it: that is, the power given over to a popular assembly, which Socrates said was the worst form of Government in the world. I am sure we do not want to inflict that on industry. In any case, it is an entirely false analogy—and here I tilt a lance against the Government—because industry exercises no power in any sense of the word at all. It is a subject: it is subject to law and to the Constitution of the country and so on. "Industrial democracy" is a totally meaningless phrase, and merely to put the word "omnibus" in front of it not only conserves the meaninglessness of it but, in fact, obscures the meaninglessness of it. I remember Godley's poem about the motor bus in Oxford where he said:
"What is this that roareth thus,
Can it be a motor bus? …
Implet in the Corn and High
Terror me motoris bi …"
Apparently it is the noble Earl, Lord Ferrers, who is issuing roarings at the Government on the implication of the words "industrial democracy" and making it even more obscure by putting in the word "omnibus". Although I am all in favour of apposition of one thing to another as the essence of language, I do not believe this is an improvement on an already very bad phrase. In the event of a Division of the House I shall certainly follow the Government into the Division Lobby.
Earl FERRERS: My Lords, I am delighted to know that the noble Earl, Lord Halsbury, agrees with me that this is the most appalling phrase and is indefinable. Even the Minister of State said that "industrial democracy" was indefiable. I must say, however, that I should have thought his condemnation, if he was going into the Greek, would have been directed to the fact that by the insertion of this word "omnibus" one would have been confusing the Greek with the Latin since, of course,, "democracy" comes from the Greek and "omnibus" comes from the Latin. But I must say

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I really cannot see where any confusion whatever arises. I should have thought it was perfectly clear. The noble Lord, Lord Melchett, said he did not want to shoot off all his guns at once over "industrial democracy" on this simple Amendment, but I am bound to say that I thought it was perfectly clear that in the dative form it would mean that industrial democracy would be for all the people. I tried to explain to the noble Lord, Lord Melchett, that if he could think back a few years to the time he left school that dative meant "to" or "for" and if omnibus—
The Earl of HALSBURY: My Lords, if the noble Earl will allow me—by, with, or from; to, for or at. There is a great deal of ambiguity.
Earl FERRERS: My Lords, I was always led to believe that the dative was "to" or "for" and the ablative was "by", "with" or "from", and I am suggesting that the dative form of "to" or "for", in other words industrial democracy, would be "for all the people" only acceptable to the Government. They might have found some difficulty in accepting the ablative form which should be "by all the people". But as the word "democracy" must mean by all the people if it means anything, I thought that the noble Lord, Lord Melchett, might have swallowed the word "omni-bus" which is the same in the dative as it is in the ablative. However it is not something on which I would give the noble Earl, Lord Halsbury, the pleasure of going into the Division Lobby against me. This is not a point of quite such substance as that. Had the noble Lord, Lord Melchett, felt obliged to accede to this helpful and constructive Amendment, which it is, it would have put into one simple word what everyone really believes; that is, that industrial democracy should be both for the people and by the people. I am sorry he feels that this is not an improvement. To some extent it might have muddled some people, but on the whole it might have been considered to be an improvement and a clarification of the Bill. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Viscount SIMON Viscount SIMON has given Notice of his intention to move Amendment No. 22:
Page 4, line 19, leave out ("in a strong and organic form") and insert ("through the effective participation of employees in the process leading to management decisions")
The noble Viscount said: My Lords, we put down this Amendment for the purpose of trying to put some kind of gloss on the meaning of industrial democracy", but having read the alternative Amendment No. 23 suggested by the noble Lord, Lord Carr, and his friends, my noble friends have decided that we should not move this Amendment and have the discussion on Amendment No. 23.
8.3 p.m.
Lord CARR of HADLEY Lord CARR of HADLEY moved Amendment No. 23:
Page 4, line 19, after ("form") insert ("in which all employees have the right to participate")
The noble Lord said: My Lords, I must confess that we have come on to this Amendment rather sooner than I had expected, but the arguments are well known to us and I want to take this one very seriously indeed. If I may say to the noble Earl, Lord Halsbury, I had a scientific and not a classical education and therefore would have been quite out of my depth in the debate on the previous Amendment. While I agree with the Government that when we are seeking to introduce whatever is meant by "industrial democracy" we should not lay down hard and fast lines on which it must be developed, if we are going to introduce this phrase into an Act of Parliament at this stage of our industrial development there are one or two principles about industrial democracy which we must make clear.
I make the distinction about being clear about principles and laying down methods because I think there is a clear distinction between them. Some of your Lordships may remember that at the Committee stage I had resort to the Oxford Dictionary to try to get some guidance as to what the Government might mean by the phrase "industrial democracy" of a strong organic kind. To be honest, I found that the Oxford Dictionary did not help me much more than the Government's own explanation. It is quite clear that the Government have not a clue what they mean by it. One

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thing that came out clearly from consulting the dictionary was that one of the essential elements of the word "democracy" was that it is something in which the whole of the community about which you are talking should be able to partake.
Our great complaint about the Bill at the moment is that having set out the very high sounding ideal of industrial democracy, it restricts the number of people to whom that shall apply. It restricts it to those described as "relevant trade unions". Whatever it means, I do not begrudge it in any way, to "relevant trade unions". It is clear that they must have a very important part in the future development of this industry. The relevant trade unions must be fully consulted; they must have a very important and probably the chief part in collective bargaining. But in our submission it is not right to exclude at least from the consultative part of industrial democracy—whatever the Government mean by it—large numbers of people who are excluded by the Bill as it is worded at the moment.
In both the shipbuilding and the aircraft industries there are a considerable number of people, mainly technical, managerial, administrative and clerical staff, who are not members of the relative trade unions as at present defined who quite genuinely and understandably do not believe that the relevant trade unions are well suited to meet their particular requirements. It is not in any way a criticism of the relevant trade unions. They simply are not sufficiently widely developed to represent the views and needs and aspirations of the sort of people I have been mentioning. That is why a large and increasing number of these people have been forming their own organisations or joining other bodies which may already be in existence but which are not at the moment included in the definition "relevant trade unions" as indicated in the interpretation clauses of the Bill. Therefore there are large numbers of people who are denied the legal right to consultation which must be implicit if we are going to talk about industrial democracy in any meaningful sense at all.
That is why in the Committee, and again now, we are doing all we can from this side of the House—I am sure with the support of the Liberal Benches and I hope with the support of those on the
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Cross-Benches as well—to see that at least so far as consultation is concerned all employees of all the constituent parts of the new Corporations shall have this legal right to consultation. I know that we have been told by Ministers in the Committee stage that there is nothing in the Bill which prevents the Corporations from consulting people other than relevant trade unions, but I do not think that is good enough. Why should we separate the sheep and the goats or, as I put it in Committee, the citizens and peasants. These other people are employees of equal right with anyone else in the Corporation. They do not believe that the existing relevant trade unions are satisfactory bodies for them to join, but they hold passionately that they should have this right to consultation. They fear that if they do not have the legal right they will not have the right in practice. If anybody is going to have the legal right, all should have it.
There are already signs, of which I gave some evidence towards the end of the Committee stage, that some of the employees who are not in relevant trade unions but belong to other respectable bodies certified as being independent by the certification officer are being denied consultation. A body of managers in the shipbuilding and ship repairing industry wrote to me last week and said that they had been promised a meeting with the Organising Committee but that that meeting still had not taken place. They understood that it was because the relevant trade unions were objecting to its taking place.
It is quite clear to us that there are large numbers of employees in these two industries who will not really have faith that their view will be properly listened to, and properly taken into account, if they are not given the same legal right as everybody else in their industries. If that is so, not only is it unfair on paper, but I suggest to the Government that these new Corporations will start off containing within themselves a source of trouble and grievance from the very beginning. So I repeat what I said on a number of clauses in the Committee stage, that, in our view, it is absolutely essential that we make clear that all have a legal right of consultation.
To make sure that there is no misunderstanding, I want to repeat again

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that we draw a distinction between consultation and collective bargaining. Collective bargaining is more difficult, and, if we are to get reasonable order in industry, those organisations recognised for collective bargaining are more limited and, probably for some time at least, will have to remain more limited. But those entitled to consultation ought not to be limited. That is the reason for our Amendment. We believe that by inserting these words, "in which all employees have the right to participate" immediately after the phrase, "industrial democracy in a strong and organic form" we are establishing an essential principle, without in any way putting rigid definitions on the method by which that principle shall be worked out in the two Corporations by their constituent members. My Lords, I beg to move.
8.12 p.m.
Viscount SIMON: My Lords, we on these Benches should like to support this Amendment. We withdrew Amendment No. 22, which was very much on the same lines, except that we wanted to strike out the words "in a strong and organic form" merely because we did not know what they meant. If they mean something, I do not suppose they do any harm, and perhaps when the noble Lord replies he will tell us what they do mean. I must say that I am in agreement with the noble Earl, Lord Halsbury, that the phrase "industrial democracy" is an abominable one. He reminded us, very properly, that the word "democracy" comes from the Greek. I think it is worth recalling that, if my memory of Greek history is any good at all, in Greek democracies—and they founded the idea—the Helots or slaves were not at all involved; they were right outside the democracies. So that our present views are very different from theirs. We believe that everybody should be included, and that is why I like the words suggested by the noble Lord, Lord Carr, in this Amendment that it is "industrial democracy in a strong and organic form, in which all employees have the right to participate".
As he rightly said, this does not lay down how it will work. It can be worked out in each organisation in a way that best suits that organisation. The important thing is that every employee has the
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right to participate. Of course, those employees who have no kind of organisation, individual "mavericks", will no doubt find it very difficult to participate effectively. That is understandable, and I think we encourage people to enter into agreements with their fellow workers in different fields. But I believe that to confine consultation to the relevant trade unions is making it much too tight.
Noble Lords opposite have said that there is nothing to prevent consultation with everyone, and I believe that the noble Lord, Lord Mottistone, pointed out, very rightly, in an intervention during the Committee stage that any good employer would make whatever effort he could to consult with everyone. But the feelings which have been expressed by some employees, who are not represented by what are likely to become recognised as relevant trade unions, that they are left out in the cold, could be so easily met by accepting these words. As the noble Lord, Lord Carr, said the relevant trade unions will no doubt get most of the consultation. They will, perhaps, be continuously in consultation with the management on many issues. But when the matter is being looked at, we should make it clear to everybody that they all have a possibility of having their say.
When I was once at the top of a fairly large business, we had a convention, which did not mean very much, that the chairman's door was always open. That meant that anybody who wanted to see the chairman could always come in. They did not very often come, but I was always delighted when they did, and it was more a gesture to say to everybody in the organisation, "You are part of it, and you have the same right to be consulted as everyone else."
Lord SHINWELL: My Lords, I have delayed my departure from this assembly, because I was anxious to take part in this debate. I regard the subject as, perhaps, the most essential element in the future restructuring of the aerospace and ship-building industries. The term "democracy" comes trippingly to the tongue. I have the impression that it comes from Shakespeare, but for the moment I cannot offer the exact location. But it is subject to various interpretations. The term is used in the political arena and it is certainly misunderstood.

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I am somewhat surprised at the noble Lord, Lord Carr, who somewhat grudingly accepted what is contained in the Bill; in other words, the Government's offer. I should have thought that every Member of your Lordships' House, particularly on the Conservative and Liberal side, where there are many prominent industrialists who are concerned about the future of British industry, would be as anxious as I am about confrontation in the future, because if we are to have a viable industry in the future—whether it is nationalised or contained in private enterprise, as it is called, under the control of private ownership—we must ensure that we can avoid industrial strife. Indeed, I would say that the avoidance of industrial strife is the prerequisite of a viable British industry in the future. I do not want to impose what may be called an academic lecture on Members of your Lordships' House, but this is a subject which I have tried to understand for a long time. Indeed, if I may dare to digress—although it is not really a digression—I would say that in the political arena true and just democracy is essential.
I am now going to indulge in what may almost be regarded as a fulsome compliment to the Liberal Party. Perhaps they need something of the kind. I am not suggesting that I am an appropriate person to indulge in compliments. I have never been regarded as a person who throws compliments about. But when the Liberal Party decided some time ago to elect a new leader, they did so by injecting into the operation, for the first time, the principle of democracy. In other words, they may not have done it completely. There may have been defects here and there, for geographical and other reasons, but they sought to consult the membership of the Liberal Party and they elected a leader.
May I suggest to my noble friends on the Front Bench—the few who remain there, but they are people with influence—that they should take note of this point because in the future the method that has been adopted by the Liberal Party will be forced upon the Labour Party, and even upon the Conservative Party. In other words, there should be thoroughgoing consultation. I mean by that not merely consultation with Members of Parliament or with Members of your
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Lordships' House—that is all very well and I accept it—but consultation with everybody who can be consulted and has a right to he consulted. For obvious reasons, it is not always possible to consult everybody, but that is what I mean by democracy. I am not suggesting that we shall telescope our Parties and that no longer will there be any confrontations or disputations and that we shall all be happy and contented, but when we reach a situation of that kind in the political arena it will make for a much more interesting and effective Parliamentary situation. That is a digression, but it is related to the subject itself. I cannot understand why the noble Lord, Lord Carr of Hadley, boggles at the offer that the Government have made. It is a very good beginning.
Lord CARR of HADLEY: My Lords, if I sounded grudging about participation, I must have expressed myself wry badly because all my life—I made my maiden speech upon it in another place—I have fought for greater participation. I want greater participation and, like the noble Lord, Lord Shinwell, I believe that participation is vital. My concern is that we shall not get it if something like 30 per cent. of the employees in one industry feel that they are legally excluded from it, or at least are not given the legal right to it.
Lord SHINWELL: My Lords, I accept the principle underlying the observations of the noble Lord, Lord Carr of Hadley. I had something to do with this question a long time ago when a nationalisation Bill came before another place. There was not adequate preparation of the legislation sufficiently far in advance, but that is another story. However, I produced an Amendment along the lines of participation, although it was not in the precise language that has been used in the course of this discussion, in which I suggested that the workers in the industry must have some say in its administ ration—in other words, that they should be consulted. The extraordinary result was that the miners' leaders would have none of it.
They said, "We represent the interests of our members and we want nothing to do with administration". That surprised me. Indeed, when it came to the election

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of members to the first National Coal Board I wanted members of the Miners' Federation executive to participate, but after they had considered the matter they decided that they would rather stay out of it and look after the interests of their members. As a result, I had to appoint somebody who was an ex-miners' leader and other people who were not necessarily interested in the industry. However, they had big names in the Civil Service and in my innocence I selected some of them, sometimes with not very happy results. But let us not speak about that.
The noble Lord, Lord Carr of Hadley, equally wants effective participation but he wants it all round. Therefore he raises a distinction between those who are associated with the relevant trade unions and those who are on the sidelines—the sideline, perhaps. They may be members of other organisations or they may not be members of any organisation at all, but the noble Lord wants them all to be consulted. I think that the noble Lord, Lord Carr of Hadley, should understand this point. It is a practical point and we are concerned about the practicalities, if it is to be effective. The reason that we must consult the relevant trade unions is because they are organised. For the purposes of negotiation they are essential. The remainder are not organised. If an industrial firm has 1,000 employees and 900 of them are organised in a relevant trade union, or relevant trade unions, and can be consulted expeditiously in order to avoid industrial strife, or for some other purpose associated with the operations of the industry, all the better. As for the remainder, you cannot consult individuals so easily or so readily; you do the very best you can.
However, I want to impress upon the noble Lord, Lord Carr of Hadley, and those who are associated with him and support him in this Amendment that it is essential to make a beginning. If we can persuade industry to understand what democracy really means and how effective it can be in the industrial operations, that will be good. Even if we do not get the whole hog to begin with, at least we should make a beginning with some part of the animal, although I shall not specify which part. That is what we ought to do. Therefore I suggest that the Government's terminology should be accepted for the
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time being. Then let us see that it becomes effective.
That is all I want to say about the matter, but I thought it was necessary to say it. I might have said it better if I had prepared it carefully by sitting down at a typewriter and getting the semantics right. However, I have done my very best to convey my ideas about what I think is a very important element in industrial operations. In those circumstances, I should accept the language that is offered and make the very best of it.
8.28 p.m.
The Earl of ONSLOW: My Lords, I have been listening carefully to the debate and I have noticed some supreme ironies in it. The ironies have come from a Party whose egalitarianism wants to exclude 30 per cent. from consultation by law; it comes from a Party—
Lord MELCHETT: My Lords, with great respect to the noble Earl, Lord Onslow, his noble friend Lord Carr of Hadley was careful in the way that he put it. The noble Earl was less careful. It is not that people are being excluded by law. The noble Lord, Lord Carr of Hadley, said that they were not necessarily being given legal rights. There is quite an important difference upon which we have laid great emphasis.
The Earl of ONSLOW: My Lords, I should have thought that the difference between exclusion by law and not being given legal rights is very similar to the filioque argument during the time of the split of the two Churches. However, we will leave that point. The irony is that the Party opposite have introduced the hereditary principle into the Agriculture (Miscellaneous Provisions) Bill. Now we have the argument of the Party opposite which is almost exactly the same as that of those who opposed the Second Reform Bill. This was perfectly personified by the noble Lord, Lord Shinwell, who said, "Yes, we think that this is right but …". The final irony is that it is interesting to note that it was a Tory Government which passed the Second Reform Bill and that it is a Tory Party which is pressing for the inclusion by Statute of everybody to have the right to be consulted. The noble Lord, Lord Kirkhill, said:
"we do not consider it right to prescribe a

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particular form of industrial democracy. … But our firm hope and expectation is that it will enable all employees to play their part in the future of these industries."—[Official Report, 14/10/76; col. 521.]
He then used almost exactly the same words later when he said,
"all employees to play their full part".
It seems to me wrong that we should give an exhortation in Parliament that something should be the case when we are legislating on the subject and not in fact include it in this legislation. In that way you are giving less force and creating unfairness, and the noble Lord, Lord Shinwell, was absolutely right—and it is perhaps impertinent for me to say so as I am probably nearly 60 years younger than he is—when he said that it is vital that industrial relations shall be smooth and not bothersome, and 1 cannot conceive of a way that will cause more ill feeling than by Act of Parliament forcing 70 per cent. to be consulted and leaving it to patronisation for the 30 per cent. I very much support this Amendment.
The Earl of HALSBURY: My Lords, the noble Lord, Lord Carr, expressed the hope that he had the support of the Cross-Benches. There are only two of us here at the moment, but that justifies a comment I made last Tuesday when I said that whatever hour of the day or night it might be there would always be a Cross-Bench presence on these occasions. Whatever minor educational differences in the sphere of classical languages there may be between myself and the noble Lord are completely overweighted by our mutual experience on the shop floor. I think we have both been works managers and we both know that the man on the shop floor wants three things: he wants a good job, a good boss and a good shop steward, and he wants to know that his boss and the shop steward are working together and not at cross purposes. That is a perfectly simple, straightforward state of affairs which the noble Lord and I are quite familiar with, and I am quite sure that he ensured that when he was a works manager just as I did when I was a works manager. I have always given myself a small pat on the back to think that I had made a success of it, and I believe the noble Lord did too, so I will give him a small pat on the back—indeed a big pat on the back.
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The question of whether this Amendment is a good one or a bad one is a question of whether or not what it seeks to amend is viable. If it is a thoroughly bad phrase that he is seeking to amend the Amendment only makes confusion worse confounded. What worries me about the whole business of writing moral sentiments into Statute law is that there is a doctrine in the courts that every word of an Act of Parliament must be there for a purpose. If it is totally meaningless, the courts have to search for the purpose which it is supposed to incorporate and they probably get the answer wrong.
I am sorry to keep the noble Lord on tenterhooks while I make up my mind whether I am coming down on one side of the fence or the other, but I must turn to the noble Lord, Lord Melchett, and ask him to elucidate in his reply to my remarks exactly how he would grade our nationalised industries—the Coal Board, the railways, the gas undertakings, the electricity undertakings, and now the undertakings which we are seeking to add to this long list: to take a spectrum between extremes of those which are strong and organic and those which are weak and inorganic, and to give us the rank order in the spectrum where he would arrange them. If he cannot, then the phrase is meaningless and therefore the modification to the phrase proposed by the noble Lord, Lord Carr of Hadley, only makes confusion worse confounded. For that reason, and that reason only, I could not support it.
Viscount ROCHDALE: My Lords, I think I heard the noble Lord, Lord Shinwell, say that we must be pragmatic in this. I will try to be pragmatic and support my noble friend Lord Carr, based on certain small experience I have had which leads me to support very strongly the emphasis in this Amendment on the point that all employees have the right to participate. I should like briefly to make two points. I can call to mind examples where, for one reason or another, probably reprehensibly, consultation has taken place by the senior management with what would be regarded in the Bill as the relevant trade unions, but where the management at various levels have either been forgotten or overlooked. As my noble friend Lord Carr said, this has caused grievances, but management is apt to be very loyal and it will sit on its grievances for quite a long

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time—probably too long, and damage is done. If all employees have the right and it is written into the Bill, that should assist the position.
My second point is this. Some noble Lords have said that all good employers would automatically consult. I have no doubt that they probably would, or that it would be their intention so to do, but I can equally recall occasions—and this is not being hypothetical—where pressure on the senior management by trade unions might deter him from making the consultations that he ought to make. That being so, if it is written into the Bill and into the Statute, that will relieve the senior management a good deal. When he has these pressures put upon him he will be able to point to the Act—as it will then be—and say, "This is what I have to do by law", and he will therefore consult. Therefore, whatever the correct interpretation of the rest of the clause may or may not be, I would still prefer to have this Amendment in, to make it absolutely clear in order that it may help the management.
Lord TREFGARNE: My Lords, the Government's protestations about this matter would be more convincing if we did not know the facts. The facts seem to he that these provisions were written into the Bill originally on the representation of the TUC, and that it is only unions approved by the TUC which should be consulted in future. The Government have never said that, of course, but it is obvious to most of us that that is what is intended. It is for that reason—I cannot speak for all of us—that I personally find this Amendment so attractive. I said that the difficulty was that the facts dissuaded us from accepting the Government's view. There are further facts like those mentioned by my noble friend Lord Carr just now, and also those mentioned by my noble friend Lord Ferrers during the Committee stage, which confirm our worst fears that consultation has so far at least not taken place with all sorts of people who really ought to have been consulted. For that reason, I hope my noble friends will press this Amendment.
Earl FERRERS: My Lords, I have never hesitated to mention my apprehensions
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of the provisions of industrial democracy. I may be alone in this, but do not think I am. The utterly commendable requirement to consult with people is totally different from what could be the concept of industrial democracy where by some form of election, selection, or something of that sort, the running of industries will be in the hands of people who are not necessarily equipped to run industries. The part of the Bill with which we are now dealing is not that part which says what form industrial democracy shall take; it is the part which says who shall be involved in discussing what form it shall take.
I was struck by two observations, one made by the noble Lord, Lord Shinwell, who said, in effect, "Let us make a start, and the Bill as it stands is a start without the Amendment". The other remark was made by the noble Viscount, Lord Simon, who said that if people are left out of these consultative processes it will be a disaster. I must say I believe the noble Viscount, Lord Simon, is right. If you are going to consult as to what form your industrial democracy should take—and, after all, this could end up by being a consultation as to how the industry in the end should be run and who should run it, and that is a colossal undertaking—then it must be that all the people should be consulted. I sought to achieve this by a very simple little Amendment earlier, an omnibus, which was rejected by everyone. The noble Earl, Lord Halsbury, says he is not quite certain whether he is going to come down in favour of this, but at least this has the merit of being neither Latin nor Greek, but English. Everyone can see that what it really means is that all employees have the right to participate.
Lord SHINWELL: My Lords, I am not sure whether I have misunderstood the noble Earl, Lord Ferrers. There is nothing in the Bill which prevents those who arc not members of a relevant trade union from being consulted. Indeed, there is a provision in this clause with which we are now dealing by which those who are not members of the relevant trade union are entitled to be consulted. There is no difficulty about that at all. It is a question of the method.
Earl FERRERS: My Lords, that is absolutely right. That last provision was

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put in at Committee stage. I think it is a point of principle—after all, we are talking about vague things like industrial demoracy; no one quite knows what it means—that it should be indicated that all people have the right to participate. Of course, the noble Lord, Lord Shinwell, is absolutely correct, because you cannot discuss and negotiate with individual people; of course you cannot; somehow they have to get themselves into bodies suitable to he consulted with. This is one of the great drawbacks of the Bill as it is—that it has resulted in a precipitation of people into, not necessarily unions, but staff associations, and so forth, as a result of the Bill, which they would not have otherwise done. This has a drawback in so far as it has dragooned people who would not wish to be dragooned into joining associations. It also has had the problem of providing a proliferation of bodies who could be consulted. But, with respect, that is the kind of problem you get into if you are going to have suggestions of this kind put into the Bill.
I should like to reiterate what was said by my noble friend Lord Carr of Hadley. There is a world of difference between those who should be consulted from the point of view of collective bargaining, and those who should be consulted from the point of view of how industrial democracy should emerge. It is the latter point with which we are dealing. I hope that the noble Lord, Lord Melchett, will be able to accept this Amendment on the basis that it is putting into clear words what most people think, which is that if you are going to have industrial democracy everyone has the right to be consulted, even though that right may be in the form of being a member of some body which should be consulted in the place of the individual.
8.45 p.m.
Baronesss WARD of NORTH TYNESIDE: My Lords, I should like to support the Amendment of the noble Lord, Lord Carr of Hadley. I have listened with great interest to all the speeches that have been made, and to a great deal of what has been said about industrial democracy. I find it absolutely fascinating that, up to the moment, nobody has referred to a fact that I have raised once before. It seemed odd that I should have to raise it, but at the moment there is a committee,
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appointed by the Government of the day, which is considering industrial democracy. Presumably they are to advise, it being thought, of course, that the Government of today will still be in power, which Heaven forbid! But a committee is sitting on industrial democracy. I raised the matter at the time and I will not continue on this, but no woman has been appointed to the committee.
I should have thought that before the committee report—and Heaven knows how long they will be before they do report—the Government could find out how they were getting on. In this debate on the Amendment of my noble friend Lord Carr, my noble friend, as I shall call him, Lord Shinwell, made a contribution, to which we listened with great interest, as we did to all the contributions made by many other noble Lords. All this will be reported, and there is not the slightest doubt, even if none of them is in the Gallery now, that the Committee on Industrial Democracy will now be in a position to sort out the problem, which is that it is very necessary that everyone in industry shall have the right to be consulted.
In the discussion tonight we have given guidelines to the Committee on Industrial Democracy. It surprises me that no one has ever mentioned this committee. I should like to ask whoever is going to reply whether they will see that the views of this House are sent to the committee without delay, so that they will know the problem, and will know that we feel that it would be right that everyone in an industry should have the right to be consulted. Of course, if one has had any connection at all with industry one knows that in some industrial establishments only the recognised trade unions are consulted. I am not against the trade unions at all, but I think that very often they have been very narrow in their approach. I want to see everybody getting themselves into groups, and if they have not done so, and if we pass this Amendment, which I hope we shall, they will then see the way that we are thinking and they will get themselves into groups.
My Lords, I hope we pass this Amendment and that it goes at once to the Committee on Industrial Democracy. In fact, noble Lords opposite can say to the committee, "Please hurry up with your

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Report", so that when the Bill finally becomes law it will cover the point so adequately put by my noble friend Lord Carr of Hadley, that all people shall have the right to be consulted in certain circumstances. I hope we are going to divide on this and I hope that we get a large majority, so that the committee can know that the majority of people from the House take the view that somehow or other we must provide for all people to be consulted.
The LORD CHANCELLOR: My Lords, the Question is—
8.50 p.m.
Lord MELCHETT: My Lords, grateful as I am to my noble and learned friend for trying to save me from the difficulties I shall have in replying, it would be appropriate if I said a brief word on behalf of the Government, if only to tell the noble Baroness, Lady Ward of North Tyneside, that there are two committees sitting on this subject at the moment. There is the Bullock Committee dealing with private industry, and there is an internal committee looking at industrial democracy in the nationalised industries. I have no doubt that the second committee will be aware of the views expressed in your Lordships' House which are, indeed, in line with the views expressed by the Opposition in another place on the subject of industrial democracy. I think it might be a little late to send evidence to the Bullock Committee, because my understanding is that they are nearing the completion of their report and it might only serve to delay matters (something which both the noble Baroness and I would not wish to do) if we provided them with a rather voluminous number of Hansards. We have discussed this matter at great length and I have no doubt that the points raised by the noble Baroness, Lady Ward of North Tyneside, and her noble friends may well have been put to the Bullock Committee before now.
The noble Earl, Lord Halsbury, asked me some questions. I must say I was slightly surprised to hear him say so categorically what he felt people on the shop floor were after. From my very limited experience—and I immediately admit to having a great deal less experience in these matters than he has, or the noble Lord, Lord Carr, has—from the time I
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was at the Department of Industry and spoke to people working in industry, I would have said a great many people had rather higher aspirations than those the noble Earl suggested they had. Indeed, I met several people who are already wholeheartedly involved in running the undertakings for which they work, which would certainly do a great deal for the noble Earl's suggestions. He has said on two Amendments that he feels the statement in the Statute is meaningless. We discussed what I felt it meant, and noble Lords opposite did not feel it meant, at considerable length during Committee.
I will not go over that again, but it may help if I remind the noble Earl that the words will not cause the court problems in the way he suggested they would because there is a provision in subsection (8) of this clause which makes them non-justiciable in front of the courts, simply because of the worry that it might be difficult for the courts to interpret them. That is something we discussed at length during Committee stage, although it obviously came as a surprise to at least one noble Lord on the Liberal Benches.
The Earl of HALSBURY: My Lords, would the noble Lord give way? I am greatly obliged. If the thing is not binding in the courts, what is the point of putting it into an Act of Parliament. Surely, Acts of Parliament are not here to write moral essays into.
Lord MELCHETT: My Lords, I am not sure that moral essays are that bad a thing, even in an Act of Parliament. The Act will be something which both Corporations will look to see the way that Parliament intended them to run their businesses.
Lord BYERS: My Lords, is the noble Lord not confusing an Act of Parliament and a code of conduct? It seems to me this is a very important point.
Lord MELCHETT: My Lords, I accept that it is an important point, but it is something which we discussed at great length during the Committee stage when an Amendment was moved to alter this provision. It may be that noble Lords are not satisfied with the fact that it is still in the Bill, but we discussed it at length. I have spent some time dodging round the

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edges of this issue, and 1 ought to get to the point. If noble Lords on the Liberal Benches wish to put down another Amendment, so that we can again have the discussion about the words being interpreted by the courts, they can.
My Lords, it is, of course, the Government's intention that employees should be effectively involved in the decisions which affect them. As I see it, the only difference between us is on how this can best be done. We firmly believe that employee interests are best represented through their trade unions. This is not a question of dogma but of facing up to present-day industrial realities, and there I am echoing something which my noble friend Lord Shinwell said in, if I may so, one of the few speeches he has made in support of the Front Bench during the course of this Bill, and all the more welcome for that. It is unreal to suppose that in an industrial landscape increasingly dominated by large conglomerates employee interests can be adequately represented other than by the trade unions, who alone have the resources and the ability to convey the collective views of their membership to management and to ensure that these views do not go unheeded. This view is, of course, reflected in Government policy on proper employee representation throughout industry and explains why independent and recognised unions have been given such a key role in all our industrial relations legislation.
The noble Lord, Lord Carr, said that without the Amendment which he and his noble friends have moved this would be a source of trouble and grievance in these two industries. When he raised this point during the Committee stage I said, and I repeat, that I accepted that there are very strong differences of view on this in the industries and between Parties and many people. But it did seem to me that there was some force in the argument that if in this Statute we followed the consistent line which this Government have adopted in all our industrial relations legislation it would be less likely to lead to particular trouble in these two Corporations than if we changed course, in the Government's view, at least, and gave a statutory right of consultation to people not in recognised trade unions. Although I do not put that as a conclusive argument, I think it is at least a point which should have some force with noble Lords opposite.
The Earl of ONSLOW: My Lords, would the noble Lord give way for a moment? Does he not realise that the argument he has just produced, for the big battalions, that only the big conglomerates can do it properly, is i he most depressing thing we have heard on the issue of individual liberty, and really must be a betrayal of Socialist principle when you consider that the Socialist Party was founded for the protection of the weak, the poor and the minorities.
Lord MELCHETT: My Lords, we fight for the protection of the weak and the poor, but we fight for adequate, realistic and effective protection. My firm belief, and 1 believe it is the experience of other countries with a great deal more experience and a long way ahead of this country in industrial democracy, is that without working through organised and independent trade unions the employee participation can occasionally be a sham; it is not effective representation of employees' views, nor an effective way of giving employees some say in the taking of management decisions or the running of the firms for which they work. I do not think that it is a denial of individual liberty to take the line the Government have taken, because, as I said at Committee stage, the Organising Committees for both British Aerospace and British Shipbuilders have made clear that they are prepared to talk to all the employees in their industries. We are saying that the way we see as going forward is going to be the most effective for all the people in the industries.
Baroness SEEAR: My Lords, before the noble Lord calls in evidence foreign countries whose experiences are in advance of ours, I think it would be fair to point out that in Germany, to which I imagine he is in part referring, employee representation is not dependent on trade union membership.
Lord MELCHETT: Yes, my Lords, and the noble Baroness will remember that during the Second Reading debate when this came up I referred to some research papers which had been published by the Bullock Committee, to which the noble Baroness, Lady Ward, referred, analysing the experience of West Germany, among other European countries. The firm conclusion which I, at least, drew

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from reading those very interesting papers was that, unless independent trade unions had been involved in carrying forward industrial democracy, the fact of the matter had been that the employees had not been able to influence the direction that the management of the companies had taken. As I said, management of companies, particularly large international conglomerates, are extremely powerful people. This is not necessarily a bad thing, but it is important that the employees should have equally powerful bodies to represent their interests.
Lord BEAUMONT of WHITLEY: My Lords, the noble Lord is not being entirely logical. Is it not true that you can have independent trade unions having representation and also have other representation as well? He is trying to bedevil the issue by putting two opposites which are not opposites against each other, that either you have independent trade unions or you have other representation. The point, surely, is that you should have both.
Lord MELCHETT: My Lords, we are not ruling out the fact that these two Corporations can consult with people who are not in recognised trade unions. We are merely saying that, if a statutory duty is to be placed on the Corporations to consult, it should be in line with the rest of industrial relations legislation, with those bodies which we consider to be most able to represent the interests of employees in the firms; that is, the independent trade unions.
I have not touched on the other difficulty which my noble friend Lord Shinwell did touch on—and I think he made the point very forcefully—that of consulting with a very wide range of people, the difficulty that may well occur when there are a large number of small organisations all claiming to represent different interest groups, the impossibility of deciding whether or not they represent particular interest groups.
My Lords, the trades union movement has a long and impressive record of representing the interests of those in industry. It has the organisation in existence to obtain and then effectively
1004
put forward their views. Recognised unions by definition must have the support of a significant proportion of the workforce. I am sure that noble Lords on all sides of the House would also agree that where an organisation is to represent those working in the industry it is important that it should be independent, otherwise the employers could put pressure on its members to take decisions that would run counter to their own best interests.
We want to build on all these strengths. We believe that the trades union movement provides a workable way for those in the industry to participate in industrial democracy. That is in contrast to the approach in the noble Lord's Amendment, in which the end is clear that rights are conferred but without any practical means of expressing them. I suggest that our approach provides a more effective means of promoting industrial democracy and I therefore commend it to noble Lords opposite in preference to that suggested in the Amendment.
Lord CARR of HADLEY: My Lords, it was the noble Lord, Lord Melchett, who said that he was dodging round the edges of this issue. I do not want to press that point too far, but I am afraid that many of us still feel that he went on dodging round the edges of the issue throughout the whole of his speech.
There is one point he made tonight which he made on a previous occasion; that is, that the line that the Government were taking in this Bill towards relevant trade unions and others was only consistent with our normal established practices of industrial relations in this country and that it would be a mistake to change course now, suddenly. There would be some reason in that argument if the Government were not changing course; but the trouble is that they are changing course. For the first time and in advance of the report of the Bullock Committee and the other Committee looking at the parallel problems within the Public Service, the Government are introducing into this Bill as a pilot experiment this concept of industrial democracy of a strong and organic kind which even they themselves cannot define. They are not pursuing the old course but are putting forward a new concept. They are raising new hopes.

1005
One of the things that I and others have said when we have discussed this matter before is that it is dangerous in this life to raise people's expectations and then to disappoint them, which is exactly what the Government are in danger of doing. at least so far as some 30 per cent. of the employees in the aircraft industry are concerned. Why create, as the Government are doing, two classes of employee? Labour Governments always talk about the wrongness of class divisions and yet here by Statute they are creating two classes of employees—first-class citizens and second-class citizens. The first-class citizens have the legal right to be consulted but the second-class citizens, although no one will prevent them being consulted, we are told, are not entitled to any legal right to be consulted. What on earth can be the justification for creating these second-class citizens? I should have thought it was impossible to justify.
The noble Lord says that they can be consulted, but I have just made the point that that is not the same as having a legal right to be consulted. Let us put that on one side for the moment, however, and ask the noble Lord whether he really believes they will be consulted, because they do not believe it. Large numbers of them do not believe they will he consulted and some of them are already writing with evidence that they are not being given the meetings with the organising bodies in these two industries that they should be getting and would be getting if indeed they are to be consulted despite not having a legal right.
A senior manager in one of these two industries whom I know said to me the other day that he had been talking to a shop steward in his works who had very strong views on this matter and who said quite bluntly that anybody who did not belong to one of the relevant trade unions as defined in this Bill was a non-person. That was the phrase used, a "non-person". They did not count and should not be considered. I am not suggesting for one moment, nor was my manager friend suggesting, that such an intolerant, uncivilised attitude is the policy of the unions concerned. Of course it is not, and I am sure the leaders of the unions concerned would do their best to prevent such an intolerant attitude ever becoming their policy. But anybody with any experience of industry knows that
1006
there are within the ranks of these trade unions small, totally unrepresentative groups of people who, alas! have that extremely intolerant and intolerable attitude to anybody who does not think as they do and is not prepared or does not feel it is apt to belong to the same organisation as they do. We in Parliament must realise, therefore, that there are large numbers of people in these industries who see this new concept of industrial democracy being injected, who see that they are being used in a pilot experiment and who see themselves being denied the legal rights under this experiment. It is not surprising, therefore, that they are unhappy. Can we wonder that they have these fears, and genuine fears, and can we wonder, if we allow this to happen, that these industries start with this core of suspicion, distrust and fear, souring employee relations within them from the very beginning.
The noble Lord, Lord Melchett, says that the Government want employees to be effectively involved in matte's which affect them and that they want all employees to be so involved. He went or to say that they also believe that the employees are best represented through their trade unions. I for one would agree with that—although I know that not everybody behind me would believe that perhaps. I do agree with that but with this important proviso, that there are genuinely appropriate trade unions for them to join.
The trouble is that as relevant trade unions are defined in this Bill there are not appropriate trade unions for large numbers of these people to join within the definition of what constitutes a relevant trade union. There are many and increasing numbers of other associations, some of which have already been certified as genuinely independent. Please let me say that no one, least of all from this side, is advocating that legal rights of consultation should be given to unions that are not independent. We are not advocating that. Let me repeat that and let there be no misunderstanding about it. Of course an organisation that is not independent is not what we are talking about. However, there are organisations that are not relevant in the meaning of the Act, though they have already been certified as genuinely independent. I am not suggesting that they should be treated

1007
as relevant for collective bargaining purposes. I keep on making this point. However, I am suggesting that they are properly relevant for the purposes of consultation.
The noble Lord, Lord Shinwell, said that we should make a start. He did not use the words but I think that what he was really saying to us was, "Half a loaf is better than no bread; let it all develop from here". The point that I am putting to your Lordships is that we should ask ourselves whether it will really all develop from here. Is it not at least likely that the very purpose of the wording is to prevent matters from developing from here and is to freeze the position exactly as it is? Is it not likely that the purpose is to prevent this flexibility and growth?
I believe that the noble Lord, Lord Shinwell—and I say this with great respect in view of his very long experience in the Labour Party and the trade union movement and of his great knowledge of these affairs—may not realise that it is the case now (and those of us who work in industry are aware of this) that some of the great organisations which in the past have fought for this right of organisation and of association and have fought battles that we all admire against great odds have now themselves become rather like the tyrants against whom they themselves once fought. They now want to keep the monopoly to themselves. I repeat: we cannot open the floodgates to everybody to take part in collective bargaining because that would be a recipe for chaos. On the other hand, I really do believe that any worthwhile organisation ought to have a legal right to be consulted. That is what we are pressing for and that is what I believe we must continue to press for.
Finally, may I say to the noble Earl, Lord Halsbury, that, while I agree with
1008
him that the conditions that he mentioned are indeed fundamental, I am also bound to say to him that I agree with the noble Lord, Lord Melchett, that increasingly—and I hope that this trend will continue—people are looking for more. The fundamentals of which the noble Earl spoke are fundamentals and must be there, but I believe that people are now looking for more. I agree with the noble Earl in that I wish these words were not in the Bill, though not because I do not want to further the cause of joint consultation and ever increasing participation and involvement. I do, as I said in an interruption of the noble Lord, Lord Shinwell, and I think I can honestly say I have fought or at least argued for this all my life and I made my maiden speech in another place on this subject some 26 years ago. So I do not object to these words because I do not want the concept in the Bill. I object to them only because of their imprecision in a Statute.
I agree with what the noble Lord, Lord Byers, said in his intervention. Injunctions of this kind are better in a code of practice rather than a Statute. My judgment, alas! is that, whether 1 or your Lordships like it or not, the Government will insist and that these terribly vague words will appear in the Bill. If so, I submit to your Lordships that it is important to clarify them and that, in principle, if we are to have the word "democracy" in a Statute, we must make it clear that it applies to everyone so far as consultation is concerned. Therefore, I am afraid that I must press the Amendment and ask your Lordships to support it in the Division Lobby.
9.13 p.m.
On Question, Whether the said Amendment (No. 23) shall be agreed to?
Their Lordships divided: Contents, 73; Not-Contents, 40.

CONTENTS

Amory, V.

Greenway, L.

Rochdale, V.

Auckland, L.

Halsbury, E.

Ruthven of Freeland, Ly.

Beaumont of Whitley, L.

Hampton, L.

St. Aldwyn, E. [Teller.]

Belstead, L.

Hanworth, V.

Sandford, L.

Blakenham, V.

Harcourt, V.

Sandys, L.

Bolton, L.

Harmar-Nicholls, L.

Seear, B.

Byers, L.

Hornsby-Smith, B.

Selkirk, E.

Campbell of Croy, L.

Inglewood, L.

Selsdon, L.

Carr of Hadley, L.

Kinnaird, L.

Sharples, B.

Cathcart, E.

Lauderdale, E.

Simon, V.

Clifford of Chudleigh, L.

Lindsey and Abingdon, E.

Skelmersdale, L.

Cork and Orrery, E.

Lloyd of Kilgerran, L.

Stamp, L.

Craigmyle, L.

Long, V.

Strathclyde, L.

Cullen of Ashbourne, L.

Lyell, L.

Trefgarne, L.

de Clifford, L.

Monck, V.

Trevelyan, L.

Denham, L. [Teller.]

Monson, L.

Tweedsmuir, L.

Drumalbyn, L.

Morris, L.

Vickers, B.

Dundee, E.

Mowbray and Stourton, L.

Wade, L.

Elles, B.

Nelson of Stafford, L.

Waldegrave, E.

Elliot of Harwood, B.

Newall, L.

Ward of North Tyneside, B.

Elton, L.

Northchurch, B.

Wigoder, L.

Exeter, M.

Northesk, E.

Windlesham, L.

Falmouth, V.

Onslow, E.

Young, B.

Ferrers, E.

Rankeillour, L.

Gowrie, E.

Redesdale, L.

NOT-CONTENTS

Ardwick, L.

Houghton of Sowerby, L.

Peddie, L.

Birk, B.

Jacques, L.

Pitt of Hampstead, L.

Blyton, L.

Kirkhill, L.

Popplewell, L.

Castle, L.

Llewelyn-Davies of Hastoe, B.

Shackleton, L.

Champion, L.

McCluskey, L.

Shinwell, L.

Collison, L.

Maelor, L.

Stedman, B.

Crowther-Hunt, L.

Melchett, L.

Stewart of Alvechurch, B.

Davies of Leek, L.

Morris of Kenwood, L.

Stone, L.

Davies of Penrhys, L.

Murray of Gravesend, L.

Strabolgi, L. [Teller.]

Donaldson of Kingsbridge, L.

Northfield, L.

Taylor of Mansfield, L.

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

Oram, L.

Wallace of Coslany, L.

Fisher of Camden, L.

Pannell, L.

Wells-Pestell, L. [Teller.]

Greenwood of Rossendale, L.

Peart, L. (L. Privy Seal)

Winterbottom, L.

Hale, L.

Resolved in the affirmative, and Amendment agreed to accordingly.
9.20 p.m.
Viscount SIMON Viscount SIMON moved Amendment No. 24:
Page 4, line 20, at end insert ("incorporated in the United Kingdom").
The noble Viscount said: My Lords, this Amendment and Amendment No. 62 repeat an Amendment which we moved in Committee. The noble Lord, Lord Winterbottom, was good enough to say that he would look into it, and I am wondering whether he will be able to tell us something about it. I beg to move.
Lord WINTERBOTTOM: My Lords, I suspect that when we discussed this last week it was at some late hour, and I may not have been able to grasp fully the exact implications of the noble Viscount's proposals. As he has said, he moved an
1010
identical Amendment in Committee, when he explained that its purpose was to relieve the Corporation of a task—and this is the important point—which it would be impossible for it effectively to carry out. I think that was the argument. He said, we were trying to impose on it a task which it could not effectively carry out; namely, to promote industrial democracy in wholly-owned subsidiaries operating overseas—say, in a subsidiary of a British aircraft company operating in Saudi Arabia. It was argued by the noble Viscount that it would be impracticable in countries where the legal position was quite different from that in this country.
As I promised on that occasion, we have carefully considered both the Amendments put down by the noble Viscount and we have asked ourselves whether we should seek to achieve the result he intended. The Amendments as drafted do not do this, because the Corporation

1011
might carry out activities abroad itself, and not through a subsidiary. That is an important point. But these are technical points. Our reason for rejecting the noble Viscount's proposal is that after very careful consideration we have concluded that the potential conflict which he fears could not in fact arise. The duty to promote industrial democracy is not enforceable in a court of law, particularly in a court of law overseas. Nevertheless, we believe it is still a duty, and a duty in the self-interest of company concerned. We therefore do not think that, so far as this duty is concerned, there could be any legal conflict, either with a Corporation or a wholly-owned subsidiary, arising from differences in the situation here and abroad.
As to Clause 6, which I believe is now Clause 7, the reference to a United Kingdom Act colours the clause, and the obligation would therefore, in effect, be limited to undertakings carried out in the United Kingdom and would not put any impossible legal obligation on a company based in this country. My Lords, I hope that this explanation will satisfy the noble Viscount that his points have been carefully considered, but we believe that an Amendment on the lines that he has suggested is simply not necessary.
Viscount SIMON: My Lords, I am much obliged to the noble Lord, Lord Winterbottom, Quite frankly, I should like to read in Hansard what he has said, and perhaps consult those with whom we have been in touch, because I cannot quite grasp the position at the moment. So if I may withdraw this Amendment, I shall perhaps bring the matter up again on Third Reading.
Amendment, by leave, withdrawn.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 28:
Page 4, line 30, leave out subsection (8).
The noble Lord said: My Lords, the purpose of this Amendment is to remove a subsection from Clause 2 which purports to exclude the rights of persons and firms to apply to the courts. In my submission, as I pointed out at Committee stage, any part of the Bill which purports to exclude rights of individuals or firms going to the courts is worthy of consideration.
1012
It may be said that such a clause as this, prohibiting people from going to the courts for any reason will be helpful in that there may be persons and firms associated with these Corporations who might go to court on minor matters and therefore cause considerable and unnecessary litigation. But the words of subsection (8) at present in the Bill are:
"Nothing in this section"—
that is, Clause 2—
"shall be construed as imposing upon either Corporation, directly or indirectly, any form of duty or liability enforceable by proceedings before any court."
Therefore, in considering the scope of such a subsection one must question the terms of the clause.
Clause 2 is headed, "General duties of the Corporations" and applies in subsection (1)(a) to a very large number of fundamental attributes in the activities of the companies, such as design, development, production, sales, repair and maintenance. Therefore, as I indicated in Committee, there may be technical matters in relation to confidential technical information which may be imparted to the Corporations and, as a result, certain rights of individuals owning know-how, or intellectual or industrial property in patents, designs, trademarks, might be infringed as a result of the action of the Corporation.
I carefully considered the lucid reply given by the noble Lord, Lord Kirkhill, in this matter at Committee, where he assured the Committee that the exercise of rights in relation to industrial property and intellectual property would not be affected by the prohibitions in this subsection. He also went on to say that this subsection purporting to prevent firms and persons going to the courts was directed to the aspects of industrial democracy which are to be found in subsection (6) of this clause. If that is so, I would go a considerable way with the Government in this because, as I have said before, matters in relation to purely industrial democracy are matters to which the courts should not possibly be involved.
Lord McCLUSKEY: My Lords, will the noble Lord please furnish me with the Hansard reference to the remarks of my noble friend Lord Kirkhill?
Lord LLOYD of KILGERRAN: Lord Kirkhill's remarks are to be found in the Official Report for Friday, 15th October, at columns 601–603. The noble Lord, Lord Kirkhill (in column 603), in reply to my rather long speech on Committee, kindly said that he would reflect on the matters which I had put before the Committee. The noble Lord, Lord Redesdale, in the course of the Committee stage expressed considerable sympathy with my point of view, but felt that in view of the great uncertainty associated with various factors in the Bill this was another matter of uncertainty and he could not go all the way along with me. I did not understand that point of view for if there was uncertainty as to what could he clone with the courts I felt that this was a matter on which I would have expected him to give me more than merely his sympathy.
The noble Lord, Lord Byers, indicated earlier this evening that there were certain matters in this Bill that might be more appropriate to a code of conduct. Subsection (8) might be more appropriate to a code of conduct rather than be included in the Bill. Since the Committee stage, the noble Lord, Lord Melchett, has introduced an Amendment (No. 30) to this subsection which I am suggesting should be deleted. With the leave of the Committee, I should like to speak to this Amendment now. The noble Lord, Lord Melchett, is proposing that the words "directly or indirectly" should be deleted from the subsection. That limits the scope of the Bill to some extent. Before I decide what should be done about Amendment No. 28, I should like to hear what the Government have to say regarding Amendment No. 30. I beg to move.
9.31 p.m.
Lord TREFGARNE: My Lords, I hope that the noble Lord, Lord Lloyd of Kilgerran, will press Amendment No. 28. If he does, I will support him, unless some convincing reasons are adduced by the Minister. Listening to these proceedings and the Committee stage earlier, I have, for some reason, acquired a suspicious mind. I have come to the conclusion that one needs to view the Government's proposals in this Bill with considerable circumspection. That applies to this one, too. How odd when one is enacting a major piece of legislation that one of its
1014
novel but none the less fundamental provisions has a subsection at the end to prevent it from being enforced in any court of law. My mind is carried back to the various pieces that one has read about how this Bill came to be produced in the first place; how the TUC, we are told, insisted that these provisions were enacted as their price for agreeing to the Social Contract. Whether or not that is the case, I am not able to say. It seems to me remarkable that this provision should be included.
I am convinced that the effect of this subsection is not to prevent the Secretary of State from achieving what he wants, not to prevent the trade unions achieving what they want, not even to prevent the Corporations achieving what they want, but it is to prevent those who have no other recourse but the courts from achieving what they think is their entitlement. Who are these people who have no other recourse than the courts? It is simply the individual people who have no other means of seeking redress for any grievance they may think they have under this clause but going to court and asking for a declaration or a judgment in their favour.
It is likely that the Secretary of State does not need the courts because he has other levers. The TUC and the trade unions do not need the courts because they, too, have all sorts of other levers. The Corporations can achieve their will without necessarily resorting to the courts. By agreeing to this subsection, we shall be depriving the individual of the right of audience where it may be most effective. For that reason, we should agree to this Amendment. I will most certainly support the noble Lord, Lord Lloyd of Kilgerran, unless the Government have a very good answer to put forward why I should not do so.
Lord REDESDALE: My Lords, after the noble Lord, Lord Lloyd of Kilgerran, in his usual charming way, caught me slightly unawares on that one point, I have to admit that on a previous occasion 1 offered him sympathy and nothing else. Perhaps the eloquence of the noble Lord, together with that of my noble friend, has swayed us a little bit more, so that instead of just giving sympathy and tea we would now come back and give tangible support to the noble Lord. I

1015
will not detain the House any longer by talking about this, but we feel that this is an Amendment which should be supported.
Viscount SIMON: Before the noble Lord replies, I wonder whether I might put another point. My noble friend covered one field and the noble Lord, Lord Trefgarne, dealt with another matter. I should like to get some guidance from the noble Lord on a simple case. Looking at subsection (3), your Lordships will see that among other things it is the duty of British Shipbuilders to promote the sale of ships. Let us assume that in the course of promoting sales of ships, a company offer a ship to a client at an agreed price and then somebody comes along and offers them a higher price and the company sell the ship to the second buyer. Would this mean that the man on whom they reneged over the original contract is denied the right to sue them in the court? Perhaps it does not mean that, but it looks to me as though it might.
Lord McCLUSKEY: My Lords, first, I should like to say that, with the leave of the House, I will take Amendment No. 30 along with Amendment No. 28 and deal with them together, as did the noble Lord, Lord Lloyd of Kilgerran. I believe that what my noble friend Lord Kirkhill said in response to this point in Committee is a correct and accurate statement of the position. I would invite your Lordships' attention to the precise terms of subsection (8), because I think it is important that it should not be misunderstood. I got the feeling from some of the observations that fell from the noble Lord, Lord Trefgarne, that he had not properly grasped the limitations of this clause. It says:
"Nothing in this section shall be construed as imposing upon either Corporation, directly or indirectly, any form of duty or liability enforceable by proceedings before any court."
It is the corollary of that that nothing in the clause will detract from any right that the person has independently of the clause. In other words, if there is a duty or liability which the Corporation have by reason of anything else, either in this Bill or in some other enactment, or by reason of some common law right or some other branch of the common law, or by reason of some agreement which has
1016
been entered into, then subsection (8) does not touch that at all. The right of recourse to the courts is still there in respect of the right, the obligation or whatever, which exists independently of Clause 2.
In my submission this is really a very limited clause. I would invite your Lordships' attention to a precedent for that which is to be found in the Iron and Steel Act 1967 in Section 3, which deals with the general duty of the Corporation which was set up under that Act. Section 3(4) provided—and I quote:
"Nothing in subsection (1) above shall be construed as imposing upon the Corporation, either directly or indirectly, any form of duty or liability enforceable by proceedings before any court."
One of the duties laid upon the Corporation under that section was the duty to secure the safety, health and welfare of persons employed by them. Plainly, the duties that arise in the field of safety, health and welfare are not touched by that. People's right to recourse to the courts is not affected by the clause in the Iron and Steel Act and the position is the same here. If there are rights independent of Section 2 or liabilities independent of Section 2, then the courts are not deprived of any right to adjudicate upon them that they have by reason of the enactment of Clause 2(8).
Lord WIGODER: My Lords, did I understand the noble Lord to say that there is a section in the Iron and Steel Act similar to this which says that nothing in subsection (1) shall be construed as imposing … I am sure I ought to have it at my fingertips but I have not. Would the noble Lord be kind enough to read subsection (1) to us?
Lord McCLUSKEY: My Lords, I can do that. Section 3(1) is rather lengthy because there are four paragraphs. It reads:
"It shall be incumbent on the Corporation—

(a) to promote the efficient and economical supply by the Corporation and the publicly-owned companies of iron and steel products, … to satisfy the reasonable demands of the persons…

(b) to secure that neither the Corporation nor a publicly-owned company shall show undue preference to, or exercise unfair discrimination against, any such persons … in the supply and price …

1017

(c) to take such steps as appear to the Corporation to be practical and desirable for the promotion of the export of such products …

(d)to take such steps as appear to the Corporation to be practical and desirable for the promotion of research into matters affecting or arising out of, the carrying on of iron and steel activities …"

and so on. The noble Lord, Lord Wigoder, will appreciate that I have read this short in order to give the general indication; but they are not totally dissimilar. If the noble Lord, Lord Lloyd of Kilgerran, would like to have the precise section before him I am sure it could be passed. I merely direct attention to it because it is a precedent in 1967 covering this kind of thing. Noble Lords opposite may know, but I do not know that it has given rise to any difficulty of the kind which is feared.
The second point arises in relation to Amendment No. 30. I refer to what was said in Committee by the noble Lord, Lord Lloyd of Kilgerran. It may be that the use of the words "directly or indirectly" would appear to give an ambit to the section which it is not intended to have. For that reason it has been decided that it would be desirable to make the position quite clear and it is proposed to remove the words directly or indirectly "by moving Amendment No. 30. I hope that what has been said has allayed any fears that noble Lords had on this matter. The inclusion of the words, "directly or indirectly" was originally designed to help clarify the effects of the subsection, but their inclusion did not in fact have that effect. Accordingly, I would propose that these words should be deleted and at the appropriate moment will move the deletion of these words by moving Amendment No. 30.
Lord CARR of HADLEY: My Lords, I am not quite sure whether I understood the noble Lord. Not being a lawyer myself perhaps I am finding it more difficult than I should. I am interested in the effect of subsection (8), which we are discussing at the moment, on subsection (6), the one we were discussing a little while ago. Supposing a body of workers organised in some association which has been declared to be independent by the certification officer feels that the Corporation is not carrying out the duty
1018
placed upon it to promote industrial democracy in a strong organic form, would that organisation have a recourse to the courts, or is it one of the objects of this clause to prevent it having such recourse?
Lord McCLUSKEY: My Lords, I think it is quite plain that one of the objects is to prevent it having recourse to the courts for that purpose. As the noble Lord, Lord Carr, will appreciate, it is clear that one could not properly have the courts adjudicating upon a matter of that kind.
Lord LLOYD of KILGERRAN: My Lords, I am grateful for that explanation, but I have had some difficulty in under-standing how the matters which the noble Lord raised, such as contracts, in relation to the general duties of the Corporation could be, as it were, inviolate and therefore that anybody who was aggrieved could go to the courts. I, too, prior to this stage, had read the relevant sections in the Iron and Steel Act, because they were referred to by the noble Lord, Lord Kirkhill, in his reply to me. But I found very considerable differences between the wording in that section and in this clause. Clause 2(1) of the Aircraft and Shipbuilding Industries Bill imposes very wide general duties upon the Corporation as to what it should promote and secure the promotion of. In fact, the scope of the duties is even wider at this Report stage, because during the Committee stage a further aspect of the general duties of the Corporation was introduced into this subsection by the Amendment moved by the noble Lord, Lord Kings Norton, which added "guided weapons and of space vehicles and systems" to the duties to be promoted by the Corporation. Therefore, I support the observations of the noble Lord, Lord Carr of Hadley, in regard to the scope of subsection (6), and in these circumstances it seems to me that this is a matter upon which we should move to a Division.
9.46 p.m.
On Question, Whether the said Amendment (No. 28) shall be agreed to?
Their Lordships divided: Contents, 65; Not-Contents, 34.

CONTENTS

Amory, V.

Greenway, L.

Redesdale, L.

Auckland, L.

Hanworth, V.

Rochdale, V.

Belstead, L.

Harcourt, V.

Ruthven of Freeland, Ly.

Blakenham, V.

Harmar-Nicholls, L.

St. Aldwyn, E.

Bolton, L.

Hornsby-Smith, B.

Sandford, L.

Byers, L.

Inglewood, L.

Sandys, L.

Campbell of Croy, L.

Kinnaird, L.

Seear, B. [Teller.]

Carr of Hadley, L.

Kinnoull, E.

Selkirk, E.

Cathcart, E.

Lauderdale, E.

Sharples, B.

Colville of Culross, V.

Lindsey and Abingdon, E.

Simon, V. [Teller.]

Cork and Orrery, E.

Lloyd of Kilgerran, L.

Skelmersdale, L.

Craigmyle, L.

Long, V.

Strathclyde, L.

Cullen of Ashbourne, L.

Lyell, L.

Trefgarne, L.

de Clifford, L.

Morris, L.

Trevelyan, L.

Denham, L.

Mowbray and Stourton, L.

Tweedsmuir, L.

Drumalbyn, L.

Nelson of Stafford, L.

Vickers, B.

Elles, B.

Northchurch, B.

Waldegrave, E.

Elliot of Harwood, B.

Northesk, E.

Ward of North Tyneside, B

Exeter, M.

Onslow, E.

Wigoder, L.

Falmouth, V.

Orr-Ewing, L.

Young, B.

Ferrers, E.

Pender, L.

Gowrie, E.

Rankeillour, L.

NOT-CONTENTS

Ardwick, L.

Halsbury, E.

Pitt of Hampstead, L.

Birk, B.

Houghton of Sowerby, L.

Segal, L.

Blyton, L.

Jacques, L.

Shackleton, L.

Castle, L.

Kirkhill, L.

Stedman, B.

Champion, L.

Llewelyn-Davies of Hastoe, B.

Stewart of Alvechurch, B.

Collison, L.

McCluskey, L.

Stone, L.

Davies of Leek, L.

Melchett, L.

Strabolgi, L. [Teller.]

Davies of Penrhys, L.

Morris of Kenwood, L.

Wallace of Coslany, L.

Donaldson of Kingsbridge, L.

Murray of Gravesend, L.

Wells-Pestell, L. [Teller.]

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

Oram, L.

Winterbottom, L.

Fisher of Camden, L.

Peart, L. (L. Privy Seal.)

Hale, L.

Peddie, L.

Resolved in the affirmative, and Amendment agreed to accordingly.

9.56 p.m.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 34:
Page 5, line 20, at end insert—
("( ) No consent or general authority shall be given in pursuance of the preceding subsection unless a draft of the document containing it has been laid before Parliament and approved by a resolution of each House of Parliament.").
The noble Lord said: My Lords, the purpose of this Amendment is to render greater accountability to Parliament over certain actions of the two Corporations. It is necessary not to misunderstand the scope of the powers of the Corporations given under Clause 3(3). The purpose of the Amendment is that wherever the Corporation is to dispose of an interest in any of its wholly-owned subsidiaries, unless the disposal is to another such wholly-owned subsidiary, then this is a matter which should be put to Parliament to consider. As at present drafted, subsection (3) is introduced by the words:
"Except with the consent of, or in accordance with the terms of any general authority given by, the Secretary of State, neither Corporation shall have power"
to discuss all these matters.
It seems to me that there could be disposal of interests of very great significance and of great national importance arising under this subsection, where it would be necessary, in my view, to have the approval not only of the Secretary of State but also of Parliament. During the Committee stage the matter was discussed very fully and, if I may say so, the noble Lord, Lord Melchett, gave a helpful reply, but it seemed to me that he was concerned with avoiding the delays that he said might arise if my Amendment were accepted and that these matters should be put to Parliament. It seems that in view of the wide range of activities of both these Corporations the disposal of certain aspects of their interests should be considered by Parliament before such disposal takes place. I beg to move.
Lord MELCHETT: My Lords, as the noble Lord said, I did my best to explain in detail during the Committee stage why we were opposed to this Amendment and I regret to have to tell the noble Lord, Lord Lloyd of Kilgerran, that I am still opposed to the Amendment although I have considered very carefully what he said during the Committee stage.
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We believe that the Amendment would have an effect which we would regard as entirely unacceptable; namely, introducing procedures which would make the Corporation commercially impotent. During the Committee stage the noble Lord, Lord Lloyd of Kilgerran, thought that we would not resist this Amendment (if I remember aright) because there was a similar provision, which was then subsection (6) of Clause 2, which was deleted during the Committee stage. However that subsection referred to the power to make an order altering the duties of the Corporation. Certainly we considered it right that this power, to which noble Lords opposite were so opposed, should be subject to direct Parliamentary control through the Affirmative Resolution procedure. However, I hope the noble Lord will accept that there is a difference between the procedures appropriate for changing the duties of a Corporation and those controlling the exercise by it of normal commercial operations, which is what we are dealing with here. In the case of duties, the Corporation is being required to undertake some activity, or to substitute for an existing activity a new one, as the case may be. All we are suggesting here is that, with the consent of the Secretary of State, the Corporations should be able to expand their activities to take advantage of commercial opportunities. The private sector companies enjoy this sort of freedom. The noble Lord is proposing that the power to take shares in companies or to participate in establishing new ones, say a connection with a new international collaborative project, should only be exercised with the specific approval of both Houses.
My Lords, I have said on Committee, and I still firmly believe, that that would be an impossible restriction on the Corporations' freedom of action and, more important, their speed of commercial response. Indeed, I cannot believe this is really a restriction noble Lords would wish to place on the British aircraft industry, however it is owned. The essential problem is one to which I drew attention way back on Second Reading. If they are to have any chance of commercial success, public corporations need scope to exploit market opportunities. At the same time, because of their role in the economy and their source of finance, they must be properly accountable. We

1023
believe these objectives are potentially in conflict and give rise to considerable difficulties. I would not attempt to hide that for a moment. We believe these objectives are best achieved and the right balance struck between them by the arrangements in nationalised industries legislation pursued by Governments of both Parties.
These objectives combine Ministerial control at strategic level with accountability by Ministers to Parliament for their responsibilities. This leaves the Corporations a reasonable degree of freedom while ensuring Parliamentary control. I would emphasise that our main objection is in the area where we believe the Corporations should have the ability to react very quickly if the need arises. That simply would not be possible if they had to come to both Houses of Parliament for a Resolution to be passed. Aside from the broad principles of the way in which we see the relationship between Government and the nationalised industries operating, which I accept is a difficult area and one, indeed, in which neither Party is entirely right—again, that is something I have made a point of saying during the proceedings of the Bill, because I do not want to hide the difficulties which undoubtedly exist in this area—the speed of reaction to exploit commercial opportunities is important. This Amendment would deny the Corporations that freedom.
The Earl of ONSLOW: My Lords, there is one thing about this Amendment which commends it quite enormously to me. A week or so ago, we went through a long process of debate and argument on the Second Reading of the Felixstowe Docks Bill. We had the Third Reading, and, finally, the Bill was rejected by this House on the grounds of nationalisation by the back door. As I under-stand this Clause 5, without this provision in it, the Secretary of State may nationalise what he likes by agreement.
My Lords, because nationalisation is not just a normal commercial transaction—it is something which affects the right of us all and it affects Parliament above all—it would seem to me absolutely right that something along these lines is put into the Bill. The noble Lord, Lord
1024
Melchett, says that the speed of reaction is important; but the inhibition on the British Transport Docks Board if it wants to take over another set of docks is that it has to proceed by the admittedly cumbersome procedure of the Private Bill. It seems to me very much less than that of the Affirmative Resolution procedure of each House of Parliament.
There is a difficulty in adopting this Amendment as it stands completely, in that it makes it impossible either to sell off or to buy something very small. Obviously, I do not think we want the whole procedure of affirmative act of Parliament; but it would seem right—and I hope we will come back to this on Third Reading—that we should get something which will stop nationalisation by the back door without the express approval of both Houses. If that is the view of both Houses of Parliament, so be it, and so it is right. But we do not want it to be done just on the ukase of the Secretary of State. I sincerely hope that my noble friend Lord Carr and my noble friend (in a non-Parliamentary sense) Lord Lloyd of Kilgerran can get together and sort out something for Third Reading which will overcome my fears and still not hamper the perfectly reasonable arrangements of wanting to sell or buy something very small.
Lord MELCHETT: My Lords, may I ask the noble Earl a question for clarification. There is no hidden motive in this. I think the noble Earl is quite clear that there is no power of compulsory acquisition here. If that is the case, is he defining nationalisation—we have had a great deal of talk this evening about what particular words mean—as being the perfectly voluntary selling of shares to a publicly owned corporation by a private company? That is not what I have ever understood by nationalisation.
The Earl of ONSLOW:My Lords, nationalisation does not have to be forced; it can be voluntary. It may be that both Houses of Parliament would think it is against the wider public interest to have even voluntary nationalisation, and it certainly states in this clause that that is what can happen.
Lord Carr of HADLEY: My Lords, I accept that this is a difficult point. I

1025
take the point made by the noble Lord, Lord Melchett, that if we wish these Corporations to succeed, to be profitable, economical and efficient and all the other things we have said, it is important for them to be able to react quickly to commercial opportunities. On the other hand, the Government, for their part, have to accept the fact that, whatever benefits they may see in nationalisation, one of the penalties of nationalisation is that it puts the activity under the Corporation's control outside the realm of normal commercial operation. This indeed is one of the claims that is made for nationalisation: that it sets different objectives, different standards, and altogether puts that previously commercial undertaking into a different—and the Socialists would say a higher—sphere of human endeavour. I do not believe we can have it all ways.
What concerns me is that if one looks at the whole of Clause 3, one starts off with subsection (1) which says what activities the Corporations may carry on, and paragraph (a) of subsection (1) says that they can carry on,
"any activities which were carried on, immediately before the date of transfer, by a company which, by virtue of this Act, becomes the Corporation's wholly owned subsidiary.".
At least we know where we stand. We know what all these companies being nationalised are doing at the moment. If we were being asked to say that these Corporations should be free, merely on the Secretary of State's say so, to exploit commercial opportunities which may present themselves to them in those spheres of activities of which we are aware, then I think that although some of us might have some fears, we should nevertheless have to concede to the noble Lord that probably it was a reasonable request that the Government were making. But, unfortunately, from our point of view, there is a paragraph (b) to subsection (1) and that says that what each Corporation may do can "with the consent of … the Secretary of State" be extended to "any other activities". That is really taking them into the field of the unknown. I know that we are talking here about powers and not duties and that makes a difference. But here we come back to what I christened my "paper bag" point in relation to powers.
It seems to me that without any rhyme or reason or accountability to Parliament
1026
the Secretary of State could lay down that these Corporations could go into the manufacture of paper bags and that thereafter they could set about an active takeover policy offering high prices for the shares of paper bag manufacturers and be able to go into the paper-bag manufacturing industry without any Parliamentary control of any kind. I am again taking an absurd example. But there is a fairly respectable mode of proof by reductio ad absurdum. If they can do it, it is something which even though Ministers may say that the Government would never think of such a thing, they have the power to do such a thing—not just this Government and this Secretary of State, but all Governments in future and all Secretaries of State in future. That seems to be going too far. In other words, if we had only Clause 3(1)(a) without (b) as well I might go along with the noble Lord, Lord Melchett, and say that the Liberal Amendment which we are discussing is perhaps unnecessary. I do not feel I can take that view because of the existence of Clause 3(1)(b) which opens up entirely unknown and much wider possibilities.
I am inclined to say, therefore, that this is an Amendment which ought to be supported. Against that, however, I wonder whether the Affirmative Resolution procedure is necessary in all such cases. This might in itself be going too far and 1 am in rather a difficult position, therefore, of believing that something is needed but not wholeheartedly being able to recommend that we should press the Amendment proposed by the noble Lord, Lord Lloyd of Kilgerran.
What I should like to say to my noble friends is that I would not advise them to support this particular Amendment, but I should like to consider whether or not at Third Reading we could get an Amendment in place of this one which could give us some Parliamentary control to ensure that great new departures outside the field of activities which we know these Corporations can take on at the moment under Clause 3(1)(a) should be subject to Parliamentary control. If we could be satisfied that they could not depart into wholly new fields without some form of Parliamentary control, then we might be satisfied. But at the moment I cannot wholeheartedly support the Amendment

1027
as it stands. I should like to advise my noble friends, if they can be so persuaded, that we should see whether before Third Reading we can agree on some more limited form of words which might perhaps impose control on any activities under Clause 3(1)(b) and leave Clause 3(1)(a) as the Government wish.
Lord LLOYD of KILGERRAN: My Lords, I am very grateful to the noble Lord, Lord Melchett, for having considered what I said in Committee, he having read Hansard. I know how busy he is, and I do not propose to delay the House very much further. I was delighted to hear the noble Lord, Lord Melchett, use phrases like, "speed of reaction", "freedom—for—commercial—activities", desirability of expansion of activities and "speed of commercial response" in relation to the activities of these Corporations.
I take the point raised by the noble Earl, Lord Onslow, and also accept that we are in a difficult area. Having heard the noble Lord, Lord Carr of Hadley, it may be that the affirmative position which has been taken up in this Amendment is not the right course and, therefore, with the leave of the House I should like to withdraw this Amendment while reserving my position for Third Reading.
Amendment, by leave, withdrawn.
10.15 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 41:
After Clause 3, insert the following new clause:
None of the functions conferred by this Act upon the Secretary of State or British Shipbuilders shall be construed as authorising or requiring British Shipbuilders to repair or maintain ships except by or through the companies referred to in Schedule 2 to this Act.
The noble Lord said: My Lords, this is the first of the Amendments to delete the ship repairing companies from the Bill and it enables us to debate now the whole question of the removal of the independent ship repairers from this Bill. There are two principal reasons why the removal of these firms would make a significant improvement to what is a bad and a damaging
1028
Bill whose only relevance to the state of our economy is that it reduces confidence in the Government's ability to tackle the real task facing the country.
The first reason is that it is clear that ship repairing was included in the Labour Party's nationalisation proposals for shipbuilding on the mistaken assumption that it was part of the same industry, and was engaged in similar activities. It is not. It is a separate service industry, not a manufacturing industry, and it operates on entirely different lines.
The second reason for its removal is the arbitrary way in which firms have been picked out for nationalisation. Part of the industry is included in the Bill, the remainder being left out. Out of over 100 companies which comprise the industry, 12 are named for nationalisation in Schedule 2. That this selection has been manipulated by the Government is plain from the fact that the criteria for inclusion have been altered several times since the original proposals were published. The companies in the list to be nationalised have changed during that period as the Government have juggled with the criteria. This absurd division of the industry according to a crazy formula—one that was still being tinkered with by the Government while the Bill was proceeding—has naturally generated strong feelings that injustice was being done. The best and quickest way of putting this situation right is to carry out a neat excision and delete ship repairing from the Bill. Nothing the Government have yet said on the subject has advanced any serious or relevant argument in favour of nationalising the ship repairers named in the Schedule.
One pretext put forward is that the Labour Party had committed itself to take ship repairing into public control. That is not a reason in itself on the merits of the case. It is only a reminder of recent history and of the fact that those who drew up the programme of the Labour Party were suffering under the misapprehension that repairing ships and building ships constituted the same Industrial activity. That was the same kind of mistake as that made by Transport House and Labour's National Executive Committee over nationalising selected insurance companies and banks. Even the Prime Minister has described that as

1029
an electoral albatross. It is of course the second albatross: the first is the present Bill, as the Government will discover in the by-elections on Thursday.
So much for the feeble argument that the Government are committed to nationalising these ship repairing firms whether or not it makes sense. There is a further identifiable excuse for this folly that has been employed in your Lordships' House. The noble Lord, Lord Melchett, said that a coherent strategy was needed for these 12 companies out of the 100 or so in the industry. Let us look at other industries that are nationalised. What about steel? The last Chairman of the Steel Corporation tried to work out a coherent strategy in his 10 year development plan. His difficulty was that the Government tried to change it and have seriously delayed it together with the investment in modernisation which was entailed.
Next, let us consider the railways. I invite noble Lord opposite to study the statements by the last Chairman of British Rail, Sir Richard Marsh, since he retired and to decide whether he was allowed to pursue a coherent strategy for British Rail. Ship repairing is a service industry that has to be available in various different places round our coasts to undertake many small tasks at short notice. Of course the same firms have to be able to perform major repairs also.
To be successful, these companies must have a close relationship and good understanding with their individual customers, the shipping firms. Decisions have to be taken quickly on the spot, and business depends also on reliably swift action to follow. The shipping industry, consisting of the customers, has made it clear through its representative body, the General Chamber of British Shipping, that it is opposed to nationalising ship repairers. It predicts loss of efficiency and knows that its own interests will suffer. The ship repairing industry cannot be condemned for its performance; the British industry has been doing well compared with its neighbours. In North-West Europe it has, in the past two years, been increasing its share of the business as a whole. It has been enterprising and successful and has not placed burdens on the taxpayers.
No one can contend that we on this Bench have not given the Government
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plenty of time to explain their proposals or to withdraw them. The extraordinary way in which a line is being drawn between the companies to be nationalised and those not to be nationalised has prompted apprehensions about possible hybridity. Again, we have given the Government ample time to try to clarify the criteria and their application to individual companies. There is always Parliamentary concern if it seems that unfairness may arise because companies in the same category are being treated differently without recourse to the proper procedure, including opportunities of providing evidence to a Select Committee. My noble friend Lord Colville of Culross has addressed himself particular; y to this subject and is eminently well qualified to do so. Questions have been put to the Government, but each reply—and there is yet another one available this evening—with its interpretations of the terms in Schedule 2, and the circumstances of individual companies, has simply raised yet more points of ambiguity.
The idea of nationalising part of the ship repairing industry simply because the Government wished to nationalise shipbuilding was misconceived. The attempt to apply the idea in this Bill has shown itself to be a mistake. It was suggested earlier today that there is no difference between taking the ship repairers out of the Bill and the aircraft industry, except in degree. With respect, I submit that there is. The Labour Party did not decide to nationalise the ship repairers on their own. The Labour Party policy people did not wake up one day and announce that they had decided to nationalise the ship repairers. They were included in the original proposals only because of the Labour Party's policy on shipbuilding and their mistaken assumption that ship repairing was inseparable from shipbuilding. Even then, only a part of ship repairing is to be included on an arbitrary basis. Ship repairing was thus dragged into the Bill on the coat tails of shipbuilding. The Labour Government now need help in saving themselves from the result of this misconception. It is very different from the aircraft industry, where unfortunately the Labour Party took a definite decision to nationalise the industry and made this a policy matter, and it is now indeed half the purpose of the Bill.
I hope that your Lordships will see fit to agree with the Amendment and to remove the ship repairers. Indeed, the Government may well benefit later this week, when the IMF team are here, from the disappearance of these particular proposals from the Bill. They may interpret this as a sign that the country is coming to its senses. Of course, the confidence of the IMF and the value of the pound would both be fortified dramatically overnight if the whole Bill were to be dropped, but this at least would be a significant step to indicate that in Britain we have not completely lost our heads or our sense of proportion.
Lord LLOYD of KILGERRAN: My Lords, I rise briefly to support this Amendment on behalf of those on these Benches. Noble Lords have heard argument over many hours as to why the ship repairing business should not be included in the scope of this Bill. If I may say so, I have listened with very great care to what has been said from the Government Benches, but I must say that I agree with the noble Lord, Lord Campbell of Croy, when he says that no relevant argument has so far emanated from the Government Benches. I have heard no argument of industrial, commercial or technical significance to justify the ship repairing business being included within the scope of this Bill, and I therefore rise briefly to associate my Party with the noble Lord, Lord Campbell of Croy, in the submissions he has made to this House.
10.26 p.m.
Lord MELCHETT: My Lords, this Amendment, together with what I take to be consequential Amendments to Schedule 2 to the Bill but which the noble Lord, Lord Campbell of Croy, did not mention in particular, seeks to delete ship repair from the Bill. The noble Lord, Lord Campbell of Croy, mentioned at least twice in his speech, if not more, or at least implied, that ship repairing had been included in the Bill because the industry was put in the Labour Party Manifesto by mistake. The noble Lord said that it had been dragged into the Bill on the coattails of shipbuilding. During the Committee stage, on the 11th October, at column 187, I went to
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some length to disprove that very allegation, and I am sorry that the noble Lord does not appear to have taken in what I said then. However, I should like to repeat what I said at the Committee stage because it makes absolutely clear that, whatever else is the case about the inclusion or exclusion of ship repairing, it is not true to say that it is included in the Bill by mistake or has been dragged in on the coattails of some other industry.
As I said at Committee stage, there were two specific commitments to nationalise the ship repair industry in both of the Election Manifestoes of this Party in 1974. The commitment was quite distinct from the commitment to nationalise shipbuilding. That commitment arose from the report of a joint Labour Party/CSEU/TUC Working Party report which was published in 1973, when we were in Opposition. This joint Working Party recommended that the proposed Corporation should acquire control of all significant companies in the shipbuilding, ship repair and marine engine industries; and that recommendation was endorsed by the 1973 conferences of all three bodies. So at that stage, in 1973, there was a quite separate and distinct mention of the ship repairing industry, and that has been the case in my Party's policy ever since. I hope that, whatever other arguments we may have about ship repairing being in or out of the Bill, people will not say that it simply slipped in at the last minute by mistake.
Lord CAMPBELL of CROY: My Lords, I am grateful to the noble Lord for giving way. I was not suggesting that it was slipped in at the last minute. I was suggesting that, if it had not been for shipbuilding, ship repairing would not be in. I do not think there was any stage where the Labour Party put forward a proposal that ship repairing should be nationalised. It was simply when shipbuilding, as he has just mentioned, was to be nationalised that the marine engine industry and the ship repairers were dragged in, too.
Lord ORR-EWING: My Lords, I have the Manifesto here. I wonder whether the noble Lord could draw my attention to how it occurred. From what he has just said there was apparently

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a behind-the-scenes agreement among the TUC, the NEC (was it?) and someone else. Was this published, and was it verbatim in the Manifesto? Because I cannot find it in the Manifesto. It says, "take into public ownership"; but I may have missed it in a rather long document.
Lord MELCHETT: At Committee stage—and it is at column 187 of Hansard of 11th October, if the noble Lord wishes to refer to the detail—I quoted from the joint working party report. That Working Party report was not quoted verbatim in the Manifesto; I am not sure that Working Party reports very often are. But, as the noble Lord has said, the commitment to take the industry into public ownership was contained in both Election Manifestoes, and that is something which I am now repeating.
Lord ORR-EWING: But I did not think it said ship repairing, which is what we are on at the moment. I thought it spoke in the Manifesto of shipbuilding and aerospace being taken into public ownership. We are now discussing ship repairing. I may have missed it; it is a complicated document.
Lord MELCHETT: I think that the noble Lord has missed it. I do not have a Manifesto in front of me, and I do not have the time to read it to find a particular reference. There might be time for some noble Lord who in a particular corner of the Chamber happens to have a Manifesto and it would be admirable if he were able to find the reference. However, I have the joint statement drawn up by the Working Party to which I referred. The noble Lord will see that it was published; and that is, at least, an answer to one of the questions he has asked me.
May I go on to make absolutely clear the reasoning behind the Government's proposals to nationalise ship repair. The Government's intentions are to take into public ownership the major ship repair companies situated on the main estuaries. The definitions in the Bill were drawn up with this objective in mind. I should like to come back to definitions in a moment.
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Our reasons for nationalising ship repair are clear. Ship repair in many cases is closely integrated with shipbuilding. Let me give your Lordships some examples. Vosper Thornvcroft has a separate ship repair division but here, as in many other cases, shipbuilding and ship repair complement each other. At Vosper's, there is interchange of labour in that the ship repair division has done outfitting work on ships built in their building yards. At Hall Russell, a new ship repair dock has been provided alongside the shipbuilding facilities. At these yards and at others there is close integration between shipbuilding and ship repair. It is therefore illogical to treat the two as separate entities. That is why it is included in the nationalisation Bill. It was done for sound industrial reasons and not, as the noble Lord, Lord Campbell of Croy, has suggested, simply because it was pulled in on somebody's coat tails. As I have said before to your Lordships at least twice and perhaps on three or four occasions, this close link is evident in many of our major competitors, and I have given evidence of this and mentioned it again in connection with Japan, one of the world's leading shipbuilding nations.
There are also sound industrial reasons for nationalising ship repair. The Industry is urgently in need of rationalisation as on some rivers there is wasteful competition. This means that, although as the PA Consultants' report pointed out, new investment is needed, as the industry is now structured that investment will not be forthcoming as it would not produce an adequate return. Nationalisation will enable new investment to take place and at the same time enable some restructuring of the industry on a more coherent basis. Already our nationalisation plans have stimulated one logical proposal for greater integration of facilities. The consultants report also referred to the poor labour relations in the industry. I believe that as nationalisation results in a more efficient, better organised industry, labour relations will improve. Certainly without modernisation, employment in the industry is likely to continue to decline as it has over the last ten years.
A great deal has been said about the definitions of ship repair companies used in Schedule 2 to the Bill. I have said that this was something to which I would return because the noble Lord, Lord

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Campbell of Croy, mentioned it in some detail. Some people say the definitions include companies that are too small to be nationalised. Others say they do not include enough companies. There have also been some allegations that the criteria have been deliberately framed to include particular companies for vindictive reasons on the part of the Government. This last allegation is complete nonsense.
The criteria used in Schedule 2 for the nationalisation of ship repair companies were drawn up with one objective in mind. That was to nationalise the major ship repair companies situated on the major estuaries. The public ownership proposals embraced these major companies because they were the companies necessary to plan a coherent strategy for the industry.
The selection of the companies listed in the Schedule was therefore made for good industrial reasons and the definitions were framed to include these companies and to omit others which were not relevant to the Government's proposals. For example, the shiprepairing subsidiaries of British United Trawlers Group (one of whom, Humber St. Andrew 's Engineering Company Limited, has already been mentioned in the course of these debates) were mainly engaged in carrying out repairs to the Group's own trawler fleet and their facilities consisted of slipways used for this purpose. It was decided that public ownership of these companies would not be appropriate or relevant to the strategy for the ship repairing industry as a whole. Although the companies met the turnover definition, they were excluded from the Bill as they did not meet the definition on drydocks. On the other hand, Scott Lithgow Drydocks Limited, which owns a large and important drydock facility on the Clyde and which is closely integrated with the shipbuilding activities of the Scott Lithgow Group was considered an essential part of the nationalised ship repair division and the turnover definition was therefore set to include this company.
Another example is given by the two Merseyside shiprepair companies, J. B. Howie Limited and Western Shiprepairers Limited. Again, these companies own and operate major drydock facilities on Merseyside, and together with other associated ship repairing companies in the Laird Group, they constitute a major
1036
shiprepairing activity. But because neither company on its own made the turnover definition, the concept of aggregation of turnover with associated companies was brought in to include these companies in the scope of the Bill.
My Lords, the Government remain convinced of the strength of the case for nationalising the shiprepairing industry. We believe it is necessary in order to maintain the close links which already exist between shiprepairing and ship building and that it will only be under public ownership that we can create a strong ship repairing industry providing good prospects of employment for the future. We will strongly resist this Amendment.
10.37 p.m.
Baroness VICKERS: My Lords, I should like to add a few words to this Amendment. Noble Lords may ask why I should take a particular interest in this, having represented Devonport for nearly 20 years, which was a national industry. When it came to Elections I generally had to point out that it was not a nationalised industry, it was a national industry. In other words, like the Fire Service or police, there to protect our country. We had to have ships ready all the time. I should like to make it clear that I consider this to he a complete difference. I realise that they have had an excellent record, over 300 years. I should also like this to be remembered: they are there for the protection of the country, not to make a profit, whereas we wish that the nationalised industries would pay their way. What worries me is the fact that ship repairing yards will now get into the category of the political arena. I know perfectly well that when there was an Election, or when there was a change of Minister, there was anxiety in the dockyards, and there will be anxiety in many of these yards. I will give an example. When 1-EMS "Ark Royal" was having a £33 million refit, we had great anxieties about whether this would continue. One Recess I was rather worried, so I sent a telegram to the then Minister, Mr. Healey, and asked him to send a reply by 2 o'clock because I wanted to go out. At 1.59 I received a reply:
"No decision made. No cows are sacred".
Honestly! That was not very helpful to the hundreds of men who were working

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there from day to day, wondering whether they had any work to do in the future.
I have in the course of 20 years travelled round and seen a great many dockyards, both naval and private, in Malta, the Far East, Northern Ireland and in Britain, too. I should like to suggest that ship repairs are completely different from shipbuilding. Refits and repairs are considerably more difficult. The repairs need a great deal of patience, initiative and sometimes imagination in order to get the pieces back in the right place. I remember seeing some repairs being carried out with pieces taken out of ships which had been in place for 13 years. They were made as good as new. This is not the kind of work which is done by the shipbuilders. In all yards, whether private or naval, the men were extremely helpful, teaching me about their work. I took a great interest in what they were doing and I made it a special interest in my Parliamentary work in another place.
On 2nd December, in column 1461 of the Official Report in another place, the Minister stated:
"Our proposals … are part of the Government's programme to instigate and encourage new investment, to restore British industry to a competitive position in world and home markets."
I should like to suggest that we do not need the Government to do that. The ship repairing yards are getting on extremely well on their own. I do not think they will do as well when they are nationalised, and they are certainly un-likely to make a profit. Nor do I think they are likely to be happier places for the workers. The Minister added in column 1462:
"… the Bill helps to fulfil our aim of bringing about a fundamental and irreversible shift of povier"—
and I particularly want to emphasise this—
"in favour of working people and their families."
My Lords, has that happened in any other nationalised industry? It will be a miracle if it happens in this one. I remember, when the railways were nationalised, going to Waterloo Station and seeing lots of people there about to be moved on by the police. They protested and said, "But we own this place now. "Of course, they found that was a great mistake. And, of course, one also has to realise that the current loss on nationalised
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industries at the present time is about £1,000 million a year.
In view of the fact that thousands of employees have shares in the firms where they work and the compensation to be offered to them will affect their pensions adversely, I suggest that in terms of the Bill they would lose rather than gain. As I understand it, there are about 140,000 people who may be transferred from the private to the public sector. They will not know what their future is to be, because they will be controlled politically.
I should like to ask noble Lords: does this part of the Bill contravene Article 102 of the Treaty of Rome? That Article advises, as I understand it, that a member State, before enacting any legislation which is likely to cause distortion compared with conditions in the EEC, must consult the Community's governing body. I should like to ask whether that has been done. In 1964, the Commission ruled that State monopolies were acceptable only so far as they applied to service industries, although I understand that there are widely differing interpretations of the EEC clause. However, there is an indication that this United Kingdom legislation might contravene that Article.
When the Minister talked about the shift of power to the working people, did they get it in steel, in the railways or in coal, for example? I have visited a great many yards and found that a great many people in them supported the present Government. But the Government will not be making themselves any more friends if they take this action, because those people are now worried about what is to happen to their future. I think in most places there is a tremendous spirit of working together and they are happy at the present time. Strikes are few. In one yard I understand that there has been no individual dispute for eight years.
I think some of the independent yards will be lost if all goes to the headquarters on the Tyne. Some yards are small and will probably close, because this large enterprise that is to be created probably will not want to be bothered about the small yards. I do not think that Welshmen or Cornishmen will ever want to leave their homes and go elsewhere. The Welsh, for example, have seen steelworks, coal mines and railways closed under nationalisation and they will not wish for another

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take-over. Private yards send experts who have been thoroughly trained in how to market their wares. In other words, there are many ships in our yards now that come from overseas.
Special training is needed for these jobs. Recently, against competition from the Dutch farmers, Silky Cox & Company Limited announced conversion work of £1 million for four gas turbine powered container ships chartered by Seatrain of New York. This is going to employ 1,200 workers. How will the people of Cornwall, for example, fare when they are taken over? On 25th June the Minister in another place said:
"A ship repair capacity will be retained at all major estuaries including the Severn. I can give an assurance that the construction of the two industries resulting directly from acts of nationalisation will not lead to losses of jobs."
However, on 5th July, a junior Minister, Mr. Huckfield, said:
"We cannot give specific guarantees about the yards.".
Who are we to believe, the Minister or the junior Minister?
I suggest that the workers will not be better off; they will not have any more power and they may lose their jobs. As I said before, they will come into the political arena which will not make for future security in this work. Any ship repairing firm which wants to continue to be independent should be allowed to do so. It must be remembered that in a great many of these yards there are many trade unions. I know one yard in which there are 17 different trade unions. I should like to know what consultation has been given to all these trade unions. They have members whom they wish to look after, and therefore I hope that due consideration will be given to accepting the Amendment so ably moved by my noble friend.
Lord GOODMAN: My Lords, I had not intended to take part in this debate, but there is something of importance which I think needs to be said. Some very intelligent and persuasive arguments have been presented on behalf of the Opposition in a very reasoned and moderate fashion, and I do not believe they are getting the respect and attention they ought to receive. In my view this is for the rather unhappy reason that the people
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engaged in presenting the Bill do not have the expert knowledge of this matter which is essential if they are to deal with this in a proper and informed fashion. I believe that the Government spokesman probably knows a shade more about ship repairing than I do, which is almost nothing, but when one comes to serious matters of this kind it is of the greatest importance that the arguments should be presented and be heeded to by people with informed knowledge. It is disrespectful to this House that parrot cries should be uttered about good industrial reasons. We have not heard a single good industrial reason advanced as to why this nationalisation should take place.
I should like to put the matter on a rather broader basis. I believe very firmly, as I think most of the Members of this House believe, in a mixed economy. We are not averse to nationalisation. I do not think that any sane man believes that government can be conducted successfully without a measure, even a large measure, of nationalisation, but if we are to live contentedly together so that our philosophies are not at war there must be recognition that you do not nationalise for its own sake; you nationalise for the sake of efficiency. There is no evidence to suggest that the nationalisation of the ship repairing industry is a matter of efficiency. There is nothing to suggest that it is, remotely in need of capital that cannot be provided in the ordinary way or through the Government agencies that already exist.
There is obviously a feeling here that this must be included for some doctrinaire reason. This is extremely unfortunate. We ought to nationalise when nationalisation is necessary. A cogent case can be made for nationalising shipbuilding. I do not know about the aircraft industry because I know very little about it. I am satisfied that no cogent case has been made out for nationalising ship repairing. There may be one, but I have not heard the faintest suggestion of it yet emerging from the Government Benches. I would continue to urge the Government to think again. It is most important that the impression should not get about that they are nationalising for the sake of netting the lot. It is of the greatest importance that the impression should get about that, where there are reasoned cases made out to them, they are prepared to defer to

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them. If this House is to serve any purpose at all, I think that it can serve a purpose only if the arguments that are addressed to the Government are heard by informed ears, listened to respectfully and considered with respect as well.
10.51 p.m.
Lord ORR-EWING: My Lords, may I support this Amendment? I declare an interest again, I think for the sixth time in these debates, in that I am a director of Richardsons Westgarth, one of whose subsidiaries is the Humber Graving Dock, which is one of the listed ship repairing units. Therefore, for that reason I shall not vote if one occurs. But I speak from the heart and with some knowledge of this subject, having been closely connected with it for many years.
Ship repairing is a totally different industry from shipbuilding. It is a service industry, and is a very personalised industry. It depends utterly on the relationship between the firm which is operating the ships, and the firm which is to repair the ships. That relationship underlies everything, and the confidence with which people deal with you. It is interesting that the North-East coast ship repairers have already gone "bust" a nationalised industry—in the last two years, because they did not attract customer confidence. This is, therefore, basic to the viability of this industry. We are concerned with an industry which will cost another £50 million of public money, 12 companies with 15,000 people, none of whom appears to wish to be nationalised, with a turnover of £100 million. It is not a big industry, with only 15,000 people, is smaller than many individual firms and is scattered around our coastline, as any study of geography will show.
In the Second Reading debate, Mr. Varley, the Minister, made a grave error which showed just how little the Government know about what is going on, when he said that six out of 12 of those ship repairers listed in Schedule 2 were closely integrated with shipbuilders, which just is not true. The noble Lord, Lord Melchett, the Minister, tonight named, I think, three that might be closely integrated. But because 25 per cent. of the industry might be allied with some shipbuilding, why should the whole industry
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be taken over in what is clearly a dogma attitude?
It is believed, whether rightly or wrongly—and I must say that I find it very strange—that because a collection of Labour people get together and publish a pamphlet, it is right many years later, in a totally different situation, when public expenditure is under grave pressure, when the IMF are about to arrive on our shores to ask how we can reduce public expenditure and not have to go on borrowing from overseas, for them to stick to saying, "Well, it was written. There were some people who got together and published a pamphlet." Is that not right?
Lord MELCHETT: My Lords, that is so. But that is not the reason why the ship repairing companies have been included in the Bill. I merely gave the instance today, and did the same in the Committee stage, to counter the argument which the noble Lord, Lord Campbell of Croy, used, that we had done this by mistake in some way, that these firms had been dragooned into the Bill, because somebody muddled them up with shipbuilding and got them in by mistake. I merely gave that little history on Labour Party policymaking to get it clear to noble Lords, if I could, that this had not happened by mistake.
Lord ORR-EWING: My Lords, it seems to me strange, because I have examined and reexamined the Manifesto, which, presumably, is the result of all these studies behind the scenes by various Fabian groups and the like, that the Manifesto said that there would be no incomes policy, but there would be free collective bargaining. Have the Government ever heard of that? They turned a bloody somersault on it! "But ship repairing? No, we cannot change that. That is the pure Gospel being handed down in the Tablets from above". Abolition of the nuclear deterrent—I remember that being mentioned in previous Manifestos. Thank God!, that has gone down the drain. They really should not be tied to certain dogma which is put into Manifestos at various times, and which is totally inapplicable and inappropriate to the present industrial position of our country, and, above all, to the present financial position of our country.

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We are told that restructuring is necessary for good industrial reasons, and I am so glad that the noble Lord, Lord Goodman, took this up. What are the industrial reasons which make it necessary to take over 12 firms with a total employment of 15,000 people? These are scattered in small numbers all over the country, are very flexible and are meeting the needs of the industry. Is this a good industrial reason? I am afraid that most of us will be sceptical about that. We shall think that the reason for the takeover is dogma and prejudice.
Ship repairers are extremely flexible. At times they are overloaded; many people are trying to get into their docks and are asking for service. At other times they are lightly loaded. In my own instance, Humber Graving Dock takes on maintenance work for the oil refineries which are close by. Apparently this maintenance work is also to be nationalised. It has little to do with ship repairing, by the way, but the Minister has said, "No, we must take over the whole lot; of course we shall extend it". Recently I was looking at ship repairers in Florida. What did they do? When they were lightly loaded they were making refuse machinery for churning up hundreds of tons of refuse which arrived every day because they wanted to level out the load on their manpower and capital investment.
It is true to say that many years ago ship repairing was an offshoot of shipbuilding, but the two industries have steadily and remorselessly diverged in their techniques and technology and in their application and type. Very often shipbuilding takes four years from conception to delivery. Ship repairing, on the other hand, can take four hours from the order arriving and the ship being turned round and despatched from the dock. It is a totally different concept. I cannot understand what are the good industrial reasons for the takeover. These are the industrial facts of life.
I am sorry for the Minister; I suppose that they will go on dishing up this information to him in his brief, but I wish he would take an opportunity to go out and look at some of these little ship repairing firms. The report of PA Consultants suggests that United Kingdom ship repairers are losing trade.
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It is true that over the years 1968 to 1973 they lost over 3½ per cent., but our competitors in Western Europe lost not 3½ per cent. but 6 per cent. every year; so our ship repairers are doing almost twice as well as Western Europe. The PA Consultants report also states that our prices are lower than those in Western Europe. Is that any justification for taking over and disturbing this little industry? The United Kingdom has steadily expanded its work for overseas customers. It was 14 per cent. a few years ago; now it is 26·8 per cent. Therefore, whatever criteria you look at you will find that this small, flexible industry is doing extremely well by European standards.
Sometimes it is argued, "Ah, but you have had Government support". Even this argument will not run. The industry has received no special support whatsoever and many of these small companies are not in development areas and have not even had the premium that is payable in those areas. I regret to say that this is the one aspect of the Bill for which there is no justification whatsoever. The people working in those companies do not want it; the industrial strategy does not want it. These companies are flexible and small and the longer they remain that way the more likely they are to retain the confidence of their customers both at home and overseas.
I hope that after all the hours we have discussed the different aspects of the Bill the Government will not be so prejudiced that they will not give way on this point, since all logic demands that these companies should be left out of the Bill, thus saving public money. They should go on servicing the industry to which they are dedicated. At the same time it would delight most of the people who are working in that industry.
10.59 p.m.
Lord AUCKLAND: My Lords, the importance of ship repairing is that the jobs should he done quickly. As has been said several times in the debate, these are small companies largely employing local labour, often in relatively rural areas where labour relations are exceptionally good. I wonder how much consultation has taken place with the ship repairing industry itself. We seem to have had very little in the way of answers to that from

1045
the Government in either House. Also I happen to have had some personal experience of management consultancy. I do not wish to run down management consultants—many do a good job—but one wonders how long P.A. Consultants, Booth-Allen and other management consultants spent with the ship repairing industry. It is no use spending two or three days with an industry like this. It is an industry which needs very careful study, and careful study by those who are well versed, not only in the industry but in the area concerned. The hour is late and it is time a decision was taken on this, but it is quite clear that the vast majority of people in this country, and certainly those concerned with the shipping industry, wish to see this provision deleted from the Bill.
The Earl of HALSBURY: My Lords, I support the Amendment, arising out of a deep conviction based upon experience. This is not an issue where an Independent like myself can listen to both sides of the case and sometimes incline one way and go into one Lobby and at another time go into the other Lobby—and I have done both in the course of this evening. I have spent 10 years in a nationalised industry—the gas industry. I know its strengths and its weaknesses. I am not in principle opposed to the nationalisation of public services. The nationalisation of the gas industry is a logical consequence of modern technology in gasmaking, and during my 10 years the industry went through two revolutions. First, the substitution of coking processes by hydro-carbon forming, and secondly the exploitation of natural gas, and it could not have been carried through on less than a national scale.
Also in the course of my industrial experience I have been responsible for the affairs of a dynamo and motor repair organisation, and nothing in greater contrast with a nationalised industry producing a public service like gas could be imagined. The degree of private initiative and the capacity for improvisation that one needs in running a repair business is not comparable with the qualities necessary to run what of necessity is a large bureaucratic organisation like a nationalised industry. Although in a homogeneous industry like the gas industry one can hold the degree of bureaucracy to a certain extent within
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limits, I must at this stage remind the noble Lord, Lord Melchett, of a Fabian essay written by his right honourable friend Mr. Anthony Crosland, in which he said that the private sector is the public's guarantee against bureaucracy. That is why I support the Amendment and shall be prepared to follow into the Division Lobby if the House is divided.
11.3 p.m.
Lord STRATHCONA and MOUNT ROYAL: My Lords, there are one or two things I ought to say. First, I said earlier that we want to see British Ship-builders flourish and this Amendment does not seek to preclude British Ship-builders from going into the ship repairing business. What it is doing is seeking to stop them from coercing the independent shipbuilders from being swept into the maw of the public sector.
The noble Lord, Lord Melchett, made much play of the close links which exist between the shipbuilding and the ship repairing industries and he spoke about the Government's desire to maintain close links, but what he did not do was to deal with the question of those companies which do not have such links at the present time. A number of my noble friends, and indeed noble Lords from all sides of the House, pointed out that some of the more successful parts of the ship repairing industry are small companies; it was said a number of times, and in particular by the noble Earl, Lord Halsbury, who uttered a striking phrase, contrasting the difference between the private initiative and improvisation that is needed for this type of industry with the bureaucratic type of organisation. It is possibly unfortunate that the word "bureaucratic" has become a rude word because it need not be. That is typical of what is required for a major industry like the gas industry.
Secondly, we have spoken about the time-scale; a number of noble Lords have spoken about that, notably the noble Lord, Lord Orr-Ewing. It is true. At this time of night I do not think it is worth labouring the point. Anybody can understand that if a ship comes in in a damaged condition, it is simply not the same kind of situation as if you are quoting for building a supertanker; to compare the two seems quite irrelevant.

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The noble Lord made much play of industrial relations. Some of us believe that there is at least one company in the ship repairing industry which is notable for industrial relations. I have to ask the noble Lord the question: Is he honestly going to stand up and say that the industrial relations record of the shipbuilding industry is all that admirable a record that he would necessarily want to impose this on the small intimate companies engaged in the ship repairing industry? I simply cannot believe he would want to lumber them with that kind of burden. The noble Lord then referred to the need for investment. Here again, one of the reasons why some of us are against sweeping the small independent ship repairing industries into this vast organisation is that they do in fact make profits. Earlier on in the debate my noble friend Lord Lauderdale was seeking to praise profits, and I hope we shall continue to do so. I would respectfully suggest that the best way of getting investment in an industry is to make it profitable. If it is profitable, is it not a pity to "clobber" it by sweeping it into a large bureaucratic organisation?
Then the noble Lord referred to the major ship repairing companies in the major estuaries. We are possibly in danger of getting into the area of hybridity, but I would have to ask the noble Lord this. Is he really sure that in all cases we are talking about major companies? And if he is, is he absolutely certain that some equally large companies have not been excluded from the Bill? Is this really sensible? Do we not come back to saying, as (I would so call him) my noble friend Lord Goodman said, that we have not had a single good industrial reason, such as that we should be nationalising for the sake of efficiency? If the noble Lord could convince me that he was nationalising for the sake of efficiency I honestly believe, despite the prejudice I freely admit to, he might even persuade me that it would be a good idea; but he has not produced a single argument which leads me to believe this is right.
The noble Baroness, Lady Vickers, when talking about the question of
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industrial relations, emphasised the enormous number of trade unions which are involved, particularly in the shipbuilding industry. If the noble Lord wants to deploy the argument that industrial relations would he better, and this is wanted by the unions, do we not come back to the kind of argument we had on the Felix-stowe Bill? Is it not surely self-evident that at least in some cases—and certainly the evidence I have supports this—the unions in these small businesses do not want to be brought into British Shipbuilders? Therefore, it seems to me not respectable to mount the argument that either this is wanted by the unions or that it would improve industrial relations. It seems to me that the onus of proof for bringing this section of the industry into the Bill must lie with the Government, and so far they have totally failed to make the case.
Lord CAMPBELL of CROY: My Lords, as I moved this Amendment, perhaps I may say in reply to the noble Lord, Lord Melchett, that he said this was the first of a number of Amendments. When I moved it, I said it was the first but when we reached the later ones I would indicate how they fitted in. The Amendment seeks to remove the independent ship repairers from the Bill. The noble Lord mentioned Vosper Thorney-croft. But in Committee I pointed out that that happened to be a company with a large ship repairing dock which is completely separate on the other side of the Itchen, and where the management and the workforce are entirely separate. Again we will return to that in a later Amendment, so I will not go into it now. As various noble Lords, including the noble Lord, Lord Goodman, in particular, have pointed out, we have had no real reason given why this industry is included in the Bill. I would ask the House to support me in this Amendment.
11.11 p.m.
On Question, Whether the said Amendment (No. 41) shall be agreed to?
Their Lordships divided: Contents, 73; Not-Contents, 34.

CONTENTS

Amory, V.

Greenway, L.

Redesdale, L.

Auckland, L.

Halsbury, E.

Rochdale, V.

Belstead, L.

Harcourt, V.

Ruthven of Freeland, Ly.

Blakenham, V.

Harmar-Nicholls, L.

St. Aldwyn, E. [Teller.]

Bolton, L.

Henley, L.

Sandford, L.

Brougham and Vaux, L.

Hornsby-Smith, B.

Sandys, L.

Byers, L.

Inglewood, L.

Seear, B.

Campbell of Croy, L.

Kinnaird, L.

Selkirk, E.

Carr of Hadley, L.

Kinnoull, E.

Sharples, B.

Carrington, L.

Lauderdale, E.

Simon, V.

Cathcart, E.

Lindsey and Abingdon, E.

Skelmersdale, L.

Colville of Culross, V.

Lloyd of Kilgerran, L.

Stamp, L.

Cork and Orrery, E.

Long, V.

Strathcarron, L.

Craigmyle, L.

Lyell, L.

Strathclyde, L.

Cullen of Ashbourne, L.

Monson, L.

Strathcona and Mount Royal, L.

Denham, L. [Teller.]

Morris, L.

Trefgarne, L.

Drumalbyn, L.

Mowbray and Stourton, L.

Trevelyan, L.

Elles, B.

Nelson of Stafford, L.

Tweedsmuir, L.

Elliot of Harwood, B.

Newall, L.

Vickers, B.

Elton, L.

Northchurch, B.

Waldegrave, E.

Exeter, M.

Northesk, E.

Ward of North Tyneside, B.

Falmouth, V.

O'Hagan, L.

Wigoder, L.

Ferrers, E.

Onslow, E.

Young, B.

Goodman, L.

Pender, L.

Gowrie, E.

Rankeillour, L.

NOT-CONTENTS

Ardwick, L.

Harris of Greenwich, L.

Peddie, L.

Birk, B.

Houghton of Sowerby, L.

Pitt of Hampstead, L.

Brimelow, L.

Jacques, L.

Segal, L.

Castle, L.

Kirkhill, L.

Shackleton, L.

Champion, L.

Llewelyn-Davies of Hastoe, B. [Teller.]

Stedman, B.

Collison, L.

Stone, L.

Davies of Leek, L.

McCluskey, L.

Strabolgi, L. [Teller]

Davies of Penrhys, L.

Melchett, L.

Wallace of Coslany, L.

Delacourt-Smith of Alteryn, B.

Morris of Kenwood, L.

Wells-Pestell, L.

Donaldson of Kingsbridge, L.

Murray of Gravesend, L.

Wigg, L.

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

Oram, L.

Winterbottom, L.

Fisher of Camden, L.

Peart, L. (L. Privy Seal.)

Resolved in the affirmative, and Amendment agreed to accordingly.
Clause 5 [Corporations to give effect to directions of Secretary of State]:
11.20 p.m.
Viscount SIMON Viscount SIMON moved Amendment No. 43:
Page 7, line 7, after ("or") insert ("any direction of a general character given to it").
The noble Viscount said: My Lords, we have now come to Clause 5 and when we were discussing this clause in Committee it was generally agreed that the Secretary of State's directions would be directions of a general nature only. But I pointed out at the time that the drafting of Clause 5(1) does not make that clear because subsection (1) reads:
"Each Corporation shall give effect to any direction given to it under subsection (2) below or under any of the following provisions of this Act …".
Subsection (2) in turn states that,
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"The Secretary of State may give directions of a general character",
and I feel that we ought to introduce a similar provision into the second part of subsection (1). That is why I propose that in line 7 after the word "or" we should insert the words:
"any direction of a general character given to it",
so that the subsection will read:
"Each Corporation shall give effect to any direction given to it under subsection (2) below or any direction of a general character given to it under any of the following provisions of this Act …".
This is simply to clarify what I understand was stated to be the intention of 1 he clause. I beg to move.
Lord MELCHETT: My Lords, the noble Viscount, Lord Simon, suggested in Committee that this subsection should refer only to general directions. Once again, we considered the points made then very carefully and I have carefully considered the Amendment, but I regret

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to say that I cannot accept it for it would undermine the essential purpose of this subsection. I hope that my explanation will satisfy noble Lords both that Clause 5(1) has no sinister significance and that this Amendment would have no undesirable consequences. It may be that my explanation in Committee did not achieve that, but I hope to do better tonight.
It is the normal form in nationalised industry legislation, where a Secretary of State has power to give directions (whether general or specific) to a Corporation, to have a requirement on the Corporation to give effect to those directions. Otherwise there would, as a point of law, be no obligation on the Corporation (other than an inference that where he directs, the Corporation must obey) to give effect to directions. In some legislation this is done separately for each kind of direction; in other cases, the obligation to give effect to all directions is laid down once in the Act and applies to all powers of direction in that Act. By way of example of this latter form, I would cite Section 40(2) of the Electricity Act 1957 and Section 58 of the Civil Aviation Act 1971.
In this Bill, as a matter of drafting convenience and conciseness, it was decided to put the obligation to give effect to all forms of directions into Clause 5(1); in other words, it follows the two previous Acts in having one single place when this is done. It is put immediately before the provision allowing the Secretary of State to give general directions in the national interest. But of course the Secretary of State has, in this Bill as in other legislation, certain other powers of direction; for example, on disclosure of information in Clause 9. Others are given in Clause 6 on organisation (this was unfortunately deleted by the House in Committee); in Clause 8 on omission of certain matters from the Corporate Plan; Clause 13 on terms of repayment and interest rates on loans; Clause 18 on accounting years; and Clause 48 on fair trading by British Shipbuilders. There needs to be a general obligation on the Corporations to give effect to all these, and this is the purpose of Clause 5(1), as indeed the side note to the clause itself suggests.
We could not accept any suggestion that the only effective power of direction the
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Secretary of State should have should be the power of general direction. In the first place, as my noble friend Lord Kirkhill—explained—in—Committee, "general" has been interpreted by the courts, as a result of its appearance in previous legislation, in such a way that it is likely that the Secretary of State could not exercise the powers of direction which the Bill expressly confers on him. That is because of the point we made at the Committee stage of the very narrow definition which the courts have imposed on the word "general". Some of the powers of direction explicitly given to the Secretary of State in the Bill would certainly not be regarded as general.
This would leave him without powers which in other contexts noble Lords opposite, certainly on the Conservative Benches, have regarded as desirable. The Secretary of State would not, for example, he able to require the omission of certain matters from the corporate plan in Clause 8, the terms of repayment and interest on loans under Clause 13, and perhaps most important to noble Lords opposite, he would not be able to direct the Corporations to stop unfair trading practices under Clause 48. The effects of this Amendment then would include preventing the Secretary of State from exercising a power conferred on him by the clause inserted following representation from the Opposition in another place.
I hope that this rather expanded explanation will satisfy the noble Viscount on the need for the clause and for the clause to refer to directions, and that to insert a reference to "general" in Clause 5(1) would relieve the Corporations from an explicit obligation to give effect to any directions under any provisions of the Bill except those that are general, and I think that noble Lords on all sides of the House would not consider that to be a desirable result.
Viscount SIMON: My Lords, I am greatly obliged to the noble Lord, Lord Melchett, for that explanation. I confess that I should like to read it in Hansard before I decide whether to do anything on Third Reading. The only thing that I was able quickly to pick up was that he referred to Clause 9(1) as an example of when the Secretary of State gives specific directions, but Clause 9(1) says that each Corporation shall furnish him with

1053
information. Therefore, another clause is not needed to say that the Corporation has to comply with his direction, because it says so in the clause itself. But I shall read carefully what the noble Lord said and, if necessary, I shall trouble your Lordships again on Third Reading. In the meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 6 [Duties of the Corporations to review and report on management of their affairs]:
11.29 p.m.
Lord CARR of HADLEY Lord CARR of HADLEY moved Amendment No. 49:
Page 8, line 16, leave out ("and").
The noble Lord said: My Lords, I think that it would be to the convenience of the House if we were to take Amendments Nos.49, 50, 52 and 53 together, because I think that they all bear on exactly the same point. They all affect Clause 6 of the Bill. Your Lordships will know that Clause 6 requires both British Aerospace and British Shipbuilders to undertake a review of their affairs for the purposes of determining particularly how the management of the activities of each Corporation and its subsidiaries can be most efficiently organised, taking account of certain desirable objectives, such as the promotion of the largest degree of decentralisation, and to determine what steps are necessary in order effectively to promote the Industrial democracy which we have been discussing on earlier Amendments today and on previous days in the Committee stage.
That seems to us to be all right so far as it goes. What we are saying in these Amendments is that one of the other things which ought to be reviewed is the machinery of the industrial relations in both these industries. I think that it is well known that one of the problems in British industry is the complicated structure of industrial relations which many of our industries suffer. It is a complication and difficulty arising, not out of or deliberate trouble-making by anybody, but principally out of the age of our industrial system, the age of our managerial structures and, above all, the age of our trade union movement.
The main way in which that shows is that we in this country suffer in a way which most other countries do not suffer, and that is from the problems arising from the multiplicity of unions in each particular industry, and indeed in each particular factory. I think that both sides, if they were honest, would say that this produces very great problems indeed, and puts us in Britain at considerable disadvantage compared with similar industries in other countries. li leads to complication of negotiating structure. It also leads to the sort of leapfrogging claims and counterclaims with which so much of British industry has been beset.
When one has an established industry, custom and practice become very deeply engrained and is very hard indeed to change; and one of the advantages of making a fresh start is that it provides an opportunity for looking at all these things anew. It seems to us that the Government are seeking to take advantage of that opportunity in one or two important aspects of the affairs of these industries, and, speaking for myself at least, that I certainly welcome. But they are missing the opportunity to seek at the outset to get agreement on how we might modernise the basic industrial relations machinery in these two industries. That is why we believe that this, too, should be part of the initial review which both these Corporations are charged to undertake within a very short time (it is three months, is it not?) of being set up. Certainly they are charged to do it forthwith, I think, and possibly subsequently from time to time in the future. I hope the Government will consider this matter very carefully indeed. If the review reveals that steps are necessary to improve the machinery of industrial relations in this industry, then the details would be the subject of consultations under Clause 7; but we think it would be right and helpful for the future good health of these industries if the consultations which are to take place under Clause 7 should, as it were, be given an agenda to bite on resulting from this fundamental review of the whole of their affairs which the Corporations are charged to make under Clause 6.
Perhaps I may indicate the scale of the problem we have here. I think I am right in saying that in the shipbuilding and ship repairing industries there are

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now 12 recognised trade unions; that is, 12 trade unions with which collective bargaining has to be undertaken. That is a slight reduction from the 15 listed by the Geddes Committee in 1966, but it is still a formidable number, even though all are members of the Confederation of Shipbuilding and Engineering Unions, which of course now provides some co-ordination; and it is admittedly true to say that inter-union disputes, which used to be such a menace in this industry, have been much less frequent and trouble-some since the 1969 national agreement on procedure for dealing with these matters. So there has been some improvement in the shipbuilding and ship repairing industries in this area brought about by the co-operation, good will and determination of both sides—and I should like to stress both sides: both management and employees. But I think anybody on either side looking at this situation dispassionately would say that a good deal of further improvement could be made, and that is why we believe that it should be looked at.
If you turn to the aircraft industry—I have not got the precise numbers but I do not think I am far wrong in saying this—there are probably about 15 recognised trade unions in the aerospace companies which are going to be incorporated in British Aerospace. This, too, is an unwieldy number. How is one to deal with this? In other countries this problem does not arise. In West Germany, for example, it does not arise because their whole union structure is of recent creation. Paradoxically it was largely created on the advice of British trade unionists who saw how it should be done if only one could start from the beginning. We, thank goodness! having won the war, did not have to start from the beginning. We were able to continue in the way we had carried on for so long before. As a Conservative, I like continuity. I think, however, that we have had a little too much continuity in the structure of our industrial relations. So a country like Germany gets over it in that way.
A country like the USA gets over it in a different way. They have bargaining agent elections. A bargaining unit is set and each of a number of different unions competes for negotiating rights.
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They have a secret ballot and the employees in each company have the chance to choose which of the competing unions they wish to have negotiating on their behalf. When that is done, that union has inalienable rights for a certain fixed time although it can be challenged periodically. That is how they obtain the structure in the USA.
In Britain I do not believe we can attempt either of those methods. It is inconceivable that one can suddenly come down to the sort of union structure West Germany has. It is also inconceivable that one can apply the American practice here, because the number of unions competing with each other in each industry is much too great to have the possibility of getting the majority of the employees in most of the companies that we are talking about to give a clear majority to one particular union at the expense of all the others.
When I had to face this problem in drafting the Industrial Relations Bill, I and my advisers conceived the idea of a bargaining unit, as in America, but giving all the multiplicity of unions a right to form a joint negotiating committee so that all the unions would continue being able to exist but there would be one joint committee with whom the bargaining would he done. The constituent unions would give that committee a mandate to be able to negotiate on their behalf. That was another way of dealing with it. As your Lordships know, that way has been rejected along with the rest of the Industrial Relations Act. Naturally that disturbs me because I believe that this hit of it, at least, was going to the root of one of the most fundamental problems of British industrial relations. It is all very well to reject that method, but nobody so far has tried to put any alternative method in its place. If I am certain of one thing, it is that that is one of the most urgent problems needing attention in the whole of British industry in general and in British industrial relations in particular.
My Lords, I think that I have said enough to show there is a real problem here. It needs to be solved by inquiry and good will. I am saying to the Government that as these new Corporations come into being and are in a formative stage, one has what I believe

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it is not an exaggeration to say is a unique opportunity that will not occur again. Once these Corporations have come into being and have hardened into certain ways of doing business it will be almost impossible to change. But at the very moment of their coming to birth, it is possible, if an inquiry was gone into in an impartial, relaxed manner, that both sides could find some agreement on how they might strive to improve the machinery.
I want to stress that I am not in anything I am saying either antiunion in general or "anti" the particular 12 unions of the shipbuilding industry or the 15 unions of the aircraft industry. I am not against those unions or unions in general. I am saying, for the benefit of the unions themselves and their members and management, for the prosperity of the industries and good of the country, that here is an opportunity to get both sides to have a careful look at this and put down some yardsticks which when they come to operate Clause 7(3) will provide a useful agenda for those detailed discussions. I hope that the Government will accept the Amendments in the spirit in which they are moved, and agree that this fundamental review of their affairs, which each Corporation is charged to undertake, should include a fundamental review of the machinery of their industrial relations. I beg to move.
11.41 p.m.
Lord MELCHETT: My Lords, I have to say frankly to the noble Lord, Lord Carr of Hadley, that when l saw this Amendment it appeared to be calculated to undermine the relevant trade unions working within these two great industries, and undermine the existing long-established and carefully balanced negotiating arrangements in these industries. I accept that that is very far from the noble Lord's mind; he made that clear. In particular, he made it clear that he was not wishing to attack either the particular trade unions in this industry, or the trade unions in general. It might have been helpful if he had added to that—and no doubt he would have done so if he had thought of it—the CSEIJ, because the Amendment seems directed at the role which that organisation plays in two industries.
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By specifying that the organisation review must take into account problems arising from the number of trade unions which are relevant trade unions and which are involved with each Corporation, the Amendment appears not only to assume that the current position and activities of the relevant trade unions within the industry are cause for concern, but also fundamentally, and in our view completely unjustifiably, to criticise the work and role of the Confederation of Ship-building and Engineering Unions. I was surprised that the noble Lord, Lord Carr, with his considerable knowledge and experience of these problems, should set his name to an Amendment apparently calculated—and certainly this would be its effect—to disrupt established and effective industrial relations arrangements in these industries. He would agree with me that, if the Amendment had that effect, it would not be in the interests of the industries themselves. The CSEU has a vital role to play in both industries, and has played it with considerable success. I was delighted to hear the noble Lord acknowledge the role which the organisation has played.
We accept that there is a large number of relevant trade unions involved in the industries, but the existence of the CSEU provides co-ordination at both the national and local level. Furthermore, its work alleviates potential problems that might arise from the number of relevant trade unions, for the CSEU has an effective internal disputes procedure which helps resolve disputes between affiliated unions. Furthermore, the CSEU has been playing a major and forward-looking role, in consultation with the Organising Committee, in formulating the future strategy and structure of the industry. Noble Lords will agree, I hope, that the CSEU has and should have a vital part to play in the future of these industries, and I can assure them that their participation so far has been most constructive.
I am sure both noble Lords opposite and my noble friends can agree about the need for good industrial relations within these industries. We have made clear, on numerous occasions, that it is the Government's view that the identification of the "relevant trade union", as defined under the Trade Union and Labour Relations Act 1974 and the Employment Protection Act 1975, is essential for good industrial

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relations. It would be fair to say—if it is not getting the noble Lord in trouble with his colleagues—that we have much in common between us on this issue, although there have been other issues on consultation in particular where we have not been able to agree. We believe that this approach provides the basis on which the industrial relations can develop. I have indicated some of my worries about the practical effects of the series of Amendments to which the noble Lord has spoken. I accept without hesitation that the noble Lord did not move them with the intention of causing difficulties, but I have to say that I think the Amendments will have an effect that neither of us would wish to see. I hope that, on that basis, the noble Lord will not press the Amendments tonight.
Lord CARR of HADLEY: My Lords, I am bound to say I find that a most disappointing reply. The first obvious comment one is driven to make is this. Why must these very powerful, and rightly powerful, union organisations be so ridiculously hypersensitive? It is perfectly right that management should be looked into. We have the managements, certainly of the two aircraft companies, running a highly successful show: yet their activities have got to be looked into in this review as to how they organise themselves, and all the rest of it. I wonder what we would all be saying in this House if they said, "Don't come near us. You must not upset us, or ask what we are doing. We must not be questioned. We must just be allowed to get on with it."
It seems to me most depressing to think that in 1976, with the unions established as well and as strongly as they are, and with nobody wishing to attack them in any way, we have to say they are so hypersensitive that any suggestion that anything they do might have to be reviewed would cause disruption and trouble in the industries concerned. It really is a pathetic situation to have got into, and I very much doubt whether these unions are as un-adult as the Government seem to indicate in this matter.
If we were asking in this Amendment—which we were not, and I think the noble Lord recognised that fact from
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what he said—that the definition of "relevant trade union" should be reopened for this purpose, I can see that might he a very explosive thing to do. That is why I have been at pains in all these debates to distinguish between consultation and collective bargaining. In theory I might not wish to, but I think anybody would he an idiot if he did not do so in practical reality. But, accepting the definition of "relevant trade union" from the point of view of collective bargaining, there really is a great deal to look into. On the shipbuilding side there are a fairly large number of individual companies coming together for the first time under a single holding company, and although they are going to be run—we hope this will be so in practice as well as in theory—in a highly decentralised form, for the first time the collective bargaining machinery for the industry could be looked at as a whole in a way that has not been possible before. In the aircraft industry we have these two very big companies coming together. That, too, will create a new situation.
One of the first things to be decided is, what are the appropriate bargaining units to be which will be concerned in the negotiations taking place? It may be the same union for each different unit, but there are certain grades of workers which could he negotiated for together, while others are the subject of separate negotiations. I suggest that after all these years the present differentiation of very ill-defined bargaining units which has grown up is really in need of review. That has nothing whatever to do with the composition of those who would do the negotiating.
Much good could come out of this, and I think the Government are making a very serious mistake when they forget, for example, all the work done by the Donovan Commission on trade unions, which had a great deal to say about this subject. Some of my colleagues and I may not have agreed with the Donovan Commission in some of their recommendations about the role of law and how to achieve certain changes that they wished to see achieved, but they paid enormous attention, industry by industry, to the need to reexamine the negotiating machinery, the contents of agreements, the sort of things to be included in agreements and areas of workers covered by

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each settlement. I believe that if the noble Lord, Lord McCarthy, who, if I remember correctly, was the Research Director or Research Secretary to the Donovan Commission, was present to-night he might be agreeing with me and giving the Government from behind some expert advice on this matter, which might not he far from what I am pressing upon them.
The moment when these new organisations are formed is a heaven-sent opportunity to look at all this matter again, without challenging which union shall have the authority to negotiate but simply the structure in their negotiating pattern for the future, which ought to be covered in agreements. I repeat to the House this is an opportunity which probably will not recur in these industries. If the Government do not see that the opportunity is taken now we shall go on in this way suffering the relative inefficiency which we suffer in relation to other countries because of the complication of our union structure. We cannot simplify it by coming down to single unions. History is against us in that. It needs to be done in a more inquiring, reporting and agreeing sort of way. I suppose the noble Lord, who is now not even in this Department, is in a difficult position. It is a great pity if the Government miss this opportunity.
The noble Lord will see the way we are moving in this Amendment and that there is no political edge or partisanship in this. I believe that if the noble Lord, Lord McCarthy, were here, though he may not agree precisely with me, he would wish to urge the Government to find some way of taking advantage of this opportunity. To say that is not in any way to criticise the work done by CSEU. This is the only opportunity which is likely to arise to make things better for a long time to come. If the Government let this slip they will rightly be to blame if our negotiating structures in these industries are not as good as they should be and if they allow these industries to harden into ways that are then difficult to change.
At this time in the evening and at this stage of the Bill I cannot ask the House to force this Amendment through. I can only try to drive into the Government the importance we attach to this matter. It is our genuine wish that the Government,
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on behalf of the country, should not lose this opportunity when they are reorganising these industries to make sure that the industrial relations machinery is brought up to date at the same time. I shall not ask your Lordships to divide on this Amendment, but even if the Government cannot bring this formally into the Bill I beg the Minister to talk seriously to his more senior colleagues and at least try to bring influence to bear behind the scenes in order that this matter will be dealt with in this review. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
11.55 p.m.
Viscount SIMON Viscount SIMON moved Amendment No. 56:
Page 9, line 14, leave out ("consult") and insert ("seek consultation with").
The noble Viscount said: My Lords, this is the same as the first of three Amendments put down in Committee to leave out the word "consult" and to insert "seek consultation with". Noble Lords will remember the discussion we had in Committee. Curiously, the third of the Amendments which we put down then was, by misadventure, carried by the Committee, because I was not here and my noble friend Lord Lloyd of Kilgerran, in perfectly good faith, moved an Amendment on my behalf and said in the early hours of 19th October:
"The wording of this Amendment was fully discussed in relation to Amendment No. 84, on which there was a Division. No doubt, in those circumstances, the Amendment will be acceptable to the Committee".—[Official Report, col. 973.]
My noble friend Lord Lloyd spoke in good faith but was quite wrong, because there was no Division. But the Government then—I know it was rather early in the morning—let that Amendment go through. I am hoping, in the circumstances, that they may be prepared to accept this Amendment which I now beg to move.
Lord WINTERBOTTOM: My Lords, the noble Viscount has underlined a problem that faces one, if one goes on too late at night or into the following morning. One often makes slight slips in procedure. This is a case in point, because, if my recollection is correct, I, speaking on behalf of the Government, resisted Amendments identical to that

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which we are now discussing. But I promised to pass on to the Secretary of State the Committee's feeling that the words "seek consultation with" were more appropriate than simply to "consult". I gave that undertaking. If the noble Lord, Lord Lloyd, misunderstood me at that hour, I can appreciate his position. But what I did do was to promise to pass on to the Secretary of State the Committee's view on identical Amendments discussed during the Committee stage, and at that time I tried to explain our reasons for the present drafting.
I hope that noble Lords will not think that I am being obstinate or pedantic, if I stick to what I said originally. I am equally sure that the noble Viscount and his noble friends are also not being obstinate or pedantic. We are trying to find the best wording. But it is a simple question of semantics. Our view is that to "consult", bluntly, has the same meaning as "seek consultation with" or "to enter into consultation", and would be so interpreted by the courts, in the unlikely event of the unions declining to be consulted. We are talking of a situation where I might say to the noble Lord, Lord Carr, "You are the appropriate union. I seek to consult with you" and he says, "Go away and play". That situation is highly unlikely, because, by and large, the unions are taken to be most responsible bodies of people and if the Government, the Organising Committee or a Corporation chairman said, "I want to consult with you", of course they would consult. So that we are talking about a hypothetical situation. But if the Government send a consultation document to an interested party and that party refuses to comment, reply or even acknowledge the document, it is still perfectly clear that the Government have consulted that party. For that reason we prefer the more direct form "to consult" for two reasons.
First, as I said at Committee stage, we want this requirement to be very clear and not permit of any coyness. Secondly, we think that it is better for the Bill to be consistent. Throughout the Bill, and throughout previous legislation, there are obligations: for instance, on the Secretary of State to consult the Corporations, or the chairman, or it is specified that the
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Secretary of State may do something only after consultation with the Corporations. There has been no question whatever in other areas of our discussion that the Secretary of State should be obliged to "seek consultation with" the Corporations, nor, in both the Gas Act 1972 and the Civil Aviation Act 1971, did members of the Party opposite feel it necessary to spell out similar provisions as "after having sought consultations with". "To consult" is clear-cut and, if I may use an Americanism, "meaningful". For this reason I hope that noble Lords will accept that the balance is in favour of the wording as it now is in the Bill.
Viscount SIMON: My Lords, I am very disappointed with that reply from the noble Lord, Lord Winterbottom. The noble Lord said that he had undertaken to seek to consult the Secretary of State but he has not told us whether he did so and what response he had.
Lord WINTERBOTTOM: I did, my Lords.
Viscount SIMON: Then, my Lords, what was the response?
Lord WINTERBOTTOM: My Lords, the response was the one I have given: that the Government do not want to change the wording.
Viscount SIMON: My Lords, I find myself in a real difficulty. It seemed to be such a reasonable suggestion and I thought that it was one which had been taken up by the noble Lord, Lord Winter-bottom. Your Lordships may remember that in Committee the noble Lord quoted an amusing conversation between a certain gentleman and a certain lady, to the effect that it takes two to kiss. This was indeed very apposite. It takes two to consult. Now the noble Lord is apparently asking that one of the parties should kiss the other without the permission of the other, which I believe technically is an assault. This seems to me to be rather unnecessary. The noble Lord has said that "consult" means the same as "seek to consult". If it means the same, why should the noble Lord object to our putting "seek to consult" into the Bill?

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It seems to me that it is a more accurate wording. When the noble Lord said that it was almost impossible that anybody should refuse to consult any trade union, I think he had forgotten the kind of case I mentioned to him which I do not think is at all out of the range of possibility: the case where a dispute is going on and the trade union has refused to have any consultation with the management until that dispute has been disposed of. I do not quite know what to do. Certainly I do not want to divide the Committee at two minutes past midnight. I had better take away the Amendment and look at it again before Third Reading.
Amendment, by leave, withdrawn.

INTERNATIONAL CARRIAGE OF PERISHABLE FOODSTUFFS BILL [H.L.]
Returned from the Commons agreed to with an Amendment; the said Amendment considered and agreed to.
NATIONAL HEALTH SERVICE (VOCATIONAL TRAINING) BILL [H.L.]
Returned from the Commons agreed to with an Amendment; the said Amendment considered and agreed to.
ENDANGERED SPECIES (IMPORT AND EXPORT) BILL [H.L.]
Returned from the Commons agreed to with Amendments; the said Amendments to be printed.