§ 3 p.m.
§ The MINISTER of STATE, NORTHERN IRELAND OFFICE (Lord Melchett)
My Lords, I beg to move that this Bill be now read a third time.
§ Moved, That the Bill be now read 3a.—(Lord Melchett.)188
§ Viscount ST. DAVIDS had given Notice of his intention to move as an Amendment to the Motion for the Third Reading, to leave out ("now") and at end to insert ("this day six months"). The noble Viscount said: My Lords, in rising to speak to my Amendment, which I am not now intending to take to a Division, I think it right that we in this House should take every possible opportunity at this present moment to hoist a storm warning to the effect that Members of this House, while attempting to behave as gentlemen, are going to find it more and more difficult if no account is taken of the very valuable contributions and Amendments which we have been making to various Bills. Yesterday I took strongly the point of the noble Lord, Lord Carrington, who said that we had worked very hard on the Dock Work Regulation Bill. We had indeed; and we have worked very hard on this Bill. It would seem a great shame, by rejecting the Bill at this moment, simply to throw all our Amendments in the dustbin; but, my Lords, into the dustbin they are going to go if something is not done at a later stage.
§ I am entirely in agreement with the noble Lord, Lord Carrington, when he says that there is a tactical reason for not rejecting Bills at this stage; but, my Lords, a tactical retreat has its purpose. Its purpose is to enable a later advance to be made. A tactical retreat is not merely the opening stage of a further retreat. I think that what we must say today, of this Bill and others which are now passing through this House and which will shortly be returning to us, is that every storm warning must be hoisted to the effect that, unless our reasons are listened to and our more reasonable Amendments are included in the Bills, then those Bills are in danger. At some moment, my Lords, the retreat must stop, and I think we should let another place know that that is our firm intention.
§ On Question, Bill read 3a with the Amendments.
§ Clause 3 [Powers of the Corporations]:
§ Lord CARR of HADLEY moved Amendment No. 1:
Page 5, line 16, at end insert—
("() No consent or general authority shall be given in pursuance of the preceding subsection in relation to subsection 3(i)(b) above
unless a draft of the document containing it has been laid before Parliament and approval by a resolution of each House of Parliament.").
§ The noble Lord said: My Lords, before I bring forward any arguments in support of this Amendment, I should like to draw attention to two errors in the Amendment as printed on the Marshalled List, of which I believe the Government are aware. I make no charges about how they came about; it is as likely to be my fault as anybody else's. If we have any excuse it is the extreme rush in which it has had to be put down, seeing that we finished the Report stage only at tea-time on Friday. The two errors in the Amendment as printed are, first, in the second line of the proposed new subsection, where there ought to be the word "or" inserted after "subsection" and before "in"; and, secondly, in the last line but one of the Amendment, the word "approval" ought to be "approved", but I think that that will be quite clear to your Lordships when the Amendment is studied.
This matter was raised, I think on Report stage, in an Amendment moved by the noble Viscount, Lord Simon, from the Liberal Benches. It concerns the powers—not the duties, but the powers—which the Bill gives to the Corporations. If your Lordships will turn to Clause 3 of the Bill, it will be seen that the powers which the Corporations are entitled to exercise are defined in Clause 3(1)(a) as:
…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".
As I said when we were debating this at Report stage, this at least leaves us quite clear about what all these companies can do. We are in no doubt about it; it is clearly defined. So far as those activities are concerned, although I am not wholly satisfied I am perfectly prepared to allow the Government to do what they wish; that is, for the Corporations, in respect of those already-defined activities, to enter into mergers, make agreements and so on and so forth, as described in subsection (2) of the clause, without further Parliamentary scrutiny and approval. As I say, I am not wholly satisfied with that, but in the circumstances I am prepared to accept it and to advise my noble friends to accept it as well.
That is not the end of the story, because under Clause 3(1)(b) your Lordships will see that the new Corporations will be able to do other things as well. It says that:
…with the consent of, or in accordance with the terms of any general authority given by, the Secretary of State",
they can undertake any other activities to which the Secretary of State's consent or authority relates. In other words, as the Bill stands at the moment the Secretary of State can give to these new Corporations powers to enter into any industry or activity he thinks fit. We may say that the present Secretary of State, and even the present Government, would not envisage entering into activities wholly foreign and unrelated to the purposes for which these Corporations are being set up. That may be the genuine intention of the present Secretary of State and the present Government; but this Statute goes on after the tenure of office of the present Secretary of State and, I fear, perhaps, after the tenure of office of the present Government, and I do not believe that we ought to give to all Secretaries of State of all Governments in future the authority to increase the powers of these Corporations without any Parliamentary authority or scrutiny of any kind. I submit to your Lordships that this is a totally different order of power from that which merely permits them to extend their activities in fields which are already defined by the duties laid down in this Bill and by the terms of the memoranda and articles of association of the various companies which are going to be vested in these Corporations.
§ Therefore, we are saying in this Amendment that, in so far as any Secretary of State in the future chooses to act under Clause (3)(1)(b) and to give these Corporations wholly new powers to enter into any sort of manufacture that comes into his mind, then we do not believe that that increase in the power of the Corporations ought to be made without the approval of Parliament. So this Amendment applies to activities under Clause 3(1)(b), and to activities under subsection (2) related to Clause 3(1)(b), the necessity that before any changes can be made there must be Parliamentary approval by Statutory Instrument subject to the Affirmative Resolution procedure. I hope that your Lordships in all parts of the House will feel that this is a reasonable and proper restraint on the exercise of power by the 191 Secretary of State, whoever it may be, in the Government of whatever Party one may think of, either in the present or the future. I simply do not believe that powers of this kind ought to be extendable without some form of Parliamentary approval. That, my Lords, is the case behind this Amendment, and I ask your Lordships to think about it and to agree that it is reasonable. I beg to move.
§ 3.10 p.m.
§ Lord LLOYD of KILGERRAN
My Lords, in view of the observations made by the noble Lord, Lord Carr, on what emanated from the Liberal Benches, may I say on behalf of my noble friends on these Benches that we support the Amendment he now proposes. Your Lordships may be aware that from these Benches I have had the privilege of moving several Amendments intended to restrict the powers of the Secretary of State. We feel that the powers of the Secretary of State are far too wide in this Bill and that too great interference is possible by the action of the Secretary of State in view of the present wording. I rise briefly to say, while not repeating my former arguments, that from these Benches we support the noble Lord, Lord Carr, on the proposed Amendment.
§ Lord VAIZEY
My Lords, I should like to oppose the Amendment. These two industries are industries in grave difficulty and they are in difficulties of different kinds. One is an industry which is old and declining where the Japanese have got something like 96 per cent. of the new orders, according to The Times Supplement. The other, the aerospace industry, is a modern industry which is depending enormously on the orders of the defence sector and we are of much less importance as a defence power than we used to be. The issue which the noble Lord, Lord Carr, has raised is whether or not these two new Corporations which it is proposed to set up should have more general powers given them in the Bill to engage in commercial and industrial activity of a more general kind than perhaps could be narrowly prescribed by a very narrow nationalisation Act such as has been passed in the past by this House and another place. Bearing in mind the enormous experience of the noble Lord, 192 Lord Carr, in another place, in Government and in business, it is with great diffidence that I beg to differ from him on this particular issue. But I think this issue is important and I hope your Lordships will bear with me for a moment if I raise certain general issues which I think are of interest and importance to all noble Lords and to the nation.
There are different ways of running the economy and of running our society. It would be a foolish and ignorant person who did not realise that we had reached the parting of the ways. This is the crunch. This is the point at which we must decide where we are going from here. The country is in desperate straits and this Bill raises issues of profound importance. Unless we are quite clear where we stand and unless we can make clear to our people where we stand, I think we shall be in an even worse situation. We have to try at this stage on this issue to decide what we are doing. I make clear the issue on which I stand and which this particular Amendment raises crucially. It is a crucial issue whether or not we believe in the future of a social democratic way of running industry. There are certain issues which are very important which are raised by this Bill about the future or our economy. I do not believe that we can run an economy in this country without an incomes policy; I do not believe we can run an economy in this country without very high investment in the public sector and in the private sector. We cannot run an economy without adequate differentials between the managerial groups, skilled groups and unskilled groups. That is ground which I think will be overwhelmingly supported by about 90 per cent. of the population of the country.
The reason why I venture to raise this matter—which might be said to be a Second Reading kind of remark—is that I think it absolutely essential. It is whether or not these State Corporations should have the more general power which in the past has rested with private entrepreneurs and private business; whether or not it is right that this particular power should not in the future lie in the public sector—the power of initiative and the power of enterprise and of generating the new investment and new ideas so necessary if this country is to be saved. We are at the point where if 193 we do not make the move now, in the next couple of years, we might as well pack up and go home for the country will be finished. That is the issue which the noble Lord, Lord Carr, has raised. It is where we stand.
We are a non-elected House. We are a House which defies the other House at our peril. I spent 45 years as a commoner; I am quite prepared to spend the next 47 years, like my noble friend Lord Shinwell, as a commoner too if they do away with us; but the fact is that we defy the other place at our peril and we want to be quite sure that we defy the other place on grounds which are sensible and reasonable. To deny to the nationalised industries, to deny to the corporations which run a very substantial part of our economy, to deny to these new Corporations, and to the National Coal Board—to deny to all these industries the power of initiative and of enterprise which in the past has belonged to private capitalists and entrepreneurs is to take a position which in the long run is indefensible.
My Lords, I am sure that the over-whelming majority of my noble friends on this side of the House will be with me in saying that we believe in a mixed economy. We are not dyed-in-the-wool Marxists believing that 95 per cent. of the economy should be run by the Civil Service. We believe in a mixed economy. On the whole, this is something shared by the great majority of the House on all sides. If you are going to say that the only initiative can come from the private sector and that initiative cannot come from the public sector, you are handicapping the public sector to a degree which is quite indefensible. I gave votes yesterday with a heavy heart. My father worked on the Thames. He left school at 13. His father left school at 12 and he worked on the Thames, and his father before him, and his father before him. They all worked on the River Thames. I supported a Bill which I think was, frankly, not one that I would have been happy to support if there had been different circumstances; but I do not believe that we should defy the elected House.
Obviously the noble Lord will carry his Amendment because of the built-in majority. In this particular issue, I think as a matter of principle the noble Lord is arguing a case which is wrong. It is 194 indefensible. If you want public servants, the people who are working in the public sector—the men who run the British Air Authority, for example—to have initiative and enterprise you must give them the power to do it. Frankly, the issue of ownership is an issue of the past, while the issue of management is an issue of the present and of the future.
This issue we are now dealing with through the Amendment of the noble Lord, Lord Carr, which from his point of view is a reasonable one; and I would not for a moment argue against it if did not think it was reasonable. Frankly, if we want to seee public enterprise succeed in this country, it must be given the powers that private enterprise has. That is why you cannot restrict the powers of these Corporations in this particular respect. With great respect to the noble Lord, Lord Carr, for whom I have immense admiration, I think that in this particular issue the Government are right, the Opposition are wrong, and the Corporations should be given these powers.
§ 3.20 p.m.
§ Lord MOTTISTONE
My Lords, if I may make a brief reply to the noble Lord who has just spoken, does he not make one great error? Is it fair, in the interests of the country, that private enterprise competition having been removed by making enterprises public, the same freedom to operate should apply to the public enterprise as applies to the private enter-prise? Private enterprise has the freedom to do all sorts of things in the interests of of a company's shareholders, managers and, above all, employees. It is reasonable freedom because the company is in competition with other firms pursuing the same activity.
I have great sympathy with the thought behind the noble Lord's speech. When you amalgamate a whole group of companies pursuing the same enterprise there is no competition and you create a new picture. This is the conundrum. The fact is that, quite apart from Parties, it has been thought necessary by successive Governments from both sides of the House to fetter in some way the public enterprise because it has no competition. This then means that it cannot do all the things it would like to do. But without competition it might like to do things that would not 195 be in the public interest. If there is no fetter on it other than the competitive world, how can we be sure that it does the right things in our interest?
So I strongly suggest that this concept of essential goodness in publicly-controlled enterprises is a myth. It is not something which happens in the real world; it is something which happens only in the imaginary world. Therefore if you must take companies into public enterprise—and all the evidence is that this is not the most efficient way of organising them—it is essential to have controls upon how they behave.
§ 3.23 p.m.
§ Lord SHINWELL
My Lords, the last thing I wish to do is to defy another place. Whatever we may think of it, it is the basis of our democratic system. I prefer the democratic system, despite its obvious defects, to any alternative. That is all I want to say about that. Nor do I wish to take part in a debate on private enterprise versus nationalisation: we can leave that for another occasion. We are debating an Amendment to a particular piece of legislation. I am concerned about that. I must confess that although I accept almost every line and comma in the speech of my noble friend Lord Vaizey, and the theory and potential, underlying it, I reject his conclusion. We are discussing whether, in dealing with legislation of a fundamental character, we are going to be specific or nebulous. This is what the debate is about. I prefer to be specific in so far as it is possible to be specific.
I should have thought that we were approaching the end—I have the word on the tip of my tongue so I had better use it, though I dislike it—of this turgid debate, prolonged almost beyond endurance with repetition which almost makes one go to sleep. I should have preferred to finish with it all. It appears—whether because of the intrusion of a baby or of an internee I am not quite sure—as if this legislation will pass. I do not want to bother about it. I am concerned that in this legislation we should know what we are talking about—and not only those of us who are responsible for the legislation but those who have to implement it and apply it.
196 I divide the two items, British Aerospace and British shipbuilding. I say nothing about British Aerospace. I have been very careful in the course of these debates not to talk on something I know nothing about—British Aerospace. But I know something about shipbuilding. Shipbuilding is a specific industry; it builds ships. It does not sell them;it leaves that to the shipping industry. The purpose of this legislation, as I understand my Government friends—and they can correct me if I am wrong—is to provide jobs. It has been said over and over again that it is to maintain an efficient industry, to use its potential against harsh competition and to make it viable. That is its purpose. I could use many other adjectives but I am content with that. I hope that your Lordships will accept it in that form.
What ought to be done? We talk about furnishing power to the shipbuilding industry, when nationalised, to engage in other activities with the consent of the Secretary of State. What are the other activities? The noble Lord, Lord Vaizey, gave a hint about it. He spoke about the commercial activities. What does that mean? The noble Lord, Lord Carr of Hadley, in the course of a previous debate, said that it might mean, in the general sense, making paper bags. I do not think it means that at all. What does it mean? The fact is, nobody knows, not even the Secretary of State.
We have a parallel example in the nationalisation of the coalmining industry. When it was nationalised the purpose was to produce and distribute coal. Naturally, we had to consider utilising the coal if we could not sell it for other purposes. That meant by-products, tar, benzole, petroleum products and even aspirin. These are part of the organic industry. There is the possibility of development, of expansion and so on. That we can understand. But in shipbuilding, what is there? I put this to my noble friend Lord Vaizey, who is an economist, which I am not, and therefore he is more knowledgeable than I am. Suppose nationalisation failed? Suppose it was defective, it collapsed, that there was a remnant of it, financial or otherwise, what would be done? In the economic sphere what could be done? I cannot imagine that anything could be done.
197 It is better to be specific about it; I suggest that this is what is wanted. I do not know whether this equates with the Amendment, but this is what I have in mind. The industry, when nationalised, should not be permitted to engage in other activities unless they are closely associated with shipbuilding. On no account should the industry be permitted to proceed other than to build ships, unless Parliament, which has responsibility in an Affirmative Resolution, decides accordingly. That is the democratic system. My noble friend Lord Vaizey would not object to an Affirmative Resolution; otherwise one places the responsibility not only on the Secretary of State but on Members of Parliament, and that would include perhaps not us but someone who follows us. I would certainly make no claim to be able to take part in any future years. So that is the situation, and I cannot understand why my friends on the Front Bench cannot accept a simple Amendment of this kind. They might not like the language, but it. could be amended on the lines I have suggested, either as an Affirmative Resolution Procedure or explicitly stating that the Secretary of State can act only if he provides regulations which have been furnished to the industry and which are the basis of their operations.
I believe that is the proper course of conduct for the Government. It may be that my Government friends feel a little lost on this dire episode, this prolonged controversy, and they ask, "What is the use of bothering about it?" Even if it means the intrusion of the baby and the internee in the other place, I would accept this. It is a perfectly reasonable Amendment which may require slight amendment, though I accept its purpose and the principle underlying it. I think that that should be acepted by my noble friends.
§ Lord HARMAR-NICHOLLS
My Lords, it was not easy to follow what the noble Lord, Lord Vaizey, was trying to argue. But I gather he was saying that he virtually objected to the last sentence in my noble friend's Amendment wherein it says that the authority will not be able to do things without first putting a draft document which has to be approved by. Resolution by both Houses of Parliament He felt that that was an unnecessary restriction upon the ability of the Corpora- 198 tion to do its work properly. But, if the noble Lord does not want that kind of thing, he ought never to vote for giving a monopoly to the operation of a necessity. If he gives a monopoly to a necessity, which no private enterprise organisation has, one is either manipulating a monopoly and giving it dictatorial powers which override Parliament, or, having given that monopoly to that necessity, Parliament has to keep an eye on it and keep the eventual control. So if the noble Lord, Lord Vaizey, objects to that kind of sentence, he ought not to have done what he did yesterday and go reluctantly into the Lobby and vote for something that he did not think was right. If he does not think that this essential restriction against what could be a dictatorial monopoly has to be retained, then he ought not to have put us in the position that he did.
I was interested in the noble Lord, Lord Vaizey, saying that he wanted the same freedom for nationalised industries that private enterprise industries have. There is one freedom the private enterprise industries have which nationalised Industries do not suffer from; that is, they have the freedom to go bankrupt if they make a mistake, and that is a restriction upon them not doing stupid or extreme things. A nationalised industry cannot go bankrupt. So unless one wants to make the grievous mistake of nationalising at all, and one is not going to keep a safety chain of control from Parliament which can be objective, then, in the first place, one ought not to go into it. The noble Lord, Lord Vaizey, said everybody agreed with a mixed economy. I am getting bored with noble Lords on the other side of the House saying they agree with a mixed economy. When does a mixed economy cease to be a mixed economy? It is 60:40 at the moment. Is it still a mixed economy when it is 75:25? Is it still a mixed economy when it is 90:10? Is it still a mixed economy when it is 99:1? At what stage? It has gone past the point on these essential industries where we can call it a mixed economy.
The reason one ought to resist this strongly is that we are now moving into an area where we are nationalising Industries which have to compete in the world markets, as distinct from having nationalised industries which have only local domestic control. That makes it even more dangerous. The noble Lord, Lord 199 Vaizey, was not clear; but where he was clear he was contradictory, and I think he should either withdraw his vote of yesterday or support my noble friend in his Amendment today.
§ 3.34 p.m.
§ Lord LEE of NEWTON
My Lords, the noble Lord, Lord Harmar-Nicholls, agrees that we are discussing two industries both of which compete in a virile world market so that they are not covered in any way by the considerations he was offering to the House. I would have thought that one of the great problems we could all agree about is that the manufacturing sector of our economy is too small. Yet within a manufacturing sector that is too small we are seeing redundancies by the thousands taking place. This is a contradiction, a dichotomy if you will. But surely it means that we are producing many of the wrong things.
I do not wish to indict anybody, but I would have thought the problem is that we are not diversifying in our manufacuting sector half as much as we ought to be doing. If we were, we would not be in the dilemma which we now face. Therefore, I would have thought that to restrict in the way the Amendment of the noble Lord, Lord Carr, restricts in two industries, both of which need expansion, is indeed the "kiss of death". In shipbuilding—and I listened to my noble friend Lord Shinwell as always—I remember a few months ago the Government getting into mortal trouble because people could not decide when a ship was a ship. Hybridity is a term with which I have been conversant ever since I tried to nationalise steel. The late Iain Macleod ran around telling everybody I was doing something hybrid.
This question of whether we can allow any manufacturing industry to stultify is at the very heart of the economic problems which we are all worried about. If, in particular, we look at the aircraft industry and aeronautics, in general, this is a rapidly expanding industry, one which almost weekly is doing new things which it did not conceive a month ago that it would have to do. I put it to the noble Lord, Lord Carr, that while I do not want to see a lot of intrusion by nationalised industry into industries which are 200 doing a good job of work in the private sector, I do not want to see silly, wasteful competition with them. That would be stupid. But in this phase, in which, by common agreement, we must find a way to expand manufactures, it would be wrong to inhibit two industries such as these, especially the aircraft industry, from an expansion into fields of technology which are as yet almost unknown, by adding an Amendment which would cripple their efforts.
§ Lord CARR of HADLEY
My Lords, I agree with the noble Lord, Lord Lee of Newton, but can he explain in what way this Amendment prevents diversification? It puts no control at all on these companies using their existing powers, under the memorandum and articles of association. All it requires is that, if they wish to go beyond their existing memorandum and articles of association, they have to come to Parliament as a new form of shareholders' meeting, just as at the moment, if they want to extend them, they have to have a general meeting to get authority to do so.
§ Lord LEE of NEWTON
My Lords, let us be practical. Many of the great firms, especially in the engineering Industries with which I am conversant, are in existence today because they diversified. Many of them could not possibly have done that without years of experiment, and of improvisation; and I could not think of the time when some of those industries, if they were in the public sector, could go to the Minister and ask for permission, "Please may we do this?" With his experience of industry, I am sure that the noble Lord, Lord Carr, knows as well as I that you start to diversify in one direction and finish up with something entirely different. My case is that, if we are to restrict them narrowly at a time when the nation requires a vast expansion, we will not permit them to take their place in a highly competitive world. Again I remind the House that we are discussing two industries both of which are in almost vicious competition, in a period where there is over-capacity in both industries. I am trying to think of how the American aerospace industry would have expanded as it has done if it had been inhibited in this way. I do not believe it could have expanded. For those reasons, I hope the Government will not accept this Amendment.
§ Lord NORTHFIELD
My Lords, I should like to intervene to make two brief points. I was provoked by listening to the very interesting speech of my noble friend Lord Vaizey. I should first like to make one point to the noble Lord, Lord Carr. He is as familiar as I am with the fact that in Parliament we have two procedures on Resolutions, Negative and Affirmative—one where it lies on the Table on the order of the Minister and goes through unless both Houses of Parliament object to it, and one where both Houses must approve it. By constitutional practice we reserve the Affirmative Resolution procedure, which this Amendment proposes, for very weighty matters—matters of enormous departure from the small print of a Bill, where great exercise of discretion on the part of the Minister is involved. Is the noble Lord really saying, in the sort of situation that might arise under this clause of the Minister having power to go just beyond, as he said, the articles of association of a company, that he really believes that Parliament should be cluttered up by an Affirmative Resolution every time such a matter arises?
§ Lord CARR of HADLEY
My Lords, it was not to go just beyond their present powers but to go into wholly different fields. if that were to happen, would the noble Lord still take the same view?—because at the moment, as the noble Lord, Lord Shinwell, said, there is no restriction of any kind whatever. It is wide open.
§ Lord NORTHFIELD
The answer is, my Lords, to look at other Statutes and to see that in nationalisation Bills in the past we have never had any trouble over the use of the Minister's discretion, the power of the Board or the Negative procedure. We have never used, or thought it necessary to use, the Affirmative procedure in a case like this, and to have Parliament cluttered up with whole debates in both Houses on what might be relatively trivial matters of day-to-day commercial practice. If there is an awkward case which seems to be going too far, the noble Lord will use the Negative procedure and he can make all the fuss and bother about it that he wishes. Not to have the Affirmative procedure is not to leave the noble Lord defenceless. The Negative procedure could be used, and that is much more appropriate from a Parliamentary point of view. This is taking a sledgehammer to crack a nut.
202 The second point refers to the more general principle which was raised by my noble friend Lord Vaizey. It partly answers my noble friend Lord Shinwell, to whom I listened with great respect. He asked what the possibilities were and what might such a nationalised shipbuilding body want to do that would not be covered by its articles of association. Of course, I do not know details of all those articles of association, but I can quite imagine that some of them would not allow the companies to go in for vertical integration, which might be very necessary. In other words, some shipbuilding authorities may need to join in partnerships, and that is covered under subsection (2) and covered also by the Amendment proposed. They may need to go into partnership in producing items needed in shipbuilding, various fittings for ships, and so on. I do not know what they would be, but there must be an immense variety involved. I have no guarantee here that, in pursuance of commercial policy in the future by such a nationalised body, they will already have in their articles of association the power to venture under subsection (2)—by agreement, let it be noted, and not by force—into partnership with other bodies. There is really no need to bind a Minister by subjecting him to the Affirmative Resolution procedure, or to bind the Boards.
The noble Lord spoke almost as though there was no protection at all for Parliament if anything went wrong. But of course there is. The matter could be raised in Parliament at any time by means of a substantive Motion, or a debate on Supply Day in another place, or by means of a Parliamentary Question. Anything that goes beyond the intention of the Bill would be raised immediately. This is putting in a sort of charade of control for occasions which will hardly ever arise and which are controlled by other means in the normal way of our constitutional practice, so I do not see the need for the Amendment or for the rather heavy handed machinery proposed by the noble Lord.
§ Lord MELCHETT
My Lords, the noble Lord, Lord Carr, warned us during the Report stage on Amendment No. 34 that he might wish to put down a similar Amendment on Third Reading, but that he felt he could not support Amendment 203 No. 34 which had been put down by noble Lords on the Liberal Benches. That Amendment would have required the Corporations to obtain the specific approval of both Houses of Parliament before taking shares in companies or participating in establishing new ones, whereas the Bill as drafted requires them to obtain the Secretary of State's approval. I resisted that Amendment on the grounds that it would impose an impossible restricttion on the Corporations' freedom of action and, most important, on the speed of their commercial response. This Amendment would restrict even more effectively the Corporations' ability to respond to rapidly-changing commercial situations and to make the most of suitable opportunities because it would require the specific approval of both Houses before the Corporations could undertake any new activities. Noble Lords opposite well know that to impose Parliamentary control in this way would entail delays which, in the context of commercial operations, could effectively prevent them.
§ Lord CARR of HADLEY
My Lords, I think, with respect, the noble Lord cannot be right in what he has just said, because these companies when vested will be able to undertake any new activities which are encompassed within their existing articles of association. I do not pretend to have studied all 43 of them, but such documents are usually drawn rather widely simply in order to give a company the power very broadly to be able to undertake new activities. So I really think they could undertake a great range of activities without this Amendment beginning to bite on them in any way.
§ Lord MELCHETT
My Lords, I heard the noble Lord make that point in response to something which my noble friend Lord Lee said, and I was coming on to disagree with that and to tell him that my advice is quite contrary to what the noble Lord said. My advice is that it is not the case that companies will be able to undertake anything allowed under their articles of association, but that in fact the Amendment would prevent companies undertaking activities beyond those actually being carried out on vesting day, whether or not they are covered by the companies' 204 articles of association. That is my advice: it is perfectly clear, and I have a feeling that the noble Lord may have mistaken the effect his Amendment would have. I must tell him that my advice is quite clear on that point. Companies would not be allowed to go as wide as they would like, if their powers under their articles of association allowed them. They would be restricted to exactly what they are doing on vesting day, and no more.
The noble Lord, Lord Carr, has argued that what my noble friend has called a "sledge hammer" is justified because the power conferred by Clause 3(1)(b) provides the Secretary of State with a means of bringing about what the noble Lord called on a previous occasion "back door nationalisation" of, for instance, the paper bag industry. By "back door nationalisation", I think the noble Lord has now admitted that he means voluntary acquisition. If I may say so, I find it strange that the last Conservative Government merely "rescued" Rolls-Royce, although when we allow a public corporation to take a shareholding in a company, without any compulsion and for blameless commercial reasons, that is called "back door nationalisation". Of course, the paper bag example which the noble Lord, Lord Carr, suggested was a respectable use of reductio ad absurdum as a method of proof, is indeed absurd.
As my noble friend pointed out, in the broad national interest we want to ensure that Corporations are able, with the commercial speed of response which noble Lords opposite have praised in other contexts, to extend their activities to related fields—related either to the product, to the technical skills, the know-how, the assets or other resources of the main business. I must say that I think it is unlikely and probably fair that I should make the point to your Lordships that the case of paper bags would fall into that category. But, as noble Lords opposite have frequently and quite properly reminded us, the aerospace industry is a resourceful, ingenious and inventive industry. As my noble friend Lord Vaizey said, it could not be in the national interest to prevent it from using its resources to create wealth for the nation. The need for the consent of the Secretary of State to protect existing United Kingdom manufacturers who might be affected, and to add to it the delay involved in 205 Parliamentary approval, would in many cases deprive the nationalised industry of the ability to act in the national interest.
As I said during the Report stage, this Amendment touches on the fundamental discussion we had at 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 believe that these objectives, which I accept and have accepted all along, may on occasions potentially be in conflict and are best achieved and the right balance struck between them by the arrangements in nationalised industries legislation by government of both parties. Clause 3(1)(b) follows broadly the similar provision in the Iron and Steel Act. These well precedented provisions combine ministerial control at the strategic level with accountability by Ministers and Parliament for their responsibility. We still firmly believe that this leaves the Corporation a reasonable degree of freedom while ensuring Parliamentary control. As I have said, I still feel that this Amendment would not be in the interests of the Corporations or of the country.
§ Lord CARR of HADLEY
My Lords, as the noble Lord has just said, although we may not all agree we can see that this is a case in which there would be considerable substance. The Government wish these new Corporations to have freedom to enter into related fields. That is a persuasive case, but as the noble Lord, Lord Shinwell, pointed out and as I have said, that is not what the Bill says. The Bill gives them entirely unlimited freedom, with the consent of the Minister, to enter into fields of activity wholly unrelated to the duties which they have been given in this Bill. If there was any qualification of that kind I can assure the noble Lord that we should not at this stage of the Bill be moving an Amendment to it. It is because there is no such limitation that we feel something must be introduced.
Of course, at this stage we are in a difficult position because if it is wrong at the moment there is no further stage at which to get our Amendment right. 206 If I may take a point made by the noble Lords, Lord Vaizey, Lord Northfield and Lord Lee, I am not seeking by this Amendment to prevent these nationalised Corporations from showing normal commercial initiative or to shackle them more than any private company is shackled. However, I want to subject them to some measure of control. I repeat that if a private company wishes to go beyond the powers defined in its memorandum and articles of association it has to go through the somewhat tiresome but perfectly proper process of approaching its shareholders in annual general meeting and getting its powers extended. The purpose of this Amendment is to apply to a nationalised Corporation the discipline equivalent—no more and no less—to that to which a private Corporation is subject. It may be technically wrong—it is difficult for the Opposition not to get Amendments technically wrong—but the purpose of the Amendment is clear, to provide no more but no less discipline in going into wholly unrelated fields than is applied to a company in the private sector. I regard this as essential.
If the Government meant to give this freedom to enter into related fields they had a duty to make that clear in the Bill, and that duty they have not fulfilled. Even though this Amendment may not be perfect, it may be that when it comes back to us from another place that will give us an opportunity to put in a revised version which makes quite clear the purpose which I thought was clear but which I have to accept from the noble Lord, Lord Melchett, may not be quite what was intended. I do not believe that on this last occasion I can advise your Lordships to allow this Bill to go through without any restraint of any kind, for these Corporations to be given power to enter into any other activity, however unrelated it may be to the duties and purposes which this Bill seeks to give them in the first place. I must ask your Lordships to put this matter to the test of a Division.
§ 3.57 p.m.
§ On Question, Whether the said Amendment (No. 1) shall be agreed to?
§ Their Lordships divided: Contents, 151;Not-Contents, 76.209
|Adeane, L||Elibank, L.||Mowbray and Stourton, L.|
|Aldenham, L.||Elles, B.||Munster, E.|
|Allerton, L.||Elliot of Harwood, B.||Nelson of Stafford, L.|
|Alport, L.||Emmet of Amberley, B.||Netherthorpe, L.|
|Amory, V.||Erskine of Rerrick, L.||Newall, L.|
|Ampthill, L.||Exeter, M.||Norfolk, D.|
|Amulree, L.||Faithfull, B.||Northchurch, B.|
|Arran, E.||Ferrier, L.||O'Hagan, L.|
|Ashbourne, L.||Fraser of Kilmorack, L.||Onslow, E.|
|Atholl, D.||Gage, V.||Orr-Ewing, L.|
|Auckland, L.||Gainford, L.||Penrhyn, L.|
|Balerno, L.||Gisborough, L.||Platt, L.|
|Balfour of Inchrye, L.||Gladwyn, L.||Rathcavan, L.|
|Banks, L.||Goschen, V.||Reay, L.|
|Barnby L.||Gray, L.||Redesdale, L.|
|Barrington, V.||Grey, E.||Robbins, L.|
|Beaumont of Whitley, L.||Gridley, L.||Rochdale, V.|
|Belstead, L.||Hailsham of Saint Marylebone, L.||Rochester, L.|
|Berkeley, B.||Hampton, L.||Ruthven of Freeland, Ly.|
|Bessborough, E.||Hanworth, V.||Sackville, L.|
|Blakenham, V.||Harmar-Nicholls, L.||St. Aldwyn, E. [Teller.]|
|Bourne, L.||Harvington, L.||St. Davids, V.|
|Boyle of Handsworth, L.||Hawke, L.||St. Just, L.|
|Brock, L.||Hertford, M.||Salisbury, M.|
|Brooke of Cumnor, L.||Home of the Hirsel, L.||Sandys, L.|
|Brooke of Ystradfellte, B.||Hylton-Foster, B.||Seear, B.|
|Byers, L.||Inchyra, L.||Selkirk, E.|
|Caccia, L.||Inglewood, L.||Sempill, Ly.|
|Campbell of Croy, L.||Killearn, L.||Shinwell, L.|
|Carr of Hadley, L.||Kimberley, E.||Simon, V.|
|Chelwood, L.||Kinloss, Ly.||Spens, L.|
|Cholmondeley, M.||Kinnaird, L.||Stamp, L.|
|Clancarty, E.||Lauderdale, E.||Strathspey, L.|
|Clifford of Chudleigh, L.||Lloyd of Kilgerran, L.||Suffield, L.|
|Clitheroe, L.||Lonsdale, E.||Tanlaw, L.|
|Clwyd, L.||Lothian, M.||Tenby, V.|
|Cobham, V.||Lucas of Chilworth, L.||Terrington, L.|
|Coleraine, L.||Lyell, L.||Teviot, L.|
|Cottesloe, L.||McNair, L.||Tranmire, L.|
|Craigavon, V.||Malmesbury, E.||Trefgarne, L.|
|Cullen of Ashbourne, L.||Mancroft, L.||Trevelyan, L.|
|Daventry, V.||Marley, L.||Vernon, L.|
|De Freyne, L.||Massereene and Ferrard, V.||Vickers, B.|
|De Ramsey, L.||Merrivale, L.||Vivian, L.|
|Denham, L. [Teller.]||Mersey, V.||Ward of North Tyneside, B.|
|Derwent, L.||Meston, L.||Ward of Witley, V.|
|Devonshire, D.||Monck, V.||Westbury, L.|
|Drumalbyn, L||Monson, L.||Willingdon, M.|
|Dudley, E.||Morris, L.||Wolverton, L.|
|Eccles, V.||Mottistone, L.||Young, B.|
|Ardwick, L.||Geddes of Epsom, L.||Maelor, L.|
|Aylestone, L.||Gordon-Walker, L.||Maybray-King, L.|
|Birk, B.||Hale, L.||Melchett, L.|
|Blyton, L.||Hankey, L.||Murray of Gravesend, L.|
|Brimelow, L.||Harris of Greenwich, L.||Noel-Buxton, L.|
|Brockway, L.||Henderson, L.||Northfield, L.|
|Buckinghamshire, E.||Houghton of Sowerby, L.||Oram, L.|
|Burntwood, L.||Hughes, L.||Paget of Northampton, L.|
|Castle, L.||Janner, L.||Pennell, L.|
|Champion, L.||Kagan, L.||Pargiter, L.|
|Collison, L.||Kaldor, L.||Peart, L. (L. Privy Seal.)|
|Darling of Hillsborough, L.||Kennet, L.||Peddie, L.|
|Davies of Leek, L.||Kilbracken, L.||Phillips, B.|
|Davies of Penrhys, L.||Kirkhill, L.||Ponsonby of Shulbrede, L.|
|Donaldson of Kingsbridge, L.||Leatherland, L.||Popplewell, L.|
|Douglass of Cleveland, L.||Lee of Newton, L.||Raglan, L.|
|Elwyn-Jones, L. (L. Chancellor.)||Llewelyn-Davies of Hastoe, B.||Rhodes, L.|
|Fulton, L.||Lovell-Davis, L.||Ritchie-Calder, L.|
|Gardiner, L.||McCluskey, L.||Rusholme, L|
|Russell, E.||Stone, L.||Wells-Pestell, L.|
|Sainsbury, L.||Strabolgi, L. [Teller.]||Williamson, L.|
|Shackleton, L.||Taylor of Mansfield, L.||Willis, L.|
|Slater, L.||Thurlow, L.||Winterbottom, L.|
|Snow, L.||Vaizey, L.||Wootton of Abinger, B.|
|Stedman, B. [Teller.]||Walston, L.||Wynne-Jones, L.|
|Stewart of Alvechurch, B.|
§ Resolved in the affirmative, and Amendment agreed to accordingly.
§ 4.6 p.m.
Lord CARR of HADLEY moved Amendment No. 2:
After Clause 37, insert the following new clause:
§ Compensation for severance
§ .—(1) This section applies to a person who—
- (a) is entitled to receive compensation under section 37 above in relation to the securities of a company (the "relevant company");and
- (b) suffers special loss or damage or reasonably incurs expenses (not being taxes) as a direct result of the vesting of those securities in a Corporation.
§ (2) A person to whom this section applies shall be entitled to receive a payment (to be determined in like manner to the compensation payable to him) equal to the loss or damage or expenses referred to in subsection (1) above.
§ (3) Where the relevant company forms part of a larger undertaking, the payment referred to in subsection (2) above shall include a sum equivalent to the reasonable cost of re-arranging the affairs of that undertaking and a sum calculated by reference to any increase in the proportion of the overhead expenses of the undertaking to the volume of the business over which those expenses are spread, so far as that increase is due to the vesting of those securities and is not reasonably capable of being avoided or diminished.
§ The noble Lord said: My Lords, this is a matter which we also raised on the Report stage of the Bill, and indeed, I think, on the Committee stage as well, and the only reason why we are returning to it now is that we said on Report stage on Friday last that we would consider the matter when we had received a reply from the noble Lord, Lord Melchett, to a point which I raised following the giving to the House by my noble friend Lord Orr-Ewing of a concrete case to illustrate the question of severance costs, which is the subject of this Amendment. If I may briefly remind your Lordships, what we are seeking to achieve by this Amendment is the acceptance by the Government of the principle that where a holding company, in hiving off one of its subsidiary companies and vesting it in 210 either of the new Corporations, thereby incurs unavoidable costs, then the holding company should be entitled to have those unavoidable costs reimbursed. In many cases, the unavoidable costs may be so small as to be insignificant and un-measurable, in which case there is no practical significance in this Amendment. But we cannot be sure that that will be so, and many of the holding companies in industry fear that the costs of vesting some of their subsidiaries in the Corporations may be considerable. So equity demands that if the unavoidable costs are considerable, they should be entitled to have them reimbursed, because they will be costs which arise wholly and solely from carrying out Parliament's instructions which are contained in this Bill.
§ On Friday last, my noble friend Lord Orr-Ewing gave the example of a company called George Clark and NEM Limited which at the moment is in the Richard sons Westgarth group and will be vested in British Shipbuilders, and he drew attention to the costs of moving their head office and things of that kind. The noble Lord, Lord Melchett, kindly acceded to my request to let me have a letter from him dealing with the concrete example given by my noble friend, and he got that reply to me very quickly—indeed, before close of play on Friday. One thing I cannot complain about is the expedition with which that reply was sent to me.
§ However, I am afraid I must tell your Lordships that I do complain about the substance of it. What the noble Lord, Lord Melchett, said in the letter was that whatever agreement is in existence between George Clark and NEM Limited and Richardsons Westgarth for the leasing of the land on which Richardsons Westgarth's head office is situated, it will be unaffected by nationalisation. That is all very well at first blush. I suggest to your Lordships that even if that were to be satisfactory in the short run, the continuation of that position would not be satisfactory to either party in the long run; it would be no more satisfactory to the nationalised Corporation than it would be to 211 Richardsons Westgarth without its firm George Clark & NEM Limited as a subsidiary.
§ The reasons why it would not be satisfactory are really quite simple, because the letter entirely ignores the physical problems of security and access which are involved on a site owned by one company where there will have to be staff, and all the other facilities then belonging to a totally different company, going in and out. Although it would be satisfactory to both sides temporarily, I cannot believe that your Lordships would think that that sort of position would be satisfactory as a permanent arrangement, either to the nationalised Corporation or to Richardsons Westgarth. One really cannot mix staff from different companies on the same site.
§ At present, there are common services—telephones, telex, security, catering, printing and various other communications arrangements. Once the head office which serves the whole group of Richardsons Westgarth no longer has this particular subsidiary company, George Clark & NEM Limited, once the connection is broken and that company belongs to the nationalised Corporation, I do not believe those mixed services of security, communications, catering and all the rest of them will be satisfactory any longer on a permanent basis. I repeat, they may be tolerable from the point of view of industry on a temporary basis, but I do not believe that either side would wish the situation to continue on a permanent basis.
§ There is only one solution. Richardsons Westgarth will have to go and find another office in another location. They will be bound to incur expense, although it may not be immediate, and this will be wholly and solely the consequence of this split. The letter of the noble Lord, Lord Melchett, does not even mention, let alone deal with satisfactorily, the problems of occupation of a mixed site to which I have just been referring and which anyone with any experience of industry knows to be very real problems and not by any means theoretical or mythical.
§ Moreover, the noble Lord, Lord Melchett, does not deal at all with the other main category of severance costs in this matter which I mentioned. The 212 noble Lord, Lord Orr-Ewing, told us, if I remember aright, that once the subsidiary companies in Richardsons Westgarth are vested in the Corporation their group's turnover will be reduced by something like 30 per cent.—about a third of their overall turnover. When they have only two-thirds of their existing turnover to control from their head office, clearly they will require a smaller head office staff. However reluctantly, they will have to reduce the size of their present head office staff wholly and solely because they will have been compelled by this Act of Parliament to vest some of their present activities in the Corporation.
§ My Lords, as I said last Friday, even if only the minimum legal requirements are complied with in dealing with a reduction in staff, redundancy is an expensive matter. If, as most substantial, responsible and good employers nowadays do, they wish to deal with their staff somewhat more generously than according to the minimum requirements laid down by law, it will be a very expensive matter. It will be a significant expense, inevitably and irretrievably placed on Richardsons Westgarth, wholly and solely as a result of this Act of Parliament compelling them to vest some of their subsidiaries in the new Corporation.
§ I feel that the Government cannot have thought about this matter properly, because I cannot believe that if they had done so they would be denying the equity of the case that we are making in this Amendment. We have raised this matter on previous occasions. Let me repeat, there may be a number of these companies which are to be vested where expenses of this sort will not arise. In those cases, the Government will be fully protected because our Amendment gives this power to the Secretary of State; he will have complete control and will be able to knock on the head any vexatious or irresponsible claims. Where there is a genuinely substantiated claim of a company's being enforced, directly as a result of vesting, to incur expenses which it cannot avoid, surely it is the duty of Parliament, in equity, to give the Secretary of State the power and the means to reimburse those costs—the costs, and no more than the costs—irretrievably and unavoidably incurred as a direct result of complying with legal duties imposed by this Bill. That is why we felt it necessary 213 to return to this matter on Third Reading, although we have raised it before both on Committee and certainly on Report stage, and it is why I hope that the Government will consider the matter seriously.
§ A great deal has been said, al most entirely outside your Lordships' House, about our exceeding the proper spirit of our duties. I strongly submit to the Government that this sort of Amendment cannot possibly come into that category. I cannot believe that another place would not have included this provision if it had had the time and had given attention to this matter. One cannot give the time and attention to everything in the Bill, however long-winded; but this point has come to our notice and now that it has been brought forward it is surely no part of the Labour Party's mandate, put into its Manifesto, to deny equitable reimbursement of costs which its legislation forces on citizens of this country, whether corporate or private. I beg to move.
§ 4.17 p.m.
§ Lord ORR-EWING
My Lords, I rise in sadness, which I shall explain later, but before I do so I had better declare once again an interest in this particular issue. I have 200 shares as a non-executive director of Richardsons Westgarth. You cannot declare an interest too often if you were a member of the standing Royal Commission looking into the standards of public life. That is why I repeat what I have already said on six occasions while discussing this Bill. My Lords, why I am sad is that this matter started two years ago. It was December, 1974, when the chairman and chief executive of the group went to see officials at the Department of Industry and explained what was going to happen if the largest of all of these subsidiaries, responsible for between one half and one third of the total group turnover, were nationalised. There was another meeting a year later, in October 1975, again with the Department officials. In that case, representatives of the SRNA were also present. When the meeting broke up, the Departmental officials said that they would reconsider the matter in the light of the representations made. I regret to say that when the Bill came out there was absolutely no consideration of the costs which were going to be incurred as a result of nationalisation.
214 Here we have this small group headquarters with 30 people, on a huge site. I imagine that the group headquarters might cover an acre, and the site might cover 600 acres. It is solemnly suggested that, surrounded by a publicly owned company of considerable dimensions, a tiny private enterprise island should be left—incidentally, administering subsidiary companies all over England, right the way down South to Kent, to the Midlands, to Manchester, to Scotland, to the North of Scotland and all over the place, from this tiny site where many of the services will be controlled, as my noble friend has rightly said, by the nationalised industry.
The central services at a group headquarters—and this is why I think that some compensation is thoroughly deserved—cover all these aspects: engineering development, metallurgy, industrial relations, accounting, salaries, pensions, insurance for all the group companies (that is to say, of the buildings and everything else), printing, catering, and above all, bulk purchasing. Therefore when you hive off up to half of a company, you negotiate for steel—our biggest raw material in engineering—on less good terms. You will suffer as a result of negotiating for a much smaller buy than hitherto. All of those services which can be supplied to the group now have to be fragmented. Some services will have to be retained for this marine engine builder, which is the biggest marine engine builder in the whole of the United Kingdom. So there must be a case for a small amount of compensation; it does not amount to billions. However, there is disruption and disorganisation and costs, which become inevitable.
Despite the representations which have been made over two years, I was sad to read in the letter which the noble Lord, Lord Melchett, sent us so very promptly, that none of those messages seems to have got through to the governing Party and to the noble Lord, because he says:This agreement"—this is the agreement to rent to us a small piece of land in the middle of a big area—will result in no disruption and hence no severance".What does the noble Lord mean when he says that there will be no disruption? For the reasons my noble friend and I 215 have explained, there will be acute disruption. To start with, we shall have to get rid of half of the staff. Most of the staff, because they are senior, are very expensive to compensate and we hope to compensate them generously. The noble Lord continues:The agreement will be unaffected by nationalisation".One despairs, after two years, that the noble Lord should say that the agreement will be unaffected by nationalisation. We have been back to the officials to explain the position, we explained it at the Report stage and we are explaining it again at Third Reading, yet we are told that the agreement will be unaffected by nationalisation. Is it true to say, as the noble Lord, Lord Melchett, says:If subsequently Richardson Westgarth wish to purchase the freehold of the land in question from George Clark"—that is, the freehold of a one-acre site in the middle of some 600 acres—this will be a matter for their own commercial judgment and for negotiation"?I am saying that it is not possible to have 30 people on a small island site in the middle of this huge public sector undertaking.
Therefore I ask the noble Lord to look again at the matter and to considerwhether we have made out a case that this is one of the factors which should be taken into account. The Government have repeated again and again that they want to be fair. At no great cost to the public sector, this is an opportunity for the Government to be fair. If we are not compensated with a reasonable return, then the economic viability of the remainder of the group and, therefore, employment, much of which is in development areas, will thereby be at greater risk. For every reason—for fairness, for the future of employment and for the economic viability of an important engineering enterprise—I ask the Government to consider whether the case that my noble friend and I have made is fair, just and worthy of attention.
§ 4.24 p.m.
§ Lord MELCHETT
My Lords, as both noble Lords who have spoken have made clear, this is a subject which we have been over at some length on previous occasions. When we had previous debates I tried to make it clear that in the view of the 216 Government there are a number of factors which bear on the question of severance. Under the Bill, complete companies are taken over as going concerns, but where we are dealing with a group company structure, which is the case with most of the companies covered by the Bill, the distinction between the various companies within a group can become blurred. As I said at Report stage, this usually arises for historic reasons and can give rise to a situation where the owner and user are, on occasions, different people. For example, on Report I suggested that it was possible that the head office of a vesting company might be owned by its parent company, even though it was occupied solely by the vesting company. The noble Lord, Lord Lloyd of Kilgerran, also made reference to industrial and intellectual property and to the problems which would arise on severance in that case. I was able to write to the noble Lord and, judging by his absence on this occasion, I hope I was able to satisfy him about the doubts which he had on the severance points.
Clause 22, together with Schedule 3, have been included in the Bill in order to mitigate, if not eliminate, the problems of severance when a company is taken out of its group structure. The clause allows for "appurtenant" assets, identified by agreement, with recourse to arbitration, to be vested in the scheduled company at the date of transfer. In this connection "appurtenant" means directly relevant to the undertaking of the acquired company. The compensation for the securities of the vesting company where such assets are transferred is calculated on the basis that the assets so transferred were part of the vesting company during the reference period. As I explained in my letter to the noble Lord, Lord Lloyd of Kilgerran, Clause 22 applies in exactly the same way to industrial and intellectual property.
Another factor relevant to severance is the basis of valuation of unquoted securities. Unquoted securities are valued under the Bill as if they are quoted. But unquoted securities are almost always worth less than the equivalent quoted securities. Therefore, by valuing unquoted securities as if they were quoted there is a direct benefit to the shareholders. In addition, the valuation process will also assume, by virtue of treating securities 217 as if they were quoted, that the company was not a subsidiary. This also, as I suggested during the Report stage, reduces the effects of severance.
The noble Lord, Lord Carr of Hadley, and the noble Lord, Lord Orr-Ewing, have returned to the particular question of Richardson Westgarth's head office. I am sorry that although my letter was prompt it does not appear to have satisfied either noble Lord about the particular case which they raised. During the Report stage I expressed my reservations about commenting on a particular case, particularly where, as I freely acknowledged, the noble Lord, Lord Orr-Ewing, is in possession of all the facts and I, from my personal experience, am in possession of none. In those circumstances, it would be foolish in the extreme—and I hope more foolish than I am—to embark on a detailed discussion of a particular case with the noble Lord. The noble Lord knows the site. I do not; I have never been there. However, I am advised that in other circumstances, both in general and in particular cases relevant to the Bill, companies have quite happily occupied offices on sites which are surrounded by or are next to larger sites owned by other people. For example, Cammell Laird and Western Shiprepairers exist side by side. The former even uses the latter's facilities. John Brown share a site with Maritime Shipbuilders (U.K.) Limited—again, as I understand it, without any problems arising. Indeed, John Brown has built engines in the Clydeside shipyard owned by Maritime since 1967. There are many examples of the joint use of office facilities—for example, where offices are leased by local authorities.
As I say, I am deliberately trying to keep my remarks fairly general because I do not know the particular problems which arise on this site. However, with respect to the greater knowledge of the noble Lord, Lord Orr-Ewing, about the case, I would suggest that it is possible, at least in other cases, for people to continue to operate in this way without disruption. In any event, as I said in my letter to the noble Lord which he has quoted, the future of the particular site will be a matter for the commercial judgment of the company concerned.
The Government have listened very carefully to the points made by noble 218 Lords on the now three occasions on which we have discussed the issue. As the noble Lord, Lord Orr-Ewing, has reminded us, it is a discussion which has been going on, in one way or another, for a very long time. I do not think, by any stretch of the imagination, anybody can say that it is not something which has been very carefully considered by both sides. Of necessity that has been the case, because my advisers have had discussions with the noble Lord and his company and on three occasions they have had to produce information for me to reply to a debate on the subject in this House. But the Government remain of the view that because of the existing provisions of the Bill the problems of severance which have been raised by noble Lords opposite will be significantly reduced, if not entirely eliminated. The vesting of the scheduled companies will be achieved, as I said at the Report stage, with the minimum of disruption to former parents and fellow subsidiaries and compensation will be determined fairly in relation to the situation of each company. I am sorry that I have not been able to satisfy noble Lords opposite with my letter, but I can assure them that this problem has been given very careful consideration and the Government remain of the view that we have taken throughout the passage of the Bill and I hope the noble Lord will not press this Amendment.
§ Lord ROBBINS
My Lords, before the noble Lord sits down I wonder whether he can explain to your Lordships' House what harm would be done by the acceptance of this Amendment, the sole object of which is to prevent inequity, even slight inequity, in certain cases? The noble Lord's reply to the debate which has taken place so far is largely orientated on a mass of detail which has been adduced, quite rightly, by the noble Lord, Lord Orr-Ewing, but it seems to me that in dealing with that matter he has, so to speak, lost the wood for the trees. Here is an Amendment which so far as I can see can do no harm to the Government, save in so far as the Government regard it as being a harmful action to redress an inequity. It seems to me that the onus of proof that this Amendment should be rejected must rest on something much more substantial than the noble Lord has so far adduced.
§ Lord MELCHETT
My Lords, it is certainly not, of course it is not, the Government's view that it would be a harmful action to redress an inequity. The Government's case, which I have put consistently throughout the several times that we have discussed this issue, is that because of the provisions already in the Bill there is not an inequity to be redressed.
§ Lord ROBBINS
My Lords, does the noble Lord mean because of the provisions which have been inserted in the Bill or because of the conditions which were already there?
§ Lord MELCHETT
My Lords, I said that I had taken the same line since the Committee stage so I should have thought it was obvious to the noble Lord that I am addressing my remarks to the Bill as it came to your Lordships' House.
§ Lord ROBBINS
My Lords, I must say to your Lordships that, although no doubt this matter is caviare to the general, thousands of people are not likely to surge up and down Whitehall because of injustices committed by this Bill, I personally, not having taken part in any discussion on the pros and cons of nationalisation (although I have my own view), would blush to explain to any foreign financial expert the proposed fundamental basis of compensation. I am quite sure that any such expert would say that this is a partial expropriation of assets. I must add that in my opinion these matters are not concealed from the small number of people who pay attention to them and it so happens, unfortunately for this country, that that small number of people includes a great many of those on whose good will we shall depend in the months to come.
§ 4.35 p.m.
§ Lord CARR of HADLEY
My Lords, one is not just disappointed by the sort of reply we have had from the Government on this Amendment; one is exasperated by it. No wonder there is growing up in this country an ever increasing gap between the "we" and "they"; between citizens who are governed and those who govern. No wonder there is a growing revolt against bureaucracy—because that is what this is: this is bureaucracy. This 220 has nothing to do—at least I hope it has nothing to do—with the genuine doctrines of belief of the Socialist Party. I really think this is petty-minded bureaucracy and nothing else, and the Government should be ashamed of it.
There is only one basis on which they need not be ashamed of it and that is if the noble Lord can answer the following question in the affirmative. I do not believe he can because, although my recollection may be wrong, I believe I put it to him in somewhat similar words way back in the Committee stage. During the Committee stage debate, if I remember correctly—and I am depending entirely upon memory because I have not read it for some days—I interrupted him at one point, or it may have been in my speech of reply at the end of the debate on Committee stage, and I think that something he had said encouraged me to believe that the basis of calculating compensation would in fact take account of costs of this kind. If I remember that correctly, I think I also remember correctly that he interrupted me to say that he was afraid he had to tell me that that was not the case; in other words, the calculation of the compensation under the terms of the Bill did not allow for taking account of costs of this kind.
Whether or not my memory is exact on that matter, may I now frame the question which I believe I then asked in rather more precise terms. Is the noble Lord saying that because Richardsons Westgarth have this particular circumstance of their head office being on an "island" in the middle of a site which is about to be nationalised and they have these other expenses which have been mentioned, this will be taken into account in working out the notional unquoted value and will end in an addition to the calculation of that unquoted share value as compared with another company which is not so encumbered? If the method of calculating the notional share value is such as to take account of the special circumstances, then I agree that the Government have not just a bureaucratic answer but they have a genuine and fair answer. If my recollection of what the noble Lord said before was wrong, and if he could now, with the leave of the House, give an answer which was positive on the point I have mentioned—namely, 221 that these circumstances are particular factors which come into the calculation of the notional share value and increase that notional share value by being taken into account—then I would accept that this Amendment is not necessary. But unless the Government can give an affirmative reply to that question then I believe this Amendment is necessary in the name of
§ equity and I ask your Lordships to pass it in a Division.
§ 4.39 p.m.
§ On Question, Whether the said Amendment (No. 2) shall be agreed to?
§ Their Lordships divided: Contents, 154;Not-Contents, 72.223
|Airedale, L.||Elliot of Harwood, B.||Monck, V.|
|Aldenham, L.||Elton, L.||Monson, L.|
|Allerton, L.||Ely, Bp.||Morris, L.|
|Amory, V.||Emmet of Amberley, B.||Mottistone, L,|
|Ampthill, L.||Erskine of Rerrick, L.||Mowbray and Stourton, L.|
|Arran, E.||Faithfull, B.||Nelson of Stafford, L.|
|Ashbourne, L.||Ferrier, L.||Netherthorpe, L.|
|Atholl, D.||Fraser of Kilmorack, L.||Newall, L.|
|Auckland, L.||Gainford, L.||Northchurch, B.|
|Balerno, L.||George-Brown, L.||O'Hagan, L.|
|Balfour of Inchrye, L.||Gisborough, L.||O'Neil of the Maine, L.|
|Banks, L.||Gladwyn, L.||Onslow, E.|
|Barnby, L.||Goschen, V.||Penrhyn, L.|
|Barrington, V.||Gray, L.||Platt, L.|
|Beaumont of Whitley, L.||Grey, E.||Reay, L.|
|Belhaven and Stenton, L.||Gridley, L.||Redesdale, L.|
|Belstead, L.||Hailsham of Saint Marylebone, L.||Robbins, L.|
|Berkeley, B.||Roberthall, L.|
|Blakenham, V.||Hampton, L.||Rochdale, V.|
|Bledisloe, V.||Hankey, L.||Rochester, L.|
|Boothby, L.||Hanworth, V.||Ruthven of Freeland, Ly.|
|Bourne, L.||Harcourt, V.||Sackville, L.|
|Boyle of Handsworth, L.||Harmar-Nicholls, L.||St. Aldwyn, E.[Teller]|
|Brock, L.||Harvington, L.||St. Davids, V.|
|Brooke of Cumnor, L.||Hawke, L.||St. Just, L.|
|Brooke of Ystradfellte, B.||Hayter, L.||Salisbury, M.|
|Byers, L.||Hertford, M.||Sandford, L.|
|Caccia, L.||Home of the Hirsel, L.||Sandys, L.|
|Camoys, L.||Hunt, L.||Seear, B.|
|Campbell of Croy, L.||Hylton-Foster, B.||Selkirk, E.|
|Carr of Hadley, L.||Inglewood, L.||Simon, V.|
|Carrington, L.||Kimberley, E.||Spens, L.|
|Chelwood L.||Kings Norton, L.||Stamp, L.|
|Cholmondeley, M.||Kinnaird, L.||Strathspey, L.|
|Clancarty, E.||Lauderdale, E.||Suffield, L.|
|Clifford of Chudleigh, L.||Lindsey and Abingdon, E.||Tanlaw, L.|
|Clitheroe, L.||Lloyd of Kilgerran, L.||Tenby, V|
|Clwyd, L.||Long, V.||Terrington, L.|
|Cobham, V.||Lonsdale, E.||Teviot, L.|
|Coleraine, L||Lothian, M.||Thurlow, L.|
|Cottesloe, L.||Lye11, L.||Tranmire, L.|
|Craigavon, V.||Macleod of Borve, B.||Trefgarne, L.|
|Cullen of Ashbourne, L.||McNair, L.||Trevelyan, L.|
|Daventry, V.||Malmesbury, E.||Vernon, L.|
|Denham, L. [Teller]||Mancroft, L.||Vickers, B.|
|Devonshire, D.||Marley, L.||Vivian, L.|
|Drumalbyn, L.||Massereene and Ferrard, V.||Ward of North Tyneside, B.|
|Dudley, E.||Melville, V.||Ward of Witley, V.|
|Eccles, V.||Merrivale, L.||Wardington, L.|
|Effingham, E.||Mersey, V.||Wolverton, L.|
|Elibank, L.||Meston, L.||Young, B.|
|Elles, B.||Middleton, L.|
|Ardwick, L.||Houghton of Sowerby, L.||Popplewell, L.|
|Aylestone, L.||Hughes, L.||Raglan, L.|
|Birk, B.||Janner, L.||Rhodes, L.|
|Blyton, L.||Kagan, L.||Ritchie-Calder, L.|
|Bowden, L.||Kaldor, L.||Rusholme, L.|
|Brockway, L.||Kilbracken, L.||Russell, E.|
|Buckinghamshire, E.||Kirkhill, L.||Sainsbury, L.|
|Castle, L.||Leatherland, L.||Shepherd, L.|
|Champion, L.||Lee of Newton, L.||Slater, L.|
|Collison, L.||Llewelyn-Davies of Hastoe, B.||Snow, L.|
|Darling of Hillsborough, L.||Lloyd of Hampstead, L.||Stedman, B.|
|Davies of Leek, L.||Lovell-Davis, L.||Stewart of Alvechurch, B.|
|Davies of Penrhys, L.||McCluskey, L.||Stone, L.|
|Donaldson of Kingsbridge, L.||Maelor, L.||Strabolgi, L.[Teller]|
|Douglas of Barloch, L.||Melchett, L.||Taylor of Mansfield, L.|
|Douglass of Cleveland, L.||Murray of Gravesend, L.||Vaizey, L.|
|Elwyn-Jones, L. (L. Chancellor)||Northfield, L.||Wall, L.|
|Gardiner, L.||Oram, L.||Walston, L.|
|Geddes of Epsom, L.||Pannell, L.||Wells-Pestell, L. [Teller]|
|Gordon-Walker, L.||Pargiter, L.||Williamson, L.|
|Greenwood of Rossendale, L.||Peart, L. (L. Privy Seal)||Willis, L.|
|Hale, L.||Peddie, L.||Winterbottom, L.|
|Harris of Greenwich, L.||Phillips, B.||Wootton of Abinger, B.|
|Henderson, L||Ponsonby of Shullbrede, L.||Wynne-Jones, L.|
On Question, Motion agreed to.
§ Resolved in the affirmative, and Amendment agreed to accordingly.
§ Clause 40 [Base value of oilier securities]:
§ 4.48 p.m.
Lord CAMPBELL of CROY moved Amendment No. 3:
Page 54, line 23, leave out from beginning to ("the") in line 25 and insert ("the arbitration tribunal, in determining the base value of the company's securities in accordance with subsection (1) above, may have regard to").
§ The noble Lord said: My Lords, I beg to move Amendment No. 3. When we discussed this on Report last week the noble Lord, Lord Winterbottom, replied in terms which seemed to meet our arguments, and therefore we were very surprised when the Government did not accept the Amendment. So we decided to table it again, because we felt that, even though the interval between Report stage and Third Reading has been very short, the Government might well see that the Amendment completely meets what the noble Lord, Lord Winterbottom, himself said.
§ Lord WINTERBOTTOM
My Lords, if the noble Lord, Lord Campbell of Croy, will forgive me for interrupting him, he used an epithet with regard to what I said. Although there is not a great disance between the noble Lord and myself, I did not quite hear the epithet he used.
Lord CAMPBELL of CROY
My Lords, I said that when the noble Lord, Lord Winterbottom, replied, he seemed to meet our arguments, and that we were surprised that the Government did not then accept the Amendment. Therefore, we have tabled the Amendment again, because we thought that with the passage of time the Government might see how closely the remarks of the noble Lord were to the Amendment we had tabled.
My Lords, the Amendment would make the parent company quotation a permissive rather than an obligatory relevant factor. We are discussing the calculation of the notional quoted price, not unquoted securities. I will not go into the whole question of the basis of compensation, but simply wish to return to the point that in that calculation the Government, in the wording of the Bill, are making as a relevant factor (and making it obligatory to take it into account) the notional quoted price of unquoted securities, the parent company's quotation.
Lord Winterbottom last week sought to assure the House that the provision in Clause 40 merely ensures that the quotation of a parent company is not excluded from the considerations when it is strictly relevant and will apply only where the activities of the acquired company are clearly a major factor in determining the quotation of the parent company. I think I have summarised accurately what he said.
Lord CAMPBELL of CROY
My Lords, clearly if Lord Winterbottom were himself to be appointed a member of the Arbitration Tribunal we should all be happy and his assurances would no doubt be carried through in the way the Bill, when enacted, would be interpreted by the Tribunal, and the basis of his assurances would be exactly what the Amendment is designed to achieve. So far as I know, however, Lord Winterbottom unfortunately will not be on the Tribunal and the strict interpretation of the Bill does not accord with the generous assurances he gave us last week. The words in the Bill, "shall have regard to", do not specify the degree of regard which the arbitrator should have for the parent company quotation. However, they require the Tribunal to have regard to it and not to ignore it, even where it would be totally irrelevant and misleading as a factor. We are proposing that the word, "may" should replace the word, "shall", a proposition which has been heard before on other occasions in your Lordships' House and will no doubt be heard again.
Another reason for tabling the Amendment and renewing the debate is that I did not fail to notice that later during the Report stage on another Amendment Lord Winterbottom stated that specific factors should not be mentioned in the Bill because their relevance would then be given undue prominence. However, the way the Bill is now worded in Clause 40, because it mentions this specific factor, therefore gives undue prominence to it, and that was one of the arguments we used. We feel that, having said this when referring to another part of the Bill and having given us what we thought were such excellent assurances last week, the Government should be able to accept the Amendment now because it closely follows what Lord Winterbottom said and much more accurately translates what apparently is the intention of the Government.
§ 4.54 p.m.
§ Lord WINTERBOTTOM
My Lords, for a moment I doubted the value of this third time around, as it were, but, having considered the discussion once again on this matter, the intention behind the Amendment becomes much clearer; 226 perhaps I was a bit dim-witted or perhaps it was due to the lateness of the hour. It has now become crystal clear what the noble Lord, Lord Campbell of Croy, wishes to achieve, and I suppose that this is the virtue of conciseness. What we are arguing is "may" versus "shall" and "permissive" versus "obligatory" and this is an extremely useful clarification which the people who have to implement the Bill when it becomes law can grasp.
We are dealing with something extremely difficult. We are giving, as it were, a general interpretation which will have to be used by the stockholders' representatives and subsequently by the Tribunal. The noble Lord is rightly trying to make our intentions as clear as possible and I, from this side, have been trying to explain as clearly as I can what those intentions are. There is this problem of undue stress on certain elements which must be taken into account, but I will leave that on one side for the moment and tackle the first point, which is "may" versus "shall".
Clause 40(6) provides that where a vesting company represents a substantial proportion or a quoted parent, the share quotation of that parent shall be one of the relevant factors. That is clear enough; it is one. The important point is that it is only one of the relevant factors. The fundamental requirement is that the Tribunal shall have regard to all relevant factors in determining the notional share quotation of an unlisted company. The inclusion of Clause 40(6) does not detract from this generality but merely ensures that one more obvious factor, namely the quote of a parent, is not excluded from the considerations. This strikes me as drawing the field of choice very wide indeed.
Clause 49(6) has a strictly limited application. As I have previously made clear, it applies only where an acquired company represents a substantial part of a quoted group. "Substantial" is not defined—I seem to remember our discussion about industrial democracy, which we found rather difficult to define—but I can assure noble Lords that Clause 40(6) will apply only where the activities of the acquired company are clearly a major contributory factor to the quotation of the parent. As the Tribunal is of a judicial nature, it will be able to weigh words like 227 "clearly" better than I in this House can. It is certainly not designed to apply where the activities of the acquired company are a minorproportion of the activities of the parent.
It is also clearly stated in Clause 40(6) that the parent company's quotation is only one of the relevant factors. As we have made clear, it is not the overriding factor; all factors which are of relevance to the valuation of an acquired company will be considered in the valuation process. It will be for the Tribunal to decide what is the significance of the parent company quotation in any particular case depending on how substantial a part of the quoted group an acquired company is. This assurance has been given quite categorically on a number of occasions and I would not wish noble Lords to be under any misapprehension about it. The Tribunal has very wide powers of discretion and it would be quite wrong to limit the application of Clause 40, as the Amendment seeks to do. The Amendment could lead to the anomalous situation of the Arbitration Tribunal deciding not to consider a parent's quotation where all common sense said that it was an important factor. Clause 40(6) as drafted can be applied in negotiations in the way most appropriate to the circumstance of a particular company.
The Amendment would reduce the clarity of the provision and hence increase uncertainty. Such uncertainty could be detrimental to either party in the negotiations. I feel that this is, on my side, a distillation of the argument we had before. We are not tying the Tribunal hand and foot. There a number of factors that must be taken into consideration. For these reasons, I feel that the Bill as drafted is superior to the Bill as it would be amended in the way the noble Lord proposes and I therefore ask your Lordships to reject the Amendment.
Lord CAMPBELL of CROY
My Lords, the noble Lord has been good enough to say again very much what he said on Report, which is virtually what the Amendment would say if it were in the Bill. When he says that the parent company's quotation will be taken into account only when it is clearly relevant, may I ask if he is aware that that is belied 228 by the word "shall" in subsection (6) because it says that it is one of the relevant factors to which the Arbitration Tribunal "shall have regard", which means that for a factor which might be completely irrelevant, the Tribunal is obliged to take it into account. That is why I cannot see that the noble Lord's reply in any way conforms with the wording of the Bill.
Lord CAMPBELL of CROY
My Lords, that makes it very complicated for the tribunal when reading the Bill. To ask them to take something into account and reject it as irrelevant if they wish to do so seems strange. The wording of the Bill says first that it is relevant and then that it shall be taken into account. The noble Lord is saying that it may in fact be irrelevant and can then be rejected, having been taken into account. I think that it will be exceedingly difficult for the tribunal to translate this part of the Bill in that kind of way even if they have read the noble Lord's words in this debate.
The assurances that the noble Lord has given are of course common sense and that is the way in which we think the Bill is intended to be operated. However, the fact that the noble Lord cannot accept our Amendment makes us wonder whether there is some other concealed reason. The noble Lord has not indicated that there is anything defective in our drafting. It is an extraordinary situation that the noble Lord seems to be rejecting the Amendment. I see that he is receiving some advice. I hope that, if I go on speaking for another moment or two, he will have received discretion to accept the Amendment. What he has been saying is a virtual acceptance of the Amendment, which makes it exceedingly difficult for us because we are in agreement on how the Bill should be operated, but the Bill, as it stands, is saying something quite different. I will gladly give way to the noble Lord if he has more to add as a result of the message which he has just received.
Lord CAMPBELL of CROY
My Lords, I am disappointed. Naturally, I 229 feel very tempted to press this Amendment because it is simply putting into the Bill what the Government have already said, but I feel that that is not an operation we ought to resort to. The noble Lord has twice given assurances. What we cannot understand is why he could not accept the writing of those assurances into the Bill as we have put them down in the Amendment. However, the noble Lord has repeated what he said before which is, virtually, that our Amendment is right in that it indicates the correct way in which the Bill is to be interpreted but that it is not necessary. In those circumstances, I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 43 [Stockholders' representatives]:
§ 5.4 p.m.
Viscount SIMON moved Amendment No. 4:
Page 60, line 19, leave out ("company whose securities") and insert ("class of securities which").
§ The noble Viscount said: My Lords, with this Amendment, I should like to speak to Amendment No. 5, these two Amendments being linked together. The Amendments are also repeats from earlier stages of the Bill because, on Report, I felt that the noble Lord, Lord Redesdale, and I had not succeeded in getting our point across to the Government Front Bench. I do not know whether any of the companies that are to be vested has more than one class of share. I have not inquired into that because it seems to me irrelevant. If all the companies that are to be vested have only one class of share, the Amendment will of course be pretty meaningless, but if by any chance one of the companies has more than one class of share it seems right that there should be a separate shareholders' representative for the different classes of share, for, as I suggested when we discussed this matter before, the interests of different classes of shareholder might be different. The interests of the preference and equity shareholders might be different when valuation is taking place. For that reason, I thought it desirable that each class of share should be entitled to have its own shareholders' representative.230
§ I recognise that this may, in what I suspect will be a very small number of cases, add a little complication, but it seems to me a very small matter to add this complication in return for getting absolute fairness as between the different classes of shareholder. I hope that the noble Lord, when he comes to reply, will be able to give us a little more explanation as to why the Government think that this is not necessary. I beg to move.
§ Lord REDESDALE
My Lords, I should like to support these two Amendments. They are, as the noble Viscount, Lord Simon, said, a re-run of those moved on the two previous occasions. They are so because I am afraid that the noble Lord, Lord Winterbottom—for whom I have a high regard—did almost a video tape re-run of his previous two speeches. As the noble Viscount, Lord Simon, said, we did not really get an answer. In fact, I should like to put it to the noble Lord, Lord Winterbottom, that, using his analogy of elephants again, he threshed a bit deeper into the elephant pit. He said,In preparing a negotiating machine, it is clear that one unit—namely, a company—must be represented by one stockholders' representative."—[Official Report, 5/11/76; col. 1673.]The mud was getting a bit deep underneath the elephant, I suggest, because the stockholders' representative of course represents not a company but the holders of stock. This was the point. The noble Lord therefore muddied the waters even further.
It is absolutely clear to me, though I am afraid it is not so to the noble Lord, that each class of stockholder has a different interest. One could hold as many meetings of different classes of stockholder as one liked but that would not do the stockholders much good if, at the end of the day, they had only one person to represent them. The real issue is not having a meeting between the stockholders' representative and the stockholders, but is what the stockholders' representative does when he speaks to the Secretary of State. Therefore, we can go on as long as we like in this way but we shall not get any further—in fact, we shall get further away from the point.
Finally, there is another matter. The Government are asking the stockholders' representative to do something that is 231 totally unethical. He will have to put different interests of the stockholders one before another. Another point here is that if it is a question of saving time one could have one meeting with all the different people speaking for the different classes of stockholder, rather than a whole set of different meetings of stockholders. If all these people met at a single meeting, the matter could be threshed out at one go. That would not only be quicker but it would be fairer. We have been through this. I am sorry to weary the House and the noble Lord with these arguments, but I feel that we have not had an answer on this matter and I hope that this time we may get an answer to these points.
§ Lord TREFGARNE
My Lords, if I can help the noble Lord, Lord Winterbottom, one of the arguments that we heard before is that because there was the possibility of so many different representatives being appointed the process of reaching agreement would be tedious and wearisome. But I would put it to the noble Lord that where the interests of the different shareholders are identical or similar there would be nothing to prevent the different classes of shareholder from each appointing the same representative. Where it was not practicable, feasible or desirable to do so, clearly, the same representative ought not to be appointed. I hope that the noble Lord will see his way to accepting the Amendment.
§ Lord WINTERBOTTOM
My Lords, just to show that this is not going to be a video tape, I put my brief on one side and I shall say what I think. I cannot find this as complicated an issue as some we have already discussed. I am putting myself into the role of the stockholders' representative. I am told that there will be approximately 10 stockholders' representatives representing some 43 companies. I understand that that is the state of play at the moment. The names of one or two of these stockholders' representatives—
§ Lord REDESDALE
My Lords, the noble Lord has made this particular point again, and I am sure that he wishes to correct himself. He refers to 10 stockholders' representatives representing each of the 43 companies. It is his point about representing the companies with which I am concerned.
§ Lord WINTERBOTTOM
My Lords, I should say representing the stockholders of those companies. This may not be firm because, after all, we are in the process of legislating and this position will change. But when I was getting myself briefed on this subject—the matter was not included in the brief which I have now thrown away—I understood that the general feeling is that there will be about 10 eminent men representing the interests of the stockholders of 43 companies with many different classes of share and so on. I think that the noble Lord, Lord Trefgarne, put his finger on this point. He said that a stockholders' representative might represent a number of different interests. He is quite right; that is what will happen.
However, let us say that a stockholders' representative is to represent the interests of the stockholders of three different companies. Those three different companies, part of which will remain in the private sector and part of which will be brought into the public sector, will all be governed by articles of association. It is quite clear to me that the first job of the stockholders' representative will be to call a general meeting of all the stockholders of each separate company which he is representing, and then with the articles of association in his hand the company will have to clear its mind as to how the actual stock that it receives from the Government as compensation is divided between the various groupings within that company. Let us say that there is an ordinary stock, a first preference and a second preference, each with different defined rights. It is quite clear to me that the actual negotiation as to how the interests of these three groups within one company are satisfied must lie in a general meeting of that company at which the stockholders' representative threshes out the interests of the three groupings within the company. They are all of one company, to use the naval phrase, and therefore they will have to settle their own division of the "loot" on the basis of the articles of association.
That is how I see it. I am speaking only as a man who has worked and lived in this world, and I see how this happens. Having said that, I think that it would be foolish to split one company down the middle by appointing two different stock-holders' representatives. It would be 233 divisive and damaging, and would cause delay. This is the simple, practical problem we are facing. I do not think that it is a question of high policy; it is a question of simple practicalities. This is how the stockholders' representative will have to work to represent the stockholders of the companies and of the various types of stock within those companies.
My Lords, I hope that the noble Viscount will not try to entice me into the Lobby on this matter because I will not go. I am fully in agreement with the explanation of the noble Lord, Lord Winterbottom.
§ Viscount SIMON
My Lords, I am much obliged to the noble Lord, Lord Winterbottom, for what he said. First, there appeared to be a reference which was quite outside what I was arguing; that is, that there were 10 distinguished gentlemen who were to represent stockholders in 43 companies. I have no objection at all to that. Of course, a distinguished gentleman, probably an accountant or someone similar, is quite capable of representing stockholders in different companies. What we are concerned about is that the same distinguished gentleman should have the task of representing, say, both the equity shareholders and the preference shareholders in one company, because their interests in what the noble Lord elegantly called the "division of the loot" might be different. I think that this would put this distinguished accountant in a very difficult position.
Of course the matter has to be threshed out. The noble Lord, Lord Winterbottom, has opened the door or the window very much wider than I expected it to be opened. I thought that the compensation was based on the Stock Exchange valuation of the equity shares, but it is also based on the notional Stock Exchange value of preference shares and other shares? Perhaps it is. That, I must say, I had not conceived; but if that is so, then I should have thought that it would be all the more necessary for a different qualified accountant to represent the two sets of shareholders.
I strongly suspect that when we come down to the facts of the case it will be found that a wholly owned subsidiary of a large corporation such as we are talking 234 about has in fact only one shareholder anyway; namely, the corporation which owns it, and it probably owns the preference shares as well, in which case there is nothing to worry about. But if there are cases where there are outside shareholders, perhaps minority shareholders with different classes of shares, it still seems to me that it would be wise to have two separate representatives. I fail to see what is the objection to that. I do not think that it would add anything to the time involved because, as the noble Lord says, it will probably be necessary to have a general meeting of all the shareholders. But when it comes to deciding how to divide the amount available, then the individual groups of shareholders will want to meet separately. In all the circumstances I do not think it is worth taking a Division on this Amendment. I hope that the noble Lord has hoisted in what we have said, and perhaps when the time comes it will be possible for any minority shareholders to get separate representation in front of the tribunal. I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 53 [Furnishing of information the Secretary of State]:
§ 5.16 p.m.
§ Lord CARR of HADLEY moved Amendment No. 6:
Page 71, line 43, at end insert—
("(4A) Where it appears to the Secretary of State that a requirement is imposed on a person under this section and that person has refused or failed to comply with the requirement, the Court on the application of the Secretary of State may make such Order or Orders requiring compliance by that person with the requirement as the Court thinks just and reasonable for the purposes of this act.
For the purposes of this subsection "the Court" means the High Court in England or Northern Ireland or the Court of Session in Scotland, as the case may be.").
§ The noble Lord said: My Lords, I beg to move Amendment No. 6. It will be to the convenience of your Lordships to include in our discussion the next Amendment, No. 7, which I understand is wholly consequential upon the one I am now moving. I can deal with this matter very briefly. We have raised this point previously. It is a matter to which the noble and learned Lord, Lord McCluskey, 235 replied on the last day of the consideration of the Bill, last Friday. On that occasion I said that what the noble and learned Lord had said seemed to make some sense to me as a layman, but that as a layman I must consult others and form an opinion about what he had said. I am sorry to bother your Lordships again with the matter, and I am doing so only because when I had those consultations I am afraid that I satisfied myself that what the noble and learned Lord had said was not satisfactory and did not really meet the point which is of concern to the companies involved.
§ The concern, as I made clear last Friday, is about the level of the court to which these matters can be taken. Of course we accept the argument of the noble and learned Lord, that as the Bill at present stands anyone prosecuted under its disclosure provisions will have an appeal from the magistrates' court to a higher court. But we believe that the magistrates' court is not a satisfactory place at which to start. Not being a lawyer, I had hoped that what the noble and learned Lord was saying in debate last Friday meant that if one found oneself called to the magistrates' court one could then choose to go to the higher court if one wished, but I am advised most definitely that that is not the case and that one would have to go through all the proceedings in the magistrates' court and then use one's right of appeal in order to get to a higher court. In our view this is not satisfactory—and for two reasons.
§ First, we believe that the magistrates' court is not equipped naturally to sift through complex commercial evidence of the kind which will have to be considered here, and the requirement imposed on the court to determine what is reasonable for the Secretary of State to demand and what consitutes a reasonable excuse for failure is not in the normal line of work of magistrates' courts. Those courts are simply not experienced in that kind of matter and are not equipped to form such judgments. They will therefore be unfamiliar with the Bill, unable to call on precedent and not equipped by their experience in related fields, and they are therefore likely to produce rulings which will lead to appeal.
§ The second reason why we were not satisfied with the noble and learned Lord's 236 reply stems directly from that. It surely is in everyone's interest—in the interests of the Government, of the Corporation and of the parties affected—that if a particular piece of evidence is to be produced an order requiring its production should be made as quickly as possible. Reasonable speed really is in the interests of all parties: not just of the complainant or of the Secretary of State, but also in the interests of the Corporation and of the firm involved. It therefore seems to us important that, to get that speed and to ensure the smooth progress of compensation negotiations, any court cases should go straight to the court most likely (not only most likely, but properly equipped) to be able to deal with this sort of question, and should not first of all have to go to a magistrates' court and then have to be interrupted, with further delay caused by the process of going to the High Court.
§ I do not think the Government disputed the argument that the magistrates' court was not really the right court for this sort of determination. Their argument, as I understood it, was merely that there was an appeal from it. In the end, of course, that appeal provides the firm with the right to have the matter heard in the higher court: but why, we ask, cause this extra possible layer of legal process? I think it is well established and well known by lawyers and laymen that magistrates' courts are not the appropriate, natural courts for dealing with commercial arguments of this kind, so why run the risk of having to go through the two processes when, if there is any serious dispute, it will certainly end up in the higher court? Why, for goodness sake, not let it go there straight away?
§ Here, again, surely, there really is no Party political issue at stake in this House; there really is no question of the other place having thought about this and having taken a decision in principle about it. I think that this is the sort of matter which your Lordships' House is well equipped to consider at a reasonable and dispassionate level; and if there is no harm in the Amendment, why on earth—perhaps I am getting too depressed in advance, but I was going to ask why on earth the Government cannot accept it. It seems to us—and it has struck us particularly today—that the Government have come to look at these matters almost searching 237 for reasons why they have to say "No", rather than trying to say "Yes". I appeal to the Minister: if we can give some comfort and satisfaction to the parties involved in this matter, why not do so? What harm will it do to the Government, Parliament or the taxpayer? It can surely do only good; and so I appeal to the noble and learned Lord to say "Yes" to this Amendment. I beg to move.
§ The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey)
My Lords, I am sorry that my answer given on the previous occasion did not satisfy the noble Lord, Lord Carr of Hadley, but I said—and I am reading from column 1688 of the Official Report of 5th November—having compared the effect of the Amendment with the effect of the Bill as it now stands:The only difference is that under the Bill the adjudication could occur only on appeal and not directly as the Amendment provides".So I hope I made it clear.
Today the noble Lord has said that this is the kind of matter which is outwith the experience of the magistrates' courts. I really do not know upon what basis that assertion is made. I have beside me (because I asked for them) a great heap of Statutes, starting with the Statistics of Trade Act 1947—and there are many others, including three passed in 1973 and one in 1975 in which the section equivalent to the proposed new subsection was put in at the instance of the noble Viscount, Lord Colville of Culross—all of which have sections putting the same kind of matter to courts of summary jurisdiction. I do not want to weary your Lordships by referring to them all in detail. It might be sufficient if I simply refer to the 1973 ones. One of them is the Employment Agencies Act 1973, where, in Section 9(3), the same kind of duty is laid upon persons to produce information to an officer of the licensing authority. Another one is the Fair Trading Act 1973, where the same kind of duties are laid down; and another one is the Insurance Companies Amendment Act 1973.
As I say, in order to show how long a history this kind of provision has, I can go back—and I am sure one could go back even further—to Section 4 of the 238 Statistics of Trade Act 1947. That also uses the same type of expression as we have here:…unless he proves that he had reasonable excuse for the failure…",that is a matter which then goes before the court of summary jurisdiction. So, far from it being the case, as the noble Lord opposite has suggested, that this is the kind of matter with which magistrates' courts are not familiar, this is the kind of matter which routinely is sent in Acts of Parliament for adjudication by that type of court. Of course, the matter can go on appeal to a higher court. It becomes in part a question of law, it may be in part a question of fact; but in my submission the proper court traditionally for this kind of thing is the magistrates' court.
The other consequence of the Amendment, or certainly of the so-called consequential Amendment, is that the refusal to provide the information requested ceases to be a refusal which has penal consequences. That is the effect of the Amendment which is No. 7, the deletion from page 72 of lines 2 and 4. It is not just a question of speed. But another matter is this: I should have thought that if one wants to achieve speed one follows the system which is laid down in the Bill. The requirement is made by the Secretary of State, and the person upon whom the requirement is made then has to supply the information. If he fails to do so, he can then be prosecuted. That must surely be quicker than taking matters to the High Court. In these circumstances, I think I can suggest to your Lordships that the criticisms which have come today from the noble Lord, Lord Carr of Hadley, are misconceived. The proper court is the magistrates' court, and the Bill simply follows an excellent number of precedents going back for at least 30 years.
§ Lord CARR of HADLEY
My Lords, I am grateful to the noble and learned Lord for his further explanation of this matter. I am sure that, for his part, he will appreciate that I am not a lawyer myself and that, as a layman, I am in this sort of matter rather at the mercy of (I was going to say) the advice of lawyers. I can only assure the noble and learned Lord that the lawyers who came to discuss the matter with me felt that the sort of examples and precedents he has quoted were not really of the same kind; that 239 there was really a chalk and cheese state of affairs. I can only say to him that they made these representations to me in a calm manner, not seeking to be fractious or difficult so far as I could judge, and clearly holding sincerely to the view they put to me.
This puts me in a difficult position, because I accepted the spirit in which the noble and learned Lord replied to our debate on Report stage. I thought, as a layman, that it sounded satisfactory. I was advised, I repeat by lawyers, that in their view it was not and that the precedents were not of the same kind; but I think I must leave it at this point and, although I am somewhat mystified as to the true situation in this matter in practice, I think I had better advise my noble friends not to press this matter and to let it rest where it is. I therefore beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Schedule 1 [Aircraft industry]:
§ 5.30 p.m.
Lord TREFGARNE moved Amendment No. 8:
Page 82, line 10, leave out ("Scottish Aviation Limited").
The noble Lord said: My Lords on behalf of my noble friend, Lord Carr, I beg to move Amendment No. 8. I should like at the same time to speak to Amendment No. 9 which is essentially consequential upon Amendment No. 8. I should like at the outset to correct an inference which may be drawn from the remarks I made on Friday when speaking to the same Amendment. I said (at column 1712 of the Official Report):
I accept that with really vigorous management, Scottish Aviation could pull round".
I believe it may be inferred that I was criticising the present management of Scottish Aviation. That was certainly not my intention. I have no reason to believe that they are other than excellent. My only quarrel with them is that they have publicly stated that they wish to be nationalised. I regret that they have seen fit to say that and I shall endeavour to persuade your Lordships that they are mistaken in that view.
§ The reasons I would suggest that Scottish Aviation ought not to be included in this Bill are threefold. First, by geography. They are far removed from the centres where the British Aerospace Corporation will have its business. The great centres of British aircraft manufacturing are, largely, in the South-East. There are, it is true, one factory at Preston and another at Chester, but those are comparatively small. The great factories at Weybridge, Bournemouth and Hatfield are all, broadly, in the South-East of the country. Scottish Aviation will, I believe, find itself a remote outpost of the Corporation at Prestwick in Ayrshire.
§ We have heard the Government say on a number of occasions that they will give autonomy (I think that that is the word used) to Scottish Aviation. I believe that will give that small company too much influence in the affairs of the new Corporation, influence at least really out of keeping with the size of their operation. The third point that I believe ought to be made is that Scottish Aviation is in a quite different line of business from the other companies that it is proposed to take over. At the present time, Scottish Aviation (I think it right to say), have no aircraft actually in production. The production of the Bulldog is now complete; the production of Jetstream is now complete. There is one aeroplane called the Bullfinch, a derivative of the Bulldog. I know that a prototype has been constructed but the aeroplane is not yet in production and is not planned for production, I understand, until a substantial number of orders can be demonstrated; and that is yet to happen.
§ It has been said, despite the fact that Scottish Aviation is not at present manufacturing light aeroplanes, that that company could form the nucleus of a new light aircraft manufacturing enterprise within British Aerospace. That, I must say, at first sight is an appealing argument, but I do not believe that the manufacture of light aeroplanes is a proper function for BAeC. This sort of business has to be very responsive, and quickly responsive, to market influences and nationalised industries historically have not been so good in that line of business. I do not think that Scottish Aviation, if it were to come into public ownership, would be able to do that particularly well. In any event, Scottish Aviation has no basic 241 aircraft design capability at the present time. Even the types of aircraft that I have mentioned were not originally designed by Scottish Aviation but for all practical purposes were complete designs acquired from other companies. Jetstream was acquired from the Handley Page enterprise which was in difficulties some years ago; Bulldog was acquired from the Beagle Aircraft Company which was in public ownership at the time and was not succeeding.
§ A further argument that has been advanced is that Scottish Aviation needs to be recapitalised now or in the near future; and that this could be best achieved, or only achieved, by complete public ownership. I would put it to your Lordships that that is not so. There are at least two ways which occur to me by which the company could be financed, by public money if need be, without going to the extent of nationalisation. The 1972 Industry Act could be used or the Scottish Development Agency Act could be used. It has been represented to me by the company—and they haw made no secret of it—that they see no future for themselves outside the British Aerospace Corporation. I suspect that such future as there may be for them within the Corporation is simply one of a sub contractor to the main companies. I fear that if Scottish Aviation come into public ownership the management of BAeC will find themselves obliged to sub-contract work to Scottish Aviation simply to keep that company going because the prospects of a closure or large-scale redundancy in Prestwick would be politically unpalatable to them. I do not think that that is a proper reason for nationalisation and I hope the noble Lord will not advance it tonight. Those are the principal reasons why I believe Scottish Aviation ought to be excluded from the provisions of the Bill. I beg to move.
The Earl of SELKIRK
My Lords, I should like to say a word on this. Although I have no connection with Scottish Aviation now, I did with two others play some part in founding the company about 40 years ago. I must say that to see this name in this Bill is a mixture of nostalgia, astonishment and, to some extent, pride—pride that the Government should take the bother to nationalise what is a relatively small organisation. The 242 company played a very valuable part during I the war particularly in the handling and repair of American aircraft which came over to this country. After the war, the company amused itself with some success in building aeroplanes which went slower and slower while everybody else were building aeroplanes which went faster and faster. Their aeroplanes played a part in various parts of the world, not least in South-East Asia, where I saw them operating in Malaysia and in the Borneo territories. Its name will always be associated with that of David McIntyre, who played a dynamic part and had an astonishing gift of foresight in seeing through the technology of aviation into the future. His death in a flying accident was a real tragedy. His name, very properly, is recorded at Prestwick Airport.
What I really want to say is that next Session we have, we are told, a devolution Bill coming to us. To the ordinary man in Scotland it looks as though every big business is being thoroughly collared by London control and then you devolve the few things that remain. This is what seems to be the position to everybody in Scotland. Here is another case of a small company which has quite a good record. I cannot speak for the present position as did my noble friend Lord Trefgarne. He reports them as saying that the company has no future outside the Corporation. The noble Lord himself says that the company has no future inside the Corporation. I do not believe that the Corporation, no matter how they are run, are going to be able to keep this organisation going as a part of the aircraft industry. It will inevitably be shut down and that will be a considerable loss. I should remind the Government that it was on this question that I believe on the only occasion in history Scottish Members of Parliament and Peers of Scotland in this country met in the City Chambers in Edinburgh. They discussed the points which arose from that.
I am fairly certain that unless the Government, if they want to nationalise this company, can give, some real assurance that it will have a degree of autonomy which will enable it to carry on, they are muddling up completely the principles of devolution which I believe they will explain to us in due course. I hope that the Government take this seriously. It is absurd to go in the direction 243 of centralising everything in London, when nearly everybody in this House believes we suffer from gross over-centralisation, in respect of a company which has prospered and will be completely lost with the two huge brothers with which it is supposed to be associated.
I ask the Government—and I daresay it is difficult because this in part is a matter of organisation, not politics—to say something that will give assurance that this very interesting development, which has had a record of high-grade engineering, will be able to continue. I am sure that it will give a great sense of relief to those who live in that part of the country.
§ 5.42 p.m.
§ Lord McCLUSKEY
My Lords, we are in a somewhat odd situation. As the noble Lord, Lord Trefgarne, said, the management want to be nationalised and see no future for the company outside the Corporation. The unions want the company to be nationalised. Only the noble Lord, Lord Trefgarne, perhaps does not want the company to be nationalised, which is rather odd. If I may take the point which the noble Earl, Lord Selkirk, made, it is plain that the Organising Committee intends to maintain the separate identity of Scottish Aviation with a high degree of local autonomy. May I quote from what my right honourable friend said in a procedural debate in the other place, in Hansard of 29th June 1976 at col 237? He spoke of conversations and discussions that he had with my noble friend Lord Beswick. He went on to say:Lord Beswick informs me that it is the Organising Committee's intention to maintain the separate identity of Scottish Aviation, with a high degree of local autonomy, as a separate profit centre within British Aerospace".That is the guarantee which has been given and I certainly would not attempt to modify or improve upon that.
May I now take the general point on devolution? The Government's proposals on devolution do not include devolution of trade and industry. The arguments put forward by the noble Lord, Lord Trefgarne, he said, were threefold. There was an argument based on geography. That is a new argument; I do not think that it has been put forward here before. Surely 244 there must be many examples, particularly in this type of industry, of co-operation between parts of an industry which are spread over considerable geographical distances and, as we know, in different countries. He also feared that the Scottish element might have too much influence. He went on to contradict that, as I understood him, by saying that he saw its future simply as a sub-contractor. Surely, it cannot be right, if its future is simply that of a sub-contractor, that it will have much influence, that the tail will wag the dog.
§ Lord TREFGARNE
My Lords, I am obliged to the noble and learned Lord for giving way. My fear is that, as a sub-contractor—which is all I can foresee for them at the moment—they will have too much influence. Sub-contractors should not have too much influence; but the influence has already been promised by the Government.
§ Lord McCLUSKEY
My Lords, what has been promised by the Government is that so far as it may be able to be achieved, the Organising Committee will maintain the separate identity of Scottish Aviation. Of course, it will be envisaged that Scottish Aviation would, if they were able properly to do it, carry out sub-contracting work. I do not think that in answer to what has been said to day that I can add anything that was not said by me last Friday. In the circumstances, and in giving the unanimous wish of those who are involved—the company and the unions—that the company should be nationalised, I ask the noble Lord to reconsider the matter.
§ Lord CARR of HADLEY
My Lords, I am not going to advise my noble friends to vote on this Amendment. The Government are probably going to be proved to be unwise in what they are deciding to do. If they feel, for whatever reason, that Scottish Aviation should be brought into public ownership, then they would do much better to buy up the company and run it as such, rather than put it inside a great organisation like British Aerospace. As we said on Friday, there is a disparity in Scottish Aviation compared with Hawker Siddeley and British Aircraft Corporation which means they will not fit happily together as parts of one great holding organisation. It is like a great 245 chain-store supermarket operator like Tesco Stores deciding to buy the corner shop in the High Street in Barnet, where I live, and run it as part of Tesco Stores. It just would not work. If, for some reason, Tesco Stores felt that they wanted to own that corner ship, or the owners of the shop wanted to sell the store to Tesco, I am sure that if Tesco Stores bought it they would run it separately. This company running in harness with two giants like BAC and the aerospace and aerodynamic side of Hawker Siddeley, does not fit.
We will not press this Amendment to a Division, but I do not think the Government are wise always to equate public ownership with setting up everything inside a national monopoly corporation. They might get much more sympathy throughout the country for their plans of public ownership—I do not know that I should give this advice—if they did not always interpret public ownership as establishing a national monopoly. Scottish Aviation will come to regret the Government's decision in due course.
§ Lord LEATHERLAND
My Lords, before the noble Lord sits down, I wonder if the noble Lord feels that he has interpreted the Tesco Stores corner shop analogy as it will occur. If Tesco Stores were to purchase the corner shop, surely they would knock it down and erect a superstore in its place. The result would be that instead of one man and his wife being occupied in the shop, perhaps a hundred people would be employed. Most probably that is what is likely to happen in Scottish Aviation.
§ Lord CARR of HADLEY
My Lords, if Tesco stores wanted that kind of operation, that is of course what they would do. I somehow do not think that the Government are saying to us: "Because we do not have a giant aerospace activity in Scotland, we need to purchase Scottish Aviation in order to get the base from which to create it". If the Government said that, there might be rejoicing both in Scotland and in Scottish Aviation. But I am afraid that that is not what the Government are saying. If the noble Lord hopes that it is, he is in for a bitter disappointment.
§ Lord TREFGARNE
My Lords, I am not going to press this Amendment now. 246 I am disappointed that the noble and learned Lord, Lord McCluskey, has not been able to tell me what plans the Government have for Scottish Aviation.
The worst fears that have been expressed that Scottish Aviation is only going to be a sub-contractor have not been dispelled. If it is the case that Scottish Aviation is going to be the nucleus of a new light aircraft industry— however unsuited we may feel it to be—why do not the Government say so? Are the Government going to finance the production of the Bullfinch? That is the only prototype the company has available at the moment. I fear that the noble and learned Lord, Lord McCluskey, is not able to answer me now for reasons of procedure. If I withdraw this Amendment and formally move the next one, I wonder if he would be able to answer that point then. In the meantime, I beg leave to withdraw this Amendment.
§ Amendment, by leave, withdrawn.
Lord TREFGARNE moved Amendment No. 9:
Page 82, line 25, leave out ("7/") and insert ("30").
§ The noble Lord said: My Lords, in moving this Amendment may I put a point to the noble and learned Lord as to what is the intention regarding Scottish Aviation? Is it intended that they should design and produce a new range of light aircraft? Is it intended that they should be sub-contractors to the other aerospace companies? I beg to move.
§ Lord McCLUSKEY
My Lords, I cannot answer in relation to the Bullfinch. Previously I gave the answer in relation to the general prospects. If I have not made it clear, may I say that in the Government's view the prospects for the future are likely to depend very much on Scottish Aviation's success in obtaining the sub-contract work which has provided so much of their work-load in the more recent past. There have been certain attempts by the company to proceed with other designs. These attempts have not been wholly successful. Certainly, so far as one can see in the immediate future, sub-contracting is likely to provide the largest part of the work. But one cannot say that it is the Government's intention to confine Scottish Aviation Limited solely to sub-contracting work.
§ Lord TREFGARNE
My Lords, I am obliged to the noble Lord, Lord McCluskey. I rather bowled him a fast one on that occasion. We will not pursue the argument. I beg leave to withdraw the Amendment.
§ Amendment by leave, withdrawn.
§ 5.51 p.m.
§ Lord MELCHETT
My Lords, I beg to move that this Bill do now pass. In doing so, I wonder whether I might detain your Lordships for a moment to look away from the detail of the Bill, which we have been discussing for many hours, to view the prospects for these two great industries which we have taken so much time in debating. These two industries have now been facing the prospect of nationalisation for over two years. I know that we on this side and noble Lords opposite may disagree about how to apportion blame for this continuing uncertainty. But no responsible person with a real interest in the future of these industries can ignore the fact that this uncertainty is now becoming deeply, critically damaging. Those in the industries who oppose the principle of public ownership have made it clear that they want, above all. to see the uncertainties ended.
As noble Lords opposite know—and as I have repeatedly said during the Bill's passage—the aircraft industry cannot long delay vital decisions which will determine its future size and capacity in this country. The scale of projects has now become beyond the resources of any single aircraft company and even beyond the resources of any single country. Because of the economic situation, until about six months ago, there had been relatively little firm activity on future new projects. But the outlook of aircraft manufacturing companies, governments and airlines is now quite different. They are beginning to enter into serious negotiations which will lead to the formation of groupings to produce the new generation of civil aircraft. The British aircraft industry has been involved in useful and promising discussions with a number of potential partners. These are now moving beyond the exploratory stage. But we shall find that they will make their alliances with others if the future organisation of our industry remains in doubt. Indeed it is not difficult to imagine that, as negotiaions now start to move towards the 248 formative stage, these uncertainties place our industry at a disadvantage. If a definite alignment is to be drawn up, the attractions of a partner whose future is in doubt will not be great. I now turn to the shipbuilding industry. During the discussion at Committee stage, a number of noble Lords asked what would be the future shape and size of the British shipbuilding industry. I can well understand their concern about this matter in the light of the difficulties which the industry throughout the world finds itself in. It is not, however, a question to which there are any simple or clear-cut answers. When the new Corporation, British Shipbuilders, is set up, it will be required to produce a corporate plan in consultation with the workforce, which it will then present to the Government. In producing that corporate plan, the Corporation will indicate how it sees the development of the shipbuilding industry.
It would be idle to pretend that any country can isolate itself from the effects of the current world downturn in orders for ships. This will mean difficult and sometimes unpleasant decisions must be taken. At the same time, as my right honourable friend the Secretary of State for Industry has made clear in another place, we are determined to preserve a viable and efficient industry, and if necessary are prepared to take measures to ensure that we retain our fair share of world orders. Noble Lords will know that we have been having talks with the Organising Committee of British Shipbuilders and with those who work in the industry, and on the international side, both in the EEC and in the OECD, about the future of the industry. Ministers have repeatedly said—and I repeat—that no jobs in the shipbuilding and ship repairing industries will be lost solely as a result of nationalisation.
Indeed, in a time of great difficulty for the industry, we believe that nationalisation presents the best hope of being able to draw up a strategy which will ensure that we retain an industry which is able to compete in world markets. Every further delay makes it more difficult to draw up this strategy which is so vital for the future of the industry. I believe that the future of these two great industries, and the future of those who work in them, is at stake. I hope, for the sake of that future, that your Lordships will now allow 249 this Bill to proceed quickly to the Statute Book. My Lords, I beg to move.
§ Moved, That the Bill do now pass.—(Lord Melchett.)
§ 5.56 p.m.
§ Lord CARR of HADLEY
My Lords, I understand that the custom of your Lordships' House permits me briefly to say a word of gratitude to those of my noble friends who have assisted in the debates on the Bill. I should like simply to say a warm "thank you" to both my Front Bench and Back-Bench colleagues who have done a great deal of work and given a great deal of application, quite apart from within this House and on the debates, to the very complicated issues raised in the Bill. May I also say, because I am sure my colleagues would wish me to do so, a word of thanks to the Ministers involved. We may not always have been satisfied with the substance of thcir replies—indeed, we have often been gravely dissatisfied—but we acquit them personally of responsibility for that, and we are grateful for the courtesy and assiduity with which they dealt with the points which we raised. We realise, particularly since they are not Ministers within the Department concerned, how difficult it has been for them to think on their feet and to meet our arguments as freely as we would have wished.
We might also wish to say, not personally to them, as is obvious from the words I have just used, but to the Government as a whole, that when a Government are introducing a major Bill of this kind, they should appoint a Minister in your Lordships' House to be attached to the Department involved for the passage of the Bill. I remember, when your Lordships' House was shortly to deal with the Industrial Relations Act, Mr. Edward Heath appointed my noble friend Lord Drumalbyn as a Minister of State without Portfolio to attach himself entirely to what was then the Department of which I was the Secretary of State, and to work in it for at least a month before legislation came to this House. He had daily access to me as well as to all my advisers throughout the whole of that debate. I feel that, whatever Government are in power, they ought to take that as a model by which we should deal with legislation of this kind in your Lordships' House.
250 This debate on the Question, That the Bill do now pass, provides us with an opportunity to sum up what has happened. This is particularly necessary in view of the somewhat emotional and extremely distorted comments which have been given currency, at least outside your Lordships' House, about what we have been doing. First, I understand that some people feel that we have been imposing a very undue delay on the passage of the Bill. Perhaps I might remind your Lordships that it was only six weeks ago today that we had our Second Reading debate. The Bill has been passed through Second Reading to Third Reading in six weeks to the day. We have had five days in Committee and three days on Report. I would just ask your Lordships to compare that with the Industrial Relations Act, which I have already mentioned in another context. When noble Lords on the Labour Benches were on this side of the House at that time, they required 15 weeks—I repeat, 15 weeks and not just six weeks—between Second Reading and Third Reading. They required not five days in Committee but 18 days in Committee. They required not three days on Report stage, but nine days; that was on a Bill which, although guillotined in the other place, had had the longest number of days ever known on both Committee and Report stages on the Floor of the I louse in another place, and had not been considered simply by a Standing Committee upstairs with such a severe guillotine on Report stage that there was no opportunity for vast numbers of clauses to be debated. So I hope that before anybody in the Labour Party, inside or outside Parliament, makes accusations about undue delay they will just remember the figures I have just given and remember what they believed—and I am sure conscientiously believed—were necessary to deal with the Industrial Relations Act in your Lordships' House.
I turn now to another aspect; and that concerns the Amendments which we have made to the Bill in this House. Some 90 Amendments were made on both the Committee and Report stages, and another two today. Of the 90, 23 were introduced by the Government, and I believe I am right in saying that all but two of those 23 were introduced by the Government at Report stage, which indicated, I think, that they must have heard something 251 during the Committee stage which led them to think it would be wise to introduce themselves at Report stage certain matters they had not thought it necessary to introduce at Committee stage. That was at least some indication that our Committee stage was not wasted on the Government, or indeed on anybody else. Of the remaining 67 Amendments which were introduced by Conservative, Liberal and Cross-Bench Peers, eight were accepted by the Government without a Division.
Thus, we are left with 59 Amendments which were moved and pressed against the Government by Conservative, Liberal and Cross-Bench Peers. I think that, at least on all Amendments of importance, Members of your Lordships' House and, above all, people outside the House should realise that the Amendments were supported and pressed by Cross-Bench and Liberal Peers, and not simply by Conservative Peers. Of those 59 Amendments, of course, a considerable number concern minor consequential points. Some of the primary ones are relatively unimportant. Thus, Amendments of real consequence were mainly concentrated on a relatively few major issues. By no means all those major issues raised questions involving any Party political division, and therefore did not raise any clash of democratic will between your Lordships' House and another place. They raised matters which were in no way part and parcel of the Labour Party's Manifesto.
Let us look for a few moments at some of those Amendments. First, among the Amendments to which we attached enormous importance were those related to the limiting of the powers of the Secretary of State. I am going to talk only about two categories; that is, the powers of the Secretary of State relating to the duties of the Corporations and his powers relating to the powers of the Corporations. The line we have taken is, I believe, consistent. Where it is a matter of the Secretary of State wishing to lay a new duty on the Corporations not covered by the duties described in this Bill, that should require a full legislative process. Where it is a question of the Secretary of State wishing to give the Corporations new powers—that is, not putting new duties on them but giving them new enabling powers—it does not 252 require a full legislative process, but a Statutory Instrument which should be subject, we said, to the Affirmative Resolution procedure. However, going back to an earlier debate today, I would accept the point made by the noble Lord, Lord Northfield, that it might be a question of considering the Negative Resolution procedure as an alternative, at least in certain instances.
That is the view we have taken, and it is a proper Parliamentary view to take. It raises no question of a challenge to the democratic authority of the present Government because, to the best of my knowledge and belief, they did not say in their Manifesto that, in addition to nationalising these industries, they were going to give the Secretary of State powers, without further proper reference to Parliament, to add to the duties of the Corporations to embark on activities which are outside those defined in the Bill and those which are closely related to the industries concerned. I am sure that the Party opposite said nothing of that kind in their Manifesto. They said they were going to take into public ownership these particular industries, but they did not say that while doing that they were going to give the Secretary of State power, without further reference to Parliament, to add to those duties and powers. Therefore, I do not believe that the Government spokesman can claim that in taking up that issue we have in any way been challenging the mandate they claim to have received from the British people.
I now turn to the question of industrial democracy, which has been another main area of the debates which have arisen on certain Amendments which Conservative and Liberal Peers, with Cross-Bench support, have pressed to Divisions and have imported into this Bill. May I remind your Lordships that throughout I have been at great pains from this Dispatch Box to distinguish between the rights to collective bargaining and the rights to consultation. That is because, whatever I may feel in theory about the desirability of collective bargaining rights I admit that in practice it would have been a most explosive thing to attempt to spread the rights of collective bargaining to a much wider circle by Statute. That, if it is to come, must come by processes of industrial inquiry, negotiation, conciliation and a growing understanding. But 253 when we come to consultation, we are not only on much firmer ground but on ground that cannot be challenged.
If the Government wish, by means of this Bill and in advance of the report of the Bullock Committee and of general legislation on what is to be meant by "industrial democracy", to bring into this Bill as a pilot experiment something that they call industrial democracy of a strong and organic kind, then I think we must insist that the legal right to consultation must be available to all. It is wrong to create second-class citizens, which is what the Bill is doing so far as the legal right to consultation is concerned. I am sorry to use the word, but what the Government are proposing here is the creation of no more and no less than social apartheid inside industry. They are making first-class and second-class citizens and, in our view, to do that in the name of industrial democracy is intolerable
If I may go back to the mandate, I do not believe that the Labour Party gave the country to understand in any way that, when they undertook to nationalise these industries, they were at the same time going to introduce compulsory legal rights which would be available to some but not to all the employees of these Corporations. By having the courage to tackle this basic problem of human liberty, I do not believe that we are in any way challenging the mandate which the Government claim to have won from the country.
Now may I turn to another main area of debate and amendment, the question of compensation. Here there is no division on objective between the Government and the Opposition. The Government have said that what they intend and what they believe should be done, is that the owners of the assets which are being taken over should have the earning power of those assets fully replaced. We from this side—the Conservative, Liberal and Cross Benches—I believe have said without any disagreement, "Yes, that is the right objective. We support the Government in the objective". The difference between us here has not been a political one; it has been a purely technical one. Neither we nor any experts outside Parliament believe that the particular method proposed by the Government is capable of achieving their own declared objective. Not only is there doubt about 254 it, there is certainty about it, certainty that the Government's proposed methods cannot achieve the objective which they themselves set out.
Here we had two alternatives, one was to rip out from the Bill all the proposed procedures and put in alternative ones. Some such Amendments were debated and we saw a glimpse of what that might mean. The Opposition Front Bench decided to advise our noble friends and the House as a whole at this stage of the Bill not to do that. It would be difficult to explain, particularly to another place, what we were up to and why; so we decided to concentrate on widening the powers of the arbitration tribunal—the existence of which was proposed by the Government—so that they could genuinely take in enough factors surrounding each case to make sure that not only our objective but the Government's own objective was reasonably capable of achievement.
For the sake of constitutional peace in this country I hope that the Government will not misrepresent what your Lordships have done in amending this Bill so far as compensation is concerned. I repeat that I hope the Government will have the integrity to repeat in another place that what we have sought to do as far as compensation is concerned is to go along 100 per cent. with the Government's declared objective. We have merely sought to change the machinery slightly to make sure as far as we can that the objective which we all want to see is achieved. It is important not merely for constitutional peace but for the good name of the British Government, for investors not only in this country but foreign investors as well, and many other people on whom we are dependent at the present time as far as confidence and good will are concerned.
Briefly, I come to three areas of amendment which I admit are far more controversial: our Amendments to remove from the Bill ship repairing, and naval shipbuilding and delay implementation of the nationalisation of the aircraft industry. So far as ship repairing is concerned, we have argued quite simply that we do not think this is right on industrial grounds. We do not believe that ship repairing can achieve the flexibility which is required of that industry 255 if it is part of a great holding Corporation and we believe it is not correct on industrial grounds to put it within British Shipbuilders. Again I would say to the Government as I said a few moments ago on the much more limited case of Scottish Aviation, that if they really believe that they were in some way committed beyond recall to taking ship repairing into public ownership they ought not to have put it into a nationalised monopoly Corporation. They should have bought control in the individual companies. It is not what we from this side of the House would advocate and I hope that later on nobody will say that this is what we are advocating. I am saying to the Party opposite that if they must carry on with public ownership, and if they also believe not only in the fact of a mixed economy but in the versatility of a mixed economy, to go on putting everything into a number of huge nationalised monopoly corporations is a mad way of going about it industrially and is mad from many other political and libertarian points of view as well.
I would say to the Party opposite that we would have found it much more difficult to resist them on the public ownership of ship repairing had they chosen a different method of doing it. We are in no doubt that on purely industrial grounds it should be removed. May I say in passing that had we not come to that conclusion and had we not intended and believed that we could succeed in removing ship repairing on industrial grounds it is highly probable that we would have regarded it as our duty to take up the matter on the grounds of hybridity. Having listened to all the arguments and having taken full advice about it, we have played this in the open from the beginning and have listened with great care to the replies. We are not doing this simply because we believe it is right to oppose this on industrial grounds; but I think it is also right to say that, had we taken a different view on industrial grounds, we might well have had to take a certain view of our duty on grounds of hybridity.
Lastly, I come to the naval shipbuilders and all I want to say about them is that our reasons for removing them from the Bill are substantially two-fold. First, we genuinely fear that, if nationalised, 256 the naval shipbuilders will lose a significant portion of their overseas business. We believe that quite a number of foreign Governments who have been important customers in the past do not like purchasing from a Government controlled corporation, that is a nationalised corporation. This alone will lose our naval shipbuilders business which they can ill afford to lose in the years ahead. The second reason why we have taken naval shipbuilders out of the Bill is that we fear that the profits which these three successful companies are making will. once they are brought together with all the merchant shipbuilders in a single corporation, be milked off from them. Instead of being used to fertilise further growth and success in their already highly successful companies, they will be used to prop up companies in other parts of the Corporation and it is only too likely that the propping up operations will fail but the three highly successful naval shipbuilders will not have expanded as they otherwise might have done.
So far as the aircraft industry is concerned, it is simply a question of two things: first, we are genuinely convinced that nationalisation will damage and not help this industry. Secondly, and in particular we are appalled at the lack of industrial argument from the Government. After all, the predecessors of the Labour Government set up a very high powered committee to examine the industrial strategy—the Plowden Committee. The Plowden Committee reported and in fact recommended a measure of public ownership which ought to have been acceptable to the Party opposite, but they specifically recommended against nationalisation of the form we are embarking on here. What do the Government think they are doing, absolutely contrary to the recommendation of the committee which their predecessors, the same Party, set up to look into the industrial strategy for the future of the aircraft industry? I must remind your Lordships that the Government have not given one reason for disagreeing with the Plowden Committee. In fact they have not mentioned the Plowden Committee. All the mention of the Plowden Committee has come from other Benches.
We were told by the noble Lord, Lord Melchett, just now and on many other occasions about the uncertainty and the 257 damage of further delay. I must ask the noble Lord and his colleagues, who caused the uncertainty and delay in the first place? The uncertainty and delay of the last two and three quarter years is entirely of their own making, and of nobody else's. It has done great damage, and I simply refuse to admit that the need for some further delay is a satisfactory reason for doing even greater damage, because we are convinced that to nationalise these industries—certainly, to nationalise the aircraft industry, the ship repairing industry and the naval shipbuilders—will reduce the number of jobs in those industries in the short run. In the longer run it will reduce investment in those industries and, therefore, employment potentialities as well. It will blunt the technical edge of our industries in those fields compared with their competitors overseas, and will do damage. In the short run, it will mean a greater strain on the Chancellor's borrowing requirement, to reduce which, we are told, is the major problem in this country, and which the Chancellor has told us only in the last two days is now, once again, likely to be higher than the figure which he forecast to us in July, and for the reduction of which he asked us to accept very painful cuts.
We simply cannot understand why this Government insist on loading on to the borrowing requirement the costs of nationalisation, while thrusting on to the country cuts in fields which really matter to people. The people of this country do not want nationalisation. They do not want to bear the cost of nationalisation; and to suffer larger cuts than would otherwise be the case in the provision of homes and in capital expenditure on hospitals and schools, is crazy. So I say to the Government again: Go to the people and ask them. I have no doubt about the answer they will get.
§ 6.22 p.m.
§ The Earl of KIMBERLEY
My Lords, we on these Benches have not altered our belief in any way, after the many hours and days that we have listened to the whys and wherefores about the nationalisation of the aircraft and shipbuilding industries. We believe, as the noble Lord, Lord Carr, has just said, that it is wrong for the country. It never was right, and in today's economic climate it is even more 258 wrong. It will, I am afraid, only prove harmful and disastrous to everybody. The only possible reason that has some logic for the nationalisation of the aircraft industry is the merger between the two big companies, BAC and Hawker Siddeley, but that could be achieved without nationalisation. In fact, today I put up some very simple proposals which would achieve that and I sent them to the relevant parties. We cannot afford to spend £400 million plus on compensation for the aircraft industry. We need that money to invest in building the four civil air projects for the 1980s.
In all the arguments that have been put by Government Ministers in another place and on television, we have never heard from them that nationalisation, public ownership—call it what you will—will be good for the country's economy, so one can reluctantly conclude that they realise in their hearts that nationalisation is no good. But because, alas!, they are so firmly attached to their Left Wing Manifesto, they need their Left Wing in order for them to remain in Office. So, my Lords, the Government are in a cleft stick. How, at a time like this, can the Government put their ideologies before common sense and the good of the country? It would seem that the Prime Minister, ably supported by the Leader of the House and his Cabinet colleagues, have a divine right to steamroller all this controversial and damaging legislation through Parliament, by the use of the guillotine; legislation which, as the noble Lord, Lord Carr, said, is against the wish of nearly 75 per cent. of the electorate and which today can do no possible good in our negotiations with the IMF.
I should like to warn the Government, and in particular the Left Wing—which makes a change from them warning us that we have to toe the line—that in today's climate it is no longer a question of the people versus the Lords; it is the people versus the Commons. Only today on the tape machine, I saw that the Prime Minister had suggested that there is a conspiracy between the Tories in another place and the Lords to hold up present legislation. I cannot speak for the Conservatives or for the Cross-Benchers, but certainly we have not been approached about any conspiracy. We in this Chamber have a job and a duty to do which 259 were given us by another place; that is, to revise Bills and make them better. If we do not fulfil our task, this second Chamber might as well not exist. We can immediately start surrendering the freedom and liberty of our country. Should we be reformed as a result of doing our duty, I should not disagree; in fact, I should be for it. This Bill is abhorrent to most people, so when we get back many of our Amendments which have been guillotined in another place, let us stand firm and send them back again post haste, together with today's two Amendments, thereby fulfilling to the best of our ability our duty to the large majority of the British people of making this bad Bill slightly better.
§ Lord NORTHFIELD
My Lords, may I ask the noble Earl a question? He is now looking to the future and saying that if the Commons reject some of these Amendments the Lords should stand firm. Does he make any distinction, when he looks at that list, with regard to Amendments which were originally discussed at great length and for many hours in the Commons? Will he still suggest that this Chamber should stand firm in pressing Amendments which were discussed at very great length in the other place?
§ 6.27 p.m.
§ Lord ORR-EWING
My Lords, may I first apologise to the House if I do not stay until the absolute completion, but I have been here for 10 days and, I believe, 70 hours while this Bill has been discussed, and I erroneously expected that we should finish about eight o'clock, which I understand was the target set, and I made other arrangements. So I hope that I shall not be accused of any discourtesy to the House.
§ Lord MELCHETT
My Lords, I hope that the noble Lord does not give everyone the impression that we might not finish by eight o'clock.
§ Lord ORR-EWING
My Lords, I am merely saying, out of courtesy to the House, that if I have to leave it is not 260 a lack of duty of which I may be guilty, but a lack of anticipation. What I found satisfactory about all our discussions was that we had a very loyal attendance, not only on this side but on the Cross-Benches and the Liberal Benches, and many speeches in support of so many of our Amendments from all those quarters, as well as many robust speeches from the Labour Benches, not least from the noble Lord, Lord Shinwell, with whom I served for 20 years. I was always destined, since he was a senior Privy Counsellor and I was not, to follow him in something like 25 debates over that period in the House of Commons. So I have not missed many of his speeches, which are always very apt, and they helped us in our discussions on this Bill.
We have been deeply critical under five headings. We were deeply critical that ship repairing was included, mainly because we had not heard the case made out, and we still have not heard it made out very well. Secondly, we were critical about compensation, because we felt it was unrealistic and would affect the wellbeing of the rump of the companies which are not to be nationalised. Thirdly, we felt that warships should not have been included, and that it would prejudice our export potential if they were. Fourthly, we felt that the power of the Secretary of State under this Bill was too great. Lastly, as my noble friend Lord Carr has so aptly said we were suspicious of the industrial democracy clauses, for which, I believe, a special Bill is to be introduced. It would have been better if they had been left to that Bill, rather than being included in this public ownership Bill. I think he chose the phrase "social apartheid" which is apt. It is sad to think that unless some change is made, two-thirds of the people in the aerospace industry will not be consulted and will not be part of those who under industrial democracy are trying to shape and change the plans of the industry and the firms for which they work.
If I may summarise, the Government case seems to have rested on this: it is a considerable step towards Socialism. This has been said in several quotations. Also, they must do it because it is in the Manifesto. I have been looking at some of the more embarrassing aspects. I hope that the noble Lord, tired as he must be, will be able to avoid a blush when I quote some of the things also in 261 the Manifesto which have certainly gone by the board. It says that they will introduce strict price control. Tell that to the housewives! They will introduce new marketing changes which will help stabilise food prices. That will go down well in this country! If you were to stand in a by-election on that, I imagine you would not do as well as in the last three by-elections. Lastly, they said that they would supply steady stocks of mortgage funds at a reasonable rate of interest. In another place, this was a reference to the ghastly rate of 8 per cent. charged under the Tory Government, which preceded it. It is now 11.5 per cent. if you are lucky and 12 per cent. if you are not. All those promises are easily cast aside, but somehow the policy to go ahead with nationalising shipbuilding, ship repairing, marine engine building and aerospace is sacrosanct, despite the fact that my noble friends have said that it will cost in commitments to this country over £2 billion.
I refer to the February 1974 Manifesto because the October one was really a restatement. What I found strange was that they do not talk about nationalisation in any of those documents. Never. It is "taken…into public ownership". Curiously enough, they set two completely separate standards. It says here,We shall also take shipbuilding, shiprepairing, and marine engineering, ports, the manufacture of airframes and aeroengines into public ownership.That, incidentally, is under the heading—it would be a mockery these days—" Employment and Expansion", neither of which has been in evidence since February 1974. Then, under another heading which has been put second in priority:Labour's determination to ensure…that North Sea and Celtic Sea oil and gas resources [are taken into] full public ownership.Therefore, "full public ownership" means 51 per cent,; "public ownership" means 100 per cent. That standard must be extremely difficult for the electorate to understand. It rather exposes the fact that really it is not the Manifesto; it has nothing to do with it. That is really the excuse. It is the Marxist wing of the Labour Party which insists that they jump, and every time it insists that they jump, they jump. I hope the time is coming when the Social Democrats will use their strength to make sure that they are not kicked about by people whose long-term 262 interest is not the well-being of the Labour movement or, I may say, of our country.
What has changed since 1973 when this commitment was first voiced in the Labour Party pamphlet? First, they have the barest majority. Only last night it was evident that people had to be dragged, kicking and screaming —or, shall I say, the baby had to be dragged in kicking and screaming? The barrel had to be scraped pretty low before they got a majority of one.
§ Lord VAIZEY
My Lords, with respect, I really think that in this day and age that sort of remark is rather below the standard we ought to expect.
§ Lord ORR-EWING
My Lords, I am delighted to take instruction from an academic who has just arrived in our midst. He was critical. I do not think that there is anything wrong in saying that. If you read the papers, you will see that they were much more biting than I was. There were headlines about a baby coming in. Incidentally, the person concerned is my own Member of Parliament, so I am perfectly at liberty to mention her. Also, I think someone came from Northern Ireland. I did not mention the name. It was all in the front page of the mid-day edition of the Evening Standard, if the noble Lord wishes to look at it.
§ Lord ORR-EWING
My Lords, I am very sorry. If anyone can find anything wrong in saying that they have just got a majority of one and it needed a baby in the Lobby and a person dragged from Northern Ireland to produce that majority of one, I cannot. In the previous round they did not have a majority at all until it was re-tried and there were certain arguments about the pairing arrangements. Everyone knows about that; it is proven. I see no reason to withdraw. If they had a majority of 50 or 100 I should feel quite differently, but when it is one, any person with a conscience, and who is keen on democracy, should be careful what he forces through both Houses with such a slender majority.
§ Baroness Phillips
My Lords, the noble Lord knows perfectly well what f was referring to; it was the phrase "kicking and screaming", and, "dragged into the Lobby".
§ Lord ORR-EWING
I am sorry, my Lords. Perhaps I should not have said "kicking". As noble Lords recognise it is a political quotation from many decades ago when it was said that a political Party hadbeen dragged kicking and screaming into the twentieth century.I said "kicking and screaming". I understand there was some screaming nearby; I would withdraw "kicking". Certainly they were dragged, there is no question about that.
What has happened since then? Not only has the majority shrunk to a bare one, but sterling has dropped from 2.30 dollars to the pound to 1.60 dollars to the pound and public expenditure has soared. With it, bureaucracy has gone up. Above all, members of the Inter-national Monetary Fund have arrived on our shores to try to determine what is to he done with our economy. That is what has changed. That is why, even at this late date, the Government should be looking at every possible way of saving public funds and saving divisive measures of this sort which cause damage to our economy.
I heard Michael Foot say on television that they had won the argument in another place. I was not there to listen, but certainly I never heard the argument being won here, despite the efforts by the Minister, particularly as it concerns ship repairing. I would ask him on this issue, is this not an ideal opportunity to leave that part out of the Bill? I do not believe it ever should have been in. It is a service industry totally out of accord with ship-building and its problems are totally different. I estimate it would save about £30 million of public funds. Is it not worth saving £30 million? Of course, I should also like to see them taking out warships. If the three warship firms were valued and fairly compensated that would be worth £70 million, making a total of £100 million.
As I understand it, we are not going to vote against the Third Reading tonight. I am sorry. This arises from what I 264 believe to be an archaic understanding of some 30 years ago. There was the Salisbury Addison Agreement which was drawn up in 1947. I cannot get a published edition from the Library. I think it is an unwritten agreement. Broadly, it was that we would not vote in this House on Second or Third Readings against major measures which were in the mandate of the governing body, in the Commons—
§ Lord BOOTHBY
My Lords, may I interrupt my noble friend for a moment to ask him how he knows that there is going to he no Division on the Third Reading of this Bill tonight?
§ Lord ORR-EWING
My Lords, that is very well put. My noble friend has always been robust. I said, as far as I knew. I would not have apologised for leaving at 8 o'clock had I had other suspicions. Of course, everyone is free and I am delighted that Cross-Benchers may take a more robust attitude. I ant saying we are abiding by an agreement which I suggest was made under very different circumstances. Mr. Attlee's Government had a majority of 150 or more. This present Government—
§ Lord ORR-EWING
My Lords, I was being generous. I said 150. It might well have run down to about 168 at the end of the period. I remember helping to win three or four by-elections of a considerable swing within that period, hut not as great as Workington. However, there was a considerable majority when that agreement was made. In the present circumstances, I wonder whether we are right to abide in every way by that agreement which was made some 30 years ago.
Like many others in this House, I believe that we should reform the House along some of the many lines that have been discussed. However, until the House is reformed I believe that we have a dedicated duty to examine and revise legislation in detail, as we have been trying to do. This duty was laid down for us by Mr. Attlee's Government. We have certain delaying duties and rights which were also laid down by the Labour 265 Government of the day, and until such time as our reform is undertaken I believe that we have to examine the tradition of never voting against measures which we intrinsically believe are damaging to British industry and which are opposed by 75 per cent. of the population. I do not believe that when the Party opposite have a majority of one in another place we can go on for ever allowing a minority Government, controlled by a minority within it, to dictate what is good for this country. Therefore I hope that we shall rethink the formula that was agreed some 30 years ago.
§ 6.41 p.m.
§ Lord CULLEN of ASHBOURNE
My Lords, we seem to be nearing the end of this very long Test Match, which reminds me of an incident in a film some years ago called "The Final Test". An American who was keen on baseball got into one of the stands at Lords and sat between two elderly gentlemen who watched every ball very intently. After about five maiden overs the American turned to one of these fellows and said, "Gee, I hope that something exciting is going to happen soon". The reply was, "I sincerely hope not". In the match that we are engaged in today the bowling of my noble friends has been good and varied but the batsmen have employed a brilliant stonewalling technique.
Certainly this technique applies to that part of the Bill with which I have been involved to a small extent; namely, compensation by notional share values. In that respect it seems to me that the noble Lord, Lord Melchett, ably supported by the noble Lord, Lord Winterbottom, has come to the wicket padded by thick briefs from head to toe and specially reinforced in the head and ears. We have tried our best to explain how notional share values simply do not make sense and I feel quite sure that the noble Lord, Lord Melchett, understands this perfectly well, too. However, I am going to make one more effort to try to persuade the noble Lord that the concept of notional share prices just does not make sense. ft is an entirely new concept. Nobody knows what it means and the intention is to use it for compensating two very important industries.
266 I am sure everybody will be pleased to hear that I do not intend again to go over a lot of old ground. However, I shall repeat something which is illustrative of the point that I am trying to make. In order to arrive at an estimate of the compensation for all hut one of the 43 companies, it is necessary to calculate the price which the shares of those companies would have had if they had been quoted on the Stock Exchange between August 1973 and February 1974. Such a calculation simply cannot he made. If a notional share price is to be calculated in any systematic way, it must be possible to show what factors determine share prices and the weight that the stock market gives to each of those factors.
Many leading City analysts, statisticians and economists have attempted to do this in order to discover whether it is possible to predict future share prices. Obviously it would be very nice to do that, if one could. They subjected data for the larger companies that went back for some years to the most advanced statistical methods, but they found that it was impossible to make predictions with a degree of accuracy that was either helpful, conclusive or meaningful. The weightings given to a number of factors appear to be completely random. In other words, there is no clear or apparent relationship between the share price of an individual company and the general level of the stock market. Two almost identical companies can have a totally different share price when measured short term or over a longer period.
It would be extremely interesting if the noble Lord, Lord Melchett, could give a clear explanation of how a notional share price is to be calculated when Stock Exchange experts find that this is impossible. I believe that the Arbitration Tribunal are going to have a busy and an impossibly difficult task.
§ 6.46 p.m.
§ Lord NELSON of STAFFORD
My Lords, even at this advanced stage I have again to declare an interest. The company with which I am associated has a 50 per cent. interest in the British Air-craft Corporation. I shall confine my remarks mainly to the aircraft industry and at this late hour I shall keep them short. May I add my apologies to those 267 of my noble friend Lord Orr-Ewing, should I have to leave early. I, too, underestimated the timing of this after-noon's proceedings.
I must confess right from the start a bewilderment that in the desparate straits of this country, which were referred to earlier by the noble Lord opposite, we still have this Bill to nationalise the aerospace industry. It is not an industry which is in grave difficulties, again a point which was referred to by the noble Lord opposite. It is an industry which is healthy, prosperous and dynamic and I am glad that noble Lords have referred to this point on several occasions. Why, therefore, are we submitting the industry to the traumatic experience of a major merger and a major reorganisation?
I must also confess to your Lordships that I have listened with great care to what has been said and I have also read with great care what has been said, both here and elsewhere, to try to find a valid explanation or a valid reason for the step which is being taken. There is none. One is only able to agree with my noble friend Lord Carr of Hadley, who said earlier that there is no valid reason. I agree with the noble Earl, Lord Kimberley, who said that if there is a reason for the merger of BAC and Hawker Siddeley, it could have been effected in other ways.
Your Lordships have made many Amendments to the Bill and have improved it in numerous ways, but I should still like to see the Government take their courage in both hands and either drop this measure or put it on one side, having regard to the circumstances in which the country finds itself. I believe that this step would have been welcomed by the vast majority of people in this country. I believe also that such a step would have eased the Government's task in their current negotiations with the IMF. Having said that, I am sure that it is the desire of many noble Lords on this side of the Chamber that, once the Bill has been passed, those charged with the great responsibility of reorganising and running this great industry should have our good wishes in the weeks and years to come.
I must say, however, that even after the Amendments which your Lordships have recorded during these days of debate, 268 I am still gravely concerned about the future of this industry. We should recognise that many questions have been left un-answered. It is not only a question of a strategy for the industry. As the noble Lord, Lord Melchett, mentioned earlier, we have had strategies for this industry for decades. A strategy is nothing new. What we are talking about is how the industry is going to be run. That is what is important. In this respect, I have a few remarks to make which may be helpful to the Chairman-designate of the Aerospace Corporation, the noble Lord, Lord Beswick, who I am sorry to see has left the Chamber at this point.
What I have to say is designed to be helpful to him in the task with which he will be faced. What are the guiding principles of a State organisation? Are they the economic criteria of the business world or are they the political criteria of the Government of the day? Listening to the complaints of chairmen of present nationalised industries, this issue is not clear by any means. Where does the authority lie, with the Secretary of State or with the chairman and his Board or with the chief executive? After hours of debate on this question we still do not know where the authority really lies. What happens when these parties disagree? Who has the final say? How do we ensure the speed of decision and response necessary to meet world competition?
The noble Lord opposite referred earlier today to the need for the power of enterprise and the power of initiative. How very much I agree with him; but we were told very firmly in another place by the Minister charged with this Bill that the Government were not acquiring the shares in this business; they were nationalising it. How can you say, "We must have initiative and enterprise", and at the same time say, "We are not buying the shares and taking over the business; we are nationalising it"? That was the argument put forward to justify the terms of compensation, but now they are saying that they are acquiring the business and that enterprise and initiative will be retained. In my opinion we cannot have it both ways.
How does one Government Department, which is the purchasing Department, settle its differences with another Government Department which is the department responsible for the industry concerned? 269 It is a very difficult issue. What happens when the Secretary of State changes? When the Government change? When the top civil servants change? This will happen. Their careers do not lie in the industry; their careers lie elsewhere. This industry must be run by career people who know what they are doing, who live with the industry and make the decisions in the industry. My fear is that that is not what we are going to get.
Look at the changes which have taken place in the past. Look at the number of Secretaries of State who have been responsible for this industry. One only has to look at that in order to see what will happen in the future. I think there is a lot in this measure which offends the basic criteria of good management. That is what a competitive international industry needs, good management. That means clarity of responsibility and authority. Have we got that? It means clarity of objectives—financial, commercial and production. Are we going to have that and, over all, are we going to have political instability as the guiding hand over this industry?
There is another point I should like to make to your Lordships. Nationalisation means access to the public purse and this removes some of the basic financial disciplines which are essential to a highly competitive industry. Failure to achieve results no longer means disaster. Orders become the god and not sound business judgment. What happens to wage claims and overmanning? These are no longer governed by the potential for bankruptcy. Are we going to see wage negotiations removed from the factory, where they should be dealt with, to the Secretary of State's office in the glare of the national spotlight? These are some of the reasons why I have grave concern for the future of this industry under this measure and these are some of the reasons, in my opinion, why the nationalised French industry is losing millions every year.
I made these notes on these particular issues last night. when thinking what would be appropriate to this particular debate. I picked up my Financial Times this morning and found these issues almost identically spelt out in a report headed, "NEDO highly critical of State industries". It may be your Lordships have already seen this, but perhaps I may give just a quick quotation: 270The National Economic Development Office has completed a long and highly critical study of the nationalised industries, recommending major structural changes in their relations with government.It goes on to refer to:the creation of supervisory boards…a management board which is left free to operate within the guidelines laid down by the Government without day to clay interference.It makes:detailed criticisms of the capital structure of State corporations…the drawbacks of the present system of annual reporting to sponsor Ministries, the relative weakness of State management in resisting union claims and the degree of short term interference by Ministers and civil servants in pricing and investments of the nationalised industries.I happened to see that this morning and those are exactly the fears which prompted me to put these points on a piece of paper last night.
I should like to make two further points, the first in regard to ship repairing. Those of us who have had experience in industry of manufacturing and those of us who have had the experience of repairing will know that these are quite different businesses. It is not a question of using the same labour, the same river or the same area; it is a different business. Ship repairing is a service which has to be handled quickly and expeditiously to meet the demands of a customer as they arise in an emergency. Manufacture has to be planned ahead, shops properly loaded, machine tools loaded, labour fully employed. These are completely inconsistent with each other and cannot be done effectively in the same plant.
That is not to say that shipbuilding should not take on repairs in order to fill gaps in its production. That is quite a different thing. But if you are giving service as a repairing shop you must be free from the fixed requirements of production, of schedules, penalties and of customer requirements. I should like to support strongly the views expressed by my noble friend Lord Carr in hoping that the Government will respect the change which has been approved by your Lordships that ship repairing should be excluded from this measure. On compensation I am glad that your Lordships have improved these provisions unsatis-factory as they are by widening the terms of reference of the Arbitration Tribunal. For the life of me I cannot see how anybody can argue that it is fair for a 271 business to be valued on a fictitious share value of three years ago, taking no account of changes which have subsequently taken place either in the company, outside the company or in the value of money.
I agree with the noble Lord, Lord Robbins, who touched on this earlier today. To my mind this is a critical point for confidence in the Government's handling of this type of compensation. We wish to see more investment in this country, we want to attract investment from overseas and that can only he done if there is such confidence. Confidence will only come if it is seen that fairness is forthcoming in a situation like this. I hope this change will ensure that the Tribunal is in a position to ensure that fairness. The Government themselves have said that they wish to see fairness and I hope that in order to achieve that they will accept the Amendment which your Lordships have put forward.
It has been a long and arduous course for this measure. We can only hope that success will fall to those who have the difficult task of carrying out what is finally decided, but I also hope that the Government, in examining the Amendments put forward by your Lordships, will recognise the wisdom and the sense in them.
§ 7 p.m.
§ Lord REDESDALE
My Lords, I am sorry that the noble Lord, Lord Melchett, is not here, because I wished to comment on the fact that when he spoke earlier he talked about trying to finish by eight o' clock. I should not wish to disappoint the noble Lord in that timetable, and, as always, will try to be as co-operative as possible. Working on the basis that "brief is beautiful", I shall speak for not more than four minutes. I wish to make a few points in thanking noble Lords opposite, first the Front Bench for being so courteous and also for the humour that they have shown, particularly the noble Lord, Lord Melchett, on two occasions which I should like to recall to him. One of those occasions was when the noble Lord was particularly helpful to me on an Amendment which he accepted, and on another occasion when I thought I stung him to reply. I do not 272 think I ever really got a final answer, and I do not expect to get one now, but remind the noble Lord that he never actually replied to me. I felt I was right at the time when I reminded him of his remarks about consultation. He said that his noble friend Lord Beswick had said that he was willing to see anybody at any time. This was one point on which probably I was right at the time, and I am sure the noble Lord, Lord Melchett, is big enough to accept that point.
I wish also to raise the question of the powers of the Secretary of State. These are vast and sweeping. The Secretary of State is able to dictate to the Corporations what to do, providing approval is obtained by Statutory Instrument, which is un-amendable. The Government say that the Corporations should he run on a commercial basis, but one point that seemed to come out, time and time again, is that if the Secretary of State has so much power to interfere it is hard to see how it is possible to run these Corporations on a real commercial basis. Then we come to industrial democracy. My noble friend Lord Ferrers moved the omnibus Amendment. This raised a few smiles when we talked about the dative and the ablative use of the word, but it really got to the heart of the matter. On that occasion my noble friend made the point that industrial democracy should be by all the people and for all the people. At the moment, I am certainly not reassured that this is the case. I hope that we have done something to try to improve this situation, but perhaps we have not been able to go as far as we should have liked.
My Lords, finally, to turn to ship repairing, one point which has not been brought out is with reference to the PA report, mentioned on many occasions. The PA management consultants made the case for Government assistance particularly strongly when it concerned problems attached to the opening of new large dry docks to accommodate enormous new ships. The whole question of investment arises here. One company, a holding company of a ship repairing company, owns the largest dry dock in the world, acquired by the American Navy. This could have been brought to England if the Government had encouraged it, but they discouraged this investment. It is very sad that at this time such Government action has inhibited the industry. My 273 Lords, may I thank once again the noble Lord, Lord Melchett, and his colleagues on the Front Bench for their courtesy? It is sad that so much effort has been put into such a misconceived and expensive Bill.
§ 7.5 p.m.
§ Lord SELSDON
My Lords, I apologise to your Lordships in that, having read the number of words that I have spoken in connection with this Bill, I can assure your Lordships that I shall take only seven and a half minutes more of your time. I have no intention of speaking about the past or on the details of this Bill, but, if I can, I will try in a few moments to convey to your Lordships the implications of the Bill. Those of us who have had something to do with ship-building or aircraft in the past will know that one of the most moving sights in the world is that of a ship going down the slipway; and there is nothing more impressive than a good British ship, built on time. I shall be seeing the launching of one of these on Thursday of this week. Equally, there is nothing more impressive than seeing a new aircraft, a new design. We shall all remember the first time that we saw Concorde take off, or the jump-jet Harrier jumping into the air like a spider on a hot plate.
The fact that this nation can build and design ships, that we can build and design aircraft successfully, as we have demonstrated in the past, may not necessarily be so in the future, unless there is one element which currently is missing: that is, the co-operation between Government and the public sector, the private sector, and the international market place. From these Benches we would argue that Government co-operation with the ship-building and aviation industries should not be by seeking to acquire them, but by finding another way. If the Party for whom I speak were in power, we should be approaching this problem very differently.
But no one who has an ounce of common sense in his head would dispute the fact that Government involvement in the aviation and shipbuilding industries is essential. Regrettably it is essential in shipbuilding, in that Governments around 274 the world, for political or other reasons, have found it essential to create a ship-building industry which is heavily subsidised. We have raised these points before in connection with South-East Asia. Our own shipbuilding industry cannot compete on the international markets without some Governmental involvement in finance. Equally we would argue that because of the substantial cost of the development of new aircraft, and because of the inevitable political involvements, some Government relationships on the aviation side are essential.
Whether for political or other reasons, the Government are approaching this particular Bill and its implications without giving due consideration to the advice that has been freely offered to them by the private sector and by the soundings taken in the international market place. Further, I think we should argue, and. the point has been raised in Committee and on Report, that the Government are entering into an open-ended financial commitment which they have not yet quantified and which other people have attempted to forecast by setting at substantial amounts of money, but the Government have given no satisfactory explanation as to how they propose to finance it. The danger for the future on the financial side is that if because of the requirements of, say, financial expediency, the Government fail to provide these two new agencies with adequate funds for their own development, and fail to capitalise them in the right and proper way, then they will be running from behind and will never be able to get into the international markets.
My Lords, if we are to have a nationalised shipbuilding industry and a nationalised aviation industry, let the Government bear in mind that they will require far more money than they would require if those industries remained in private hands. There has never, to my knowledge, been a transfer of assets or of ownership, on this scale that has not brought with it financial commitment, way above that which the protagonists have claimed is necessary. The profitability of these industries, if some are profitable, can only decline during the transient years before the appropriate reorganisation is completed. The demands placed on management are considerable. We know in these arguments that it is not necessarily labour forces, 275 but management, which is essential if we are to have a successful industry. This management is hard to come by at present. Many of the brighter brains or more effective managements, both in the private and in the public sector, feel that there is only so much that they can do in a spirit of patriotism. They think of their families. They feel that there is only so much they can do in order to generate and build businesses without appropriate rewards and remuneration.
The difference between these industries and previous industries which have been nationalised by successive or previous Governments is that these two industries require, above all, the spirit of the entrepreneur, the man who "gets up and goes", who makes his decision on his own. Many of these organisations which will be acquired have established links throughout the world with entrepreneurs who have helped them build their businesses. These are men who in days gone past would have been known as buccaneers or privateers, people who got up and pursuaded people to buy an aircraft even before it was built and before it was known whether it would fly. This sort of salesmanship, one might say persuasion, is not something that Embassies or Governments are normally successful at doing.
The sales and exports of this nation in general have rested almost entirely in the hands of the private sector and almost completely in the hands of a relatively small number of large companies with good management. I am not convinced by anything I have heard from the Benches opposite—and it is sad that we have heard so little—that the Government's proposals for the financial structure of the new industries or their management will ensure that they are successful. I have no doubt that they could be successful, Aerospace above all, and that ship-building, with substantial pruning and reorganization—because the men and organisation are there; it is not all capital investment—could be successful. It is a question of motivation.
If the Government intend to go ahead with this legislation—I have not spoken a word against the principle because it was in the Manifesto;I have spoken only against implementation—let them bear in 276 mind that it is still not too late to consult with people outside who know better than they do about the running of successful businesses; and the outside world is willing to co-operate with Government, even though it may disapprove of their policies. I ask noble Lords on the Front Bench opposite, bearing in mind the problems in another place: please use your powers of persuasion to encourage your right honourable friends to give consideration to some of the words that have been spoken in your Lordships' House. If not, many of us will feel that we have wasted much time unnecessarily. Many of us have done it with the right sense of proportion and, perhaps we can say, in a certain spirit of patriotism.
§ 7.12 p.m.
Baroness WARD of NORTH TYNE-SIDE
My Lords, I seem to be speaking rather earlier than I had expected. In any event, I assure noble Lords that I have only a few comments to make, which will please everybody because it is getting late and we have had a tremendous debate. I am anxious to get my first point on the record, but let me preface it by saying that in my view the arguments against the Bill have been stated admirably by many noble Lords who have experience of what is involved and what will follow the implementation of what in my view is a deplorable Bill; I am absolutely deadly opposed to it.
Having said that, may I add that we should remember that once the Bill becomes law, once the machinery has been put into operation and once the compensation has been paid, there will be no chance of ever reversing the process should a new Government coming into power wish to do so. It is important to realise that, because many previous measures introduced by Labour and Conservative Governments have been able to be withdrawn or reversed by an incoming Government. That is not so with this Bill. As I say, once it becomes law there appears to be no method of reversing it, however much a new Government may wish to do so. The country, which is mostly against this nationalisation, should be told that because it is important.
I remember what happened when the then Labour Government nationalised the mining industry. When I was returned 277 to Parliament in 1950 as the MP for Tynemouth, having been defeated in 1945, I was continually being asked why the Conservatives did not withdraw the Act nationalising the coal mines. The country felt that that could and should have been done, but in fact it was impossible. Equally, once this Bill becomes law and the machinery is introduced and the inadequate and unfair compensation paid, there will be no opportunity, as far as I can see, to withdraw it, and it is very important that the country should be told that.
I hope that the noble Lord, Lord Melchett, will be able to answer a question I have about the power of the Secretary of State and those who will run the two Corporations. Will it be possible to withdraw the Secretary of State's powers? At least, if we could do that, we could in future stop the implementation of some of the suggestions that have been made about extending the powers of the Corporations over a field so wide that it has horrified many people, including myself.
I sometimes have a little laugh to myself when I hear it said, time and again, that the Secretary of State will be making appointments. Although I do not particularly like the various Secretaries of State, I think that one of these days they will drop down dead because of the tasks which are being given to them. I do not see how any Secretary of State can take on the responsibility of appointing all the boards and choosing people and generally having to do far too much. The powers which are being given to the Secretary of State and the Corporations under the Bill seem almost endless and could, of course, involve in a way the nationalisation of many small industries which are not included in the measure. Lord Melchett is always nice when he tries to answer our questions, although rarely is he able to answer any. Nevertheless, in this difficult world we like triers, even when we say, "How awful! they don't know their stuff". I should like to know whether it would be possible to withdraw these powers, even if we cannot reverse this most unfortunate and disliked Bill.
As the recent by-elections proved, the people in my part of the world do not like nationalisation. That does not mean 278 to say that they would prefer the Tories to be in power. I was for quite a time the MP for the highly industrialised seat of Wallsend, a large shipbuilding area. I won it in 1931. Everybody wrote me off in 1935, but fortunately the constituency decided to retain me, so I know something about what the people feel. They certainly sometimes voted for me, though that does not say that they liked my policy or agreed with me. However, they were kind enough to keep me as their Member of Parliament and therefore I got to know quite a lot about shipbuilding and ship repairing and the problems, needs and requirements of those engaged in the industries. I want to say, though I do not know whether or not my Party agrees with this, that I feel that I should certainly like to see some of the good trade union representatives sitting on boards. I am all in favour of that, whether it be in private or in nationalised industries. I believe that one wants to look a long way ahead and I believe that that policy is coming and will shortly be put into operation and I certainly approve of it.
Finally, as regards ship repairing, I have always tried to do what I could and I am very well satisfied with the shipping industry. I think that it has done a magnificient job for the country and for our economy. I know that the shipping people do not want ship-repairing firms nationalised. So I certainly agree with that and I am very glad that, up to the moment, we have managed to remove ship repairing from the Bill be means of our Amendment. I hope that perhaps the Government will realise why the shipping industry does not want ship repairers nationalised. I believe that it is a tremendous problem. Swan Hunter had and still have a ship repairing yard and I know that when a ship came in with some damage done to it the organisation would start ringing up men on both North and South Tyneside and would get men over who would co-operate marvellously. We have first-class workers on Tyneside if they do not get spoilt by this unfortunate Labour Government. They are magnificent people. They respond. However, if one has an industry that is run more or less centrally and is controlled by the Secretary of State and these Corporations one will not be able to get in each ship repairing yard a body of qualified management and co-operative 279 workers with whom one can get in touch at a moment's notice. One will not have that if ship repairing yards are included in this horrible nationalisation Bill.
I hope that at any rate the noble Lord, Lord Winterbottom, will, if I may say something rather impolite, learn a little more about ship repairing and how it is worked for the benefit of its workers and of the country and of all our industrial undertakings. That is all I have to say. I hope that the Government will be thoroughly defeated in due course, but I realise that once the machinery is started and once that unjust compensation has been paid it will be difficult to change matters. The compensation is very much worse than in the first instance when it was paid to the coal owners when the mines were nationalised. I try to understand a little psychology and I quite realise that when the Government nationalised the mining industry they thought that if they used an independent body to assess the compensation that was to be paid—and the owners thought that they were very well compensated—that would be a good idea psychologically. Since then, however, they have nationalised so many industries that they do not mind what anybody thinks, so that they think it quite all right to give unjust and unfair compensation to the shipbuilders. That distresses me very much.
That is all I have to say. I hope that the Bill never reaches the Statute Book. I hope that we shall have a General Election. I hope that the Government will be defeated, as I am sure they will be. I hope that we shall start trying to rebuild the very important shipbuilding, ship repairing and aircraft industries, though I do not know anything about the aircraft industry because it hardly affects my part of the world. I have enjoyed listening to the debates and all the wonderful speeches made by the many people who know about the details of these industries and I therefore hope that before long the Government will be defeated and the Conservatives Back in power. I believe that that will be a good thing for industry, the worker and the economy of the country as a whole.
§ 7.26 p.m.
§ Lord AUCKLAND
My Lords, I sometimes wonder, if your Lordships 280 had thrown in the towel over these five Bills and said, "Oh, the other place with its elected majority has passed them, let's give formal recognition and have done with it, "thus saving a lot of Parliamentary time and late hours, what would have been the reaction of the country and the other place. I suspect that we should have been accused of being cowardly and insipid and any other adjective one likes to use. As we are undertaking a proper exercise of revision, all sorts of rather lurid adjectives and threats are being issued. Those who watch the Today programme and the Tonight programme and other such television programmes where one can hardly keep away from the politicians, will know full well the slings and arrows that are being thrown from side to side.
The fact remains that, of the five dismal Bills with which your Lordships are at present involved, the present Bill must be the most dismal. It has really not been thought out at all. I can only talk in a limited way about shipbuilding and ship repairing. As I said on Second Reading, I have spent many years in the field of insurance and what worries me very much is the kind of relationship there will be between the Corporation and Lloyd's and other insurance organisations if, by any mischance, the ship repairing part of the industry comes under the amount of State control envisaged in the Bill.
The record of some of the other nationalised industries in this field is anything but good. I am not suggesting that in private industry it is always first class, but with nationalised industries it is very difficult to get any kind of decision. This is one of the principal fears, at least of the insurance industry, when claims are made and not settled promptly, as could well be the case at least initially when this Board is set up.
The other point which has been made almost interminably in this and other fields is the question of delivery dates or, in the case of ship repairing, of repair dates. Whenever one goes abroad on business, as I do from time to time, one hears the cri de coeur almost hurled at one, "What are you doing about your delivery dates?" This is not confined to the present Government. It happened when those of us who sit upon these Benches were in Government, so I am not 281 making any kind of a Party point here. At present, the smaller ship repairing companies at least owe their reputation to the fact that repairs are carried out promptly, efficiently and with the minimum amount of interference from boards of any kind. But as one looks at this dismal Bill one wonders whether this happy situation will continue.
The other point is the question of those who are going into the ship repairing and shipbuilding industry—the trainees. What kind of future is there for them under this rather shaky kind of Board which has been set up? One knows very little about it at the moment. There does not seem to have been very much discussion about it before the Bill was brought before another place. As has been said previously I am quite sure that the noble Lord, Lord Beswick, will make an admirable chairman, but he cannot carry everything on his shoulders, and in these very grave times it is not altogether easy to find people of considerable business experience who can really know sufficient about the industry of shipbuilding and ship repairing to be able to devote the required expertise to it.
So finally I would make this plea to the other place. Of course they will argue, or they are likely to argue, that they have a mandate—we have heard much about this word—for bringing these Bills into law. Incidentally, I cannot remember a Session of Parliament when we have had about six controversial Bills in one Session guillotined at both ends. It is all very well noble Lords opposite and others criticising the Industrial Relations Bill, which I admit had its critical points. I know, I sat through a great deal of it day and night in your Lordships' House; and one can speak in similar terms about the London Government Bill. But they were the only controversial Bills in those particular Sessions. As my noble friend Lord Carr of Hadley said earlier, a very large amount of time was given in both Houses for discussion on those Bills despite the use of the guillotine in the other place. But here we have had the very minimum of time to discuss these Bills. I do not believe that that is the fault of noble Lords opposite. Obviously they are in the hands of the other place and it is a convention that controversial legislation begins in the other place, and that is right.
282 But it does not make the task, or the reputation, of this House any easier to handle if we are to bow to every whim of the other place regarding legislation which has been brought in and which is not in the public interest. Many of the people who are working in these industries do not come from titled families. They are people of humble means, but they work for firms in which father, grandfather, and in some instances generations before them have worked. Therefore, in these companies there is enormous loyalty on all sides. It is not as if industrial unrest is rife in these companies.
So I end with these words, my Lords. Why make these quite extraordinary changes at a time when the country is desperately short of cash? Why not listen to those in the industry who know best, and why not take examples of some of the other State controlled industries which are not exactly on firm feet at this time? I only hope that when they get to the other place these Amendments are very carefully probed. They are not in the main Party political Amendments: they are Amendments of common sense, and they are Amendments which the vast majority of the people in this country want to see carried.
§ 7.36 p.m.
§ Lord WARDINGTON
My Lords, unfortunately I was away last week and was not able to take part in any of the debates at the Report stage. This evening my main concern, like that of my noble friend Lord Cullen of Ashbourne, is the practicality of using the Stock Exchange price as a basis for compensation. I should like to reiterate what I said in the Committee stage; namely, that the price in the Stock Exchange represents the price at which a small number of shares will change hands between a willing buyer and a willing seller. It also represents the whole of the business, the totality of the assets, and it does not seek to show or reflect the performance of any one division or subsidiary, except in very exceptional circumstances.
I used the phrase, "the totality of the assets", but in almost all cases the Stock Exchange price is at a discount to the assets in that it obtains a very valuable quality in addition, that of market-ability, and that is worth a great deal when 283 one is trading between a willing seller and a willing buyer. I read that last week the noble Lord, Lord Melchett, ended one remark by saying:Under the Bill, we are seeking to define an objective value for shares…"—[Official Report, 3/11/76; cols. 1352–3.]On 20th October he said, as reported at column 1437 of the Official Report:the Stock Exchange market is an independent and objective means of assessing the work of a company at any given time.I think it is between a willing buyer and a willing seller, but there is only one company quoted in this instance—only one. All the rest, all the other 42, have to be a notional price based on a Stock Exchange price. I think that it is impossible to say that a notional price is objective. How can it be when it is subject to so many influences? The object of these many Amendments that have been inserted in the Bill is to make the compensation fairer to those corporate shareholders—they are corporate share-holders in most cases—and to make it more workable.
I have been asking myself, what is a notional price? We do not have it in the Stock Exchange. There is no such thing. There is "the" price. The only time I can think of using a notional price is when I am making an offer for sale to the public. I, so to speak, make a guess as to what price I would be able to put on the company's shares that would be attractive to the public at that particular time. This assessment, this guess, is, and always has been, subject to fashion. In 1973 the fashion was to base one's guess on a profits-earning ratio and to project that forward. In this current year, as we saw in August, the fashion has been for new issues to be dividend-orientated.
In an offer for sale, as I have illustrated, the seller is a willing seller and the price has to be pitched attractively enough to bring in buyers so that they are willing buyers. It may be, therefore, that this notional price, which subsequently be-comes a real price, has to be at a small discount in order to attract subscriptions from the public. These shares are not offered to a corporate shareholder: they are offered to the public at large, to hundreds and maybe thousands of shareholders, none of whom takes up a 284 large amount of shares. If they were being bought by any one buyer, then the bid price would be infinitely greater and would be based on assets. My Lords, if the Government can indicate that they are prepared to acknowledge this position by accepting the Amendments that have been put into the Bill, then I for one would feel very much happier. It would be easier to administer and it would be fairer to all. As my noble friend Lord Selsdon said 10 days ago, one has to be fair to the taxpayer as well as to the shareholder.
I have already mentioned the totally different price at which Teacher's stood before they were bid for by Allied Breweries some three weeks ago—190 pence before the bid and 380 pence after the bid. The assets in this case were being acquired, and therefore they had to be paid for. It is interesting to note that after the three-weeks' fall in markets that we have been experiencing the price of Teacher's today is 380 pence. it is the same. That is because in the case of a take-over it is based on assets. In the last 10 days we have seen Lyons disposing of their hotels, and the figure is totally unrelated to price in the market. It is based on assets. Indeed, in this case it is based on book cost; and one might perhaps say that they were not what one would usually describe as a willing seller.
The noble Lord, Lord Melchett, referred earlier to unquoted shares always commanding a price slightly lower than they would have done had they been quoted. I should like to put an alternative view on this, which is that it is lower when it is being offered in part to the public at large but it is not necessarily lower when it is being bought by one particular buyer. I am not trying to increase the bids to be made in total by the Government to the shareholders, but I am trying to arrive at a fair basis of calculation of compensation, both to the companies concerned and to the taxpayer, and something that arbitrators will be able to find totally workable. I hope that the Government will see fit to accept some of the Amendments that we have put in.
§ 7.46 p.m.
My Lords, I hope my noble friend Lord Wardington will forgive me if I do not follow him on the particular topic that he has been 285 discussing with such practical experience. During the Second Reading debate, when I addressed your Lordships, I covered a number of points, but the point about which I felt most strongly was the effect of nationalisation on the boards of companies to be nationalised, and before I sit down I want to say a few words further about that. During the Committee and Report stages of the Bill I have concentrated my contributions largely on the relation-ships between the Corporations and the two great companies, Harland and Wolff, shipbuilders, and Short Brothers and Harland, aircraft manufacturers, in Northern Ireland. I certainly do not want to repeat the great mass of detail that was gone into then, but I should like to round off the arguments for the importance of the relationship between those companies which are outside the scope of this Bill and the Corporations.
Despite everything that has been said from the Government Bench on the importance, as they saw it, of very close association with the Corporations; despite the very sympathetic expression by the noble Lord, Lord Melchett, himself Minister of State at the Northern Ireland Office, on what the objectives should he in regard to those companies; despite, indeed, the fact that the Government themselves introduced an Amendment, which is now in the Bill, which widened the scope of the consultations between the Corporations and the companies left out, the fact remains that the most important Amendment of all that my noble friend Lord Brookeborough (who I see is not here this afternoon) and myself moved was in fact resisted, and it was inserted into the Bill where it now stands only as a result of a Division and a decision by your Lordships.
The noble Lord, Lord Melchett, if he will allow me to say so, has really performed a remarkable feat of steering his way through an enormous number of complicated Amendments and an immense amount of paper which was provided for him as brief, and I am not surprised that he had to tie himself fairly rigidly to his brief and give himself little latitude for moving one way or the other. I say that in order that he may not think that I am being critical of his activities and his efforts in what I am going to say now, but I am critical of two main things. Firstly—and I know many of your Lordships will agree with me—there is 286 the very short time that has been allowed between the various stages to deal with Amendments, to have negotiations and discussions and to get them right. There really has not been time, and it must have been absolutely intolerable for the officials and draftsmen who have been working to try to get them right. One is bound to ask the question, therefore: Who in fact have been the advisers of Ministers on (shall we say?) the shipbuilding side of the Bill? I am quite sure that their advisers and the draftsmen have done their work with the utmost care and the utmost loyalty, but have they been allowed to advise and draft from the firm basis of practical experience in the industries concerned? I am forced to the conclusion that practical experience and conclusions based on experience have not always been the main planks for decisions taken and put into the Bill. I am sure that the noble Lord, Lord Melchett, will agree with me that there has been any amount of practical experience available for him to draw upon if he so wanted.
I cannot speak for the aerospace industry and what I am going to say now will be based primarily on the ship-building industry; but ever since the Second World War there has been a growing movement and desire in the shipbuilding industry to become not merely of a collection of isolated companies but a compact United Kingdom industry. That movement was pushed ahead by the Geddes Report a few years ago with the result that today there is a very active, experienced and authoritative central organisation for the industry—indeed, for both industries.
This, to my mind, is important because it recognises the essential fact of the interdependence these days of industry and Government. You cannot get away from that. The central organisation is absolutely necessary in welding the industry into a compact whole. If we look at the Northern Ireland aspect of the shipbuilding industry, it is an essential part of the United Kingdom industry. It has become so. If I may, I will illustrate that point. If your Lordships were to go to Belfast and look at that shipyard, you would see a remarkable piece of investment second to none in Europe. The first tranche of that investment was originally started in 1969 or 1970.
I hope not, my Lords. I appreciate the noble Lord's intervention. I am going to be very brief. I am illustrating a point. What I was about to say was that this investment came essentially not from Northern Ireland but from Westminster as a result of a recommendation from the then Shipbuilding Industry Board. They recognised that they were making that investment in Belfast as a part of the industry as a whole.
This Bill—and it has become very clear as we have gone through its various stages—has had the effect of carrying out what may be regarded as a surgical operation and has cut off an important limb of the main body, an operation which is seldom good for either side. During the passage of the Bill in another place, they recognised at the very last minute that something will be necessary and (to carry the analogy a shade further) they put on a piece of plaster to try to hold together as best it could the limb to the main body. Our Amendments which we have put down and discussed at some length in this House have merely had the intention of trying to strengthen that plaster in order to keep the two as closely knit together as possible.
I know that any analogy like that may be an over-simplification. I realise that there are political and other problems which have prevented the Government from including these companies under the aegis of the two Corporations; but the main argument that the noble Lord, Lord Melchett, has put forward has been the question of impending devolution to Northern Ireland. I would remind him that the investment I talked about in 1969/70 came from Westminster at a time when there was more or less complete devolution in Northern Ireland. Therefore, I feel that the argument of devolution does not really bear too close a study. And if it were a good argument why was it not applied to Scotland? All that I would say on that is that I hope very much that further study of the Amendment that has now been put into the Bill will reveal that it has really good commonsense and that it will be allowed to remain in.
288 I come finally to the other point that I want to make: the effect of nationalisation on the boards of the operating companies, due to—and I use this word with some hesitation—interference from the Secretary of State. This, to my mind, raises a very serious danger. There is a danger of constraint on the boards of companies, the boards which in my Second Reading speech I likened to the heart of the body but which I call now the power-house of the company. Constraint is never helpful to anything. It reduces confidence in the board, it reduces momentum, it reduces or may reduce the quality of performance and the success, therefore, of the undertaking. One can see several examples of this recently in nationalised industries.
But, my Lords, I take the view that the effect of that constraint is not inevitable. I have been critical of the Bill. I do not like it. But there is one good thing in the Bill, if we must have it; and that is the insertion, the inter-position, of the Corporations between the Secretary of State and the companies. That, I think, is very good and it is particularly good because in the Bill it says that the Corporations have to exercise the largest degree of decentralisation of management decision-taking. That can be a saving grace for the operation of the Bill but it will create great difficulties for the chairmen of the Corporations if they are to take full advantage of that. The chairmen and the chief executives will have a great many problems to deal with—and not only ordinary economic and commercial problems.
Those problems will be intensified and come to them in a stronger way than ever, whether from the Secretary of State, from Parliament or, perhaps more importantly and more difficult to resist, from public opinion. The natural conesquence of those pressures on the chairmen and the chief executives will be an instinctive thought to exercise tighter control over their subsidiaries. Difficult as it may be for them, I hope they will resist those pressures. If I am going too far in suggesting that they should try to behave rather as servants than masters of the subsidiaries, then I would say to them: "Try and drive your subsidiaries with the lightest possible rein. That is the way you will most likely make the greatest success of the very difficult job that has been entrusted to you".
289 I said that I did not like the Bill; but if, for one moment, one forgets the political argument and pictures oneself walking around some of these yards, seeing the men working, the investments there and all the ambitious intentions, efforts and high hopes, one comes back to the inevitable decision that, dislike the Bill as one does, it has to be made to succeed for the benefit of the industries, of all who work in them, and of the economy of this country. That places great responsibilities on the chairmen of the Corporations, and I wish them well.
§ 8.2 p.m.
§ Lord MOTTISTONE
My Lords, I shall be brief. I should like to follow on from what my noble friend Lord Rochdale and my noble friend Lord Selsdon have said. It seems to me that we have to accept this Bill. I suppose it is too faint a hope to think the other place will not ruin it. In its present form, it is probably acceptable in a way. But, come what may, we shall be lucky if we escape this public ownership project altogether.
I should like to address my thoughts to how it might be put into effect with particular reference to how the management are treated and encouraged. This is the key. My noble friend Lord Selsdon said that what we require for success is an entrepreneurial spirit which has been sadly lacking in all the nationalised industries so far. He said that we want the type of organisation in which people are selling aeroplanes that have not flown yet. It is that attitude of mind which somehow must be given freedom to develop. I am sure that is what my noble friend Lord Rochdale was saying in another way.
It seems to me that for one reason or another the nationalised industries that we have at the moment are not functioning in that way at all, and have not done so more or less from the beginning. I am sure that when the Labour Party came into power in 1945 there were many people, particularly in the other place and perhaps one or two here, who had brave hopes of a new way of doing things. It was the early days; there were not all that number of nationalised industries around the world, apart from the other side of what is now the Iron Curtain, and they thought that this was going to 290 be a splendid way of doing things for the benefit of everybody. Somehow that has not worked. It is a great pity. Some of the nationalised industries I personally think we all accept must stay nationalised, like the coal mines and the railways, to mention two.
Having sat through many of the debates on this Bill—though not as many as I should have done—I believe that it is incumbent on this Government, having launched again into this nationalisation theme based on theories which in these modern times are suspect, to analyse where they have gone wrong in the past. They never seem to have done that. I do not think that I have ever heard of consultants being called in to see where the Secretaries of State have made wrong decisions. It is at the Secretary of State and senior civil servant level that we need to have the investigation conducted, not further down the tree.
I am sure that people do their level best in the nationalised industries. But they lack the spark of enthusiasm which comes from the competitive world of free enterprise. It has been said in the interchange at the beginning of these discussions that it is a perfectly good competitive world because we are competing with other countries. This is absolutely true. If this nationalised organisation is subjected to the same pressures from which, we understand, very many chairmen of nationalised industries—such as, for example, Sir Richard Marsh—in the recent past have suffered, the organisation will not get off the ground and compete in world markets. The country cannot afford that at this point in time. With the very best intentions I suggest to the Government that whatever happens to this Bill, however much goes through—and I think in some ways it must because of the uncertainties, because of the position of those shipbuilding firms still left in it—they must start to be self-critical and see how the management at Government level can be adjusted to provide the spark that has been missing in all the other nationalised industries.
§ 8.7 p.m.
§ Lord SHACKLETON
My Lords, I should like to apologise for the fact that the rather unpredictable and unexpected speed with which this Bill moved in its 291 final stages caught me unawares. I know that the noble Lord, Lord Carr of Hadley, made quite a long speech, but I cannot reply to it as I was not here. Nor am I given the opportunity to comment on Lord Selsdon's many "told to the children about the City" speeches to which we listened during long nights. Nor do I regard the Third Reading of a Bill as a suitable occasion on which to debate generally the issues of nationalisation. I would only say that there have been countless investigations, and consultants have been endlessly called in.
I rise for only one purpose; that is, to refer to what I regard as one of the most offensive leaders in The Times about my noble friend Lord Beswick. There has subsequently been one which has tried to redress the balance slightly. I will not repeat the remarks they originally made, but they suggested that my noble friend was unfitted for the post. It is very easy for a secret newspaper—because we never know who writes the leaders—to make comments of this kind, and it is difficult to reply to them. To suggest that my noble friend Lord Beswick, who is uniquely familiar with the aviation industry, is unfitted in the terms they used and which I will not repeat, caused not only great personal offence to me but considerable sorrow to my noble friend Lord Beswick, who is well known to your Lordships and also to many people in the aircraft and aviation industry. Almost uniquely he has been fitting himself throughout his life for this particular post.
He joined the RAF in 1940. He served in Transport Command in the days when it began to move into BOAC. He was Parliamentary Private Secretary to the Under-Secretary of State for Air, then Geoffrey de Freitas. He became Under-Secretary to the Minister of Civil Aviation in 1950. He has been active all his working life with his interests in the aviation industry. He has been vice-president of BALPA, and he has been chairman of the Labour Party Aviation Committee. I have often discussed aviation with him and I know of no one with a greater devotion to the industry and the purposes of the industry.
I would rebut the concept that every man who runs a nationalised industry must automatically have had managerial 292 experience in industry. I have had considerable experience in both, and I know people who have come straight out of the public service—and I could mention many of them—who have been great successes in running industries. Lastly he has spent the last few years as special adviser to Sir George Edwards and has a strong commitment as one of those who believe in Concorde and who contributed to its survival. I am sorry to speak so strongly. I know your Lordships are generous. Many of you know my noble friend Lord Beswick. I only hope that my remarks—though I doubt it—will reach the Press, but I felt that my noble friend had been defamed in a way that made it my obligation to set right.
§ 8.11 p.m.
§ Lord NORTHFIELD
My Lords, I am grateful to my noble friend for those remarks which put the balance right on this issue. I intervene briefly to take up one point made by the noble Earl, Lord Kimberley, on behalf of the Liberal Party earlier in the debate. It was a remark which I felt was unfortunate in a debate which has been marked by extreme moderation of speeches from the other side, something which has heartened me a good deal at this final stage of the Bill's progress. The noble Earl said that the Bill had been steamrollered through the House of Commons with the use of the guillotine. He added that in those circumstances he hoped that your Lordship's House would not only make the Amendments but would insist on them if the Commons were to reject them. That is unfortunate, because the real facts are beyond doubt. The House of Commons spent 186 hours on this Bill. In Committee there were 58 sittings lasting from December to June. It was only at a late stage that the guillotine was introduced on the Bill in the Commons. I believe it is unfortunate, with the dangers of the present situation—that is, a danger of confrontation between the two Chambers—to give the impression that in some way this Bill was steamrollered through the other place. It just is not the case, based on those figures.
It may be said that nevertheless the situation ended there with some clauses not being discussed. But here we are up against a fact of Parliamentary life; namely, that the consumption of time is 293 used as a weapon in the House of Commons, something which I have deplored and which the Chairmen of the Procedures Committee in the House of Commons have tried for a long time to bring to an end. However, my figures show a clear situation in which it was obviously the intention of the Opposition in the Commons to consume time in order to make this Bill look disreputable and disgraced by inadequate Parliamentary discussion. And of course the Party opposite took part in that. I do not blame them; it is still a part of Parliamentary tactics. But it is improper, in my view, then to come back and pretend innocence and say that because of the inadequacies of the other place we must now not only pass but insist on Amendments which they never had a chance to discuss. This was a point deliberately decided upon as tactics by the Opposition in the Commons: to prolong the discussion beyond what is reasonable within the limits which I have described—58 Committee sittings lasting from December to June. It was a tactic to make this Bill look as bad as possible by the time it left the Commons. It is then hard for that same Opposition to come here and say they are innocent and we must stand by everything they do because the Commons did not do their work adequately.
My Lords, the danger we are running into is that of a confrontation between the two Houses. I would deplore this very strongly, if only because this is a weak situation. It is not the case that this was an inadequately discussed Bill in the Commons, and it would be a bad case on which to start some kind of confrontation. I hope, therefore, that the noble Earl's remarks, which he may have made in the heat of the moment, will not be taken at their face value. It is not true that the Bill was steamrollered and it should not follow, I hope, in those circumstances that this House should both make and insist upon Amendments. My final point—
§ The Earl of KIMBERLEY
My Lords, I assure the noble Lord that my remarks were not made in the heat of the moment, but after much thought.
§ Lord NORTHFIELD
Well, if they were I ask him again to study the figures I have given. The noble Earl was not in the Chamber when I gave them. There 294 were 186 hours of discussion in the other place, and 58 sittings of the Committee lasting from December to June. It was only very late after that that the guillotine was introduced. The point I forgot to make was that this is the longest number of Committee sittings of any Bill. So it really is not the case that this is a Bill which was steamrollered through under the guillotine.
Finally, my Lords, I come to what the noble Lord, Lord Carr of Hadley, said—perhaps he will interrupt me after I make the point—when he listed a number of Amendments which are now being made by this Chamber. I ask him to consider the fact that a number of those were strongly and adequately discussed in the other place. I refer to the Amendments dealing with the form of compensation, those with ship repairing and certainly those, perhaps not in their precise form but in the spirit of the Amendments, about industrial relations. They were three of his half dozen Amendments. I again urge that we keep our language and our position vis-à-vis the other Chamber moderate in the final stages of this Bill.
§ Lord CARR of HADLEY
My Lords, I wonder whether the noble Lord would forgive me for interrupting before he sits down, because I am sure he would not want to mislead the House? He used the words "longest sittings".
§ Lord CARR of HADLEY
Yes, my Lords, he did. For example, the Housing and Finance Act, with the Labour Party in Opposition, got 50 per cent. more debating time.
§ Lord NORTHFIELD
That does not detract from my point. It was the greatest number of sittings on any Bill. So this would hardly be a case for a blanket statement that this is a Bill that has been steamrollered with a guillotine through the House of Commons, which is what the noble Lord said.
§ 8.17 p.m.
§ Viscount SIMON
My Lords, if the noble Lord, Lord Northfield, will forgive me, I do not want to go into the question of what was happening in another place, 295 but to come to the Motion here, the Question "That this Bill do now pass". We are coming towards the end of a long debate which in itself comes at the end of a long discussion in your Lordships' House. I should not be surprised if those noble Lords who have lasted the course hope that it will finish soon—and so do I. First, I join the noble Lord, Lord Carr of Hadley, in his opening speech in offering our congratulations and thanks to the noble Lords on the opposite Front Bench. They had a rather rough passage. They kept a steady course, but I sometimes used to wish that they might be blown off it by the reasoned arguments from this side. At any rate, they were always courteous and helpful. Even if they tended to give us the same replies, which left one with the vague impression that sometimes they had not had time to think of the arguments advanced from this side, nevertheless they did their job well. I particularly want to congratulate the noble Lord, Lord Melchett, who has carried a heavy burden indeed.
My Lords, I have not been long in politics. This is the first time I have ever sat through a major Bill from beginning to end. It is an experience which I have found very depressing. I have spent most of my working life in business. I kept thinking how in business one would try to settle the structure of two great industrial corporations. One cannot follow the analogy completely, but I think of the members on the Government Front Bench more or less as the executive directors, who have all the backroom boys behind them and who come along with an organised plan which they offer to the board. Noble Lords on this side are like the outside directors whose job is to probe and to criticise, not for the sake of criticising but for the sake perhaps of testing whether the executive directors have really thought the plan through. In exchanges of that kind in a business there is a very free interchange. Of course the executive directors are keen on their own plan. But if they are any good they are willing to think carefully about suggestions that are made from outside by the non-executive directors and to wonder whether they themselves have been too inward-looking because they have been working on the scheme for so long.
296 Then there is the added difficulty—and this was, of course, a very controversial Bill—that it was difficult, in many of the Amendments, to avoid some Party political interest. That is unavoidable in a Bill of this kind. It produces the unfortunate result, as I see it, that the Government automatically distrust any Amendment coming from the other side and, in turn, the other side distrust any explanation which is given by the Government. Even the several-times-injected sound advice by the noble Lord, Lord Shinwell, did not appear to make any impression upon the Government Front Bench.
Anyway, my Lords, we finally managed to discuss a great number of what I think were very useful Amendments. I shall not go through them: the noble Lord, Lord Carr, has already gone through quite a lot of them. I will only say something about the Amendments that actually removed from the Bill substantial parts of the industries it was proposed to nationalise. First, I suppose, I ought to mention the Amendment which we produced from these Benches to exclude the aircraft industry. That was not intended—and I did my best to make it clear—as a challenge to another place. We thought it was a good example, and indeed it has been supported today by the noble Lord, Lord Nelson of Stafford, of where the same effect could have been achieved without nationalisation. I am bound to say that when I introduced the argument for the second time on Report, I was quite prepared for the noble Lord, Lord Melchett, to say: "That is all very well, but we have discussed this with the noble Lord, Lord Beswick, and with the companies concerned, and we think you are wrong. We do not think they would come together without nationalisation". But the noble Lord did not say that, and because of that, I inferred that he thought it might have been possible. I accept that it is the Government's policy to go ahead with nationalisation, so the fact that it is possible to do that without nationalisation may not have cut much ice with the noble Lord, Lord Melchett. At any rate, it slightly tended to confirm my belief that there was something in the argument I put forward; but I do want to repeat that it was not put forward with the idea of confronting another place.
297 We made it quite clear we felt that in the country's present position there was a case for the Government to look again at a commitment they had entered into two years ago in quite different circumstances. We still think there is any opportunity for the Government to look at the matter again. There are two Amendments Which have been sent to another place in regard to ship repairing and to naval shipbuilders, where the same considerations apply. I hope that noble Lords here, as well as the noble Lord the Leader of the House, who has influence in these matters, will suggest to colleagues in another place that this matter really ought to be reconsidered. It would be tragic if the Government decided to send these Amendments back to us and then were finally compelled, as a result of discussions that are now going on with the IMF and others, to do something of that kind. I do not want to see them forced to do it. I should like to see them take the decision themselves to postpone for some time the achievement of this wish of theirs.
During our discussions on this Bill, I do understand the frustrations of noble Lords opposite when we are debating Amendments and they see the serried ranks on the Conservative Benches and the not-quite-so-serried ranks on our Benches, and they say, "Where are we?" I think they have sometimes been very noble in going into the Division Lobbies when they might just as well say, "Let it go". I think that perhaps they must feel, as all of us do from time to time, rather tired of sitting down, and look forward to a little walk to restore the circulation. But, on the other hand, I hope that noble Lords opposite will also understand the frustration that we feel on this side of the House; the frustration that arises from the fact that we have worked hard on this Bill and have put a great deal into these Amendments, only to be told that there is going to be so little time in another place that many of them will not be able to be considered at all. I am not going to assume that all, or any of them, will not be accepted: I hope many of them will be. But there is a general feeling that those which are not discussed because of lack of time are not likely to be accepted, and I therefore hope that noble Lords opposite will understand our frustration in that respect.
298 In this connection I should like to ask one question, which I know the noble Lord cannot answer: is it not possible that in circumstances which have arisen—and I am not going to argue with the noble Lord, Lord Northfield, as to just how they have arisen—as to the extreme shortage of time, for the Government to move a Motion in another place and here that these Bills should be carried over into the next Session, to give us a little more time? That is quite often done in the case of Private Bills, and I have been told there is no constitutional objection to its being done with Public Bills. I wonder whether noble Lords would like to consult their right honourable friends in another place as to whether that could not be done, just to give us a little more time—it does not need very much more time—to consider these Amendments, because some of them are very valuable indeed and it seems to me it is not necessarily the most important of the Amendments that will be considered.
I do not think I ought to keep your Lordships any longer but, looking back on this long discussion, I have wondered, I must confess, whether a Bill of this complexity would not have been more effectively discussed if it had been committed to a Select Committee upstairs. I know that is not a very popular view, but one great advantage of doing that, of course, would be that the composition of a Select Committee could be so arranged as to more correctly balance the interests of the Parties. Apart from that, a Bill with such a complicated structure and involving such complicated technical problems would have been much better discussed, I should have thought, in a rather less formal atmosphere and in a rather smaller company of people than we have in the Whole House. It only remains for me to say that if this Bill goes through—and I see no chance that it will not—then I must join with other noble Lords in wishing these two industries well. In our own way, we must all do what we can to make them a success.
In conclusion, I should like to acknowledge appreciation of what the noble Lord, Lord Shackleton, said about the noble Lord, Lord Beswick. I did not see the article to which he very rightly took exception. We on these Benches have always had great admiration and, if I may say so, affection for the noble Lord, 299 Lord Beswick, and I am extremely sorry to hear that anything which was said outside has caused him offence. I think I can safely say that I have never heard a word in your Lordships' House that would have caused him any offence at all.
§ 8.29 p.m.
Lord CAMPBELL of CROY
My Lords, at this point in the evening and at this stage of the Bill, I have no intention of speaking for more than a short time. I should like to direct your Lordships' attention to two or three points only; but before doing that I should like to join my noble friend Lord Carr of Hadley in thanking those who have helped us on these Benches during the Bill, and also in expressing appreciation to Ministers for their personal efforts at the Dispatch Box. It is not altogether surprising that one Minister should have dropped out in the later stages because he lost his voice; and we hope he will very soon recover it.
As regards the Amendments which deleted the ship repairing part of the Bill, that is a change which has already been widely accepted. The acclamation has come from many quarters, including the noble Lord, Lord Shinwell, and the leading article in the Sunday Times two days ago. In the ship repairing areas of the country it is also known to make good sense. The Government would he wise to accept those Amendments and, I believe, they will certainly find it difficult to muster a majority in another place to try to overturn the proposals.
Last week during the Report stage I referred to the latest nationalisation proposals emanating from the Labour Party's National Executive Committee; namely, those on selected banks and insurance companies. I referred to the fact that the Prime Minister had described that as an electoral albatross. I pointed out that it was the second albatross, the first being this Bill, and the Government would discover that at the by-election. It took only two or three days for me to be proved correct in that. When I said it I thought I detected from the Benches opposite some derisory noises—or the nearest your Lordships' House ever gets to making derisory noises—but I think I can now 300 Say that the prophecy was not a wild one.
As my noble friends have said during the debate this evening, this is an irrelevant and expensive Bill for the country. The IMF and the countries who are lending us money must be perplexed by the Government's priorities. Probably the one action which the Government could take which overnight would change the situation in their eyes would be to drop this Bill. The second best would be to accept our Amendments to it. In our debates today my noble friends have discussed proposals in the Bill and the changes made and I will not go over the main subjects again. But there are two matters of unfinished business to which I should like to draw attention. In the shipbuilding area, first, on the question of the location of the headquarters of the new Corporation.
During the Committee stage on 18th October I pointed out that it had still not been decided, although British Shipbuilders was supposed to carry out all kinds of activities as soon as the Bill was enacted: they were to be in operation; taking decisions; carrying out a review; submitting a report, all within a few weeks of the enactment of this Bill. But it was still not known in what part of the country the Shipbuilders Corporation's head office was to be, and so far as I know it is still not known. I have seen no announcement. The noble Lord, Lord Melchett, in column 941 on 18th October, said that he accepted that it was desirable that this information should be known before the Bill left your Lordships' House. It is leaving your Lordships' House tonight. It seems extraordinary that at this stage nothing should have been announced and I would ask the noble Lord when he winds up whether he can tell us about a decision on this subject.
The second matter is the restructuring of the shipbuilding industry. The word "restructuring" is perhaps a euphemism for the necessary rationalisation and the redundancies which are bound to follow. The Government have accepted that there must be a reduction in the total workforce in the shipbuilding industry, especially in the very difficult world situation today, but the noble Lord, Lord Melchett, confirmed today and repeated that the Government expected the Corporation 301 to take the decisions in this difficult field. I ask now: when do the Government expect it to become known where the shedding of labour is going to take place and where the closures are to be? In what parts of the country is this to happen? The sooner this is known the sooner action to ameliorate the situation can be put in hand—to consider alternative jobs, the possibility of other industry coming in and the associated retraining schemes.
The Government are leaving the initiative on restructuring the industry to the new Corporation, British Shipbuilders; but will they leave to the Corporation the initiative to carry out its decisions in this field? We on these Benches are concerned to promote the best interests of the British aircraft industry and the British shipbuilding industry. Of course their situations are entirely different. We do not think that nationalisation is the right solution, but we have done our best to improve the Bill which we were able to start discussing in this House only six weeks ago.
§ 8.35 p.m.
§ Lord MELCHETT
My Lords, could I start by thanking the noble Viscount, Lord Simon, and the three noble Lords on the Opposition Front Bench for their kind remarks about myself and my noble friends, and on behalf of my noble friends express thanks for what was said, despite a slightly barbed comment in the tail of the compliments paid to us by the noble Lord, Lord Carr. I should also like to thank three of my noble friends who have given me such a great deal of assistance. It would not have been possible for me to do the work I have been able to do in my Ministerial capacity but for the enormous help and support which I have been given on this Bill by my noble friends in your Lordships' House. I am very grateful, too, for the kind way in which noble Lords opposite, and, indeed, on all sides of the House, have responded to us personally, although I expect they have not always liked everything which we felt it necessary to say to them.
May I also associate myself further with what my noble friend Lord Shackleton said about my noble friend Lord Beswick. Of course, my noble friend was Minister 302 of State in the Department of Industry before I was made a junior Minister in that Department. I know from experience the close association my noble friend had with the aircraft industry in his Ministerial role as well as all the other capacities mentioned by my noble friend Lord Shackleton.
My Lords, by the time this debate ends, which I can assure your Lordships will be in not more than a few minutes, we shall have spent some 78 hours debating this measure in your Lordships' House. I think it would be agreed that this amounts to a very thorough scrutiny. I should have thought that the most recent legislation comparable with this Bill, bringing a manufacturing industry into public ownership, is the Iron and Steel Act 1967. Your Lordships' House spent only 25 hours discussing that Bill. The noble Lord, Lord Carr, gave some interesting analogies with the industrial relations legislation and the length of time that took in your Lordships' House. He did not tell us how many of the 136 Divisions which I understand took place were carried against the then Conservative Government. That statistic might have been useful if we were genuinely to compare the amount of time taken on that measure with the Bill we are discussing tonight.
I do not intend to follow the noble Lord, Lord Carr, on a detailed discussion of all the Amendments passed. It is my contention that a great deal of time has already been spent on that. I should like to respond to the point made by the noble Lord, Lord Campbell of Croy, about the headquarters of British Shipbuilders. He reminded your Lordships of the remark I made, on the Question, That the clause stand part of the Bill, about the desirability of knowing where the headquarters was to be. I hold the view that it would be desirable, but I regret it has not been possible to let your Lordships' House know where the location is to be. As I said then, and would repeat, the Government are committed to ensuring that the headquarters of British Shipbuilders should be in an assisted area with traditional shipbuilding. The matter has been receiving full consideration and an announcement about the choice of location will be made in the near future. I apologise to noble Lords opposite that 303 I am not able to go any further than that before the Bill leaves your Lordships' House.
In coming to consider in more detail just how we have spent our time on this measure—and in this I am following some of the remarks that the noble Lord, Lord Carr, made in opening this debate—I should first like to point out that the Government cannot, by any stretch of the imagination, be accused of taking up time by tabling Government Amendments. Out of 248 Amendments tabled in Committee only two were put down by the Government, and out of 204 tabled on Report only 21 were put down by the Government—mainly in response to undertakings given by myself and my noble friends during the Committee stage. These figures clearly show that most of the time we spent was taken up with points which noble Lords opposite thought it important to raise.
During the Bill's passage frequent reference has been made to the need for full debate because discussion in another place was curtailed. A comparison between the subjects and Amendments considered both here and in another place does, to say the least, throw some doubt on that assertion. If we look at the very important policy isues which this Bill raises, and if we look at Amendments on minor technical points or on questions which an impartial observer would consider of no real significance, we find there are many instances where in this House, as my noble friend Lord Northfield said, we have simply gone over ground which was covered more than fully in another place.
I should like to turn, first, to our debates on some of the far-reaching issues which this Bill covers. I regret that, having looked again at some of the reports of the debates in another place, I have to say that in many instances your Lordships simply repeated arguments which had already been fully put in another place. There are a number of examples that I could mention, but the subject of industrial democracy probably provides the best illustration. Of course, we regard this as one of the key features in the Bill. It was debated for, at the very least, five and a half hours in Committee in another place, for nearly two 304 hours on Report in another place, for five and a half hours in Committee here, and for one and a half hours on Report in your Lordships' House. Each time, inevitably, I and my noble friends answering Amendments were accused of putting forward the same arguments as had been put forward on other occasions. But I think it would be fair to put it on record that, in speaking to the Amendments, noble Lords opposite put forward very much the same points as were made by the Parties opposite in another place.
Perhaps I may turn for a moment to some of the Amendments on more minor matters. We debated in Committee and on Report an Amendment to prescribe qualifications for membership of the Corporations. This is a relatively minor matter. An identical Amendment was discussed in Commons Committee at considerable length, and I have to say to your Lordships that in most of the debates in your Lordships' House the points were merely repeated. We did not move forward from the point where the argument had been left in Committee in another place, perhaps because the fact is that there was really no more to be said on this relatively minor point.
Perhaps I should mention one other example on a somewhat more technical point. Virtually the same Amendments were put down to Clause 35 in Committee in another place where they were debated for eight hours; in Committee in this House, where the debate lasted for about six hours, and again on Report, where discussion lasted for about an hour and a half. These Amendments deal with the mechanics of payment. Of course, I appreciate the interest that noble Lords opposite take in the compensation terms, but these Amendments do not even touch on any of the fundamental questions which our proposals raised.
My Lords, the result of all the time we have spent on this Bill has been to make a small number of useful technical changes and a number of major changes which would have effects of the most serious kind. The scope and nature of these changes make nonsense of the claim that the Bill has been merely revised. It has been altered in the most fundamental way. As introduced into your Lordships' House this Bill would have taken 145, 000 people 305 from the private to the public sector. The Bill, as it leaves this House, will, as a result of the Amendments on aircraft, warship building and ship repair, transfer only some 40, 000. While claiming to revise the Bill, your Lordships have quite simply wrecked it. For the sake of the industries concerned and for the people working in them, when it returns to another place the Government will set out to repair the damage done to the Bill.
§ On Question, Bill passed, and returned to the Commons.