LORDS AMENDMENT (Hansard, 16 November 1976)

§ The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey)

My Lords, I beg to move that this House doth not insist on their Amendment No. 8 to which the Commons have disagreed for the Reason numbered 9. I would wish, with the leave of the House, to speak to the same purpose to Lords Amendment No. 17 which the Commons have disagreed for the Reason numbered 18. In this Bill we have attempted to introduce a modest element of flexibility. Experience with existing nationalised industries has shown that in some cases the statutory framework has proved unduly rigid and has hampered their ability to operate successfully. We have therefore attempted to avoid this danger in the present Bill.

Turning first to Amendment No. 8, this removes the power of the Secretary of State under Clause 2 to adjust the duties of the Corporations in line with changing needs, subject to Affirmative Resolution in each House. As has been explained on numerous occasions, we wish to introduce a procedure whose purpose is to allow the duties of these Corporations to be adjusted more expeditiously than has been the case in the past. In the past when the duties of nationalised industries have had to be changed, it has been necessary to introduce a Bill containing the proposals for change. The delay involved in this procedure can be very damaging. Therefore, we aim to make the procedure swifter, but still subject to the approval of Parliament.

There has been at least some misunderstanding about the purpose and effect of these new procedures, and I should like to reiterate in some detail the effect of 1126 the subsections which the Amendment would remove. Clause 2(5) allows the duties of either Corporation to be changed in three ways. First of all, new or alternative activities may be prescribed, which the Corporation will be required to carry on. We envisage that this would normally happen where an activity already being carried on by the Corporation under the clause becomes sufficiently central to its business for this to be recognised by being written into its duties. Conversely, an activity prescribed under Clause 2(1) or Clause 2(2)—an activity which seems central now—might in the course of time cease to be so substantial that the Corporation should actually be required to carry it on (I emphasise the word "required") and so under Clause 2(5) the Secretary of State will be able to substitute a new activity. I would emphasise that in this respect the Secretary of State can for good cause reduce the duties without need for amending legislation.

Secondly, the Secretary of State may prescribe objectives to be pursued. I emphasise that this is not a power to interfere on detailed affairs—the objectives must be, as the clause says, of a general character. Thirdly, he may lay down conditions of a general character subject to which any activities are to be carried on or objectives pursued.

These provisions are not, and are not intended to be, a means of providing for the extension of public ownership by Statutory Instrument, as has been suggested both in this House and in another place. These provisions were said by noble Lords opposite to provide a way for the Government to undertake some form of back-door nationalisation, perhaps of some unrelated sectors. I see the noble Lord, Lord Carr, smiling, because he knows I am about to refer to the paper bag industry which played an important part in his thinking in the matter. But these provisions could not be used for this because they provide no means of compulsory acquisition. They would simply allow the Secretary of State to alter the duties of the Corporations.

Let me say what I hope will be a final word on the subject of paper bags and set the noble Lord's mind at rest. Even if an eccentric Secretary of State decided to make it a duty of the Aerospace Corporation to manufacture paper bags and both Houses of Parliament were 1127 persuaded to agree to that course, we would have no means of bringing a reluctant paper bag manufacturer into public ownership. There is simply no means of doing it under the Bill. These provisions are nothing more than an attempt to allow a greater degree of flexibility in order to respond to changing circumstances. Indeed, we believe that they are a means of increasing Parliamentary control because they provide an opportunity to formalise smaller changes and to keep the practical and statutory position more closely in line.

With your Lordships' leave, may I say something about. Amendment No. 17. Amendment No. 17 would restrict the Corporations' ability to respond to rapidly changing commercial situations. We are concerned here of course with powers. Originally we were concerned with duties, a distinction which the noble Lord, Lord Carr, made very forcefully. But this Amendment would restrict the capacity to respond rapidly to changing commercial situations and to make the most of suitable opportunities because they would require the specific approval of both Houses before the Corporations could undertake any new activities. To impose Parliamentary control in this way would entail delays which, in the context of commercial operations could effectively prevent the activities being undertaken.

Public corporations, if they are to have any chance of commercial success need a scope for exploiting market opportunties. At the same time, because of their role in the economy and their source of finance, they must be properly accountable. The Government believe that these objectives, which are potentially in conflict, are best achieved and that the right balance is struck between them by the arrangement in nationalised industry legislation of Governments 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 responsibilities. This leaves the Corporations a reasonable degree of freedom while ensuring Parliamentary control. For these reasons I would urge noble Lords not to insist on Amendment No. 8, and in due course, when we reach it, also Amendment No. 17.

§ Lord CARR of HADLEY

My Lords, before I refer to what the noble and learned Lord, Lord McCluskey, has said, may I be allowed to make two general points. I think your Lordships' House should be aware that of all the Amendments which have been disagreed to by the Commons, 53 in all, and which we shall be discussing today, no fewer than 26—in other words, half of them—were rejected by the other place without any discussion at all. I think that that brings home to your Lordships' House the farce to which our democratic Parliamentary procedures have been brought by the use of the guillotine in another place. Of course there was precedent set in guillotining Lords Amendments. I cannot help recalling, however, that when in a previous Parliament we were providing for a guillotine of Lords Amendments on the Industrial Relations Bill we provided not six hours but five days for discussion of Lords Amendments.

There is one other point I should like to make briefly, because Ministers may perhaps wish to consider the matter. I am sure that I am not alone in your Lordships' House in being concerned by the reports which appeared in today's Guardian, "Labour threat to stop cash on shipyards". If one reads the text it includes the aircraft industry as well. Apart from the question of cash, it is suggesting that in certain circumstances the Government would see to it that the new British Shipbuilders Corporation would deny orders to Messrs. Yarrows, Vickers, and Vosper Thornycroft, the naval shipbuilders, and as punishment would see that the orders were sent elsewhere if Parliament were to remove those firms from the Bill.

I am quite sure that these reports cannot be true. If they were true, it would be blackmail of the most despicable kind. I suspect that it might really amount to a breach of Parliamentary privilege. I repeat that I cannot believe that there is any truth in these reports but I hope that Ministers will take an early opportunity today of denying that 1129 there is any truth in these reports. When reports like this appear in a newspaper like the Guardian I feel that the Government should formally deny the truth of them. Although I want to stress to your Lordships that I am not giving them any credence, I thought it was right to bring the matter to the attention of the House.

Coming to Amendment No. 8, the noble and learned Lord, Lord McCluskey, said that the Government in these sub-sections, which the other place are seeking to reinsert in the Bill, are taking a modest element of flexibility. I have not got my Oxford Dictionary with me but I cannot believe that the powers the Government are taking could possibly be covered by the word, "modest". I accept that it may be the Government's genuine intention to use these powers in a modest way. That is probably true. However, as we said at the Committee stage, we have to consider what is in the Bill, not the intentions of the present Secretary of State. As I pointed out and as the Government have admitted, these powers would in fact enable the Government, simply by Statutory Instrument procedure, to place a duty on either of these Corporations to enter into any sort of manufacture or activity they choose to think of, including paper bags. As I said, I deliberately chose an absurd example in order to spotlight the limitless breadth of the powers which are included in the clause. I saw the noble Lord, Lord Sainsbury, smiling when the noble and learned Lord, Lord McCluskey, mentioned paper bags. I am sorry he has left the Chamber because it could equally encompass food retailing and distribution simply by Statutory Instrument. I do not know whether we all realise the literally limitless power inherent in these subsections.

Of course the noble Lord made the point℄and I deny and have never ceased to deny it℄that the Bill does not give them power actually to acquire against their will paper bag manufacturers or food retailing establishments. It simply gives the Secretary of State power to order these Corporations to undertake these activities as a matter of duty, and to do so without any fair trading provisions in the Bill to safeguard the way in which they should carry out the undertaking. I repeat that I am not suggesting for one moment that the present Secretary of 1130 State or the present Cabinet or the new Corporations when set up have any idea of doing those things. I just beg your Lordships to take note of the fact that these are the powers we are putting on the Statute Book for future Secretaries of State of whatever Party. I only hope that one day your Lordships do not look back and say that it was an unwise thing to do.

However, we are not going to fight this matter to the last ditch. We think it is a silly degree of power. We would not have opposed a modest element of flexibility. But it is not a modest element of flexibility; it is an unlimited element of flexibility for which power is being taken. Finally, we wish to register the protest, but having said that I think we must leave it and hope that nobody ever abuses these powers; but that there is scope to abuse them let your Lordships be in no doubt at all.