Lords Sitting of 11 October 1976

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

LAW OF THE SEA CONFERENCE
Lord BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what were the conclusions of the Law of the Sea Conference in New York.
The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, the overall achievements of the Fifth Session, which ended on 17th September, were somewhat disappointing. In particular there was little real advance towards a consensus of the régime for exploiting deep sea-bed minerals beyond national jurisdiction. However, progress was made on a number of other issues. The outstanding issues are now very clear. Given realism and the will to succeed on all sides they should be susceptible to solution at the next session of the Conference next May.
Lord BROCKWAY: My Lords, while welcoming the realism of that Answer, may I ask the Minister whether it is not the case that unilateral decisions have now been taken by nearly all the nations of the West regarding fishing limits, and that legislation has been introduced in the American Congress for unilateral decision about the exploitation of minerals under the ocean? In these circumstances will the British Government do their utmost before the meeting in May to reach an international solution of these problems?
Lord GORONWY-ROBERTS: Yes, indeed, my Lords. We have made absolutely clear from the very start of the Conference, and we continue to make it clear, that we greatly prefer consensus decision and movement in these matters. It is unfortunate that so much unilateral action has been taken and is projected. We shall continue to do our utmost to secure decision and advance on a multilateral basis.
Lord CAMPBELL of CROY: My Lords, is the noble Lord aware that so far as this country is concerned the most urgent matter is new fishing limits, which is of great importance to our fishermen, and that we must extend our fishing limit to 200 miles when the other principal fishing nations do so in accordance with the consensus already reached at the Conference?
Lord GORONWY-ROBERTS: My Lords, I welcome that question because

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it stresses the fact that there is already an informal consensus on this matter and therefore, we think, little more negotiation is necessary to make it quite formal. The United Kingdom has of course been supporting at the Conference the régime on fisheries which appears in the negotiating text, and this would provide for an economic zone in this matter of up to 200 miles. We have said in Brussels, and continue to say, that we would hope to move in this matter with other countries, other participants in the Conference, but of course like other countries we would have to consider whether we had not the duty and obligation to our own population to institute unilateral action which, in the context of so much unilateral action in this matter by other countries, would in fact be multilateral.
Lord BROCKWAY: My Lords, may I ask whether the Government in particular will seek to secure for the landlocked, or the disadvantaged, nations a share of the mineral and fishing resources under the heritage of the oceans, and, secondly, the right, under the international authority of all nations rather than private corporations to enjoy the minerals under the oceans?
Lord GORONWY-ROBERTS: Yes, my Lords. Without going into technical detail I can give the assurance that we shall do our utmost to secure both objectives.
Lord CLIFFORD of CHUDLEIGH: My Lords, in view of the noble Lord's reply to the noble Lord, Lord Campbell of Croy, may I ask why it is that the East European fishing fleets are still hoovering the Channel off the South-West of England?
Lord GORONWY-ROBERTS: My Lords, one is hopeful that there is consensus in the way the noble Lord, Lord Campbell of Croy, has urged, with which I do not fundamentally agree, though one had hoped that if such a consensus is in fact reached that kind of intrusion into our fisheries will not in future happen.
Lord CAMPBELL of CROY: My Lords, will the noble Lord bear in mind that the group known as the landlocked and geographically disadvantaged States is a somewhat unexpected one which includes,
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among others, West Germany, Belgium and Holland?
Lord GORONWY-ROBERTS: Yes, indeed, my Lords, and the lines of, I shall not say confrontation but of dispute on this matter are not very easy to draw. They can he drawn horizontally as between North and South, between developed and developing, and, as the noble Lord indicated, can be drawn right through the middle of Europe. This is an important matter. We would seek to get substantial justice for landlocked and geographically disadvantaged States. It is not an easy matter to solve, and the only way to go about it is by constant examination not only of the merits of the matter but also of certain implications that might flow from taking decisions on this kind of disadvantage. There are other kinds of disadvantage that affect other nations.
Lord SLATER: My Lords, is my noble friend aware that the answers that he has sought to give to this particular Question have been given with the object of trying to allay our fears? But would he not agree that there seems to be little affinity or compromise on the part of other nations in regard to the United Kingdom on this particular issue? Would he not agree that it seems rather remarkable that it has got to take at least another year before we have another Conference, a united Conference of all the nations involved, on this major issue in which we are so interested?
Lord GORONWY-ROBERTS: My Lords, I agree that this Conference is taking longer than any of us would wish. However, it is a very complicated and many sided question affecting all the nations of the world and, as I have said before, five-sevenths of the surface of the world. As to the difference of view between the United Kingdom and other nations, this, I fear, is common to all the groups and individual members of this Conference. I would say to my noble friend, who clearly has been following these complicated discussions closely, that on the whole the United Kingdom, in what it has been proposing and in the way in which it has been helping to accommodate negotiation, is probably in the maintsream of what we hope is an emerging consensus on most of these matters.
Lord BROCKWAY: In conclusion, may I ask my noble friend whether, in view of the appalling delays at these Conferences about procedural points before the issues are really discussed, the representatives of Her Majesty's Government will do their utmost at the coming Conference to secure an end to the confrontation between the developing and the developed countries and the landlocked and the ocean nations?
Lord GORONWY-ROBERTS: Yes, of course, my Lords. That is our policy and intention. We think we have done quite a lot already to press matters in that direction and certainly we hope to do more.

AIRLINES: OVERBOOKING COMPENSATION SCHEME
2.44 p.m.
Baroness BURTON of COVENTRY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what was the result of the discussions between the Civil Aviation Authority and British airlines concerning the application of the overbooking compensation scheme to return flights resulting from an original booking made in the United Kingdom on British airlines; and whether they will make a statement.
Lord ORAM: My Lords, I understand that the Airline Users' Committee, of which my noble friend is a member, is to consider a report of these discussions from the Authority at the Committee's next meeting, on Wednesday of this week. It will then be for the Authority, on the advice of the Committee, to form a view on the matter.
Baroness BURTON of COVENTRY: My Lords, I do not think that is really good enough. Is my noble friend aware that I tabled this Question some two months ago? Is he now saying that I have to wait for an answer until the Committee, of which I happen to he a member and which is also interested in this matter, gets a reply? What is the reasoning behind that?
Lord ORAM: My Lords, the reasoning is that the Consultative Committee is an important link in the chain for reaching a decision and no conclusion has yet been reached by the Authority because it is awaiting the views of the Committee. I think that is perfectly reasonable. I regret, as my noble friend obviously does, that the timing in relation to her Question and the meeting of the Committee is an unhappy one, but first we must await the views of the Committee and then the conclusions of the Authority.
Baroness BURTON of COVENTRY: My Lords, is my noble friend aware—and I think the whole House agrees with me on this—that the difficulty in getting a straight answer to a straight question seems to be insuperable? Is he aware that I was not asking for conclusions but merely for some information? Proceeding from that, is my noble friend aware that British Airways would welcome some progress on this matter and equally would welcome some help from the Government? May I ask the Minister whether he will take this action before Wednesday and the meeting of the Airline Users' Committee? Is he aware that the European Civil Aviation Conference is to take place in Paris this week and that presumably representatives of the Board of Trade and the Civil Aviation Authority will be there? Will he ask his right honourable friends if they will give backing to this suggestion that compensation should apply to the whole of a ticket and not just half of it?
Lord ORAM: My Lords, I take a little umbrage at the opening remarks of my noble friend; I always endeavour to give straight answers to straight questions and I shall always hope to do so. I indicated that the timetable in relation to the Question was particularly difficult and I was hoping that my noble friend would accept that. She raised a variety of points of which I have taken note and I will certainly convey them to the people concerned before the meeting on Wednesday. I have no doubt that my noble friend will have a thorough innings on that occasion on Wednesday.
Baroness BURTON of COVENTRY: My Lords, I apologise if it was my fault and I was not clear in asking my last supplementary question. Does my noble friend realise that, apart from the Airline

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Users' Committee, which perhaps I should not have reintroduced, there is a meeting in Paris of the European Civil Aviation Conference this week? I was asking if the Secretary of State for Trade would ask his representative to support British Airways in its plea that this compensation scheme should be extended to the whole of a passenger's ticket.
Lord ORAM: My Lords, I will certainly convey that matter to my right honourable friend but I doubt whether he would wish to give such categorical advice before we all receive the advice of the Committee to which I referred.
Lord THOMAS: My Lords, would the Minister accept that this is an extremely delicate, sensitive and complicated matter and, as one who first approved a system of overbooking on airlines about 23 years ago, I have full knowledge of how delicate and complicated it is? Would he agree that we must all observe a degree of patience and not try to railroad—if that is not a bad metaphor to use—the airlines into rushed decisions which may have a very bad effect on their economics?
Lord ORAM: I fully accept that, my Lords. It is a complex and often delicate matter and indeed when one takes one step one opens up all sorts of other complications and therefore patience is a very good watchword.
The Earl of ONSLOW: My Lords, is the Minister aware that this matter has been raised by the noble Baroness, Lady Burton of Coventry, time and again in this House and it seems that one gets only "flannel" as an answer? Nothing seems to happen; it is overbooking and it seems to be a matter of simple justice.
Lord ORAM: My Lords, since I have been in this House progress has been made, though I do not say that one follows from the other. However, there has been progress on this matter of a compensation scheme, perhaps not as fast as some noble Lords want but it is important to ensure that progress is sound progress.
Baroness SUMMERSKILL: My Lords, some of us have heard my noble friend ask different forms of this Question on several occasions and believe that she
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has exercised tremendous patience. May I ask my noble friend how long it will take before she must put this Question down again?
Lord ORAM: My Lords, I hope that my noble friend will have a talk with me as to what would be the most appropriate time for such a Question to appear.

HOMELESSNESS OF YOUNG PEOPLE
Lord JANNER: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what action has been taken to implement the recommendations in their Working Group Report on Young Homelessness since its publication in August.
Lord WELLS-PESTELL: My Lords, as my right honourable friend the Secretary of State for Social Services said in another place on 3rd August, in view of current economic circumstances and the Government's call for restraint in local authority spending there is little prospect of early implementation of those proposals which would require additional expenditure. Government Departments are, however, examining what can otherwise be done to help homeless young people and will be consulting with the local authority associations. Copies of the report are being sent today to all local authorities in England and Wales.
Lord JANNER: My Lords, I appreciate some part of the reply given by my noble friend, but does he realise the very grave anxiety about the matters contained in the report, some of which are of a very urgent nature, and will he see what can be done at minimum expense to meet the situation? The situation is extremely serious and a large number of organisations are very deeply concerned about it.
Lord WELLS-PESTELL: My Lords, I can say that there is no organisation, voluntary, or otherwise, which is more concerned about the matter than are the Government themselves. This report has thrown up 11 different sections that have

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to be examined by the Government Departments concerned. Those of your Lordships who have seen the report—and I arranged for those who have taken part in previous questions on this matter to receive a copy—will know that there are 28 recommendations, several of them with subsidiary recommendations. They are being considered by the five Government Departments concerned. An inter-departmental meeting has already taken place and there will now be discussions with local authority associations and other interested bodies to see just how many recommendations can be implemented.
Lord JANNER: My Lords, would my noble friend issue statements from time to time showing what Departments and what organisations are being consulted in the matter? After all, this commenced in 1975 and the members on the Working Group were people of very great standing in the Government Departments concerned as well as representatives of other official voluntary bodies. Would the Minister say categorically which items are to be dealt with in spite of the expense which may be incurred, and which not?
Lord WELLS-PESTELL: My Lords, the Department of the Environment, the Department of Education and Science, the Home Office, the Department of Employment and the Department of Health and Social Security are all involved. As I said, they will very soon be meeting local authority associations and other interested bodies, including the Metropolitan Police and those voluntary organisations that are working in this particular field, and they will consider all the recommendations. I cannot say when they will be in a position to report, nor can I say which recommendations can be implemented at this stage and which cannot.
Lord JANNER: With respect, my Lords, does my noble friend not realise that most of the Departments he has in mind were already represented on the Committee which made the recommendations and that they must have known what the recommendations were about, having been involved in the inquiry, particularly those representing Government Departments? Nevertheless, they have made the recommendations in spite of the financial position. Is it not important
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that something very vigorous should be done at the present time? It is an extremely important problem.
Lord WELLS-PESTELL: My Lords, the five Government Departments were represented by only five members of a committee. They did not know in advance what the Committee's discussions and recommendations would be. All the recommendations in question would put a considerable amount of work on local authorities and one must consider the implications of this. We are alive to the fact that this is an important matter, but can we go on putting more and more work upon local authorities in the position in which local authorities find themselves at present?
Baroness FAITHFULL: My Lords, may I ask whether, if it is not possible for local authorities to deal with this, a voluntary organisation could be approached?
Lord WELLS-PESTELL: My Lords, I am very grateful to the noble Baroness. That is the whole point of the Government Departments having discussions not only with local authority associations but also with the interested bodies concerned which are in fact voluntary bodies. We hope that they will come up with certain suggestions.

HOMELESSNESS: RAIL INFORMATION BOOTH
2.55 p.m.
Lord JANNER: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what have been the results of their continued negotiations with British Rail about permission to site an information booth for the young homeless on the concourse of Euston Station.
Lord WELLS-PESTELL: My Lords, British Rail have repeated their offer to consider letting the East Lodge at Euston Station for use as an information centre. I understand that the voluntary organisations concerned are reconsidering

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their previous rejection of this offer. British Rail have also offered to make facilities available for leaflets giving details of the services and agencies concerned with helping young people in the London area.
Lord JANNER: My Lords, while I thank my noble friend for his reply, is he aware that kiosks are set up on the station from time to time advertising commercial items and has he ever considered suggesting that the railway authorities should have a kiosk in the places which they from time to time sell to their commercial customers?
Lord WELLS-PESTELL: My Lords, originally the Government wanted something of this kind on the concourse itself. As your Lordships will recall, when I replied to my noble friend Lord Janner on 22nd July I myself gave an account of the position at that time, pointing out that British Rail were not prepared to have anything on the concourse. We have made some progress and are depending on the attitude of the organisations which would man this facility. However, we are also having further correspondence with British Rail to see whether we can provide something on the concourse. It may be that the leaflets which British Rail are prepared to allow will be available on the concourse.

AIRCRAFT AND SHIPBUILDING INDUSTRIES BILL
2.57 p.m.
The MINISTER of STATE, NORTHERN IRELAND OFFICE (Lord Melchett): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, that the House do now resolve itself into Committee.—(Lord Melchett.)
On Question, Motion agreed to.
House in Committee accordingly.
[The EARL OF LISTOWEL in the Chair.]
PART 1—THE CORPORATIONS.
Viscount SIMON Viscount SIMON moved Amendment No. 1:
Page 1 line 6, leave out ("Corporations") and insert ("Corporation").
The noble Viscount said: On behalf of my noble friend Lord Kimberley I rise to move Amendment No. 1. As your Lordships may have seen, this is a paving Amendment to Amendment No. 2 and I believe that it will be for the convenience of the Committee if I address myself to the substantive Amendment, Amendment No. 2. There are 51 consequential Amendments which will stand or fall by the fate that befalls Amendment No. 2 and I do not think that your Lordships will want me to waste the Committee's time by reading them all out. They will be clear enough when they are reached and there will be no discussion on them one way or the other.
The purpose of Amendment No. 2 is to remove the aircraft industry from the scope of the Bill. The Government, having put five different industries, each with its separate problems, into this one Bill, it seems to me that they must be prepared to justify their case in regard to each industry. I am bound to say that I did not find the justification offered at Second Reading for the nationalisation of the aircraft industry to be particularly convincing.
The noble Lord, Lord Kirkhill, said quite rightly that new projects are urgently needed in civil aircraft and that this required us to add to technical skills the ability to make right judgments, and I entirely agree with that. But I do not know whether we are meant to assume that a nationalised board is naturally more capable of reaching right judgments than the commercial boards that are at present running the industry. If we look back I think we shall find that certainly some mistakes have been made over the past years, and I venture to suggest that more have been made by Governments than by the boards of the industry.
The noble Lord went on to say what was needed to bring the two existing Corporations together, and that a merger had failed to come about under existing arrangements. I think it would be fair to say that a threat of nationalisation is not likely to make it easier to reach a merger, and I am certainly informed that the companies are very well ready to come to a merger if this threat can be lifted from them. Personally, I am not

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quite certain that I would be keen on a merger in the full sense. The history of forced marriages of this kind in recent years has not been altogether a happy one, and I should have thought that if the two companies could reach a firmly welded working arrangement, in which naturally the Government would be a third party, they could probably produce the right result just as well without having to go through the complicated merging of the private interests involved.
But in any case, whether it is a merger or a consortium, I see no reason at all why the private companies cannot do all that the Government want. The noble Lord said a little further on that the noble Lord, Lord Beswick, and his organising committee were giving a lead in collaborative arrangements with Europe. Given the present circumstances, of course it is for the organising committee to give that lead, and I welcome the news, and I know that we all warmly congratulate the noble Lord, Lord Beswick, upon the work he is doing with the organising committee, with his very special knowledge of this industry over many years.
But it seems to me that if the two companies can be brought together, either by merger or by consortium, there is no reason for any of the work that has been done by the noble Lord, Lord Beswick, and his organising committee to be wasted. The companies can pick up the baton from the noble Lord and carry it forward, and I certainly hope that the noble Lord himself would be associated in some way because he has given so much of his time to this issue in the past few years, and indeed going back over many years.
Of course I recognise that the Government must always be closely involved with the aircraft industry, not least because they are the largest customers. But I am not at all sure that the best relationship between the Government and the industry is, as the noble Lord, Lord Melchett, said in his winding-up speech, that they should be put in the position of shareholders. Incidentally, this Bill does not put them in the least in the position of shareholders, because shareholders meet the board of directors once a year, criticise them if they have to, dismiss them if they have to, but they do not interfere with the management from day to day; and that is what seems to be possible under the Bill,
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although I know that some Amendments have been put down, to be dealt with later, which are intended to reduce the powers of the Secretary of State to intervene in that way.
But I should have thought that again it is a partnership of understanding rather than a financial partnership which was wanted, and that if the merged company or the consortium and the Government sat down together and discussed their problems, there is no reason to suppose that the companies would not do whatever was required. We all know the old story about General Motors, who said that what was good for General Motors was good for America. I think that that is equally true of these great aircraft corporations: what is good for the country is good for them, and what is good for them is good for the country.
I want to say a little about the question of cost. We shall probably be told again that there is no cost involved because it is effected by what is called the transfer of resources. I should be surprised of course if it was found in the end that the cost to the Exchequer of any nationalisation proposal was confined to the compensation. But just looking at the compensation alone, we see that this transfer of resources, as I understand it—and I do not claim to be an economist—is due to the fact that Government stock is issued in return for the shares in the aircraft companies.
I assume that it is not to be an irredeemable stock. I assume also that having regard to the high rates of interest ruling today it will be as short-dated a stock as the Government can possibly manage. Let us suppose that it is a 10-year stock. Is there really any difference, in the eyes of foreigners whose confidence we are seeking to regain, between issuing a 10-year stock, in which admittedly the money will not have to be paid for ten years, and paying in cash and at the same time borrowing the amount on a 10-year basis? If one puts that to the foreign bankers I do not think that they would think it was a very good thing to do at the present time in the situation in which we find ourselves. I do not think somehow that our creditors would be deluded by smooth words.
Now I come to the main reason why my noble friends and I decided to put down the Amendment. In commending the

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Bill, both in another place and here, the Government have clearly been swayed by what they regarded as an obligation arising from the inclusion of this proposal in the Labour Party Manifesto before the last Election. But that the Manifesto was rejected by the majority of the electorate does not seem to have moved them, and the obligation, if it exists, is really an obligation to their Party, or perhaps to a section of their Party, rather than to the people of this country.
I will not labour that point. The point I want to make is that since the Manifesto was written, since the Election took place, since the Bill was introduced into another place, even since the Bill had its Third Reading in another place, the situation in this country has become very seriously worse. Surely this is a time when your Lordships' Committee should give the Government the opportunity to think again. We have the power to do that by sending the Amendment back to another place; but power carries with it responsibility, and is it not our duty in these difficult times to carry the Amendment and send it back? I recognise that politically the Government could not possibly yield to pressure in this House, but in the other place they could, I feel sure, if they were persuaded to do so, also persuade their supporters—they will not need to persuade anybody else—that this is not the time to press forward with proposals like the one we have before us, however cherished they may be.
I can think of nothing that would do more to unite the nation behind the Prime Minister and Mr. Healey in their brave attack on inflation. I can think of nothing that would do more to inspire confidence abroad, than that the Government, despite their known predilections, are prepared at this moment of crisis to put first things first. I beg to move.
3.9 p.m.
Lord CARR of HADLEY: I welcome the fact that this radical Amendment has been moved by the noble Viscount on the Liberal Benches, because it offers us the opportunity to discuss much more thoroughly than was possible in Second Reading, either in this House or in another place, the real merits, in regard to this Bill, of including or excluding the aircraft industry. As was pointed out
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here and in another place, one of the troubles we have had with this Bill is that so many industries are included in a single Bill that the discussion of principle, quite apart from detail, simply has not been adequately covered in two one-day debates, one in each House. So I think we should be grateful, first of all, for the opportunity which this Amendment and those which follow from it give us for discussing the merits in principle; and I hope that on this occasion the Government will really try to address themselves in a more substantial way than they have done hitherto to the real merits and the real objectives of nationalising the aircraft industry.
Although all of us on this side would disagree with the arguments, I think we can see that, in relation to the shipbuilding industry, there are substantial arguments which have to be faced and dealt with. We have made clear that we believe that the argument for reorganising the shipbuilding industry by methods other than nationalisation is stronger than the argument for doing it by nationalisation; but we admit that there is a substantial argument in relation to that industry, the shipbuilding industry. However, we have never heard any substantial argument for the nationalisation of the aircraft industry, and I really think it is about time we did hear it. What is the real economic and industrial strategy behind this proposal? What are the answers to some of the objections, such as, for example, the objection which I raised on Second Reading, and which I think other noble Lords raised as well; that is, the really basic objection, in industrial terms, of uniting the main customer with the main supplier? In most of industry this is regarded as a bad thing to do. I described it as "an incestuous relationship". I think it is generally accepted that benefit to the public normally flows from a dominant customer being at arm's length from a monopoly supplier, and not united with him.
There are substantial arguments of this kind to which the Government really have not yet addressed themselves in either House, so I believe we really do need, for the first time, a properly argued case on the basis of industrial strategy, and not just by reference to a Manifesto which, as the noble Viscount has said, was a Manifesto which managed

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to achieve the support of only 28 per cent. of the electorate of this country—and there is substantial circumstantial evidence to suggest that, of that 28 per cent., only a small minority actually want this industry nationalised.
So I welcome the Amendment for the opportunity which it gives for this proper discussion of the merits, and I may well wish to return to this matter myself a little later, as I am sure many noble Lords will want to do. For the moment however, I want to speak about a more limited aspect of this Amendment; namely, its merit for achieving the purpose of excluding the aircraft industry. I am frankly rather doubtful about this for reasons which I will explain; and I certainly want to express the hope that noble Lords on the Liberal Benches will not press this Amendment to a Division, at least not at this stage of the Bill. I shall certainly advise noble Lords in my Party not to go into the Lobby on this Amendment, at least at this stage, and I should llike to explain why. It really is very simple.
It seems to me that if we are realistic politicians we have to at least provide for the possibility that, at the end of all the Parliamentary processes, this industry might, alas!, find itself nationalised; and, if that is the case, it is of the greatest importance that this Committee should give a proper examination to all those clauses and subsections of, and Schedules to, this Bill which deal with the aircraft industry. If we were to carry this Amendment here and now, of course we should remove all those, as I understand it, from the Bill and we should never give to them that detailed consideration and that substantial amendment which I am sure should be made to them if, alas!, the aircraft industry is ever to be nationalised. I therefore think it is of the greatest importance that this Committee should go through all the aircraft industry clauses and Schedules in this Bill and examine them in great detail, making them as good as it is possible to make them, against the unfortunate accident that at the end of the day the industry might be nationalised. I really believe that that is a conclusive argument for not voting on this Amendment, at least at this stage. However, I should like tentatively to put before noble Lords possible reasons why it might not be the right
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Amendment to vote on even at a later stage.
It seems to me that there is a more and a less responsible way of achieving the purpose which the movers of this Amendment have in mind. I say to them with respect—and I do not expect to carry automatic agreement—that I believe there is a more responsible way than the way they have chosen which might achieve exactly the same objectives, including those mentioned at the end of his speech by the noble Viscount who moved this Amendment. On Second Reading we made clear from this Bench that, although with great reluctance because of our conviction that this Bill was against the national interest and that to nationalise the aircraft industry in particular was against the national interest, we nevertheless felt that we must adhere to the established convention of your Lordships' House that the House of Lords does not refuse a Second Reading to a Bill which featured as a major item in the election programme of the Party which holds office in another place by virtue of the number of seats it has won at a General Election. In my view, although it was a reluctant conclusion, it was a right conclusion.
It seems to me that an Amendment to remove from this Bill the whole of one of the two major industries which are the subject of it really goes against that principle. It is virtually, in effect, a vote against the Second Reading. I do not take that view in relation to some parts of the industries included in the Bill. This is a matter of subjective judgment and degree; but whereas, in due course, my noble friends and I will be arguing strongly for the removal of ship repairing, I think that is in a different category of scale as compared with the removal of the whole of the aircraft industry.
As I have said, this is not black and white; it is a judgment of degree. But that is the judgment of degree which, anyhow at this stage, I make about it; and perhaps I may gently and, I hope, delicately ask noble Lords on the Liberal Benches what they might be saying and doing had this Amendment been moved by the Conservative and Unionist peers. I am sure that they behave with very great consideration and discretion in these matters, but having lived for a good

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many years in another place I could (but I will not, for the moment at least) name one or two of their colleagues in another place who I suspect would be going down to constituencies like my old constituency, which vainly the Liberal Party always thinks it has a hope of winning or of doing rather well, and saying what an irresponsible Lords versus the people issue it was that had been raised by the Tory Peers in seeking to upset the will of the elected Chamber. I know, of course, that no noble Lord on the Liberal Benches in this House would do such a thing, but I am not altogether confident that their less restrained colleagues in another place, or certainly the Young Liberals, might not do that thing. However, that is a matter for the imagination at the moment, and I will not press it any further.
The real point I want to put before noble Lords is this. I believe there is a better and more responsible way of achieving this purpose, and that is the subject of an Amendment which, along with my noble friends, I have tabled this morning. Of course, it is not appropriate to discuss it now, and I will therefore not attempt to go into its merits at the moment. It is an Amendment to Clause 19, which would lay down that the vesting date for the aircraft industry should not be until after the next ensuing General Election. It seems to me that this would really be a more responsible method of proceeding in this House in the sense that it would be more in tune with the status of this House as a revising and delaying Chamber rather than as a Chamber which rejects major Government measures in toto.
It seems to me that if that were to be achieved later on, we should have the opportunity to think again and there would be an opportunity for further reflection and verdict by the electorate; for one of our cases against this Bill is that it is not wanted by the electorate. It would also give the opportunity to postpone this measure to a time which we hope will be a less unfortunate one from the point of view of the financial and economic state of the country.
As I and other noble Lords have said to the Government on many occasions, even if one is in favour of nationalisation in principle—as I appreciate are many noble Lords opposite, even though we
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on this side are not—this really is an extraordinarily inappropriate time to do that. They cannot deny the fact that it costs money; that it is in competition with the Chancellor's other measures to meet his borrowing requirements, and therefore it is a singularly inappropriate thing to be doing at a moment when he is having to do everything he can—not enough, in our opinion—to restrain the public sector borrowing requirement and to fund it in non-inflationary ways from savings and not by printing money.
To postpone, seems to me to avoid some of these immediate problems without asking the Party opposite to forgo its acceptance of the principle—which, although I disagree with it, I accept that they feel very strongly about. I say preliminarily to the Committee that this might be a better way for those who believe strongly that this ought not to be done at all but, above all, not now and that it ought not to be done without the electorate themselves having a further say in the matter. That might be a better way of doing it than the way proposed by the noble Lord. However that may be in the long run, my main plea to the noble Lord and his colleagues at the moment and the main advice that I would give my noble friends is that we should not divide on this Amendment at this stage.
Lord SHINWELL: After the hysterical outbursts which flooded the atmosphere at Brighton quite recently, the speech of the noble Lord, Lord Carr—and I do not say this at all maliciously and certainly not meaning any offence—is about the most flat-footed oration that I have listened to for a very long time. Much of what went on at Brighton will be recalled by noble Lords from Press reports and the media—and some of us have had the opportunity of occupying our enforced leisure time in the last few days in watching television. But what we are being asked to accept now from the Conservative leadership—and I leave the Liberal Benches for the moment—is not that we are to have Margaret Thatcher and her associates flourishing their weapons and using all their invective against nationalisation, not at all! All we are being asked to do by the noble Lord, Lord Carr, is to delay this Liberal Amendment. And for what purpose?—

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to ask this Committee to accept an Amendment not against nationalisation but so that nationalisation should be delayed until the next Election, for that is the purpose of the Manuscript Amendment. What a come-down! What a falling from grace has just been exhibited.
In the course of the Second Reading debate I ventured to express an opinion—and some of the opinions that were expressed in the course of that Second Reading debate were misreported in the Press; but I leave that aside—and I said at the time, and now repeat it, that the proposition to acquire the aerospace industry and bring it under Government control was very much of a gamble. It is a highly speculative industry. With shipbuilding we can deal later, but I still hold the opinion I then expressed.
But again a great deal depends on the form of nationalisation, the method of nationalisation and, in particular, the operative aspects of nationalisation. Because, if I may say so to many of the technocrats and prominent industrialists in this House, who are far more knowledgeable than I can ever hope to be in matters of this sort, there is a fundamental distinction between ownership—or I could use another term, "holding"—and operation. A great deal depends on what my noble friend Lord Melchett has to say on this subject. Could we have some information at this stage, at the beginning of the Committee stage, about the concepts that have been generated in the minds of those who have produced this legislation? Is this to be outright nationalisation similar to the nationalisation of the coal industry or transport? If it is, I dislike it intensely.
If I had my way again—but, of course, I shall not; I could not expect it, not only politically but for other reasons—and had to deal with the nationalisation of the coal industry, I certainly would not have adopted the devices, expedients and concepts which were embodied in that piece of legislation. I would have appointed a chairman and a vice-chairman responsible for general policy—nothing to do with the executive operations, but to determine policy after consultation with the appropriate Minister and on the assumption that the appropriate Minister would have consulted his Cabinet colleagues, and I would have left the opera
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tion entirely to the individual companies to operate. That is what I should have done. It would have been a more sensible form of nationalisation than that which was eventually accepted.
I would apply the same principle to the nationalisation—and I use the term again for want of another—of the aerospace industry; that is to say the appointment of a corporation. I think there is a great deal to be said, and we shall come to that later, as to the numbers who should be appointed for the purpose as members of the Corporation. I would only appoint a couple and, as I say, in association with the Secretary of State, after consultation with the Cabinet, they should determine the line of policy, what should be done with this vast industry—and, let us note, an industry that has defence ramifications. That seems to have been forgotten by some. We cannot leave defence operations entirely and exclusively in the hands of private ownership and private enterprise. There is national security and there are national considerations to take into account. Therefore, I should like some information from my noble friend Lord Melchett on this matter.
Now, about the Amendment itself, the noble Lord, Lord Carr, said, "Leave it aside for the moment", as if it was a minor Amendment. It is a fundamental Amendment. If it is accepted we do not require to discuss all the nuts and bolts of the industry later on, which is suggested by the noble Lord, Lord Carr. He wants some more information about minor matters, matters associated with the industry and nationalisation. He wants that. No, No. If this Amendment is accepted it means that aerospace is out. Is that challenged? No. No challenge from the Liberal Party. Is it challenged from the Conservative Party? No. It is a completely wrecking Amendment and—
Lord CARR of HADLEY: I just want to make it clear that if, of course, the Government were to indicate acceptance of this Amendment, no one would be better pleased than I and all my noble friends. My only fear is that if it were not to be accepted by the Government, although carried by this Committee, it might get back somehow or other, because I have known such things happen, and it would get back without all the

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aircraft provisions having been properly revised.
Lord SHINWELL: What the noble Lord has said has not vitiated a single iota, even a comma, of the argument I have adduced. He said exactly what I have said. I thank him very much. Of course, he wants a prolonged argument. Of course, as an old campaigner and an old propagandist I delight in a long argument, but not when I really want to get something done; and the sooner we get done with this, the better. I say this because I quote now what was said by the noble Lord who was connected, I think, with the shipping industry, who said in the course of the Second Reading, "Let us get on with it. Let us get settled with it." He was dealing with shipbuilding, and I say the same about this. Let us get on with it, let us get done with it, leave it where it is or reorganise it on one line or another.
There is no doubt about it that the Liberal Amendment is an Amendment which means, if accepted, that it is not worth while going on so far as the aerospace industry is concerned, except to ask a few questions about the method of organisation, to decide how many men should run it or how many women should be incorporated in the Corporation; and I do not rule that out, either. That is all. But the Liberal Party know what they are after. They are against nationalisation of the aerospace industry. When it comes to shipbuilding, I think we shall find it a horse of another colour. That is not a very appropriate metaphor, but it is the only one I can think of at the moment. That is the situation. I do not want to detain your Lordships' Committee more than is necessary—in any case, I am not in very good condition for it—but I submit that what we ought to have from my noble friend Lord Melchett is some information as to the method, the formation, the running of this industry if it is taken over by the State, and I ask him in particular to take note of what I have said about the need for incorporating defence in any kind of merger.
Guided weapons were mentioned. You cannot leave that entirely to private enterprise. There has got to be State direction there, for financial reasons and for security reasons, and I am quite sure
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that the very intelligent members of the Liberal Party—they are all intelligent, but I should not have said "very"; I withdraw the word "very"—the members of the Liberal Party, are well aware of the need for this. So I suggest to them that they proceed with their Amendment to see what the Conservatives do, à la Margaret Thatcher last week, and the rest of them. Or was it just hysteria full-blown? Well, I should like to an answer to that. I have a lot to say about that aspect of the subject but I do not want to indulge in a wrecking, a Second Reading speech.
So I suggest that my noble friend tells us what this nationalisation means, how it is going to work, whether it means you take it over and a number of people—seven, ten, whatever it may be—run the show, executive, operative, or whether it is to be left to the individual firms with all their knowledge, their expertise, to run the industry but under direction which has to come before Parliament from time to time according to the Bill and give us an opportunity to express our opinions.
3.36 p.m.
The Earl of KIMBERLEY: I must say I agree very mich with my noble friend Lord Simon and for what I consider some very sound reasons that he put forward as to why we tabled this Amendment. I also, up to a point, agree with the noble Lord, Lord Carr and, of course, I very much agree, as I usually do with the noble Lord, Lord Shinwell. I shall try very briefly to give your Lordships some further reasons this afternoon which I hope will dispel any possible disagreement or doubt that some of your Lordships may have about this Amendment.
First, Britain, as my noble friend Lord Simon said, is in a state of great insolvency and the only way it can get out of this insolvency is to start living within its means. One of the first ways for this country to live within its means is to cut public expenditure, and one of the ways of cutting public expenditure is to drop most or nearly all of the controversial legislation with which we are beset at the moment. If we do this it will achieve two things. First of all, foreign Governments will realise that we mean business and therefore the pound will start getting stronger. Secondly, the majority of the

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British people, who want a sane, non-extremist government, will buckle down and put their shoulders to the wheel, which they will not do unless they are given leadership, and leadership which they recognise has integrity.
In spite of 20 years of ministerial interference in the aircraft industry, the industry has still done a remarkable job, and I do not have to repeat the figures that came out of the Second Reading about the millions of pounds it earned last year compared with the year before, and so on. Your Lordships know that. Taking it all in all, we can consider the industry as in fairly good shape, Nevertheless, the situation could still be improved if the Government at this moment would let it have its head a bit. Then BAC would not be in the very unhappy position that they probably are going to have to axe another 4,000 jobs in the near future. Those are the jobs of skilled men, skilled technicians, and once they have left the industry they will not return to it.
I have myself spoken to various people in both BAC and Hawker Siddeley, from the top echelon down to the bottom, and from those talks I have found out that the majority of the people in those two companies advocate two things: one, they do not want to be nationalised; two, they basically agree, as my noble friend Lord Simon has said, that in some form or other the two companies should be restructured, and this could be done without their being nationalised. I am sure that the noble Lord, Lord Beswick, could be found a position which would be worthy of his many great talents in some form or other on the new Board.
There is one interesting point about the aircraft nationalisation Bill and that is that Westland Aircraft were not included. They were not included owing to trade union pressure within that firm. It seems ironic that one of the arguments by the Labour Party for nationalisation is that it will promote and expand the so-called "industrial democracy", by improving the workers' lot through better management. It has already been said that this Bill was originally put into the Labour Party Manifesto in 1974. If we are honest with ourselves, it was put in to satisfy or pacify the Tribune Group.
Lord MURRAY of GRAVESEND: Will the noble Earl give way? The noble Earl must concede that this was in both General Election Manifestos in February 1974 and October 1974. Notwithstanding what the noble Lord, Lord Carr of Hadley, said about only 28 per cent. supporting it, 39 per cent. of the electorate supported that policy. The Liberals are now propagating a new political doctrine of Parties not keeping their election promises.
The Earl of KIMBERLEY: I thank the noble Lord for rising and saying that. Thirty-nine per cent. to me still does not seem over 50 per cent. We have the assurance from the Government that if this Bill goes through there will be the minimum interference by Ministers and Government in the business. However much the noble Lord, Lord Beswick, says this will not happen, I do not believe he can stop it. Once bureaucracy is let loose, no mortal can stop its insatiable appetite.
A noble Lord opposite me the other day agreed very much with my sentiments when I spoke on Second Reading. Nevertheless, he said that it would be nice to nationalise the industry. I cannot think of a more feeble reason for nationalising the industry than to say it would be nice. I have humbly to suggest four points that might help matters. First, should BAC and Hawker-Siddeley fail to restructure themselves without being nationalised, I believe the Industry Act 1972 could be used. From conversations that I have had, I feel that would be completely unnecessary. Secondly, I should love to see £40 million allocated for spending on the developed Concorde which will not only improve its performance but provide employment. Those 4,000 jobs in BAC I talked about may still be retained. This course will also keep and retain the expertise and the technology that we have in this country if we ever build an advanced supersonic transport in the late 1980s.
The third point is that I should like to see £30 million spent in 1977 on continuing with the research and development on the BAC X-11 with our EEC partners, because by 1984 there is going to be a world need for 1,200 of these aeroplanes. The last point is to continue work on a 150-seater transport. Again, in 1984, 1,500 of these aircraft are going to be

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required by the world's airlines. The money for these projects will be considerably less than the compensation paid in nationalising the industry. We have wasted in the past, through Government interference, somewhere between £5,000 million and £10,000 million on buying American aircraft. Can we not learn from our mistakes? This is a considerably larger sum than we are presently negotiating through the IMF.
If we pursue the action that I have humbly advocated, there will be no doubt in anybody's mind that once more the lion has wings, is fit and well and, in the world of aviation, is a force not to be trifled with. I said not long ago in this Chamber that men who admit their mistakes and can think again, are great. Very often small-minded people do not have this magnanimity. I appeal therefore to your Lordships' consciences. We in this Chamber are not a rubber stamp. Two weeks ago, on Second Reading, some 30 Peers spoke against this Bill. As the noble Lord, Lord Shinwell, said, not only this afternoon but long ago, we should show the colour of our money and not just talk about it. The time has come for not just us in this Chamber but for Britons throughout the land to put their country's needs before their political Parties. That is why I will support my noble friend Lord Simon and will press this Amendment to a Division. Whatever might be the outcome of the vote, I shall leave the Committee tonight with a clear conscience.
3.45 p.m.
Lord SLATER: I was very interested in what the noble Viscount, Lord Simon, said. He presented his case clearly. He felt that nationalisation of the aircraft industry should not take place. He was sceptical regarding the form of marriage which might take place. I began to wonder whether or not he was a married man or whether his marriage was still in existence. Listening to the appeal made by the noble Lord, Lord Carr of Hadley, reminded me of something. I do not know whether the noble Lord was in the other place at the time I have in mind—I think he was. But the speech he made appealing to noble Lords not to go ahead with this Bill at this juncture, but to let it lie until after the next General Election,
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made me wonder whether the Research Department at the Conservative Central Office had informed him of what had happened in the other place at the time when Mr. Anthony Eden (as he then was) sought to get the Labour Government in the 1950s to suspend going ahead with the nationalisation of the steel industry.
The resolution at that particular time from the Tory Opposition was that we should suspend nationalisation of the steel industry for no less a period than six months. I well remember one of our Back-Bench Members putting a question. There was only one Member of the Tory Opposition on the Front Bench on this occasion, Mr. Oliver Lyttelton, as he then was. The Back-Bencher asked: What would happen if the Conservatives came back into power at the next Election with a majority of only one? Mr. Lyttelton said he was the only Member representing the Shadow Cabinet and that if that occurred they would denationalise the steel industry.
The noble Lord, Lord Carr of Hadley, said that the people of this country do not want this. How does he know? What propaganda has taken place? It is not only that people have been watching on the "box" the Conservative Conference and taking note of the speeches that have been made away from the rostrum regarding that Party's policy. I think the noble Lord ought to have second thoughts when he makes his appeal to the Liberal Benches not to press forward with this Amendment when the Conservative Party has been so guilty in the past. Another feature regarding nationalisation so far as the Labour Party is concerned is—and this edict was laid down by Herbert Morrison—that we will pay compensation at the national value of any particular stock we might take over and place under our control.
I remember a late Member of this Chamber, at one time known as Viscount Castlereagh. Then he became Lord Londonderry. What did he say? He told us that it was the finest thing that had ever come his way as a colliery owner when we nationalised the mining industry, and that the amount of money he received as compensation had saved him, along with many others, as they had not the capital to bring forward new types of machinery

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into that basic industry and to bring it up to par.
I should ask the noble Lord, Lord Carr, a question, and it is this. As he knows so much about private industry, can he tell us why the Tory Party has not cited the CBI in all its propaganda over the last week but could only direct its attention at the trade unions in this country and their trying to run the Parliamentary party and the Parliamentary Government of this country? What overtures are they making to the CBI? Can it be that they will make representations to the CBI that if a major company in this country finds itself in a serious financial position it should not be helped in any way at all, if it is one of the lame ducks that one of the Ministers in a previous Tory Government spoke about? I repeat, will the noble Lord make that application to the CBI now under Lord Watkinson and others and say, if any major firm in this country finds itself in dire circumstances, whether or not the Government will come to its aid?
Lord GEORGE-BROWN: I wonder whether my noble friend would allow me? He quoted Herbert Morrison, a great friend of mine and I hope a great friend of his. Herbert Morrison did not only say that the nation should pay for what it takes; he also said that it is for the nationalisers to prove their case. Would my noble friend please tell me how one proves the case for nationalising the ship repairing part of the industry?
Lord SLATER: I am not going to disagree with my noble friend as to what Herbert Morrison said. I used that reference because it is and always has been the policy of the Labour Government ever since I came into it in 1950. My noble friend came into it in 1945, I believe, and held higher positions that I. But even apart from that the position still is that if the Labour Government should take over this particular type of industry, as is under consideration at the moment, it will pay compensation, it will meet the demands made upon it, in consultation, by negotiation and formal procedure. It is up to the Liberal Benches—and nobody, in my opinion, can ridicule or criticise the case presented by the noble Viscount, Lord Simon, for his Amendment. If I were he I would not be influenced in any way by the noble Lord, Lord Carr, and not carry
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out what I intended to do in the first place when I put this Amendment on the Order Paper.
3.55 p.m.
Lord MELCHETT: I hesitate to interfere in what appears to have been largely a private fight between some of the opponents of this Bill, but there are several important points and some quite spurious allegations against the Government and our case for nationalising the aircraft industry to which I think I should reply. My noble friend Lord Shinwell asked me to go into some detail on the way in which the industry will be organised under nationalisation. Also in the course of his speech he accused the noble Lord, Lord Carr, of attempting to prolong the debate. To ask me to go into a lot of detail about matters which are to be covered by later Amendments might well lead me into the same trap.
However, I should like to make it clear to my noble friend that my noble friend Lord Beswick has said that he intends to avoid entirely an over-centralised bureaucratic headquarters. He intends to leave decisions delegated as close as possible to the point of production. The men now running the industry and its plants will continue to run them. There will be some reorganisation to secure the benefits which, as I understand it, both the Conservative Party and we see in a merger between these two companies, but it will be essentially a delegating, decentralised system of organisation. As my noble friend will know, the Amendment already written into Clause 5 of the Bill to promote decentralisation does in this way already endorse what my noble friend Lord Beswick intends in the running of the industry.
Noble Lords will know that in discussing Amendment No. 1, we are also discussing approximately 52 or 53 consequential Amendments. I hestitate to start off by saying this but I am advised that in fact 53 is not enough consequential Amendments. There are technical deficiencies, therefore, in Amendment No. 1 in that it does not achieve, with its various consequential Amendments, what I understand noble Lords on the Liberal Benches would wish to achieve.
Some reference has been made both by the noble Lord, Lord Carr, and the noble Viscount, Lord Simon, to the fact that

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there was a pledge in two Election Manifestoes to nationalise the aircraft industry. I do not want to make too much of that but one is in a difficulty in this House because, as the noble Lord, Lord Carr, pointed out, it has been the practice of this House not to throw out on Second Reading measures which were placed in a Party's Election Manifesto if that Party has the majority in another place. That, as I understand it, was why the noble Lord and his noble friends on the other side of the House did not vote against a Second Reading. I entirely agree with him that to vote for this Amendment tonight would make a mockery of not voting against a Second Reading of the Bill a couple of weeks ago. I can see no difference between deleting a major part of the Bill like this and abstaining from a vote on Second Reading. I merely make the point because it is one that was taken by some noble Lords opposite, although I appreciate that any mention of the word "Manifesto" is anathema to noble Lords on the Liberal Benches.
The case for taking the aircraft industry into public ownership has been made many times in another place, as it was, I believe, during the Second Reading debate here. I find it particularly extraordinary that noble Lords on the Liberal Benches are seeking to perpetuate the continued existence of two large groups in the aerospace sector when it has for so long been recognised that amalgamation of the resources of the two main groups is urgent and long overdue. Indeed that has been the case since the Plowden Report in 1965.
The Earl of KIMBERLEY: My noble friends and I have never tried to stop the two large companies from having some form of amalgamation. We have just said that they could be amalgamated without being nationalised.
Lord MELCHETT: The noble Lord and his noble friends did not explain, as I was waiting anxiously for them to explain, why the companies have not achieved this if it has been accepted, as I believe it has, since 1965 that this should happen. A great many years have passed and a great deal has happened to the industry since 1965 and indeed, as we discussed during the Second Reading
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debate, when the Party of the noble I Lords opposite was in office strenuous efforts, as I understand it, were made to try to get the two companies together. Quite obviously they were not successful. That was in a period after the 1972 Industry Act—on which a lot of weight has been placed by some noble Lords opposite—was in force.
I regret to say that I do not believe that these Amendments demonstrate a genuine and responsible concern for the future of this industry or for the people who work in it. By merging the two major firms, our proposals provide the opportunity to reorganise and so improve efficiency and productivity. This will help the industry to realise its full potential and will enable us to fight for our place in world markets in the face of very strong competition.
I believe the industrial case is unanswerable, but it is by no means the only reason for taking the aircraft industry into public ownership. Workers expressing their views through their unions have made it clear that they wish the industry to be taken into public ownership. Moreover, while noble Lords opposite are presumably fighting this rearguard action on behalf of the private sector, I must again point out to them that an industry which depends for its existence and progress on public money on the scale that the aircraft industry does can hardly be called a genuine example of private enterprise. Public ownership is a logical and reasonable means of reflecting the enormous public investment in this industry. This also has what we see as a practical advantage for those running the business: if public money is channelled into a publicly-owned enterprise, then accountability can be exercised at the strategic and corporate level—which is what I believe we should all like to see—nstead of the detailed intervention and monitoring by the Government which is necessary when the companies are in private ownership.
The long list of Amendments looks very impressive, but all they would achieve would be to deprive the aircraft industry in this country of the opportunity to reorganise and use its resources more effectively. It has been apparent for some time now that the scale of investment needed to develop and produce a new civil aircraft is now so large that it is

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beyond the resources of a single company and is growing beyond the resources of a single country. Within the framework of the Organising Committee of British Aerospace, British companies are deeply engaged at this moment on discussions on future civil aircraft projects with manufacturers both in Europe and the United States. These discussions are now reaching a crucial stage. The momentum of the various industrial analyses is being stepped up and companies and countries are beginning to form groupings. The French have announced a partnership with McDonnell Douglas, the Italians are already in partnership with Boeing and the Japanese are also negotiating with Boeing. We, the Germans and the Dutch are actively discussing the possibilities with all the main firms in Europe and across the Atlantic, but unless this legislation goes ahead there is a very real risk that the British industry will find itself left out.
Lord STRATHCONA and MOUNT ROYAL: Is the noble Lord suggesting that the Government would be a better body to negotiate this kind of arrangement than these large corporations?
Lord MELCHETT: No, I am not. I am suggesting that British Aerospace will be a better body to conduct these negotiations than two companies acting separately and often possibly in conflict with one another.
Lord DRUMALBYN: May I also interrupt the noble Lord for a moment? What does he mean when he says that the French are at present negotiating with McDonnell Douglas? Does he mean the French Government or does he mean a particular company?
Lord MELCHETT: As the noble Lord knows, a lot of these discussions are going on at Government level and many of them are between companies. In the French case, so far as I know, some of both are involved, as indeed is the case with most of these negotiations. I do not think the noble Lord was here when the noble Earl, Lord Kimberley, asked an Unstarred Question at the end of July on particular aspects of the future of the civil aviation industry. At that time I went into rather more detail than I have today about what exactly the Government and the Organising
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Committee of British Aerospace are doing both at Governmental level in discussions between my right honourable friend the Prime Minister and other Ministers with their counterparts in Europe and America, and also on a company-to-company basis. If I may say so, that underlines the importance of this country not having two separate companies involved in the negotiations.
Under the aegis of my noble friend Lord Beswick and the Organising Committee, the British aircraft industry is working in real co-operation and speaking with a single authoritative voice. It has had very useful and promising discussions but, as noble Lords will understand, at this delicate stage it is not possible to go into a great deal of detail. Potential partners will not be prepared to consider a serious long-term commitment involving an organisation whose future is in doubt. When the present fluid position about the future shape of the civil aviation market begins to crystallise, as it soon will, the British aircraft industry must he in a position to make the most of its opportunities, but it will not be in such a position if the Organising Committee and the industrial structure that the prospective partners now expect, were to be thrown away, as would happen if this Amendment were passed. Merely to drop aircraft nationalization will resolve nothing.
As noble Lords have made clear, their intention is, as I understand it, to restart the process they were engaged on in 1974 of trying to unite the companies, although they would prefer to see this done under private ownership. To throw everything back into the melting pot now could well mean—and I say this with the utmost seriousness to noble Lords on the Liberal Benches—that the British aircraft industry would be precluded from playing its proper part in the world aircraft industry and it would miss out on full participation in international collaborative projects shortly to be decided on. It would therefore mean less work for the 70,000 workers in this industry. It would mean that the country's technological capacity and defence capability would be reduced. These are some of the serious long-term consequences that could result from not proceeding with what has already begun.

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I do not believe that I am exaggerating the dangers. Even some of the staunchest opponents of the principle of nationalisation have said that they would prefer public-ownership to be continued rather than have further uncertainty and delays. They have taken this view because they are putting the future prosperity and success of the industry first, and I suggest to your Lordships that that is what we should do, too.
4.7 p.m.
Earl FERRERS: We are grateful to the noble Lord, Lord Melchett, for explaining to some extent how this is going to operate. I thought that when the noble Lord got up he was rather enjoying it because he felt that he did not want to take part in a private fight, as he put it, between Conservatives, Liberals and people who were against nationalisation. But I am glad that he did take part, because he has at least shown a little of what is in the Government's mind. Among other things, he said that the noble Lord, Lord Beswick, had said that he wants to see this operating as "a decentralised body". Of course, that is highly commendable.
I think that few people would believe that this industry, composed of many companies but with two prime companies involved, would work well with overall Government interference. Therefore, I am glad that the noble Lord, Lord Melchett, referred to the intention expressed that this should be decentralised. But this brings us to perhaps one of the most serious worries of all. The noble Lord, Lord Beswick, may want to see it decentralised, but that is not what the Bill says. The Bill allows specifically for a great deal of interference by the Secretary of State; and we shall be referring to this in respect of later Amendments.
The noble Lord, Lord Melchett, said that one of the most convincing arguments here is the amount of public money invested in the industry. Certainly great sums of money are invested, and one of the greatest of them refers to military expenditure and missiles, to which the noble Lord, Lord Shinwell, referred. That is perfectly true, but these contracts are given to the industry as a result of competition, and international competition. In no way are they given as sub
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sidies, and if a contract is to he given and if it is not given to the British aircraft industry, it goes abroad. Really, to say that this is an argument for taking over the companies that produce the missiles and military aircraft simply because the Government happen to be the purchaser, is a spurious argument, I would suggest.
As regards civil aircraft, again large sums of money are involved; but the noble Lord did not answer a question which I raised on Second Reading. I do not know whether he would agree with this, but in fact of all the money given to the civil aircraft projects over the last ten years, 92 per cent. has been involved with Concorde and the RB.211. Those are both projects which have had intricate Government involvement, and the remainder of the assistance given to the industry, given as a result of launching aid and so on, amounted to a matter of only £6 million a year over the last ten years. Therefore, I think one needs to get that straight. One cannot use the argument that the industry requires vast Government funds in order to keep it going, because that simply is not the fact.
In all that has been said, both in another place and here, we have not had any industrial arguments in favour of this Bill, other than the one to which the noble Lord, Lord Melchett, referred, of joining these two great bodies together; in other words, the rationalisation argument. I would only put to him the question which I asked on Second Reading, to which he did not reply. One of the arguments about rationalisation and joining them together is that you will thereby reduce the number of employees concerned. This may be a good thing to do, or it may not be a good thing to do. But you cannot have rationalisation, the fusing together of these two bodies, with the same number of employees, and I should therefore like to ask the noble Lord, Lord Melchett: If this comes about, does he expect that it will mean a reduction in the number of employees? If it will, then we ought to know; and if it will not, then the whole object of rationalisation will have gone.
Lord MELCHETT: If I am to be asked that question, is the noble Earl going to ask noble Lords on the Liberal Benches what reduction in employment they expect if their Amendment is passed and the

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companies are left as they are? The noble Earl, Lord Kimberley, has already mentioned that there might be a loss of 4,000 jobs from one of the companies in the near future.
Earl FERRERS: That is quite a crafty answer. The noble Lord cannot bounce an answer off of me and on to the Liberal Party. I ask the noble Lord what is the Government's intention, because no one in this place or in another place has faced up to the fact that if these two companies arc to be fused there will be a reduction in labour. If that is so, then let us know. If it is not, then the whole object of rationalisation goes and, as the noble Earl, Lord Kimberley, said, rationalisation can be achieved without nationalisation.
Lord WYNNE-JONES: Does not the noble Earl's argument depend entirely upon whether or not the industry expands after rationalisation? If I may quote the chemical industry, with which my noble friend on the Front Bench is not altogether unconnected, when Sir Alfred Mond brought together three parts of the chemical industry he enormously expanded that industry. He did not contract it.
Earl FERRERS: I do not think the noble Lord can use as an argument the fact that two industries working on their own are so inefficient that they require more people than they would require if they were joined together. What happens in the future is a matter for the future, but this is a question of what is to happen now and it is very much in people's minds.
If I may come to the Liberal Party's Amendment, we have a great deal of sympathy for them, as they know perfectly well. The Conservative Party has always been entirely against the nationalisation of this industry and we believe that it is entirely wrong. Particularly do we believe it is wrong when we are in such a fearful economic mess. One of the things we want is successful companies and, in fact, we already have them. These two companies make profits, and one of the tragedies at the present time is that there are too many companies in this country which are not successful and are not making profits. Of all times, therefore, this must he the wrong time to alter what
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are recognised as two successful companies. In that respect, I would say that if the Liberal Party's Amendment were to go through they could argue that that gave the House of Commons another occasion on which to consider this matter.
Obviously, this is also the wrong time to indulge in vast Government expenditure. If there is to be nationalisation, then there has to be compensation, which means Government expenditure. I do not accept for one moment the argument that buying an industry and giving compensation means only a transfer of assets, as the noble Lord, Lord Melchett, said on Second Reading, and that it does not really cost anything. Of course it costs money and is more than a transfer of assets. In the same way, if I go into a shop and pay over a cheque for £10 and get a pair of shoes in exchange, I do not regard that as a transfer of assets. That is expenditure on the part of the person who purchases the shoes. For all these reasons, this is a thoroughly bad time for this industry to be nationalised and, therefore, our sympathies lie entirely with the Liberal Party.
But what is the fact of the case? The fact is that the Government stated that they wanted to nationalise the aircraft industry. We have always accepted that, if the Government have a mandate, then we in this House should not he seen to override that mandate. We can improve a Bill and alter it where we can, but to carve out a whole slice of it would not he facing the facts of life and would, I believe, involve us in a great constitutional problem. In fact this is a wrecking Amendment. Therefore, as my noble friend Lord Carr said, we on these Benches would not support the Amendment if the noble Viscount, Lord Simon, and his friends were to press it.
I would go further and say that I believe that the only reason why the noble Viscount, Lord Simon, and his friends on the Liberal Benches might press this Amendment is if they thought that we would not follow them. They are just as conscientious Members of your Lordships' House as are the Labour Members, the Cross-Benchers and everyone else, and they know perfectly well that if this Amendment were passed there would be a head-on confrontation with another place, because we would have

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carved out of the Bill one section in regard to which the Government have a manifested obligation. Therefore, if they press this Amendment they will be doing so only because they know that we will not support them, which will almost look like playing Party politics, because it could so easily be said, "The Liberal Party have put down the Amendment. They have been the great champions against nationalisation. Of course, when they moved it in the House of Lords all the Conservatives did not follow them, because they 'chickened out' at the last minute". If that is the reason why it is being done, then that is really playing Party politics and I do not believe that this is the right opportunity.
Lord SHINWELL: The noble Earl is making a most interesting speech, but I put to him this very simple point: If it is the Liberals who propose it, then it must be wrong. But if the Conservatives proposed it, would it be right?
Earl FERRERS: The point I was trying to make was that the Conservatives do not propose it, for the very reasons which my noble friend Lord Carr gave, and he is in fact proposing another Amendment which will not be nearly so difficult. But—and this is the point—it will give the House of Commons an opportunity to reconsider the whole matter. That is where I agree with the noble Lords on the Liberal Benches. The economic state of the country is such that this ought to be considered again.
I think it was the Prime Minister who said in the News of the World yesterday—it is not a paper which I read very often, but I saw it reported today in another paper—that "some of our Socialist objectives will have to be deferred" (not "postponed", but "deferred"). So I think it is right that the Government should have an opportunity, and that another place should have an opportunity of asking, "Can we afford this?" When my noble friend Lord Carr moves his Amendment later, that will be an opportunity for the Government to reconsider without there being a major drama between the two Houses, which I fear might be the case if this Amendment were pressed to a Division.
4.20 p.m.
Lord DRUMALBYN: I wonder whether I might put a rather different point which has not yet been specifically and explicitly considered. In your Lordships' House there may be those who are in favour of the nationalisation of shipbuilding and against the nationalisation of the aerospace industry. The noble Lord, Lord Melchett, has said that this is a Second Reading point but how could a person who held those views have expressed himself on Second Reading? If he was in favour of the nationalisation of shipbuilding, would he have voted for or against the Bill?
The noble Lord, Lord Shinwell, introduced a point that was made at Second Reading by the noble Lord, Lord Inver-forth, who in a remarkable maiden speech said that there should be no more delay. But this was on the shipbuilding, not the aerospace side. The view was expressed at a much earlier stage in the proceedings, even before the Bill came to the Commons, that it was wrong in principle to introduce two major industries in the same nationalisation Bill. If it is in order for two industries—I disregard ship repairing because it does not appear even in the Short Title and should come out, anyway—why is it not in order for four, 16 or 256 industries? That is the danger of this precedent for the future and it must be taken very seriously into account.
Before reverting to this point may I say another word, and I speak here entirely for myself. When we went into Europe I had always envisaged that we should work towards a single united Europe. It seems to me that nationalisation of the aerospace industry in particular is working directly contrary to the principle of a united Europe. When I was associated with the Association of British Chambers of Commerce the general view that was being canvassed at that time was that across-frontier amalgamations should be promoted, not necessarily just co-operation between industries in different countries. How is that going to be possible if we in this country nationalise the aerospace industry? It would be possible only if in the end we had one single aerospace body for the whole of Europe which was controlled by the Governments of Europe. This is an important consideration for the future

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and I hope that we shall bear it in mind during the consideration of the Bill.
I am sure that my noble friend is right, that we cannot take the risk at this stage that there will be a change of Government at the next Election. Therefore, we have to ensure that in so far as the Bill deals with aerospace it is as good as we can make it. For that reason, while having the utmost sympathy with the Amendment put forward by the Liberals, I urge them not to press it to a Division because, as my noble friend said, I do not think that this is the right time. If there is any risk of the industry being nationalised it is our duty to examine the Bill in detail.
Lord WIGODER: We on the Liberal Benches have tabled this Amendment because we believe profoundly that it is wholly wrong to nationalise the aerospace industry. If this is said by the noble Earl, Lord Ferrers, to be a matter of Party politics—well, so be it. It is part of our fundamental political convictions and we are not prepared to resile or run away from these convictions when the crunch comes.
We believe wholeheartedly in the mixed economy. We believe that already the State sector has taken over such a large percentage of the economy, something like 60 per cent., that before a further industry is added to it, as is now proposed, an overwhelming case must be made out on the merits of the nationalisation of the industry. In those circumstances, we listened with some care to the case that was made out by the noble Lord, Lord Melchett. I hope he will forgive me if I say that we all owe him a great debt of platitude because we heard from him nothing but words like "unanswerable" and "public accountability". We heard nothing from him to indicate in terms why it is that the defects, as he sees them, in the aerospace industry at this moment can be rectified only by State ownership. Where no adequate case has been made out we regarded it as our duty to table this Amendment and in due course to divide the Committee on the merits of the matter. I venture to suggest that if your Lordships all vote according to your convictions there will be no doubt as to which way the Division will go.
It is suggested that this is a wrecking Amendment, that it is equivalent to voting
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against the Second Reading. May I respectfully endorse the point made by the noble Lord, Lord Drumalbyn, that in no sense is this a wrecking Amendment. A wrecking Amendment is one which reduces the rest of the Bill to a mere meaningless shell. This is not a wrecking Amendment; it is a neat surgical operation and the reason for it is simply that the Government have chosen to embark upon what I suggest is the gross constitutional impropriety of seeking to nationalise no fewer than five industries in one Act of Parliament. If the Government choose to take that course it does not lie in the mouth of the Government to say, "You are seeking to wreck the Bill if you seek to remove, one, two, three or four of the five industries concerned".
We have listened with care to the argument put forward by the noble Lord, Lord Carr of Hadley, and the noble Earl, Lord Ferrers. One has a certain amount of sympathy with them. It appears that after all the braggadocio of Brighton they are now seeking to lead away their troops from the sound of gunfire. It is suggested by them in the first place that a ground for not pressing the Amendment today is simply that the Government will inevitably reverse it if it is carried and that the aerospace industry will be included again when the Bill goes back to the other place. I wonder whether we are wise to base our actions entirely upon inspired guesses as to what may happen in the other place over the next three or four weeks owing to the present political situation and the present state of the economy?
It is suggested secondly by the noble Lord, Lord Carr of Hadley, that an Amendment which he has tabled has much the same effect and that it consists of postponing the vesting date for the nationalisation of this industry until after the next Election. If that Amendment is carried does it have the same effect? What happens if at the next Election 28 per cent. of the electorate once again put a Labour Government in power; and what happens if after the next Election—
Lord MURRAY of GRAVESEND: Can we break down this myth? The noble Lord, Lord Wigoder, speaks of what was said by the noble Lord, Lord Carr of Hadley, regarding 28 per cent, but let us hear what is the Liberal percentage if we are going to argue about percentages. The

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fact is that at the General Election under the present system of representation the Labour Party won the greatest number of seats and polled the greatest number of votes in percentage terms; namely, 39 per cent. of those who voted.
Lord WIGODER: I accept entirely the figures which have been given by the noble Lord. The only question is whether any Government, elected on a minority of the votes cast, have a valid claim to put before Parliament measures which not only are not supported by a majority of the electorate but are not even supported by a majority of its own Party. I was referring to that matter only in relation to the suggestion that we can safely pass the Amendment to be moved by the noble Lord, Lord Carr of Hadley, and leave the matter until after the next Election in order to decide whether or not these industries should be nationalised. There is not only every possibility of a minority Government after the next Election but also every possibility that the balance of power on this occasion might be held by the Scottish National Party. Are we really, in those circumstances, to pass an Amendment in due course to this Bill which might leave the fate of these industries to such a very small minority Party?
Lord DRUMALBYN: Would the noble Lord forgive me for interrupting for one moment. The noble Lord opposite talks about laying this figure to rest. He cannot lay it to rest. The noble Lord, Lord Wigoder was quite right. In round figures it was 28 per cent. of the electorate who voted for the Government and 39 per cent. of the voters.
Lord MURRAY of GRAVESEND: Would the noble Lord accept then that we say that the other 28 per cent. of the electorate who did not vote in that Election supported the nationalisation of shipbuilding?
Lord DRUMALBYN: No.
Lord MURRAY of GRAVESEND: Of course you would not. You are continually picking on this argument and it is absolutely meaningless in those terms.
Lord WIDODER: I do not know whether this is a private fight or whether
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I may join in for a moment, only to suggest that it cannot seriously be said by any serious student of politics that this Bill to nationalise these five industries has the support of a majority of the electorate.
Lord MURRAY of GRAVESEND: There is no mandate against it. If one is talking in those terms, the Liberal Party received less than 20 per cent. of the votes cast and has no mandate to oppose this Bill.
Lord WIGODER: I am not suggesting that we as an individual Party have a mandate to oppose this Bill. I am suggesting that it is part of our political convictions that we do oppose it and that, as a matter of fact, those political convictions on this particular issue are shared by a majority of the population. It is not for the Opposition to make out that they represent a majority of the electorate; it is for the Government to make that out if they bring forward a measure of this kind.
There is one other matter in relation to the suggested Amendment in regard to postponing the vesting date, and that is the question which I would ask the noble Lord, Lord Carr, to consider; whether that is not in itself going to prolong the uncertainty in relation to the aerospace industry and whether therefore there might not be a great deal to be said at this stage, while the Bill is going through this House, for removing the industry from the Bill altogether.
Having said all that, I must confess that I am a trifle disconcerted by the advice of the noble Lords, Lord Shinwell and Lord Slater, that we should proceed to divide the Committee this afternoon. If I may say so, I fear the Greeks when they bring gifts! I have listened with some care to what I venture to think is perhaps the one valid argument which has been put forward this afternoon and which weighs to a considerable extent with us on these Benches. If this Amendment is carried this afternoon there will be no Committee stage so far as this industry is concerned. If in due course in the other place this industry is reinserted as part of the Bill, it will mean that there will be no opportunity for perhaps even the minor improvements that could be effected to the Bill at Committee stage here.

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In those circumstances, I am going to suggest to my noble friend Lord Simon that it might perhaps be in the general public interest that, so far as the aerospace industry is concerned, the Bill should proceed through its Committee stage this afternoon and on succeeding days, but I hope that my noble friend will make it perfectly clear that our commitment to this Amendment remains absolute and that, sooner or later in the course of the passage of the Bill through your Lordships' House, we shall divide on this Amendment and we shall invite your Lordships to vote according to your Lordships' convictions on whether this industry should be nationalised or not.
Lord CARR of HADLEY: I am grateful for what the noble Lord, Lord Wigoder, has just said because the merits or otherwise of the Amendment which I intend to move later can be debated at that point. I do not deny that there is some force in what the noble Lord has said, but I think there are arguments the other way which also have substance and which we may think outweigh what he has said.
I have now risen to press the Government to be a little more explicit because we still have not had from them the industrial arguments which we ought to have before they say to us that we should nationalise a major industry. The noble Lord, Lord George-Brown, reminded the noble Lord, Lord Slater, that the late Herbert Morrison made it very clear that the case for nationalisation had to be made by the nationalisers, and the case for the nationalisers simply has not been made. All that the noble Lord, Lord Melchett, said this afternoon—his main point—was that there was a need for these two firms to merge. We can only repeat to him that, if that is so, it can be brought about quite easily without the need for nationalisation. The noble Lord, Lord Melchett, said that that was not so because after all—I think he said everybody had been agreed since 1965 that these two firms should merge, but they had not and that was why they now had to be nationalised.
With respect to him, I am not aware of everybody having agreed since 1965 that these two firms should merge. If the noble Lord will cast his mind back he will recall that there was a great series of
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mergers in the aircraft industry round about the years 1960, 1961 or 1962. One thing that cannot be done successfully in industry is continually to change the structure of great firms. It would have been madness in 1965 to have suggested that the still new Hawker Siddeley Aviation Group and the still new British Aircraft Corporation group should have merged with each other. Each of them was itself a big new merger which had far from settled down, and to put a super merger on top of the great ones which had already taken place and which had not yet sorted themselves out, would have been a recipe for complete chaos in the British aircraft industry. So it certainly does not begin to be true that the time has been ripe for the merger of these two companies for any substantial period of years.
I am by no means sure that there is unanimity that it is right even yet, because I think there is great substance in the point raised by my noble friend Lord Drumalbyn. It is a serious point that I remember making in the other House when I was the so-called Shadow Minister for Aviation and leading for the Opposition there on the debate on the Plowden Report on the aircraft industry. The point made by my noble friend Lord Drumalbyn on the future European structure of the industry is immensely important. Are we going to get a European industry able to stand on more or less equal terms, and therefore be a more or less equal partner with the American industry, if we have fragmented national industries? If we reach the state in Europe where we have one single British industry, another single French industry, another single German industry, another single Italian industry, I simply do not believe that it is going to be easy for those industries to cooperate. I think it is much more likely that each individual country will be driven by political as well as industrial pressures to take a highly nationalistic line, and genuine European co-operation among European manufacturers will therefore be more difficult.
I had always envisaged—and this was one of the arguments made by a number of people, including myself, when the Plowden Report was debated some ten years ago—that it might be much more profitable to think in terms of a number of trans-national companies; the merger of BAC with the French and German

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companies, and the merger of Hawker Siddeley with another one. At least the case for this ought to be argued and the reasons against it ought to be put by the Government before they do something which makes that sort of development of the European industry impossible. That is just one example of the sort of question I refer to when I say that the Government have not attempted to make a case for the industrial strategy behind what they are doing. There may be arguments against the sort of future pattern that I have put forward, but my noble friend Lord Drumalbyn is quite right in saying that this is a serious case which ought to be discussed before one puts it out of the realm of possibility by creating a single nationalised Corporation here in Britain.Another example of the industrial strategic argument to which the noble Lord, Lord Melchett, did not address himself at all, is the fundamental question as to whether it is or is not right to have a dominant customer linked organically with the sole monopoly supplier in this country. I think it is not right. As I said at Second Reading, I think that it is an incestuous relationship which will lead to a loss of the competitive edge of the British aircraft industry and a loss of the technical excellence compared with other countries which it possesses at the moment. Presumably the Government do not think that, but if they rebut this argument they should show why they rebut it.
There have been occasions in the past to my knowledge when a Government—and I am quite sure to the knowledge of noble Lords opposite when their Party has been in Government—as customer have had to be very tough with the British aircraft manufacturers, one company or the other. Although they may have been providing a great deal of the finance, they still had to be very tough with them—and as a customer it was possible to be very tough with them—but once the British Government are not just the customer but also the owner of the manufacturers will the Government any longer be in a position to be tough when it is necessary to be tough with the aircraft Corporation as the supplier?
I submit that this is a serious industrial point, and we have not heard it argued
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from the Government Benches in any way at all. All we hear is the assertion that the merger is needed. I am inclined to think personally—although I certainly do not think that it is unanimous—that the time may have come when, in spite of all the other arguments, it may now be right on balance to think of Hawker Siddeley and BAC merging. That is the side to which my view marginally inclines, although I am certainly not very confident about it and certainly there will be many people who take a different view. But it does not follow from that that nationalisation is either the only or the best way to achieve it, because achieving it by nationalisation creates the situation that I have just mentioned; that is, the question of the supplier and the customer being under common ownership. I think that the Government should address themselves to this as another example to convince us, to convince Parliament and the country, that they have thought out all these things. I presume they must have thought them out, but so far they have not let us, let Parliament or the country, into the secret of their thinking on these very important matters.
Another matter which they have not let us into their confidence about is how they see the relationship of a nationalised Corporation with the industry's most important foreign customers. We know that there are some foreign Governments and some overseas companies in other countries who do not like dealing with nationalised Corporations. What assessment have the Government made about this? There is no doubt that many of the existing customers of the British aircraft industry, the two big members of it, the British Aircraft Corporation and Hawker Siddeley, are much happier to deal with BAC and Hawker Siddeley than they would be dealing with a single nationalised Corporation. What assessment of this risk of customer resistance have the Government made, and what are the results of it? We have not been told.
I could go on with a whole list of questions of this kind which any serious promoter of a merger ought to answer to its shareholders in the private sector, but certainly to the country when the promoter of the merger are the Government and the Government are promoting a nationalised monopoly and putting the whole power of the customer and the whole power of production into single

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hands. I beg the Government, if they wish to have a smooth passage of the conduct of this Bill, to make a real effort to address themselves seriously to what are serious arguments. I am not saying that there are not serious replies to these arguments; what I am saying is that we ought to have them. I can only speak for myself when I say that if we do not have them the progress we shall make is not likely to be very satisfactory.
Lord LEATHERLAND: Before the noble Lord sits down, may I ask him a question about the point he made a few moments ago that grave difficulties might flow from the fact that the customer and the manufacturer were both under Government ownership? The noble Lord will remember that his Government nationalised Rolls-Royce. The Government are therefore the producer at Rolls-Royce: the Government are also a very big customer of Rolls-Royce. Have those grave difficulties followed there?
Lord CARR of HADLEY: That is a fair question and I think it is really rather too early to be sure, but let me reassure the noble Lord that the action of the Government of which I was a member in nationalising Rolls-Royce was a matter of force majeure. We were faced with a situation where, if we did not nationalise it, the Rolls-Royce organisation would have gone out of existence in all practical effect. When faced with that alternative, I had no doubt at the time—and looking back I have no reason to change my view—that we took the lesser of the evils available to us. That does not apply, there is no pressure of that kind, in relation to Hawker Siddeley and in relation to the British Aircraft Corporation; they are both highly flourishing companies. There is no danger of their going bankrupt at 48 hours' notice, which was the dilemma which was placed on the Cabinet's table about Rolls-Royce.
Lord LEATHERLAND: That is quite all right, but that is not the point being made. The point is that you have the customer and the manufacturer both under Government ownership, and the noble Lord has suggested that grave difficulties will flow from that situation. They have not come through that situation in the case of Rolls-Royce, which is both a producer and a supplier to the Government, and the
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Government are owning that manufacturing firm.
Lord CARR of HADLEY: I do not want to detain the Committee, but the noble Lord questions me so perhaps the Committee will allow me to reply. I do not regard the present situation as satisfactory as it was prior to the need to nationalise Rolls-Royce. It is much too early to know how serious this unsatisfactory position is going to be, because when we are talking about big aero-engine projects we are talking about development times of ten years, certainly five years, and therefore it is quite a long period before one can be sure of the degree of disadvantage which flows from this sort of relationship.
My argument that it does flow is, I admit, a prima facie one, and it is perfectly possible that ten years' experience might show that my fears were not well founded, but I believe it is a serious matter to raise. It is a serious factor to take into account when coming to a decision of this kind, that is why I believe that the Government should discuss openly with us in Parliament, and for the benefit of the public, their thinking on this question and on a number of other questions, some of which I have instanced but some of which I have not instanced. I have been making these points only because my overriding complain against the Government at the moment is not that I disagree with them, or we on this side disagree with them on these issues—that is rather fundamental—but it is that they have not attempted to justify the reasons for taking the views which they have. We have at least from this side put forward a number of arguments which make us believe that nationalisation is unlikely to be the best course for the country. Those arguments are serious arguments, and no attempt has been made to rebut them. That is why I must again ask the Government to do so now.
Viscount SIMON: We have had an interesting debate and I am not at all sorry that we tabled the Amendment. As the noble Lord, Lord Drumalbyn, said, it it not really right to suggest that our attitude is equivalent to a vote against the Second Reading, a point that was made clear by my noble and learned friend Lord Wigoder. I was grateful to the noble Lord, Lord Slater, for what I

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thought was some muted support, though I am not sure whether it was meant to go the whole way; and, if I may, I will discuss my matrimonial affairs with him later outside the Chamber. The noble Lord, Lord Melchett, seemed to find amusement in the fact that opponents of the measure were not singing the same tune. That is not in the least surprising. It so happens that the Conservative Party and the Liberal Party are opposed to this measure, but we start with a different political background and it is therefore not unlikely that our objections are different and are put in a different way from the objections put by noble Lords on my left.
I listened with care, as one must, to the grave words of Lord Melchett about our missing a great opportunity for the advancement of international agreements if we did not go for the nationalisation of the industry at this stage and immediately. I have found it difficult in my mind to imagine why this should be so because I am sure that the noble Lord, Lord Beswick, and his committee have all along been in close touch with the two aircraft corporations and of course with the Government; all the four parties must know the state of the negotiations and if it is possible, as we believe it is, to bring the two companies together, either in a merger or consortium, they should be ready to proceed straight away, continuing the negotiations from the position where they are now.
It has always seemed to me that there is no reason why a company whose business is of such great importance to the country should not be continuously amenable to suggestions from the Government, at the same time as telling the Government their own views as to how things should be done. The idea that the Government must be in the position of a governess telling them what to do seems to be not only objectionable but quite unnecessary. Speaking from experience, in a very minor way, I had the experience of being chairman of the Port of London Authority, which was a public authority but not Government owned. I had the closest contact all the time with the relevant Ministers and I do not think there was ever an occasion when Ministers wanted something done and we did not do it. Therefore, I am a little concerned at the suggestion
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that if nationalisation was not proceeded with immediately, these important negotiations would fail.
The noble Earl, Lord Ferrers, I think misunderstood and therefore unwittingly misrepresented the attitude of the Liberal Party. We are not wanting to be left out on a limb and then to point to our neighbours on our left; we tabled the Amendment because we believed it was the right thing to do. Lord Melchett rather annoyed me, which he seldom does, by implying that we did not have a genuine interest in the future of the aircraft industry. I assure him that we have just the same interest as all other noble Lords, but of course we may be wrong. The odd thing about the Liberal Party is that, unlike the other two great Parties, we do not always know we are right, but we do believe that on balance—this is not an issue on which there is blackness and whiteness—a non-nationalised approach would be more successful than a nationalised one. As I think the noble Lord would agree if he listened to what I said, our genuine concern is for the future of the country and the desperate position in which we find ourselves.I listened with care to what the noble Lord, Lord Carr of Hadley, said about the fact that if we pushed the Amendment and were fortunate in carrying it we would end all discussion on the aerospace side of the Bill. I found that a very compelling argument. Lord Wigoder suggested in his speech that we should take that fact into account and, in view of that, I shall seek to withdraw the Amendment, but in doing so I wish to make it clear that we will bring up the matter at a later stage of the Bill and, unless we get a very different reception from the Government than we have got up to now, we will seek to divide your Lordships on the issue. In the meantime, I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 1 [British Aerospace and British Shipbuilders]:
4.57 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 4:
Page 2, line 3, at end insert—
("from among persons who appear to the Secretary of State to have wide experience of, and

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to have shown capacity in, the activities specified in section 2(1) or (2) below or in industry, technology, commercial or financial matters, administration or to the organisation of workers.").
The noble Lord said: Let me say on behalf of my noble friends that perhaps we can now start a genuine Committee stage, having had virtually one of the Second Reading debates that we should have been having if we had had the appropriate number of Bills to deal with what we are trying to deal with this afternoon. This is a comparatively small point and I hope that it may be considered a sufficiently common-sense Amendment to commend itself to the Government. We are saying here quite simply that those who are appointed to these corporations should know a little of what they are talking about, and I pray in aid the fact that nearly all the nationalisation measures in the past have included provisions of this kind specifying the qualifications which those appointed to the board of the nationalised industry should possess. It seems to us, most particularly in the case of aerospace, that this applies with greater than usual force in the case of a high technology industry of this kind.
A suggestion on these lines was put forward in another place and was countered by a rather cynical reply from the Under-Secretary of State who said, in effect, that leaving out an Amendment of this kind would be more honest because if the Secretary of State looked around a bit he could always find some excuse in the record of anybody who was likely to be appointed to one of these bodies to justify his action under the terms put forward in an Amendment of this kind, though he said all the same that he would without commitment, have a look at the requirement.
There is a further point that is perhaps relevant to some of the discussion that has been taking place in the newspapers recently. Possibly a restriction of this kind would place some limitation on the power of patronage which is dispensed by the Secretary of State without disqualifying anybody whom he would probably want to appoint, and in doing that it seems to me that we should really be codifying what most of us would think to be a commonsense practice.
The MINISTER of STATE, SCOTTISH OFFICE (Lord Kirkhill): An identical Amendment was discussed in some detail in Committee in another place. I think the noble Lord, Lord Strathcona and Mount Royal, conceded that it is not a matter of great controversy. As my honourable friend explained then, there are of course precedents both for provisions in line with this Amendment and for the way the Bill is now drafted. The Government have looked again carefully at the points made in that discussion but we do not find a compelling reason to change our mind. As my honourable friend the then Parliamentary Under-Secretary of State said at the time, the Amendment is so widely drafted that it achieves almost the same effect as the complete discretion of the Secretary of State.
I am sure noble Lords will accept that all the appointments we have made so far for the organising committees fall easily into the criteria of this Amendment. Indeed, it is difficult to imagine an appointment that would not fall into them. Although we readily concede that this is not a major point, we do not think that we should move from our original position, and I therefore cannot accept the Amendment.
5 p.m.
Lord REDESDALE: This tends to put so much power into the hands of the Secretary of State that he can do exactly as he wishes in terms of manipulating. It comes down to the area of political patronage. It is so important that the people concerned on these boards should be experts and should be the really top people in their field that I feel that, if the Secretery of State can fiddle around as he wishes (and I use the word "fiddle" to mean that the more you mess about with something the more likely it is to go wrong—and that certainly applies to a car and probably applies to an organisation to an even greater extent) political patronage could come in. The Government should really think again on this.
Lord KIRKHILL: To reply very briefly, unquestionably, the overall level of political patronage is one to which any Government, no matter what its political complexion, must have considerable and careful regard. However, I should have thought that the appointments that we have

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made to the organising committees of British Aerospace and British Shipbuilders amply met the criteria which the Amendment seeks to lay down. These are men of wide experience in the industries concerned and, indeed, in industry generally. They are men of wide technological experience, of considerable commercial experience, and of wide financial administrative and trade union experience. I believe, therefore, that the criteria have been fully met as regards appointments to the organising committees to date.
Lord CARR of HADLEY: What I do not understand about the Government's position is that they do not disagree with the thought that people of the sort of experience specified in the Amendment should properly be appointed to the Corporations. Indeed, they say that so much do they agree that they have instanced those whom they have already appointed and have said, "Look, we are appointing men of suitable qualifications". It is no part of our case to contradict that, but what is to happen 20 years from now, or even 5 years from now? There will be different Ministers, a different Party in power, perhaps. I cannot see why the Government wish to resist putting in these words.
I have not done a lot of research into previous nationalisation Statutes but I do not think that my memory is playing me false when I say that we have tended in the past to indicate at least some categories of people which should be represented. For example, I am sure there are a number of Statutes in which it is at least required that somebody with experience in the organisation of workers should be included—something which I personally have always agreed with. Why, in this Statute, do we not wish to define what is obvious? One cannot help wondering what is the reason. I agree that it does not look as if the wide power were going to be abused, but is there not some suggestion that it could be used for the wrong purposes in the future? If we really are always going to appoint men of suitable experience, including the experience mentioned here, then let us by all means write it in. If, for any reason, the provision is not wide enough, perhaps the Government can suggest some widening. I find it difficult to understand why the Government
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cannot accept an Amendment of this kind.
Lord KIRKHILL: If one looks at this retrospectively, it is a bit of a mixed bag. For example, lists of qualifications considered necessary for appointment were not included in the Civil Aviation Act 1971 nor yet in the Post Office Act 1969. This is a question which it falls to the Government of the day to assess for themselves. I repudiate any hint or any suggestion of ulterior motives. The Government consider that, at this time, to include the Amendment would not be in any way to alter materially the position which they themselves have adopted. The Government sustain that point.
Viscount SIMON: Perhaps it would be easier for someone from these Benches to say that we should just as much fear that a Conservative Government might make improper appointments as that a Labour Government would do so.
Baroness WARD of NORTH TYNESIDE: I should have thought the Government would have been rather pleased that we wanted it stated in the Bill that we believe in having somebody of experience in administration or the organisation of workers on these boards. Would I be right in saying, perhaps rather nastily, that the Government do not want this in?
Lord WARDINGTON: Perhaps I may be allowed to ask a question and to support the Amendment. I do not normally attend your Lordships' House very much, so that I hope that your Lordships will bear with me if I am not quite correct in some of the etiquette. It seems to me that, referring to the earlier remarks of the noble Lord, Lord Carr, three major matters that have to be borne in mind are cost, employment and management. Here, management is of paramount importance. My experience, such as it is, is that the greater the technical excellence the greater the expertise necessary to cope with it. Everyone is perfectly well aware of the slightly humorous Parkinson's Law, but unless one has real excellence in the management one is laying oneself open to very great problems.
Lord KIRKHILL: I readily concede that excellence in management is an ideal which we should all strive to attain. I

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reiterate that I hope the members of the organising committees so far appointed and announced give every evidence that the initial judgment on that point has been sound. However, the central point of the Government's position here is that the members of these boards, will have to declare their interest in exactly the same way as, for example, a Member of Parliament. One could almost argue that there is a greater need for a member of a board to declare an interest: he is certainly very near the point of commercial action. We think that this is an extremely fair provision in the Bill.
Lord SOMERS: Can the noble Lord tell me one thing? The Government have introduced this Bill, which is apparently very close to their hearts: why is it that they seem so unwilling to have it really well done?
Lord KIRKHILL: The Government's view, I must tell your Lordships' House, is that the Bill forms part of their Election Manifesto commitment and that the detail of the Bill has been extremely well discussed.
Lord STRATHCONA and MOUNT ROYAL: I find that last assertion from the noble Lord, Lord Kirkhill, an extremely shocking one. If I understand him, he is saying that what has been done in the other place is adequate and that the best thing we can do in this House is to shut up and let it go through. That is an astonishing constitutional assertion, and I cannot believe that the noble Lord means it. Also, in view of the support that we have had from all sides of the House on this comparatively small point, I find it a not terribly promising start to the marathon upon which we are all embarking with a certain amount of gloom—and I am fully aware that the Ministers have perhaps even greater preoccupations than most of us on this side of the Committee. So let them not complain, if they give us a bad start, if we find this a laborious process.
The second point we must reiterate is that it is by this process of the dedication to nationalisation that the power of patronage is so very much extended. I totally agree in that I do not think that a Government of our complexion would be any less likely to exploit that power of
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patronage in an unwelcome manner, except perhaps that it would be welcome to us personally. But in principle I do not think that there is anything between us as to which side would be the most likely to exploit the powers of patronage. I am not taking that point at all.
The final thing I ought to say is that here we have something to which the noble Lord says he does not object strongly but he does not really think it a good idea to put it in the Bill. We are going to have a number of arguments of the same kind before we are through with the Bill. I am quite sure that the noble Lord is going to say, "Well, you have made arguments saying that this thing should be put in the Bill or should not be put in, and we are saying that we have got something in the Bill that you think we don't really need in the Bill because it states the obvious".
All I am saying here is that if he is being so unwelcoming to this small point which we are making, when it has such wide support in the Committee, let him remember that this is something which will not be readily forgotten in the next week or two. It may be that if we still have the energy left we will have to return to this matter at later stages of the Bill. In the meantime, I think the proper thing for me to do would be to beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.12 p.m.
Viscount ROCHDALE Viscount ROCHDALE moved Amendment No. 5:
Page 2, line 3, at end insert—
("( ) The Secretary of State shall ensure that in the case of the British Shipbuilders Corporation one of the members appointed shall be an executive director of Harland and Wolff Limited.").
The noble Viscount said: My noble friend Lord Brookeborough and myself have put down certain Amendments which deal with Northern Ireland and, in particular, with two companies, Harland and Wolff, shipbuilders, and Short Brothers and Harland, the aircraft constructors. My noble friend will be dealing primarily with Short Brothers and Harland and I want to confine my remarks largely to the shipbuilders. During the passage of the Bill through another place the

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company Harland and Wolff had considerable discussion on whether or not it should be included, and in the event the then Secretary of State, Mr. Rees, finally, at the very last stage, introduced a new clause which is the new clause we shall come to in due course, Clause 48 in the Bill we have here. This clause obliges British Shipbuilders
"to consult with, and wherever possible, coordinate their activities with those of, any body"—
which coincides with certain criteria set down in the Bill, and that in effect means Harland and Wolff.
My noble friend and I do not feel that
"to consult with, and wherever possible, co-ordinate"
with is anywhere near enough; it may not be effective at all. It can mean anything or nothing. Therefore, we want to stiffen the conditions in this respect so that the company is not put, as we think it very easily could be put, at a serious disadvantage. Therefore, we have put down three sets of Amendments and with the leave of the Committee I hope that I may discuss them together because the points are all the same, although they deal with the matter in varying degrees of intensity.
There are the two Amendments which we have here, Nos. 5 and 6, relating to Clause 1, and there are Amendments relating to Clause 48, and again Amendments to two Schedules, but they all deal with the same point—
Lord MELCHETT: I apologise for interrupting the noble Viscount, but if he wishes me to respond to all the later Amendments at this stage, it would be helpful if he could tell me the numbers of those Amendments.
Viscount ROCHDALE: I was proposing very broadly to give the main point and say how the different group of Amendments are stronger or less strong, or intermediate. I wish to make that point, and then we can discuss the individual Amendments when we come to them. Would that be satisfactory?
Harland and Wolff is a company which owns a very large shipyard. It also has a major engineering section of great importance with a very large export business, as well as a rather more modest ship repairing
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business. So all its three activities are very relevant to the Bill. As regards the shipyard it is a major shipyard, it has the most sophisticated plant and equipment which I think I can still say is second to none in Europe, and second to not very many in world terms. It is a plant that has been largely paid for by taxpayers—British taxpayers—and which is also owned by the Government, although the shares actually are held in Belfast.
It is true that as the yard is planned today and as it exists today it has been made for the building of very large ships, whereas, as was pointed out in the Second Reading debate, the market unfortunately is particularly difficult. But that does not prevent the yard, as is sometimes implied, from being able to build ships of rather more modest size. It is true also that over the last decade or so its performance has at times admittedly been disappointing, but today that company has a management team which is absolutely first-class, the quality of its ships has never been in question and that implies the quality of the skill of its operatives, and given an improvement in world markets it has, I am quite sure, a very important future.
It is true that it has to operate in the rather confused climate of Northern Ireland, but here it has succeeded in being a virtual oasis in those troubles. I could speak from my own personal experience in very encouraging terms on such further matters as industrial relations on both sides, the loyalty of the employees to the company, and other points. When in another place the Secretary of State was moving the Amendment to which I earlier referred, he said that it should be dealt with in the same way as other nationalised industries in Northern Ireland, and he quoted the Northern Ireland electricity authority, or the Northern Ireland railways. But a company like Harland and Wolff is much more than a Northern Ireland company; it is a United Kingdom company. Indeed, it is a world company, and as such it has always in the past operated as a very important member of the family of United Kingdom shipbuilders, and this is what I am seeking to preserve in my Amendments.
It has been party to the United Kingdom industry's deliberations on a host of matters, national and international. It has had access to the industry's research

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arrangements, commercial intelligence, and many other matters where it has been in a position both to give and to take, and in my view it is inconceivable that this situation, which I believe is most valuable to the United Kingdom, should now be changed by its being excluded from the umbrella of discussions of British Shipbuilders.
It may be that when the noble Lord, the Minister, replies he will offer an assurance that there is no intention on the part of the Government that this situation should be changed. Of course, one obviously respects the sincerity of the Minister, but assurances do not go far enough, and I would say very strongly to my noble friends that something in the direction of the Amendment I am now moving should be put into the Bill if the co-operation, consultation and assistance (whatever we might like to call it) is to he really active and effective. I realise that to go the whole way and include the company as another subsidiary, as I shall seek to do in my later amendment when we come to the Schedules, could raise difficult, though not in my view insuperable, problems bearing in mind the possibility of devolution. We can discuss that more drastic move when we come to it, but all I would say on that point at this stage is that it is a course which has been strongly represented to the Government, I know, by the trade unions in the yard.
Coming back through the Bill and looking for a moment at Clause 48, what we seek to do by our Amendment there is to add the word "assist" to the consultation and possible co-ordination provided for. That is the minimum; and the Amendment which I am now moving comes half-way between those two extremes. It says that there should be an executive director of Harland and Wolff on the British Shipbuilders Corporation. I do not think that in the light of my very brief explanation of the background, I need elaborate on this point at all.
As to Governments' treatment of the company in the past—I do say not "a Government's treatment" but "Governments' treatment"—some may feel that the Governments have been over-generous. Well, there is a point of view there, but I am not asking anything more nor less for Harland and Wolff than would be available to the rest of the United Kingdom industry
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under the Shipbuilders Corporation. The company must obviously take the rough with the smooth; and, for the rest, its future must depend upon its own efforts. It is in that context that I want to see very much closer collaboration between the Northern Ireland company and the British Shipbuilders Corporation, and for that reason I beg to move.
5.23 p.m.
Viscount BROOKEBOROUGH: I should like to support the Amendment so well moved by my noble friend Lord Rochdale. He speaks with such authority that I am sure everybody must be impressed, because, having been chairman of Harland and Wolff for such a long time, he really does know the problem of that great international company. These particular Amendments, and the problems which we are raising today, were not fully discussed in another place; they were in fact guillotined. Therefore, it is quite right and proper that we should discuss them in considerable detail here; because Harland and Wolff has 20 per cent. of the output of the United Kingdom yards, and the size in employment terms of Short Brothers and Harland is 7,000 out of 70,000, which is 10 per cent. They are both very important companies in relation to the size of our total aerospace industry and shipbuilding industry.
The Government recognised that there was a problem for companies which were left out. When this problem was put to Scottish Aviation, they said, "All right; bring them in", and in the end they proposed Clause 48. In the opinion of my noble friend and myself that goes nowhere near far enough, because it is modified by the terms of reference given to the Corporation, which are set out on page 4, where it says in Clause 2 that British Aerospace and British Shipbuilders will promote through their wholly-owned subsidiaries,
"the efficient and economical design, development, production, sale, repair and maintenance of",
and then it goes on. They are very compelling terms of reference, and merely to require each of the Corporations to consult and co-operate with these two firms is really no good because, in the first instance, if there is a question of the prosperity of one against the other, Parliament requires the large unified

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body to look after its subsidiaries. If the Government do not like the particular method which we are proposing in this Amendment, then have they some better method of doing it? All we are trying to do is to make quite certain that Harland and Wolff and Short Brothers and Harland have an equal opportunity to finance, an equal access to research and intelligence, and an equal opportunity to the market to be able to quote at the very first possible opportunity. We are not asking for anything unreasonable or unfair.
The importance of any shipbuilding complex in a given area is overwhelming. This has been one of the problems of the shipbuilding industry as a whole, that it is such a very large employer in every area in which it operates—the Tyne, the Clyde, or wherever it is. But in Northern Ireland the importance of these two industries is exaggerated to an enormous extent by that little strip of water and by the frontier which divides us from Eire. Harlands may have only 10,000 people directly employed, but there is hardly a family in the Province which is not affected directly by their prosperity. It was calculated that Short Brothers, who employ 7,000 people, directly affect some 40,000. Harland and Wolff have been a Government-controlled company for some time, and many millions of pounds were put into it by successive Northern Ireland Governments. I should like to ask the Minister to say, when he replies, how much of that money is in physical assets, as opposed to the money which went to pay for losses on ships which were tendered for at the wrong price.
If this Bill goes through the situation will be that, if the Government are right, we are going to have aggressive, efficient British shipbuilding and aerospace industries. They are going to have the advantage of scale; they are going to be governed by the directive which I just read out; and because of that Short Brothers and Harland and Harland and Wolff are both likely to be left out in the cold. It is for that reason that this Amendment is being moved, because in large-scale industry "out of sight" is out of mind. Whatever one may say, industry in these terms is a matter of personal contact and personal confidence between buyer and seller, and if we do not have the right for the managing directors
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or the executive directors of each of these bodies to be on the large British Aerospace Corporation and the British Shipbuilders Corporation, then I am quite sure that confidence in both these two great industries could be eroded.
I want to pose the question: what happens if some foreigner—a Sheikh from Arabia, or somebody like that—decides he wants to build a ship or an aeroplane? Where does he go? The first move is to the largest concern possible, British Aerospace or British Shipbuilders; and it is from that point that the market will be channelled away from these two firms, because the Corporations must look after their own. It is rumoured that the EEC are going to direct our Government to cut shipbuilding by 60 per cent. If that is true, then Harland and Wolff certainly should not be in a less well off position than the rest of the industry.
There is a question I should like to raise on the supply of money. Eighteen months ago £60 million was provided for Harland and Wolff, but £37 million of that came out of the standard of services to Northern Ireland; that is, the Budget was made and it was decided to have parity of service—because we have always worked on parity of service at £x-millions per year. Because Harland and Wolff were in trouble £37 millions was taken out of the Northern Ireland Budget. That is a very good idea if it applied to the rest of the United Kingdom, but I can tell your Lordships of the hospitals that have been delayed, of the technical college which has been very much delayed. What technical colleges, what hospitals, have been delayed by the aid given to Clyde Shipping? Is this to be a precedent for the future? If it is, then these two firms do not get equal access to finance and without that they cannot survive.
We are being told every time that the excuse for this failure to provide an institutionalised link with these two great firms is that the Government are waiting for devolution. I should hate to feel that devolution would not occur, but it could be a very long way off. In the meantime, are we going to let these two industries suffer until a Northern Ireland Government of Northern Ireland people fight for their industries? It would be an appalling tragedy if we were to let this go by.

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I find it ironical when I see the urgency with which the Government are pursuing their efforts to produce a Socialist type of education in Northern Ireland without a devolved government, and in this case we are delaying matters because there is no devolved government. The decision to make Harland and Wolff the tanker builders for the United Kingdom was made in Whitehall and in Westminster; it was not made by the Northern Ireland Government. It was part of a general rationalisation of the whole of the shipbuilding industry of this country. Therefore, this is a United Kingdom responsibility and the tie-in between these two companies should be very close.
I will now in a small amount of detail refer to Short Brothers. The case for Short's having their director on British Aerospace is just as compelling as that applying to Harland and Wolff. At the present moment, Short's are not a lame duck. Their morale is excellent, under first-class leadership, and the part that Short's have played in the community in Northern Ireland as leaders in raising technological skill in the engineering field is unrivalled. It would be a tragedy if, as a result of failing to supply them with a proper link into their markets through British Aerospace, they were put in a position where they could no longer serve our community.
Short Brothers' shareholding used to be owned by the Department of Trade and Industry. During August its shareholding was moved to the Ministry of Commerce. If rumour is right, some of it is going back to the NEB. But the fact of the matter is that the stimulation of trade, the channelling of research projects, was always done to Short's by the DTI. Where is this channelling of markets, this channelling of projects, going to come from if it is not by some institutionalised link to our British aerospace industry? Again it is a question of lack of confidence which might exist among the buyers. This Amendment would go some way to remedy that situation; but even with just this Amendment, I think more needs to be done.
Lord SHINWELL: It would appear to me that the case which has now been argued by the noble Viscount, Lord Rochdale, and the noble Viscount, Lord Brooke-borough, might go by default if nobody
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on the Back Benches on this side of the Committee makes a contribution. I am bound to say that the case for the inclusion of a director of the proposed corporation associated with Harland and Wolff, and also, presumably, with the firm of Short Brothers, has been argued with almost excessive moderation. I say that because when I saw the Bill for the first time and noted that Harland and Wolff, in particular, one of the most famous shipbuilding firms in the world, had been excluded, I wondered what was the reason for the exclusion. I stand to be corrected, but I cannot recall that in the Second Reading debate any reference was made to the exclusion of Harland and Wolff and Short Brothers. It may have been mentioned.
Lord MELCHETT: To put that right, may I say that it was mentioned by me when I wound up the debate.
Lord SHINWELL: I may have missed it. I accept what my noble friend said. After all, it is, as I have suggested, a very moderate demand. Speaking for myself and not for the Labour Party on this side of the Committee, I should have supported a proposition for the inclusion of Harland and Wolff in the nationalised shipbuilding scheme because it appears to me that a firm of this character with a worldwide reputation and so closely associated—it must be, whether we like it or not—with the nationalised shipbuilding operation, certainly ought to receive more consideration.
The reason for the exclusion I do not know. It may be that Harland and Wolff have lost quite a lot of money. But that cannot be the sole reason for the same might be said of Govan Shipbuilders who have been subsidised all along the line and I should not be surprised if they were to continue to be subsidised for some years to come, as indeed many other companies may require to be assisted. But from the economic point of view—and I use the term "economic" not in a narrow sense, but in a British sense—Harland and Wolff certainly should have been incorporated.
What I cannot understand is this. What about the title of this new corporation? The Bill seeks to establish two public corporations: British Aerospace and British Shipbuilders. Are we to understand that Harland and Wolff are outside

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the ambit of the term "British"? I think that the title should now be rearranged to, perhaps, "Nationalised Shipbuilders" and not "British Shipbuilders," if we are to use that term. This may be regarded by some as a minor point, but if we are to use the term "British Shipbuilders" then British shipbuilding firms such as Harland and Wolff—not a small firm of little consequence—ought to be included. But what is being asked for? It is nothing like that. That may be regarded as an extravagant demand. All that is being asked for is that a director of Harland and Wolff should be one of the directors of the British Shipbuilders Corporation. Surely, that is not too much to ask for.
It would require a very strong argument on the part of my noble friend Lord Melchett—and I know he has the capacity for putting a strong argument; but it would have to be stronger than he has hitherto produced—to convince me that this Amendment should not be accepted. If this Amendment is brought to a Division, while I can only speak for myself, I certainly shall support it. For the life of me I cannot see why Harland and Wolff should be excluded in some form, even this modest form, from the scheme now proposed.
Baroness WARD of NORTH TYNESIDE: I rise to support both these Amendments, but particularly the one relating to Harland and Wolff, and for this reason. When I was in another place I very well remember it was decided —this is some time ago, of course—that £25 million should be sent to Harland and Wolff to modernise. As your Lordships know only too well, many shipyards have needed modernising in modern times and I thought to myself, even when I was in another place, that as I spent most of my time arguing for help to be given to my own area, I would give anything to the industries of Northern Ireland in the situation in which they found themselves. If I remember rightly, there was no opposition at all, and I was very pleased to learn that the money was finally sent to Harland and Wolff. As I understand it—I have never been there myself but from time to time I am asked how they are getting on—they carried out a first-class modernisation
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and therefore they were ready, as has been said today by the movers of the Amendment and by my noble friend, if I may so call him, Lord Shinwell, to do a first class job. They are known all over the world. I am very proud of that, because I think that British shipbuilding is the best in the world, so it seems to me that the Amendments are very relevant and ought to be supported.
Of course, I cannot say anything about aerospace because, although I have very strong views on the subject, I do not really know as much about aerospace as I know about shipbuilding. I would just say to the noble Lord who is to reply that many of the arguments used have been on the lines: "Oh, of course, anything that is nationalised will get all sorts of help". Well, I am against nationalisation, but at the same time, when the shipyard is being modernised and can compete in the world, I think it is tremendously important to have on the board which this Government are proposing to set up, people who know what they are talking about. I think both these Amendments include that, and I should have thought that the Government would be very pleased about it. They seem not to want to include in this Bill—most of which I do not agree with—things which would please both the shipbuilders and the workers; that is to say, some of the good trade unionists. There are many who are not good, but there are quite a lot who are good and I like always to support good people from wherever they come.
What I am saying is that I hope the Government will find it suitable to include the Amendments in the Bill, although I see the difficulty of nominating people before the Bill actually becomes law. But I felt that I ought perhaps, having taken some interest in Harland and Wolff in another place, to support these two Amendments, and I look forward to hearing that, somehow or other, a pledge will be given, if the Amendments cannot be included in the Bill, that Harland and Wolff and the other firm will have their positions regularised if ever the Bill gets on to the Statute Book.
5.45 p.m.
Lord MELCHETT: As I have been asked by the noble Baroness to give her my point of view, maybe I could at this

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point enter the debate. May I first say to the noble Viscount, Lord Brookeborough—on an entirely different matter, but he did raise the question of education in Northern Ireland—how sorry I am that he had not heard that on Saturday I announced that there was to be an extension of the time for consultation on the reorganisation of secondary education, and I made it perfectly clear that no decisions had been taken by the Government. I am glad to have this opportunity to let him know that.
May I start by assuring both the noble Viscounts that I am entirely sympathetic to the objectives they are looking for in this Amendment. I certainly agree that it is vital that there is proper co-ordination between British Shipbuilders, British Aerospace and the respective Northern Ireland industries. Indeed, in the case of British Shipbuilders we accepted on report a new clause, Clause 48, which was, incidentally, put forward by the Opposition in another place and subsequently accepted by the Government. That clause requires the new Corporation to consult or co-ordinate their activities with the industry in Northern Ireland. However, I do not think that appointing executive directors to the Board is necessarily the right way to achieve the appropriate degree of co-ordination and consultation between the industries in Great Britain and in Northern Ireland. The noble Lord, Lord Strathcona and Mount Royal, it seemed to me, could be taken to have implied in some of his remarks on the previous Amendment that if noble Lords on this side of the House were not going to consider Amendments at an early stage of the Bill, we should be kept here for a very long time. I am quite sure that he did not mean to imply that, but I make the point to clear the air, because it appeared that such an implication or threat, if I can use the word, could be read into his remarks. I make the point because I should like to say to both the noble Viscounts, particularly as they raised the point of later Amendments to the Bill and those on Clause 48, that I will look very carefully indeed at the Amendments they have suggested to Clause 48 to see whether there is anything we can do to meet the points that those Amendments will make.
To return to the Amendments, I am afraid that there are serious technical objections to accepting them. Companies
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are not statutory bodies and it would therefore be unusual for them to have a specified statutory role. This Amendment would give the two companies a special relationship with British Aerospace and British Shipbuilders. It thus puts them in a privileged position compared with other companies. In addition, Short Brothers and Harland is not entirely Government-owned, as the noble Viscounts know. The proposed arrangement involving its executive director might be thought to go against the interests of the other shareholders. Certainly the Government do not want to take any action which remotely risks damaging private interests, whether of the shareholders in Shorts or of other companies in the aircraft and shipbuilding industries whose executive directors would not be members of British Aerospace and British Shipbuilders.
I believe that Clause 48 will ensure proper co-ordination between British Shipbuilders and Harland and Wolff. My right honourable friend the Secretary of State for Northern Ireland will be making a statement shortly about Short Brothers and Harland Limited. I can, however, say that the capital structure of the company has been strengthened with the writing-off of some Government loans, the capitalisation of others and the injection of additional working capital. Under these financial arrangements, the Northern Ireland Department of Commerce will become the major shareholder in the company. However, the Department of Industry will retain a substantial shareholding and will remain as sponsor for Shorts as part of the British aerospace industry. My right honourable friend the Secretary of State for Industry will thus retain responsibility for helping Shorts play its proper part in the United Kingdom aerospace industry. It will be for my noble friend Lord Beswick to evolve a satisfactory working relationship in the first instance, but my right honourable friend the Secretary of State for Industry and my right honourable friend the Secretary of State for Northern Ireland will need to be satisfied that the relationship is in the best interests of both Shorts and British Aerospace.
Finally perhaps I may emphasise that the Secretary of State could under the Bill as drafted make the appointments suggested in the Amendment, but, as I have said, we do not believe that this is

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the right way to achieve the objective. If the more flexible arrangements which we propose did not turn out to be satisfactory, we could take the steps which have been proposed by the noble Viscounts. I hope that what I have said, together with the sympathy I expressed with the objectives and the real technical difficulties which I have mentioned, will persuade the noble Viscounts that at least at this stage they should withdraw their Amendments, and see what happens when we reach Clause 48.
5.50 p.m.
Lord TREFGARNE: I am sorry that the noble Lord jumped up rather sharply just now. I have a feeling that it may have been better if he had listened to my very short point; however, be that as it may. I hope that the Government, when considering their attitude to this Amendment and others to be moved by my noble friends, will bear in mind, above all, the interests of the people of Northern Ireland. Nobody has a better claim to speak for those people than the noble Viscounts who are moving these Amendments. We ought therefore to listen most carefully to the points they make. The noble Lord, Lord Melchett, recently assumed responsibilities in Northern Ireland and we wish him well. Even he in his brilliance is unlikely yet to have acquired the knowledge and experience of my noble friends. Therefore I find myself in very real sympathy with the purposes of the Amendments and shall find it difficult not to support them.
Lord CARR of HADLEY: I too find myself in considerable sympathy with the two noble Viscounts who have moved these Amendments. Probably it is right that we should not press these Amendments to a Division at the moment. I, for example, see considerable difficulties in having an executive director of these two companies as members of the Corporations. It seems to me this could be very embarrassing to the shipbuilding and aerospace industries to have members who are executive directors of the companies. It may be the executive director is not the right person to be a member of the Corporations.
On the other hand, the noble Viscount, Lord Rochdale, said he had Amendments of three different strengths. I think he
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described this as the intermediate strength. I am not sure I like his "double", if I may put it that way. Equally, I am inclined to wonder whether his single, the weakest one, is strong enough. I am not sure whether I understood the noble Lord, Lord Melchett, correctly about this, but I hope I understood him rightly to say that when we come to Clause 48 the Government will be proposing what they might do. I am sorry if I misunderstood the noble Lord, as he is now shaking his head. We shall have to consider our position then. The right course would be to have a debate on all three categories of Amendments moved by my noble friends and to decide when we have heard the Government's reaction on each one of them what the final decision should be when we come to Report stage.
At the moment, simply with Clause 48 and nothing else I have a strong understanding regarding the fears which exist in Northern Ireland. I know that the Minister must in the most direct manner be concerned with that now in view of his new appointment. I am sure that he will give due weight to it. The best course is to let the matter go and to have our debates on the other two grades of Amendments and decide at Report stage where we are going to come down. I believe that before we get to the next debate (which I believe will be on Clause 48 and later on also on the Schedules) it will be helpful if the Government can give us the thought which I believe the Minister promised, so that he can indicate at that stage how the mind of the Government is moving. Then, when we get to the Report stage we can form a firm view about which, if any, of these three types of Amendments we may wish to support. At this stage I can only say "which, if any". Certainly, speaking for myself, I have not reached the decision whether it should be any of them or, if so, which of the categories. The noble Viscounts have raised a matter of concern in Northern Ireland which ought to be seriously considered by us.
Lord HARMAR-NICHOLLS: The advice my noble friend gave would have been sound advice and accepted with alacrity if the noble Lord had not shook his head when the question was put to him. I gathered from the brief intervention that the noble Lord made that when we reach Clause 48 he will say

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something further. That was the impression he gave.
Lord MELCHETT: I said I would consider carefully the Amendments which the two noble Viscounts have moved. The noble Lord, Lord Carr of Hadley, as I understand it, said was I intending to put forward some Amendments of the Government. I said that that was not my intention. I was merely clearing up that point; that was why I shook my head.
Lord HARMAR-NICHOLLS: We must hope that as a result of this intervention, the noble Lord will say more when we reach Clause 48 than he otherwise would have done.
Viscount ROCHDALE: May I thank my noble friends and the noble Lord, Lord Shinwell, who supported me on this Amendment. I should also like to say to the noble Lord, Lord Melchett, that I received some encouragement from what he said. Like many other noble Lords, I perhaps read more into what he said than he himself seemed to think he said. I gathered from what he said that when we come to Clause 48 he will think carefully about it, but the inference I received was not that he would necessarily accept my Amendment but might himself put down a stronger Amendment which would meet the present Amendment and what we put down for Clause 48. I hope that he will think sufficiently carefully about it with his colleagues to be able to produce something which will enable us to accept it maybe without then going to the next set of Amendments in the Schedules.
Having said that, I certainly agree with my noble friend Lord Carr that the correct procedure is to withdraw the amendment and think about it, bearing in mind that one way or another my noble friend Lord Brookeborough and I want to make absolutely certain that something by the way of improvement is achieved before the Bill leaves this House. I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
5.59 p.m.
The Lord STRATHCONA and MOUNT ROYAL The Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 7:
Page 2, line 3, at end insert—
("() As soon as possible after appointing a person to be a member of either Corporation, the Secretary of State shall lay before each House of Parliament a statement of the term for which he has been appointed.").
The noble Lord said: On behalf of my noble friend I beg to move Amendment No. 7. I am sorry that the noble Lord, Lord Melchett, has now left the Committee because I want to reassure him on two things. In the first place, we have no desire to filibuster over this Bill; certainly, I was not in any way threatening the noble Lord. I would not dream of doing anything of that kind. All I was pointing out was that if we meet a continuing, unyielding attitude on the part of the Government, it is inevitable that the discussions in advocacy of certain points we hold dear are going to be long. That was all I was trying to say in the friendliest possible way. That may sound churlish after the helpful way in which the noble Lord, Lord Melchett, dealt with the last Amendment.
This Amendment leads us back to this question of appointments and it is a fairly simple point. We are suggesting here that as soon as possible after the Secretary of State has made an appointment to these boards he should lay before the House a statement of the term for which the appointment has been made. We could, I suppose, have said, "the terms upon which" rather than, "the term for which" but we are really addressing ourselves to the question of the time. There is a precedent for this, I understand, in the Iron and Steel Act 1975. What we are seeking here is to make the Government take an initiative in keeping Parliament informed about what they are doing in respect of appointments to these boards. It seems that it would be a good idea if we could be told the term for which these appointments are being made, and it seems an entirely reasonable suggestion that what is good for the British Steel Corporation in this respect might well be a sensible thing to apply to both British Aerospace and the British Shipbuilders.
May I end by asking the noble Lord a question which perhaps I should have informed myself upon: if so, I apologise to him. Do we in fact know the terms as opposed to the term upon which these appointments are made and, if so, where do we find details of these terms? I beg to move.
6.2 p.m.
Lord KIRKHILL: First let me assure the noble Lord, Lord Strathcona and Mount Royal, that I shall convey his comments to my noble friend Lord Melchett, although I thought that he had rather addressed them to me as I spoke on an earlier Amendment. I can only confirm that he will have to sustain continuing advocacy for much of these Committee proceedings.
Quite simply, the Government view is that this Amendment is unnecessary. It would require the Secretary of State as soon as possible after appointing a person to either Corporation to lay before both Houses of Parliament a statement of the term for which he had been appointed. Although a provision such as this is included in the Iron and Steel Act 1967, it has not been thought necessary in recent nationalisation Statutes. I give as an example the Gas Act 1972. There is no question, on the other hand, of the Secretary of State's withholding information on the term of appointment. I can assure noble Lords that at the time of an appointment it is normal practice to announce the term of appointment, and appointments to the Corporation will not break with this practice. Furthermore, the terms of appointment of members of public boards are published in the White Paper Public Boards: List of Members of Public Boards.
As to the specific question which the noble Lord has posed, I cannot give him a reply at this stage but I will pursue that point and let him know. I think that in the light of what I have said it may not be necessary to press this Amendment.
Lord TREFGARNE: Can the noble Lord help me on one point? Can he say whether, in general, questions on the principal terms and conditions of appointments of members of boards such as this could be answered in Parliamentary Questions?
Lord KIRKHILL: I have to rest on my earlier comment. I shall have to pursue this point and I shall certainly let the noble Lord, Lord Trefgarne, know the outcome of my questioning of those who know. I do not myself know the answer to that question. It is fair to say that the terms of appointments
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are announced when they are made virtually by way of Press release. I should perhaps have added that in my earlier reply.
Lord REDESDALE: I have just a brief point of clarification. The noble Lord says that it is normal practice. What sort of terms of appointments are we talking about? Are we talking about long terms, somewhere in the region of ten-year appointments, or are we talking about relatively short periods?—because you could have somebody on a board whom you wished to get rid of and it could be an awful impediment to the board.
Lord KIRKHILL: Again entirely on my own experience, usually these appointments are of three-year or five-year duration. I do not know of appointments beyond that.
Lord SHINWELL: I am bound to say that I am on the side of the Government on this occasion. I am not sure that it is wise to specify the period for which any person appointed to a board should occupy the position, because the Government may come to a decision after consultation with a person about to be appointed that he should be appointed for four or five years. That has happened. Some people have been appointed to various boards in that way and during that period one cannot get rid of them. It is very difficult for a Secretary of State to dismiss somebody whom he may have appointed and who may be a friend of his. It is difficult and it is most embarrassing. Therefore it is far better not to specify the period during which a person should occupy a position.
It should be within the discretion of the Secretary of State to say after a period of time—say 12 months or two years—"You have had enough of it, out you go", unless these appointments are regarded as permanencies. I do not want to enter into another subject, although I am very much tempted to do so in view of recent appointments that have been made, but sometimes people expect to be appointed for ever and ever, Amen, and that is not good enough. I cannot speak personally, because I have never been appointed to anything and now I do not think there is much chance, but it is really a mistake to specify a period, however short it

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may be or however long it may be. It is far better to leave it to the discretion of the Secretary of State.
Lord STRATHCONA and MOUNT ROYAL: This has turned out to be a rather informative little debate, if only because it has shown a certain degree of ignorance, which I appear to share with the Front Bench opposite, about where exactly one finds details of these appointments. It may be useful if I give the noble Lord a minute or two's notice that the question of the powers of dismissal will come up again under another Amendment, and I think this is relevant to a point which the noble Lord, Lord Shinwell, was making. I agree with many of the things that he said, but I should like to state a contrary view. There is a case, I think, for appointing people to this kind of job, as indeed to many other jobs in life, for a relatively short time on the clear understanding that they have to offer their resignation in a relatively short time so that a positive step has to be taken to reappoint them if one wants them to carry on. This can sometimes be a rather useful way of avoiding the embarrassment of having to sack somebody who has been there rather too long. I am trying to remember Cromwell's remark—
Lord SHINWELL: I wonder whether the noble Lord is aware of what happens. I do not know how long he has been a member of a Government, but if one wants to get rid of somebody one just arranges with the Prime Minister to confer an honour on him, and that settles it.
Lord STRATHCONA and MOUNT ROYAL: I look forward with keen anticipation to the last volume of reminiscences of the noble Lord, Lord Shinwell, when some of the secrets of the operations of the Governments he has been in are disclosed to an astonished public. I have to confess to him that I have not met that particular problem. I fear that I shall be accused of filibustering if I wander from the point. I think the right thing for me to do at the present time is to beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.9 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 9:
Page 2, line 6, leave out paragraphs (a) to (c).
The noble Lord said: As I said just now, this again is an Amendment concerning the powers of appointment in a rather wider sense. The issue here is a question of Government interference, which has already been referred to at the beginning of our activities today by my noble friend Lord Ferrers. Lord Kimberley said earlier on that the Government had given us an assurance of minimum interference. Therefore, I think we are entitled to ask that if that is indeed what they intend, why do they take the powers enumerated in paragraphs (a), (b), (c) and particularly (e) in this clause of the Bill? I take the view with which I hope that many noble Lords will agree, that the watchdog powers of Parliament make it incumbent upon us to keep the powers demanded by Governments to a minimum. The noble Lord, Lord Shinwell, whom I think I might legitimately describe as everybody's noble friend, made the point in general terms to your Lordships this afternoon when he was expressing certain misgivings about the power to interfere.
We are concerned about paragraph (a), because here the Government are taking the right to alter the numbers on these Boards. This gives rise to the kind of threat made to this House by Lloyd-George in, I think, 1911 and which ultimately led to the Parliament Act as we know it today. In other words, it gives the power presumably to "swamp" the Board of one of these Corporations if they do not agree with what it is doing. I should like to ask the noble Lord this question. If the Government have power to appoint members to these Boards, do they not in fact have the power to remove them? If I sound ignorant in asking that, I hope I shall be excused, because it is an important point which indeed we have discussed earlier this afternoon. There was also rather a strange comment made in Committee in another place by the Minister who said:
"… we do not consider that the Secretary of State should have quite the same power to dismiss a member of a board merely because he has disagreed with the Member's point of view."
He referred to the case of Lord Hall and accused a Conservative Government of having sacked him for disagreement with the Minister. I have been quoting from column 114 of the Committee proceedings in another place on 16th December.
When we come to paragraph (b), I think that that is still more alarming. If there

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is any justification for the Secretary of State to have power to prescribe that, in addition to the office of Chairman, there should be offices to which the Secretary of State can appoint members to the Corporation, does this not put the Secretary of State in a situation where lie can compel the Corporation to employ people who, almost ex hypothesi, they do not want but have to pay for? All sorts of possibilities spring to mind: the Secretary of State might insist upon there being a public relations officer—one of these 2,700 we were talking about the other day—or there might be a safety director imposed upon the Corporation under this clause, or a trade union director.
We are getting back to this question of the Secretary of State interfering with what, in effect, is the day-to-day management of a rather large and complicated Corporation. Really, the Department concerned here is already fairly large, employing God knows enough civil servants whom one presumes are already busily occupied in doing what they have to do. If we offer a Minister a whole lot of extra opportunities to interfere, this he will do by using his civil servants to carry out the operation so that, ipso facto, are we not going to have additional loads placed upon civil servants and, hence, more civil servants? With the greatest respect to that admirable body of people, I think we would all agree that we have too many of them already. Therefore, while at first sight this may appear to be a minor group of Amendments, I believe that we are raising an issue of some importance.
Finally, in the same proceedings in another place at column 113, this dreaded word "flexibility" came up once again. Mr. Carmichael said:
"We believe that the power to appoint to specific named offices would a worthwhile piece of flexibility."
Anybody who sat through the proceedings on the Energy Bill in this Chamber will remember that this word became extremely overused during those debates, and I would ask the Government whether they could, early in our deliberations on this Bill, please see their way to making a self-denying ordinance about the use of the word "flexibility". If they mean "power to employ", for goodness' sake say so, because that is what Governments
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usually mean when they say they want flexibility. I hope we shall not sound as if we are nit-picking if we say that the kind of detailed interference suggested in paragraph (e) is wholly inconsistent with this desire not to interfere in the running of these great Corporations. Please, let us not claim that this is needed in the interests of "flexibility". It is needed in order to be able to interfere in detail, and we do not believe that that is a good thing to do. I beg to move.
Lord HAWKE: I have sat through all the nationalisation Bills from that with which the noble Lord, Lord Shinwell, was concerned onwards—which I think was in 1946, was it not? My memory may be defective, but I cannot remember provisions of this nature in any other of the nationalised industry Bills. I can only conclude that the working of those bodies has been so unsatisfactory to the Government that they now wish to include these particular forms of interference in order to obviate the difficulties they may have encountered with the other bodies. Would the noble Lord, when he comes to reply, say which bodies they have had difficulties with so that from experience they have decided that they must have these particular powers in this latest nationalisation Bill?
Lord HARMAR-NICHOLLS: I think these Amendments are very much more important than the words as they read would have one believe. I have always understood that those who have set up these nationalised Corporations have always said something along these lines: "We want them to be run as independently as private industry. We do not want any sort of political day-to-day interference. We want them to use their judgment, having been given the responsibility for running it, without having somebody looking over their shoulder and breathing down their neck".
Certainly, paragraphs (a), (b), (c) and (e) retain for the Secretary of State a power which will mean that he is interfering on day-to-day matters. I believe that if the nationalised Corporations are to work at all, some sort of security of tenure has to be given to the people who are appointed to run them. That is where I disagree to some extent with the point made in the last Amendment, where it was

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suggested that an appointment should be of very short duration. If we want to get the right sort of people looking after these very important businesses they must have some sort of security of tenure so that they can be there for some reasonable amount of time to work out their policies, see how they work and then amend them later in the light of experience. So the period of appointment has to be a reasonable one and no doubt here, as in any other business, they would want a contract of service which would lay out the period and the sort of standards that they are expected to follow.
There were quite a few comments on the last Amendment about having the right to dismiss, but I hope the idea is that, eventually someone will be appointed who, one hopes, will do the job well. So that we should not begin by talking about how effectively people can be dismissed. People must be appointed on the basis that they will do the job well. However, if you want to dismiss them they ought to have the protection of a service contract, so that they can get compensation and have their point of view taken into account, if need be in a court of law. While these paragraphs do not cover that point of view, they give a power to the Secretary of State which he ought not to want.
I should like to know the answer to the question put by my noble friend. Do these words appear in other nationalisation Statutes? If they do not, then why should they he brought in now? If they have appeared, have there been any occasions when there has been a divergence of view about the very extensive powers that are embodied in paragraphs (a), (b), (c) and (e)? What is behind the idea of wanting them there at all? I do not think that it is going into the flights of fantasy to extend the point made by my noble friend on the Front Bench. Why should the Government want the power in paragraph (a), unless they want to appoint a lot of new people who, under instruction, will overrule the people who have previously been running the organisation in what they thought was the right way? Why else should the Government want to include these provisions? If any people go, then they ought to be properly replaced, but if the minimum and maximum are left at the behest of the Secretary of State he is being given power to have
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as many as he likes. The Corporations themselves should retain this full power in paragraph (b). They should be able to appoint extra officers. They are the ones who ought to know whether or not extra people are wanted, not the Secretary of State.
I hope that the noble Lord, Lord Melchett, will find that he is able to give a reasonable acceptance of the idea behind these Amendments—even if he does not accept the Amendments as they stand—because unless he gives that it will remove the alibi which the supporters of nationalisation have always thrown out to those of us who do not believe that nationalisation is the right way of proceeding. They have always said, "We will not have the day-to-day running of these organisations open to question by Ministers or Parliament", and if this means that they are moving away from that philosophy it will be a very fundamental change in their approach to these matters. So, with that in mind, I hope that the noble Lord, Lord Melchett, will find it possible to say—if he is not able to accept the wording of these Amendments—that he is prepared to remove these great powers which give an overriding control to the Secretary of State which, as a politician, he ought not to have.
Lord LLOYD of KILGERRAN: As the fourth mover of this Amendment, and belonging to a different Party from the first three, I should like to say formally that I support the questions and the statements of the noble Lord, Lord Strathcona and Mount Royal. But I should like to ask a further question of the Minister. I was interested to hear his speech earlier this afternoon, when he referred to the desirability of increasing the powers of delegation and decentralisation of the new Corporations which are to be created. Therefore, I should like him to explain how he finds paragraphs (a), (b), (c) and (e) to be consistent with that general policy.
Viscount ROCHDALE: I should like very much to support my noble friend Lord Strathcona on this Amendment. During the debate on Second Reading, I criticised very strongly that part of the Bill which, in my view, made the Secretary of State act at times as chief executive. This is exactly what paragraphs (b) and (c)

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seem to do. They give him, or his officials, enormous powers in the way of appointing people to the Corporations. They therefore denigrate and undermine the authority of the chairman and that is the very worst thing that could he done for the successful operation of the undertaking.
As regards paragraph (c) which states:
"make provision with respect to the appointment and tenure of office",
I am afraid that my own knowledge of the facts about appointments by Government Departments of senior individuals in industry has been such as to make me highly suspicious of the way in which they are made, although I am not saying that they are not the right people. To illustrate what I am saying, I know of somebody who was needed for a particular job. Out of loyalty, he took it straight away so that he could get on with the work before his contract of service was agreed. That contract of service was a matter for endless discussion between the Government's solicitors, the company's solicitors and the individual's solicitors, and it was months and months after he started working before he finally had the contract. At one time he came to me and said: "I am really fed up, and I am not sure whether I shall sign it when it eventually comes." That being so, the removal of paragraph (c) is very relevant. Once the Secretary of State has agreed whom it shall be, then it should be left to the Corporation or the company, whichever it happens to be, to get on and do the detailed work, to decide the terms and settle the matter.
Lord TREFGARNE: I think that the power to meddle, as my noble friend Lord Strathcona put it, is one of the most loathsome features of this Bill which has many loathsome features. Above all, I believe that paragraph (e), which is the subject of Amendment No. 10, is the worst of even that awful lot. Therefore, I hope very much that my noble friend Lord Strathcona will be very firm and resolute and will not withdraw his Amendment too easily. I should like to ask the noble Lord, Lord Melchett, one question arising out of Amendment No. 10 which I hope he will be able to answer. It seems to me that the Ministerial powers conferred by that paragraph also convey some Ministerial responsibilities. Therefore, I wonder whether it will be the case that the Minister,
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or in this House the Government, will be answerable to Parliament for the functions described in paragraph (e), for which the Government have taken responsibility.
6.28 p.m.
Lord MELCHETT: I think it would be sensible, as I intend to use the word "flexible" on certain points in my reply to the Amendment, if I started off by dealing with the remarks which the noble Lord, Lord Strathcona, made about the word. He gave what, for me, was a very interesting insight into the workings of Governments of noble Lords opposite, when he told us that what Governments of his experience mean by the word "flexible" is the power to meddle. I think there is another way of looking at it, and one which I would say this Government have adopted; that is, that if a position is not flexible it is inflexible, and that inflexibility may well give rise to substantial difficulties. It is those substantial difficulties to which I would seek to persuade the noble Lord his Amendment would give rise, and would seek to persuade him of the advantages of the provisions currently in the Bill.
These Amendments seek to delete certain important matters from the scope of the regulations which the Secretary of State is to make under Clause 1. I must say that I consider that the subjects which noble Lords propose to remove from the scope of the regulation-making power are ones which must be dealt with in or under the legislation. Previous nationalisation Statutes have covered these matters; for example, provision for the size of the board, particular offices, appointment and tenure of offices, quorum, board proceedings and related questions. In response to the various questions which I have been asked on the point, these provisions do not differ from the precedent except in one respect to which I shall come.
Subsection (3)(a) is a new departure in nationalised industry legislation, giving flexibility to change the minimum and maximum numbers of the board, but I gather that this is not something which noble Lords opposite find particularly disturbing. If they do, perhaps they could explain why because, for the life of me, I cannot see why having the power to change the minimum and maximum

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numbers of the board by legislation, which will be subject to proceedings before Parliament, should be all that sinister.
Lord STRATHCONA and MOUNT ROYAL: If I may interrupt the noble Lord, it is merely to point out that I said to him that it is the swamping powers that the paragraph seems to imply which seem to us to be objectionable. If I may take this opportunity to answer his other point about orders laid before Parliament, I think I am right in saying that this order is subject to the Negative Resolution procedure, and everybody knows that the safeguard involved in that procedure is minimal.
Lord MELCHETT: I am no clearer in my own mind, although it may be that I am being very stupid in not understanding the noble Lord, as to exactly what he means by the swamping of the board in this way. I simply do not see how the powers given under the Bill could lead to that. It is true that the regulations will be subject to the Negative Resolution procedure, but it is not a question of the Secretary of State simply deciding something for himself and it not being subject to any further discussion.
If I could deal with the various subsections, subsection (3)(b) provides for the Secretary of State to nominate particular offices to which members are to be appointed and covers matters which in previous Statutes are set out in the Statute itself rather than by regulations—for example, deputy chairman and in some previous Statutes chief executive. Unlike the precedents, however, this subsection would allow other offices to be nominated. At the moment I confess that we do not have any particular offices in mind, but I would suggest that, given the complexity of these industries and the fact that none of us can be certain about what in future will be the best way for them to be organised, it is sensible to have this kind of flexibility—not the power to meddle—provided for in the Statute. Subsection—
Lord HAWKE: Before the noble Lord moves away from paragraph (b) perhaps I may ask him a question. Apparently the members of the boards are normally to be appointed after consultation with the chairman, but there seems to be no
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provision in paragraph (b) for consultation with the chairman. Therefore, the Secretary of State can appoint people direct to these various offices without any consultation with the chairman.
Lord MELCHETT: My understanding is that paragraph (b) provides the power to arrange particular titles for the people to be appointed and I have given as examples the deputy chairman and chief executive. I shall need to take advice, and will certainly do so before we leave the Amendment, as to whether or not that power overrides the need to consult the chairman about making appointments of that kind. Perhaps I may take that advice and come back to the noble Lord upon it.
Lord CARR of HADLEY: Before the noble Lord leaves paragraph (b), may I make one further point to him? During the Standing Committee proceedings in the other place the Minister when dealing with the matter gave a pretty clear indication of the kind of way in which these powers might be used. He said—I quote him and I think I am entitled to do so:
"It may be important that a member of the board be given charge of sales specifically but that the Minister should suggest this and give that man the status. It could be a scientific officer. We believe that the power to appoint to specific named offices would be a worthwhile piece of flexibility."
It would make nonsense of the claim to be decentralising if the Minister could tell the chairman of the Corporation who is to be the sales director, who is to be the director of research and development, who is to be the production director and so forth. This is interference in management on the biggest scale imaginable.
Lord MELCHETT: I do not accept that for the Secretary of State to have this power is interference on the scale that the noble Lord is suggesting. It seems to me to be perfectly reasonable that the Secretary of State, who is responsible to Parliament for the overall strategy of these Corporations, should have the power to appoint people to the kind of offices which my honourable friend gave as examples when he was discussing this matter in another place.
If I may turn to subsection (3), paragraphs (c) and (e) (loathsome as some noble Lords opposite may find paragraph (e), in particular), both of these

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paragraphs cover ground which in all previous Statutes has been covered either in the Statute itself or, in the case of the Gas Act 1972—which was a Conservative precedent—in regulations. The implication of the Amendments is that these matters can safely be left to the boards of the Corporations. I believe that, as in the past, these matters should be dealt with either in the Statute or in regulations. For example, the Amendments would deprive the Secretary of State of the power by regulations to impose upon himself a duty, before appointing members, to satisfy himself that they have no interests which would prejudicially affect the performance of their functions as board members. This duty would be exercised by the regulations made under subsection (3)(c). It appears in some form or another in previous nationalisation Statutes and I suggest to noble Lords that it is an important safeguard. Further more—
Lord CARR of HADLEY: I apologise for seeking to interrupt the noble Lord again but perhaps I just cannot read the Bill correctly. However, I thought that the power to which the noble Lord has just referred, the power of the Secretary of State to vet the question of whether a proposed appointee has conflicting interests, came under paragraph (d). We are not proposing to leave out paragraph (d). We arc proposing to leave it in the Bill.
Lord MELCHETT: As I understand it, there would be nothing to prevent the Secretary of State from placing a duty upon himself under subsection (3)(c) to make sure, when he is appointing someone to a particular office, that he had no interest that would prejudicially affect the performance of his functions as a board member. I was going on to say that the Amendments seem to imply that although the Secretary of State is responsible for appointments, he should not have the power to make regulations concerning the appointment and tenure of office, about the quorum at board meetings and about board proceedings. I regret to say that I cannot accept that these matters should be left entirely to the Corporations without any element of control by the Secretary of State and, therefore, by Parliament.
Lord HARMAR-NICHOLLS: I gather that the answer which the noble Lord has given to the question we have put is that paragraphs (b), (c), (d), (e) and (f) of subsection (3) figure, if not in exactly the same words, in other legislation where nationalisation has taken place but that paragraph (a) is new. Am I to understand that we are merely repeating, if not in the same words, so far as all the other paragraphs are concerned, what has operated in practice since 1946? Is it only paragraph a which is new? Paragraph (a) is to me the most important paragraph in terms of change because, as I said a second ago, it is not beyond the flight of fancy that the Corporations would want to come to a decision based upon their experience of having run the show and that for some reason quite outside the good of the Corporation's work, the Secretary of State would want to make a fundamental alteration.
Subsection (2)(b) says that no fewer than seven and no more than 20 members shall be appointed by the Secretary of State after consultation with the chairman. There is no suggestion in paragraph (a) of subsection (3) that the Secretary of State can alter this maximum and minimum number only after having consulted the chairman. Unless the noble Lord can produce evidence that in another nationalised industry the absence of this power to alter the maximum and minimum number has been injurious to the running of that industry, subsection (3)(a) ought not to be accepted. If it is that paragraphs (b), (c), (d), (e) and (f) have passed the test and have worked reasonably well, I would not be prepared to push this much further, but certainly as far as subsection (3)(a) is concerned I would want to be satisfied about the extra power taken by the Secretary of State to over-ride anything the Corporation may do by appointing new people to carry out his will.
Lord SHINWELL: I wonder whether my noble friend Lord Melchett could indicate whether he has anything in mind in regard to the officers other than the chairman? There might be two vice-chairmen; could there be any others? Usually when a nationalised Board is appointed they appoint a chairman, and a vice-chairman, and there is one member who deals with marketing, another

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member who deals with science if that is relevant to the Corporation. What is meant by "other offices"? Surely when this Bill was drawn up those who drew it up must have had some idea what they meant, and if so they might have conveyed the information to my noble friend.
Lord MELCHETT: Perhaps I may answer the questions which have been posed so far. I am not leaping up in order to pre-empt the noble Lord's comments, and I will certainly listen to everything he has to say when I have finished, but it might be helpful if I were to answer so far, and it would certainly help me. In response to my noble friend Lord Shinwell, I gave the two examples of the Deputy Chairman and the Chief Executive, and the noble Lord, Lord Carr, was kind enough to tell us of some other instances which have been given by my honourable friend in another place. I was asked particularly in regard to subsection (3)(b) about the need to consult the Chairman when appointing members, and I can assure noble Lords that paragraph (b) covers the question of members being appointed to particular offices, and it does not mean that before members are appointed the Chairman must not be consulted. In other words, the Chairman must be consulted about the appointment of members to the Board, and those members who are appointed after consultation with the Chairman may then be appointed to the particular offices mentioned in subsection (3)(b).
There seems to be some confusion, unless I misread the expression on the face of the noble Lord, Lord Carr, when I spoke about paragraphs (c) and (d)—the question of the subsection on the disclosure of interest, which the noble Lord said he did not intend to admit. My understanding of the distinction, which perhaps I did not make absolutely clear, is that paragraph (d) relates, as in precedents, to the disclosure of interests in particular contracts as specific Board discussions; paragraph (c) is well precedented, and it ensures that the Secretary of State satisfies himself about conflicts of interest before appointing members of the Board. So there is a fairly clear distinction between the two subsections and I would suggest that both are important.
Lord MOTTISTONE: Would the noble Lord not agree that this sort of thing can very well be left to the Chairman, because if he is any good he will be able to find out who are the right people to serve with him, what sort of jobs they should do, and whether they have a conflict of interests. If he is not capable of doing that he should not have the job anyhow. Going back to what has happened in previous nationalised industries does not seem to be a frightfully good guide, because would it not be possible to say that, practically all nationalised industries, particularly in regard to their relationship with Secretaries of State, have not been a roaring success. Therefore, might it not be better to cut out all this sort of thing at this stage? If, in the event, the Government find they cannot get a Chairman who can do the job properly, they can then take action; and furthermore, they will probably stand a better chance of getting a good Chairman if he has a free hand. I suggest we do not put it into the Bill but give them a chance. If, in due course, the Government are not satisfied that they can get a good independent minded Chairman they might then introduce legislation at a later date, but for heaven's sake give him as much freedom to start with as possible.
Lord HAWKE: In regard to paragraph (b), the members of the Board will have been appointed with consultation, but it will be perfectly possible for the Secretary of State to appoint any one of those to one of the offices which the Chairman may already have filled. The Secretary of State really has complete power to overrule the Chairman by virtue of paragraph (b). I object to paragraph (b) just as strongly as I object to paragraph (a). I should have thought paragraph (d) was almost common form. Surely no corporation will allow its members not to make disclosures at Board meetings of their interest in contracts.
Lord TREFGARNE: I wonder whether the noble Lord can be a little more forthcoming on the question of the accountability to Parliament of the Minister in respect of the powers which the Secretary of State is taking unto himself by means of these paragraphs in subsection (3). For example, can he answer questions on the appointment of individual members, if he

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has taken to himself that power; and, in particular, will he answer questions in respect of the proceedings at meetings over which he has taken power in paragraph (e)? I believe that is an important point, and I hope the noble Lord will be able to give me a comprehensive answer.
Lord MELCHETT: If the Secretary of State's power is exercisable only by regulations which come before Parliament, then of course he is subject to questioning in Parliament on those regulations. I should have thought it was quite clear and straightforward that, having made a regulation which has passed through Parliament, the Secretary of State is still open to be questioned on the content of those regulations.
Lord TREFGARNE: I am sorry to press the noble Lord on this but I am sure he understands that it is an important point. Is it then the case that if I—or any other noble Lord—were to table a Question about a particular appointment to one or other of these Corporations, questioning the merit or otherwise of it, that the Minister would answer clearly and justify his appointment without—as is unhappily so often the case now—saying that it is a matter for the Corporation itself?
Lord MELCHETT: I stand to be corrected by the noble Lord, but I am not aware of any cases where a Minister, having appointed someone as Chairman or chief executive or to a similar post in a nationalised body, has then refused to answer questions in Parliament on the ground that it is a matter for the body itself. If there are such precedents, I should be glad to have my attention drawn to them.
Lord HARMAR-NICHOLLS: I should like to receive an answer to my Question on subsection (3) (a). I gather that this paragraph is new and that nothing like it has appeared in any previous legislation. It gives power to the Secretary of State to alter the maximum and minimum membership of the corporation. Has anything happened over the last 15 years which would justify that change? If so, we should like to hear about it.
Lord CARR of HADLEY: I am seeking information, because as I understand it paragraph (b) gives the Secretary of State the power to appoint the sales director, the production director, the marketing director, the research and development director, the social affairs director—he can appoint the main heads of all the managerial functions in the Corporation. Am I right in thinking that? It seems to me to be so, judging by what the Minister here has said and reading what his honourable friend the Minister said in the Standing Committee in another place. If this is so, it makes complete nonsense of the claim that this is going to be a particularly decentralised undertaking in which management will be peculiarly left to get on with the job. It seems to me that far from being overseen less by the Secretary of State than other nationalised industries, the Secretary of State will have powers which are much greater than those in other nationalised industries.
Can we now have a clear answer? Are we right in interpreting paragraph (b) to mean that he can indeed make an appointment of the kind I have mentioned? Was the Minister in the other place right about this, and if so, can the noble Lord please confirm the point of Parliamentary accountability; namely, that the Secretary of State intends that we should be able to ask him in Parliament whether he will appoint a certain person to a particular position in the Corporation, or for that matter whether he will remove certain persons from a particular position in the Corporation? I think that the detailed Parliamentary accountability, rightly or wrongly—I think perhaps the noble Lord, Lord Shinwell, thinks wrongly—has always been specifically excluded in the past.
Lord MELCHETT: My understanding is, as my honourable friend said, and as I have said, that the Secretary of State would be able to appoint members after consultation with the chairman of the board to the particular offices of which I have given examples and my honourable friend gave examples. There is some difference, and the noble Lord has slightly glossed over this, between appointing management and between interfering with the job which management do after they have been appointed. It appears to me

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that the noble Lord is glossing over that distinction, and also leaving out of account the fact that the Secretary of State will make these appointments by regulation which will be subject to procedures in front of Parliament. It is not something that the Secretary of State simply sits in his office and decides to do; there will be accountability before Parliament, and that is something which we believe is right in the case of nationalised industries.
The noble Lord, Lord Harmar-Nicholls, asked me about subsection (3)(a). So far as I know there is not any case in existing nationalised industries where the need has arisen to change the minimum or maximum numbers of the board. I think he would accept that we are dealing with two rather different industries; industries of different scope and character from those previously nationalised; industries which may develop in very different ways in the future. We believe that it would be sensible to have this power to alter the minimum or maximum numbers of members of the board.
Baroness WARD of NORTH TYNESIDE: May I add just one thing to that. In this particular situation we are dealing with a nationalised industry which has a deep relationship with defence. I mind more about that, though I dislike all nationalisation. But it really was not quite so necessary in the nationalisation of gas or electricity as it is in this particular Bill which has so much to do with defence where all sorts of objections can arise politically—I am going to say "politically"—in Parliament if we do not have the right Parliament.
Viscount SIMON: Might I ask the Minister whether he could elaborate on something he said about subsection (b). It seems to me that the Minister can make regulations under Statutory Instruments providing that there will be, let us say, a sales director or a production director, or whatever it may be, but when it comes to appointing members of the Corporation to those posts he will surely not make a
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regulation appointing Mr. Smith to those posts?
Lord MELCHETT: No, my Lords, he will not make a regulation appointing Mr. Smith. I apologise if I was not being clear. I was asked about the distinction between appointing members to the board where the Secretary of State has to do that having consulted with the chairman of the board beforehand, and in replying to the point that that would remain the case I may have unintentionally misled the noble Lord, for which I apologise.
Viscount SIMON: When he appoints Mr. Smith he should consult the chairman before he does so?
Lord MELCHETT: He will have to do so, yes.
Lord STRATHCONA and MOUNT ROYAL: I am bound to say that we find the Government rather obdurate here, and I am also bound to say to the noble Lord that I do not believe that many of my noble friends have been in the least bit convinced by the answers which he has been attempting to give us on some of these points. We think that in at least one case we are in fact saving the Government from themselves. If, as a result of these two Amendments which we have been talking to together, Amendments Nos. 9 and 10, there arc some essential provisions removed which the Government feel it is essential to have in the Bill, then it will be up to them to reintroduce an Amendment which deals with the points that they think we have removed and that they must have. But in the meantime I cannot see that we have any alternative but to ask the Committee to express their views on Amendment No. 9.
16.55 p.m.
On Question, Whether the said Amendment (No. 9) shall be agreed to?
Their Lordships divided: Contents, 101; Not-Contents, 41.

CONTENTS

Airedale, L.

Ferrers, E.

Mowbray and Stourton, L. [Teller.]

Amherst, E.

Gainford, L.

Amory, V.

Glasgow, E.

Northchurch, B.

Ampthill, L.

Goschen, V.

Norwich, V.

Arran, E.

Gowrie, E.

Nugent of Guildford, L.

Avebury, L.

Gray, L.

Onslow, E.

Barrington, V.

Greenway, L.

Penrhyn, L.

Beaumont of Whitley, L.

Grey, L.

Platt, L.

Belstead, L.

Gridley, L.

Redesdale, L.

Berkeley, B.

Grimston of Westbury, L.

Reigate, L.

Broadbridge, L.

Hailsham of Saint Marylebone, L.

Rochdale, V.

Brookeborough, V.

Ruthven of Freeland, Ly.

Campbell of Croy, L.

Hampton, L.

St. Aldwyn, E.

Carr of Hadley, L,

Harmar-Nicholls, L.

St. Davids, V.

Carrington, L.

Hatherton, L.

Sandys, L. [Teller.]

Clifford of Chudleigh, L.

Hawke, L.

Seear, B.

Clitheroe, L.

Hunt of Fawley, L.

Selsdon, L.

Colville of Culross, V.

Hylton-Foster, B.

Simon, V.

Cork and Orrery, E.

Inchcape, E.

Somers, L.

Cottesloe, L.

Kemsley, V.

Strathclyde, L.

Craigavon, V.

Killearn, L.

Strathcona and Mount Royal, L.

Craigmyle, L.

Kimberley, E.

Cromartie, E.

Kings-Norton, L.

Swansea, L.

Cullen of Ashbourne, L.

Lauderdale, E.

Terrington, L.

Daventry, V.

Lindsey and Abingdon, E.

Thorneycroft, L.

de Clifford, L.

Lloyd of Kilgerran, L.

Tranmire, L.

De Freyne, L.

Long, V.

Trefgarne, L.

Deramore, L.

Loudoun, C.

Vickers, B.

Drumalbyn, L.

Lyell, L.

Vivian, L.

Dundee, E.

Margadale, L.

Ward of North Tyneside, B.

Dundonald, E.

Merrivale, L.

Wardington, L.

Elles, B.

Monck, V.

Wigoder, L.

Elliot of Harwood, B.

Monson, L.

Wolverton, L.

Elton, L.

Morris, L.

Young, B.

Emmet of Amberley, B.

Mottistone, L.

NOT-CONTENTS

Aylestone, L.

Houghton of Sowerby, L.

Oram, L.

Birk, B.

Jacques, L.

Pannell, L.

Blyton, L.

Kaldor, L.

Peart, L. (L. Privy Seal.)

Brimelow, L.

Kirkhill, L.

Phillips, B.

Brockway, L.

Leatherland, L.

Shinwell, L.

Champion, L.

Llewelyn-Davies of Hastoe, B.

Stedman, B.

Collison, L.

Lovell-Davis, L.

Stewart of Alvechurch, B.

Cooper of Stockton Heath, L.

Lyons of Brighton, L.

Stone, L.

Davies of Leek, L.

McCluskey, L.

Strabolgi, L. [Teller.]

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

Maelor, L.

Taylor of Mansfield, L.

Evans of Hungershall, L.

Mais, L.

Wells-Pestell, L.

Goronwy-Roberts, L.

Melchett, L.

Wigg, L.

Hale, L.

Milner of Leeds, L.

Winterbottom, L. [Teller.]

Harris of Greenwich, L.

Murray of Gravesend, L.

Wynne-Jones, L.

Resolved in the affirmative, and Amendment agreed to accordingly.
7.4 p.m.
Lord STRABOLGI: This might be a convenient moment to halt the Committee in order to take other business.
Lord STRATHCONA and MOUNT ROYAL: Might we first take Amendment No. 10, which is really consequential on or part of the argument we have just been conducting?
Lord STRABOLGI: Certainly.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 10:
Page 2, line 21, leave out paragraph (e).
The noble Lord said: We have already spoken to this Amendment. I beg to move.
On Question, Amendment agreed to.
Lord STRABOLGI: It is proposed to resume the Committee at 7.50 p.m. In the meantime, I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

DOMESTIC VIOLENCE AND MATRIMONIAL PROCEEDINGS BILL
Baroness PHILLIPS: My Lords, I understand that no Amendments have been set clown to this Bill and that no noble Lord has indicated a wish to move a manuscript Amendment or to speak in Committee. Therefore, unless any noble Lord objects I beg to move that the Order of Commitment be discharged.
Moved, That the Order of Commitment be discharged—(Baroness Phillips.)
On Question, Motion agreed to.

CONSUMER TRANSACTIONS (RESTRICTIONS ON STATEMENTS) ORDER 1976
Lord ORAM Lord ORAM rose to move, That the draft Consumer Transactions (Restrictions on Statements) Order 1976, laid before the House on 14th June, be approved. The noble Lord said: My Lords, in moving the first order that stands in my name on the Order Paper, I hope it will be for the convenience of the House if we discuss both orders together. I shall of course formally move the second order at a later stage.
Part II of the Fair Trading Act enables the Secretary of State or any other Minister or the Director General of Fair Trading to refer to the Consumer Protection Advisory Committee the question whether a consumer trade practice adversely affects the economic interests of consumers in the United Kingdom. If the Director General considers that a consumer trade practice misleads, confuses or is otherwise unfair to consumers, he may include proposals to remedy the position. The CPAC then reports to the Secretary of State whether it agrees with the proposals. If the Committee reports that it considers the Director General's proposals, broadly speaking, to he necessary, practicable and fair, the Secretary of State may make an order, subject to Parliamentary approval, banning or regulating the practice in question. These two orders are the first to be laid under these provisions of the Fair Trading Act and arise from the first references to the Consumer Protection Advisory Committee made by the Director
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General. They deal with rights of consumers and mail order advertisements.
The first reference, made on 24th April 1974, covered three practices concerning the purported exclusion of consumers' inalienable rights and the failure to explain the existence of those rights. Until 1973 it was open to parties in a sale of goods transaction to agree that certain rights implied by the Sale of Goods Act 1893—such as description of goods, fitness for purpose and merchantable quality—should not apply to the transaction. The Supply of Goods (Implied Terms) Act 1973 made such exclusion clauses void but not illegal. The effect was that although certain statements became legally void they might nevertheless be used by traders and thus mislead or confuse consumers as to their rights under the civil law. A common example has been the notices in shops stating, "No money refunded" which is inconsistent with the rights granted to consumers by the Sale of Goods legislation.
The three practices referred were, briefly: first, the use of void terms in notices, advertisements, catalogues, invoices, et cetera: second, furnishing written statements to consumers about their rights against the shopkeeper or other supplier without advising them of their statutory rights (if, for example, the goods are not of merchantable quality); and, third, furnishing written statements relating to the consumers' rights against third parties or the obligations to them of such third parties (such as manufacturers' guarantees) without advising them of their statutory rights.
The Committee reported in September 1974, and agreed that all three practices adversely affected consumers' economic interests in that they misled consumers about their rights or otherwise confused them about the terms of the transaction. It generally endorsed the Director General's proposals for controlling these practices although it drew attention to the limitation that the order would inevitably not bite on statements such as "No goods exchanged" which are not void under present civil law.
The Consumer Transactions (Restrictions on Statements) Order implements the Committee's recommendations. Its purpose is to ensure that consumers are not

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misled about their statutory and inalienable rights, and accordingly prohibits the use by traders, when dealing with consumers, of notices or documents which purport to exclude those rights. The order also protects consumers from being misled about their statutory rights by the appearance on goods, containers or documents of statements about their rights against the supplier, or about obligations accepted by the supplier or manufacturers, should the goods prove defective, and it requires such statements to be accompanied by a further statement that consumers' statutory rights are not affected.
My Lords, I know that certain sectors of trade and industry are concerned about certain aspects of this order, and I therefore propose to deal in some detail with two particular issues: manufacturers' guarantees, and the possible effect on finance houses. The Food Manufacturers' Federation and other associations have represented strongly that manufacturers of prepacked foodstuffs would be discouraged from offering their existing guarantees of satisfaction if they had to accompany them with a further statement reminding consumers of their rights against the supplier. This point was considered carefully by the Committee which however concluded that, since guarantees had a strong promotional purpose and provided manufacturers with a valuable method of quality control, manufacturers would be unlikely to discontinue them. Moreover the Committee concluded that it was reasonable that the reminder about consumers' statutory rights should be added.
I would emphasise that I, for my part, certainly have no desire to discourage manufacturers' guarantees of satisfaction which are useful both to the purchaser of the goods and to the recipients of gifts such as boxes of chocolates. I would nevertheless accept the Committee's view that manufacturers will continue to give such guarantees even though they will have to be accompanied by a further statement.
Another matter of concern arises in connection with the responsibilities of finance houses. The Finance Houses Association has represented that under the provisions of the order finance houses will have a responsibility for matters which
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are quite outside their control, such as statements by retailers. These representations have been considered very carefully. Indeed your Lordships will recall that this debate was postponed from 2nd July to allow time for this problem to be thoroughly examined.
I certainly appreciate the objections of principle raised by the finance houses. Nevertheless, we must look at the facts of the situation. The proposed order will of course place finance houses in exactly the same position as they are under the Trade Descriptions Act 1968, where they may in law be the suppliers of goods to which a retailer over whom they have no control has applied a false trade description. So far as I am aware, there has not been a single case of a finance house being prosecuted in such a case under the 1968 Act. Enforcement officers undoubtedly use their good sense in pursuing the actual offender and, as they will aslo be responsible for enforcing the provision of the order, I foresee no danger of finance houses being placed at any greater risk.
I am strengthened in this view by the similar provisions in the Fair Trading Act and the Trade Descriptions Act whereby it is a defence for a person charged to prove that the offence was due to the act or default of another person, and that he had taken all reasonable precautions and exercised due diligence to ensure that neither he himself nor any person under his control committed such an offence. We do not believe, therefore, having considered the question very carefully, that the proposed order is likely to have any material practical effect on either the availability or the cost of hire purchase facilities.
My Lords, I will now turn to the second order. This arises from the second reference, which was made on 16th May, 1974, and which covered three practices concerned with prepayment in mail order transactions and in shops. The practices were, briefly these: first, seeking mail order customers without giving any undertaking to return money if the goods are not sent within a specified period; secondly, seeking mail order customers without identifying the seller or indicating his place of business; and, thirdly, taking payment for goods (other than through mail order transactions) without arranging for the money to be returnable if the

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goods are not supplied by a specified date or within a specified period.
The Committee reported to the Secretary of State in November 1974, and agreed that the three practices adversely affected the economic interests of consumers. However it accepted only the Director General's proposals for dealing with mail order advertisements which failed to identify the seller or indicate his place of business.
This order therefore gives effect only to the proposals relating to one of the practices in the second reference. It provides that mail order advertisements, catalogues, etc., which invite prepayment for goods should state the name of the seller and the address where his business is managed. Although less ambitious than the original reference, the order, which will come into effect on 1st January 1977, will, in my judgment, be of some benefit to the consumer who wishes to get in touch with the advertiser after sending him money or receiving the goods. I hope that that is a sufficient explanation of the two orders, the first of which I now beg to move.
Moved, That the draft Consumer Transactions (Restrictions on Statements) Order 1976, laid before the House on 14th June, be approved.—(Lord Oram.)
7.20 p.m.
Lord ELTON: My Lords, I thank the noble Lord for his lucid introduction of the two orders which he has brought to the attention of your Lordships, and I follow him in dealing with them together, but not in the order in which he has put them because the point with which he concluded is naturally freshest in my mind and the one on which I have not written a note. It is to the effect that the Committee to which the reference was made and which gave the advice on the second order—that is the Mail Order Transactions (Information) Order 1976—accepted only one of the recommendations. As I read paragraphs 88 and 89 of that report on pre-payment for goods—ordered by the House of Commons to be printed on 13th April 1976—I see on page 21 that they did in fact accept two of the suggestions, though one of them with modifications.
Therefore there remains at the back of my mind a nagging worry that since there is provision in the parent Act for the
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Minister to accept the final recommendation, or to reject it, but not to accept it in part or to modify it, it may prove, if it ever went to the courts, that this order was ultra vires. I hope that the noble Lord will feel able to give a reassurance on this point. I would not wish to put it further than asking for his reassurance, but obviously if it is found to be ultra vires then it will have to be withdrawn and it is as well to be prepared for that eventuality.
My Lords, I now turn to the first of the orders to which the noble Lord referred the Consumer Transactions (Restrictions on Statements) Order 1976. As some of your Lordships will be aware, certainly none better than the noble Lord, Lord Oram, there has been a good deal of anxious exchange about this order, and at the outset of discussing it I should like to thank the noble Lord for having allowed the time for this discussion to take place, which he did by withdrawing the order at an earlier stage. That is an act which is never lightly undertaken by a Minister, and it is appreciated.
Among the reservations which have been voiced on this order by interested bodies has been prominent one to the effect that the order, as it appears to bear its interpretation, will require two separate statements to be made on every bar of chocolate as well as on every washing machine or other, more durable consumer goods. There is the statement which is the traditional one which we as schoolchildren perhaps relied on rather heavily. It is to the effect, "If these goods do not reach you in perfect condition please send them back to us for inspection and we will send you a new bar of chocolate together with the cost of sending the old bar of chocolate", of which, my Lords, I regret to say most of us had eaten two thirds before we sent it. That is a familiar announcement and the suggestion would appear to be implicit in the wording of the order, on page 3, Article 5, in the last paragraph:
"… unless there is in close proximity to any such statement another statement which is clear and conspicuous and to the effect that the first-mentioned statement does not or will not affect the statutory rights of a consumer."
On first reading, this assumes that every bar of chocolate, box of chocolates, or pat of butter would have its old guarantee and next to it a new and rather intimidating statement that would give many people

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the feeling that they ought not in fact take up the old guarantee any more than they ought to smoke cigarettes with a Government health warning on the packet. If a layman's interpretation of this is acceptable and can be endorsed to the effect that the two statements can appear in one concurrent paragraph—in other words, if the present guarantees can be re-worded to say all that they have said in the past and in concluding say that this does not in any way remove the duty of a retailer to return the money one paid for defective goods—then a great deal of this difficulty disappears.
I hope that in replying to what I hope are my brief remarks, the noble Lord, Lord Oram, will take the opportunity to reassure those who are concerned in this direction. This may be a little difficult for him in view of the transactions in another place recorded in Hansard of 30th July this year at column 1171 in which the remarks of the Minister of State replying appear to mean that the first of the two interpretations which I put before your Lordships—the requirement of two separate statements—was technically right but that it was so obviously commonsensical to apply the second of the two intrepretations (that is, the concurrence of two statements in one paragraph) that any court, even if a prosecution was ill-advisedly brought under the order, would none the less, while recognising the true state of the law, not enforce it by not giving a verdict to that effect.
That is something which one cannot accept as an assurance because it is asking a court blatantly to alter the law. But if in fact the law is as I have suggested it may be, and as we all hope it would be, then that is something on which we could rest rather more content with the order.
The noble Lord also referred to the difficulties of the finance houses and pointed out that this order leaves them in the same situation as the Trade Descriptions Act. I would not wish to advance any great pleasure on their part towards that Act, but I take note of what the noble Lord said and I suspect that the length of exchanges on the matter have probably removed the greatest difficulties.
In conclusion, I wish to refer to one other matter. There is anxiety, of which
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I am sure the noble Lord is aware, about the effect of this on exclusion clauses in motor car sales guarantees when they are guarantees by the distributor and coincide with guarantees by the manufacturer, and there is a fear on behalf of the Society of Motor Car Manufacturers that the retailer's guarantee—as it were, the subsidiary guarantee, excluding the tyres and glass—may in fact be rendered ineffective. This is a fairly technical matter on which the noble Lord has had recent correspondence. I am sorry that my own correspondence on this matter came to hand so late that I was not able to tell him in advance that I was going to raise this matter, but I should be grateful if he could find an opportunity to work that into his reply. My concluding remarks, on which I inadvertently embarked too early a second or two ago, cover the whole of this, and that is that where regulations of this kind prove in the event to be unsatisfactory or unjust, or as many of us feared might be the case with the Restrictions on Statements Order, that they prove to work against the very people that they are meant to help, the consumer, and if the effect of the order is that two statements have to printed—then I think that it may result in a withdrawal of a number of guarantees, and that operates against the consumer, whom we are trying to help.
If any such eventuality or illegality arises, then it is very important that the Minister's Department and his advisers should become aware of it quickly and take rapid remedial steps. The construction of this Act is such that to amend an order is a very difficult, lengthy, and costly proces, and if it is to be used at all frequently I hope that it will be the Act and not the regulations that eventually get altered.
7.29 p.m.
Lord AIREDALE: My Lords, this is an extension of the criminal law by delegated legislation and therefore it requires rather careful attention. I should like to refer to the first order in particular in its relation to the finance houses. The Minister referred to this aspect of the matter in some detail and I was very grateful for that. I do not think we can really feel very happy about this order in relation to the finance houses, because the Advisory Committee itself, in its report, expressed some misgivings. Paragraph 72 says:

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"In relation to hire-purchase transactions mediated by dealers or agents it has been represented to us that it would be unfair to hold the supplier, for example, a financing company, criminally responsible for the wording in statements on goods, or on containers in which they are packed, because it is argued, the financing company has little if any control over the physical delivery of the goods by the dealer and no control at all over the container."
Then I leave out one sentence, and the Committee concludes the paragraph by saying:
"… We would suggest that further consideration should be given to the matter before any order is made by the Secretary of State."
So there is the Advisory Committee itself having qualms about it.
I believe this was the first report of the Advisory Committee, and I do not blame them at all, because they were feeling their way, but they clearly made a mistake in supposing that they did not have to come to a conclusion themselves but could ask the Minister to consider it further and then, presumably, introduce an order using his own prerogative, as it were, after further consideration. That, unfortunately, could not happen, because there is a rigidity of procedure built into the Fair Trading Act which was very well explained by the Minister in another place when this order was before them on 30th July. He said at column 1161 of the Official Report (Commons) of that date:
"I must make it clear that there are definite limitations on the action open to the Government in respect of any particular practice. An Order may implement the Director General's original proposal or such proposals as modified by the Consumer Protection Advisory Committee, but we have no power to introduce our own remedies."
I think it was in supposing that the Minister had that power that the Advisory Committee, in their first report, made that mistake.
There is one other matter concerning this which I think requires attention. The Fair Trading Act under which this order is laid was passed in 1973. In the following year we had the Health and Safety at Work Act 1974, in which a new conception was introduced for the first time, so far as I am aware, in relation to the responsibilities of finance houses. Section 6(9) of the Health and Safety at Work Act 1974 imposes a liability, under criminal sanction, on suppliers of goods that, where goods are supplied on hire-purchase, the Act distinguishes between
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the ostensible supplier, which is the finance house, and the effective supplier, which is the retailer, and it places liability on the effective supplier, the retailer, and not upon the ostensible supplier, the finance house. My Lords, that was not a piece of delegated legislation like this; that was an Act of Parliament, and Parliament itself enacted those words. I think the question must arise: Is it right that a subsequent piece of delegated legislation like this should fail to follow the example of distinguishing between the effective and ostensible suppliers laid down in an Act of Parliament?
I do not think we can expect this order not to be passed this evening—it has, after all, been passed in another place—but I think that something can be done about this. Both the Director General of Fair Trading and the Minister himself have power to refer matters to the Advisory Committee, and I would suggest that one or other of them refers this back to the Advisory Committee saying, in effect: "You must come to a decision upon this matter that you wanted the Minister to consider. It is for you to consider it, and, while you are considering it, have a look at that 1974 Act and see whether you do not recommend that this distinction between ostensible and effective suppliers should be preserved in subsequent legislation, particularly delegated legislation, in the field in which finance companies operate."
My Lords, my final word is to mention a point which was made by the Minister, who said that the finance houses have not got much to fear because there has not been any prosecution for an offence of this kind. You can use a two-sided argument here. If finance companies do not behave in this way and do not render themselves liable to prosecution, why continue to publish and pass orders making them criminally responsible for something which practice shows they do not in fact do?
7.36 p.m.
Lord MOTTISTONE: My Lords, I must preface my remarks by declaring an interest as being a director of the Cake and Biscuit Alliance, and therefore I am more interested in the food side of these arguments than in any other. If it be permissible to your Lordships, I would

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concentrate my remarks on the first of these two orders, which your Lordships will remember were withdrawn by the Government in July and then, rather unexpectedly, came to us through the Commons. We did our best during the holiday months to try to organise a meeting of the consumers, because the food processing industry genuinely believe that the outcome of this, although it may have all sorts of advantages to consumers in other respects, is positively harmful to them. The balance goes against the consumer.
One point was mentioned by the noble Lord, Lord Oram, and that is that there will be some firms who will withdraw the guarantee of satisfaction which most foods now have in some form or another. It is true that it is very useful to them in, if you like, assisting with their quality control, and therefore they will seek to try to retain them, although in the case of some foods there are some legal difficulties in complying with the order as it is at present phrased. I will not elaborate on that now as it varies from food to food; and, furthermore, I did not quite understand what the lawyers were talking about when I heard them discussing it. With the greatest respect to the noble and learned Lord on the Woolsack, lawyers are not always explicable to strangers.
The real point at issue, on which I think the meeting that we had with the consumers was making progress, is that in so far as the consumer is, if you like, part of the quality control chain, this is of immense value, not only to the manufacturer but also to the consumer. You can dismiss, just to dismiss it, the question of quality of food, because the Food and Drugs Act and that sort of control is sufficiently tight in this country to take care of that side of it. So it is a question of whether they are getting the quality of packaging; whether they are getting the sort of food they expect to have in the state in which they expect to have it; and it is terribly important in these days for the manufacturer to be able to have direct access to this information. In ancient times, when the Sale of Goods Act was written—what is it? Nearly 100 years ago—this was not a point, because the manufacturer dealt through
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the retailer and it was perfectly reasonable that the consumer went to the retailer with a complaint, when it was up to the retailer to put it right.
In those days—and, indeed, until (shall we say?) about 1955—the retailers had a much greater control over the goods, particularly the food, going through their hands. But now, in the days of supermarkets, you will find that food goes through the supermarkets almost on a production line. The food manufacturing firms do not deliver all the goods by means of a personal salesman to the individual retailer, as they did, and still do, with the corner shops. They will probably deliver to some warehouse which eventually gets the goods to the supermarket, but they do not deliver most foods (except for those which are very perishable) and see how they are handled at the retailers. The retailer is operating, if a supermarket or something like it, at such a speed that if somebody complains it is simpler to say, "Have another packet", or tin, and to put the tin that has been complained about in a disposal bin than go to the trouble of sending it back to the manufacturer. This is one aspect of the problem.
The fact is that at present—and up to, perhaps, the implementation of this order in, I think, two year's time—the balance of responsibility between the retailer and the manufacturer so far as food to the consumer is concerned is very nicely balanced. It meets the needs of the manufacturer to give the best product he can (which is the way he sells) and the needs of the consumer in not specifically encouraging him or her to go to the retailer in the first instance.
The effect of this order, if it is read—and one has to assume it is read and followed through by the consumer organisations to educate people to use it—will be that in the first instance consumers will now tend more to go to the retailer than is perhaps good. They would then not go to the manufacturer and the manufacturer's assistance with his quality control will be diminished. This, in turn, means that the consumers will perhaps not get products quite as good as they were getting in the past and that the retailer will not, because of modern life, necessarily do more than just provide something in lieu for the customer. He

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will not provide the missing link back into the quality control system of the manufacturer. The real worry is that as far as foods are concerned this order is not a particularly good one, and could perhaps have been phrased in a better way.
My Lords, I will not detain your Lordships much longer. The lesson that I personally have learned from this—and I hope that the Government might be able to learn from it too—is that it was possible, with a group of food manufacturers talking to the consumers directly, to get the beginnings of an understanding of each other's problems. What was remarkable was that it was the first time that a meeting like that had been held in relation to this order because I think there is only one manufacturer on the Consumers' Protection Advisory Committee because the Fair Trading Act merely talks about one or two people who supply, one of whom may be a manufacturer. I think there is only one. I do not know the gentleman. I discovered this only this morning and I have not had time to find out; but he does not himself provide a strong influence of, at any rate, the food manufacturing interests, to guide the CPAC on how it behaves.
What would have been helpful, would have been if the CPAC could have organised a meeting between the consumers and manufacturers—and possibly another between the consumers and the retailers who have a separate problem and the two must not be confused—and not, as has happened in this order, to rely on the Office of Fair Trading to send for the representatives of the food manufacturers trade associations, to tell them what the consumer was saying and then to relay their views back to the consumer by remote control through a Government or semi-Government office.
This process, which is perhaps a direct result of the Fair Trading Act, leads me to suggest that it is time we started to review the Fair Trading Act, which has been going for about three years, and that such procedures of consultation as are not properly dealt with (as clearly they were not in this case) could be tightened up within its rules or, if this is not possible—and the noble Lord mentioned the fact that the order itself is too tightly controlled—it may be that we shall have to have amending legislation. Let us get on with that, and not wait for more examples of
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bad consultation resulting in a bad order which we then cannot reject.
7.46 p.m.
Lord DRUMALBYN: My Lords, I suppose it is true to say that we are still in the experimental stage of the Fair Trading Act. It introduced an entirely new procedure with a good many safeguards. I am sure that the experience gained so far has been illuminating and that, after a certain time, one would wish to review that procedure and to make changes in it. But that is not what we are concerned with today because we either have to accept or reject these two orders. I welcome the one which the noble Lord dealt with second, and I hope that it is intra vires. As to the first, I think there are difficult considerations arising there. Everyone was agreed that guarantees—? certainly those given for durable goods; and we were thinking in terms of durable goods over this—ought not to appear to withdraw any of the rights of consumers and, indeed, should specifically draw attention to their rights.
What seems to have happened is that people have looked at the various forms of promises that are given and classed them all as guarantees. When I am thinking of a guarantee I am generally thinking of a document with an imitation seal at the top, very grand and in great detail, covering several square feet and covered in small print; whereas what my noble friend Lord Mottistone has been talking about, and what we are all concerned about, is a tiny slip of paper with perhaps one or two lines of writing on it.
My Lords, what is the effect of this bit of paper? Take the case of, say, the box of chocolates. You may get a tiny reference on the package itself or on the label. I think that the noble Lord, Lord Airedale—and I always listen with great attention to him—has drawn attention to the difficulties here, as has the noble Lord, Lord Mottistone. This is not regarded in any way as a guarantee. It is merely saying in effect: "If you, the consumer, find something wrong with these products of ours that you have bought from a retailer, send the box back to us and, if we think fit, we will either reimburse you or replace the product." I find that a very long way away from a guarantee in any sense whatsoever. Of course, the

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actual order is careful not to use the word "guarantee".
My Lords, what exactly are we talking about here? We are talking about a very small section of cases that go wrong. A group of manufacturers had a survey carried out which was based on 3,000 interviews with housewives—generally considered a pretty wide survey, and about ten times wider than the previous survey carried out. It was there found that in the food field, where you have fairly low-priced goods, 77 per cent. of housewives who discovered that a particular product was below the standard in some aspect did nothing about it at all. Only 4 per cent. contacted the manufacturer and a further 18 per cent. contacted the store from which the goods were purchased. I should not have said that that indicated a very close balance between the people who, ignoring the piece of paper altogether, go back to the retailer and the people sending the goods to the manufacturer. Of course, it is very greatly to the advantage of the manufacturer, from the point of view of both market intelligence and product control, that the goods should be sent back to the manufacturer, but it does not follow that because it is an advantage to the manufacturer it is to the disadvantage of the consumer.
Several Noble Lords: Hear, Hear!
Lord DRUMALBYN: Quite the contrary. We ought to be encouraging more people to send the goods back to the manufacturer, because it improves the situation from the consumers' point of view.
The noble Lord said in introducing this order that if the proposals are necessary, practicable and fair, the order can be made. I think this short debate has shown that in this particular case it is very difficult to see that the proposals are necessary, and the difficulty, I am told, has been for the CPAC to find a way of differentiating between different types of goods, between durables and foodstuffs and other perishables. If this is so, we would rather like to hear from the Minister about it, because there ought to be some way, some prodecure, for getting round this difficulty.
Under the Trade Descriptions Act, the sections dealing with information
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and so on, orders can be made relating to particular products and one need not try to cover the whole field. It might have been better to have proceeded in this particular case under the Trade Descriptions Act and not under the Fair Trading Act. I do not know. In any case, I agree with my noble friends that to this extent we have reached the wrong answer. It is going to be very expensive to make this change. It is suprisingly expensive to make changes of this kind, as I have found in my advertising Standards Authority role. Fortunately, we are not talking about advertising standards at all. This has not been under discussion, though it is once referred to in the orders.
My Lords, I really think that some means must be found of distinguishing in this way, and as we do not want to throw the order out, because it will do a great deal of good in other respects, we have to consider what should be done about it. I hope that a very broad interpretation will be given to what is required in the way of providing, another statement which is clear and conspicuous and to the effect that the first-mentioned statement does not and will not affect the statutory rights of the consumer". I wonder what notice the consumer will take and what good it will do? He might say, "What are my statutory rights?" He might go along and purchase a copy of the order and he will find this:
"statutory rights" means the rights arising by virtue of sections 13 to 15 of the Sale of Goods Act 1893 as amended by the Act of 1973, sections 9 to 11 of the Act of 1973, or section 4(1)(c) of the Trading Stamps Act 1964 or section 4(1)(c) of the Trading Stamps Act (Northern Ireland) 1965 both as amended by the Act of 1973."
What information is the consumer going to derive from that? We really must be practicable with our legislation. I do not know what to say about this, but I hope the courts will take a sensible view of it, and where and as long as a very broad indication is given that the consumer has nothing to lose by complying with the advice—and it is only advice—that he is given to send the goods back to the manufacturer, that will be all right. The alternative is to regard these kinds of document as advice and not as in any way expressing a right of a consumer or an obligation of the manufacturer. There really is no obligation other than a moral obligation in this case, and the noble Lord will see that if he looks at the

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various pieces of paper that are enclosed with goods.
So, while welcoming most of this order, I express considerable reservations about the other part. May I just say that one of the reasons for encouraging people to go to the manufacturer, or for that matter to the retailer, is that this particular survey I have referred to found that in 99 per cent. of the cases where the goods were returned to the manufacturer and in 96 of the cases where they were returned to the retailer, a satisfactory result was obtained.
7.55 p.m.
Baroness ELLIOT of HARWOOD: My Lords, I shall not delay the House for more than a few minutes. I am nothing like as expert as the two last speakers, the noble Lords, Lord Mottistone and Lord Drumalbyn, but I had for five years the chairmanship of the Consumer Council and I did learn a lot on the consumer side as well as on the manufacturer side. I agree with all that Lord Drumalbyn has said. It seems to me that we have a highly satisfactory situation in our dealings with the manufacturers and the consumers and the guarantees that we see written on bars of chocolate and so on. All that, on the whole, works fairly well.
I do not know whether one could say that these additional protection notices in this Act are the best being the enemy of the good. It can happen very often that that is true. Certainly it adds tremendously to the cost to the manufacturer. In one paper that I have been sent there is a figure given for one company alone; that is, that if they have to add to the existing guarantees the words suggested in the order, it will cost them £20,000 and in another case £10,000. While that might be perfectly justifiable, it is certainly not very encouraging when everybody is trying to produce goods at the lowest price they can. I realise that this can be done. It is possible to alter guarantees. It is possible to put new stickers on foodstuffs, chocolate bars and so on, but it is tremendously complicated and frightfully expensive and one wonders whether the existing system is not sufficient protection for the consumer for the time being.
I agree with the noble Lord, Lord Drumalbyn, that the complicated machinery, or anyway the description of it in this order, is such that one does not
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know how the ordinary consumer could possibly understand it. I hope very much that the noble Lord will consider what we have said, and that he will try to see whether it cannot be made a little simpler, a little less complicated and a little less expensive.
7.59 p.m.
Lord ORAM: My Lords, first I should like to thank the four noble Lords and the noble Baroness for the tone of their contributions to the debate and the constructive approach that they have made to these two orders. I fear that I may not be able to answer or comment upon all the points that were made, but I will do my best.
I shall do as the noble Lord, Lord Elton did and take the first one, about which there is least disputation; namely, the mail order order. I think the only point raised in that connection was whether or not this order is ultra vires, because it was one of a group and only one is being legislated upon. I acknowledge that the noble Lord, Lord Elton, gave me notice that he was going to raise this point. This gave me an opportunity during the day to get advice, and I am glad to say that I am able to give him the assurance for which he asked. I am advised by the solicitors in the Department that any suggestions that the second order is ultra vires is incorrect. It is their opinion that where three practices and three sets of proposals were referred, as was the case here, it is possible for the Secretary of State to give effect to one set of proposals in their original form. Each set of proposals relating to one practice must be treated as a whole, but it is not ultra vires if it legislates on only one of the references and one of the proposals. I hope that that gives him the assurance that he was seeking.
The rest refers to the first of the orders, the consumer statements. The first point that the noble Lord, Lord Elton, raised concerned the drafting of the statements and the question of what is meant by "close proximity". He feared that if two statements were put in different parts of, for instance, a label, this might perhaps add to the cost and lead to difficulties. It is my understanding that it is essential that the two statements should be made and they would need to be two separate

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sentences. To merge them into one sentence would possibly add to confusion. Provided that they are two statements, whether or not exactly in one paragraph as the noble Lord asked, or two consecutive paragraphs, would be a matter of drafting. But the fact that they can be in a consecutive form is probably the point that the noble Lord was asking about.
Lord ELTON: My Lords, I take it the noble Lord will, in using what machinery there is (with which I am not familiar), make this view known to those who are in contact with his Ministry and who might otherwise be the instigators of prosecutions. In other words, this will be a disseminated view not merely a view held at the centre.
Lord ORAM: My Lords, advice will be available, but I do not think it would be for me or possibly the Department actually to undertake the drafting, because the assessment of the drafting in the final case would be for the courts. Certainly there are facilities for advice and I take the noble Lord's point. Then he raised what he called—and I am glad he called it—a technical point in relation to the motor manufacturers and the fear that the order will prevent car manufacturers from giving warranties which exclude tyres. I can assure him that they need not fear that exclusion from their guarantees of warranties would be prohibited; but they would, however, have to include the statement required in Article 5. The point, as he acknowledged, is a difficult one. It may be helpful if I write further to him on this point. I shall gladly do that.
Then we had the contribution from the noble Lord, Lord Airedale, who first raised the problems which have been raised with a number of noble Lords by the Finance Houses Association. I covered the Government's case in respect of this in my opening remarks. He quoted from the advisory committee in this connection, indicating that they had qualms on this very point. There was a part of the paragraph that the noble Lord did not read out. It may be helpful if I read out that paragraph, because they went on to say:
"We think that there is substance in this representation though, on the basis of the evidence
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before us, we do not consider that we would be justified in suggesting any modification of the proposals to meet the point".
Lord AIRDALE: To be fair, would the noble Lord finish the paragraph?
Lord ORAM: My Lords, it continues:
"However we would suggest that further consideration should be given to the matter before any order is made by the Secretary of State".
I can assure the noble Lord that consideration of all the details of these reports is given before legislation is drafted. That point has not been overlooked. The noble Lord, Lord Airedale, referred to something which I think is in the back of all our minds. He called it the rigidity of procedure under the Fair Trading Act. The noble Lord, Lord Drumalbyn, had this in mind in one or two of his remarks when he said that we are in an experimental period. Perhaps that is so. I notice that my honourable friend in another place likened the consultative committee to a jury and that apparently was the case for establishing this rather rigid procedure. It is clear that noble Lords are suggesting that second thoughts about that procedure are worth having. I personally tend to think that, although it is a little early to start amending legislation, particularly since—as has been acknowledged—this is the first step in implementing the legislation, we need to give a longer run before beginning to suggest amendments.
The noble Lord, Lord Airedale, made one further point. I remember having a private discussion with him in the corridor upstairs last July when we were looking at this matter. There was the interesting suggestion that we might have lifted out of the Health and Safety at Work Act the provision that distinguishes between the ostensible supplier and the effective supplier. Here again, interesting though that is, we are caught by the rigidity of procedure to which the noble Lord referred. The Committee did not take up this point. It did not suggest a modification of the Director-General's proposals along this line. Without such a modification or inclusion in the original recommendations, I am advised that it would not be possible to legislate in that way.
Lord AIREDALE: My Lords, that was why I was suggesting a reference back to the Committee so that the Committee could consider this matter. They probably have not considered it at all, so far.
Lord ORAM: Yes, my Lords, but I think it is rather asking much of me, having moved and urged noble Lords to accept this, at this point of time to say that I will withdraw it yet again.
Lord AIREDALE: Oh no!
Lord ORAM: I am glad that the noble Lord does not go to that extent. May I turn to one or two points which have been raised by the noble Lord, Lord Mottistone. He announced his interest. He need not apologise, because it helps to have an interest in these matters. It is a qualification that we welcome. He will recognise that I included in my opening remarks the main argument about the case put up by the Food Manufacturers' Association. The noble Lord said—and I accept this—that it is a matter of judgment as to how the balance of the effect of the order will fall in favour of the consumer or against the interests of the retailers and the manufacturers. We have to wait and see, but it is the view of the Government that this order will, on balance, help the consumer. That is what we are setting about doing.
Lord MOTTISTONE: I do not think the noble Lord has quite got the flavour of what I am trying to say, which is that at the moment, in relation to food—I am not talking about other goods—the balance is right without this order and the effect of this order will only be to make it worse. I am sorry the Government have been persuaded that this might not be so. I suggest to them that, because of the lack of consultation and the sort of things which I think the noble Lord agrees with us ought to have happened, they have not quite got the right story because the experts, the people who make the food and know the problems of doing that and how best to serve it and sell it to the consumer, have not been consulted in sufficient depth at the right time in the presence of the right people.
Lord ORAM: I can see that that is what the noble Lord had in mind as a spokesman for the food manufacturers, but equally I think I can say by way of rejoinder that the Consumers' Association, for example, representing the consumers, has reached the opposite conclusion in terms of the balance of advantage. Who will prove to be right, we must wait and see.
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I was glad to hear the noble Lord say on behalf of those for whom he speaks that they will seek to retain the manufacturers' guarantees because, as I indicated, we are convinced that those guarantees are of value both to the consumer and to the manufacturer. Certainly we are hoping that they will retain them even though it costs something, and it will cost something. This was the point that the noble Baroness raised also. Certainly in these days of inflation I deplore as much as anyone the imposition of any unnecessary cost, but we should recognise that any legislation to give better protection to the consumer inevitably involves some cost. I believe that here again the outcome will be that it will not be a serious cost, and in any case will be outweighed by the benefit to the consumer.
I would point out in relation to the cost of printing the statement about the guarantee that there is a period of two years allowed in the order. That is a reasonable period, I think, for administrative arrangements to be made, and it should be possible to spread the cost over a reasonable period.
I doubt whether I have dealt with every point but I have tried to deal with the most important ones. With those words I should like again to move the first order standing in my name.
On Question, Motion agreed to.

MAIL ORDER TRANSACTIONS (INFORMATION) ORDER 1976
8.14 p.m.
Lord ORAM: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That the draft Mail Order Transactions (Information) Order 1976, laid before the House on 14th June, be approved.—(Lord Oram.)
On Question, Motion agreed to.

AIRCRAFT AND SHIPBUILDING INDUSTRIES BILL
8.15 p.m.
House again in Committee.
Lord MOTTISTONE Lord MOTTISTONE moved Amendment No. 14:
Page 2, line 40, leave out from ("State") to ("and") in line 41 and insert ("advising the Minister for the Civil Service as necessary").
The noble Lord said: For the convenience of the Committee I suggest that with Amendment No. 14 we might take Amendments Nos. 15 and 16 and Amendment No. 195. The Government perhaps should be pleased at going as far as No. 195 so quickly, and I think it is jolly decent of me considering that by their business they have done me out of my supper, I having been involved in the last debate.
These particular matters are not peculiar to this Bill. This matter of the consent of the Minister for the Civil Service has crept into other Bills in recent years with both this Government and the last. I have had experience of having to exist in circumstances in which this applies, because in my last job I was working for the Distributive Industry Training Board and this was inflicted on me as a result of the Employment and Training Act 1973 which my noble friend Lord Carr of Hadley, had occasion to pass through the other House. This particular aspect of it—and I am not bringing my noble friend to task on it—was a comparatively new idea, as I understood it, working from the undergrowth, if you like, being controlled from central Government in a training board. It was possibly something that had been tried before by the Civil Service Department. I believe that it was resisted by the Department of Employment on grounds of principle and of practical fact, but that they were overruled.
I suggest to your Lordships that it is yet another example of those unpleasant features which are in this Bill, and indeed often in others in which Government control is involved, where unnecessary supervision is caused really for no purpose at all other than to satisfy some people's idea of neatness, perhaps, possibly because people consider that by so phrasing this Civil Service consent they are doubly guarded against accusations that misuse of public funds is not being properly avoided or controlled. But whatever it may be—and here, as I say, I quote from practical experience—there are three practical disadvantages of having the degree of control which consent of the Minister
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for the Civil Service implies. You will note that in my Amendments I am not suggesting that this should be done away with altogether, because I think it is reasonable that there should be an advisory link between the Secretary of State or the Minister concerned and the Minister for the Civil Service. What I am suggesting that the Government might give very serious consideration to in this connection and in others of the same sort, is the really tight control that in practical terms this implies.
The three practical disadvantages are these. I admit that in this particular case we are only talking about the board members and, in Amendment No. 195, the pensions which extend, so far as I can see, very much more widely than just to the board members. In the case of the Employment and Training Act 1973 it applied to all employees of the Manpower Service Commission, the Training Services Agency and each and every one of the training boards. This is a large number of people and I suspect that there are other areas in other Acts which have crept through Parliament during the last dozen years in which this same, to my mind, objectionable feature exists.
It means that when you seek to alter terms and conditions you not only have to consult with the parent Ministry, whichever that may be; in the case of the training board it has to go through the training centres, through the Manpower Services Commission, through the Department of Employment and eventually, before it can be implemented, through the Civil Service Department. Then it has to come all the way back down the line. This makes it difficult to enter into proper negotiations with one's trade union, because it is frustrating to both sides to try to strike a bargain, particularly under conditions when no pay restraints are in operation (and hopefully that will not always be the case), when the ultimate person who is going to decide the end of the matter is somebody in the Civil Service Department whose knowledge of the matter under consideration is remarkably little, and must be so, because with the best will in the world anybody who sits in a Ministry does not have executive responsibility for the matter.
Noble Lords will remember that on Second Reading I made the point that the whole problem of nationalisation is the

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fact that the advisers to the Secretary of State are people who themselves are not concerned with the practical day-to-day working of the enterprise on which they are seeking to advise him. That is the reason for the earlier Amendments we discussed before everybody else had their supper, and so noble Lords will appreciate that we are really talking about the same things.
The great difference about the Civil Service Department is that it has not even got a first-hand contact with the enterprises with which it deals. It is going to be remote. Finally, it is not big enough to deal with these problems expeditiously. This in effect is the most important of the lot in that area.
The other factor which makes me recommend that rather than having a consenting role the Civil Service Department should have an advisory role is that the people who are responsible—in this case it will be the chairman of the board and in the case of pensions under Amendment No. 195 it will be the committee appointed to look after pensions—are in effect having their authority undermined by not being able to make the final decisions on any of the flatters which are the subject of these Amendments. That is because in the end it is not just their Minister, with whom we hope that, if this terrible nationalisation is to occur, they will be in reasonably good contact, but another body hidden away which is in effect the final arbiter.
The third area in which this particular relationship which is built into the Bill as it stands is at fault concerns trade unions. I do not suppose that the boards of these boards will have trade union representation, but who is to know what will happen as the years go on? And, even if they do not, the pensions people will, if anything like the hideous suggestions that have been bandied about come into existence about the management of pensions being shared by recognised trade unions to a very large extent. Therefore, trade unions will come into this sort of problem. That means—and here I quote from my practical experience—that they will seek ways of getting round the people with whom they should be negotiating. They will seek ways of applying direct to the Civil Service Department. That, I would suggest, makes a nonsense of collective bargaining at company or plant level, because if
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decisions have to be made elsewehere in that way it is not reasonable to expect the trade unions to accept the plant level as being the end of their arguments.
Therefore, I should like to suggest to the Government that this particular Amendment is not one which strikes at the very root of the principles behind the Bill. It may strike at the very root of the principles behind the detailed Civil Service Department control of agencies of this nature, but I would suggest to the Government that this is a comparatively new problem because it is only perhaps within the last five or six years that this has crept into Acts of Parliament, and such experience as I have had myself—and I think that noble Lords opposite would find this if they were to investigate the matter—is that it does not work very well and it really is not necessary.
An advisory role for the Civil Service Department is quite satisfactory. They may not like it, but I would strongly suggest to the Government that this is something which deserves a very thorough investigation. Perhaps in the meantime they would like to accept this Amendment while they do the investigating. I beg to move.
8.26 p.m.
Lord WINTERBOTTOM: I am sure the Committee is very grateful to the noble Lord for getting us on so quickly to Amendment No. 195, with probably a slight hiatus between that Amendment and Amendment No. 16. But having thanked the noble Lord, may I say that he has made life rather difficult for me because, instead of issuing a specific complaint against the drafting of this Bill, he has issued a general complaint against the iniquities of Treasury control in general. In effect he is saying that an organisation which is essentially an industrial one—and I agree with him about that—should have freedom of action beyond and wider than that usually allowed by the Civil Service Department role of fixing norms and comparisons for monetary remuneration and pensions. I think everyone will agree that this is a very large issue to raise on what is a comparatively minor point in an important Bill.
Noble Lords will know—the noble Lord, Lord Carr, in particular will

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Know—that the provisions of a Bill which require the Minister's consent to conditions of appointment are standard in all relevant previous legislation: that is, previous legislation since the date when the Treasury was split into two so that we now have the Treasury proper and the Civil Service Department. The Minister for the Civil Service, as noble Lords will know, has a responsibility for coordinating policy on public sector board appointments, conditions of appointment and, in particular, pay because subsection (5) deals with pay and compensation while Clause 49 deals with pensions. At this moment we are all deeply concerned to ensure that the inflation of pay and salaries does not continue at the headlong rate it has been doing during the past two or three years. I feel that the role of the Civil Service Department, however irksome it may be at times, is absolutely essential if we are to control the inflation which is threatening our whole economy.
The noble Lord's Amendment, set against the standards required in other legislation, could cause—and I think he will agree—confusion and inconsistency. There is no question of delay, which was the fear expressed and I think it is a proper fear; but the fact that there has to be co-ordination between the remuneration of hoard members of the two new Corporations and of other similar appointments I believe would not cause confusion and delay. Nor do I believe that there would be conflicting decisions as a result of a statutory requirement, which at present exists and which the noble Lord does not like, for the consent of both the Secretary of State and the Minister for the Civil Service, since Departments would, in the normal course, ensure co-ordination of a common Government view on any point at issue.
The great Departments of State—in this case, the Department of Industry and the Civil Service Department—would, quite clearly, hammer out a common policy which would not only apply to members of the board and individuals affected by this Bill, but bring their requirements into a proper relationship with all similar organisations. I hope, therefore, that the noble Lord will accept that to introduce different wording in a single Statute when, as he himself said, it is a general complaint
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against the whole system of Treasury control, would put this piece of legislation at variance with all other comparable legislation, and create inconsistency and confusion without any compensating benefit.
Lord CARR of HADLEY: May I ask the noble Lord to reflect for a moment on what his noble friend said earlier before the dinner interval? When he was talking about subsection (3) of this clause, he was justifying much more power for the Secretary of State, compared with previous Statutes, on the grounds of flexibility. The noble Lord is now saying, in relation to another subsection of the same clause, that it would be undesirable to introduce into this Statute something which is not in others. The Government cannot have it both ways. What are we doing here? Is their policy to introduce into this Bill more flexibility and more power for the Secretary of State, or is it not? We cannot have the Government justifying one subsection on the grounds of more flexibility, and justifying another subsection in the same clause by saying that to introduce new flexibility would be undesirable. Please, will the Government make up their minds which horse they are riding?
Lord MELCHETT: It is not quite as simple as that, as the noble Lord will know. This legislation, as is not totally unexpected, follows on the whole the most recent precedents of previous nationalisation legislation. But, obviously, there will he some instances where it appears to the Government, and indeed it appeared desirable to another place, not to follow the precedents, either because of the particular nature of the industries affected by the Bill, or because of past experience with other nationalised industry Statutes, or for some other reason. For the noble Lord simply to say that we must make up our minds to follow the precedents rigidly, without taking any notice of the nature of the two industries which we are nationalising, or, on the other hand, not to follow the precedents at all and to make up an entirely new Bill, is being, if he will allow me to say so, a little simplistic.
Lord CARR of HADLEY: I agree that there may be some substance in what the noble Lord has just said, but I think he is pushing his case a little too far. If we

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were talking about two entirely disparate functions within this Bill, then it might be perfectly legitimate for the Government to say, "Yes, in this area we are breaking new ground. We are not following precedent. But in this other new area we believe, on the whole, that it is better to stick to previous precedent ". But we are talking, both on this Amendment and on the ones to which I referred earlier, about the pay, conditions and functions of senior appointments. So the Secretary of State is to have unprecedented power to dictate and say, "I will nominate so-and-so as sales director of this Corporation" or, "The sales director will be somebody else" which it will not be left to the Corporation to do. On the other hand, he is not given any power, without the permission of another Minister, to fix the salary of the chap he is appointing to the position. Pay, conditions, functions and responsibilities of the job go together and if you are managing something sensibly you cannot devolve responsibility to many different places for deciding who does what, the pay he gets and the conditions under which he does it; and it is nonsense and managerial mania to go about it as the Government are going about it at the moment.
8.34 p.m.
Lord MELCHETT: I had the feeling, in part of what the noble Lord said, that he had forgotten that he has pressed an Amendment into the Bill which means that the Secretary of State will not make these appointments any more. But leaving that aside, I do not think lie has answered the point of my noble friend that it is sensible to have some co-ordination of the various appointments to different statutory bodies within the Government service, and that the Civil Service Department is the right body to do that. It would have caused much more mayhem and confusion if nobody was exercising that sensible, standard and well-precedented coordinating role.
Lord CARR of HADLEY: Is it, then, the view of the Government that in nationalised industries there should be standard conditions of pay as between one Department and another? We are told that there is a new departure, and is not the aircraft industry one of the first examples where the State is taking into ownership a profitable industry? If this
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industry is highly successful, highly profitable and winning new markets for the country, are we really to say that the chairman and those who guide that Corporation are to be fixed in their salaries exactly as those running the most unprofitable and least successful Corporations? Is all this to be standardised? Is that Government policy? Is that how we are going to get efficiency in this country?
Lord MELCHETT: I do not want to keep jumping up and down, but the noble Lord has asked another question and in doing so, I am sure quite unintentionally, has totally misrepresented what I said. I said that there is a need for some coordination. Of course, it is riot the case that everybody appointed to a nationalised industry is appointed at the same salary as everybody else. But I do not see that there is anything unreasonable in having somebody responsible for making sure that there is some co-ordination in the different responsibilities, and that at least one salary is not wildly out of line with that of somebody in another job with more or less the same responsibilities. It seems to me totally reasonable, and I am not sure what the noble Lord is getting so excited about.
Viscount SIMON: I have a great deal of sympathy with the view expressed by the Government on this matter. But it has always worried me, and I have never understood why it is, that it is necessary to lay down in a Statute that one Minister must consult another Minister. If the Secretary of State is to be responsible for the Aerospace Board, the question whether he has to consult anybody else about salaries and so on is something which can be laid down in a Treasury minute. It is not necessary to put in a Statute that one Minister must consult another. Indeed, in theory, all Ministers are part of a unified Government which has a constant policy. We know that that is not always so, but the theory is that all Secretaries of State and all Ministers represent one Government which has a consistent policy, and I have never understood why it is necessary to write this provision into a Bill. I do not know whether the noble Lord can throw any light on that.
Lord MELCHETT: I imagine it is just to make sure that everybody knows

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what we are doing. I do not imagine that noble Lords opposite will have any objection to that.
Lord MOTTISTONE: I am not very happy. I do not think that the noble Lord, Lord Winterbottom, gave me a reasonable answer. First, he mentioned control of inflation and said that it was extremely important to have detailed control from the Treasury and/or the Civil Service Department. Surely at the moment inflation is dealt with by the Social Contract, or whatever one likes to call it, and this is common to all. If and when we get free collective bargaining, then that will be that. If this body is to be a responsible one, and be able to enter into the markets under a proper free enterprise banner, which I gathered from the closing speech of the noble Lord, Lord Melchett, on Second Reading, we shall find ourselves at variance as between one and another. So I do not think that the control of inflation stands up. You could not say that ICI behaved badly in inflationary circumstances as of themselves, and they would not have been helped if they had had the Civil Service Department breathing down the backs of their necks. As regards confusion, speaking from practical experience I agree that there is no confusion, because there is such an enormous delay. Confusion does not have time to arise. But delay there is, and I am sorry to say that, whatever advice the noble Lord may have been given—and it was probably given with the best possible intention—if you are at the receiving end there is delay.
As to a common policy and co-ordination, which the noble Lord, Lord Melchett, mentioned, nobody would grumble about that. This is why I did not seek to persuade the Government to strike it out altogether. I sought to change the balance from consent—which means deep active involvement—and advice which is just the level of intervention, if you like, by this outside Ministry that would enable it to ensure a common policy, so far as that was practicable and applicable, and co-ordination.
Therefore may I suggest to the Government that, having heard what my noble friend Lord Carr of Hadley has had to say regarding the underlying contradictions within the Bill, which are what disturb
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us about it, they might care to give further consideration to it. Either these people will be set up as tremendously successful world beaters and given the maximum freedom or they will be condemned to the same centralised, unenterprising kind of life which is followed by the unfortunate nationalised industries of today. This is the contradiction. Practical experience of it is of great value, as I am sure your Lordships will appreciate, and shows that perhaps the system requires a fresh look and that perhaps this could be made retrospective in due course to cover other Acts of Parliament over the last 10 years or so. Certainly it would be splendid if my wording could be adopted. Perhaps noble Lords will feel that they can agree to that.
Lord WINTERBOTTOM: Those of us who have suffered under Treasury control, as I do now, have great sympathy with what has been said by the noble Lord, but he is prescribing chaos within the present very delicately balanced situation. This clause of the Bill springs from a very long tradition of Treasury control dating back, I think, to Mr. Gladstone who first put down the iron rule of that Department. To change it for one Bill and at the same time to hope that the good example given tonight would then spread through other industries is asking for too much. The age of miracles is, in fact, past.
Lord TREFGARNE: Before the noble Lord sits down, I wonder whether he would consider the case of the Civil Aviation Authority where the salaries of the junior staff—that is to say, those who are not members of the Authority itself—are tied directly to the Civil Service scales. They have risen very sharply in past years and are directly in line with their counterparts in Government Departments. However, the salaries of members of the Authority, those who might be regarded as directors in the context we are now discussing, are not tied directly to the Civil Service scales and are subject to Ministerial control. In some cases, those salaries are now less than those of the staff who are serving under them. Therefore, the Government control which has been applied in that area has resulted in the chaos which the noble Lord now thinks will arise if we accept this Amendment.
Lord WINTERBOTTOM: Every fair minded person knows that this period through which we are passing is causing anomalies and stress. However, the individuals employed by the Civil Aviation Authority who have been mentioned by the noble Lord, Lord Trefgarne, represent only one group among many who are suffering because of the present situation. That situation would not be ameliorated by accepting the Amendment which has been moved by the noble Lord, Lord Mottistone.
Lord MOTTISTONE: I can see that the Government are not going to budge on this Amendment, and I am sorry because I think that there has to be a starting time for everything. Perhaps this was it. Perhaps I could end by asking whether this does not prove that the principle of State control has within it the seeds of its own contradiction, because it forces people to do things that are unnatural from a business and practical point of view. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.46 p.m.
Earl FERRERS Earl FERRERS moved Amendment No. 21:
Page 3, line 27, leave out subsection (9) and insert—
("(9) Each Corporation shall maintain a register of interests disclosed pursuant to regulations made under subsection (3)(d) above.")
The noble Earl said: I beg to move Amendment No. 21. At the same time I will speak to Amendment No. 22 because the two Amendments are tied together. Subsection (9), which this Amendment seeks to replace, puts a duty on the Secretary of State to keep a register of the financial interests of the Board members of each Corporation, in just the same way as a register is kept of the financial interests of Members of the House of Commons. Then Clause 18(5) requires each Corporation to publish to the world all the interests of these directors by making the Corporation add this information to the annual report. Subsection (9) was incorporated without debate at the Report stage in another place in fulfilment of an undertaking which was given to Mr. Richard Wainwright in Committee on 16th December. It so happens
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that it follows exactly the wording of Section 1(8) of the Industry Act 1975 which relates to the financial interests of members of the National Enterprise Board.
It is possible that the activities of the National Enterprise Board are of so wide a scope that it is reasonable that its members should be required to disclose all their financial interests for publication to the same extent as that which is required of Members of another place. However, directors of privately owned companies are required to register only their other directorships and their interest in the shares or debentures of their own company and other companies in the same group. In neither case, However, is the information published in annual reports; it is kept by the company secretary and is available on demand.
In subsection (3)(d) of the Bill, the Secretary of State can make regulations by which Board members have to disclose their other interests in contracts which are made or proposed by the Corporation or in any other matter whatsoever which falls to be considered by the Corporation. I believe that it is going too far to require the Secretary of State to keep a register of directors and their interests.
I should have thought that it was far more reasonable—and this is what these Amendments seek to do—to make the Corporation, not the Secretary of State, keep the information. The information will be available to the Secretary of State, and it is quite right that it should be, but it should be kept by the Corporation, not by the Secretary of State, and it should not be published in the annual report. After all, what will be published in the annual report is the information required in subsection (3)(d) which relates to the disclosure of members' interests in contracts and any other matter which the Secretary of State puts in the regulations. Therefore he has the power to put it in the regulations, and I should have thought that that was as far as reasonable disclosure should go.
It may be that the noble Lord, Lord Kirkhill, who is to answer will say that it is wholly right that in a large nationalised Corporation the public should know the interests of people. I should have thought that it was right that the Secretary of

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State should certainly know their interests and that it was also right that the Corporation should keep a register, but what I do not think is necessarily right is that under this Bill, or Act as it will be, all their interests should be published.
But if the Secretary of State so thinks fit he has the power to make the regulations. I would just draw this distinction, that the interests of the Members of the House of Commons which are required to be kept in a register really are slightly different. The way in which the Members of the House of Commons influence public affairs is totally different from the way in which the interests of members of a nationalised Corporation should be brought to bear. I would say that is going too far, and I hope the Government will accept that this Amendment is reasonable, in so far as it will not restrict the disclosure of information but it will only require to be published that which is in the public interest. I beg to move.
Lord HAWKE: I am a little puzzled about both this Amendment and the part of the Bill which it purports to amend. I do not know whether I am right, but as I read it subsection (3)(d) concerns interests in contracts. Those would be inscribed in the minutes of the meeting of the Corporation and so there would be a record, whereas subsection (9) seems to deal with a totally different type of interest which might be a member's other directorships, or something of a permanent nature. I should have thought it was necessary to have records of both of those things kept somewhere. But another thing that rather puzzled me is whether it is good drafting to refer to them as if they were Members of the House of Commons. It is proposed to put this Bill on the Statute Book, and goodness knows what in 50 years' time will be the rules for disclosure of their interests by Members of the House of Commons. I know what is intended at the moment, but if the rules change in the House of Commons will these rules also change?
Lord KIRKHILL: Before I respond to the noble Earl, Lord Ferrers, may I just say to the noble Lord, Lord Hawke, that in my opinion it is quite fair that a Board member should be asked to disclose as widely and as generally—and indeed,
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if you like, as particularly—as a Member of the other place. I might also say that on the very first point made to me, it would appear to be covered by the phrase "or in any other matter whatsoever", making a distinction between subsection (3)(d) on the one hand and subsection (9) on the other hand. I should have thought that was a reasonable distinction to make.
Earl FERRERS: I wonder whether the noble Lord could just say that again. He said it was a reasonable distinction to make: does he mean that the information which he seeks to have published could be published under subsection (3)(d)?
Lord KIRKHILL: I was actually merely agreeing with an earlier point which the noble Earl had made. I think the phrase "or in any other matter whatsoever" is not in contra-distinction to the substance of subsection (9). I would tend to agree with that point, whereas the noble Lord, Lord Hawke, thought otherwise, and I was attempting to suggest that I did not quite agree with him.
The Amendment would remove the provisions which the Government introduced at Report stage in another place to require the Secretary of State to maintain for each Corporation a register of the financial interests of the members of the Boards. These provisions—introduced, I might add, in response to a suggestion made by a Liberal spokesman for industry—followed those (as has just been said) in the Industry Act, and place the members of the Corporations under the same obligation to declare their financial interests as honourable Members in another place.
The classifications under which they may be expected to notify their interests will be broadly the same as for the Members of another place—particularly share holdings if these exceed 1 per cent. of the issued share capital, directorships, paid overseas trips, payments from abroad or details of land or property held. The Amendment would reduce the range of financial interests which would have to be disclosed by members of the Corporations solely to those which might be considered directly or indirectly related to the work of the Corporations.
While accepting that the interests specified in subsection (3)(d) are those which are

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likely to give cause for concern, we cannot accept that the Amendment represents the best method of approaching what we think of as a general problem. This Amendment could create practical difficulties because, as the noble Earl, Lord Ferrers said, Clause 18 requires it to be annexed to the annual report. It might, for instance, be possible to discover, from the information disclosed under the suggested provisions in the annual report, both the nature of projects considered by the Corporation as well as the names of companies which had failed to land contracts with the Corporation. I do not believe that noble Lords opposite would really support a system which could, unintentionally, reveal (or at least hint at) decisions which would normally be commercially confidential and where disclosure could be damaging to the interests involved.
Our provisions seek to place members of the Boards under the same requirement to disclose their interests as Members do in another place. In the view of the Government that is an entirely reasonable requirement. For those reasons I ask noble Lords to leave the provisions as they stand.
Lord CARR of HADLEY: May I ask the noble Lord to enlarge a little on the Government's reasoning? I have always personally been very much in favour of more disclosure rather than less. I have wanted our companies law to be tightened up in demanding disclosure. I have also been one of those in another place who wanted to have a register of Members' interests, so my record in both the commercial and the Parliamentary fields is in favour of disclosure. But there is also such a thing as privacy, and it is our job to try to find the balance between the public need for disclosure on the one hand and the right to privacy on the other. The right to privacy in a free society is something which should not be overridden easily or lightly.
As I understand the position, the conditions about disclosure finally agreed and now laid down for Members of Parliament were drawn up in relation to the nature of the work of a Member of Parliament. They were meant to be appropriate in relation, directly or indirectly, to the work and responsibilities of a Member of Parliament. Surely the degree of disclosure required for members of a Corporation
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ought also to be drawn up, related directly or indirectly to the work of a member of a Corporation, not to the work of a Member of Parliament, which is totally different.
There is a gross illogicality which I think trespasses too far on the proper right of privacy of citizens in this country. Members of Parliament have to disclose all simply because they are Members of Parliament and Parliament may deal with everything. Members of this Corporation are not in this position, and I do not think they should be subject to the same breadth of disclosure requirement as applies to Members of Parliament.
9.0 p.m.
Lord KIRKHILL: I think that essentially this is a question of judgment—political judgment if you care to use that term, as I do. The Government make a distinction between the citizen who is a director of a private company on the one hand, and someone who quite voluntarily joins the Board of one of these Corporations on the other. The Government view is that clearly the member of one of these new Corporations should in every meaningful way declare his manifold interests in exactly the same way, as we have said before, as the Member in the other place does.
There is a good reason for the Government reaching that conclusion. We believe that at a central point of decision making those members of public boards carry great responsibility, and thus all their actions and their other activities must be clearly known for the public record, as indeed is the case with Members in the other place. We therefore would make a simile between those who are Members of the other place and those who are members of public corporations on the one hand, and those who are privately employed or have private directorships on the other hand. I think that is the essential distinction between this side of the Committee and the other side. It is a question of judgment, and the Government's judgment is as I have described.
Viscount SIMON: We on these Benches support generally the view of the Government on this issue, but I must say I was impressed by what the noble Lord, Lord Hawke, said about the way in which this clause is drafted. This is

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legislation by reference in the most extraordinary way, because it refers to resolutions of the House of Commons and does not refer to any other legislation. One usually refers to other Acts of Parliament or Statutory Instruments, but this refers to resolutions of the House of Commons. I do not think that we in your Lordships' House know what the resolutions are in the House of Commons. I certainly do not. I am certain that the people who have to understand this Bill will not know what they are. If it is desired to do this ought we not to write into this Bill what those resolutions are?
Lord TREFGARNE: Can the noble Lord help me on two points? First, on the question of resolutions of the House of Commons, as a purely practical matter where on earth does one obtain an authoritative copy of resolutions of the House of Commons? On another matter, may I ask the noble Lord whether he is satisfied that with this very wide range of disclosure required he will not be discouraging some people, who might have quite extensive interests in a totally unrelated field, from coming forward for the most important posts in these new Corporations, which will surely need the best calibre of people they can get?
Lord KIRKHILL: I can give an assurance that my right honourable friend the Secretary of State will make available to all Board members the record which is mentioned, so I think a copy could he readily made available to the noble Lord, or to anyone else. As to the second point, could I ask the noble Lord to develop the last part of his second question?
Lord TREFGARNE: I am obliged to the noble Lord. Can the noble Lord imagine a situation in which a very reputable scientist, or salesman, or engineer, might be regarded as the best person for a particular post in one of the new Corporations, and he is told before he takes up the post that he must disclose all his interests. He might for some reason object to doing that. But the interests that he was reluctant to disclose might be in some quite unrelated industry. I admit that the Bill, at present at least, gives the Minister power to extend the activities of the Corporation into almost every field in the world, but we hope to be
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able to see to that later. Is it right for potential recruits for these important posts to be required to disclose every singe commercial interest—I am speaking from memory of what is required in the House of Commons—and every conceivable area of activity, most of which will or may be quite unrelated to the activities of these Corporations?
Lord KIRKHILL: I am obliged to the noble Lord, Lord Trefgarne, for elucidating for me the essential point, which I do not think I fully understood as he first put the question to me. I would respond by saying that I accept that it is a reasonable point which he places before me for my consideration. I can only say that in my judgment the balance of advantage would weigh in favour of public declaration in all cases, as against the example that the noble Lord gave of perhaps one very distinguished person feeling unable to serve because that person would have to declare all his many interests. On balance, I still feel that the public advantage lies in disclosure.
Lord CARR of HADLEY: I wonder whether the Minister would at least say to us that he would give some further thought to this matter, along with his colleagues. Speaking personally, I hope I made clear that I attach great importance to disclosure. What sticks in my gullet about this is the automatic linking of the disclosure which is proper for a member of a Corporation with that which is proper for a Member of Parliament. The two jobs are wholly different.
I can imagine that something might crop up where a member of a Corporation ought to disclose something which a Member of Parliament does not have to disclose. More usually it would be the other way round for the reasons I have mentioned; a Member of Parliament, by definition, is responsible in an enormous field to the public and not a relatively limited one, however important. But it seems wholly inappropriate that the requirements for disclosure of the member of a Corporation should be defined by reference to what may be thought proper at any given moment for a Member of Parliament.
The House of Commons may pass resolutions at any time. Are we to say, therefore, that the House of Commons

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passing a resolution based on political considerations—I am not talking about Party political considerations—in the widest sense of the word will automatically change the requirements of disclosure for a member of this Corporation, even though the change in the requirements of Members of Parliament may make them wholly irrelevant to the responsibilities of members of Corporations? I am not necessarily wanting to make it less, but I think the Government ought to give further thought to defining it in a different way. If they wish to change it in the future, enlarge it or anything else, let them enlarge it by reference to what is needed for this job and not by this extraneous reference to what happens to be proper at a given moment of history for a Member of Parliament.
Lord HAWKE: Would the Government please take this provision away and look for another yardstick? They have obviously chosen this one because it was the only yardstick they could think of; I am sure they could find another one.
Lord SELSDON: I, too, am slightly disappointed at the attitude of the Government on this. Presumably the provision is in the Bill for two reasons; first to protect those members of the Board who might be accused of nefarious practices or doubtful dealings and, secondly, to protect the Government or the Corporation from any doubtful activities—I speak of corruption—where interests may be controversial. What the Government are overlooking is the fact that the Amendment or these proposals represent nothing unreasonable. What we are saying is that in general we seek to encourage responsible people to join the Board, and the Secretary of State will appoint only responsible people. The provision as it stands will prevent a large number of people from wishing to join the Board should the Government wish to appoint them because inevitably we shall be faced with this problem about disclosure.
The United Kingdom is on record throughout the world as disclosing more information about company activities than probably any other country. We are also faced with the dangers which confront us when we have too much disclosure. Nobody is objecting to the principle of somebody with an interest
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declaring it. What we are objecting to is the principle of declaring that interest in public when there is no need to declare it in public, remembering that a mere declaration can have an adverse effect on the activities of a member of the Corporation who may have outside interests. If the Government are saying that they cannot trust a member whom they appoint to the Corporation—that they cannot trust him to declare it to the Secretary of State or explain privately what those interests are—to act in a responsible manner, then the man should not be appointed to the Corporation in the first place, if they are forcing him to disclose all those outside interests, they are to a large extent restricting him from having certain outside interests which could be of benefit to the Corporation.
I will not delay your Lordships in explaining the problems of the disclosure of companies which are quoted or non-quoted or the dangers of disclosing information of private interests to competitive third parties on an international basis. All that has been taken up in another place. However, if, as my noble friend Lord Carr of Hadley has said, the principle of the Amendment is to say that Members of Parliament and employees of public corporations should be treated in the same way and be forced into overall disclosure, then we are narrowing the field when surely the object of corporations in having outside members or directors is that their value is or should be because of their outside interests and not because they are totally bound up within the political or bureaucratic system.
I urge the Minister to look at this matter seriously. This is not a plea that rests on the overall arguments that have been put forward against Members of another place disclosing their interests or even demands in that context relating to your Lordships. If the noble Lord will say that he will have another look at the matter, then that is all that we are asking him to do at this stage.
Lord KIRKHILL: Initially, of course, there is no body of evidence which leads to any firm conclusion that people of distinction and eminence are reluctant to serve on public boards of one kind or another because of the general question of disclosure, and I would say to noble

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Lords, and in particular to the noble Lord, Lord Carr of Hadley, that the Government have not been remiss in giving very careful thought to the kind of yardstick which would be appropriate. I might add that the subsection was inserted following a promise given to the Liberal spokesman in Committee in another place that there would be disclosure at about the same level as is contained in the Industry Act. The Government think that their definition or yardstick, using that which already obtains for Members in the other place, is very reasonable. I could not say that the Government are not open to suggestions. On the other hand, I would not ask your Lordships to sustain the Amendment.
Earl FERRERS: I do not think we are all that far apart on this issue. There is no doubt that nobody wants any of these appointments to be in any way clandestine or that people should be appointed without proper knowledge of their other interests. I suggest that this can almost boil down to two things. First, why must the Secretary of State keep the register? The noble Lord has not really answered that. If there is a register to be kept, surely it is appropriate for the Corporation to keep it. Certainly, the Secretary of State will have access to it. Secondly, why should the register be the same as that of the Members of another place?
As my noble friend Lord Carr said far more clearly than I could, the responsibilities of the Members of another place are totally different from those of members of a Corporation. As I understand it, too, subsection (9) could and, I think, does, involve members of the Corporation declaring their financial interests in all other companies or interests in which they have a part and then requiring that information to be published. That is the point. Certainly, it could be that that information should be available and should be available on request, but my noble friend Lord Trefgarne put his finger on the point when he said that this would be a drawback in that it would discourage people from joining a Corporation. For example, if a man is a very eminent director, he may have to say that he is a director of Tate and Lyle and owns 1,000 shares; he may be the chairman of ICI and own 20,000 shares.
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He might have to declare his income from all that. Is that really the type of information that has to be published? If people are going to have to publish all their financial affairs to that extent, I believe that we may very well find that people will be reluctant to serve on these bodies. The noble Lord, Lord Kirkhill, said that there had been no evidence of reluctance of people to come forward, but of course they have not had this kind of requirement put upon them.
All I would say to the noble Lord is this. I believe that he will have sensed the feeling of the Committee that people are concerned that this is what might be called an over-reaction. It was not debated in another place. It was caught up in the guillotine system and was not discussed. The Government were quite right to introduce it as they did in response to a request, and all I am asking the noble Lord is whether he will take it away and see whether some of the arguments that we have used are not germane and have some force. If so, he would, I am sure, be acceding to the sense of the Committee.
Lord SELSDON: I am sorry to intervene again, but since the Government have said that they would be open to suggestions, can I ask the noble Lord to take a look at the status quo so far as the Companies Act is concerned at the present time? Any director of a corporation or of a company is required by law to disclose his outside directorships. This is done automatically and on a regular basis each year. Furthermore, any director of a responsible company makes it a matter of principle that if he has any commercial interest or any interest in activities connected with the company at that particular time—for instance, a takeover going one way or another—he automatically and on principle discloses that interest to his colleagues. This system has worked reasonably well, though there have been mistakes and, rather than trying to introduce new principles and to equate the commercial sector with Parliament, the Government could look at the whole subject to the Companies Act and at the disclosure responsibilities of directors, who, as a matter of principle, declare their outside directorships and their interests to their own company if there is a conflict of interests.
Lord REDESDALE: May I ask as a matter of clarification and on the basis

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of the House of Commons, whether the interests of wives are required to be declared?
Lord KIRKHILL: I can respond to the latter point first: I do not know. However, I shall find out and let the noble Lord know. My general position is as follows. I must sustain the Government position here this evening. We have thought about this very long and carefully and we cannot think of another yardstick. However, if suggestions are put to us, we shall certainly listen to them.
Earl FERRERS: I am bound to say that I am disappointed with the noble Lord, Lord Kirkhill, because this was a matter on which there was no partisan feeling at all. I should have thought that the least he could have done would have been to say that he would look at this. However, he specifically did not say that, though I should have thought that that was an olive branch that he could willingly and with good measure have offered. All I would say is that we shall return to this again. It would have been much better if the noble Lord had taken the suggestion away and considered it, but he will not and it falls on us to bring it back again at a later stage. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 1, as amended, agreed to.
Clause 2 [General duties of the Corporations]:
9.20 p.m.
Earl FERRERS Earl FERRERS moved Amendment No. 25A:
Page 4, line 4, leave out ("efficient and").
The noble Earl said: My noble friend and I have put down this Amendment in order to try to find out from the Government what they mean by "efficient". One of the dramas of present day legislation—particularly in this Bill—is that many obligations are put into legislation which are completely undefinable in practice and certainly in law. This clause places a duty on the British Aerospace Corporation to be efficient. Efficiency is what one might describe as a fairly smart word. Everyone tries to be efficient. I do not know whether there are businesses which would claim that they are inefficient. One does not often hear people say that they are running a business
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which is inefficient; everyone says that their business is efficient.
Here a duty and an obligation is placed on the British Aerospace Corporation to be efficient. I ask: what does this mean? What is the criteria of efficiency? Is it total profit? Is that the measure by which the Corporation has to be guided, or is it the percentage of profit on turnover? Presumably the higher the percentage of profit on turnover, theoretically the more efficient one is. Maybe it is in profit per man or profit per £100 of labour. That is a very different thing. Or is it the output per man; or is it good industrial relations? One might say that one has had no strikes at all in the past ten years, from which it might be concluded that one has been efficient. It may be that the low level of overheads forms the criterion of efficiency.
I do not see how one can write into an Act of Parliament the obligation on a firm to be efficient unless one knows what that means. This matter becomes slightly more sinister because a Member in another place, a Mr. Thomas, said that in his opinion "efficiently and profitably" were straightforward capitalist economics, and this slightly infers that if a nationalised industry is to be efficient and profitable, it has to operate under capitalist economic standards.
Perhaps efficiency means cutting the staff, that the staff should be curtailed. Is this a criterion of efficiency? That could mean the breaking up of design teams. Is it to be said that this would be desirable? I cannot believe that it is. The Under-Secretary of State drew attention to the fact that the Corporations should carry out their activities in an efficient and economical way. That is what he said, and I can only assume that that means that the Corporations have to act commercially.
I hope that the noble Lord, Lord Melchett, will say that that is what is meant. If he does say that that is what is meant, that the Corporations have to operate commercially, then I should point out that in subsection (7), with which we shall be dealing in a short while, the Secretary of State is given the right to alter by Statutory Instrument the provisions that obtain earlier in Clause 2. In other words, he could give a direction to the Board to do something which is not economical and is not efficient, and if he

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were to do so, that would override the obligation under Clause 2(1) to be efficient. I hope that the noble Lord will explain exactly what is meant by the statement that the Corporations have to work efficiently. I beg to move.
Lord KINGS NORTON: Is it entirely clear that the words "efficient and economical" apply to anything but design in that paragraph?
Earl FERRERS: Perhaps the noble Lord, Lord Melchett, may be a better person to answer that than me, but, as I read it, it says:
"the efficient and economical design, development, production, sale, repair and maintenance …"
So you have to be efficient, not only in design but in developing the thing, and I do not know how you are efficient in developing something new. Is the development of the Concorde efficient? I do not know. How do you know? This is an obligation. I should have thought that the answer to the noble Lord, Lord Kings Norton, is that it applies to the whole lot.
Lord SELSDON: I would guess that if we removed the word "the" the point which the noble Earl is trying to make would be a true one.
Viscount COLVILLE of CULROSS: Does not the research have to be either efficient or economical?
Lord KINGS NORTON: No. It says, "the promotion … of … research". This is how it reads; not "of … efficient and economical research".
Lord MELCHETT: I must say that I was absolutely astonished when I saw this Amendment on the Marshalled List; that noble Lords opposite were actually planning to delete the word "efficient" from the Bill. I thought their main complaint about nationalised industries was that they were not efficient enough, and when that complaint has been made I have not heard it elaborated on in the way in which the noble Earl elaborated on it this evening in saying, "Not only are they not efficient, but when I say 'efficient' I mean", and then going into a long string of things which the noble Earl said "efficient" could mean and several other things which he said it could mean but
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which for the life of me I cannot see how it could possibly mean, and various other things which he did not think it would mean, but "Did it?", he asked me.
The cry from the noble Earl opposite has been that nationalised industries are not efficient enough—straightforwardly. Now we are putting a duty on them to operate efficiently and economically—and I can confirm that, on my understanding, the words apply to all the operations in paragraph (a). The noble Earl asked me to explain this. "Efficient" means all the good things that he said it means, and I hope that is an efficient explanation of it.
Viscount COLVILLE of CULROSS:
With respect to the noble Lord, Lord Melchett, I have not taken part in this debate before but there must be some point in setting out the duty in these terms. Whom is it going to help, and on what occasion? If it is merely a piece of political flag-waving, then there is no particular object in having it in the legislation. I would assume that it is in there for some very good purpose. It is probably a very laudable purpose, but if the noble Lord could tell us this I think we would be rather more helped.
On what sort of occasion is either of these new nationalised industries going to be able to say to somebody: "There is in our Act a duty to be efficient and economical in the various duties that we are undertaking. Mind you, I do not think anybody can enforce it; but, still, that is our duty. Now you are trying to get us to do something which is not economical or efficient". To whom are they going to say this? Is it the Secretary of State, or whom? Because there must be some point, there must be some scene, in which the noble Lord anticipates that they will be able to call upon the words that Parliament has laid upon them as their duty so as to achieve something; otherwise, one would merely consider that it is a piece of otiose language which has perhaps been put in merely as window-dressing.
Lord MELCHETT: It has not been put in as window-dressing or as Party political flag-waving. It follows precedents in many previous nationalisation measures, including the Conservative's Gas Act. It is a standard provision. I can just imagine the uproar there would have been from noble Lords opposite had we not put it in,

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on the basis that they would have said, "Every other nationalised industry has been made to be efficient, and here you are leaving it out." It is a perfectly standard provision. The answer to the noble Viscount is that the Corporations are under a duty to perform these various functions and they are under a duty in their day-to-day operations, in their long-term planning and in all the other activities that they conduct that when they are doing these things they must do them efficiently and economically. That seems to me quite reasonable.
Viscount COLVILLE of CULROSS: With respect to the noble Lord, that is not the answer. It is no doubt absolutely true for him to say that this is in accordance with precedent, but if it is in accordance with precedent then there must be quantities of opportunities known to the Department which is advising him upon this when these words have turned out to be useful. You do not follow precedent in legislation just for the sake of following it. You follow it because it achieves something useful. I am asking the noble Lord to give some examples of occasions when this is a useful form of words for the Corporations to have.
Baroness WARD of NORTH TYNESIDE: May I add to that? Most of the nationalised industries have been using a lot of money. Does that mean that they have been efficient? If they have not been efficient, what action do the Government take to make them efficient?
Lord MELCHETT: As the noble Baroness knows, one of the policies which this Government follow on nationalised industries is to return their prices to an economic level so that they will make money, something which noble Lords opposite, for their own reasons, did not allow them to do. The answer to the noble Viscount is that I do not know whether these words, as a result of their being in previous legislation, have come in useful or not. If he can convince me that it would be better to leave them out, then I will discuss it.
Lord TREFGARNE: I am not sure that the noble Lord understands our complaint. We are not complaining about the inclusion of the words. We think they may very well be useful. But will the noble Lord tell us the occasions on which he thinks
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those words might be useful? Can the noble Lord conceive of a situation where a member of British Aerospace sitting in his office, faced with a choice of how to perform a particular task, asks himself, "How am I required to do this under my Act? Oh, I remember! It says I am to be efficient." What does that mean? Can the noble Lord help us?
Lord MELCHETT: I honestly think that anybody coming into this Committee and listening to this debate would think that we were living in Cloud Cuckoo-land. It is a perfectly reasonable form of words precedented in several previous nationalisation Bills, including those passed by Governments of noble Lords opposite. If noble Lords opposite seriously think that the Bill would be improved by deleting the word "efficient", then let them say so. I said that I do not think I can give an instance of where the inclusion makes any difference. If they think that is a reason for leaving it out, let them say so and we will discuss it.
9.32 p.m.
Lord LLOYD of KILGERRAN: Before the noble Lord sits down, may I say that my sympathy is entirely with the Minister on this matter. It seems to me that the noble Lords on the Benches to my left have not quite understood what the object is. The duty is to promote these matters. It is a duty therefore to promote proficiency in general terms. We do not want any legal definition and "to whom" they should report. In my view, a general term of this kind, efficiency, is something which everybody understands. The introduction of general terms of this kind is, I submit, useful in the promotion of activities of nationalised Corporations of this kind.
Lord CARR of HADLEY:If we have not made outselves clear to the Minister and to the Committee I appreciate it; but I thought there was sufficient degree of Parliamentary sophistication on the Front Benches opposite to know that, because of our adversarial system in this Parliament, the only way that one can raise matters for debate is to move Amendments to leave something out of or to insert something into the Bill. This is a genuine probing Amendment. This is the only way one can raise it. If we did not make that clear by saying that this is a probing

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Amendment, then I apologise for the inconvenience we have caused. But that is what it is. The reason that we raised this was because this matter was debated in the Standing Committee of another place. The description given by the Minister in another place of what they meant by "efficient" was rather unusual and certainly not clear. I think that it would be useful to know what the Government mean by "efficient" in this case. Do they simply mean profitable or something more than that?
The noble Lord has just made a reference—I was going to say a "crack"—about the previous Government's policy in relation to prices of the nationalised industries. It does not necessarily mean that industry is efficient because you allow it to raise its prices to the level at which they become profitable. In industries not subject to competition it is difficult to know whether a price to be profitable represents efficient operation or not. It really would be of interest for us to know what the Government mean by the word "efficient". Let me assure the Committee that we are certainly not going to move to take it out of the Bill. We welcome it in the Bill. We want to know what the Government mean by it because if one reads Mr. Kaufman, for example, in another place it is far from clear what the Government mean.
Lord MELCHETT: I merely intervene to make a point to the noble Lord. As he says, if you allow an industry, for example a nationalised industry, to raise its prices that does not mean to say it is more efficient—quite the converse, I think he would agree—but if you artificially depress the prices of a nationalised industry that does not necessarily mean it is in-efficient and I hope he will take that point. I should have been happy to have a "bash" at saying what the Government think "efficient" means but the noble Earl, Lord Ferrers, has pre-empted me. He gave us a long list of what efficiency could mean and I openly and warmly agree with his exposition. If any more is needed for noble Lords opposite, I suggest that they look back to their own Act where the word appears and see what they meant by it, and I assure them that we will agree with them entirely.
Lord TREFGARNE: Unfortunately, we have never sought to nationalise either
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the aircraft or the shipbuilding industry and the parallel therefore is not a real one. Can I give the noble Lord a positive example? Imagine at Weybridge a man responsible for supplying spare parts for aircraft to be manufactured under the new Corporation. An airline overseas rings up and wants a new spare part for one of its aeroplanes. The man is faced with the choice of sending the spare part by air, at enormous expense, or by sea, more efficiently it may be said but cheaper. Which course of action would the noble Lord suggest if he were anxious to comply with this section?
Lord MELCHETT: I would not suggest anything to him. I would leave it up to the management.
Earl FERRERS: That at least is a step in the right direction.
Several Noble Lords: Hear, hear!
Earl FERRERS: I must say that not only am I disappointed in the noble Lord's reply but rather horrified at the flippant way in which he dealt with it. He makes a sort of clucking noise of disagreement. All I can say is this. I wanted to put this down, not from any partisan feeling at all but simply because one wanted to know what it meant. There are some other things in this Bill that we are going to inquire about, such as "industrial democracy." Those are fine words—but what do they mean? All that the noble Lord, Lord Melchett, did, and he did treat it in a very partisan way, was to reel off a whole list of things and say he agreed with the whole lot. He did not appear to observe that a number of them contradicted each other. Therefore, if he says "I agree with the whole lot", he agrees with certain things which do not, so to speak, agree with themselves. I could not help being reminded slightly of the bishop who, when asked what he thought of sin, said he was against it. If one may elevate the noble Lord, Lord Melchett, to the Episcopal Bench on this occasion and ask him what he thinks of sin his answer will be, "I am for it".
But I am disappointed that the noble Lord has not attempted to define at all what is meant by this word "efficiency". I wanted to put it in simply because it is a word that is used time and time again throughout the country nowadays—" We

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are being efficient". You can do anything on the basis of being efficient, but when you say, "What is efficiency? What do you mean by it?" nobody can tell you. And the noble Lord, Lord Melchett, tonight could not tell us either. It is disappointing that he should have felt that the only reason why we put this down was in order to vote it out of the Bill. Nothing was further from our minds. All we wanted to know was what the Government meant by it and the noble Lord, Lord Melchett, does not know. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord KINGS NORTON Lord KINGS NORTON moved Amendments Nos. 26 and 27:
Page 4, line 6, leave out first ("and");
Page 4, line 6, after ("weapons") insert ("and of space vehicles and systems").
The noble Lord said: With the leave of the Committee I should like to take Amendment No. 27 together with Amendment No. 26. An increasingly valuable and important proportion of the work of the leading aerospace companies, including the British Aircraft Corporation and Hawker Siddeley Dynamics, is concerned with space, especially communications satellites for military and civil purposes, and it is important not only that the existing work of BAC and Hawker Siddeley in this field be maintained by British Aerospace but also that British Aerospace be in a position to exploit the growing commercial opportunities in the development of space technology.
Of course there is nothing in the proposed legislation which precludes a space systems business as part of the British aerospace; but if it is spelt out as a duty of the Corporation in the Bill, then work on space vehicles and systems, which is of growing significance worldwide for aerospace companies, is less likely to go by default in the United Kingdom on financial or political grounds in the years ahead. I consider therefore it should be explicitly made the duty of British aerospace, if this legislation is enacted, to continue this work, which is potentially so important for the country, and for which BAC and Hawker Siddeley have an acknowledged fund of expertise, both with satellite hardware and overall systems co-ordination.
In other words, these two Amendments are intended to protect a section of the existing companies' business. In this work the British Aircraft Corporation has a turnover at the present time of £7 million and Hawker Siddeley Dynamics has a turnover of almost double that. Those figures will be dwarfed shortly by the future activities of these companies. I gather that at the present time the British firms have an order book of approximately £300 million. It is relevant to note that in the United States' aerospace industries about a quarter of their business is on space satellite and associated work. Of course all the leading European companies are very actively concerned as well. What I am asking by means of these two Amendments is that the duty should clearly be laid down for the British Aerospace Corporation that space vehicles and systems are their work. That is what the two Amendments are intended to achieve. I beg to move.
9.43 p.m.
Lord WINTERBOTTOM: I am grateful to the noble Lord, Lord Kings Norton, for making his intention so clear. When I read the Amendments proposed I felt, to be honest, he was labouring the obvious. If I understand him correctly, he is making certain that the work now taking place within the two great corporations which may be involved and come together in British Aerospace, will continue. It is not a question of what is happening now; it is what is happening in the future which concerns him. That is a very understandable wish which I am certain the Committee will support. There is no question whatever of the Corporation's power to undertake space activities. Under Clause 3(1), the Corporation has power (without any consent being required) to carry on any activity which any wholly-owned subsidiary was carrying on immediately before vesting. Since both the British Aircraft Corporation and Hawker Siddeley Dynamics are engaged in space activities, there is no question at all about their continuance.
Space activities have not, however, been included in the prescribed activities in Clause 2(1), that is, activities which the Corporation must carry on, because they are relatively small in the context of the Corporation's operation as a whole. In very round numbers—and my figures are

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different from the noble Lord's—the Corporation's turnover will be some £400 million a year. Guided weapons turnover will be in the region of £100 million. Space, on the other hand, will be some £5 million. We therefore considered that at this moment it was inappropriate in terms of scale to include space activities as a prescribed activity.
There is another argument against to which I should like to draw the noble Lord's attention. The space industry in this country consists of two firms which will come within British Aerospace and a number of electronics firms in the private sector—Rediphone, Plessey and so on. They will operate in the context of a close relationship with Government and with European institutions. To impose a positive duty on the Corporation to operate in this field could—I do not say would, but could—upset this delicate balance which reflects technological capabilities in particular areas of space activities. Particularly in the form proposed by the noble Lord, Lord Kings Norton-that is to say, space systems— this could compel British Aerospace to enter areas, for instance on the systems and payload side, where it has a limited current capability, where it would be competing with other British firms to the possible detriment of their employment and from an inferior technological starting point. To put that in other words, we have an efficient private sector which it is not our intention to bring into national ownership, and if we imposed upon the two State Corporations the duty to enter into competition with the private element in our aerospace industry this might cause an imbalance. For this reason, we are opposing the noble Lord's Amendments and I hope that for that reason too, they will not be accepted.
Lord KINGS NORTON: I must say that the noble Lord has disappointed me. It seems to me perfectly clear that in the future an efficient aviation organisation will be dealing with military aircraft, civil aircraft, guided weapons and space vehicles and space systems. If it is not, then it ought not to be in business at all. I have told the noble Lord and I have told the House that in the United States, which admittedly is further ahead than ourselves, 25 per cent, of their industry
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is engaged on this work. It seems to me to be absolutely absurd that this should not be prescribed as one of the duties of the British Aerospace Corporation. The delicate situation to which the noble Lord referred can be paralleled in all sorts of other areas in the aviation field. I beg him to think again, because unless we are in a position to exploit this to the full—and one of the ways of doing it will be to call attention to this Act—I think we shall regret it very much in the future. This is an innocuous suggestion at the very worst, and I was intending it to be a helpful one. I hope the noble Lord will think again.
9.48 p.m.
Lord WINTERBOTTOM: I am sorry that I have not convinced the noble Lord. These two Corporations which will enter into State ownership are in the business now. We hope that they will stay in the business, but we feel that it would be unwise to force them to enter into competition with the private sector just for the sake of a situation which I do not think will arise. If the promise is as great as the noble Lord has pointed out then I am certain that the new British Aerospace Corporation will in fact grasp the opportunity with both hands and develop the work that the two firms are doing now. It will certainly not be the role of Her Majesty's Government to stop them from doing something which is clearly to the advantage of the nation as a whole.
Earl FERRERS: How are they going to grasp the opportunity with both hands when they are not allowed to under the Bill?
Lord WINTERBOTTOM: They are allowed to do so. They are allowed to continue doing so. What we do not want to do is tell them that they must do so and thus perhaps enter into competition with the private element of the industry which is more highly specialised and where a good balance has been struck at the moment between the proposed future members of the British Aerospace Corporation and the present private industry. That surely is an area of interference which noble Lords opposite could not welcome.
Lord CARR OF HADLEY: The Government are being extraordinarily

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obtuse about this. Here we have an industry which calls itself the aerospace industry and we are dealing with its two biggest members which are involved in guided weapons and all this technology surrounding this area. We are told that they may continue this activity in which they are involved at the moment but that they should not be under a duty to do so because we are suddenly told out of this extraordinary rush of sympathy to the head of the Government for private enterprise, they might go and compete with private enterprise.
Frankly, as a defender of private enterprise, J say the more competition we have the better, as long as it is fair competition. We shall want to say something later about ensuring that the competition is fair, but for goodness' sake! do not let the Government inhibit this Corporation from daring to dash in and be competitive. I think it would be thoroughly healthy for effective competition to take place. The noble Lord, Lord Kings Norton, speaks with some authority in this area—much more than the rest of us can muster, I think—and if he is right in suggesting that in five or ten years' time the turnover of these two great companies which is devoted to space is not going to be more than 5 percent., then I do not think these Corporations and this country are going very far in this new higher technological world. It seems extraordinary to me.
Supposing they do have a duty to do it, that duty is qualified, as we have just seen, by the need to do it efficiently, economically and fairly. They will not come charging in competing with the private sector, at least so we are assured, greatly advantaged by public money which they can slop about and spend without regard to efficiency and economy. As long as they are generally competitive and as long as they have a duty to be efficient and economical, surely in this vital field they should be under a duty to do what they can for Britain in this field of technology, and not simply be in this permissive condition as it stands at the moment. It seems so ludicrous for the Government to resist Amendments of this sort.
Lord WINTERBOTTOM: The Government are resisting the Amendment for one good reason—that under Clause 2(5) space activity can be prescribed as a duty
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by order in the future. We believe the two Corporations will continue their work and expand it but, if they do not, we have the power to see that they do. I hope this explanation contents noble Lords.
Earl FERRERS: It actually does not, because one of the things we are anxious about is that certainly the Government have powers to make them go into aerospace and they have powers to make them go into anything else as well. If they wanted them to go in for aerospace one would have thought they would have done so under this clause and not rely on powers which are only to be permissible by Statutory Instrument.
Lord TREFGARNE: Before the noble Lord answers that point, might I just probe his new-found conversion to the principles of competition, which I find quite remarkable? I hope he is reflecting the views of all his noble and right honourable colleagues. May I once more create a scenario for the noble Lord? What would happen in the near future, before the Minister perhaps has had time to prescribe new powers for the Corporation, if the Corporation were then invited to tender for a major space project such as a communications satellite system or something similar. Would their newfound reticence persuade them to stand back while private enterprise stepped in, or would they hastily take powers to do just that?
Lord WARDINGTON: May I try to clear up one point: I cannot understand why the additional words do present such an objection to the Government because subsection (2)(a) is based on chronological order. There is the efficient and economic design, development, production, sale, repair and maintenance. We are obviously going to have a very big future development in space vehicles and systems. I should have thought it must either be included here or be separate. The most important word in this is "sale". If it is a nationalised industry, one is hoping it will be profitable and that the sale of all these systems will produce some benefit to the country. As it stands at the moment, as far as I can see, we seem to be leaving out a major future development and possible profitability later on.
Lord WINTERBOTTOM: The noble Lord, Lord Trefgarne, seemed to think that only today had I seen the virtues of competition. I think I have seen the virtues of competition for as long as any noble Member of this House, because I am becoming one of the older Members. But what I must say is this. Please do not think that either British Aerospace or British Shipbuilders will be free of competition. To take another great national Corporation, British Airways is successful and more profitable than, shall I say, Pan-American Airways, because it has imposed upon it the same forces of competition as private industry. Both British Aerospace and British Shipbuilders will be facing severe and savage competition from other companies in the outside world, including some which are nationalised, such as Aerospatiale.
Lord TREFGARNE: I hope that the noble Lord will not mind my intervening again, but he really cannot use British Airways as an example. Only a few months ago we passed a Motion restricting competition for British Airways. Dual designation on the major international routes was precluded by the Government's own policy.
Lord WINTERBOTTOM: But that was within Britain itself. There are
companies called Trans World Airlines, Pan-American Airways, Air France and Air Everything, and they are in direct competition with British Airways. These new national Corporations will be under severe international competition, and I am absolutely certain that their managements will face up to it and will impose upon the Corporations the efficiency which noble Lords seemed to doubt. The word "efficiency" caused some confusion in noble Lords' minds. I have no doubt whatever that if the opportunity is offered, as suggested by the noble Lord, Lord Trefgarne, to the proposed members of the British Aerospace Corporation to take part in a major satellite development, or the equivalent, they will grasp it with both hands. They will not be idiots.
Lord KINGS NORTON: Nothing that the noble Lord has said has convinced me that these items should not be made part of the duty of the British Aerospace Corporation, and I do not propose to withdraw the Amendments.
9.58 p.m.
On Question, Whether the said Amendments (Nos. 26 and 27) shall be agreed to?
Their Lordships divided: Contents, 77; Not-Contents, 34.

CONTENTS

Airedale, L.

Gainford, L.

Orr-Ewing, L.

Amherst, E.

Glasgow, E.

Pender, L.

Amory, V.

Gowrie, E.

Pike, B.

Armstrong, L.

Gray, L.

Redesdale, L.

Arran, E.

Harcourt, V.

Rochdale, V.

Balerno, L.

Harmar-Nicholls, L.

St. Aldwyn, E.

Barrington, V.

Hatherton, L.

St. Davids, V.

Beaumont of Whitley, L.

Henley, L.

Sandford, L.

Belstead, L.

Hornsby-Smith, B.

Sandys, L.

Berkeley, B.

Hunt of Fawley, L.

Seear, B.

Brookeborough, V.

Inchcape, E.

Selsdon, L.

Campbell of Croy, L.

Inverforth, L. [Teller.]

Simon, V.

Carr of Hadley, L.

Kemsley, V.

Strathclyde, L.

Colville of Culross, V.

Killearn, L.

Strathcona and Mount Royal, L.

Cork and Orrery, E.

Kimberley, E.

Thorneycroft, L.

Craigmyle, L.

Kings Norton, L. [Teller.]

Tranmire, L.

De La Warr, E.

Lauderdale, E.

Trefgarne, L.

Drumalbyn, L.

Lloyd of Kilgerran, L.

Trevelyan, L.

Duncan-Sandys, L.

Long, V.

Vickers, B.

Dundee, E.

Lyell, L.

Vivian, L.

Dundonald, E.

Margadale, L.

Ward of North Tyneside, B.

Eccles, V.

Monson, L.

Wardington, L.

Elles, B.

Mottistone, L.

Wigoder, L.

Elliot of Harwood, B.

Mowbray and Stourton, L.

Wolverton, L.

Falmouth, V.

Northchurch, B.

Young, B.

Ferrers, E.

Onslow, E.

NOT-CONTENTS

Birk, B.

Hirshfield, L.

Murray of Gravesend, L.

Boston of Faversham, L.

Houghton of Sowerby, L.

Oram, L. [Teller.]

Brimelow, L.

Jacques, L.

Peart, L. (L. Privy-Seal.)

Brockway, L.

Janner, L.

Shackleton, L.

Champion, L.

Kagan, L.

Stedman, B.

Collison, L.

Kaldor, L.

Stewart of Alvechurch, B.

Davies of Leek, L.

Kirkhill, L.

Stone, L.

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

Kissin, L.

Strabolgi, L. [Teller.]

Goronwy-Roberts, L.

Llewelyn-Davies of Hastoe, B.

Wells-Pestell, L.

Hacking, L.

Lyons of Brighton, L.

Winterbottom, L.

Hale, L.

McCluskey, L.

Harris of Greenwich, L.

Melchett, L.

Resolved in the affirmative and Amendments agreed to accordingly.
10.8 p.m.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 28:
Page 4, line 7, leave out ("matters relating thereto") and insert ("and innovation concerning the above-mentioned matters.")
The noble Lord said: At this late hour I hope it may be relaxing, if not a little refreshing, for the Government Ministers to have to deal with this important industrial Amendment, devoid as it is of any Party political controversy. Briefly, the purpose of the Amendment is to add to one of the duties of the Aerospace Corporation the duty to promote innovation as well as research. In my view research by itself as a duty of the Corporation is far too limited, and therefore I have tabled an Amendment to the effect that" innovation" should be added after the word "research".
May I remind your Lordships of the definition of "innovation" as given by the General Advisory Council on Science and Technology:
"Innovation comprises the technical, industrial and commercial steps which lead to the marketing of new manufactured products and to the commercial use of technical processes and equipment".
May I emphasise that "innovation" includes a variety of aspects of industrial processes, such as commercial aspects, marketing aspects, and so on, and therefore is far wider than the limited term "research". Innovation requires the fostering of a wide range of skills in a company. To foster research is far too limited, and innovation is just the kind of activity which must be promoted by the Aerospace Corporation.
In this context may I say that I was most impressed by the peroration to the fine speech of the noble and learned Lord the Lord Chancellor in winding up the debate on the economic situation last week. He is recorded in the House of Lords Hansard for 4th October, at column 966, as follows:
"We have a tremendous store of skills and knowledge in our people. We still have massive industrial plants. The problem is to bring these assets into full and vigorous operation. I believe that this Government are capable of doing that and will do that".
In my view it is necessary therefore to continue to revitalise and keep revitalising this Aerospace Corporation, and it is this aspect of innovation which can do that. It is a general term. It is a general term
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like "efficiency of an industry" and I am sure that I shall have the sympathy of the noble Lord, Lord Melchett, in introducing, even at this later hour, as a general term, innovation as a duty of the Corporation. The sponsoring by the Corporation of innovation will do much to revitalise the organisation, and it will assist in the growth in the industrial economy of a variety of talents which, as I have indicated, are required by employees in various fields, and in that context it may be said that innovation is part of the industrial democracy about which we shall hear later in this debate.
I raised the matter of innovation at Second Reading. I was disappointed that the Minister, the noble Lord, Lord Melchett, had no time to say anything about this matter, although I sent him a short note about it beforehand. I was disappointed, particularly as his ancestors were, and were associated with, brilliant innovators in recent decades. In my enthusiasm to move this Amendment for the introduction of the word "innovation," I must apologise for not having disclosed that I am president of the Institute of Inventors and Patentees, and it also may be helpful if I indicate, with the leave of Committee, that I should like my remarks to be associated with Amendment No. 37, which is in practically the same words in regard to the Shipbuilders Corporation.
Also with the leave of the Committee I should like to say that from all parts of the House I have had letters from noble Lords who are unable to be present this evening who have supported me in this general activity of innovation as being one of the main duties of these two Corporations. In this regard I should like to point out again with the leave of Committee that I have had a long letter in support of this Amendment from the noble Lord, Lord Energlyn.
Lord KINGS NORTON: I should like to support in general terms the noble Lord, Lord Lloyd of Kilgerran. It seems to me that in the world of aeronautical science there must be two main activities; discovery of new facts, and that is what is called research, and the creation of new things. The creation of new things seems to me to be admirably covered by the word "innovation" which the noble Lord suggests. I therefore wholeheartedly support the more balanced phrase that is used in the Amendment.
Lord KIRKHILL: I freely acknowledge that the noble Lord, Lord Lloyd of Kilgerran, sent my noble friend Lord Melchett a note during Second Reading outlining his strong views on the importance of innovation and its encouragement. Unfortunately during the winding-up speech my noble friend was unable due to the shortage of time to deal with the points that Lord Lloyd had made to him. I can assure noble Lords however that we fully realise the importance of innovation to both industries. In the case of the aircraft industry, for example, the merger of the two main companies, which have in the past competed against each other, will remove the element of duplication from the research and design work within the industry and enable greater and more concerted work towards technical innovation. Within the Bill itself, we are confident that the provisions in Clause 2 already provide the necessary impetus to the work and indeed already cover the aspect of research to which Lord Lloyd referred.
Not only in the Government view do subsections (1)(b) and (2)(b) lay down the specific duties on both Corporations and their subsidiaries to promote research, but subsection (4) ensures that the important channel of innovation, the worker's specialised knowledge and experience of his own job, is fully utilised. I am confident that proper emphasis will be placed on innovation, invention and design in the new Corporations and I assure the noble Lord that his Amendment is unnecessary. However, I can assure the noble Lord that I will place his views before the chairmen of the respective Corporations—indeed the noble Lord, Lord Beswick, is present in the Committee now—and he has my assurance that the Corporations will be very aware that there is already within these industries a long tradition of innovation, a tradition that is there to be maintained.
Lord LLOYD of KILGERRAN: I am obliged to the noble Lord, Lord Kings Norton, for having supported me generally in having the word "innovation" introduced as one of the duties of the Corporation. However, with the assurances that the Minister has given, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
10.18 p.m.
Earl AMHERST Earl AMHERST moved Amendment No. 29:
Page 4, line 7, at end insert—
("( ) Nothing in this Act shall preclude British Airways Corporation or any other British Airline registered in this country from seeking supplies of civil aircraft including engines and ancillary equipment from any sources should British Aerospace be unable or refuse for any reason to meet the specifications for civil aircraft including engines and ancillary equipment asked for by such airline.").
The noble Earl said: The object here is to secure as far as the Bill is concerned full freedom of action for the British airlines in the purchasing of aircraft and equipment as may best meet their needs, both technically and commercially. There appears to be nothing in the Bill which spells out provision for such a freedom. It should be noted that while the new Corporation is charged with the development and production of civil aircraft, it is the Secretary of State, if I read the Bill correctly, who will in the last analysis have the final power of veto on the production of any such equipment. Secretaries of State come and go and some are more equal in technical knowledge than others. Are our airlines to have this freedom of choice or are they to be forced to take whatever the new Corporation is able or allowed to produce? As matters stand, we could have a situation where the Secretary of State, for purely political reasons and through his veto, could force the airlines to buy equipment irrespective of what those airlines, with their professional and technical know-how, want to buy and operate. I suggest therefore that this is a matter of some importance.
Lord WINTERBOTTOM: I assume that this Amendment is what is known in terms of art as an "avoidance of doubt" Amendment. I can assure noble Lords that an Amendment on these lines is entirely unnecessary. There is no requirement in the Bill that British Airways and other airlines must buy from British Aerospace. Any such requirement would run counter to our international obligations. My right honourable friend the Secretary of State for Industry has also made it clear that his responsibilities for the aerospace industry cover both the public and the private sectors. He wishes to see both healthy and profitable. Any requirement on British Airways and the

163
British airlines of the kind which this Amendment seeks to preclude would not be conducive to that objective. Since the contingency that these Amendments are designed to guard against would run counter to our international obligations and would conflict with Government policy, I hope that noble Lords will agree that a provision on these lines is not necessary and that they will not press their Amendment.
Lord WIGODER: Would the noble Lord be kind enough to assist us by indicating what obligations he is referring to?
Lord WINTERBOTTOM: At a guess and without speaking with exact knowledge, the use of British engines in American aeroplanes and the joint operations with, for instance, the French.
Earl FERRERS: The noble Lord, Lord Winterbottom, said that this was unnecessary. I am not absolutely convinced that it is, and I think that the reason why the noble Earl, Lord Amherst, moved the Amendment was because of the problem to which my noble friend Lord Carr referred in the first place. We have two industries that are to be joined together by this Bill, and the Secretary of State will have tremendous power and influence over these Corporations. He will provide them with funds. Equally, the Government are responsible in the last analysis for British Airways, and if British Airways come to the Government and say, "We have got to buy more aeroplanes", it could well be that the Minister will say, "Look, here is British Aerospace; they have produced this aeroplane which is costing a tremendous amount of money and if British Airways do not buy it there will be no market for it". It is perfectly possible—though I do not say it is at all in the mind of the Government at the moment—that, in the future, where the Government are controlling British Aerospace and British Airways, we could find an obligation forced upon one by virtue of the other.
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It is that that the noble Earl, Lord Amherst, wishes to protect against, and in that respect I have much sympathy for him.
Lord WINTERBOTTOM: As an exercise in doom watching, this is entirely possible, hut, so far as I am aware there is not a single aircraft on the stocks which, in the foreseeable future, British Airways would wish to buy. The whole tendency is towards collaborative development of new aircraft. In my view, that trend will continue and, as I said earlier, it is against Government policy that the purchase of aircraft should be imposed on British Airways, and it is in any case against our international obligations. Of course, ten, fifteen or twenty years from now the situation may change, but we are talking now of the foreseeable future.
Earl FERRERS: With great respect, that is exactly what we are not talking about. We are talking about the merging of two great Corporations, not over the next four or five years but for a protracted period of time, and I believe that the noble Lord ought to consider very seriously. I accept that the Government have no intention of making this an obligation on British Airways at the present time, but it is not impossible that this might happen in the future.
Lord WINTERBOTTOM: I am informed that, as long as we are within the EEC and bound by the Treaty of Rome, it cannot happen.
Earl AMHERST: I am not happy with what the Minister has said. He seems to say that it will be all right on the night and that the intention is such and such, but it does not say so in the Bill. I do not think that we are very safe to leave it to good intentions and I think I must refer the matter to the opinion of the Committee.
10.25 p.m.
On Question, Whether the said Amendment (No. 29) shall be agreed to?
Their Lordships divided: Contents, 68; Not-Contents, 31.

CONTENTS

Airedale, L.

Glasgow, E.

Northchurch, B.

Amherst, E. [Teller.]

Gowrie, E.

Onslow, E.

Amory, V.

Gray, L.

Orr-Ewing, L.

Balerno, L.

Hacking, L.

Pender, L.

Barrington, V.

Harcourt, V.

Redesdale, L.

Beaumont of Whitley, L.

Harmar-Nicholls, L.

Rochdale, V.

Belstead, L.

Hatherton, L.

St. Aldwyn, E.

Brookeborough, V.

Henley, L.

St. Davids, V.

Campbell of Croy, L.

Hornsby-Smith, B.

Sandford, L.

Carr of Hadley, L.

Inchcape, E.

Sandys, L.

Carrington, L.

Kemsley, V.

Seear, B.

Colville of Culross, V.

Killearn, L.

Selsdon, L.

Cork and Orrery, E.

Kimberley, E.

Simon, V.

Craigmyle, L.

Kinnaird, L.

Strathcona and Mount Royal, L.

De La Warr, E.

Lauderdale, E.

Tranmire, L.

Drumalbyn, L.

Lloyd of Kilgerran, L. [Teller.]

Trefgarne, L.

Duncan-Sandys, L.

Long, V.

Vickers, B.

Dundee, E.

Lyell, L.

Ward of North Tyneside, B.

Dundonald, E.

Margadale, L.

Wardington, L.

Elles, B.

Monson, L.

Wigoder, L.

Elliot of Harwood, B.

Mottistone, L.

Wolverton, L.

Ferrers, E.

Mowbray and Stourton, L.

Young, B.

Gainford, L.

Newall, L.

NOT-CONTENTS

Birk, B.

Houghton of Sowerby, L.

Murray of Gravesend, L.

Boston of Faversham, L.

Janner, L.

Oram, L. [Teller.]

Brimelow, L.

Kagan, L.

Peart, L. (L. Privy Seal.)

Brockway, L.

Kaldor, L.

Segal, L.

Champion, L.

Kirkhill, L.

Shackleton, L.

Collison, L.

Kissin, L.

Stedman, B.

Davies of Leek, L.

Llewelyn-Davies of Hastoe, B.

Strabolgi, L. [Teller.]

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

Lyons of Brighton, L.

Wells-Pestell, L.

Hale, L.

McCluskey, L.

Winterbottom, L.

Harris of Greenwich, L.

Melchett, L.

Hirshfield, L.

Morris of Kenwood, L.

Resolved in the affirmative, and Amendment agreed to accordingly.
10.33 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 30:
Page 4, line 8, at beginning insert ("Subject to section (Ship-repairing) below")
The noble Lord said: This is the first of several Amendments which would have the effect of removing the independent ship repairers from the Bill. We regard this as a major issue, because no sound reason has yet been given why the ship repairing industry has been dragged into the Bill on the coat-tails of the shipbuilding industry. From the statements which have been made by the Government so far it seems that they are under the misapprehension that ship repairing and shipbuilding are involved in the same or similar activities, but they are not. Ship repairing is a different and separate industry. Indeed, in recent years the
166
difference between the two industries has grown, largely because of advances in technology.
An analogy which helps to illustrate the difference between the two industries, certainly for those who are more at home on land than at sea, is the motor car. The shipbuilding industry, like the car manufacturing industry, is concentrated in a few units and engaged in construction and assembly. The ship repairing business is similar to the multitude of garages distributed widely throughout the country and carrying out repairs and maintenance on motor cars. The ship repairers, like those garages, constitute a service industry, not a manufacturing industry. They are spread around our coasts, and they undertake tasks of great variety, often at short notice.
For them, a job of work could bring in as much as £1 million or as little as £100. Their customers are the ship owners, and

167
the ship owners wish to continue to deal direct with individual ship repairing firms. This is confirmed by the General Council of British Shipping, who have made it clear that they are opposed to the nationalisation of ship repairing firms. They believe that this will harm the efficiency of those firms—and the ship owners are their customers.
The character of the ship repairing industry, a service industry, its diversity and its need to respond immediately to many demands in different places, makes it wholly unsuitable for centralised control. Nationalisation elsewhere has shown that the structure and management that it produces are totally inappropriate for this kind of business activity.
The ship repairing companies in the list in Schedule 2 to the Bill, which our Amendment No. 216 in due course would delete, are not closely connected with shipbuilding. The names may in some cases be misleading to anyone who is not familiar with the industry. For example, Swan Hunter Shipbuilders Limited and Swan Hunter Shiprepairers Tyne Limited do not exchange labour and they have a different wages rate for their work forces. Ship repairing is also different because it does not compete throughout the world for orders as the shipbuilding industry can. It is geographically restricted to vessels plying in waters near Europe since it is not economical as a general rule to send a ship for repair from the other end of the world. Within the reduced tonnage operating in European waters owing to the recession in shipping, the British ship repairing industry has done well in winning business. Enterprise and quick decisions are needed to achieve these results against foreign competition. There are about 100 ship repairing companies operating in Britain. There are 12 in the list.
The criteria for inclusion have been changed since the original proposals for the Bill were put forward. Those criteria still seem arbitrary. Comparison with the records available of companies for inspection by the public reveal apparent discrepancies. I raised this matter on Second Reading because if the list of companies in Schedule 2 did not conform with the criteria, the Bill might well be
168
determined to be a hybrid Bill. Companies in the single category would not be receiving the same treatment and the hybrid Bill procedure would enable evidence to be given by persons or bodies affected to a Select Committee. The Government gave a long explanation in a written reply from the noble Lord the Leader of the House on Wednesday last and we on this Bench are grateful for the great amount of trouble clearly taken by the Government to produce a long, considered reply. Such clarification was certainly needed.
The reply indicated the way in which the Government are interpreting the criteria and conditions set out in Schedule 2. The terms of that reply are still being closely examined because we are advised that there can be different interpretations in law from sonic of those which have been adopted by the Government. Moreover, Government interpretations could also give rise to other discrepancies when applied to other cases. I do not intend to say more on this now because my noble friend Lord Colville of Culross with his legal expertise is proposing to dilate on that subject during the course of this debate.
This is a bad and an unnecessary Bill but it would be improved by the elimination of the ship repairing companies in Schedule 2. At this stage we hope to hear from the Government the reasons which they have for including ship repairing in the Bill. Up to now the arguments have not been noticeable. We will continue to give close examination to the explanation which the Government have given for including certain companies in the Schedule. We are, frankly, unhappy about the 12 companies which have been listed and we intend to go into this in considerable detail, but the first thing we should like to hear is the Government's reasons for including ship repairing at all in the Bill.
Viscount ST. DAVIDS: I should very much like to support the noble Lord, Lord Campbell of Croy, in this matter. Of all the unnecessary parts of the Bill this seems to be the most unnecessary. The ship repairers he described as being the equivalent of car repairers. I rather prefer the simile that the noble Lord, Lord Shinwell, put to this when he made the difference between the makers of

169
shoes and the repairers of shoes. This is the sort of difference in scale. The ship repairers are very much smaller and, of course, depending on the size of the ship they are repairing, you go down to some very small sizes indeed. It is not intended to nationalise the whole of this industry. It is intended to nationalise only the very top cream of it. But in many ways that makes it all the sillier. It seems absurd to nationalise just the very top cream of an industry and not the rest.
However, there are many more difficulties than that. I am not a lawyer. I have no legal qualifications. I have no accountancy qualifications. But this question of hybridity really is very serious. It is the duty of this House, of all parts of this House, to make sure that individuals are protected, and this is why we have Private Bills and why we have the conception of hybridity. The question as to what is hybrid and what is not is most complicated. I am not going to say myself that this Bill is hybrid. I am not a lawyer; I am not an accountant. I have not, thank God! got to make any such announcement; nor have I to make the announcement that it is not hybrid. That would be equally difficult. What I am absolutely certain about is that I am totally uncertain in the matter, and this is the position, I think, that the rest of the Committee is in.
This is not a business where we can give up. It is our duty to protect the individual and therefore we must find out from the highest quarters of the land just what is the position of this Bill: is it hybrid or is it not? I am totally uncertain in the matter and the more I look at the law and the complicated accounts of the various companies concerned, the more certain I am that a very thin line has been drawn through an area of very considerable fog and quite what has fallen on one side of it and what on the other seems to be a matter of enormous dispute. The matter must be resolved somehow. It is no good noble Lords on the Government Front Bench saying that they are certain. What is clear above anything else is that they are not certain. What is more, I would not even feel very happy about their certainty.
I remember the Macmanaway case. In that case, as a number of noble Lords who sat in the Commons will remember, there was a gentleman who became
170
elected to the Commons. A certain Queen's Counsel, Mr. Bing, raised doubts about whether he could legally be elected. The law officers advising the Government at that time all said they were quite sure there was no doubt about it, Mr. Macmanaway was legally a member of the House of Commons. The legal advisers of the Opposition agreed with the Government, not with Mr. Bing. All the legal advisers—the greatest in the land—were totally agreed that Mr. Bing was wrong and Mr. Macmanaway was legally a Member of the House of Commons.
Mr. Bing insisted on his petition and took it to the highest lawyers in the land in your Lordships' House. They agreed with Mr. Bing and disagreed with the Government and the Opposition. If this can happen—and it did happen there is no doubt about it—it makes one thing certain: we ought to inquire into this business. If the ship repairers are struck out of the Bill there is no further point in inquiring, the Bill is no longer hybrid. If, on the other hand, we leave them in the Bill, the matter may have to be gone into further. It is simply a matter of what your Lordships see fit to do tonight. Apart from the question of hybridity, these people ought not to be in the Bill at all. If it comes to a vote, I shall vote that they be removed.
Viscount COLVILLE of CULROSS: Since my noble friend Lord Campbell of Croy suggested that I might amplify the points that he introduced, it may be for the convenience of the Committee if I do so now. I hope that I may be forgiven if I take a little while to do so, because, as the noble Viscount, Lord St. Davids, indicated, this is liable to be a difficult and complex matter, and the more I study the points the more difficult and complex they seem to be. I suspect that is probably the conclusion of noble Lords on the other side as well.
I entirely agree with my noble friend and the noble Viscount, that now we have been put on notice of this possible hybridity we ought to inquire into it. I am not going to suggest the Committee conies to a conclusion tonight; I am sure this is not the occasion. I should like to follow up some of the matters which appeared in the Written Answer by the noble Lord the Leader of the House the other day. The noble Lord, Lord Melchett, said in

171
his winding up speech on Second Reading that he would attempt to resolve these matters to the satisfaction of the House, and I know that is what the Government wish to do. The trouble is that when one looks at some of the points in the Written Answer, they do not themselves seem to be the end of the road; they give rise to further questions.
I wonder whether I can take this opportunity—the first after I have been able to assemble the information—to ask noble Lords for some more homework and more answers; not, I hasten to say, to be given tonight, but upon reflection when they have had time to look at the matter in detail. I will take the points in the reverse order to the Written Answer because that is the way the logic runs best. I will start with the case of Richard Shipbuilders Limited. This was at the relevant time undoubtedly a ship repairing company and it had the necessary rights in a dry dock. That fulfils two out of the three criteria which you have to fulfil to get yourself nationalised. What it did not fulfil on its own was the requisite turnover. In order to be brought into the Bill—as was being suggested it should—it would be necessary to aggregate its turnover with one of its associated companies, as defined in the Schedule 2 to this Bill. There were two candidates for this. First of all there was a candidate called Clyde Wharf Limited. The difficulty about that was that it had ceased its business before the relevant date and therefore was not an associated company at the right time. The second candidate was one of the senior companies in the group called Sugar Line Limited. As to Sugar Line, the Government said in their Written Answer that this did not fall within the category of an associated company either, therefore its turnover was not aggregable with Richards (Shipbuilders) Limited, for this reason, that Sugar Line Limited did not at any time during the financial year ending 29th September 1973 hold itself out as a ship repairer or in fact repair, refit or maintain the ships of any other person whether within the Tate and Lyle group or otherwise.
That is an important interpretation of what the Government mean and what is contained in the Bill at the bottom of page 82, where it says that one of the
172
criteria is that the company has to be engaged in the business of repairing, refitting or maintaining ships. The Government now say that it is no use their repairing, maintaining or refitting their own ships; they are not then a ship repairing company; they are only so if they either hold themselves out to or do in fact repair and maintain other people's ships. The Bill does not say that and it may be that on another occasion your Lordships will have to decide whether the Government's interpretation of this is what your Lordships think the law is.
Our problem is that we are not in a position at this stage of the Bill to ask any court to decide what these words mean and it will not be possible to do so until after the Bill becomes an Act, if those words stay in it, at which stage it may well turn out that hybridity has been occurring all this while but has not been disclosed and dealt with. Therefore it may be that your Lordships will have to decide whether the words, "business of repairing, refitting or maintaining ships" mean what the Government have interpreted them as meaning.
It is not, I think, altogether clear on the basis of what Sugar Line were doing. In the first place—and this is by no means conclusive—their memorandum of association entitles them to maintain ships and they did in fact at the relevant period repair or maintain ships. Indeed, they said this in the accounts for the period, which was the same one as was referred to in the Written Answer, and this your Lordships will now recognise the significance of. It says:
"Clyde Wharf Limited undertook to repair the ships. The company sold its premises and ceased trading on 31st March 1973. The ship repair section transferred to Sugar Line Limited and is operating satisfactorily."
The Government make a point in column 1486 that the total turnover was described as being in respect of gross freights received, but that is not inconsistent with what I have said because, of course, the expenses incurred by the ship repairing activities of Sugar Line were put in as expenses against their profits and were not individually picked out. It may be that your Lordships will have to decide whether in a case like that Sugar Line were in the business of repairing ships, and there are two questions I

173
should like to ask Her Majesty's Government on this.
First, do they take the same definition to put to your Lordships of repairing ships as they do of maintaining ships? Both the words appear in the Schedule. Do they say that you are not a ship repairer if you repair only your own ships and equally you are not a ship repairer if you maintain only your own ships? I think that in the shipping world there is a difference, particularly in terms of the amount of people and plant and expertise that goes into maintaining ships belonging to any shipping line—a matter to which I shall return. That is the first question.
The second question is this. The Government have obtained an assurance in the terms that I have read out as to the activities of Sugar Line during this period, that they were not repairing or holding themselves out to repair anyone else's ships. Have the Government asked Sugar Line whether they themselves consider that they were in the business either of repairing ships or, alternatively, of maintaining ships during that period? It may not be conclusive, but Sugar Line's own views may be a pointer to what we in this Chamber think about it, if we ever have to.
Immediately before that, the noble Lord, Lord Peart, dealt with Humber St. Andrews Engineering Co. Limited. This company fulfils two of the criteria. It is certainly a ship repairer and its turnover is quite large enough. We are told that at the relevant date it did not have any interest or possession or licence to occupy a dry dock. It was working on two trawlers belonging to associated companies at Hull: one called "Esquimaux" and the other "Kingston Emerald". We are told by the Government that if dry dock facilities were necessary to repair the ship—and they were—these facilities would be arranged by the ship owner and the company (that is Humber St. Andrews) sent its employees to the dry dock to do the repair work. Therefore, say the Government, they did not have a licence to operate that dry dock.
There are two ways of putting this, either of which may be right. First of all, the Bills says,
"a licence to occupy a dry dock or a graving dock".
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It does not refer to "an exclusive licence" to so occupy. The "Kingston Emerald" was in dock for 25 days, and that involved a fairly substantial amount of work being done to her. The dock it was in had a minimal amount of equipment provided by the dock owners. It is perfectly true that if the ship owners arranged for the accommodation of that ship in that dry dock, they had arranged a licence to occupy it. But I do not think it necessarily follows that those who came to repair that ship and brought with them plant and equipment and men did not also have a licence to occupy the dry dock for the purposes of that repair as well. Have the Government, therefore, any views as to why they say that the licence to occupy must be an exclusive licence in order to exclude Humber St. Andrews? That is one way of putting it.
The other way is to look at it from the point of view of people whom the Government say did have a licence to occupy the dry dock; that is to say, the ship owners. In this case, the ship owners are a company called Hellyer Brothers, who are another member of the Associated Fisheries Group. They also have a turnover of more than £3·4 million in the year in question and have had a turnover of more than that over a series of years. Ex hypothesi, on the Government's arguments, they had a licence to occupy a dry dock; that ice, the one "Kingston Emerald" was in at the relevant time. Are they also a shipping repair company? I have looked at their articles of association and am not sure whether that is so or not, but I understand that they do in fact repair their own ships—in which case we are in much the same position as we are with Sugar Line, and the Government's answer on that would also apply to the case of Hellyer Brothers Limited. That company are not in the Schedule and, if my doubts are right, perhaps they should be.
There follows from this one further extrapolation. It had not previously occurred to me that ship owners and people who run shipping lines were candidates for inclusion in the list; but it will be found that there are a fairly substantial number of household names who certainly had turnovers in the relevant period in excess of £3·4 million, who also had ships in dry docks which they themselves had arranged at the relevant period and who have in their

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articles of association the necessary powers to maintain and indeed in some cases repair ships and who did, as a substantial part of their business, maintain and repair or maintain or repair their own ships. Furthermore, one of them at least in more recent years—and I do not know how far back this goes—advertises its services to repair or maintain other people's ships. I refer to BP Tankers Limited.
Can the Government, when they answer, say whether they have checked up on all those companies which would, if the Humber St. Andrews answer as to the owners having the licence is the right test, also he liable to fail within these criteria and should, therefore, in propriety, come within the Schedule to the Bill? That is the second case.
I will not go into the question of Howie and Western Shiprepairers because on that there is no necessity to elicit further facts, but it may be a matter for argument. However, I have to look lastly at the case of Scott Lithgow Drydocks Limited and on this the situation is equally clear, on its face. They were certainly ship repairers and they certainly had the necessary rights over dry docks. What is crucial is whether they had the necessary turnover. There was one year, the year ending December 1972, when their turnover just exceeded £3·4 million and we were told in the Government's answer that the accounts containing that turnover were laid before the company in general meeting on 11th June 1973. We were also told that these facts had been confirmed by the company and are made clear by the documents contained in the company's public file in Edinburgh, and therefore they are correctly in the Bill. The company's file in Edinburgh is, of course, open to the public and in what I am about to say I hope that it will not be taken that I am in any way implying that anything improper has been done by anybody at all. The trouble is that there arises a mystery when one looks at those files.
If you look at them today, it will be found that the various years' entries tend to contain two matters. There is the statutory annual return, which is filed 14 days after the annual general meeting, and there is the accompanying account.
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It appears to have been the practice of those who filed these matters in Registry House in Edinburgh to file them under a folio number for each year. For instance, the annual return for the year ending 1971, and the accounts which were presented at the next annual general meeting, bear the folio number 30. Consequently, for the annual return on the following year, the June 1973 meeting on which the Government rely, we find there is entered the folio number 31. But there are no accounts bearing the folio number 31.
You do, in fact, at the moment find the accounts upon which the Government rely immediately following the return for the meeting in June 1973. There are also later annual returns and accounts bearing subsequent folio numbers; for instance, that relating to the annual general meeting in September 1974, which was just too late to be important for this Bill, bears the folio number 32 and there is in the register another document, also bearing the folio number 32, which says that no accounts were presented at the meeting in 1974. If you go on and look further you will find that the next year the folio number was 33. It is therefore, on the face of it, strange that the accounts which were supposed to have been presented at the annual general meeting in June 1973 bear the wrong folio number. They should have 31 on them, but in fact they have 32.
But this is not all. I have two affidavits by people who have inspected these accounts at different times. I have told the Committee what is the situation today.. It was not so on 24th August. The account upon which the Government rely, folio number 32, was not at that time in position following the annual return for the meeting, folio number 31, in June 1973. It appeared after the annual return for the general meeting in September 1974 when, not unnaturally, it found itself in company with other documents with tile folio number 32. From this I conclude—and I would ask the Government to look again—that it does not necessarily follow, as night follows day, that the accounts, and the only accounts, which would produce a sufficient turnover for Scott Lithgow Dry Docks Limited to qualify under this Bill were presented at the meeting in June 1973. It seems at any rate possible that they may have been

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presented the following year, in which case the company would not qualify.
I suggest to the Committee that that adds up to a number of further matters which arise out of the Written Answer, and I am giving to the Government the earliest possible notice that I am able to give this evening that I should like, please, answers to those matters (and I think other noble Lords would as well) so that we may seek to get to the truth of the matter before we decide what, if anything, has to be done about it—and it may be that nothing has to be done about it.
I am grateful to the Committee for listening to this saga. I am also grateful in advance to the noble Lord for his promise privately to me that he will look into it and answer.
Lord MELCHETT: Before the noble Viscount sits down, may I ask him one point of further information, although I do not know whether he is able to help your Lordships' Committee. He said that in the one case which he did not go into in any detail—Howie Limited—he felt there was no need for additional facts, but he added as a rider that there might be something which could be argued about. The noble Viscount did not tell us, however, what that was and it would be for the convenience of the Committee if he could go into it.
Viscount COLVILLE of CULROSS: Yes, certainly, if the Committee's patience will endure it. There are involved in this case two destroyers on refit for the Venezuelan Navy. They were in dry dock and the contract for their refitting was entered into by a firm called Cammell Laird Shiprepairers Limited who are an associate company of the two in the list: Howie and Western Shiprepairers. Only if you can aggregate the turnover of Cammell Laird Shiprepairers Limited do you get sufficient turnover for nationalisation under the Bill. Therefore the question is whether this was rightly done. Furthermore, since the turnover of Cammell Laird Shiprepairers was in itself in excess of £3·4 million, if you aggregate it in order to bring in J. B. Howie and Western Shiprepairers, why do you not also bring in Cammell Laird Shiprepairers who are not in the Schedule?
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Two points arise out of this. It so happens that by the time one comes to the crucial date Cammell Laird Ship-repairers were a pure shell of a company. They possessed absolutely nothing at all in the way of equipment, manpower or anything else, and they had sub-contracted everything they were doing to Cammell Laird Shipbuilders Limited to carry out in a dry dock. The Government therefore concluded, first, that although they were not actually doing anything themselves they were still in business as ship repairers and therefore were capable of being an associated company but, secondly, that as they did not have a licence to occupy a dry dock, because they had sub-contracted the whole thing to Cammell Laird Shipbuilders Limited, they did not fulfil all three of the criteria and therefore themselves did not fall within the terminology so as to go into the Schedule.
Difficulty could arise in this way. First of all, if Cammell Laird Shiprepairers Limited were engaged in the business of ship repairing, it seems to me, at any rate, to be arguable that they must have been doing something about that business involving going either with sub-contractors or with agents on to a dock with equipment and men in order to carry out the refitting of the Venezuelan destroyers. Alternatively, if the Government are satisfied that they are not doing that, or were not doing it at the relevant time, are the Government sure that they were engaged in the business of refitting, or were they engaged in the business of procuring the refitting, over which there is a difference, as the noble Lord will appreciate. If the latter is the case, they do not fulfil another of the criteria in the Bill: their turnover would not be aggregable and, therefore, J. B. Howie and Western Shiprepairers would get out of the Schedule. Those are the two brief arguments but, as the noble Lord will appreciate, I do not think that they depend upon a matter of fact.
Lord WIGODER: The noble Viscount, Lord Colville of Culross, has raised these matters with a lucidity which makes him the envy of his colleagues at the Bar and I would not venture to follow him as to the details of these matters. I have also seen the various documents and respectfully agree with the noble Viscount's suggestion that clearly there are matters here which require the most careful

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inquiry. I would ask the noble Lord, Lord Melchett, only whether he would agree about two matters. First, if the issue of hybridity is one that forces itself upon the attention of noble Lords, it is not the duty of a noble Lord to raise the matter in your Lordships' Committee.
Secondly, am I right in understanding the position that if there is a Motion to refer either the whole or the ship repairing part of this Bill to Examiners, the issue for your Lordships will be merely whether there is a doubt as to the Bill's hybridity? Am I right in understanding the position that if there is a doubt about the matter the House must decide to refer the whole issue to Examiners?
Perhaps I should add that on Second Reading the noble Lord, Lord Campbell of Croy, and I raised various matters about hybridity, and we then gave the Government every opportunity to answer these points. I think it is no breach of confidence if I say that the noble Lord, Lord Melchett, was kind enough, with his advisers, to see the noble Lord, Lord Campbell, and myself and to discuss matters with us. I think I can say on behalf of the noble Lord, Lord Campbell, as well as myself that we were much impressed with the great care and thoroughness with which the Government had been inquiring into these matters, and I am quite sure that nothing in the observations of the noble Viscount, Lord Colville, or myself, is intended for one moment to suggest that there has been any deliberate concealment by the Government or by their advisers in these matters; but the criteria that the Government have chosen in this Bill as to whether ship repairing companies should be included or excluded clearly gives rise to the greatest possible difficulties. As we have seen, every time the Government answer one set of queries, unhappily, it gives rise to another set. I do not know how long this process can go on. The matter was raised on Second Reading and it has been raised today in Committee and all of us have restrained ourselves from the temptation to table an Amendment to refer the matter to Examiners. I hope that on this occasion the noble Lord, Lord Melchett, will find it possible to give answers which will remove once and for all the doubts which at this moment so obviously exist.
11.12 p.m.
Lord HARMAR-NICHOLLS: Before the noble Lord, Lord Melchett, replies, we have heard the lawyers, and I should like to add my tribute to the lucid explanation given by the noble Viscount, Lord Colville. He said that he was not at this moment charging anybody with doing anything wrong. Unless it is that when the noble Lord replies he says that in view of the doubt, clearly expressed from an authoritative source, on evidence which is impressive, and unless he says that he is prepared to recommend to the noble Lord the Leader of the House that it is referred to the Examiners, I think the Government will not be doing their duty. We have heard sufficient to know that there is a doubt about this; we have heard sufficient to know that the doubt is well based, and if there was an answer that the noble Lord could give off the cuff to my noble friend's argument it would have been given in the Written Answer that the noble Lord the Leader of the House put in Hansard the other day. I believe there is much more to this than wanting to win an argument.
When hybridity was raised as a matter that ought to be taken into account for good government, Parliament set up a procedure whereby if there were genuine doubts those doubts could be dispelled by impartial and objective examination by Examiners, and if we do not use that procedure then we are not using the full machinery set up by Parliament in order to deal with these things. The noble Viscount, Lord Colville, said it may well be that your Lordships will have to satisfy yourselves. How can Members of this House satisfy themselves with normal speeches across the Chamber?—a great speech from my noble friend; a speech in reply from the Dispatch Box on the other side. No evidence is called, no papers are produced, no proper examination is given. A matter such as this ought to be dealt with, and can only be dealt with, by a tribunal such as the Examiners, sitting down and doing it properly. We know very well that unless the Government offer to send it to the Examiners there will always be a doubt about it, whatever happens. If the Government put forward arguments which make it appear that it is not a hybrid there will always be doubts that they came to that conclusion by stretching

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their conscience because they had to get their business through.
Several noble Lords: Withdraw!
Lord HARMAR-NICHOLLS: No. I am saying that if this decision is left to a supposed argument adduced at the Dispatch Box, there will be a doubt that they pushed that argument because it fitted in with Government business which had to be done. If, on the other hand, the argument was one from this side of the House, then the charge would be that it was the Opposition playing politics, the Opposition deliberately trying to hamstring the Government in doing their duty in bringing in legislation.
I do not think it is fair to Parliament that either the Government or the Opposition should have to risk that charge of bad faith when there is no need for it. If this was sent to the Examiners, who could call for papers, examine witnesses, and look at the matter quite clear of any sort of partiality, it would be accepted as an objective, impartial, and proper decision. Then it would be Parliament doing its duty, using the machine as it was intended to be used, and there would be no question of noble Lords asking me to withdraw, or, if the other thing happened, where we should be charged with putting ideology in front of doing our duty in working the Parliamentary system.
Now that the doubt has been raised—and I do not think anyone can say after listening to my noble friend that there is not a well based doubt—the longer that doubt is allowed to fester, then the more difficult it will be eventually to do the proper thing. I hope that the Government will give the sort of lead that in the past we have always had. I am addressing myself specifically to the Leader of the House who has the ear of his colleagues in the Cabinet. There is much more to this than winning a Parliamentary argument; there is much more to this than having alert and able lawyers arguing across the Floor of the House without the intensive examination that could be given if it was taken outside this House into an Examiner's Chamber. If we follow that line, we shall be doing our duty, and, what is perhaps more important, coming to a much better result out of fairness and justice to the people who are
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going to be affected, than by leaving it to speeches across the Floor of the House.
11.18 p.m.
Lord ORR-EWING: May I put a view not wholly associated with hybridity, though I realise the strength of that case. I suggest that since the Second Reading there has become an even stronger case, apart from hybridity, for leaving ship repairing out of this Bill. We shall be discussing this at a later stage. There has been pressure all round to reduce public expenditure. By leaving this out of the Bill I would estimate that £50 million might well be saved. There is a demand on all sides from all Parties to restore the confidence of those to whom we owe a great deal of money, our overseas creditors. It has been said that we are borrowing overseas at the rate of £35 million a day, so since Second Reading we have borrowed nearly another £490 million. This is not bird seed. The longer this is put off, the longer we go on the present trend, the longer we continue with these sort of measures, the more lack of confidence overseas will grow, and so will the value of the pound diminish. I cannot help feeling that, judging from world reaction to the speech in the other place today, we still have not stemmed the lack of confidence in the pound overseas. So apart from hybridity there is a strong case.
Much was made by the noble Lord, Lord Melchett, in his wind-up—and I do not want to deal with it in full detail now because there will be other occasions—of the recommendations of PA Consultants. We all recognise them as a very able firm—I think better known for head-hunting than passing judgments on heavy industry, but that is a matter of judgment. But one of the things that they alleged was that ship repairing, the whole industry, was suffering from lack of investment. I hope that noble Lords will consider that this is the one area of shipbuilding, apart, possibly, from docks, which does not really need massive machinery investment. This is the one area where management, flexibility, and the ability of the artificers, the mechanics, the turners, the shipwrights, count most of all. I note that PA Consultants said there was no need for a large dock. I should not think that is true; if we are to take on ship repairing in

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this country, sooner or later we shall have to have that facility.
Since the announcement way back in 1973 that the Government were going to nationalise ship repairing we have had some first-class, and recent, experience of what happens when ship repairers have been nationalised. As part of the Court Line nationalisation we had North-East Coast Ship Repairers on the Tyne, a company which was doing extremely well. It had been historically profitable. What has happened? It is now making a loss. Then, after 18 months of nationalisation, Greenwells of Sunderland closed down on 31st March 1967, sacking 380 men and the reason given was that the Government could not attract clients. Thus we have two further reasons, up-to-date reasons, to show that nationalising ship repairing does not give the flexibility or dynamic that is so essential in this industry.
To summarise the further reasons I have given, first there is the complexity of hybridity and all that can do to the Parliamentary timetable; secondly, there is up-to-date evidence that it does not work, not only in this field but in many others as well; and thirdly, there is the desperate need to reduce public expenditure, a need that grows greater every day, and here we can save £50 million. For those reasons alone, I hope the Government will seriously consider whether this part of the Bill could not neatly, tidily and without raising great emotions on either side be removed from the measure, with merit to all.
Lord TREFGARNE: I have been involved, on the perimeter I must say, in the recent discussions on hybridity and have read the Written Answer which was provided with care and, like the noble Viscount, Lord St. Davids, I can only offer a layman's view, which is, as the noble Viscount said, that there is nothing certain except that there is some uncertainty. May I ask the Minister to say clearly what would happen if the Committee decided that the Bill should go to the Examiners, or at least if the ship repairing element in it should go to them? I am told that it would be possible for us to submit to the Examiners only that part of the Bill that relates to the ship repairing industry and that it would at the same time be possible for
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the other parts of the Bill to proceed, while the Select Committee, if that was decided upon, sat on the ship repairing side. If that were decided upon, what sort of timetable would the noble Lord envisage?
Lord LLOYD of KILGERRAN: I wish to join other noble Lords in urging that ship repairing be removed from the Bill. Quite apart from the aspects of hybridity, in my submission to have the ship repairing industry taken over—if those are the correct words to use—in the way the Bill envisages is likely to do great damage to a virile and successful industry. It is likely to cause more unemployment in the regions in which these firms operate. I do not think from what I have heard in our proceedings or from what I have read of the debates in another place that the Government have yet appreciated that the ship repairing industry is quite distinct from the shipbuilding industry. It is distinct in its skills and size; in doing the jobs it must carry out, it operates with perhaps from 35 to 100 persons. It is a highly specialised industry and it is, as the noble Lord, Lord Campbell of Croy, said, a service-based industry whose jobs may take a few hours or a few months under a variety of conditions both onshore and offshore. In my view, the nationalised industries cannot respond quickly and successfully to the demands that are now made on this virile and successful industry. Therefore, I would follow the noble Lords who have urged on grounds other than hybridity that ship repairing should be excluded from the Bill.
11.25 p.m.
Lord MELCHETT: May I first seek to put right something which I think the noble Lord, Lord Harmar-Nicholls, said. If I have misunderstood him, I shall immediately withdraw what I am about to say. I got the impression that he told the House that if the answers to the points about hybridity that have been raised this evening by the noble Viscount had been available when the Written Answer was produced they would have been put in.
That is simply not the case. The Government were given certain information during the Second Reading stage and in a letter from the noble Lord, Lord Campbell of Croy. That was all the

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information that we were given and we provided, to the best of our ability, all the answers to that information by way of Written Answer. The full information that the Government could have provided, the Government provided to the House. What is more, to make sure that there was no misunderstanding about the items of information that we had and the questions that noble Lords opposite wanted answered, I asked the noble Lords, Lord Wigoder and Lord Campbell of Croy, to have a meeting with my advisers with the papers and the documents—which, on many of these issues, are very lengthy and complicated—to ensure that any questions that remained in their minds were answered to the best of their ability by the Government and my advisers. There is absolutely no question that at any stage the Government have been attempting to conceal information from your Lordships' House.
Lord HARMAR-NICHOLLS: I did not say that. The point that I was making was very clear. I was saying that the noble Lord's speech now was superfluous because I had no doubt that everything the Government knew had already been put into the Answer to the Written Question. That was what I meant. I said that we already had sufficient information to come to a conclusion and that that conclusion was that this ought to go to the Examiners. Rather than saying that the Government had withheld anything, I said the opposite. I said that they had already put on the record all they knew and that what the noble Lord was now going to say was superfluous as a consequence.
Lord MELCHETT: What has happened this evening, in my understanding—and I followed the noble Viscount as carefully as I could—is that he has raised some new issues and, in particular, some new questions of fact which have not been raised before in your Lordships' House; that, the noble Viscount very considerately, fairly and properly told us. To say that the Government have answered those new questions seems to me to be quite unfair, and I hope that the noble Lord will withdraw the allegation that vie do not have any more information to give on these matters. These are new matters
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that have not been placed before the Government before tonight.
The noble Viscount told me before this debate started that he would not wish me to answer the points of detail that he has raised. I therefore do not intend to do so. It would not be sensible to try to answer questions on particular documents until I have had a chance to look at the very detailed questions of fact that the noble Viscount has asked me. I believe that he will agree with that response. As I said on Second Reading, the Government's attitude has all along been that we shall certainly do our utmost to answer any questions about this issue that are put to us. I think that our record to date bears out that what I was saying is indeed the attitude of the Government.
For the same reasons, I do not think that it would be fair for me to attempt to answer the questions asked me by the noble Lord, Lord Wigoder. Indeed, I do not pretend to be an expert on your Lordships' procedure. I am not sure that anyone is really all that expert on the procedure which should be followed in this case and I believe that the noble Lord, Lord Wigoder, will understand if I do not attempt to answer the two questions he asked me, and the same goes for the question which the noble Lord, Lord Trefgarne, asked me.
I find myself in some difficulty in replying to the remainder of the debate. I am not at all clear whether the noble Lord, Lord Campbell of Croy, intends to press the Amendment. If he does and ship repairing is deleted from the Bill, then much of what we have been discussing tonight becomes slightly academic, to put it no higher. On the other hand, it would seem to me rather unnecessary at this late hour, unless noble Lords wish me, to go into a long and detailed explanation of the very good industrial case which the Government have for nationalising the ship repairing industry, if we are to spend some time later during the Committee stage discussing the matter further. But I should be very grateful for the advice of the noble Lord, Lord Campbell of Croy, on how he would prefer me to proceed at this stage.
Lord CAMPBELL of CROY: I hoped that I had made it clear. First, on the question of the hybridity which has been raised, as my noble friend Lord Colville

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of Culross said, he did not expect a full answer to that tonight. He has raised complicated matters. The Government should clearly look into these matters thoroughly and urgently. After all, these are new questions which have been raised by the Government's own interpretations of the criteria as set out last week in the Answer of the noble Lord the Leader of the House.
I agree with the noble Lord, Lord Wigoder, that the Government took great trouble last week to clarify their view of the application of criteria and the facts as known to them. I made this clear in my speech at the beginning. But what I asked the noble Lord, Lord Melchett, was at this early stage to explain to the Committee the general reasons why the Government were still insisting apparently upon the nationalisation of the ship repairing industry. I for one should certainly be disappointed if the noble Lord is not prepared to do that now, though I should not expect him to go into the details of hybridity.
Lord MELCHETT: It delights me to be able to return to the mundane matter of the Amendments before the Committee, and it is with great pleasure that I should like to answer the speeches by the noble Lord, Lord Campbell of Croy, the noble Lord, Lord Orr-Ewing, and the noble Lord, Lord Lloyd of Kilgerran, who spoke on the Amendment before us in particular and on the case for including, or not including, ship repairing in the Bill.
I should like to open with a remark which I should prefer to be directed entirely to noble Lords immediately opposite, rather than those on the Liberal benches, because I regret to say that I want very briefly to mention the question of Manifestoes. As noble Lords know, there were two specific commitments to nationalise the ship repair industry in both our 1974 Election Manifestoes, a commitment which was quite distinct from the commitment to nationalise shipbuilding. That commitment arose from the report of the joint Labour Party/CSEU/TUC Working Party report which was published in 1973 when we were in Opposition. This joint Working Party recommended that the proposed corporation should acquire,
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… "control of all significant companies in the shipbuilding, ship repair and marine engineering industries"
and this was endorsed by the 1973 annual conferences of all three bodies—
Lord ORR-EWING: I am sorry to interrupt the noble Lord, but since he mentioned nationalisation, if he looks at that—and I looked at it most carefully in the Library—he will see that there was no mention of nationalisation. It said, "take under public control". As I said earlier, one can take under public control with 30 per cent.; one does not have to have total ownership of all the assets and all the equity of a company.
Lord MELCHETT: As we have said in several different debates on the Bill, we believe that the Bill represents the most effective way of taking this industry under public control, and that is why the ship repairing industry is included in the Bill. The ship repairing industry faces a number of problems identified, as the noble Lord, Lord Orr-Ewing, reminded us, by the PA Management Consultants Limited report on the industry. I would not follow the noble Lord, Lord Orr-Ewing, in his slightly hesitant doubts about the competency or otherwise of PA Management Consultants; after all, they were appointed by a Government of noble Lords opposite and it would not be for me to question their competence or otherwise.
That report identified a number of "obstacles to growth" in the ship repairing industry. From the report some of the most significant are:
"1. the development of an already strong industry on the continent;
"2. the existence in many cases of several ship repairers within one estuary and the consequent tendency for the individual companies to compete against each other instead of concentrating upon meeting overseas competition;
"3. outdated facilities of many repairers which will become even more unsuitable in the longer term as the average size and type of vessel changes;
"4. unsatisfactory labour relations and their impact upon international competitiveness".
The report states that assistance is likely to be needed to finance essential investment as sufficient funds are unlikely to be forthcoming from the private sector. In the past 10 years, employment in ship repairing has halved, and without modernisation the industry is likely to decline further. Most of the jobs at present provided by the industry are in

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assisted areas. The major aim, therefore, of taking into public ownership the larger ship repairing companies is substantially to improve investment and productivity in the industry. Taking into public ownership the larger companies, mostly situated on the main estuaries, will enable British Shipbuilders to produce a coherent strategy for the larger ship repairing yards as a whole.
I would suggest that if Amendments were passed which deleted the ship repairing companies listed in the Bill, that would create serious anomalies. One of the largest ship repair companies, North East Coast Shiprepairers Limited, is already in public ownership. The activities of Scott Lithgow Dry Docks Limited, Swan Hunter Shiprepairers Tyne Limited and the Wallsend Slipway and Engineering Company are all closely linked with their associated shipbuilding companies. Indeed, when an Amendment was moved at Committee stage in another place to nationalise the shipbuilding companies and to leave Scott Lithgow Dry Docks in the private sector, it was pointed out that this would create real difficulties over flexibility; for example, in exchange of labour between the two. It has been said both here and in another place that there is no real connection between shipbuilding and ship repairing. I would suggest to noble Lords that the examples cited above belie that claim, as does the experience of our most successful competitors.
When this was mentioned by my noble friend during the Second Reading debate, there were some expressions of mirth from noble Lords opposite. My noble friend mentioned, in particular, the experience of Japan and South Korea. Noble Lords are constantly telling us that this country's industry must become more competitive, and I suggest that one of the ways in which we might learn a little is to look around at our most successful competitors to see what they are doing which we are not. Japan and South Korea are both very successful in the shipbuilding field, and both of them have closely integrated shipbuilding and ship repair industries.
During the passage of the Bill there has been some criticism of the scope of public ownership in the ship repair industry. Some people have argued that individual companies should be exempted from
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nationalisation on the grounds that they are small, while others have pressed for the inclusion of other, even smaller, ship repairing companies. I think it might be helpful if, in conclusion, I explained, therefore, why the Government's proposals were drawn up as they are in Schedule 2 to the Bill. As the PA report pointed out, the most significant ship repairing units are those which are located on the major estuaries in Great Britain; for example, the Tyne, the Mersey, the Thames, the Bristol Channel, the Humber and the Lower Clyde. In fact, what the Bill achieves is to bring into public ownership all the large ship repairing companies, mostly located on the main estuaries, thus enabling us to draw up a coherent strategy for the industry. It is often said that the Government have not even attempted to set out the industrial case for nationalising the ship repair industry. It is for that reason that I make no apology to your Lordships' Committee for taking some time, at this very late hour, in attempting to do just that.
Lord CAMPBELL of CROY: The noble Lord, when asked to give sound reasons for the inclusion of ship repairing in these nationalisation proposals, started, not by giving us a reason but a commitment. He simply said that, because it had been in the Labour Party's Manifesto, this was the reason why it now had to be included. We on this side of the Committee cannot accept that as a reason in itself. The Party opposite may now find themselves in this position; but it is not a sound reason for carrying out this operation which could be extremely harmful to an important industry.
Then the noble Lord spoke about some of these firms being in one estuary. As I pointed out in my earlier speech, this is the equivalent of the garages on land which carry out repairs at very short notice, sometimes a matter of only a few hours, where everything depends on good relations, quick contact and quick decisions with the consumers' interests uppermost in mind. The noble Lord said that the equipment and installations were outdated and spoke about investment and the need for modernisation. What has happened to Greenwall's since they were nationalised? They have had to go out of business and over 700 redundancies have been caused. If that is what is

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being prescribed for these firms under this Bill, that is not in the direction of investment and modernisation.
The noble Lord said that some centralised control would improve the British ship repairing industry. I pointed out when moving this Amendment that the British industry has, in fact, been successful in obtaining a large share of the business which has been available in the European sphere. This has depended upon, and relied upon, the fact that the individual firms could independently meet the wishes of their customers. We believe that when centralised control and nationalisation, if it were to come about, descended upon these ship repairing firms, some of their customers would feel that they no longer have the quick response and direct communication with the firms that they do now and have had when they have done business with them in the past.
Lord MELCHETT: I am sure the noble Lord did not say so deliberately, but I did not mention anything about centralised control. I spoke about a coherent strategy; but we have made it clear all along that if this industry were nationalised it would not be subject to centralised control.
Lord CAMPBELL of CROY: If I did not use the exact words, it was because I was not able to take them all down. The noble Lord talked about firms in a single estuary and the need for some control or coherent strategy which does not exist at present. But at present it is clear that the firms are successful in this business, which is a service industry, where they are carrying out the same kind of job and operation as garages who maintain and repair motor vehicles on land. It is not the same kind of business as a manufacturing industry which goes in for construction and assembly in a few concentrated units.
The noble Lord also said that most of these firms were in assisted areas; but a number of them are successful and carry out their business in areas which are not assisted areas or special development areas or intermediate areas. They are showing that they can carry out their business without grants or considerable assistance from the Government. The
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effect of nationalisation would probably be to make them less able to carry on the business that they have been doing. Certainly, it will promote doubt and suspicion in the minds of their customers.
I do not believe that the noble Lord has yet given a real reason for nationalising the ship repairing industry. From what he has said, it still sounds as though the Government think it is very closely and irrevocably linked with the ship building industry and they are putting these firms into the Bill because they had muddled up the two industries and their operations.
The noble Lord asked whether I was proposing to press this Amendment; but I think I made it clear earlier that this is simply an initial paving Amendment on which we were seeking the Government's views which hitherto we had not received and which, even now when we have heard them, can hardly have impressed many noble Lords on any but the Front Bench opposite. So I will tell him straight away that I am not proposing to press this Amendment tonight because we want to pursue this subject on later Amendments and at later stages. We hope to get better answers from the Government than we have heard tonight. I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Viscount SIMON Viscount SIMON had given Notice of his intention to move Amendment No. 31:
Page 4, line 10, leave out ("(a)")
The noble Viscount said: I put down this Amendment because I cannot make out what paragraph (a) means or why it has been put in the Bill; but having said that, I do not move the Amendment.
Viscount SIMON Viscount SIMON had given Notice of his intention to move Amendment No. 33:
Page 4, line 11, after ("production") insert ("and").
The noble Viscount said: This Amendment and Amendment No. 34 is an attempt to do what the noble Lord, Lord Campbell of Croy, was trying to do, to get the ship repairing business out of the Bill. We do not want to discuss this all over again on a different Amendment which, in the last resort, is going to have the same effect. Amendment No. 33 is also in some sense a paving Amendment for Amendment No. 35, and perhaps I

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should speak to Amendment No. 35. As this is a major Amendment, I wonder whether the noble Baroness the Chief Whip would think this an appropriate time to adjourn.
Baroness LLEWELYN-DAVIES of HASTOE: We on this side are prepared to go on for a long time. But I think most of the Committee are somewhat exhausted. As I understand it, the noble Viscount is moving Amendments Nos. 33 and 34, and not proposing to move Amendment No. 35. Am I right?
Viscount SIMON: No, I was going to withdraw No. 34. Amendment No. 33 is also a paving amendment to Amendment No. 35 and I did not know whether the Committee wished to embark on that debate now.
Baroness LLEWELYN-DAVIES of HASTOE: We have already started on Amendment No. 33 or the noble Viscount could not have moved Amendment No. 34.
Viscount SIMON: We have the great difficulty that the earliest Amendment is not an Amendment of substance at all; it is purely a drafting Amendment to make room for the one which follows.
Lord CAMPBELL of CROY: I suggest that as Amendment No. 35 starts a debate of some substance, whereas the other two Amendments are small drafting Amendments, it would be convenient if we did not start on Amendment No. 35 tonight.
Baroness LLEWELYN-DAVIES of HASTOE: That had been my understanding before the noble Viscount introduced Amendment No. 35. I think it would be a good idea if I now move that the House do now resume.
Moved accordingly and, on Question, Motion agreed to.
House resumed.