AIRCRAFT AND SHIPBUILDING INDUSTRIES BILL

HL Deb 11 October 1976 vol 375 cc11-96

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 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 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, 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 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 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 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 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 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 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?— 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 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 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 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 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 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, 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 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 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 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 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 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 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.

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 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 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 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 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 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 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 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 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.

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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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.

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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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) 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, 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 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 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 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 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 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 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 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 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.