AIRCRAFT AND SHIPBUILDING INDUSTRIES BILL (Hansard, 11 October 1976)

HL Deb 11 October 1976 vol 375 cc118-93 118

§ 8.15 p.m.

§ House again in Committee.

119

§ Lord MOTTISTONE moved Amendment No. 14: Page 2, line 40, leave out from ("State") to ("and") in line 41 and insert ("advising the Minister for the Civil Service as necessary").

§ The noble Lord said: For the convenience of the Committee I suggest that with Amendment No. 14 we might take Amendments Nos. 15 and 16 and Amendment No. 195. The Government perhaps should be pleased at going as far as No. 195 so quickly, and I think it is jolly decent of me considering that by their business they have done me out of my supper, I having been involved in the last debate.

§ These particular matters are not peculiar to this Bill. This matter of the consent of the Minister for the Civil Service has crept into other Bills in recent years with both this Government and the last. I have had experience of having to exist in circumstances in which this applies, because in my last job I was working for the Distributive Industry Training Board and this was inflicted on me as a result of the Employment and Training Act 1973 which my noble friend Lord Carr of Hadley, had occasion to pass through the other House. This particular aspect of it—and I am not bringing my noble friend to task on it—was a comparatively new idea, as I understood it, working from the undergrowth, if you like, being controlled from central Government in a training board. It was possibly something that had been tried before by the Civil Service Department. I believe that it was resisted by the Department of Employment on grounds of principle and of practical fact, but that they were overruled.

§ I suggest to your Lordships that it is yet another example of those unpleasant features which are in this Bill, and indeed often in others in which Government control is involved, where unnecessary supervision is caused really for no purpose at all other than to satisfy some people's idea of neatness, perhaps, possibly because people consider that by so phrasing this Civil Service consent they are doubly guarded against accusations that misuse of public funds is not being properly avoided or controlled. But whatever it may be—and here, as I say, I quote from practical experience—there are three practical disadvantages of having the degree of control which consent of the Minister 120 for the Civil Service implies. You will note that in my Amendments I am not suggesting that this should be done away with altogether, because I think it is reasonable that there should be an advisory link between the Secretary of State or the Minister concerned and the Minister for the Civil Service. What I am suggesting that the Government might give very serious consideration to in this connection and in others of the same sort, is the really tight control that in practical terms this implies.

§ The three practical disadvantages are these. I admit that in this particular case we are only talking about the board members and, in Amendment No. 195, the pensions which extend, so far as I can see, very much more widely than just to the board members. In the case of the Employment and Training Act 1973 it applied to all employees of the Manpower Service Commission, the Training Services Agency and each and every one of the training boards. This is a large number of people and I suspect that there are other areas in other Acts which have crept through Parliament during the last dozen years in which this same, to my mind, objectionable feature exists.

§ It means that when you seek to alter terms and conditions you not only have to consult with the parent Ministry, whichever that may be; in the case of the training board it has to go through the training centres, through the Manpower Services Commission, through the Department of Employment and eventually, before it can be implemented, through the Civil Service Department. Then it has to come all the way back down the line. This makes it difficult to enter into proper negotiations with one's trade union, because it is frustrating to both sides to try to strike a bargain, particularly under conditions when no pay restraints are in operation (and hopefully that will not always be the case), when the ultimate person who is going to decide the end of the matter is somebody in the Civil Service Department whose knowledge of the matter under consideration is remarkably little, and must be so, because with the best will in the world anybody who sits in a Ministry does not have executive responsibility for the matter.

§ Noble Lords will remember that on Second Reading I made the point that the whole problem of nationalisation is the 121 fact that the advisers to the Secretary of State are people who themselves are not concerned with the practical day-to-day working of the enterprise on which they are seeking to advise him. That is the reason for the earlier Amendments we discussed before everybody else had their supper, and so noble Lords will appreciate that we are really talking about the same things.

§ The great difference about the Civil Service Department is that it has not even got a first-hand contact with the enterprises with which it deals. It is going to be remote. Finally, it is not big enough to deal with these problems expeditiously. This in effect is the most important of the lot in that area.

§ The other factor which makes me recommend that rather than having a consenting role the Civil Service Department should have an advisory role is that the people who are responsible—in this case it will be the chairman of the board and in the case of pensions under Amendment No. 195 it will be the committee appointed to look after pensions—are in effect having their authority undermined by not being able to make the final decisions on any of the flatters which are the subject of these Amendments. That is because in the end it is not just their Minister, with whom we hope that, if this terrible nationalisation is to occur, they will be in reasonably good contact, but another body hidden away which is in effect the final arbiter.

§ The third area in which this particular relationship which is built into the Bill as it stands is at fault concerns trade unions. I do not suppose that the boards of these boards will have trade union representation, but who is to know what will happen as the years go on? And, even if they do not, the pensions people will, if anything like the hideous suggestions that have been bandied about come into existence about the management of pensions being shared by recognised trade unions to a very large extent. Therefore, trade unions will come into this sort of problem. That means—and here I quote from my practical experience—that they will seek ways of getting round the people with whom they should be negotiating. They will seek ways of applying direct to the Civil Service Department. That, I would suggest, makes a nonsense of collective bargaining at company or plant level, because if 122 decisions have to be made elsewehere in that way it is not reasonable to expect the trade unions to accept the plant level as being the end of their arguments.

§ Therefore, I should like to suggest to the Government that this particular Amendment is not one which strikes at the very root of the principles behind the Bill. It may strike at the very root of the principles behind the detailed Civil Service Department control of agencies of this nature, but I would suggest to the Government that this is a comparatively new problem because it is only perhaps within the last five or six years that this has crept into Acts of Parliament, and such experience as I have had myself—and I think that noble Lords opposite would find this if they were to investigate the matter—is that it does not work very well and it really is not necessary.

§ An advisory role for the Civil Service Department is quite satisfactory. They may not like it, but I would strongly suggest to the Government that this is something which deserves a very thorough investigation. Perhaps in the meantime they would like to accept this Amendment while they do the investigating. I beg to move.

§ 8.26 p.m.

§ Lord WINTERBOTTOM
I am sure the Committee is very grateful to the noble Lord for getting us on so quickly to Amendment No. 195, with probably a slight hiatus between that Amendment and Amendment No. 16. But having thanked the noble Lord, may I say that he has made life rather difficult for me because, instead of issuing a specific complaint against the drafting of this Bill, he has issued a general complaint against the iniquities of Treasury control in general. In effect he is saying that an organisation which is essentially an industrial one—and I agree with him about that—should have freedom of action beyond and wider than that usually allowed by the Civil Service Department role of fixing norms and comparisons for monetary remuneration and pensions. I think everyone will agree that this is a very large issue to raise on what is a comparatively minor point in an important Bill.
Noble Lords will know—the noble Lord, Lord Carr, in particular will 123 Know—that the provisions of a Bill which require the Minister's consent to conditions of appointment are standard in all relevant previous legislation: that is, previous legislation since the date when the Treasury was split into two so that we now have the Treasury proper and the Civil Service Department. The Minister for the Civil Service, as noble Lords will know, has a responsibility for coordinating policy on public sector board appointments, conditions of appointment and, in particular, pay because subsection (5) deals with pay and compensation while Clause 49 deals with pensions. At this moment we are all deeply concerned to ensure that the inflation of pay and salaries does not continue at the headlong rate it has been doing during the past two or three years. I feel that the role of the Civil Service Department, however irksome it may be at times, is absolutely essential if we are to control the inflation which is threatening our whole economy.
The noble Lord's Amendment, set against the standards required in other legislation, could cause—and I think he will agree—confusion and inconsistency. There is no question of delay, which was the fear expressed and I think it is a proper fear; but the fact that there has to be co-ordination between the remuneration of hoard members of the two new Corporations and of other similar appointments I believe would not cause confusion and delay. Nor do I believe that there would be conflicting decisions as a result of a statutory requirement, which at present exists and which the noble Lord does not like, for the consent of both the Secretary of State and the Minister for the Civil Service, since Departments would, in the normal course, ensure co-ordination of a common Government view on any point at issue.
The great Departments of State—in this case, the Department of Industry and the Civil Service Department—would, quite clearly, hammer out a common policy which would not only apply to members of the board and individuals affected by this Bill, but bring their requirements into a proper relationship with all similar organisations. I hope, therefore, that the noble Lord will accept that to introduce different wording in a single Statute when, as he himself said, it is a general complaint 124 against the whole system of Treasury control, would put this piece of legislation at variance with all other comparable legislation, and create inconsistency and confusion without any compensating benefit.

§ Lord CARR of HADLEY
May I ask the noble Lord to reflect for a moment on what his noble friend said earlier before the dinner interval? When he was talking about subsection (3) of this clause, he was justifying much more power for the Secretary of State, compared with previous Statutes, on the grounds of flexibility. The noble Lord is now saying, in relation to another subsection of the same clause, that it would be undesirable to introduce into this Statute something which is not in others. The Government cannot have it both ways. What are we doing here? Is their policy to introduce into this Bill more flexibility and more power for the Secretary of State, or is it not? We cannot have the Government justifying one subsection on the grounds of more flexibility, and justifying another subsection in the same clause by saying that to introduce new flexibility would be undesirable. Please, will the Government make up their minds which horse they are riding?

§ Lord MELCHETT
It is not quite as simple as that, as the noble Lord will know. This legislation, as is not totally unexpected, follows on the whole the most recent precedents of previous nationalisation legislation. But, obviously, there will he some instances where it appears to the Government, and indeed it appeared desirable to another place, not to follow the precedents, either because of the particular nature of the industries affected by the Bill, or because of past experience with other nationalised industry Statutes, or for some other reason. For the noble Lord simply to say that we must make up our minds to follow the precedents rigidly, without taking any notice of the nature of the two industries which we are nationalising, or, on the other hand, not to follow the precedents at all and to make up an entirely new Bill, is being, if he will allow me to say so, a little simplistic.

§ Lord CARR of HADLEY
I agree that there may be some substance in what the noble Lord has just said, but I think he is pushing his case a little too far. If we 125 were talking about two entirely disparate functions within this Bill, then it might be perfectly legitimate for the Government to say, "Yes, in this area we are breaking new ground. We are not following precedent. But in this other new area we believe, on the whole, that it is better to stick to previous precedent ". But we are talking, both on this Amendment and on the ones to which I referred earlier, about the pay, conditions and functions of senior appointments. So the Secretary of State is to have unprecedented power to dictate and say, "I will nominate so-and-so as sales director of this Corporation" or, "The sales director will be somebody else" which it will not be left to the Corporation to do. On the other hand, he is not given any power, without the permission of another Minister, to fix the salary of the chap he is appointing to the position. Pay, conditions, functions and responsibilities of the job go together and if you are managing something sensibly you cannot devolve responsibility to many different places for deciding who does what, the pay he gets and the conditions under which he does it; and it is nonsense and managerial mania to go about it as the Government are going about it at the moment.

§ 8.34 p.m.

§ Lord MELCHETT
I had the feeling, in part of what the noble Lord said, that he had forgotten that he has pressed an Amendment into the Bill which means that the Secretary of State will not make these appointments any more. But leaving that aside, I do not think lie has answered the point of my noble friend that it is sensible to have some co-ordination of the various appointments to different statutory bodies within the Government service, and that the Civil Service Department is the right body to do that. It would have caused much more mayhem and confusion if nobody was exercising that sensible, standard and well-precedented coordinating role.

§ Lord CARR of HADLEY
Is it, then, the view of the Government that in nationalised industries there should be standard conditions of pay as between one Department and another? We are told that there is a new departure, and is not the aircraft industry one of the first examples where the State is taking into ownership a profitable industry? If this 126 industry is highly successful, highly profitable and winning new markets for the country, are we really to say that the chairman and those who guide that Corporation are to be fixed in their salaries exactly as those running the most unprofitable and least successful Corporations? Is all this to be standardised? Is that Government policy? Is that how we are going to get efficiency in this country?

§ Lord MELCHETT
I do not want to keep jumping up and down, but the noble Lord has asked another question and in doing so, I am sure quite unintentionally, has totally misrepresented what I said. I said that there is a need for some coordination. Of course, it is riot the case that everybody appointed to a nationalised industry is appointed at the same salary as everybody else. But I do not see that there is anything unreasonable in having somebody responsible for making sure that there is some co-ordination in the different responsibilities, and that at least one salary is not wildly out of line with that of somebody in another job with more or less the same responsibilities. It seems to me totally reasonable, and I am not sure what the noble Lord is getting so excited about.

§ Viscount SIMON
I have a great deal of sympathy with the view expressed by the Government on this matter. But it has always worried me, and I have never understood why it is, that it is necessary to lay down in a Statute that one Minister must consult another Minister. If the Secretary of State is to be responsible for the Aerospace Board, the question whether he has to consult anybody else about salaries and so on is something which can be laid down in a Treasury minute. It is not necessary to put in a Statute that one Minister must consult another. Indeed, in theory, all Ministers are part of a unified Government which has a constant policy. We know that that is not always so, but the theory is that all Secretaries of State and all Ministers represent one Government which has a consistent policy, and I have never understood why it is necessary to write this provision into a Bill. I do not know whether the noble Lord can throw any light on that.

§ Lord MELCHETT
I imagine it is just to make sure that everybody knows 127 what we are doing. I do not imagine that noble Lords opposite will have any objection to that.

§ Lord MOTTISTONE
I am not very happy. I do not think that the noble Lord, Lord Winterbottom, gave me a reasonable answer. First, he mentioned control of inflation and said that it was extremely important to have detailed control from the Treasury and/or the Civil Service Department. Surely at the moment inflation is dealt with by the Social Contract, or whatever one likes to call it, and this is common to all. If and when we get free collective bargaining, then that will be that. If this body is to be a responsible one, and be able to enter into the markets under a proper free enterprise banner, which I gathered from the closing speech of the noble Lord, Lord Melchett, on Second Reading, we shall find ourselves at variance as between one and another. So I do not think that the control of inflation stands up. You could not say that ICI behaved badly in inflationary circumstances as of themselves, and they would not have been helped if they had had the Civil Service Department breathing down the backs of their necks. As regards confusion, speaking from practical experience I agree that there is no confusion, because there is such an enormous delay. Confusion does not have time to arise. But delay there is, and I am sorry to say that, whatever advice the noble Lord may have been given—and it was probably given with the best possible intention—if you are at the receiving end there is delay.
As to a common policy and co-ordination, which the noble Lord, Lord Melchett, mentioned, nobody would grumble about that. This is why I did not seek to persuade the Government to strike it out altogether. I sought to change the balance from consent—which means deep active involvement—and advice which is just the level of intervention, if you like, by this outside Ministry that would enable it to ensure a common policy, so far as that was practicable and applicable, and co-ordination.
Therefore may I suggest to the Government that, having heard what my noble friend Lord Carr of Hadley has had to say regarding the underlying contradictions within the Bill, which are what disturb 128 us about it, they might care to give further consideration to it. Either these people will be set up as tremendously successful world beaters and given the maximum freedom or they will be condemned to the same centralised, unenterprising kind of life which is followed by the unfortunate nationalised industries of today. This is the contradiction. Practical experience of it is of great value, as I am sure your Lordships will appreciate, and shows that perhaps the system requires a fresh look and that perhaps this could be made retrospective in due course to cover other Acts of Parliament over the last 10 years or so. Certainly it would be splendid if my wording could be adopted. Perhaps noble Lords will feel that they can agree to that.

§ Lord WINTERBOTTOM
Those of us who have suffered under Treasury control, as I do now, have great sympathy with what has been said by the noble Lord, but he is prescribing chaos within the present very delicately balanced situation. This clause of the Bill springs from a very long tradition of Treasury control dating back, I think, to Mr. Gladstone who first put down the iron rule of that Department. To change it for one Bill and at the same time to hope that the good example given tonight would then spread through other industries is asking for too much. The age of miracles is, in fact, past.

§ Lord TREFGARNE
Before the noble Lord sits down, I wonder whether he would consider the case of the Civil Aviation Authority where the salaries of the junior staff—that is to say, those who are not members of the Authority itself—are tied directly to the Civil Service scales. They have risen very sharply in past years and are directly in line with their counterparts in Government Departments. However, the salaries of members of the Authority, those who might be regarded as directors in the context we are now discussing, are not tied directly to the Civil Service scales and are subject to Ministerial control. In some cases, those salaries are now less than those of the staff who are serving under them. Therefore, the Government control which has been applied in that area has resulted in the chaos which the noble Lord now thinks will arise if we accept this Amendment.

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§ Lord WINTERBOTTOM
Every fair minded person knows that this period through which we are passing is causing anomalies and stress. However, the individuals employed by the Civil Aviation Authority who have been mentioned by the noble Lord, Lord Trefgarne, represent only one group among many who are suffering because of the present situation. That situation would not be ameliorated by accepting the Amendment which has been moved by the noble Lord, Lord Mottistone.

§ Lord MOTTISTONE
I can see that the Government are not going to budge on this Amendment, and I am sorry because I think that there has to be a starting time for everything. Perhaps this was it. Perhaps I could end by asking whether this does not prove that the principle of State control has within it the seeds of its own contradiction, because it forces people to do things that are unnatural from a business and practical point of view. I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ 8.46 p.m.

§ Earl FERRERS moved Amendment No. 21:

§ Page 3, line 27, leave out subsection (9) and insert— ("(9) Each Corporation shall maintain a register of interests disclosed pursuant to regulations made under subsection (3)(d) above.")

§ The noble Earl said: I beg to move Amendment No. 21. At the same time I will speak to Amendment No. 22 because the two Amendments are tied together. Subsection (9), which this Amendment seeks to replace, puts a duty on the Secretary of State to keep a register of the financial interests of the Board members of each Corporation, in just the same way as a register is kept of the financial interests of Members of the House of Commons. Then Clause 18(5) requires each Corporation to publish to the world all the interests of these directors by making the Corporation add this information to the annual report. Subsection (9) was incorporated without debate at the Report stage in another place in fulfilment of an undertaking which was given to Mr. Richard Wainwright in Committee on 16th December. It so happens 130 that it follows exactly the wording of Section 1(8) of the Industry Act 1975 which relates to the financial interests of members of the National Enterprise Board.

§ It is possible that the activities of the National Enterprise Board are of so wide a scope that it is reasonable that its members should be required to disclose all their financial interests for publication to the same extent as that which is required of Members of another place. However, directors of privately owned companies are required to register only their other directorships and their interest in the shares or debentures of their own company and other companies in the same group. In neither case, However, is the information published in annual reports; it is kept by the company secretary and is available on demand.

§ In subsection (3)(d) of the Bill, the Secretary of State can make regulations by which Board members have to disclose their other interests in contracts which are made or proposed by the Corporation or in any other matter whatsoever which falls to be considered by the Corporation. I believe that it is going too far to require the Secretary of State to keep a register of directors and their interests.

§ I should have thought that it was far more reasonable—and this is what these Amendments seek to do—to make the Corporation, not the Secretary of State, keep the information. The information will be available to the Secretary of State, and it is quite right that it should be, but it should be kept by the Corporation, not by the Secretary of State, and it should not be published in the annual report. After all, what will be published in the annual report is the information required in subsection (3)(d) which relates to the disclosure of members' interests in contracts and any other matter which the Secretary of State puts in the regulations. Therefore he has the power to put it in the regulations, and I should have thought that that was as far as reasonable disclosure should go.

§ It may be that the noble Lord, Lord Kirkhill, who is to answer will say that it is wholly right that in a large nationalised Corporation the public should know the interests of people. I should have thought that it was right that the Secretary of 131 State should certainly know their interests and that it was also right that the Corporation should keep a register, but what I do not think is necessarily right is that under this Bill, or Act as it will be, all their interests should be published.

§ But if the Secretary of State so thinks fit he has the power to make the regulations. I would just draw this distinction, that the interests of the Members of the House of Commons which are required to be kept in a register really are slightly different. The way in which the Members of the House of Commons influence public affairs is totally different from the way in which the interests of members of a nationalised Corporation should be brought to bear. I would say that is going too far, and I hope the Government will accept that this Amendment is reasonable, in so far as it will not restrict the disclosure of information but it will only require to be published that which is in the public interest. I beg to move.

Lord HAWKE
I am a little puzzled about both this Amendment and the part of the Bill which it purports to amend. I do not know whether I am right, but as I read it subsection (3)(d) concerns interests in contracts. Those would be inscribed in the minutes of the meeting of the Corporation and so there would be a record, whereas subsection (9) seems to deal with a totally different type of interest which might be a member's other directorships, or something of a permanent nature. I should have thought it was necessary to have records of both of those things kept somewhere. But another thing that rather puzzled me is whether it is good drafting to refer to them as if they were Members of the House of Commons. It is proposed to put this Bill on the Statute Book, and goodness knows what in 50 years' time will be the rules for disclosure of their interests by Members of the House of Commons. I know what is intended at the moment, but if the rules change in the House of Commons will these rules also change?

§ Lord KIRKHILL
Before I respond to the noble Earl, Lord Ferrers, may I just say to the noble Lord, Lord Hawke, that in my opinion it is quite fair that a Board member should be asked to disclose as widely and as generally—and indeed, 132 if you like, as particularly—as a Member of the other place. I might also say that on the very first point made to me, it would appear to be covered by the phrase "or in any other matter whatsoever", making a distinction between subsection (3)(d) on the one hand and subsection (9) on the other hand. I should have thought that was a reasonable distinction to make.

Earl FERRERS
I wonder whether the noble Lord could just say that again. He said it was a reasonable distinction to make: does he mean that the information which he seeks to have published could be published under subsection (3)(d)?

§ Lord KIRKHILL
I was actually merely agreeing with an earlier point which the noble Earl had made. I think the phrase "or in any other matter whatsoever" is not in contra-distinction to the substance of subsection (9). I would tend to agree with that point, whereas the noble Lord, Lord Hawke, thought otherwise, and I was attempting to suggest that I did not quite agree with him.
The Amendment would remove the provisions which the Government introduced at Report stage in another place to require the Secretary of State to maintain for each Corporation a register of the financial interests of the members of the Boards. These provisions—introduced, I might add, in response to a suggestion made by a Liberal spokesman for industry—followed those (as has just been said) in the Industry Act, and place the members of the Corporations under the same obligation to declare their financial interests as honourable Members in another place.
The classifications under which they may be expected to notify their interests will be broadly the same as for the Members of another place—particularly share holdings if these exceed 1 per cent. of the issued share capital, directorships, paid overseas trips, payments from abroad or details of land or property held. The Amendment would reduce the range of financial interests which would have to be disclosed by members of the Corporations solely to those which might be considered directly or indirectly related to the work of the Corporations.
While accepting that the interests specified in subsection (3)(d) are those which are 133 likely to give cause for concern, we cannot accept that the Amendment represents the best method of approaching what we think of as a general problem. This Amendment could create practical difficulties because, as the noble Earl, Lord Ferrers said, Clause 18 requires it to be annexed to the annual report. It might, for instance, be possible to discover, from the information disclosed under the suggested provisions in the annual report, both the nature of projects considered by the Corporation as well as the names of companies which had failed to land contracts with the Corporation. I do not believe that noble Lords opposite would really support a system which could, unintentionally, reveal (or at least hint at) decisions which would normally be commercially confidential and where disclosure could be damaging to the interests involved.
Our provisions seek to place members of the Boards under the same requirement to disclose their interests as Members do in another place. In the view of the Government that is an entirely reasonable requirement. For those reasons I ask noble Lords to leave the provisions as they stand.

§ Lord CARR of HADLEY
May I ask the noble Lord to enlarge a little on the Government's reasoning? I have always personally been very much in favour of more disclosure rather than less. I have wanted our companies law to be tightened up in demanding disclosure. I have also been one of those in another place who wanted to have a register of Members' interests, so my record in both the commercial and the Parliamentary fields is in favour of disclosure. But there is also such a thing as privacy, and it is our job to try to find the balance between the public need for disclosure on the one hand and the right to privacy on the other. The right to privacy in a free society is something which should not be overridden easily or lightly.
As I understand the position, the conditions about disclosure finally agreed and now laid down for Members of Parliament were drawn up in relation to the nature of the work of a Member of Parliament. They were meant to be appropriate in relation, directly or indirectly, to the work and responsibilities of a Member of Parliament. Surely the degree of disclosure required for members of a Corporation 134 ought also to be drawn up, related directly or indirectly to the work of a member of a Corporation, not to the work of a Member of Parliament, which is totally different.
There is a gross illogicality which I think trespasses too far on the proper right of privacy of citizens in this country. Members of Parliament have to disclose all simply because they are Members of Parliament and Parliament may deal with everything. Members of this Corporation are not in this position, and I do not think they should be subject to the same breadth of disclosure requirement as applies to Members of Parliament.

§ 9.0 p.m.

§ Lord KIRKHILL
I think that essentially this is a question of judgment—political judgment if you care to use that term, as I do. The Government make a distinction between the citizen who is a director of a private company on the one hand, and someone who quite voluntarily joins the Board of one of these Corporations on the other. The Government view is that clearly the member of one of these new Corporations should in every meaningful way declare his manifold interests in exactly the same way, as we have said before, as the Member in the other place does.
There is a good reason for the Government reaching that conclusion. We believe that at a central point of decision making those members of public boards carry great responsibility, and thus all their actions and their other activities must be clearly known for the public record, as indeed is the case with Members in the other place. We therefore would make a simile between those who are Members of the other place and those who are members of public corporations on the one hand, and those who are privately employed or have private directorships on the other hand. I think that is the essential distinction between this side of the Committee and the other side. It is a question of judgment, and the Government's judgment is as I have described.

§ Viscount SIMON
We on these Benches support generally the view of the Government on this issue, but I must say I was impressed by what the noble Lord, Lord Hawke, said about the way in which this clause is drafted. This is 135 legislation by reference in the most extraordinary way, because it refers to resolutions of the House of Commons and does not refer to any other legislation. One usually refers to other Acts of Parliament or Statutory Instruments, but this refers to resolutions of the House of Commons. I do not think that we in your Lordships' House know what the resolutions are in the House of Commons. I certainly do not. I am certain that the people who have to understand this Bill will not know what they are. If it is desired to do this ought we not to write into this Bill what those resolutions are?

§ Lord TREFGARNE
Can the noble Lord help me on two points? First, on the question of resolutions of the House of Commons, as a purely practical matter where on earth does one obtain an authoritative copy of resolutions of the House of Commons? On another matter, may I ask the noble Lord whether he is satisfied that with this very wide range of disclosure required he will not be discouraging some people, who might have quite extensive interests in a totally unrelated field, from coming forward for the most important posts in these new Corporations, which will surely need the best calibre of people they can get?

§ Lord KIRKHILL
I can give an assurance that my right honourable friend the Secretary of State will make available to all Board members the record which is mentioned, so I think a copy could he readily made available to the noble Lord, or to anyone else. As to the second point, could I ask the noble Lord to develop the last part of his second question?

§ Lord TREFGARNE
I am obliged to the noble Lord. Can the noble Lord imagine a situation in which a very reputable scientist, or salesman, or engineer, might be regarded as the best person for a particular post in one of the new Corporations, and he is told before he takes up the post that he must disclose all his interests. He might for some reason object to doing that. But the interests that he was reluctant to disclose might be in some quite unrelated industry. I admit that the Bill, at present at least, gives the Minister power to extend the activities of the Corporation into almost every field in the world, but we hope to be 136 able to see to that later. Is it right for potential recruits for these important posts to be required to disclose every singe commercial interest—I am speaking from memory of what is required in the House of Commons—and every conceivable area of activity, most of which will or may be quite unrelated to the activities of these Corporations?

§ Lord KIRKHILL
I am obliged to the noble Lord, Lord Trefgarne, for elucidating for me the essential point, which I do not think I fully understood as he first put the question to me. I would respond by saying that I accept that it is a reasonable point which he places before me for my consideration. I can only say that in my judgment the balance of advantage would weigh in favour of public declaration in all cases, as against the example that the noble Lord gave of perhaps one very distinguished person feeling unable to serve because that person would have to declare all his many interests. On balance, I still feel that the public advantage lies in disclosure.

§ Lord CARR of HADLEY
I wonder whether the Minister would at least say to us that he would give some further thought to this matter, along with his colleagues. Speaking personally, I hope I made clear that I attach great importance to disclosure. What sticks in my gullet about this is the automatic linking of the disclosure which is proper for a member of a Corporation with that which is proper for a Member of Parliament. The two jobs are wholly different.
I can imagine that something might crop up where a member of a Corporation ought to disclose something which a Member of Parliament does not have to disclose. More usually it would be the other way round for the reasons I have mentioned; a Member of Parliament, by definition, is responsible in an enormous field to the public and not a relatively limited one, however important. But it seems wholly inappropriate that the requirements for disclosure of the member of a Corporation should be defined by reference to what may be thought proper at any given moment for a Member of Parliament.
The House of Commons may pass resolutions at any time. Are we to say, therefore, that the House of Commons 137 passing a resolution based on political considerations—I am not talking about Party political considerations—in the widest sense of the word will automatically change the requirements of disclosure for a member of this Corporation, even though the change in the requirements of Members of Parliament may make them wholly irrelevant to the responsibilities of members of Corporations? I am not necessarily wanting to make it less, but I think the Government ought to give further thought to defining it in a different way. If they wish to change it in the future, enlarge it or anything else, let them enlarge it by reference to what is needed for this job and not by this extraneous reference to what happens to be proper at a given moment of history for a Member of Parliament.

Lord HAWKE
Would the Government please take this provision away and look for another yardstick? They have obviously chosen this one because it was the only yardstick they could think of; I am sure they could find another one.

§ Lord SELSDON
I, too, am slightly disappointed at the attitude of the Government on this. Presumably the provision is in the Bill for two reasons; first to protect those members of the Board who might be accused of nefarious practices or doubtful dealings and, secondly, to protect the Government or the Corporation from any doubtful activities—I speak of corruption—where interests may be controversial. What the Government are overlooking is the fact that the Amendment or these proposals represent nothing unreasonable. What we are saying is that in general we seek to encourage responsible people to join the Board, and the Secretary of State will appoint only responsible people. The provision as it stands will prevent a large number of people from wishing to join the Board should the Government wish to appoint them because inevitably we shall be faced with this problem about disclosure.
The United Kingdom is on record throughout the world as disclosing more information about company activities than probably any other country. We are also faced with the dangers which confront us when we have too much disclosure. Nobody is objecting to the principle of somebody with an interest 138 declaring it. What we are objecting to is the principle of declaring that interest in public when there is no need to declare it in public, remembering that a mere declaration can have an adverse effect on the activities of a member of the Corporation who may have outside interests. If the Government are saying that they cannot trust a member whom they appoint to the Corporation—that they cannot trust him to declare it to the Secretary of State or explain privately what those interests are—to act in a responsible manner, then the man should not be appointed to the Corporation in the first place, if they are forcing him to disclose all those outside interests, they are to a large extent restricting him from having certain outside interests which could be of benefit to the Corporation.
I will not delay your Lordships in explaining the problems of the disclosure of companies which are quoted or non-quoted or the dangers of disclosing information of private interests to competitive third parties on an international basis. All that has been taken up in another place. However, if, as my noble friend Lord Carr of Hadley has said, the principle of the Amendment is to say that Members of Parliament and employees of public corporations should be treated in the same way and be forced into overall disclosure, then we are narrowing the field when surely the object of corporations in having outside members or directors is that their value is or should be because of their outside interests and not because they are totally bound up within the political or bureaucratic system.
I urge the Minister to look at this matter seriously. This is not a plea that rests on the overall arguments that have been put forward against Members of another place disclosing their interests or even demands in that context relating to your Lordships. If the noble Lord will say that he will have another look at the matter, then that is all that we are asking him to do at this stage.

§ Lord KIRKHILL
Initially, of course, there is no body of evidence which leads to any firm conclusion that people of distinction and eminence are reluctant to serve on public boards of one kind or another because of the general question of disclosure, and I would say to noble 139 Lords, and in particular to the noble Lord, Lord Carr of Hadley, that the Government have not been remiss in giving very careful thought to the kind of yardstick which would be appropriate. I might add that the subsection was inserted following a promise given to the Liberal spokesman in Committee in another place that there would be disclosure at about the same level as is contained in the Industry Act. The Government think that their definition or yardstick, using that which already obtains for Members in the other place, is very reasonable. I could not say that the Government are not open to suggestions. On the other hand, I would not ask your Lordships to sustain the Amendment.

Earl FERRERS
I do not think we are all that far apart on this issue. There is no doubt that nobody wants any of these appointments to be in any way clandestine or that people should be appointed without proper knowledge of their other interests. I suggest that this can almost boil down to two things. First, why must the Secretary of State keep the register? The noble Lord has not really answered that. If there is a register to be kept, surely it is appropriate for the Corporation to keep it. Certainly, the Secretary of State will have access to it. Secondly, why should the register be the same as that of the Members of another place?
As my noble friend Lord Carr said far more clearly than I could, the responsibilities of the Members of another place are totally different from those of members of a Corporation. As I understand it, too, subsection (9) could and, I think, does, involve members of the Corporation declaring their financial interests in all other companies or interests in which they have a part and then requiring that information to be published. That is the point. Certainly, it could be that that information should be available and should be available on request, but my noble friend Lord Trefgarne put his finger on the point when he said that this would be a drawback in that it would discourage people from joining a Corporation. For example, if a man is a very eminent director, he may have to say that he is a director of Tate and Lyle and owns 1,000 shares; he may be the chairman of ICI and own 20,000 shares. 140 He might have to declare his income from all that. Is that really the type of information that has to be published? If people are going to have to publish all their financial affairs to that extent, I believe that we may very well find that people will be reluctant to serve on these bodies. The noble Lord, Lord Kirkhill, said that there had been no evidence of reluctance of people to come forward, but of course they have not had this kind of requirement put upon them.
All I would say to the noble Lord is this. I believe that he will have sensed the feeling of the Committee that people are concerned that this is what might be called an over-reaction. It was not debated in another place. It was caught up in the guillotine system and was not discussed. The Government were quite right to introduce it as they did in response to a request, and all I am asking the noble Lord is whether he will take it away and see whether some of the arguments that we have used are not germane and have some force. If so, he would, I am sure, be acceding to the sense of the Committee.

§ Lord SELSDON
I am sorry to intervene again, but since the Government have said that they would be open to suggestions, can I ask the noble Lord to take a look at the status quo so far as the Companies Act is concerned at the present time? Any director of a corporation or of a company is required by law to disclose his outside directorships. This is done automatically and on a regular basis each year. Furthermore, any director of a responsible company makes it a matter of principle that if he has any commercial interest or any interest in activities connected with the company at that particular time—for instance, a takeover going one way or another—he automatically and on principle discloses that interest to his colleagues. This system has worked reasonably well, though there have been mistakes and, rather than trying to introduce new principles and to equate the commercial sector with Parliament, the Government could look at the whole subject to the Companies Act and at the disclosure responsibilities of directors, who, as a matter of principle, declare their outside directorships and their interests to their own company if there is a conflict of interests.

§ Lord REDESDALE
May I ask as a matter of clarification and on the basis 141 of the House of Commons, whether the interests of wives are required to be declared?

§ Lord KIRKHILL
I can respond to the latter point first: I do not know. However, I shall find out and let the noble Lord know. My general position is as follows. I must sustain the Government position here this evening. We have thought about this very long and carefully and we cannot think of another yardstick. However, if suggestions are put to us, we shall certainly listen to them.

Earl FERRERS
I am bound to say that I am disappointed with the noble Lord, Lord Kirkhill, because this was a matter on which there was no partisan feeling at all. I should have thought that the least he could have done would have been to say that he would look at this. However, he specifically did not say that, though I should have thought that that was an olive branch that he could willingly and with good measure have offered. All I would say is that we shall return to this again. It would have been much better if the noble Lord had taken the suggestion away and considered it, but he will not and it falls on us to bring it back again at a later stage. I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ Clause 1, as amended, agreed to.

§ Clause 2 [General duties of the Corporations]:

§ 9.20 p.m.

§ Earl FERRERS moved Amendment No. 25A: Page 4, line 4, leave out ("efficient and").

§ The noble Earl said: My noble friend and I have put down this Amendment in order to try to find out from the Government what they mean by "efficient". One of the dramas of present day legislation—particularly in this Bill—is that many obligations are put into legislation which are completely undefinable in practice and certainly in law. This clause places a duty on the British Aerospace Corporation to be efficient. Efficiency is what one might describe as a fairly smart word. Everyone tries to be efficient. I do not know whether there are businesses which would claim that they are inefficient. One does not often hear people say that they are running a business 142 which is inefficient; everyone says that their business is efficient.

Here a duty and an obligation is placed on the British Aerospace Corporation to be efficient. I ask: what does this mean? What is the criteria of efficiency? Is it total profit? Is that the measure by which the Corporation has to be guided, or is it the percentage of profit on turnover? Presumably the higher the percentage of profit on turnover, theoretically the more efficient one is. Maybe it is in profit per man or profit per £100 of labour. That is a very different thing. Or is it the output per man; or is it good industrial relations? One might say that one has had no strikes at all in the past ten years, from which it might be concluded that one has been efficient. It may be that the low level of overheads forms the criterion of efficiency.

I do not see how one can write into an Act of Parliament the obligation on a firm to be efficient unless one knows what that means. This matter becomes slightly more sinister because a Member in another place, a Mr. Thomas, said that in his opinion "efficiently and profitably" were straightforward capitalist economics, and this slightly infers that if a nationalised industry is to be efficient and profitable, it has to operate under capitalist economic standards.

Perhaps efficiency means cutting the staff, that the staff should be curtailed. Is this a criterion of efficiency? That could mean the breaking up of design teams. Is it to be said that this would be desirable? I cannot believe that it is. The Under-Secretary of State drew attention to the fact that the Corporations should carry out their activities in an efficient and economical way. That is what he said, and I can only assume that that means that the Corporations have to act commercially.

I hope that the noble Lord, Lord Melchett, will say that that is what is meant. If he does say that that is what is meant, that the Corporations have to operate commercially, then I should point out that in subsection (7), with which we shall be dealing in a short while, the Secretary of State is given the right to alter by Statutory Instrument the provisions that obtain earlier in Clause 2. In other words, he could give a direction to the Board to do something which is not economical and is not efficient, and if he 143 were to do so, that would override the obligation under Clause 2(1) to be efficient. I hope that the noble Lord will explain exactly what is meant by the statement that the Corporations have to work efficiently. I beg to move.

§ Lord KINGS NORTON
Is it entirely clear that the words "efficient and economical" apply to anything but design in that paragraph?

Earl FERRERS
Perhaps the noble Lord, Lord Melchett, may be a better person to answer that than me, but, as I read it, it says: the efficient and economical design, development, production, sale, repair and maintenance … So you have to be efficient, not only in design but in developing the thing, and I do not know how you are efficient in developing something new. Is the development of the Concorde efficient? I do not know. How do you know? This is an obligation. I should have thought that the answer to the noble Lord, Lord Kings Norton, is that it applies to the whole lot.

§ Lord SELSDON
I would guess that if we removed the word "the" the point which the noble Earl is trying to make would be a true one.

Viscount COLVILLE of CULROSS
Does not the research have to be either efficient or economical?

§ Lord KINGS NORTON
No. It says, "the promotion … of … research". This is how it reads; not "of … efficient and economical research".

§ Lord MELCHETT
I must say that I was absolutely astonished when I saw this Amendment on the Marshalled List; that noble Lords opposite were actually planning to delete the word "efficient" from the Bill. I thought their main complaint about nationalised industries was that they were not efficient enough, and when that complaint has been made I have not heard it elaborated on in the way in which the noble Earl elaborated on it this evening in saying, "Not only are they not efficient, but when I say 'efficient' I mean", and then going into a long string of things which the noble Earl said "efficient" could mean and several other things which he said it could mean but 144 which for the life of me I cannot see how it could possibly mean, and various other things which he did not think it would mean, but "Did it?", he asked me.
The cry from the noble Earl opposite has been that nationalised industries are not efficient enough—straightforwardly. Now we are putting a duty on them to operate efficiently and economically—and I can confirm that, on my understanding, the words apply to all the operations in paragraph (a). The noble Earl asked me to explain this. "Efficient" means all the good things that he said it means, and I hope that is an efficient explanation of it.

Viscount COLVILLE of CULROSS
With respect to the noble Lord, Lord Melchett, I have not taken part in this debate before but there must be some point in setting out the duty in these terms. Whom is it going to help, and on what occasion? If it is merely a piece of political flag-waving, then there is no particular object in having it in the legislation. I would assume that it is in there for some very good purpose. It is probably a very laudable purpose, but if the noble Lord could tell us this I think we would be rather more helped.
On what sort of occasion is either of these new nationalised industries going to be able to say to somebody: "There is in our Act a duty to be efficient and economical in the various duties that we are undertaking. Mind you, I do not think anybody can enforce it; but, still, that is our duty. Now you are trying to get us to do something which is not economical or efficient". To whom are they going to say this? Is it the Secretary of State, or whom? Because there must be some point, there must be some scene, in which the noble Lord anticipates that they will be able to call upon the words that Parliament has laid upon them as their duty so as to achieve something; otherwise, one would merely consider that it is a piece of otiose language which has perhaps been put in merely as window-dressing.

§ Lord MELCHETT
It has not been put in as window-dressing or as Party political flag-waving. It follows precedents in many previous nationalisation measures, including the Conservative's Gas Act. It is a standard provision. I can just imagine the uproar there would have been from noble Lords opposite had we not put it in, 145 on the basis that they would have said, "Every other nationalised industry has been made to be efficient, and here you are leaving it out." It is a perfectly standard provision. The answer to the noble Viscount is that the Corporations are under a duty to perform these various functions and they are under a duty in their day-to-day operations, in their long-term planning and in all the other activities that they conduct that when they are doing these things they must do them efficiently and economically. That seems to me quite reasonable.

Viscount COLVILLE of CULROSS
With respect to the noble Lord, that is not the answer. It is no doubt absolutely true for him to say that this is in accordance with precedent, but if it is in accordance with precedent then there must be quantities of opportunities known to the Department which is advising him upon this when these words have turned out to be useful. You do not follow precedent in legislation just for the sake of following it. You follow it because it achieves something useful. I am asking the noble Lord to give some examples of occasions when this is a useful form of words for the Corporations to have.

Baroness WARD of NORTH TYNESIDE
May I add to that? Most of the nationalised industries have been using a lot of money. Does that mean that they have been efficient? If they have not been efficient, what action do the Government take to make them efficient?

§ Lord MELCHETT
As the noble Baroness knows, one of the policies which this Government follow on nationalised industries is to return their prices to an economic level so that they will make money, something which noble Lords opposite, for their own reasons, did not allow them to do. The answer to the noble Viscount is that I do not know whether these words, as a result of their being in previous legislation, have come in useful or not. If he can convince me that it would be better to leave them out, then I will discuss it.

§ Lord TREFGARNE
I am not sure that the noble Lord understands our complaint. We are not complaining about the inclusion of the words. We think they may very well be useful. But will the noble Lord tell us the occasions on which he thinks 146 those words might be useful? Can the noble Lord conceive of a situation where a member of British Aerospace sitting in his office, faced with a choice of how to perform a particular task, asks himself, "How am I required to do this under my Act? Oh, I remember! It says I am to be efficient." What does that mean? Can the noble Lord help us?

§ Lord MELCHETT
I honestly think that anybody coming into this Committee and listening to this debate would think that we were living in Cloud Cuckoo-land. It is a perfectly reasonable form of words precedented in several previous nationalisation Bills, including those passed by Governments of noble Lords opposite. If noble Lords opposite seriously think that the Bill would be improved by deleting the word "efficient", then let them say so. I said that I do not think I can give an instance of where the inclusion makes any difference. If they think that is a reason for leaving it out, let them say so and we will discuss it.

§ 9.32 p.m.

§ Lord LLOYD of KILGERRAN
Before the noble Lord sits down, may I say that my sympathy is entirely with the Minister on this matter. It seems to me that the noble Lords on the Benches to my left have not quite understood what the object is. The duty is to promote these matters. It is a duty therefore to promote proficiency in general terms. We do not want any legal definition and "to whom" they should report. In my view, a general term of this kind, efficiency, is something which everybody understands. The introduction of general terms of this kind is, I submit, useful in the promotion of activities of nationalised Corporations of this kind.

§ Lord CARR of HADLEY
If we have not made outselves clear to the Minister and to the Committee I appreciate it; but I thought there was sufficient degree of Parliamentary sophistication on the Front Benches opposite to know that, because of our adversarial system in this Parliament, the only way that one can raise matters for debate is to move Amendments to leave something out of or to insert something into the Bill. This is a genuine probing Amendment. This is the only way one can raise it. If we did not make that clear by saying that this is a probing 147 Amendment, then I apologise for the inconvenience we have caused. But that is what it is. The reason that we raised this was because this matter was debated in the Standing Committee of another place. The description given by the Minister in another place of what they meant by "efficient" was rather unusual and certainly not clear. I think that it would be useful to know what the Government mean by "efficient" in this case. Do they simply mean profitable or something more than that?
The noble Lord has just made a reference—I was going to say a "crack"—about the previous Government's policy in relation to prices of the nationalised industries. It does not necessarily mean that industry is efficient because you allow it to raise its prices to the level at which they become profitable. In industries not subject to competition it is difficult to know whether a price to be profitable represents efficient operation or not. It really would be of interest for us to know what the Government mean by the word "efficient". Let me assure the Committee that we are certainly not going to move to take it out of the Bill. We welcome it in the Bill. We want to know what the Government mean by it because if one reads Mr. Kaufman, for example, in another place it is far from clear what the Government mean.

§ Lord MELCHETT
I merely intervene to make a point to the noble Lord. As he says, if you allow an industry, for example a nationalised industry, to raise its prices that does not mean to say it is more efficient—quite the converse, I think he would agree—but if you artificially depress the prices of a nationalised industry that does not necessarily mean it is in-efficient and I hope he will take that point. I should have been happy to have a "bash" at saying what the Government think "efficient" means but the noble Earl, Lord Ferrers, has pre-empted me. He gave us a long list of what efficiency could mean and I openly and warmly agree with his exposition. If any more is needed for noble Lords opposite, I suggest that they look back to their own Act where the word appears and see what they meant by it, and I assure them that we will agree with them entirely.

§ Lord TREFGARNE
Unfortunately, we have never sought to nationalise either 148 the aircraft or the shipbuilding industry and the parallel therefore is not a real one. Can I give the noble Lord a positive example? Imagine at Weybridge a man responsible for supplying spare parts for aircraft to be manufactured under the new Corporation. An airline overseas rings up and wants a new spare part for one of its aeroplanes. The man is faced with the choice of sending the spare part by air, at enormous expense, or by sea, more efficiently it may be said but cheaper. Which course of action would the noble Lord suggest if he were anxious to comply with this section?

§ Lord MELCHETT
I would not suggest anything to him. I would leave it up to the management.

Earl FERRERS
That at least is a step in the right direction.

Several Noble Lords
Hear, hear!

Earl FERRERS
I must say that not only am I disappointed in the noble Lord's reply but rather horrified at the flippant way in which he dealt with it. He makes a sort of clucking noise of disagreement. All I can say is this. I wanted to put this down, not from any partisan feeling at all but simply because one wanted to know what it meant. There are some other things in this Bill that we are going to inquire about, such as "industrial democracy." Those are fine words—but what do they mean? All that the noble Lord, Lord Melchett, did, and he did treat it in a very partisan way, was to reel off a whole list of things and say he agreed with the whole lot. He did not appear to observe that a number of them contradicted each other. Therefore, if he says "I agree with the whole lot", he agrees with certain things which do not, so to speak, agree with themselves. I could not help being reminded slightly of the bishop who, when asked what he thought of sin, said he was against it. If one may elevate the noble Lord, Lord Melchett, to the Episcopal Bench on this occasion and ask him what he thinks of sin his answer will be, "I am for it".
But I am disappointed that the noble Lord has not attempted to define at all what is meant by this word "efficiency". I wanted to put it in simply because it is a word that is used time and time again throughout the country nowadays—" We 149 are being efficient". You can do anything on the basis of being efficient, but when you say, "What is efficiency? What do you mean by it?" nobody can tell you. And the noble Lord, Lord Melchett, tonight could not tell us either. It is disappointing that he should have felt that the only reason why we put this down was in order to vote it out of the Bill. Nothing was further from our minds. All we wanted to know was what the Government meant by it and the noble Lord, Lord Melchett, does not know. I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ Lord KINGS NORTON moved Amendments Nos. 26 and 27:

§ Page 4, line 6, leave out first ("and");

§ Page 4, line 6, after ("weapons") insert ("and of space vehicles and systems").

§ The noble Lord said: With the leave of the Committee I should like to take Amendment No. 27 together with Amendment No. 26. An increasingly valuable and important proportion of the work of the leading aerospace companies, including the British Aircraft Corporation and Hawker Siddeley Dynamics, is concerned with space, especially communications satellites for military and civil purposes, and it is important not only that the existing work of BAC and Hawker Siddeley in this field be maintained by British Aerospace but also that British Aerospace be in a position to exploit the growing commercial opportunities in the development of space technology.

§ Of course there is nothing in the proposed legislation which precludes a space systems business as part of the British aerospace; but if it is spelt out as a duty of the Corporation in the Bill, then work on space vehicles and systems, which is of growing significance worldwide for aerospace companies, is less likely to go by default in the United Kingdom on financial or political grounds in the years ahead. I consider therefore it should be explicitly made the duty of British aerospace, if this legislation is enacted, to continue this work, which is potentially so important for the country, and for which BAC and Hawker Siddeley have an acknowledged fund of expertise, both with satellite hardware and overall systems co-ordination.

150

§ In other words, these two Amendments are intended to protect a section of the existing companies' business. In this work the British Aircraft Corporation has a turnover at the present time of £7 million and Hawker Siddeley Dynamics has a turnover of almost double that. Those figures will be dwarfed shortly by the future activities of these companies. I gather that at the present time the British firms have an order book of approximately £300 million. It is relevant to note that in the United States' aerospace industries about a quarter of their business is on space satellite and associated work. Of course all the leading European companies are very actively concerned as well. What I am asking by means of these two Amendments is that the duty should clearly be laid down for the British Aerospace Corporation that space vehicles and systems are their work. That is what the two Amendments are intended to achieve. I beg to move.

§ 9.43 p.m.

§ Lord WINTERBOTTOM
I am grateful to the noble Lord, Lord Kings Norton, for making his intention so clear. When I read the Amendments proposed I felt, to be honest, he was labouring the obvious. If I understand him correctly, he is making certain that the work now taking place within the two great corporations which may be involved and come together in British Aerospace, will continue. It is not a question of what is happening now; it is what is happening in the future which concerns him. That is a very understandable wish which I am certain the Committee will support. There is no question whatever of the Corporation's power to undertake space activities. Under Clause 3(1), the Corporation has power (without any consent being required) to carry on any activity which any wholly-owned subsidiary was carrying on immediately before vesting. Since both the British Aircraft Corporation and Hawker Siddeley Dynamics are engaged in space activities, there is no question at all about their continuance.
Space activities have not, however, been included in the prescribed activities in Clause 2(1), that is, activities which the Corporation must carry on, because they are relatively small in the context of the Corporation's operation as a whole. In very round numbers—and my figures are 151 different from the noble Lord's—the Corporation's turnover will be some £400 million a year. Guided weapons turnover will be in the region of £100 million. Space, on the other hand, will be some £5 million. We therefore considered that at this moment it was inappropriate in terms of scale to include space activities as a prescribed activity.
There is another argument against to which I should like to draw the noble Lord's attention. The space industry in this country consists of two firms which will come within British Aerospace and a number of electronics firms in the private sector—Rediphone, Plessey and so on. They will operate in the context of a close relationship with Government and with European institutions. To impose a positive duty on the Corporation to operate in this field could—I do not say would, but could—upset this delicate balance which reflects technological capabilities in particular areas of space activities. Particularly in the form proposed by the noble Lord, Lord Kings Norton-that is to say, space systems— this could compel British Aerospace to enter areas, for instance on the systems and payload side, where it has a limited current capability, where it would be competing with other British firms to the possible detriment of their employment and from an inferior technological starting point. To put that in other words, we have an efficient private sector which it is not our intention to bring into national ownership, and if we imposed upon the two State Corporations the duty to enter into competition with the private element in our aerospace industry this might cause an imbalance. For this reason, we are opposing the noble Lord's Amendments and I hope that for that reason too, they will not be accepted.

§ Lord KINGS NORTON
I must say that the noble Lord has disappointed me. It seems to me perfectly clear that in the future an efficient aviation organisation will be dealing with military aircraft, civil aircraft, guided weapons and space vehicles and space systems. If it is not, then it ought not to be in business at all. I have told the noble Lord and I have told the House that in the United States, which admittedly is further ahead than ourselves, 25 per cent, of their industry 152 is engaged on this work. It seems to me to be absolutely absurd that this should not be prescribed as one of the duties of the British Aerospace Corporation. The delicate situation to which the noble Lord referred can be paralleled in all sorts of other areas in the aviation field. I beg him to think again, because unless we are in a position to exploit this to the full—and one of the ways of doing it will be to call attention to this Act—I think we shall regret it very much in the future. This is an innocuous suggestion at the very worst, and I was intending it to be a helpful one. I hope the noble Lord will think again.

§ 9.48 p.m.

§ Lord WINTERBOTTOM
I am sorry that I have not convinced the noble Lord. These two Corporations which will enter into State ownership are in the business now. We hope that they will stay in the business, but we feel that it would be unwise to force them to enter into competition with the private sector just for the sake of a situation which I do not think will arise. If the promise is as great as the noble Lord has pointed out then I am certain that the new British Aerospace Corporation will in fact grasp the opportunity with both hands and develop the work that the two firms are doing now. It will certainly not be the role of Her Majesty's Government to stop them from doing something which is clearly to the advantage of the nation as a whole.

Earl FERRERS
How are they going to grasp the opportunity with both hands when they are not allowed to under the Bill?

§ Lord WINTERBOTTOM
They are allowed to do so. They are allowed to continue doing so. What we do not want to do is tell them that they must do so and thus perhaps enter into competition with the private element of the industry which is more highly specialised and where a good balance has been struck at the moment between the proposed future members of the British Aerospace Corporation and the present private industry. That surely is an area of interference which noble Lords opposite could not welcome.

§ Lord CARR OF HADLEY
The Government are being extraordinarily 153 obtuse about this. Here we have an industry which calls itself the aerospace industry and we are dealing with its two biggest members which are involved in guided weapons and all this technology surrounding this area. We are told that they may continue this activity in which they are involved at the moment but that they should not be under a duty to do so because we are suddenly told out of this extraordinary rush of sympathy to the head of the Government for private enterprise, they might go and compete with private enterprise.
Frankly, as a defender of private enterprise, J say the more competition we have the better, as long as it is fair competition. We shall want to say something later about ensuring that the competition is fair, but for goodness' sake! do not let the Government inhibit this Corporation from daring to dash in and be competitive. I think it would be thoroughly healthy for effective competition to take place. The noble Lord, Lord Kings Norton, speaks with some authority in this area—much more than the rest of us can muster, I think—and if he is right in suggesting that in five or ten years' time the turnover of these two great companies which is devoted to space is not going to be more than 5 percent., then I do not think these Corporations and this country are going very far in this new higher technological world. It seems extraordinary to me.
Supposing they do have a duty to do it, that duty is qualified, as we have just seen, by the need to do it efficiently, economically and fairly. They will not come charging in competing with the private sector, at least so we are assured, greatly advantaged by public money which they can slop about and spend without regard to efficiency and economy. As long as they are generally competitive and as long as they have a duty to be efficient and economical, surely in this vital field they should be under a duty to do what they can for Britain in this field of technology, and not simply be in this permissive condition as it stands at the moment. It seems so ludicrous for the Government to resist Amendments of this sort.

§ Lord WINTERBOTTOM
The Government are resisting the Amendment for one good reason—that under Clause 2(5) space activity can be prescribed as a duty 154 by order in the future. We believe the two Corporations will continue their work and expand it but, if they do not, we have the power to see that they do. I hope this explanation contents noble Lords.

Earl FERRERS
It actually does not, because one of the things we are anxious about is that certainly the Government have powers to make them go into aerospace and they have powers to make them go into anything else as well. If they wanted them to go in for aerospace one would have thought they would have done so under this clause and not rely on powers which are only to be permissible by Statutory Instrument.

§ Lord TREFGARNE
Before the noble Lord answers that point, might I just probe his new-found conversion to the principles of competition, which I find quite remarkable? I hope he is reflecting the views of all his noble and right honourable colleagues. May I once more create a scenario for the noble Lord? What would happen in the near future, before the Minister perhaps has had time to prescribe new powers for the Corporation, if the Corporation were then invited to tender for a major space project such as a communications satellite system or something similar. Would their newfound reticence persuade them to stand back while private enterprise stepped in, or would they hastily take powers to do just that?

§ Lord WARDINGTON
May I try to clear up one point: I cannot understand why the additional words do present such an objection to the Government because subsection (2)(a) is based on chronological order. There is the efficient and economic design, development, production, sale, repair and maintenance. We are obviously going to have a very big future development in space vehicles and systems. I should have thought it must either be included here or be separate. The most important word in this is "sale". If it is a nationalised industry, one is hoping it will be profitable and that the sale of all these systems will produce some benefit to the country. As it stands at the moment, as far as I can see, we seem to be leaving out a major future development and possible profitability later on.

155

§ Lord WINTERBOTTOM
The noble Lord, Lord Trefgarne, seemed to think that only today had I seen the virtues of competition. I think I have seen the virtues of competition for as long as any noble Member of this House, because I am becoming one of the older Members. But what I must say is this. Please do not think that either British Aerospace or British Shipbuilders will be free of competition. To take another great national Corporation, British Airways is successful and more profitable than, shall I say, Pan-American Airways, because it has imposed upon it the same forces of competition as private industry. Both British Aerospace and British Shipbuilders will be facing severe and savage competition from other companies in the outside world, including some which are nationalised, such as Aerospatiale.

§ Lord TREFGARNE
I hope that the noble Lord will not mind my intervening again, but he really cannot use British Airways as an example. Only a few months ago we passed a Motion restricting competition for British Airways. Dual designation on the major international routes was precluded by the Government's own policy.

§ Lord WINTERBOTTOM
But that was within Britain itself. There are

156

§ companies called Trans World Airlines, Pan-American Airways, Air France and Air Everything, and they are in direct competition with British Airways. These new national Corporations will be under severe international competition, and I am absolutely certain that their managements will face up to it and will impose upon the Corporations the efficiency which noble Lords seemed to doubt. The word "efficiency" caused some confusion in noble Lords' minds. I have no doubt whatever that if the opportunity is offered, as suggested by the noble Lord, Lord Trefgarne, to the proposed members of the British Aerospace Corporation to take part in a major satellite development, or the equivalent, they will grasp it with both hands. They will not be idiots.

§ Lord KINGS NORTON
Nothing that the noble Lord has said has convinced me that these items should not be made part of the duty of the British Aerospace Corporation, and I do not propose to withdraw the Amendments.

§ 9.58 p.m.

§ On Question, Whether the said Amendments (Nos. 26 and 27) shall be agreed to?

§ Their Lordships divided: Contents, 77; Not-Contents, 34.

157

CONTENTS
Airedale, L.	Gainford, L.	Orr-Ewing, L.
Amherst, E.	Glasgow, E.	Pender, L.
Amory, V.	Gowrie, E.	Pike, B.
Armstrong, L.	Gray, L.	Redesdale, L.
Arran, E.	Harcourt, V.	Rochdale, V.
Balerno, L.	Harmar-Nicholls, L.	St. Aldwyn, E.
Barrington, V.	Hatherton, L.	St. Davids, V.
Beaumont of Whitley, L.	Henley, L.	Sandford, L.
Belstead, L.	Hornsby-Smith, B.	Sandys, L.
Berkeley, B.	Hunt of Fawley, L.	Seear, B.
Brookeborough, V.	Inchcape, E.	Selsdon, L.
Campbell of Croy, L.	Inverforth, L. [Teller.]	Simon, V.
Carr of Hadley, L.	Kemsley, V.	Strathclyde, L.
Colville of Culross, V.	Killearn, L.	Strathcona and Mount Royal, L.
Cork and Orrery, E.	Kimberley, E.	Thorneycroft, L.
Craigmyle, L.	Kings Norton, L. [Teller.]	Tranmire, L.
De La Warr, E.	Lauderdale, E.	Trefgarne, L.
Drumalbyn, L.	Lloyd of Kilgerran, L.	Trevelyan, L.
Duncan-Sandys, L.	Long, V.	Vickers, B.
Dundee, E.	Lyell, L.	Vivian, L.
Dundonald, E.	Margadale, L.	Ward of North Tyneside, B.
Eccles, V.	Monson, L.	Wardington, L.
Elles, B.	Mottistone, L.	Wigoder, L.
Elliot of Harwood, B.	Mowbray and Stourton, L.	Wolverton, L.
Falmouth, V.	Northchurch, B.	Young, B.
Ferrers, E.	Onslow, E.
NOT-CONTENTS
Birk, B.	Hirshfield, L.	Murray of Gravesend, L.
Boston of Faversham, L.	Houghton of Sowerby, L.	Oram, L. [Teller.]
Brimelow, L.	Jacques, L.	Peart, L. (L. Privy-Seal.)
Brockway, L.	Janner, L.	Shackleton, L.
Champion, L.	Kagan, L.	Stedman, B.
Collison, L.	Kaldor, L.	Stewart of Alvechurch, B.
Davies of Leek, L.	Kirkhill, L.	Stone, L.
Elwyn-Jones, L. (L. Chancellor.)	Kissin, L.	Strabolgi, L. [Teller.]
Goronwy-Roberts, L.	Llewelyn-Davies of Hastoe, B.	Wells-Pestell, L.
Hacking, L.	Lyons of Brighton, L.	Winterbottom, L.
Hale, L.	McCluskey, L.
Harris of Greenwich, L.	Melchett, L.

§ Resolved in the affirmative and Amendments agreed to accordingly.

159

§ 10.8 p.m.

§ Lord LLOYD of KILGERRAN moved Amendment No. 28: Page 4, line 7, leave out ("matters relating thereto") and insert ("and innovation concerning the above-mentioned matters.") The noble Lord said: At this late hour I hope it may be relaxing, if not a little refreshing, for the Government Ministers to have to deal with this important industrial Amendment, devoid as it is of any Party political controversy. Briefly, the purpose of the Amendment is to add to one of the duties of the Aerospace Corporation the duty to promote innovation as well as research. In my view research by itself as a duty of the Corporation is far too limited, and therefore I have tabled an Amendment to the effect that" innovation" should be added after the word "research".

§ May I remind your Lordships of the definition of "innovation" as given by the General Advisory Council on Science and Technology: Innovation comprises the technical, industrial and commercial steps which lead to the marketing of new manufactured products and to the commercial use of technical processes and equipment".

§ May I emphasise that "innovation" includes a variety of aspects of industrial processes, such as commercial aspects, marketing aspects, and so on, and therefore is far wider than the limited term "research". Innovation requires the fostering of a wide range of skills in a company. To foster research is far too limited, and innovation is just the kind of activity which must be promoted by the Aerospace Corporation.

§ In this context may I say that I was most impressed by the peroration to the fine speech of the noble and learned Lord the Lord Chancellor in winding up the debate on the economic situation last week. He is recorded in the House of Lords Hansard for 4th October, at column 966, as follows: We have a tremendous store of skills and knowledge in our people. We still have massive industrial plants. The problem is to bring these assets into full and vigorous operation. I believe that this Government are capable of doing that and will do that".

§ In my view it is necessary therefore to continue to revitalise and keep revitalising this Aerospace Corporation, and it is this aspect of innovation which can do that. It is a general term. It is a general term 160 like "efficiency of an industry" and I am sure that I shall have the sympathy of the noble Lord, Lord Melchett, in introducing, even at this later hour, as a general term, innovation as a duty of the Corporation. The sponsoring by the Corporation of innovation will do much to revitalise the organisation, and it will assist in the growth in the industrial economy of a variety of talents which, as I have indicated, are required by employees in various fields, and in that context it may be said that innovation is part of the industrial democracy about which we shall hear later in this debate.

§ I raised the matter of innovation at Second Reading. I was disappointed that the Minister, the noble Lord, Lord Melchett, had no time to say anything about this matter, although I sent him a short note about it beforehand. I was disappointed, particularly as his ancestors were, and were associated with, brilliant innovators in recent decades. In my enthusiasm to move this Amendment for the introduction of the word "innovation," I must apologise for not having disclosed that I am president of the Institute of Inventors and Patentees, and it also may be helpful if I indicate, with the leave of Committee, that I should like my remarks to be associated with Amendment No. 37, which is in practically the same words in regard to the Shipbuilders Corporation.

§ Also with the leave of the Committee I should like to say that from all parts of the House I have had letters from noble Lords who are unable to be present this evening who have supported me in this general activity of innovation as being one of the main duties of these two Corporations. In this regard I should like to point out again with the leave of Committee that I have had a long letter in support of this Amendment from the noble Lord, Lord Energlyn.

§ Lord KINGS NORTON
I should like to support in general terms the noble Lord, Lord Lloyd of Kilgerran. It seems to me that in the world of aeronautical science there must be two main activities; discovery of new facts, and that is what is called research, and the creation of new things. The creation of new things seems to me to be admirably covered by the word "innovation" which the noble Lord suggests. I therefore wholeheartedly support the more balanced phrase that is used in the Amendment.

161

§ Lord KIRKHILL
I freely acknowledge that the noble Lord, Lord Lloyd of Kilgerran, sent my noble friend Lord Melchett a note during Second Reading outlining his strong views on the importance of innovation and its encouragement. Unfortunately during the winding-up speech my noble friend was unable due to the shortage of time to deal with the points that Lord Lloyd had made to him. I can assure noble Lords however that we fully realise the importance of innovation to both industries. In the case of the aircraft industry, for example, the merger of the two main companies, which have in the past competed against each other, will remove the element of duplication from the research and design work within the industry and enable greater and more concerted work towards technical innovation. Within the Bill itself, we are confident that the provisions in Clause 2 already provide the necessary impetus to the work and indeed already cover the aspect of research to which Lord Lloyd referred.
Not only in the Government view do subsections (1)(b) and (2)(b) lay down the specific duties on both Corporations and their subsidiaries to promote research, but subsection (4) ensures that the important channel of innovation, the worker's specialised knowledge and experience of his own job, is fully utilised. I am confident that proper emphasis will be placed on innovation, invention and design in the new Corporations and I assure the noble Lord that his Amendment is unnecessary. However, I can assure the noble Lord that I will place his views before the chairmen of the respective Corporations—indeed the noble Lord, Lord Beswick, is present in the Committee now—and he has my assurance that the Corporations will be very aware that there is already within these industries a long tradition of innovation, a tradition that is there to be maintained.

§ Lord LLOYD of KILGERRAN
I am obliged to the noble Lord, Lord Kings Norton, for having supported me generally in having the word "innovation" introduced as one of the duties of the Corporation. However, with the assurances that the Minister has given, I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

162

§ 10.18 p.m.

§ Earl AMHERST moved Amendment No. 29: Page 4, line 7, at end insert— ("( ) Nothing in this Act shall preclude British Airways Corporation or any other British Airline registered in this country from seeking supplies of civil aircraft including engines and ancillary equipment from any sources should British Aerospace be unable or refuse for any reason to meet the specifications for civil aircraft including engines and ancillary equipment asked for by such airline.").

§ The noble Earl said: The object here is to secure as far as the Bill is concerned full freedom of action for the British airlines in the purchasing of aircraft and equipment as may best meet their needs, both technically and commercially. There appears to be nothing in the Bill which spells out provision for such a freedom. It should be noted that while the new Corporation is charged with the development and production of civil aircraft, it is the Secretary of State, if I read the Bill correctly, who will in the last analysis have the final power of veto on the production of any such equipment. Secretaries of State come and go and some are more equal in technical knowledge than others. Are our airlines to have this freedom of choice or are they to be forced to take whatever the new Corporation is able or allowed to produce? As matters stand, we could have a situation where the Secretary of State, for purely political reasons and through his veto, could force the airlines to buy equipment irrespective of what those airlines, with their professional and technical know-how, want to buy and operate. I suggest therefore that this is a matter of some importance.

§ Lord WINTERBOTTOM
I assume that this Amendment is what is known in terms of art as an "avoidance of doubt" Amendment. I can assure noble Lords that an Amendment on these lines is entirely unnecessary. There is no requirement in the Bill that British Airways and other airlines must buy from British Aerospace. Any such requirement would run counter to our international obligations. My right honourable friend the Secretary of State for Industry has also made it clear that his responsibilities for the aerospace industry cover both the public and the private sectors. He wishes to see both healthy and profitable. Any requirement on British Airways and the 163 British airlines of the kind which this Amendment seeks to preclude would not be conducive to that objective. Since the contingency that these Amendments are designed to guard against would run counter to our international obligations and would conflict with Government policy, I hope that noble Lords will agree that a provision on these lines is not necessary and that they will not press their Amendment.

§ Lord WIGODER
Would the noble Lord be kind enough to assist us by indicating what obligations he is referring to?

§ Lord WINTERBOTTOM
At a guess and without speaking with exact knowledge, the use of British engines in American aeroplanes and the joint operations with, for instance, the French.

Earl FERRERS
The noble Lord, Lord Winterbottom, said that this was unnecessary. I am not absolutely convinced that it is, and I think that the reason why the noble Earl, Lord Amherst, moved the Amendment was because of the problem to which my noble friend Lord Carr referred in the first place. We have two industries that are to be joined together by this Bill, and the Secretary of State will have tremendous power and influence over these Corporations. He will provide them with funds. Equally, the Government are responsible in the last analysis for British Airways, and if British Airways come to the Government and say, "We have got to buy more aeroplanes", it could well be that the Minister will say, "Look, here is British Aerospace; they have produced this aeroplane which is costing a tremendous amount of money and if British Airways do not buy it there will be no market for it". It is perfectly possible—though I do not say it is at all in the mind of the Government at the moment—that, in the future, where the Government are controlling British Aerospace and British Airways, we could find an obligation forced upon one by virtue of the other.
164 It is that that the noble Earl, Lord Amherst, wishes to protect against, and in that respect I have much sympathy for him.

§ Lord WINTERBOTTOM
As an exercise in doom watching, this is entirely possible, hut, so far as I am aware there is not a single aircraft on the stocks which, in the foreseeable future, British Airways would wish to buy. The whole tendency is towards collaborative development of new aircraft. In my view, that trend will continue and, as I said earlier, it is against Government policy that the purchase of aircraft should be imposed on British Airways, and it is in any case against our international obligations. Of course, ten, fifteen or twenty years from now the situation may change, but we are talking now of the foreseeable future.

Earl FERRERS
With great respect, that is exactly what we are not talking about. We are talking about the merging of two great Corporations, not over the next four or five years but for a protracted period of time, and I believe that the noble Lord ought to consider very seriously. I accept that the Government have no intention of making this an obligation on British Airways at the present time, but it is not impossible that this might happen in the future.

§ Lord WINTERBOTTOM
I am informed that, as long as we are within the EEC and bound by the Treaty of Rome, it cannot happen.

§ Earl AMHERST
I am not happy with what the Minister has said. He seems to say that it will be all right on the night and that the intention is such and such, but it does not say so in the Bill. I do not think that we are very safe to leave it to good intentions and I think I must refer the matter to the opinion of the Committee.

§ 10.25 p.m.

§ On Question, Whether the said Amendment (No. 29) shall be agreed to?

165

§ Their Lordships divided: Contents, 68; Not-Contents, 31.

CONTENTS
Airedale, L.	Glasgow, E.	Northchurch, B.
Amherst, E. [Teller.]	Gowrie, E.	Onslow, E.
Amory, V.	Gray, L.	Orr-Ewing, L.
Balerno, L.	Hacking, L.	Pender, L.
Barrington, V.	Harcourt, V.	Redesdale, L.
Beaumont of Whitley, L.	Harmar-Nicholls, L.	Rochdale, V.
Belstead, L.	Hatherton, L.	St. Aldwyn, E.
Brookeborough, V.	Henley, L.	St. Davids, V.
Campbell of Croy, L.	Hornsby-Smith, B.	Sandford, L.
Carr of Hadley, L.	Inchcape, E.	Sandys, L.
Carrington, L.	Kemsley, V.	Seear, B.
Colville of Culross, V.	Killearn, L.	Selsdon, L.
Cork and Orrery, E.	Kimberley, E.	Simon, V.
Craigmyle, L.	Kinnaird, L.	Strathcona and Mount Royal, L.
De La Warr, E.	Lauderdale, E.	Tranmire, L.
Drumalbyn, L.	Lloyd of Kilgerran, L. [Teller.]	Trefgarne, L.
Duncan-Sandys, L.	Long, V.	Vickers, B.
Dundee, E.	Lyell, L.	Ward of North Tyneside, B.
Dundonald, E.	Margadale, L.	Wardington, L.
Elles, B.	Monson, L.	Wigoder, L.
Elliot of Harwood, B.	Mottistone, L.	Wolverton, L.
Ferrers, E.	Mowbray and Stourton, L.	Young, B.
Gainford, L.	Newall, L.

NOT-CONTENTS
Birk, B.	Houghton of Sowerby, L.	Murray of Gravesend, L.
Boston of Faversham, L.	Janner, L.	Oram, L. [Teller.]
Brimelow, L.	Kagan, L.	Peart, L. (L. Privy Seal.)
Brockway, L.	Kaldor, L.	Segal, L.
Champion, L.	Kirkhill, L.	Shackleton, L.
Collison, L.	Kissin, L.	Stedman, B.
Davies of Leek, L.	Llewelyn-Davies of Hastoe, B.	Strabolgi, L. [Teller.]
Elwyn-Jones, L. (L. Chancellor.)	Lyons of Brighton, L.	Wells-Pestell, L.
Hale, L.	McCluskey, L.	Winterbottom, L.
Harris of Greenwich, L.	Melchett, L.
Hirshfield, L.	Morris of Kenwood, L.

§ Resolved in the affirmative, and Amendment agreed to accordingly.

§ 10.33 p.m.

§ Lord CAMPBELL of CROY moved Amendment No. 30: Page 4, line 8, at beginning insert ("Subject to section (Ship-repairing) below")

§ The noble Lord said: This is the first of several Amendments which would have the effect of removing the independent ship repairers from the Bill. We regard this as a major issue, because no sound reason has yet been given why the ship repairing industry has been dragged into the Bill on the coat-tails of the shipbuilding industry. From the statements which have been made by the Government so far it seems that they are under the misapprehension that ship repairing and shipbuilding are involved in the same or similar activities, but they are not. Ship repairing is a different and separate industry. Indeed, in recent years the 166 difference between the two industries has grown, largely because of advances in technology.

§ An analogy which helps to illustrate the difference between the two industries, certainly for those who are more at home on land than at sea, is the motor car. The shipbuilding industry, like the car manufacturing industry, is concentrated in a few units and engaged in construction and assembly. The ship repairing business is similar to the multitude of garages distributed widely throughout the country and carrying out repairs and maintenance on motor cars. The ship repairers, like those garages, constitute a service industry, not a manufacturing industry. They are spread around our coasts, and they undertake tasks of great variety, often at short notice.

§ For them, a job of work could bring in as much as £1 million or as little as £100. Their customers are the ship owners, and 167 the ship owners wish to continue to deal direct with individual ship repairing firms. This is confirmed by the General Council of British Shipping, who have made it clear that they are opposed to the nationalisation of ship repairing firms. They believe that this will harm the efficiency of those firms—and the ship owners are their customers.

§ The character of the ship repairing industry, a service industry, its diversity and its need to respond immediately to many demands in different places, makes it wholly unsuitable for centralised control. Nationalisation elsewhere has shown that the structure and management that it produces are totally inappropriate for this kind of business activity.

§ The ship repairing companies in the list in Schedule 2 to the Bill, which our Amendment No. 216 in due course would delete, are not closely connected with shipbuilding. The names may in some cases be misleading to anyone who is not familiar with the industry. For example, Swan Hunter Shipbuilders Limited and Swan Hunter Shiprepairers Tyne Limited do not exchange labour and they have a different wages rate for their work forces. Ship repairing is also different because it does not compete throughout the world for orders as the shipbuilding industry can. It is geographically restricted to vessels plying in waters near Europe since it is not economical as a general rule to send a ship for repair from the other end of the world. Within the reduced tonnage operating in European waters owing to the recession in shipping, the British ship repairing industry has done well in winning business. Enterprise and quick decisions are needed to achieve these results against foreign competition. There are about 100 ship repairing companies operating in Britain. There are 12 in the list.

§ The criteria for inclusion have been changed since the original proposals for the Bill were put forward. Those criteria still seem arbitrary. Comparison with the records available of companies for inspection by the public reveal apparent discrepancies. I raised this matter on Second Reading because if the list of companies in Schedule 2 did not conform with the criteria, the Bill might well be 168 determined to be a hybrid Bill. Companies in the single category would not be receiving the same treatment and the hybrid Bill procedure would enable evidence to be given by persons or bodies affected to a Select Committee. The Government gave a long explanation in a written reply from the noble Lord the Leader of the House on Wednesday last and we on this Bench are grateful for the great amount of trouble clearly taken by the Government to produce a long, considered reply. Such clarification was certainly needed.

§ The reply indicated the way in which the Government are interpreting the criteria and conditions set out in Schedule 2. The terms of that reply are still being closely examined because we are advised that there can be different interpretations in law from sonic of those which have been adopted by the Government. Moreover, Government interpretations could also give rise to other discrepancies when applied to other cases. I do not intend to say more on this now because my noble friend Lord Colville of Culross with his legal expertise is proposing to dilate on that subject during the course of this debate.

§ This is a bad and an unnecessary Bill but it would be improved by the elimination of the ship repairing companies in Schedule 2. At this stage we hope to hear from the Government the reasons which they have for including ship repairing in the Bill. Up to now the arguments have not been noticeable. We will continue to give close examination to the explanation which the Government have given for including certain companies in the Schedule. We are, frankly, unhappy about the 12 companies which have been listed and we intend to go into this in considerable detail, but the first thing we should like to hear is the Government's reasons for including ship repairing at all in the Bill.

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

Viscount COLVILLE of CULROSS
Since my noble friend Lord Campbell of Croy suggested that I might amplify the points that he introduced, it may be for the convenience of the Committee if I do so now. I hope that I may be forgiven if I take a little while to do so, because, as the noble Viscount, Lord St. Davids, indicated, this is liable to be a difficult and complex matter, and the more I study the points the more difficult and complex they seem to be. I suspect that is probably the conclusion of noble Lords on the other side as well.
I entirely agree with my noble friend and the noble Viscount, that now we have been put on notice of this possible hybridity we ought to inquire into it. I am not going to suggest the Committee conies to a conclusion tonight; I am sure this is not the occasion. I should like to follow up some of the matters which appeared in the Written Answer by the noble Lord the Leader of the House the other day. The noble Lord, Lord Melchett, said in 171 his winding up speech on Second Reading that he would attempt to resolve these matters to the satisfaction of the House, and I know that is what the Government wish to do. The trouble is that when one looks at some of the points in the Written Answer, they do not themselves seem to be the end of the road; they give rise to further questions.
I wonder whether I can take this opportunity—the first after I have been able to assemble the information—to ask noble Lords for some more homework and more answers; not, I hasten to say, to be given tonight, but upon reflection when they have had time to look at the matter in detail. I will take the points in the reverse order to the Written Answer because that is the way the logic runs best. I will start with the case of Richard Shipbuilders Limited. This was at the relevant time undoubtedly a ship repairing company and it had the necessary rights in a dry dock. That fulfils two out of the three criteria which you have to fulfil to get yourself nationalised. What it did not fulfil on its own was the requisite turnover. In order to be brought into the Bill—as was being suggested it should—it would be necessary to aggregate its turnover with one of its associated companies, as defined in the Schedule 2 to this Bill. There were two candidates for this. First of all there was a candidate called Clyde Wharf Limited. The difficulty about that was that it had ceased its business before the relevant date and therefore was not an associated company at the right time. The second candidate was one of the senior companies in the group called Sugar Line Limited. As to Sugar Line, the Government said in their Written Answer that this did not fall within the category of an associated company either, therefore its turnover was not aggregable with Richards (Shipbuilders) Limited, for this reason, that Sugar Line Limited did not at any time during the financial year ending 29th September 1973 hold itself out as a ship repairer or in fact repair, refit or maintain the ships of any other person whether within the Tate and Lyle group or otherwise.
That is an important interpretation of what the Government mean and what is contained in the Bill at the bottom of page 82, where it says that one of the 172 criteria is that the company has to be engaged in the business of repairing, refitting or maintaining ships. The Government now say that it is no use their repairing, maintaining or refitting their own ships; they are not then a ship repairing company; they are only so if they either hold themselves out to or do in fact repair and maintain other people's ships. The Bill does not say that and it may be that on another occasion your Lordships will have to decide whether the Government's interpretation of this is what your Lordships think the law is.
Our problem is that we are not in a position at this stage of the Bill to ask any court to decide what these words mean and it will not be possible to do so until after the Bill becomes an Act, if those words stay in it, at which stage it may well turn out that hybridity has been occurring all this while but has not been disclosed and dealt with. Therefore it may be that your Lordships will have to decide whether the words, "business of repairing, refitting or maintaining ships" mean what the Government have interpreted them as meaning.
It is not, I think, altogether clear on the basis of what Sugar Line were doing. In the first place—and this is by no means conclusive—their memorandum of association entitles them to maintain ships and they did in fact at the relevant period repair or maintain ships. Indeed, they said this in the accounts for the period, which was the same one as was referred to in the Written Answer, and this your Lordships will now recognise the significance of. It says: Clyde Wharf Limited undertook to repair the ships. The company sold its premises and ceased trading on 31st March 1973. The ship repair section transferred to Sugar Line Limited and is operating satisfactorily. The Government make a point in column 1486 that the total turnover was described as being in respect of gross freights received, but that is not inconsistent with what I have said because, of course, the expenses incurred by the ship repairing activities of Sugar Line were put in as expenses against their profits and were not individually picked out. It may be that your Lordships will have to decide whether in a case like that Sugar Line were in the business of repairing ships, and there are two questions I 173 should like to ask Her Majesty's Government on this.
First, do they take the same definition to put to your Lordships of repairing ships as they do of maintaining ships? Both the words appear in the Schedule. Do they say that you are not a ship repairer if you repair only your own ships and equally you are not a ship repairer if you maintain only your own ships? I think that in the shipping world there is a difference, particularly in terms of the amount of people and plant and expertise that goes into maintaining ships belonging to any shipping line—a matter to which I shall return. That is the first question.
The second question is this. The Government have obtained an assurance in the terms that I have read out as to the activities of Sugar Line during this period, that they were not repairing or holding themselves out to repair anyone else's ships. Have the Government asked Sugar Line whether they themselves consider that they were in the business either of repairing ships or, alternatively, of maintaining ships during that period? It may not be conclusive, but Sugar Line's own views may be a pointer to what we in this Chamber think about it, if we ever have to.
Immediately before that, the noble Lord, Lord Peart, dealt with Humber St. Andrews Engineering Co. Limited. This company fulfils two of the criteria. It is certainly a ship repairer and its turnover is quite large enough. We are told that at the relevant date it did not have any interest or possession or licence to occupy a dry dock. It was working on two trawlers belonging to associated companies at Hull: one called "Esquimaux" and the other "Kingston Emerald". We are told by the Government that if dry dock facilities were necessary to repair the ship—and they were—these facilities would be arranged by the ship owner and the company (that is Humber St. Andrews) sent its employees to the dry dock to do the repair work. Therefore, say the Government, they did not have a licence to operate that dry dock.
There are two ways of putting this, either of which may be right. First of all, the Bills says, a licence to occupy a dry dock or a graving dock". 174 It does not refer to "an exclusive licence" to so occupy. The "Kingston Emerald" was in dock for 25 days, and that involved a fairly substantial amount of work being done to her. The dock it was in had a minimal amount of equipment provided by the dock owners. It is perfectly true that if the ship owners arranged for the accommodation of that ship in that dry dock, they had arranged a licence to occupy it. But I do not think it necessarily follows that those who came to repair that ship and brought with them plant and equipment and men did not also have a licence to occupy the dry dock for the purposes of that repair as well. Have the Government, therefore, any views as to why they say that the licence to occupy must be an exclusive licence in order to exclude Humber St. Andrews? That is one way of putting it.
The other way is to look at it from the point of view of people whom the Government say did have a licence to occupy the dry dock; that is to say, the ship owners. In this case, the ship owners are a company called Hellyer Brothers, who are another member of the Associated Fisheries Group. They also have a turnover of more than £3.4 million in the year in question and have had a turnover of more than that over a series of years. Ex hypothesi, on the Government's arguments, they had a licence to occupy a dry dock; that ice, the one "Kingston Emerald" was in at the relevant time. Are they also a shipping repair company? I have looked at their articles of association and am not sure whether that is so or not, but I understand that they do in fact repair their own ships—in which case we are in much the same position as we are with Sugar Line, and the Government's answer on that would also apply to the case of Hellyer Brothers Limited. That company are not in the Schedule and, if my doubts are right, perhaps they should be.
There follows from this one further extrapolation. It had not previously occurred to me that ship owners and people who run shipping lines were candidates for inclusion in the list; but it will be found that there are a fairly substantial number of household names who certainly had turnovers in the relevant period in excess of £3.4 million, who also had ships in dry docks which they themselves had arranged at the relevant period and who have in their 175 articles of association the necessary powers to maintain and indeed in some cases repair ships and who did, as a substantial part of their business, maintain and repair or maintain or repair their own ships. Furthermore, one of them at least in more recent years—and I do not know how far back this goes—advertises its services to repair or maintain other people's ships. I refer to BP Tankers Limited.
Can the Government, when they answer, say whether they have checked up on all those companies which would, if the Humber St. Andrews answer as to the owners having the licence is the right test, also he liable to fail within these criteria and should, therefore, in propriety, come within the Schedule to the Bill? That is the second case.
I will not go into the question of Howie and Western Shiprepairers because on that there is no necessity to elicit further facts, but it may be a matter for argument. However, I have to look lastly at the case of Scott Lithgow Drydocks Limited and on this the situation is equally clear, on its face. They were certainly ship repairers and they certainly had the necessary rights over dry docks. What is crucial is whether they had the necessary turnover. There was one year, the year ending December 1972, when their turnover just exceeded £3.4 million and we were told in the Government's answer that the accounts containing that turnover were laid before the company in general meeting on 11th June 1973. We were also told that these facts had been confirmed by the company and are made clear by the documents contained in the company's public file in Edinburgh, and therefore they are correctly in the Bill. The company's file in Edinburgh is, of course, open to the public and in what I am about to say I hope that it will not be taken that I am in any way implying that anything improper has been done by anybody at all. The trouble is that there arises a mystery when one looks at those files.
If you look at them today, it will be found that the various years' entries tend to contain two matters. There is the statutory annual return, which is filed 14 days after the annual general meeting, and there is the accompanying account. 176 It appears to have been the practice of those who filed these matters in Registry House in Edinburgh to file them under a folio number for each year. For instance, the annual return for the year ending 1971, and the accounts which were presented at the next annual general meeting, bear the folio number 30. Consequently, for the annual return on the following year, the June 1973 meeting on which the Government rely, we find there is entered the folio number 31. But there are no accounts bearing the folio number 31.
You do, in fact, at the moment find the accounts upon which the Government rely immediately following the return for the meeting in June 1973. There are also later annual returns and accounts bearing subsequent folio numbers; for instance, that relating to the annual general meeting in September 1974, which was just too late to be important for this Bill, bears the folio number 32 and there is in the register another document, also bearing the folio number 32, which says that no accounts were presented at the meeting in 1974. If you go on and look further you will find that the next year the folio number was 33. It is therefore, on the face of it, strange that the accounts which were supposed to have been presented at the annual general meeting in June 1973 bear the wrong folio number. They should have 31 on them, but in fact they have 32.
But this is not all. I have two affidavits by people who have inspected these accounts at different times. I have told the Committee what is the situation today.. It was not so on 24th August. The account upon which the Government rely, folio number 32, was not at that time in position following the annual return for the meeting, folio number 31, in June 1973. It appeared after the annual return for the general meeting in September 1974 when, not unnaturally, it found itself in company with other documents with tile folio number 32. From this I conclude—and I would ask the Government to look again—that it does not necessarily follow, as night follows day, that the accounts, and the only accounts, which would produce a sufficient turnover for Scott Lithgow Dry Docks Limited to qualify under this Bill were presented at the meeting in June 1973. It seems at any rate possible that they may have been 177 presented the following year, in which case the company would not qualify.
I suggest to the Committee that that adds up to a number of further matters which arise out of the Written Answer, and I am giving to the Government the earliest possible notice that I am able to give this evening that I should like, please, answers to those matters (and I think other noble Lords would as well) so that we may seek to get to the truth of the matter before we decide what, if anything, has to be done about it—and it may be that nothing has to be done about it.
I am grateful to the Committee for listening to this saga. I am also grateful in advance to the noble Lord for his promise privately to me that he will look into it and answer.

§ Lord MELCHETT
Before the noble Viscount sits down, may I ask him one point of further information, although I do not know whether he is able to help your Lordships' Committee. He said that in the one case which he did not go into in any detail—Howie Limited—he felt there was no need for additional facts, but he added as a rider that there might be something which could be argued about. The noble Viscount did not tell us, however, what that was and it would be for the convenience of the Committee if he could go into it.

Viscount COLVILLE of CULROSS
Yes, certainly, if the Committee's patience will endure it. There are involved in this case two destroyers on refit for the Venezuelan Navy. They were in dry dock and the contract for their refitting was entered into by a firm called Cammell Laird Shiprepairers Limited who are an associate company of the two in the list: Howie and Western Shiprepairers. Only if you can aggregate the turnover of Cammell Laird Shiprepairers Limited do you get sufficient turnover for nationalisation under the Bill. Therefore the question is whether this was rightly done. Furthermore, since the turnover of Cammell Laird Shiprepairers was in itself in excess of £3.4 million, if you aggregate it in order to bring in J. B. Howie and Western Shiprepairers, why do you not also bring in Cammell Laird Shiprepairers who are not in the Schedule?
178 Two points arise out of this. It so happens that by the time one comes to the crucial date Cammell Laird Ship-repairers were a pure shell of a company. They possessed absolutely nothing at all in the way of equipment, manpower or anything else, and they had sub-contracted everything they were doing to Cammell Laird Shipbuilders Limited to carry out in a dry dock. The Government therefore concluded, first, that although they were not actually doing anything themselves they were still in business as ship repairers and therefore were capable of being an associated company but, secondly, that as they did not have a licence to occupy a dry dock, because they had sub-contracted the whole thing to Cammell Laird Shipbuilders Limited, they did not fulfil all three of the criteria and therefore themselves did not fall within the terminology so as to go into the Schedule.
Difficulty could arise in this way. First of all, if Cammell Laird Shiprepairers Limited were engaged in the business of ship repairing, it seems to me, at any rate, to be arguable that they must have been doing something about that business involving going either with sub-contractors or with agents on to a dock with equipment and men in order to carry out the refitting of the Venezuelan destroyers. Alternatively, if the Government are satisfied that they are not doing that, or were not doing it at the relevant time, are the Government sure that they were engaged in the business of refitting, or were they engaged in the business of procuring the refitting, over which there is a difference, as the noble Lord will appreciate. If the latter is the case, they do not fulfil another of the criteria in the Bill: their turnover would not be aggregable and, therefore, J. B. Howie and Western Shiprepairers would get out of the Schedule. Those are the two brief arguments but, as the noble Lord will appreciate, I do not think that they depend upon a matter of fact.

§ Lord WIGODER
The noble Viscount, Lord Colville of Culross, has raised these matters with a lucidity which makes him the envy of his colleagues at the Bar and I would not venture to follow him as to the details of these matters. I have also seen the various documents and respectfully agree with the noble Viscount's suggestion that clearly there are matters here which require the most careful 179 inquiry. I would ask the noble Lord, Lord Melchett, only whether he would agree about two matters. First, if the issue of hybridity is one that forces itself upon the attention of noble Lords, it is not the duty of a noble Lord to raise the matter in your Lordships' Committee.
Secondly, am I right in understanding the position that if there is a Motion to refer either the whole or the ship repairing part of this Bill to Examiners, the issue for your Lordships will be merely whether there is a doubt as to the Bill's hybridity? Am I right in understanding the position that if there is a doubt about the matter the House must decide to refer the whole issue to Examiners?
Perhaps I should add that on Second Reading the noble Lord, Lord Campbell of Croy, and I raised various matters about hybridity, and we then gave the Government every opportunity to answer these points. I think it is no breach of confidence if I say that the noble Lord, Lord Melchett, was kind enough, with his advisers, to see the noble Lord, Lord Campbell, and myself and to discuss matters with us. I think I can say on behalf of the noble Lord, Lord Campbell, as well as myself that we were much impressed with the great care and thoroughness with which the Government had been inquiring into these matters, and I am quite sure that nothing in the observations of the noble Viscount, Lord Colville, or myself, is intended for one moment to suggest that there has been any deliberate concealment by the Government or by their advisers in these matters; but the criteria that the Government have chosen in this Bill as to whether ship repairing companies should be included or excluded clearly gives rise to the greatest possible difficulties. As we have seen, every time the Government answer one set of queries, unhappily, it gives rise to another set. I do not know how long this process can go on. The matter was raised on Second Reading and it has been raised today in Committee and all of us have restrained ourselves from the temptation to table an Amendment to refer the matter to Examiners. I hope that on this occasion the noble Lord, Lord Melchett, will find it possible to give answers which will remove once and for all the doubts which at this moment so obviously exist.

180

§ 11.12 p.m.

§ Lord HARMAR-NICHOLLS
Before the noble Lord, Lord Melchett, replies, we have heard the lawyers, and I should like to add my tribute to the lucid explanation given by the noble Viscount, Lord Colville. He said that he was not at this moment charging anybody with doing anything wrong. Unless it is that when the noble Lord replies he says that in view of the doubt, clearly expressed from an authoritative source, on evidence which is impressive, and unless he says that he is prepared to recommend to the noble Lord the Leader of the House that it is referred to the Examiners, I think the Government will not be doing their duty. We have heard sufficient to know that there is a doubt about this; we have heard sufficient to know that the doubt is well based, and if there was an answer that the noble Lord could give off the cuff to my noble friend's argument it would have been given in the Written Answer that the noble Lord the Leader of the House put in Hansard the other day. I believe there is much more to this than wanting to win an argument.
When hybridity was raised as a matter that ought to be taken into account for good government, Parliament set up a procedure whereby if there were genuine doubts those doubts could be dispelled by impartial and objective examination by Examiners, and if we do not use that procedure then we are not using the full machinery set up by Parliament in order to deal with these things. The noble Viscount, Lord Colville, said it may well be that your Lordships will have to satisfy yourselves. How can Members of this House satisfy themselves with normal speeches across the Chamber?—a great speech from my noble friend; a speech in reply from the Dispatch Box on the other side. No evidence is called, no papers are produced, no proper examination is given. A matter such as this ought to be dealt with, and can only be dealt with, by a tribunal such as the Examiners, sitting down and doing it properly. We know very well that unless the Government offer to send it to the Examiners there will always be a doubt about it, whatever happens. If the Government put forward arguments which make it appear that it is not a hybrid there will always be doubts that they came to that conclusion by stretching 181 their conscience because they had to get their business through.

Several noble Lords
Withdraw!

§ Lord HARMAR-NICHOLLS
No. I am saying that if this decision is left to a supposed argument adduced at the Dispatch Box, there will be a doubt that they pushed that argument because it fitted in with Government business which had to be done. If, on the other hand, the argument was one from this side of the House, then the charge would be that it was the Opposition playing politics, the Opposition deliberately trying to hamstring the Government in doing their duty in bringing in legislation.
I do not think it is fair to Parliament that either the Government or the Opposition should have to risk that charge of bad faith when there is no need for it. If this was sent to the Examiners, who could call for papers, examine witnesses, and look at the matter quite clear of any sort of partiality, it would be accepted as an objective, impartial, and proper decision. Then it would be Parliament doing its duty, using the machine as it was intended to be used, and there would be no question of noble Lords asking me to withdraw, or, if the other thing happened, where we should be charged with putting ideology in front of doing our duty in working the Parliamentary system.
Now that the doubt has been raised—and I do not think anyone can say after listening to my noble friend that there is not a well based doubt—the longer that doubt is allowed to fester, then the more difficult it will be eventually to do the proper thing. I hope that the Government will give the sort of lead that in the past we have always had. I am addressing myself specifically to the Leader of the House who has the ear of his colleagues in the Cabinet. There is much more to this than winning a Parliamentary argument; there is much more to this than having alert and able lawyers arguing across the Floor of the House without the intensive examination that could be given if it was taken outside this House into an Examiner's Chamber. If we follow that line, we shall be doing our duty, and, what is perhaps more important, coming to a much better result out of fairness and justice to the people who are 182 going to be affected, than by leaving it to speeches across the Floor of the House.

§ 11.18 p.m.

§ Lord ORR-EWING
May I put a view not wholly associated with hybridity, though I realise the strength of that case. I suggest that since the Second Reading there has become an even stronger case, apart from hybridity, for leaving ship repairing out of this Bill. We shall be discussing this at a later stage. There has been pressure all round to reduce public expenditure. By leaving this out of the Bill I would estimate that £50 million might well be saved. There is a demand on all sides from all Parties to restore the confidence of those to whom we owe a great deal of money, our overseas creditors. It has been said that we are borrowing overseas at the rate of £35 million a day, so since Second Reading we have borrowed nearly another £490 million. This is not bird seed. The longer this is put off, the longer we go on the present trend, the longer we continue with these sort of measures, the more lack of confidence overseas will grow, and so will the value of the pound diminish. I cannot help feeling that, judging from world reaction to the speech in the other place today, we still have not stemmed the lack of confidence in the pound overseas. So apart from hybridity there is a strong case.
Much was made by the noble Lord, Lord Melchett, in his wind-up—and I do not want to deal with it in full detail now because there will be other occasions—of the recommendations of PA Consultants. We all recognise them as a very able firm—I think better known for head-hunting than passing judgments on heavy industry, but that is a matter of judgment. But one of the things that they alleged was that ship repairing, the whole industry, was suffering from lack of investment. I hope that noble Lords will consider that this is the one area of shipbuilding, apart, possibly, from docks, which does not really need massive machinery investment. This is the one area where management, flexibility, and the ability of the artificers, the mechanics, the turners, the shipwrights, count most of all. I note that PA Consultants said there was no need for a large dock. I should not think that is true; if we are to take on ship repairing in 183 this country, sooner or later we shall have to have that facility.
Since the announcement way back in 1973 that the Government were going to nationalise ship repairing we have had some first-class, and recent, experience of what happens when ship repairers have been nationalised. As part of the Court Line nationalisation we had North-East Coast Ship Repairers on the Tyne, a company which was doing extremely well. It had been historically profitable. What has happened? It is now making a loss. Then, after 18 months of nationalisation, Greenwells of Sunderland closed down on 31st March 1967, sacking 380 men and the reason given was that the Government could not attract clients. Thus we have two further reasons, up-to-date reasons, to show that nationalising ship repairing does not give the flexibility or dynamic that is so essential in this industry.
To summarise the further reasons I have given, first there is the complexity of hybridity and all that can do to the Parliamentary timetable; secondly, there is up-to-date evidence that it does not work, not only in this field but in many others as well; and thirdly, there is the desperate need to reduce public expenditure, a need that grows greater every day, and here we can save £50 million. For those reasons alone, I hope the Government will seriously consider whether this part of the Bill could not neatly, tidily and without raising great emotions on either side be removed from the measure, with merit to all.

§ Lord TREFGARNE
I have been involved, on the perimeter I must say, in the recent discussions on hybridity and have read the Written Answer which was provided with care and, like the noble Viscount, Lord St. Davids, I can only offer a layman's view, which is, as the noble Viscount said, that there is nothing certain except that there is some uncertainty. May I ask the Minister to say clearly what would happen if the Committee decided that the Bill should go to the Examiners, or at least if the ship repairing element in it should go to them? I am told that it would be possible for us to submit to the Examiners only that part of the Bill that relates to the ship repairing industry and that it would at the same time be possible for 184 the other parts of the Bill to proceed, while the Select Committee, if that was decided upon, sat on the ship repairing side. If that were decided upon, what sort of timetable would the noble Lord envisage?

§ Lord LLOYD of KILGERRAN
I wish to join other noble Lords in urging that ship repairing be removed from the Bill. Quite apart from the aspects of hybridity, in my submission to have the ship repairing industry taken over—if those are the correct words to use—in the way the Bill envisages is likely to do great damage to a virile and successful industry. It is likely to cause more unemployment in the regions in which these firms operate. I do not think from what I have heard in our proceedings or from what I have read of the debates in another place that the Government have yet appreciated that the ship repairing industry is quite distinct from the shipbuilding industry. It is distinct in its skills and size; in doing the jobs it must carry out, it operates with perhaps from 35 to 100 persons. It is a highly specialised industry and it is, as the noble Lord, Lord Campbell of Croy, said, a service-based industry whose jobs may take a few hours or a few months under a variety of conditions both onshore and offshore. In my view, the nationalised industries cannot respond quickly and successfully to the demands that are now made on this virile and successful industry. Therefore, I would follow the noble Lords who have urged on grounds other than hybridity that ship repairing should be excluded from the Bill.

§ 11.25 p.m.

§ Lord MELCHETT
May I first seek to put right something which I think the noble Lord, Lord Harmar-Nicholls, said. If I have misunderstood him, I shall immediately withdraw what I am about to say. I got the impression that he told the House that if the answers to the points about hybridity that have been raised this evening by the noble Viscount had been available when the Written Answer was produced they would have been put in.
That is simply not the case. The Government were given certain information during the Second Reading stage and in a letter from the noble Lord, Lord Campbell of Croy. That was all the 185 information that we were given and we provided, to the best of our ability, all the answers to that information by way of Written Answer. The full information that the Government could have provided, the Government provided to the House. What is more, to make sure that there was no misunderstanding about the items of information that we had and the questions that noble Lords opposite wanted answered, I asked the noble Lords, Lord Wigoder and Lord Campbell of Croy, to have a meeting with my advisers with the papers and the documents—which, on many of these issues, are very lengthy and complicated—to ensure that any questions that remained in their minds were answered to the best of their ability by the Government and my advisers. There is absolutely no question that at any stage the Government have been attempting to conceal information from your Lordships' House.

§ Lord HARMAR-NICHOLLS
I did not say that. The point that I was making was very clear. I was saying that the noble Lord's speech now was superfluous because I had no doubt that everything the Government knew had already been put into the Answer to the Written Question. That was what I meant. I said that we already had sufficient information to come to a conclusion and that that conclusion was that this ought to go to the Examiners. Rather than saying that the Government had withheld anything, I said the opposite. I said that they had already put on the record all they knew and that what the noble Lord was now going to say was superfluous as a consequence.

§ Lord MELCHETT
What has happened this evening, in my understanding—and I followed the noble Viscount as carefully as I could—is that he has raised some new issues and, in particular, some new questions of fact which have not been raised before in your Lordships' House; that, the noble Viscount very considerately, fairly and properly told us. To say that the Government have answered those new questions seems to me to be quite unfair, and I hope that the noble Lord will withdraw the allegation that vie do not have any more information to give on these matters. These are new matters 186 that have not been placed before the Government before tonight.
The noble Viscount told me before this debate started that he would not wish me to answer the points of detail that he has raised. I therefore do not intend to do so. It would not be sensible to try to answer questions on particular documents until I have had a chance to look at the very detailed questions of fact that the noble Viscount has asked me. I believe that he will agree with that response. As I said on Second Reading, the Government's attitude has all along been that we shall certainly do our utmost to answer any questions about this issue that are put to us. I think that our record to date bears out that what I was saying is indeed the attitude of the Government.
For the same reasons, I do not think that it would be fair for me to attempt to answer the questions asked me by the noble Lord, Lord Wigoder. Indeed, I do not pretend to be an expert on your Lordships' procedure. I am not sure that anyone is really all that expert on the procedure which should be followed in this case and I believe that the noble Lord, Lord Wigoder, will understand if I do not attempt to answer the two questions he asked me, and the same goes for the question which the noble Lord, Lord Trefgarne, asked me.
I find myself in some difficulty in replying to the remainder of the debate. I am not at all clear whether the noble Lord, Lord Campbell of Croy, intends to press the Amendment. If he does and ship repairing is deleted from the Bill, then much of what we have been discussing tonight becomes slightly academic, to put it no higher. On the other hand, it would seem to me rather unnecessary at this late hour, unless noble Lords wish me, to go into a long and detailed explanation of the very good industrial case which the Government have for nationalising the ship repairing industry, if we are to spend some time later during the Committee stage discussing the matter further. But I should be very grateful for the advice of the noble Lord, Lord Campbell of Croy, on how he would prefer me to proceed at this stage.

Lord CAMPBELL of CROY
I hoped that I had made it clear. First, on the question of the hybridity which has been raised, as my noble friend Lord Colville 187 of Culross said, he did not expect a full answer to that tonight. He has raised complicated matters. The Government should clearly look into these matters thoroughly and urgently. After all, these are new questions which have been raised by the Government's own interpretations of the criteria as set out last week in the Answer of the noble Lord the Leader of the House.
I agree with the noble Lord, Lord Wigoder, that the Government took great trouble last week to clarify their view of the application of criteria and the facts as known to them. I made this clear in my speech at the beginning. But what I asked the noble Lord, Lord Melchett, was at this early stage to explain to the Committee the general reasons why the Government were still insisting apparently upon the nationalisation of the ship repairing industry. I for one should certainly be disappointed if the noble Lord is not prepared to do that now, though I should not expect him to go into the details of hybridity.

§ Lord MELCHETT
It delights me to be able to return to the mundane matter of the Amendments before the Committee, and it is with great pleasure that I should like to answer the speeches by the noble Lord, Lord Campbell of Croy, the noble Lord, Lord Orr-Ewing, and the noble Lord, Lord Lloyd of Kilgerran, who spoke on the Amendment before us in particular and on the case for including, or not including, ship repairing in the Bill.
I should like to open with a remark which I should prefer to be directed entirely to noble Lords immediately opposite, rather than those on the Liberal benches, because I regret to say that I want very briefly to mention the question of Manifestoes. As noble Lords know, there were two specific commitments to nationalise the ship repair industry in both our 1974 Election Manifestoes, a commitment which was quite distinct from the commitment to nationalise shipbuilding. That commitment arose from the report of the joint Labour Party/CSEU/TUC Working Party report which was published in 1973 when we were in Opposition. This joint Working Party recommended that the proposed corporation should acquire, 188 … "control of all significant companies in the shipbuilding, ship repair and marine engineering industries and this was endorsed by the 1973 annual conferences of all three bodies—

§ Lord ORR-EWING
I am sorry to interrupt the noble Lord, but since he mentioned nationalisation, if he looks at that—and I looked at it most carefully in the Library—he will see that there was no mention of nationalisation. It said, "take under public control". As I said earlier, one can take under public control with 30 per cent.; one does not have to have total ownership of all the assets and all the equity of a company.

§ Lord MELCHETT
As we have said in several different debates on the Bill, we believe that the Bill represents the most effective way of taking this industry under public control, and that is why the ship repairing industry is included in the Bill. The ship repairing industry faces a number of problems identified, as the noble Lord, Lord Orr-Ewing, reminded us, by the PA Management Consultants Limited report on the industry. I would not follow the noble Lord, Lord Orr-Ewing, in his slightly hesitant doubts about the competency or otherwise of PA Management Consultants; after all, they were appointed by a Government of noble Lords opposite and it would not be for me to question their competence or otherwise.
That report identified a number of "obstacles to growth" in the ship repairing industry. From the report some of the most significant are: 1. the development of an already strong industry on the continent; 2. the existence in many cases of several ship repairers within one estuary and the consequent tendency for the individual companies to compete against each other instead of concentrating upon meeting overseas competition; 3. outdated facilities of many repairers which will become even more unsuitable in the longer term as the average size and type of vessel changes; 4. unsatisfactory labour relations and their impact upon international competitiveness". The report states that assistance is likely to be needed to finance essential investment as sufficient funds are unlikely to be forthcoming from the private sector. In the past 10 years, employment in ship repairing has halved, and without modernisation the industry is likely to decline further. Most of the jobs at present provided by the industry are in 189 assisted areas. The major aim, therefore, of taking into public ownership the larger ship repairing companies is substantially to improve investment and productivity in the industry. Taking into public ownership the larger companies, mostly situated on the main estuaries, will enable British Shipbuilders to produce a coherent strategy for the larger ship repairing yards as a whole.
I would suggest that if Amendments were passed which deleted the ship repairing companies listed in the Bill, that would create serious anomalies. One of the largest ship repair companies, North East Coast Shiprepairers Limited, is already in public ownership. The activities of Scott Lithgow Dry Docks Limited, Swan Hunter Shiprepairers Tyne Limited and the Wallsend Slipway and Engineering Company are all closely linked with their associated shipbuilding companies. Indeed, when an Amendment was moved at Committee stage in another place to nationalise the shipbuilding companies and to leave Scott Lithgow Dry Docks in the private sector, it was pointed out that this would create real difficulties over flexibility; for example, in exchange of labour between the two. It has been said both here and in another place that there is no real connection between shipbuilding and ship repairing. I would suggest to noble Lords that the examples cited above belie that claim, as does the experience of our most successful competitors.
When this was mentioned by my noble friend during the Second Reading debate, there were some expressions of mirth from noble Lords opposite. My noble friend mentioned, in particular, the experience of Japan and South Korea. Noble Lords are constantly telling us that this country's industry must become more competitive, and I suggest that one of the ways in which we might learn a little is to look around at our most successful competitors to see what they are doing which we are not. Japan and South Korea are both very successful in the shipbuilding field, and both of them have closely integrated shipbuilding and ship repair industries.
During the passage of the Bill there has been some criticism of the scope of public ownership in the ship repair industry. Some people have argued that individual companies should be exempted from 190 nationalisation on the grounds that they are small, while others have pressed for the inclusion of other, even smaller, ship repairing companies. I think it might be helpful if, in conclusion, I explained, therefore, why the Government's proposals were drawn up as they are in Schedule 2 to the Bill. As the PA report pointed out, the most significant ship repairing units are those which are located on the major estuaries in Great Britain; for example, the Tyne, the Mersey, the Thames, the Bristol Channel, the Humber and the Lower Clyde. In fact, what the Bill achieves is to bring into public ownership all the large ship repairing companies, mostly located on the main estuaries, thus enabling us to draw up a coherent strategy for the industry. It is often said that the Government have not even attempted to set out the industrial case for nationalising the ship repair industry. It is for that reason that I make no apology to your Lordships' Committee for taking some time, at this very late hour, in attempting to do just that.

Lord CAMPBELL of CROY
The noble Lord, when asked to give sound reasons for the inclusion of ship repairing in these nationalisation proposals, started, not by giving us a reason but a commitment. He simply said that, because it had been in the Labour Party's Manifesto, this was the reason why it now had to be included. We on this side of the Committee cannot accept that as a reason in itself. The Party opposite may now find themselves in this position; but it is not a sound reason for carrying out this operation which could be extremely harmful to an important industry.
Then the noble Lord spoke about some of these firms being in one estuary. As I pointed out in my earlier speech, this is the equivalent of the garages on land which carry out repairs at very short notice, sometimes a matter of only a few hours, where everything depends on good relations, quick contact and quick decisions with the consumers' interests uppermost in mind. The noble Lord said that the equipment and installations were outdated and spoke about investment and the need for modernisation. What has happened to Greenwall's since they were nationalised? They have had to go out of business and over 700 redundancies have been caused. If that is what is 191 being prescribed for these firms under this Bill, that is not in the direction of investment and modernisation.
The noble Lord said that some centralised control would improve the British ship repairing industry. I pointed out when moving this Amendment that the British industry has, in fact, been successful in obtaining a large share of the business which has been available in the European sphere. This has depended upon, and relied upon, the fact that the individual firms could independently meet the wishes of their customers. We believe that when centralised control and nationalisation, if it were to come about, descended upon these ship repairing firms, some of their customers would feel that they no longer have the quick response and direct communication with the firms that they do now and have had when they have done business with them in the past.

§ Lord MELCHETT
I am sure the noble Lord did not say so deliberately, but I did not mention anything about centralised control. I spoke about a coherent strategy; but we have made it clear all along that if this industry were nationalised it would not be subject to centralised control.

Lord CAMPBELL of CROY
If I did not use the exact words, it was because I was not able to take them all down. The noble Lord talked about firms in a single estuary and the need for some control or coherent strategy which does not exist at present. But at present it is clear that the firms are successful in this business, which is a service industry, where they are carrying out the same kind of job and operation as garages who maintain and repair motor vehicles on land. It is not the same kind of business as a manufacturing industry which goes in for construction and assembly in a few concentrated units.
The noble Lord also said that most of these firms were in assisted areas; but a number of them are successful and carry out their business in areas which are not assisted areas or special development areas or intermediate areas. They are showing that they can carry out their business without grants or considerable assistance from the Government. The 192 effect of nationalisation would probably be to make them less able to carry on the business that they have been doing. Certainly, it will promote doubt and suspicion in the minds of their customers.
I do not believe that the noble Lord has yet given a real reason for nationalising the ship repairing industry. From what he has said, it still sounds as though the Government think it is very closely and irrevocably linked with the ship building industry and they are putting these firms into the Bill because they had muddled up the two industries and their operations.
The noble Lord asked whether I was proposing to press this Amendment; but I think I made it clear earlier that this is simply an initial paving Amendment on which we were seeking the Government's views which hitherto we had not received and which, even now when we have heard them, can hardly have impressed many noble Lords on any but the Front Bench opposite. So I will tell him straight away that I am not proposing to press this Amendment tonight because we want to pursue this subject on later Amendments and at later stages. We hope to get better answers from the Government than we have heard tonight. I beg leave to withdraw my Amendment.

§ Amendment, by leave, withdrawn.

§ Viscount SIMON had given Notice of his intention to move Amendment No. 31: Page 4, line 10, leave out ("(a)")

§ The noble Viscount said: I put down this Amendment because I cannot make out what paragraph (a) means or why it has been put in the Bill; but having said that, I do not move the Amendment.

§ Viscount SIMON had given Notice of his intention to move Amendment No. 33: Page 4, line 11, after ("production") insert ("and").

§ The noble Viscount said: This Amendment and Amendment No. 34 is an attempt to do what the noble Lord, Lord Campbell of Croy, was trying to do, to get the ship repairing business out of the Bill. We do not want to discuss this all over again on a different Amendment which, in the last resort, is going to have the same effect. Amendment No. 33 is also in some sense a paving Amendment for Amendment No. 35, and perhaps I 193 should speak to Amendment No. 35. As this is a major Amendment, I wonder whether the noble Baroness the Chief Whip would think this an appropriate time to adjourn.

§ Baroness LLEWELYN-DAVIES of HASTOE
We on this side are prepared to go on for a long time. But I think most of the Committee are somewhat exhausted. As I understand it, the noble Viscount is moving Amendments Nos. 33 and 34, and not proposing to move Amendment No. 35. Am I right?

§ Viscount SIMON
No, I was going to withdraw No. 34. Amendment No. 33 is also a paving amendment to Amendment No. 35 and I did not know whether the Committee wished to embark on that debate now.

§ Baroness LLEWELYN-DAVIES of HASTOE
We have already started on Amendment No. 33 or the noble Viscount could not have moved Amendment No. 34.

§ Viscount SIMON
We have the great difficulty that the earliest Amendment is not an Amendment of substance at all; it is purely a drafting Amendment to make room for the one which follows.

Lord CAMPBELL of CROY
I suggest that as Amendment No. 35 starts a debate of some substance, whereas the other two Amendments are small drafting Amendments, it would be convenient if we did not start on Amendment No. 35 tonight.

§ Baroness LLEWELYN-DAVIES of HASTOE
That had been my understanding before the noble Viscount introduced Amendment No. 35. I think it would be a good idea if I now move that the House do now resume.

§ Moved accordingly and, on Question, Motion agreed to.

§ House resumed.