HL Deb 14 October 1976 vol 375 cc561-633

8.11 p.m.

House again in Committee on Amendment No. 45.


Before the dinner break we were in the middle of what I think most people would recognise as a very valuable discussion on industrial democracy, and in some ways it was a pity that the trend of the debate had to be interrupted. The noble Lord, Lord Mackie, said that in his view either the words "industrial democracy" as written in the Bill really ought to be defined, or some other kind of expression ought to be used, and I am bound to say that I, too, am of that opinion. So far as I am concerned, the remarks that I wish to make about this have absolutely no partisan feeling about them at all. If "industrial democracy" means anything, as my noble friend Lord Carr said, it must refer to all the people and, quite clearly, as it is put in the Bill at least, to that extent "industrial democracy" is not being used in that capacity.

When one puts in a phrase such as this it must mean something, and it must be interpreted in a certain way; and it is disturbing when the Minister of State says: Through consultation with our legal advisers, we have established that the phrase 'industrial democracy' does not as yet have a sufficiently clear meaning to be interpreted in a court of law. Therefore, to place a statutory duty for industrial democracy would be to impose an improper burden on the courts in requiring them to interpret it."—[Official Report, Commons, Standing Committee D, 13/1/76; col. 184.] I think that is an absolutely understandable view and a very important one, because to put these words in the Bill as they are is bound to indicate that they are deserving of some interpretation and the Minister of State, in his own words, after taking advice says that this is not possible.

Viscount SIMON

May I interrupt the noble Lord for a moment, because I did not quite hear him. He said, "the Minister of State". When did he say it, and which Minister of State?


It was Mr. Kaufmann, at col. 184 of Standing Committee Don 13th January.

Viscount SIMON

I am most grateful.


The fact that he has said that this phrase is not interpretable in the strictest sense to me is an argument for saying we must find some other words, because they must be interpretable; and what I should like to suggest is that we should try to see what we mean by "industrial democracy". As I see it, there are two concepts here. On the one hand, if it means that a firm or a corporation or a body of people should consult those who are members of it, take into account the interests of those people involved in it and make them be participating in their organisation, then that, of course, is highly commendable, and I think nobody in any part of the House would say that a firm or a business will not work considerably better if those who are involved in all its work know what they are doing, feel that they are cared for and that they are properly participating in the success of the business.

On the other hand, of course, it may be the second alternative, that industrial democracy requires those who are involved in the business in fact to participate in the running of the business, to participate in the management of the business and to be elected to those positions of management. This would, of course, have a very different working, for this reason: if you are going to have on a board, as my noble friend said before the dinner break, what are normally described as worker directors, this may in some terms be highly democratic, but I think it poses one great problem. If it is to be wholly democratic they have to be elected by some means or other. Once they are elected, immediately there arises a conflict of loyalties. To whom are such people responsible? To the Board corporately, or to those who have elected them? And if it is that they are not responsible to those who have elected them, it may be asked, why, then, are they elected? Is the answer, to be responsible to the Board, as my noble friend said, and that those worker directors who are so elected to a Board must accept corporate responsibility? If so, and if you are not careful, inevitably they are going to be divorced from those who have elected them there.

There is no Party stuff whatsoever in this. This is merely how I see the concept of the difficulty: Once people are elected, to whom are they responsible? This in turn makes one think, "Is it right that a business of any description, whatever it is, should be managed solely by those who are elected or for those who are elected?" That leads one to say, "Well, what is the purpose of business?" The purpose of any business must surely be to run the business as successfully as possible for all those who are involved in it. Fundamentally, this means that you have to run it for the benefit of, essentially, those who consume, because if you have not got the consumers then you cannot sell your products.

In any business, and particularly in these two vast industries of shipbuilding and aerospace, there arc whole hosts of people involved. You have the people on the shop floor, you have the management people, you have the foremen, the technicians, the engineers, the naval architects, the solicitors, the accountants, those who sell abroad, those who sell in this country; each person is hugely dependent upon the others. Equally, you have those who manage the business, whose business is to run the finances, to try and organise and direct all the efforts of these people to a profitable conclusion.

I am bound to say that I find it difficult to think that if you are going to get industrial democracy operating in that second area which I have tried to describe, you will end up by being a producer-orientated organisation. Once you are a producer-orientated instead of a consumer-orientated organisation then, as I think I mentioned in my Second Reading speech when I quoted Sir Keith Joseph, you are well on the way to being crippled.


Would the noble Earl say that the Milk Marketing Board is an incompetent organisation? It is a wholly producer-elected body and it works. I think that the noble Earl is carrying the argument too far. Would he not agree that, after experience, we could well have worker elected directors but that it is too early to have them now?


I quite agree with the noble Lord and in what I have said I have tried not to dispense entirely with the idea of worker elected directors. I was merely trying to point out the difficulty which may well come about if you write into a Statute something which is not absolutely crystal clear. There may well be examples of producer organisations which work effectively. The noble Lord, Lord Mackie of Benshie, has mentioned one example and I would say to him that, as he will readily realise, it is a quite unique example.

If one is to have this kind of democracy, which in itself may be desirable, it is essential to know exactly what it is that one is after. May I suggest with the greatest of respect that fundamentally a business must be run by those who are capable of running it for the people who are going to purchase. Once you have lost that fundamental aim you have lost the purpose of the business.

This does not mean that there are not many circumstances in which the participation of employees cannot fruitfully take place. I think that it can take place. There are many opportunities of this nature for people. I merely utter one word of warning. If you are to write into a Bill that you want industrial democracy you must be absolutely clear about what you mean by industrial democracy. I do not believe that the Bill makes this clear, and I hope that some method will be found of trying to discern whether it is participation by those who are involved that is required or whether it is the eventual and gradual running of the organisation for the benefit of those who are involved that is required. My fear is that it might end up by being the latter, which I do not believe would be for the benefit of either the organisation or those who are involved.

Viscount ST. DAVIDS

I am totally with the noble Earl in his remarks about producer and consumer orientated organisations. However, I think that the noble Earl missed a point which is very much in his favour. A producer orientated organisation can run in certain circumstances—that is, if the consumer is more or less captive. In the case of the Milk Marketing Board, all the people who buy milk are in this country; they cannot cross the Channel in order to buy their milk. However, there is nothing whatever to stop the consumers of ships or aircraft from buying them elsewhere. They are not in the same position. Surely, therefore, the example which was quoted to the noble Earl of the Milk Marketing Board is not quite fair in this context. The fact of the matter is that you can get away with a producer orientated organisation in the case of milk but not in the case of ships or aircraft.


Like so many noble Lords who have spoken thus far, I am quite in the dark as to what industrial democracy means. If the Bill had just contained a few vague references to the term it might have passed unremarked, but my fears are raised by the references to the "relevant trade unions" in a subsequent part of the Bill. The Government's concept of industrial democracy seems to me to be just to consult a few of the work people. This has raised our fears; at least it has raised mine.

We shall be discussing the question of "relevant trade unions" in a later Amendment, but may I put it to the noble Lord that our fear is that industrial democracy, as he would have us imagine it, is not that at all; it is simply handing over power from one set of people, those who are presently charged with running these industries, to another set of people whose record is as yet untried. I hope that the noble Lord will be able to allay my fears in that respect at least.

The Earl of ONSLOW

I am sorry to intervene again during the Committee's debate on this subject, but what has struck me throughout the debate, and also when I re-read the Bill, is that the Bill says that it shall be the duty of each Corporation to promote this strong and organic industrial democracy. Then we read in subsection (10): Nothing in this section shall be construed as imposing upon either Corporation, directly or indirectly, any form of duty or liability enforceable by proceedings before any court". If we have something written into an Act of Parliament, what on earth is the point of saying that it is unenforceable in any court? It seems to me to be meaningless.

8.27 p.m.


We have had a long and interesting, although sadly interrupted, debate and I am glad to have the chance at last to say a brief word on behalf of the Government. A couple of points have been raised. The noble Earl, Lord Onslow, has just raised one about the position of the courts in interpreting this phrase in the Bill. The noble Lord, Lord Trefgarne, raised another point about trade unions, which we shall come to in later Amendments. Therefore I will deal primarily with the two Amendments which we arc debating at this stage.

Before I explain the Government's view of industrial democracy, I should like to deal very briefly with what seems to me to be a specious argument, although it is one that several noble Lords have advanced during the course of the debate on these two Amendments: that is, as argued by noble Lords, that anything which cannot be precisely defined should not be included as part of the duties of the Corporations.

Leaving aside for one moment the question of legal interpretation, which, as I say, we shall come to, that does not seem to me to be an argument that is necessarily valid. There are a large number of concepts, many of which we would all agree are extremely valuable and desirable but which we would all have a great deal of difficulty in defining—and, indeed, many of which courts of law might have a great deal of difficulty in defining. Just because these things are difficult (and I do not think that they are difficult) to define, I do not believe that that is necessarily a reason for excluding them from a Bill. Nor I do think, just because they arc difficult to define, that they are necessarily either meaningless or useless.

It has been said on many occasions by Government spokesmen on this Bill that we see positive disadvantages in defining "industrial democracy". As my noble friend Lord Kirkhill said on an earlier Amendment, it is something which we see developing from the wishes and aspirations of those in the industry itself. We expect it to involve participation by employees in decision making at all levels, but in whatever form they decide is most appropriate. We sec it developing in a variety of ways, and progressively, over time. We do not want to suggest a definition prescribing a final form for industrial democracy which might inhibit its development to take account of the changing views of those actually working in the industry. While we do not want to put definitions into the Bill, I believe that "industrial democracy" is a phrase which is well understood in industry. It does not cover a single, narrow system of voting but a wide though recognisable range of industrial organisation and behaviour.

The noble Lord, Lord Carr—whom I see is not able to be with us for the end of the debate—spent some time going over the dictionary definitions of various words that his Amendment touched on. I would have to agree with my noble friend who spoke earlier in the debate and said that dictionary definitions were not really going to be much use to people on the shop floor, and therefore would suggest that they should not take up too much of your Lordships' time. Of course, democracy in a constitutional sense covers a wide range of forms and practices from constant referenda to representative chambers. Democracy applied within an industry similarly covers a range of concepts and possibilities, some of which may, of course, overlap, from co-operative ownership to thoroughgoing consultation with varying degrees of involvement or participation in management decisions at various levels in between. Industrial organisations in all the developed economies are bound to move in this direction, as they have done already in many countries and indeed within some enterprises in this country. I believe that all noble Lords agree that benevolent patriarchy is simply not enough in the late twentieth century.


Benevolent what?



The Earl of ONSLOW

A patriarch, with the greatest respect to the noble Lord, is a gentleman with a long beard who lives in Istanbul and keeps the Greek Church in order.


I accept the noble Lord's correction of my pronuncuation.

If I lack political sophistication, as was alleged by noble Lords opposite when we were discussing the meaning of the word "efficiency" in Clause 2, I can at least see that people have reached a degree of social and educational sophistication at which they rightly feel that they have something to contribute to the way their enterprise is run. That is not, I believe, a Party matter, and I would entirely agree with the spirit in which the noble Earl, Lord Ferrers, introduced his remarks on the Amendment. And although we may disagree in your Lordships' Chamber about particular forms or even about names, I believe that all people of good will are now trying to encourage effective industrial democracy.

It seems to me that where the main difference, if there is a difference, lies between what my noble friend and I have been saying and what some other noble Lords have said in the course of the debate, is that we see as of fundamental importance the fact that what form industrial democracy takes should be left to the people involved. In fact, when noble Lords ask us to define precisely what we mean by industrial democracy what they are either consciously or unconsciously saying is: "You must lay down what form industrial democracy is to take in these particular industries at this particular time"—presumably in the Bill, where it will be enshrined in Statute law for all time. I simply do not see industrial democracy working like that. If that is a difference—and the noble Lord, Lord Mackie, is making noises which suggest that he and I at least would disagree on this—it is a fundamental difference in what we see as the industrial democracy involvement.


Would not the noble Lord perhaps agree that when the Government take an industry and support it with the money of all the people, perhaps the Government, representing all the people, ought to have some say in how the thing develops? It might even be irresponsible not to have some say.


Well, as I say, it reflects a fundamental difference in what we mean by industrial democracy. We quite firmly see that as something that must develop from the people working in the industries. The noble Lord mentioned that he was not entirely at one with the young Liberals on this matter. I am not sure to what extent the rest of his Party follow the younger members, but I suggest to him that on the whole this is something that the Liberal Party have tended to agree with—that industrial democracy must develop from the people actually involved and should not follow rigid formulations laid down by the Government or indeed the management of the industries concerned either.

I want to say a word about the expression "strong and organic" to which several noble Lords have drawn attention. I do not pretend for a moment that the words have any precise meaning, but the Government believe that they are important and useful because they underline that we are not talking about something imposed from outside, as I have said to the noble Lord, Lord Mackie, and we are not talking about something weak. We mean, and the phrase to us implies, something vigorous, something growing from within the organisation as part of its constitution and as part of its structure.

To turn to the actual Amendment which we have been discussing all this time and which was moved by the noble Viscount, Lord Simon, I would just make one brief comment to him. It seems to me that the effect of the Amendment is to narrow the duty placed on the Corporations because the Amendment specifies the form worker participation should take in these particular industries. I would, of course, expect industrial democracy to involve participation in the processes leading to management decisions, but it can also, as I have said in general terms, involve other forms of participation—for example participation in decision-taking itself. As my honourable and right honourable friends have explained frequently in another place and as I have repeated in the general debate tonight, we believe it is for those involved in shipbuilding and aerospace to decide which form of industrial democracy is most appropriate for their industries. The present wording in the Bill, therefore, has been carefully chosen to place a firm obligation on the new Corporations to promote industrial democracy, while leaving the greatest possible scope for those within the industries to determine what form this should take.

The Amendment moved by the noble Viscount, Lord Simon, would, I believe, reduce this flexibility, and I therefore do not believe that it would be wise to narrow the definition in the way he suggests.

8.36 p.m.


The noble Lord has been arguing as though somebody had suggested that the words "industrial democracy" should be removed from the English language. That is not the situation. The Amendment is to remove them from the Bill. It would be perfectly all right to put them in the Explanatory Memorandum. It would be perfectly all right to explain when the Bill is being presented for somebody to operate that this is the general intention behind it. But if we are going to be responsible legislators, bearing in mind that other people have to suffer sometimes if they do not adhere to the words we put in our legislation, we ought not to put into an Act something that cannot be defined. The noble Lord tried very hard to produce a definition, and I would imagine that if anybody could do so it would be he; he is alert and he is with it. It is not a question of removing it from the language, but I believe it ought not to be put into the Bill.


I know it is not for me to lecture an experienced Parliamentarian like the noble Lord, Lord Harmar-Nicholls, but this illustrates one of the dangers of joining a debate having not heard the mover of the Amendment who made it quite clear that he was not moving the Amendment to delete these words but merely to seek an explanation from the Government as to what they thought they meant.


That was very courteous, and I accept it, and the noble Lord was absolutely right. But if this is Parliament in Committee, it is not for Members of any House to adhere slavishly to what movers and seconders of Amendments have done. If in the process of discussing these things weaknesses are shown which could not have been foreseen by the movers and seconders, any Member has a duty to draw attention to this. All I am saying at this minute is that the noble Lord went to the Dispatch Box to answer arguments that I had heard, whatever somebody before that had said; and I am saying that his argument made it perfectly clear that neither he nor his colleagues know what these words mean.

The noble Lord said that what he thinks they mean is a desirable thing for people to keep in mind, and I do not disagree with that, but if that is the explanation—and he is the Minister giving it—the place for that is in the Explanatory Memorandum, not in the Bill itself. I say as a general proposition, quite apart from this one, that legislators ought never to put into Acts things which cannot be defined, because if that is done people are left to put their own interpretation on what is in the Act and this may be starting trouble. Some of us who have to run businesses know perfectly well that on occasions we have employees who are just as desirous as one is oneself to make a success of the business.

If they see in this that it is the duty of the Corporation to take into account and to promote industrial democracy, they can charge you with not promoting industrial democracy as they see it and that can be grounds for their being a little more awkward in terms of general production. What I am saying is that he has proved that it cannot be defined, in this Act or in any other, and words ought not to be put in which cannot be defined. They can be in an Explanatory Memorandum as a general proposition but not in an Act.

8.41 p.m.


One thing still worries me, and I think it would worry a lot of people. These two industries are so sophisticated that it does not matter whether you are a person on the shop floor, a manager, a salesman or a member of the Board—each person is vitally important as an expert at his own particular job. I remember saying during the Second Reading debate that I thought there was every virtue in consultation but there was none in "Buggins' turn". All I meant by that was that, just in the same way as a pilot of an aeroplane has to be a highly trained and skilled person to fly that aeroplane, he can only do so if the people who have been involved in the electronics and the avionics and if the machine tool operators have been equally efficient in their way. Equally, the person who has been responsible for running the business has to be efficient, and in my humble opinion those people responsible for running the businesses must be chosen because of the qualities they possess for doing the job that they arc put in to do, which is to run the business.

The fear is that in the long term this concept of industrial democracy might well end by people being in particular positions in business, not because they are qualified to do the job but simply because they have been elected to do it. It is in that way that you become inward-looking and producer-orientated. I think that is the danger.

The Earl of ONSLOW

I should like to press the noble Lord, Lord Melchett, on this point. When replying to the mover and to other speeches on the subject of industrial democracy, he has gone to great lengths to say that it is what the workers want. I should like him to answer this question: If the workers want British aerospace and British shipyards to be denationalised, and this is democratic, will he give the Government's pledge that their wishes will he adhered to?


I shall be very brief, as the noble Lord knows I always am, but there are a few points I should like to raise. First, my noble friend Lord Carr of Hadley unfortunately has had to leave but he will, obviously, be reading the noble Lord's reply very carefully. My noble friend stated quite clearly that lie was not going to move this Amendment, which of course we shall not do. I should like to congratulate the noble Lord, Lord Melchett, on a masterly speech. I felt that not only was it a masterpiece as a speech, but it was a masterpiece of flexibility inasmuch as at the end of the day I do not think any of us were all that much wiser on some of these points. It was a fascinating speech and it was beautifully delivered.

There is another aspect which concerns me and I am sure the noble Lord may just answer this point in concluding the debate. I know that the noble Lord has been very careful tonight to get his words quoted hack to him correctly, and I should hate to get this wrong, although I am sure he will tell me if I have. He said that the people who work in the industry must decide —or words to that effect. This point was raised earlier and the noble Lord did not actually answer it then. In the aircraft industry, where there are large numbers of white collar workers, the proportion of people who are in the unions is not that large and the question really comes back to one of consultation, to which we shall be coming later. Surely it is not merely the unions concerned; it is all the people. I am sure that we shall all be grateful if the noble Lord will cover that point in somewhat greater detail.

Another point which has been raised is, that if industrial democracy is not defined then, as the Minister of State said, it could not be enforced. I listened carefully to what the noble Lord said and it seemed to me that on the one side we had the Red Queen saving, "Strong organic industrial democracy", and on the other side we had the Cheshire cat in the terms of the clause which says it is unenforceable, saying, "Which way?" I thought there was a slight inconsistency there.


In response to the noble Lords who have raised these points I would just say that they will very shortly he arising on Amendments and I did not feel it was my job to delay the Committee by making long speeches which I shall have to make again in a few minutes' time.

Viscount SIMON

We have had a long and interesting debate, interrupted by dinner. There is only one respect in which I really disagree with the noble Lord, Lord Melchett. I think he told the Committee that the mover of the Amendment had said that he did not want to remove these words but merely to probe. I think the noble Lord, Lord Carr, said he wanted to probe, but I want to remove these words for the reasons I have expressed. I think they are imprecise and, what is worse, they can lead to misunderstanding.

We have had a lot of discussion about what "industrial democracy" means. I think all of us in this Chamber have heard a lot of it in recent years, and we know broadly what it means. But in my view it is desirable to try to define it in some way, for the reasons I have explained. I found a splendid definition which was given by the Secretary of State in another place on 28th July of this year. It was mentioned by my noble friend Lord Lloyd of Kilgerran during the Second Reading debate in this House. What Mr. Varley said was: The honourable gentleman pretended not to know what it meant. The honourable gentleman says that we should tell him. It really means that we have to identify those who work in industry with the decision taking in their industries. Strangely enough, I had not read those words, and I had not even heard them from the lips of my noble friend Lord Lloyd of Kilgerran when I wrote this Amendment; but it seems to me that I came pretty close to what the Minister said.

In my view that is all we need to say. The noble Lord, Lord Melchett, suggested that these words in some way limited the form in which this participation could take place. They certainly were not meant to, and if the noble Lord feels that the words are limiting, perhaps he can suggest some wider words. There was one phrase which I did not like very much. He said that it should be discussed in each industry or in each business, and that it should be finally settled "in the form they decide"—"they" being the workers. I think on consideration the noble Lord will agree that it is not the form they decide; it is the form that is agreed between the workers and the management. I entirely agree with him that there must be complete flexibility, and if I thought that the words I had suggested inhibited complete flexibility I would withdraw them at once and look for some others; but having found the support of Mr. Varley I think the words are pretty good.

In all other respects I want to say, for the benefit of noble Lords on my left, that I am far closer to the noble Lord, Lord Melchett, than they are. I think the Liberal Party and noble Lords opposite are aiming at exactly the same thing here. It is just a question of how we get it. I do not think it would be useful to press this Amendment today, but I hope that between now and the later stages of the Bill the Government will consider the wording. Wording does not mean much if we know what it means, but I think there is uncertainty about this.

Perhaps briefly I may mention something else to your Lordships. I was at a meeting in Paris last week, listening to some of the civil servants of the OECD, and I suddenly pricked up my ears when I heard them talking about "industrial democracy". I then discovered that this was a generic term for the democratic countries of Western Europe which were also industrialised. They were described as "industrial democracies", which shows that the words can convey completely different meanings. I feel really strongly that these words should be out. I agree that they are already in some Statutes, but I do not think it is too late to give them an honourable burial and to put something in their place. If we go on with them much longer we shall be landed with them for ever. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

8.50 p.m.

Viscount SIMON moved Amendment No. 47: Page 5, line 12, at end insert ("incorporated in the United Kingdom".)

The noble Viscount said: This is a tiny point which has been brought to my notice. The clause requires the Corporations to ensure that the promotion of industrial democracy, or whatever words we put in, is undertaken by themselves and by their wholly owned subsidiaries. It has been called to my attention that one or two of those companies have wholly owned subsidiaries abroad. It has been suggested to me that in fact it is impracticable to ask them to promote this situation abroad in circumstances where the legal position may be quite different from the legal position in this country, and that therefore we should add after the words "wholly owned subsidiary" the words "incorporated in the United Kingdom". It is a fairly narrow point, but we feel we may be imposing on the Corporations a task which in fact it is impossible for them effectively to carry out. I beg to move.


I should like briefly to support what has just been said by the noble Viscount, Lord Simon. It seems to be quite impossible in certain countries to enforce something which is in any event somewhat difficult to define. It could cause a number of problems if these directives were put down where the legislation in that country was in contradiction to the ruling by the Corporation. Consequently, I support the noble Viscount.

The Earl of ONSLOW

I have one or two words to say on this Amendment. I think the Amendment is very clear in its intention, but it might be worth while taking some examples of this. If we developed this, as yet still undefined, concept of industrial democracy, and laid down in this country how it should work, and then tried to impose that pattern in, say, Germany, France or Holland, we should run up against the pattern of supervisory boards and worker electors which I think exists in those various countries. If some of these companies have a subsidiary in South Africa—and I think they do—we should be building up terrible trouble. By this, please do not let anybody take the impression that I am in any way sympathetic to or that I like apartheid. I do not, but that could present problems.

If there were a joint company in a Communist State, we would again run up against enormously complicated arrangements and difficulties. All I am doing is trying to identify some of the difficulties which could arise. I should like to hear the views of the noble Lord, Lord Winterbottom, on this particular subject.

Several noble Lords

Hear, hear!


I think those cheers are excessive in view of the size of the Amendment. May I say that we are talking about wholly owned subsidiaries which are in fact, I presume, separate local entities belonging to but being separate from the parent company. One thing has come out clearly from the discussions which have been going on for some little time on the subject of industrial democracy; that is, that industrial democracy can mean many things to all men. If I may paraphrase a statement by a judge of the American Supreme Court, and I am paraphrasing in order not to shock your Lordships, it is simply: I recognise an elephant when I see it but find it difficult to define. I think this is very true. We all know what we mean by industrial democracy, but it is difficult to define. Industrial democracy in an independent but wholly owned subsidiary in Germany will differ from a similar organisation in Saudi Arabia—and these are two real possibilities.

We believe that the concept of industrial democracy is sufficiently flexible to embrace various legal systems and various civilisations. If, as we hope, the British Aerospace companies and British Shipbuilders take a lead in this field in this country, their foreign subsidiaries should have the same opportunity. For these reasons, I hope that your Lordships will not accept the Amendment of the noble Viscount, Lord Simon.


I know that this discussion has been going on for a long time, but am I not right in thinking that this Government have appointed a committee on industrial democracy? I remember it, because I was so annoyed that they did not even put a woman on it. I am not a Women's Lib person, but I thought it really was ridiculous. I think the committee was appointed a few months ago, as we do not seem to understand what "industrial democracy" means in terms. So is it not possible now, for all of us interested in the subject, in these Amendments and so on, to go to that committee and ask it if it is ready to interpret the words "industrial democracy"? What on earth is the good of having such a committee, a very important committee with many important members on it, appointed by the Labour Government, if the Government keep on giving answers in the Chamber which do not seem to be very satisfactory? What is the good of appointing a committee if the Government try and interpret these words? Presumably the Government have to wait until they get a report from the Committee which will tell them about industrial democracy.


I must say that the Government Front Bench seem to find the Amendment rather funny. I do not find it so. It is a serious and important Amendment. I hope the Government will consider the matter with rather more care than is apparent just now. As my noble friend Lord Onslow and the noble Viscount, Lord Simon, have said, this is an important matter. I should particularly like to emphasise the point that my noble friend Lord Onslow made about countries which have a different social order from ours. We may not approve of their social orders, but that is the situation in those countries, for now at least. For us to prejudge the issue and, in short, to be very patronising about the situation, is inappropriate. I hope that the noble Lord, Lord Winterbottom, will consider this matter a little more carefully than appears to have been the case thus far, and perhaps offer a more sympathetic acceptance of the Amendment.


Would the noble Lord care to change his illustration? Everybody recognises an elephant, although they do not need to define it. Would the noble Lord agree to take an abstract thing like Heaven? Everyone's idea of Heaven is entirely different. No one has ever succeeded, so far as I know, in defining it. Perhaps an elephant is the wrong illustration.

Viscount SIMON

I see that the noble Lord, Lord Winterbottom, shakes his head, which seems to indicate he is not prepared to move towards us. I am rather sorry about this, because I agree with the noble Lord, Lord Trefgarne. This is a serious Amendment, although the area in which it operates is fairly narrow. We must recognise that there are countries—I am not saying there are cases in point, because I do not know that there are, but there are countries, for instance, where trade unionism is very little developed and where possibly it would be extremely difficult at this stage to develop any effective participation with employees. In that case, one might be imposing on these corporations a duty—we must remember it is a duty, not just a power but a duty—which it would be very difficult to fulfil.

I do not believe many cases are involved, so that by putting in these words we should not be shutting the door. After all, in all areas where it is possible companies will still be able to encourage industrial democracy, or whatever we call it, in these various companies. But to impose a duty on them to do it irrespective of the industrial conditions and political system in the country might be to impose upon them a duty which is not capable of being fulfilled. And although in the later clause it does say—and my noble friend Lord Lloyd is going to have a go at it—that they could not be sued if they failed to do it, the object must be to lay upon the Corporations duties which it is reasonably possible for them to perform. I am obviously not going to press this Amendment, but I should like noble Lords on the Front Bench opposite to give some thought to this before the next stage to see whether there is anything we can do.


We will certainly consider the points raised by the noble Viscount, particularly looking into the legal aspects of companies trading overseas.

The Earl of ONSLOW

Before the noble Lord concludes with that very short answer, which is basically, "I will go away and think about it, but nothing will be done at all", if I am not being too cynical—


I think, with respect, the noble Earl is being too cynical. The noble Viscount asked my noble friend to take this away and look at it and my noble friend has said that he will do just that.

The Earl of ONSLOW

If I am being too cynical I would certainly apologise to the noble Lord, Lord Winterbottom, who is quite comfortably my favourite man on the Government Front Bench. The point I should very much like him to answer is in regard to, first, Saudi Arabia, or secondly, say, South Korea. One hopes that these Corporations are going to work and are going to be aggressively commercial and set up companies to make money for the public who are going to own them, in various other countries. If in a country like South Korea, you impose this duty on a board there and then the South Korean police move in with the orders of President Park, this is going to be incredibly difficult. We must please have some greater explanations to Lordships from the Government on this.

Viscount SIMON

I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

9.2 p.m.

Viscount SIMON moved Amendment No. 49: Page 5, line 13, leave out ("3") and insert ("6")

The noble Viscount said: I am sorry to be troubling your Lordships so continuously. In my speech on Second Reading, I outlined the purpose of this Amendment. We lay upon the Corporations a duty to promote (I am going to use my own words) the effective participation of employees in processes leading to management decisions, but we say that within three months of vesting date they are to consult with the trade unions as to the methods by which this can be implemented. I agree that all it says is that they are to get in touch with the trade unions in three months, and it may be said that they will not be all that busy that they cannot have a meeting with the trade unions in three months.

The Corporations, when they are set up, will have a very big task in moulding all these different undertakings together. If they have a meeting with the trade unions, of course immediately after that there will be a great deal of pressure to say when the next meeting will be. They could well spend a great deal of time on this very difficult subject. I have suggested that the time should be extended from three months to six months. There is no great magic in these figures. I thought that six months would give time for the Bullock Report to be published, and it would be much easier for these discussions to take place when the parties concerned have before them the Bullock Report. That Committee has been looking into this matter, and would perhaps give them some guidelines along which they might work. The Corporations could say, within three months of being set up, "Let us ask the trade unions to come and talk to us and then we have started our consultation". But I do not think that that is quite what the Government want to happen. I should have thought it might be better to extend that period, from three months to six months. As I say, there is no magic in the figures. Three months is a rather short time. These new Boards will be dealing with a great multitude of problems. I beg to move.


Surely what the noble Viscount, Lord Rochdale, said earlier on another Amendment, about how industrial democracy was introduced into Harland and Wolff, is very relevant to this Amendment. What people want to happen quite often does not happen as quickly as they would like.


May I support the Amendment from my own knowledge about what has happened in Northern Ireland. Although people have said that seven days is a long time in politics, when it comes to the question of promoting industrial democracy, whatever that means, dealing with very many various Types of unions and many types of men, six months is a jolly short time in which to get a lot of very strong characters to agree.


I think noble Lords have not quite grasped the point. We have not said that agreement should be reached within three months or six months, but that discussions should begin within three months or six months. That is a very profound difference. I cannot share the fears of the noble Viscount, Lord Simon, that this is something that will be given a low priority in the general reorganisation and negotiations which the two new Boards will have to tackle the moment they are made responsible for these two great industries. I should have thought that this might appear right at the head of their list of priorities.

I will take a bet with the noble Viscount that discussions will start within the first month, because in fact, as noble Lords probably know, the Organising Committees and the trade unions are already working on this important subject. The ground rules are now already being laid down. For this reason I do not think it really matters very much whether we take three months or six months, since the work has already started. But I feel that it is better, to give a sense of urgency, that we should not accept the six months proposal of the noble Viscount but should stay with the three months in the Bill.


What is the point of putting any number in if they have already started?


That is just to encourage them to get on.

Viscount SIMON

I think the noble Lord, Lord Winterbottom, has made a fair point here. It is, as he said, only the question of starting discussions. I did not want discussions to start just for the sake of getting them going in order to comply with the law and then going to sleep on them. He rightly says that these matters have no doubt been examined already by the Organising Committees, and in view of that I think the sensible thing for me to do is to withdraw this Amendment.

Amendment, by leave, withdrawn.


Earl FERRERS moved Amendment No. 50: Page 5, line 14, after ("with") insert ("(a)").

The noble Earl said: Here we come on to the part of the Bill which determines how this industrial democracy shall be brought about. The noble Lord, Lord Winterbottom, said in reply to the Amendment before last that we all know what industrial democracy means. We have had a discussion on this, and one thing that is perfectly evident is that we do not know what it means, which in itself is a worry. But I think we do determine a bit from this subsection what the Government mean by "industrial democracy". Incidentally, Amendment No. 50 goes with Amendment No. 51.

If industrial democracy means anything at all, as we discussed previously, it must mean of all the people. Clause 2(8) says that industrial democracy should be carried out. Subsection (9) imposes a duty on the Corporation to have consultations about how that industrial democracy is to be carried out. The first thing it does is to confine those discussions to the relevant trade unions, and they are defined at page 76 as being the unions which not only must be independent but also must have been recognised for the purposes of collective bargaining to be unions as to which the Advisory Conciliation and Arbitration Service has made a recommendation for recognition.

The Corporation has a duty laid upon it to discuss only with those people the form that industrial democracy is to take. By this Amendment what we seek to do is to allow all the workforce to be a party to these discussions. I suppose there are about one-third of the total employees of both the shipbuilding and the aircraft industries who are members of no unions at all. These are such people as naval architects, engineers, accountants, and people in the managerial grades who are members of no union. It seems to me quite inconceivable, if we are going to have industrial democracy, if the employees and those who participate in the firms are to determine the way in which their firms or businesses are to go, that one-third of them should be removed from such a discussion. It makes a mockery of the word "democracy" whatever it does to the "industrial" part of the phrase. I hope that your Lordships will agree that this is a reasonable Amendment to make. Not only do I hope that noble Lords will agree but I hope particularly that Her Majesty's Government will agree.

One of the drawbacks of this industrial democracy concept has been the polarisation of people who are fundamentally un-unionised people into unions as quickly as possible in order to try to safeguard their position. There are many people involved in these industries who are, by their very nature, not union orientated people, and they suddenly discover that the Government have brought in this Bill which is going to divest them of all say in how their company is going to be run. Therefore, they have tried to gather themselves into unions in order that their say should be heard.

Then of course we have the problem that the Government complain, as they have, that there is a proliferation of unions, and they cannot cope with talking to all these unions because there are too many of them. There are various staff associations, for instance, which this Bill, as it is constructed at the moment, completely removes from participation, not in industrial democracy but in consultations about how industrial democracy should work. I can tell your Lordships of one organisation which has recently grown up—The British Aerospace Staffs Association—a new union or corporation of people who have joined together simply in order that their voice should be heard in the future of the industry with which they are highly involved. But they are not allowed to be consulted and I know that the noble Lord, Lord Beswick, has had some trouble because they were anxious to see him, yet he said, "No, I cannot see you because you are not a recognised trade union and therefore it would be wrong for me to see you".

I can understand that point of view, but that is what has happened and that is what the Government have done by introducing the Bill; they have encouraged people to join into unions which they would never have done before. I have even heard it said—I do not know whether the noble Lord, Lord Melchett, would care to comment on this—that the TUC has brought pressure on Lord Beswick not to become involved with the British Aerospace Staffs Association because there are already sufficient unions in the aircraft industry.

If that is so, and I do not know whether Lord Melchett knows if it is, then it is terrible because it is really the TUC bringing pressure to bear on a chairman-elect of a Corporation as to whom he should consult. That cannot possibly be right and our fear is that as the Bill is drafted the only people who are to be consulted about how industrial democracy should be brought to bear are those who have the right to participate in discussions on wages, terms and conditions and so on of their employment. We believe that this is far too narrow. We believe that if industrial democracy is to be written into the Bill then all those people who are involved in their industry must as of right be consulted. I hope that Lord Melchett will see the virtue of the Amendment and will accept it.


I support this important Amendment and I view the Government's conception of industrial democracy with grave suspicion. When the noble Lord, Lord Winterbottom, used the expression "you know what an elephant is", perhaps he was thinking of the trade unions as his concept of democracy. If one cannot envisage the fact that if industrial democracy is to mean anything it will mean plant, company and corporation loyalty and that the further down it goes the more effective it is, then one does not understand what industrial democracy means at all. It is self-evident that the trade unions of this country are not only too fragmented to be effective but are in many cases completely out of touch with workers on the shop floor and have lost much of their influence to the shop stewards on the shop floor.

It is to us in the Liberal Party self-evident that it must be wrong to consult only whom one regards as the relevant trade unions. If this is to be a success it must involve all the people in the plant. I am afraid that if industrial democracy is to work in this country it will lead to a withering away of the enormous trade unions with their card votes and everything else because the loyalties of the workers in a plant must inevitably be to their own firm and to their own fellows in that plant and not to remote and strange trade unions. If one is to promote industrial democracy, it must be within a sizeable group to which the workers and all the people working can relate, and for that reason I have much pleasure in supporting the Amendment.


Perhaps it is appropriate to remind people on the 200th anniversary of the United States that it is government of the people, by the people, and for the people", and that it was not said that it was government by a few people. Fundamentally, it is all the people, and that is why this is an Amendment of good substance. In the aircraft industry, in which between one-third and one-half of the total work force is not in organised "relevant" unions, it does not make sense to set out in the Bill a limitation which prevents an important section in any organisation from being consulted in the introduction of industrial democracy and from participating fully in working it out.

It is to be remembered that subsections (8) and (9) were considerably tightened up as a result of pressure from the Tribune Group in the Committee stage. I do not think that the Tribune Group is very strongly represented in this House—I do not see it very strongly represented on the Front Bench at the moment. Perhaps the noble Lord would like to claim honorary membership. I should be very happy if he wishes to do so, although it seems that at the moment he will not.

Perhaps this is an opportunity to restore the balance a little, because as my noble friend in front here has said, plant loyalty is to be encouraged. It is all too fragile at the moment. When I first started working in industry we met one another a good deal more in canteens, and at football and cricket grounds or similar places. Now in more than half the cases sports fields have been sold by firms for building. Immediately the hooter or its equivalent sounds—and generally a quarter of an hour before this—everyone is starting to rush out to their cars, motor cycles or bicycles to go home to watch the telly, redecorate the house or do something else. Therefore we need to do all we can to encourage the workforce to feel a whole and a loyal support to the plant. This would he one more divisive factor. It is being said here that theoretically industrial democracy is for everyone but that in fact one-third or sometimes a half of the workers cannot take part. As noble Lords know only too well, it is only a few of those people who take part, and this is what leads to so much disruption in our industrial life. I very much hope that when the noble Lord looks at this matter he will put it back and will make it possible for everyone to participate and to work towards an industrial democracy which makes sense and which is above all both fair and represents people in all grades, every one of which grade is important to the working of any industrial plant.


I have no wish to delay the proceedings of the Committee unduly, for very obvious reasons, but I rise to say that I have a very slight sympathy with the Amendment. Since we are discussing industrial democracy I wish to suggest that I should be able to muster far more sympathy with Amendment 51 if in the second line the noble Earl were to insert: organisations appearing to the Corporation to be democratically elected representatives of its employers … Equally in line 3 of the Amendment it might be desirable, again since we are discussing industrial democracy—whatever it may mean to noble Lords on either side—to insert before the word "employees" the words: democratically elected representatives of employees of its wholly owned subsidiaries… I merely throw out this suggestion to the Opposition because this matter may arise again at the Report stage. It might he worthwhile for the Opposition to redraft the Amendment so that it might have a wider appeal to other Members of the House.


It might be thought that from these Benches one is not in sympathy with the trade unions and I hasten to add that this is not the case so far as I am concerned. In a sense, if one sits on these Benches or those Benches opposite one is a joiner in your Lordships' House, but if one is not one sits on the Cross-Benches. I have found from practical experience that trade unions are absolutely essential to any form of business. I was very surprised recently in trying to organise a job evaluation exercise to find how absolutely dedicated certain individuals were. My noble friends have talked about groups of people who will be excluded if the Bill is not amended. But there are within all of us individuals who are dead against committing their future, their life, into the hands of organised bodies, and they tend to be disenfranchised in any arrangement. Even when one starts talking about democratically elected representatives, this is very difficult to do.

I think it important to take account of the fact that there are a lot of people—maybe one might describe them as "loners"—whose interests must be looked after and who feel deeply resentful at the organised bodies with which they feel powerless to compete. I suggest that somehow we must take account—and this does not relate only to the trade unions—of a rather large number of people with this feeling, which one only discovers almost by mistake, who are resentful of the growing influence of organised bodies such as the trade unions, Parliament, consumer groups or whatever. We are, in a sense, being undemocratically organised where account is not taken of that feeling. The only area in which we do take account of it is in Parliamentary and local government elections, which your Lordships will remember include everybody. I suggest to the noble Lords opposite that these Amendments of ours may need rather more careful consideration than might be thought necessary at first view. They are not Party political Amendments, but Amendments which take account of the feelings of people today. I believe that they should be seen in that light.

9.26 p.m.


When the noble Lord, Lord Segal, rose, my heart leapt up at the thought that at long last this Bill or a small part of it was about to be supported by a Member on the Government Benches. Alack! To my eternal disappointment, it was not to be. The noble Lord, Lord Melchett, will agree that we have been over this or similar ground on innumerable other clauses in innumerable other Bills. I hope, therefore, that he will forgive my asking him whether, when he comes to the passage in his brief in which it says that there is nothing in Clause 9 to prevent the Corporation from consulting with other persons or organisations as suggested in the Amendment moved by the noble Earl, Lord Ferrers, he would be good enough to pause for a moment and explain to us not merely that, but also why it is that in those circumstances the "relevant trade unions" have been given a privileged position by being specified in the clause rather than all the employees as indicated in the noble Earl's Amendment.


I have a nasty feeling that the Government have been rumbled in this Bill. They are seeking to pass power to a privileged group of people. In the Dock Work Regulation Bill which we are considering on other days this week, they seem to be seeking to do precisely the same thing. Your Lordships will recall that in the Dock Work Regulation Bill the Government are seeking to transfer the wor0k presently done by people belonging to all sorts of unions and organisations to one set of people—namely, the dockers. I feel that that proposal is just as objectionable as this one. In my submission, it is to transfer control or, if that is too strong a word in this context, industrial democratic power from where it may lie at present to a narrow set of people called the "relevant trade unions".

Our worst fears have been realised by the facts that have been recounted by my noble friend Lord Ferrers, who told us about the members of a particular trade union who were apparently not seen by the chairman of the Organising Committee because he, according to the rumours that we have heard, was asked by the TUC not to see them. This seems to me to be a quite disgraceful state of affairs and unless the noble Lord, Lord Melchett, is able to give us some very reassuring facts about the situation, I believe that our worst fears will have been well founded. The situation is quite clear. We must not allow this to arise even if we are misinformed on the facts as we now believe them to be, although that I doubt. In any event, I shall most strongly support the Amendment.


May I first of all apologise for the fact that I appear to have a page missing from my brief if I am to believe what the noble Lord, Lord Wigoder, told me it should say. It might be useful if I did not read out that part that he said I was meant to read out, as it is not here.


Would the noble Lord like a page of mine instead?


I think it would be fair to say to the noble Earl that we have heard quite enough pages from his brief and it is time that mine at least had a chance of a say in your Lordships' Chamber. Instead of reading out the part which the noble Lord, Lord Wigoder, expected, it might be more helpful to him to say what my understanding is of the actual practice of the chairman designate of the two Corporations. As I understand it, they arc both perfectly willing to talk to anybody who wishes to talk to them, and I know that my noble friend Lord Beswick has met groups of people, among which have been both members of trade unions and also people who are not members of trade unions. I do not know whether that helps the noble Lord, Lord Wigoder, at all, but it is perhaps more useful than the non-existent page of my brief.


Can the noble Lord say specifically whether the noble Lord, Lord Beswick, has seen the group of persons referred to by my noble friend Lord Ferrers?


No, I am afraid I do not have that particular information, and I regret to say I cannot remember which group it was which the noble Earl referred to.


I am sorry to press the noble Lord, but I regard this as a matter of particular importance. It has been alleged that the noble Lord, Lord Beswick, declined to see—and I am speaking from memory of what the noble Earl said, and he will correct me if I am wrong—the British Aerospace Staffs' Association who are, I believe, according to the noble Earl, a comparatively recently formed Association. Unless the noble Lord can give us some clear indications on that fact, our worst fears will remain in our minds.


As the noble Lord said before he sat down, whatever I said his worst fears would remain in his mind, so I am not sure why he is troubling to press me, particularly as I have told him that my noble friend Lord Beswick has said that he is willing to see anybody at any time.

The Earl of ONSLOW

May I be permitted to press this point. The noble Lord, Lord Beswick, cannot answer this question on account of the Addison Rules but I would have thought, as the noble Lord, Lord Melchett, said earlier that he did not know, that it would have been possible for him to put pen to paper and pass a note approximately 12 feet down your Lordships' Chamber and ask the noble Lord, Lord Beswick, whether he has seen these people and then give a reply to my noble friends Lord Trefgarne and Lord Ferrers.


As the noble Earl knows, I am here to speak for the Government and not for my noble friend Lord Beswick or any other individual who may be affected by this. I am giving your Lordships to the best of my ability the Government's view on the Amendments which have been moved in your Lordships' Committee.




I have given way twice to the noble Lord and once to the noble Earl. If I could now be permitted to finish my speech, the noble Lord may then make another speech if he wishes to afterwards and no one, I am sure, will prevent him.

These Amendments seek to confer on any organisation representative of employees or employers in the wholly-owned subsidiaries, the rights the Government believe should be confined to unions which meet the criteria for independence and recognition which have been established by the Trade Union and Labour Relations Amendment Act 1974 and the Employment Protection Act 1975. We have had representations from the employees in these industries who are not members of unions at present recognised by employers in the industry, and who very understandably want to participate in the consultations on industrial democracy under Clause 2, on organisation under Clause 5 and on machinery for settling terms and conditions of employment under Clause 6.

I fully understand this and the Government certainly hope that these people will make their full contribution to the future of these industries. None the less, I do not believe that it would be in the interests of the employees of either of these two industries to accept these Amendments. They would cut across the Government's policy on collective bargaining and employee representation which we continue to believe to be in the best interests of all employees. As the wording suggested by noble Lords opposite fails to take account of current legislation, I believe it could lead to each Corporation facing a difficult industrial relations problem without providing any means of solving it.

The provisions in the Bill which, as I have said and as the noble Lord, Lord Wigoder, pointed out, are in line with other recent Acts of Parliament which have been through your Lordships' House and over which we have had exactly the same arguments as we are having tonight, provide a means of resolving disputes between rival groups claiming to represent employees. Under those provisions any such disagreement which would not be resolved by the Corporation and those involved would be considered by ACAS. The Government are of the firm view that the arrangements in the Bill are in the best interests of all employees in both industries. I therefore urge noble Lords to resist the Amendment.

9.36 p.m.

Viscount SIMON

I was rather surprised to hear what the noble Lord, Lord Melchett, was saying then, because in an earlier Amendment he was saying—and I was warmly agreeing with him—that in the various subsidiary companies of the Corporations there should be freedom to negotiate what was the best arrangement. If the Government are laying down that the arrangement must take a particular form, they are doing exactly what earlier on the noble Lord was saying he thought that he could not do.


I think the noble Lord has found the page in his brief which he said he did not have. He said precisely what the noble Lord, Lord Wigoder, anticipated would be in the brief. He did not use the identical words. The noble Lord said that the chairman and others had made it perfectly clear that they were perfectly prepared to see anybody. There was no question about that. He went on to say that it was important that one group should be identified and the other should not. The question put to him by the noble Lord, Lord Wigoder, ought to be answered clearly. If, in arriving at a proper arrangement one can name one group—in this case, the relevant trade union—and if it is the desire of other groups, for the very good reasons my noble friend put forward, also to have a chance to put their point of view, why cannot that equally be written in to the Bill?


One thing that came out of what the noble Lord said made me very happy indeed. As I understood it, he guaranteed that at least the noble Lord, Lord Beswick, will see the Association which was mentioned. We should all be very grateful that this will definitely happen.


I do not know whether the noble Lord is deliberately trying to make trouble for these important industries; but it is quite unfair for him to say that I said that. He knows very well that I did not, and I hope that he will withdraw the suggestion.


I do not follow the noble Lord at all. Asking me to withdraw is rather discourteous on his part. I was merely saying that it is nice to know that he said that the noble Lord, Lord Beswick, will sec anybody on this. That is what I understood him to say. It will be very interesting to see in Hansard what was actually said. If he did not say that, then I misheard him. I certainly understood those were his words.

There is one brief point that I wish to raise which seemed to be totally skated over in the normal way by the noble Lord, Lord Melchett, who makes a nice argument but does not touch on the real meat of the matter—or get down to the bones of it, perhaps I should say. In an industry which is so technologically orientated, you have certain groups of people who are not, as we know, orientated to trade unions. These people are of a vast importance to the on-going health of that industry. They must be consulted. To say that it is inconvenient—and there are so many things in this life that are inconvenient—and hiding behind that, is not good enough. The Council of Engineering Institutions, and their various members, must be consulted. If it is just going to be the trade unions who will be consulted, industry will suffer. I hope that the noble Lord will have some more to say on this.


I pause because I thought the noble Lord, Lord Melchett, was going to reply. It appears he is not. The noble Lord has evidently "shot his bolt". I think that I can come to the noble Lord's help because I realise that he was addressing himself—quite correctly—to the Amendment as printed in the Marshalled List. Unfortunately, there is a misprint. The Amendment says: and other persons or organisations appearing to the Corporation to be representative of those of its employers or the employees of its wholly-owned subsidiaries … Of course, the word "employers" is a misprint and should be "employees". If the noble Lord finds that any of the remarks he has made he would wish to change because he might have addressed himself to that erroneously printed Amendment, I will willingly give way—No, the noble Lord shakes his head.


Then is it "employees" twice?


Yes, that is so. It should read: other persons or organisations appearing to the Corporation to be representative of those of its employees or the employees of its wholly owned subsidiaries … I think that makes grammatical sense: the other version, as it was printed, makes nonsense. I am bound to say I was glad that the noble Lord, Lord Segal, felt he was minded to support us in the theory, if not in the wording, of the Amendment.


Might I dispel any misapprehension about this. When I said I was slightly in sympathy with this Amendment, I should like to confirm that the degree of sympathy is so miniscule that I wanted some slight alteration in the wording of the Amendment before I could slightly increase the amount of sympathy I might have felt for it.


The noble Lord is peculiarly ungenerous, considering it is after dinner. But I am glad that he showed at least a tiny bit of sympathy, even though it was not quite as large as we might have hoped. I believe that what he said was that he would like to see democratically elected representatives. I believe that draws the net even tighter, because if the Amendment goes in as it is it would read: other persons or organisations appearing to the Corporation to be representative of those of its employees.… That could well include those who are democratically elected representatives. If one were to use that form of words, one would again exclude that vast proportion of people who are not union orientated and who do not want to belong to groups of people. I think, as my noble friend Lord Mottistone said, there is a very great fear that people in general are having a reaction against the big battalions. People do not always want to belong to the big battalions, and of course this does not mean that they arc any less in favour of their industry or less well disposed towards it. It merely means that as an individual you prefer to remain on your own and not to be grouped together.

The whole purpose of this Amendment was to try to ensure that when British Aerospace or British Shipbuilders, or any other body, is consulting on how to organise industrial democracy all these people, whether they are inside or outside unions, should be involved. I am bound to say that I was as surprised as my noble friend by the remarks of the noble Lord, Lord Melchett, when he said he could not accept this as it cut across collective bargaining and employee representation. With the greatest respect, this has nothing to do with collective bargaining; it is solely concerned with how to bring about this extraordinary phrase "industrial democracy" which is clear to the noble Lords, Lord Melchett and Lord Winter-bottom, but which everyone else finds it difficult to interpret. It is how to put that into operation that we are concerned about here.

That is the great problem with the Bill as it is drawn—that the only people who are to be consulted are to be consulted for collective bargaining purposes. I think that is a far too narrow proportion of people. And the inference is that that is all right: "We have got enough unions, and if you want to be involved in consultation, then you must join one of the existing unions." I do not believe, even if that is accepted as an argument for collective bargaining, that it is an argument for considering how industrial democracy should be brought about. I would therefore ask your Lordships to agree with me, in the interests of this peculiar form of words which the Government have themselves put into the Bill, that our Amendment should go into it as well, so as to encompass all those who at the moment are specifically—and, I

Resolved in the affirmative, and Amendment agreed to accordingly

venture to say, deliberately—excluded from consultation.

9.45 p.m.

On Question, Whether the said Amendment (No. 50) shall be agreed to?

Their Lordships divided: Contents, 61; Non-Contents, 22.

9.54 p.m.

Earl FERRERS moved Amendment No. 51:

Page 5, line 15, after ("unions") insert ("and (b) other persons or organisations appearing to the Corporation to he representative of those of its employers or the employees of its wholly owned subsidiaries who are not members of a relevant trade union").

On Question, Amendment agreed to.

Lord LLOYD of KILGERRAN moved Amendment No. 52: Page 5, line 18, leave out subsection (10).

The noble Lord said: In so far as I can understand Clause 2(10) it raises matters of very considerable public importance, because it endeavours to exclude aggrieved parties from having recourse to the courts and in those circumstances, of course, it affects the rights of individuals, and is worthy of careful consideration. I am inviting the help of the Minister in so far as his Government's understanding of the clause is concerned. In order to help him may I say that I have considered the scope of this subsection in the context of Part III of the Bill, and in particular Clause 42 of that Part, which sets up an arbitration tribunal for disputes under the Bill. I have also carefully considered Clause 53, which deals with liabilities arising on the Corporation. But in my submission, in so far as I can understand these clauses, none of them is of relevance to the point I am making in regard to subsection (10). As at present drafted, it seems to me that the exemption contained in this subsection is far too wide and could lead to serious hardship for employees of the Corporations and could also involve the industrial property rights of firms associated with aerospace and shipbuilding technology.

May I ask your Lordships to consider the scope of Clause 2(10). It says: Nothing in this section shall be construed as imposing upon either Corporation, now follow two important words— directly or indirectly, and it is the scope of the words "or indirectly" which cause me considerable anxiety. The subsection continues: any form of duty or liability enforceable by proceedings before any court". Therefore the effect of the subsection is that any form of duty or liability arising directly or indirectly under its terms cannot be enforceable in the courts of law.

Perhaps I may give one or two examples of why I think that this subsection, as drafted, could cause considerable hardship. Let us suppose that in the course of their duties under Clause 2(1) the Corporations decided to promote efficient and economic design, or development or production, to take three aspects of this clause which it is the duty of the Corporations to promote; and let us also suppose that the Corporations decide to use the results arising from their duties to promote research. I assume that useful, practical and commercial results will arise from the promotion of research, particularly having regard to the sympathetic approach of the Minister when I suggested that a more balanced expression would have been "research and innovation" and I withdrew my Amendment to insert the word "innovation". Let us further suppose that in the course of this operation the Corporations were to use a design, invention or process which is thought by some firm or individual to be the subject of patent or design rights owned by that outside firm or individual. If it were a normal commercial matter, the person or firm owning the patent or design rights would be entitled to bring proceedings either in the courts or in the Patents Appeal Tribunal against the person or firm which was thought to be infringing those rights.

It seems to me, therefore, that the wording of subsection (10), particularly having regard to the word "indirectly", means that if the Corporations should infringe a patent or design when exercising their duty to promote then there shall be no recourse to the courts. It seems to me that that cannot be a just position for the Corporations to adopt.

May I give a second instance. Suppose that there is disclosure of know-how by a person or firm not employed in the Corporation, a confidential disclosure to the Corporation through one of the employees of the Corporation. It might be that the disclosure was made to a person in the management; it might be a disclosure to a technical person on the staff of the Corporation—it is a very common experience for confidential information to be disclosed to an organisation or a firm—and trouble arises.

Suppose that the Corporation uses this confidential know-how which has been disclosed to it—and this could be done quite inadvertently, without any intent to be fraudulent or to raise difficulties. In the normal commercial practice at the Patent Bar we are frequently involved in such disputes, where the person who owns this confidential know-how can at once go to the court and say that his property in certain inventions as designs has been used, that the know-how has been used and that it was disclosed in confidence. Therefore he would have some rights and be able to have recourse to the courts. It seems to me that as the Bill is at present drafted, particularly having regard to the word "indirectly", there is a danger of the owner of know-how who discloses it in confidence to the Corporation having his rights affected.

May I take another instance of an employee in the Corporation who is an inventor and who happens to produce an invention while an employee. This again in ordinary commercial practice can raise difficulties. The employee may say that he owns rights in the invention. The Corporation may say that he has no rights in the invention. At once a dispute arises which in normal practice could be sent to the High Court, or, as I have said, to the Patent Office Court, where provision is made for dealing with such disputes.

No doubt the Minister and his Department are aware of the discussions at the present time, ill which the Trades Union Congress is interested, as to the rights of employees. Many inventors as employees of firms have had problems arising from the question of what is the scope of their rights, and it is sometimes very difficult and expensive for an employee to assert his rights against his employer. It seems to me, therefore, that if it is the duty of the Corporation, as is stated in Clause 2, to promote research and the other factors, it may happen that a dispute will arise with an employee who produces an invention. As I understand it, the effect of subsection (10) is to preclude that employee from having recourse to the courts to exercise his rights.

I ought perhaps to apologise to the Minister for not having given him notice of these rather technical but very practical points that I have raised, but I think that they are of sufficient practical importance to be discussed at the present time. There may be other examples of cases in which difficulties might arise in view of the word "indirectly", in that an employee might be precluded from exercising his rights under safety regulations, for instance. If it is his duty to promote efficient designs in shipbuilding, maybe in the course of that employment dealing with this aspect of shipbuilding a person may suffer some kind of injury. The word "indirectly", it seems to me, is inclined to imply that even in regard to safety regulations the employee might not have the normal rights of individuals in industry to have recourse to the courts.

I have spoken at some length, but I hope that the Minister will agree that any clause which endeavours to exclude the rights of an individual to the courts is worthy of careful consideration. I beg to move.


I thought the noble Lord, Lord Lloyd of Kilgerran, made a fascinating and able case, which I tried to follow in its technicality as best I could. I feel that the noble Lord, Lord Kirkhill, will have quite a lot to answer, which he may have to answer at a later date.


The Lord Kirkhill has had similar difficulty!


Although I felt that the noble Lord, Lord Lloyd of Kilgerran, argued his case so well that there is much to be answered, I felt that at this stage, although I have much sympathy, I could not go the whole way with the noble Lord, for the simple reason that there is so much uncertainty—or perhaps the word one should use, because it is so favoured by the other side, is "flexibility"—in the Bill that it will be hard to test anything in a court of law. Therefore, as was stated by the Minister of State, perhaps this is the easy way out; but the other aspect of it really must be settled.

The Earl of ONSLOW

We have now amended subsection (9)—the relevant trade unions—to include the words that my noble friend Lord Ferrers moved in his Amendment. If peradventure another place agrees with this Amendment, how on earth are people who have a justifiable grievance at not being consulted going to ensure that they are consulted? I am assuming for the sake of argument that something ghastly happens to the noble Lord, Lord Beswick, and he is replaced by somebody who would not perhaps be so sympathetic. If these people are supposed to be consulted about introducing this mythical concept which Her Majesty's Government as at present constituted cannot define, of "industrial democracy", and if they say they ought to be consulted, how is this going to be sorted out? That is my first point.

My second point is this. Surely it is a principle of law that if we pass an Act of Parliament it should ultimately be enforceable at law, because if it is not enforceable everybody is wasting the time and the heating of this building while we arc discussing it; the energy of being in this Chamber at the moment when we could all be at home in bed or playing chess, or whatever it may be, and it seems to me that to pass an Act of Parliament—or a section of an Act of Parliament—which is in no way enforceable is, with the greatest respect to Her Britannic Majesty's advisers, really rather dotty.

10.9 p.m.


I think at the outset I could use the very same phrase as was used by the noble Lord, Lord Lloyd of Kilgerran, that as far as I understand—and I would go on to say "upon advice". But first I will try to deal with one or two of the points raised by the noble Lord. I am advised that nothing in this subsection would affect any rights at law which individuals would otherwise have in respect of patents or their intellectual property rights of which the Corporations secure benefit as a result of Clause 2(4), which requires the Corporations to seek to secure the benefit of the knowledge and experience of employees. I am further advised, on Clause 2(10), that it is fair to point out that it merely says that no duty imposed by the clause can be enforced in a court of law. Duties in respect of patents, intellectual property, et cetera, are imposed by general law, not by the clause, and are therefore not affected. But I would certainly undertake to reflect at a more appropriate moment upon some of the nuances of the word "indirectly", and I will communicate with the noble Lord.

The view of the Government is that if the courts were required to adjudicate on industrial democracy this could give rise to substantial legal problems—noble Lords laugh, so my sense of timing was perfect. Therefore, when we decided that it was important to underline our commitment to industrial democracy by imposing on the Corporation a positive duty to promote it in a strong and organic form, we had to ensure that this duty was not enforceable by proceedings before a court of law. We therefore inserted the subsection which this Amendment seeks to remove. The subsection applies to all the duties imposed by Clause 2, and not just to the duty to promote industrial democracy, because we wished to follow the precedent of the Iron and Steel Act 1949, and revived by the Iron and Steel Act 1967.

It is further the view of the Government that the courts are not an appropriate forum for enforcing the duties of the Corporations because of the relationship between the Secretary of State and the Corporation. He has the powers to see that the Corporations carry out their duties should it seem that they are not meeting their responsibilities. The Secretary of State could do this in various ways; for example, through his powers of appointment, or over finance. The experience of 30 years with nationalised industries suggests that the courts are unlikely to provide a practical means of dealing with problems of this kind. We do not consider that this Amendment will in any way make it more difficult to see that the Corporations carry out their obligations, otherwise we would not have put it forward.

It is the view of the Government—and I need hardly point out that the Government have given proper weight to the legal advice they have received, and I have to emphasise that point—that if this clause were omitted as the Amendment seeks to do, we should be enacting bad laws. In the light of my comments, I think that your Lordships will not wish to press the Amendment.

Viscount SIMON

If the noble Lord, Lord Kirkhill, is going to consider the legal aspects, he talked a great deal about enforcement duties, but he will remind himself that the clause refers also to relieving them of liabilities (and I think that is very important) quite apart from enforcement duties.


I am grateful to the noble Lord, Lord Kirkhill, for his reply. As one who is not unfamilier with the Patent Bar in view of 25 years' experience there, I fully appreciate the difficulties of getting an answer from legal advisers who are not so familiar with these matters as are some other specialists. I understood the noble Lord to say that in so far as the word "indirectly" was concerned, he was prepared to reconsider the position and therefore consider some aspect of the wording of this clause.


I said I would reflect upon it.


At this late hour I hope we are not indulging in semantics, but if the noble Lord, Lord Kirkhill, will reflect upon this matter I shall be grateful. As I understood him, he also said that the main purpose of the subsection was to preclude recourse to the courts in deciding what is meant by industrial democracy. Speaking for myself, I certainly would go along with him and say that recourse to the courts in relation to matters involving industrial relations and so on is often a great mistake. I would agree with trade unionists who say that lawyers are of little use in deciding these matters of industrial relations. If it is the view of the Government that this subsection is largely intended to remove from the courts any discussion of industrial democracy, may I ask the noble Lord to reflect upon that matter as well? If he will be good enough to reflect upon both those matters, and any other matters incidental to my speech, when he happens to read it tomorrow, in those circumstances I do not propose to press this Amendment at this stage. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 3, as amended, agreed to.

Clause 3 [Powers of the Corporations]:

10.16 p.m.

Lord LLOYD of KILGERRAN moved Amendment No. 59: Page 6, line 3, at end insert— ("( ) No consent or general authority shall be given in pursuance of the preceding subsection unless a draft of the document containing it has been laid before Parliament and approved by a resolution of each House of Parliament.")

The noble Lord said: The Amendment which I propose is an attempt to render accountability to Parliament in relation to actions taken in view of the wording of Clause 3. Under Clause 3, and particularly under subsection (3), the Secretary of State can give general authority to extend the powers of the Corporation and to extend them very widely indeed. Particularly in Clause 3(1)(b) in the third line, the Secretary of State can extend the powers of the Corporation to "any other activities" quite apart from the activities with which this Corporation is primarily concerned. In subsection (2), each Corporation shall have power to do (a), (b), (c) and (d), which are a considerable extension of their powers. Therefore, I felt that if the Secretary of State is to be entitled to extend the powers of the Corporation very widely, as Clause 3 seems to suggest, then before these powers are extended a draft should be put to Parliament of the scope of the extension suggested. Therefore, my Amendment comes to this, that: No consent or general authority shall be given in pursuance of the preceding subsection unless a draft of the document containing it has been laid before Parliament and approved by a resolution of each House of Parliament. I draw attention to the fact that it should be a draft of the document, which is, therefore, capable of being discussed in another place and in your Lordships' House before it is finally approved. In conclusion, I would draw the attention of the Minister to the fact that that the form of my Amendment is on the lines of Clause 2(6). I beg to move.


May I first of all make the point that the provisions in the Bill follow the general principles of previous legislation. Subsections (2) and (3) are broadly in line with Section 2(2) of the Iron and Steel Act 1967. There is only one important modification. Under subsection (3)(b), disposals of interest in wholly owned subsidiaries require the consent of the Secretary of State. The absence of this provision would make it possible in principle for the Corporations to reduce the scope of their activities without the Secretary of State's and, through him, Parliament's consent. I think the noble Lord would agree with me that that would be undesirable.

The powers of the Corporations we are discussing here are no more than those which their subsidiaries, as separate legal entities, derive from the Companies Acts and their own Memoranda and Articles. The Corporations, being entirely a creation of Statute, are not covered by the Companies Acts or Memoranda and Articles and therefore have to have the equivalent powers laid down in the Statute. The powers in Clause 2(2) are no more than those given to a private sector company and which are essential for that company's normal commercial operations.

Noble Lords could imagine the effect on the operations of a private sector company if they had to come to Parliament and submit their proposals to Affirmative Resolution procedure in the way proposed by this Amendment. The two Corporations would be required, by these Amendments, to do just that. It seems clear that any commercial opportunity which they were hoping to exploit would have either disappeared or been snapped up by some other organisation in the time taken. We of course recognise that as publicly owned industries these Corporations must be subject to the proper degree of Parliamentary control. In that respect I do not think that there is any difference in principle between the noble Lord, Lord Lloyd of Kilgerran, and myself. But I would suggest to him that this Amendment would impose on the Corporations procedures which would greatly limit their chances of commercial success. The Secretary of State is answerable to Parliament, and we believe strongly that the provision requiring the Secretary of State's consent or general authority for the exercise of these powers is the most appropriate way of ensuring Parliamentary accountability while at the same time ensuring that the Corporation can operate competitively in the commercial markets.


I am grateful to the noble Lord for his lucid explanation of the position. I would have thought prima facie that he would not have resisted this Amendment, having regard to the inclusion in Clause 2 of subsection (6) which is in almost the same form as the Amendment I proposed, and leading, as I would suggest, to greater public accountability. I sympathise with the point he has made that it might lead to some administrative difficulties and some delays, and in the circumstances I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 3 agreed to.

10.23 p.m.

Lord CAMPBELL of CROY moved Amendment No. 66: After Clause 3 insert the following new clause:

Ship repairing

. None of the functions conferred by this Act upon the Secretary of State or British Shipbuilders shall be construed as authorising or requiring British Shipbuilders to repair or maintain ships except by or through the companies referred to in Schedule 2 to this Act.

The noble Lord said: I beg to move Amendment No. 66 standing in the names of my noble friends and myself, and the noble Lord, Lord Byers. This is another of the Amendments in our series of Amendments which would have the effect of deleting from the Bill the ship repairing industry. This would make it clear that the nationalised Corporation, British Shipbuilders, would not be repairing or maintaining ships except through the companies referred to in Schedule 2.

I must start by saying that on the last of these Amendments, which was discussed on Monday, my noble friend Lord Colville of Culross raised again questions of possible hybridity in the Bill arising from a Written Answer which had been given to me and to the noble Lord, Lord Wigoder, about points which we had raised on Second Reading on the same subject. I must tell your Lordships that the Leader of the House has this evening passed a Written Answer to my noble friend Lord Colville, and I have been able in the last few minutes to see it. I think there is only one copy in existence at the moment, though I have passed it out for some copies to be made. That reply, which may appear in Hansard tomorrow as it was available before 10 p.m.—I hope it will because on the last occasion it was about two days before it appeared in Hansard—follows the same form as the previous reply by the Leader of the House in giving a long written explanation of the Government's interpretation of the criteria in Schedule 2 and therefore a justification of why the 12 ship repairing firms have been named as falling within the criteria and other firms of the 100 or so ship repairing firms that exist in the country are not included.

My noble friend Lord Colville and I are grateful that the Government have obviously taken a great deal of trouble since Monday to make this Written Answer available and to put forward their explanation. It is a complex question, and I know that my noble friend will be examining the reply carefully without delay, as will others of us who are not so well versed in the legal and drafting matters involved. If the noble Lord, Lord Melchett, has anything to add on this point tonight I hope he will do so.

I come to the general question of the ship repairing industry and whether it should be included in the Bill. On Monday evening, I outlined the vigour and success with which the ship repairing industry as a whole has been carrying on its business in Britain. I also described its nature as a service industry and pointed out that it was very different from the shipbuilding industry and should not be treated as part of the shipbuilding industry. I gave the analogy of the motor car industry where motor cars are manufactured at large plants and are quite different kinds of installations and industries from the garages which carry out repairs and maintenance on motor cars all over the country. That is the sort of relationship that exists when the shipbuilding industry and the quite separate ship repairing industry are compared.

The ship repairing industry is to be found in scattered units round our shores because that is what is required; they have to carry out repair work often at very short notice doing often small jobs. We believe that it is wholly unsuitable for nationalisation and the kind of structure which, in other industries which have been nationalised, then grows from the form of nationalisation. When Lord Melchett was answering the Amendment on Monday, he seemed to place much emphasis on the report of the firm PA Management Consultants which had reported on the ship repairing industry about two years ago. That report in itself did not propose that nationalisation was the way in which any improvements in that industry might be carried out.

What that report did was what one would expect of any report from a firm of consultants examining an industry: it was critical in some respects and it made some suggestions. But the performance of British ship repairers must be considered in the context of North-West Europe. The PA Management Consultants' report showed that ship repair output in North-West Europe as a whole declined in the period 1968 to 1972 by about 6 per cent. a year. But during that same period, British ship repairing output fell by 3½ per cent. a year. So, while output was falling in both North-West Europe and Britain, it was falling less in Britain than in North-West Europe. The comparison is a favourable one so far as British ship repairers are concerned.

This consultant firm—and any other consultant firm—would be likely to produce a report of this kind, but, as I repeat, it did not propose that the ship repairing industry should be nationalised. I believe that the noble Lord would find that, if a firm of consultants was appointed to examine a Government Department—his own, for instance—it would be likely to produce a report that was critical in some respects and make suggestions for changes.


Would the noble Lord not agree that a firm of consultants is unlikely to suggest that an industry should be nationalised in any event, particularly if the firm had been appointed by a Conservative Government?


No. I believe that if a consultant firm is asked to carry out a job it will carry out that job and make a report. What I was drawing attention to was the great emphasis which the noble Lord, Lord Melchett, placed upon that report in his reply on Monday. If noble Lords who were not here on Monday and did not hear the noble Lord will look up Hansard they will see that in his reply he relied very largely upon that report. He indicated that in some part of its recommendations it was critical of the industry.

I am submitting that that is what one would expect when a consultant firm is asked to examine an industry. I was going on to say that that happens even in Government. I certainly remember times in the past—though this is a little out of date now—when the organisation and methods team within the Civil Service used to tackle Departments which thought themselves exceedingly efficient: the O & M team would find things to criticise and would put forward suggestions and perhaps new ideas, some of which were adopted. This is quite a normal process.

I believe that the noble Lord was placing too much emphasis on the advice given by a firm of consultants which was helpful but which in no way condemned the industry or proposed that this was the kind of solution which should be adopted. So, I first draw attention to the fact that the noble Lord the Leader of the House had provided my noble friend Lord Colville with a Written Answer, which is being immediately studied on the question of hybridity. If the Government have anything more on that at this point, we should be grateful. Secondly, as regards the general question of the nationalisation of the ship repairing industry, I reiterate that no case has been made for this and that the consultants' report is not in itself a sound reason for this action. I beg to move.

10.34 p.m.


Quite apart from the question of hybridity, I have spoken at some length both on Second Reading and in this Committee on the undesirability of having the ship repairing firms taken up in the scope of this Bill. I rise merely to make it clear that I support the noble Lord, Lord Campbell of Croy, in so far as this general question of the exclusion of ship repairers from the scope of the Bill is concerned. We are still strongly of the view that, on this general point, the ship repairing firms should not come within the scope of the Bill.

10.35 p.m.


I have now had an opportunity of reading this report, which as my noble friend said was the excuse—and one cannot help feeling a rather slender excuse—which the noble Lord gave for nationalising the whole of this rather special service industry. I have previously declared an interest but perhaps it is wise to do so again. I am a director—a non-executive director—of a group and in that group there is one wholly owned ship repairing subsidiary. I have now read the report fairly carefully and I have tried to line it up with the rather selective quotations from it which the noble Lord gave. I do not blame him entirely for that. If I were doing his job I probably would also be selective in making points which favoured my case.

But I think he would be wrong in saying that the consultants were not in a position to examine the future formation of the industry, or the nationalisation of it; I think he suggested that because the consultants were appointed by a Tory Government this might have inhibited them from making that recommendation. But their terms of reference, which were not so very carefully carried out as some of the other terms of reference, specifically asked them, at paragraph b: to examine and report upon what action, if any, the Government could take or cause to be taken to improve the performance and prospects of the industry. So I think the noble Lord was wrong in saying that they could not have recommended it. Clearly they could have recommended anything which they genuinely thought would have helped ship repairing. They could have recommended public ownership, a public share on the BP principle. They could have recommended an injection of aid under the 1972 Act, had they thought that that would be helpful, but they did not. They could have recommended nationalisation, had they thought that that would be helpful.

After quoting those things, the noble Lord said, at column 188 of Hansard of 11th October: The major aim, therefore, of taking into public ownership the larger ship repairing companies is to substantially improve investment and productivity in the industry. I made the point last time that ship repairing is a labour intensive industry; it is not a capital intensive industry like shipbuilding. But I wonder if the noble Lord should really have put in the point about increasing productivity by nationalising?

Did the Government not remember what had happened to the coal industry? Did they not remember what had happened to British Rail? Did they not remember—more recently—what has happened to British Steel, where it needs three times as many people in a nationalised industry to produce a ton of steel as it does in Germany or in the United States of America? Could they not remember the strike at Llanwern over manning, where a £50 million plant remained idle for years because people would not cut down the over-manning on it? I hardly think that the productivity of a nationalised industry is the strongest argument that the noble Lord can make. It is the weakest, and I suggest that in future it be left out.

Much has happened since this report was made. It was based on the results from 1968 to 1972, results which are now basically four years out of date. In that period there has come about North Sea oil and the servicing of North Sea oil rigs and the servicing of the ships to supply and service North Sea oil, and ship repairing firms play a big part there. There is the opportunity, also in connection with North Sea oil, for new facilities which ship repairers can undertake: tank washing and the like. There is the argument—which I think the noble Lord also used—that rationalisation can more easily take place under nationalisation. In this connection it was mentioned that sometimes there were several firms in a single estuary. But this is a service industry, and if a ship calls in an estuary and finds that there is no berth available in one of the ship repairing firms it is a positive advantage to have alternative resources; otherwise a ship may have to steam another hundred miles along the coast before it can get assistance.

The noble Lord has suggested that the declining output of the ship repairing industry was another factor reflecting poorly on its performance. But as my noble friend has pointed out, in that period from 1968 to 1972 the fall off in British ship repairing yards was only 3½ per cent. per year while in Western Europe it was 6 per cent. We were nearly twice as good as Western Europe in that respect.

Then, the report shows that UK costs—and this was not mentioned—are generally lower than they are in the case of our North European competitors. That was before the pound fell by another 50 per cent. in value so they are even better value now than they were then. Here, again, I do not think that that argument stands up.

Then it says that ship repairing industrial relations are not good. But any of us who travel abroad know that the reputation this country has for industrial relations anywhere in engineering is not good. That is why we are not getting the orders we ought to be getting because we cannot promise either reasonable escalation of costs, or sometimes we cannot promise functional delivery on time because of poor industrial relations.

Surely it must be remembered that generally in North-West Europe—and this comes out in one section of this report—they have one trade union with whom they deal and here we have five or six trade unions. It is very much more difficult to get happy industrial relations with five or six competitive unions. I do not think, therefore, that it is right to compare the structure of industry in this country to its disadvantage. If we take the whole report it certainly does not put forward a bad image of what ship repairing has been able to do in the period in which it was reviewed and I hope the noble Lord will now consider whether in the interests of saving public money—and I come back to it—of not disrupting a reasonably happy and productive industry, and of saving the reorganisation, the disenchantment and the waiting which now goes on, he will not agree to delete ship repairing from this Bill.

10.43 p.m.


The noble Lord, Lord Orr-Ewing, has raised points about the whole of ship repairing. I do not claim to know much about this, but I should have thought that there is a very big difference between the scale of operation of different firms in this field. There may be certain branches of ship repairing such, for example, as are associated with Swan Hunter on the Tyne, which are done on a very large scale and which amount almost to shipbuilding, but there are others which are very minor. It is rather like the difference between completely reconstructing a particular vehicle or, if one is referring to garments of wear, for example, to sending one's shoes back to the manufacturer almost to be re-made, and having the minor job done. I should have thought there may well be a case for distinguishing between scale but not a case for distinguishing between ship repairing as a whole and shipbuilding.

The noble Lord has roamed rather widely. He has roamed over the steel industry and the coal industry. I would challenge some of the things he has said, but they seem to me to be largely irrelevant to what we are discussing now. We are discussing this question of ship repairing and it seems we ought to stick quite clearly to this point. The point is surely a very simple one; that is, is ship repairing as a whole so distinct from shipbuilding that it ought to be separated? I should have thought that ship repairing as a whole is not so distinct. It may well be that certain branches of ship repairing, depending on the scale, may well be regarded as unsuitable for exclusion from this Bill. I am not prepared to discuss where the line should be drawn, but the Government have taken this into account in the Bill and therefore I should have thought we are dealing here with something that is essentially perfectly reasonable and sensible, and that to exclude ship repairing as a whole would be utterly unreasonable.

10.45 p.m.


If I may address your Lordships briefly in answer to what the noble Lord has just said—and I am quoting from experience in the Navy—surprisingly, there is a great difference betweeen ship repairing as a whole and shipbuilding. It is quite remarkable how good shipbuilders are bad ship repairers, and good ship repairers (like the Naval Dockyards) are not so good at shipbuilding. I studied this for many years with puzzlement. It seems to demand a different approach, a different way of dealing with things; maybe there is a greater flexibility of approach in ship repairing. Frankly, you cannot compare it rather casually with repairing shoes. It is a totally different activity. I am not entering into the other arguments at this point. But I just want to make it quite clear that the noble Lord is on the wrong track.


I do not intend to make a very long speech about ship repairing, but having represented from 1931 to 1945 a very industrial constituency, Wallsend-on-Tyne, where we had a very important ship repairing yard as well as a shipbuilding yard, I know that in my part of the world—and they do not always, naturally, agree with me—they like to be referred to. Therefore I thought that I would support our Amendment that ship repairing is different from shipbuilding, and I wish to make certain comments on that fact.

I listened with very great interest to my noble friend Lord Orr-Ewing, who knows very much more technically about this matter than I do. At the same time, the noble Lord opposite very wisely began by saying that he did not know very much about it. Probably he thinks I do not know very much about it. At any rate, for quite a long time Wallsend did me the honour of returning me to another place, and therefore I learned a lot about ship repairing.

I want to mention the two firms concerned, Swan Hunter Ship Repairers (Tyne) Limited and the Wallsend Slipway and Engineering Company Limited. In the North of England one of our problems, as I am sure noble Lords know very well indeed, is that of employment. In the Swan Hunter ship repairing yard not only did we give a lot of work to those who lived in Wallsend, but also to a great many people who used to cross over the Tyne from Jarrow. Most noble Lords will know of the problems of unemployment that Jarrow had to face for very many years. While I certainly think that the noble Lord opposite is a very distinguished person in his own part of the country, he would have been a little wiser had he not started by saying that he did not know anything about ship repairing.

May I say that sometimes I am very annoying to my own Party, and my own Government. I well remember that for very many years in another place I was arguing for certain action for the Wallsend ship repairers. I remember that one of my colleagues and I in another place always had down an Amendment for a little additional assistance when new berths were being built in our ship repairing yard. I noticed that I was always called to speak at 6.30 a.m., and I was never able to convince even my own Party that what I and my colleague were suggesting was worth while. Nevertheless, the Wallsend ship repairing yard has gone on and is a very highly regarded yard. It is quite different from a shipbuilding yard. The men were very proud to work in the Swan Hunter ship repairing yard, and I think it would be absolutely wrong to nationalise it. I can tell your Lordships that on the Tyne they do not like nationalisation. I find it extraordinary that when in another place the Chancellor of the Exchequer says, quite rightly, that we must save money, the Government want to go on with their nationalisation plans. I do not understand it, because they could stop them quite easily. They could cut expenditure in this way much more easily than in other ways. If the ship repairing yards were left to get on with their work they would do it very well indeed.

I shall not go into technical matters because I have never regarded myself as "technical"; but I was extremely proud when, not so very long ago, the Boilermakers' Union—a very tough Labour-supporting union—were celebrating, I believe, 100 years of existence, they very kindly asked me to their dinner. I thought that was extremely nice of them, because I have always been on friendly terms, even with those people who used to vote solidly against me. I believe in that kind of relationship, even if it means that I have had to argue with my own Party sometimes; but tonight I am supporting them wholeheartedly.

I should like to mention another firm, because I know how good they are; that is, Bristol Channel Ship Repairers Limited. They have an excellent record, too. They are smaller, of course, and have been able to bring their employees into consultation on the actual working. I should like to support them too, because I have great admiration for their work. I shall not say any more, but I feel almost as though I were back in the old days, although not quite back to 6.30! Certainly, unless we get a reasonable answer, which I doubt—and I do not say that nastily, because I do not expect the noble Lord, Lord Melchett, will agree with what we are saying—I shall have great pleasure in voting against him. Therefore, I shall have great pleasure in supporting the Amendment which has been so ably moved from this side of the Chamber. I hope that we shall have a very large majority, because I believe that would please those in the North of England, and I always like to speak up for those who have been such friends and done so much for the nation all the years that I have been their Member.


The 100 ship repairing companies under the SRNA are spread out all round the coast where they are needed. The peculiar thing about them is that the jobs they have to do are very varied: some last only for hours while others last for days or months. The cost varies from £100 to £1 million, and so on. We know already that the repairers undertake surveys, repairs, refits, conversions and a great variety of jobs. Some have to work in dry dock, some in harbours, some in buoys and some at sea, while the ship is sailing all over the world. The speed at which they can do the work is all-important. Shipowners like to keep contact with individual firms because they know their opposite numbers and can very often bargain about prices, and so on, before work starts.

The efficiency of this industry is vital to the customers, because one must remember that the cost of running or delaying a ship can amount to thousands of pounds per day. There is criticism on the grounds of fragmentation, but that is necessary because every port needs to have a ship repairing outfit not too far away. As has already been said, this industry is similar to the manufacture of motor-cars, because although the manufacturer can be some distance away the garage around the corner is always needed. Rationalisation has been going on and is continuing. Criticism has been levelled at the industry for its labour relations, but the number of man-days lost is no worse than in any other industry, and in some cases is much better. It is said that casual labour is employed on a day-to-day basis, but this is a totally outdated idea and casual labour was finished in the 'sixties. Labour relations in some firms have been particularly good, and one has been mentioned by the noble Baroness.

It is said that there has been a decline in the share of the world market for repairing, with a reduction in employees. But it must be remembered that, while shipbuilding is worldwide and a ship can be built anywhere, repairing can be of use only to ships within the area of North-West Europe. It is interesting that the Australian-Japanese trade has blossomed out at various times, but that is totally irrelevant to the repairing industry. It is only fair to compare the British ship repairing industry with like industry in Europe, and one notices that between 1968 and 1972 the drop in the output of the repairing industry in Europe was 6 per cent., whereas that in the United Kingdom was only 3 per cent. It is also true to say that there was a slump in shipping yet, in spite of that, during the period from 1968 to 1972 the number of foreign ships dealt with by repairers went up from 14 per cent. to 27 per cent.

There has also been a reduction in many directions over which the repairers have no control. The number of coastal vessels, and the number of passenger ships using United Kingdom terminal ports, have both reduced. There are very much bigger, and therefore far fewer, ships and, in some cases, the facilities of the repairing yards have been too small to cope with the big tonnages. There have also been longer periods between dry-docking, due to the increased efficiency and management of ships, together with modern techniques; and, in addition, continuous survey has crept in, which has reduced the need for regular surveys. A relaxation in the requirements of classification societies has meant that minor damage is allowed to continue unmended for a longer period. There has been a change in trade patterns—for example, containers—and British fleets have generally become younger and require fewer repairs.

There has been a suggestion that nationalisation would allow a further exchange of labour between shipbuilding firms and ship repairing firms. This is something of a red herring. At the moment, 9 out of the 12 firms are totally divorced from shipbuilding yards. At Swan Hunter and Wallsend, where they work closely together, there is extremely little interchange. There is, however, quite a lot of interchange in the case of the smaller and medium sized yards which are not to be nationalised, and there is a real fear that if they are not nationalised they may be forced to change. That is to say, work which would otherwise go to some ship repairers might forcibly be transferred to shipbuilding yards, to the cost of the ship repairers but to the benefit of the shipbuilding yards which may be short of work. However, it may work to the considerable disadvantage of the ship owners and cause delays and extra costs.

The idea of linking shipbuilding with ship repairing is out of date. If anything, the trend in the modern industry is for their courses to diverge. I should like to support the noble Lord who said that there is a very distinct difference between the shipbuilders and the ship repairers and that the one does not do particularly well the job of the other. One of the reasons for nationalisation in other industries has been the amount of public money which has been poured into them. The ship repairers have had no support whatsoever from public funds. They have reinvested from their own profits. One particular case that I should mention is a special dry dock which has been built to cater for North Sea opportunities. Another example is a large floating dry dock which is being brought from the Middle East and is on its way here now, entirely financed by the ship repairers.

Some of the ship repairers are not to be found in the assisted areas and do not benefit from the higher levels of assistance which are available to the rest of the industry. There is no argument for the nationalisation of the ship repairers. Indeed, there are arguments against it. It is an industry which is unsuitable to management on a national scale and national planning. The sizes of the yards are different and their management varies greatly. The shipping industry has indicated that it would much rather deal with individual firms and it opposes the nationalisation of the ship repairers.

Finally, I have yet to hear any reason given as to why nationalisation will speed up modernisation. I have yet to hear any reason given for the nationalisation of any part of the industry which is convincing in any way, other than political dogma. Every reason that is given is completely refuted by the facts. This is a successful and good industry and it is able to carry on by itself. Any change which involves nationalisation can do no good; it can only muck it about. The industry serves this country well and has contributed to tax. The nation is virtually broke, yet instead of having the tax which the profits from the ship repairers bring to it, this nation wishes to buy the companies' capital. Even if the terms are confiscatory, nationalisation will still cost a great deal.

About a week ago we heard that the issue of bonds was not inflationary—that it was a transfer of resources. One should remember that the resources which are to be transferred, or the bonds which are to be issued, will mean that interest amounting to 15 per cent. annually will have to be paid to those who are issued with the bonds. I expect that those people will sell their bonds immediately, but some people will be left with them. Unless, therefore, the companies which are bought pay considerably more than 15, 20 or 30 per cent., through nationalisation, both the country and the industry will be worse off. The ship owners will be worse off also because of the lower service that they will be able to offer. In fact, we shall all be worse off—except the political theoreticians who will have had their way. Their dogma and their political pride will have been satisfied.


May I first respond to the point which the noble Lord, Lord Campbell of Croy, made on the subject of hybridity. As he said, my noble friend the Leader of the House has answered a Question for Written Answer which was placed on the Order Paper, I believe, yesterday by the noble Viscount, Lord Colville of Culross, on the matters which the noble Viscount raised on the last day on which we discussed ship repairing at sonic length, the previous day on the Committee stage of this Bill. My understanding is that that Written Answer will appear in Hansard tomorrow, although unfortunately it was not prepared until rather late this evening. But noble Lords will appreciate that it was not until yesterday morning when the noble Viscount's speech appeared in Hansard that those who advise the Government, indeed the Ministers involved, even had a chance to read what the noble Viscount had said. As the noble Lord has said, although the Government remain quite convinced of their case, and have done all along, it was important—and I think noble Lords opposite would expect it—that we took some time and considerable care to study what was said and respond. And some of the points were points of detail which inevitably necessitate further checking just to make sure that the facts that were checked many months ago when the Bill was prepared were still as they were when they were previously checked. So inevitably a considerable amount of time has to go by; if I may be permitted to pay a tribute to those who have done a great deal of work in providing the answer so quickly it might be appropriate for me to take this opportunity to do so.


I hope the noble Lord noticed that I thanked the Front Bench opposite for having taken so much trouble to produce this answer by this evening, because I certainly wish to say so myself, recognising how much work must have been done by officials.


I am very grateful to the noble Lord. Indeed, I was passing the buck from the Front Bench, who did not have to do most of the work, to those who actually did. I am in a difficulty in replying to what I think is the third major debate we have had on ship repairing in your Lordships' House in the space of a few weeks. There is one of me and I have one speech which I have now made at least twice, and there are several noble Lords opposite who have made the same speech or at least the same points more than once. However, some noble Lords have not necessarily made new points but put the same points in a different way, and my answer, if I read the whole thing out again, would inevitably be rather repetitive.

I certainly accept what the noble Lord, Lord Orr-Ewing, said about the PA Management Consultants' report. I apologise if I gave the impression that the report was entirely critical of the industry. I do not think it would be fair to say that any Government Minister has ever got up and said that the industry is in a complete mess and can only be saved by nationalisation. We have said that there are things wrong with the industry which could be put right and we have drawn on the information given in that report to support the case, but not necessarily entirely to make it for us.

As the noble Lord knows, it is tempting, obviously, when there are consultants appointed by the Party opposite, to draw on their conclusions for one's evidence, and I was grateful to the noble Lord, Lord Orr-Ewing, for acknowledging the temptations, to which I have, I regret to say, succumbed. The only point I would make on the recommendations is that of course the consultants could look very widely at the industry, but I think the noble Lord would accept that it would be a bold firm of management consultants which, having conducted the survey, would recommend to a Conservative Government that the only way solution for the industry was nationalisation. That was the only point I was seeking to make about their conclusions.

There was one point which I think was made by the noble Lord, Lord Orr-Ewing—it may not have been him, and I apologise if it was somebody else—about the question of there being more than one ship repairer on a particular estuary. I know that this is a point made by PA Management Consultants in their report on the industry. But it seemed to me that there might be a danger of confusing the criticism in their report that there was more than one ship repairer on an estuary and often they were competing with each other for orders instead of competing against the Continent, which I think is the point made in the consultants' report, and the Government's proposals for that sector of the ship repairing industry which we wish to see vest in British Shipbuilders. Our case there is that the definitions in Schedule II have been drawn up to provide British Shipbuilders with a coverage of most of the major estuaries in this country so that they have ship repairing firms which cover the main estuaries in this country. The Schedule has not particularly been drawn up in an effort to rationalise the industry, but to give a reasonable coverage of the main estuaries to British Shipbuilders and the main ship repairers in this country.

I am tempted to return to a debate on a previous Amendment when the noble Lord, Lord Orr-Ewing, referred to the multiplicity of unions faced by the ship repairing industry. That was one of the criticisms that was put into the Government's mouth by noble Lords opposite, although I do not think I actually made the point myself. One of the dangers of consulting with a multiplicity of bodies is exactly that which the noble Lord, Lord Orr-Ewing, has raised, and one which I think we all accept that this country suffers from to some extent.

I am sorry in a way to see ship repairing leave the Bill at this stage, when we have had so many interesting debates on it. It will be like losing an old friend; but I hope I shall not be losing the friendship of the noble Baroness, Lady Ward of North Tyneside, who says that she wishes to vote on this Amendment. I sympathise with her; I know how strongly noble Lords opposite feel about this. She will forgive me if, like Danny McGarvey in his time, I vote strongly against her. The Government continue to believe that the proposals in the Bill are the right ones for British Shipbuilders, the shipbuilding industry and the ship repairing industry. I do not think this is something on which the noble Baroness and I can agree; I think we shall just have to agree to vote against each other on the issue.

11.12 p.m.


There has been a useful debate on this Amendment, and first I should like to say something about the remarks of the noble Lord, Lord Wynne-Jones, because he inquired about the characteristics of the ship repairing industry and he did so with that inquiring scientific mind of his which we know so well. I think he was genuinely seeking information and then making an assumption which led him to a certain conclusion. But I think one can answer him straight away when he asked whether ship repairing was so different from shipbuilding. It certainly is a different and separate activity, and also the characteristics of the ship repairing industry are such that most of the firms are ready to take on small repair tasks as well as larger tasks, whereas the noble Lord, Lord Wynne-Jones, was inquiring whether the industry was not divided into larger firms which were restricted to taking on major tasks. That is not so. In different areas these firms are ready, at short notice, to carry out a wide variety of tasks, whatever the size of the firm itself. I think the noble Lord was answered most concisely by my noble friend Lord Mottistone from his experience of years in the Royal Navy, when he pointed out that ship repairing was, as he had found from his own experience, entirely different from shipbuilding.

My noble friend Lord Orr-Ewing went in some detail into the P.A. Management Consultants' report. I simply mentioned the main recommendations and the background to that report. I think he has helped us, in the light of what the Minister said on Monday, to read a proper interpretation into that report. In particular the noble Lord, Lord Melchett, having said that they were not asked to put forward any solution, when my noble friend read out the remit it was perfectly clear that if they had wanted to they could have put forward their own solutions. The noble Lord has asked whether they would put forward nationalisation to a Conservative Government, but the point is that they could have put forward any particular solution or pattern had they so wished. In fact what they did, as one would expect, was to make certain criticisms but generally to give a report on the industry. It was not a bad report. It was helpful as it came from consultants to a Government which were looking at the industry to see what improvements might be made.

My noble friend Lady Ward of North Tyneside very much reinforced us in our views on the subject, speaking, as she does, from her personal experience of having represented a ship repairing area. She gave her support quite clearly to the purpose of this set of Amendments. Then the noble Lord, Lord Melchett, himself, in his reply, said, with his usual charm, that he had only had one speech on this subject, and he had used a little of it on Second Reading, he had used it on Monday and again he had had to make use of most of it today. We were hoping for a different speech today. We were hoping that at least there would be some new element in it after he had considered what had been said on the earlier occasion last Monday.

I must tell the noble Lord that there is no question of his losing the subject so easily tonight, because I made it clear on Monday that we would move the Amendment on Monday and this Amendment again with a view to continuing our examination of this subject, one of the most important subjects in the Bill, and asking for Government explanations, and especially explanations on why these 12 firms have been selected for inclusion in Schedule 2. Although we shall he studying in that connection the Written Answer Liven on the hybridity question, we must again record that the criteria themselves which the Government are interpreting seeni to be quite arbitrary in the selection of 12 out of the 100 or so firms which exist in Britain.

We intend to press these Amendments on Report, as I said earlier on, unless the Government satisfy us on this important matter. But we do not intend, as I did not on Monday, to press this series of Amendments at this stage. Therefore, I now seek leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

11.17 p.m.

The Earl of INCHCAPE moved Amendment No. 67: After Clause 3, insert the following new clause:

Restriction on certain powers

. Notwithstanding anything in the two last preceding sections of this Act or in any subsequent provision of this Act or in any order, consent or authority made or given under this Act neither British Shipbuilders nor any of its subsidiaries shall—

  1. (a) manage or operate any ship;
  2. (b) enter into any arrangement with regard to the management or operation of any ship unless the arrangement is such that the amount of any payment thereunder of money or moneys worth to or by British Shipbuilders or any of its subsidiaries is calculated independently of the earnings of that ship;
  3. (c) acquire and hold an interest in or form or take part in forming a body corporate or enter into any partnership with a person if the business of that body corporate or person is or is to be wholly or mainly the management or operation of any ship;
  4. (d) receive any moneys or moneys worth in consequence of holding an interest in a body corporate or of being in partnership with any person if the amount of those moneys or that moneys worth is dependent in whole or in part upon the earnings of any ship.

The noble Earl said: I will not read out the Amendment because it is too long, but I should like to explain why three of your Lordships, all of whom are involved in the shipping industry, feel it necessary to put forward this Amendment. Briefly—and I will be brief at this late hour—we are concerned that British Shipbuilders could deliberately or inadvertently stumble into the position of setting up an embryo national shipping line—in short, engaging in a shipping industry, which is completely and absolutely different from shipbuilding. As your Lordships can see, it is not stated expressly in the Bill that British Shipbuilders can operate or manage ships, but under Clause 3 the Secretary of State could clearly give British Shipbuilders authority to engage in such activities, either directly or indirectly. That is not in the interests of British Shipbuilders for reasons which I will give later. It is also not in the interests of British shipping, and it is for that reason that my noble friends and I are so concerned about it.

Our fear is that, because of the vast over-capacity in world shipbuilding today, British Shipbuilders will not find it at all easy to sell ships, which means that from time to time they may find themselves completing a ship for which there is no previously arranged buyer. In those circumstances they will have a choice between selling the ship at a loss or trying to muddle through by operating it themselves, until hopefully the market turns up. I believe that in these circumstances any attempt by British Shipbuilders to retain the ship would be merely concealing and postponing a loss, and doing so in a way which would vastly increase it. If no experienced shipowner in the world can make a profit from operating such a ship, it is quite certain that British Shipbuilders will not be able to do so. It follows that if British Shipbuilders were so foolish as to engage in ship operating, they would be losing money and before long someone would be suggesting that this Government-owned company should receive special assistance.

It might, for example, be suggested that it should receive special preference in obtaining cargoes from other nationalised industries. That is cargo discrimination, a practice against which successive Governments of all Parties have set their face for over 100 years and opposed all round the world, to the great benefit not only of the British shipping industry but of world trade. That is not all. I believe that cargo discrimination would be the thin end of the wedge, the first sorry step towards the nationalisation of shipping. It is for that reason that the shipping industry believes that the restrictions proposed in this Amendment are necessary. They are also in the interests of British Shipbuilders itself. We hope that the new Corporation will be capable and experienced shipbuilders, but even so they will have the greatest difficulty in making money in their own line of business; they have no hope whatever of making money in someone else's business, with ships the rest of the world does not want and without having any shipping management expertise. Accordingly common sense alone should rule out any question of British Shipbuilders engaging directly or indirectly in the operation or management of ships.

As your Lordships may have noticed, this Amendment does not prevent British Shipbuilders from owning ships. It is now quite common for ownership of ships to be divorced from management and operation. The owner of a ship may be a bank or a leasing company having a purely financial interest, and they are both charging out the ship in return for a fixed revenue. My noble friends and I can see no objection to British Shipbuilders assuming this role, and we have drawn our Amendment with great care so as not to inhibit British Shipbuilders in this respect. It was tempting to have an Amendment which would simply prohibit British Shipbuilders from being involved in any way in the ownership, management or operation of ships. I hope the Government will appreciate the efforts we have made to keep these restrictions to the absolute minimum.

I shall not be surprised if the noble Lord, Lord Melchett, attempts to justify the retention of this power on the grounds that other international shipbuilders have it and use it. If so, it will be interesting to hear if his examples are from nationalised industries or from private industries. For it is one thing to have a private shipbuilder lose his own money in trying to operate ships; it is quite another thing for a Government organisation to do so, and it is only in a nationalised industry that there is this risk of cargo discrimination about which I have spoken. If the Minister is asking for freedom or flexibility, he is asking for that freedom to operate ships at a loss. My noble friends and I believe that it is not in the interests of British shipping or British Shipbuilders that the new Corporation should have that particular freedom. I beg to move.


I made my maiden speech a few days ago during the Second Reading of this Bill, and several of your Lordships were extremely kind in the way you received it. Unfortunately, I had to leave before the end of that debate, and I should particularly like to thank the noble Lord, Lord Melchett, and other noble Lords who spoke in the later stages for the kind references they made to my first effort. I read their remarks with much appreciation, and I do apologise for not being in the House to actually hear them.

My noble friend Lord Inchcape has carefully explained the purpose of the Amendment which stands in our joint names. The wording is inevitably complicated and we are sorry for this. I would certainly be willing to go into the details as to why four separate paragraphs are necessary, but I really think it would suffice to say that our Amendment is designed to prevent British Shipbuilders from engaging in the operation or management of ships either directly or, by means of a contract or a joint venture, indirectly.

As the Bill stands, British Shipbuilders could easily become involved in a contract or joint venture under which its fortunes would depend on the trading results of a foreign shipping company, competing with British shipping companies. Your Lordships will, I hope, agree that it would be a sad day if the Government had a financial interest—albeit an indirect interest—in a foreign shipping company, prospering at the expense of British shipping companies. Our Amendment is obviously a relatively minor issue to the shipbuilding industry. To us in the shipping industry it is a major one. The shipping industry is an efficient one—I use this much debated adjective proudly. It is engaged in earning the foreign currency this country so desperately needs. We hope your Lordships will prevent any risk of this successful shipping industry being damaged almost accidentally by a Bill which deals with quite another industry.

May I mention one aspect which seems to me highly important, which is that the excellent relationship that currently exists between the owners and the builders should not be damaged. The goodwill of the customer could quickly cool if the supplier became a potential competitor. When my company orders a ship we work most closely with the builder, his naval architect and his design staff. The trade for which the ship has been designed must be very fully discussed. Indeed, the British yards who have built over the years many ships for my company know the pattern of our trades and their requirements nearly as well as we do. Several British shipbuilders have at times come to my company for advice, as we have ships operating in the worldwide tramp market as well as those servicing our Lines. The builders ask us how we see the future pattern of worldwide trade, as they say it would help them to know the type and size of ships we are thinking of building. This, they tell us, greatly helps their design teams in preparing plans for future tonnage.

There are many other owners who also work closely with our shipbuilders, and so we have this helpful and cordial atmosphere between the two industries, with information being exchanged for mutual good. The owners are in fact co-operating wherever possible in an especial endeavour to lighten the many problems which face the builders at this time. I should not like to see this spirit of co-operation undermined or soured by the advent of the proposed new Shipbuilding Corporation managing its own fleet. When the apprehension of the ship owners over this matter was mentioned in another place the Government attempted to reassure our shipping industry with kind words, which were appreciated. However, that is not enough. The one reassurance which would set our minds at rest would be the acceptance of this Amendment, which I hope your Lordships will support.

11.28 p.m.


On behalf of my noble friends on this Bench I should like to support this Amendment which has been moved and explained so clearly by my noble friend Lord Inchcape, and supported by the noble Lord, Lord lnverforth. Although the Bill has been amended today, as originally drafted Clauses 2 and 3 made it possible for British Shipbuilders to move without any further legislation into other activities and to engage in the ownership and operation of ship-owning as one of those activities.

It is clear from what my noble friend Lord Inchcape pointed out, that this would not be in the interests of either the shipbuilding industry or the ship-owning industry, or in the interests of Britain. But may I add some reasons to those that have already been given. I would point out that the new Corporation, British Shipbuilders, might well be tempted at times to sell ships to itself at moments when, such as in the last two or three years, there has been a recession in the market for ships and there is great competition for orders and far more capacity in shipbuilding than demand requires. It could then well be a temptation for British Shipbuilders to go on building ships and then to sell them to themselves. That would be a short-sighted policy and would only conceal losses, and in the end British shipbuilding and British ship owners would suffer from that sort of competition.

The British shipping companies already buy most of their ships from British shipyards and if British Shipbuilders were to move into this new activity it would only antagonise the British shipping industry. As my noble friend pointed out, there will not be a lot of money available to British Shipbuilders. Indeed, the money needed for the Bill as a whole is money that can scarcely be afforded in our present situation, and to use some of it for ship operating as well as shipbuilding would surely be a wrong use of those funds.

The other reason I would put forward in support of the Amendment is that British Shipbuilders, however good its management may be for shipbuilding, will not also have the management required for operating ships at sea. I should like clarification from my noble friend as to whether I am right in thinking that there is no prohibition in the Amendment on British Shipbuilders owning ships; that they might for a period own ships provided they were not operating them. That was my interpretation of it, but for clarification it would he helpful if that could be made clear. Certainly if the new Corporation were to operate ships and try to branch into that activity it would have the unfortunate results which my noble friend outlined.

This is a reasonable Amendment which in our view is needed, and if the Government have difficulties with its terms, I hope they will come forward with alternative wording. It is important, whatever assurances the Government may give on this subject today, that this should be clearly written into the Bill to allay any apprehensions among ship owners that this new nationalised body would start operating in ship owning and running ships as well as the duties they are supposed to have under the Bill.

Viscount SIMON

I appreciate that noble Lords are anxious to hear what the noble Lord, Lord Melchett, has to say in reply, so I will detain the Committee only briefly. My noble friends and I warmly support the Amendment. The noble Earl, Lord Inchcape, made a very good point when he said that if the ship owners—and British ship owners are very efficient in their operations—are not prepared in certain circumstances to buy a ship and to operate it, it is very unlikely, if it were left to the new Corporation, that they would be able to make profitable use of it in a business in which clearly they will have no management expertise. We, like the Conservative Party, believe that nationalisation has gone far enough and that to go into a new venture like shipping with a nationalised Corporation would be a serious mistake.


I have only one point to make. Other noble Lords, including the noble Lord, Lord Campbell of Croy, have gone into the detail of the Amendment. It seems to me from experience of active ship owning, which I must confess now extends to slightly over 50 years, that one lesson one can learn is that it is almost always fatal to be at the same time the supplier and the customer. I can remember one case a long time ago where a very large concern in the ship owning and shipbuilding fields came very badly to grief very largely for that reason. The temptation is always there, if you build a ship you must run her; if you run a ship and if you think that you can build cheaper than you can if you go to a specialist, you come adrift in the other direction. My noble friend Lord Inverforth emphasised that the relationship between the ship owners as customers and the shipbuilders as suppliers must be absolutely clear cut. If you do not ensure that, you will have trouble, confusion and, I think, loss to both parties.

11.36 p.m.


I should like first to reiterate the point which I made on Second Reading in response to the remarks which the noble Earl, Lord Inchcape, and the noble Lord, Lord Inverforth, made during that debate. Of course, I entirely agreed when the noble Lord, Lord Inverforth, said tonight that it was extremely important to continue the existing relationship between the shipbuilding industry and the ship owners. I am sure that that is something of which the Organising Committee of British Shipbuilders is very much aware.

As the noble Earl and the noble Lord have explained, the new clause is an attempt to limit the scope of the activities which British Shipbuilders may undertake. This new clause represents another attempt to limit the scope of the activities British Shipbuilders may undertake. One of the main objectives of the Bill is to allow the Corporation maximum flexibility to operate commercially while ensuring that it is fully accountable. This new clause would place further restrictions on the scope of the Corporation's activities by preventing it from even considering particular options. Indeed, I am advised that in the case of the Falmouth Towage Company which, I understand, operates tugs, the Amendment, if carried, would actually prevent the carrying out of an activity already undertaken by an existing company which is to vest in British Shipbuilders under the Bill. The Government are naturally opposed to limiting any option open to the Corporation which might help it to achieve its objectives, however unlikely it may now seem that it would wish to take advantage of it.

At the same time I should point out that British Shipbuilders may not undertake any new activity without the consent of the Secretary of State. Such consent would not be forthcoming if the Secretary of State had doubts as to whether the activities would be in the national interest. In considering the possibility, the Secretary of State would look most carefully at the effect on the activities of existing shipping lines of any extension of British Shipbuilders into the shipping field.

The position I have just outlined is of course a theoretical one. Present circumstances make unlikely an extension of the Corporation's activities into shipping on the lines envisaged in the Amendment. British Shipbuilders envisage that it will normally be its practice where it owns ships to put them out on bareboat charter for a fixed period through ship brokers on commercial terms. I understand that noble Lords who moved the Amendment see no objection to this, and I understand it to be the present intention of British Shipbuilders to do this.

There will be occasions, however—and I expect them to be comparatively rare—where British Shipbuilders may see an opportunity to enter into a joint venture and thereby persuade an owner to order, say, three ships instead of the two he would order if he were to operate alone. By participation in the venture, British Shipbuilders might thereby secure an additional order for a British yard. Noble Lords may say that the Corporation could under the terms of the Amendment participate on a fixed return basis. But this is unlikely to be attractive to the partner, who is only likely to be persuaded to go ahead with ordering more ships if the Corporation shows itself ready to take a share in the risk-taking involved. As I have said—and I would emphasise this—the Corporation is obliged to act commercially and it will therefore not enter into such ventures lightly.

There may also be occasions, again probably only rarely, when for some reason British Shipbuilders may find itself with a ship on its hands; for example, when it built for charter for a specific buyer who was then unable to take delivery for some reason. If the Corporation had this ship on hand, it would be acting in its commercial interests to occupy it with individual cargoes until such time as a bareboat charter could be secured. I hope I have made it clear that I expect occasions on which the Corporation would either wish to canvass for individual cargoes or to enter into joint ventures to be rare. Moreover, on such occasions British Shipbuilders would operate in a genuinely commercial manner. Equally, however, to accept this new clause could result in an unacceptable restriction on the flexibility which the Corporation needs both to achieve a commercial return and to best assist the British shipbuilding industry in its present very difficult position. The Government believe it would be quite wrong, as was made clear when this subject was debated at least twice in another place, to impose restrictions on the public sector which are not imposed on the private sector. I should like to repeat my assurance that I do not envisage, and indeed I can assure noble Lords that Ministers would not condone, such activities resulting in harm to the British shipping industry. I hope that with that full explanation of our objections to the new clause and with the assurances I have given, the noble Earl and the noble Lord might be able to withdraw the Amendment.

The Earl of INCHCAPE

I thank the noble Lord, Lord Melchett, very much for his reply. Certainly some of the assurances he has given would on the face of it seem to be satisfactory. But from some of the other things he has said it would seem clear that there would be exactly the same dangerous effect on the British shipping industry as my noble friends and I feared in our speeches, and therefore I wish to press the Amendment.

11.43 p.m.

On Question, Whether the said Amendment (No. 67) shall be agreed to?

Their Lordships divided: Contents, 43; Not-Contents, 17.

Amherst, E. Hives, L. Orr-Ewing, L.
Beaumont of Whitley, L. Hornsby-Smith, B. Redesdale, L.
Brookeborough, V. Inchcape, E. [Teller.] Runciman of Doxford, V.
Campbell of Croy, L. Inverforth, L. Salisbury, M.
Carr of Hadley, L. Killearn, L. Sandys, L.
Carrington, L. Lloyd of Kilgerran, L. Selkirk, E.
Colville of Culross, V. Lyell, L. Selsdon, L.
Denham, L. [Teller.] Mackie of Benshie, L. Simon, V.
Drumalbyn, L. Morris, L. Strathclyde, L.
Dundonald, E. Mottistone, L. Strathcona and Mount Royal, L.
Elles, B. Mowbray and Stourton, L. Vickers, B.
Elton, L. Newall, L. Ward of North Tyneside, B.
Ferrers, E. O'Hagan, L. Wardington, L.
Gisborough, L. Onslow, E. Wigoder, L.
Harcourt, V.
Champion, L. Llewelyn-Davies of Hastoe, B. Peart, L. (L. Privy Seal.)
Davies of Leek, L. McCluskey, L. Stedman, B.
Elwyn-Jones, L. (L. Chancellor.) Melchett, L. [Teller.] Wells-Pestell, L. [Teller.]
Harris of Greenwich, L. Murray of Gravesend, L. Willis, L.
Janner, L. Oram, L. Winterbottom, L.
Kirkhill, L.

Resolved in the affirmative, and Amendment agreed to accordingly.


I think it would be with the general agreement of the Committee if I moved that the House do now resume.

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

House resumed.