AIRCRAFT AND SHIPBUILDING INDUSTRIES BILL

HL Deb 18 October 1976 vol 375 cc763-851

2.58 p.m.

The MINISTER of STATE, NORTHERN IRELAND OFFICE (Lord Melchett)

My Lords, I beg to move that the House do again resolve itself into Committee on this Bill.

Moved, that the House do again resolve itself into Committee.—(Lord Melchett.)

On Question, Motion agreed to.

House in Committee accordingly.

[The Earl of LISTOWEL in the Chair.]

Clause 4 [Corporations to give effect to directions of Secretary of State]:

The CHAIRMAN of COMMITTEES (The Earl of Listowel)

Before I call Amendment No. 68, I should point out that if this Amendment is agreed to I cannot call Amendment No. 73.

Lord LLOYD of KILGERRAN moved Amendment No. 68: Page 7, line 9, leave out subsections (1) to (3).

The noble Lord said: This Amendment is directed towards the viability of the functions and operations of the two Corporations to be set up under the Bill, and to remove the very wide powers of the Secretary of State in relation to the operation of these Corporations. As at present advised, I cannot reconcile how the main objectives of the Corporations—and your Lordships' will remember that these relate to efficiency, profitability and job security, to quote three of the main objectives—can possibly have relation if such wide powers for interference in the management of the business are granted to the Secretary of State under Clause 4. Therefore, I should be grateful to the noble Lord the Minister if he would kindly help me by giving as full an explanation as possible of the reasons for giving the Secretary of State such wide powers. I should also be grateful if the Minister could reconsider whether these powers are really necessary in the context of the national and international commercial interests of these two Corporations.

May I briefly run through the proposed powers of interference in the business of these Corporations, as at present set out in Clause 4, in order to show how very wide they are. Subsection (1) of the clause says: Each Corporation shall give effect to any direction given to it under subsection (2) below". Therefore, it is mandatory upon each Corporation to give effect to these directions as set out in subsection (2). The Secretary of State is not satisfied with that. The Corporation must also give effect to the following provisions of this Act wherever they are set out throughout the Bill. I come to subsection (2). I suppose one would expect this to be the definitive subsection, stating the kind of directions that should be given. What sort of directions are to be given? According to this subsection, they are to be of a general character". Then they must be related to the exercise and performance by either Corporation of its functions". Your Lordships will recall that the wide functions or duties given to the Corporations are particularly set out under Clause 2 of the Bill. Lastly, according to this subsection, they must be such as would appear to the Secretary of State himself to affect the national interest". Your Lordships will note that the words are: "to affect the national interest" and not "national security".

Therefore, these words in subsection (2) surely give the Secretary of State powers to do almost anything. It must be remembered that each of these Corporations will have been set up in the national interests. Men of ability and experience will have been appointed to carry out the functions of each Corporation. The Corporations are to deal with most complicated industries. And yet the Secretary of State is to have these wide powers.

The management of each Corporation, in order to be successful in these competitive industries, should not, in my submission, have the Secretary of State breathing down their necks in this way. I should, of course, refer to subsection (3), but this hardly limits at all these extensive powers. It is true that under subsection (3) the Secretary of State has to consider all factors which appear to him to be relevant to the proposed direction, and then at the end of this subsection there is a short phrase which says that he "shall consult the Corporation". Perhaps a telephone consultation before lunch would be adequate for this purpose. This consultation with the Corporation seems to have been put in as something of an afterthought. Again, at present there is no machinery for dealing with the position if the Corporation disagrees with the Secretary of State.

That the Government were rather anxious about these wide powers, at least so far as the Shipbuilders Corporation is concerned, is clear because in subsection (4) there are guidelines given as to the form of directions to be taken into consideration with the shipbuilders. This Amendment was put in in the other place at quite a late stage in the proceedings and was not in the original Bill. There are no similar guidelines in so far the Aerospace Corporation is concerned, and I should be grateful to the Minister if he could indicate why the guidelines have been put down in the case of the Shipbuilders and there are no guidelines at all in the case of the British Aerospace Corporation.

The Minister in the other place, Mr. Kaufman, mentioned in the peroration of his speech on Third Reading on 29th July last (at col. 1024 of the Official Report, Commons), the fact that he had visited many shipyards and aircraft factories and had been, to use his words, dazzled and humbled by the expertise of the workers in those industries. That is indeed a great tribute to the two industries about to be nationalised. Prima facie it seems to me that the bureaucratic control, as apparently envisaged in Clause 4, will dim that bright light characteristic of the workers of these companies which Mr. Kaufman so clearly recognised. I need not emphasise in this Committee—noble Lords have such wide experience of commerce—that the success of these Corporations will depend on overall efficiency of management and production at all levels. Efficiency will depend on a host of practical policy decisions. I have often spoken of the old-fashioned and perhaps rather snobbish approach made to management in some parts of British industry, and I recognise and I sympathise with the basic objectives and good intentions of the Government. I, therefore, in all sincerity ask the Government to reconsider the scope of subsections (1), (2) and (3) of Clause 4. It seems to me that far more commercial freedom is required if the Corporations arc to succeed. I beg to move.

3.7 p.m

Lord ORR-EWING

This follows the discussion we had on an earlier clause when we were considering the Secretary of State's powers, and we on this side objected that they were too far reaching. I think we even sowed some doubts in the minds of noble Lords opposite because in the subsequent Division we did very well. Certainly we had a lot of support from the Liberal Benches and the Cross-Benches and others. I think we all wanted to see a certain degree of flexibility and we acknowledged that that was necessary, but we did not see that it was necessary to give such far-reaching powers to the Secretary of State. We wanted to find some compromise solution. As I understand it, these subsections (1), (2) and (3) are fairly standard for most of the nationalised industry Bills, but this Bill goes further. I would say that there was one exception, and that was BNOC; there it was not just a general direction which was allowed but specific direction; so that went further than the general format accepted by both Houses. This one goes a little further, because Clause 4(1) says: Each Corporation shall give effect to any direction given to it under subsection (2) below"— and then, this is the significant part— or under any of the following provisions of this Act". That is pretty far-reaching. We shall come to discuss the following provisions later today or in the days ahead, but that provision is rather more far reaching than in any other nationalisation Act.

Whether or not we leave in subsections (1), (2) and (3), perhaps amended in some form as a result of the very obviously flexible mind of the Government—although we have not yet seen it in this Bill, I am sure they are open-minded on this—I hope they will still maintain subsections (4) and (5), particularly (5), because it is supremely important that when the Secretary of State gives a direction, under subsection (2) above, he shall lay a copy of it before each House. I think we would all wish, if such a direction is given, that it be known and open, and that both Houses can question it and even perhaps debate it. I hope that others will support us in thinking that this clause goes rather too far. Perhaps the Government would consider at Report stage whether the rather more comprehensive approach might be eradicated, either by the Liberal Amendment or some Amendment which the Government themselves might like to table, so as to limit the Secretary of State's powers and set at rest some of the fears expressed in all parts of the Committee earlier in these debates.

Lord ROBBINS

I should like to support the Amendment which has been moved from the Liberal Benches, and I should like to take your Lordships' minds back to the 1940s when the idea of nationalisation was still in the air. In those days it was thought to be a great institutional invention that there should be quasi independence created by the institution of corporations subject only to ministerial direction on matters of high national principle. This was thought to be a tremendous improvement on nationalisation managed entirely from Whitehall. I suppose few of us would differ from the view that it was an improvement from that point of view. But I wonder how many of us would think that, as regards the nationalised industries, things have not worked out as well as was promised at that time.

I personally would not claim to inside expert knowledge of the conversations between Whitehall and the heads of the various nationalised industries, but I must confess, having to some extent mixed among those people responsible, that it is my impression that far too large a proportion of the time spent by the heads of nationalised industries is engaged in conversations regarding demarcation disputes between their own sphere of action and that of the alleged national interest as represented by Whitehall. We have had an example in the last few weeks of one of the brightest heads of nationalised industry retiring apparently in a state of dismay and frustration at the extent to which his elbow room had been restricted in just this way.

To cut a long story short, the provisions which we are discussing now, as has just been said, go much further than anything which is standard form in these matters. It gives the Secretary of State power to interfere about anything. If such an enactment takes place, I personally should regard the conduct of nationalised industries to be even less efficient than at the present time, and that is saying quite a lot.

3.14 p.m.

Lord SHINWELL

I fully appreciate the opposition to this Bill. I can under stand it, and those who oppose it in this democratic system of ours have a perfect right to express their opposition. What I cannot understand, on the assumption that this piece of legislation will eventually receive the endorsement of Parliament, in spite of the opposition expressed in your Lordships' House, is why we should object to ministerial direction on policy where it affects the national interest.

In the course of our previous debates I have ventured—perhaps little notice has been taken of my observations on the subject—views about the form, the concept, and particularly in the sphere of implementation of nationalisation. Indeed, it may be within the recollection of Members of the Committee that I expressed the view which was interpreted as that of a holding company, with general directions affecting financial accountability and other matters of national interest, leaving individual firms with considerable autonomy. I expressed that opinion because over the years, with my experience, such as it was, of nationalisation schemes—and I took a very active part not only in advocacy but also in implementation—I varied my views. If I had to deal with the situation today, with the knowledge that I seem to have gained over the years, I should have offered a different method of dealing with public ownership than that which was adopted at the time.

On the assumption that this Bill—that is to say, speaking about the fundamental purpose of the Bill—will be eventually accepted, which will mean that Corporations are established with powers to operate aerospace operations and shipbuilding operations (with, I hope, the exception of ship repairing because to that I strongly object on technical grounds apart from the political issues involved), it seems to me that there must be some form of ministerial direction. I go further than that. One of the defects in nationalisation has been the creation of corporations with complete autonomy in matters of administration. The term "administration" is susceptible of various interpretations. Members of your Lordships' Committee will recall that on frequent occasions when questions have been put to Ministers about various aspects of policy associated with nationalisation schemes, they have been referred to the National Coal Board, the Post Office, or what-have-you. I should like to dismiss that entirely. I should like to bring us back to the other concept to which the noble Lord, Lord Robbins, appears to have referred; namely, that Parliament should always be able to discuss and ask questions and intervene in matters affecting nationalisation schemes.

By Parliamentary control let there be no misunderstanding; I mean not ministerial control, but control by Members of Parliament, however inferior they may be regarded as, however disdainful we may be of some of them because of their apparent lack of common sense. We want Parliamentary control. I would say the same of Members of your Lordships' House, that it is within our right to ask questions about how a scheme is working under public ownership, under the control of the State, and with directions by the Secretary of State, the Minister involved.

Therefore, I cannot understand what the opposition is about, except that perhaps from the standpoint of the Liberal Opposition and the Tory Opposition I can understand that they would like to dismiss the Bill entirely. Indeed, The Times leading article this morning advocates for various reasons getting rid of this obnoxious and objectionable Bill, which is repugnant in the opinion of many Members of your Lordships' House, many Members in another place, and many people in the country. No, it seems to me that the Secretary of State must be vested with certain powers of direction. What is contained in the provisions to which the noble Lord, Lord Lloyd of Kilgerran, referred, seems quite appropriate and by no means to differ from directions which have been contained in previous nationalisation Bills. We must get back to Parliamentary control.

If the Bill is passed, a Minister must be there to direct, not the day-to-day operations and matters of administration but matters of general policy; the relationship between one Corporation and another or even between the Corporation and private interests outside. That is essential. I suggest, therefore, that we either dismiss the whole thing and be done with it and leave things as they are—

Several noble Lords

Hear, Hear!

Lord SHINWELL

I note the applause for that obesrvation; I do not agree with it entirely, although I have not been happy about the Bill from the outset. Let us not make the mistake of assuming that one can have a Corporation that can do as it likes irrespective of the national interest; unless, that is, one assumes that privately owned corporations are concerned with the national interest. I have no doubt that they take that interest into account, but that is not their essential business. I beg the Government to oppose the Amendment on the grounds I have submitted, although I have no doubt that they will have ideas for doing so very much more fundamental and more intelligent than I have offered.

3.22 p.m.

Lord DRUMALBYN

I congratulate the noble Lord, Lord Shinwell, on his birthday. I am sure he knows that we all wish him well. He has been saying that Ministers must have certain powers of direction under the Bill but that they should be subject to Parliamentary control. My questions are directed to the degree of Parliamentary control. As my noble friend Lord Orr-Ewing said, there are two different kinds of directions involved here. Clause 4(1) says: Each Corporation shall give effect to any direction given to it under subsection (2) … If we then look at subsection (2) we find that those are directions of a general character, the type of directions and the only type of directions that have been given under previous nationalisation measures, except, I am told—though I am not sure about this—in the Act relating to the BNOC.

Certainly in the past nationalisation measures have provided for giving directions only on matters of a general character. I agree that this has proved difficult to interpret in the past and it has sometimes been felt that there should be wider powers or that they should be differently formulated. That I accept, but the point here is that the Parliamentary control and safeguards are limited to powers of general direction. That is clear from subsections (4) and (5), but on the other side subsection (1) says: Each Corporation shall give effect to any direction given to it under subsection (2) …or under any of the following provisions of this Act … No safeguards are provided for, so far as I can see, in the clause. It is to that in particular that the Government must address their answer. I do not think the noble Lord, Lord Lloyd of Kilgerran, would necessarily oppose the same degree of power as has been given in previous nationalisation measures, if we are to have one at all; that is, power to give directions of a general character, but here new powers are being given to give new kinds of directions and without any Parliamentary control.

The Minister may say—or he may have been briefed not to say—that this is designed to take account of the possibility that there will be Directives coming from Europe and that this would enable the Government to carry out those Directives. If that is the purpose, I hope the noble Lord will say whether it is the only purpose, and, if not, what other purposes are envisaged under these provisions.

The Earl of ONSLOW

The difficulty with wide-ranging powers of direction given to a Secretary of State is that the Secretary of State is under totally different pressures from those applying to a board of directors. He will be under political pressure to do things which a board of directors would probably not do because, as the noble Lord, Lord Shinwell, pointed out, they have in all honesty a narrower range of interests. If shipbuilding and aircraft nationalisation is to succeed, as Lord Shinwell informed us it is—and I will not gainsay him on his birthday—we must make sure that political interference is kept to a minimum, or, if political interference is to be allowed, then, when it comes to adding up the sums, we must be able to know the cost of that interference so that consequently we may judge it. It may be interference for perfectly justifiable reasons, but whatever the reasons we must know the cost of it as opposed to the cost of the purely business or effective balance sheet approach. We must be able to separate them.

One must agree with Lord Shinwell—if I were a quarter as lucid at 38 as he is at 92 I should be pleased indeed—that we must have Parliamentary accountability; we must be able to ask questions of the Government, whichever Party is in power. After all, we have seen the valiant efforts by members of the Government Front Bench in the past to answer Questions about such matters as Post Office charges and aeroplane bookings. The buck gets passed so quickly that an All Blacks threequarter line would be pleased with the rate of passing. We must make Ministers answer because that is what democracy is all about. People, through their representatives—perhaps your Lordships' House is not the most representative of Chambers in the world. but there is another place in our Constitution where the Members are much more representative—must ensure that Ministers answer questions about why and how they are giving directions, and the reasons and costs of all that to the general taxpayer.

3.28 p.m.

The Earl of LAUDERDALE

We are trying to assist the Government and we realise that there are all sorts of difficulties involved, but this question of the very wide powers of direction is surely not one that can be just brushed aside as a sort of throw-away line. I am sure that the Government spokesmen on the Bill in this Committee would not dream of doing that. Nevertheless, this is a matter of great and legitimate concern to all noble Lords in whichever part of your Lordships' House they may sit. The noble Lord, Lord Shinwell, put part of the case extremely well. Whichever Party is in power, we have seen Ministers writhing in misery on the Front Bench because their hands have been tied in giving answers relating to public services or nationalised industries. One always feels sorry for Ministers in that position, particularly if one has a sneaking affection for them or if one is busy attacking them.

Should not Ministers, in their own interests, try to make sure—and certainly they should if they hope to be in office for more than a few months longer—that Parliamentary control is so strengthened that they will be able to answer the questions put to them? 1 have never sat on the Front Bench myself and at this late stage of my life I do not expect to, but one has seen noble Lords of one's own and the opposite Parties squirming on the Front Bench when quite simple and quite serious questions of public importance were addressed to them and they were unable to answer. Surely, in their own interests, the Government should take another look at this. I hope very much that we shall hear in due course that they are prepared to look at this. So often in the past we have been confronted with a difficult and complicated Bill and all we have had is a sort of deadpan answer which has discouraged co-operation at an early stage of what have sometimes threatened to be rather long proceedings. Let us hope that, today, we shall start by getting a response from the Government on this matter.

This is really a question of Government power being in search of responsibility. We want to make quite sure that the Government's directions are answerable to Parliament and therefore can be defended. In that sense, we want to ensure that the Secretary of State, in giving directions, can be properly protected and, indeed, supported if the directions are right. However, one of the difficulties that I see about this part of the Bill arises under subsection (3)(a), where the Secretary of State has to consider, All factors relating to that Corporation … That seems rather a lot. It might range from the prices for which the products of the Corporation are sold. It might embrace labour relations—and, usually, the Government are very anxious to keep out of labour tangles between the nationalised industries and the organised labour force.

There might be questions of using a lot of public money. I shall not say of wasting public money. There might be questions of regional development. There might be pressures from different parts of the country—of course, these would hardly come from Scotland, but they might well do so from Wales—to get some extra development of the Corporation in question in their part of the country. For instance, the Bristol Channel is very much in our minds throughout the Bill and it could well be that the Government would be forced to consider such pressures. There might even be questions of the way in which employees who were not embraced in a trade union were properly consulted. There are endless questions which could he comprised and, indeed, would be liable to be comprised under "all factors". Supposing that the Secretary of State was obliged to consider all factors but tripped up because he had not been sufficiently briefed on the sanitary arrangements at a particular plant: is that a factor or is it not? I am only trying to suggest in the nicest possible way and in a constructive fashion that the phrasing of this passage is not satisfactory as it stands and that Government Ministers are really tying a noose around their necks. However, it may be that they well know that they will not be there very much longer anyhow.

Lord BALFOUR of INCHRYE

I should like to add my plea to the Government to think again about the wide powers they are asking for in this Bill. I have had the experience on the Board of a nationalised industry of that Board being subjected to pressure by the Government of the day. Granted, it was a Conservative Government, but I should like to tell the history of what happened in a few words. The occasion was when British European Airways wished to order a particular type of aircraft. The pressure was upon us to order another type from a manufacturer in the Coventry area because at that time Coventry was suffering from very severe unemployment.

Having examined our technical experts' views, the Board wished to order from de Havilland the highly successful Trident. The Board had a majority of part-time members at that time. That was a safety provision against political pressure, because I well remember that all the part-time members and, indeed, some of the executive members—whose livelihood depended on the workings of the Corporation—said, "The Minister must give us a direction and then we shall resign as a body." The Government gave in and the Trident was born and it was a highly successful aircraft. I do not know what is to be the structure of the Boards of this new organisation but I will hazard a guess that there will not be a majority of part-time members. Therefore, the safety valve against political pressure will be non-existent unless the Government look once more at the wide powers they are asking for.

3.36 p.m.

The MINISTER of STATE, SCOTTISH OFFICE (Lord Kirkhill)

I am grateful to the noble Lord, Lord Lloyd of Kil- gerran, for suggesting at the outset that, at the very least (though I believe that the Government would use rather more than the word "least"), the Government have good intentions in many parts of the Bill, not least that which is before your Lordships at the present time. The Amendment seeks to achieve two effects which we regard as quite unacceptable. It deprives the Secretary of State of the power of general direction over both British Aerospace and British Shipbuilders. It also transforms what are presently factors that the Secretary of State must take into account in giving a general direction into factors that British Shipbuilders must take into account.

We cannot agree to the removal of the Secretary of State's power of general direction. As my noble friend Lord Shinwell said, this power is a standard provision under Governments of both Labour and Conservative persuasions in nationalised industry legislation. The noble Lords, Lord Orr-Ewing and Lord Robbins, will be interested to know that I am advised that it has rarely been used because the subject of any such direction must be general, not specific, and the legal interpretation of "general" is such that the power can rarely be used. In view of this, noble Lords might indeed wonder why we retain it. But the power, like so many others in the Bill, is essentially a reserve power. It is part of the well established framework which the Bill sets for the operations of the Corporations and the Government. Although rarely used, the existence of the power is important in colouring the relationship between the Secretary of State and the Corporation. An example would be when the Secretary of State felt that, in the national interest, he might have to lean on the Corporation to edge it in a certain direction.

The other major effect of this Amendment we also regard as quite unacceptable. If the Amendment were carried, British Shipbuilders would be expected to have full regard to a number of factors which we agree it is right the Secretary of State should take into account before giving a general direction hut which are not the proper province of British Shipbuilders.

The Earl of ONSLOW

Before the noble Lord goes any further, I wonder whether he can give examples of directions that have been given under similar clauses—for example, to British Rail, the British Steel Corporation or British Airways? It would be very helpful to the Committee if the noble Lord could do so, so that noble Lords could know what is in the Government's mind.

Lord KIRKHILL

I speak from memory. I believe that there have been only three occasions when a direction has been given.

As to the specific occasions, I could not say at this time but I might be able to have an informal conversation with the noble Earl. I cannot myself exactly recall the three specifics, but certainly as I recall there have been only three occasions when direction has been given. I will single out one as an illustration. This, of course, does not refer to the point that the noble Earl has just made. It refers to my earlier point about factors to which we must have regard as we discuss this Bill. I would ask noble Lords whether it is appropriate that British Shipbuilders should have to ensure that they are able to compete in world markets on equal terms with competitors in other countries. Surely the sort of factors that this requirement was intended to cover are matters primarily for the Government, not for the Corporation? This is a view which I would seek to sustain before your Lordships.

The noble Lord, Lord Lloyd of Kilgerran, posed two major questions to me. In particular he made reference to, as he saw it, interference that could be occassioned in commercial matters. I am advised that this provision is standard in nationalisation Statutes. They are general. They could not be interpreted on commercial matters, because any such matters would be regarded by the lawyers as specific, not general. Indeed, although this power has been in all previous Statutes it has almost never been used because of the legal interpretation. This is the point that I was trying to make earlier to the noble Earl, Lord Onslow. On only three occasions, I think, have these powers been invoked.

I would, if I may, finish on the second point which the noble Lord, Lord Lloyd of Kilgerran, put to me, that as he understood it the guidelines in Clause 4 applied to shipbuilding but not to the aerospace industry. I am to say that in the Government's view there is no need to cover aerospace in the Bill. These guidelines were put down following an assurance given in Committee in another place to Mr. Willey, and I am assured that these were supported by the Opposition at the time.

3.42 p.m.

Viscount SIMON

The noble Lord explained that these clauses concerned only the general directions. This is a point which I did not quite follow because, as the noble Lord, Lord Orr-Ewing, pointed out, the first subsection refers to directions under subsection (2) or under any other provision. Subsection (2) does indeed refer to directions of a general character. Would the noble Lord consider putting in the words "or general directions under any of the following provisions", to make it clear that the second half of subsection (1) also refers only to general directions and not to specific directions?

Lord KIRKHILL

Of course, I am always willing to consider a constructive suggestion. I could not give the noble Viscount, Lord Simon, an unequivocal assurance that the Government would accept the point he makes to me. These are complicated legal matters at this particular stage, but no doubt I can at least consider his suggestion.

I confirm that my noble friend Lord Shinwell was quite right when he emphasised that Ministers are answerable to Parliament for use or non-use of the powers of general direction in the national interest. There are many other direct Parliamentary powers—for example, the crucial borrowing powers contained in Clause 11, as well as answerability of Ministers for use or non-use of their powers.

If I may turn to the very interesting point which the noble Lord, Lord Drumalbyn, put to me and to which the noble Lord, Lord Balfour of Inchrye, made reference, I can say to your Lordships' Committee that there are powers and specific directions in, for example, Clause 5, the question of organisation following on organisation review; in Clause 8, which concerns the publication of information; in Clause 18, which contains certain aspects of accounts and makes reference to these aspects; and I am also advised that there are a number of powers to determine, for example financial objectives, to approve new activities, to lay orders and to make regulations. For all of these, Ministers are answerable to Parliament, but only on the question of the laying of orders or the making of regulations are Ministers answerable with specific and to specific Parliamentary procedure. I hope that reply may be of some assistance to the noble Lord.

I think I have covered the points which have been put to me. I hope that what I have said will convince noble Lords that, even if rarely used, the power of general direction is essential and that the requirements which the Amendment would lay on British Shipbuilders are, in the Government's view, quite inappropriate. I hope, therefore, that the Amendment will not be pressed.

Lord ROBBINS

Before the noble Lord sits down, may I ask him to elucidate a perplexity? He has assured the House that only rarely have directions been given. Would he also be prepared to assure the House that only rarely has pressure been brought to bear?

Lord KIRKHILL

That is a valid comment which the noble Lord has made to me. It could not bring forth the type of assurance that he would obviously like to have from me.

The Earl of LAUDERDALE

Is the noble Lord quite happy about this unfortunate word "all", to which I referred, in subsection 3(a)? Do the words: …"the Secretary of State … shall consider all factors that appear to him to be relevant…": really mean anything that comes to mind, and so long as it comes to his mind in terms, or does "all" mean "all"? If it means "all", surely this is very extensive; and is not the Minister thereby really asking for trouble? The noble Lord said he is willing to look again at any constructive suggestion. This is intended to be constructive, although I say it with a smile on my face. I like smiling. But the word "all" seems to me to be pregnant with trouble. Perhaps he has an answer?

Lord KIRKHILL

I deliberately slowed up my latter remarks in what at the time proved to be a vain hope that I might receive some very necessary support. Left to my own limited devices, I felt slightly unable to discuss with the noble Earl the question of "all" and its relevance. I find myself still in some difficulty, because I have some problem in following the note, but I would just say to the noble Earl that I am advised that none of the examples he gave in discussing the requirement of the Secretary of State to take into account all factors would be considered under the heading of "general directions". All these matters would be regarded as specific, and, therefore, could not be the subject of a general direction. As an example, there could be the question of industrial relations; prices; sanitary arrangements—I think the noble Lord did mention it, so I mention it back, not too seriously. These are things on which in the past legal advice has prevented Ministers from giving general directions.

The Earl of LAUDERDALE

I am much obliged to the noble Lord for going to the trouble to get an answer from the Box. With the greatest respect, I am not quite sure that the Box has answered the right question. The question is not whether the directions are general or specific. The question is whether, in giving general directions, the Minister is required to take into consideration all factors that he thinks relevant. It is not whether they are specific or general. I was not raising the point as to whether prices, labour relations, sanitary arrangements or other things were general or specific but the question of whether they could be considered under the heading "all". Is the Minister quite happy? I think there are two or three more people at the Box now, and no doubt they will help.

Lord KIRKHILL

To be serious about this matter, I should say to the noble Earl that Ministers must take account of all relevant factors which pertain to the giving of a general direction. I cannot improve upon that; that is the position as I understand it. If the noble Earl disagrees with me, then we must disagree on this point. This is the interpretation, as I understand it.

The Earl of LAUDERDALE

I am sure that it is relevant. The noble Lord referred to all the relevant factors. All right, but the point is this: who is to say what is relevant to the Minister? Unless the Secretary of State protects himself in some way, he can be charged with neglecting a relevant issue, or he can be required to treat everything as relevant. I appreciate that the noble Lord is landed with this drafting; we are all landed with it, though we shall try to prevent some of it passing into law. All I am asking is this: would he please have another look at it? To hide behind the phrase, "all relevant" is just as bad as hiding behind a fig leaf. It is a fig leaf. It is not a very satisfactory one, and I am sure that my appeal will appeal to a gentleman of his powers of comprehension.

Lord KIRKHILL

I should have thought that only a matter of broad generality can be considered within the confine or the ambience of a power of general direction.

Lord ORR-EWING

Perhaps this matter will arise under clause stand part, and so I should like to give notice to the noble Lord, so that the Officials' Box can think on this matter. When someone queried whether the same powers should be provided in respect of the air corporations, the noble Lord said that he did not feel that that was relevant. The noble Lord, Lord Balfour of Inchrye, has already reminded the noble Lord of one instance. I should like to remind him of a more recent one in 1963, when the Government of the day, which happened to be a Tory one, forced BOAC, very much against its will, to buy the VC10 and the Super VC10, rather than the American aircraft which it wanted to buy. One cannot call that a general direction; I should have thought that it was a highly specific direction. It was one of the rare occasions on record where the politicians were right and the operators were wrong, because when one looks at the true accounts of British Airways one sees that the VC10 is the most profitable aircraft operating today. It has an 84 per cent. load factor—or used to have —on the Atlantic and is the most popular one for all Americans to travel in.

I do not think that Parliament is always right in making these judgments, but certainly on that occasion the very strong US lobby which has always existed in British Airways was wrong and Parliament was right. But I should have thought that that was an example where not a general direction but a specific direction was given to an air corporation. Perhaps the noble Lord will consider that example in the light of what he said and see whether we want to come back to this point at Report stage or later.

3.53 p.m.

Lord CARR of HADLEY

The noble Lord, Lord Kirkhill, said that he must advise the Committee to reject these Amendments on the grounds that they deprive the Secretary of State of power of general direction, and that they would leave with British Shipbuilders obligations and powers which I think I would agree with him ought, if they are to exist at all. properly to rest only with the Minister, not the Corporation. Before making some other comments on these Amendments, I should like to advise my noble friends that we should regard these as probing Amendments. Of course I cannot speak for the noble Lord, Lord Lloyd of Kilgerran, and his colleagues on this, but this is certainly how 1 regard them at this stage.

The debate we have had has shown how important that is. Some of us have been getting increasingly concerned about the Ministerial powers in the Bill. We have been getting concerned because although the word "general" is still used in a comforting kind of way to reassure us, we are aware that Ministers of the present Government are, even in statutory form, introducing the word "specific" as well. They are becoming much more fond of the idea of "specific" directions as well as "general" directions, and we need to assure ourselves that "general" means what it has always been intended to mean, and that more interventionist Ministers are not in future going to stretch what they mean by the term "general".

I must say to the noble Lord that lie and his colleagues on the Front Bench have still more to answer about this, particularly when it comes to those powers to which my noble friend Lord Orr-Ewing referred. In subsection (1) of the clause we are dealing not only with general powers under subsection (2), but with other powers right throughout the Bill. I shall come back to that matter at the very end of what I have to say which, I assure your Lordships' will not be very much.

Not only does the noble Lord, Lord Kirkhill, try to reassure us by emphasising that these are indeed only general powers of direction, but he goes on to reassure us even further that the legal meaning of the word "directions" has been held to be so narrow that the powers are scarcely usable at all or, indeed, are very rarely used. I think he was a little coy when replying to the last intervention by the noble Lord, Lord Robbins. It is pressures which are brought to bear upon nationalised Corporations which to my mind are one of the strongest reasons against nationalisation.

I have served in a Government who instinctively would not have wished to be driven to intervene more than necessary, but there are pressures which fall upon a Government, whatever their instinctive wishes, and I have seen such pressures brought to bear on nationalised industries. I cannot imagine what threat of penalty or what offer of reward would ever induce me to become the chairman of a nationalised industry—though nobody would ever be foolish enough to ask me to do such a job. But if anyone were sufficiently foolish, having seen what I have seen, I must repeat that I cannot imagine what terrible threat or what enormous reward could make me take on a job of this kind. Although this is not the subject of the debate today, I believe that it is in this area that there lies the ultimate argument against nationalisation, because nationalised industries cannot operate as Parliament keeps on insisting they should operate.

That brings me to the point raised by the noble Lord, Lord Shinwell. Although I may look at this in a different way from the noble Lord, Lord Shinwell, I think that he was really pointing out the dilemma we are in. If we are to have nationalisation—and as the noble Lord said, he recognises that I, and my noble friends would not wish to have it at all—we want it to work. Why, then, if we are to have it, do we object to Ministerial direction? I agree up to a point with the noble Lord, Lord Shinwell, that there is a great inconsistency here. But I think that the inconsistency is more in the minds of the Government even than it is in the minds of the Opposition. If there is to be nationalisation, then there is a very strong case indeed for running it virtually as a Government Department, having full accountability, including full accountability to both Houses of Parliament in terms of answering Questions and all the rest of it.

In this regard, I wonder whether, for example, we have done much good, either to the Post Office or to the public, in doing what a few years ago I would have supported warmly in general principle; namely, hiving the Post Office off from being a Government Department to being a nationalised Corporation. I repeat that I doubt whether it has done very much good to the Post Office or to the public or to the service which the Post Office has to try to give to the public.

Therefore, half of me goes along with the noble Lord, Lord Shinwell, in saying that if we are to have something nationalised, let us have power of Ministerial direction, but perhaps even more so, let us at least gain some Parliamentary accountability, so that it is publicly accountable in a proper sense of the word, not in some wholly bogus sense of the word. When I say that the Government are even more confused and have a greater dichotomy in their thinking than have we on the Opposition Benches, it is because they have been holding out this particular nationalisation measure to the country as something new, something different—different in two senses. First of all, for the first time we are told that here we are, at least in the aircraft industry, taking over a successful, profitable organisation. There is, therefore, no question of the nationalised Corporation merely picking up some public utility service which may be profitable but is not competitive in the normal sense of the word, or picking up some industry which is in the doldrums or worse. Here, at least so far as aircraft are concerned, we are picking up a profitable flourishing industry. That is one new departure in nationalisation.

The second departure, we are constantly told by Ministers in their general speeches to the country, is that, "Although we are going to nationalise it we assure the country that it will be quite different from all other nationalisation ventures. There will not be this incubus of central control. There will not be civil servants and Ministers crawling all over it; it will be highly decentralised. The shipyards will be able to run themselves and will not be interfered with. The aircraft Corporation and its constituent parts will have a high measure of autonomy". That is what they tell us. But when we look at the Bill, although the Bill pays tribute to this new principle in parts of clauses—and in some of this clause, or if not in this one then in one of the next ones we will come to specifically mentioning paying attention to the need for decentralisation —in other parts the Bill goes much further than any previous nationalisation Statute has gone in giving the Minister more and not fewer powers. That is done in the name of flexibility.

I am afraid that we are rather sceptical and perhaps even rather cynical about the use of the word "flexibility", because once the Minister has all these extra powers his civil servants—and in saying this I do not make any cheap crack about the motives or practices of civil servants—are virtually in bounden duty to crawl over these industries even more than they crawl over the existing ones.

Lord KIRKHILL

I am grateful to the noble Lord for giving way. I for my part wish to make just one brief intervention and to assure him that the word "general" is still being interpreted in the established manner. It is not being interpreted more specifically. That point should be made.

Lord CARR of HADLEY

I accept that, of course, and I accept the sincerity of the intention which the Government give to that. I still say, however, that throughout this Bill there are increasing powers for the Secretary of State compared with those which have existed in previous nationalisation Statutes, and they do not match with the other general assurances which the Government consistently give, both to Parliament and to the country, that it is their intention in these particular nationalised industries to have much less centralisation and to give much more freedom and autonomy of management to the new Corporations which this Bill seeks to set up.

I say to the noble Lord, Lord Shinwell, therefore, that I accept he is right in saying we are inconsistent here, but we want to know from the Government which way they are going. We do not want them to nationalise industries at all, but if they are going to nationalise and we are unable to stop them, let them be clear in their own minds which way they are going. Do not go on saying that we will have much more decentralisation, much more freedom, and then ask us to pass the Bill in a form which gives the Minister far more power in ever wider fields and with less Parliamentary control than we have had in the past.

That I believe is the real dichotomy in the Government's thinking—at least as expressed in the terms of the Bill before us—and it has been valuable to air this matter on this Amendment. I am sure the House ought to be grateful to the noble Lord, Lord Lloyd of Kilgerran, for raising the matter. I very much hope that the Government will think seriously about this; but even if, as I myself believe, we should not divide on these Amendments, I hope that enough has been said to cause the Government to think very carefully before Report stage as to whether these subsections are in the best possible form.

The noble Lord, Lord Orr-Ewing—and this is the last point I wish to make—stressed the words in the second and third lines of subsection (1) of this clause; that is to say, in lines 10 and 11 of page 7 of the Bill, which say that the Corporation shall give effect not only to directions under subsection (2) of this clause but also "under any of the following provisions of this Act". The noble Lord, Lord Kirkhill, was quite open with the House in his reply in drawing our attention voluntarily to some of the subsequent provisions in this Bill, and indeed some of the previous ones, where quite specific powers of direction are given to the Minister. The protection provided in subsection (5) applies only to the general directions given under subsection (2), and not in any way to this whole host—at least if "host" is exaggerative, then to the considerable number of other sorts of directions which the Minister can give, not under this clause but under any of the other provisions of the Bill.

I notice that the noble Viscount, Lord Simon, intervened a short while ago to ask whether the Government would seriously consider, at least before Report stage, inserting the word "general" somewhere in this first subsection of Clause 4. Whether that is the right place to put it in or not I do not feel competent to say definitely at this stage, but while I repeat I would not advise my noble friends to vote on these particular Amendments, I must say to my noble friends that when we come to Report stage we must not be content with the wording of the subsection as it is at the moment.

I hope that the noble Lord will undertake, with real seriousness of intent, to take account of what has been said and will, when we come to Report stage, try to meet this with some redrafting of these subsections. It would be a great help to us not only in relation to these Amendments, but because hitherto we have laboured quite hard on the Bill and there has not been much sign of flexibility or give from the Government Front Bench. They are anxious to make progress, and I can only say to them that the chances of making progress will increase quite significantly if we have sensed from them a genuine wish to deal with points of this kind which, in all honesty, they must admit are not Party political in the sense that votes to move out whole sections of the industry are. They are not Party political, they are genuine constitutional all-Party points. I hope, therefore, that we shall get that reaction of genuine desire to help this House pursue effectively what is its proper revisionist role.

4.8 p.m.

Lord MELCHETT

Before the noble Lord sits down may I make one point in response to his general comment, which went rather wider than these Amendments, on the Government considering points put to us by noble Lords opposite. There are two brief points I would put to him. The first is that I am sure he would accept that we are in great difficulty in a Bill of this sort which has been 185 hours in another place, and where a great number, if not a majority of the Amendments we have discussed, at least so far, have already been considered at great length in another place. I do not know the precise proportion, but a good number have, I know. Added to this, on two occasions I am aware of, we have undertaken to look at things and we have been criticised by the noble Lord sitting behind the noble Lord, Lord Carr of Hadley, for a wishy-washy reply. We have said that we are taking something away, but it has been suggested that we are quite clearly not going to take it seriously and are not going to do something about it. That has been my experience, not only on this Bill but also on other Bills, when Government have offered to take things back and look at them, but noble Lords opposite have said that this is not a serious gesture and is just a way for the Government Front Bench to try to get off the hook.

The Earl of ONSLOW

Before the noble Lord, Lord Carr of Hadley, defends himself, I am absolutely certain that the noble Lord, Lord Melchett, was directing his remarks, if not 100 per cent. against me, then at least 70 per cent. against me, and, judging by the self-satisfied grin on his face, I seem to have hit the target fairly accurately. I apologised to the noble Lord, Lord Winterbottom, for an over-cynical remark and I am perfectly happy to do it again. If it means that, because of my possible lack of judgment, noble Lords opposite will not take seriously the measures they said they would take to reconsider, perhaps my original cynical remark might not have been quite so cynical after all.

Lord CARR of HADLEY

Perhaps I may say just this to the noble Lord, Lord Melchett. Of course, my experience in your Lordships' House is still very minimal, but I will risk any disapproval from (I was going to say "quarrel with") some of my noble friends behind me and stick my neck out and repeat what I said a few moments ago; namely, to encourage Ministers to offer to reconsider. I am sure they will make that offer only in good faith. A promise to reconsider does not carry with it an automatic promise that they will find an answer, but as long as we are satisfied that it is not made cynically with an absolutely closed mind saying, "We will get rid of it today by promising to reconsider, but we are jolly well not going to do anything about it", as long as they can give us the confidence that "reconsider" does mean what it says, and as long as we make it clear that we realise that it means no more than what it says, then I believe it could help us quite considerably. May I say this on the noble Lord's first point.

I think he said that this Bill had had 200 and something hours in another place.

Lord MELCHETT

It was 185, I understand.

Lord CARR of HADLEY

Then I have been kind to the noble Lord. It had, I think, 140 something hours in Committee, but, as I think I remember pointing out on Second Reading, although those 140 hours were spread among a record number of sittings, it was by no means a record for a major Bill; and I drew attention to the fact that, for example, the Labour Party in Opposition had over 200 hours in Committee on the Housing Finance Bill under the last Conservative Government. But I think there is another aspect which the noble Lord and his colleagues really must take into account. Although the Committee stage of this Bill was, I agree, substantial and full, the Report stage was conducted under a very severe guillotine indeed. Therefore, many of the points on which the noble Lord's colleagues in another place, Ministers, gave assurances of reconsideration when in Committee—and they were very numerous—were not able to be discussed, because of the guillotine, when the Bill came back at Report stage, and therefore the Opposition in another place was never able to test the Government on many points on which they had undertaken to give reconsideration. That, I think, is another reason why we in this Committee have to go through this Bill with a toothcomb.

Lord DRUMALBYN

Perhaps I may make one comment on what the noble Lord, Lord Kirkhill, has said in dealing with my remarks. I think it would be only fair to recognise that in one sense this clause recommends an advance on what has happened before, because, unless I am very much mistaken, one of the difficulties about directions of a general character was that your Lordships' House could well get to know about them only when the annual report was published; so that if a direction of a general character were given in, say, January 1971, the public would not necessarily get to know about it until the report for that year was published—and it generally came out in the autumn of the following year, in this case 1972, which was a very long time indeed after the event. So, in the sense that a direction of a general character now has to be laid before your Lordships' House and foreknowledge given of what it is, this is obviously a great advantage in accordance with what the noble Lord, Lord Shinwell, has said. But now we are inventing another thing; that is, a direction which is to be just like what the direction of a general character was previously. The same will apply: the public will get to know that such a direction has been given only within anything from 12 to 23 months after the direction is actually given.

I appreciate what the noble Lord says in the context in which we were working just now with the noble Lord, Lord Melchett, that it is late on in the day to consider a matter of this rather general character because it affects so many other pieces of legislation as well. But I think that some new method has to be devised—and this is very much along the lines of what the noble Lord, Lord Shinwell, was saying—to let Parliament and the public know much sooner what kind of directions the Government are giving. It is not really satisfactory to have to wait all that time; there should be some method for doing it earlier. Even companies are making quarterly statements nowadays: why should the Government not make quarterly statements about the directions which are being given? These are the sort of lines along which one should be thinking if one is really trying to take Parliament and the people into the confidence of the Government.

4.15 p.m.

Baroness WARD of NORTH TYNESIDE

May I make just two very brief comments. I fully support everything that my noble friend Lord Carr has said, but the point emphasised by the noble Lord answering the Amendment was that it would be on the most extraordinary occasion that the power would be used. Does the noble Lord not realise that that might be the most important occasion? This, I think, must be put on the record. If it is the most important occasion, then it requires even more opposition from those who do not agree with the powers that the Government want to take.

The other point is this. If it is a very important occasion, how long would the powers-that-be concerned with the matter have to wait until the decision was in fact taken? If it was so important, it might be very detrimental indeed to the interests of the nation as a whole. I am not really commenting on either my own Government or the Labour Government, but my view is that things take so long before any decisions are taken that it is very important, if possible, not to give powers which allow too long to elapse before a decision has to be taken, because it could be very detrimental to the national interests as a whole. Therefore, though I always like to take action very quickly and should like very much to vote on this Amendment as otherwise it only makes things go on longer and longer and we would have to sit longer and longer, I am fairly disciplined and so I am supporting my noble friend Lord Carr. But I should like to know, if the Ministers get the power that they want (which I hope they will not) and any very important decision has to be taken, how long they think they will take arguing on this very important decision which has been referred to in this discussion.

The Earl of ONSLOW'

Just before the noble Lord, Lord Kirkhill, winds up, perhaps we could go back to the point of the three general directives which have been produced by the Government to nationalised industries—and by that I assume is meant since the war, or since nationalisation was introduced in 1946 or 1947. When we get to the Question, Whether the clause shall stand part?, I am sure the noble Lord will have been able to have been given the answer on these things, and, with the greatest respect to him—and I know he did it in the nicest possible way—I think it is probably of greater interest to the Committee as a whole than just chatting to me. So, first, can he give the Committee details of the three general directives which were given; and secondly, can he give an indication as to whether they were political or commercial. Thirdly, can he give some idea of the cost differential; that is, if the Board's view had been carried out rather than the Government's view, what would have been the extra cost to the taxpayer?

Lord HARMAR-NICHOLLS

May I add just a word to what my noble friend Lady Ward said? My noble friend Lord Carr intimated that he would not recommend his noble friends to divide on this Amendment. I think the case has been well made, and I think we ought to vote for this Amendment. I think effect ought to be given to the arguments which have been adduced in support of it. I should like to put a point to my noble friend, if I may. If he gets a promise from the Front Bench opposite that they will look at it again and nothing comes of that—although they could say that and mean it without in the end having to do something—and if they do not bring forward some Amendment themselves, I should like my noble friend to be specific on what he would recommend his noble friends to do on Report stage. I feel that, in order to let them see that we should like them to look seriously at doing something about this point, in the event of their not doing it, while we are letting it pass on this occasion, on Report we should like this or something like it to be voted upon so that this House can give a definite lead on what I believe is an outstandingly important trend.

Lord SHEPHERD

We have been on this Amendment for some one hour and 25 minutes. I have no doubt it is an important Amendment to an important Bill. The noble Lord, Lord Carr, indicated that his advice to his noble friends was that he would not recommend a vote in support of the Amendment; but he made a plea that my noble friend and other Ministers should look carefully at what has been said in this debate. There was some question about whether Ministers do or do not so look and whether, if they gave an undertaking, it was fair or not. My experience—and I am certain that it is the experience of the noble Lord, Lord Carr—is that in one's Department even if a Minister has not given an undertaking, what has been said in the debate is looked at with great care in case there should have been something there that is not immediately obvious either in previous debates or in another place.

I suspect that in the way we have debated this Amendment we are spoiling what good may have been done because we are beginning to labour it. My strong advice to the Committee, if I may be allowed to say so, and particularly to my noble friends, is that if they will give an undertaking to look carefully at what has been said and if there is any way in which they can help allay some of the fears that have been expressed, they should immediately undertake to see the noble Lord, Lord Carr, or the noble Lords who might have raised particular points. We have a large number of Amendments on the Marshalled List. There is no doubt that the Committee wish to see this Bill examined fully but we shall not be able to do so unless, frankly, we use our time to the best advantage. That certainly does not come by labouring an issue which I think has been fully gone into. If my noble friends on the Front Bench would give an undertaking to look at what has been said in this debate, I would hope that the Committee would feel that we had done enough on this Amendment and could move to the next.

Lord KIRKHILL

I am grateful for the intervention of the former Leader of the House, Lord Shepherd, but I think that I should emphasise to the Committee that when the noble Viscount, Lord Simon, put to me what I thought was a point of substance, although I did not have the expertise to define it or pronounce upon it, I said that I would take careful note of what he had said. I made my remarks in a constructive manner.

Lord CARR of HADLEY

Since my noble friend Lord Harmar-Nicholls raised this point, and it may help rather than hinder the good purposes suggested by the noble Lord, Lord Shepherd—although he must not expect me to assist him too much in his nefarious intentions for I shall be not only displeasing myself but perhaps displeasing other noble Lords—may I say to my noble friend, Lord Harmar-Nicholls, that I certainly would want to look very carefully at this clause. I cannot for the moment frame any possible Amendments in my mind but I think that I have to say this. What I shall want to do (and I am sure this applies to other noble Lords as well as to the Government) before Report stage is to try to find some words which put some limits on the almost limitless powers of the Secretary of State at the present moment.

But I do not think that we can take away altogether the powers of direction. if we must be saddled with a nationalised industry—which, as my noble friend knows, I should much rather not—I think we must admit that the Secretary of State, of whatever Government, must have some powers of direction. The difficulty is, I think, to find words which leave him with those necessary minimal powers of direction without taking them away altogether. I shall seek to find those words and if the Government are not prepared to go along with them or to produce something reasonable of their own, then I shall take a different attitude about dividing.

Lord LLOYD of KILGERRAN

I thank the noble Lord, Lord Kirkhill, for his courteous, and lucid, and I thought, conciliatory reply to the point I raised. I sympathise with him on his dichotomous position as indicated by the noble Lord, Lord Carr, on the important matter of the scope of the powers of the Minister. There was some comfort in his reply in that he appeared to indicate that the word "general" has such a significance in subsection (2) that these powers will be rarely used, if at all, in practice. I am also grateful to him for the sympathetic approach he has made in regard to the suggestion of my noble friend Lord Simon that the word "general" could be used more liberally throughout the Bill than it is at present.

May I briefly add my congratulations to the noble Lord, Lord Shinwell, on two grounds. First, today is his birthday and I wish him well: secondly, I do so for his most enlightening remark that if he had his time over again he would use different methods for public ownership. That was one of the main reasons that I had for raising this matter by these Amendments today.

It is all very well to talk about standard clauses for nationalised industries. My practice has been that I rarely job backwards for that is not usually very fruitful. But when one is considering the nationalisation of any industry one must be careful to consider the precise facts in relation to those particular industries. We are now dealing with industries like aerospace and shipbuilding which are of great technological interest and they have specific characteristics which are not to be found in many of the industries which have been nationalised in the past.

We on these Benches are seeking therefore a new form of management and system for running more efficiently the nationalised industries. The object of these Amendments was to try to help the Government to reconsider the powers that at present they have taken in Clause 4 for the Minister. In view of the way in which this debate has been dealt with by the noble Lords, Lord Kirkhill and Lord Melchett, may I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

4.28 p.m.

Earl AMHERST moved Amendment No. 73:

Page 7, line 26, at end insert ("and (c) shall, in the event of any disagreement between British Airways Corporation or any other British Airline registered in this country, and British Aerospace as to the specification of civil aircraft including engines and ancillary equipment to be supplied by British Aerospace invite representations from and consult with the Airline concerned.").

The noble Earl said: To avoid any confusion that this Amendment has anything to do with an Amendment I raised earlier, I must point out that the earlier one was an attempt to get freedom for the airlines to purchase equipment where and when they liked and not to have to go through this new Aerospace Corporation. The Amendment that I am now moving is to try to obtain for the airlines the right to be able to make their case direct to the Secretary of State should there be disagreement between the airlines and this new Aerospace Corporation. This Bill gives the Secretary of State the final veto on what the Corporation can develop and sell so that he will be the final court of appeal, short of arbitration, on any dispute.

If there is a dispute between the airline and the Corporation it will probably be a highly technical one and I think it desirable that they should be able to take their case direct to the Secretary of State and not have to go through either the new Aerospace Corporation or some other Government agency such as the Department of Industry. To take the matter through the Corporation would mean the the Corporation, which is the seller, would be making the case for the buyer, the airline, against themselves. Surely that would be an impossible and invidious situation. Alternatively, if the airlines have to go through the Department of Industry, or some other Government agency of that kind, quite apart from the delay and probably the considerable use of extra paper work, is it sensible to think that even with the best will in the world Government Departments must have better technical knowledge of the equipment that these airlines maintain and operate than the airlines themselves, and so can make a better case on behalf of the airlines? This Bill makes it a duty for the Secretary of State to consult with the new Aerospace Corporation. Cannot this duty now be extended to include consulting the airlines in the circumstances that I have pointed out? I beg to move.

4.32 p.m.

Lord WINTERBOTTOM

The noble Earl, as he told the Committee, is fighting the second round of a debate in which he won the first round. I am struck with slight confusion as to the expression he has used which is in conflict with the views of his noble friends who have just spoken to Amendment No. 68. As regards the power of the Secretary of State, the noble Lord, Lord Carr of Hadley, and his Conservative friends were clear that the power is too great and that the matter should be watched with suspicion and care. This is a view shared by the noble Lords, Lord Lloyd of Kilgerran and Lord Mackie of Benshie. But here we have two noble Earls, Lord Amherst and Lord Kimberley, who are trying to add to the powers of the Secretary of State.

Earl AMHERST

May I intervene? What I am trying to say is that the airlines should have the right to make their case direct to the Secretary of State because he, with his powers of veto, is surely the final arbiter short of arbitration. It is not a question of increasing the powers of the Secretary of State.

Lord WINTERBOTTOM

I cannot understand it any other way. The situation is that when the Bill becomes law we will have two State Corporations—British Aerospace and British Airways Corporation—which admittedly both have the same shareholders. In addition, there are other major airlines, such as British Caledonian and Laker Airways, for example, which have different shareholders. The general rules applying to all these airlines are the same. They must operate commercially and trade profitably. For this reason, I am certain that British Aerospace, British Airways and, indeed, the second force airlines, will be firm in their right to determine what equipment they use, what type of aircraft they will fly and how the aircraft will be fitted out.

If we agree to the noble Earl's Amendment, any disagreement between British Airways or any other British airlines and British Aerospace can be referred to the Secretary of State. This adds to the powers of the Secretary of State, which seems to be contrary to the wishes of his colleagues. Frankly, I do not see what role the Secretary of State can play in what the noble Earl has described as a highly technical situation. At the end of the day the ordering and equipping of aircraft and the negotiations which take place between private airlines and the British Aerospace Corporation must be conducted by techicians. The less the Secretary of State has to do with it, the better. It is for that reason that the Government are opposing this Amendment.

Lord TREFGARNE

I did not participate in round one of this "competition" to which the noble Lord, Lord Winter-bottom, referred. I should like to make one or two points in round two. The first difficulty with the Amendment is the reference in the second line to: … any other British airline registered in this country … This opens up the scope of these negotiations very considerably. I am not sure how the noble Earls, Lord Amherst and Lord Kimberley, would define a British airline. If it be one that holds an air operator's certificate, then the noble Earl, Lord Kimberley, should know that the Civil Aviation Authority recently promulgated proposals for making every single public transport air operator in this country hold an air operator's certificate—and quite right, too. That means that even the operator of the most humble air taxi might in future regard himself as an airline.

According to this Amendment, he may seek the intervention of the Secretary of State in a negotiation regarding the fitting of a new piece of equipment to his aeroplane. That, clearly, would be ludicrous. On the other hand, I have sympathy with the fundamental purposes of the Amendment—that is to say, the desirability of securing that British operators have freedom to buy their equipment from the most competitive source; but at the same time that British Aerospace ought to be given a chance to know of the requirements and to tender for those. If those tenders are competitive, if their specifications arc right and delivery dates good, by all means let the business go to them. I would be against the detail of this Amendment which creates an impossible situation both for the Secretary of State and airlines concerned.

Lord CARR of HADLEY

I agree very strongly with what my noble friend Lord Trefgarne has said about the phrase, "any other British airline". I do not believe we could consider passing an Amendment in this Committee with such an all-embracing phrase. Having said that, may I come to what I understand is the main point of this Amendment. I must say to the noble Lord, Lord Winterbottom, that he cannot get away with opposing this Amendment with the nice piece of debating footwork which he was displaying.

What we are saying here is not contradictory to what we were saying in earlier Amendments. If he were to say: "You can have your choice, we will take away most of the other powers to which you object, provided you do not want to put this power in", then I would not argue. But given the fact that we have to assume that the Secretary of State is going to have more power to direct than we would wish him to have, then if he is to have any of these powers at all there is a serious case for the power which is proposed in this Amendment. Here we are not talking about a power for the Secretary of State to interfere in the direction and management of the Corporation; we are talking much more about giving the Secretary of State power to arbitrate in a case of major conflict between two State Corporations. I say that because I have already said that I could not accept the phrase, "any other British airline".

We ought to look back at the history of our British airline industry. Take two fine British aeroplanes. First of all, the Trident. I stand to be corrected in my understanding of the facts—perhaps my facts are not complete—and I am speaking from memory of events which are now a good many years in the past. But while the Trident has proved a highly successful plane for British Airways, and for a number of other airlines in the world, it has never captured the world market which we hoped it would.

I knew—perhaps "knew" is rather a rather vain word to use—or felt very sure, alas, that it would fail to capture the world market long before that plane ever flew. I felt that not because I had any doubt about the competence and brilliance of the de Havilland Aircraft Company, as it was then, and its designers and engineers, but because I knew that under pressure from, I suppose, British European Airways they had been forced to modify their original design concept for that plane in order to meet the particular needs of British European Airways, as they saw them at the time. If I am right, the kind of plane which de Havilland first put on the drawing board was almost exactly what Boeing eventually produced as the 727, which then proceeded to scoop the world market, because de Havilland had been forced, by a mixture of British airline and Government pressure, to build a plane to meet the perceived but narrower needs of British European Airways. A very fine plane it is within the limits imposed upon it by those original specification constraints, but there could have been a much bigger world market if that had not happened.

Of course, there is a very similar story about that other outstandingly fine British plane the VC 10. Here, again, the Vickers part of the British Aircraft Corporation originated the concept of the large British jet plane, the first version of which was called the P.2000, or something like that. That was dropped because the Government would not support it, and when the design that eventually became known as the VC 10 came on as a real project, here again the specification of that plane was distorted by pressure from the then other British airline, BOAC, to give it particular take-off characteristics at high-altitude Commonwealth airports. This character- istic was given to the VC 10, but only at some cost to its performance from the majority of airports, affecting its range, economy and various factors of that kind. By the time this was all done, at those airports at high altitudes including, but not only including, Commonwealth countries, the runways had been lengthened in any event so that the Boeing 707 could operate from them. So here we have another case where an outstanding British aeroplane, which, in spite of sonic of the restrictions inherent because of the design imposed on Vickers, still managed to compete extremely profitably because of its great customer attraction, could have been an absolute world beater if it had not had those design restrictions imposed upon it.

If this Bill, alas, goes through, we shall have the British Aerospace Corporation and the British airlines, but it seems to me that what we are really saying is that this kind of pressure or tension may occur again in the future between these two great State Corporations. If the Minister is to have any powers or duties, it is for very serious consideration whether one of his specific powers and duties should be to act as arbitrator if this kind of conflict between the two great Corporations—the airline operator and the aeroplane manufacturer—should arise in the future, and we must hope that he will solve such conflicts in ways wiser than his predecessors. Let me say that I mean predecessors of both Parties, because there is no Party point at all in this. So I ask the Government to think very carefully about the spirit behind the noble Earl's Amendment. I repeat that if we do a deal about the Minister's other dreadful powers, then I will not press this one. But I do not accept that this is contradictory to what we said earlier, because it is a different kind of power and I submit it is one about which the Government ought to think seriously, because it could be useful.

Lord TREFGARNE

May I say one more word following what my noble friend Lord Carr has said? I entirely agree with my noble friend that British Airways, or at least its constituent parts, BEA and BOAC, have made a number of mistakes in defining the specification of aeroplanes. But I do not think that that is necessarily an argument for taking decisions from them in the future. I firmly believe that British Airways must be given the power and authority to buy the aeroplanes they think are best for their requirements. If they make a mess of determining their requirements, as I believe they have in the past, then that is an argument for shooting the conductor rather than for taking the power away from them. I suggest, in parenthesis, that Hawker Siddeley and the British Aircraft Corporation have yielded too readily to the requirements of BEA and BOAC when building new aeroplanes. To take the example of the Trident, which my noble friend mentioned, Hawker Siddeley should have insisted that it was bigger and then it might have sold better. But instead BEA, in my view quite wrongly, insisted on its being a much smaller aeroplane with the result that we all know about. The example of the VC 10, which my noble friend also mentioned, is equally apposite in that connection.

Earl AMHERST

I am grateful to noble Lords who have spoken in this debate and note the difficulties which could arise from this Amendment. But I am largely reassured by the noble Lord, Lord Winterbottom, in that the airlines will be free to order the equipment they want and from where they want, and to pay for it how they want. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

4.47 p.m.

On Question, Whether Clause 4 shall stand part of the Bill?

Lord CAMPBELL of CROY

I should like to ask the Government about the application of the powers which we have been discussing for the Secretary of State to give general directions to the shipbuilding industry, and also, in that connection, the fact that under subsection (4), before giving any such direction to British Shipbuilders, the Secretary of State has to have full regard to the need, (d) to take account of any special considerations relating to parts of the United Kingdom and in particular, but without prejudice to the generality of those considerations, relating to employment. We have heard what some of these general directions will not cover, but we are not sure what subjects they will cover, except that they will clearly be very important matters.

There is at least one most pressing question which is facing the shipbuilding industry at present. That key question is the whole matter of rationalisation and the consequent contraction of merchant shipbuilding. We have spoken in previous debates about the comparison between the world capacity for shipbuilding and the fact that world demand for new ships in the next few years is likely to be very much less. There has been no real start yet on restructuring the shipbuilding industry. That is something which we believe could have been started some time ago and did not require nationalisation, for which the Government have been waiting.

One thing that is perfectly clear is that rationalisation will lead to redundancies. Two and a half months ago, when the Bill was in the Commons, questions were asked of the Government as to whether they could yet say where the contractions would take place and where the redundancies would occur. Those were questions which the Government were unable then to answer. I believe that they should now be in a position, over 10 weeks later, to tell us something about this urgent matter. Are they waiting, on the other hand, for the new nationalised corporation, British Shipbuilders, to be set up? Are they waiting for that body to take decisions on this? If not, are they waiting to issue a direction themselves? This is clearly going to be one of the most important questions affecting the shipbuilding industry if and when it is nationalised. The rationalisation, including increasing productivity and the contracton of the industry, is bound to come and Ministers in recent months have admitted publicly that there must be redundancies. The question is, where? Can the Government yet indicate where the reduction of work forces will occur? This will be helpful in order to give early warning to all concerned. The organising committee has been active for at least six months and it must by now have provided the Government with much of the information that is needed. Many people outside your Lordships' Committee as well as many of us here will want to know as soon as possible whether the reductions will be on Tyneside, on Teesside, on the Clyde, or whether there will be general reductions everywhere.

The other point we are asking is, who is to take this decision? It is important because at an earlier stage many of those who are working in the shipbuilding industry were given the false impression that nationalisation was somehow going to keep them in jobs in perpetuity and would obviate reductions and redundancies. There are signs that some still think this, despite Ministers' more recent warnings. Restructuring of the industry is left to be dealt with after nationalisation but there is still no decision and no guidance on this important matter. Is it the intention of the Government to pass this difficult series of decisions to the new Corporation, in which case subsection (4)(d) would not come into operation and the Secretary of State would not intervene? This is a real question which will pose itself to the industry.

I should like to remind your Lordships about the situation in the steel industry. Only last year, from this very Bench, I was asking questions of the noble Lord, Lord Beswick, who was then replying about the situation which has developed in that nationalised industry. The late chairman, Sir Monty Finniston, felt that there had to be closures and a large number of redundancies in order that the steel industry in Britain should be competitive. On the other hand, the Government and the Minister understandably were worried about redundancies occurring particularly in large numbers in certain places. One can see both sides of the problem. The result was that tremendous pressure was brought on the chairman of the industry.

As the noble Lord, Lord Robbins, was saying earlier, whether you call it a general direction or whether you call it pressure, it amounts to the same thing; that the Government or the Minister are pressing hard on the chairman of a nationalised industry to carry out a policy which is against his mandate for being competitive and running the business commercially one year with another. It would be helpful to the industry and to those who have to make plans for the future if the Government were in a position to tell us today something about this. If they cannot tell us today, can they at least tell us how these decisions are to be taken, whether the Government will issue a direction or whether it will be left to British Shipbuilders in due course. The sooner the information is known, the sooner the remedying action can be taken, for instance, to ameliorate the situation in some areas where redundancies and closures may fall heavily. Alternative employment arrangements could be started now; schemes which would mean that those redundancies will occur mainly by wastage could be worked out now; there may be retraining and all the preparations for that.

These are the sort of things which ought to be started as soon as it is known where the rationalisation is going to cause redundancies or even closures. This is not going to be an easy matter for decision. As I said, it was and still is, exceedingly difficult in the steel industry, but it is the kind of problem which British Shipbuilders will come up against when it first comes into existence unless the Government have already taken decisions and made arrangements, or are going to issue a direction.

Lord MELCHETT

As the noble Lord will realise, the position remains as it has been throughout the passage of the Bill. These are decisions which British Shipbuilders will have to take because they will be in a position to look at the industry as a whole and take rational decisions about the future. I do not think the noble Lord was being quite fair when he said that the Government had given the impression that there are no hard decisions to be taken. On the contrary my right honourable friend has made it quite clear to the people whose jobs will be affected by any changes in the pattern of the industry that there are very hard decisions to be taken and great difficulties to be faced.

Lord CAMPBELL of CROY

I am grateful to the noble Lord for giving way. He has misunderstood me, or else I unintentionally said the wrong thing. The whole purpose of what I was saying was that these will be hard and difficult decisions.

Lord MELCHETT

In that case, both sides can agree about that. It is something which I know my right honourable friend the Secretary of State for Industry has been at pains to discuss with those most closely involved, that is, those representing the people working in the shipbuilding industry. I entirely agree with the noble Lord, Lord Campbell of Croy, when he says that the sooner these decisions are taken the sooner any schemes or other steps which need to be taken as a result of the decisions can get under way. In my view it is an argument for getting the Bill through your Lordships' House rather quicker than we are doing at the moment.

The Earl of LAUDERDALE

I do not wish unduly to delay the passage of this Bill—we appreciate that the noble Lord is in a hurry as all young men are—but before we part with this clause there are one or two things which we must try to get clearer, perhaps when we come to the Report stage. First, there is the question of where the industry, be it aircraft or shipbuilding, is to contract. The Bill says that: the Secretary of State shall have full regard … I do not quite know the difference between "full" or "less full". It is like "all" or "not all". Anyway, the word "full" is used: … to … any special considerations relating to parts of the United Kingdom … If that is not regional development writ large, I do not know what is. This is what the Bill is about.

Just now, we heard that it is for the industry to take the decisions. Well and good. Is the nationalised industry, be it shipbuilding or aircraft, to decide on its own, irrespective of what the Government have to say, where it is going to contract? Indeed, the noble Lord's words seem rather to contradict what we are told in the Bill, that: the Secretary of State shall have full regard … to … any special considerations relating to parts of the United Kingdom … Either the industry will decide or the Government will decide, or it will be somewhere between the two. Everybody needs to know; public opinion in Scotland wants to know—

Baroness WARD of NORTH TYNESIDE

And Tyneside.

The Earl of LAUDERDALE

And Tyneside. I was about to say the North-East of England but I realise that my noble friend would say it in her own inimitable "Geordie" fashion. Whether it is Scotland or the North-East, Lancashire or Wales that wants to know, everybody, sooner or later, will want to know where the industry is to contract. It is not good enough to pass off this question and leave it to a future decision by Corporations which do not yet exist. To pretend that it is only the Corporations which will decide will not fool anybody. Nobody in Parliament and nobody in the country will believe that a decision by the industry will be taken independently of the Government. However, that is what the Minister led us to suppose was his intention.

Another point before we leave this clause for a little while is that of consulting the airlines. The matter was raised on the last Amendment, and I must apologise that the pangs of hunger caused me to withdraw from the battle for a short while so that I missed all the discussion. However, the question of consulting the airlines, whether or not it is spelled out in the Bill, is very serious. Noble Lords may not realise that, between them, British Airways and British Caledonian come second in the world in the pattern of international scheduled passenger transport. Within the European Community British Airways carry the greatest single proportion of passengers on scheduled flights, that is, 26 per cent. British Airways run 10 out of 12 or 8 out of 10 of the densest passenger routes in Europe. Britain, thanks to our glorious Imperial past (and that is nothing to be ashamed about) has the greatest network of civil air agreements around the globe.

These matters are very serious. When the question of the industry considering with the airlines what aircraft are to be produced is glossed over, one is up against a problem of great magnitude and complexity. It is clear that throughout the world there are too many aircraft seats chasing too few passengers. In Europe too many different kinds of aircraft are being made for too few airlines, with absurdly high unit costs. These are matters which must be discussed between British Aerospace and the airlines, and it is not satisfactory just to leave the question on one side.

I know that the Government would like to push on and so would we, because we are looking forward to our breakfast; but finally, with the very greatest respect, I must come back briefly to the point that I made earlier on subsection (3)(a), regarding all relevant factors. We did not receive a proper answer to that point, and I for one shall certainly come back to it with relish (and perhaps not so briefly) on Report. But I have no doubt that the Government will be anxious to assist the Committee, as, of course, they always are.

Lord ORR-EWING

On the general case, surely it must be up to the Government to shape out the size and type of industry which this country wishes to have. This cannot be a matter just for the shipbuilding Corporation. The Government have to take into consideration the industry's export potential. The size of the shipbuilding industry that we broadly want must be the result of a general direction by the Secretary of State. In forming his judgment the Secretary of State will naturally consult the shipbuilding Corporation, but what size of marine engine building facility do we want? Is it to be the recommendation of the shipbuilding industry board that there should be one main marine engine builder in this country, and that we should stop the proliferation of minor facilities in all of the shipbuilding yards? Does this make sense in the present day and age? Certainly it was a recommendation of the shipbuilding industry board—one which was largely implemented but which has never really come about. You may get two engines built in one yard, 10 at the yard of one of the marine engine builders which is to be taken over, while perhaps one engine a year is built by another yard. Is this part of the rationalisation programme which we have been told by Ministers on many occasions is to take place?

Secondly, how much is to be reserved for warship building and what will be the Minister's judgment, presumably advised by the Ministry of Defence and their sales department, regarding the export potential to South American countries which have long bought their warships from this country? How large a proportion of our facility will that take up, and how large a proportion will be reserved for the Royal Navy auxiliaries? As Royal Navy bases overseas become increasingly not available to us, one has to provide fleet support to an increasing extent. How much will that support take up of our shipbuilding facility? Wherever you look, therefore, the broad pattern of the size and type of the industry which the Government foresee for the next two decades must be laid down by the Government. The decision cannot be left after nationalisation to a Corporation which is to be responsible in this country, not overseas, for the administration of shipbuilding.

We were told by successive Ministers that this industry was to be nationalised, first, so that they could rationalise—and that point I have covered. Presumably the decision cannot be left to the Corporation to take the responsibility for causing unemployment in certain areas. It must be a Government decision that, broadly, shipbuilding will remain on the North-East coast, with some facility on Merseyside and perhaps in Aberdeen or Upper Clyde, while the facilities in other areas will have to be redeployed and given other engineering activities. That must be a Government decision it cannot be left to the Corporation.

Secondly, it has always been up to the Government to decide how much capital is available to nationalised industries. Their capital programme has always been part of the general shape and direction of Government responsibilities. In this case we are told that there will be greatly improved investment. Therefore I ask, first, how much money will he available and, secondly, how will the working capital be obtained? For every million pounds that you pay for improved machine tools—and they are very expensive in the heavy engineering field—you probably need £2 million of working capital for the raw materials and for the machine tooling. You need to work them on a two or even three shift basis if you are to work them economically and satisfactorily. Therefore the working capital requirement must surely be submitted by the Corporation but approved by the Government of the day.

There are, therefore, all these areas, apart from the pure management of the industry by the Corporation, which must surely come as general directions from the Secretary of State as they have in the case of all the other nationalised industries. I am sure that the Government would not wish this industry to be any exception.

5.8 p.m.

Lord KIRKHILL

When we were debating the matter earlier, the noble Lord, Lord Orr-Ewing, was kind enough to suggest that at "clause stand part" I might give the Government's view on the question he posed regarding the direction given in the case of the VC 10. I have to say to the noble Lord that I have been unable to check quickly whether or not this was done by general direction. What I can say is that Ministers have other powers to influence investment decisions and similar strategic planning matters through the power to approve the capital investment programmes. The noble Earl, Lord Lauderdale, returned to the attack on the question of all relevant matters.

The Earl of LAUDERDALE

Not to the attack; I was just trying to help the Committee.

Lord KIRKHILL

Having been on this matter now for about two hours, it begins to appear in a rather attacking guise, although I readily acknowledge that it was put to me in the most friendly spirit and manner. I was going to say that it is for the Minister, answerable to Parliament, to judge what is meant by "all relevant factors", and he is required to take into account the particular factors which can be determined in Clause 4(4). I do not think I can usefully add to my comments at this stage. That is as far as I have been able to go in the matter at this time.

The noble Earl, Lord Onslow, asked whether I could be more specific about the question of the three occasions on which the general direction had been given. As I said earlier, the power of general direction is normal in nationalised industry Statutes: for example, Section 7(1) of the Gas Act 1972 and Section 4(1) of the Iron and Steel Act 1949. I indicated earlier that it is of course a reserve power. It has been used once in relation to the Transport Boards and once for technical reasons in relation to the Air Corporations, and I can refer the noble Earl to the Select Committee on Nationalised Industries and to the Ministerial control of the nationalised industries, H.C. 37(1) of 1967/68, at paragraph 649. It was also used shortly after the passing of the Iron and Steel Act 1953 in relation to the Iron and Steel Corporation of Great Britain, in respect of the financial structure and management of the then publicly owned companies and the sale or disposal of the undertakings of securities of such companies.

Those are the three occasions; I am unable to give him any effective reply on the question as to cost differentials.

Baroness WARD of NORTH TYNESIDE

Before the noble Lord sits down may I ask him whether all that has to be done under Clause 4, which has been well put by a number of noble Lords, has been commenced? Has the Treasury been consulted? Has the Department of Health and Social Security begun consultations? I should not like to have to set out the number of Departments that will be concerned in this matter because it must be an enormous number, but I should like to know whether they have started consultations or whether they are waiting until the Bill gets on the Statute Book—if it ever does, and I hope it will not.

Lord KIRKHILL

My understanding of the position is that consultation has already started and I can confirm without any equivocation at all that the Treasury has been most active thus far.

Lord TREFGARNE

I hope the noble Lord, Lord Kirkhill, has not said his final word on this Motion because I should like to put a point to him. Like the noble Lord, Lord Campbell of Croy, I am disappointed that the Government are unable to be more specific about the distribution of the redundancies which will inevitably happen when the British Shipbuilders' Corporation comes into being. Hopefully the same will not be necessary when British Aerospace comes into being, but we shall see. There is an important point which I raised on an earlier Amendment and the noble Lord, Lord Melchett, was not then able to help me. It is the question of customers. As we have been told by the noble Lord, Lord Melchett, the British Shipbuilders' Corporation will be taking over the existing companies and will continue to be active in the export business. The noble Lord, Lord Melchett, was insistent that there would be no loss of export business as a result of this nationalisation but I should like to ask the noble Lord, Lord Kirkhill, whether he can give us a firm assurance that there will be no directives to the Corporations with regard to with whom they should deal. For example, are we certain that the Government will not yield to pressures, from whatever source, that the Corporations should not deal, for example, with some so-called Right-wing reactionary régime, and can we be equally certain that a Conservative Secretary of State, if he came to office, as I believe he will ere long, will not direct the Corporation (if he has the power) not to deal with some extreme Left-wing régime? I think both these possibilities are undesirable and I hope the noble Lord can reassure me.

Lord KIRKHILL

In the course of the debate on this clause, I have been attempting to emphasise that these are reserve powers. The general power of direction is a reserve power. I have also been clearly stating that I am legally advised that most issues which will come before the then Secretary of State are of a specific kind. Because they are of a specific character they therefore fall out with the remit or direction under general powers. Beyond making a statement of that kind I do not think I can comment.

Lord TREFGARNE

I thank the noble Lord. That goes some way to help me. But is it not the case that the Minister has the power to make directions in the national interest which could perhaps be of a more specific and a less general nature?

Lord KIRKHILL

Certainly the Minister must take the national interest into account and as I think I said earlier it is one of the ways in which he can covertly lean upon a nationalised industry. However, I do not think that the question of activation of our general reserve powers necessarily follows from that proposition.

The Earl of ONSLOW

Two points come to my mind as a result of this debate on the Question, Whether the Clause shall stand part of the Bill? First, I would thank the noble Lord for referring to the general directive issued to the gas, the iron and steel and the airways corporations. Can he say what those directive are?

Lord KIRKHILL

No.

The Earl of ONSLOW

No possible way.

Lord KIRKHILL

I am sure there would be a way but the Minister concerned has not got the information.

The Earl of ONSLOW

That was what I intended to say; I was not implying that he was unwilling because I can see that the noble Lord is trying desperately hard on a very sticky wicket. The noble Lord, Lord Orr-Ewing, came up with a point about marine engines. I sincerely hope that the national interest will not mean that a British built ship is going to be compelled to buy, say, Sulzer engines as opposed to an engine built in England, purely for reasons of local employment.

Thirdly, can the noble Lord also be slightly more explicit as to how many people he thinks will be declared redundant in the shipbuilding industry: will it be 1,000, 5,000, 10,000? Are there any ideas on this? Surely the Minister or some of his colleagues must have given some thought to this. Following upon that, will the Minister please direct his thoughts not to saving the jobs, as such, but finding people alternative employment as opposed to padding the industry? We have seen what has happened throughout British industry as a result of padded workforces. Orders are lost, taxpayers' money goes down the drain and we are all worse off. It is surely so much better, even though it may result in a little short-term unemployment, that people should be put into jobs where they are making money and making a contribution to the general wellbeing and doing a worthwhile job as opposed to padding out and building over-cost ships generally subsidised by the taxpayer and which nobody wants to buy.

Lord GEORGE-BROWN

Let me say that I have not always been on the side of the present Government, but having listened to Opposition Peers this afternoon I find myself supporting what the Government want to do in relation to this clause. I have never heard such nonsense as has been talked in the last hour or so by Opposition Peers. The idea that the British shipbuilding industry, when independent, has really taken care of its employees is nonsense. The idea that it has produced ships because they were called for is nonsense. The idea that they never, in the words of the noble Earl, Lord Onslow, padded out their contracts is also nonsense. I think the noble Baroness should be reminded—

Baroness WARD of NORTH TYNESIDE

Is that me?

Lord GEORGE-BROWN

My Lords, it does, indeed, mean that that particular noble Baroness should be reminded that her people are much more likely to be taken care of by a British shipbuilding industry which decides where to spread its contracts than it has yet done. Just to keep the record square—and there are other parts of this Bill with which I do not agree—I should make it perfectly plain that, in my view, a British Shipbuilding Corporation is needed so that we can build frigates, warships and merchant ships where we think we can build them, and maybe subsidise them, and maybe take a great risk in so doing.

I would finish my short intervention by saying that the private shipbuilding industry in fact has not done it. All this tremendous concern which noble Lords on the other side of the Committee are showing about redundancies, and "can we say how many?", and how they will be dealt with—I must say that the trade unionist has never been a great part of their business. When they have wanted to make people redundant, they have done so. For once, I am irritated by noble Lords on the Opposition Benches seeking to get from Ministers on the Labour Government Benches assurances that they themselves have never been willing to give. My own feeling is that we shall probably do better in running this industry by a national Corporation than we have so far done it by letting Swan Hunters and a variety of other individual companies run the industry by themselves.

And so, since I have been on other occasions very critical of the Government, and will be on certain parts of this Bill, I thought it fair to say that, on this particular issue, Opposition Peers are being extremely unfair, exceedingly irresponsible for their own bad powers. Speaking for myself, I go along with the Government on this particular issue, That this clause stand part.

Baroness WARD of NORTH TYNESIDE

Before the noble Lord the minister replies, as it has been said that the Treasury are also engaged in discussions of all these kinds of work may I ask where the Treasury is getting the money from? Is it not true that the Treasury have already said that really they have not got any money until they get something from the IMF?

If I may say so to the noble Lord, Lord George-Brown, to whom I am really devoted although he is rather odd sometimes, would he bear in mind that for a very long time all the people whom he says are very funny in supporting us have returned me to Parliament for a very long time because they like me better than the Labour Party.

Lord BOOTHBY

May I remind my noble friend Lord George-Brown, to whom I am also devoted, that not very long ago he asked me to join him in an attempt to throw out this ill-begotten and unwanted Bill on Third Reading. I agreed, and if we succeed, we are all wasting our time.

5.25 p.m.

Lord HARMAR-NICHOLS

I am also a great admirer, on many occasions, of the noble Lord, Lord George-Brown. He knows that. I have admired him in the past because he has always had his feet on the ground. He is a realist, despite all the idealism he had a few years ago. However, I have great difficulty in understanding that what he said today has to do with Clause 4. No doubt his comments would stand firm in the general context of the Bill, but they do not come under Clause 4. I am certain that if the noble Lord had been speaking on Clause 4, which is what we are talking about now, he would have said something slightly different. I do not think he would have pledged his support to getting this clause through. In point of fact, what the clause does, in the absence of some more clear explanation than we have had so far, is to allow the Government of the day, whoever they are, to interfere with the day-to-day running of a great industry where our exports, our balance of trade and our employment are involved.

While I think that this way of doing it is wrong—that is, nationalisation, central control, come what may—we are now examining in Committee the details of the Bill. If, despite one's general objection to nationalisation, we must have it, then I say, "Please do not have a clause like this in it". If we are to hand over to a Corporation the private enterprise organisations we do not want a Government breathing down their neck every time the Corporation wants to make a decision. Have confidence in the people appointed to the Corporation; let them make decisions where they ought, if they have to, to cut down, and where they have to make redundancies. The noble Lord, Lord Kirkhill, said that they are only taking the power on specific items. He said that although the terms are general, he could assure us it is only on the specific items that any one directive will be given from the Government to the Corporation. How can it be suggested for a minute that you can take general powers, where one must take into account the need of the whole nation—

Lord KIRKHILL

If the noble Lord, Lord Harmar-Nicholls, will allow me, what I said (at least I hope I said this) was that I am legally advised that most of these powers turn out to be specific. Because of that, the power of general direction is a reserve power and cannot be activated, which is rather different from the point being made by the noble Lord.

Lord HARMAR-NICHOLLS

That is my problem. The noble Lord has just said that most of the powers will be specific. It is not the "most" that bothers me, but those which come outside the "most"; the one or two where the Government, for over-riding ideological or policy reasons, are taking the power to do it. The noble Lord says he does not think they will, and that on most occasions it will be specific.

Lord KIRKHILL

With great respect, on an intervention of the noble Lord, Lord Carr of Hadley, I said earlier that the question of general powers is still being interpreted in the traditional manner. There is no difference in the continuing interpretation.

Lord HARMAR-NICHOLLS

I noticed when I had a little exchange with my noble friend a moment ago that his outlook on these things may be slightly different from mine. I do not see even that marginal merit in giving these powers that my noble friend does. I am certain that if the noble Lord, Lord George-Brown—whose opinion I value very much—had been concentrating on Clause 4 and recognising the specific dangers that will come from giving these powers, he would not have been so generous in offering the wholehearted support that he did. Having said that, I do hope that before this Bill gets its Third Reading and becomes an Act there will be some words included which will restrict the general nature of the powers and confine them to something which is more specific, rather than retain the dangers which are possible under the overall powers.

Lord GEORGE-BROWN

Since I have been mentioned so heavily, may I make this quite clear. I would not myself have this Bill pass, and if the Conservative Front Bench were not so timid as it now is I would oppose the Bill as a whole entity. What I am saying is that, since I know they are so timid, that the noble Lord, Lord Carrington, will persuade them in the end to let it through, do not pick the wrong issues to oppose. This particular clause is, in my view, the wrong clause to oppose. Everything that the private enterprise shipbuilding companies have done up till now would support this particular clause. So this is not the one to pick on. There are much wider issues why, in my view, the Bill should not go through, and I should like to speak on that when we come to that point. But at that point I am not going to be supported by those Conservative Peers who just want to save what is good for private enterprise and lose what is good for public enterprise. This leads me to the view that they have picked on the wrong clause to oppose. If they should in the end pick on the whole Bill to oppose, I will almost certainly be with them.

The Earl of LAUDERDALE

The noble Lord says "almost certainly". Can we know whether he will oppose or not? We are very glad to have his support when we can get it. When he refers to the Benches opposite we take it he is referring to the Woolsack. We are glad to have his support, but when he says he is almost certain, we should like a little more precision.

Lord GEORGE-BROWN

I can be absolutely precise. The very moment that the noble Lord, Lord Carrington, and the noble Lord, Lord Hailsham, say, "We will now resist this Bill, at the risk of having a confrontation with the other House", I will be with them. The noble Earl must ask his noble friends Lord Carrington and Lord Hailsham whether they are willing to do it.

Lord BOOTHBY

Surely the noble Lord, Lord George-Brown, must realise that we both have very good voices, and if at the critical moment we both shout, "No" loud enough we shall put the Tory Front Bench on the spot and the Committee will have to vote.

5.34 p.m.

Lord CAMPBELL of CROY

While these two distinguished noble and redoubtable Cross-Benchers are working this out, I must make it clear that in starting this debate there was no question of our opposing Clause 4, so they will have to reserve their ammunition. Indeed, it is my intention to have debates on the Question, Whether the clause shall stand part? on quite a number of other clauses as we go along. This is one of the most important clauses, and I felt that we ought to discuss it. When we were moving Amendments earlier it was with a view to the Government doing some redrafting, as my noble friend Lord Carr indicated. But I will say that I agree entirely with the noble Lord, Lord George-Brown, that he is very fair in bestowing his support to either side of your Lordships' House or Committee. It just does not happen to be our turn today.

I was not speaking about the past, as he seemed to think, when I was opening this debate. I made no reference to the past at all concerning shipbuilding. My only reference to the past was to last year in connection with the confrontation in the steel industry between the Secretary of State for Industry and the last chairman of the Steel Board. What I was asking for was information, and again I would tell the noble Lord, Lord George-Brown, that I asked for no assurances; I simply asked for information. This had been asked for two and a half months ago at the last stage in another place; the Government were not able to respond then but they gave an indication that they might be able to before long. Here we are two and a half months later. As they are not able to tell us about any Government decisions on this, I went further and asked whether it was the intention that the important decisions would be left to the new Corporation or whether there would be a general direction issued by the Minister. Of course, perhaps the most important policy decision of all in the field of shipbuilding is to be the rationalisation, together with the contraction that is necessary, of the merchant shipbuilding industry. That is what I was talking about, the future restructuring that is necessary and the repercussions of that. I was glad to find that my noble friend Lord Lauderdale had also been exercising his mind on the same problem and put similar questions.

We had this situation arising with the steel industry last year. There there was a slightly different situation, over-manning in comparison with our competitors, obsolete plant. As I readily admitted, there were problems, and the Government had every reason to be worried and to wish to speak to the industry before decisions were taken that might have thrown several thousand people out of work in one small community. On the other hand, the chairman of the industry would find it very difficult to run an industry when he was handicapped in taking commercial decisions, however he tried to ameliorate those decisions for social purposes.

My noble friend Lord Orr-Ewing pointed out that the Government cannot fail to be concerned about that major decision of policy when it comes. Noble Lords have said that it ought to be left to British Shipbuilders, and I agree that so far as possible they must be left with the decisions of management. But something which may mean thousands of people being put out of work in one particular place must be of concern to the Government. The question is to what extent the Government will intervene, and how, and more important when, this decision is to be taken.

I think all noble Lords who have taken part in this short debate have agreed that the sooner decisions are taken the sooner people can get started on all the work that is necessary to compensate for the loss of jobs in certain areas. Again I say this arises from this particular paragraph in this clause, which states that before giving any such direction to British Shipbuilders, the Secretary of State shall have full regard to the need … to take account of any special considerations relating to parts of the United Kingdom and … relating to employment". Those are the factors which are going to be behind this really important decision. I am sorry the Government have not been able to tell us more today, but I think it is a matter which, rightly, will be considered again because it is so important for the country.

Clause 4 agreed to.

Clause 5 [Duties of the Corporations to review and report on management of their affairs]:

5.40 p.m.

Lord LLOYD of KILGERRAN moved Amendment No. 78: Page 8, line 10, leave out ("or the Secretary of State so requires").

The noble Lord said: Amendment No. 78 raises perhaps a minor point in respect of the powers of the Secretary of State in relation to the British Aerospace Corporation. Amendment No. 79 raises a similar point in relation to the powers of the Secretary of State regarding the British Shipbuilders Corporation. Therefore, with the leave of the Committee, may I speak to both Amendments. Clause 5 deals with the duties of the Corporations to review and report on management of their affairs. The Corporation has to report either when the Corporation itself thinks it is appropriate, or when the Secretary of State so requires. Both these Amendments are to remove the powers of the Secretary of State to require a report.

This may appear to be a comparatively minor matter, but it raises the question as to whether it really is necessary, when the Government set up corporations of this character with responsible directors, and so forth, that the Secretary of State should have powers at any time to cause them to report. I realise that the Government are seeking high efficiency from these Corporations. It would seem to me that they could leave all these matters and duties as to reporting to the Corporations themselves. It may be that this would be recognised as a small step forward in progress towards improved systems of management in relation to nationalised corporations. I beg to move.

Lord REDESDALE

I should like briefly—and I am sure the noble Lord, Lord Melchett, will be delighted that it is a brief intervention—to support what the noble Lord, Lord Lloyd of Kilgerran, has said. It seems to us unnecessary for the Secretary of State to ask for such a complicated and far-ranging report—and I promise I will not raise a hare—going down to how they are getting on with industrial democracy. As I said, I will not raise that particular hare. It seems rather unnecessary to do it when he "so requires". I should have thought that in the normal course of events the normal type of report which is produced every year would be quite reasonable enough.

Lord MELCHETT

As the noble Lord, Lord Lloyd of Kilgerran, said, these Amendments would deny the Secretary of State the power to ask the corporations to undertake an organisational review, a power which we consider is essential if the Secretary of State is to be able to fulfil his responsibilities for British Aerospace and British Shipbuilders. The power is of course once again, as with the power we were discussing for some time on Clause 4, only a reserve power and not one which the Secretary of State would use in normal circumstances. But I would suggest to the noble Lord that, if the Secretary of State became concerned about the way in which these Corporations were being organised and managed, a sensible response would be to ask them to review their organisation, and if the Amendments were carried this would deprive the Secretary of State of a potentially useful means of resolving a difficult problem in the best interests of the nation as a whole and the Corporation concerned in particular.

If this is his concern, I can assure the noble Lord that the power will not be used to interfere in matters of detail. There is certainly no such intention, and I would offer, as proof of our intention that the clause should not cover organisational detail, our decision to restrict the Secretary of State's power of direction to general principles of organisation. I hope I have persuaded the noble Lord that the power to require organisational reviews will not be an oppressive one, but that it is one that must be in the Bill as an essential long-stop. The normal procedure—I think this replies to something the noble Lord, Lord Redesdale, mentioned in particular—in other words, what has happened with other corporations where similar duties exist, is that the Corporation itself decides to undertake a review on its own initiative when it considers one to be necessary. I am sure that this will continue to be the case. I believe that it is important to retain this long-stop in the Bill.

The Earl of LAUDERDALE

If the Secretary of State requires such reviews of organisation and so on, could the noble Lord say whether those reviews would naturally be presented to Parliament, or whether the Secretary of State would naturally report them to Parliament? I am not clear from reading the Bill whether that is so. I cannot find it anywhere, but I may not have done sufficient preparation on it. Perhaps the noble Lord could clear our minds as to whether the exercise of that power would be in some way answerable to Parliament, other than of course in answer to Questions, where he would have to tell Parliament.

Lord MELCHETT

If the Secretary of State retains his power to ask the Corporation to review its organisation, then my understanding would be that the Secretary of State would be answerable in Parliament for the use or failure to use that power to go to the Corporation. But the noble Earl asked me two questions in one. He started by asking, if such a review was undertaken, whether it would be presented to Parliament or published. My understanding, and I shall certainly let the noble Earl know if this is wrong, is that that would not necessarily be the case. Indeed, it might well disclose matters that would be commercially confidential to the Corporation. That could well be the case. So I do not think that it would be the fact that the Secretary of State would be obliged to publish a report of this sort.

The Earl of LAUDERDALE

Would the Secretary of State be obliged at any rate to tell Parliament that he has called for a review? I appreciate that the review might very well be confidential, and probably would be, but would the Secre- tary of State be obliged at any rate to tell Parliament that he has called for such a review?—not answer a Question that we might put to him, but volunteer the information.

Lord MELCHETT

Again I am answering off the cuff, but my understanding is that the Secretary of State would not be under any obligation to volunteer the information, to come to Parliament, to make a Statement, or lay an order, or anything of that sort.

Viscount MONCK

Would not the noble Lord agree that on Page 9 subsection (5) covers this point? The Secretary of State shall lay before each House of Parliament—

1. (a) a copy of any report under subsection (1) or (2) above, or
2. (b) where the Secretary of State is of the opinion that the disclosure of any part of the report is against the national interest, a copy of the report excluding that part, …"

I agree that (b) is a little questionable, but surely (a) covers what we have been talking about.

Lord MELCHETT

The noble Earl and I both missed this. As the noble Viscount got up, the information arrived from a source in the Chamber which is invariably infallible to tell me that I was quite wrong. As the noble Viscount said the subsection on Page 9 would require the report to be published.

5.48 p.m.

Lord CARR of HADLEY

This is becoming an absolutely ridiculous situation. If the Secretary of State is going to want as many powers to order the Corporation to do this, that, and the other, as we keep hearing, then he ought to be the chairman of his own Corporation. This goes back to what we were saying earlier. We do not want nationalisation at all, but if this is what is going to happen it would be much better to bring it under a Government Department and let the Secretary of State be his own chairman of the Corporation and take responsibility for running the industry, and for answering for it to Parliament.

I wish noble Lords would consider for a moment the situation we are in. We have the situation in Clause 5 where British Aerospace and British Shipbuilders shall forthwith make this funda- mental review. I do not complain about that. I may have some ideas about the sort of things they should review or not review, but basically I do not complain about that; they should review and report. That is fair enough when they are first set up. They are then given power to undertake to repeat such reviews in the future if they think fit; also fair enough. But are we not to trust these people at all—the chairman and his fellow board members? Are they really not to be the best judges of when further reviews should be made, or should not be made?

After all, the Secretary of State is not deaf and dumb. He can talk to the chairmen of these Corporations, and if he is not content with the way things are going on, and if he feels they ought to be making a review but are not, then the remedy for that situation is not to order that chairman and that board to make the review which they, in their judgment, do not believe is necessary. His only proper remedy is to get a new chairman and a new Corporation. If they, in their conscientious managerial and directorial judgment do not believe that a review is necessary and therefore will not initiate one themselves, there will be no confidence as between that Secretary of State and that chairman and that Board, or between that chairman and that Board and all the people whom they are supposed to be directing and managing if the Secretary of State drives, orders, them to make a comprehensive review when they do not believe in it.

Either in these major matters one trusts the chairman and the members of his Corporation or, if they do not any longer command the trust of the Secretary of State and Government of the day, it is up to them to change them; the way to deal with these problems is not to nanny them or take all these powers over them. The Government should think rather more deeply, and with more sense, of what makes industry tick or not tick than they appear to have done until now.

Lord MELCHETT

I was not aware that this would be something over which either side of the Committee would get all that heated, particularly as the noble Lord, Lord Carr of Hadley, knows this is a provision precedented in two nationalisation Acts passed by Conservative Governments—this particular power is precedented in those measures. It seems to me that it is going too far to say that if a Corporation does not itself believe that a review of the organisation should be undertaken, the response to that should be to sack the lot of them. It seems to me to be far more sensible to ask the Corporation to undertake a review but, as I have said, I do not think this is something that would normally happen. It is not the way it has worked in the past and it seems to me, as it seemed to previous Conservative Governments, a sensible reserve power to have in the Bill.

Lord CARR of HADLEY

I am sorry to press the noble Lord further and I do not know what experience he has had of running industries. I have had some and perhaps he has had some, too, and I certainly do not want to make any sort of cheap point about that. I assure him that nothing so upsets an organisation as a fundamental review of this kind. It causes disturbance, uncertainty and loss of morale from top to bottom. When one is starting with a new organisation like this, I accept that it is necessary and I have said that I accept that it is necessary; but once it has been set up and running, such reviews should not be undertaken unless there arise the most special circumstances, and if those special circumstances are not perceived by the chairman of the Corporation, then I must assure the noble Lord that he should not remain as chairman.

It causes an absolute upheaval to have a review of this kind, and if the chairman does not believe in its necessity he should resign; and the problem is not got over by giving the Secretary of State power to impose such an upheaval on the organisation against the will and wish of whoever is running it. I repeat in the most serious manner—I am not talking as a politician but as someone with some experience of industry—that the way to deal with this problem is not to impose something like this on the chairman of the Corporation and his team by Ministerial order. If he cannot agree on such a fundamental point as this, there is only one proper way to deal with it and that is, I hope in as friendly a manner as possible, to change the chairman and such members of the board who cannot agree.

Lord MELCHETT

I bow to the noble Lord's experience in industry and I accept that he was not trying to make a point about that. Nevertheless, it seems to me, inexperienced though I am, that to lose the chairman and possibly other senior members of the management of the industry, would be a much greater upheaval than to undertake a review of the organisation. We are not saying that the Secretary of State will direct them to change the organisational structure. I accept that reviews of this sort involve a great deal of work, particularly of senior management's time, and no doubt that is the reason why in the past they have been undertaken only at the initiative of the Corporation. If the noble Lord is saying that the alternative, which should be in the Bill, is that if for one reason or another senior management will not agree to a review they should simply all have to leave, then that seems a rather drastic step when all we are asking for is a review of the organisation.

Lord CARR of HADLEY

I am sorry to press this matter, and I promise the Committee that this will be my last intervention on the subject. I repeat that I am speaking not as a politician but as someone who has had some managerial experience. Imagining myself as the chairman of this great Corporation, if all the people down the line beneath me as chairman know that I am having to do something which, in my best judgment as chairman, ought not to be done, and if it is something so fundamental as an upsetting review of this kind, then I assure the noble Lord that the natural authority and respect that one needs to lead a great Corporation from the position of chairman will have disappeared, and I hope that the chairman in those circumstances would have the good sense to resign. If not, he should be replaced.

Lord MELCHETT

I promise the Committee that this is the last time I jump up in response to the noble Lord because I should not be doing it. This is a serious point and I accept that we are arguing about the Amendment and not going rather wider, as maybe we have done during the afternoon. I should have thought that it was quite possible to envisage, regrettable though it may be, that there will be times when the Board will be split about an issue of this sort. There may be a majority, possibly with those working full-time, who believe that the organisation is satisfactory. As an entirely hypothetical case, there may be a minority of outside members who take the view that the organisation should be reviewed. The Corporation in those circumstances would not of its own initiative undertake a review, and it may be that the Secretary of State feels that a review would be desirable in those very special circumstances. Possibly, say, the chief executive goes along with the minority view that the organisation should be looked at. It seems to me that in those circumstances it would be quite wrong for the Secretary of State simply to say to the chairman, "Resign", and that it would be sensible for the Secretary of State simply to say, "I think a review should be undertaken".

5.56 p.m.

Lord HARMAR-NICHOLLS

If a few moments ago I gave the impression that there was a difference of emphasis on this issue between my noble friend and myself I now withdraw that absolutely because the vehemence and strength of argument he has adduced on this matter is, in my view, well justified. I do not know whether the noble Lord, Lord Melchett, has the sort of experience to which my noble friend referred, but certainly he is a very adept debater. It is noticeable that what he took up from my noble friend was, in effect, a throw-away line; that if this did not happen, they should resign. That was using hyperbole to make a particular point and, like the skilled debater he is, Lord Melchett accepted that and it was the only point he answered as though that was the only point that my noble friend had made, when he knows very well that it was not.

The point of my noble friend's argument is that if these reserve powers are given to the Secretary of State to call for an inquiry—if he is given the over-riding power which makes him the admiral whereas the chairman of the Corporation is only the captain—he does not believe that we will get the concentration and leadership from the captain that we would have if this reserve power were not given to the Secretary of State. In terms of actually running the show—that is, if we must have it in some form as is envisaged in the Bill—at least let us have it run well. In terms of running the show, people must be appointed to the Corporation, and certainly to the chairmanship, in the knowledge that they have almost complete power on how it should be run and whether there should be investigations into any malpractices or mistakes that may be made in the process of running it. If Lord Melchett had concentrated on that point, instead of being so able in taking the issue up as they do in another place, and making a big argument out of something that was not intended, he would agree from practical experience that what my noble friend is arguing is sound and is in the best interests of the Bill, should it ever become an Act.

The Earl of LAUDERDALE

Before the noble Lord, Lord Melchett, replies and presents his debating skill I wish to raise a point that is not clear to me, though I am sure he will make it clear, either from his own resources, which are extensive, or from those at the Box, which are almost as extensive. The principle of decentralisation is contained in the clause. Whether there are political overtones to that in regard to certain deals that were done in another place with the Scottish National Party I would not know, but the principle of decentralisation is here, and it has much to be said for it, as also the principle which was once proposed by my Party in regard to the nationalised railways; there might be a good deal to be said for competition in terms of profit-making and pricing between different areas.

It is proposed that there should be a review in effect, to secure decentralisation. The trouble is that shipbuilding is a single industry and what is done in one place must inevitably have repercussions in another. For example, Yarrow are in Glasgow. Are we to understand from this that Yarrow will be subjected to some kind of Scottish division and that that will set pricing policy, guide investment policy and so on? If so, what will happen to, say, Vospers in Portsmouth? Will they be similarly and perhaps divergently guided and directed by an English division? We do not know and we should like to know. What we do know from this is that decentralisation is the slogan. It may be a good slogan; it may be a bad slogan; it may have political overtones; it may be the result of a rather shady bargain behind the scenes. We should like to know about it.

The other point is, what about naval shipbuilding? Surely that is something which is different in kind from what I choose to call ordinary, run of the mill shipbuilding. Your Lordships may say that the same also applies to military aircraft building. We know from the aircraft industry that the decision of the armed forces of any country to order a particular plane results in an indirect influence on the civil aircraft which, in effect, are derived from it. Also, it must to some extent be true that naval ship design and requirements will have their impact indirectly on merchant and passenger ship design. Is naval shipbuilding to be treated separately? Surely it is distinct in the way that military aircraft production is. Is that what is intended here? Does "decentralisation" mean not only geographical decentralisation but also decentralisation in terms of class of vessel or aircraft, and does it mean that certain kinds of ship and aircraft will be produced under the guidance of a particular division? Alternatively, will they all be lumped together? This is an obscurity. I feel that the Government probably had their heart in the right place when thinking about decentralisation but, as has happened so often, their heart is in the right place while their head is in the wrong place.

Lord LLOYD of KILGERRAN

I am disappointed with the reply of the noble Lord, Lord Melchett, and I find myself in something of a dilemma because I agree with a great deal of what the noble Lord, Lord Carr, has said in regard to the upheaval which is likely to be caused to a Corporation by this kind of review being forced upon it by the Secretary of State. I should have thought that these were matters that could have been left to the Corporation to decide when is the appropriate time to make a review of this nature.

I am always reluctant to introduce anything very contentious into debates of this kind, but the reply of the noble Lord, Lord Melchett, suggests from its general tone that perhaps he himself and the Government are unwilling to trust members of the Commission even in matters of this kind. However, the powers of the Secretary of State have been very widely considered under Clause 4 and this is another aspect of the powers of the Secretary of State. Therefore, it is with considerable reluctance that I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

6.5 p.m.

Viscount SIMON moved Amendment No. 84: Page 9, line 16, leave out ("consult") and insert ("seek consultation with").

The noble Viscount said: I hope that we can deal with this Amendment together with Amendments Nos. 92 and 102 which relate to the same points. I hope that we can deal with them very briefly. I put down the Amendment to try to find out the thinking of the Government in changing the wording of the Bill. When it was originally introduced in another place, the words were, "seek consultation with" but, in the course of the proceedings in another place, the wording was altered to "consult".

Looking at it with, I hope, a fairly impartial mind, I am bound to say that I believe "seek consultation with" is a much better phrase to use because, essentially, consultation involves two people. One cannot consult unless the other person consults and, therefore, if we seek to lay a duty upon one party, surely that duty cannot go beyond seeking to consult. If the other party does not respond to the invitation, it would be quite unfair to impose an absolute duty upon one of the participants to consult. If that seems rather far fetched, let me put this point to noble Lords opposite. As noble Lords know, we in the Liberal Party are not in the least anti-trade union but we have some knowledge of the facts of life. It is by no means unusual in any industry when the management put forward some proposition for the trade union officials to say, "We will not have any consultations until you have reinstated Mr. John Smith who was sacked last week" or whatever it may be. They are perfectly entitled to do that, but if that is the situation, there will be no consultation. It seems to me—and I want to hear what the noble Lord has to say on this—that the words "seek consultation with" are much more apt for this purpose. I beg to move.

Earl FERRERS

I should like to support the noble Viscount because I feel that the words which the Amendment suggests are much better. It is difficult to place an obligation on anybody to consult if those with whom he is obliged to consult do not wish to do so. Therefore, it seems better to be obliged to seek to consult. Of course, this could go one step worse if a body with whom one was obliged to consult laid down preconditions, saying, "We will only consult with you if this, that and the other conditions are first met". Under the wording as it is at the moment the Corporation would be obliged to consult. This is only a matter of drafting, but I think it would be better that the words should be, "seek to consult".

Lord WINTERBOTTOM

I have some sympathy with what the noble Viscount has said. As the headmaster of Cheltenham said to the headmistress of Cheltenham Ladies' College, "It takes two to kiss". I believe that it takes two to consult but, on the other hand, if we consider the situation, we live in a real world and what we are trying to do as a Government is to make our intentions abundantly clear. We believe that industrial democracy, which we discussed at some length in the earlier part of our debates, is a most important element in the operation that we are trying to undertake. For that reason, we want to make the Government's point of view very clear. "Seek to consult with" permits coyness. The determination to consult may overcome it. It is an attempt to state as strongly as possible the Government's views as to what should happen in this particular case.

Lord WIGODER

The noble Lord, Lord Winterbottom, must realise that he has not answered the case that was put at all. You cannot impose a duty upon somebody to consult somebody else if that other person does not want to be consulted. In those circumstances, what conceivable objection can there be to the very much more intelligible Amendment proposed by my noble friend?

Lord WINTERBOTTOM

As I see it, the instruction is not so much to the trade union movement as to the new Board. It is being instructed by the Government to be resolute in this matter; not to send a valentine, a bouquet, but simply to knock hard on the door. That was the reason for changing the wording from a rather permissive to a mandatory form which lies behind the change that we made in the Committee stage of the Bill in another place.

Lord HARMAR-NICHOLLS

I can understand the problem behind this Bill from what the noble Lord has said. With what he has said he is drawn either to making their intentions clear or being goad legislators. It is a good thing to have your intentions made clear and to give a general directive to someone. I can understand that; and I have a lot of sympathy with his point of view in wanting to let it be seen by the trade unions and anyone lese that that is not given grudgingly to them. That is one side of it. But we are now in Committee as part of Parliament drafting legislation and we have a duty to be good draftsmen. Where we recognise in advance that something is ambiguous, and may well be interpreted in a way that could be dangerous, we have a duty to put it right. I believe that in Committee we ought to be taking that side of our duty more seriously than we noble Lord, Lord Winterbottom, has just done. The words suggested by the noble Viscount make it clear that the intentions the noble Lord, Lord Winter-bottom, has in mind are genuine, and the Government wish them to be carried out. At the same time the words must be clear there can he no misunderstanding and there must be fairness, if at the end of the day we want consultation which is real consultation. I would suggest to the noble Lord that he get off this sort of בwo-way facing. His intentions are perfectly clear. Now let him be a good draftsman. Put words into the Bill which when it becomes an Act will minimise the sort of trouble that will flow from sloppy words.

Baroness PHILLIPS

I think the noble Lord is with me, in that he is very keen always to see very clear wording in Acts of Parliament. I think there are a number of us who rather dislike the ponderous and sometimes unintelligible English in which they are couched. If I feel ill, I do not say I am going to seek a consultation with a doctor; I say I am going to consult a doctor. It seems to me everyday English, which is much more intelligible than the rather lengthy and protracted was of saying, "I am going to seek consultation".

Lord WIGODER

The noble Baroness, Lady Phillips, cannot be required to consult her doctor.

Lord STRATHCONA and MOUNT ROYAL

May I follow that point up? I think that is exactly right. We have here the legal mind pointing out what could be a real difficulty. Supposing one party seeks consultation with somebody, they decline to have it and it does not take place; are they not then entitled in lay to say, "We were not consulted. The reason we were not consulted was that we refused to be consulted; therefore the act that you are proposing to perform is invalid."?

Lord AIREDALE

My noble friend is seeking to put back into the clause the words which were the Government's own first thought and which the Government took out and changed. Having heard this short debate, does the Minister not think that, as so often, the Government's first thoughts were best, and will he not accede to this Amendment?

Lord SOMERS

The noble Lord has said that the Government wished to make their intentions perfectly clear. Surely they have done so by merely saying, "The Government shall consult"—or what were the words? If we accept the Amendment, it is "seek consultation with". But the word "shall" is there; therefore the Government's intention is clear. What is the intention of the other side nobody of course can ever know until it takes place.

Lord WINTERBOTTOM

All I can say is that the Committee seem to believe that the Government's first thoughts were best, and I will certainly convey that to my right honourable friend the Secretary of State. May I make one personal point to the noble Lord, Lord Harmar-Nicholls—whom I nearly referred to as "my noble friend". If he prefers a heavier approach to these problems, I can provide it. I was not being flippant; I was just being lighthearted.

Earl FERRERS

When the noble Lord conveys these sentiments to the Secretary of State, would he remember one thing? It is a point he did not refer to. Where you have an obligation, "shall consult", it is perfectly possible that there could be preconditions made by those who are seeking to be consulted and the words, "seek consultation with" would avoid that. The point that I wish to make is that it is obviously wrong that a Corporation should apparently be at fault because they have not consulted when in fact they might have been obliged to accept preconditions.

Viscount SIMON

I am much obliged to the noble Lord, Lord Winterbottom, for saying he would take this back to his right honourable friend and consult with him—or seek to consult with him in any case. I think, in those circumstances, I would be pleased to withdraw this Amendment. Perhaps the noble Lord will let me know what luck he has with his right honourable friend.

Amendment, by leave, withdrawn.

The DEPUTY CHAIRMAN of COMMITTEES (Baroness Wootton of Abinger)

The next two Amendments are wrongly numbered. We call Amendment No. 86 before Amendment No. 85.

6.17 p.m.

Lord LLOYD of KILGERRAN moved Amendment No. 86: Page 9, line 16, at end insert ("or professional organisation.").

The noble Lord said: This Amendment to subsection (4) of this clause raises very significant matters in relation to a large number of employees of the Corporations, particularly the British Aerospace Corporation. As your Lordships will be aware, there are large numbers of engineers, designers and certainly members of management who belong to professional organisations. Many of them, for a variety of reasons, do not belong to a trade union. This clause as at present drafted relates to the review which the Secretary of State or the Corporation will have to produce. It will inevitably raise questions of a technical nature, quite apart from questions of industrial relations.

As my noble friend Lord Simon said earlier, we are in no way making any attack upon the trade unions. Indeed, earlier in the Committee stage of this Bill I said that of course members of the trade unions know far more about industrial relations matters than possibly engineers and certainly lawyers; but when a review so fundamental as the review contemplated under Clause 5 is to be made it will necessarily involve consultation with engineers and designers, technical men, upon whom the whole success and efficiency of this Corporation very largely depends. In those circumstances, it seems to me essential that there should be consultation not only with the relevant trade unions but also with a relevant professional organisation. Therefore this Amendment is to add the words, "or professional organisation" to the words, "trade union", so that consultation can take place at all levels, with trade unionists, engineers, designers and all the responsible people concerned and who are represented in the organisation. I beg to move.

Lord MELCHETT

As the noble Lord has explained, these Amendments seek to extend the Corporations' duty to hold consultations on the subjects covered by Clauses 5, 6 and 7 to professional organisations. At the moment, the only organisations which the Corporations are required to consult on these matters—organisations, machinery for setting terms and conditions of employment and the corporate plan—are independent and recognised trade unions; but, of course, this requirement does not prevent the Corporations' consulting any individual or organisation whom they consider may be able to make a constructive and useful contribution. I know from meetings with both organising committees that they will want to draw fully on the relevant expertise of the professional organisations since the skills they represent are vital to both these industries, as the noble Lord, Lord Lloyd of Kilgerran, said.

The Corporations can do this as appropriate under the terms of the Bill as drafted. But there would be a number of problems involved in requiring them to do so. First, there is a technical problem of definition: there would be a considerable debate about which organisations the Corporation was expected to consult, and disagreements could lead to delays and create difficulties for both parties involved, as well as actually impeding the course of the consultations themselves. Moreover, Clauses 5, 6 and 7 are directed primarily at those who work in the industries. I believe that the noble Lord's Amendment could have the effect of giving equal rights to organisations of which only a small part were directly involved in the two industries themselves.

But the Government have a more serious objection of principle to these Amendments. Professional organisations are only one of many groups which in some way represent some of the interests of employees. The Bill follows the Government's general policy on collective bargaining and proper employee representation. We believe that our policy is in the best interests of all those who work in both industries. We regard this as of the greatest importance and we will therefore, I regret to say, resist the Amendments. In doing so I am absolutely satisfied, as I have already said, that there is nothing in the Bill as it is to stop those who belong to professional organisations playing their full part in the future of these industries. I am sure that they will do so, and I am sure that that is what the organising committees and everybody else will want.

Viscount SIMON

I would ask the noble Lord to elaborate on one thing he said. He was rather resisting the suggestion that the professional organisations should be consulted on the grounds that a number of their members would not be in the industry. Surely this is equally true of the relevant trade unions? There will be many members of the relevant trade unions who are not engaged in the industry.

Lord MELCHETT

My understanding is that it will be those people in the relevant trade union representing the people in the industry—in other words, the shop stewards and other full-time officials of the unions involved—who will be consulted by the two Corporations.

Viscount SIMON

I was concerned that the people in the professional organisations working in the industry could be consulted.

Lord HARMAR-NICHOLLS

I would ask the noble Lord to have another look at this matter. I accept at once that under the Bill it is not ruled out that these organisations can be consulted and I also accept at once that the words used in the Amendment may create a difficulty as they stand. But I think that in practical terms it would be very useful indeed to have some words to carry out the intention which the noble Lord has in mind. I say that because some of us speak from past experience and have had dealings with nationalised Corporations. I am thinking particularly of where the trade unions come into the matter. If one consults a professional organisation, for example, and as a result of those consultations advice is given which is contrary to that which the relevant trade union wants to give, then the relationship between the Corporation and the trade union can be soured by the very fact that the Corporation consulted the professional organisation at all.

Therefore, if it is written into the Bill that somebody has to be consulted, and words are used to that effect, then that absolves the Corporation at once from that type of criticism which comes from trade unions when the trade unions say, "You deliberately consulted someone whom you knew would give different advice to what we give." That situation causes a soured atmosphere and in the long run does not result in coming to an harmonious conclusion which might otherwise be reached.

While I can see that the organisations are not ruled out, and while I can see that these words may not be the right words, I nevertheless ask the noble Lord whether he will give a little consideration to protecting the Corporation when it goes to other than trade unions, so that the Corporation is not accused of doing something devious or biased in so acting. I believe that there is something in this point which the noble Lord may want to take into account, and I hope he will look at it.

Lord WIGODER

I should like to support the point put forward by the noble Lord, Lord Harmar-Nicholls, in a slightly different way, and ask the noble Lord, Lord Melchett, this question. If, as he clearly indicates, the Corporation will consult with relevant trade unions and relevant professional organisations, what is the point of writing subsection (4) of Clause 5 into the Bill at all?

The Earl of ONSLOW

There seems to be one oddity here. Seventy per cent. of the people who work in these two new Corporations will in effect be enfranchised by law. When your Lordships last looked at the Bill we had considerable discussion on industrial democracy. Only 30 per cent. of these people "may be" enfranchised, but they do not have to be. This seems to me to be a straightforward piece of unfairness. It may seem a rather naive way to put it, but it seems wrong that 70 per cent. of the people in the organisations have to be consulted and talked to. I am not in any way criticising that. I am criticising the fact that 30 per cent. of them only may be.

Underlying the point made by the noble Lords, Lord Harmar-Nicholls and Lord Wigoder, what happens if the Corporation discusses with one of these organisations representing 30 per cent., or some members of the 30 per cent., and some of the 70 per cent. say, "No, we don't want you to discuss it like that"? If it is written into the Bill that everybody has to be consulted, then that would seem fair, above board, right and correct. But if the provision is only for 70 per cent. and the position is one of "may be" in regard to the other 30 per cent., then that is unfair.

6.26 p.m.

The Earl of LAUDERDALE

Before we pass on from this matter, I should like to take up the opening remarks of the noble Lord when he said that of course the Corporations will, in fact, consult the professional organisations. He said that he hopes they will and he believes they will, and he thinks that in that regard there will be the very greatest help resulting. But then the noble Lord went on to say that there is an objection in principle to defining them as, so to say, worthy of consultation. Surely this is bringing us to what must now—or ought now—be becoming a quite outdated approach to industry. For years we have been told about what are known as both sides of industry, as if they are different and antagonistic instead of being closely interwoven, and as if there was not a considerable grey area of what I might call middle management who are the employees of companies but who, none the less, have an executive role to fill.

To exclude professional organisations or staff associations—and, let us say it now, somebody will call them "sweetheart associations", which really is a red herring if ever there was one—is surely to say that some are to be more equal than others. This is the difficulty which one has throughout this matter and I cannot, in my heart, believe that this is really what the Government intend, since the noble Lord has assured us that the Corporations will want to consult staff organisations and professional associations and that they will look forward to the benefit of the advice of those bodies. Clearly, there is some mistake here. If one leaves the situation so that the Corporations are only really to take note, so far as industrial democracy is concerned, of what I might call the shop floor organisations, then a very difficult and silly situation may develop.

One has already seen in the Hospital Service cleaners and others, who are in no way competent to judge on medical matters, exerting for political purposes a policy that is in fact in the medical field. I do not think that there is a single noble Lord or noble Baroness who will deny that that has happened—and it has been a disgrace. Anyone who has visited Communist countries and knows how they work will be very familiar with the practice there, which is borrowed directly from what I might call emergent Communist countries when the revolution is going forward but has not yet quite completed itself. If we are really to make this a success we must be aware of what I choose to call mere, or only, shop floor organisations having the whip hand.

Those who provide technical and highly skilled management or provide supervisory services—and they are services; they are employees too—have a very important part to play, as the noble Lord recognised. But to exclude them, and deliberately to exclude them, smacks of the same kind of consent as happened in the hospital business which was a shame and a disgrace, and everybody in this House knows that it was a shame and a disgrace. We want to be quite sure that we do not get involved in this highly technical industry, in its reorganisation, in a sort of phoney concept of industrial democracy. Industrial democracy is not simply one lot dominating the others by sheer force of brawn; it is a mixture of brawn and brain serving one another to the public benefit.

In the case of the aircraft industry, I think I am right in saying that something like half the number of persons employed —if I may just have the noble Lord's attention for a moment; I would just repeat that we have plenty of time in front of us—in the aircraft industry are senior management or supervisory in one way or another. This is not an industry of blacksmiths any more than shipbuilding is. Technical management, design, supervising, the checking of quality, all these matters arc every bit as important. Indeed, they are critical and are every bit as important as what I call the brawny shopfloor working. Therefore, not to make proper provision for them is to lay the Corporations and to lay the Bill open to the charge of perpetuating this wicked concept of the "opposite sides of" industry. There are not opposite sides, there are many sides; and unless they all seek to serve one another they serve no good purpose in any event.

Lord ORR-EWING

I add myself to views already expressed and I am not sure whether to speak on this Amendment or the next one, on which my noble friend wants to speak. My instinct is to prefer slightly the official Conservative Amendment which follows on immediately. For ten years I was a member of the BBC staff Association and it is interesting to note that it was led by an ex-Parliamentary Labour candidate, so it could not have been called a Tory organisation, a tame union or a sweetheart union. I then joined the Association of Scientific Workers which was then dominated by a far more left-Wing character and has now ended up after takeover after takeover probably as the ASTMS, so I had a little experience when I was younger in these areas. But it seems to me that if we are to come to industrial democracy, then the one thing we do not want to do is to separate the hourly workers from the junior staff and middle management. That is particularly true in a science-based industry like the aircraft industry.

It is a fact that between 33 per cent. and 50 per cent. of the entire workforce of that industry are not members, under the present definition, of any relevant trade union. Therefore, so far as participation is concerned, which is Clauses 5 and 7, rather than wage bargaining, which is Clause 6, I would ask the Government to consider, even if they will not come with us all the way, whether they might make a differentiation that in any cases where industrial democracy and participation is the main object, as in Clauses 5 and 7, they may perhaps give way and come to some solution which can bring other people in. I have been re-reading the Third Reading debate on this Bill in another place where Mr. Varley, moving the Third Reading said: One of the Bill's main themes is industrial democracy … He went on: Industrial democracy is central to the Bill in a number of ways. First, we decided to introduce the Bill partly as a result of the expressed wishes of the workers in the two industries, through their representative unions."—[Official Report, Commons, 29/7/76; col. 984.] Even then there are a great number of workers, particularly in the ship repairing industry who think exactly the opposite. They do not want to be nationalised. So only a minority was consulted.

What is more disturbing is that at col. 985 of the same speech, he went on to say that, the Government agree that the general legislation relating to certification of independence is unsatisfactory and needs tightening up. It looks from this as if there is a move in the Government to make it more difficult to consult the non-TUC unions. I cannot believe that the Corporations would wish that to come about, otherwise we are going to find something which is deeply divisive, and I cannot believe that the Government wish that to come about. I hope very much, therefore, that we may find a form of words as between Clauses 5 and 7, and Clause 6 on the other hand, which can promote industrial democracy. Naturally, we want to feel our way cautiously in this area, but the one way to go is not to divide the workforce into those who work on the workbench and those who work in the testing departments, in the quality assurance departments, in the scientific departments, in the drafting departments, all of whom have a considerable part to play, particularly in an industry which is capital intensive like the Aerospace Industry.

Lord GISBOROUGH

The ship-builders themselves welcome the study started by the Secretary of State for Trade into industrial democracy. They are very anxious for a greater involvement and participation with the workforce at all levels, if that participation is sought by workers in each establishment. That, of course, may sometimes be questionable. Subsections (8) and (9) of Clause 2 resulted from the Government giving an undertaking to the Tribune Group in the Committee stage in another place to promote industrial democracy in a strong organic form to start three months after the vesting date. The definition of this was obviously so impossible that subsection (10) had to be added so that there could be no recourse to a court of law. The intention of industrial democracy is based on the fact that the trade unions rather than the workforce should have industrial democracy. But, as has been mentioned, a large number of people do not fall into the category of being members of the relevant trade unions and the numbers vary up to perhaps 50 per cent. It is only fair that if industrial democracy is to have any meaning at all, the entire workforce should be a party to the consultative process and thus this Amendment.

So far, the Government seem to have been very unsympathetic in another place and perhaps here. The Bill originally introduced talked about "independent" trade unions, but now it has been changed to the "relevant" trade unions—in other words, unions not only independent but also recognised for collective bargaining, or, alternatively, unions which are recommended for recognition by the Advisory, Conciliation and Arbitration Service. This Bill disenfranchises from the consultative process a large part of the workforce, and in the aircraft industry this would probably include many of the aero-dynamicists, the metallurgists, the designers, the test crews and many other categories. This Amendment is designed to give all that kind of people the opportunity to share in the consultation.

The members of the Staff Association surely have equal rights with the relevant trade unions and should be given them. After all, they are all human beings whether they work on the shop floor, the design office, or wherever. They are equally dependent on the success of the company. They are equally dependent on the remuneration they get, whether annually, monthly or weekly. They are equally able to withdraw their labour. They can strike whether they are draughts-men on the shopfloor or whatever. They are equally needed for all the processes, because the designer can design for ever, but it is no good unless the chaps will convert the designs to parts, and the man who is making parts will not get on very well if the designer is not producing plans. They are all needed; and it is equally necessary that they all should be there for the jobs of each other.

The noble Lord has said that the associations can be consulted; but the unions might well claim that, as there is no mention of them, they should not be consulted. And my noble friend behind me has already pointed out that if advice was given by an association which was contrary to the advice by the trade unions, the unions would no doubt very quickly say that the association had no right to be consulted in the first place, which could only lead to friction. There is great interdependence between the scientists and the engineers; they work together. They must, indeed, because they all require training. The apprentice on the shop floor may have five years' training for his work on the lathe, just as the designer will. They must work together, because the safety of the aircraft that is eventually produced is essential, and there is no leeway for mistakes throughout the process.

There is another, substantial group that demands attention with consultation, and that is the spearhead of the industry, involving the sales force and the product-support departments. The sales force, particularly, are skilled right across the world, which is where they have to compete. They are a very strong group who probably have as much knowledge as any of what is required to sell, and therefore to eventually pay the wages of the workers, and they should be consulted. It is estimated that in BAC about one-third of the workforce are not members of unions, and therefore would not be consulted, or whose consultation would not be accepted, perhaps, by the trade unions. 1 think it would be very interesting to hear the extent to which consultation takes place in existing nationalised industries.

It was interesting to see how industrial democracy had been tackled in one firm, the Bristol Channel Ship Repairers, who have circulated many papers to many people in an effort by all in that firm—managers, shop stewards, the lot—to avoid being overwhelmed by this monolithic Bill. They have one employee-director to every 50 men, and this director is elected by the employees themselves. They have a total workforce of some 380, and at the moment they have very close liaison with their board. They will be 380 out of 95,000. How much say will they have in the industry, for a start, even though they may continue to have a say within their own organisation? In the future they will have the dead hand of bureaucracy and the powerful unions throughout the country staying their hand or guiding their course, rather than being guided by their own directors, consisting of members of their own workforce, elected I to 50. The decisions will no longer be collective, by the whole firm.

Furthermore, the workers are shareholders, and very soon in excess of 50 per cent. of the shares will be owned by the workforce themselves. When they own their own shares they will surely have some feeling of ownership and pride, and a desire to get on, if for no other reason than that they wish their shares to increase in value. I am not aware that anybody who works for the Government feels that they are working for themselves, as if they own the thing. This is the nice idea that when you have a sort of communistic State you feel, "We are working for ourselves". I have yet to discover anybody who is made aware of that sort of feeling in nationalised industries, however much the idea may appeal to the theorist.

Furthermore, in this small firm they have very full financial disclosure. They produce accounts which I think are a model of accounting. I have never seen anything like them before. They are totally pictorial, and even I can understand them—and that is saying quite a lot. But, in fact, really anybody can understand them because they are colourful, pictorial and interesting to read, and at the end of it you really can see what the company looks like. They have quarterly conferences, when the shop stewards, man- agers, workers and apprentices all get together and discuss future policies.

Now this is all about consultation. One wonders whether there has been consultation as to whether this firm, particularly, should be taken over, because if they were consulted at this moment there is absolutely no doubt that they would not want to be nationalised. I should like to know what nationalised industries practise the sort of consultation about which I have been talking. For example, I think I am right in saying that the coal industry and the railways have been nationalised longer than any other businesses, and I should be most interested if the noble Lord could perhaps tell us to what extent both those industries practise industrial democracy, with what success, and whether they have reached the state of circularising all their members with accounts, and so on. Because if there is an aiming mark, then one knows what it will be like when this industry is nationalised. I hope the noble Lord will be able to tell us what success has been achieved in this respect in those industries.

6.47 p.m.

Lord CARR of HADLEY

The debate recently has spilled over a little, I think, into the next Amendment, and perhaps it might have been for the convenience of the Committee if we had discussed Amendment No. 85, which is the next one, together with Amendment No. 86. But, as we have taken it in this way—and I shall want to move No. 85 in due course on behalf of my noble friends and myself—perhaps I may say something about this Amendment. Of course, while I agree with every word that my noble friend Lord Gisborough has just said, all he is wanting is not covered by this Amendment; and I am sure that the noble Lord, Lord Lloyd of Kilgerran, will be the first to realise and admit that all he is wanting is not covered by the Amendment we are discussing at the moment. The Amendment we are discussing at the moment is concerned simply with adding professional organisations to the relevant trade unions, as at present in the Bill, and may I say to the noble Lord who moved this Amendment that I am all with him in his intention.

I must confess that I had thought that the next Amendment, which is in the names of my noble friends and myself, subsumed professional organisations, and therefore I had not felt that it was necessary to deal separately with professional organisations. But if he or anybody else thinks it is, then at some stage, which might be the next stage of the Bill, I would not in any way object to making it clear that the professional organisations are included. Whether the noble Lord, Lord Lloyd of Kilgerran, thinks that or not, he must make up his own mind, but if he does think that the next Amendment covers them all then perhaps it may not be necessary to press both matters. Certainly I must say to the Committee in advance that if we do not get satisfaction from the Government we shall wish to press the next Amendment, because it is only if we press the next one that we can achieve all the other results about which, for example, my noble friend Lord Gisborough has just been talking. But certainly I wish to see professional organisations having a specific right to consultation.

It is rather different when we come to Clause 6, when we come to collective bargaining, because, whatever we might want, professional organisations themselves do not wish to participate in collective bargaining. Indeed, it is something which distinguishes a professional organisation that it does not enter into trade union activities of that kind; but in terms of consultation I certainly believe that a professional organisation which has a substantial contribution to make to an industry through its members who work in that industry ought to be open to consultation, and that ought to be made clear. I did not think that this Amendment was necessary, because I thought it was covered by the following one. If the noble Lord thinks that it is necessary and wishes to press it, he will have my support and, I hope, the support of my noble friends.

May I say another thing about this Amendment? It is to refer to something that the noble Lord, Lord Melchett, said in his earlier reply. I think that what he said could be very important and I would ask him to think about it and perhaps, if need be, take further advice about it. If that means that he cannot give his considered view or if he feels that it may be necessary to modify his first reply, and would wish to wait until a later occasion, we should understand. if I remember correctly, in his opening speech resisting the Amendment he gave as one of the reasons for resisting it the fact that we were concerned with people who work in the organisation—and the professional organisation, of course, was apart from the organisation.

This was taken up by the noble Viscount, Lord Simon, and it was in reply to the noble Viscount, Lord Simon, that the noble Lord, Lord Melchett, said something which I feel needs clarification. He seemed to be saying—and I am not certain what exclusivity he wished to give this—that in the case of relevant trade unions the consultation would be with the shop stewards; that is, with the union organisation in the plants within the companies of Hawker-Siddeley and BAC which are going to form the Aerospace Corporation if this Bill becomes an Act.

That is a very interesting concept. Does he mean that? While there would be consultations at that sort of plant level with shop stewards, I must confess that I had imagined that the consultation centrally carried out by the Corporations was more likely to be with regional or national representatives, leaders of the relevant trade unions; I think this could be a cause of some confusion if it is not clarified. If the noble Lord was answering "off the cuff" in the points he made, of course he would wish to consult more closely with his advisers before giving a definitive answer. If he does wish for time, then I shall understand. But if what he said is a definitive answer it is important that we should know it; because it puts a totally different complexion on what people in this House and in the other place and outside hitherto have been expecting.

Lord MELCHETT

Certainly, I should like to think about it, but I did not want to give the impression that the Government—and I on behalf of the Government—were laying down who should be consulted. I think the noble Lord would know that. I was not saying that the Corporations may consult only with any one particular branch of the trade union movement. It will be a matter for the trade unions and the Corporations to decide. I think the noble Lord will agree with me that it should not be something which would be laid down by the Government or by me speaking "off the cuff" in response to a question asked here.

The Earl of ONSLOW

Surely what the noble Lord has said needs clarifying. He has said that he is not laying down on behalf of the Government who would he consulted or not. But the Bill actually says: …shall consult any relevant trade union". That seems to me to be laying down exactly who should be consulted.

Lord MELCHETT

I was answering a specific question about who in the trade union would be consulted, whether it would be the shop stewards or the national organisation. I was addressing my answer to that question.

Lord COOPER of STOCKTON HEATH

These Amendments concern the whole question of industrial democracy. The question was asked as to the extent of industrial democracy in the present nationalised industries. The answer is that there is not very much of it, because the concept of industrial democracy is a very recent one, coming in from the EEC. We had the noble Viscount, Lord Rochdale, describing the experiment at Harland and Wolff at Belfast which is leading the way. The people who have sponsored industrial democracy are the trade unions. None of these professional bodies that have been referred to, so far as I am aware, has considered or bothered about industrial democracy. Industrial democracy is a kind of evolution where men who have for many years enjoyed political democracy now ask the question as to their rights in industry as partners. This means great changes are to come about if you follow industrial decocracy to its logical conclusion. It means different things to different people in different places.

I agree with what was said about the positive attitude of industry, the fact that we have a common interest in making a successful business. Industrial democracy can play a great part there. I know that this is a problem. Many professional bodies work under Royal Charter and at one time, because of that, they used to be prohibited from having anything to do with industrial matters. But times are changing and these professional bodies are changing. Some of them are taking part in negotiation. If they want to solve this problem, they can be parties to relevant trade unions which cater for those professionals.

This is the answer. If they wish to participate, then they have the solution in their own hands, because professional bodies are not trade unions; they are educational bodies, they are bodies that, very properly, set standards in industry for their members. The professions can become part of the relevant trade unions if they are so anxious to be represented.

6.57 p.m.

Lord HANKEY

I had the great advantage of going to Sweden with a Parliamentary delegation in May. We went round a considerable number of well-known Swedish companies, all of whom had a different system of industrial democracy. I have since had the advantage of being able to study the documents issued by the Swedish Trade Union Federation (LO), well known to my noble friend, which give an account of the form of industrial democracy adopted by about 100 different companies. The system which is suitable for each company depends on what the company does, what the employees consist of, how the companies are run and many other considerations.

In aerospace and shipbuilding, the technological developments are becoming increasingly important. The advent of computers has changed shipbuilding enormously and the technology of aerospace is developing constantly and rapidly—as I know from a nephew of mine who works on Concorde. Therefore I should like to say that the professional members of the staffs of these Corporations, if not the organisations to which they belong, should be brought in. They have an equal right to he consulted with the trade unions. If they belong to a trade union, all well and good. If industrial democracy means just counting heads, then the technicians on whom the efficient conduct of industry may depend may be outnumbered. I should like to see this Amendment adopted, as well as Amendment No. 85. I hope that both will he accepted by the Government.

Lord LLOYD of KILGERRAN

The noble Lord, Lord Melchett, in his reply said that the Corporations would want to consult the professional organisations. His only objection to this seemed to be that it might take a little time for consultation to take place with the relevant organisations. I think it must be recognised that now there are professional organisations which cover a very large percentage of the members of the employees of these companies.

Some of these engineers and designers to whom I referred are also members of trade unions. It seems to me that although at present technical matters will be reviewed, the Corporation having a duty to advance a view, technical matters are bound to arise quite apart from general matters in relation to industrial democracy. I quite agree with what—and I shall refer to him as—my noble friend Lord Cooper said; namely, that perhaps in future times there may be only one trade union or a few trade unions to organise these matters or, perhaps, the professional bodies may become more respected in these general matters. I

believe that at present we should make a positive reference to the relevant professional organisations in this Bill.

The noble Lord, Lord Carr, referred to the next Amendment. That is far wider than my Amendment. In this connection I am sure that I shall have the support of the noble Baroness, Lady Phillips, in that my Amendment has three words whereas the Conservative formal Amendment has 30. However be that so, the fact is that in my Amendment there is a definite positive reference to professional organisations and there is nothing to preclude the Conservative Amendment from being added to the Amendment if the Committee is good enough to pass my Amendment. Therefore, there is no real conflict at all between us in this matter. In these circumstances, I am reluctant to withdraw this Amendment.

7.2 p.m.

On Question, Whether the said Amendment(No. 86) shall he agreed to?

Their Lordships divided: Contents, 96; Not-Contents, 40.

Resolved in the affirmative, and Amendment agreed to accordingly.

7.10 p.m.

Lord STRABOLGI

This may be a good moment to halt the Committee in order to take other business. It has been agreed, subject to the completion of other business, that the Committee should reassemble again at eight o'clock. I hope that is for the convenience of the Committee. I beg to move that the House do now resume.

House resumed.