§ 4.15 p.m.
Lord ORAMMy Lords, with permission I shall repeat a Statement on Industrial Democracy being made in another place by my right honourable friend the Secretary of State for Trade. The Statement is as follows:
"With permission I should like to make a Statement on industrial democracy. The Departmental Committee of Inquiry, which was announced by my predecessor on 5th August 1975 and which came into being during December of that year under the chairmanship of Lord Bullock, submitted its Report to me on 14th December. I am arranging for it to be published today and copies have been placed in the Library and the Vote Office.
"The Report of the Committee is not unanimous. There is a majority report signed by the Chairman and six members of the Committee, but with a note of dissent by one of the six. In addition there is a minority report signed by the remaining three members. Nevertheless I welcome the work that the Committee as a whole has done and I pay tribute in particular to its Chairman, 501 Lord Bullock, for the vast amount that has been accomplished in the course of 12 months. The Committee has greatly advanced the consideration of this complex subject by analysing the issues and clarifying the choices.
"The majority of the Committee recommend the introduction of legislation to give employees a right to representation on the boards of companies employing 2,000 or more. This right would be triggered by an application from a recognised trade union, confirmed by a ballot of all employees. The reconstituted board would consist of three elements, that is to say equal numbers of employee and shareholder representatives who would co-opt a further small uneven number of directors. All directors would have the same duties and responsibilities. If the trade unions representing the employees, and the representatives of shareholders and management, agree that other arrangements to develop industrial democracy are more appropriate in their company, there is nothing in the majority report which would prevent the introduction of those arrangements.
"The minority report favours the prior development of participation below board level and proposes that if employee representation is to be introduced it should be on a supervisory board in a two-tier system. The employee representatives would not necessarily be selected through trade union machinery.
"The minority report also criticises the terms of reference of the Committee, which presupposed a commitment to employee representation on company boards. I should therefore make it clear that the Government are committed, as we were when we set up the Committee, to a radical extension of industrial democracy by representation of the workforce on company boards and to the essential role of trade unions in this process. The minority report would not be consistent with this approach. It is the Government's view—a view widely shared in Europe—that arrangements for joint decision-making at all levels, including board level, will represent a fundamental change which should make a major contribution to an improvement 502 in labour relations and industrial efficiency.
"The Government now intend to undertake consultations with the TUC and the CBI in order that as much common ground as possible may be identified. Other organisations will be able to express their views to the Government. We shall consult on the general basis of the recommendations contained in the majority report and we shall bring forward legislative proposals this Session. I very much hope that the consultations can take place in a positive and constructive atmosphere and with recognition by both sides of industry of the need to seek a lasting settlement.
"The terms of reference of the Bullock Committee were confined to private sector companies: the legislative proposals will also cover companies in which the Government have a shareholding. The Government have also been giving separate consideration to the development of industrial democracy in the nationalised industries and have decided that employees in these industries should be given the right to representation at board level. Consultations about this will take place in parallel with the consultations on the Bullock Report, and the Government's conclusions will be embodied in the legislative proposals to which I have referred.
"Special considerations apply to the development of participation in central and local government. It is fundamental to the working of our democracy that elected representatives take decisions and act in the interests of the community as a whole. There are, however, many matters on which employees can legitimately expect to contribute their views. The Government have put in hand and are continuing a series of studies, in consultation with the appropriate unions and management, into the scope for the extension of participation in the public services within the accepted principles which govern the operations of elected bodies.
"The Government's aim is to see democracy extended from our political to our industrial life. That is an essential ingredient of the social contract. Just as political democracy has been accepted by all our people, so we 503 believe industrial democracy—at all levels from the shop floor to the board itself—will come to be regarded as part of the accepted fabric of our national life and open a new chapter in industrial relations and a continuing improvement in our industrial performance."
My Lords, that concludes the Statement.
§ 4.22 p.m.
§ Lord CARR of HADLEYMy Lords, I am sure that we are grateful to the noble Lord for repeating the Statement which has been made by his right honourable friend in another place. It is, of course, a very complex as well as difficult subject, and we shall want to consider the report. The first general question, therefore, that I wish to put to the Government is whether they will give an undertaking to your Lordships' House that we shall have the opportunity to debate the subject before the Government come to a final decision about it.
Turning now to the Statement, may I make it clear that we on this side of the House have as strong a commitment as the Government, or indeed anybody else, to the need for a step forward in participation in industry and for the development of greater involvement and commitment by those at all levels who work in industry to the enterprises in which they work. The differences between us, which may be sharp, are about methods, not about the achievement of the objective which I have just described. Against that background may I ask the noble Lord four specific and, I hope, brief questions.
First, will the Government give an assurance that on entering into the consultation promised in the Statement they will do so with an open mind as to the methods and not with a firm prior commitment to what has been described as a 2x + y formula which forms the central part of the majority recommendations? May I say to the noble Lord that such an assurance of open-minded consultation is absolutely essential if the Government are to achieve their objective, which we welcome, of identifying as much common ground as possible on the subject and avoiding a very damaging and deep confrontation about it.
Secondly, may I ask the Government in what precise ways the recommendations 504 of the minority report fail to conform to the broad approach of the Government as described in the Statement which has just been read to us? With respect, I believe that the Statement misquotes the minority report's definition of what they mean by "industrial democracy". They do not confine themselves to participation below board level. They specifically state "at every level in the company". Therefore I ask the Government to reconsider their Statement, because I believe that they are factually inaccurate in excluding the minority report from consideration on those grounds.
Thirdly, in view of the terms of reference of the Bullock Committee, charging the Committee to take account of experience in EEC and other countries, do the Government recognise the full extent to which the recommendations of the majority of the Bullock Committee are radically different from what is the practice in any other country in Europe or, indeed, anywhere else? In particular, they are radically different from the practice followed by the most successful of our European partners, a practice which is often mentioned by Ministers as an example to us. Do the Government recognise that those recommendations are radically different from the practice in any other country?
Finally, may I say this to the Government and ask them a question about it. While we note that the Statement contains the wish of the Government to see democracy extended from our political to our industrial life, will the Government give a clear assurance that the rights of industrial participation will be given to all employees at all levels in the companies involved? This is a matter of particular concern, since the majority recommendations seem to us to imply that many millions of industrial employees will be disfranchised and treated as second-class citizens from this point of view. At first sight the core of the majority recommendations lead not towards industrial democracy but towards the control of industry by trade union leaders through the power to nominate one-third of the employees on to the boards of all these companies and to have a strong influence over the nomination of another third. Whatever may be the merits or, as we see them, the demerits of such a system, it is certainly not one which can be 505 described as democratic. To impose this system on the country in the name of industrial democracy would be double talk of an extremely hypocritical kind.
§ 4.28 p.m.
§ Lord ROCHESTERMy Lords, we on these Benches also would like to thank the noble Lord for having repeated the Statement. For the last 50 years or so the Liberal Party has had its own distinctive policy on industrial democracy or, as I prefer to call it, largely for the reasons that have already been put forward by the noble Lord, Lord Carr of Hadley, employee participation, involving such matters as the establishment in any sizeable companies of works councils, profit-sharing schemes and even employee representation on supervisory boards of directors. This is all set out in a book that we call the Yellow Book. It is entitled Britain's Industrial Future, and was published in 1928. Indeed, thanks to the researches of my noble friend Lord Wigoder, I was able just now to see a copy of the Yellow Book—it was Lloyd George's own copy—in the House of Lords Library.
As I see it, there do not seem to be any differences which are unbridgeable between Liberal Party policy on this matter and the conclusions which, given time for further consultation and experiment, would, I understand, be acceptable to at least a minority of the Bullock Committee and also, judging from the outcome of the opinion polls published in today's papers, to the majority of employees in many of our larger companies. This undoubtedly will be the dominating issue in industrial relations in 1977, and as I see it, it is one on which we can either unite or we go our separate ways.
I should like to ask a few specific questions, so that I do not make a speech. In a situation in which there exists this division of opinion, a real attempt is going to be made to find some degree of consensus in the matter. Or, to put it bluntly, does the phrasing of this Statement really mean that the Government have made up their mind that if and when there is legislation it will be on the basis of what we understand is the majority view of the Bullock Committee and in conformity with TUC proposals that there 506 should be trade union representation on unitary boards of directors?—because if that is so, let us have it straight. On the answers to these questions it seems to us will depend whether we can go forward together or, to the great damage of the national interest, we are going to fight among ourselves.
There is one further question I should like to ask. When the setting up of the Committee of Inquiry on Industrial Democracy was first announced 18 months ago it was said that the Government hoped that experiments then being carried out in this field would continue and their development would not be impeded in any way. But does the phrasing of that statement mean that companies which are actually trying to do something to solve this problem can only have the assurance that such natural developments worked out voluntarily within the companies concerned can prosper if they have the consent of the unions? If that is the case, then, like the noble Lord, Lord Carr of Hadley, we certainly feel this is not industrial democracy.
§ Lord RHODESMy Lords, I will not prolong this discussion too long——
Lord ORAMMy Lords, I acknowledge the constructive spirit in which the two noble Lords have made their contributions. The noble Lord, Lord Carr of Hadley, recognised, as indeed I fully recognise, that it is a most complex subject. He asked whether there would be Parliamentary debate before the Government took final decisions. We are anxious that there should be consultation and discussion on a wide basis and I would expect that would include Parliamentary debate, although these matters are settled not by me but through the usual channels.
I am glad, too, that he acknowledged that the differences between us—if differences emerge—are differences of method rather than objective I think there is now a will for steps "forward to industrial democracy, and although there will be disputation about methods I think we should all keep the target very clearly in view. The noble Lord, Lord Carr, asked four specific questions. The 507 first one, about consultation, was echoed by the noble Lord, Lord Rochester; namely, as to whether the Government would go into the consultations, to which I have referred, with an open mind, particularly as to method. The answer is that we want to go into these consultations so that they can be full and thorough, and that particular point certainly should be open to consideration. It is also our hope that all who take part will approach these consultations in a helpful and constructive manner, so that we may achieve a lasting solution and the greatest support from all sections of the community.
The minority report was referred to by the noble Lord, Lord Carr. The clearest distinction between the minority report and the majority report is the question of a unitary board on the one hand favoured by the majority of the Committee or the two-tier system recommended by the minority report. It is certainly not our wish at this stage to exclude from the consultations consideration of the two-tier system, although I think it was made clear in my right honourable friend's Statement that our starting point is certainly that of the majority in favour of a unitary board.
The noble Lord, Lord Carr, then made the point perfectly fairly that the recommendations of the majority report differ from the practices in terms of industrial democracy in other countries. That is true. The Committee examined the methods that have been adopted in a number of countries, but it came to the conclusion that our trade union experience, our general experience of these matters and our history was different from the countries which they had examined and that the unitary system was more suitable for this country.
Fourthly, the noble Lord came to the question of the rights of all employees, as he put it. On the question of the recommendation that the trade union channel should be adopted for representation on boards, the Committee's report examines the role of unions in industrial democracy in considerable detail. It goes into the question raised by the noble Lord of the need to safeguard the interests of non-union members and it makes proposals which it believes achieve the necessary balance. The Government will wish to consider the Committee's 508 proposals in the light of the Government's commitments in these matters, but the report commends a good deal of flexibility in this matter. It puts forward proposals such as the secret ballot of all employees——
§ Lord CARR of HADLEYSecret, my Lords?
Lord ORAMYes, my Lords, to trigger it off, and this again is a matter which is fully open for discussion when the consultations take place. I think I have already covered a number of the points made by the noble Lord, Lord Rochester. He referred to the polls which noble Lords will have seen in the Press today. Polls of this kind are doubtful in any case; but particularly one taken before the publication of this report, in my view, is open to some question, and probably a poll taken at the end of public debate on this matter might well produce a different result.
§ 4.39 p.m.
§ Lord RHODESMy Lords, I should like to ask the Minister whether the White Paper will be issued after consultations with the unions and the CBI. Will an opportunity be given to the House to debate the White Paper? May I also ask the Minister to say that the speech made by the noble Lord the Lord Privy Seal was larded throughout with mentions of the approach to industrial strategy and remind him that the important point in No. 7 was summed up in these words: Above all, we must get away from policies of confrontation and work together in the national interest towards agreed objectives. If there is anything more serious than that in the attitude that the Government have in going into these consultations I would not know what it was.
Lord ORAMMy Lords, my noble friend Lord Rhodes asks whether a White Paper will be issued after the consultations. The phrase in the Statement which I repeated was that we would bring forward legislative proposals. At this stage, I should not like to forecast what shape those proposals would take—whether a White Paper or a Bill—but certainly whichever is forthcoming there will be an opportunity for a debate on it. I agree with what he says about the wish to avoid confrontation.
Earl DE LA WARRMy Lords, may I ask the noble Lord whether he can explain to the House why it was that Her Majesty's Government chose to impose upon the Committee terms of reference which allowed only of the discussion of "how" and, by definition, totally disallowed the discussion of "whether"? Does he not think that these very tight parameters may have damaged the work of the Committee in that they only enabled it to produce too narrow a report for proper public discussion? I had a second point in a Question I had tabled but have withdrawn. Perhaps the noble Lord would first like to deal with the first barrel.
Lord ORAMYes, my Lords. I do not agree with the noble Earl's suggestion about the terms of reference. The Government's commitment to a radical extension of industrial democracy stems from the Manifesto on which the Government were elected; it was, therefore, right to ask the Committee how this commitment should be fulfilled. But nevertheless the terms were widely drawn. If the noble Earl will read the early paragraphs of the report, he will see that the Committee itself commented that it did not consider itself prevented by the terms of reference from considering all aspects of participation in decision-making.
Earl DE LA WARRMy Lords, would not the noble Lord agree that this was the very point that was made in specific terms in the minority report? Indeed, they used the words "whether" and "how" in the terms I have described.
Lord ORAMYes, my Lords, that was the view of the minority, but I have indicated what was the view of the majority.
§ Lord TAYLOR of GRYFEMy Lords, I noted that towards the end of the Statement the Minister said that the Government regarded this as an essential ingredient of the Social Contract. In view of the controversial nature of the document itself, may I ask the Minister to say that, in the negotiations which will proceed shortly with the trade unions on the next stage of the incomes policy, this will not be regarded as an ingredient in that situation?
Lord ORAMMy Lords, I think I can give my noble friend the assurance that consultations on this report will proceed separately.
§ Lord HARMAR-NICHOLLSMy Lords, would the noble Lord not agree that it is both dangerous and precipitate to contemplate legislation upon this report this Session?—dangerous because it is bound to upset the agreement we need in industry generally to get us out of our overall economic problems, and precipitate because it could well be that the results of this inquiry may speed up the voluntary achievement of what is wanted instead of bringing in all the disadvantages of making it compulsory.
Lord ORAMMy Lords, I do not think it is a choice between legislation and voluntary development which faces us in these matters; both are necessary and possible. In terms of the legislative timetable, I think we should wait and see.
§ Lord THORNEYCROFTMy Lords, may I ask the noble Lord a question on something I do not understand at the moment, about consultation. I understand him to say that he is going to have consultations with the TUC and with the CBI, and perhaps others, about how these directors should be put on a board, or even perhaps which board they should be put on, whether unitary or otherwise. I understand that. I want to ask the noble Lord to give me an assurance that the consultations also include the question, whether; namely, that the consultations with the CBI or the TUC will cover the question of whether board members ought to be imposed by Statute on any of these boards.
Lord ORAMMy Lords, the consultations will be as broad as the CBI, the TUC, the Government jointly wish them to be. Almost everything in this report is subject to consultation, subject to the commitment which the Government have made clear in their Manifesto and in the Statement which I have repeated, that we are anxious for and committed to an extension of industrial democracy by representation of the workforce on boards.
§ Lord THORNEYCROFTMy Lords, the noble Lord will forgive me for pressing this, but I think it is an important question. I am worried by the words he uses when he says, "everything in the report". As my noble friend said, the report was carefully drawn to exclude the question whether members should be imposed by 511 Statute on the boards of companies in this country. It is a very big and a very important question. I am not trying to judge it. I am asking the noble Lord: Is that question, whether they should be imposed by Statute, open to discussion in these discussions that are about to take place, or not?
Lord ORAMMy Lords, I have no doubt that the CBI, which has already made its views known, will insist on putting forward its point of view in these discussions, and it is certain that its views will be responded to.
§ Lord THORNEYCROFTMy Lords, I am sorry, but I must press this.
§ Lord THORNEYCROFTMy Lords, I am sorry, but I think I am entitled to press a question. I am not making a speech in any way. The question is not whether the CBI can put it forward. It takes two to negotiate and discuss. What I am asking is this: Have the Government so made up their mind about the question of whether, that there is no question of negotiation or real discussion of whether by Statute you should impose these members or not? In other words, are the Government going in with a really open mind on this, willing to discuss it with the parties interested, or not? I do not mind which way the answer is, but I think we ought to know it before we start.
Lord ORAMMy Lords, as I have said, I have no doubt at all that this matter certainly will be discussed during the consultations.
Lord BRUCE of DONINGTONMy Lords, the Statement read out by my noble friend indicated that the Government propose to introduce legislation, and at a later stage expressed the hope that it would lead to a lasting settlement. Is my noble friend aware that many of us regard industrial democracy in rather wider terms than being designed to secure a lasting settlement? Is he aware that many of us regard these new proposals as a means of releasing the creativeness of individuals who for many years have been denied a full opportunity of exercising their latent abilities? Will he also 512 give an undertaking that before decisions are made in this matter all concerned will be invited to study the Community White Paper on the same subject, Employee Participation in Company Structure, bearing in mind, in case it may be forgotten, that we are now members of the European Community?
Lord ORAMYes, my Lords. The Industrial Democracy Committee gave considerable and detailed consideration to the EEC Commission's report. I share my noble friend's feelings about the growth of industrial democracy and the release of energies to which he has referred. The phrase "a final settlement" in no way runs counter to those sentiments.
§ Lord CARRINGTONMy Lords, the noble Lord in the course of one of his answers said that all this is open to discussion, subject to the Government's commitment that worker directors should be on the boards. Does this mean that the Government are committed to worker directors by Statute?
Lord ORAMMy Lords, we are committed to starting these consultations on the basis of the majority report, and the majority report favours statutory provisions for worker representatives. That is the Government's starting point in these consultations. I would not wish to commit the Government beyond that.
§ Lord CARRINGTONThen they are not committed.
§ Lord PEARTMy Lords, I think it would be the wish of the House that we should now continue with our debate.