AIRCRAFT AND SHIPBUILDING INDUSTRIES BILL

HL Deb 08 March 1977 vol 380 cc915-53

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

My Lords, I beg to move that this Bill be now read a second time. The Bill which comes forward for Second Reading today is an old friend, and I hope that I need not spend too much of your Lordships' time in introducing it. Following the statement made by my noble friend the Leader of the House last Wednesday, and the procedural Motion passed last Thursday, noble Lords will be aware of the Government's intention to propose Amendments to the Bill at Committee stage, to delete the 12 listed ship repairing companies from Schedule 2 to the Bill. On the basis of that intention, your Lordships' House has resolved that Petitions against the Bill should not be heard, and that the Standing Orders (Private Bills) Committee's requirements for notices about petitions to be published should be dispensed with. In other words, the Bill will now proceed quickly as an ordinary Public Bill, and the 12 ship repairers will be deleted.

I do not propose to dwell on the events which have led up to this decision, which the Government have taken with great regret. It has been suggested that the Government could and should have made this concession at the end of last Session. The position has changed in an important respect: the Examiners have reported that the Bill was hybrid in its ship repairing section. The Government were therefore faced with a choice. We could wait until the end of the Session, when the whole Bill would have passed on to the Statute Book under the Parliament Act and the whole summer would have been wasted in pointless hearings before a Select Committee (as the Examiners recognised in their report), or we could abandon the ship repairing sector, despite its grave problems, in order to get the aircraft and shipbuilding industries on to a firm basis now, so that they can come to grips with their pressing difficulties.

We had two reasons for resisting the deletion of ship repair. First, there was, and is, a strong industrial case for rationalising the ship repair industry in public ownership. I know that noble Lords opposite dispute that. They might not do so vigorously if they knew the pressures we have been under from some of the listed ship repairing firms not to drop ship repairing. As the Government Statement last Wednesday said, some of those firms will now seek to come into British Shipbuilders voluntarily by negotiation. Moreover, several of the vesting shipbuilding companies have ship repairing operations which will vest with them: and three of the 12 listed ship repairers now to be deleted are already publicly-owned and will be transferred by agreement to the new Corporation.

Our second reason for resisting the deletion of ship repair was a constitutional one. The elected Chamber had twice passed intact a Bill which this House sought to change in a fundamental way. Moreover the proposal to nationalise ship repairing was contained in two Election Manifestoes.

The position has changed because of the Examiners' ruling. We regret its effect on this Bill and more generally. The ruling leaves the general position on hybridity in an unsatisfactory and uncertain state. The implications for future legislation will have to be considered carefully and we are now doing that. But we have to deal with the here and now. The realistic assessment we had, with great regret, to make was that unless we deleted ship repair, the Bill would be this was a unique and unprecedented situation. They then dealt with this particular question by bringing in Amendments.

However, during the painful passage of the Bill through this House, the Government were repeatedly warned by an ever-increasing crescendo of voices from all sides of the House that the Bill was demonstrably hybrid on more than one count. They were implored therefore to remove the ship repairing section which was anyway objectionable and for which in our view no logical, convincing case has been made. Seen from this side of the House, the Government's reaction appeared to be a witch's brew of arrogance, obduracy and wishful thinking in the face of these suggestions. This attitude persisted throughout the "ping-pong" session which brought the last Session to a long-delayed and exhausted close towards the end of last year.

Small wonder, then, that there was consternation when the Bill was reintroduced in November, the Clerks sought to refer the Bill to the Examiners and when the leader of another place again suspended Standing Orders, notwithstanding all the previous protestations in May. Thus, it was inevitable under the doctrine of community between the two Houses that the Clerks would refer the Bill to the Examiners before our Second Reading here today.

I suggest that it is misleading—to use the kindest possible word—to allege that this House has used what Mr. Varley back in May light heartedly called a "diverting Parliamentary ploy" in order to filibuster or frustrate the passages of this Bill. This, incidentally, is only the 13th day on which this House has been considering this Bill, so in any case it has not been all that long-drawn-out an affair. On the contrary, I think it is proper to say that the House of Lords has prevented the Government from frustrating the Officers of both Houses when they seek to operate the constitutional safeguards de signed to protect the individual, acting alone or in association.

At this juncture I should like, if I may, briefly to try to lay a procedural ghost which I know has been haunting some noble Lords behind me, who felt that the bargain belatedly struck through the usual channels had somehow deprived some companies of their constitutional rights under the hybrid Bill procedure. I merely want to say to them that the advice I have received is quite clear: the only points that the Select Committee would have agreed to hear would have been those which alleged discrimination as between individual interests within a general provision in the Bill—in other words, those issues which raise the questions of hybridity.

I must also ask the noble Lord, Lord Melchett, when he comes to reply, to expand a little on what he meant when he talked about "examining the implications of the Examiners' ruling". Is he seriously suggesting that the Government are considering removing the constitutional safeguards which have been built into our parliamentary procedure? If he is, we should want to know about it and I doubt very much whether we should be very happy.

Lord HARMAR-NICHOLLS

My Lords, is the noble Lord saying that if we had not passed the Motion last Thursday there could not have been an appeal to the Select Committee by, for example, Vosper, who feel that their ship repairing operations come under hybridity? Is the noble Lord saying that in passing the Motion that we did, that we robbed them of their opportunity to take the necessary action?

Lord STRATHCONA and MOUNT ROYAL

My Lords, I could not possibly give an answer to that question, which is properly one for the Officers who advise this House. I would suggest that the noble Lord might put the question to them. Over two years we have been saying that the principal contention in this Bill was unnecessary at a time of national crisis under a minority Government. Was that not borne out two weeks ago when Mr. Kaufman announced that £65 million was to be made available for the shipbuilders under Part II of the Industry Act, which was passed by the last Conservative Government? On those policy issues perhaps we can again give Mr. Kaufman the last word, because it seemed to me he put his finger on the crux of the matter over the weekend when he is reported to have told shipbuilding workers in Glasgow that nationalisation would not this was a unique and unprecedented situation. They then dealt with this particular question by bringing in Amendments.

However, during the painful passage of the Bill through this House, the Government were repeatedly warned by an ever-increasing crescendo of voices from all sides of the House that the Bill was demonstrably hybrid on more than one count. They were implored therefore to remove the ship repairing section which was anyway objectionable and for which in our view no logical, convincing case has been made. Seen from this side of the House, the Government's reaction appeared to be a witch's brew of arrogance, obduracy and wishful thinking in the face of these suggestions. This attitude persisted throughout the "ping-pong" session which brought the last Session to a long-delayed and exhausted close towards the end of last year.

Small wonder, then, that there was consternation when the Bill was reintroduced in November, the Clerks sought to refer the Bill to the Examiners and when the leader of another place again suspended Standing Orders, notwithstanding all the previous protestations in May. Thus, it was inevitable under the doctrine of community between the two Houses that the Clerks would refer the Bill to the Examiners before our Second Reading here today.

I suggest that it is misleading—to use the kindest possible word—to allege that this House has used what Mr. Varley back in May lightheartedly called a "diverting Parliamentary ploy" in order to filibuster or frustrate the passages of this Bill. This, incidentally, is only the 13th day on which this House has been considering this Bill, so in any case it has not been all that long-drawn-out an affair. On the contrary, I think it is proper to say that the House of Lords has prevented the Government from frustrating the Officers of both Houses when they seek to operate the constitutional safeguards de signed to protect the individual, acting alone or in association.

At this juncture I should like, if I may, briefly to try to lay a procedural ghost which I know has been haunting some noble Lords behind me, who felt that the bargain belatedly struck through the usual channels had somehow deprived some companies of their constitutional rights under the hybrid Bill procedure. I merely want to say to them that the advice I have received is quite clear: the only points that the Select Committee would have agreed to hear would have been those which alleged discrimination as between individual interests within a general provision in the Bill—in other words, those issues which raise the questions of hybridity.

I must also ask the noble Lord, Lord Lord Melchett, when he comes to reply, to expand a little on what he meant when he talked about "examining the implications of the Examiners' ruling". Is he seriously suggesting that the Government are considering removing the constitutional safeguards which have been built into our parliamentary procedure? If he is, we should want to know about it and I doubt very much whether we should be very happy.

Lord HARMAR-NICHOLLS

My Lords, is the noble Lord saying that if we had not passed the Motion last Thursday there could not have been an appeal to the Select Committee by, for example, Vosper, who feel that their ship repairing operations come under hybridity? Is the noble Lord saying that in passing the Motion that we did, that we robbed them of their opportunity to take the necessary action?

Lord STRATHCONA and MOUNT ROYAL

My Lords, I could not possibly give an answer to that question, which is properly one for the Officers who advise this House. I would suggest that the noble Lord might put the question to them. Over two years we have been saying that the principal contention in this Bill was unnecessary at a time of national crisis under a minority Government. Was that not borne out two weeks ago when Mr. Kaufman announced that £65 million was to be made available for the shipbuilders under Part II of the Industry Act, which was passed by the last Conservative Government? On those policy issues perhaps we can again give Mr. Kaufman the last word, because it seemed to me he put his finger on the crux of the matter over the weekend when he is reported to have told shipbuilding workers in Glasgow that nationalisation would not create another job for them. I could not have put it better myself my Lords: that is exactly what we have always said.

The best one can say about this Bill now is that it is a tiny bit less crazy than it was. At least most of the independent ship repairers will be left alone to get on with their job. We accept that the Government have removed the hybridity, as we urged them to do. I have to say, however, that I think it is the greatest shame that they have not been able to find the wisdom and the magnanimity, if that is the right word, to go one stage further and take out the whole of the independent ship repairing industry. They are now in an illogical position which defies common sense, and I have to warn them that if some of the prognostications of what is going to happen to those parts of the ship repairing industry which are left nationalised prove correct, and if they should prove unable to compete against their "freewheeling" brethren, that is not something we shall lightly overlook in the months to come.

Let us try to end this melancholy affair on a not-too-sombre note. The one institution which emerges with some credit from it is, I suggest, your Lordships' House. We can fairly claim that we have shown restraint, wisdom, statesman ship and a recognition of reality. We have been assailed from all sides and reviled by extremists for our efforts, often inaccurately and unjustly. Nevertheless we can face our critics and say with some pride: "We may be an illogical anachronism and we probably ought to be reformed, but we have done our duty by our lights, and this country would have been a poorer place without us."

3.16 p.m.

The Earl of KIMBERLEY

My Lords, as the noble Lord, Lord Strathcona, said, perhaps this Bill is not an old friend, and I should not like to say what many noble Lords might possibly call it. It has been an unhappy Bill from the date of its conception, and your Lordships are all too familiar with its very unhappy and chequered career. We on these Benches, along with many noble Lords and Members of another place, have opposed it for divers reasons, but I assure your Lordships that I am not going to resuscitate those reasons this afternoon. However, I will say that we on these Benches opposed it because we are against nationalisation, and we say here and now that we shall continue to oppose any other nationalisation plans or ideas that this Government may have in the future.

As I have said, I am not going into recriminations: they are entirely superfluous in the present circumstances. How ever, I should like to make one point—perhaps "re-emphasise" would be a better word—which the noble Lord, Lord Strathcona, mentioned just now. We feel, as we think do most noble Lords in this Chamber, that there may possibly be some people in Great Britain who think, completely misguidedly, that your Lordships' Chamber was responsible for the delay over this Bill. Those people may well not understand the hybridity issue, and I am sure that most noble Lords, wherever their Party allegiance may lie, including noble Lords who sit on the Cross-Benches, would welcome confirmation of that fact from the noble Lord, Lord Melchett, when he winds up for the Government. Yesterday, the noble Lord, Lord Harris of Greenwich, said that most opponents of our joining the European Economic Community have now accepted the will of the British people through the Referendum. Indeed, several notable anti-Marketeers have now become Members of the European Parliament. The noble Lord, Lord Harris, said quite rightly that credit should be given to them for their democratic attitude and I, for one, agree with him.

That brings me to the ship repairers, who have been finally discarded from the Bill. May they now be left in peace to get on with their job, and may the back biting and any further snide allegations against them cease and the decision of Parliament be accepted with grace. As I have already said, we do not welcome the Bill but, for the sake of the two industries and in the national interest, we shall no longer object to it on principle and we shall undertake to use our best endeavours to facilitate its passage.

Finally, may I take this opportunity of wishing the noble Lord, Lord Beswick, and his colleagues all success with their venture—a success which British Aero space more than deserves and which will not be easy to secure. Likewise, if we are to have this Bill, may the British ship building industry prosper as well.

3.20 p.m.

Lord INVERFORTH

My Lords, my maiden speech last September was on the Second Reading of this Bill, and I hope that it is not my fate to be addressing your Lordships on the same Reading of the same Bill every six months. My noble friend Lord Inchcape, who is President of the General Council of British Shipping, is in the Far East on business, and in his absence I should like to inform your Lordships' House that British shipowners welcome the Government's decision to drop the nationalisation of independent ship repairing companies—a proposal which always seemed to us, as customers, to be misguided and indeed damaging.

The Bill's provisions for the nationalisation of shipbuilding are familiar to us all, and that perhaps allows us to spend more time today talking about the real problem of the United Kingdom shipbuilding industry, which is that, like all its competitors, it is capable of producing more ships than its customers either want or need. The Government have now acknowledged that there must be a contraction in the industry, and they are talking of a redundancy scheme. In addition, it is possible that the EEC will eventually produce proposals to the same end. Meanwhile, however, the order book is running down and the Government have set up a £65 million intervention fund to help United Kingdom shipbuilders quote competitive prices. There is no money in this scheme for British ship owners—the shipping industry has not asked for aid, and is not receiving aid—but we have assured the Prime Minister that we will do what we can to help. Already the General Council of British Shipping has written to its members suggesting what might be done.

It is worth stressing that British ship owners are by far the largest customer of the United Kingdom yards, and 72 per cent. of the tonnage on order in this country is for British registration. Indeed, British shipowners already have £600 million worth of ships on order in United Kingdom yards. Because British ship-owners are not looking for anything for themselves from this new intervention fund, we have welcomed the idea that it should apply to sales to foreign owners as well as to British owners. Thus we are happy for United Kingdom yards to win orders from Poland. It would, however, be intolerable if the Government put foreign owners—and Eastern bloc owners at that—at an advantage by comparison with British owners.

This is the basic theme of the British shipping industry—we compete against the world, and we must never be shackled with a competitive disadvantage. It is not good enough for the Government to say that they will give careful consideration to any similar orders by British owners. I should hope that the Minister would give a clear assurance that if, in future negotiations with buyers in Poland, Nigeria or any other country, concessions are offered, similar concessions will not be considered but offered to British buyers. If the Government do this, they will not only avoid criticism but also, perhaps, obtain additional orders, which is presumably the object of the exercise.

Your Lordships will appreciate that, against the size of the problem, the Government's new scheme is modest, and I have nothing against modesty. As Ministers have admitted, it is only an interim stage. It may buy time, but it will not solve the problem of surplus shipbuilding capacity. All over the world there is surplus capacity, and no amount of governmental or inter-Government aid will make that surplus go away. Indeed, if every Government try to buy orders then the situation will worsen, subsidies will spiral at the taxpayers' expense, and the problem of surplus will spread at an alarming rate from shipbuilding to shipping. The chronic over-tonnaging at present being experienced by the tanker section of our industry can easily be the fate of other types of tonnage, if the unnecessary building of ships is encouraged. Worldwide ship orders are at present low. If uncontrolled subsidies flood the world with ships, the normal re-ordering by established shipping companies will rapidly dry up and the plight of the world's shipbuilding industries will become even worse than at present.

There is no easy solution to the problem, but shipowners would urge the Government to seize the opportunity offered by this Bill to produce a national shipbuilding policy, which is based not on wishful thinking but on realities, bearing in mind particularly the undoubted strength which still exists in the British shipbuilding industry. As a customer of that industry, may I wish the Government well in their endeavours to create a shipbuilding organisation which is not only strong but viable, and able not merely to survive but to flourish.

It is perhaps timely that my company actually has a ship running her trials off the North-East coast today. She is the third of a series of ships being contructed for us by the State-owned Sunderland Shipbuilders Limited. When the fourth vessel of this series is delivered at the beginning of June, she will have the distinction of being the fiftieth vessel built for us at Sunderland. This simple statistic is much more meaningful than any expressions of praise. Let the last word come from our new ship, as I received the following message from Cullercoats radio just before leaving for the House today: 'Streambank' trials satisfactory with all equipment and systems fully functional. First class vessel all respects. Master and officers send thanks to Sunderland Shipbuilders and wish the future British Shipbuilders good luck and success. That is a message which all in British shipping echo. We want British ship building to be strong, competitive and successful.

3.26 p.m.

Lord SHINWELL

My Lords, I under stand that the noble Lord, Lord Selsdon, whose name appears on the list of speakers, is not present in the assembly and there fore it is my turn to venture to offer a few observations. In the course of previous debates, I mentioned that, in my judgment, nationalisation would not provide more employment. It would not create new jobs. The speech by Mr. Kaufman to Clyde Shipbuilders the other day is a complete vindication of what I said on those occasions. My experience of nationalisation is also a demonstration of the fact, which cannot be challenged on the statistical evidence, of that assertion.

Some years ago, we nationalised the coalmining industry at a time when 800,000 or 900,000 miners were in the employment of private owners. The industry was brought under public control. There are now approximately 300,000 mineworkers in the industry. Similarly with the steel industry and with others, and for obvious reasons. Indeed, one of the prime objects of nationalisation was to promote greater efficiency, to produce more with less labour, and that has occurred. It does not follow from what I have said, and what was mentioned on a previous occasion, that nationalisation possesses no advantages whatever. On the contrary, it seeks to free industry from monopoly control. It also provides many other advantages into which I need not enter, but they are well known to those who have studied the subject and who have profited from the experience of public control.

We are faced with a very simple issue. The shipbuilding industry of the United Kingdom is in the doldrums. Even before the First World War, when I first associated myself with the seafarers of the country, and naturally acquired some knowledge of shipbuilding, because the two industries are closely related, the shipbuilding industry was in a parlous state. It is worse now than ever, for obvious reasons. We were the greatest shipbuilding country in the world. We had the finest shipwrights and the most competent management. We made these contributions to other countries, which had only potential; they lacked experience. Those countries included Japan, West Germany and even some of the Scandinavian countries which had long experience of shipbuilding. We exported hundreds, indeed thousands, of our skilled shipwrights and marine engineers to other countries and thus built up a huge, efficient and viable shipbuilding industry among our competitors. We are now experiencing the results.

However, other factors were operating. The shipbuilding industry of the United Kingdom has never possessed a surplus of finance. It has been compelled constantly to borrow from the banks and to obtain from a number of Governments, not only from the Labour Government, the requisite finance in order to continue their operations. One of the prime examples is Harland and Wolff. For many years past it has hardly ever been out of financial trouble. It was a Conservative Government, not a Labour Government, which many years ago had to find the requisite finance to enable the world-famous Cunard Line to build the Queen Mary and the Queen Elizabeth—not the present but the previous ships. There has been a certain amount of controversy over procedure and also over the constitutional privilege of this Assembly to override or, to use a milder term, to revise decisions reached in another place. I do not want to embark on a discussion of that issue because, quite frankly, it does not affect the future of British shipbuilding, which is our concern. What is to be done about it?

Leaving aside hybridity and examination by the officials of both Houses of Parliament, we are faced with the simple fact that the Government, by arrangement with the other side of the House, have come to the conclusion that they can afford to set aside not the whole of ship repairing but part of it, some of which is absorbed in shipbuilding itself while some of it is of an independent character, so as to enable nationalised shipbuilding to proceed on a financial basis of £65 million. I am bound to say that this is a drop in the ocean when one considers the needs of British shipbuilding. In creating the organisation it may assist to provide the staff, managerial and otherwise—and very essential they are. But what financial cover they can provide for the ship owners, who have to buy the ships and who need the ships, and for the ship builders who have to build the ships is of a character which, quite frankly, appears to be horrific to those who understand the needs of United Kingdom shipbuilding.

How are we to face the formidable competition from Japan, West Germany, the Scandinavian countries and other countries in the Near and the Far East and elsewhere who are now engaged in shipbuilding with some measure of success? I ask that question, because every one of the countries which I have mentioned is, without exception, highly subsidised. I do not believe that there is a shipbuilding company in the world, whether in Japan, or in the United States, or elsewhere, that is viable without Government financial assistance. We have to face the fact that that has been our situation for some time and that we have not met with a substantial measure of success.

I say to Members of your Lordships' House, leaving aside the political implications, controversy and the like, that there is a paramount need to build up a viable shipbuilding industry in this country. We are suffering enough in the shipping industry itself, which is almost in the doldrums. It is faced with competition from the Liberians who engage in what are called "flags of convenience" and in ploys which are designed to confound British ship owners. We have been discussing these matters for many years, again not with any great measure of success, because we face formidable com petition. For example, questions have been asked recently by noble Lords on both sides of the House about the injection of Russian shipping. Why have the Russians succeeded where we have failed? They have succeeded where we have failed because they do not pay the kind of wages that we pay. And we do not pay as high wages as the Israelis or the Americans pay. All of these competitive factors are operating.

What are we to do with the £65 million? It will not help very much so far as ship owners are concerned. It may encourage them if they are satisfied that under nationalisation shipbuilding in this country will provide the facilities which will enable us to build more efficiently—or with anything but inefficiency. We are very efficient indeed on the technical and technological side. It may encourage ship owners if they are satisfied that under nationalisation shipbuilding in this country will have the facilities to enable ships to be built speedily and will not be subject to the excessive delays which apparently are peculiar to this country. There are difficulties elsewhere, but delays seem to be peculiar to this country. I am not going to impute blame to the shipwrights and others. Very often a ship is delayed in its construction because the components, without which a ship cannot be completed, are not available.

Moreover, there is one factor that seems to be disregarded in this country and an attempt has to be made to overcome the difficulty. The difficulty is that ships have to be built under cover. The Japanese have succeeded in building ships under cover, and other shipbuilding countries have met with some success. In this country, where the weather cannot be relied upon, inclement weather means that the construction of a ship without any cover is bound to be delayed. If the whole of the £65 million were to be devoted to providing cover in shipbuilding yards, it would be a more effective contribution than almost anything else. I mention it only as one of the factors.

If the Government had not decided to embark on nationalisation—I want to say this with the greatest respect to the noble Lord, Lord Strathcona and Mount Royal, and those who are supporting him who object to nationalisation, and I say it to the Liberals also—they would have had to rationalise the industry. They would have had to amalgamate the industry and to effect mergers, which would have created difficulties also. There is no guarantee that even amalgamation would mean that we could provide the facilities which, after all, require in the ultimate the assistance of the Government of the day. That is what we are embarking on now. We must go ahead with providing assistance, and there ought to be no delay. The ship owners of this country have to be protected, also. They want ships and they have to obtain them at the cheapest possible rate.

Finally, when we had the previous debates I said that shipbuilding in the future will be highly speculative. I said the same about the aerospace industry, although I may be wrong about that because I know little or nothing about the subject. However, I understand that there are difficulties in that industry, too. Shipbuilding is highly speculative, though, and we have to make the best of the situation. It requires the good will of ship owners, it requires the good will of those engaged in the industry—the management, the shipwrights and, I should like to add, the Clyde Shipbuilders. It is easy enough to "talk big", as they were the other day, and to say to Mr. Kaufman, "If a single person is made redundant by nationalisation you will be in trouble". That is not the way to talk. Their work and their lives depend upon it and their children depend upon it. There must be co-operation. Without that co-operation there will be serious trouble, and we are in enough trouble already.

I should like to say this also to those engaged in this subject, like the noble Lord, Lord Inverforth, who is an expert on it. So far as the ship owners are concerned, do not rush into this without prudence and caution. There are too many ships in the world anyway just now. There is a surplus of shipping. I happen to read, every other fortnight, a periodical called the Telegraph—nothing to do with the Daily Telegraph; I am sorry even to mention the Daily Telegraph because I do not want to give them a gratuitous advertisement at any time. It is the Telegraph, which deals with shipping affairs, so that one may get to know what is going on at the present time. We obtain contemporary knowledge. Ship owners must be careful, but with co operation and with good will and an acceptance by the other side of the House of something that appears inevitable whether or not they like it, we can make of this some success. That is the best that we can hope for.

3.44 p.m.

Lord MONSON

My Lords, the Government's decision to delete ship repairing from this Bill represents a great victory for justice, not because an efficient and versatile industry is being spared from the net of nationalisation, although no doubt that is a good thing it itself, but specifically because it obviates the distasteful prospect of private interests or individuals being "singled out by a public Bill for adverse treatment", to quote the words of the Examiners. But unfortunately another and even greater and more glaring injustice remains and, as the question of hybridity is not involved, in this instance, the Examiners are in no position to "defend the subject against selective ill-treatment"—to quote their words again. I refer, of course, to the confiscatory compensation terms being offered to certain of the shipbuilding companies which remain within the scope of the Bill. These terms, which are quite without precedent in the history of British nationalisation—if one may so put it—have far more profound implications than might generally be supposed.

To simplify the argument as much as possible, I do not propose to deal with those aircraft and shipbuilding firms which may well have valid grievances over the amount of compensation proposed, but where the element of confiscation is less than 50 per cent.; nor do I propose to deal with the refusal of the Government to take into account the premium invariably paid for control—over and above the stock market valuation—in transactions between willing buyer and willing seller, this point having been so ably expounded by the noble Lord, Lord Goodman, from these Benches and by the noble Lord, Lord Selsdon, from the Conservative Benches in our debates last year. Nor do I propose to expand on the unprecedented and in explicable refusal to grant roll-over relief on the reinvestment of the compensation monies (such as they are) which among other things will adversely affect future employment prospects in the parts of the country concerned, many of them being development areas. I want to concentrate instead solely upon the two companies that are by far the most unfairly, even scandalously, treated—Yarrow and Vosper Thornycroft.

But first I should like to put on record that I do not have, and never have had, one single penny invested in either of these companies, nor are the shares in these companies held in any of the portfolios which I manage. Nor, may I add, did either of these companies approach me for help in this matter. I wonder whether the average person has any idea of quite how scandalously unfair the compensation terms for these companies are? Vosper Thornycroft, for instance, by dint of hard work and by a great and successful export drive (so that exports now provide 90 per cent, of the shipbuilding subsidiaries' profits, to the great benefit of this country's balance of payments) has pushed up its pre-tax profits to £5.51 million for 1976. Yet the prospective compensation—assuming that the part is valued at less than the whole, which is usually the case—seems unlikely to exceed £4.2 million; that is, equivalent to scarcely more than nine months' (not nine years' but nine months') profits, at a price, incidentally, equal to less than one-fifth of the asset value. It should be noted that the return on capital was 25 per cent, and that surely demonstrates that the asset value has not been artificially inflated. The terms proposed for Yarrow are almost as bad.

Time and time again when we debated this Bill last year Ministers rose to insist that the Government proposed to stick by the compensation formulae in the Bill; in other words a notional share value during the reference period between 1st September 1973 and the end of February 1974. Time and time again the Ministers, often in the same speech, rose to say that the compensation terms would be fair. This is really an Alice in Wonder land state of affairs, because either the compensation terms can be based on values which were prevailing three and a quarter years ago or they can be fair; but they cannot possibly be both at the same time, except by some wild and unlikely co incidence.

It may be suggested that I am making a mountain out of a molehill and that however hard the Government's decision may be on small shareholders and the beneficiaries of pension funds which happen to hold these shares in their portfolios, it is something that cannot possibly concern the average person in this country. Nothing could be further from the truth. Once the precedent has been established, once confiscation is seen to have legislative blessing, nobody who owns any property at all can feel entirely secure in the future—and I am not just referring to shareholders.

Let us suppose that by some misfortune, the famous—or perhaps I should say the infamous—M.3 motorway ever comes to be built round Winchester, might it not be argued that because the building of that road (which after all has been on the drawing board for a great many years) was only frustrated by the long drawn out, pernicious, vociferous opposition of protestors, the people whose houses have to be demolished for the building of the motorway should be compensated at the prices prevailing in the 1960s?

Let us take the M.3 analogy just a little further. Consider a pair of semi-detached houses standing in the line of the motor way. The left-hand house was worth quite a lot of money five years ago, but the present owner has allowed it to deteriorate. It has not been decorated internally or externally; it is in an entirely shabby state and accordingly the market value is no more than £10,000. In contrast, the right-hand house, formerly derelict, has an owner who has expended love and care upon it, and has spent all his leisure hours with electric drills, paint sprays and so on, installing central heating, so that it is now worth all of £15,000. Might it not be decreed that the appropriate compensation for the at present less valuable left-hand house should be fixed at £9,000—less than the market value admittedly, unfairly less, but not to the extent of being confiscatory—and the compensation for the right-hand house, which was worth so little five years ago, should be a mere £3,000? The £3,000 is proportionately equivalent to the compensation that Vosper Thorneycroft stand to receive; one-fifth of the true market value. It may be unlikely that this precise analogy will in fact occur; there are electoral considerations which will rule this out, if nothing else. But in theory anything is possible; 1984 is, after all, less than seven years away.

Property rights are not the only thing to be threatened by this part of the Bill. The efficient, dynamic and enterprising firms, mainly big exporters, are seen once again to be scorned and rejected in favour of the sluggish, static and inefficient ones. Dividend restraint is another example of this. Next it leads to greater uncertainty and demoralisation among investors, large and small, direct and indirect, and among businessmen and, just as important, aspiring businessmen, and it will certainly deter future foreign investment in this country. In an out-and-out Marxist country at least one knows exactly where one stands, depending on whether the country in question is still Stalinist, like Albania, or is slightly liberalised, like Hungary and Poland. The citizen knows that he is allowed to own a strictly limited amount of property, varying from nothing at all in one case to perhaps one house, a car, if he can afford it, and in certain countries a business employing no more than four people in addition to the owner and his wife. People know exactly where they stand, and therefore they can make their choice; either submit tamely, or take to the hills or emigrate, provided they can circumvent whatever Berlin-type wall is thrown around the country.

I am not suggesting for one moment that we have reached anything like that stage here, but paradoxically the uncertainty and demoralisation are even worse, intensified by such extraordinary and shocking actions as the declaration that promises made to short-service Fleet Air Arm and RAF pilots will not now be honoured. Thinking both of these pilots and of the compensation terms, if the Government are seen to be behaving in an unscrupulous and "crooked" fashion, what incentive is there for the private citizen to behave in a decent and honest manner, other than the negative one of the fear of being caught.

Finally, my Lords, confiscation, except in times of grave national emergency—I do not think that it can be argued that this applies here—is in breach of our inter national obligations under both the United Nations Universal Declaration of Human Rights and also the European Convention on Human Rights, as I have pointed out on more than one occasion before. What is the reason for the refusal by the Government to provide a more equitable basis for compensation, faced as they are with the obvious unfairness of these terms? Suspicious-minded people will see in this the hands of the Marxists, in whose interests it would be to acclimatise the British people to the idea of expropriation so as to pave the way for more in future. Other uncharitable individuals will suspect that there exists some sort of vindictive vendetta against these two companies. I prefer to think that their attitude stems from the obsession with saving face which characterises all Governments, and not just Labour ones; the desire not to be seen to be pushed into changing their mind. I have always thought this a most unfortunate tendency, as well as electorally disadvantageous, because the man in the street respects and admires politicians and Parties that admit their mistakes and declare their intention of rectifying them.

It may be that there are some people—not, of course, in your Lordships' House, but elsewhere—who are quite unruffled and unabashed at the charge that the compensation terms proposed are more appropriate to a Warsaw Pact country than to a liberal, free enterprise, Western democracy. Let me, therefore, give them some food for thought. From the researches that I have been able to make—and I confess that precise statistics are extremely hard to come by—it would appear that the prices being offered for these two companies are, if anything, less favourable than the prices at which many members of a certain minority group were forced to sell their businesses under the aegis of the National Socialists in the early and mid-1930s. The comparison stops there, of course, but even this limited similarity is surely one which any British Government would wish to avoid.

The irony of it is that Labour's record in this particular sphere of human rights is a good one, and worth living up to. For many decades owner-occupiers of terraced houses in working-class areas who were forced to leave their homes because of comprehensive redevelopment or slum clearance schemes, or because their homes were declared to be unfit for human habitation by virtue of their bedroom ceilings being 1½ inches lower than the statutory minimum or whatever, were awarded the most derisory compensation, scarcely more than site value, however, comfortable and serviceable their homes might be.

To its eternal credit, it was a Labour Administration that took steps to end this particular injustice by means of Part V of the Housing Act, 1969, which replaced the quite inadequate provisions contained in Section 30 of the 1957 Act. A Labour Government, in other words, stepped forward to put a stop to the virtual confiscation of private property, thereby effectively asserting that this sort of behaviour has no place in a Western democracy. However, if this Bill remains unamended, all the good work of this Government's forerunner will be reversed, overturned. It would be a tragedy for the people of this country if this were to happen, and even at this late hour I beg the Government to think again.

3.57 p.m.

Lord ORR-EWING

My Lords, I think we all welcome the noble Lord, Lord Melchett, back from his arduous duties in Northern Ireland; I am glad to see him looking so hale and hearty. I observe that his shadow grows no less. But I find that his arguments grow less and less convincing, and I hope that we shall not have to hear them for very much longer. I think he went slightly too far—this was a new one I think, and I have heard all his arguments—when he said that this was a "rationalisation" of the ship repairing industry. If we look at the ship repairing industry we find there are 90 ship repairers of all shapes and sizes. This Bill seeks, or did seek, to nationalise 12. Of those 12, three are already nationalised—and those incidentally are the ones in the worst trouble—three want to be nationalised, and six are going to be allowed to continue their prosperous future. We must be glad for small mercies. There is one among the shipbuilders which wants to have its ship repairing side made free and is not allowed to. So it is a strange sort of rationalisation that is going to affect different ship repairers in different packets all over our country.

The other argument which I thought was even less convincing was that we must go ahead with this because this was the will of the other place. I really must remind the noble Lord that this will was a little uncertain. On one occasion it was a tie; that was because one gentleman, I think on my side of the House, was taking a holiday in Corfu; I admire his taste but not his punctuality in returning. It seemed to us that in the other place there was no very distinct will observed at all. The majorities were slender; once a tie. When it was retried and the pairing system was made less manoeuvrable, shall we say, there was a majority of one.

Nor do I accept myself—and I think I am rot alone, judging from the columns of our national newspapers—that because something is in the Manifesto you must automatically charge ahead with it even though all the conditions under which it was put down have changed in the interim. I would remind noble Lords that it did not say "nationalisation" in the Manifesto, it said "take into public ownership". BP is in public ownership, and in fact the Government are trying to reduce the degree of public ownership because it plans to "flog" off a portion of it. The Government did not have to take 100 per cent. of all the aerospace and shipbuilding companies.

Nor do I ever accept that because you have got 39 per cent. of the popular vote, the great majority of whom have never read the Manifesto of any Party, you are entitled to go ahead irrespective of changed conditions and irrespective of a change in our economic situation. I would remind your Lordships that Hitler had more than 39 per cent. of the popular vote, and we all thought it was ghastly that he should be allowed to go ahead with everything that he included in his Manifesto; it was to the detriment of the world that he did so. Therefore, I am not greatly convinced under any of those headings with the arguments that have been advanced today.

This nationalisation Bill started life on 17th April 1975. It has been nearly 23 months before Parliament. Through out that time we have discussed it for only 12 days, although it has been discussed for many more days in another place. It is sad for democracy how minuscule the number of Amendments tabled by the Liberal Benches, the Cross-Benches and our own Benches that have been accepted by the Government. The Government were elected on the ticket—and we saw this not just in small print in the Manifesto but it was widely publicised on television—that they stood for open government. It seems that it is open government but closed minds, and that is not to their credit.

I should like to reiterate what my noble friend Lord Strathcona and Mount Royal said. Within the period of 700 days that the Bill has been before Parliament it has been before this House for only 12 days. I hope that when the Minister replies he will give us credit that that was not due to delays in this House. No one could say that 12 days is a large slice of 700 days. The Bill has taken that long because of delays in other places.

Lord MELCHETT

My Lords, I should like to get that straight. Is the noble Lord saying that out of the total period of 700 days the Bill has been before this House for only 12 days? If so, I am not sure that he is comparing like with like.

Lord ORR-EWING

My Lords, that is why I particularly said "Parliamentary days"—700 elapsed days and the Bill has been discussed in this House for only 12, counting all the stages and the period of ping-pong between the two Houses. Therefore, in that period, we have not had the power to delay the Bill. The Bill has taken so long partly because it is a bad, muddled and unjust Bill and partly because the Government do not have the majority in the House of Commons to bulldoze it through, as they would like to do. Certainly there is not a majority in the country behind it.

Throughout the discussions of the Bill in both places—and I have read these debates fairly carefully—we have argued that under the 1972 Act it is perfectly possible to go ahead, and that we do not need to have all this extra nationalisation business. The Government could have proceeded under the 1972 Act and also through the National Enterprise Board. That has recently been made even more evident because £65 million has been given to the holding company to carry on with shipbuilding management.

Lord PARGITER

My Lords, the noble Lord has referred to the National Enterprise Board. I thought that the Conservative Party did not like the National Enterprise Board.

Lord ORR-EWING

My Lords, we do not like it because we do not think that it will do the job. However, it is there for better or for worse. Is it not better to use something that is in existence rather than to drag many extra organisations into the vortex of a bad thing? Those portions of the ship repairing or ship-building industry which it was felt it was desirable to nationalise could be taken over by the National Enterprise Board. If the Government can be spoke £1,400 million to British Leyland under the 1972 Act, how much easier is it to give the relatively small amount of £300 million or £400 million under the 1972 Act.

Lord PARGITER

My Lords, I thought that the Conservative Party was also committed to getting rid of the National Enterprise Board.

Lord ORR-EWING

My Lords, I have also mentioned the 1972 Act. It was under Part II of that Act that the last £65 million was given. It was under the 1972 Act initially that British Leyland was assisted. There is the power and the format. Although we may not approve of these organisations they do exist and could have been used if the Government had the will and wanted to get on. Why the sudden hurry to reach this agreement between our two Front Benches? I find this perplexing in view of the amount of time that has elapsed.

I believe that the Front Benches were asked to make a decision within two or three days. If that is so, it is surprising because the proposition has been trailed over the front pages of our national newspapers for a long time. We have read in the Financial Times, The Times and other newspapers that ship repairing would be omitted; then suddenly there is an approach through official channels and immediately the decision has to be taken. There should have been more consideration of both the pros and cons of making this arrangement—that would have been beneficial.

I also object to this procedure on constitutional grounds. The Bill has been declared hybrid. How glad I was to hear the noble Lord, Lord Shinwell, say that. The more we say it the better because it is not yet generally believed outside that the Bill was examined by two officials from the House of Commons and two officials from this House. It is sometimes implied that your Lordships made this decision and sat in judgment on the issue of hybridity. Noble Lords know perfectly well that that was not so. The Bill was found to be hybrid. Once a Bill is found to be hybrid by the Examiners all parts of the Bill are normally open for people to petition against, and a Select Committee is set up to receive the petitions and consider them. Every part of the Bill is open for consideration. None of us can know whether the Select Committee, which could comprise five or even seven Members of your Lordships' House, would have found it possible or in order to listen to some of these petitions.

We must give individuals and individual bodies the right to petition—that is inbuilt into our present Constitution. At a stroke they have been denied that right. There could be many people, particularly the 70 per cent. in the aerospace industry who are not organised in trade unions, who might wish to petition. They could have petitioned against that part of the Bill which sets up the participation machinery—industrial democracy as it is called—on the ground that it was unfair because it discriminated in favour of the 30 per cent., the trade unionists. I do not know whether that is in order. However, those people should have the right to petition. I see that the noble Lord is shaking his head.

Lord MELCHETT

My Lords, I am doing so on the basis of the remarks made by the noble Lord, Lord Strathcona and Mount Royal.

Lord ORR-EWING

My Lords, the remarks of my noble friend were very pertinent but I am not sure to which part the noble Lord, Lord Melchett, refers. I have said that I do not know whether the Select Committee would have found that this was in order—none of us can forecast that. We must seriously consider whether we are right in denying such people the opportunity to put their case to a Select Committee. Certainly some of the shipbuilders like Yarrow and Vosper Thornycroft were preparing a case to petition against the Bill. We have now denied them the right. They should have been allowed to petition.

I hear my noble and learned friend Lord Hailsham of Saint Marylebone, who is very learned in the law, making critical noises from the Front Bench. He was one of those who negotiated this deal and I am sure that he knows very much more about it than others. We shall take a serious turn if we deny people the right to petition under our procedure and Constitution. This would be a new format for a Bill which denies them their inalienable right.

Those at Vosper Thornycroft may say that they are being unfairly treated vis-à-vis some of their competitors. This certainly could happen as regards compensation, to which the noble Lord, Lord Monson, referred. This is not compensation; in some cases it is outright robbery. Those at Yarrow are to be paid, if we judge it correctly, one year's earnings. That is incredible. When one takes over a company one probably pays five years' earnings or sometimes even seven years' earnings. The good firms should have been compensated more generously; the bad ones should have been compensated much less generously. That would give rise to a much greater degree of fairness than is built into the Bill and this formula.

As I have said, your Lordships' House has earned a great deal of respect, particularly as regards the constitutional stand that it has taken in the last six months. It has been noted that we operated strictly according to the rules laid down for us and according to the power given to us by Mr. Attlee's Government in 1949. It is most unfortunate that, without remonstration, we seek to pass a Bill using a device which is very similar to that which Mr. Foot in the House of Commons tried to use and of which we were deeply critical. It may be convenient for us on both sides of the House that we act like this and do not delay further. It is certainly convenient to the Government, and certainly convenient to the House of Commons where they no longer have a majority. I wonder whether we do not do ourselves a disservice by eroding our constitutional powers in this manner. We are looked up to for our constitutional prowess and our integrity: this is how we are respected in the country now, and I think we are setting a very dangerous precedent which may well be quoted against us on some future occasion. In the House of Lords the convenience of a minority Government cannot, and must not, take precedence over our constitutional duties.

4.10 p.m.

Lord SELSDON

My Lords, in rising I am conscious of a certain feeling of déjà vu, or prévu, and on the moment critique I was absent. May I apologise to your Lordships' House and particularly to noble Lords opposite. As the noble Baroness, Lady Llewelyn-Davies, would know, things often do not go according to plan. Noble Lords opposite are well aware of their own administrative problems and, if I may, I will intervene for two and a half minutes, not on points of principle but on points of action. Noble Lords opposite will know how strongly we on this side of the House feel that the way to increase productivity or to regenerate industry in this country is not by acquisition but by creation and perhaps one should say a certain sense of freedom and incentives. But today we are faced with the situation whereby for one reason or another, the Government in power believe that a solution to the shipbuilding and aerospace industry lies in acquisition or nationalisation. The point we have made before is that it is obviously the duty of Government, if they decide that is the right thing to do, to do it as cheaply and as quickly as possible.

I have been criticised by my colleagues on this side of the House in previous debates where one urged that something should be done quickly, and while one does not approve of the way in which this is being done there is no doubt that Government involvement or public sector involvement in both industries is essential, although perhaps some of us would say not necessarily desirable. But what concerns me more than anything is that in the intervening months or years since this Bill was originally drafted the situation has changed beyond all belief.

At the time the Bill was drafted there were many who believed that in the country we had already reached the bottom and people did not believe that we could continue to slide in the way we have. There are people who believe that we have now reached the bottom and that there is no way, economically, that the United Kingdom can go down. It may seem odd that the passage and the implementation of this Bill should be so critical, for we are faced with two points. There are those in this country who, for one reason or another, can create and produce and generate enthusiasm for Bills and there are those who car not. The interesting thing to me, and the question I pose to noble Lords opposite, is this. Why is it that all those people who surreptitiously, through innumerable corridors, urge that they should be taken over and that their liabilities should be passed on to the State are those who have notoriously failed before? And why is it that those who have done well and have demonstrated that with the right amount of Government support, or perhaps total independence, they can stand on their own feet, are opposed to nationalisation? My Lords, I hope in the interpretation of this Bill noble Lords will bear this question in mind.

4.14 p.m.

Lord CAMPBELL of CROY

My Lords, I hope that we are about to see the closing stages of the protracted proceedings on this Bill. The Second Reading of the Bill in this House took place in September, but it was first introduced in another place in April 1975, nearly two years' ago, and it has now spanned three Sessions of Parliament. At the beginning I will make it absolutely clear to your Lordships that we from this Bench thoroughly dislike this Bill. We believe that the proposals for nationalising the industries are damaging in the long term, damaging both to the industries and to the country's economy. As we have made clear on previous occasions, we accept that there is a crisis in the merchant ship-building industry, but we have pointed out that there are other ways in which this could be dealt with and indeed the Government within the last two weeks have agreed to start action under the 1972 Industry Act.

But I must point out that the Parliament Act is hanging over this Bill during this current Session. Besides the Examiners' report, that is another major difference between our previous consideration of the Bill and our discussion today. The choice boils down to, first, delay and the whole Bill probably becoming law eventually under the Parliament Act; or a quick passage of the Bill now through Parliament, minus the list of 12 named ship repairing companies. The Examiners' report found that the Bill was hybrid in the ship repairing section and the Government now intend to remove that section and so remove hybridity from the Bill. They are not proposing to remove all the ship repairing from the Bill, and, like my noble friend Lord Orr-Ewing, I regret that, but they are intending to remove hybridity as a response to the finding of the Examiners.

I believe that we should recognise what has happened since 8th December when the Bill, reintroduced, came here from another place. The Bill has been dealt with by Parliamentary clerks and other officials and there has been time for two things: first, for the proper procedure to be adopted and, secondly, for the Government to have second thoughts. I believe that this is not a day for recriminations. The Government in the end have conceded, in accepting what a large majority in this House thought right in November; namely, that the ship repairing section of the Bill should be dropped. This is an occasion for a cool assessment of what has happened.

Some noble Lords have spoken of precedents and I think there is still some confusion outside your Lordships' House as to what has happened. The powers of this House are very limited. None the less they had enabled the truth to emerge and the truth to prevail—that the Bill is hybrid. Had it not been for the existence of this House there would have been no opportunity and no time for the Examiners to determine that the Bill is hybrid, contrary to the Government's opinion. The Government held their opinion very strongly but they were proved to be mistaken. Governments are not infallible and no blame attached to this Government for that. It is the same for all Governments and, since fallibility is a human weakness, noble Lords opposite will not mind my pointing out the Examiners' finding that the Parliamentary draftsman was given an impossible task. He was not given all the information needed in order to ensure that the Bill was not hybrid.

The Bill was in the Commons for a year and a half before we in this House were able to discuss it for the first time in September. We were then expected to pass it through all its stages within six weeks, though that time was later extended. In that first debate—I hope your Lordships will not mind my recalling this—it was I who happened to be the first person to raise the question of hybridity in the ship repairing section. On the 28th September, in col. 208 of the Official Report onwards, I pointed out that the 12 ship repairing companies named in Schedue 2 did not appear accurately to conform with the criteria in the Bill. If that was so, private interests in particular categories were not being treated equally. In those circumstances Parliament had devised the hybrid Bill procedure to enable affected citizens to put their cases in person. That procedure exists to protect the rights of the citizen to plead his cause and to be heard before a committee of Parliament.

Had the Government identified the Bill as hybrid at the beginning it would have followed a different course from the beginning. When I raised the matter at the end of September it was too late for the necessary procedure to be introduced within that Session. At the very end of the last Session the Examiners' proceedings and hybrid procedure could not have been introduced without the Bill's failing to complete its passage in time. As the ship repairing section was not a significant or essential part of the Bill, and as we on these Benches considered that the Bill would be better without it, we pressed Amendments to omit ship repairing. Had the Government then accepted our proposition they would have obtained the rest of the Bill last November.

Ministers rejected my advice last September, although it was being put help-fully, that the ship repairing section seemed hybrid. They did so in long Written Answers to me and to my noble friend Lord Colville. But it must have been study of those replies which caused the Public Bill Offices in both Houses to refer the Bill to the Examiners immediately on its reintroduction this Session. Revelation of the Government's interpretations of the criteria produced a prima facie case for examination. As a result, the four Examiners, two from the Commons and two from the Lords, determined that the ship repairing section was hybrid before any Peer discussed the Bill in this Session, far less voted upon it. There must have been much joy in heaven during this past week, for the Government are now accepting what they resisted four months ago.

For our part, we on these Benches intensely dislike the proposed nationalisation of the aircraft and shipbuilding industries. That is not the way to promote their interests or success. The Government have on many occasions referred to the plight of the merchant shipbuilders, who have been experiencing a very severe crisis owing to the worldwide shortage of orders. As noble Lords know, the British industry is not alone in this; other countries which build merchant ships are suffering too. At any time during the last two years the Government could have assisted their necessary restructuring using the powers and finance available under the Industry Act 1972. Only within the last two weeks have they decided to do so.

It is clear, and the Government have admitted this, that the industry must become smaller, with consequent redundancies, as a result of restructuring, whether or not under nationalisation. But the later remedial action is started, the more difficult the problems will be. In this situation, it was not surprising that most of the organising committee, including Mr. Graham Day the designated chief executive, decided to depart at the end of last year. They formed the nucleus of the proposed national corporation, British Shipbuilders; their patience must have been exhausted with the Government's mishandling of the Bill, culminating in the Cabinet's refusal in November, for reasons best known to themselves, to accept the Bill without ship repairing.

I hope Ministers will find ways of informing the House within the next few days how that organising committee is now to be reconstituted—because so many of its members have departed—if, as now expected, the Bill will arrive on the Statute Book within a few weeks. I have been inquiring from time to time—the noble Lord, Lord Melchett, will be aware of this very well—whether the Government have yet decided in what part of the country the headquarters of that organisation will be; it seems very late in the day not to have taken even that decision yet. Perhaps Lord Melchett will be able to tell us today or, if not, in the near future. I asked him on Second Reading in September and he said he hoped very shortly to be able to give us that information.

My noble friend Lord Orr-Ewing is right to express concern, as he did today, that the alternative course to what is now proposed by the two Front Benches should be very carefully considered. I can tell him that various courses have been very carefully considered by the occupants of this Front Bench because one does not lightly acquiesce in throwing away the opportunities that the citizen has once they have been won, even if a very large majority of those concerned have had conceded to them what they were asking for. But I ask Lord Orr-Ewing, and others who may think like him and who are equally concerned, to consider carefully the Parliament Act and its restrictions on the actions and options which are open to Parliament as a whole. I think Lord Orr-Ewing knows that I have myself been in the forefront of those trying to help the industries and particularly the companies he named; regarding compensation, for example, Yarrows, and, as far as the ship repairing industry is concerned, Vosper Thornycroft, concerning whom I moved the special Amendments which had been drafted in order to meet that company's unique position.

I am sorry that the Government preferred to remove hybridity and would not go further and take the ship repairing element which still remained in the Bill out as well; that would have meant removing 13 companies and not just the named 12. Since the Government put this proposal last week I have been examining every contingency in the coming months and I can tell my noble friend that I think the course we are now proposing is the best one for the industries as a whole and for the country.

The noble Lord, Lord Monson, also spoke about his grave concern, particularly about the compensation clauses. I will not go into the Parliament Act in detail, nor will I re-open the debates on compensation, which were very long in this House, and the noble Lords who took part in those debates spoke with great concern and knowledge. Lord Monson raised the possibility of voting against the Bill now on Second Reading in view of what had happened, or at any rate I thought he spoke as if he did not like the idea of the Bill getting a Second Reading. I would point out to him that the quirks which arise under the Parliament Act are such that, were this House to have a Division and decline to give the Bill a Second Reading, that would have the effect of activating the Parliament Act immediately and producing exactly the opposite result to what Lord Monson would wish; namely, the Bill, including ship repairing, would be available to the Government forthwith.

Lord MONSON

My Lords, I did not suggest that the House should vote against the Second Reading of the Bill. I was urging the Government to think again between now and the Committee stage.

Lord CAMPBELL of CROY

My Lords, I am glad to have given the noble Lord an opportunity to make clear what he was saying and it has given me the opportunity to point out the extraordinary contradictions that exist if one looks into the operation of the Parliament Act and considers the various possibilities. I have not today repeated the arguments against the Bill; we have heard them many times from various quarters of your Lordships' House. Nor have I repeated the arguments against the ship repairing section of the Bill. From what I have said about the history and handling of the Bill, however, I hope your Lordships will realise that I and my noble friends on this Bench consider it better to adopt the course now proposed by the Government in view of the effects of the Parliament Act, and to drop the ship repairing section in Schedule 2.

We prefer that course, rather than continuing the uncertainty, which is painful for the merchant ship building industry, and facing the probability that the Parliament Act would eventually cause the nationalisation of all the industries, including the 12 ship repairing companies. For these reasons, we hope that the House will accept now what has been proposed by the Government as the best course in the most unusual circumstances in which this Bill has returned to us.

4.31 p.m.

Lord MELCHETT

My Lords, I should like to follow the noble Lords, Lord Strathcona and Mount Royal and Lord Campbell of Croy and thus, hopefully, avoid going over all the ground that we covered at such length and so often in the previous stages of the Bill. May I say straight away how grateful I am to both noble Lords for the support that they have given to the arrangements reached through the usual channels about the deletion of the independent ship repairing firms from the Bill?

The noble Lord, Lord Campbell of Croy, raised the matter of the headquarters of British Shipbuilders, which is, as he indicated, something that we have discussed on several previous occasions. However, as I readily acknowledge that I have not been able to give a satisfactory answer before and, I regret to say, I shall not be able to give a satisfactory answer today, I felt that it was a matter to which I should briefly revert. As the noble Lord himself said, several members of the Organising Committee of British Shipbuilders who were to have been appointed to British Shipbuilders will not now be joining the Corporation. In the circumstances, I understand that it was felt that, regrettable though I readily acknowledge this to be, a decision on the choice of location for the headquarters of British Shipbuilders could not properly be made without the benefit of the views of the new members of the Corporation after its formation. As your Lordships know, the headquarters will be in an assisted area with a tradition of shipbuilding, and I am afraid that all I can add to that is that an announcement about the choice of location will be made as soon as possible.

The noble Lord, Lord Strathcona and Mount Royal, asked me to elaborate on the Government's reaction to the Examiners' findings which I touched on briefly in my opening remarks. It may be helpful if I take this opportunity just to clarify what I said. Needless to say, the Government are deeply concerned about the Examiners' findings. It would not be seemly nor is it now necessary to go over that ground in great detail in respect of this Bill. So far as the Bill is concerned, the findings created a new situation and we had to deal with that situation. However, in the Government's view, the findings raise serious issues for the future. As I have said and as the Government's Statement last Wednesday made clear, the Examiners' findings leave the general position on hybridity in an unsatisfactory and uncertain state. We are therefore carefully considering the implications for future legislation. I hope that noble Lords will accept that, throughout, we have acted in good faith over hybridity and on the basis of the best factual information and legal advice available to the Government.

Lord HARMAR-NICHOLLS

My Lords, I feel that the noble Lord is perhaps being deliberately ambiguous about this. What is unsatisfactory about the Examiners' report? They were asked to report whether or not the Bill was hybrid in order to retain the rights of certain individuals and companies. They reported that it was hybrid. What is unsatisfactory about that from the Government's point of view except that it cuts across what the Government wanted to happen and that they refused doggedly to send it to the Examiners to have it cleared in good enough time for them to have dealt with it earlier? What is unsatisfactory? To leave it in that ambiguous way is not at all satisfactory to me.

Lord MELCHETT

My Lords, if the noble Lord had allowed me to finish, I should not have been in the position of leaving it in what he calls an "ambiguous way". I did not say that the findings were unsatisfactory: what I did say, as the noble Lord will see if he cares to study Hansard, was that the Examiners' findings left the general position on hybridity in an unsatisfactory and uncertain state. As I was saying, it was the Government's belief that, according to the precedents and previous rulings on the facts as we knew them, the Bill was not hybrid. On matters of fact and legal interpretation, the Examiners found in the Government's favour in all the many cases raised except one—the Westminster Dredging Company, one thousandth part of whose turnover is in ship repairing. The Examiners recognised the absurdity of this and it is sure to raise problems for legislation in the future.

On the question of the turnover criterion for ship repairing, which the Examiners found not "germane" and therefore a further cause of hybridity, the Government are concerned that the Examiners' approach to what is "germane" may well make it exceedingly difficult in future legislation, not just nationalisation legislation but also other Bills which might risk hybridity, to find criteria which it will be possible to advise with any degree of certainty will not be found hybrid.

This is not a simple matter of whether individual subjects should or should not have a right to plead their cause; the whole hybridity procedure is about the balancing of individual rights against the wider public interest. It has hitherto been recognised that nationalisation measures are, in the wider public interest, not appropriate to Private Bill procedure. The Examiners' findings leave the subject in a state of uncertainty. That was all I was attempting to say when the noble Lord, Lord Harmar-Nicholls, intervened[...].

Lord HAILSHAM of SAINT MARY-LEBONE

My Lords, this is really very serious indeed, because what the Examiners really said, if the noble Lord will study again the beginning and end of their report, was that, by any rational criteria, this Bill was an obvious candidate for hydridity but that, because the rights of the subject had been so far eroded that they were compelled to decide on trivialities and arid details, they none the less held that it was still hybrid. However, it was plain as a pikestaff from the beginning and end of the report that, but for the way in which the rights of the subject had been eroded by successive readings, the Examiners would have regarded this as obviously hybrid.

I look upon this as a matter of the utmost seriousness. What the noble Lord, on the instructions of his colleagues, now indicates is that he will erode the rights of the subject still further if he can and destroy the reality of the subject's rights. I must warn him that he will have bitter opposition from this side of the House.

Lord MELCHETT

My Lords, I am grateful to the noble and learned Lord for his lengthy intervention, but that was not what I said. Again, if I may ask him to read what I said in Hansard, he will see that I merely said that the Examiners' findings left the position slightly unclear and in an unsatisfactory state. If the noble and learned Lord will look again at the Examiners' ruling I believe that he will find that they themselves make it clear in their report, particularly in the final paragraphs, that they regard the position as unsatisfactory. That is all I was attempting to say to your Lordships' House.

Lord HAILSHAM of SAINT MARY-LEBONE

My Lords, the only reason the Examiners regard it as unsatisfactory is because they say that the hybridity procedures were designed by both Houses to ensure that the subject should have a right to plead his cause before them if he could show that their legislation would put him to greater disadvantage than it would put his fellows. In other words, Parliament has been careful to protect the individual from the majority, from the power of the State or, if you prefer it, from the power of the Government. The Examiners go on to say that the only unsatisfactory part is that, As we have indicated above, the rulings of Mr. Speaker King and his predecessor, Mr. Speaker Clifton-Brown, have, we think, almost completely lost sight of the fundamental purposes of the hybridity rule. If the noble Lord's unfortunate intervention in this matter means anything, it means that the Government intend to erode the rights of the subject still further and these rights the Examiners have said clearly have already been eroded too far. If the noble Lord did not mean that, perhaps he will explain to the House what he does mean.

Lord MELCHETT

My Lords, it clearly does not mean that. As I have said, I suggest that he should look again at my remarks in Hansard. If I may say so, he is getting rather excited about something over which there is absolutely no difference between us. If the phraseology which I used when he was listening to me led him to believe that I was saying what he suggests I was saying, he was mistaken, and I can give him that assurance. There really is no difference between us. All I was attempting to explain was a phrase in my opening remarks which the noble Lord, Lord Strathcona, asked me to elaborate on. No more than that. If I may say so, the noble and learned Lord has no justification for reading into what I said something rather more exciting and disturbing than was intended.

Lord HARMAR-NICHOLLS

My Lords, will the noble Lord give way?

Lord MELCHETT

My Lords, I have given way several times on this point and the noble and learned Lord interrupted me at considerable length. I was now intending to turn to another matter, and so I should prefer at this stage not to give way, if possible.

The noble Lord, Lord Orr-Ewing, spoke about the convenience for various Parties of the arrangement that had been reached between the usual channels. He mentioned in particular the convenience for both Front Benches that he could see in this arrangement, the convenience to the House of Commons, and so on. The noble Lord did not mention the convenience, and indeed the vital interests, of the industries affected by the Bill and all those who work in them, and I think that that might have been a consideration that was very much in the forefront of all those who were involved in coming to the agreement that has been reached.

The noble Lord, Lord Inverforth, made an extremely constructive and helpful speech. He may remember—and I think that we referred to this in the past in the course of consideration of the Bill—that he and I first met when I opened the Pallion yard of the State-owned Sunderland Shipbuilders, to which the noble Lord referred in his speech. My noble friend Lord Shinwell may be interested to know that this yard is the most modern covered shipbuilding yard in the world, and I am happy to say that the yard is fulfilling its promise as one of the most efficient and modern in Europe.

I was delighted to hear what the noble Lord, Lord Inverforth, had to say about the ship that has just been delivered to his company. I can certainly, and gladly, give the noble Lord an assurance that the Intervention Fund which he mentioned will not be used to place United Kingdom shipowners at a disadvantage compared with overseas customers. I am very grateful to the noble Lord for his good wishes and for his helpful statements, and once again I should like to pay tribute to the good will being shown by the British shipping industry to the British shipbuilding industry.

I am sure that, whatever our differences over this Bill, I shall be expressing the views of the whole House when I give our good wishes for the future to the two industries and to all those who work in them. Our aim is, and always has been, to see a strong and successful British shipbuilding and British aircraft industry.

Baroness WARD of NORTH TYNE-SIDE

My Lords, before he sits down, will the noble Lord explain, on the question of compensation, why the original arrangements for compensation, introduced when the coal mines were taken over, have not been introduced in this Bill? My recollection is—and I have lived a very long time—that the compensation and the methods used when the coal mines were taken over were considered very satisfactory, even by those people who were against nationalisation. Why under this Bill is compensation not to be based on the same scheme, with the same people examining it, so that there would be less injustice in the compensation schemes offered under this Bill? The noble Lord has not really mentioned compensation at all, and that does not suit me. I want to know why the same system is not going to be used in this case.

Lord MELCHETT

My Lords, as I have now been sat down for some time, it might be appropriate for me to refer the noble Baroness to the appropriate place in the Committee stages of the Bill when this particular subject was gone into at some considerable length and when the analogy with the compensation terms when the coal industry was nationalised was discussed at considerable length by those noble Lords who were taking an interest in the Bill at that stage.

On Question, Bill read 2^a, and committed to a Committee of the Whole House.