§ 3.23 p.m.
§ The MINISTER of STATE, NORTHERN IRELAND OFFICE (Lord Melchett)My Lords, I beg to move 1166 that the House do now resolve itself into Committee on this Bill.
§ Moved, that the House do now resolve itself into Committee.—(Lord Melchett.)
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The Lord ABERDARE in the Chair.]
§ The CHAIRMAN of COMMITTEES (Lord Aberdare)With your Lordships' permission, I will put as many as possible of these clauses en bloc. I understand that one of your Lordships wishes to speak on Clause 35, so if I may I will put Clauses 1 to 34 en bloc.
§ Clauses 1 to 34 agreed to.
§ Clause 35 [Compensation for t[...]esting of securities]:
§ On Question, Whether Clause 35 shall stand part of the Bill?
§ Lord ORR-EWINGI rise or the first of these compensation clauses, which I think run from Nos. 35 to 40. I would not at this late stage wish to repeat the endless arguments which we have had, but this is probably the last day when your Lordships will consider this Bill. I understand that the Government now hope that it will become law next Thursday, 17th March, and before it leaves us I feel that I must say some words about compensation, because it is so grossly unfair, despite the wording of the Bill, despite the assurances of the Minister, that it should leave our House without somebody objecting on that score. It is so unfair that in some sections it is really legalised robbery, and I will seek very shortly to point that out.
It is a long time since 13th April 1975–23 months ago—when the Bill was first introduced in another place, and during this long-drawn-out period the basis for compensation has become more and more out of date. Your Lordships will remember that the base period was September 1973, and it was calculated on so-called notional share values. The fact that 95 per cent, of the companies to be nationalised had no public share values made these rather hypothetical judgments, and will make them hypothetical judgments. But the share values in September 1973 were presumably arrived 1167 at as a result of the profitability, the progress and the order books of the shipbuilding and aerospace companies in the previous year, so we are really back to 1972; and in 1977 there is a very different picture and a very different degree of prosperity as between one firm and another. It is our contention that the formula is likely to be over-generous to the ailing companies in shipbuilding, and grossly unfair to the prosperous progressive companies which have made massive investments in the last five years to make themselves more up to date and more competitive. If it was fairer there would be more for the good and less for the moderate.
I should like to take one example, and that is Yarrow. This is a classic example. Last year's profit was somewhat under £5 million. The year before the profit was over £5 million. The year before that the profit was about £7 million. But this formula will give a gross compensation value of about £5 million; that is the kind of basis that they will be negotiating. By no stretch of imagination can that be thought to be fair, and I urge the Government, even at this late stage, to stretch the wording of the phrases and give as much power to the arbitration tribunal as is conceivably possible—there is certain room for manoeuvre there—to try to make this a little more realistic. In this instance which I quote, I think that between £15 million and £20 million would be a much fairer basis for return. In other sectors, I believe that the compensation is over-generous.
We sought during the passage of this Bill to help the Government to honour their pledge that compensation would be fair and reasonable, and we in this House tabled between 300 and 400 Amendments. These came from the Cross-Benches, from the Liberal Benches, from the Tory Benches and, in many cases, they were staunchly supported from the Labour Benches—perhaps most staunchly supported by the noble Lord, Lord Shinwell. But apart from one Amendment concerning Ulster, out of those 300 or 400 the Government have not accepted one single change. That is not open Government. It is not sensible; it is not democratic. Mr. Kaufmann, speaking an another place at the end of their long-drawn-out Committee stage, said, and took pride in 1168 the fact, that not one Opposition Amendment had been carried against the Government.
Belatedly, we tried desperately hard from all sections of this House, in the 13 days that the Bill was before your Lordships, to try to effect improvements to make the compensation better and to effect improvements in other ways. We have succeeded in getting 12 of the ship repairing firms deleted—actually it is six, because three are already nationalised and three want to be nationalised. There are 90 ships repairers in all the in United Kingdom, and we have saved six from being nationalised.
Our criticism of this Government measure as it is pressed forward to meet the demands of the Marxist wing has been expressed, and expressed again, on all sides of the House. If we have been critical of the measure it does not mean that we are critical of the great companies which are to be nationalised. For three decades I have been associated with the aerospace industry and my respect for the ingeniousness, foresight and forethought of those who work in it is tremendous. I would not wish it to be thought at this late stage that criticism of the Bill and its compensation terms means criticism of the great companies. The same applies to shipbuilding. The shipbuilding industry has an ardous and desperately difficult task to perform. We think that the industry might have been dealt with in other ways, but we wish it well.
Also we hope that those who are going to lead the industry in the future will win their battle against increasing bureaucracy, because that normally happens in any State owned industry. We hope that good men will come forward who will try to do their duty to serve the industry in such a way that it will prosper, despite the disadvantages of the Bill. Finally, I wish that at this late stage the Government would try to be a little fairer in the compensation offered to those firms which have had such an admirable record since the base date was set down.
§ Lord ROBBINSI shall not delay your Lordships for more than a moment, but having the privilege of being a Member of this House I should be ashamed of myself if at this stage I did not declare my complete agreement with what the noble 1169 Lord, Lord Orr-Ewing, has said as regards both its technical competence and its unfairness. I only say to myself in the words of the poet Housman:
Be still my soul; it is but for a season.Let us endure awhile and see injustice done".
§ Lord SHINWELLIt was not my intention to intervene, but since the noble Lord, Lord Orr-Ewing, has mentioned my name I want to clear up any misunderstanding that there may be. I made only one observation on the subject of compensation during the Committee and Report stages of the Bill. I did not enter into the complications—there were far too many—of the compensation proposals. All I suggested was that the procedure adopted in the case of the nationalisation of the coalmining industry and some other industries and services which were nationalised was much more satisfactory.
I recall the occasion when we had to consider the financial proposals arising out of the take-over of the privately-owned coalmining industry. Suggestions were made which were similar to the procedure that has been adopted for the shipbuilding and aerospace industries. Fortunately, on advice I decided to adopt a different expedient: to appoint a tribunal to consider the situation, past and present, in the mining industry and to assess what was a fair measure of compensation. On the whole, it turned out very well. At any rate, so far as I know none of the coal owners who were dispossessed offered any strong objection.
In the course of the Committee stage I suggested that that was a far better device, but it was not a point which was picked up by those who took part in the debate. They preferred to discuss the intricacies of the compensation procedure which is now before us. That was a mistake and I think that we have missed the bus. I doubt very much whether anything can be done now to correct any defects which appear in the compensation procedure.
I want to mention one other point. I do not want to raise any Party or ideological issue but, after all is said and done, the shipbuilding industry was not in such a prosperous condition as to demand excessive compensation for the take-over. Very few of the shipbuilding firms were viable. I do not want to go into the 1170 details; the noble Lord, Lord Orr-Ewing, who is familiar with the subject, is well aware that that is so. Therefore when it comes to the question of compensation one has to assess what is fair.
Although I do not stand firmly by the procedure now adopted, because I have not gone into the subject so carefully and meticulously as others who took part in the debates have done, I am bound to say that in the circumstances the compensation seems to be as fair and reasonable as one might expect. Of course, there is always some disappointment when there is a take-over. Suggestions are made that there has been unfairness, injustice and the like. In the circumstances, I think that it would be far better to let it go and accept what has happened, for if we raise compensation as an issue now what will happen? Have we not had enough of it? After all, as I ventured to observe the other day, what we must do now is to co-operate and use all our efforts on the managerial side, the workers' side and the Government side—whichever Government may be responsible in the ultimate—to ensure that the industry becomes viable in the interests of the country.
Baroness WARD of NORTH TYNE-SIDEI have already raised the compensation point, but I should like to say a few more words on the subject. Can the Minister who is to reply tell us whether representations have been received from the shipbuilding firms? I shall deal only with the shipbuilding side, because I have no knowledge of the aerospace industry. Can the Minister tell us what representations have been received and how many conferences or discussions have taken place between the shipbuilding firms and the Department concerned
I agree absolutely with what the noble Lord said about the compensation which was given when the mining industry was nationalised very many years ago. I raised this matter the other day and the Minister said many words which I found difficult to follow. I want to be told in quite straight and simple terms what the position is, because this is our last chance. I am not at all pleased that his noble House is not going to divide on the compensation clauses. I would always divide. I like to make statements and to take action on my statements. I am very glad that several noble Lords have spoken 1171 on the issue. It is absolutely devastating that there is not to be fair compensation. I do not believe in nationalisation, but that is another matter. We have come to that decision with a Government at the helm who believe in nationalisation, so they are getting on with it. But it is up to those of us who do not believe in nationalisation at least to try to ensure that fair compensation is paid.
I should like to know why the Government have decided on this method of compensation, which does not appear to be fair, and why they did not do as I suggested the other day—a suggestion which the noble Lord, Lord Shinwell, has repeated. When the mining industry was nationalised the compensation terms were sent to an independent body. Even those people who did not believe in the nationalisation of the coal mines were satisfied that the compensation terms were fair. Why is it that on this occasion the Government do not want to pay fair compensation? Is it because they are so short of money?—which I really do believe. Is it because they have not got the money to pay the compensation? I want to have a fair and full statement of the facts.
I repeat again that I should be prepared, even if I were the only person, to go into the Division Lobbies against the compensation terms. If you have a fair view, you ought to state it. I fully understand that everything that I believe in may not be good or, indeed, that it may be indifferent, but when I have views I try to stand by them. If we believe that the compensation terms are not fair, I am very sorry indeed that we are not going to divide against them. Perhaps the Minister can give a full statement first and then see what happens. I am furious about the whole thing.
§ Lord MELCHETTAs the noble Lord, Lord Orr-Ewing, said, we have discussed this topic at considerable length on previous occasions. It is a technical subject and I do not intend to go into the full technicalities this afternoon.
§ Lord MELCHETTI certainly could not accept that the method of calculation of compensation is, as the noble Lord, 1172 Lord Orr-Ewing, said, grossly unfair. The noble Baroness, Lady Ward of North Tyneside, said, when she raised this matter on Tuesday, that I replied with a lot of words which she had difficulty in following. I wrote a letter to the noble Baroness which I signed this morning when I returned from Northern Ireland and delivered personally to your Lordships' House before lunch and I am sorry to hear that obviously she has not yet received the letter.
Baroness WARD of NORTH TYNESIDEIf the noble Lord will allow me to say so, I am delighted to hear that he has written me a letter. This morning I inquired whether there were any letters for me and there were not. There were only two little pamphlets which I put into the wastepaper basket. I did not expect to receive a letter from the noble Lord and I thank him for being so nice about it, but it is a pity that he could not ensure that I received the letter before this debate took place this afternoon.
§ Lord HAILSHAM of SAINT MARY-LEBONEHe did his best.
§ Lord MELCHETTI think it is a little uncharitable on the part of the noble Baroness because I personally signed the letter and put it in the normal place in your Lordships' House before lunch, and if the noble Baroness has not received it I am very sorry.
As I have said, I do not want to go into the full details but I should like to make two points about the method of assessing compensation which has been used in the Bill and which, as the noble Lord, Lord Orr-Ewing, said, is based on the stock market valuation during the reference period. The noble Lord implied that this was based on the results of companies in 1972. I should like to point out that it is my understanding of the stock market valuation of shares that they would take into full account the future prospects of companies as well as the companies' performance during the previous year. In general terms, I think it is true to say that the stock market today is at roughly the same level as it was during the reference period on which the compensation terms are based.
I certainly agree with the noble Lord that it could be said that some firms are 1173 getting inadequate compensation and others are getting too much on some bases of looking at the firms' current position. But I have to say that the Government have looked at this at great length and in great detail at several stages of the Bill and we have not been convinced that any other method of calculation of compensation would provide the objective and fair test which is necessary and which would make the calculation of compensation reasonably efficient and speedy. For those reasons we have stuck with the method of compensation which is used in the Bill, and it is because the basic method has remained unaltered that we have not accepted Amendments which attack the basis on which compensation is to be calculated. We are satisfied that the basis on which we shall calculate compensation is as fair as we can possibly devise, and I hope that on that basis your Lordships will allow this clause to remain in the Bill.
Baroness WARD of NORTH TYNE-SIDEWould the noble Lord like me to read out the letter, which I have now received?
Several Noble Lords: No.
§ Lord MONSONCan the noble Lord say why the compensation must be based on stock market values which are three and a half years out of date, bearing in mind that the stock market cannot possibly anticipate what is going to happen three and a half years in the future? Why can it not simply be based on a straightforward multiple of 1976 profits?
§ Lord MELCHETTAs I have said, this is a technical subject. If your Lordships would like me to do so I could read out the answers which I gave on the same point in the Committee stage in your Lordships' House at great length, but it would take a long time. I shall be happy to write to the noble Lord and refer him to the column in Hansard where I answered that particular point.
§ Lord ORR-EWINGBefore the noble Lord leaves this clause, he said that the Government had considered an alternative formula but they could not find a fairer one. Did they ask some competent 1174 industrialists and well-known accountants to see whether they could devise some? They would not have had any difficulty in devising a formula which would be more realistic and more up to date than to give one year's profits to a company in compensation, when incidentally that particular company has assets, securities in the bank, worth £5 million apart from the business. This is so unfair that anyone could devise a better method than that.
§ Lord MELCHETTI was trying not to get drawn into detailed argument, particularly in regard to individual companies. I think the noble Lord would accept that in the past in your Lordships' House I have put forward various arguments to suggest that some of the individual companies which noble Lords have named have benefited from other Government funds and Ministry of Defence orders which have affected their position and which have not been taken into account in a way which would reduce the compensation payable, so there is a balance to be struck here. We also went into the question of the Government's relationship and contacts with chartered accountants at great length during the Committee stage and letters were passed to and fro; and again if the noble Lord would like me to do so I can refer him to the relevant columns in Hansard.
§ Lord WARDINGTONMay I ask whether we could possibly have some confirmation of the last debate which took place on this matter, when I think there was general agreement that in arriving at terms of compensation for unlisted companies, cognisance should be taken of the Stock Exchange listing agreement requirements, which went some way—although only a little way—towards meeting some of my objections. This was raised in a letter from the Minister (I think it was), and I think I am right in saying that the noble Lord, Lord Melchett, gave assent in principle to that final arbiter, if I may put it that way.
§ Lord MELCHETTMy Lords, I do not have in front of me at this moment the letter I wrote to the noble Lord, and I assume that the noble Lord does not, either, but certainly the letter referred to The Stock Exchange listing agreement and 1175 gave certain assurances and I am happy to repeat those assurances again today.
§ Clause 35 agreed to.
§ Clauses 36 to 57 agreed to.
§ Schedule 1 agreed to.
§ Schedule 2 [Shipbuilding industry]:
§ Lord MELCHETT moved Amendments Nos. 1 to 3:
§ Page 82, leave out lines 18 to 30.
§ Page 83, line 8, leave out ("a shiprepairing company").
§ Page 83, line 38, leave out paragraph 3.
§ The noble Lord said: With your Lordships' permission I should like to move Amendments Nos. 1, 2 and 3 en bloc. I do not propose to speak at length on these Amendments. Noble Lords are already aware of the Government's intention to propose these Amendments at this stage in the passage of the Bill through your Lordships' House. Their effect will be to remove the 12 named ship repairing companies from Schedule 2 to the Bill. Your Lordships' House has resolved, on the basis of the Government's intention to move these Amendments, that Petitions against the Bill should not be heard and that 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 hope that the Amendments will be acceptable to your Lordships. I beg to move.
Lord CAMPBELL of CROYWe from this side can hardly cavil at these Amendments. I should remind your Lordships that they are identical in wording to three Amendments which were moved by me in the last Session and supported by your Lordships.
§ On Question, Amendments agreed to.
§ Schedule 2, as amended, agreed to.
§ Remaining Schedules agreed to.
§ House resumed: Bill reported, with the Amendments: Report received.
§ Then, Standing Order No. 43 having been dispensed with (pursuant to Resolution):
1176§ Lord MELCHETTMy Lords, I beg to move that the Bill be now read a third time.
§ Moved, That the Bill be now read 3a—(Lord Melchett.)
§ On Question, Bill read 3a, with the Amendments, and passed, and returned to the Commons.