Lords Sitting of 28 April 1980

Preamble
The House met at half-past two of the clock. The LORD CHANCELLOR On the Woolsack.
Prayers—Read by the Lord Bishop of Truro.

CHP GENERATING STATIONS
Viscount HANWORTH: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have considered the possible economic advantages of smaller electric generating stations working on a combined heat and power cycle (CHP), sited adjacent to suitable conurbations, thus providing district heating potential without the prohibitive cost and energy loss of very long mains pipelines.
The MINISTER of STATE, DEPARTMENT of EMPLOYMENT (The Earl of Gowrie): My Lords, the programme of work announced by my right honourable friend the Secretary of State for Energy on 2nd April to examine the feasibility of combined district heating and power generation in particular locations will necessarily have to include examination of the most appropriate method of supplying heat. It is impossible at this early stage to anticipate the nature of any future CHP scheme but the siting and size of the generating capacity will clearly need to be taken into account. The House may, however, be interested to know that the report of Dr. Walter Marshall's inquiry into CHP indicates that transmission costs assume less importance the larger the scheme.
Viscount HANWORTH: My Lords, I thank the noble Earl for that helpful reply. Would he agree that, whereas there is a potential saving of energy from combined heat and power of perhaps 30 per cent. or more, the loss in efficiency between a large and small generating station is of the order of 5 per cent.?
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Bearing in mind that the objection to moving ahead with a CHP scheme has always been stated as being that there was not a big enough conurbation to take the heat from a large power station, would he give particular weight to the Question which I have put down on the Order Paper?
The Earl of GOWRIE: My Lords, I am delighted to give weight to the Question which has been put down. Indeed, the Government have really to some degree anticipated the noble Viscount's Question by setting up a programme.
The Earl of LAUDERDALE: My Lords, are we to understand from my noble friend's reply that the Marshall Report has in principle been accepted by the Government, and that the Government will now seek to identify a suitable site for a pilot scheme?
The EARL of GOWRIE: My Lords, my noble friend is anticipating the Government a little. The Government have accepted the need for conservation and the value of CHP schemes as outlined by the Marshall Report. As a result of accepting this issue of principle, they are now setting up a programme to look at the feasibility and costing of utilising such schemes.
Lord LEATHERLAND: My Lords, will the Government bear in mind the welfare of the coalmining industry, because what might be a convenience to some districts here might spell disaster for some mining communities?
The EARL of GOWRIE: My Lords, there is no plan to have a CHP programme as part of a network all over the country. In the initial stages, it would probably be at most half a dozen sites.
Lord AVEBURY: My Lords, does the Minister recall that a few years ago the South of Scotland Electricity Board conducted a feasibility study in the Pinkston area of Glasgow, and came to the conclusion that it was marginally uneconomic on the assumptions made of required return by the Treasury and the future increases in the cost of coal? In view of the fact that the Government are now committed to undertaking a feasibility study, would not one possible way forward

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be to request the South of Scotland Electricity Board to rework the arithmetic in that scheme, putting in more realistic assumptions about the future costs of energy?
The EARL of GOWRIE: My Lords, I think that the noble Lord, Lord Avebury, has in fact put down some Questions for Written Answer in respect of the need for the electricity board to reconsider its costings, which I am in the process of answering, if I have got the timing of that right. The broad principle about the use of CHP has led the Government to set up a programme, but what comes out of the programme will of course depend on the economic cost-effectiveness of what we discover.
Viscount HANWORTH: My Lords, would the noble Earl say whether I am correct in thinking that Newcastle have carefully studied the problem and asked for a CHP scheme in that area?
The EARL of GOWRIE: My Lords, I am not aware of what particular boroughs have made representations to the Government at this stage, because at this stage the Government are inviting individual local authorities to put forward their recommendations; but when they have done so I should be delighted to let the noble Viscount know.
The EARL of HALSBURY: My Lords, would the noble Earl agree that whatever conclusions come from today's studies would be a function of today's costs and prices, and that what is at issue for the future is not realistic assumptions on the lines of Lord Avebury's Questions, but updating the conclusions of any current inquiry regularly year by year in the Department of Energy's annual report, so that the issue is not lost sight of in future?
The Earl of GOWRIE: My Lords, it would also be right for that point to be drawn to the attention of those working the programme, because it would be lamentable if the programme were allowed to get out of date.
Lord WYNNE-JONES: My Lords, will the noble Earl take into account the possibility of retaining the CHP
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scheme which has been working at Battersea, and renewing the equipment of the station in order to give it a new lease of life?
The Earl of GOWRIE: My Lords, I shall certainly be delighted to inquire into that.
The Earl of LAUDERDALE: My Lords, will my noble friend add this further point to the matters he has answered? Will the Government consider inviting local authorities, when they prepare their structure plans, to consider the possibilities of CHP as a suitable ingredient, if you like as a suitable input, in their studies for structure planning?
The Earl of GOWRIE: My Lords, I think that that effect will be achieved as a result of the programme which my right honourable friend announced on 2nd April.
Viscount HANWORTH: My Lords, would the noble Earl agree that, in looking at the economics, what really matters is the economics over the life of the power station and not necessarily at the present time? Would he also agree that costs of fuel will almost certainly rise and that what is not now clearly economic will be economic in a few years' time?
The Earl of GOWRIE: My Lords, my information is that at the upper end of the scale of energy savings given in the report, those from CHP and district heating would have an economic value equivalent to 30 million tons of coal per annum, and that would be between 5 and 10 per cent. of probable United Kingdom primary energy demand up to the end of the century.

RATES DEMANDS: BILLING
2.44 p.m.
Viscount HANWORTH: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they consider that sending out separate demands for general rates and for water charges is efficient or accept-

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able bearing in mind the extra work and expense placed on the consumer and the possibility of having to take separate action for enforcement of payment.
Lord MOWBRAY and STOURTON: My Lords, we think on balance that it is right that the water industry should, like others, collect its own charges. One has to remember that in fixing these charges water authorities are required under the Water Act 1973 to have regard to the cost of providing services. Consequently, although domestic consumers are currently charged mainly on the basis of rateable value, there needs to be scope for water authorities to adopt other systems, such as two-part tariffs and metering. Water authorities have in fact made savings by direct billing and consumers are now better informed about charges for the services they receive.
Viscount HANWORTH: My Lords, while thanking the Minister for that reply, may I ask whether he appreciates that having to reply to two separate demands first of all means two stamps of 12p and, for most of us who pay by cheque, an additional charge of 15p? If there are perhaps 20 million households in England, that conies to well over £1½ million. Surely, any administrative inconvenience would be far outweighed by that amount. Would the noble Lord agree that the definition of a civil servant must be one who serves the public and not his own administrative convenience?
Lord MOWBRAY and STOURTON: My Lords, I am not certain of the implication of the noble Viscount's last statement; civil servants serve their Ministries which serve the public, and the public decide at general elections whether they are content. As for what the noble Viscount said in the earlier part of his supplementary, which was more to the point, there is no reason why water authorities, which are authorities in themselves, should not do their own billing. Electricity boards and gas boards do their own billing. Why should water boards not do their own billing? There has never been any comparison with other services such as education and policing, which are charged to the general rates. I said in my main Answer that there was a saving. For instance, the Severn Water Authority estimates that its consumers alone have
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benefited by some £3½ million by direct debiting.
Lord STRATHSPEY: My Lords, is my noble friend aware that a great many people in this country are paying three rates, not two: one to the local authority in the shape of a general rate, a second to the water company for the supply of water, and a third to the water board, water authority or whatever it may be called, to cover sewerage, environmental river control and all sorts of other things?
Lord MOWBRAY and STOURTON: My Lords, I am not quite certain to what my noble friend was referring in the second part of that supplementary. Water authorities not only provide water—purified, clean and pure water such as very few countries have in such good supply—but also have one of the best sewerage systems in the world, and we should be proud of what we have. The average family in this country is still on average paying only £1 a week for all this service. I do not think we need hide our heads in shame about this. We are proud of what we have done in this sphere.
Lord PARGITER: My Lords, is it a fact that some water authorities examined the position in regard to direct billing and found that local authorities were charging them more to collect the water rates than it cost to do it themselves?
Lord MOWBRAY and STOURTON: Yes, my Lords, and I am grateful to the noble Lord for making that point. The average council was charging about 3 per cent. of all the money taken from the public, so the public were not getting a good bargain. I must point out that local authorities should be reducing that amount which now the water boards are charging out of their own rates. In other words, the rates in general would have been higher had the water rates not been paid separately.
Lord WYNNE-JONES: My Lords, were the laudatory remarks made by the Minister concerned with a national or privately-owned board?
Lord MOWBRAY and STOURTON: My Lords, the water authorities in this

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country, whether private or national, have in my opinion all done a splendid job.

ILEA: THE BAKER REPORT
2.49 p.m.
Baroness PHILLIPS: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what action is contemplated following the Baker report on ILEA.
The MINISTER of STATE, DEPARTMENT of EDUCATION and SCIENCE (Baroness Young): My Lords, my right honourable friend the Secretary of State for Education and Science is today announcing that the Government have embarked on a comprehensive examination of the local government arrangements for the provision, administration and financing of education in Inner London. A further statement will be made when this examination has been completed.
Baroness PHILLIPS: My Lords, I am sure that the Minister will be glad to know that I appreciate her reply, bearing in mind that there is a great deal of concern about what appeared to be action on behalf of a report—a political report—which seemed to be curiously inaccurate. The parents, teachers and children concerned will be very glad to know that there is to be another inquiry.
Baroness YOUNG: Yes, my Lords; I am glad to have the recognition from the noble Baroness, Lady Phillips. The Government are in effect undertaking the review of the Inner London Education Service which the London Government Act 1963 said should be put before Parliament in 1970. In fact this provision was repealed by the Labour Government in 1967, but it was clearly intended by the legislators in 1963.
Baroness DAVID: My Lords, may I ask the Minister what consultations are proposed with parents and the governors of the schools which will be affected in the
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Inner London Education Authority's area? May I also ask what notice the Government intend to take of the costs which might be involved, remembering that, in the Marshall Inquiry, which went into this matter in 1977–78, Sir Frank Marshall, now vice-Chairman of the Conservative Party, said that any break-up would greatly add to the financial problems facing London's local government? In a statement made more recently he said—this year—that only a fool would attempt it.
Baroness YOUNG: My Lords, with regard to the first part of the noble Baroness's supplementary question, the Government have already received a great many representations on this matter. Naturally we shall be willing to look at any further written expression of views from interested parties, whoever may submit them. We shall take full account of these and the earlier representations in the course of the present study.
So far as the cost is concerned, the unit costs of the Inner London Education Authority are generally higher than those of other education authorities, although they are not always the highest in every sector; and I recognise that there are special factors in London which affect costs. I think that it is worth looking at the analysis of individual authorities' estimates of expenditure which are contained in the education statistics published annually by the Chartered Institute of Public Finance and Accountancy, and copies of this are in the Library.
Baroness PHILLIPS: My Lords, bearing in mind that the Minister will be making another statement on the committee to be set up, may I ask her for an assurance that the committee will not be composed merely of Conservatives but will take into account all parties and all interests?
Baroness YOUNG: My Lords, this will be a Government examination of the matter, and plainly it concerns a number of other Ministers as well as my right honourable friend. The examination will be done in a way which involves them all.
Baroness DAVID: My Lords, will the Minister agree that it is not only the education costs in Inner London that are higher than those in the areas of many

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other authorities, but that there are social services and housing costs, too, and these are not administered by the GLC or ILEA?
Baroness YOUNG: My Lords, I would not feel it appropriate at this moment to comment on the costs of other services, because the Question is concerned with education in London. However, we shall of course be looking at all aspects of this problem, and we recognise that the alteration of administrative arrangements for education in Inner London would have wide financial and educational implications.
Lord PEART: My Lords, the noble Baroness has said that Government Ministers will look into this matter, but that means that there will be political decisions. Is she not aware that ILEA has been responsible for a fine example of the development of comprehensive education? Many of us feel that the party opposite is anxious to destroy ILEA, but is she aware that we hope it will survive?
Baroness YOUNG: My Lords, I note the points that the noble Lord has made on this matter. The Government have concluded that it would be right, particularly in view of the undertaking that was given in the 1963 Act, and which has never, for the reasons that I have already indicated, been fulfilled, to look at this matter. We are setting up a Government committee to do so, and we shall of course take into account all the points that have been made.
Lord AVEBURY: My Lords, does the answer of the Minister to the noble Baroness, to the effect that all parties will be involved in the inquiry, mean that they will not be represented on the body which is to conduct the inquiry, and that therefore it has already been decided to have an internal departmental inquiry, to which the political parties would merely be able to give evidence? If that is so, does the Minister recognise that it would be profoundly unsatisfactory to do this behind closed doors, and that what the public in London demand—in particular, the parents and teachers in Inner London—is that the examination should be conducted both thoroughly and in public?
Baroness YOUNG: My Lords, the way that the Government propose to conduct the inquiry is, I think, a normally accepted way of conducting inquiries of this nature. As I said in my original reply, we shall be publishing the result, but, since we have reached no conclusions at all on the matter, I cannot say precisely what form that might take. But of course we shall be very happy to receive evidence on this matter from anyone who cares to submit it.
Baroness PHILLIPS: Finally, my Lords, is the Minister aware that this report, which is very far-reaching so far as ILEA is concerned, was received at County Hall only through indirect means, which, to put it at its lowest, seems highly discourteous, and, at its highest, really quite dangerous, because they obviously had no way of making comment on this? In some cases they read about it through the Press, and in other cases they obtained copies of the report quite indirectly.
Baroness YOUNG: My Lords, if the noble Baroness is referring in her remarks to the Baker Report, I should make it clear that this report was not commissioned by the Government, and therefore it is not for me to comment upon it. If the Government's own examination of the issues leads us to conclude that a major change is necessary, that would of course require legislation. Thus, naturally, there would be opportunity for consultation and public debate on any changes proposed.
Baroness PHILLIPS: I am sorry, my Lords, but surely the Minister is incorrect. The report may not have been commissioned by the Government, but it was certainly set up by the Minister of State for Education. I am not quite sure whether that amounts to it having been commissioned by the Government, but the terms of reference specifically stated that it was set up by the Minister of State.
Baroness YOUNG: My Lords, this was not a Government report in the sense of the Government review that I have been speaking about in my answers to questions.
Baroness DAVID: My Lords, I have here a report which says,
"As has been widely reported in the Press, a committee of London Conservatives was established last autumn by the Secretary of State for Education and Science …".
Baroness YOUNG: My Lords, the noble Baroness is quoting from a report in a newspaper. I should like to give an assurance—
Lord PEART: No—from ILEA.
Baroness YOUNG: Well, my Lords, the noble Baroness may be quoting from ILEA. I should like to say, so far as the Baker Report is concerned, that it was not a Government report, and that what we are proposing to set up here is a Government committee to look at the whole question.

RIGHTS OF THE CHILD: DECLARATION VIOLATIONS
2.57 p.m.
Lord JANNER: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what steps have been, or are being taken, by the members of the United Nations to deal with violations by terrorists of the Declaration of the Rights of the Child adopted unanimously by the United Nations; and in particular what action they propose to take in regard to the Lebanese Government, who are harbouring terrorists who plan and carry out such violations.
Lord TREFGARNE: My Lords, as I have said on several occasions, the Government condemn all acts of terrorism, including those mounted from Lebanon against neighbouring countries. The Declaration of the Rights of the Child is not a binding legal instrument, but exhortatory. The question of violation does not therefore arise. The chances of preventing terrorism from Lebanon would be considerably increased if the Lebanese Government were enabled to exercise their authority throughout the country.
Lord JANNER: My Lords, with the greatest respect, is not that an evasive reply? Did not Lebanon in fact vote for the declaration, and does it not today harbour and encourage the PLO, and give them an open field to commit these atrocities against babies and children in
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homes, and in addition to destroy the confidence that any decent set of people can have in a Government who are prepared to perpetrate, and assist in perpetrating, these acts?
May I also ask the noble Lord whether it is not about time that Isreal ceased being blamed for doing what it is entitled by international law to do; that is, to pursue these criminals into Lebanon, in the same way as we ourselves act, and as other nations act, in accordance with the desire to prevent babies and children from being murdered, brutally assaulted, and treated as hostages? What are we prepared to do in order to persuade the Lebanese Government to stop the PLO doing these things?
Lord TREFGARNE: My Lords, I think that the noble Lord misleads the House with those kind of supplementary questions, because he is wholly misrepresenting the situation. The fact is that the Lebanese Government are doing their best to maintain law and order in their country, and at the moment are very much obstructed by the irregular forces of Major Haddad, which are operating in the South of that country. Those forces, we are told, are supported and encouraged by the Israelis.
Lord JANNER: My Lords, may I ask one final supplementary question? Is that not the kind of answer which is being given in respect of a democratic country which, for example, condemned the action of one sect of Moslems who killed somebody in another sect, and which was blamed for it in certain quarters? Will the noble Lord realise that I know enough of the situation not to misrepresent it, and to know that no longer ought we to utilise Israel as a scapegoat for any difficulties that arise?
Lord TREFGARNE: My Lords, perhaps the noble Lord did not quite hear my original Answer, when I said, as I have said so many times before from this Box, that we condemn all acts of terrorism, from wherever they come and whoever may perpetrate them. The fact is, as I have said on many occasions before and as your Lordships will know in any event, that the problems in Southern Lebanon are at the moment under control (or we would wish they were more under control) by

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virtue of the presence of United Nations forces in that country. The actions of that force are being severely hampered by the forces to which I referred earlier.
Lord WELLS-PESTELL: My Lords, may I ask the noble Lord the Minister this question: Since he has said that the Lebanese Government are anxious to maintain law and order, is he saying that the Lebanese Government recognise Israel's right to exist?
Lord TREFGARNE: My Lords, that is a wholly different matter, and, of course, those sort of things come within the compass of an overall settlement in that area.
Lord PAGET of NORTHAMPTON: My Lords, does not the point which my noble friend has raised really involve a very much wider issue? An increasing class of nations have neither the power nor the will to perform their duties under international law or to respect the security of their neighbours, and will not the time come when such nations have to be told that if they cannot perform their duties under international law then they cannot expect the protection of international law, and that nobody will help them when private action is taken?
Lord TREFGARNE: My Lords, I am not quite sure who the noble Lord is referring to when he talks about countries not honouring their commitments under international law on this matter, but as far as the Lebanese are concerned they, of course, are party to the fact that the United Nations forces are present in their country, and the situation there would be greatly helped if those United Nations forces received more co-operation.
Lord GORONWY-ROBERTS: My Lords—
Lord PAGET of NORTHAMPTON: My Lords, if my noble friend will permit me, may I—
Lord GORONWY-ROBERTS: My noble friend has had one go. May I ask the noble Lord whether he is aware that there is general agreement in condemning this kind of abomination, whoever is responsible for it? But is he further aware (to put it like this) that it is not
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always a question of national policy, but sometimes that stems from the fringe groups—very powerful, very vindictive—which are operating all over the world; and, to that extent, would it not be a good idea for this country and like-minded countries to promote in the United Nations an international statute with sanctions, rather similar to the series of provisions which we have successfully adopted in regard to hijacking, especially in the air?
Lord TREFGARNE: My Lords, that sounds a most interesting suggestion, which clearly ought to be looked into further.
Lord PAGET of NORTHAMPTON: My Lords, if I could return to the noble Lord's reply to me, is he suggesting that the Lebanese Government are in control or in charge of their own country`? They obviously are not. They are not in a position to control the PLO. That is the whole trouble, is it not?
Lord TREFGARNE: Yes, my Lords, the noble Lord is quite right.

BUSINESS
Lord DENHAM: My Lords, with the leave of the House, at a convenient moment after 3.30 my noble friend Lord Belstead will repeat a Statement being made in another place on the disturbances in Bristol. This will be followed by my noble friend Lord Trefgarne, who will then repeat a Statement being made in another place on the Tenerife air crash.
It may also be to the convenience of your Lordships to know that dinners will be available this evening at the usual time. The Committee stage of the Industry Bill will be adjourned at approximately 7 o'clock for approximately an hour, and consideration of Commons amendments to the Insurance Companies Bill will be taken during this adjournment.

TRANSPORT BILL
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Lord Bellwin): My Lords, I beg to move the Motion standing in my name on the Order Paper.

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Moved, That it be an Instruction to the Committee of the whole House to whom the Transport Bill has been committed that they consider the Bill in the following order, viz.:—

Clauses 1 to 3

Schedule 1

Clauses 4 to 12

Schedule 2

Clauses 13 to 20

Schedule 3

Clauses 21 to 33

Schedule 4

Clauses 34 and 35

Schedule 5

Clauses 36 and 37

Schedule 6

Clauses 38 to 43

Schedule 7

Clauses 44 to 51

Schedule 8

Clauses 52 to 58

Schedule 9.

—(Lord Bellwin.)

On Question, Motion agreed to.

INDUSTRY BILL
3.6 p.m.
The MINISTER of STATE, DEPARTMENT of INDUSTRY (Viscount Trenchard): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, that the House do now resolve itself into Committee.—(Viscount Trenchard.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clause 1 [Functions of the Board and Agencies]:
Lord LEE of NEWTON Lord LEE of NEWTON moved Amendment No. 1:
Page 1, leave out lines 8 and 9.
The noble Lord said: I beg to move the first amendment standing in my name and those of my noble friends. The effect of leaving out lines 8 and 9 would be to retain in Section 2(2) of the Industry Act 1975 the words "reorganisation or", and paragraphs (c) and (d) of that subsection, which seek power to extend public ownership into profitable areas of manufacturing industry and to promote industrial democracy in undertakings which the National Enterprise Board control. The power of the National Enterprise Board to reorganise those firms which are within its control, in the sense of transferring the functions of one to another, may well become a most appropriate method of saving numbers of firms which are in danger of collapse.
I am, of course, well aware that there are many ways of interpreting "reorganisation"—I suppose that in the last analysis the courts would determine that—but it seems to me that in its widest interpretation it could be inimical of the ability of management within firms to reorganise their line-out, their methods of production, and that if they are to be tied down by their inability to reorganise they could be in very great danger of collapse. There cannot be within the NEB, or the Welsh and Scottish Development Agencies, the reasons which some firms in the private sector have for promoting take-over bids, which serve to eliminate competition or asset-stripping. There is no danger whatever of that kind of thing happening so far as the NEB is concerned. I do not know whether the Minister has any ideas, but, for my part, I have no knowledge of any charges ever made against the NEB by private firms that they feel in any way threatened by the powers which are now vested in the NEB under the 1975 Act.
Paragraph (b) of the subsection with which we are dealing, subsection (2), deals with this, and I invite study of the words. It does not speak only in terms of the reorganisation of an industry; it includes,
"or any undertaking in an industry";
and it is this wording which prompts me to wonder just how far the NEB will be inhibited by the deletion of the words in the 1975 Act. I suggest therefore that we are dealing not only with the reorganisation of an industry but with the firms within an industry. We all know of

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firms which are, or were, under the control of NEB which have more than one factory within their undertaking. Changing productive methods in one large undertaking often leads to switching between factories. I am thinking in terms of Rolls-Royce, Ferranti and Fairey. They may find that the reorganisation which is essential to their purpose is now forbidden to them.
One of the principal causes of the serious decline now taking place in parts of our manufacturing industries is the failure of firms to reorganise themselves on modern lines and adapt their plants and layouts to enable them to produce new lines of products as consumer demand changes. Surely, we can all agree that there has never been a period since the first Industrial Revolution when the ability to reorganise industry with the very maximum of speed was more essential to success than at the present period. Yet the first issue with which we are asked to agree is a quite deliberate attempt to freeze NEB industries into whatever form they happen to be when this Bill becomes an Act of Parliament. Many of the firms within the NEB are there because their private owners had failed to keep them profitable. They are the very ones who are in the greatest need of drastic reorganisation. Yet this paragraph in the first clause seeks to imprison these firms in an almost petrified posture, which can only deny the best managements their ability to modernise.
At Second Reading I pointed out the fact that the firms owned by the NEB which the Secretary of State said were not "up for grabs" were those in the advanced technology range. These are the ones in which the NEB have made great efforts to keep us abreast of the microelectronic revolution and the development of the silicone chip. It reminds me of a period when I was in industry when we were developing radar and when we were compelled to reorganise our methods as the "boffins" improved on previous ideas. It was almost a daily occurrence that we had to stop production and reorganise the lines completely as the "boffins" came along with new ideas. It seems to me that this is the kind of period we are now in.
I should like to comment on the efforts, for instance, of INMOS, the NEB company dealing with software in the computer
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industry who are doing an extremely good job in trying to ensure that the nation becomes competitive with other nations which are going ahead with this. If they are to be forbidden to indulge in any drastic reorganisation it would put back our modernisation a very long way indeed. While I am speaking of INMOS, can the Minister tell us whether they are to get the extra £25 million? I commented on this the other day. They were promised a further tranche of £25 million by the last Government. The present one does not show much inclination to come forward with this. Can the Minister say whether this is to take place or whether we are still in negotiation with Sir Arnold Weinstock on the future of INMOS and whether that may be holding up INMOS' plans while the competitors proceed on their way?
The second part of the amendment that I am moving forbids the extension of public ownership into the profitable areas of manufacturing industry. In other words, we must pass the supreme test of Tory nationalisation of manufacturing industries by making quite sure that it is unprofitable—in which event the nation can be left to shoulder the losses. Again, the NEB have no power of compulsion in the sense of taking over industries or firms in the public sector. All that would have to be by mutual agreement between the parties. Why is it that the Government feel that it is necessary to cripple the NEB in this quite ridiculous manner? In his Second Reading speech on the Industry Bill, the present Secretary of State for Industry made it clear that the object of this Bill is to increase the size of the private sector of industry and to decrease the size of the public sector. I suppose, politically, he is entitled to take that view; but, surely, that is no excuse for deliberately emasculating an organisation which nobody on any side of this Committee can argue has been a failure. In any sense, NEB have been a first-class success. Merely to say that he now proposes to cut them down for no better reason than that he wishes to see an extension of the private sector is anarchy at its worst.
The Secretary of State told the House on that occasion that he would rather see private industries going out of existence than to see them in the public sector. What a remarkable statement for a Secre-

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tary of State to make! If anybody wishes me to do so I will quote the source. But that is the statement he made in response to an interruption during his Second Reading speech.
It seems to me that, on the two grounds that I have mentioned, no real reason has been advanced why the Government wish to take this step. The third ground refers to the promotion of industrial democracy. The power of the NEB in the way of promoting industrial democracy is to be eliminated. The Liberal Party have an amendment down which deals with this subject. I shall certainly support them in the amendment that they move. To anybody who looks at this logically, if you are opposing the creation of industrial democracy, you are supporting its opposite; and the opposite of industrial democracy is industrial dictatorship. And this in a period when we are perfectly entitled to say that some of us, anyway, have been trying extremely hard to get the trade unions to move away from the task they were created to carry out; namely, to improve the conditions of their members. I want to see them do that, but also I want to see them take an active and responsible part in the creation of industrial democracy within the industries and the firms with which they are concerned.
I had a great deal of experience in industry before I went to the Commons in 1945, in a great factory employing many thousands of people. It was more like a town than a factory. One spent one's time as a principal representative of the unions working in complete harmony with management in trying to improve industrial democracy within that great factory. Indeed, we reached a stage in perfecting our internal negotiating machinery where we did not need to ask for the intervention of either outside trade union officials or representatives of the employers' associations; we perfected our own machinery as part of our idea of improving industrial democracy. The machinery of negotiation of course is an essential part of promoting such democracy.
In these days, when so many people on both sides seem either to have forgotten or failed to learn what constructive negotiation is about, I should have thought that Governments should be
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encouraging the promotion of industrial democracy, not vetoing it in this ridiculous way. I have commented before about the habit of this Government first of all telling us how abject has been the failure of incomes policies, and then bemoaning the results of free collective bargaining. This cannot be applied both ways. If one wants to encourage a constructive, positive approach by all sides of industry—the unions and employers—then there is no substitute for an arrangement by which both sides accept responsibility for the products and for the pace of production. These are the essential concomitants of an industry which can put Britain back in the position where we all want it to be. I cannot understand why a Government, which is in the terrible predicament of seeing a great deal of our manufacturing industry being eroded, should now be trying to put back the clock to the days when employees were simply numbers on a clock card. Surely, that day has gone. What I have said about the NEB also applies to the Scottish and Welsh Development Agencies.
There are noble friends here from Wales who must be wondering what kind of future Wales has with the rundown of steel and the running down that may well affect coal, and the ancillary industries which will be affected. What can be the future when, added to that picture, we are now forbidden to think in terms of an industrial democracy which to me—with some little experience of how men react to these things—is to be vetoed? I think that it is drastic and deplorable. I beg to move.
3.22 p.m.
Lord ROCHESTER: I am rather sorry that the noble Lord, Lord Lee of Newton, has framed this amendment in the way he has. My noble friends and I sympathise with the view that the NEB should retain two of the three functions that the amendment deals with and about which the noble Lord, Lord Lee, has just spoken. We believe that the board should retain the power to promote or assist the reorganisation of industry, as he has suggested. We have consistently expressed the view that the board should be able to continue its work on as broadly agreed a basis as possible, irrespective of the political complexion of the Government of the day.

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I recall the more drastic fate which overtook the Industrial Reorganisation Corporation under an earlier Conservative Government; it was abolished altogether. That has not yet happened to the NEB; but I have grave doubts whether, if it loses its capacity to help in the reconstruction and development of our British industry that is so sorely needed at the present time and will be needed in the next few years, and it is left only with British Leyland, with the odd "lame duck", with some responsibility for new technology—important though that is—it can for much longer remain a viable body. If a Labour Government are returned to power in the future, are we to go through the same old rigmarole once more? Is there to be yet another reversal of national policy? If so, we shall never achieve the political equilibrium in industry that in this respect we so badly need.
If I may say so to the noble Viscount, Lord Trenchard, the Department of Industry seems to have struck an attitude that on no account must there be any intervention in industry. This constrasts markedly with the position in France, through its Civil Service; in Germany, through its Central Bank; and in Japan. In those countries over the past few years there has been an industrial performance which has been better than our own. It also contrasts most markedly with what the Minister of Agriculture was reported the other day to have said: that if you are in competition with an industry overseas, and that industry has the cooperation and collaboration of its Government, and you do not have that co-operation, then you normally lose. That is a very big indictment—if the Minister was correctly reported—coming as it does from within the Conservative Government.
Secondly, we believe that it is a mistake for the Government to deny to the National Enterprise Board any role in seeking to develop industrial democracy in undertakings for which it is responsible. I personally prefer a term such as "involvement" or "participation", if only because the term "industrial democracy", following the publication of the Bullock Report, has so many interpretations, with which some of us would not agree: things such as worker control and the pursuit, as we see it, of excessive union power on the boards of companies, and so on. Indeed, if this particular amendment that
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we are now considering does not succeed, then, as the noble Lord, Lord Lee of Newton, has already said, I shall be moving another amendment couched in different terms in part for this reason. Let it be clearly understood that we fully support the principle underlying the amendment of the noble Lord in this respect. How could it be otherwise when for the past 50 years the Liberal Party has taken the lead in championing this very cause?
We are in some difficulty over that part of this amendment which seeks to retain as a function of the NEB the extension of public ownership into the private sector of industry. Judged by the crucial test of performance over the past 35 years, we cannot accept that there is any case for even more nationalised industry. We therefore find ourselves in a dilemma, to say the least. I do not see how I could readily vote or recommend my friends to vote either for the Government, for the reasons that I have given, or—because of this particular difficulty—for Lord Lee's amendment. It is obviously for him to decide, together with his noble friends, whether at this juncture he should press it to a Division. We shall all listen to what others have to say, and in particular to what the noble Viscount, Lord Trenchard, has to say on behalf of the Government.
Perhaps I should say no more at this stage except that if, in the light of the discussion, the noble Lord, Lord Lee, and his friends felt that they could for the moment withdraw this amendment in its present form and come back at a later stage with some amendment to which we on these Benches could agree, that would be a happy arrangement. That might take into account, I suppose, also the fate—whatever it proves to be—of the next amendment we come to. It is entirely for him and his noble friends to decide. I mention it as the most constructive suggestion that I can think of at this moment, if he wishes to rely on our support.
3.30 p.m.
Lord BROOKS of TREMORFA: The Secretary of State for Industry said on 6th November 1979:
"The Government's regional policy announced in our manifesto and carried through by me is to reduce regional incentives by one third. We do not intend to abolish them. We intend to take them away from areas where economic conditions do not justify them".

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I wish to speak specifically to that part of this clause which refers to the Welsh Development Agency, and I should he very grateful to the noble Viscount, Lord Trenchard, if, when replying to this debate, he would tell us how the Government can possibly justify evaluating the role of the Welsh Development Agency in the light of what the Secretary of State said on 6th November.
In this House there have been a number of references to the economic and social conditions in the Principality, particularly in the light of the Government's policies since last May. But perhaps they have not been said loudly enough, and for a brief period I should like to repeat some of what was said and to bring to your Lordships new information that has come to hand as a result of a document produced by the Standing Conference on Regional Policy in South Wales.
The Standing Conference is a body comprising the three counties of Glamorgan—West, Mid- and South Glamorgan—and the County of Gwent. The West and Mid-Glamorgan counties are Labour controlled; South Glamorgan is controlled overwhelmingly by the Conservatives and in Gwent no party has an overall majority. There is no party political dispute among the elected representatives in South Wales as to the seriousness of the problems that face us.
In the document that is entitled South Wales in the 1980 Steel Crisis, they tell us that the present figure of unemployment is 90,000 and that it is suggested that it will rise to 130,000 as a result of the proposals to run down steelmaking at Llanwern and Port Talbot. The Wales TUC estimates the figure at 140,000, and the Western Mail said on 29th January that a Welsh Office projection had shown that the figure would reach 160,000 towards the end of 1981.
It took 10 years to provide 32,000 jobs in South Wales, and that was done with a whole range of regional incentives. I wonder whether at this point I may say to the noble Lord, Lord Rochester, who said that he had severe doubts about further extensions of public ownership, that we in Wales are not too perturbed about whether the industry is in private or in public ownership; we want more of
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both. I ask him to bear in mind when we are dealing with this clause that it refers to the Welsh Development Agency and the Scottish Development Agency, and that, for historical reasons, we in Wales have depended much on public ownership—the coal and steel industries. I think I gave a figure some months ago showing that some 70 to 80 per cent. of the people working in Wales depended on public ownership of one kind or another for their living, so that is the historical situation in which we find ourselves.
I ask the noble Lord, Lord Rochester, not to take on board the dogmatic approach of the Government in looking at these problems. When Members of Parliament representing South Wales seats are attempting to bring industry into their areas they are quite happy to negotiate with entrepreneurs in exactly the same way as they try to influence Governments in order to bring more industry and industrial activity to their areas. There is no dogma in it at all, and I ask the noble Lord, Lord Rochester, if he would reconsider his hesitancy on whether he is to support us on our amendments.
Very briefly, the document to which I refer has given a great deal of the background to the problems that we find in South Wales, and there is no question that, despite a hiccup or two, the Welsh Development Agency has played a very important role in financing and attracting new industry to the Principality.
In South Wales we have lost 100,000 jobs in steel and coal over the last 25 years. I have said to your Lordships before that there is no Luddite attitude in Wales at all. The facts and the figures speak for themselves. Pits were closed literally by the dozen in the 'fifties and the 'sixties and steelworks have already closed. I am told that many of the workers at Llanwern and Port Talbot recognise that the industry needs restructuring; although they would by no means go to the lengths to which the British Steel Corporation has gone, they recognise that there are problems in the industry and they are prepared to co-operate. I suggest that that co-operative attitude requires the same kind of response from the Government, and what are we getting? We are getting an emasculation of the Welsh Development Agency, which could play a very important part in rejuvenating the Welsh industry.
The PARLIAMENTARY UNDER-SECRETARY of STATE, HOME OFFICE (Lord Belstead): There are two Statements this afternoon for your Lordships' House. If it be for the convenience of the Committee, I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

DISTURBANCES AT BRISTOL
3.37 p.m.
Lord BELSTEAD: My Lords, with the leave of the House, I shall now repeat a Statement being made in another place by my right honourable friend the Home Secretary. The Statement is as follows:
"I have considered the full and clear report which I have had from the Chief Constable of the Avon and Somerset Constabulary, and I have placed in the Vote Office a memorandum containing an account of the disturbances, of the difficulties which faced the police, and of how they sought to deal with them.
"In the light of the memorandum, there will not, I believe, be dispute about the facts. What began as a normal operation into possible criminal offences, turned sharply and unexpectedly into serious public disorder. The memorandum also sets out the chief constable's conclusions and recommendations for future arrangements in his force area. A number of important lessons have been learned from this event. The chief constable has acknowledged frankly that there were points at which decisions might, with hindsight, have been taken differently. But he remains of the opinion that the decision to regroup his officers away from the area of St. Paul's was, in the face of great violence and extensive injuries to the police, a necessary step. In the light of his report, I understand the reasons for that decision, as, I am sure, will the House.
"There can be no excuse for the lawlessness which then followed. But we must ensure that, however quickly or fiercely public disorder may occur, the
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police are able swiftly to restore the peace and enforce the law.
"We must therefore concern ourselves with the more general lessons which must be learned from these events, not only for the efficiency of policing, but also for good community relations. There are three ways in which I believe we can best move forward.
"First, in this country we rightly wish the police to maintain order through traditional methods but, if that is so, police forces must be able to call rapidly on sufficient trained officers. I am, therefore, asking senior officials in my Department and Her Majesty's Chief Inspector of Constabulary, in conjunction with the Commissioner of Police of the Metropolis and the Association of Chief Police Officers in England and Wales, to examine thoroughly and urgently the arrangements for handling spontaneous public disorder. I shall publish the results of that review.
"But we must not look simply at the policing aspects of these events. We must look much more widely in our search for solutions to the underlying problem. Secondly, therefore, the Government particularly welcome the decision of the Select Committee on Home Affairs to look into racial disadvantage and, as a part of that work, to study the St. Paul's area of Bristol. We shall do all we can to help the Select Committee in this work.
"But action at local level is also essential. I welcome the decision of the Avon County Council and the Bristol City Council to come together to examine how best they can further help in strengthening good community relations in the area. Experts from all the Government Departments concerned will play a full part in this examination.
"Mr. Speaker, I am convinced that this three-fold approach is the best way to respond positively and constructively to these events."
My Lords, that was the Statement made by my right honourable friend the Home Secretary in another place.
Lord BOSTON of FAVERSHAM: My Lords, I should like to thank the noble

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Lord, Lord Belstead, for repeating that Statement and for taking this early opportunity to keep the House informed, as he promised to do on 3rd April. Certainly, I would welcome the speed with which the police inquiry was instituted and carried out. Would the noble Lord the Minister accept that I also welcome the fact that there is to be this three-pronged investigation? It does, I think, go some way to meet some of the misgivings which some of us had in your Lordships' House on 3rd April about the adequacy of a police inquiry alone into this disturbing matter.
So far as the chief constable's report is concerned, that will obviously need further study. The memorandum referred to by the noble Lord, Lord Belstead, which is being made available to your Lordships, is a very lengthy one. At this stage I would just say this, if I may, and ask the Minister to accept it: In the particular circumstances of the situation on 2nd April, I would accept the chief constable's decision to regroup on that occasion. However—and I think this needs to be emphasised—it remains the case that we must not countenance what have been referred to as "no go" areas of any kind in this country.
Whatever else may be said, would the Minister also accept that there was clearly no lack of courage on the part of police officers when this incident took place?—including, if I may say so, the Chief Constable of Avon and Somerset who was on the scene from an early stage. I do not think we should overlook this, either: it is in fact a tribute to the police that there was no loss of life, nor indeed any serious injury sustained.
So far as the police study is concerned to examine as a matter of urgency arrangements for dealing with situations involving public disorder, I would ask the noble Lord the Minister to accept that we would welcome the fact that this is to be published, because it may well be that the conclusions arising out of this will be not just of local but of general application. While it is clearly essential that there should be support available for a police force from outside a particular area, I would ask the Minister whether he would agree that it is nevertheless absolutely essential that control should continue to
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be in the hands of those who know the area. I would ask him, too, whether he could confirm, even before these inquiries are further embarked upon, that nothing is contemplated in the nature of a national body here.
So far as the Select Committee investigations in another place are concerned, those are clearly to be welcomed. I am wondering whether the Minister can say if it is likely that some at least of those sessions might be in public, because if they were to be, no doubt many people, not only here in Parliament but throughout the country, would welcome the fact. So far as the local investigations by Avon County and the City of Bristol are concerned, would the noble Lord, Lord Belstead, accept that we would hope their report will be published? I would welcome the involvement of the Commission for Racial Equality, the Department of the Environment and other bodies. Again, it may well be here that there will be lessons to be drawn which are of wider than purely local application. Therefore, it would be particularly valuable if that report, too, could be published.
The noble Lord has said something about the wider implications of the events in Bristol on 2nd April. Misgivings about those were expressed in your Lordships' House on the following day. I would ask him now whether he could confirm that some of the questions and concerns that were mentioned during the course of our exchanges on 3rd April are among the questions which will be covered in one way or another by one or other of these inquiries—such as the underlying causes and indeed the fact that, as we heard earlier, there were warnings from local leaders of difficulties arising before the events of 2nd April. It would be valuable—indeed, I would suggest, essential—if those fears could be allayed and those questions answered. I would venture one further point. Would the Minister also accept—this is something which has been mentioned before, but it needs re-emphasising now—that there is a great need to tackle even more urgently than before the problems of the inner cities and to maintain expenditure on urban programmes?
Lord WIGODER: My Lords, it is clearly a matter of the utmost gravity when the police have to abandon control

1025
of an area in one of our major cities for some four to five hours, during which some 49 police officers are injured and I think, 21 police vehicles severely damaged, with 13 premises attacked and looted.
Arising out of this matter, may I raise three very brief issues with the noble Lord? First, it is clear from the chief constable's memorandum that this was in no sense a race riot. It appears to have been, if anything, an anti-police riot. Is it not correct that those people in positions of responsibility who spend their time in hysterical abuse of the police force as an institution have very much to answer for when a disturbance of this sort takes place?—though one must add with regret that perhaps disturbances of this sort are exactly what they hope will arise.
Secondly, is it not clear from the chief constable's memorandum that much of the difficulty arose here as a result of an unfortunate decision by the police officers concerned to seek to remove a damaged vehicle at a time when the violence had quietened down? In saying that, I am very much aware that it is easy to make criticisms in the calm light of day in your Lordships' House of a decision taken on the spur of the moment at a time of crisis.
Thirdly, do the Government accept the chief constable's observation that it is essential that, in situations of this sort, the local police community relations officer should be consulted in advance? May I also ask the noble Lord whether he feels that it is sufficiently recognised in the police force that that position is one of the highest responsibility? It is not a dead-end position, but one which should be held by officers of the greatest ability, because it plays the most important role in seeking to preserve the peace on occasions such as this.
3.50 p.m.
Lord BELSTEAD: My Lords, I am grateful to both noble Lords for their response to this Statement. If I may reply to the noble Lord, Lord Boston, certainly the points which were made in your Lordships' House on the occasion of the first Statement on this subject have been very much taken into account. Your Lordships may have noticed from the Statement which I have just made that the review of police contingency arrange-
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ments—the first prong of the three-pronged approach—is a review which my right honourable friend has undertaken to publish.
I agree with the remarks of the noble Lord, Lord Boston, about the bearing of the police in this matter. I would like to make it crystal clear that my right honourable friend the Home Secretary has full confidence in the chief constable. There were reasons for the withdrawal of the police from the area for a time, but I think your Lordships would prefer to look yourselves at the memorandum, to reach your own conclusions, and to read the conclusions of the chief constable which are very frankly set out.
Lord Boston asked me about the making public of the deliberations of both the Home Affairs Select Committee and also the meeting at local authority level. Obviously this will be a matter for a Select Committee of another place, and for the local authorities concerned, as to exactly what they want to say in public. I am most grateful to both noble Lords for accepting that this is a sensible way to proceed. I think that for the two local authorities concerned, the county council and the city council, to come together in this way with other agencies, which incidentally will also include the Manpower Services Commission, is a valuable and sensible way to proceed.
The noble Lord, Lord Wigoder, asked whether it was the fact that this was not a race riot. The answer in broad terms is, yes, the noble Lord is correct in that assumption. It was not what we would call a race riot. Was it an unfortunate decision, the noble Lord put to me, that an attempted removal of a police car occurred, which perhaps started the trouble off again and led perhaps to its escalation? I think the noble Lord would want to read the memorandum on this and to see how the matters in this very difficult night in fact went from one step to another. Clearly that was a step in the story. Thirdly, Lord Wigoder put to me whether the local police community relations officer should not be consulted in advance in matters of this sort? The answer is, yes, and the chief constable in his very frank report, in the memorandum in the Printed Paper Office, says as much.
Baroness PHILLIPS: My Lords, having had the opportunity to work with the

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Avon and Somerset police in both crime prevention and the juvenile liaison bureau, I want it on the record that this is an area which has had particularly imaginative schemes for dealing with both juvenile delinquency and community relations. As the police force has had some notable successes, I feel this to be the moment when these should be recorded in this House.
Lord ELWYN-JONES: My Lords, I am grateful to the noble Baroness. While we on this side of the House welcome the inquiries which are to be made, both parliamentary and local, into the underlying problems, may I ask the Minister what positive action the Government are taking in the meantime to tackle what is at the root of much of the trouble in urban areas with a large black or coloured population; namely, the persistent level of above-average unemployment among the youths in those areas? Has not the increase in unemployment since the Government have been in office exacerbated the problem very seriously?
Lord BELSTEAD: My Lords, I would not necessarily accept that on a local basis. When the noble and learned Lord, with his experience, takes a view on a matter of this sort, I would not take it upon myself to say that he is wrong. So far as a particular place of the size and importance as Bristol is concerned, however, surely your Lordships' House would want to find out what at local level the elected representatives think. It is because my right honourable friend the Home Secretary wants to find out what is really thought on this as well as on other points by the county council and the city council, in consultation with other agencies which I have mentioned, including, as I said, the Manpower Services Commission, that I think it would be right to wait for the result of those local deliberations.
Baroness MACLEOD of BORVE: My Lords, in view of the very worrying escalation of the carrying of offensive weapons by people of all ages, but mostly by the young, I wonder whether my noble friend the Minister can tell the House how many of those arrested carried offensive weapons?
Lord BELSTEAD: My Lords, I am afraid I cannot answer my noble friend's question. There is no question but that a great deal of the damage and the injuries was probably done by missiles which were thrown. All I think I ought to say in reply to my noble friend, as I cannot answer the specific question she has put to me, is that the numbers have changed somewhat since I reported to the House on the first occasion. We do now know that 22 police officers were injured; 27 more had minor injuries, and 10 members of the public were also injured.
Lord SHINWELL: My Lords, may I ask the noble Lord the Minister to explain why he has referred in his Statement to the "underlying causes"? I notice that the Members of the Opposition have referred to the "underlying causes", but seem to be reluctant to go further than make reference to them, when everybody in your Lordships' House is aware that those underlying causes are, first of all, unemployment; secondly, social conditions; thirdly, the abominable housing conditions in these areas. What is being done in the matter, as it appears to me, is to deal with it superficially by transferring the social problem to the police. Why should that happen? Why should the police he used to deal with social problems wherever there is discontent which expresses itself by looting or assaults upon the police? This is not the responsibility of the police. Although we call upon the police to suppress disorder whenever it is possible to do so, it is a matter for the Government to delve deeply into this issue of underlying causes. Why are we so reluctant to talk about it? There seems to be some hesitancy. I do not share that hesitancy. I have seen this sort of thing happening many years ago on the Clyde—long before we accepted vast numbers of coloured people from Asia and elsewhere—because of unemployment, because of discontent, because of poverty. These are the underlying causes and I cannot in any aspect of Government policy detect any real effort to eradicate these problems.
Lord BELSTEAD: My Lords, so far as the police are concerned, the point of the Statement is that the police are looking into their own contingency arrangements for the future. The police inquiry has nothing to do with the social conditions

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to which the noble Lord, Lord Shinwell, has drawn attention. The noble Lord asked me what the Government are doing about the social conditions in the area. Grants under Section 11 of the Local Government Act are paid to Avon County Council, which is responsible, for instance, for education in Bristol. In the last year grants amounted to £400,000, mainly to aid expenditure on the salaries of teachers specially employed to meet the needs of Commonwealth immigrants and their children; and the noble Lord will, I am sure, be glad to hear that grants under Section 11 to Avon in the current financial year are being increased.
So far as the urban programme is concerned, which over many years now has been specifically designed to try to relieve the kind of conditions which the noble Lord has been explaining to the House, the Government recognise the extent and depth of the problems facing people of all races in deprived parts of our inner cities. For that reason, the Government have maintained the level of resources allocated to the urban programme which helps those parts of our cities which are facing the most acute social and economic problems. It is not the case that the Government are not sympathetic to the kind of problems which the noble Lord has outlined to your Lordships' House.
Lord KILMARNOCK: My Lords, while it is obviously necessary that a study should be made of police contingency arrangements for emergencies of this nature, will the noble Lord give an assurance to the House that this will not become the thin end of the wedge for the establishment of a national paramilitary type of police force, on the lines which exist in other European countries; for example, in France and Spain? I think that the noble Lord, Lord Boston, made some reference to this, and I do not believe that we had a reply.
Lord BELSTEAD: My Lords, I do not think that this matter arises from the Statement which I have made. It was for that reason that I let go that point which the noble Lord, Lord Boston, made.
Lord ELWYN-JONES: With respect, it may arise by reason of the reference in the Statement to the fact that the Chief Inspector of Constabulary, the Commis-
1030
sioner of Police of the Metropolis and the Association of Chief Police Officers in England and Wales are all going to be involved. This may have caused the noble Lord the anxiety that he has expressed.
Lord BELSTEAD: I am so sorry, my Lords. I am grateful to the noble and learned Lord for helping me in this matter. The reason why there is this meeting together of people on a national basis for what has happened in local circumstances, is that my right honourable friend the Home Secretary has an overall responsibility for the efficiency of policing in this country, and it is my right honourable friend who has asked these representatives to come together to look at contingency arrangements for policing against spontaneous outbreaks of violence and trouble in England and Wales.

TENERIFE AIR CRASH
4.3 p.m.
Lord TREFGARNE: My Lords, with your Lordships' permission, I should like to repeat a Statement which is being made in another place by my right honourable friend the Secretary of State for Trade about the accident at Tenerife last Friday. The Statement is as follows:
"The House will be aware that on Friday last a Boeing 727 operated by Dan-Air Services Limited from Manchester to Tenerife crashed about 10 miles from its destination and all the 146 passengers and crew on board were killed.
"I am sure all sides of this House will wish to join me in expressing Parliament's great distress at this tragic accident and our greatest sympathy to the relations and friends of all those who were killed.
The accident occurred after the crew had reported when the aircraft was at 6,000 feet over a radio beacon at Los Rodeos airport on the northern end of Tenerife island 19 minutes after 1 o'clock in the afternoon GMT. It was then cleared by air traffic control to descend to 5,000 feet and carry out an approach procedure to the runway, but this message was not acknowledged by the aircraft and it is believed to have

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crashed very shortly afterwards. The accident site is about 10 miles South-West of the airport and just over 5,000 feet above sea level. The aircraft had completely disintegrated.
"The Spanish authorities have commenced an investigation into the circumstances and causes of the accident and a team of investigators from the Accidents Investigation Branch of my Department arrived at 6.30 a.m. on Saturday morning and have been participating in the Spanish investigation in accordance with established international practice. The flight data and cockpit voice recorder have been recovered from the aircraft and will be carefully examined and read out in the next few days. Similarly, the recording of the radio communications will also be subject to detailed analysis. I will give more information to the House as soon as it is available. There remains much work of investigation to be done and it is expected that it will be some time before the final report of the investigation will be completed. By international agreement a copy of the report will be passed to the State of registry of the aircraft.
"The House will wish to know that the Spanish authorities have treated this tragedy with the greatest sympathy and consideration and memorial services are being held in Tenerife today. British Consular officials and members of the Dan-Air Company are doing everything in their power to assist the official services in Tenerife with their work."
My Lords, that is the Statement.
4.6 p.m.
Lord PONSONBY of SHULBREDE: My Lords, may I thank the Government for their early Statement, and also thank the noble Lord for repeating it this afternoon. We on this side of the House wish to associate ourselves with the sympathy expressed by the Government to all the relatives and friends of those killed in this appalling tragedy. Already, a number of theories have been floated in the Press as to the cause of the accident, and I am sure it would be premature to add any weight to any of those theories at this point of time. However, what we must
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ensure is that the inquiry is of the fullest, and that it deals with such matters as the safety of the aircraft, the landing procedures, the value of the ground proximity warning system and the limitation of the radar system at Los Rodeos airport.
The noble Lord has said that it will be some time before the final report of the investigation is received. One hopes that that will be well before the British holiday season. British holiday-makers should be reassured as to the general safety arrangements in Tenerife. I wonder whether the noble Lord can give some indication as to when the report is likely to be received? By saying that the report will be passed to the State of registry, one assumes that the noble Lord means that it will be passed to his department. I should be glad if he could confirm that. I am sure all noble Lords will be pleased to know that all concerned are doing what they can to assist the official services in Tenerife.
4.8 p.m.
Earl GREY: My Lords, we on these Benches also wish to express our sympathy and to extend our condolences to the relatives and friends of those who were killed. We are grateful to the noble Lord for making that Statement. We should like to know whether the black box has been translated and, if so, what it says. Is it not time that airlines were advised to avoid airports which do not have full-scale, up-to-date navigational equipment, bearing in mind the growing increase in holiday traffic?
The noble Lord said that the aircraft was cleared by air traffic control to descend and to carry out an approach procedure, but that the message was not acknowledged by the aircraft. Is it yet clear that this was so, or whether the captain was recommended or ordered to divert and land at the alternative airport? Finally, when the official inquiry is completed, will the report be published in full, without any alterations or deletions?
4.9 p.m.
Lord TREFGARNE: My Lords, I am obliged to noble Lords for their reception of this Statement. To answer the noble Lord, Lord Ponsonby, the report is, in fact, prepared by the Spanish authorities and thus the timing of its publication is a matter for them. However, there are

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British representatives accredited to the investigation team who will, of course, be assisting with the inquiry within the limits laid down under the international agreement.
As for the questions put to me from the Liberal Benches, both the flight data recorder and the cockpit voice recorder have been recovered. The playback of these devices, which is a highly technical matter, has not yet been completed. As for the other questions which the noble Earl put, naturally I do not want to pre-empt anything that is considered by the inquiry, but we understand the position so far to be that the aircraft was not instructed to divert, nor did the captain indicate that he was so doing. I can, of course, confirm that the facilities at Los Rodeos airport, although they do not include radar, are entirely satisfactory and have been approved for that purpose for many years.
Lord KILBRACKEN: My Lords, I understood the noble Lord to say that the aircraft was flying at an altitude of 6,000 feet and that it was then cleared to descend to 5,000 feet. Am I right in assuming that that is the height above sea level, because the noble Lord went on to say that the airfield itself is at 5,000 feet. In this case, the two pieces of information do not appear to coincide.
Lord TREFGARNE: My Lords, I do not think I said that. The airfield is 2,073 feet above sea level, and the height of 5,000 feet, which is the height above sea level, as the noble Lord suggested, is the correct height for the approach procedure to Runway 1/2.
Lord BALFOUR of INCHRYE: My Lords, may I ask the Minister whether, from now on, scheduled airlines and charter companies will operate from the new airport and not from this airport at which the aircraft which crashed was attempting to land and which is admitted to be, particularly in bad weather, one of the most unsatisfactory airports for pilots to approach—and I use the word "unsatisfactory" advisedly? Secondly, assuming the unlikely event of the Spanish authorities declining to publish the findings, can the Minister say whether in that event our British representatives will be asked to give to Her Majesty's Government
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their information and their views on the findings?
Lord TREFGARNE: My Lords, if I may first answer the last supplementary, under international agreements the Spanish authorities are required to provide a copy of their report to the country of registry, and I have no doubt that they will do that. Publication by us of a Spanish report can only be done, I think, with the agreement of the Spanish authorities, but I have no reason to believe that they will withhold that permission. As for the earlier supplementary of my noble friend, I understand that it is not intended that the new airport should replace Los Rodeos, because the two airports are located at opposite ends of the island and it is proposed that in future they should each serve the different resorts nearest to them.
Lord MORRIS: My Lords, would my noble friend be good enough to let me know whether Her Majesty's Government will be expressing to the Government of His Majesty the King of Spain their gratitude for the very moving expressions of sympathy by the people of Tenerife as a result of this disaster?
Lord TREFGARNE: Certainly, my Lords. As I indicated in the Statement, we very much appreciate those expressions of grief.

INDUSTRY BILL
4.13 p.m.
Committee stage resumed.
Debate on Amendment No. 1 continued.
Lord BRUCE of DONINGTON: I should like to reinforce some of the arguments which have been put forward by my noble friend Lord Lee of Newton in regard to the amendment which we are moving. One of the functions of your Lordships' House—many noble Lords may perhaps think that it is the most important function—when considering legislation that comes to it from another place is to give the Government of the day an opportunity to reflect upon what has previously been done.

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This afternoon we are moving Amendment No. 1 in the hope that the noble Viscount, Lord Trenchard, will see fit to announce that the Government are prepared to accept it. Indeed, at a later stage I am sincerely hopeful of being able to carry the noble Lord, Lord Rochester, with me in seeking to convince the Committee that this amendment is vitally necessary and that, so far as the matters dealt with in this paragraph are concerned, the Industry Bill 1975 is much better left in the form in which it now stands, unamended.
In the euphoria after a General Election one can expect the newly elected Government to seek to demonstrate that they really believe in what they say and to try to enact, with some emphasis, those political objectives to which they have frequently given such strident voice in the course of the election itself. Given their mandate, one would therefore expect this Government not to be exactly enthusiastic about nationalisation. The argument on this issue has gone on between the parties for many years, and nobody would blame the Government if, in general terms, they stuck to their attitude. If, however, the Government wish to prevent the National Enterprise Board from embarking upon any further nationalisation, one finds they already have powers, under Section 7 of the Industry Act 1975, to give specific directions to the hoard on what it may or may not want to do.
I should have thought the most sensible way of going about this would be to leave the Industry Act as it is. Each proposal—if, indeed, one came from the National Enterprise Board—for possible further nationalisation, or demand from Parliament or elsewhere for this or that to be done, should be dealt with on the pragmatic basis that if the Government seek to exercise their will that such-and-such an industry shall not be nationalised they already have adequate powers under Section 7 of the Industry Act to give a direction that it shall not be done. I should have thought that this was the more sensible way of going about it. What is now happening is that the Government have not only closed the door but have bolted that door against themselves. Are the Government really quite sure that over the next two or three years circumstances will not arise in which they
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would be very glad indeed if the National Enterprise Board had retained this power?
As your Lordships know, one of the greatest problems in British industry ever since 1950, although it was not so much of a problem in the years 1945 to 1950, has been to get a sufficient amount of manufacturing and industrial investment out of the private sector or the financial interests, who presumably are there to serve precisely that purpose. This has been not only the experience of successive Labour Governments; it was the experience of Mr. Heath's Administration. The noble Viscount, Lord Trenchard, who has a very good memory, will doubtless find engraven on his soul at some point the cri de coeur from Mr. Edward Heath in August 1972, when, in the course of a bitter address to the Institute of Directors, he said that they had given them every possible inducement—taxation, credit or otherwise—and still, said Mr. Heath, they refused to invest.
The present Government have gone on a different tack. They have said, first, that industry has been groaning under a burden of taxation. All those of your Lordships who are aware of the reliefs granted under Schedule 5 to the 1976 Finance Act in regard to stock appreciation relief may perhaps be permitted to raise an eyebrow as to the groaning of any corporation under the burden of taxation. After taking into account the provisions of Schedule 5 to the Finance Act 1976 and the earlier Act, has been reduced to an almost derisory 26 per cent. in real terms, as against the higher rates of corporation tax on the Continent. I think the noble Viscount is aware of that, but it is said that if one reduces personal taxation, particularly at the higher levels (or so it has emerged), there will be much more enthusiasm in the private sector.
Similar arguments have been adduced by the Government as regards the progressive reduction of the public sector borrowing requirement, on the grounds that it will free funds to be invested in industry. Even the Government cannot remain insensitive to the fact that, so far, the response has been completely negative. Moreover, the Government themselves in their own recent White Paper envisaged a further decline in industrial development. We know where the funds have gone, of course, because, as one could observe from the Financial Times of 25th April, invest-

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ment overseas by British financial institutions has risen sharply since the ending of exchange controls last year. Essential statistical figures published yesterday showed that purchases of overseas company and Government securities totalled £490 million in the second half of last year, compared with £195 million in the preceding six months.
The question I have to ask the noble Viscount is this: What happens if the new incentives offered by the Government for investment in manufacturing industry in this country do not produce any more favourable response than the old ones? Are the Government content, for the sake of maintaining party dogma, to refuse to acknowledge for the good of the country as a whole that private investors have for one reason or another failed to respond to the incentives that have been so generously bestowed upon them? If they fail to invest, are the Government prepared to confront the country with that failure and at the same time to say to the country "We, for our part, are so committed to our dogma that we would sooner the whole spectrum of manufacturing industry and its place in the economy went to the dogs than abandon our cardinal principle"? That is ultimately what the Government will have to answer for to the country.
As my noble friend Lord Lee of Newton has pointed out to the Committee, there is the case of INMOS—the case of investment in the micro-chip industry. The noble Viscount knows quite well that private enterprise capital, in view of the heavy risk involved is up to now unprepared to take the risk on its own. But there is a very good reason why. It is because they are in competition, or at any rate in potential competition, with the Americans in this field, and the Americans, partly as a spin-off of their space programme, have been completely State-subsidised in this aspect of their industry. Is the noble Viscount prepared to face the possibility that this country might be denied the development of this most important section of manufacturing and commercial activity purely for the sake of keeping to a party dogma? It is quite clear—and I shall be glad to hear from the noble Viscount to the contrary—that if this industry is to get firmly on its feet (and I am speaking of the microchip and INMOS) to compete on any
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scale with the United States of America, it will have to receive sustained and very significant Government support. Whether or not the noble Viscount likes that, I am afraid that the opinions of most experts in the matter, of which I have here several copies but with which I will not weary the Committee, are exactly to the contrary.
Does it not follow that, if the State—or, if the noble Viscount prefers it, the British taxpayer (which means all of us)—is going to support industries of this kind, it is right that the nation should have some interest in its outcome? The most that the noble Viscount has said so far, in his Second Reading speech, is that the Government look to the NEB to maximise the involvement of the private sector in these companies as soon as as practicable.
On this side of the Committee it has been emphasised by my noble friend that we do not take such a dogmatic attitude. The noble Viscount, Lord Trenchard, will have observed that, with regard to the Industry Act 1975 and also the Scottish Development Agency Act 1975 and the Welsh Development Agency Act 1975, we have not raised any objection to the insertion of the words,
"promoting the private ownership of interests in industrial undertakings".
There is no reason why we should, because we take a very pragmatic attitude towards it. What we want within a mixed economy—and I take it that the noble Viscount is as committed to the mixed economy as other parties in this House—is for all sections of British industry to prosper, whether they be under national ownership or whether they he in private hands. That, surely, should be the yardstick.
Therefore I reiterate the argument with which I started, that surely in the light of the six months' experience that the Government have had since they first drafted this Bill—I believe it had a Second Reading in the other place on 6th November and it must have had a two months' period of gestation prior to that, during which time the noble Viscount's own party's dogmas have come under some query, not the least from substantial sections of his own party, as well as from the CBI—the time has come for the Government to take another look at this.

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What harm can there be in leaving the industry as it was in 1975? In so far as it was going to be affected by Clause 1 of the present Bill, why should it not be left as it is? The Government have lost nothing thereby. They are still at liberty under Section 7 of the Industry Act 1975 to enforce their will in so far as that will may remain constant, although, as past experience has shown, it has occasionally exhibited symptoms of wavering. Just leave that as it is. If for the time being Sir Keith Joseph in another place still holds on to his dogma, which is beginning to become a little shaken in view of the wide doubts which are now spreading within his own party, he can always issue a direction under Section 7.
I think it is most dangerous that these prohibitions should be put on the statute book. I would think otherwise if there were not powers in the Industry Act for the Secretary of State to issue specific directions in specific cases. I do hope that we on this side of the Committee shall not only carry the support of the noble Lord, Lord Rochester, and those who sit with him, but shall also, upon reflection, carry us with the noble Viscount, Lord Trenchard, who, as past experience has shown, is a most reasonable Minister.
4.32 p.m.
Lord CLEDWYN of PENRHOS: I will, if I may, confine my remarks, for the sake of brevity, to the problem posed in the Bill for the Welsh Development Agency. No one, I think, on either side of the House would doubt the importance of the Welsh Development Agency; certainly there is no one, of whatever political complexion, in Wales who would seek to argue today that the Welsh Development Agency is not an essential instrument for the purpose of seeking to resolve some of the more acute problems which confront the Principality at this time.
When the Welsh Development Agency Act was going through Parliament the party opposite saw fit to oppose it. In fact they were able successfully, within the proper rules of parliamentary procedure, to delay implementation of the Act for 12 months. We protested at the time. In due course the Bill became law. But after the Act had been in operation for two or three years the views of the party opposite changed, and it is very much to
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their credit that their views changed. They then said publicly that they thought the Welsh Development Agency was a first class instrument, and I think they took the same view about the Scottish Development Agency, and to a lesser degree the National Enterprise Board as well. But certainly so far as Wales is concerned the then Front Bench spokesman for Welsh Affairs, Mr. Nicholas Edwards, who is now the Secretary of State, said publicly in the other place and in the Welsh Grand Committee that the party opposite had changed their minds, that experience had shown them that this was an agency worth keeping, worth building upon. This was good news to us and certainly it was good news to the people of Wales. If it was true then it is even more true today. With the worsening employment situation. with the increasingly grave economic position in Wales, the Welsh Development Agency is of even more crucial importance than it was.
I have in two or three speeches gone into some detail on the present unemployment and economic situation in Wales and I do not propose to repeat myself on this occasion. But I would refer to a memorandum which was submitted by the Welsh Office to the Committee on Welsh Affairs. The report of the committee was recently published, and therefore I take it that the House as a whole, including the Government, will regard this report as a detached report, and it is therefore worthy of our consideration.
What the report says on page 1 is that the pattern of employment in Wales in recent years shows four major features: (a) unemployment rates continually higher than the Great Britain average; (b) changes in the structure of employment; between 1967 and 1979 there has, for example, been a severe decline in mining and quarrying, down by 52 per cent., agriculture, forestry and fishing, down by 41 per cent., metal manufacture down by 28 per cent., growth in professional scientific services, insurance, banking and finance up 44 per cent.; between 1967 and 1976 employment in miscellaneous manufacturing rose by 44 per cent. Those figures I think summarise the development of employment opportunities in Wales over the last few years.
Then the report goes on: (c) a decline in the total number of male employees in

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employment and a steady increase in the number of females coming into employment; and, lastly, (d) an expectation that the labour force after a period of comparative stability will rise by some 179,000 in the period between 1976 and 1991. This represents an increase of 15 per cent. compared with 10 per cent. in Great Britain as a whole.
That report from the Welsh Office, under a Conservative Administration, summarises the problems which face the Principality at the present time, and these are the problems which the Government and the House have to face. Certainly we who live in Wales and meet the people who are affected, those like myself who meet people who are going into unemployment for the first time in their lives, who are meeting young school-leavers with no chance of a job, are truly deeply and profoundly disturbed about the implications of the present trend. That is why we are entitled to take seriously the Government's proposals in this Bill.
We have been told of a £35 million cut in the industrial assistance being given to Wales. I would ask the Minister of State, whom I have always found both in and out of Government to be a reasonable man, for further clarification of this. The noble Viscount, Lord Trenchard, referred to this when lie made a speech in the House in our Welsh Affairs debate on 20th February. Then we were told by him, and by the Secretary of State for Wales, Mr. Edwards, that Wales is to receive an additional sum of money amounting to £48 million. These figures need to he brought together; they need to be explained to the House so that there can be no misunderstanding about the situation. What is the nature of the £48 million? How is it to be paid? Through what channels is it to go? Again, how is the £35 million cut analysed? How are we losing that £35 million? Is it that what we are to receive over the next two years is in fact a net £13 million, which is the difference between £35 million and £48 million? If that is the case let us be told; let us have no playing about with words. If it is £13 million, well, £13 million is better than nothing, but it certainly is not enough to deal with our present problems. That is the reality of the problem Ministers opposite have to face.
As I understand it—I would ask the Minister to deal with it in rather more
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detail—the rates of regional development grants in the development areas are to be reduced from 20 per cent. to 15 per cent., and regional development grants in intermediate areas are to be eliminated altogether. Are those two cuts in fact responsible for the overall cut of £35 million in grants to Wales? If that is the case perhaps the Minister will so tell us.
Then there are the functions of the Welsh Development Agency. Would he be precise as to these? Are they to be affected in any way, and if so in what way, by this Bill? We are, of course, concerned not only with the functions but with the resources available to the agency. If the functions remain the same but the resources are reduced, then the operations of the agency are much crippled at a time when they should be receiving more resources.
There are noble Lords in the House—and I respect them—who take the view that no agency is justified and that no kind of instrument is justified. There are those who would go the way of laissez-faire, the way of the last century. They are perfectly entitled to their point of view, but they are very fortunate that they do not live in a Welsh valley at present. It is very easy to make these points from an easy chair in the Athenaeum but it is much more difficult to swallow them if you and your family are out of work.
Therefore, when we deal with this matter we need to deal with it with a certain amount of realism, and I hope that that is what we shall get from the noble Lords on the Government Bench. Given the enormity of the problem we need the fullest possible resources. Because I am not clear on the matter, I should be grateful if the Minister of State would differentiate between the resources made available under Section 7 of the Industry Act, which now come under the Secretary of State for Wales, and the operations of the Welsh Development Agency.
Our present fear is that the resources will not be adequate. What will be made available in South Wales and Deesside—however welcome that may be—will itself not be enough, but it will certainly preclude necessary funds and resources being made available to those other parts of Wales which are more sparsely populated, but where the problem is equally serious—for example, in areas like the island which I had the honour to represent for so many

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years, and where unemployment at present is running at about 15 per cent. of the insured population. It could be argued that we must leave Angelsey at present, with its small population of 65,000, and we must consider the hundreds of thousands of people living in the industrial areas of South Wales and on Dee-side. I appreciate that point and the problems of the area mentioned by the noble Lord, Lord Brooks of Tremorfa, who spoke so well at the beginning of this debate. But, it does not make the problems of the rural areas and the small towns of Wales any less: they must be given equal consideration by the Government and by Ministers opposite. Therefore, unless I hear some very powerful arguments from the Minister of State, I see no apparent justification for the changes which are now proposed by the Government.
The Welsh Development Agency is working well, as is the Scottish Development Agency. The National Enterprise Board is, at present, an absolutely essential instrument in Great Britain. To interfere with their operation for apparently doctrinaire reasons is absolutely inexcusable and I hope that the Committee, on all sides, will have the courage to defeat this proposal unless the Government put forward very strong arguments indeed in favour of it.
4.45 p.m.
Lord HATCH of LUSBY: Clause 1, which we are seeking to amend, is obviously the philosophical core of the whole Bill, and I would dearly love to debate the issue on those grounds, but this is not the time to do so. I wish to refer very briefly to two issues raised in Clause 1 and those parts of Clause 1 which we are seeking to amend. According to the Explanatory and Financial Memorandum they are covered in the words:
"the NEB and the Agencies shall cease to have the function of promoting industrial reorganisation and industrial democracy".
I want to make a special appeal to the Government, to the Liberal Benches and to the Cross Benches to consider what has happened since the Bill was first drafted. A number of important things have happened which concern the industrial and economic future of this country, and which I believe should lead us, and should
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lead the Government, to think again about this section of Clause 1.
The Government, like all of us, have been deeply concerned about the decline in manufacturing industry. The Government, again like most of us, have been constantly making pleas for greater wealth production in this country. Yet, since the Bill was drafted it is the Treasury that has forecast that manufacturing industry in this country will fall by 20 per cent. over the next two years. That was not a forecast that was available to the Government at the time the Bill was drafted. However, further to that point, since the Bill was drafted the Government have had the opportunity of discovering what effect the dropping of foreign exchange control has had upon investment in this country.
My noble friend Lord Bruce of Donington gave some figures. I would remind the Minister who is to reply that this was an issue which I raised at the time that exchange control was dropped, during the economic debate of last summer, when I pointed out to the Government that there was a precedent here from which they could learn—namely, that when they were in office in 1970 they could see during the first two years of Mr. Heath's Government what was happening to investment when the restrictions on overseas investment were removed by that Government. I gave figures at that time and I asked the Government why they thought that their experience in 1979–80 would be different from that in 1972–73, when, as I pointed out to them, there was the massive exodus of investment to Western Europe and North America compared with the minimal investment in industry in this country.
Now, again since the Bill has been drafted, they have been told by no less an authority than the Financial Times that, within the first two months of the dropping of exchange control, this country lost in overseas investment a greater sum than the Prime Minister is now trying to recover from our contribution to the EEC. During the first two months of the dropping of exchange control we lost well over £1,000 million in overseas investment. I would suggest to the Government that that should eive them some cause for thought. If at one and the same time our manufacturing industry is declining—and if my noble friends Lords Balogh and

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Kaldor were present we would be told for how long it has been declining; that it has been declining at least since the nineteenth century, and it is now declining very rapidly, indeed it has almost disappeared—and also investment is going overseas instead of into industry here, what is the Government's remedy? Surely at least one of the major factors of that remedy must be the operation of the National Enterprise Board.
Instead of repudiating the Keynesian remedy for industrial decline and depression, as they have done, I would suggest to the Minister that many members and supporters of his own party are now beginning to recognise, and are now saying, that Keynes should have been used more and that there should have been an increase in Keynesian operations, rather than a decrease, to meet exactly the situation with which we are now faced.
But let me go one stage further than that. Most, if not all, of the industries that have been supported by the National Enterprise Board have been industries which are export-orientated, and which certainly export more than they import; whereas, as we know, our country as a whole imports more manufactured goods than it exports. Again, let me make this plea, in particular to the Liberals and to the Cross-Benches. Surely in these circumstances it is only common sense—indeed, it is our responsibility to the people of this country—to ensure that when we are faced with rising imports and falling exports, the Government take some action to reverse that position. The machine that they have to hand—and have to hand in the Industry Bill—is the National Enterprise Board. The National Enterprise Board can be used in order to stimulate industrial development in this country and in particular our export-orientated industries.
I shall deal very briefly with the question of industrial democracy; the Liberal spokesman accepted that part of our amendment and has tabled an amendment on industrial democracy. Surely the argument that I have just put to the Liberals would convince them that industrial reorganisation is essential for the future, if we are to maintain just the present standard of living of the British people; that that reorganisation needs the use of the National Enterprise Board, but that
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it is an extremely dangerous, difficult and complex human problem.
The reorganisation of industry in this country—which means concentrating upon those industries which we can develop while inevitably allowing certain industries to run down—requires mobility of labour. That is a very nice phrase, but in fact it means people being prepared to tear themselves away from their familiar surroundings, their friends and relatives and moving to other parts of the country. It often means retraining men and women who are 30 and 40 years old—people who thought that they had finished their educational activities many years ago. It often involves a deep and wounding argument within the family itself. It is a very complex and profound human problem.
If it is to be achieved successfully, surely the first thing required is an involvement of the workers themselves in the organisation of the industry in which they are asked to take part. Is there any way in which industrial organisation can be achieved without the measure of industrial democracy which gives the worker a stake, a feeling of possession, a new home in the industry which he is entering? Therefore, I am suggesting that industrial reorganisation and industrial democracy are inextricably linked and that our amendment, which includes both of them, should be accepted by the Government and, above all, should be accepted and supported by the Liberals and the Cross-Benches.
Viscount TRENCHARD: May I take a little time in my answer to the important statements that noble Lords have made in relation to this Clause 1 amendment? As various noble Lords have said, it is a fundamental one. I do not wish to repeat, more than I need to, what has been said in the Second Reading debate, but a degree of repetition has already taken place and I feel that I must answer some part of it. Perhaps if I take the time to do so on this fundamental clause, we may not need to repeat ourselves; I shall try to follow that lesson myself hereafter.
The noble Lord, Lord Lee of Newton, gave a perfectly correct definition of the purpose of his amendment. We see the amendment as having exactly the effects which he declared. It is because we are

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fundamentally opposed to them that I shall have to advise the Committee not to accept it. At this point, if I may, I shall turn to the interesting remark that the noble Lord, Lord Bruce of Donington, made when he said, in a voice of astonishment, "Unless the noble Viscount tells us that this Government really believe in what they say". Odd as it may seem, I can confirm to the noble Lord that a responsible party and Administration should really believe in what it says and said before the election; but, yes, against the failure of the previous policies, we believe in what we say and intend to carry it out.
Is it more dogmatic or less dogmatic to believe in furthering public ownership by one means or another, or Government agencies for reorganisation, rather than furthering private enterprise? We need to recognise that at first base there is no more intrinsically dogmatic view on this side of the Committee than on the other side on this question. We believe most sincerely not in winding up all public ownership or all important functions of the NEB—to which I shall return in a moment—but in moving towards the maximisation of private enterprise. We believe in it and we believe that the evidence in the major economies of democratic countries is on the side of those who believe that this is most likely to produce success and to raise standards of living, as indeed it has raised them above those of the United Kingdom by a long way.
We believe that ours is the more humble of the two beliefs, whether dogma or not, because it is based on a humility about what Ministers, Governments or centrally created Government agencies can do. We believe that the success of a country depends upon a free market because it harnesses all the efforts of all the people. We believe that the market system and private enterprise have—
Lord WIGG: Will the Minister give way? If he is arguing the case for or or against dogmatism, will he tell us the meaning of his previous words?
Viscount TRENCHARD: I am sorry, I did not catch the noble Lord's question.
Lord WIGG: The noble Viscount said that the Government believe in having as much private enterprise as they can because it releases all the efforts of all the people. If that statement is not a dogmatic one, I should like to know what is.
Viscount TRENCHARD: I think that the statement that public ownership should be expanded and that Government agencies should investigate and reorganise large branches of successful private industry is much more dogmatic. My statement at the beginning was that there was no prima facie case either way. We happen to believe—and we believe that the evidence is on our side—that the success stories of world economies go the other way, and that they permit the kind of thing we all need and want; a rise in the standard of living, a rise in our social policies, and our educational policies, about which we have to discuss so many things because at the moment we cannot afford them.
Lord HOWIE of TROON: I wonder whether the noble Viscount would give way for a moment? Is he not just over-egging the pudding a little? Could he tell us why all the advantages he has adumbrated arise from private rather than public ownership? It is not as easy as that, is it?
Viscount TRENCHARD: I think that, as I continue, the balance of what we believe will become clear.
Lord HOWIE of TROON: Why should it not become clear now?
Viscount TRENCHARD: I believe that the noble Lord will be satisfied. Well, I doubt whether the noble Lord will be satisfied, but certainly his question will be answered as time goes on.
Lord HOWIE of TROON: Why not at this time?
Several noble Lords: Order!
Viscount TRENCHARD: We believe that the health of the private sector of industry, which has in the past created the wealth for this and other nations to a greater extent than the public sector, has been debilitated over two decades in which controls, lack of incentives, taxation

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policies, have made sure that it has neither the money nor the freedom with which to operate. My answer to noble Lords opposite who have argued that the investment was not available in the past—and I include the period of the previous Conservative Administration mentioned—is that the whole system had been reduced to a level of profitability which I have quoted many times in this House and which is about a quarter of that of our main international competitor countries; a quarter of the profitability level; barely a level at all in current cost accounts.
In that situation we do not believe that one can instantly wave a magic wand and have universally a really profitable private sector of industry. One has to move gradually. We believe, however, that the alternative roads have been tried with no success, and that the road to follow is the one we have described often, and which I have mentioned this afternoon. But we do not believe that any one Government agency, the NEB or the Scottish and Welsh agencies, can be a panacea for putting right all that is wrong across the whole field of a complicated industry. Neither do we believe that they can conceivably, within the resources left to us in this country, either put right the total investment that we should like to see in this country, or be a prime way—as I think the noble Lord, Lord Lee of Newton, said—to save any appreciable numbers of firms against bankruptcy.
That does not mean that either this Bill or our intention is to reduce the NEB, let alone the agencies, to which I shall return later, to, as the noble Lord, Lord Rochester, said the odd "lame duck" function. The functions that remain were well outlined on Second Reading. There are some 60-odd holdings of NEB, and they are important. The new function, of returning some of those investments as soon as it is possible to do so to private ownership, is an important and a difficult one. The catalytic function in high technology areas which remains, and which is in the guidelines in the Library, has been completely ignored by speakers opposite. The functions in the assisted areas and in relation to small businesses have been ignored. These are formidable functions by any standard. I can tell noble Lords opposite that I
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would find those as much as any one board of directors could begin to carry out efficiently.
We leave to the NEB not a short-term role, not the odd "lame duck", but major and important functions. We leave precisely these parallel functions to the agencies, and we do not interfere with the other functions that the agencies have. There was a suggestion that the agencies were being emasculated; that NEB was being emasculated. I reject the word. In the case of the agencies, other functions not mentioned in this Bill remain, including their factory building functions for instance, the promotion of investment, their inward investment functions. Formidable functions, important functions, remain, but we believe that the direction must be to maximise private investment.
Lord HATCH of LUSBY: Would the noble Viscount allow me to intervene for a moment? I have followed the argument closely so far, but if one reads Hansard tomorrow I think one will see the reason for my question. If you believe so fervently in private enterprise, then why do you maintain any nationalised industries at all, and in particular the NEB and the agencies we are talking about? If private enterprise is so wonderful in its investment, management and profitability, can you philosophically explain why you are maintaining the public sector that you are now claiming has so many important functions?
Viscount TRENCHARD: Because we are not dogmatic.
Lord HATCH of LUSBY: You cannot have it both ways.
Viscount TRENCHARD: It is because we are not dogmatic. Certain functions of the State have been agreed for many years, and we go right back to defence and other things here. Nationalisation has taken place in many areas over a prolonged time. The NEB exists, and my right honourable friend and I have paid tribute to the work they are currently doing, in fact because we are not dogmatic.
It was suggested that reorganisation was to be forbidden—I think that is what the noble Lord, Lord Lee of Newton, said.

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There is nothing in our philosophy which forbids reorganisation taking place. We believe that in the main this will take place if the normal market forces are allowed to operate. In addition, reorganisation in the areas within the guideline rules of the NEB can be prompted, within the rules and within the safeguards that exist.
Lord BRUCE of DONINGTON: I promise not to interrupt the noble Viscount again, but if what he said be the case, then what is the reason for removing the words "reorganisation of" from Section 2(2)(b) of the Industry Act 1975?
Viscount TRENCHARD: Probably I did not make myself clear. I said the market system would cause reorganisation, and I further said that while the general reorganisation powers of the NEB over an extraordinarily wide range are to be curtailed, there is nothing to stop the NEB—within its terms of reference in the advanced technology industries, in its existing holdings and in the assisted areas once more—from prompting reorganisation.
In turning to the advanced technology situation, I remind the Committee that we have said that the catalytic function in advanced technology must continue. And I say to those who have said that we are dogmatic in being non-interventionists, that we are supporting—I leave out for the moment, because I shall come back to it, the question of a further £25 million—INMOS, we are supporting the electronics industry through MAFF and MAP and we are continuing various schemes which help research, development and technology outside the NEB; and the NEB role will specifically be to include the catalytic function in the high technology areas.
In relation to INMOS, at present the question of the further £25 million for which they have applied and the location of their production unit are, as the House knows, under consideration. Both those questions raise many very important issues on which noble Lords opposite and their right honourable friends in another place have been making very clear to me in the Department of Industry that they have definite views. I can only tell them that there is more than one view in both parties about exactly what we should do on those two issues. However, we do not plan
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to cause a hold-up of any consequence to the INMOS operation in coming to these decisions in terms of meeting the market-place requirements. They have asked for this money in advance of their absolute need and we are coming to the point of decision as fast as possible.
The noble Lord, Lord Bruce of Donington, suggested that the Secretary of State could use Section 7 to give directions, and we shall come to amendments later. Section 7 is the one dealing mainly with regional support and Section 8 with support for special industries or industry reorganisation plans. These functions will continue to be functions of the Secretary of State and the Department of Industry, but we do not think they should be muddled with the question of the NEB's powers. NEB subsidiaries with support from the NEB itself can, in accordance with the regulations of those schemes, apply for aid and these matters can be judged in the normal way and on merit.
The noble Lord, Lord Cledwyn of Penrhos, asked questions about Wales and the noble Lord, Lord Brooks of Tremorfa, made a number of important points relating to Wales. We have had a Welsh debate—as the noble Lord, Lord Brooks, knows because he introduced it—and we have had a great many steel discussions, and I do not want to go into either of those subjects. It is perhaps a pity that South Wales has depended to such a high degree on public ownership industries where, for one reason or another, demand, which has nothing to do with the fault of anybody, has fallen, or our share of markets due to our failure to remain competitive has fallen. There is a good deal of growth, as the noble Lord knows, in Wales now. I do not accept the extrapolation of figures which were mentioned as rising as high as even 160,000 unemployed in Wales; I believe the present figure is just below 90,000.
The reorganisations plans of the BSC have yet to be confirmed, agreed and timetabled and, in anticipation of those, we have already gone ahead with £48 million extra authorisation for factory building. I will write to the noble Lord, Lord Cledwyn, in relation to the exact calculation of the £35 million he mentioned. If I have noted his intervention aright, it is that £35 million less would be likely

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to be available under the regional programme plan. I will confirm to him what aspects of the plan are involved. At this point I will merely say—and I do not want to debate regional policy either—that I am convinced of the need for a change away from a regional policy which covered 43 per cent. of the population and 56 per cent. of the travel-to-work areas in Britain as assisted areas, with the whole of the intermediate areas having unemployment no higher than the non-assisted areas (to the decimal point it was the same) meaning that approximately half of them had more unemployment than the assisted intermediate areas. That sort of nonsense—I have to call it that—relieved me when I examined it because it has enabled us to make large economies, economies which we must make because of the situation of the economy of this country, and yet retain a sharply pointed and effective regional policy. So while I confirm the figure of less money for Wales, I can tell the noble Lord that Wales has a bigger percentage of assisted areas than Scotland or even the North of England—the vast majority is assisted in one form or another—and even though the grant may not be available in the intermediate areas, Section 7 assistance for good projects is.
I leave the general questions which have been raised, except to return briefly to the statement by the noble Lord, Lord Hatch of Lusby, that we have lost £1,000 million overseas in relation to investment. There is no evidence that money, either nationally or internationally, is a completely finite quantity in terms of investment. If there are more good things to invest in and if things are going well and expanding, investment can follow. It does not start the other way, and all the studies reveal, for example, that greater investment overseas in a particular country is almost always mirrored by greater exports to that country within a certain time-lag of years behind it.
I will not go into the question of the decline over the century. As I pointed out in the economic debate last week or the week before (as recorded in Hansard) it has not been a decline over a century. Indeed, there was a major period of recovery between the wars, but there has been a catastrophic decline in the last two decades—
Lord HOWIE of TROON: The noble Viscount mentioned a time-lag. Will he tell us what the time-lag is?
Viscount TRENCHARD: No, but I shall write to the noble Lord. These matters are never entirely regular; they will differ from country to country. However, as I understand it, the majority of academic evidence is quite clearly that overseas investment is compatible with increasing exports—
Lord HOWIE of TROON: Yes, but we are not interested in other countries; we are interested in our own country.
Viscount TRENCHARD: May I now turn to the major remaining function that the amendment seeks to change; that is, the question of the NEB ceasing to have the function of promoting industrial democracy. Of course, everyone in your Lordships' Committee and every industrialist I know is trying in every way possible to arrive at a situation where all the people in a particular company will work with the same objective, and much information is already being made available to all employees and trade unions within companies in order to do this. I believe that every responsible company, and certainly the NEB, will probably encourage its subsidiaries, according to their various and particular needs, to do everything they can to promote this situation, because it is so important for productivity.
However, we do not believe that we should impose particular forms of employee participation on companies, nor in general—and this is a matter of industrial organisation—involve the NEB in the relationships between an NEB subsidiary and its work force. This should be a matter for the companies themselves, and for the NEB, as it finds appropriate and necessary in a particular case, gently to prompt or prod. Perhaps I may remind your Lordships that under the previous Administration the NEB found itself quite unable to exercise its industrial democracy function because of the absence of any coherent Government policy on that subject.
I do not in any way wish to discourage; I wish to encourage in every way possible, within sensible management organisation, the furtherance of the working together

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that we need so badly. I always find it a little strange that noble Lords opposite, and the party that they represent, should be so keen to force things in this area—even though they did not really do this themselves when they had the opportunity—when they resist so fervently legal questions in relation to trade union affairs which will only take the situation in this country to a far less legalistic point than that of all our major industrial competitors. I invite the Committee to reject the amendment.
Lord KALDOR: Before the noble Viscount sits down, may I ask whether I heard him correctly when he said that this country suffered a catastrophic decline in the last two decades? If that is what he really said, I fear that he was in error. We may have suffered a catastrophic decline in the last decade, the 1970s, but in the 1960s our productivity growth was considerably better than it was in the 1950s, and in no sense can one describe the 1960s as a decade of catastrophic decline.
Viscount TRENCHARD: I stand a degree of correction and accept it from the noble Lord, but the decline has been accelerating. I do not think that in the 1960s our record internationally was good and we lost a large share of world markets during that period; but I accept that the situation has become very much worse in recent years.
Lord LEE of NEWTON: I have heard nothing which prompts me to withdraw the amendment, but may I mention one or two matters before we divide. The noble Lord, Lord Rochester, is, I know, a very fair-minded man. He said that he and his party would not accept any further nationalisation, but the fact is that no one is asking them to do so. We are asking that the 1975 Industry Act be retained, whereas the Government are asking us to make changes. It is not the case that anyone is asking anyone else under this proposal to accept any further nationalisation.
I do not think that the noble Viscount really expects us to be very enthusiastic when he tell us that the NEB has an
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enormous role to play in emasculating itself. That may be a process that improves certain steeplechase jumpers, but it hardly has that kind of effect for the NEB. Again in this case it is the Government who are taking an initiative of that sort, whereas we, like good Conservatives, are asking to retain the status quo.
Viscount TRENCHARD: I must say that I said that the four roles of the NEB that I outlined constituted a major task.
Lord WIGG: I wonder whether the noble Viscount is able to acquit himself of the charge of being over dogmatic on the issue of public ownership versus private enterprise. It seems to me that here he is fighting a battle which in fact is over and done. I believe that there is a considerable body of opinion among members of the Labour Party that ownership as such is not the dominant issue; ownership can take varying forms. So I am not going to battle with the noble Viscount on that issue. Rather I want to make a point as follows. He said that he is not dogmatic, but when I intervened earlier it was in order to underline the fact that on the issue of the pricing system and the practicability of leaving everything to the market forces, as the Government are doing, the noble Viscount is dogmatic and, in my view, is 100 per cent. wrong. I should go so far as to say to him that if he went to a place where the free market really operates—for example, Epsom Downs on Derby Day—in view of the philosophy that he has expounded, with an incompetence which passes belief, the one thing I would guarantee is that when he came away he would not have even his braces.
Viscount TRENCHARD: I must tell the noble Lord that one of my earliest commercial duties was to be in charge of the sale of ice cream on the free side of the race course that he mentioned, and so I am well aware of the situation there.
5.29 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 57; Not-Contents, 105.

CONTENTS

Ampthill, L.

Gore-Booth, L.

Phillips, B.

Ardwick, L.

Goronwy-Roberts, L.

Ponsonby of Shulbrede, L.

Barrington, V.

Gregson, L.

Robson of Kiddington, B.

Bernstein, L.

Hale, L.

Rochester, L. [Teller.]

Beswick, L.

Hampton, L.

Seear, B. [Teller.]

Birk, B.

Hanworth, V.

Stamp, L.

Blease, L.

Hatch of Lusby, L.

Stedman, B.

Boston of Faversham, L.

Hylton-Foster, B.

Stewart of Alvechurch, B.

Brockway, L.

Irving of Dartford, L.

Stewart of Fulham, L.

Brooks of Tremorfa, L.

Jacques, L.

Stone, L.

Bruce of Donington, L.

Janner, L.

Strabolgi, L.

Byers, L.

Kaldor, L.

Taylor of Gryfe, L.

Chitnis, L.

Kilmarnock, L.

Taylor of Mansfield, L.

Cledwyn of Penrhos, L.

Kirkhill, L.

Thomson of Monifieth, L.

Collison, L.

Leatherland, L.

Underhill, L.

David, B.

Lee of Newton, L.

Wells-Pestell, L.

Davies of Leek, L.

Maelor, L.

Wilson of Radcliffe, L.

Davies of Penrhys, L.

Northfield, L.

Winterbottom, L.

Donaldson of Kingsbridge, L.

Ogmore, L.

Wootton of Abinger, B

Evans of Hungershall, L.

Oram, L.

Wynne-Jones, L.

Gaitskell, B.

NOT-CONTENTS

Abercorn, D.

Forester, L.

Murton of Lindisfarne, L.

Airey of Abingdon, B.

Fortescue, E.

Newall, L.

Alexander of Tunis, E.

Fraser of Kilmorack, L.

Northchurch, B.

Avon, E.

Gainford, L.

Onslow, E.

Balerno, L.

Galloway, E.

Orkney, E.

Bellwin, L.

Glenarthur, L.

Pender, L.

Belstead, L.

Gowrie, E.

Penrhyn, L.

Bridgeman, V.

Greenway, L.

Rawlinson of Ewell, L.

Campbell of Croy, L.

Gridley, L.

Redmayne, L.

Cathcart, E.

Grimston of Westbury, L.

Robbins, L.

Chelwood, L.

Hailsham of Saint Marylebone,

Rochdale, V.

Cockfield, L.

L. (L. Chancellor.)

St. Davids, V.

Colville of Culross, V.

Harmar-Nicholls, L.

Sandys, L. [Telllr.]

Cork and Orrery, E.

Holderness, L.

Savile, L.

Cottesloe, L.

Hornsby-Smith, B.

Sempill, Ly.

Craigavon, V.

Killearn, L.

Sharples, B.

Cullen of Ashbourne, L.

Kimberley, E.

Strathspey, L.

Daventry, V.

Long, V.

Sudeley, L.

Davidson, V.

Loudoun, C.

Swinton, E.

de Clifford, L.

Lucas of Chilworth, L.

Torphichen, L.

De La Warr, E.

Lyell, L.

Tranmire, L.

Denham, L. [Teller.]

Macleod of Borve, B.

Trefgarne, L.

Drumalbyn, L.

Mancroft, L.

Trenchard, V.

Ebbisham, L.

Marley, L.

Tryon, L.

Eccles, V.

Merrivale, L.

Vaux of Harrowden, L.

Ellenborough, L.

Middleton, L.

Vivian, L.

Elliot of Harwood, B.

Mottistone, L.

Wise, L.

Exeter, M.

Mowbray and Stourton, L.

Young, B.

Ferrers, E.

On Question, Motion agreed to.

Resolved in the negative, and amendment disagreed to accordingly.
5.37 p.m.
Lord ROCHESTER Lord ROCHESTER moved Amendment No. 2:
Page 1, line 9, after ("effect") insert ("() after paragraph (b) there shall be added—
"(c) in undertakings which the Board control encouraging action aimed at
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increasing the involvement of employees in the making of decisions which affect them."").
The noble Lord said: As has already been said, one effect of subsection (1)(a) of Clause 1 of this Bill is to remove from the National Enterprise Board the function of promoting industrial democracy in undertakings that the board control. The purpose of the amendment now before

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us is to ensure that, at a time when more than ever it is necessary for management and employees to work together to improve our industrial performance, the National Enterprise Board should play a part in achieving that objective by encouraging action aimed at increasing the involvement of employees in making decisions which affect them. In conjunction with my noble friend Lady Seear, I have endeavoured to frame the amendment in such a way as to invite the maximum support from all parts of the Committee. The term "industrial democracy" is not used because of the offence which that term can cause in certain quarters. To accommodate those who feel that it is not for the National Enterprise Board but for the undertakings themselves to initiate action in this area, the amendment does not even "empower" the board to promote but merely to "encourage" such action.
The word "involvement" is used deliberately, in part because when I referred to the amendment which was put forward from the Conservative Front Bench to the clause of the 1975 Industry Bill which gave the Board the function of promoting industrial democracy, I found that this was the word which was then advocated in substitution for the offending phrase, "industrial democracy" It was also the word used by Sir Raymond Pennock, President-elect of the CBI, at an industrial society conference that I attended last Wednesday, when he said that one of the three main personal objectives that he had set himself for his term of office was to raise the standards of involvement of employees in industry. I fear that Sir Raymond may have to modify these objectives somewhat in the light of the sad death, later the same day, of Sir John Methven, but, knowing him. I somehow do not think that this particular objective will be one of those to suffer.
Having mentioned Sir John Methven, and since it is the Industry Bill that we are discussing, I hope the Committee will think it fitting for me, as a former colleague of his who held him in high respect, to say how widely his loss will be felt and how much many of us, in whatever part of your Lordships' House we may sit, admired the unstinting way in which he devoted himself to the wellbeing of British industry. The amendment calls for increased involvement of employees in the
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process of decision-making. Again, I should like to call in aid the president-elect of the CBI for, in the same speech to which I have referred, he said that in his view there were still, in industry generally, too few opportunities for employees to influence, before they were made, decisions that could directly affect their livelihood. I suggest that my amendment goes a little way to remedy that deficiency.
It does not advocate that employees should join in the taking of decisions nor that there should be any alteration or extention of existing arrangements for collective bargaining, for negotiation with trade unions and so on; what it recognises is the situation which already exists in our most progressive companies. I could elaborate on this from my knowledge of what goes on in the great company for which I myself used to work; but that would take too long. It is perhaps sufficient to say that in the consultative framework that has been built up in that company over the past 50 years—very properly starting at plant level and working upward to the very top; and not the other way round—what is now talked about is not the food in the canteen but relevant business facts such as where the money comes from and where it is going to; the criteria which should determine how capital is invested and the plans for that investment extending over the next two or three years, including the location of new plants and so on.
I suggest that it is that best industrial practice that needs to be encouraged. Surely, the NEB is a body which should have the function of giving such encouragement to the undertakings that it controls. I am convinced that this gradual approach to greater employee participation is the way forward. I hope that we shall not be told that if this paragraph in the 1975 Industry Act is removed there still will be nothing to stop the NEB from making sympathetic noises if the companies under its wing wish to do more of this sort of thing. I took some encouragement from what the noble Viscount, Lord Trenchard, said in his winding-up speech at the end of the discussion on the last amendment when, if I heard him correctly, he said that in this area he thought that the function of NEB should be to exercise what he called gentle persuasion on the companies which it controls.
The point is that the Government are now proposing to take out this paragraph. If it is removed without putting anything better in its place, this will be seen as a setback to industrial relations at just the time when we should be advancing on this front together. In my view, we cannot afford to stand still. If we do, I fear that in time employers will find that they will have changes imposed upon them which do not have their consent and we shall have missed the chance of obtaining the political consensus in this field which in my view is absolutely essential.
I hope that the amendment will commend itself to noble Lords in all parts of the Committee. May I say at this point how grateful I am for the assurance that, as I understood it, the noble Lord, Lord Lee of Newton, speaking for himself, has already given. I hope that his example may be followed by members of his party. I hope also that it may command support from noble Lords on the other side of the Committee and particularly from those who have experience of industry. More than that, I trust that the noble Viscount, who well knows about—and, I I do not doubt, has sympathy with—the kind of thing that this amendment intends, will feel able to accept it on behalf of the Government. I beg to move.
5.45 p.m.
Baroness SEEAR: I should like to add to what my noble friend has said. The noble Viscount, Lord Trenchard, in his summing-up speech said that this was going on in any case. I think that he said that every company of which he was aware was doing all that it could to see that all important information got through to the whole of the staff. The noble Viscount, Lord Trenchard, moves in the best circles. I do not. I frequently talk about these matters on managerial courses—at which I get rather a different clientele from that with whom the noble Viscount mixes. I can assure him that there is no such widespread conviction that this is what we ought to be doing.
On the contrary, the position at the moment is that there is widespread belief in the rank-and-file management of British industry that Bullock is dead, thank God!—and I refer to the report, of course—and that Heffer is temporarily out of the way and that there is therefore no need to do anything.
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This is the greatest folly from every point of view. It is the greatest folly, as the CBI are fully aware, from the point of view of employers because they now have a heaven-sent opportunity to experiment and develop their own patterns of involvement. This is what they say they want to do; this is what they said in response to Bullock; and this is what, in my belief, they ought to do. I do not believe in mass produced formulae for involvement. They must be tailor-made to suit individual organisations, but they must be prodded into doing it. We are not talking about the Unilevers or ICIs (with respect to the noble Viscount, Lord Trenchard, and my noble friend) but about the great mass of British industry which, left to itself, will do little or nothing because it does not believe that it has to do anything.
I would underline what my noble friend has said. If there had never been any mention of industrial democracy in relation to NEB perhaps there would be some argument in support of what the noble Viscount, Lord Trenchard, has said: but to take out the reference to industrial democracy and to put nothing in its place will be seen by the type of manager to whom I am referring—and he is in the great majority in this country—as a message, a signal, that efforts to increase employee involvement are now no longer of any considerable importance. What we are making is a very modest request. There is to be no force behind this; it is only encouragement. Surely the noble Viscount, Lord Trenchard, can agree that encouragement in this field has everything to be said for it. I beg noble Lords on all sides of the Committee to see that at a time when we need technical change, and we need consent to get technical change, we must do nothing whatsoever to discourage new experiments and efforts in the field of employee involvement.
Lord LEE of NEWTON: This is the old story: if only everybody was as good as the best we should have no cause for complaint. I agree with what has been said from the Liberal Benches. It is now essential that we should try to get the people working in any industry utterly involved, and to encourage them to seek information on decisions which are of great importance to them. I agree with what the noble Baroness, Lady Seear, was saying. I can remember being on production com-

1063
mittees long before the war; they all became devolved during the war. In factories where work people really are taken into confidence, this is part of the make-up and part of the set-up. We did not need a war to start going on to production committees, although they functioned very well during that period. In a great many factories that I know it is not the case that there is the slightest encouragement given in this respect.
There seems to be a fear that if employees know the state of the order book or the rate of investment, in some way or other this is treading on what we used to call "managerial functions". "Managerial functions" have a very bad taste in my mouth: they caused the biggest lock-out I can remember in the whole of my life. We have to start from the point that trade unions were not set up to co-operate with management. There are still a number of important unions that do not wish to do so. They take the view that their job is to get the best possible terms and conditions for their members, and that management is for others. That is arguable, of course; but it is the wrong approach. It is an approach which, especially in these days, probably finishes up with the situation where many of their members are unemployed anyway.
I want to support this amendment in the hope that we can get a far wider anticipation by those employers and unions which have not yet thought of dedicating themselves to a vast increase in productivity, to getting their people to want to know some of the things now, regarded almost as confidential by some managements for some reason that I have never understood. I came to the point of agreeing to a reduction in piece work prices in order to get a contract; and, in consequence, men who would have lost their jobs did not do so. This is the atmosphere we can create if we get people together to discuss the way a company functions. The future prospects may depend on succeeding in getting those contracts which we may fail to get by a short head.
For my part, I believe that there has been a great deal of movement in some national trade unions on this issue. There is still a long way to go, and I think that this amendment will help bring it about.
Lord SHINWELL: I had the good fortune this afternoon of listening to several of my colleagues from the Front Bench arguing in support of the retention of the very useful and desirable functions of the NEB. All of them argued with great force and ability against, as they alleged, the emasculation of the NEB. Unfortunately, I left the Chamber before the noble Viscount, Lord Trenchard, made his response. Whatever, that was, I have no doubt that it was executed with his customary ability. Whether or not we accept his arguments is beside the point because a Division was taken. The decision has been reached; I do not quarrel with that. It derives from what happened at the last general election and one has to face facts.
Now we are being asked to accept an amendment which, in its general objective and based on the principle involved, follows what members of the Liberal Party have been advocating for many years; namely, a form of co-partnership or (to present it in the form in which the noble Lord, Lord Rochester, argued it) involvement of the workers in decisions. I respond to that to begin with by making this comment: it is quite unnecessary to have such an amendment or to promote legislation towards such an objective. Almost any trade union in the country, particularly those with substantial memberships and—to use the jargon that is now common—plenty of "muscle", could force or persuade ("persuade" is a more appropriate term) the employers concerned to agree that the workers in the industry should be involved in decisions, not merely regarding—and I use the expression we have just heard from my noble friend Lord Lee—productivity, but on administration, organisation and indeed almost every aspect of the industry concerned.
There is a history about this project. My noble friend touched upon it when he referred to the efforts that were made in the past through the medium of productivity committees to assist in reaching decisions which presumably were intended to benefit not only the industry itself but, in particular, the workers involved. I have had something to do with this. I now venture to impart to all the members of the Committee who are present—not

1065
a great many, which is perhaps a pity—that I was engaged in preparing legislation for the nationalisation of the coal mining industry.
Unfortunately, not one of the miners' leaders of the time who met me and fully represented the workers in industry are alive today. But in the course of our discussions I used language which is on record in a Government document, so that it cannot be challenged. One could challenge the argument, but not the existence of what appears in the record. I said to them that I did not want them to regard themselves as employees; when the National Coal Board was actually formed, with responsibility for the administration of the industry and all of the aspects associated with it, I wanted them to regard themselves as partners, not only concerned about wages, health and safety, but also about the organisation of the industry and the administration. I said that if they would agree to my suggestion—subject, although I did not say so at the time, to Cabinet decision, which was obvious; I had to have their consent—I would embody the proposal in legislation. They rejected it out of hand. They said to me, in the language that miners' leaders were accustomed to use at the time, that they were concerned about the interests of their members and they wanted none of my fancy ideas.
That is the position. The fact is that if the trade union movement wants to participate in industry in the various industrial firms existing in the United Kingdom, it has only to ask and to press for it, without an industrial dispute, and it will be embodied in industrial language without any difficulty at all. The fact remains that the workers do not want to do so; they do not want to be involved in administration. It might lead to a loss or, if it led to a profit, they would have no assurance that they were going to derive any advantage, so why should they do it? In their view they should go on in the old-fashioned way with their collective bargaining.
The only comment that I want to make about collective bargaining—and we have had it from the beginning of the century, as I well know; I was involved in it early in the century—is that it has never proved successful or effective. It is no more effective today than it was at any
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other time. Sometimes advantages have been gained, such as changes in wages, in the hours of labour and in working conditions. But very often, no sooner had they attained these advantages than they disappeared because of the construction of the industry itself, the difficulties associated with finance, and so on. That is the position; the trades unions do not actually want it. Let me leave that for a moment to deal with the question of nationalisation, because that has a bearing on this—the NEB, for example. Our opponents, if I may use that term, on the other side of the Committee and elsewhere, dislike nationalisation. They say that they do not like nationalisation because it is socialism. All I have to say, having had something to do with it, is that it is nothing of the sort. If, for example, one takes the nationalised coal mining industry, of course the miners have succeeded in obtaining wages far in excess of what was anticipated in the past, and working conditions on the whole are satisfactory; safety, so far as it is practicable, is ensured; and all the advantages have been derived as a result of a change in legislation. But there is no socialism in the industry. It is a very class-conscious industry, although not class conscious in the socialist sense at all.
We have the various grades, beginning at the top with the chairman of the Coal Board, with a very substantial salary. I will say nothing of the perks—I set those aside. Then we have the members of the Coal Board; then the general managers, the under-managers; and so it goes on, from the top to the bottom, a whole series of relations, and at the bottom are the people who do the work. The others are responsible for administration and policy. So far as those who do the work at the coal face are concerned—and heaven knows, anybody who has seen the men working at the coal face realises that it is pandemonium, and no one should ever express a feeling of dissent because they get very high wages—they have no say in the administration of the industry or of its organisation. They tried it.
I shall come back to the point raised by my noble friend Lord Lee about productivity. They created pit committees, and they were to sit down round the table and discuss, what? Even while they

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were discussing, as they had to do from time to time, there was a decision of the Coal Board to close down a number of pits. That was the great achievement of my noble friend Lord Robens, not Lord Robbins. I am speaking of the industrialist—not the economist—who was responsible for the most remarkable achievement. He closed down 250 pits. I could have done that myself, without a salary. Anybody could have done so. That feat was equalled only by the noble Lord, Lord Beeching, who closed down two-thirds of the railway system—a wonderful achievement!
But the people in the coal mining industry, the men at the coal face, at the surface, those who assisted in cleaning and processing the coal—I wish they would process it even more; I tried to introduce that myself but failed because the processors were not available—take their wages and do what they like with them. They enjoy themselves, but so far as the administration and being involved in decisions are concerned, there is nothing at all. They may believe from time to time that they exercise some power during a strike, but so far as the administration is concerned, there is not a word. That is nationalisation. One of these days it will change and we shall convert it into a form of socialism. Then one will get industrial democracy as I understand it. Industrial democracy is not achieved merely by allowing the workers to have a discussion with management about productivity and the like.
Therefore, I say to my friends of the Liberal Party that their amendment, however well intentioned it may be, and though the principle is one that sooner or later will have to be adopted, is quite unnecessary, for the simple reason that if the trade unions wanted it, if they could make up their minds and, instead of having that one-day strike about which there is considerable controversy, they went to those at the head of the industrial firms and said that they wanted more say in the running of that industry, it would be impossible for the employers to reject that request. That is how it can be done. This will not please the people on the other side of the Committee. They are on the road to socialism. We shall have nationalisation with socialism and industrial democracy, but not until then.
Lord BRUCE of DONINGTON: I rise briefly to say that, so far as I can see, the amendment proposed by the noble Lord, Lord Rochester, does not carry any reference either to trade unions or to co-partnership. I prefer to think that the amendment means what it says. I think there can be no doubt that we can all have own own views as to what "industrial democracy" may or may not be; but there can be no doubt that over wide sections of industry, in some of which I have myself had a managerial responsibility, one of the problems leading to industrial unrest is the undoubted feeling by some workers, particularly those in large industrial undertakings, that they are alienated from the whole ethos of the firm in which they operate. I cannot help feeling that anything which encourages a company or a works to operate more as a social organism—for that is what in fact it is—is something that ought to be encouraged.
I say nothing about the involvement of trade unions, either officially or unofficially. These are matters in which there is some argument even within the established political parties in this Chamber. But of this I am sure: the more a worker feels himself identified with the progress of the firm and with the whole climate which is in existence within that firm, the less likelihood there is of the industrial disputes that we have experienced these many, many years. Therefore, in principle, we on this side of the Committee, with a few exceptions, are generally in support of the involvement of people who work within undertakings in the objectives, purposes and decisions that are pursued.
May I say, as one who some years ago managed a public company in the North, that I found it of tremendous assistance to technical directors, to works directors, inspectors and so on, that one could get first-hand opinion from the floor of the shop on a whole series of matters. I recall one instance where the works director, in conjunction with his technical director colleague, proposed changes of layout within a factory which it was thought would work to far greater advantage. We had a works committee on it which took place in the boardroom. The representatives were invited and shown models.

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They contributed their own views as to how they thought the same thing could be accomplished but in a much more profitable and easier fashion. I must tell the noble Viscount that we benefited very considerably from that advice: in fact a good part of it was preferred by the board to the advice which was given by the works director. The final conduct of a company's affairs must reside in a company's board and its chief executive and managing director, but that does not prevent the workers from being involved in consultation in the whole of production and also, in some cases, in the marketing process. I think this amendment should be supported.
The noble Viscount, Lord Trenchard, in dealing with the previous amendment, which mentioned "industrial democracy", said, I think very truthfully: "We all have different definitions of industrial democracy." But I do not think there can be any difficulty in the correct interpretation of what the noble Lord, Lord Rochester, really means. They are plain words, and the noble Viscount opposite understands them just as well as the rest of your Lordships do. He says, however, that this should be the function of the company and not of the NEB. But I thought the noble Viscount attributed great regard to ownership. Ownership, in his view, is of the utmost importance. All publicly-owned things are bad and all privately-owned things are good.
If there is one responsibility which ownership has, whether it is public or otherwise, it is the right to appoint directors to the boards of companies who are responsible for policy decisions. I cannot for the life of me see why the NEB, which, as this report shows, is the owner, part-owner or substantial owner of a number of firms and is likely, if what the noble Viscount says is true, to participate in private industry even further, should not have this mandate. It is a mild mandate, a good mandate: it is not a dogmatic mandate. I suggest it is in keeping either with what is the spirit of the times now in certain areas, or certainly with the spirit of the times as they ought to be. Therefore, I hope the noble Viscount will accept this amendment.
Lord GORE-BOOTH: Your Lordships may be a little surprised that I should intervene in this debate, and so I had
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better present my credentials. The first one is that I went the whole way through the debate which we had in connection with the Bullock Report. I sat through all that and made a speech on it. I also studied some German work on this precise subject, so that I have grappled with it before. But perhaps my most powerful qualification to say just a word on this subject is that in fact my father spent practically the whole of his working life manufacturing steel in Sheffield, and so one got a little insight into these things, particularly as the rest of our lives at that time were spent only about six miles from Doncaster. Therefore I was able to visit and talk with people for many years in those great industries.
I should like to express a warm acknowledgement to the noble Lord, Lord Rochester, for introducing this subject. Certainly, with the growth of education and the general growing versatility of the people of this country, it is quite clear that you cannot deal with this problem in the old way; namely, as appeared to grow up in some of the cities such as I mentioned, with what are called "workers"—I dislike that term because I worked quite hard myself and yet I do not think anyone would call me a worker, so it is a bad one for this purpose. However, leaving that behind, it certainly was the fashion then in that part of industry that the people who were the employees and doing the hard work on the floor, were regarded, in a way, as citizens entirely separate from the rest of us. I am quite convinced that society will not go on being like that. It will go on in the way that it is going now: that more and more people will combine knowledge of and experience in differing industries at different times. The ability of the people who do mainly manual work to understand other things has grown enormously and greatly to our benefit in our life time.
I am therefore extremely grateful to my noble friend Lord Rochester for raising this matter because I am sure it is a very up-to-date and useful thing for us to talk over. To try to see, through the mists of the next part of history, whether society is going in the direction in which people who do manual work also do a great deal of mental and intellectual work, and therefore feel that they have some claim to take part with management in certain processes of running industry and in which both sides

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can help each other to an important extent.
I do not accept in these days the enmity theory of industry. Neither do I accept that it is one big happy family. I am sure, and again this is from seeing it if not actually practising it, that both elements subsist in a natural and normal industry. In other words, that at times, particularly over economic matters, there will be perfectly honest conflict between those people who really are working and, at other times, it will be a happy family. That can be done with intelligence, good temper and a real consideration for other people on the side of management. Equally, it can happen, because it does happen in quite a lot of industries, that the people doing the manual work enjoy it and are not people who resist management all the time.
It is quite clear, from such spectator experience as one has had, 'that that mood can exist and then there is real and genuine co-operation between what are, not perhaps very happily, called the two sides of industry. Although one has to admit that in certain respects two sides do exist. With those few words, taken from a little experience, I would very much support the ideas contained in the speech of the noble Lord, Lord Rochester. I hope very much therefore that the Government will feel able to give this amendment a fair wind, whether it is done directly by accepting the amendment or at least by associating themselves with the ideas that the amendment contains. I believe that something along the lines of the noble Lord's thinking is basically helpful to the modernity and prosperity of our industries.
Lord ROBBINS: I cannot believe that there is anyone in this House who will find himself in disagreement with the spirit underlying the statements of Lord Rochester and Lady Seear. While in harmony with that spirit, while wishing—to use the words of Lord Bruce of Donington—to diminish the sense of alienation, I can believe, however, that some reserve may be expressed regarding the wording of this amendment. After all, this is the Committee stage, and we are obliged at this stage to pay attention to the implications of the words to which we are
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asked to agree as well as to the spirit which underlies them.
It seems to me that the words,
"involvement of employees in the making of decisions which affect them",
are capable of interpretation in ways which are not beneficial to mutual understanding. It is all very well to elaborate arrangements which acquaint the employees of any undertaking, large or small, with the situation and with the prospects of that undertaking, but involvement in the administrative decisions of the board—and it is those decisions which principally affect the future of the employees—is another matter.
Lip service has been paid by various speakers to the fact that the board must eventually decide. But in so far as the decisions regarding, let us say, reorganisation. regarding the installation of advanced technology, are taken at board level, may it not be that if we pass this resolution with these precise words that some of the employees can say, "I was not involved in the making of those decisions"? I submit that this is not a frivolous point.
Baroness GAITSKELL: I would add one sentence to this. It seems to me that if we do not carry this amendment we shall be so much behind the times in the world—in the way the whole argument is going about employees and management—that we shall be ashamed of what we are doing. It has now become the problem, and we should not be arguing about it at all but accepting it wholeheartedly.
Viscount TRENCHARD: I covered parts of these points in resisting the previous amendment, but this has been a most interesting discussion and I shall read it again with extreme care. May I start by saying that I should like to associate myself and the Government from these Benches with the sentiments expressed by the noble Lord, Lord Rochester, in relation to Sir John Methven. We have lost a man of exceptional ability, with a record of service to the private sector, then to the public sector at the Office of Fair Trading, and then again to the private sector. He was a man of great qualities and, I know, a personal friend of many of us here. We shall miss him very badly.
The Government are not saying just that this amendment is unnecessary because

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there is nothing to stop companies introducing employee involvement systems of one kind or another. That is true. But we resist it on wider grounds than that. What we are really asking is: Does an amendment in the words of this amendment in legislation, have any substantial effect in the direction which nearly all noble Lords have supported this afternoon, in terms of improving and increasing employee involvement? Is it, in that context, necessary and would it, in that context, achieve anything?
Let me say straight away that perhaps I should not have given the impression, if that is what I did do, as the noble Baroness, Lady Seear, suggested, that everything in this area is perfect—of course it is not perfect—and that everyone is doing what we would wish him to do. But I said that, in any event, at the appropriate time, the NEB would no doubt prod, or, as the noble Lord, Lord Rochester, suggested, gently persuade, those of its subsidiaries where they felt there was improvement in this area to be made.
Here I would ask the Committee to consider whether it is really likely that the distinguished industrialists on the NEB—and I hope in the future, once more, trade unionists, where seats have been kept—and the representatives of leading companies, where, as the noble Lord, Lord Rochester, suggested the best practice is practised, will not put this sufficiently importantly to their subsidiaries in the way and at the time that seems right to them?
I certainly did not wish to give the impression that I was looking only at the leading company areas, but I think that the small business area there are fewer problems here than anywhere else. The problem is where you get size and big areas of employment, whether in the nationalised industries or in the private sector. What Government do think is that where involvement is inadequate, there is almost certainly a history of problems with, quite possibly, faults in relation not just to management but also to employees and their representatives.
There are complicated problems. There are some of those problems from some while ago, which the noble Lord, Lord Shinwell, described and which still exist in some areas. Even the noble Lord.
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Lord Lee, said that there were certainly areas where the representatives of employees went single-mindedly for the best terms, rather than participating in the organisation. In the Bullock debate, in which the noble Lord, Lord Gore-Booth, made a notable speech and in which I made a very inadequate maiden speech, some of us questioned whether, in all cases, the same objectives were shared and whether this was a necessity before any particular systems were introduced.
The noble Lord, Lord Robbins, has suggested that even the mild words—and they are mild words—of this amendment could be taken to go too far and to impinge on decisions which are, essentially and finally, those of management. I have very considerable experience in the countries of the Continent, where the systems are more specified and more detailed. I tell noble Lords that whatever the systems written, the situations come down to the same problems. Management has to get its head clear on what seem to it to be the possible alternatives, before it starts consultation and finally has to decide. If one of three factories has to be closed management, in the end, has to decide which it shall be.
I wondered whether the noble Lord, Lord Shinwell, with all his wisdom, was going to support words such as "encouraging" in legislation, and in this respect, he made some very interesting observations out of the history of some time ago. I hope very much that the picture he paints is diminishing. I should like to assure the noble Lord, Lord Gore-Booth, that I associate the Government fully with the desire that that picture of employees refusing to be interested in the objectives of a company will fade, and that management will play a major part in making sure that it does fade.
If we are to have the success of countries such as Japan, we really must have employees not just being involved, but chasing management in order to get management to change processes, to introduce new products and to become more effective, even if it means redundancies in some areas, in order that, at the end of the day, their firm shall be competitive and that there, therefore, will be something in real money terms, not paper terms, to share. So perhaps, in those terms, I can assure the noble Lord that the Govern-

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ment associate themselves with the desire to see this kind of progress.
But we are left with the question of whether an amendment using the all-important word "encouraging" should find a place in legislation, in relation to what a board of very distinguished industrialists from leading companies advise their subsidiary companies to do. It is in that sense that the Government believe that the amendment is unnecessary, that it is perhaps capable of the kind of misinterpretation that the noble Lord, Lord Robbins, explained and that it should be resisted. But the record should stand in this House, as I believe it does in the other place, that the whole House—and I hope that the noble Lord, Lord Rochester, who moved this amendment will make clear that it is the whole House—supports the greater involvement of people, particularly in the large employment areas, as all leading industrialists, including those he mentioned in the CBI, will of course support it.
6.39 p.m.
Lord ROCHESTER: I am grateful to all those who have spoken in this little debate. I am particularly grateful to the noble Lord, Lord Lee of Newton, to the noble Lord, Lord Bruce of Donington, and to the noble Lord, Lord Gore-Booth, for their support. I was frankly depressed by the contribution of the noble Lord, Lord Shinwell. If, and in so far as, it is that union members do not want the sort of thing that this amendment seeks to achieve, then I suggest that that is largely why we are in the mess that we are in.
I was not going to say anything more about the company of which I spoke in my opening speech, but perhaps in the circumstances I may be forgiven for just adding this. In that company, in all the committees, at each level from the plant to the very top, all the employee representatives are, in fact, shop stewards, and there is absolutely no doubt in their minds that they wish to influence decisions, of the kind that I was talking about, before they are taken. It is of interest that near the top of that consultative framework there is a business and investment committee, upon which sit employee representatives—again shop stewards who
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have received training from the London Business School, the TUC and the company. I suggest that it is highly significant that at a meeting last year of the central committee, at the very pinnacle of this framework, it was an employee representative, a shop steward who has since become a union official, who presented the company's investment plan. It was not presented by a main board director, and I am told that it could not have been done better. Surely it is that sort of thing which we want to develop.
The noble Lord, Lord Bruce of Donington, was absolutely right to say that there is no intention in this amendment of interfering with collective bargaining on the part of trade unions. I was sorry that the noble Lord, Lord Robbins, interpreted the amendment as he did, given that I had sought to say in my opening remarks that the intention here is not that the employee representatives should themselves join in the taking of decisions. Nevertheless, I have to recognise that the noble Lord speaks with great experience, and clearly it is possible to misinterpret what I had in mind since that is what he did.
Had it been the noble Viscount, Lord Trenchard, who had said that the wording was defective, that could easily have been put right; I am sure that between us we could have sorted out some wording that would be generally acceptable to accommodate the difficulty. But the noble Viscount, Lord Trenchard, as I understood him, was saying something quite different. He was saying that this was not necessary, that it would not substantially improve things, and so on. If the National Enterprise Board are in any event going to give encouragement to the companies under their control, what is the objection to putting in a simple phrase of this kind?
I do not want to detain the Committee any longer. My noble friends and I will give further consideration to the possibility of coming back with a further amendment to take care of any defective wording that there may be. I am clear that there has been a good discussion of the principle underlying the amendment. It has enjoyed a lot of support, and I think that I should be letting down not simply my noble friends but others who have spoken if I did not take this opportunity,

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as a matter of principle, to press the amendment to a Division.
Noble Lords on the other side are not now present in large numbers, but no doubt shortly they will be pouring in. Some of them have considerable industrial experience and, I do not have very much doubt, must feel that there is a lot to commend this amendment. I hope that for once, if they feel they should, they
will have the courage of their convictions and vote for this amendment. If they cannot—well, let them at least not vote against it.
6.45 p.m.
On Question, Whether the said amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents, 61: Not-Contents, 84.
Lord DENHAM: My Lords, I do not know quite what the feeling of the Committee would be, but we agreed to adjourn for dinner at approximately 7 o'clock. It seems a pity to start another amendment and then possibly break off in the middle.
Lord WELLS-PESTELL: My Lords, may I ask the Government Chief Whip whether we are in a position to proceed with the next business?
Lord DENHAM: Yes, we are, my Lords.
Lord WELLS-PESTELL: Then I would agree entirely with what the noble Lord has said.
Lord DENHAM: My Lords, if all sections of the Committee are in agreement, I will move that the House be resumed and perhaps if the next business is finished before five minutes to eight, then at the end of that business we will adjourn until five minutes to eight, so that we restart this Committee stage at that time. I beg to move that the House be now resumed.
Moved accordingly, and, on Question, Motion agreed to: House resumed.

INSURANCE COMPANIES BILL [H.L.]
6.54 p.m.
Lord LYELL: My Lords, I beg to move that the Commons Amendments be now considered.
Moved, That the Commons Amendments be now considered.—(Lord Lyell).

COMMONS AMENDMENTS
[References are to Bill [84] as first printed for the Commons.]
1 Schedule 1, page 10, line 9, leave out from 'or' to the end of line 10 and insert 'Articles 2(2) and 3(1) of the Industrial Assurance (Northern Ireland) Order 1979'.
2 Schedule 1, page 10, line 28, leave out from 'or' to the end of line 29 and insert Articles 2(2) and 3(1) of the Industrial Assurance (Northern Ireland) Order 1979'.
3 Schedule 1, page 11, leave out lines 37 to 42.
Lord LYELL: My Lords, I hope it may be for the convenience of your Lordships'
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House if I move Amendments Nos. 1 to 3 in this instance and if I speak to those amendments and also to Amendments Nos. 5 to 12. In other words, I should like to speak to all the amendments with the exception of Amendment No. 4. Since your Lordships considered this Bill, the Industrial Assurance (Northern Ireland) Order 1979 has been made and has come into operation. That measure, which I shall refer to as the 1979 order, is a pure piece of consolidation of earlier Northern Ireland industrial assurance legislation. The purpose of all these amendments is simply to delete all mention of the Industrial Assurance (Northern Ireland) Act 1924 and the Industrial Assurance and Friendly Societies Act (Northern Ireland) 1948 and to insert the appropriate references to the 1979 order, which consolidated both of these spent orders.
These amendments, Nos. 1 to 3 and 5 to 12, are purely technical amendments to bring the present insurance Bill up to date. I am assured that none of them makes any material change, but I am sure your Lordships would agree that I should run through them briefly. Amendments Nos. 1, 2, 5, 6 and 7 simply substitute reference to the 1979 order for references to the old Acts. Amendment No. 3 deletes the requirement in Part II of Schedule 1 to the Bill for the Industrial Assurance Commissioner for Northern Ireland to report on his proceedings under the Insurance Companies Act 1974. This provision has become unnecessary because the 1979 order itself contains the requirement. Amendments Nos. 8 and 9 are amendments to Schedule 3 to the Bill and this particular schedule deals with consequential amendments to primary legislation.
Amendment No. 8 deletes the reference to the repealed 1924 Act and the second amendment (No. 9) brings in the 1979 order and makes the necessary modifications. Amendments Nos. 10 and 11 are to Schedule 5 of the Bill, which is dealing with the consequential repeals of primary legislation. These two amendments delete the references to the repeal of the 1924 and 1948 Acts and in their place Amendment No. 12 brings in the 1979 order and provides for the necessary repeal of some of its provisions. I hope that that explanation will be of some assistance to your Lordships. I beg to

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move that this House doth agree with the Commons in their Amendments Nos. 1 to 3 en bloc.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
Lord BLEASE: My Lords, I am grateful to the noble Lord, Lord Lyell, for his explanation of the Commons Amendments Nos. 1 to 3, and I readily accept the manner in which he proposes to deal with them. I take this opportunity to speak in general terms to the Commons amendments and say that I readily accept them, subject to one or two matters on which I may ask for explanations. Nevertheless, there are some aspects of the EEC requirements which I consider impose on the United Kingdom a compliance with impracticable uniformity. I am glad to see that the measures we are considering today are more in keeping with the ideals of a useful and helpful harmonisation. I believe that the proposals contained in the amendments should enable Northern Ireland interests to be dealt with effectively in the changed EEC circumstances.
One point which arises out of several of the amendments which are before us, beyond Amendments Nos. 1 and 3, with which we are now dealing, is this. In the changed administrative arrangements I assume that the Department of Trade will report annually to the United Kingdom Parliament. I should like to ask the noble Lord this: Will the Northern Ireland Commissioner or the Northern Ireland Department of Commerce be enabled to present with that annual report a regional section dealing with Northern Ireland affairs only? In other words, will all the relevant Northern Ireland provincial data and information be distinguishable from the total United Kingdom data and information? I think it important that we are enabled to see Northern Ireland's performance in respect of this and see it aside from the total report that may be presented to Parliament. With that point in mind, I would support the amendment as presented by the noble Lord.
Lord LYELL: My Lords, perhaps I may at this juncture thank the noble Lord for his general welcome for what I have said so far, and especially for his comments that this is mainly useful harmonization
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of existing United Kingdom law and indeed Northern Ireland provisions. I had hoped to be able to convey to the noble Lord some information on his question, but I am sure he will appreciate that, as we are running a little ahead of the schedule, I have not been able to obtain the information he is seeking. Certainly I will obtain it as soon as I can and in the simplest and most concise form, and I hope he will have it very shortly.

COMMONS AMENDMENT
4 Schedule 2, page 12, line 42, at end insert—
"The Insurance Companies (Valuation of Assets) (Amendment) Regulations 1980 (S.I. 1980/5)".
Lord LYELL: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 4. Since your Lordships last considered this Bill a new Statutory Instrument has been made under the Insurance Companies Act 1974 and indeed this has come into operation. This Statutory Instrument is called The Insurance Companies (Valuation of Assets) (Amendment) Regulations 1980. They were laid before Parliament on 25th January and they came into force on 15th February this year. Therefore they need to be added to the list in Schedule 2 of the secondary legislation that this Bill is extending to Northern Ireland. I am assured that no modifications are needed to take account of their extension. These particular regulations enable life assurance companies to elect to use the book value of their assets for the purpose of actuarial valuations which are required by the Act, rather than what we broadly call market values which result from determinations made in accordance with the principal Valuation of Assets Regulations. It is somewhat complicated, but I think the two concepts are reasonably simple.
In the intervening time I have received a brief answer to the noble Lord's query. I hope your Lordships will allow me to reply briefly to the noble Lord's question. I am informed that the Industrial Insurance Commissioner for Northern Ireland will report on the Northern Ireland figures, as indeed the noble Lord, Lord Blease, was asking. The Secretary of State for Trade will report on the United Kingdom basis, and that will include, of

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course, Northern Ireland. I understand that we are establishing a United Kingdom régime to cover both these aspects. I would hope therefore that the noble Lord's query is answered. Perhaps we could leave it there and if there is any point that is still uncovered we may settle it later. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)

COMMONS AMENDMENTS
5 Schedule 2, page 14, leave out lines 8 and 9 and insert 'Industrial Assurance (Northern Ireland) Order 1979".'.
6 Schedule 2, page 14, line 14, leave out from 'or' to the end of line 17 and insert 'Article 2(2) of the Industrial Assurance (Northern Ireland) Order 1979".'.
7 Schedule 2, page 14, line 23, leave out from 'or' to the end of line 24 and insert 'Schedule 5 to the Industrial Assurance (Northern Ireland) Order 1979".'.
8 Schedule 3, page 16, leave out lines 24 to 40.
9 Schedule 3, page 18, line 24, at end insert—
'The Industrial Assurance (Northern Ireland) Order 1979
19. In Article 3(4) of the said Order of 1979—

(a) for "Order and in particular to Article 6(2) of that Order" substitute "Act 1974 and in particular to section 2(2) of that Act";

(b) for "Northern Ireland" substitute "the United Kingdom";

(c) for "Article 7 of that Order" substitute "section 3 of that Act".

20. In Article 18(1) of the said Order of 1979 for "Insurance Companies Order" substitute "Insurance Companies Act 1974".
21. In Article 32(1)(b) of the said Order of 1979 for "Insurance Companies Order" substitute "Insurance Companies Act 1974".
22. In Article 40 of the said Order of 1979—

(a) for the words from the beginning to "Order" substitute "Sections 42 and 43 of the Insurance Companies Act 1974";

(b) for "Article 83(5)" substitute "section 72(6)".

23. In Article 50(2) of the said Order of 1979 for "Order" substitute "Act 1974".
24. In Schedule 5 to the said Order of 1979—

(a) in paragraph 1 for "Article 2(2) of the Insurance Companies Order" substitute "section 85(1) of the Insurance Companies Act 1974 ";

(b) in paragraph 6 for "Order" substitute "Act 1974".'.

10 Schedule 5, page 21, leave out lines 12 to 18.
11 Schedule 5, page 21, leave out lines 35 to 47.
12 Schedule 5, page 23, line 6, at end insert

'S.I. 1979/1574 (N.I. 13)

The Industrial Assurance (Northern Ireland) Order 1979.

In Article 2(2) the definition of "Insurance Companies Order".

In Article 23, in paragraph (1) the words "and an industrial assurance company" and the words "or company" and in paragraph (3), sub-paragraph (b).

In Schedule 8 the entry relating to the Insurance Companies (Northern Ireland) Order 1976.'.

Lord LYELL: My Lords, I beg to move that this House do agree with the Commons in their Amendments Nos. 5 to 12. I have already spoken to all these amendments in my first intervention.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
Lord DENHAM: My Lords, I beg to move that this House do adjourn until 7.55 p.m.
Moved accordingly, and, on Question, Motion agreed to.

INDUSTRY BILL
7.55 p.m.
House again in Committee.
On Question, Whether Clause I shall stand part of the Bill?
Lord BRUCE of DONINGTON: I rise to address your Lordships on the

1085
Motion, Clause I stand part, only to put a question. Your Lordships will recall that during the opportunity I had of addressing your Lordships on the Opposition's amendment to Clause 1, I put a question to the noble Viscount, Lord Trenchard, which was substantially in the following terms. I asked the noble Viscount what he or the Government would do in the event of the incentives offered to industry—in the variety of ways in which they have been offered over the years in terms of credit facilities, tax incentives and all the rest—not succeeding in attracting the amount of investment into manufacturing industry which would enable it, as a whole, to reverse the present position of decline. Would they, in those circumstances, for the sake purely of the pursuit of dogma, still refuse to allow the State itself, out of taxpayers' money, to establish those manufacturing industries that were necessary for the economy of the United Kingdom to remain a viable unit? I asked him whether he would in all circumstances, if the incentives failed, refrain from taking action on the lines that were already in the Industry Bill 1975 prior to its emasculation—would he still refuse that the State should involve itself in public enterprise? In asking the noble Viscount that question, may I say that today is 28th April 1980 and within one year I shall return to this question after events unfold.
Viscount TRENCHARD: Let me very briefly reply to the noble Lord. Indeed, I thought that I had taken too long in my original reply and if I did not specifically answer his question let me now try and remedy the situation. I think that I answered it indirectly because I spoke of the continued involvement of the Government in their own schemes and through the wide range of powers of the NEB, which we are keeping. Really my answer to him is that we have by no means pulled out of intervention or help in investments. I mentioned a good number of the schemes that we still operate. So I think that his assertion in the question is not a valid one. But we believe that the scope of the Government of this country, in its present economic position, to think they can—as the noble Lord has just said—out of taxpayers' money put everything, or a great deal, right is something that we regard as unrealistic and back to the thought of the NEB as a panacea.
1086
The other point which I did not answer earlier was raised by the noble Lord, Lord Blease—and I apologise to him for not mentioning the matter—when he again said, as he did on Second Reading, that by any standard the NEB had been a success. We want it to be a success in its limited roles. I would refer the noble Lord to column 524 in the Second Reading debate, where I gave the figures in terms of historical accounts and the trends of the figures. New figures will shortly be published and there will be a note in terms of current cost accounts. I think that that may put into perspective the power of any one agency to reverse industrial decline and to get investment right.
The problem currently with investment—although we want it to keep right up-to-date and be changed wherever possible—is not that we actually have too little investment; it is, in the main, in the utilisation of our existing investment that we are not competitive.
Clause 1 agreed to.
Clause 2 [Transfer of property to Secretary of State.]:
8.2 p.m.
Lord BRUCE of DONINGTON Lord BRUCE of DONINGTON moved Amendments Nos. 3 to 6:
Page 2, line 38, leave out ("or to a nominee of his;")
Page 2, line 38, leave out from ("State") to end of line 2 on page 3.
Page 3, line 6, leave out ("or a nominee of his")
Page 3, line 12, leave out ("or a nominee of his")
The noble Lord said: It may be convenient if the four amendments that are down in our joint names are taken together. The powers that are taken in this clause of the Bill mean that by direction of the Secretary of State the assets or other property held by the board or the agencies may be transferred by them, on his direction, either to himself or to his nominees; and that the direction shall extend to the giving of directions as to the making and terms of a transfer. This seems a little odd. We have heard that the Government do not consider the National Enterprise Board to be all that successful. The inference from that is that the Secretary of State knows much

1087
better. That is a little odd, because in the speech by the noble Viscount on the previouse clause he referred to the personnel of the NEB as being distinguished industrialists. Indeed, in his Second Reading speech on the same matter he referred to:
"… two high-powered sets of industrialists, industrial executive directors and managers, one on top of the other, and the Government's inevitable involvement on top of that, was not a sensible organisational position. "—(Official Report, 18/2/80; col. 489.)
Therefore, for one purpose the noble Viscount appears to consider that these are very estimable gentlemen, full of all the industrial and commercial virtues with which the noble Viscount normally associates private enterprise; then, in this particular clause, he gives power to the Secretary of State to give directions as to the making and terms of a transfer of property or other assets held by the board. That appears to be a little odd.
With his party's devotion to the selling off of assets under the control of the NEB at the present time, I can understand the noble Viscount, saying. "Well, when it comes to selling them off, we should have the best possible skills in the world in determining the terms of the transfer". After all, the industrialists in the NEB, and very often in the firms that are involved, are pretty high-powered people. I do not want to be disrespectful to the noble Viscount's right honourable friend Sir Keith Joseph, but I should hardly think that he is a person on whose commercial judgement I would rely to negotiate the sale of one of the NEB's assets. I should not think that he was the right person. He is a very distinguished politician, and certainly a theoretical and fanatical economist of kinds, but if it comes either to running an enterprise or to selling it off, I would not trust him to run a whelk stall.
Therefore, when it comes to the terms on which assets belonging to the NEB should be disposed of, with the greatest possible respect, I would sooner rely on those people who have been more intimately concerned with their administration and who have some knowledge of them—unless it is the policy of the Government, in the pursuit of obtaining a quick buck out of capital, to reduce their public sector borrowing requirement and count asset realisations as income in their hands, which the present Government are very
1088
much disposed to do; unless they virtually wish to sell them at any price. Therefore, as I said, I should not have thought that the Secretary of State is the best person to give directions as to the making and terms of a transfer.
The other subsidiary matter on which I have already had discussions with the noble Viscount and on which he is prepared to enlighten us, is as to the reasons why the securities or other property should be transferred to the Secretary of State "or a nominee of his". I understand that there are technical reasons for that and the noble Viscount can shorten the proceedings by referring me to those particular sections of the Companies Acts 1948, 1967 or 1976 which he considers have particular relevance to the insertion of "a nominee" here. It is my experience—and I stand to be corrected by the noble Viscount—that once a company has been incorporated, it is a legal entity, and even though its shares may be transferred to one person only, that transfer does not invalidate the status of the company as a corporate entity. I may be wrong about that; I do not have the advantage of having had a prior consultation with the Law Officers of the Crown or even with the noble and learned Lord the Lord Chancellor; but perhaps we could have some enlightenment on that. Of course, in ordinary legal parlance, "nominee" means a transfer to a person who ultimately has no beneficial interest. I can conceive of circumstances in which it might be convenient for the Secretary of State to nominate someone else to receive them without having beneficial ownership, but we should like some enlightenment on that. In the meantime, however, our objection remains.
Once again there is this impulsion by the Government, regardless of the merits of a particular case, to proceed with haste in disposing of, or transferring to the Secretary of State, companies either under the control of the NEB, or in which the NEB has substantial interests. I have been going through the annual report and accounts for 1978 for the NEB, which are the latest accounts available to me. On going through them I am curious as to which assets, companies, or shares the noble Viscount is bent on disposing of. Perhaps he could give me some enlightenment.
The NEB holdings cover a wide range of activities. I have been through them all carefully. It would be helpful to the Committee if some indication could be given as to which particular holdings, or part thereof, the Government intend to transfer to the Secretary of State. It might also be convenient if the reasons could be given. I shall afford the noble Viscount the opportunity, should he so wish, to draw my attention to any particular companies that the Secretary of State may have in mind.
It would be a complete injustice to the Government—and one knows that we on this side of the Committee do not wish to inflict any injustice on them in any way—to think that this clause was put in without any particular reason, or without some idea in mind as to what they might do. I should have thought that at least half-a-dozen companies would trip off the tongue of the noble Viscount as to assets, or part thereof, that they might want to dispose of. If so, we should be glad to hear them, and associate them with the report and accounts for 1978. If, on the other hand, it is purely a general idea that they should have this, then frankly, on the Secretary of State's track record so far in the field of commerce and industry, I do not think that he ought to have the power. Therefore, I shall invite your Lordships to support the amendment standing in our names.
Viscount TRENCHARD: I have some points to make of a general nature later and I shall hold them, but may I just deal with the technical points in relation to these amendments before the noble Lord, Lord Rochester, speaks, because that might be helpful. The words "or to a nominee of his", which these amendments seek to remove, are necessary to avoid a difficulty which could arise under Section 31 of the Companies Act 1948. This is because some of the provisions of a limited liability company would not apply if there is only one member of a company. For these provisions to apply there have to be two or more shareholders. That is the whole purpose of the words which the amendments seek to remove.
The provision would allow the Secretary of State to nominate sufficient other persons for this difficulty to be overcome. In practice, this would mean that a number of senior officials would each hold one
1090
share and the Secretary of State would hold the rest, with his liabilities limited to those to which such a shareholder would be subject. I shall reserve my remarks, and I want to answer some of the noble Lord's general points, but I thought it might be helpful to have that technical explanation before there were more contributions.
8.15 p.m.
Lord ROCHESTER: I shall not follow the noble Viscount down that particular road. I endeavoured to look knowledgeable while he was speaking, but I do not think that any contribution that I can helpfully make will touch on that technicality. We should like to support this amendment, if indeed I have properly understood its general purpose. From the quizzical look from the noble Viscount I am beginning to wonder whether I have. However, let me proceed. If I make any errors, or have any second thoughts, they can always be remedied in the Division Lobby later should the amendment be pressed that far.
I have not much to say that the noble Lord, Lord Bruce, has not already said. As it appears to me, although the future of Rolls-Royce appeared to be the immediate issue, surely it was interference, was it not? with the commercial judgment of the National Enterprise Board as provided for in this clause which earlier precipitated the resignation of the whole board under Sir Leslie Murphy, for whom I certainly had a very great respect.
Like the noble Lord, Lord Bruce, unless I still have something to learn from the noble Viscount, I am not at all clear why the Secretary of State should wish to take to himself the power to give directions as to whom assets of the National Enterprise Board should be transferred; nor why it should be thought that a Government department knows better in these matters than people with the commercial expertise of those now serving on the NEB.
What if some firm, perhaps from overseas, which may now be in partnership with the NEB, finds itself lumbered in consequence with a partner unacceptable to it? Surely that is not going to prove a fruitful or productive association. At the very least, should not the Secretary of State be required, in making directions

1091
of this kind, first to seek parliamentary approval? It seems to me to come oddly, certainly from a Government priding themselves on standing back and letting industry get on with the job and all that, to take power to interfere as directly and as arbitrarily as they can under this clause, particularly when the body interfered with responds so directly as does the NEB.
On the basis of the information that is now available to me, and unless I have misunderstood something which I took to be only of a technical kind and not really impinging on basic points such as these, I think that if this amendment were pressed to a Division I should be likely to recommend to my noble friends that we should vote with the Opposition.
8.20 p.m.
Lord BRUCE of DONINGTON: To deal with the technical point with which the noble Lord dealt in regard to Section 31 of the Companies Act 1948, it should be noted that that section says:
"If at any time the number of members of a company is reduced, in the case of a private company, below two, or in the case of any other company, below seven, and it carries on business for more than six months while the number is so reduced"—
those words are particularly important, "carries on business for more than six months while the number is so reduced"—
"every person who is a member of the company during the time that it so carries on business after those six months and is cognisant of the fact that it is carrying on business with fewer than two members, or seven members, as the case may be, shall be severally liable for the payment of the whole debts of the company contracted during that time, and may be severally sued therefore".
I can quite understand the apprehension of some noble Lords lest the Secretary of State, in an excess of party or partisan zeal, decided to issue a direction to the NEB, or to anybody else, to transfer shares to him, and of course if he held on to them for longer than six months, he would be liable under that section. But can anybody in their right senses imagine the Secretary of State running a business for six months? I should have thought the whole purpose of the clause which we are debating was to enable the Secretary of State to say to the NEB, "I want you, on terms that I shall determine, to transfer the shares from A to B. Initially, of
1092
course, they will be transferred to myself and after that they will go to some section of private industry".
The decision is a political one, is it not? I cannot imagine the Secretary of State meditating for over six months about what he should do with the shares he has acquired. And I am terrified at the thought of him running an undertaking during that period because, like the noble Lord, Lord Cockfield, I want the public sector borrowing requirement to be reduced by the maximum amount I can get for the shares. The thought terrifies me and should terrify the Committee, and therefore to accomplish the purpose of the Government—that the Secretary of State should rid himself of the shares he has acquired within six months—I urge prudence on the Government. They should clearly circumscribe the powers of the Secretary of State to hang on to the shares, and after taking due advice he should certainly get rid of them within six months, after which, as the noble Lord said, the disciplines of Section 31 of the 1948 Act would apply. I am sure noble Lords will agree that the Opposition's amendment in this matter should be supported in every quarter of the Committee purely on grounds of commercial and industrial prudence.
8.24 p.m.
Viscount TRENCHARD: The amendments as drafted are technical and are designed to delete the words "or to a nominee of his." They do not stop businesses being transferred to the Secretary of State, so the amendments as drafted are technical and the reason why we require the words "or to a nominee of his" are those I have described.
The noble Lord, Lord Bruce of Donington, quick to the reference books—and I congratulate him for that—pointed out that what I had said was accurate but that there was a six months provision in it. The case that has already arisen, namely Rolls-Royce, could conceivably be there for a good deal longer. I am not suggesting there is some particular need for this protection in relation to Rolls-Royce, but just that there could be circumstances in which even the six months provision, which I have not had time to be advised on, is not completely appropriate.

1093
As for the general point on the powers of the Secretary of State to request the NEB to transfer companies or assets to him, nobody with my right honourable friend's record could possibly be accused of wishing to manage any business whatever. That is neither his intention nor his style—certainly not, as we have said, to manage Rolls-Royce. We stand as shareholders and it is a question of time whether there should be an intermediary or not. So on the general question regarding these powers, I give those answers and will amplify a little further, though I say again that the purpose of doing it is simply to answer what has been said rather than to bear on the amendments, which refer only to the question whether the words "or to a nominee of his" should be included.
It is the Government's policy that the NEB should progressively sell more of its shareholdings as soon as that is commercially practicable and having regard to the interests of the company and the taxpayer. The power of transfer is there to deal with difficult and intractable cases which the Government and the Secretary of State cannot dodge. These powers are to enable the latter to deal with otherwise difficult disposal problems that could become incompatible, say, with the achievement of the NEB's financial duties. Similarly, the power to determine the making and terms of a transfer could relieve the NEB of obligations it could not otherwise meet.
The policy has been stated and passed in the other place and on votes already taken in this place. The constitutional duties of the Secretary of State for the proper use of public powers and public funds are clear and unavoidable, and for the reasons I have stated he wishes to have those powers. However, in regard to these amendments, we believe that the power should be not only to transfer the property to him but to transfer it to his name and that of nominees, who would normally be senior officials, as I have described. I therefore hope the amendment will be resisted as a technical one which is completely unnecessary.
8.28 p.m.
Lord LEE of NEWTON: Would the noble Viscount agree that in another place the question was raised whether this clause
1094
was inspired by the Rolls-Royce issue? My noble friend Lord Bruce of Donington asked for an explanation of which of the assets would be likely to be involved. The Secretary of State himself gave as his reason for the decision to take these powers that there might be occasions on which the disposal of an asset might take an inordinately long time, and it seemed to him that it would be unreasonable to leave the NEB with the burden of managing such a company. That was the case put by the Secretary of State.
So far as we can make out, the NEB does not seem to have encountered any such difficulty. Indeed, when one of my honourable friends in another place asked the Secretary of State whether he could give an illustration of a set of circumstances in which an inordinately long time might hinder the workings of the NEB, but would not hinder the workings of his department, he replied, "No, I cannot"; so it does not look as if this sort of emergency has come about. It was some time ago that those matters were argued in another place. I wonder whether the noble Viscount, or the Secretary of State, can give an illustration of such a contingency arising.
Viscount TRENCHARD: At this stage of a new Government policy relating to the direction in which the NEB should move it is not surprising that we have not yet had more than one case where it has been decided that the shares of an NEB company should be transferred to the Secretary of State. There may well be more such instances, for the reason that my right honourable friend mentioned (to which the noble Lord, Lord Lee of Newton, has referred) as well as for the reasons that I have spelt out. His answer was typically short and to the point, but I agree with him entirely; I certainly will not speculate on the many possible problems that can arise within this policy of gradual disposal of major assets.
Lord BRUCE of DONINGTON: May I press the noble Viscount on one further question. I am sure that he would not wish to mislead the Committee, but he tended to indicate that the amendments put down by my noble friends and myself were technical amendments, and that we were concerned with the question of nominees. If the noble Viscount looks at the second

1095
amendment of the group, in which we seek to leave out the words:
"shall extend to the giving of directions as to the making and terms of a transfer",
I am sure he will appreciate that that is not a technical amendment. It is a direct amendment that seeks to challenge the right of the Secretary of State to determine the terms in regard to any transfer. I should be glad if the noble Viscount will agree that that is far from being a technical amendment, and perhaps the Committee will also like to have his views on what in particular qualifies the Secretary of State, as against a group of distinguished industrialists, to determine the price at which such shares should be transferred.
Viscount TRENCHARD: I do not accept that the noble Lord has a point of substance in relation to the second of these amendments. As I have tried to point out in my previous answers, I do not consider that it is a question of whether the Secretary of State is better qualified than are other people to do a commercial

CONTENTS

Ardwick, L.

Hampton, L.

Phillips, B.

Birk, B.

Hatch of Lusby, L.

Pitt of Hampstead, L.

Blease, L.

Irving of Dartford, L.

Ponsonby of Shulbrede, L. [Teller.]

Boston of Faversham, L.

Jacques, L.

Rochester, L.

Brockway, L.

Janner, L.

Seear, B.

Brooks of Tremorfa, L.

Jeger, B.

Sefton of Garston, L.

Bruce of Donington, L.

Kaldor, L.

Stewart of Alvechurch, B.

Byers, L.

Kirkhill, L.

Stewart of Fulham, L.

Cledwyn of Penrhos, L.

Lee of Newton, L.

Stone, L.

Collison, L.

Llewelyn-Davies of Hastoe, B. [Teller.]

Taylor of Gryfe, L.

David, B.

Taylor of Mansfield, L.

Davies of Leek, L.

Maelor, L.

Underhill, L.

Elwyn-Jones, L.

Northfield, L.

Wigoder, L.

Evans of Hungershall, L.

Ogmore, L.

Wilson of Radcliffe, L.

Goronwy-Roberts, L.

Oram, L.

Winstanley, L.

Hale, L.

Peart, L.

Winstanley, L.

Hall, V.

NOT-CONTENTS

Airey of Abingdon, B.

de Clifford, L.

Gridley, L.

Alexander of Tunis, E.

De La Warr, E.

Grimston of Westbury, L.

Avon, E.

Denham, L. [Teller.]

Haig, E.

Balerno, L.

Drumalbyn, L.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Bellwin, L.

Eccles, V.

Belstead, L.

Ellenborough, L.

Hanworth, V.

Bridgeman, V.

Elliot of Harwood, B.

Harmar-Nicholls, L.

Brougham and Vaux, L.

Falmouth, V.

Hornsby-Smith, B.

Campbell of Croy, L.

Ferrers, E.

Hunt of Fawley, L.

Cathcart, E.

Forester, L.

Hylton-Foster, B.

Chelwood, L.

Fortescue, E.

Killearn, L.

Cockfield, L.

Gainford, L.

Kimberley, E.

Colville of Culross, V.

Galloway, E.

Long, V.

Cork and Orrery, E.

Glenarthur, L.

Lyell, L.

Craigavon, V.

Gowrie, E.

Macleod of Borve, B.

Cullen of Ashbourne, L.

Greenway, L.

Mancroft, L.

deal. The last thing that I think my Secretary of State should ever want to become involved in would be the details of a commercial deal, and in all probability the deal would be between the company—particularly if it were a large company—and the private interests who were to take it over.
The power of the Secretary of State at such a point, if he has taken over responsibility for the company, obviously is very necessary in order that he can ensure that the deal is a fair one in relation both to his constitutional duties and his duties as shareholder. I believe that that would be the nearest equivalent of normal practice in the commercial world.
Lord BRUCE of DONINGTON: I beg to move the amendments en bloc.
8.34 p.m.
On Question, Whether the said amendments (Nos. 3 to 6) shall be agreed to?
Their Lordships divided: Contents, 47; Not-Contents, 73.

CONTENTS

Ardwick, L.

Hampton, L.

Phillips, B.

Birk, B.

Hatch of Lusby, L.

Pitt of Hampstead, L.

Blease, L.

Irving of Dartford, L.

Ponsonby of Shulbrede, L. [Teller.]

Boston of Faversham, L.

Jacques, L.

Rochester, L.

Brockway, L.

Janner, L.

Seear, B.

Brooks of Tremorfa, L.

Jeger, B.

Sefton of Garston, L.

Bruce of Donington, L.

Kaldor, L.

Stewart of Alvechurch, B.

Byers, L.

Kirkhill, L.

Stewart of Fulham, L.

Cledwyn of Penrhos, L.

Lee of Newton, L.

Stone, L.

Collison, L.

Llewelyn-Davies of Hastoe, B. [Teller.]

Taylor of Gryfe, L.

David, B.

Taylor of Mansfield, L.

Davies of Leek, L.

Maelor, L.

Underhill, L.

Elwyn-Jones, L.

Northfield, L.

Wigoder, L.

Evans of Hungershall, L.

Ogmore, L.

Wilson of Radcliffe, L.

Goronwy-Roberts, L.

Oram, L.

Winstanley, L.

Hale, L.

Peart, L.

Winstanley, L.

Hall, V.

NOT-CONTENTS

Airey of Abingdon, B.

de Clifford, L.

Gridley, L.

Alexander of Tunis, E.

De La Warr, E.

Grimston of Westbury, L.

Avon, E.

Denham, L. [Teller.]

Haig, E.

Balerno, L.

Drumalbyn, L.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Bellwin, L.

Eccles, V.

Belstead, L.

Ellenborough, L.

Hanworth, V.

Bridgeman, V.

Elliot of Harwood, B.

Harmar-Nicholls, L.

Brougham and Vaux, L.

Falmouth, V.

Hornsby-Smith, B.

Campbell of Croy, L.

Ferrers, E.

Hunt of Fawley, L.

Cathcart, E.

Forester, L.

Hylton-Foster, B.

Chelwood, L.

Fortescue, E.

Killearn, L.

Cockfield, L.

Gainford, L.

Kimberley, E.

Colville of Culross, V.

Galloway, E.

Long, V.

Cork and Orrery, E.

Glenarthur, L.

Lyell, L.

Craigavon, V.

Gowrie, E.

Macleod of Borve, B.

Cullen of Ashbourne, L.

Greenway, L.

Mancroft, L.

Mottistone, L.

St. Davids, V.

Swinfen, L.

Mowbray and Stourton, L.

St. Just, L.

Swinton, E.

Murton of Lindisfarne, L.

Sandys, L. [Teller.]

Torphichen, L.

Northchurch, B.

Savile, L.

Tranmire, L.

Orkney, E.

Selkirk, E.

Trefgarne, L.

Orr-Ewing, L.

Shannon, E.

Trenchard, V.

Pender, L.

Sharpies, B.

Vaux of Harrowden, L.

Redesdale, L.

Stamp, L.

Vivian, L.

Rochdale, V.

Sudeley, L.

Resolved in the negative, and amendments disagreed to accordingly.
8.42 p.m.
Clause 2 agreed to.
Clause 3 [Finance for companies transferred to Secretary of State]:
[Amendments Nos. 7 to 9 not moved.]
On Question, Whether Clause 3 shall stand part of the Bill?
Lord LEE of NEWTON: As I understand Clause 3, we are dealing with writing off capital which is represented by the firms which have been sold by the NEB or by the agencies, and my understanding is that the agencies are to be answerable to the Scottish and Welsh Ministers, who for all we know may take a view different from that of the Secretary of State for Industry. 1, for my part, have no objection—in principle, anyway—to dead capital being written off. Indeed, I remember on one occasion writing off about £415 million of the NCB's capital because it was imposing a heavy penalty on the NCB. Over the years there had been many pit closures, the coal industry having been asked by the Government to invest for more coal than in fact was ever needed. Therefore, I have nothing in principle against writing off dead capital, but I submit that this case is a very different proposition. There is no question of writing off dead capital: indeed, the assets are so much alive that others are buying them in forced sales made necessary only because of the policy the Government are now pursuing. They are creating a situation, quite deliberately, to shrink the activities of the board itself in order to sell back to private firms the assets which have been made viable by the work of the NEB and the two agencies.
Of course, there are many examples of firms having been rescued from bankruptcy by enlightened reorganisation, which is forbidden under this Bill. It is
1098
always a great pleasure to learn about such rescues, either by private enterprise or, indeed, by public enterprise. But, of course, no such story can in fact be told in this instance. Clause 3 envisages that the Secretary of State has acquired the assets of the NEB and is putting such assets "up for grabs". It is to that principle (if that is the right word) that we now object. We object very much indeed to conduct of that type, and we are not willing to accept the Secretary of State's arrangements with the Treasury to complete emasculation. It is because of our opposition to that which lies behind Clause 3 that I myself object to the clause standing part of the Bill.
Viscount TRENCHARD: The fact that the noble Lord has not moved the amendments which were standing in his name disappoints me no end, because I wanted, possibly at the expense of my noble friend Lord Cockfield, to make the point that in the past many Ministers have sought to leave out the powers of the Treasury in giving permission for money affairs—Ministers of more than one Government.
Lord LEE of NEWTON: If the noble Viscount agrees to second it, I will move it.
Viscount TRENCHARD: But really that was not practical; and the other amendment was a technical one. I do not think that Clause 3 has any of the sinister concepts that the noble Lord, Lord Lee, suggests, if I followed him correctly. This is a clause which follows the power to transfer assets to the Secretary of State, which we have discussed at considerable length, and provides the necessary finance in, I think, unobjectionable, sensible and technically correct ways in order for him to be able to discharge his duties if those companies are transferred to him. I think I would really ask the noble Lord to be a little more specific as to what is wrong with that. I see it as inevitably following Clause 2, upon which the Committee has just voted.
Lord BRUCE of DONINGTON: The noble Viscount has himself said that in his view Clause 3 essentially follows Clause 2. This is a remarkable situation, because here we have a situation where, in Clause 2, he takes powers to direct the terms and everything else of transferring assets to himself and/or to his nominees, presumably with the aim of disposal, because that is the avowed policy of his party. Now we come to a situation where, according to the note explaining the clause, it:
"empowers the Secretary of State to provide finance for companies in which a controlling interest has been transferred to him from the NEB".
So, in a situation where not only does the Secretary of State acquire the company, presumably for some good purpose, but (if I may use the term loosely) "flogs" it off to private enterprise, he wants to finance it before he does so.
Viscount TRENCHARD: No.
Lord BRUCE of DONINGTON: If the noble Viscount will excuse me for a moment, I am reading directly from the explanatory note to the Bill.
Viscount TRENCHARD: I wonder whether I could interrupt. I wonder how the noble Lord would suggest that the Secretary of State should carry out his responsibilities in relation to Rolls-Royce, for instance, in the continued probably quite long interval before that company can be returned to private ownership, without the kind of powers spelled out in Clause 3.
Lord BRUCE of DONINGTON: I can answer the noble Viscount very quickly. He should not exercise the powers under Clause 2. This is the very simple answer. The noble Viscount admits that the Government are proceeding with such indecent haste for purely dogmatic and doctrinaire reasons to dispose of assets which are in either the ownership or the partial ownership of the NEB, and he wants to exercise Clause 2 with such haste that he thinks, "I need not bother about taking it over now because if I need finance to hold it over for a bit longer I can get it under Clause 3". I should have thought that that was a very unsound way of doing it. The correct thing, of course, is that if Clause 2
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is applied properly and in due time, even in strict conformity with the policy of the Conservative Party, Clause 3 ought not to be necessary.
Lord ROCHESTER: As one who has just given evidence of support to the Labour Opposition by voting with them on the last amendment, may I endeavour to mediate? I must say that for our part (for I think I speak for my noble friends as well) we feel that what the noble Viscount has just said is not unreasonable. It seems to follow on what we have just done. We have had a vote on the principle involved and have gone our separate ways. I hope that in the circumstances the noble Lord, Lord Lee of Newton, or Lord Bruce of Donington, will not press this matter any further.
Clause 3 agreed to.
Clause 4 [Public dividend capital.]:
On Question, Whether Clause 4 shall stand part of the Bill?
8.52 p.m.
Lord BRUCE of DONINGTON: Clause 4 provides for the making of payments by the NEB and agencies in reduction of their public dividend capital. The NEB and the agencies are empowered to make such payments with the agreement of the Secretary of State, and must do so if required by him. I think it is remarkable that the Secretary of State should seek powers of compulsion for an enterprise to reduce its capital and to pay over the funds (doubtless for the pleasure of the noble Lord, Lord Cockfield, for application to the Consolidated Fund or something like that) when, in the view of the company itself or the NEB, it is, on purely commercial grounds, not desirable that the capital of the company should be reduced.
I can think of many circumstances. The board of directors, whether or not confirmed by their shareholders at an annual general meeting, may have farsighted plans for the development of the company in the company's own interest and, if I may say so, in the interests of the nation as a whole. They may desire to keep their capital intact, because (whether or not the Secretary of State likes it on purely doctrinaire grounds) they may wish to extend their activities

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into a whole series of developments and make the company more prosperous than it is.
I should have no objection if the NEB or one of the agencies as a matter of their own skill and judgment—and we have it on the authority of the noble Lord that the NEB and the agencies are composed of illustrious individuals—in consultation with the Secretary of State agreed to a reduction of capital as in the foreseeable future capital could not be more profitably employed and might (to the pleasure of Lord Cockfield) be applied in reducing his public sector borrowing requirement. If the decision is arrived at jointly on industrial and commercial grounds and in consultation between the Secretary of State and the agencies or the NEB, then I am in agreement with it.
But here, once again we have the doctrinaire diktat. If the Secretary of State decides that there are unused funds or decides for his own purposes that there is surplus capital in a particular concern, he may decide on purely political grounds to direct a return of capital. He may decide, on the eloquence of the noble Lord, Lord Cockfield, and the weight of support that we are reliably informed he commands in the Cabinet, that these concerns are in effect milked—not of income, as they have been in the case of the Electricity Board and the Gas Board—of their capital. That is the reason why I propose to ask the noble Lords on the Liberal Bench to join us in resisting this diktat. If the noble Viscount will undertake to introduce at Report stage a suitable amendment which indicates that this is a matter of joint consultation between the boards and comes on the initiative of the board, this is one thing which we might consider; otherwise, I would advise my colleagues to go into the Division Lobby against this clause.
8.56 p.m.
Viscount TRENCHARD: I shall explain in a moment the technical purpose of this clause; but in relation to who could have power over public dividend capital it clearly must be the Government and the Secretary of State working in conjuction with his colleagues. To decide how much public dividend capital is necessary cannot he a question for the NEB.
This clause is here for the following set
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of reasons. Under paragraph 5(3) of Schedule 2 to the Industry Act 1975, the Secretary of State already has power to require the NEB to make payments to him in consideration of receiving public dividend capital. That power is sufficiently widely drawn to cover the surrender of share disposal receipts to the Exchequer. The same applies to the agency. That has been there in the 1975 Act. The noble Lord's amendment would not therefore prevent the Government from obtaining the actual proceeds from disposals by the NEB or the agencies; but, because there is no existing statutory power for him to write down public dividend capital, the appropriate adjustments could not be made to the NEB's or the agency's capital structure to reflect the fact that they would have surrendered the actual receipts from the disposals. Without the clause, the effect of the NEB's surrendering the receipts from disposals would be to depress artificially their financial performance. Their apparent results would no longer reflect their true performance as the public dividend capital, or part of it, would not be represented by companies or assets that they still held.
Noble Lords opposite may disagree with Government policy on "privatisation", which we have debated several times already. That is a difference of principle. But it is clearly necessary that the NEB's books should show the effect of disposals in a sensible way. I therefore hope that noble Lords opposite, if that explanation has helped them, will withdraw their opposition to this clause.
Lord LEE of NEWTON: Is it not the case that Clause 4 reduces the £3,000 million rising to £4,500 million of the 1979 Act as far as the NEB is concerned and that the Scottish Development Agency—I am quoting from the Under-Secretary at the Committee stage in another place—
Viscount TRENCHARD: There could have been different clause numbers. It is Clause 5 which deals with the financial limits. Clause 4 deals with the reduction of public dividend capital in the Bill before the Committee. That is for the technical reasons that I have described. Otherwise, if the board no longer has a company, it would still have the dividend capital and we should not be able to do anything about it.
Lord BRUCE of DONINGTON: The noble Viscount has made the point once again that this is a purely technical matter and largely a question of the presentation of accounts in their form. May I draw the noble Viscount's attention to the wording of the clause as it now stands:
"The Board may with the agreement of the Secretary of State, and shall if the Secretary of State with the approval of the Treasury requires them to do so, make payments to the Secretary of State in reduction of the public dividend capital of the Board;"
Let nobody think that this is merely a window-dressing operation to regularise matters from an accounting point of view. Anybody with any knowledge of accounts knows that this is not so, and it says so in the Bill. It says:
"… make payments to".
"Payments", if "payments" means anything, means "payments in specie". We do not know in a year's time, with inflation running at 20 per cent. with no possibility of a reduction, what the payments are going to be worth in real terms. But they are still payments and they are a matter of compulsion. There is no need for the noble Viscount to go beyond anything that is said in the explanatory statement to the Bill at Clause 4. It explains the position precisely as I have endeavoured to explain it, embodying a
principle with which we do not agree and upon which we propose to divide the Committee.
Viscount TRENCHARD: I repeat that there is no existing statutory power to write down public dividend capital. I also ask the noble Lord to consider once again who can make decisions about public dividend capital. It cannot be the NEB; it must be the Government.
Lord ROCHESTER: Before this is put to the test, I am afraid that the noble Lord, Lord Bruce of Donington, cannot have our support if he takes this matter to the Division Lobby. At the Report stage in another place this was judged to be consequential—and I have the relevant copy of Hansard before me—by my honourable friends. Although we are capable of making up our own minds on these Benches in this Committee, I should say that if this matter is pressed to a Division, we shall not support the Opposition but feel obliged to vote with the Government.
9.3 p.m.
On Question, Whether Clause 4 shall stand part of the Bill?
Their Lordships divided: Contents 73: Not-Contents 35.

CONTENTS

Airey of Abingdon, B.

Gainford, L.

Orr-Ewing, L.

Alexander of Tunis, E.

Galloway, E.

Pender, L.

Avon, E.

Glenarthur, L.

Rochdale, V.

Balerno, L.

Gowrie, E.

Rochester, L.

Bellwin, L.

Gridley, L.

St. Davids, V.

Belstead, L.

Grimston of Westbury, L.

St. Just, L.

Bridgeman, V.

Haig, E.

Sandys, L. [Teller.]

Brougham and Vaux, L.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Savile, L.

Campbell of Croy, L.

Seear, B.

Cathcart, E.

Hanworth, V.

Selkirk, E.

Chelwood, L.

Harmar-Nicholls, L.

Sharples, B.

Cockfield, L.

Hornsby-Smith, B.

Stamp, L.

Colville of Culross, V.

Hunt of Fawley, L.

Sudeley, L.

Cork and Orrery, E.

Killearn, L.

Swinfen, L.

Cullen of Ashbourne, L.

Kimberley, E.

Swinton, E.

de Clifford, L.

Long, V.

Torphichen, L.

De La Warr, E.

Lyell, L.

Tranmire, L.

Denham, L. [Teller.]

Macleod of Borve, B.

Trefgarne, L.

Drumalbyn, L.

Mancroft, L.

Trenchard, V.

Eccles, V.

Mottistone, L.

Vaux of Harrowden, L.

Ellenborough, L.

Mowbray and Stourton, L.

Vickers, B.

Elliot of Harwood, B.

Murton of Lindisfarne, L.

Vivian, L.

Ferrers, E.

Northchurch, B.

Wigoder, L.

Forester, L.

Ogmore, L.

Winstanley, L.

Fortescue, E.

Orkney, E

NOT-CONTENTS

Birk, B.

Hale, L.

Northfield, L.

Blease, L.

Hall, V.

Oram, L.

Boston of Faversham, L.

Hatch of Lusby. L.

Peart, L.

Brockway, L.

Irving of Dartford, L.

Pitt of Hampstead, L.

Brooks of Tremorfa, L.

Jacques, L.

Ponsonby of Shulbrede, L. [Teller.]

Bruce of Donington, L.

Janner, L.

Sefton of Garston, L.

Cledwyn of Penrhos, L.

Jeger, B.

Stewart of Alvechurch, B.

Collison, L.

Kaldor, L.

Stewart of Fulham, L.

David, B. [Teller.]

Kirkhill, L.

Stone, L.

Davies of Leek, L.

Lee of Newton, L.

Underhill, L.

Elwyn-Jones, L.

Llewelyn-Davies of Hastoe, B.

White, B.

Goronwy-Roberts, L.

Maelor, L.

White, B.

Resolved in the affirmative, and clause agreed to accordingly.
On Question, Whether Clause 5 shall stand part of the Bill?
9.11 p.m.
Lord LEE of NEWTON: The switch from Clause 4 to Clause 5 having taken place, after having put down an amendment to Clause 4, may I say a word about Clause 5 before we part with it. As I understand it, the 1975 Act laid down limits for the NEB of some £3,000 million and provided that it could be increased by order to £4,500 million. Clause 5 now removes the power to make that increase. So far as the Scottish Development Agency is concerned—and my Scottish friends know the state of the economy up there at the moment—the limit of £500 million could be increased to £800 million under Clause 5; that increase will not now be implemented. When we come to the Welsh Development Agency, the effect of Clause 5 is that, whereas the 1975 Act gave an amount of £250 million which could be increased to £400 million, the limit will remain at £250 million. Therefore, on the argument that by the Government's policies there would be increases of some type or another for the private sector, the reductions in amount from the NEB, the Welsh Development Agency the Scottish Development Agency will be as I have described.
We know of the state of industry in Wales and in Scotland. We know of the pace of inflation that will make that which they will receive of far less value than it was. The Government are choosing at this time to force the agencies in particular to try to bring about a decent level of employment and to generate new industry in Wales and in Scotland on the basis I have described. It seems to me that for a Government deliberately so to treat
1106
places in the United Kingdom where there is particularly heavy unemployment and where there is worse to come, according to the pundits—and, indeed, according to the Government themselves—at such a moment savours of a Government who do not care two hoots about the levels of unemployment in those areas.
9.14 p.m.
Lord DAVIES of LEEK: I am grateful to my noble friend on the Front Bench who spoke about the Welsh situation. If one looks at the world situation, whatever economic standpoint we might take—and I am not going to speak for more than a couple of minutes, so I do not want noble Lords to think that I am trying to waste time—I really believe that at this juncture in the history of capitalism (I use the good old fashioned word) there is not the slightest doubt about it: Major economists from one end of the world to the other who study these matters, and may be themselves in support of the acquisitive society, are realising more than ever that at this juncture to get private enterprise to invest is very difficult indeed.
Consequently, in certain areas of the world—I will just take Wales, but I could take it on a vast world scale—it would be absolutely necessary for an intelligent Government which was looking after the welfare of the State to keep up its sleeve an organisation such as the National Enterprise Board that we established. Particularly is it true of the Welsh valleys, because of the nature of that society which had impinged upon it in our glorious 19th century and the period of our imperialism the great industrial incubus of one industry only; namely, coal.
That has gone, and to take away the National Enterprise Board that could have encouraged small businesses—and to use the Schumacher phrase, "small is

1107
beautiful"—I think, without trying to make a party point, is a mistake on any Government's shoulders. Consequently, in this tiny debate on clause stand part, I must regret that this has been left in by the Government. I sincerely believe it is shortsighted.
Lord TAYLOR of GRYFE: I do not propose at this stage at all to discuss the doctrine of whether we should have a greater degree of State involvement or private enterprise. The Government have made up their minds on that matter and, frankly, I go so far as to say that if private capital is available to support industrial development there is no reason why the State should be involved in financing such projects. Therefore, I would try to look at this matter quite objectively, as one would look at any financial proposition.
What we are doing, as the noble Lord has just said, is putting financial limits on the activities of these agencies. But in a period of inflation you are going to have a substantial reduction in these limits anyway, because they are financial limits; so that you are, by the mere fact that there is a 20 per cent. inflationary rate, reducing their capacity to intervene. That is one thing.
The second thing, of course, is that it is common ground between all parties that the economic situation is not going to improve in the immediate future; and various Ministers have spoken about two or three years, and so on, in which we shall have a deterioration in economic activity. It is in that situation that interventionist agencies may be necessary.
I am not arguing the doctrine of whether the State should be more involved or less involved, but there are very few economies in the world—and I am thinking about Japan, Germany and other countries—where they have retained these tools of intervention to be used in a situation which shows signs of deterioration and where the process of de-industrialisation must be halted in the interests of the survival of the nation. Therefore, I say that the Government's objective of reducing the involvement is going to be achieved by inflation. Secondly, the need for tools of intervention could be all the greater as the total economic situation deteriorates.
1108
The theory is, of course, that if you limit the financial powers of these agencies there is some other source of finance. But we are moving into a period of very high interest rates where the attraction of Government stocks to investors is much greater than that of risk capital investment in a period of economic uncertainty. Therefore, there is no immediate availability of funds on a large enough scale for industries that are showing weakness or have very poor prospects in the immediate future. I would say that in the light of the growth of inflation, the general economic deterioration, and the competing sources of finance in the City, it might be wise in the interests of the nation and of the nation's survival that we keep these limits reasonably high.
I have a good deal of admiration for the men who are serving on the NEB and in the SDA. It is unfortunate perhaps that our trade union friends have not found it possible to continue their membership. I know that the Minister agrees with me in that regard. Nevertheless, the nation and the Government are indebted to the men who are serving in these agencies. If you consider their background and their record in industry, they are men of considerable wisdom and experience. If you have confidence in these men to do a job for the nation then it might be very unwise to limit them. Why limit them? I trust their wisdom. I trust their judgment. They are not all socialists who are hellbent on nationalising everything in sight. They are respected industrialists and bankers who have taken a view of a situation and can be trusted. To that extent, therefore, it might be wise not to limit them.
For all these reasons I would certainly commend to the Minister the view that it is unwise to insist on these limits. This strikes me as being a bit of a gesture. We do not need these kind of gestures but we may need these instruments, which I am glad are going to be maintained, but I do not think you should reduce their capacity to intervene at this stage.
Lord MOTTISTONE: I greatly respect the words of Lord Taylor of Gryfe, who is much more knowledgeable in these matters than I am, but that is not the problem. Is not the problem that when there is underpinning from the State,

1109
it creates in people's minds a sense of dependence and not get up and go? Under the guidance of the noble Lord opposite, we introduced all these agencies, we introduced all this underpinning, this supporting, this "Auntie Government can help you out if you cannot help yourself". I am sure noble Lords did not feel that when they put the legislation through, but that is what I fear has been the effect on the people. Having done this underpinning, and created this position in which people feel that there is somebody to fall back upon, they have not realised that it is up to us all in this country to get ahead and to do something on our own, without an underpinning, with a feeling that we have got to try.
What the sense of this rejection of the clause is seeking to do is to say: "Let us keep it nice and soggy so that Auntie Government continues to help, and maybe help a little bit more". This surely is wrong—surely we must stand on our own feet.
Lord TAYLOR of GRYFE: The people who are going to administer these cash limits are not the Government, are not the people who are creating a soft atmosphere or a soft option. They are hardheaded businessmen. I am simply asking that we trust the judgment of these substantial people who presently man the NEB, the SDA, the Welsh Development Agency, and so on.
Lord MOTTISTONE: I am sure they are splendid people in every way and exactly as the noble Lord, Lord Taylor of Gryfe, says. It is the effect on people of the sort of legislation which is being modified in this Bill which is what matters rather than the day-to-day competence of the people trying to administer the previous laws. I am not quarrelling with that, but with the underlying thought. This Bill is trying to modify that. It is not going to wipe it away, but to modify it so that people stand on their own feet.
Lord BROOKS of TREMORFA: Before I make my main comments on this amendment, may I say a word or two to Lord Mottistone. I quite understand the view he has just put, that people should stand on their own feet; that they should not hang about and wait for "Auntie Government" to assist them.
1110
Unfortunately, there are some areas of the United Kingdom which, for historical reasons and not of their own choosing, simply have to look to Auntie Government.
I have said before in debates in your Lordships' House, and, indeed, I said it again this afternoon—perhaps the noble Lord, Lord Mottistone, was not here—that almost 80 per cent. of the insured population of Wales depend upon public expenditure of one kind or another. Private enterprise is not going to rush in to help the people of the Principality, particularly in the light of the severe problems that we shall face as a result of the rundown of Llanwern and Port Talbot, and, of course, the unemployment which will be consequential upon those rundowns. So I am wondering whether the noble Lord, Lord Mottistone, would exempt at least the Principality from some of his strictures, because I assure your Lordships, as I said earlier, that we in the Principality really do not mind whether the investment is private or public, as long as the investment is there.
What this Bill seeks to do, to use a word that is popular in these debates, is to emasculate the Welsh Development Agency. If the Government want to emasculate the National Enterprise Board, I shall, of course, oppose it. But when they want to do the same thing to the Welsh Development Agency, they are talking about two different animals which are designed to do two different tasks.
The noble Viscount, Lord Trenchard, has a wholly unintentional but lamentable talent for provoking me. He has repeatedly referred to some of our amendments as technical and consequential. Of course, in some respects that is correct, but he has constantly referred today to the Welsh Development Agency and other agencies as not being a panacea. No one on this side has ever suggested that they were panaceas, or were ever intended to be panaceas. They were intended, in the main, to be part of a thrust to help the regions, in the case of the Welsh Development Agency, along with a series of other measures, to help the Welsh economy through a very difficult period, and the agency has done a very good job. What this clause is intended to do is to make the task of the Welsh Development Agency even more difficult than it already is.

1111
Perhaps I may quote again from the document which was published by the Regional Policy Committee, comprising the four South Wales counties, which stated:
"Merely to generate the momentum to maintain the South Wales economy in its pre-steel crisis state will require at least an additional 20,000 new jobs in manufacturing industry (that is replacement for steel and coal jobs lost, plus additional manufacturing jobs lost in this crisis). The cost of this is estimated as a minimum of £380 million Rhodes and Moore (the Cambridge Economists) on the basis of past experience have put this figure much higher at £1 billion".
The role of the Welsh Development Agency and its ability to generate industrial activity in Wales is more important now than ever it has been. So I understand that it is the intention of the mover to press this to a Division, and he should have the wholehearted support of the Committee.
9.29 p.m.
Lord BRUCE of DONINGTON: In addressing myself to Clause 5, I wish simply to deal with the aspect that reduces the limits of finance available to the two agencies, as distinct from the National Enterprise Board. I do not wish to discuss the board, but wish rather to discuss the reductions that have taken place in regard to the Welsh Development Agency and the Scottish Development Agency. The Committee will be aware that the existing limits for the Scots and the Welsh are £500 million and £250 million, but I believe there is power by order, under the 1979 Act, to increase them to £800 million and £400 million respectively. What the present clause does is to take the National Enterprise Board together with the two boards; it lumps the whole lot together and limits them to £3,000 million. This is, I understand, the position.
Something that has been discovered in Europe—and is, I think, known to all economists, including the noble Lord, Lord Cockfield—is that there is a regional problem in practically every country in Europe, including the most prosperous ones. In other words, the regional problem is not unique to the United Kingdom, although its intensity in some areas, particularly in South Wales and Scotland and also, of course, in Northern Ireland, is rather greater than it is in some parts of Germany, and it is about on a par with
1112
some parts of Italy, particularly the Mezzogiorno.
The common experience in Europe over the last four years—I speak with a year's experience as chairman of the European Parliament's Regional Committee, reinforced by Commission reports on the subject—is that the poorer regions are still getting poorer while the rich regions are still getting richer. The detailed statistics will not arise for discussion on this clause, and I reserve the right and, indeed, the duty to refer to the figures when we come to discuss the provisions of Clause 14. But there can be no doubt, even on the basis of the unemployment statistics which were issued only last week, that exactly the same thing is happening in the United Kingdom, as an entity, as is happening in Europe. The poorer regions are getting poorer and the richer regions are getting richer.
Despite the increase in the unemployment figures, your Lordships will find that the South-East region still remains remarkably stable, at approximately the same percentage of unemployment as it was last year at this time. This is not the case with the other regions. I am a little puzzled to know why the Government should want to reduce these limits. We are not talking here of sums that are paid out to people who, through no fault of their own, are unemployed or who through no fault of their own are sick or incapacitated. We are not talking about payments to indivudals out of the normal social security scheme. Some noble Lords opposite seem to think that the payment of social security to individuals somehow inhibits their will to work. Believe me, there are well over 1½ million people who at present would be only too willing to work if there were jobs for them. But I digress. The finance available to the agencies is not for payments of that kind. It is, in the main, as my noble friend has indicated, for payments towards the establishment of enterprises, of infrastructure and the rest of it within the regions themselves.
Why, therefore, should the Government seek to restrict that development at this time? Bearing in mind the desire of all parties in the House to aid private enterprise in establishing new enterprises, particularly in view of the very dismal forecasts that have been incorporated in the

1113
annex to the region budget statement, one would have thought that the mind of a reasonable Government would have been directed towards making things as easy as possible for private enterprise to establish itself in these areas in order to reduce the disparities in the regions, because, of course, the Government intend in effect to regard these matters as digits. In a sense people have become statistics in the same way that capital is a statistic. The difference between capital and labour is that capital can be transferred from one side of the earth to the other by key tested telex in about 2½ seconds but if you want labour transferred from one place to another (which you would have to do to obey the immutable laws of capitalism, which have been so recently enshrined by Milton Friedman and his British disciples) one would expect labour automatically to flock to where capital is prepared to invest.
But the noble Lord knows perfectly well, as a matter of practical experience, that there is the whole of the social furniture established in the localities which suddenly, through no fault of their own, find themselves divested of the means by which they can enter into the phase of production. Thousands of millions of pounds have been sunk in the provision of hospitals, of schools, of houses and of all the other social furniture which goes to make up life in those particular areas, inadequate though (as we all know) it is still in some of those areas. Therefore, I should have thought that it would be in the interests of all sane Governments, mindful of the interests of all the people, mindful of the inherent tendency for the rich areas to get richer and the poor areas to get poorer—rather than restrict the limits of this moment in time—
Lord BROUGHAM and VAUX: May I ask the noble Lord a question. Will he not agree that the noble Lord's Government put a lot of money into a factory at Treforest in South Wales and the company has gone bankrupt?
Lord BRUCE of DONINGTON: That might well be so. The noble Lord has asked me a question and I will answer him as I understand it. I am not aware of the particular incident to which he referred; if the noble Lord had given me full particulars I would have replied to
1114
it. If the noble Lord is making it conditional for the adoption of a principle that every grant of aid to every enterprise should be successful, and that if it is not successful in one or two instances that would vitiate the principle, then on that basis the whole of private enterprise in the United Kingdom stands condemned because in private enterprise there have been the most deplorable failures, the most deplorable standards of management. But they do not apply over the whole range of British industry and in case the noble Lord gets too mournful about the matter when discussing the plight of British industry, I am pleased to report that out of the 50 most prosperous companies in the whole of Europe no fewer than 25 are British companies. I am very pleased to report their success. It does not altogether square with some of the mournful tales we hear from time to time when questions of taxation are being discussed.
However, I revert to the principle. It should surely be the aim of every Government—bearing in mind that all citizens are supposed to be equal before the law—that the poorer areas are alleviated. That is so, even adopting the principles of noble Lords opposite, not necessarily by establishing State industries, although that might well be necessary and I certainly would not exclude it. But we are not insisting on that—not by subsidising individuals and by handing them out various social security benefits, which are not the subject of this Bill. I cannot understand why they should deliberately restrict themselves to this policy which flies in the face of the conclusion of every economist qualified to write about regional affairs in the whole of Western Europe. If any noble Lord cares to give me the name of an economist discussing regional questions who comes to the opposite conclusion I would be very pleased to be supplied with the name and the reference, and I will sling that back in his teeth.
So far as we are concerned, this is a regressive clause altogether; it displays an attitude of mathematical cutting, in order to produce some effect upon a public sector borrowing requirement in the future or some monetary supply M3 definition which we now know is not of all that frightful individual significance anyway. We reject it because it is a doctrinaire measure calculated, not to meet the real

1115
needs of the regions to which they apply or the industries at which they might aim, but purely in satisfction of a dogma which has progressively been proved to be entirely in error anyway.
Lord ROCHESTER: I wonder whether, before the noble Viscount replies, I may intervene in an endeavour to make progress in a generally acceptable way. If I may latch on to something which I understood the noble Lord, Lord Bruce, to say earlier. He wished to reserve to himself the right to revert to the question of the amounts of aid to be given when, perhaps tomorrow, we come to the very important Clause 14, which deals with regional development grants. I was not quite sure to what the noble Lords were going to lead either in relation to any action he might feel like advising his noble friends to take in relation to this amendment, or indeed precisely what he would have in mind for tomorrow. I always listen with the greatest care to what the noble Lord, Lord Taylor of Gryfe, has to say, and I was impressed by what he said, as always. However, I wonder whether he, and indeed other noble Lords of the Labour Opposition, might feel that the better place in which to resolve this question of principle in regard to amounts of aid might be under Clause 14, rather than now. Certainly if that was their view, subject of course to the way in which the debate on Clause 14 might proceed, I think they are likely to find a sympathetic response to their views from these Benches.
Viscount TRENCHARD: Following what the noble Lord, Lord Rochester, has just said, I shall not deal with questions of regional policy, to which we have made ample reference at Second Reading and again shortly at the start of today's Committee stage, and which, as the noble Lord, Lord Rochester, rightly points out, will come up no doubt under the Clause 14 amendment. I say, will come up, if they must, because in fact the policy within statutory powers has been decided, debated at length in this Chamber, and Clause 14, as I shall describe tomorrow, does not in fact alter the regional policy. It is quite clear to me that noble Lords opposite are taking any opportunity of restating the arguments on regional policy as such that have been stated before.
1116
We are supposed to be discussing whether Clause 5 shall stand part. The noble Lord, Lord Brooks, was supporting an amendment; I do not know what amendment he was supporting. I return his compliments to me, and those of his friends who paid me more generous ones earlier. Just to get the facts of Clause 5 right, and the noble Lord, Lord Bruce, has them right, it was the 1979 Act that laid down £3,000 million for NEB with power to raise to £4,500 million, Scottish Development Agency £500 million with power to raise to £800 million, and Welsh Development Agency £250 million with power to raise to £400 million. The powers to raise are deleted here and the figures held. That is in view of our change of policy which is gradually to decrease the shareholdings, and thus the needs to borrow, of these organisations.
We have been through this matter today again as well as during Second Reading. We shall move steadily and slowly. Initially, we asked the NEB to find £100 million worth of sales in the financial year. We let it off that particular hook. It has sold ICL for, I think, a fair price of all concerned, and we welcome it back into the private sector and wish it well. We believe that other disposals will follow. Therefore, against these policies which we really have debated, these figures are not so unreasonable as perhaps the noble Lord, Lord Taylor of Gryfe, in a very reasonably toned approach may feel. I would ask him to take account of the change of policy.
As regards the noble Lord, Lord Brooks of Tremorfa, once again I should like merely to say that there is no intention of emasculating the Welsh Development Agency, either in relation to the figures, about which we are talking here, or in relation to its other purposes to which we recently allocated £48 million extra to build factories to relieve the problems of the public sector, as he rightly says, on which Wales has too great a dependence. There is considerable growth in Wales to which we shall no doubt refer on other occasions in your Lordships' House. So I should like to suggest that this clause, to which no amendment is recorded, stand part of the Bill.
Lord LEE of NEWTON: We have heard nothing which dissuades us from the

1117
point that this is a Gradgrind kind of a clause which is unworthy of the Bill and we shall vote against it.

CONTENTS

Airey of Abingdon, B.

Forester, L.

Orkney, E.

Alexander of Tunis, E.

Fortescue, E.

Orr-Ewing, L.

Balerno, L.

Galloway, E.

Pender, L.

Bellwin, L.

Glenarthur, L.

Redesdale, L.

Belstead, L.

Gowrie, E.

Rochdale, V.

Bessborough, E.

Greenway, L.

Rochester, L.

Bridgeman, V.

Gridley, L.

St. Davids, V.

Brougham and Vaux, L.

Grimston of Westbury, L.

St. Just, L.

Campbell of Croy, L.

Haig, E.

Sandys, L. [Teller.]

Cathcart, E.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Savile, L.

Chelwood, L.

Seear, B.

Cockfield, L.

Harmar-Nicholls, L.

Selkirk, E.

Colville of Culross, V.

Hornsby-Smith, B.

Sharples, B.

Cork and Orrery, E.

Hunt of Fawley, L.

Stamp, L.

Cullen of Ashbourne, L.

Killearn, L.

Sudeley, L.

de Clifford, L.

Kimberley, E.

Swinfen, L.

De La Warr, E. [Teller.]

Long, V.

Swinton, E.

Denham, L.

Lyell, L.

Torphichen, L.

Drumalbyn, L.

Macleod of Borve, B.

Tranmire, L.

Eccles, V.

Mottistone, L.

Trefgarne, L.

Ellenborough, L.

Mowbray and Stourton, L.

Trenchard, V.

Elliot of Harwood, B.

Murton of Lindisfarne, L.

Vaux of Harrowden, L.

Falmouth, V.

Northchurch, B.

Vickers, B.

Ferrers, E.

Ogmore, L.

Vivian, L.

NOT-CONTENTS

Birk, B.

Goronwy-Roberts, L.

Peart, L.

Blease, L.

Hall, V.

Pitt of Hampstead, L.

Boston of Faversham, L.

Hanworth, V.

Ponsonby of Shulbrede, L. [Teller.]

Brockway, L.

Hatch of Lusby, L.

Brooks of Tremorfa, L.

Irving of Dartford, L.

Sefton of Garston, L.

Bruce of Donington, L.

Janner, L.

Stewart of Alvechurch, B.

Cledwyn of Penrhos, L.

Jeger, B.

Stewart of Fulham, L.

Collison, L.

Kirkhill, L.

Stone, L.

David, B. [Teller.]

Lee of Newton, L.

Taylor of Gryfe, L.

Davies of Leek, L.

Llewelyn-Davies of Hastoe, B.

Underhill, L.

Elwyn-Jones, L.

Northfield, L.

White, B.

Resolved in the affirmative, and Clause 5 agreed to accordingly.
Clause 6 agreed to.
[Amendment No. 10 not moved.]
Clauses 7 and 8 agreed to.
Viscount TRENCHARD: I beg to move that the House do now resume. I think we have gone far enough tonight at this stage on this subject.
Moved accordingly and, on Question, Motion agreed to: House resumed.