HL Deb 28 April 1980 vol 408 cc1084-117

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 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.

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 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 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 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 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 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 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.

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 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 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 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 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 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 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 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 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.

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, 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.

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.

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 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 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 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 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.

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 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.