INDUSTRY BILL

HL Deb 12 May 1980 vol 409 cc6-28

2.45 p.m.

Report received.

Clause 1 [Functions of the Board and Agencies]:

Lord ROCHESTER moved Amendment No. 1:

Page 1, line 14, at end insert— (" (g) in undertakings for which the Board is responsible, promoting the disclosure by management to employee representatives of information aimed at achieving a shared understanding of the relationship between productivity, investment, prices, pay and employment. ")

The noble Lord said: My Lords, I think that I first owe the House an apology for not having given notice at the Committee stage of the Bill of an intention to move an amendment of this kind at Report. What happened was quite simple. To my surprise, an amendment from the Opposition Front Bench to leave out Clause 19 of the Bill, which prescribes that the sections of the 1975 Industry Act relating to planning agreements and disclosure of information by companies should cease to have effect, was not moved. When, immediately afterwards, the Question was put, That the clause stand part of the Bill, I should of course have leapt to my feet and said what I had in mind, but I am afraid that my slow wits grasped what was happening too slowly and I allowed the opportunity to pass. It then seemed that the best thing I could do was to move at Report this amendment standing in the names of my noble friend Lady Seear, who is sorry that she cannot now be present this afternoon, and myself, and to which the noble Lord, Lord Bruce of Donington, and the noble Lord, Lord Kilmarnock, have been kind enough to lend their names.

I should make plain that we on these Benches are shedding no tears about the ending of planning agreements. Indeed, I think it is correct to say that not one of these has been implemented since 1975, not even in the case of Chrysler. Moreover, we do not approve of a statutory requirement that certain information should be disclosed exclusively to trade union representatives. But we do think that as much business information as possible should be given by management to representatives of employees generally, and that in eliminating the relevant sections of the 1975 Industry Act and putting nothing at all in their place the Government have missed a glorious opportunity to help to achieve that desirable objective.

I have been looking back to our discussions on this subject when we debated the Industry Bill, as it then was, in 1975, and I have been reminded that at that time members of the party opposite lent their names to an amendment which I moved, aimed at ensuring that certain information relating to the business of particular undertakings should be disclosed to employee representatives. Now there is a Conservative Government, and I should like to see in this Bill some recognition on their part of the need for employee representatives to receive from management information which would give them a clearer understanding at all levels in an undertaking of how the business is run, the alternative uses to which money can be put and, as this amendment has it, the relationship between productivity, investment, prices, pay and employment ". I believe that nothing could contribute more to an improvement in our industrial performance and, incidentally, to the avoidance of occasions such as next Wednesday's "Day of Action" that we have just been hearing about, than the sharing of information of this kind. If the Government feel able to accept this amendment, that will afford welcome evidence of their consistency and their desire to contribute to stability and continuity of policy in this field.

Instead of moving such an amendment, I could of course have sought to replace Clause 19 of the Bill with new clauses, but that would have given rise to a number of difficulties. It would have been necessary to specify the precise categories of information in place of those set out in the 1975 Act which it would be a statutory requirement for employers to disclose. That in itself, it seemed to me, would have been highly controversial. It would also be necessary to define a number of terms, and the clauses would generally have had to be much longer and more complicated than is needed for the National Enterprise Board to exercise what, in my view, is really a very simple function.

The amendment which I moved in Committee relating to the desirability of the increased involvement of employees in the making of decisions affecting them, sought to make it a function of the board to encourage action having that aim in view, and in replying on that occasion the noble Viscount, Lord Trenchard, questioned whether the word "encouraging" should find a place in legislation of this kind. He said it was in that sense that the Government believed the amendment to be unnecessary. Learning from that experience on this occasion, I have substituted for "encouraging", as your Lordships will see, the word "promoting".

The amendment makes plain that the information should be disclosed to employee representatives, and at this point I should like particularly to stress to noble Lords on the Labour Benches that although in this amendment there is no reference to trade unions, where employee representatives are trade union members, or indeed shop stewards, as in many companies they now are, if my amendment were acted upon they would of course be recipients of the information to be disclosed. By using these words the amendment gives expression to what seems to me to be a minimum requirement. I should like, however, to add that in my view, and I think in the view of my noble friends, the communication process should not end with employee representatives but with briefing groups, at which their present relevant business information should, so far as possible, also be given directly by first-line managers to all those whom they manage.

The amendment refers finally to five items— productivity, investment, prices, pay and employment. The words used are deliberately of a general kind, for I think it would defeat the whole object of the exercise to seek to define them more precisely. It is an understanding of the inescapable relationship between these items that it is so vital for management and employees to share, and, as with the amendment which I moved in Committee earlier, I once again emphasise that this is a matter only of communication and of consultation, not of negotiation, although of course it may have enormous effect on collective bargaining subsequently.

I hope that this time it will not be said that the amendment is unnecessary because people of the calibre of Sir Arthur Knight and his board do not need to be told of the importance of the point. For one thing, if what is here sought is likely to happen anyway, that seems to me to remove any possible objection to its inclusion in the Bill. More positively, I believe this matter is of such significance for our future, especially in medium-sized firms, that form such a large part of British industry, that we need to take every opportunity, including that presented by this Bill, to draw attention to the importance which I do not doubt noble Lords in all parts of the House accord to it. I beg to move.

Lord BRUCE of DONINGTON

My Lords, on behalf of this side of the House I wish to say that we are very pleased to give support to the amendment that has been moved by the noble Lord, Lord Rochester. I have no desire to go over the ground that was covered at the Committee stage when we were dealing with an amendment substantially on these lines, but it is true to say that the amendment itself, if I understood the noble Viscount, Lord Trenchard, aright at the Committee stage, more nearly meets the objections which the noble Viscount might have had to a clause of this kind. As I recall, the noble Viscount expressed some sympathy with the views that were then expressed by the noble Lord, Lord Robbins, who himself objected to the use of the word "involved".

In the Committee stage the noble Viscount seemed to give the impression, if he did not state it outright, that although he thought the subject matter of the amendment was admirable in itself, he himself considered that this was a matter that would be far better left to the individual companies as distinct from the NEB. I wonder whether the noble Viscount has had an opportunity to reconsider that in the light of the form that the debate took? The various companies involved are, in the main, new companies. They are companies which have not had a tremendous amount of experience in industrial relations. That obviously does not apply in every case, but for the life of me I cannot see why it should not be said that the board should promote the various sentiments that are expressed in the amendment itself.

Even the existence of this particular clause in the Bill would itself have some effect. It would indicate to those concerned that the NEB after all had the final power of promoting all those particular types of activity. It seems to me that the Government could quite easily accept an amendment of this kind that does not do violence to the main principles enshrined in the Bill, and therefore I am hopeful that the noble Viscount, Lord Trenchard, will indicate that he is prepared to accept the amendment.

Lord KILMARNOCK

My Lords, I should like to rise briefly from this politically neutral terrain to support the amendment to which my name is attached along with those of the noble Lord, Lord Rochester, the noble Baroness, Lady Seear and the noble Lord, Lord Bruce of Donington. Some members of your Lordships' Select Committee on Unemployment recently visited the Northwest of England, and I was lucky enough to be among them. I was tremendously struck by the emphasis laid by the managements we talked to on the importance, in their view, of improving industry-education links. They felt that the academic world was not sufficiently sympathetic to the aims and problems of British manufacturing industry. They felt that much more information about how industry actually works should be included in such school courses as economics and geography. If the desirability of improved communication between industry and schools is accepted, as I think it must be, is it not equally important, if not more so, that such communication should be continued and strengthened once the school-leaver actually takes the step of entering industry, at whatever level?

This amendment is a very simple and modest one but I think an important one. It lays upon management none of the elaborate obligations to disclose information specified in the Industry Act 1975, Part VI Sections 28 to 34, which the Government seek to repeal in this Bill. It does not specify that employee representatives must be union officials; it simply enjoins on the rump of the National Enterprise Board and the development agencies that they should promote disclosure by management to employees of information aimed at giving the workforce a better understanding of management policies. In fact, it is a simple recipe for a more open form of government in industry. If manufacturing industry in this country is to have any future at all, we simply have to overcome automatic acceptance that there are two sides of industry. I always thought this was an alarming phrase, not to say an incomprehensible one, and it is all the more alarming if we merely accept it as though it were laid down by some divine law. Anything, even such a modest proposal as this amendment embodies, which helps to promote the idea that management and labour should be on the same side is surely to be encouraged. I therefore very much hope that we shall hear from the noble Viscount, Lord Trenchard, who has these matters so much at heart, that the Government will take an opportunity of showing that on this issue their heart is in the right place.

Lord CAMPBELL of CROY

My Lords, in moving this amendment the noble Lord, Lord Rochester, made reference to support that was given to a somewhat similar amendment in July 1975, nearly five years ago, when we were dealing with the Industry Bill 1975 which became the Industry Act 1975. This is very relevant because Clause 19 of the present Bill has the effect of repealing Sections 28 to 34, the whole machinery, on which we spent three days at Committee stage at that time, dealing with disclosure of information. And this was not a procedure applying only to the National Enterprise Board and bodies within its control; it was to cover the whole of manufacturing industry in this country. So that is being taken out, and the noble Lord is suggesting that something like this might go in its place.

I do not know what my noble friend the Minister of State is going to say about this amendment because I have not had a chance to talk to him about it, but I should like to put what the noble Lord, Lord Rochester, said in its context. He rightly said that my noble friends and I supported with our voices and with our votes what he was doing, and he supported some of the similar amendments which we were making. But what we were doing almost five years ago was considering Part IV of that Industry Bill, several clauses, and we were not trying to take out that whole Part of the Bill. Of course, we were regarding our role in this second Chamber, as a revising Chamber, as trying to improve this machinery for disclosure of information which the Government of the day were putting forward. We did not regard it as our role in this House to try to vote out about eight clauses of that Bill, the whole of that Part; we were trying to improve it. But we made it quite clear that we did not think it was necessary; we did not like the procedure which was proposed, but we were trying to make changes, and we were, therefore, supporting these kinds of proposals and also putting forward proposals ourselves.

Since then it seems to me that that machinery has been little used, and I would ask my noble friend the Minister of State to tell me, if he can, how much it was used during the nearly four years after the passing of the Bill while the Labour Government were in office. The machinery had to be activated by a Minister; under Clause 28 a Minister was to serve a preliminary notice, as it was called, when he thought that a certain company should start taking action to provide information. Moreover, under subsection (3) of that clause the Government at the same time had to lay a statement before both Houses of Parliament stating that a preliminary notice had been served.

I have not seen any such statement. I should like to ask my noble friend whether in fact any statements were laid before Parliament during that time and whether the machinery was activated. If I am right in thinking that the machinery which we spent so much time dealing with in this House— both in Committee and on Report, long hours into the night; and I see noble Lords here who were present— was not activated, or was activated very little, it goes to show that this kind of thing was not necessary.

We at the time did not think that it was the best way of trying to solve problems or improve unsatisfactory situations. We all agreed that, while some companies are paragons in this field, others leave a great deal to be desired on questions of disclosure; but we did not think that legislating in the kind of way proposed in Part IV of that Bill, which became the Industry Act 1975, was a sensible way of doing it. It seems that we have been proved to be right, because almost nothing has been done under that Part of the Bill.

I think that puts it into its context. I would add that the proposals we were putting forward during the Committee stage in July 1975 were drafted in order to bring in employee representatives, people who were employed by the company, rather than trade union officials who were not employees of the company, and who indeed in some cases would be receiving information from quite a large number of companies. We were also concerned with the question of commercial confidentiality of information and we found agreement on all sides of the House on that; it was a question of how it could be drafted. Otherwise trade union officials, in the best of faith, unwittingly, without realising the sensitivity of the information, might have discussed among themselves information which was highly confidential and would then go to other rival companies.

That was the background to the discussions on the amendments which were moved at that time, and it was in relation to a system applying to the whole of British manufacturing industry, not confined to the National Enterprise Board, as this is. So I look forward with particular interest to hearing how my noble friend the Minister of State will react to this amendment. Having followed the discussions which took place at Committee stage, when I could not be here, I shall listen with great interest to my noble friend's reaction.

The MINISTER of STATE, DEPARTMENT of INDUSTRY (Viscount Trenchard)

My Lords, this amendment has been moved in the most calm and reasonable way, with appeals to reason, by the noble Lords, Lord Rochester, Lord Bruce and Lord Kilmarnock. But I have to say that I am afraid I still believe the view I expressed in the case of a similar amendment, though on consultation rather than on providing information, which was moved by the noble Lord, Lord Rochester, and the noble Baroness, Lady Seear, at Committee stage. That is to say, it is one aspect, a very important aspect, of good business practice. On the question of how the NEB sees its role in relation to its subsidiaries and to making sure that they adopt good practice, I find that Sir Arthur Knight in his chairman's statement quotes his predecessors and says, "I cannot improve upon the statement of my predecessor in his report last year". He goes on to explain, quoting his predecessor: The NEB cannot and does not seek to involve itself in the day-to-day management of the companies. That would be to duplicate the management skills which are to be found in the companies ". He goes on to give as a general philosophy the role of the board of the parent company. The phrases that I used at Committee stage were that they would no doubt give company A or company B a prod or a nudge in a particular direction, which might be to do with industrial relations and man management and might be to do with other vitally important areas of good management. I notice that the noble Lord, Lord Rochester, has changed from the word "encourage" to the word "promote"; but to have it singled out that the NEB is required by the statute book to nudge its companies, I do not believe is necessary, as my noble friend Lord Campbell has said. Nor do I believe that it should be singled out.

We are against putting into statutes a lot of words giving the impression that we expect the NEB, or the Government, or Government agencies to be constantly breathing down the neck of important companies. I believe, if I may say it rather rudely, that nothing is to be gained by putting pious, platitudinous declarations in statutes. If they have a use at all, once there, they will probably be misused by being taken out of context and used at just such a time when perhaps the NEB did not want to give a prod in that particular direction.

I am grateful to my noble friend Lord Campbell for explaining the attitude of my party back in 1975. I had indeed guessed that as the revising Chamber, he was obviously aiming to avoid wide-ranging compulsory powers for intervention of various orders, and that this part of such a power did not offend to the same degree. I therefore feel that this is not a necessary amendment. There can be no doubt about the NEB, with a chairman like Sir Arthur Knight, with the record of Courtaulds in the area of labour relations and consultation, in an age today when this really is a platitudinous statement which not one single businessman at any conference would contradict— businessmen reaffirm it all the time. To put this in the statute and thus to give it prominence, without any specific powers, is not a sensible thing to do.

I believe that the business experience of the noble Lord, Lord Rochester, must indeed make him fully aware of the truth of what I am saying. I feel that this is the kind of amendment designed to look good politically and to look as though we wanted to encourage all good actions and to discourage sin. I really do not believe that one gets anywhere by that kind of amendment in a statute, and I ask your Lordships to resist it.

Lord CAMPBELL of CROY

My Lords, before my noble friend sits down, may I say that I know that my questions were put at short notice, and I apologise for not having been able to get in touch with him before, but I have flown from home in Inverness this morning and therefore I have had to come in at rather short notice. If he is able to answer the questions about whether the machinery has ever been used, I should be grateful.

Viscount TRENCHARD

My Lords, I apologise to my noble friend. We have an amendment later to leave out Clause 19, which may be moved, and which centres on planning agreements as a whole. I suspect that this subject will come up again then. By then I shall certainly be able to answer the question of whether the machinery that my noble friend Lord Campbell mentioned was activated. What I know now is that only two planning agreements were ever made: one with a nationalised industry and one with a company in desperate straits. Both have expired and have not been renewed. What I also know is that the right honourable gentleman the Prime Minister of that time, Sir Harold Wilson, described these planning agreements after giving up the premiership as the ignis fatuus of Labour policy.

Lord CAMPBELL of CROY

My Lords, before the noble Viscount sits down may I thank him. I was aware that there had been only two planning agreements, and I have prepared him for the later amendment. It is not Section 27 or the planning agreements that I was concerned about, but disclosure of information, which is Sections 28 to 34.

Viscount BARRINGTON

My Lords, may I ask in great ignorance about one point that I did not understand in the noble Viscount's very clear speech. I understood him to say that this amendment, which he agreed is suggesting that this should be an aspect of good business practice, is carried out by all companies all the time. But I understood him later to say that it would be a bad thing to put it in the Bill because there might be a moment when the board did not want to put it in. I am not sure how those two statements are reconciled. I can understand that it is unnecessary if they all carry it out all the time, but I find it difficult to believe it is unnecessary if the situation might be otherwise.

Viscount TRENCHARD

My Lords, I do not think I said that they all do it all the time, which was a point we discussed on a similar amendment at Committee stage. What I said was that businessmen would all say that it is a vitally important aspect of business. In this sense it is a platitudinous remark. Some however do essential things, which are known to everybody as desirable to do, better than others. What I did say is that it must be up to the NEB to decide in relation to each of its subsidiaries, in so far as you can interfere with the management of those subsidiaries, which prod in which direction should be given: Is that subsidiary spending too much time with industrial relations and not enough trying to get its design, its quality, its commercial aspects right? There will be different situations which Sir Arthur and his colleagues will judge.

I am saying that if we put this provision in as a function— and in that sense I regard it as a platitudinous function— if it is used at all it will be misused, probably not by the NEB, and even the management of the subsidiary, but by someone who probably has been consulted very fully, saying, "You have not carried out your function, No. X", probably just at a moment when the NEB feel that the nudge should be given in the opposite direction.

3.18 p.m.

Lord LEATHERLAND

My Lords, the noble Viscount said that he did not want to put a pious statement in legislation. All I would piously ask is this: what is wrong with piety? The aim of this proposal which has been moved by the noble Lord, Lord Rochester, is to encourage peace in industry. Surely that is a very worthy objective. Peace can be encouraged by the methods of consultation which are suggested in the proposals the noble Lord, Lord Rochester, has put forward. That method of consultation already operates in many industries and in many firms. It operates very successfully. It brings about a much happier state of affairs than would otherwise be the case.

I was born in Birmingham and lived there until I joined the Army in 1914, which of course is a long time ago. I knew, as everybody in Birmingham knew, about the firm known as Cadbury. They not only make chocolates; they have for years upon end made industrial peace. They are a very worthy example to the rest of the industrial community. One of the things that they learned was how to enter into consultation with their employees. They have a works council— a very effective body. Two of my brothers happened to serve on it, but, of course, they were not directly responsible for its effectiveness. However, that works council, where proposals by the employers to the workers that certain changes were to be made and certain objectives were to be aimed at, was extremely valuable. I suggest that Cadburys is a fine example to the rest of British industry. I sincerely hope that the Minister will have another look at the matter to see whether something cannot be done along the lines suggested to bring both sides of industry together, working in harmony.

Baroness SEEAR

My Lords, I do not want to prolong this discussion, but I cannot resist the challenge that this is a "platitudinous" amendment: it is nothing of the kind. If it is platitudinous, it is rather surprising that at present the CBI never loses an opportunity to say to its members that they should develop participatitive practices and give far more information to employees. The CBI knows perfectly well— as the Minister is apparently not prepared to agree— that there are a great many backwoodsmen around who are doing absolutely nothing of the kind.

Viscount TRENCHARD

My Lords, with the leave of the House, I would merely say to the noble Lord, Lord Leatherland, that I, too, with him, am against sin; and to the noble Baroness, Lady Seear, I would say that I really do not believe that the cause which we all support will be furthered by including in a statute for a body like the NEB, one aspect of good management which, because the CBI is chanting it all the time, the NEB knows all about as well.

Lord ROCHESTER

My Lords, I am grateful to all noble Lords who have joined in this discussion and I am particularly grateful to the noble Lord, Lord Bruce of Donington, and to the noble Lord, Lord Kilmarnock, for their support. I was interested, of course, in the observations of the noble Lord, Lord Campbell of Croy, because although I did not name him, he was, as he has acknowledged, one of the Conservative Peers who were involved in the episode to which I referred in 1975. He asked the noble Viscount how far the machinery that was then instituted had been activated. He has not as yet received an answer. But I would like to say that it is not, of course, that machinery that I am seeking in this amendment to activate: it is, as I was seeking to say, something very much more general and more modest. In particular, there is no reference in the amendment, as I also indicated, to any specific items of information which might in themselves have given rise to controversy.

The noble Lord, Lord Campbell of Croy, also said that what was sought in 1975 was to be applied to industry generally rather than merely to the National Enterprise Board. That, I suggest, is a further indication of how modest the proposals of this little amendment really are. I am sorry that the noble Viscount, Lord Trenchard, has taken the view that he has taken. He has said that Sir Arthur Knight, as chairman of the National Enterprise Board, has made it plain that he does not seek to interfere in the day-today management of the companies for which the Board is responsible. The noble Viscount used some fairly strong words, but it amounted to breathing down those companies' necks. He questioned whether, with my business experience, I did not know that the terms of this amendment were really simply platitudinous— "they looked good politically" was, I think, a phrase which the noble Viscount employed. I ask him to believe that if I had thought that nothing needed to be done I certainly would not have put down this amendment.

I think that the action of the party opposite in 1975 was, to put it bluntly, rather different from that just described by the noble Lord, Lord Campbell of Croy. In 1975 they did, as he said, support an amendment couched in somewhat similar terms to this, but perhaps they then found the Liberal Party a rather convenient nanny— if I may put it that way— to whose apron strings they might attach themselves. Perhaps they remembered the moral of the story of poor little Jim who, your Lordships will recall, had the misfortune to be eaten by a lion— … be sure to keep a hold of nurse for fear of finding something worse "! I am sorry that the noble Viscount, Lord Trenchard, has not been able to give an inch on this matter. I believe that it would be a sign not of weakness but of strength if, just occasionally, the Conservative Government in this House with their inbuilt and unelected majority, showed themselves willing, after informed debate of this kind, to concede a point or two. As the noble Lord, Lord Bruce of Donington, has said, this does not ask for very much; it does not seek to make great inroads into the Bill, but it would go some little way to demonstrate their support for a principle that they claim to uphold.

My noble friend Lady Seear has already referred to the attitude of the CBI towards this matter. It certainly thinks that something is necessary. I suggest also that the Secretary of State for Employment is very well aware of the need to take every opportunity to do something about this. It was, after all, in his Granada television lecture only last Wednesday that he said that management in industry must now be prepared to disclose information and to take employees into its confidence. That is really all that this small, modest amendment seeks to encourage. I do not feel that I can let the matter go at that. I think that the amendment has enjoyed support— for which, let me say again, I am most grateful— from other parts of the House besides these Benches. It is a modest proposal which deserves the support of the House and I propose to press it to a Division.

Lord ROBBINS

My Lords, am I out of order—

Viscount LONG

My Lords, I am afraid that the noble Lord is not in order.

Lord ROCHESTER

My Lords, with the leave of the House would it be helpful to the noble Lord, Lord Robbins, if I sought to suggest to him— as we value so much his contributions— that he phrase what he has to say in the form of a question to me before I sit down. Is that of help to the noble Lord?

Lord ROBBINS

My Lords, before the noble Lord sits down, is he aware that his present amendment meets entirely the strictures which I passed on the original amendment at the Committee stage?

Lord ROCHESTER

My Lords, I am most grateful to the noble Lord.

Viscount TRENCHARD

My Lords, I do not know whether I am out of order in answering the factual question of my noble friend Lord Campbell of Croy? It is only two lines. The machinery of the information powers in the Industry Act 1975, about which he asked have never been used, and I understand that there has never been any formal requests that they should be employed.

3.29 p.m.

On Question, Whether the said amendment (No. 1) shall be agreed to?

3.36 p.m.

Lord LEE of NEWTON moved Amendment No. 2:

Leave out Clause 1.

The noble Lord said: My Lords, during the various stages of the Bill the content of a great deal of Clause 1 has

Their Lordships divided: Contents, 70; Not-Contents, 76.

CONTENTS
Airedale, L.	Gladwyn, L.	McNair, L.
Amherst, E.	Gordon-Walker, L.	Paget of Northampton, L.
Ampthill, L.	Goronwy-Roberts, L.	Peart, L.
Amulree, L.	Grey, E.	Porritt, L.
Ardwick, L.	Hale, L.	Robbins, L.
Aylestone, L.	Halsbury, E.	Rochester, L. [Teller.]
Banks, L.	Hatch of Lusby, L.	Sainsbury, L.
Barrington, V.	Henderson, L.	St. Davids, V.
Birk, B.	Hood, V.	Seear, B.
Blease, L.	Howie of Troon, L.	Shinwell, L.
Boston of Faversham, L.	Hughes, L.	Somers, L.
Brockway, L.	Hylton-Foster, B.	Spens, L.
Brooks of Tremorfa, L.	Jacques, L.	Stedman, B.
Bruce of Donington, L.	Janner, L.	Stewart of Alvechurch, B.
Buckinghamshire, E.	Kilbracken, L.	Stone, L.
Burton of Coventry, B.	Kilmarnock, L.	Strabolgi, L.
Byers, L.	Kinloss, Ly.	Strauss, L.
Cledwyn of Penrhos, L.	Leatherland, L.	Taylor of Mansfield, L.
Cooper of Stockton Heath, L.	Lee of Newton, L.	Underhill, L.
David, B. [Teller.]	Listowel, E.	Wallace of Coslany, L.
Davies of Penrhys, L.	Llewelyn-Davies of Hastoe, B.	Wedderburn of Charlton, L.
Elwyn-Jones, L.	Lloyd of Hampstead, L.	Wells-Pestell, L.
Fisher of Rednal, B.	McCarthy, L.	Wynne-Jones, L.
Gaitskell, B.

NOT-CONTENTS
Alexander of Tunis, E.	Emmet of Amberley, B.	Netherthorpe, L.
Allen of Abbeydale, L.	Energlyn, L.	Northchurch, B.
Avon, E.	Erne, E.	Nugent of Guildford, L.
Bellwin, L.	Exeter, M.	Onslow, E.
Belstead, L.	Gowrie, E.	Orkney, E.
Boothby, L.	Gridley, L.	Redmayne, L.
Brentford, V.	Hailsham of Saint Marylebone, L. (L. Chancellor.)	Reigate, L.
Campbell of Croy, L.		Romney, E.
Chesham, L.	Harvey of Prestbury, L.	Sandford, L.
Clancarty, E.	Henley, L.	Sandys, L. [Teller.]
Clitheroe, L.	Hornsby-Smith, B.	Selkirk, E.
Clwyd, L.	Inchyra, L.	Sharpies, B.
Colville of Culross, V.	Kimberley, E.	Soames, L. (L. President.)
Cottesloe, L.	Lindsey of Abingdon, E.	Strathcarron, L.
Cullen of Ashbourne, L.	Long, V.	Strathspey, L.
Daventry, V.	Lucas of Chilworth, L.	Swinton, E.
Davidson, V.	Lyell, L.	Torphichen, L.
De Freyne, L.	McAlpine of Moffat, L.	Trefgarne, L.
De La Warr, E.	McFadzean, L.	Trenchard, V.
Denham, L. [Teller.]	Mackay of Clashfern, L.	Vaizey, L.
Derwent, L.	Macleod of Borve, B.	Vaux of Harrowden, L.
Drumalbyn, L.	Mansfield, E.	Vickers, B.
Ebbisham, L.	Marley, L.	Vivian, L.
Effingham, E.	Merrivale, L.	Willoughby de Broke, L.
Ellenborough, L.	Morris, L.	Young, B.
Elliot of Harwood, B.	Mowbray and Stourton, L.

Resolved in the negative, and amendment disagreed to accordingly.

been examined and, indeed, has been subject to various amendments. This was so both in this House and in another place, and on each occasion the Government have rejected the amendments.

Our central objection to Clause 1 is that it completely changes the function of the NEB, so that it becomes a mere vehicle for expanding the private sector, irrespective of the state of recovery of those firms which have been rescued from probable bankruptcy by the work of the board. We are not objecting in the least to the fact that, after many of these firms have been almost recreated they then go to the private sector. That is not our objection. The objection is that this is the predominant issue within Clause 1 itself. There is no question of when a firm is in a position to revert to private enterprise. Indeed, if one looks at the wording of paragraph (f) in paragraph (b) of Clause 1 (1) one sees that it says: promoting the private ownership of interests in industrial undertakings by the disposal of securities and other property held by the Board or any of their subsidiaries ".

Those words are repeated three times in the clause as they refer not only to the NEB, but to the Scottish Development Agency and to the Welsh Development Agency. As I have said, the disposal of such assets at a time when the NEB considers such action appropriate has always been a very important part of its function, but it has always been able to take into consideration the degree of recovery which firms have achieved. It has also been able to determine the price obtainable and, indeed, the desirability or otherwise of the people who wish to take the companies over.

As a result of an imposed instruction from the Government to dispose of its companies in order to assist in reducing the public sector borrowing requirement, the NEB will now be completely unable to exercise its judgment on the timing of such disposals. Indeed, the Government's original instruction was to make sufficient money from sales of NEB firms in order that they could contribute £ 100 million towards the public sector borrowing requirement in the last financial year. Fortunately, wiser counsels prevailed and the order was withdrawn, but that move did not mean any change in the purpose of Clause 1. There is now bound to be confusion as to the relationship of the new board to the NEB, and indeed to the Government, and the relationship between the board and the companies it controls.

Consider the case of Fairey. We have recently learned that Fairey has now been sold to Doulton, which is part of the S. Pearson Group, for £ 24 million. There was an original offer of £ 19–5 million by Hambros, and my impression is that had the Government demand for an NEB contribution of £ 100 million been persisted in, that sale at that figure would have gone ahead, more particularly as the board of Fairey approved of it. I submit that that illustrates the fact that a time limit within which the NEB has to work removes the concept of a willing seller and a willing purchaser. That is one case which illustrates the point I have been making.

What about the future of Ferranti? In the last financial year Ferranti made a profit of about £ 10 million. When introducing the NEB's annual report the other day, Sir John King, deputy chairman of the new board, commented: Ferranti belongs in the market place. It is restored to health and we will take a decision on the options available for it by the end of June ". It sounded as though he had almost picked up a brief belonging to the Secretary of State for Industry, who uses that kind of language. He may be right and perhaps the members of the previous board would have come to the same conclusion, but with the content of the present Clause 1 as a guide, even before it becomes law, I doubt it very much.

Indeed, it makes one wonder what is to be the future of the 60-odd firms which are still within the purview of the NEB, and perhaps the Minister would say. Is the NEB now compelled within the time limit to sell off those companies irrespective of the state of recovery for which the NEB has been responsible? One could ask the same question about the Welsh Development Agency and the Scottish Development Agency. Both those parts of the country are in dire unemployment straits and it seems desperately foolish to force the NEB, or the Welsh and Scottish Development Agencies— unless they themselves are convinced that they have brought those firms to a stage of recovery at which the public can get the maximum returns for them— into a position where they must get rid of them.

I have asked on a previous occasion, more than once I think, for information for the House on the financing of INMOS. Up to now we have had no reply. On Second Reading the Minister said that as for firms dealing with advanced technology, the NEB would not at this stage be forced to put them in the marketplace. INMOS covers that position exactly; it is dealing with the most advanced kind of technology, including the silicon chip, about which some of us are very concerned over our position vis-à vis the Americans, Germans and others. The last Government allocated certain funds to INMOS, some of which have not yet been granted to them. I hope the Minister can now tell us whether there is some hiatus so far as INMOS is concerned. There are, or have been, some negotiations going on, but if the position is that certain private firms are negotiating to take it over and the Government are refusing to find the finances for it to be able to go ahead with its research and development, we shall lag behind deplorably. Thus, the time is overdue for the Minister to say precisely what the position is.

To take another illustration, in hot pursuit of his intention to enlarge the private sector at the expense of the public one, which the Secretary of State has told us on many occasions is the real basis of Clause 1, may we now be told what is to be the position of Rolls-Royce? We know that after discussions with the chairman of Rolls-Royce it was decided that the Secretary of State would transfer responsibility for it from the NEB to himself. We now have the information that Rolls-Royce has managed to make a loss of £ 58 million, and perhaps the Minister will tell us if there is any truth in the rumour that the Secretary of State would now like the NEB to take it back, plus the £ 58 million loss which he has inherited. Perhaps he could now argue that, as he has always said he wishes to divorce this Government from industry and that, as he has himself agreed, he is incompetent to run industry, it would be a good thing if the NEB would graciously agree to relieve the right honourable gentleman of his responsibilities in this respect.

None of us favours the work of the insider who uses inside information to get great profits, but the Secretary of State has no need to prove his virtue by grabbing all the losses; it really gets to something when we reach that kind of position. Is it still the intention of the Government to attempt to sell Rolls-Royce shares to the public? If so, then against the background of the £ 58 million they have now declared, what will be the effect on the timing of that transaction?

It seems to me that the whole objective of Clause 1 is now being shown to be quite ridiculous, not by anything which people in another place or in this House have been saying, but by the facts of life; by the fact that Fairey themselves would have been sold for a much smaller price than was eventually obtained if the Government had had their way and forced a £ 100 million contribution; that Ferranti are now in a position where none of us know whether they are still being forced into the market at a price less than could be obtained if they held it for a while; and that Rolls-Royce itself almost makes a laughing-stock of what the Bill attempts to do. Indeed, the nation is now entitled to know whether the whole objective of seeking to expand the private sector with no consideration to the effects on the public purse is to be the case as laid down in Clause 1. It seems to me that the case has now almost gone by default. I beg to move.

3.50 p.m.

Lord CLEDWYN of PENRHOS

My Lords, as my noble friend Lord Lee of Newton has just said, we had a fairly full debate on this clause during the Committee stage, but I am bound to say that I am still not quite clear what are its full implications for the Welsh Development Agency. The Minister, when he spoke in Committee, gave me a clear impression that the functions of the Welsh Development Agency will remain more or less unimpaired as a result of the Bill, and I should like him to confirm that statement today. If this be the case, then part of my apprehension is removed, although my noble friend Lord Lee has again created some fairly grave doubts in my mind.

The noble Viscount the Minister of State dealt with some of the points that I raised in Committee on 28th April. My concern then— and it is not entirely allayed— was that whatever be the position with regard to the powers and the functions of the board, the resources available to the Welsh Development Agency will be severely curtailed as a result of Government policies and will largely neutralise the £ 48 million which the Secretary of State for Wales, Mr. Nicholas Edwards, has promised over the next two years.

If I may, I should like to read an extract from the letter which the noble Viscount was so courteous as to send me following the debate on 28th April. I quote from his letter: As you know, the level of Regional Development Grant is maintained at 22 per cent. in Special Development Areas and reduced to 15 per cent. from 20 per cent. in Development Areas. It will not be paid in Intermediate Areas. These changes apply to assets provided after 31st July 1980. Minimum levels of expenditure eligible for grant were increased on 18th July last from £ 100 for plant and machinery and £ 1, 000 for buildings to £ 500 and £ 5, 000 respectively in respect of expenditure defrayed on or after 18th July last year ". The noble Viscount continued: Because of the transitional provisions and the two years during which applications for grant can be made, we do not expect the full effect of the changes to be felt until 1982–83. The estimate of £ 35 million to which you referred in the debate on the Industry Bill is the estimated reduction in payments of Regional Development Grants in Wales in that year ". The noble Viscount said that this is not intended to be a precise figure. Let me read more of his letter, and indicate what he said: It was made in the middle of 1979 and was based on the changes in the status of Welsh Assisted Areas, in the rates of grant and in the minimum values, and assumed that in future Assisted Areas the rate of investment would approximate to that of the recent past. An assessment of changes in the investment pattern could not be arrived at without a disproportionate amount of time and effort ". I understand the position of Ministers and civil servants in relation to work of that kind and production of statistics, but the position of Wales is grave enough to justify a little disproportionate time and effort in these circumstances. We are to lose £ 35 million in one year, and the loss will affect a wide area; that is to say, it will affect the whole of the development area in Wales. But the £ 48 million will be used to build factories in those areas affected by BSC plans. That is the object of the £ 48 million; at least that is what Mr. Nicholas Edwards says. I ask the noble Viscount whether he would be good enough to confirm that. Does this relate to advance factories? Is that what the £ 48 million is for? Perhaps the Minister will enlarge upon that. Will the £ 48 million be handled exclusively by the Welsh Development Agency? Can it be used for a purpose other than in connection with factories? We need much more clarification about the £ 48 million than we have had in either of the two Houses thus far.

My chief criticism— and I think it a valid one— is as follows. The Government are to give the £ 48 million over two years to a limited part of Wales affected by steel closures; and of course I welcome this. However, on the other hand, the Government are taking £ 35 million a year at least from a much wider area of Wales— that is the whole of the development area— from 1982 onwards. There is there a very severe disparity which has not been made clear to Parliament or to the people of Wales, and I am very anxious that this point should go home today before we agree to the Bill going through on Report and Third Reading. These are the bare bones of Government action, and they are not an attractive sight. I am bound to say that the prospect for Wales is at present daunting.