HL Deb 17 February 1981 vol 417 cc573-82

Second Reading debate resumed.

4.5 p.m.

Lord Mishcon

My Lords, a clause of the Industry Bill now before the House deals with the engineering profession. As the noble Earl, Lord Gowrie, reminded us, it is almost exactly a year to the very day that this House debated the report of the committee of inquiry into the engineering profession affectionately known, because of the esteem with which the chairman of that committee of inquiry is held, as the Finniston Report.

In the course of that debate, I ventured to make a plea for the independence of all professions; and for the engineering profession, together with other professions, to have the safeguard of seeing that they were masters in their own household when dealing with their internal professional affairs. I wonder whether I may inflict upon your Lordships a short quotation from the speech which I made one year ago when we were debating the Finniston Report. I said on that occasion: The suggestion made in the report which has not yet been detailed in this debate—and therefore I will be forgiven if I draw your Lordships' attention to what is involved—is set out on page 155, at paragraph 6.19, of the report and says that the leader and members of this suggested statutory authority will constitute an executive board of the authority. The suggestion is that it be of some 15 to 20 members and that, initially, these should all be appointed under statute by the Secretary of State for Industry. There is then a requirement in regard to consultation; there is a reference to the fact that the condition should be that a majority of the members should be qualified engineers and that at least three should be non-engineers; and that after the authority has been established for a while (and I am paraphrasing paragraph 6.20), and is deemed to be sufficiently representative of the profession, consideration should be given for a system of elections whereby a proportion—and I emphasise the word 'proportion'—of the members of the authority should be elected from the register by registered engineers".—[Official Report, 27/2/80; col. 1407.] The noble Viscount, Lord Trenchard, who was in charge of the debate from the Government Front Bench, with his usual courtesy, dealt with the remarks in the following terms (I am quoting from Hansard): The noble Lord, Lord Mishcon, has raised a point which clearly is an important and broader one outside this particular area. We shall certainly consider what he has said. But let me just point out that, as I read the Finniston Committee Report, they have started from the premise that all is far from well and, against that, have recommended (if you like) an intervention at this stage and in this current situation. I have found myself making these notes with some interest in order to say them to a noble Lord on the other side of the House; nevertheless the Committee has not recommended that this body should be left permanently at the dictate of appointments of Government. There could be an analogy in the "hospital" role of the NEB that we have retained: namely, that one keeps the patient there until such time as he is fit to be returned to private enterprise. Nevertheless, we will consider carefully the general point made; but I want to stress that, as I read the Finniston Report, the recommendation is temporary".—[official Report, 27/2/80; col. 1448.] I listened with the utmost attention, as I am sure did all your Lordships, to the lucid way in which the noble Earl, Lord Gowrie, introduced the Second Reading of this Bill. I understood him to say—and here I, too, will listen with the greatest respect and interest to what the noble Lord, Lord Hinton, has to say hereafter on these professional matters—that there had been discussions in the intervening period over the past year. As a result, a statutory authority recommendation had given way, from the Government's point of view, to a recommendation for a body under a Royal Charter, and the Government were thinking only in terms of an interim measure of making nominations for a period of three years. Therefore, the engineering profession was ultimately, after this comparatively short period of time, to have its independent authority.

It is therefore with some anxiety and a request to the noble Earl for some clarification that I looked at Clause 6 of the Bill to which other noble Lords have referred, but in the strict context of subsections (4) and (5). Reference was made by the noble Earl to the fact that the Government were being given power to guarantee the loans being made by the Treasury to this body that was going to be set up to look after the engineering profession and its various professional needs. That is clearly stated in subsection (4), which says this: The Secretary of State may, with the approval of the Treasury, guarantee obligations (arising out of loans) incurred by any body which falls within subsection (5) below"— I emphasise those words— … and which in his opinion is concerned with promoting the practice of engineering". With interest one turns, therefore, to the definition of the body in subsection (5) and there one finds this: A body falls within this subsection if—

  1. (a) it is established by Royal Charter; and
  2. (b) its members are for the time being appointed by the Secretary of State".
In ordinary English—and perhaps there will be a translation into some sort of legislative language when the noble Earl comes to reply and therefore we may know what this is supposed to mean—this means that the power to guarantee is there only if the body guaranteed is one which is set up by Royal Charter and where its members are for the time being (which presumably means in the course of the guarantee period, which may be three, six, nine years or whatever, and one knows that the period Finniston recommended may well be involved here) appointed by the Secretary of State. They are not even nominated for consideration, but appointed by the Secretary of State.

Therefore, I voice the same concern as I did a year ago, purely as a member of one profession honouring the members of another profession and believing that in the great tradition of professions in this country they ought to retain their internal government without interference from national Government with regard to the appointment of their governing body, or whatever it may be. It is with that in mind that I raise this point on Second Reading, hoping to have some clarification which may mean that I shall not be quite so busy at the Committee stage regarding this matter as I have endeavoured to be on Second Reading.

4.16 p.m.

Lord Hinton of Bankside

My Lords, unlike the noble Lord, Lord Mishcon, I intend to speak only about Clause 6 of this Bill. That clause seeks to give to the Secretary of State financial powers to make grants or loans, and it does define the purposes for which those loans shall be given. Roughly, in the words of the Bill, the purposes are to assist in the promotion of the practice of engineering, the improvement of links between industry and education and the encouragement of young people to become engineers. All those are laudable objectives, but I agree with the noble Lord, Lord Mishcon, that the strings tied on to them are highly undesirable.

The bodies to which financial assistance is to be given are not defined in the Bill, but one was not surprised to find that in presenting the Bill for its Second Reading the noble Earl said that they were primarily intended to assist the Secretary of State in setting up whatever organisation might evolve from our discussion of the Finniston Report. We are not debating the Finniston Report today, or the discussions that have flowed from it, and I think it would be undesirable for us to do so. There have been long and, as I understand it (though I have not been in the forefront of those discussions), sometimes, I am afraid, acrimonious discussions between the Secretary of State and the representatives of the engineering profession.

The noble Earl has told us that the Secretary of State has now deposited in the Library of this House a copy of the charter which he proposes to promote. If that charter is the same as the one to which I have had unofficial access, there are several points—some minor, some major—on which there is still disagreement between the Secretary of State and the engineering profession. I feel it would be wrong and undesirable to debate most of those points today in connection with a Bill which is essentially a money Bill. I would rather express the hope that discussion between the Secretary of State and the representatives of the engineering profession can proceed in perhaps a rather more amicable way in the future and with less delay. There has been far too much delay in this matter. That delay is damaging to the engineering profession; and what is bad for the engineering profession is bad for this country.

But, apart from the other points of disagreement and points which are still under discussion, one which is of importance has been referred to by the noble Lord, Lord Mishcon. That is that the great body of members of the engineering profession feel that that profession, like all the other learned professions of which I know, should be self-governing. I understand that the proposal which has been advanced is, as has already been said, that the initial board shall for a period of three years be composed of men who have been appointed by the Minister after discussion with the bodies representing the engineering profession. Such an arrangement would, I believe, be acceptable, but it seems to me that Clause 6 makes it possible for the Secretary of State to claim the right to appoint the members of the board at any carefully manipulated date in the future.

May I give your Lordships an example of what I have in mind? The first board will, unquestionably, need financial pump-priming. It is hoped that it will ultimately be self-supporting, but initial pump-priming will, I am quite certain, be necessary. I believe that, in our discussion of the Finniston Report, a figure as high as £10 million has been talked about, although I should hope that the commitment would be less than that. If that money is provided by way of a loan, and if, as seems likely, that loan, or part of it, is outstanding at the end of the initial three-year period, the Secretary of State could foreclose on that loan.

The board would then have to raise money on the money market and it is improbable that it could do that, unless the money that it so raised was underwritten by a Government guarantee. Under the terms of Clause 6(5), the Secretary of State could not provide that guarantee, unless the members of the board continued to be appointed by him. I do not for one moment suggest that the present Secretary of State intends to use the clause in that way, but if it gets on to the statute book it will be the law, it can be so used by his successors and he cannot commit his successors to any course of action. Such a position seems to me to be dangerous, particularly when one remembers, as the noble Earl has pointed out, that Ministers are under constant and unremitting pressure from the Treasury.

That particular danger could be removed by substituting the word "or" for the word "and" in Clause 6(5)(a). But there are other objections to Clause 6; for instance, the rigid limitation of the rate of interest that is to be charged, which is far more parsimonious than the terms which are given to certain other learned societies; certainly, to one to which I have the honour of belonging. It is my hope that, when this Bill returns to another place, the Secretary of State will withdraw the whole of Clause 6 and will consider, when his discussions with the engineering profession have been brought to a happy conclusion, whether—or perhaps what—legislation is necessary.

4.25 p.m.

Lord Granville of Eye

My Lords, I am sure that we have all listened with interest to the noble Lord, Lord Hinton of Bankside, with his great experience and knowledge of this problem. It seems to me that the Government might have consulted with him before they drafted their Bill, but no doubt, as the Minister suggested, much of this can be dealt with in Committee.

I certainly welcome the Minister's statement with regard to a Royal Charter for engineering education. For too long we have looked favourably upon the scientist and have perhaps neglected our engineering industry, particularly the apprentices. As has been said, this Bill is a mixed bag. It revokes, it increases and it reduces. But, of course, all Governments have for long subsidised basic industries in this country. There was the £300 million subsidy for shipbuilding, in order to get Polish warship orders. That goes on and we have to face it. The problem has become so large that it now involves steel, motor-cars—as in the case of British Leyland—and, of course, as the Minister said, with the sum of £800 million, the Government are very much involved in the mining industry. Furthermore, large redundancy payments will obviously loom ahead in the settlement of this dispute.

But we are not alone in this situation. How many thousand million dollars did the United States Government supply to bail out the Chrysler Corporation? It is not this country alone, or even the EEC alone, which is affected. This is a worldwide problem, for the very simple reason that the sums of £400 million or £800 million, which we now talk about so glibly, are far too big for even long-standing international commercial banks to supply, or even to cope with.

As I see it, this measure varies loans, subsidies and grants, but it is fair to ask: how long can a Government borrow or expect the taxpayer to foot the bill? We have to remain creditworthy or, as the Americans say, credit-wise. In 1931 we were in a position where it was very difficult to borrow, and if we are not able to borrow large sums of money we cannot remain creditworthy, which for this country, in its present position, would be a disaster. International trade depends upon credit. Even our assistance to the third world depends upon those countries being creditworthy. If the basis of being creditworthy goes, then we shall not be able to borrow. Even householders know that they have to be creditworthy in respect of their mortgages, their hire-purchase and so on. They understand the importance of credit.

The Minister spoke on the radio and I believe he said that there was 1 per cent. increase in productivity over a period of years, and 300 per cent. increase in wages. I want to ask the Government if we can revive the great basic industries of this country on that basis. If not, are we to live on consumer and service industries, trying to take in each other's washing, which could eventually reduce us to the low level of an Iron Curtain state? It is these great basic industries in the North, and some in Wales, which have to attract Government assistance and Government credit, or we are in trouble. When one remembers what happened in 1931, when we could not borrow money, I wonder whether it is time now for the Government to suggest the calling of a world economic and financial conference similar to the one which was held at the British Museum in 1931.

A great deal has been said by noble Lords about exporting oil to import coal. I do not think it can be right for our national economy to export North Sea oil and to have some of it paid for by importing coal into this country. As one noble Lord suggested earlier this afternoon, why not look again at the problem of subsidising exports to enable the coal industry to make up the £40 million leeway? It may be that the Government, the NUM and the industry have left this a little late.

The winter of discontent elected this Government. Let us not have political views about this, but it could be re-elected. If the people of this country feel they are going to face hardship, without coal, water or food, I do not think that they will stand for it. The miners have always enjoyed great sympathy, great charisma, among the ordinary people of this country. It is well deserved; so they should. It is my hope that whatever takes place in this country during the next few weeks—it will be of vital importance—the miners will keep that charisma. For us this afternoon there is, as noble Lords have said in the debate, no alternative to the Bill, but we shall look at it in Committee. I am sure that several suggestions will be made similar to the ones which were mentioned by the noble Lord, Lord Hinton of Bankside.

4.32 p.m.

Lord Howie of Troon

My Lords, I had not intended to speak in this debate and therefore did not put down my name, but I have been attracted by the discussion on Clause 6, largely due to my having been a member of the Finniston Committee. I am therefore anxious about the fate of our recommendations. Since I did not put down my name to speak I shall detain the House for the shortest possible time I can manage and shall ask the noble Earl only two questions.

The first relates to subsection (5)(b) of Clause 6, which has already been referred to by the noble Lord, Lord Mishcon, and the noble Lord, Lord Hinton of Bankside. Am I right in supposing that that provision limits the guarantee to three years? If it limits the guarantee to three years and to three years only, it is a very worrying proposition. I should like the noble Earl to clear up that point.

Secondly, the noble Earl referred to a draft charter which he has lodged in the Library. We are very grateful to him for doing that. It is not often that a Member of either House sees the documents about which consultations are taking place. Often we are the last to see them, so I am grateful to the Government for placing the draft charter in the Library. My question relates to its status. Is this the draft charter which the presidents of the major engineering professions have already rejected? If they have rejected it, are we to have a revised charter? And if we are, can we see that revised charter before we get to the end of the Bill? It is just conceivable that the terms of the charter, as finally agreed between the various bodies engaged in the consultations, will affect the way in which many of us react to the provisions of the Bill.

4.35 p.m.

The Earl of Gowrie

My Lords, I am grateful and the Government are grateful for the general response we have had to this very miscellaneous but nevertheless very important Bill. The noble Lord, Lord Ponsonby of Shulbrede, seemed to welcome it, though his rapture was pretty modified. He said that it was an inadequate Bill to deal with the scale of the crisis. I think it was the noble Lord, Lord Granville of Eye, speaking from the Cross-Benches, who encouraged me to tot up the sums of public money which this Bill potentially disburses. Leaving out the odd million here and there, as I did it in a hurry and without advice, I come to £6,500 million which is, interestingly, the very figure which is being urged upon the Government by the TUC for a programme of reflation. So perhaps one is not so far apart as all that. These figures are over a five-year period of course.

The noble Lord, Lord Granville of Eye, was quite right to remind us that there are great limitations on governments as to how much they can ease situations for small industries, medium industries, or indeed great public sector industries such as these, even if their creditworthiness, as ours has been, has been boosted not only by North Sea oil but by the success of the other sectors of our economy: our financial services, agriculture and the like. The provision of monies in this Bill is designed to try to get the big public sector industries into shape and back on to the road, whereby they are not out of kilter and not out of balance with the very successful parts of our economy, to which I am very pleased to pay tribute.

The noble Lord, Lord Ponsonby of Shulbrede, said that he disagreed with the sales policy that the Government have for BL, but I am glad that he drew attention to it. Part of the purpose of disbursing money on this scale over this period of time is that, if I may put it this way, we should be able to sell the family silver to the family, which seems to be a reasonably sensible way of proceeding. I am glad that he gave a little bit of free advertising from the Benches opposite, which I welcome, to the success of the subscription to the British Aerospace sale.

Lord Mischon

My Lords, is the noble Earl aware that in most decent families, when the family silver is distributed it is not sold to members of the family? It is given to them.

The Earl of Gowrie

My Lords, obviously the noble Lord comes from a much better or more fortunate family than I. When we have our periodic carve-ups, one usually has to kick in a bit to the others and we do so without any kind of resentment.

The noble Lord, Lord Ponsonby of Shulbrede, asked me about the downgrading—I think that was the way he put it—of the National Enterprise Board. May I briefly refer to the developments in the NEB since we came to office. Under the Industry Act of last year, the functions of the NEB have been modified—the noble Lord is quite right—as part of our policy of reducing public expenditure and the size of the public sector in order to release resources for industry and help to bring down inflation. The Act gives to the NEB the new function of disposing of its assets in order to promote more private ownership. It also provides that the NEB shall cease to have the function of extending public ownership and promoting industrial reorganisation. Nevertheless, within this overall framework new guidelines were issued last August giving to the board a catalytic investment role, especially in connection with its existing holdings, companies developing or exploiting advanced technologies, companies in the assisted areas in England, and small firms, by providing loans of up to £50,000. To date, the NEB has sold its shareholdings in 11 companies for a total of £120 million. The noble Lord, Lord Rochester, asked me whether the FT Actuaries' index was a reasonable measure of the NEB's financial performance. Although there are differences between the portfolio of investments held by the NEB and that contained in the FT Actuaries' index, I believe it is realistic to make a comparison of the proceeds accruing to the Board on its investments, as they are disposed of and with the return that might have been obtained on the investment of the same amount over the same period as represented by the Financial Times index. I should perhaps add that it was the NEB themselves who proposed that we should proceed in this way.

The noble Lord, Lord Rochester, and also the noble Lord, Lord Howie of Troon, in his brief intervention, asked me about the Finniston Charter, which I have laid in the Library of your Lordships' House. I can confirm that the Department of Industry is continuing discussions on that charter with the engineering institutions and with the EEF and the CEI and we all hope that these discussions will lead to the consensus which the noble Lord mentioned. I take the point made in this connection by the noble Lord, Lord Hinton, that we must get on without much delay.

If I may answer the substantive point put to me by the noble Lord, Lord Mishcon, together with the same point made to me by the noble Lord, Lord Hinton, in just a moment, I should like first to say to the noble Lord, Lord Hinton, that I want to pay tribute to the outstanding contribution that he has made to British engineering. He has not only played the distinguished part that we all know about in the development of nuclear engineering but I understand that this very day he has relinquished his leadership of the Fellowship of Engineering to my noble friend Lord Caldecote and I think we must all be very glad that the torch has passed on, so to speak, within this House.

The noble Lord, Lord Hinton, and the noble Lord, Lord Mishcon, asked whether Clause 6 could enable the Secretary of State to nominate the chairman and members of the council for longer than the initial three years. I think their anxiety was that the nomination could go on and the body therefore could be interfered with. I can assure the noble Lord that his fear is wholly without foundation. We are restricting our powers for the three-year period and therefore of course we are also restricting—and I think this is the point that the noble Lord, Lord Mishcon, wanted to put to me—the period in which we can guarantee loans.

Lord Mishcon

But, my Lords, would the noble Earl not concede that, on reading the Bill itself, this is certainly not apparent and that therefore it would mean that any other Minister taking over from the present Minister and finding the wording of the Bill as it stands would decide that the guarantee could continue provided that the Government appointed all the members of the chartered body?

The Earl of Gowrie

My Lords, that is a point that I will look at. My advice is that such is not the case and it may be that we shall be able to think of more suitable wording at the Committee stage. I think it is a Committee point. I have been anxious to put the policy as clearly as I can, and I can only repeat that it is not possible to overrule this by the provision of a loan on which the Government could foreclose.

Lord Hinton of Bankside

My Lords, may I emphasise that this is an extremely important point? I am very glad to be supported in my interpretation of the wording by so distingusished a member of the legal profession as the noble Lord, Lord Mishcon. I would most strongly suggest tht the Secretary of State and the department should consider an alteration in the wording.

The Earl of Gowrie

My Lords, as I have said, I will take that point on board, but this is fundamentally the kind of issue that we might take up at Committee stage when we consider the precise and best form of wording for the provision. I have tried to make the policy point clear. I can only say that I look forward to returning to this at the Committee stage and I welcome the broad acceptance of the Bill that has been expressed.

Lord Howie of Troon

My Lords, before the noble Earl sits down can he answer my question about whether or not we shall be able to see any revisions to the draft charter which are agreed in the course of the next week or so?

The Earl of Gowrie

My Lords, I am glad that the noble Lord has taken up that point again because I was rather surprised when he said that we do not always see the documents in this House. I thought that Ministers usually had to be held down to prevent them from showering your Lordships with documents, and I will see that this continues if the noble Lord so wishes.

Lord Energlyn

My Lords, before the noble Earl sits down, may I ask permission to make one comment? Listening to the debate I am haunted by the situation that faces us at the present time regarding the action of the coal miners. As the noble Earl knows, this industry is very close to my heart and I would remind him that there is a lesson to be learned from the last impasse between the NUM and the Government. The first thing I would remind him of is the fact that the record of the NUM was really spotless after the war. The first time that they used any muscle to impress their views upon the Government was when they were confronted by the impasse that faced Mr. Heath. In your Lordships' House a speech was made by the noble Lord, Lord Taylor of Mansfield, in which he demonstrated to the House that the real obstacle to a solution of the difficulties was not the contest between the NUM and the Government but between the NUM and the lack of communication of the National Coal Board with the Government.

The Earl of Gowrie

My Lords, I am most grateful to the noble Lord for giving way. I recognise his experience and the value of his advice on this industry, but this afternoon we have had a Statement, which I repeated to your Lordships, about the meeting proposed between the Government and the Coal Board and the NUM tomorrow, and we had some debate on that Statement. It is really stretching our rules of order very far to think that the NUM issue could come into the Industry Bill, which does not deal with it. However, I repeat that I am personally aware, as are the Government, of the noble Lord's experience of this issue, and we welcome his advice so long as it is in the proper context.

Lord Energlyn

My Lords, may I apologise to your Lordships for speaking out of context.

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