§ House again in Committee.
§ Schedule 1 [Provisions supplementing ss. 1 to 3]:
Lord Mishcon moved Amendment No. 17:
Page 26, line 5, leave out ("may") and insert ("shall").
§ The noble Lord said: The Committee now moves from the transfer of assets from public into private hands to the transfer of human beings from public into private hands. Whereas the minds of the Committee may well have been affected by all the arguments that have taken place in regard to the first part of the Bill, I hope that the hearts of the Committee, too, will be moved in regard to this part of the Bill.
§ It is well known that employees in the transport industry—and certainly this is applicable to British Rail—chose what they thought to be secure employment; employment which in many ways did not have much of the excitement and which also in many ways had none of the gilded profits of other sections of the business which the subsidiaries of British Rail carried on. They chose to be employees of British Rail—and many of them have been very loyal and long-term employees—because of the conditions of service, which they found attractive and secure. Now we are faced with measures which will mean that some of those subsidiaries will go out of public hands into private hands.
§ We should consider for a moment the nature of the businesses carried on by at least some of the subsidiaries, and I hope that your Lordships will find it convenient that in this connection I should speak to amendments Nos. 17, 18 and 19. For example, one of those subsidiaries is the hotel side of British Rail. Outside British Rail the hotel industry is an industry which has floating employment; even in times of good employment, as is very well known, many of its employees are immigrants; many of them change their employment, for one reason or another, very rapidly. The hotel industry, as such, is not organised at all from a union point of view. It is because of reasons such as those that I have just given that many of its employees are not within unions, and unions have not had a great success in getting them to become members.1416
§ Therefore, it is of great importance that we should be considering the welfare of those who may find that their subsidiary company has been taken over by private hoteliers or people who have decided, together with British Rail, that it is proper to merge with British Rail, which would not then have a controlling interest.
I am not just talking in generalities without the support of some up-to-date evidence as to the state of much of the hotel industry in this country. Indeed, only in this morning's Times there is a headline of:
Quarters for hotel staff called cockroach city".
With the Committee's permission I shall read from that article. It commences as follows:
A hostel for staff at a British hotel was described as "cockroach city" by a safety representative of the Hotel and Catering Workers' Union yesterday. The union has launched a campaign against unhygienic and dangerous conditions endured by many of its members.
The union is not naming the hotel. It said that while some hotels had made improvements, others had a long way to go to improve—
and I quote in particular these words:
"lousy conditions" below stairs, which could threaten the health of customers and cost them more".
Later on the article says:
The safety representative at one hostel said at a press conference: "In the staff rooms in the basement it is like a whole cockroach city. They tour around sometimes, like any human being. One day they will raid us".
§ I am not suggesting for one moment that a subsidiary will find itself in private hands where conditions of this sort apply. I am merely saying that all of us ought to be conscious, certainly in regard to one of the subsidiaries about which we are talking, that in private hands there are many hotels—and there are many very good hotel companies—and many hotel employers who, as regards their employees, are not observing conditions which we would regard as being satisfactory. Therefore, we must exercise the greatest of care as to the rights of those who were employed by British Rail in one of the subsidiaries, who may now be taken over by private control. It is strictly in connection with pension rights that I make this observation.
If your Lordships would be good enough to refer to Schedule 1, you will see that in paragraph 1(1) there is a provision that:
The Secretary of State may make such orders under Section 74 of the Transport Act 1962"—
and there is a general description of what that section provides, in the following words:
(power to make provision about pensions in the nationalised transport industry)"—
and then it says:
in relation to related companies as he could make if those companies were subsidiaries of the Railways Board".
A reference to Section 74 of the Transport Act provides for the Minister's power to make orders about pensions, and they were orders in the nationalised industries, and I quote from subsection (3)(e) of that section:
for enabling all or any of the participants in a pension scheme to become instead participants in another pension scheme
Subsection (6)(a) of that section says:
Orders under this section shall be so framed as to secure that no person other than the Boards, the Holding Company and any subsidiary of any Board, or of the Holding Company, is placed in any worse position by reason of the order".
Another paragraph follows upon that which one would have hoped, in regard to the inelegance of its language, would have died, having been put in the Transport Act 1962 and not resurrected in this Bill. Unfortunately, that is not so but because we shall look at it hereafter, I shall read the inelegant language of a triple negative in subsection (6)(b). With some embarrassment I read it to your Lordships:
An order shall not be invalid by reason that in fact it does nor have the result of securing that all such persons are not placed in any worse position by reason of the provisions of the order, but if the Minister is satisfied or is determined as hereinafter mentioned that any such order has failed to secure that result, the Minister shall as soon as may be make the necessary amending order".
I say in passing that one wonders why somebody drafting this provision did not say that an order shall not be invalid by reason that in fact it has the result that all, or some, of such persons are placed in a worse position by reason of the provisions of the order. But the draftsmen decided that the complicated language was the better, and there it was in this 1962 Act.
§ Your Lordships will have observed that the discretion is given under the wording of this schedule to the Secretary of State to make such an order as is provided for under Section 74 of the Transport Act, and to make it in regard to the new company that will be taking over the subsidiary as though it were one of the nationalised companies that was dealt with under the 1962 Act. The purpose of this amendment is to say that the Secretary of State shall make such an order so that provision can properly be made to see that the pensions of the employees of a subsidiary of British Rail shall, in fact, be in no worse position in regard to their pension rights than they would have been if they had remained employees of a subsidiary of British Rail.
I am not going to weary your Lordships with a long speech in this connection, and I shall try to make some short remarks in regard to the various amendments that follow and make my main speech now. If I may, I am just going to quote from the Committee stage in another place when these provisions were dealt with, and when the Minister spoke about the Government's policy in regard to these very important pension rights. I do not think that I can do better than quote him in order to see how necessary it is for us to be awfully careful about these pension rights for these employees. This I quote from col. 1029 of Hansard of the Standing Committee E deliberations of 17th March 1981. The Minister said:
The Government's intention is that the new subsidiaries will be private sector companies. We expect—we cannot guarantee it but in the real world it is overwhelmingly likely—that the companies will wish to have occupational pension schemes for their employees. That will be a matter for negotiation between them and their trade unions, as the right honourable Gentleman has said".
I pause there in the quotation because I have already referred your Lordships to the situation that in the hotel industry there are not strong unions who are able to negotiate with private hotel companies. This is a very much under-unionised industry. The quotation continues:
As far as possible in practice the new private sector companies will have pension rights for their employees in the same way as any other Companies Act company and will be reasonably unfettered by any particular statutory provisions. Where does that leave those who are now either receiving pensions from British Rail funds or are working for subsidiaries but are likely to be transferred in that way? At present they have rights under the rules of the British Rail pension funds which cannot, and should not in any circumstances, be taken away from them".
I pause there to wonder at the generosity of the Minister in saying that those pension rights that have been earned up to date shall indeed be received by the employees! As a generous reaction it did not strike me as being overwhelming. To continue:
I should first make clear"—
I am leaving a little out—
that pensions in payment of Sealink, British Transport and hotels and so on cannot be affected by what we are doing. They will carry on receiving pensions. We then look at the position"—
and he then goes on to talk about those employees who have already finished their employment and who are therefore in receipt of pensions, and says that they will not be affected.
§ What we are considering of course are those who have not yet reached pensionable age and will be going over into private employment. The purpose of this amendment is to ensure that the Minister will as quickly as possible make an order to ensure that these rights are safeguarded. I said that he would have to do this as soon as possible, because your Lordships might have seen that in the succeeding provisions in the schedule there is a completely unprecedented right given to the private sector; namely, that if the Minister does not make the order by the appointed day, then the private company concerned can get his order revoked if they manage to show that the order affects them in an unsatisfactory way.
Indeed, I ought possibly to quote precisely what paragraph (2) of Section 1 of the schedule says:
Except on the application of a related company which is not a subsidiary of the Board, no order shall be made by virtue of this paragraph which has the effect of placing the company or any of its subsidiaries in any worse position; but for this purpose a related company or a subsidiary shall not be regarded as being placed in a worse position because an order provides that any changes in a pension scheme are not to be effected without the consent of the Secretary of State".
An order such as is mentioned in sub-paragraph (2) which is made without the application of the related company shall not be invalid"—
and then we go on with the words which I thought were so inelegant and which are a repetition of Section 74(6) of the Transport Act 1962.
§ The simple point—but it is such an important point for the employees concerned—is that we wish to safeguard the employees in order to make absolutely sure that they are not in any worse position in regard to their pension rights when a subsidiary company of British Rail now goes over to private control. That is the purpose of the amendment. It is to make something mandatory and not permissive. I beg to move.
§ 8.18 p.m.
§ The Earl of Avon
These amendments Nos. 17, 18, and 19, and in fact the following four, all relate to pensions, which is a notoriously complex field. I think that the whole Committee will be grateful to 1419 the noble Lord, Lord Mishcon, for taking us through it in such a clear and concise way. There is a common theme in these three amendments, in fact all the amendments relating to pensions, and that is whether there should be a statutory requirement that existing pension benefits should be maintained once the subsidiaries of the British Railways Board have moved into the private sector.
I must make it clear at the outset that the Government do not feel able to accept these amendments. There is a straightforward difference of opinion between Government and Opposition, which I shall try to explain, though of course, as the Committee would expect, in no way to excuse. The reason for resisting these amendments is that it is wholly contrary to the philosophy underlying this legislation to impose constraints on the organisation into which private capital is to be introduced—our intention is quite the opposite, in fact. But the amendments, taken as a whole, would place a statutory requirement on the private sector employer to maintain existing pension entitlements, whether he is able to do so or not. It is no part of this Government's intention to place such stringent confinements on private employers.
That is not to say that I foresee early and radical changes in employees' pension arrangements. Naturally an employer will think long and hard before making changes that do not have the willing agreement of his employees. But the Government are determined that the companies, when in the private sector, should, as far as possible, be in the same position as any other private sector employer, no more and no less. They will need to observe all the existing employment protection legislation, but they should not face any more rigid constraints. These are matters which should be settled in negotiations between employers and the trades unions concerned.
The noble Lord, Lord Mishcon, painted a picture of the hotel industry. I gather that under-unionisation is not a feature of the hotel industry, and I expect the NUR, or other railway unions as appropriate, will continue to represent staff. I could not help wondering, as the noble Lord painted that picture, whether to a large degree everything he was suggesting was not already covered in the hotel industry by present legislation. For example, the cockroaches should not be there now if the health inspector was doing his duty. I have suffered in the catering industry from the inspections by health inspectors. I assure the Committee that they are extremely rigid, to the extent that they even force one to put up banisters so that employees will not fall down staircases. I cannot believe, therefore, that the legislation we now have would not easily cover the cases the noble Lord raised concerning the hotel trade.
I come back to the question of pension schemes and I wish to emphasise that, in the Government's view, the best prospects for pension benefits, and all other terms and conditions of service, lie in a prosperous, flourishing industry. The Government are sure that this is most likely to be achieved by the policy of introducing private capital and not by a web of legislative constraints. I must also stress that the Railways Board, as good employers, are anxious to look after the interests of their staff. For the past service, as 1420 employees of British Rail I expect that staff will be able to choose, if they wish, to leave a preserved accrued entitlement in their British Rail pension scheme.
With that outline of the Government's philosophy, I will deal with the amendments in a little detail. First, I come down from the level of philosophy to those excellent words "may" and "shall", which is really the crux of the argument. Amendment No. 17 at once indicates how noble Lords opposite envisage statutory compulsion entering into the area of pensions. But this paragraph of Schedule 1 as drafted deliberately leaves the options open. It is for the board in the first instance to prepare proposals on pensions as part of their preparations for the introduction of private capital. I can readily envisage circumstances in which perfectly satisfactory arrangements—satisfactory to all parts of the Committee—could be established without the need for an order by the Secretary of State. It is necessary for the Secretary of State to have an order-making power just in case he can assist; I have in mind the complex legislative history of transport industry pensions. But the Secretary of State does not intend to take statutory action unless he is convinced it is necessary and in the best interests of all concerned.
Concerning Amendment No. 18, all that the clause as drafted means is that the Secretary of State should have a power as if the related companies were subsidiaries. Even if the first amendment were agreed, "could" is, as far as I can see, all we need here; there is no reason why the Secretary of State should have to make orders about subsidiaries.
As for Amendment No. 19, I have already explained why the Government cannot agree to the proposed addition. Again, we see plainly the intention to provide a statutory pensions obligation. This seems to me to be a quite unjustified constraint. It would inhibit commercial flexibility and it might even, I suggest, not be in the best interests of staff, who might prefer to be free to negotiate their preferred balance between benefits and the contributions they pay for them.
The noble Lord, Lord Mishcon, also touched on the worsening situation and quoted from the 1962 Act, which probably comes under Amendment No. 22. I would draw the attention of noble Lords to the fact that the orders we are discussing would all be made under Section 74 of the Transport Act 1962; as far as I can see, Section 74(6)(b) of that Act already contains a provision whose wording is very close to that of this amendment. I therefore suggest that the amendment's purpose is already achieved. But we come back in the end to "may" and "shall", and on that we must agree to differ. With that explanation, I hope the noble Lord will not press the Amendment.
§ Viscount Simon
I was rather shocked to hear the noble Earl's remarks on this issue. I am no lawyer and the noble Lord, Lord Mishcon, will correct me, but I thought that if a company had a pension fund, the employees of the company were entitled—that they had an implied contract with the pension fund—to get their pension, and should new shareholders come along and buy the company, that did not bring the pension fund to an end. They buy the company with the pension fund, do they not? I am surprised that 1421 this question arises at all and perhaps the Minister will explain the position. Why should a pension fund come to an end merely because there are new shareholders in the company?
§ The Earl of Avon
There are difficulties involved in splitting amendments when they might be considered together. Be that as it may, the point which the noble Viscount, Lord Simon, is raising would be true if a subsidiary were taken over as a whole subsidiary, but we have been talking of, for example, the Gleneagles Hotel, which would have an entirely different aspect which one would not expect a whole subsidiary to have, and one of the problems is trying to cope with all the situations that can be envisaged.
§ Lord Mishcon
The Minister has, as one would expect, given a correct explanation. Indeed, I imagine it would be most unusual for an acquirer of a subsidiary company to do anything other than vest his new subsidiary in his own concern, for example, when one is thinking in terms of the hotel industry. Secondly, as I am sure the noble Viscount knows, the Revenue would not permit one to go on with the pension rights of a previous employer; to be admitted for Revenue purposes it would have to be the present employer's scheme. Thirdly, I think I am right in saying that all the employees of subsidiaries would be members of the main British Rail pension fund and there would not necessarily be separate pension funds for each subsidiary. I imagine that is the position.
On the basis that nobody else wishes to contribute to this enlightening debate—I imagine because it has succeeded the interval between 7 and 8 o'clock—I will briefly answer what the Minister said. The noble Viscount, Lord Simon, said he was rather shocked at some of the noble Earl's remarks. The Minister makes them with such charm that it is difficult to be shocked; one can only be pained, and that certainly was my reaction. To say that it is for these people, these old employees, to fight their own battles with their new employers—one can assume that the new employers in these days of full employment will be only too anxious to satisfy the employees of British Rail if they wish to come into their orbit—is really saying something which I am perfectly sure most members of the Committee find hard to accept.
The hotel industry, in which are engaged companies that are most reputable, has a glut of employees at the moment in various parts of the country, and the employees of the hotel subsidiary of British Rail will not be in a terribly strong competitive position. I have already dealt with the question of the unionising, or under-unionising, of this industry.
I do not want to go on repeating the arguments, but I must say that I felt that due to the very language that he used, the noble Earl made out the case for some form of mandatory protection for these employees. His language showed that unless we do as we propose, we shall be throwing the employees into the position where they might have to say, "The conditions of employment as offered to us are so unsatisfactory that we have to elect to be redundant"—which of course is their right. But I should have thought it quite dreadful in this day and age to throw more people on to the redundancy heap. So I press the amendment, but I 1422 hope that if there is not to be a Division, the noble Earl will at least tell the Committee that sufficient has been said today—I wish I could say "on all sides of the Committee", but that would not be quite truthful; at least it has been said on two sides of the Committee—to make him feel that he ought to take away the amendment and consider whether there should not be greater protection than is afforded by the mere permissive use of the word "may".
§ 8.32 p.m.
§ On Question, Whether the said Amendment (No. 17) shall be agreed to?
§ Their Lordships divided: Contents, 29; Not-Contents, 57.
|Auckland, L.||Milner of Leeds, L.|
|Bishopston, L.||Mishcon, L.|
|Boston of Faversham, L.||Phillips, B.|
|Collison, L.||Pitt of Hampstead, L.|
|David, B. [Teller.]||Ross of Marnock, L.|
|Galpern, L.||Simon, V.|
|Hanworth, V.||Stewart of Alvechurch, B.|
|Houghton of Sowerby, L.||Stewart of Fulham, L.|
|Howie of Troon, L.||Stone, L.|
|Irving of Dartford, L.||Strauss, L.|
|Jeger, B.||Underhill, L.|
|Jenkins of Putney, L.||Whaddon, L.|
|Kilmarnock, L.||White, B.|
|Llewelyn-Davies, L.||Wigoder, L.|
|Llewelyn-Davies of Hastoe, B. [Teller.]|
|Airey of Abingdon, B.||Macleod of Borve, B.|
|Avon, E.||Mansfield, E.|
|Bellwin, L.||Massereene and Ferrard, V.|
|Belstead, L.||Middleton, L.|
|Benson, L.||Monk Bretton, L.|
|Brabazon of Tara, L.||Mottistone, L.|
|Brougham and Vaux, L.||Mountgarret, V.|
|Cockfield, L.||Murton of Lindisfarne, L.|
|Colville of Culross, V.||Newall, L.|
|Cork and Orrery, E.||Nugent of Guildford, L.|
|Cullen of Ashbourne, L.||Onslow, E.|
|de Clifford, L.||Portland, D.|
|De La Warr, E.||Rochdale, V.|
|Denham, L. [Teller.]||St. Aldwyn, E.|
|Drumalbyn, L.||Sandys, L. [Teller.]|
|Dundee, E.||Savile, L.|
|Eccles, V.||Sharples, B.|
|Ellenborough, L.||Skelmersdale, L.|
|Elliot of Harwood, B.||Stamp, L.|
|Ferrier, L.||Stradbroke, E.|
|Gainford, L.||Strathcarron, L.|
|Gowrie, E.||Strathclyde, L.|
|Greenway, L.||Sudeley, L.|
|Grimston of Westbury, L.||Swinton, E.|
|Henley, L.||Teviot, L.|
|Home of the Hirsel, L.||Trumpington, B.|
|Kemsley, V.||Vaux of Harrowden, L.|
|Lucas of Chilworth, L.||Vivian, L.|
§ Resolved in the negative, and amendment disagreed to accordingly.
§ [Amendments Nos. 18 and 19 not moved.]1423
§ 8.39 p.m.
§ Lord Mishcon moved amendment No. 20:
Page 26, line 9, at end insert—
("( ) Where by virtue of the size and nature of the Pension Scheme provided by a Company securing control or ownership of a related company it is not possible for the employees of the related company to receive from that Company's pension scheme a pension which did not involve a diminution of pension rights held in their British Rail Subsidiary Scheme, the Minister shall make an order to secure by means of a facsimile scheme pension rights for those employed in the subsidiary Company immediately prior to its becoming a related Company from the time it becomes a related company.
( ) The facsimile scheme shall provide identical pension rights to its members as those which they held as employees of a British Rail subsidiary in respect of benefits and contributions.
( ) Where funding by the British Railways Board is required to secure for the employees of a subsidiary a facsimile pension scheme under the provisions of this Schedule, this funding shall be paid for from the first sale of securities in the subsidiary. No initial sale of securities in a subsidiary covered by this provision shall take place if it does not provide sufficient to pay for the funding required.").
§ The noble Lord said: I must apologise to the Committee for what must be my failing eyesight, due no doubt to the advent of old age. I must confess that I had not realised that there were some 80 noble Lords in the Chamber listening to the argument that I put forward on the last amendment. I must apologise for not seeing many of the 50 or so noble Lords who I noticed voted against the amendment. I apologise to them most profusely, and perhaps if I do not force a Division on this amendment I shall not see them again.
§ I now wish to turn to Amendment No. 20 and to deal with it with some brevity, since my main argument was advanced on Amendment No. 17. This amendment deals with a related company—that is to say, a company that comes in and acquires a controlling interest in a subsidiary—and with the situation where it is not possible for the related company to provide a pension scheme save one that inovlves a diminution of pension rights. The Minister is to make an order to secure by means of a facsimile scheme pension rights for those employed immediately prior to the company becoming a related company from the time it becomes a related company. With the exception of the funding provision which occurs in the fourth paragraph, that is really the essence of the amendment. When this was discussed in Committee in another place the Minister was good enough to say that he could quite see that in many cases a facsimile scheme could be an appropriate way of dealing with the matter. Indeed this has a precedent; it was done in the case of Thomas Cook. When that company went into private hands, so far as I can remember, a facsimile scheme was prepared and an order was made which actually made use of the wording in the facsimile scheme, and it ensured that there was no diminution of pension rights.
§ We are now dealing with a situation in which the noble Earl, Lord Avon, said he thought would be a very unlikely one; where one has a company in private hands taking over a subsidiary and unable to provide as good a pension scheme to the employees. This is one of those minority cases, and in my humble submission to the Committee, this amendment provides the protection which ought to be given to the loyal employees of British Rail's subsidiaries.1424
§ The Earl of Avon
The noble Lord, Lord Mishcon, made a remark about the supporters behind me but I cannot quite see the supporters behind him either. If I may say so, Amendment No. 20 produces an interesting proposal but for the same reasons as before I should like to advise your Lordships not to accept the amendment. The first reason is one of principle. Here again the noble Lords opposite are seeking to impose a statutory pension straitjacket on private sector companies, and this is not something that the Government can support. The second reason is one of practicality. The amendment tries to lay down a single pension solution for each and every one of the Railway Board's subsidiaries into which private capital is to be introduced. We are not prepared to do that because this legislation would have to cover a number of different subsidiaries whose individual circumstances will be different.
For example, we do not know how many employees will be involved. Numbers are important when deciding whether or not a new pension scheme is viable or what the wishes of the staff themselves may be. Schedule 1 of the Bill as drafted leaves the options open and that, I am sure, is the right course. To take just one example, it may be that it will seem best to split existing pension funds, and sub-paragraph 6 of Schedule 1 provides for that. Other solutions might seem better not only to the board but also to the staff themselves as well as to the new employer. I should like to make it clear—and I hope that this will be of some comfort to noble Lords who do not agree with me—that it may very well be that an arrangement along the lines of the amendment will be adopted in some or even most cases. I acknowledge that a new pension scheme for a subsidiary with the same rules and benefits as the existing British Rail scheme may be the ideal solution for some subsidiaries, and I know that the Railways Board is looking at that idea most carefully. I expect it will also be possible for staff, if they wish, to keep their past service entitlements in a British Rail scheme after they themselves have moved to the private sector. I do not say that in principle the arrangements outlined by the amendment are unworkable; I merely say that the Government are not prepared to lay down an iron law making such arrangements compulsory in every case, and we are not persuaded that this would be to everybody's real benefit.
The noble Lord, Lord Mishcon, did mention the case of Thomas Cook, which is in some respects a parallel between the two cases. A great deal of time has passed since the earlier example to which the noble Lord referred and attitudes and policies have changed and developed. The Government's present policy towards privatisation is reflected not only in this Bill but also in other items of legislation such as the provision of privatisation in the National Freight Corporation which we discussed last year. Of course the Secretary of State and the Railways Board are aware of the need to make proper provision for pensions and the provisions of Schedule 1 are designed to make this possible. I am firmly of the view that it is not appropriate to impose statutory requirements which go far beyond those applying to employers generally, and it is for that reason that I cannot accept the noble Lord's amendment.
§ Lord Mishcon
As the Committee will have anticipated, it is with some sorrow that I see the intransigence 1425 of the noble Earl, Lord Avon, which is so different from the smile which he always proffers at the same time that he issues his denials of consideration to anything said by anyone on these Benches. Would the noble Earl at least consider whether some announcement about pension rights could be made by the Government, to give a little more confidence to the employees of these subsidiaries? The one he has given is merely that the Government will take into account employees' rights and hope that those who take over subsidiaries will have the means, the ability and the will to provide for at least equal pension rights. If the noble Lord would only say that he will consider making a statement which will carry that further assurance then I shall be only too pleased to withdraw my amendment rather than proceed with any other course. But to be left with a negative would be to abandon the protection which my noble friends and I are trying hard to give the employees concerned.
§ The Earl of Avon
I am slightly surprised that the noble Lord finds me intransigent because, having read, as he has, the Committee stage proceedings in another place, I know that the argument has been thoroughly gone through. I believe that the Government spokesman at Committee stage in another place was quite as firm as I have been today. However, so far as employees' protection is concerned. of course the Government are aware of this point and I was under the impression that I had given an indication that both the Government and the British Railways Board will do their utmost to protect employees' pension rights and will ensure that the employee is protected in any prospectus. I shall certainly have a word with my Secretary of State and establish whether he feels there is any need to make a special statement about the protection of employees at, shall we say, the end of the Committee stage.
§ Lord Mishcon
I am much obliged for those comforting words—if that is the appropriate term with which to describe them. With great respect to the noble Earl, I will just say that part of my affection for this Chamber is that it is supposed to be a revising Chamber. Therefore, one hopes that more wisdom may prevail here than prevails elsewhere. One does not necessarily anticipate precisely the same replies here as Ministers give in another place. At least something has been said today which possibly brings a little comfort and I shall await the further outcome of the noble Earl's promised consideration before deciding what I shall do at another stage. At this stage, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
Lord Mishcon moved Amendment No. 21:
Page 26, line 17, at end insert ("or maintains existing pension rights of former employees of British Railways Board.").
§ The noble Lord said: With a promise to be equally brief, though I hope there will not be a promise from the noble Earl to be equally intransigent, I move to Amendment No. 21, which refers to page 26, line 17, of the Bill. This is a provision to which I referred earlier, that after the appointed day—that being governed by sub-paragraph (4)—no order is to be made by the Secretary of State which has the effect 1426 of placing the company or any of its subsidiaries in any worse position. That, obviously, is in relation to pension rights. It goes on to say that the company or subsidiary will not be regarded as being placed in a worse position because an order provides that any changes in a pension scheme are not to be effected without the consent of the Secretary of State. This amendment simply wishes to tack on to that the provision that it equally will not be deemed to be an invalid order if, in addition to that, it maintains the existing pension rights of former employees of the British Railways Board. I beg to move.
§ The Earl of Avon
The addition of this amendment really once more highlights the thinking of the Opposition. They want private companies to be placed under a pensions obligation, and they want a piece of what I should like to call legislative make-believe saying that that obligation does not make the company worse off. Let me emphasise that we do not resist such an amendment because we envisage employees having their pension rights attacked. In truth, the employees, through their unions, are already equipped to look after themselves. I could go on longer, but I think I should end by saying that we merely want to leave employers in the same position as any other private sector company. That really sums up the thinking from this side of the Committee.
§ Lord Mishcon
I can only hope that the same consideration of what has been said in regard to this amendment will be given by the noble Earl as he promised he might do in the case of the last amendment. In that hope I ask the Committee's leave to withdraw this amendment.
§ Amendment, by leave, withdrawn.
§ Lord Mishcon moved Amendment No. 22:
Page 26, line 36, at end insert—
("( ) Notwithstanding anything in the foregoing provisions of this section an order shall not be invalid by reason that in fact it does not have the result of securing that all employees concerned are not placed in any worse position by reason of the provisions of the order, but if the Secretary of State is satisfied or it is determined that any such order has failed to secure that result, the Secretary of State shall as soon as may be make the necessary amending order.").
§ The noble Lord said: With equal brevity may I remind your Lordships of what I said about the copied language of subsection (6) of the 1962 Act, in Section 74, I think it was. Your Lordships will not wish to be entertained at this hour with any dissertation upon the use of the English language in legislation, although I am perfectly sure that the very live and lively spirit of the noble Lord, Lord Renton, hovers over the Committee at this stage. Unfortunately, he is not in his seat, which is why I had to refer to his spirit hovering, but that, I can assure your Lordships, is a reference to a gentleman who we all pray is in extremely good health. There is this provision in the 1962 Act which seeks to say that nothing shall be done which puts the company, the associated company, the new company, in any worse position. In exactly the same way we ask for this provision to read that this applies equally to employees, that they shall not be placed in a worse position.1427
§ I think, even before I sit down, that I can anticipate, as your Lordships can, that as I have been making rather similar remarks so will the noble Earl have to make similar remarks in reply to this. Again, I am hoping—and I think this is the shortest, simplest and clearest way of putting it—that the noble Earl will consider the whole matter of the security of employees and their pension rights in the light of the discussion that we have had this evening. In that hope, even before he rises, I ask your Lordships' leave to withdraw the amendment.
§ The Earl of Avon
I am not quite sure whether I am allowed to speak on this amendment as it has already been withdrawn, but perhaps on this amendment I might be slightly more forthcoming. I think I drew the noble Lord's attention to this one earlier. It is my belief that the orders we are discussing would all be made under Section 74 of the Transport Act 1962, and so far as I can see Section 74(6)(b) of that Act already contains a provision the wording of which is very close to that of this amendment. I venture to suggest, therefore, that the purpose of the amendment is already achieved. Having so said, may I please have a look at this and make sure that I am right, and obviously I will consider what the noble Lord has himself said.
§ Amendment, by leave, withdrawn.
§ 8.56 p.m.
Lord Mishcon moved Amendment No. 23:
Page 27, line 10, at end insert ("notwithstanding anything in this section, in the event of a subsidiary being removed from the control of the British Railways Board, the Secretary of State shall make an order to provide that there shall be no diminution of the pension rights of the employees concerned.").
§ The noble Lord said: Again, the spirit of this amendment is precisely the same as that which I have tried to bring to the Committee's attention. I do not know whether the noble Earl has anything more reassuring to utter than he has already done, and on the basis that he has not except, again, after consideration of what has been said today, I shall ask your Lordships' leave to withdraw.
§ Amendment, by leave, withdrawn.
Lord Underhill moved Amendment No. 24:
Page 27, line 22, leave out ("may") and insert ("shall").
§ The noble Lord said: This is a fairly simple amendment. I am certain all your Lordships will understand this far more than one or two noble Lords did on the pensions amendments. It deals with the question of the British Transport police. Sealink now has powers to use the services of the British Transport police, and paragraph 2 of Schedule 1, with which we are now dealing, provides that the Railways Board may make an agreement with Sealink, or a new harbours company to be set up, for the purpose of making the services of the transport police available. The British Transport police has considerable experience in policing harbours and docks, and this should be continued in the public interest as well as in the interests of the new concerns to be established.1428
But the Schedule makes this power only permissible, and if the transport police are not to be used the alternative would be to use one of the private security organisations—and that, I would suggest to your Lordships, is absolutely undesirable. Therefore, it should be made mandatory on the Railways Board to make the necessary agreements, so that the services of the British Transport police shall continue. That is all the amendment seeks to do—to substitute "shall" for "may". In this, there is some very influential support in the form of Mr. Kenneth Clarke, the Parliamentary Secretary for Transport, who, when the British Rail (No. 2) Bill was before the other place on 10th March, said this:
I hope I shall be able to assure Members serving on the Standing Committee on the Transport Bill that we are not paving the way for private police forces; that we are merely preserving the existing transport police in docks and we shall look at the implications of denationalisation upon them".
The Under-Secretary of State, in other words, believes that the British Transport police should be the body to deal with the policing of harbours and docks under the new set-up. With that influential support, I am sure that the Government will accept my amendment.
§ Lord Mottistone
This amendment worries me. In the Isle of Wight where we have part of the Sealink services and the harbours to which the noble Lord, Lord Underhill, has referred, we have never had British Rail police and would never expect to have them. If his "shall" is turned into "must" that might mean that they have to be inflicted upon us. It could be that we have what are called the ordinary police because of some association with the fact that we have vast prisons in the Isle of Wight, and this is something which it would not be fair to put upon the railway police. But whatever the situation may be, it is not an open-and-shut situation that the railway police look after all the harbours of Sealink. Therefore, turning this into an obligatory commitment, as opposed to "shall", would probably be unwise.
§ Lord Underhill
If I may intervene after the remarks of the noble Lord, Lord Mottistone, I may say that that will not affect my amendment at all. All that the schedule says is:The Railways Board may make an agreement with Sealink or the harbours company for making available the services of the British Transport Police Force…".I want an agreement that they shall make an agreement. That could cover exceptions where it is necessary for the ordinary police to carry out the duties.
§ The Earl of Avon
I apologise for replying in the place of my noble friend Lord Bellwin. The noble Lord, Lord Underhill, will know I am very intransigent this evening! This amendment relates to the British Transport police force, a private force employed by the Railways Board to provide a service to them and their subsidiaries, and to the British Transport Docks Board and London Transport. At present Sealink, as a subsidiary of the Board, have the right to use the services of these men for policing their harbours; but when they cease to be a subsidiary they will not have that right unless provision is made in the Bill. That 1429 is what paragraph 2 of the first Schedule seeks to do. It provides enabling powers for the board and Sealink to enter into an agreement for the continued use of the British Transport police by Sealink; and in that event gives the British Transport police suitable powers in relation to Sealink properties and activities.
While I am unable to answer for my honourable and learned friend Mr. Kenneth Clarke, as he has been piloting this through the other place I am sure he feels that this is a more than adequate power to carry forward.
The power to enter into an agreement is an enabling power; but Sealink have already said that it is their intention to do so, although naturally nothing is likely to be finalised until the change in Sealink's status is imminent. I hope the noble Lord will find that declared intention reassuring.
We have not made it a requirement that Sealink and the board should enter into such an agreement, as the amendment proposes, because it would not be appropriate to tie the hands of both parties in this way. It is not part of our philosophy to place new statutory duties on Sealink; rather it is our intention that Sealink should be subject to all the statutory requirements and should benefit from all the freedoms that affect other private sector shipping and harbour companies—no more, no less. This amendment, if accepted, would make Sealink the only harbour company in the country under an obligation to use the British Transport police. Not even the British Transport Docks Board are similarly bound. Earlier harbours legislation has contained similar enabling powers, but there is no precedent that we can find for this sort of obligation on a harbour company.
I hope the noble Lord will accept my assurance that it is Sealink's firm intention to enter into the sort of agreement referred to in the legislation and that therefore he will decide not to press his amendment.
§ Lord Underhill
I accept the assurance that the noble Earl has given. There is one problem. We have in mind that the Sealink which may give the assurance now may not be the Sealink of the future because of the policy measures being taken by the Government and their use of the wicked word "privatisation". Therefore, it may not be the same concern. I presume that the Secretary of State will endeavour to carry out his assurance with the new company as for the present one. Therefore, I am prepared to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ The Earl of Avon moved Amendment No. 25:
Page 29, line 7, at end insert—
("This paragraph applies equally where the lease and sub-lease were granted after, but in pursuance of an agreement entered into before, the commencement of this Part.").
§ The noble Lord said: Even though I am moving it, this is a straightforward and, I hope, uncontroversial amendment designed to overcome a potential problem which has arisen since the Bill was originally introduced. Sealink has three large new ships which are leased by the Railways Board from private sector banks and subleased to Sealink. A fourth ship is under construction at Harland and Wolff's yard in Belfast and will be the subject of similar leasing arrangements. At present, 1430 the board has a contractual agreement to lease that ship when it is complete. These leasing arrangements will need to continue once Sealink is in the private sector; the board have considered whether they might be renegotiated but have ruled this out. We recognised however that when Sealink ceases to be a subsidiary of the board, and as a consequence the Secretary of State repeals by order the board's shipping powers under paragraph 7(1) of the schedule, the board would have no power to continue the leases. So we have provided in Paragraph 6 a saving provision to ensure that these particular leases and sub-leases can continue as if the Railway Shipping Acts were not repealed.
§ The problem is that delivery of the ship being built by Harland and Wolff, the "St. David", is overdue and may be delayed until after this Bill has been enacted. If that happens, the lease and sub-lease on the ship will not have begun when the Bill comes into effect and will not be covered by the saving in Paragraph 6. So in due course the lease and sub-lease could become ultra vires the board. Clearly we have to guard against that possibility and therefore we have tabled this amendment. It provides that a lease or sub-lease of a vessel granted after the commencement of Part I of the Bill as the result of an existing agreement shall continue to have effect notwithstanding anything in the Bill. I beg to move.
§ Lord Mishcon
In order to show how different is the Front Bench on this side, we have no objection to this amendment.
§ On Question, amendment agreed to.
§ Schedule 1, as amended, agreed to.
§ Clause 5 [Associated British Ports and its Holding Company]:
§ 9.6 p.m.
§ Lord Underhill moved Amendment No. 26:
Page 4, line 34, at end insert—
("(3) The Holding Company shall consist of a chairman and not more than 12 and not less than 6 other members. The chairman and other members shall be appointed by the Secretary of State".).
§ The noble Lord said: Clause 5 provides that the present British Transport Docks Board shall be known in future as the Associated British Ports, which is to be a wholly-owned subsidiary of a holding company. The clause also makes provision for the setting up of the holding company. Later in the Bill we find, in Clause 7 and in Schedule 2, that there is provision for the appointment of a number of directors for the new Associated British Ports Company and that these directors will be appointed by the holding company. But, so far as I can see, there is no reference in the Bill to the appointment of directors for the holding company. Yet we find in subsection (10) of Clause 6 that there is a reference to the first report of the directors of the holding company. Therefore, I must ask who will be the directors who will give this first report and how they will be appointed. There is no reference at all in the Bill to directors for the holding company.
§ All the amendment provides is that the holding company shall consist of a chairman and a number of 1431 other members, all appointed by the Secretary of State. Therefore this seems to me to be a reasonable amendment. If the noble Lord thinks that the figures that I have given of the number of members are wrong, I shall willingly withdraw and the Government can bring forward their own amendment. If the directors have to give a report—and this is according to the Bill—there ought to be some provision in the Act for the appointment of such directors. I beg to move.
§ Lord Bellwin
I can quickly dispose of the problem that concerns the noble Lord on this matter. During the transitional period between the appointed day and the setting up of the two-tier organisation, the Secretary of State will, of course, appoint the directors of the holding company. We have already announced that the intention is to appoint those who are members of BTDB as the first directors of the holding company; and paragraph 10(1) of Schedule 4 provides that the members of BTDB before the appointed day will also be the first directors of Associated British Ports. This will ensure continuity of management during the transitional period and keep disruption to a minimum. But after flotation, control of the holding company, including the power to appoint and dismiss directors, must pass to the private sector if the aim of our proposals is to be achieved.
§ Lord Underhill
There is nothing in the Bill about the present directors of the BTDB being directors of the holding company. It says in the Bill that there directors shall be the same directors as for the Associated British Ports Company when it is formed. But the other is not there. Apparently the Government have decided to appoint provisional directors to the holding company, but I can see no reference to that in the Bill.
§ Lord Bellwin
We consider that it will be in the best interests of the company if the management and workforce are made responsible for their own future. We have said that. That is why the Government do not intend to appoint directors to the holding company either by taking specific powers in legislation or by using their majority shareholding so to do. The appointment of directors to the holding company is a matter for the shareholders, and by this we mean the private sector shareholders who will control the company and who have a very real financial stake in its success. The Government accept that they have a responsibility as a prudent shareholder to protect the public's asset. We do not think it necessary to appoint directors to control the company to achieve this objective. The taxpayers' interests should be perfectly well protected by the directors appointed by the private shareholders who control the business and who will pursue its best commercial interests. As to the transitional period, as I have said, the directors will be those who are members of the BTDB. They will be the first directors of the holding company.
§ Lord Underhill
I am still not happy but I shall read what the noble Lord has said in the Official Report. I beg leave to withdraw my amendment.
§ Amendment, by leave, withdrawn.1432
§ On Question, Whether Clause 5 shall stand part of the Bill?
§ 9.13 p.m.
§ Lord Underhill
May I raise a few points because reference has been made to there being a two-tier structure. I should like clarification as to whether or not it should be a three-tier structure. First, there is the holding company which is to act as a private company under the Companies Act. Secondly, the new company, Associated British Ports, which is going to assume the position of the present Transport Docks Board, and that is to be a private company but also to be the statutory undertaking which has responsibilities of the statutory docks body. Will there also still be the separate harbour authorities of the separate harbours which come under Associated British Ports?
What is to be gained by this elaborate structure? The present Transport Docks Board operates some ten ports which handle 20 per cent. of the country's seaborne trade. This is not a badly run undertaking. It is good management—so good that the Secretary of State has said that over the past few years the financial and managerial performance has been very satisfactory. If my memory serves me correct, that viewpoint was echoed by the noble Lord, Lord Bellwin, during the Second Reading.
I find that an article in the January-February issue of the journal Transport, Mr. J. K. Stewart, vice-chairman and managing director of the British Transport Docks Board, sets out the problems of the docks industry in this country. He illustrates the progress of the board and outlines that in 1962 the Docks Board was in a very sorry state, both financially and physically. There was a substantial capital debt and reserves were nil. He explains that by 1980 reserves had been built up to £84 million. Ten years ago the return on capital was 3.5 per cent. and in 1979 this had been developed to 15.1 per cent. Most private sector companies would like to be in that situation. Despite the recession during 1980, which caused a drop of nearly 13 per cent. in the tonnage handled, the return on capital was 9.9 per cent. So really we must ask (although the Transport Docks Board is not above criticism, everyone admits that it is an efficient undertaking and has carried out its job correctly) why we are having this complicated Bill and this complicated structure—as I say, either a two-tier or a three-tier structure—and why should we interfere with what is generally regarded as an efficient and properly managed undertaking?
§ Viscount Simon
Before the Minister replies perhaps I could raise one other point on this clause. As your Lordships know, in the original Bill it was proposed that the operating company, the successor to the British Transport Docks Board, should be called British Ports. Objection was raised to that by a number of port authorities in the country who felt it would be misleading to the public generally, and so it was agreed that the body should be called "Associated British Ports".
I am bound to say I think that is a very unfortunate choice because we now have two bodies, Associated British Ports, the successor to the British Transport Docks Board, and the British Ports Association, which is in fact a trade association of port authorities of which 1433 Associated British Ports would be a member. I think this is bound to lead to confusion, and indeed in the Second Reading debate I made a remark at column 237 about the British Ports Association. I do not think I made a mistake because I understand these bodies fairly well, but the Hansard reporters thought I had spoken of Associated British Ports.
I think the noble Baroness, Lady Stedman, fell into a rather similar trap when she referred, if I have got the right place, to the British Ports authority. There is no such thing. She asked whether the British Ports Authority was eventually going to take over the ports of London and Merseyside. I think probably she meant, not the British Ports association but Associated British Ports. It is extraordinarily confusing and I just wondered whether, between now and the next stage of the Bill, the Minister would like to have further consultations with those concerned with this matter. I do not think it is for us in this Chamber to suggest what the right answer is; it is a matter for the people concerned. But I should have thought that instead of having two bodies like this with such similar names, but with different ports associated with them, and with different objects, it would be simpler if the names were changed to something a little less alike. It was pointed out to me, and I have just been to an international ports conference, that if these titles were translated into the French language both would be exactly the same; one could not express them differently. So may I leave that thought with the Minister, to see whether something could perhaps be considered?
§ Lord Bellwin
My information is that in another place this matter of the name was debated for six hours; that shows that we are able to make some advance on that. I think it may be fair to say that, if indeed Parliament had discussed it for six hours in that way, I must confess to being a little hesitant at reopening the matter, though I do know of the concern of the noble Viscount, Lord Simon, since he has expressed it to me privately. I would have to say that the department in fact has received no representation against the name Associated British Ports since it was adopted. I should have thought it unlikely that many people would confuse that with the British Ports Association. Indeed, I understand that the chairman of BPA welcomed the adoption of the name "Associated British Ports", and suggested the new name should prove a satisfactory compromise all round. However, I have not talked to my colleagues about it; I will do so and see what they have to say.
So far as the clause setting up two or three tiers is concerned, I would say to the noble Lord, Lord Underhill, that Associated British Ports will be the same corporate body as the BTDB, in fact under another name, and Associated British Ports will therefore continue to be the harbour authority for all the BTDB ports. Therefore we are back, for good or ill, to the two tiers.
May I say on that that the clause sets up this structure which is to be a successor to the BTDB, and is therefore, I submit, fundamental to Part II of the Bill. The top tier will be a company formed and registered under the Companies Act, which will have conferred on it by the Bill power to control the lower tier—that is, the reconstituted BTDB, which is to be 1434 known as Associated British Ports—corresponding to the powers of a holding company over a wholly-owned subsidiary. This two-tier arrangement ensures that the BTDB's docks business continues within its statutory framework, while also giving the new organisation maximum freedom to respond to changing circumstances and to take advantage of wider opportunities through the top tier company.
The continued existence of BTDB as the same entity, albeit reconstituted and with a new name, will ensure the minimum disruption to the board's business. Indeed, the retention of the BTDB's undertaking as a single management unit should be seen as a central part of the Government's approach to the privatisation of BTDB. It will allow the maximum benefit to be drawn from the happy mix of ports, good management and generally sound industrial relations which have contributed so much to the success of the board's undertaking over the last few years. I do not share the concern of the noble Lord, Lord Underhill, on this matter. The clause is basic to what we are setting out to do and, therefore, I hope that it will meet with the approval of the Committee.
§ Clause 5 agreed to.
§ Clause 6 [The financial structure]:
§ 9.22 p.m.
Lord Underhill moved Amendment No. 27:
Page 6, line 2, at end insert ("save that any such directions shall provide that the Secretary of State shall retain at least 51 per cent. of the shares of the Holding Company").
§ The noble Lord said: I shall be very brief in speaking to this amendment. It is similar to that proposed by my noble friend Lord Mishcon in dealing with the British Rail subsidiaries. But in this case there is one considerable difference, because the Government should find it possible to accept this argument. Over and over again, Ministers have made it absolutely clear that it is the firm intention of the Government to retain a 51 per cent. stake in the new set-up, which will be the holding company for the new Associated British Ports.
§ I know that the Government have said that they have no intention of exercising any control over policy by virtue of their majority holding. We consider that that is to be regretted, but that is not the issue with which we are concerned here. All we are concerned with is that the Government's firm intention, which has been reiterated time and time again, that they intend to have a 51 per cent. stake in the holding company, should be written into the Bill. I see no reason at all why the Government should be at all coy about doing so, because Minister after Minister has repeated that this is firmly the Government's intention. I beg to move.
§ Lord Bellwin
I must say that if we were to accept this amendment it would prove to be a hindrance rather than a help to our proposals, for reasons which I can explain. But it may be helpful if I first explain why we propose to take a 51 per cent. shareholding in the business when shares are sold to investors. It is basically because we want to demonstrate our confidence in the future of the business to all concerned, 1435 including the unions and the workforce who attach importance to that expression of confidence on the business's move into the private sector. We have promised to keep our 51 per cent. shareholding for the foreseeable future, but we have never proposed to write this figure into the Bill.
I believe this to be right for a number of reasons. The figure of 51 per cent. is not strictly related in practice to the question of control of the company. Control of the holding company will rest firmly in the private sector, through the directors appointed by private investors at the annual general meeting. In fact, if we were seeking to control the new company, we would not need to hold 51 per cent. of the shares. A much lower figure would be adequate, depending on the distribution of the remaining shareholdings.
We do not believe it necessary or desirable to bind for all time this Government, and future Governments, to a level of holding of 51 per cent. or more. To do so would create serious doubts about the Government's intention not to interfere in the management of the business and not to seek to control it in any way. Our policy is that, while there may conceivably be circumstances in which it may prove necessary for the Government to exercise their shareholding if a serious issue involving the national interest were to arise, it is not feasible for such hypothetical circumstances to be spelt out or to become the subject of specific guarantees provided in this legislation. We believe it would be wrong to fix the level of the Government's shareholding and thereby impose inflexibility which might be entirely inappropriate to circumstances facing a future Government.
It is difficult to envisage such circumstances but one possibility must be a situation in which the holding company wishes to make a rights issue in order to raise additional cash to fund port expansion and development. Naturally the Government would then have to consider at the time whether to subscribe their rights, although I think it most likely that the Government would not want to subscribe and would expect the holding company to look instead to the private sector for all its financial requirements.
We have made our position absolutely clear. We have said that we will take a 51 per cent. stake in the holding company when shares are sold to private investors and that we will retain those shares for the foreseeable future. We will confirm this intention when shares are offered to the public. I believe that to go further is unnecessary and that it would be wrong to bind future Governments. I appreciate why the noble Lord has moved this amendment, but in the light of what I have said I hope he will not feel that he must press it further.
§ Lord Underhill
Although I shall not press it further, naturally I am not satisfied with the position which the Government are taking. The view has been expressed by the noble Lord, Lord Bellwin, that the fact that 51 per cent. is held by the Government would develop confidence in the workforce and in investors. I should have thought that that confidence would be more firmly expressed if it were written into the Bill and if everybody could see it there in firm print.
1436 The noble Lord says that we cannot bind future Governments. Of course we cannot bind future Governments to the whole of the legislation in the Transport Bill which we are discussing tonight. When we want to do something which the Government do not want us to do it is strange that we are told that their view is that one ought not to interfere in any way in the management of the new concern, yet we had a long discussion on Clause 3 under which the Government intend to interfere with the general position of British Rail.
It should have been possible for the Government as they look to the foreseeable future, even if they did not wish to take a position, to consider that there might need to be primary legislation to change me situation. It should be possible for the percentage to be changed by regulation, subject to a resolution of both Houses. However, in view of what the Minister has said, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Lord Underhill moved Amendment No. 28:
Page 6, line 2, at end insert—
("( ) In the event of the Holding Company proposing to dispose of a majority holding in any part of Associated British Ports, details of the proposal shall be sent to each port user, trade union or local authority affected by such proposal, who may make representations to the Secretary of State during the fourteen days following the day on which the proposal was sent. The Secretary of State shall make a decision on such representations within a period of twenty-eight days from the date such representations were received.").
§ The noble Lord said: I hope that this amendment will be seen to contain so much common sense and to be so practicable that the Government will accept it. It is a very straightforward amendment. When the noble Lord replies, it may be that I shall find that the amendment is completely unnecessary because this is never going to happen.
§ The purpose of the amendment is to make provision for representations to be made to the Secretary of State in the event of any proposal coming forward to dispose of a majority interest in any part of the new company, Associated British Ports. Possibly the Bill contains something that I have not seen which makes this impossible. However, it appears to me that if Associated British Ports wished to dispose of any part of its structure it could do so.
§ The Government may argue that the intention is to retain the existing Docks Board as a complete, integral unit. However, that is not in the Bill. As I have said so frequently during the course of the proceedings, we can only deal with what is in the Bill. We cannot deal with hypothetical matters. So far as I can see, it would be possible for Associated British Ports, with the approval of the holding company, to dispose of any part of its undertaking. All the amendment says is that in that event there should be an opportunity for any port user, for any trade union with labour involved in that particular port, or for a local authority which may be affected by the change to make representations to the Secretary of State. The amendment goes no further than that the authority for considering such representations would rest with the Secretary of State. This seems to be such a reasonable and equitable amendment that I hope the Government will feel that they can accept it. I beg to move.1437
§ Lord Mottistone
If I may intervene before my noble friend speaks, I am absolutely astonished at the noble Lord, Lord Underhill, saying that this is reasonable. I cannot understand why those intelligent noble Lords opposite do not seem to understand the fundamentals and the benefits of private enterprise. All this grabbing to try to keep control and to give everybody a chance to talk—do not let them be free, they say. That is what this amendment says, and I think that it is absolute nonsense.
§ Lord Bellwin
I trust that the noble Lord, Lord Underhill, will have gathered that my noble friend does not agree with him. While endeavouring to be brief, I am trying at the same time to give as much explanation as I can and as I think I ought to do, on some of these points and not simply to dismiss them, even though we do not agree with them.
The reference in this amendment is to the disposal of "parts of Associated British Ports". I take that reference to be to the formation of subsidiaries by ABP to manage parts of its business, and I shall deal with that point in a moment. It is also possible, however, that the noble Lord has in mind the disposal of part of Associated British Ports itself and I should like to make clear that this is simply not possible under the provisions of the Bill. ABP is a statutory corporation which is controlled by the holding company as if it were a wholly owned subsidiary, but that control is not by virtue of share ownership, it is by virtue of the statutory provisions of the Bill, including Clause 7(4) which provides for the holding company to appoint ABP's directors. Associated British Ports does not have a share capital. The provisions of the Bill place it under the control of the holding company and only future legislation could alter this relationship. Clause 13 of the Bill provides for control of the holding company to be transferred to an intermediary holding company, but only if such a holding company remains wholly owned by the original holding company so that the statutory link remains. I know that that is hard to follow, but I hope it will read clearly enough. With regard to subsidiaries, the concern of the noble Lord is perhaps more readily understood. I believe that what the noble Lord may have in mind is that the Associated British Ports undertaking could be broken up by the formation of subsidiary businesses in which a majority of the shares are then sold, and so thereby transferring the business to a new operator. To believe that such a move could be used to transfer a significant part of BTDB's ports business is to misunderstand the nature of that business.
The individual harbours and docks that make up BTBD's business at its 19 ports are, as I am sure noble Lords will be aware, all subject to individual statutory powers and duties which cannot be transferred to another owner or operator except by legislation. The most usual form of this would be a Private Bill where there would be, as noble Lords will realise, a full opportunity for local interests and others involved to make representations. The Government's proposals that underlie the provisions of Part II of the Bill, for introduction of private capital into BTDB's undertaking, have consistently made clear that a central feature of those proposals is that BTDB's existing business will not be broken up. If in the future 1438 Associated British Ports should wish to alter or reduce the scope of its statutory ports business, it would be necessary for it to come to Parliament in order to be able so to do.
The Government believe that the machinery proposed in the amendment for making representations to the Secretary of State on the disposal of a majority holding in such subsidiaries would be out of keeping with the private sector status of the new organisation and the Government's undertaking not to interfere in its management and commercial decision making. In view of the safeguards I have mentioned that govern the operation of statutory port facilities, I hope that the noble Lord will be less concerned than he was on this matter.
§ Lord Underhill
I am grateful to the noble Lord for that detailed explanation. I think he will readily understand if I say that it is such a complicated business that I would prefer to read in the Official Report what he said and decide what course of action to take. I am very pleased that he is not adopting the same view as his noble friend Lord Mottistone. Strangely enough, although the noble Lord, Lord Mottistone, makes an attack on the case we have put up for representation, only a few moments ago he was pressing for local representation on harbour authorities. I should have thought he would have supported the proposals I am putting forward. Whether it is a private sector company or a public sector company, where the occasion arises surely there must be a democratic right for people concerned to make representations to the Secretary of State. I am very pleased that that attitude was not taken by the noble Lord, Lord Bellwin. I shall read carefully what he has said. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 6 agreed to.
§ Clause 7 agreed to.
§ Schedule 2 agreed to.
§ Clause 8 agreed to.
§ Schedule 3 [Powers of Associated British Ports]:
§ 9.37 p.m.
Lord Lucas of Chilworth moved Amendment No. 29:
Page 32, leave out lines 14 and 15.
§ The noble Lord said: This amendment seeks primarily to elicit information. In asking for the removal of these two lines, I question the connection between this activity, carrying goods by road on behalf of other persons to or from its harbours, and the principle activity of Associated British Ports, which is, after all, that of operating and managing harbours and ports. I do not wish to be protectionist for the haulage industry; but it is certainly big enough to look after anything that can be envisaged. Indeed it has been the prime mover of goods both domestically and internationally for some years, and under this new rearrangement I cannot see the necessity for change. Certainly there have been no complaints with regard to the arrangements of the British Transport Docks Board and the private haulier.1439
§ Even if it were thought that my attitude might be protectionist and not acceptable, one is left with the thought that were Associated British Ports to enter into the haulage industry the personnel engaged would in all probability be those currently in employment within the dock industry. Not to put too fine a point on it, if one takes Southampton, there have arisen over the years a number of restrictive practices. Your Lordships may well remember that I spoke quite briefly at Second Reading of the dockers' proposal for a drivers' registration scheme in that dock. Were Associated British Ports to enter into the haulage industry, it would seem to me a probability that the ordinary haulier would be precluded from operating in and out of some harbours and some ports. This would be against the spirit of the free enterprise we are looking for in the Bill. I would go further and suggest that were this so it would be difficult to attract private investment money into an organisation one section of whose activities was not controllable in any way at all because of the protection that dockwork labour enjoys. Those are the reasons for tabling the amendment and I should be interested, obviously, to hear what my noble friend the Minister has to say in response. I beg to move.
§ Lord Mottistone
I was about to leap to my feet to say that I should prefer it if my noble friend would not do that, as I wish to raise my point separately.
§ Lord Bellwin
The point is taken, but I cannot promise my noble friend that he will get a very lengthy answer. However, I shall do my best. The reason that I suggested that we might take the two amendments together was that these powers are both new powers not available to BTDB and I thought that it would be helpful if we discussed them at the same time. We have heard that ships' agents have a long and independent history in which they are called—
§ Lord Mottistone
I hesitate to intervene, but I would very much like to make a speech in support of my noble friend. However, I do want to advance my own argument for my own amendment. I am extremely sorry for my noble friend on the Front Bench, but please would he leave me alone until I come to my amendment?
§ Lord Bellwin
I promise not to touch my noble friend. Perhaps I can proceed by saying that we have heard that ships' agents have a long and independent history in which they are called to act on behalf of shipowners in a wide variety of situations. The great number of agents who carry on this business in United Kingdom ports are concerned that their work may be seriously at risk if port authorities such as Associated British Ports are to provide this service themselves.
I should like to reassure those who express these fears by setting out in more detail—and I think that I owe it to my noble friends to do this—why it is the Government's policy to grant these powers to Associated British Ports. I hope also—briefly if I can, but in 1440 detail—to indicate, so far as it is possible at this stage, how the power of ships' agency is likely to be used.
Noble Lords will appreciate that Associated British Ports is a statutory corporation and that its activities are therefore limited to the extent of its statutory powers. In considering what powers it is approprate for ABP to have, it is necessary to consider the likely scope and development of its business. As I have previously explained, Associated British Ports will inherit in general the existing statutory powers and duties of BTDB, but the nationalised industry controls to which BTDB was subject under certain provisions of the Transport Acts 1962 and 1968 will be removed in view of the private sector control of the new organisation. At the same time the Government believe that it is appropriate to make a small number of limited extensions to BTDB's existing statutory powers, and these include the power to carry goods by road and to carry on the activities of a ship's agent.
The Government believe these to be sensible, logical extensions of BTDB's existing powers. They are intended to enable Associated British Ports, if they wish, to develop ancillary activities which are complementary to their main business of operating harbours and providing ports facilities and which can be carried on profitably and efficiently in conjunction with this business. Similar powers are already enjoyed by other port authorities in various forms. In particular, several harbour authorities have specific powers to carry goods by road.
The extent to which Associated British Ports will use these new powers will of course depend upon their commercial judgement, and they have commented that they will continue to regard the efficient provision of port facilities as their primary objective. I can assure my noble friends that the British Transport Docks Board are well aware of the concern felt by ships' agents as to the future role of ABP in this area and the board have been anxious to emphasise that they do not intend to engage in any of these new activities unless the circumstances fully justify it.
As far as ships' agency is concerned, BTDB are fully aware of the independent status of ships' agents and of their close links with shipowners; and they have no intention of imposing any particular agency on customers or of acting against the longer term interests of the port by alienating ships' agents or discrimination against particular port users. There could, however, be circumstances in which there was a gap in the existing services of a particular port which Associated British Ports might usefully fill.
I believe that this undertaking given by the board should go a long way to reassure those who are concerned by this provision in the Bill, that what is involved is not a major new business initiative in this area but the ability to support their existing ports business by offering a fuller range of services where some of those services are not at present available. There is no question of a shipowner being unable, as a consequence of this provision, to exercise the choice he has at present of placing his business in the hands of a ship's agent who may act as intermediary with all third parties, including the port authority.
I hope that these comments will meet the fears expressed by my noble friend. I understand why he raises the point as he does, and there is no doubt that 1441 my noble friend Lord Mottistone will also raise it. But it is a matter that has also concerned us, not least in the light of the representations made and the observations heard. We were, and are, anxious about the matter and do not want to treat it lightly. However, I feel confident that in the light of what I have said there need not be the kind of difficulty to which my noble friend's fear could give rise.
§ Lord Brougham and Vaux
I am an importer and exporter for a major international company using ships' agents and haulage agents separately but which also work together. I have received representations and seen a copy of representations which a certain company sent to the Minister in another place. I am not too happy with the reply of my noble friend and I should like to hear what my noble friend Lord Mottistone will say on the next amendment. So far as I am concerned as an importer and exporter using ships' agents and haulage agents, both amendments tie together.
§ Lord Mottistone
I should like to support my noble friend Lord Lucas and to reserve all my comments on what my noble friend on the Front Bench has said in relation to ships' agents. I noted much of what he said. Indeed, I may have to ask him to repeat it because it is most confusing to have one's amendment answered, in the main, by the reply to someone else's amendment. I tried to point this out to my noble friend. I believe that my normally very courteous friend on the Front Bench has made it extraordinarily difficult for me to tackle my amendment when I come to it.
In the meantime, I think that the principle—and this is where it is similar—of the transport argument of my noble friend and the principle of the ships' agents argument are very similar in the sense that Associated British Ports is asking for special legislative backing for an activity which, for an ordinary private enterprise operation, would be taken as it came and would not have to have special rights. That is as much as I will say at this stage. However, I hope that my noble friend will forgive me if I return to the full argument at a later stage when my own amendment is called.
§ Lord Lucas of Chilworth
I thank my noble friend for his answer. I am sorry that he chose to respond to the two amendments because I do not believe that that reply has given sufficient weight to the real problem, which I attempted to explain—that involving the haulage aspect. Frankly, in a Bill which is attempting to free a particular activity, I can see no justification for concentrating the main effort in particular directions where an additional power is now granted. It may look very well on paper and it may sound very well in this chamber this evening, but those of your Lordships who have business in the docks—and my noble friend Lord Brougham has explained this—will know that on balance it is working reasonably well for somebody who is typically employing haulage services.
Southampton docks is very nearly strangling itself with restrictive practices. Many of the business houses, many of the cross-Channel operators, are moving down the road to Portsmouth where there is a much freer activity. I have said, and I repeat, that we 1442 know Southampton wishes to impose restrictions on haulage, on the private haulier. Here is a way in which they will be able to do it without let or hindrance.
§ Lord Brougham and Vaux
May I just interrupt my noble friend? I just had a recent case of exporting some goods, agricultural supplies, from this country to the Far East and we were late in shipping. I nearly had to ask for an amendment to my letter of credit because of what was happening in Southampton. If we go to the smaller ports we find we get much better service and much quicker service.
§ Lord Lucas of Chilworth
I am grateful to my noble friend for his support of the general argument. I was saying really that if we allow this power in the Bill, I can see a strangulation. Were I a potential investor in Associated British Ports at some time, there is no way that I am going to put my money into a company one-nineteenth of which might strangle itself, because I reckon that is one-nineteenth of my share that has gone. I do not want to delay the Committee. Time is getting on. I am not too happy about the answer we have heard, and I should like to consider this point rather more carefully and may wish to return to it at a later stage. Meanwhile, unless my noble friend can help me further—
§ Lord Bellwin
May I say first that there is no question of this Bill in fact preventing road haulage business continuing to operate into and out of BTB harbours. Several major harbour authorities, as I am sure he knows, already have power to carry out road haulage. These are, for example, the Clyde Port Authority, the Tees and Hartlepool Authority, and the Medway Ports Authority. I am sure my noble friend knows of this, but I thought it might be helpful if I just made the point.
§ Lord Lucas of Chilworth
I am grateful for that further explanation. All I can say is that I do not suppose for a moment that the Government, or indeed anybody concerned with this Bill, is wishing at this time to deny free access by all people properly engaged in using harbour and port facilities. However, it may not be in our hands when restrictions apply. I am looking perhaps on the dark side. I should like to think hard upon what my noble friend has said. If he will permit me, I shall perhaps return to the subject at a later stage. With that, I beg leave to withdraw this amendment.
§ Amendment, by leave, withdrawn.
§ 9.45 p.m.
Lord Mottistone moved amendment No. 30:
Page 32, line 17, leave out paragraph 4.
§ The noble Lord said: At last we can come to my amendment in its own right. I will not, as I threatened, ask my noble friend to repeat all his argument, the points of which I took, though it was confused. To be quite honest, it made it difficult for all of us that the two were muddled up as being one thing. They were put down as separate amendments deliberately. It is an awful pity that my noble friend's advisers did not see that that was probably done on purpose.
§ This paragraph 4 that we want to get rid of is a 1443 puzzle, because the rights which have been sought for Associated British Ports so far as is known have not existed before. The British Transport Docks Board do not have these rights, so far as we know, in any ports. There is a clear lack of understanding as to what a ship's agent really is. Are we talking about a chartering agent, a ship's agent or a qualified chartered ship broker? If we are talking about the latter, then we are talking about a professional person and not someone who can be appointed overnight by Associated British Ports.
§ There are all sorts of problems over this, and the most important one is that it seems that paragraph 4 has been slipped in somehow to present a new thing for ABP which no other ports have had before. If it is argued that this is an aim to try to make ABP more equal in order to be a free enterprise company, then I must say that free eneterprise companies do not have this right written in by legislation. And what is the advantage of it? A ship's agent operates widely over many ports; we do not on the whole want a particular local one.
§ Whatever the Minister does about the transport side, for which there is precedent, I noticed in his composite reply that he said there were powers already "for goods by road", but he did not say "and for ships' agents". He quoted to my noble friend some of the ports where the power already existed for goods by road, but in his opening statement he did not say that it extended also to ships' agents. I rather think therefore that this has been slipped in under the carpet in some funny way.
§ If the Minister would undertake to have a good look at the matter, I should be happy to accept that answer. If he cannot say that, then this is so clearly an introduction of something new, with so much power being involved, with possibly the exclusion of expert knowledge, that I might have to persist with it. I therefore hope my noble friend will have a special look at the question of ships' agents; the transport aspect is another issue.
§ Lord Bellwin
I am sorry if my noble friend Lord Mottistone feels it essential that the two amendments should have been taken separately. On reflection, he is probably right, and I apologise to him. Indeed, my noble friend Lord Lucas would probably say, "The same applies to me", so I gladly apologise to him as well.
Clearly, this matter is giving cause for concern, although I do not think it is quite so worrying as my noble friend Lord Motitstone makes out in the sense that if a power of this kind were not given to ABP, it would be open to the holding company to set up a further subsidiary to provide those services without any further powers; perhaps that would be a satisfactory way of going about it to my noble friend. What I said to my noble friend Lord Lucas I feel obliged to say to my noble friend Lord Mottistone, 1444 but I shall want to read carefully what he said. While he knows I can give no undertakings as to what we might or might not do, I suspect we shall come back with the argument set out in more detail, yet presenting the same case.
However, not least because of the confusion, I think I owe it to my noble friends to say that we will look at the matter carefully again to make sure that we are absolutely right on it. I suspect we are, but, even so, I should undertake to look at the matter again, and that I gladly do.
§ Lord Brougham and Vaux
I want to echo something that was said about the chartering aspect of this matter. There is a tremendous difference between chartering a 300 tonner coaster plying across the North Sea from the Wash to Holland, carrying scrap iron or clay, and the carrying of 30,000 tonnes of fertiliser or whatever it is to India. There is a tremendous difference not only in the chartering aspect, but also in regard to the contracts, demurrage and everything else. The noble Lord has said that he is to look into the matter, and I think that it must be looked into seriously.
§ Lord Mottistone
I thank my noble friend for apologising for taking my amendment with the amendment of my noble friend. I think we both feel that it was a pity, because neither of us has been able to deploy our arguments, and of course the Report stage is another stage. In view of the complications that have arisen, and bearing in mind the possible tone of slight irritation on my part, I hope that when my noble friend looks at the matter again (as he has very kindly said he will) he does so from a standpoint not of trying to put up barriers to prove the point that the paragraph should remain in the Bill—which I could well understand him and his advisers wanting to do—but of asking whether the paragraph is really necessary. What will Associated British Ports lose by not having this particular provision written into the legislation? If it is omitted, chartered ship brokers will be able to operate in the ports, as they now do in 90 per cent. of the ports of the world, and there will be nothing to stop Associated British Ports appointing their own agent, because there is no law against doing that. The point is that there is no need to include this in the form of a statutory permission.
However, if it is included statutorily, for whatever reason—and I suggest that there is no reason—people might be tempted to take advantage of that particular piece of legislation, to no purpose, to create a situation that is not necessary. Therefore, I wish to suggest to my noble friend that the real answer to the problem here is to leave out the paragraph. Perhaps at Report stage he might care to table an amendment not very dissimilar from the one that we are now discussing, and that would solve the problem. At this stage I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.1445
§ 10.3 p.m.
Lord Underhill moved Amendment No. 31:
Page 32, leave out lines 33 to 35.
The noble Lord said: This amendment relates to paragraph 6 of Schedule 3 and to the powers to be given to Associated British Ports for the development of land. In view of the discussions on the last two amendments, perhaps I should say in passing that under the Bill as drafted ABP has been given powers extending far beyond those of the British Transport Docks Board. When I saw this provision regarding development of land it seemed to me to be quite useful, at least until I looked at it more closely. Sub-paragraph (2) will enable Associated British Ports to develop land belonging to it, either for the use of other persons, or partly for its own use, combined with use by other persons. That seemed to be a sensible provision. Then in lines 33 to 35 I found provision that such development of land shall be—and I shall now quote from the schedule:
with a view to the disposal of any right or interest in the land or, as the case may be, the buildings or any part of the buildings, after the development is carried out".
In other words, the Government are proposing that Associated British Ports may develop the land in the way that is mentioned, but only with a view to disposing of the development.
§ To me that seems a crazy way to go about things from a business point of view, and I should like to know what is the reasoning behind the provision. I hope that we shall not again be accused of having a doctrinaire view on this matter, since we are talking about Associated British Ports, which will be the subsidiary of a private sector company, albeit one in which the Government will have a 51 per cent. Holding—which is the assurance we have been given by the noble Lord, Lord Bellwin. I wonder for what reason they have this power of development, when having completed a development they must get rid of it. One would have thought it was business sense for ABP to retain the development for future earnings.
§ Lord Bellwin
I was going to quote exactly that part of the schedule which was quoted by the noble Lord, Lord Underhill. I will not do that but will move on to say that of the section which was quoted, it is the latter words which noble Lords opposite wish to delete. In practice, the effect of such deletion would be very little. It would not give ABP the significantly wider scope which I believe the noble Lord, Lord Underhill, intended. All the amendment would achieve would be to make the powers of Associated British Ports less clear. The deletion of the requirement on ABP to dispose of developments would not enable Associated British Ports to retain new developments, for example to run hotels, because ABP do not have the power to operate hotels.
I appreciate how difficult it is sometimes for noble Lords without the support of Government resources to draft legally effective amendments. I will therefore address myself towards what I think were the noble Lord's objectives in putting down his amendment—to give ABP wider powers in respect of land development. The statutory powers of all significant port authorities are restricted in scope to those necessary for the authorities to carry on their business as port 1446 operators, together with certain powers which enable a port authority to carry on activities ancillary to its main line of operation. Thus, it would be most unusual to allow a port authority to branch out into more wide-scale land development than the Bill allows.
However, this is not to say that the Government have any inhibitions about land development. The holding company controlling Associated British Ports will have its Memorandum and Articles of Association drawn in the wide manner that is customary among Companies Act companies. Therefore there will be nothing to prevent the holding company developing land anywhere it sees fit—or developing any of a multiplicity of other lines of possible business activity if it so wishes. Such diversification would, of course, be at the discretion of the directors of the holding company and the Government would not use their 51 per cent. shareholding either to encourage diversification or to prevent it—whether it be into property development and ownership or into other, different activities.
The two-tier structure for which the Bill provides enables BTDB's present framework of statutory powers and duties to continue undisturbed while enabling investors to put their money into a Companies Act company with a broad range of powers and familiar administrative arrangements. Thus, ABP's dock business includes some of the country's major ports and conservancies operated under public general statutes, as well as some 300 local statutes which relate to the BTDB's 19 harbours. These statutes provide a statutory framework for the control of public navigation, the making of by-laws which carry criminal sanctions and the compulsory purchase powers which are essential in the running of ABP's business. Such a statutory framework is not an inappropriate one for the expansion of ABP's powers to develop land; such diversification, if it takes place, should occur in the holding company. I hope, having given that amount of detail, that the noble Lord, Lord Underhill, will consider that my explanation is a satisfactory one.
§ Lord Underhill
I am grateful to the noble Lord, Lord Bellwin, for his explanation. I shall consider what he has said and I will do a little more homework on reading the harbour Acts. What the noble Lord has said seems to have clarified the position, but I will read what he has said in the Official Report. I beg leave to withdraw my amendment.
§ Amendment, by leave, withdrawn.
§ Lord Middleton moved Amendment No. 32:
Page 34, leave out lines 21 to 23 and insert—
("13.—(1) British Ports may dispose of any part of its undertaking, property, obligations or rights for any consideration which British Ports may see fit to accept, subject to the provisions of the Dock Labour Scheme administered by the National Dock or Labour Board.").
§ The noble Lord said: I hasten to relieve noble Lords opposite of any responsibility for this amendment. It seems that the printing has gone a little astray. This is a probing amendment, the intention of which is to elicit from the Government the general effect of the wording of paragraph 13 of Schedule 3 in certain circumstances, and in particular the effect of the words "for the purposes of its business". I am prompted to ask 1447 my noble friend for clarification of the wording of this paragraph by the anxiety which is felt in the City of Hull about the future of its role as a fishing port.
§ The recession has hit all Hull's industries, and that, coupled with other factors which are known to your Lordships, has had a very depressing, if not ruinous, effect upon Hull's fishing industry. There are no politics in this; it is an economic fact, acknowledged and deplored by everyone in the industry, management and unions alike, and by representatives of all parties. Many Hull jobs depend upon the continuance of the fish landing facilities, and these jobs are, it is felt locally, now at risk. As I understand it, paragraph 13 sets out Associated British Ports' power to dispose of its assets, and this power will be similar to that given to the British Transport Docks Board by the 1962 Transport Act. I am also fairly clear in my mind that no disposal would be possible where docks are subject to statutory powers and duties without some kind of parliamentary measure.
§ Where I am not clear, however, is in this respect. Under certain circumstances it might be to the advantage of the prosperity of Hull, and also to Associated British Ports, if they were, with the consent of Parliament, to enter into an agreement for the transfer of Hull fish docks to a new owner. The question which I would ask my noble friend is therefore this. Would Associated British Ports be prevented from selling or transferring a dock even if it wanted to because the words "for the purpose of its business" in paragraph 13 might be construed as inhibiting the sale of any asset which a competitor or potential competitor might use for the same purpose as Associated British Ports had used it? I beg to move.
§ Lord Bellwin
I think my noble friend and, indeed, your Lordships may find it helpful if I outline very quickly the Government's attitude towards recent developments at Hull before I come to the amendment itself. The Government believe that the British Transport Docks Board are in the best position to run their own business effectively. No useful objective would be served by the Government dictating their commercial policies or intervening in their commercial decisions. The possibility of a sale of the fish docks is in our view entirely a matter for commercial negotiation between BTDB and any interested purchaser. While the Department of Transport would welcome the retention of a viable fish landing facility at Hull, the department is not in a position to offer assistance or to ask BTDB to act against its commercial interests.
The Transport Bill will leave Associated British Ports in the same position as BTDB are in now in respect of the disposal of parts of its business. Indeed, the wording of paragraph 13(1) of Schedule 3 follows that of Section 14(1)(e) of the Transport Act 1962 very closely. Thus, the sale of a port or part of a port governed by statutory powers and duties will require, as now, the promotion of private legislation or a harbour revision order under the Harbours Act 1964. In these circumstances the sale of a docks complex like the Water Docks, where the fish landing facility at Hull is situated, would almost certainly require private legislation. This is what the Government have always intended. For us to have done 1448 otherwise and provided ABP with general powers to sell statutorily operated ports or parts of ports, as the amendment moved by my noble friend Lord Middleton is intended to allow, would not only have been completely unprecedented and have raised difficult issues of principle, but would have run contrary to the assurances which the Government have given that they would keep the BTDB's successful business together as a single management unit.
I has been suggested that the drafting of paragraph 13 of Schedule 3 and, in particular, the phrase "for the purpose of its business" could be interpreted in such a way as to prevent ABP selling one of its docks even if appropriate private legislation were promoted. The suggestion is that the words "for the purposes of its business" could be construed as underwriting the sale of any asset which a competitor or potential competitor might use for the same purpose as ABP had used it. I can assure noble Lords that paragraph 13 would not in fact have the effect feared, and I confirm to my noble friend Lord Middleton that there is nothing in the Transport Bill or currently in the Transport Acts which would prevent the promotion of a Private Bill or a habour revision order, or, in appropriate circumstances, a harbour reorganisation scheme to transfer one of BTDB's harbours or docks to another person or body. There are, in fact, examples of former BTDB harbours which have been transferred in the manner I have just described; namely, the former BTDB harbours which were transferred to other bodies by the Forth Harbour Reorganisation Scheme 1966 and the Tees and Hartlepool Port Authority Act 1966.
The Government cannot accept this amendment. If, in fact, it achieved the result of enabling ABP to transfer docks managed under statutory powers without recourse to Parliament, that would be unacceptable for the reasons I have mentioned. If, as I think more likely, it did not achieve that result, it would, for practical purposes, add little to the provisions of the Bill as they stand in relation to disposals by ABP.
Perhaps it is the Government's emphasis on keeping the BTDB undertakings intact and not breaking it up that has led to the fears that the Bill could make a transfer of this type more difficult. There is nothing in the Bill which would make the possible transfer of Hull fish docks easier or more difficult. I am glad to confirm to my noble friend and to others who are interested that it would have no adverse effect on any negotiations or move to obtain the necessary powers to achieve the transfer of the docks concerned. I hope that I have been able to deal with the fears which led my noble friend Lord Middleton to put down his amendment and that he may now feel disposed to withdraw it.
§ Lord Middleton
I understand very well why the actual wording of this amendment is not acceptable. I am grateful to my noble friend for what he has said by way of clarification of this paragraph. I shall study carefully the assurances that he has given, which will, I think, give grounds for confidence where it is much needed. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 33 and 34 not moved.]
§ Schedule 3 agreed to.1449
§ [Amendment No. 35 not moved.]
§ Schedule 4 agreed to.
§ Clause 15 [Dissolution of National Ports Council]:
§ 10.19 p.m.
§ Lord Underhill moved Amendment No. 36:
Page 12, line 18, leave out ("and") and insert—
("( ) The powers and duties of the Council as defined in the Harbours Act 1964 shall pass to a National Ports Authority which shall be established and shall also keep under review the suitability and adequacy, in relation to the trade of Great Britain, of the ports of Great Britain; review the discharge of their functions by the various ports authorities; consider how any port should be improved and what services and facilities should be provided at any port, and, as requested by the Secretary of State advise him, and at any time make recommendations to him, on any matter affecting the suitability, adequacy and efficiency of the ports.
() In accordance with the provisions of subsection (1) above").
§ The noble Lord said: I am sorry—and I am certain that noble Lords will be sorry—that we have reached this important amendment at this stage this evening; but, to do justice to it, I must explain precisely why the amendment is being moved; and I regret that it cannot be done in a minute or two. Clause 15 makes provision for the Government decision to abolish the National Ports Council. During the Second Reading debate on the Bill, I referred to the 1979 report of the National Ports Council which, I said, gave an indication of the wide scope of the work of the council which has been of immense value to successive Governments and to the ports industry since its inception in 1964. Since that debate, the 1980 report of the National Ports Council has become available and a number of appendices in that report set out the full work carried out by the council.
§ In one section of the report the council officers state that the adequate performance of various functions, in view of the abolition of the Ports Council, is likely to require an addition to the department's staff, whether in the ports directorate or elsewhere, of perhaps up to 20 people, and an increase in the staff of the British Ports Association of at least another 20 people. But the numbers will depend on which functions are located with Government and which with the industry.
§ During the Second Reading debate the noble Lord, Lord Bellwin, explained the reason for the Government's decision to abolish the Ports Council and he said the Government's view is that the National Ports Council has played an important role in bringing about a major improvement in the organisation and efficiency of the port industry since 1964. But he went on to say that he believed that the time was now right for responsibility for the future development of the ports to be placed firmly on the industry itself. Replying to the Second Reading debate, the noble Lord said that the Government could not see the need for a central body to oversee the organisation and operation of the ports industry.
§ I suggest that that is a very short-sighted and complacent attitude being adopted by the Government. 1450 It ignores the present situation in the docks industry. There seems to be general agreement that at the present time there is some two-thirds surplus capacity in the docks in the United Kingdom.
§ Noble Lords will recall that recently we had before the House the Ports (Financial Assistance) Bill which provides further financial help to the Port of London Authority and the Mersey Docks and Harbour Company which are in dire financial straits. In the Second Reading I suggested there are other ports in difficulties but the noble Lord, Lord Bellwin, said this was not so except for the Bristol authority. However, this is not the view of the managing director of the British Transport Docks Board.
§ In the same article to which I have already referred, Mr. Stewart, the managing director, states that several of the major ports and port authorities are in deep financial and commercial trouble. He stated also that there could be no doubt that the port industry in the United Kingdom is operating against deep-seated structural, historical and commercial disadvantages. He said that all ports were subject to those disadvantages though some more than others.
§ Faced with this situation, the abolition of the National Ports Council seems a senseless move. The separation of the harbours of Sealink into a separate company and the change of structure of the British Transport Docks Board into Associated British Ports are not really relevant to this particular current situation. It is generally appreciated that the ports industry is a service industry. Only to a small degree can the ports create trade. Ports are dependent upon producer and manufacturing industries to supply the trade which the various ports are competing to handle.
The last major inquiry into the ports industry was that of the committee which carried out an intensive inquiry into the then 15 major ports. The chairman was noble Viscount, Lord Rochdale (who I am pleased to see in his place tonight) and the report was published in 1962. That report made some important recommendations, a number of which have been carried out. However, one major recommendation was not carried out. Paragraph 140 of the report stated:
We have become increasingly aware in the course of our inquiries that a fundamental defect in the organisation of ports in this country is the lack of any central planning".
The Rochdale Report included in its recommendations a strong recommendation for the establishment of a national ports authority. The report listed 12 proposed powers for the authority, most of which would be very pertinent today. Incidentally, the Central Ports Advisory Council was advocated as far back as 1948 by the Docks and Harbours Authorities' Association. There seem to be strong grounds for thinking that now the Government are abolishing the National Ports Council they are removing an independent body which has given excellent advice to the Minister and the industry over a number of years.
§ I hope noble Lords will feel that this is a very sensible amendment. If they look at the wording they will see it is not proposing an executive authority. The body will assume the powers and duties of the present National Ports Council and also give to the Secretary of State, as he may require it, advice on the various 1451 points listed in the amendment and at any time the authority thinks timely itself to make recommendations to the Secretary of State. Therefore we are not proposing a bureaucratic executive authority but a body which would appear to be much needed to deal with the situation in the ports industry, particularly in view of the Government's decision to abolish the National Ports Council. I beg to move.
§ Lord Bellwin
I welcome the opportunity, even at this hour, which these amendments provide to explain the Government's ports policy and why they have decided to abolish the National Ports Council. The amendment to establish a national ports authority illustrates the basic divergence of views between the Government and the Opposition on ports policy. The Opposition genuinely believe that the future success of the industry depends upon the creation of a strong, centralised national ports authority, as the noble Lord, Lord Underhill, said, with overall responsibility for planning the future development of the ports and for advising on the provision of services and facilities at individual harbours.
The existence of such an authority would take away from the very people who should be directly responsible for their own affairs (the port authorities themselves) all major decisions determining their future. In particular, the creation of a national ports plan, inherent in the idea of a national ports authority, would seriously distort the ability of ports to operate in commercial competition with each other. Indeed, experience has proved that such a plan would not work in practice. Ports, being a service industry, must be able to act flexibly and quickly in regard to changing commercial circumstances. This would be prevented by a national plan which would simply promote development at some ports while preventing it at others. That surely is no way for a commercial industry to operate. On the other hand, the Government are firmly of the view that the future health of the industry depends upon the industry itself taking as much responsibility as possible for its own affairs.
We acknowledge that in the past there has been a need for the National Ports Council. Indeed, as the noble Lord, Lord Underhill, so rightly said, the council has a great deal to its credit. In particular it has formulated and, in co-operation with the industry, has promoted estuarial amalgamations and a major programme of reconstituting harbour boards; it has encouraged ports to adopt a more commercial approach to port charging, and it has assisted the industry by providing comprehensive statistics and forecasts and by carrying out research and training. Consequently, the industry is generally in a much healthier position than when the council was set up, and it has much to be thankful to the council for. But most of the recommendations of the Rochdale Committee have been successfully implemented and we consider that the council has largely discharged its role. This is, indeed, a measure of its success.
There are, of course, areas where improvements are still required, notably in reducing surplus manpower, in improving productivity and efficiency and in developing facilities to take advantage of technological developments and to meet the changing requirements of 1452 trade. But there are now strong and competitive ports in this country which, if they take up the task, are capable of dealing with these problems themselves. They have indicated that they are both willing and able to do this. But first they must be given responsibility for their own affairs. This is why we are abolishing the council. There is, of course, a challenge facing the industry, but the British Ports Association has been enlarging and strengthening its organisation to meet this challenge and it is currently discussing with the Freight Transport Association and the General Council of British Shipping proposals for a port users consultative committee.
I hope that I have adequately explained why we are abolishing the council. The merits of what we are trying to achieve are clear—placing in the hands of those who manage the industry responsibility for their own affairs—and I hope that your Lordships will recognise that, in the current position and mood of the industry, the creation of a national ports authority is not in the best interests of the ports industry.
When I began, I said that I was grateful for the opportunity of explaining the Government's ports policy. I could go on at greater length, but I hope I have done that to your Lordships' satisfaction and have explained why the Government do not believe that the amendments are in the best interests of the ports industry.
§ 10.31 p.m.
As the report produced by the committee over which I had the privilege to preside in the early 1960s has been referred to, perhaps I might be allowed to make one or two observations. If the noble Lord, Lord Underhill, had moved his amendment 16 or 17 years ago, I can assure him that I would have jumped at it at once, received it with open arms and supported him in any Division Lobby. But as my noble friend Lord Bellwin has said, a great deal has happened in the last 16 or 17 years.
If one looks at some of the main tasks that the council has been given—namely, the preparation and establishment of estuarial port authorities, the reconstitution of many ports where the old constitutions were very difficult and complex and a very considerable amount of port investment—one sees that the first two of those have been largely completed. As regards investment, a very considerable amount of investment was carried out in the early years and, with the present changes in technology on the one hand, and being in an era of contraction on the other, it does not look as though the degree of investment now required is likely to be anything like so great as it was in those days. Therefore, on those scores, one can see that there is not the need for a ports authority that we wanted—we did not want the ports council; we wanted the ports authority—or for a body like a national ports authority, as there was distinctly at that time.
There are, of course, today other continuing functions that have to be carried out. Let me take just two—the question of continuing research, which is most important, and continuing training throughout the industry, which is equally important. I take the view that in any industry, as a whole, these are generally functions that ought to be carried out by those responsible for the industry, as my noble friend has said. Whether 1453 Associated British Ports carries them out as efficiently as I believe the National Ports Council has carried them out in the past, remains to be seen. I certainly would not wish to prejudge that issue. Confronted with that responsibility, I hope they will carry them out very well.
In passing, there is just one point that I would add on that. I hope that, just as the National Ports Council has had the co-operation and assistance of trade union members, so that work will also be carried out with trade union members in the future. Having said that, I am sure there is not a need for a national ports authority now—I could not support that—and it remains to be seen whether there is a need for any central body at all. One thing I am certain of is that the Secretary of State will not, as suggested in the Explanatory Memorandum, find that his involvement is any less. I think that his involvement will probably be just as much, if not more, and of course he will not have the advice of the National Ports Council to rely on. Therefore, I should like to ask my noble friend whether he intends to recruit into the ports division of the department any of the expertise which has up to now been working in the council. This is very important because I doubt whether the same degree of expertise exists in the Ports Directorate.
Having said that, I must say to the noble Lord, Lord Underhill, that I cannot support him on the authority.I hope—I shall not be more definite than this—that the Government have made a wise decision. Whether they have or not remains to be seen. However, as the noble Lord himself said, with all the changing techniques and needs of the shipping industry it is vitally important that the ports industry goes ahead, is perhaps a step ahead of the requirements of the shipping industry and is as alive as ever.
§ Lord Bellwin
I am deeply grateful to my noble friend for what he has said. His opinion is of great value. We shall certainly want to think very carefully about the points which he has made—certainly those which I did not cover. I know that my right honourable friend will also be very grateful to him for what he has said.
§ Lord Underhill
I am sure noble Lords will be very grateful to the noble Viscount, Lord Rochdale, for his intervention. He has great experience of the ports industry. As the noble Lord, Lord Bellwin, has said, many of the Rochdale Committee's recommendations have been carried out. I would never set myself up as knowing more about the docks industry than the noble Viscount. However, it is generally admitted that today there are problems in the ports industry. It is no good suggesting that there are not. Perhaps another Rochdale Committee is needed to look at just where we are. One cannot be so complacent as to say that one can leave the problems to the industry itself when there is general agreement that a two-thirds surplus capacity exists.
There are to be three separate structures. There will be the Sealink harbours which are to be formed into a separate company. There will be Associated British Ports. Then there are the independent ports authorities which will still exist.
I believe that it is necessary to have somebody 1454 advising the Minister over and above those who are engaged in the industry. Other people are to be considered as well as those who are operating the harbour authorities. The noble Lord, Lord Bellwin, spoke about this authority having a national plan. With respect, I suggest that he reads the amendment. What it suggests is that a national ports authority shall be established and shallkeep under review the suitability and adequacy, in relation to the trade of Great Britain, of the ports of Great Britain; review the discharge of their functions by the various ports authorities; consider how any port should be improved and what services and facilities should be provided at any port, and, as requested by the Secretary of State, advise him, and at any time make recommendations to him…".There is nothing in the amendment about the establishment of an all-powerful national ports authority which is going to run the industry.
I think the noble Viscount, Lord Rochdale, will agree that the authority we are suggesting will have nowhere near the powers which his report recommended that such an authority should have. It is reduced mainly to reviewing, considering and advising the Minister, both when the Minister requests it and also when the authority wants to make recommendations to him. To wipe away a suggestion of this kind is inadequate. However, in view of the late hour it would be pointless of me to divide the Committee. Therefore, I shall read carefully what has been said, including what was said by the noble Viscount, and see what action we may have to take at Report stage. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 37 not moved.]
§ Clause 15 agreed to.
§ Clauses 16 and 17 agreed to.
§ Schedule 5 [Provisions supplementing ss. 15 to 17]:
Lord Bellwin moved Amendment No. 37A:
Page 49, line 29, leave out ("continued").
§ On Question, amendment agreed to.
§ Schedule 5, as amended, agreed to.
§ Clause 18 agreed to.
§ Lord Skelmersdale moved Amendment No. 38:
Page 55, line 16, leave out ("an order which is opposed") and insert—
§ The noble Lord said: With the agreement of the Committee I should like to speak also to Amendments Nos. 40, 41 and 43. I shall not be able to do it quite as quickly as the last amendment but I shall do my best. It is a rather complicated subject.
§ Paragraph 4 of Schedule 6, to which these four amendments refer, amends the Harbours Act 1964 to provide that a harbour revision or empowerment order 1455 is not to be subject to special parliamentary procedure unless an objection which is outstanding when the order is made is renewed by the objector. But it has become clear that the amendments are defective in relation to Scottish orders, and the effect of the Bill in relation to Scotland is uncertain.
§ The original intention was to treat Scottish orders in as similar as possible a way to English or Welsh orders, while taking account of the fact that special parliamentary procedure applies to Scottish orders before they are made and that this produces differences in the statutory procedure governing the consideration of orders at draft stage. Having identified the defect in the Bill the options were to introduce amendments to achieve the original intention, or to leave the existing law on Scottish harbour revision and empowerment orders unchanged. We have decided, therefore, to leave the existing law unchanged, and these four amendments are concerned with the exclusion of orders relating to Scotland from the changes made by paragraph 4 of Schedule 6.
§ I appreciate that it is very late at night. I could go on at length on this rather complicated subject but I hope perhaps I have said enough. I beg to move.
§ On Question, amendment agreed to.
Lord Skelmersdale moved Amendment No. 39:
Page 55, line 35, leave out from ("shall") to the end of line 37 and insert (", subject to sub-paragraph (4) below, become operative on the expiration of 28 days from the date of the notice given (or last given) tinder this sub-paragraph or on such later date as the Secretary of State may appoint.").
§ The noble Lord said: Again with the permission of the Committee, I should like to speak also to Amendment No. 42. These two amendments make a very minor clarification of the date on which certain English and Welsh orders become operative. If a harbour revision or empowerment order relating to England or Wales is opposed at draft stage, the Secretary of State will have to give notice when the order is made to all those who opposed it and give them 28 days in which to indicate whether they wish to maintain their opposition. If they do not maintain their opposition the order will not be subject to special parliamentary procedure. These amendments make more specific provision than the Bill already does about the date on which an order which was opposed when it was made will come into operation in a case where no objection is renewed and the order does not therefore become subject to special parliamentary procedure I beg to move.
§ On Question, amendment agreed to.1456
§ Lord Skelmersdale moved Amendment No. 40:
Page 55, leave out lines 43 to 47 and insert—
("4B. A harbour revision order relating to a harbour in Scotland and a harbour empowerment order relating to a harbour or to works to be carried out in Scotland shall in every case be subject to special parliamentary procedure.").
§ On Question, amendment agreed to.
§ Lord Skelmersdale moved Amendment No. 41:
Page 56, line 19, leave out ("an order which is opposed") and insert—
§ On Question, amendment agreed to.
Lord Skelmersdale moved Amendment No. 42:
Page 56, line 38, leave out from ("shall") to the end of line 40 and insert (", subject to sub-paragraph (4) below, become operative on the expiration of 28 days from the date of the notice given (or last given) under this sub-paragraph or on such later date as the Secretary of State may appoint.").
§ On Question, amendment agreed to.
§ Lord Skelmersdale moved Amendment No. 43:
Page 56, leave out lines 46 to 50 and insert—
("8B. A harbour revision order relating to a harbour in Scotland and a harbour empowerment order relating to a harbour or to works to be carried out in Scotland shall in every case be subject to special parliamentary procedure.").
§ On Question, amendment agreed to.
§ Lord Denham
I think we have probably reached the stage where we should adjourn the Committee, as the next two amendments are to be taken separately. Unless any noble Lord particularly objects, perhaps I might move that the House do now resume.
§ Moved accordingly, and, on Question, Motion agreed to.
§ House resumed.