§ 3.10 p.m.
§ Lord Beswick rose to call attention to the consequences of the Government's policy of privatising publicly-owned companies and the importance of concentrating on a positive policy to secure maximum efficiency in the public sector; and to move for Papers.
§ The noble Lord said: My Lords, the Motion I beg to move gives to the House an opportunity of considering all the implications of the Government's policy of privatisation, and it seeks to stimulate thinking on the positive policy needed to ensure maximum efficiency and satisfaction in the public sector. My Lords, I am only too sorry that current policy does not allow us to devote all the Motion and all the debate to the positive forward possibilities, but, in my view and that of my friends, this Administration has chosen to pursue a policy which is as prejudicial to the economy as the choice of the title "privatisation" is offensive to the literate and aesthetic sense. Over Easter I pondered 546 over this charge of prejudice and whether it really was uniquely justified, or whether it did not invite a yah-boo debate that Labour was as bad in its time. I have lived through all this history, and maybe the House will bear with me if I set out some of the facts.
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Labour nationalised civil aviation, but the Act establishing BOAC was piloted by that staunch Conservative, Sir Kingsley Wood. Public ownership of the gas undertakings was recommended by that most successful private entrepreneur, Mr. Geoffrey Heyworth, chairman of Unilever. We nationalised the Bank of England, but even the noble Lord, Lord Boothby, voted for that. We nationalised coal, but only 32 years after the Tories said it should be done; it was in 1919 that Mr. Bonar Law said:
on behalf of the Government I confirm that we are prepared to carry out the spirit and letter of the recommendations of the Sankey report".
These recommendations were for public ownership.
§ If we come to more recent times, it was private and not public ownership which brought Rolls-Royce to bankruptcy, and the noble Lord, Lord Carrington, can tell us the part he played in the public take-over. As for British Leyland, it is denounced as a burden on the public, but again it was private and not public ownership which starved it of investment and practically brought it to breakdown.
§ My Lords, I go into the past only to put the present into perspective and to seek to show that it should be possible to discuss public enterprise without excessive prejudice. Let us look at the facts of today. It is a fact that the Government have been selling off public property at below market value. They are selling off the growth assets brought to profitability by public enterprise and public investment. I am tempted to head the list of valuable public assets sold with the aircraft carrier "Invincible", but for various reasons I shall not pursue that line of thought.
§ I shall, however, put in the list the 171,400 local authority-owned houses sold off by Government demand between 1st April 1979 and 30th September 1981. The noble Lord, Lord Bellwin, said proudly on one occasion that £526 million had been realised by the sales of those properties. When I put down a Question asking for the estimated market value of the same properties, I was told on 29th March that it was no less than £2,640 million. The noble Lord suggested that the disparity was not an unduly large amount for what he called the desirable state of home ownership. Actually, I think he was being less than fair to his own case, for I am sure the figure he gave included an element of loans outstanding to the local authorities. But, even at a more modest estimate of a £4,000 discount per house, it means that some £685 million of public assets have thus been dissipated in that 18-month period. Home ownership is, I think, a desirable thing, but a less prejudiced approach would have found a more cost-effective way of encouraging it than that. How can there be satisfactory estate management and a reasonable rents policy if properties are sold off at historic costs and books have to be balanced by rents charged on houses mostly built under current loan terms? If we turn to industrial property disposed of under privatisation, the percentage discounts are less but the total assets are enormous.
§ And it is not only the matter but the manner of 547 disposal which bears the marks of prejudice. When this subject came up at Question Time the other day, the noble Lord, Lord O'Brien of Lothbury, intervened. I am sure he was trying to be helpful to the Government, for I know him to be a helpful person, but he said that, from his experience—and we know that his experience in these matters is unsurpassed—sometimes the share issue price may be pitched too low and sometimes it is pitched too high. Of course, the noble Lord was right, but he only served to emphasise the fact that, under Government policy, in what are virtually forced sales the price has always been pitched too low, to ensure a speedy sale. In any case, I was not on that occasion seeking to criticise the pricing of those shares but the scale of reward to the City institutions concerned The £12,200,000, paid out to the City institutions in the case of British Aerospace and the other three companies was out of all proportion to the useful services actually rendered. Those City houses had added not one pennyworth of real wealth to the nation. And, of course, the £12,200,000 in fees is not the total cost of the paperwork of privatisation. Other costs are incurred by the companies themselves, and a great diversion of time and energy is caused.
§ Then, if we look at the most recent case—that of the flotation of Amersham International—we recall the scenes at the Stock Exchange, the standing on the chairs and tables selling the shares. This was not a case of wider share ownership; half the shares were sold off that first morning, and those dealers made more in the morning than productive workers at Amersham International would make in months.
§ I believe these things are wrong. They are wrong in themselves, and they are even more evil and damaging in the part they play in the undermining of morale and a proper motivation in that large part of the national activity upon which the nation as a whole depends. I have said before, and I say again, that the Government have seriously undermined the morale of the public service in Britain, and I challenge the Minister to deny it.
§ Let me give some of the more obvious pieces of evidence. First there is the case of British Gas. We discussed it to some extent yesterday. It has bettered every target set for it, it pays a proper dividend on capital. Far from borrowing from the Government, it actually lends to the Government, and there is a £100 million loan outstanding at the moment. It is not a burden on the Exchequer, but over a three-year period it will actually pay some £1,300 million in levies. Yet, the chairman of that organisation has to report to his workforce that they are under attack. As Sir Denis Rooke put it in his message to his workforce, it is "incomprehensible and unfair". What a way to run a country when the leader of one of the most successful and largest undertakings in our society has to say that!
§ Or take another highly successful organisation—the Central Electricity Generating Board. They were subject to a study in depth by the Monopolies and Mergers Commission, which for thoroughness makes those stockbroker studies of private companies look like tea-time gossip. After that study, and with all the benefit of the hindsight which the noble Lord, Lord Cockfield, was decrying quite properly the other day, 548 the commission were unable to fault the management in any major particular.
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The report stated:
Although … we have been critical in certain respects, we wish to record … we were impressed with the evident ability and dedication in their work. … They take a justifiable pride in the technical efficiency and security of the Board's system".
What a wonderful opportunity for an unprejudiced responsible Minister to have echoed that praise and get even more effort out of the board and their workforce by words of encouragement? Any chairman of a properly run company, or the captain of a football team, would have done just that. But in this case the chairman of the CEGB felt compelled to say—I quote from a paper given to the Policy Studies Institute—
there was a noticeable lack of enthusiasm among Ministers for the discovery that a major public enterprise could be found to be efficiently run with the staff well motivated".
§ All he had from the Secretary of State for Energy, said the chairman of the CEGB, was a "bureaucratic departmental letter".
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Since that talk at the Policy Studies Institute the chairman of the highly profitable CEGB has been told that his appointment will not be renewed. None of the elementary procedures of succession has been followed. No successor has been named and the board ate concerned and confused. I wonder if the noble Lord, Lord Bellwin, will say whether he considers that this is a fair, sensible or efficient way to run our affairs. Given time I could give other examples of other individuals, respected and reputable, entrusted with the responsibility for our great publicly-owned concerns but who are upset and frustrated by the attitude of the present Government. However, maybe I can do no better than to quote the industrial editor of the Financial Times, who summed it up in a main article on 7th April. He said:
They"—
that is, the chairmen—
feel so battered by a hostile Government [that] none of them is naive enough to believe that any organisational reforms would change the Prime Minister's overriding personal distaste for everything they and their industries stand for".
We are, indeed, in the presence of a personal distaste; not a considered economic strategy but something narrower, less pleasing and less constructive. As against that less than constructive approach, the Motion before the House calls attention to the importance of concentrating on a positive policy designed to secure maximum efficiency. I am hoping that the Minister will not only comment on the suggestions which I shall put forward but will give us the benefit of his own thinking.
§ At the head of my list of constructive suggestions is the need for a proper atmosphere, an atmosphere encouraging and stimulating, in which to work. I put it at the head of my list, but I shall consider it more fully when I have dealt with some of the factors that can help create that atmosphere. One factor is the public sector's relation to Parliament. In much earlier days I was all for greater power for Parliament in these affairs. Even now I would say that major issues of policy, the decisions which significantly affect the economy and society as a whole, are matters on which the view of Parliament must be heard and must ultimately prevail. But, below those major issues, the less 549 Parliament has to do with industrial management the better.
§ When opinion generally accepted that day-to-day matters were not appropriate to the Floor of the House, the idea of the Select Committee developed. In the Select Committee I think we would all agree that the innate maturity of an MP prevails over party point-making. But for various reasons I doubt whether the Select Committee is the solution we want. For one thing I doubt whether the qualified MP really has the time to study in depth the detailed problems of an advanced modern industry. This would be even more true if ever we became a single-chamber Parliament.
§ There are some questions, those affecting employee relations and consumer relations, which the Commons Select Committee may be specially fitted to pursue. But I believe that other machinery and other means might be developed to ensure that the contribution of both workforce and consumers could better be heard. A more radical development of employee participation might give much more satisfaction and enable a much more effective contribution than through the procedure of a parliamentary committee. Moreover, experience suggests that there are those in the workforce, at all levels, who are more likely to stick to the facts if they are speaking in the presence of their colleagues rather than in the ear of a politician.
§ As for the consumers, we ought surely to give more satisfaction there too, by the strengthening of the consumer council authority. Moreover, if, as proposed, there are to be more part-time members on the boards, then there should be scope for both workforce and consumer representation. Given corporation boards with wider part-time representation and with the executive committees below them, there could be quite adequate check on management without obtrusive intervention from a sponsoring department. We should be, so far as I can make out, although I would much like the opportunity to study it further, very near the two-tier systems in France and Germany and their experience appears considerably happier than ours.
§ Of course I can detect noble Lords opposite or the right honourable lady in another place saying, "What about the financial discipline exercised in the private sector by the magical opinion of the City, or the ultimate dread threat of bankruptcy?" My admiration for the industrial judgment of the City does not pass the bounds of moderation. And when I recall how private companies have been rescued by the state or by the lifeboats launched by the Bank of England, and when we see in recent experience just how easily those operating as a limited liability company can hand over their debt obligations to the receiver and then start up in business again the next week, I am not convinced that the threat of bankruptcy is such a superb discipline. However, I agree that in the public sector, above the direction of the respective boards, and above the structure of producer and consumer representation, there should be a mechanism capable of checking, occasionally in depth, the efficiency of an organisation and the soundness of its forward planning.
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There are those who say that the Monopolies and Mergers Commission could be such a body. I am ready to be convinced, although I have reservations. One also hears of the Public Enterprise Analytic
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Unit now taking shape in the Treasury, and the Minister will probably tell me if I have the name aright. It, too, could be an effective instrument given the right directive and the sympathetic atmosphere within which to work. The fearful question is whether under this Administration they will be given the right directive. That same Financial Times article which I mentioned earlier paints an alarming picture of what might be. I quote the Finantial Times article:
The CPRS will be checking up on the Treasury which will be monitoring the individual departments which will be monitoring the individual industries. And that will be as well as efficiency audits by some of the part-time directors, more efficiency audits by the Monopolies and Mergers Commission and regular inquiries by the Public Accounts Committee and parliamentary Select Committees".
§ That sounds exaggerated, but a Government which are picking out the profitable growth assets in the public sector and selling them off below market price will seem to many to be capable of even that nightmarish intervention. I very much hope that the Minister will take the opportunity of saying clearly what the new Treasury machinery means and I hope he will tell us that it will be instead of, and not in addition to, present intervention devices.
§ For myself, I see merit in an idea of a unit, maybe in the Treasury, but independent in structure and composition, with responsibility for the whole of the public sector, not only for efficiency audits as necessary but for the whole of the sector's financial planning. They would be the bankers of the sector. They would take the investment requirements right away from the PSBR. It is surely increasingly evident that to lump all productive investment in the same PSBR column as administrative expenses is a nonsense. It makes as much sense as a housewife justifying borrowing to buy a new hat by claiming that it is the same as borrowing to buy a house.
§ If we extract those payments made to certain industries for specific social purposes, there is no reason why the public sector as a whole should not be self-supporting financially and show a positive return on investment. Provided that the profitable bits are not sold off, the sector as a whole could make an increasing contribution to the national budget. If I am told that external borrowing needed for planned development, say, for the sinking of a new pit, makes it that much more difficult for the Treasury to raise money to meet a budgetary deficit, then I suggest that they should look again at all the millions of pounds that have gone abroad to finance overseas industry since exchange controls were lifted.
§ Given the right attitude and a sympathetic approach, much that is hopeful can be done to further the efficient development of the public sector. I hope that the Minister who is to reply, who has himself a very practical experience in these problems of public administration, will be able to tell us something helpful of the Government's intentions about the composition of boards, their relationship to departments and to Parliament and the role of this new Treasury unit, the proposed mechanism of monitoring and financing, and their way of dealing with the anomaly of PSBR restraints.
§ But then I return to the point that I put at the head of my list—the need for the right atmosphere within which to work. No organisational change can mean 551 an improvement unless there is the right motivation. Of course, we must avoid the path that leads to the over-centralised collectivism of the Eastern bloc. Of course, we want the maximum of decentralised and delegated authority. Of course, we must secure all the benefits of constructive democracy within industry. A healthy suspicion of large-scale organisations is not a bad thing, but the personal distaste for everything they stand for, as the Financial Times phrased it, is something different altogether.
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In support of the first part of my Motion, I would say, cut out the Poujadist prejudice and stop this wasteful process of selling off public assets at a cut price. As for the second part of my Motion, I have put forward some ideas which I hope are worth discussing, here and outside. To those ideas may I add some words that I recall from that book of H. G. Wells, The Work, Wealth and Happiness of Mankind. Wells wrote this:
A man's guiding and satisfying idea of himself is what Jung calls his persona".
Wells went on, and we recall that he was writing over 50 years ago:
the continually more centralised economic society, of mankind is dependent upon the harmony … of millions of personas".
The persona of service is the persona of harmony and hope. It can flourish in the public sector especially though not of course only. We need to encourage that persona, not to frustrate it. My conviction is that if we stopped this squabble of private versus public sectors, we have in Britain today a unique opportunity of developing precisely that type of persona which the modern world so badly needs. My Lords, I beg to move for Papers.