HL Deb 05 July 1982 vol 432 cc554-611

3.4 p.m.

The Parliamentary Under-Secretary of State, Department of the Environment (Lord Bellwin)

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Lord Bellwin.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD ABERDARE in the Chair.]

Clause 1 [Bus Company's powers of disposal]:

Lord Underhill moved Amendment No. 1:

Page 2, line 9, at end insert— ("() In this section the term "subsidiaries" shall not apply to the National Express coach services.").

The noble Lord said: Clause 1 gives the National Bus Company powers to dispose of the whole or part of any subsidiary. This amendment seeks to provide that this power shall not apply to the National Express coach services. The Government have stated that one of their intentions is that this provision shall cover National Express. This is interference with a very successful public enterprise, and it is generally agreed that it has made very successful development from the provisions of the 1980 Act.

Although National Express is only 7 per cent. of the National Bus Company's operations, it is a very profitable part. From the 1981 report of the National Bus Company we see that the profit of the whole company before interest and taxation was £25.3 billion. Of that National Express contributed some £4 million. Ministers have tried to minimise the importance of this and from time to time have said that it is small in relation to the turnover of some £618 million. If that is to be the comment, then I must say that we are relating profit to turnover and a more sound argument would be to relate National Express turnover to National Bus Company turnover.

However, the attitude has been also expressed on behalf of the Government that, if anything is capable of privatisation, it should leave the hands of the state. As regards the British Rail subsidiaries, it was argued that the subsidiaries had nothing whatever to do with British Rail; that cannot possibly be argued here. In this case bus and coach services are closely interrelated and integrated, as I shall show later in the course of my comments. The National Express contribution enables the bus company to maintain stage carriage services. It assists to maintain some services in rural areas and off-peak urban services, which might otherwise have to be curtailed or restricted. This is because of cross-subsidisation. Again, Ministers have attempted to decry the effects of the National Express contribution to cross-subsidisation. In actual fact, it is estimated that some 12 per cent. of the subsidisation of stage carriage services is helped as a result of the National Express contributions to the National Bus Company.

Mr. Kenneth Clarke, the then Under-Secretary of State, argued on 4th March during the Committee stage in the other place that express services do not come into the calculations of revenue support against the counties. That is not strictly correct. There is a specific allocation by the National Bus Company to its subsidiaries for the running of the express coach services, and if a subsidiary did not have a share of the National Express contributions, it would need to make that up from the county's transport supplementary grant, or it would have to cut services. Therefore, cross-subsidisation is an essential factor in public transport undertakings, which I think cannot be denied by anyone.

This closeness was made abundantly clear in paragraph 76 of the annual report of the National Bus Company for 1980, which says: They"— referring to the National Express and the National Holiday services— are of particular importance because they make up a large share of the coach operations of the subsidiary companies and make a substantial contribution to overhead costs of the companies. Without these services the viability of some companies would be seriously impaired, requiring either larger revenue support to be provided by local authorities or major withdrawal of stage carriage operations". That statement was made, of course, before the Government published the details of this present Bill.

The success of the National Express development has occurred because the National Bus Company is an integrated service. There was no need for it to establish separate depots; there was no need for it to establish separate booking offices. It had, of course, some 400 outlets for the sale of tickets. There was no necessity for it to establish separate maintenance and repair facilities. It already had those as part of its integrated service. The drivers and coaches of the National Bus Company can be used with considerable flexibility, part of the time on coach services and then, as required, part of the time on stage carriage services.

The position has been further exemplified by a statement made by the chairman of the company as recently as the publication of the 1981 annual report, when the chairman said: I have said on a number of occasions that National Bus Company is an integrated business and what might happen to one sector must necessarily have an impact upon the remainder. It must not be forgotten that National Express and National Holidays in 1981 contributed substantially to group net revenue and to the business of maintaining stage carriage passenger services.

Why is it that some competitors who endeavoured to enter the coaching business under the 1980 Act failed? I understand that, at the time when this matter was discussed at the Committee stage in the other place in February, of 19 which had commenced at that time only five remained. They failed because they had to set up all these separate offices, separate depots, whereas the National Bus Company had it all as part of their integrated business. The noble Lord, Lord Bellwin, at Second Reading on 17th June, at column 721, said: The Government accept that the 'National Express' and National Holidays' business are closely integrated with the provision of local stage carriage services, which is NBC's main business. The National Bus Company is able to share its costs because of the very nature of its infrastructure.

I should like to question what would be the assets to be sold. Mrs. Chalker, Under-Secretary of State, on 11th March, at column 251, said: The express coach and holiday business have no legal entity at all. The coaches are mainly with the subsidiaries, and my information is that at the peak of the season over 1,500 vehicles are provided by the operating subsidiaries of National Bus Company, and only some 320 or so by the national travel companies of the National Bus Company.

What manpower will be transferred? Will that prevent flexibility, which must of course affect the existing stage services? Will other companies, other competitors, be able to come along and compete with the new National Express related company which the Government propose to establish? Surely the Government have to allow that in view of their arguments in favour of competition. Would it be possible for one of the operating subsidiaries of the National Bus Company itself to start express coach services should it so desire? Again I assume that the Government will not prevent that in view of their desire for the maximum of competition.

It must be kept in mind that neither National Express nor anyone else has the exclusive right to run coaches anywhere. Under the 1980 Act, there is deregulation for express services. Therefore, there can be no question of any disposal, that any particular routes will be transferred, because that will be against the deregulation of the 1980 Act.

Finally, unless a later amendment is carried, the Government appear to be pressing for a majority holding in all the disposal subsidiaries to be dealt with. Therefore, whatever may be the Government's intention, as a private company, the organisation to take over the National Express could change completely the intentions of the Government. There is no commercial reason at all for the transfer of the National Bus Company. It should be left where it is, part of the integrated service of the National Bus Company, and to help to maintain the most valuable stage carriage network which is so essential to the travelling public. I beg to move.

3.14 p.m.

Lord Bellwin

The noble Lord, Lord Underhill, is clearly seeking to make a case for removing NBC's National Express network from the ambit of this Bill. In the Government's view, that would be to miss a great opportunity. National Express has had very considerable success since this Government's Transport Act 1980 removed all licensing controls on express coach services. Passenger carryings in 1981 were 50 per cent. up on the previous year, and the financial performance of the business also improved, though by a lesser amount. I am glad to pay tribute to that success. It is surely a happy commentary on the results of the Act, although as I seem to recall that part of it was strongly opposed by noble Lords opposite.

The question facing us now is, how do we help NBC to build on that success? We need to bear in mind that National Express is, or ought to be, a fully commercial concern—I believe there is no difference between the parties in that respect. But, as we have heard, we also need to bear in mind that National Express currently makes a significant contribution to NBC's overall financial strength. I say significant, and indeed it is so. But we should not forget the relative figures: National Express accounted for less than 7 per cent. of NBC turnover in 1981, and although its contribution to long-run unavoidable costs was equivalent to about 20 per cent. of group working profit, it made only a modest profit of £318,000 on a fully allocated cost basis.

The Government believe that in the light of these considerations the right course is to allow National Express to build on its commercial success outside public sector financial constraints, while ensuring that NBC itself retains a significant financial and operational stake. Why should the taxpayer provide investment finance for this market-oriented enterprise when private investors could shoulder part of the burden?

Let us clearly understand the position. First, National Express is only a small part of NBC's total business. Second, the Government are not proposing to close it down but to allow it to expand outside public sector constraints. Third, NBC itself need be no worse off and could be better off after privatisation. Fourth, where operational links between express and state services make economic sense to both sides they will continue after privatisation.

The truth is that the Government's plans offer a major opportunity for developing a successful coach business in order to serve the market better. NBC would have an important share in that success, leaving them, in the Government's view, better off on balance than they are now. I am sure that the noble Lord, Lord Underhill, tabled this amendment to allow us an opportunity to discuss what is an important part of the proposals in this Bill. We have had this opportunity. The noble Lord has made his position clear. I am sure he knows the Government's position equally clearly. I hope in those circumstances he will withdraw this amendment and let us get on with the other parts of the Bill.

Lord Molloy

Is the noble Minister aware that what he has said with regard to the National Express Company, which still plays a vital role within the National Bus Company, is true? It is equally true, as he said, that the Bill introduced by the present Government some time ago seemed to improve the situation. It is of course remarkable that a Tory Government should go out of its way to help a publicly-owned industry. That is to be applauded.

The noble Minister spoke in terms of an increase in business of around 45 per cent. to 50 per cent., and we would all applaud this. We would applaud it irrespective of who is responsible. But now we come to the major issue at stake. What is at stake is that it is publicly owned. There are no private regiments, or private bits of the RAF. We would not stand for that. We would not expect them to increase their productivity by 50 per cent. by bombing, invading, or carrying on in a dastardly way somewhere, so the Government cannot have it all ways.

I am asking the noble Minister to consider this: here we have a part of the National Bus Company which is making good headway. We all know that if it makes good headway it is good for the country and it is good for the taxpayer. Equally, we know that those who invest their money will not be doing it primarily for the good of the nation, or that will not be the driving force behind what they are doing. The driving force will be for them to make money out of the National Express Company, built up by public funds, improved on by all in the name of the British public. The National Express Company is moving from success to success. I appeal to the Government to let it alone for a while, for it to prove itself. If we are found to be wrong in our submission, the Government in due course can explain that all we had expected had not transpired, and the clause can be introduced at that time.

Lord Teviot

I also find myself falling between two stools, between the amendment and my noble friend's answer. I appreciate the Minister's answer on economic and perhaps political grounds, but the National Bus Company has been going for many years and has built up the coaching side as an integral part of the business. My noble friend replies that the coaching side should be given over because it would be unfair for the taxpayer to have to subsidise industries which should be commercial concerns. Very well, but there are a few practical matters we should bear in mind. One is the availability of crews working unsocial hours. At present we are suffering unemployment and the amount of lost mileage due to lack of crews is very little compared with what it was a decade or two ago. We can look forward, we hope, to the future with a fuller employment situation, and then one of the first industries to suffer will be service industries such as this which involve working unsocial hours, as must be the case with buses. The coach industries, either private or public, will be all right; there will be plenty of people to work in those because a certain glamour attaches to them.

What worries me—again I fall between the two arguments—is that we shall again have the situation in which there will be a lack of people wishing to drive stage carriage vehicles for the use of people who use public transport for essential journeys. One can see that happening, and I hope my noble friend will refer to that, as he will be aware of my concern in the matter. I should also like to know whether, although the Bill gives powers only for National Express to be sold off, the National Bus Company would be allowed to start another coaching enterprise on their own. Is there anything in the Bill to prevent them from doing that?

Lord Bellwin

We are in many ways moving away from the basic reasons behind what is proposed in this part of the Bill. I hear what my noble friend Lord Teviot says, and he knows that whenever he speaks on practical matters, not only affecting those who drive and the vehicles involved, I want to know his views because of his expert knowledge. Nevertheless, we need to get hack to the basics on this, which brings us to the point made by the noble Lord, Lord Molloy, and it might help if I re-stated the position. The amendment ignores the fact that NBC would retain a significant shareholding; secondly, it ignores the potential for improving profitability which could come with wider access to investment capital; thirdly, it ignores the proceeds of sale which would flow to NBC as one of their sources of external finance; and fourthly, it ignores NBC's continued involvement at the operational level in supplying National Express with marginal capacity, engineering and maintenance services, all of which will be paid for at the proper commercial rate.

I understand exactly the point which the noble Lord, Lord Molloy, makes, but, in the end, I suppose we return to a philosophical difference of view, and that is not to discard what the noble Lord says, any more than what the noble Lord, Lord Underhill, says. The Government have taken the view that this is the best direction for them to go. They took the same view when we were talking about the 1980 Act—that we should open up the whole field; and I say that not to crow about the point, but because everyone is pleased if something happens for the national good, as Lord Molloy said, regardless of who brings it about. In the way in which that pointed us in a direction, it is not unreasonable to claim that we got that one right. I think we have this one right as well, for the reasons I have given, but only time will tell. One hopes there will be extra profitability; and if it is done through the private sector, so be it. At the end of the day we are most concerned to discover whether this is the best way to proceed. We believe it is, and that is why we take the view we do of the amendment.

Lord Mishcon

I have tried hard to follow the Minister's logic. I am usually able to do so, even if I find myself disagreeing with his principles. I do not find his logic on this occasion as strong as it usually is. If the Government were saying that NBC would retain a 51 per cent., controlling, interest in National Express coach services—if they were willing to say, "We give that undertaking to the Committee and the noble Lord, Lord Teviot"—I could follow that. I would then understand that the public is being asked—I am using the Minister's words—to shoulder the responsibility of finance, instead of it being left purely to the Government, and that as a result of that, financial policy would be controlled on behalf of the nation. One would then be able to see to it that employees were retained and old traditions, built up over the years, dealing with, for example, unsocial hours (I almost wondered whether we were going to get into a debate on flexible rostering, but thank goodness! we did not) were maintained, even in days, for which we all hope, of fuller employment.

We have no such assurance and the Minister's logic therefore falls to the ground. I am hoping that, possibly as a result of this debate and his own reasoning, the Minister will be forthcoming—I shall not anticipate the argument on Amendment No. 2—and will say, "In regard to National Express coach services, the intention of the Government (and we have no objection to writing this in the Bill) is that there will be control of them in future". In those circumstances, while I cannot speak for my noble friend Lord Underhill, I think that those responsible for the amendment would be prepared to think again. But if the Minister is not prepared to write that into the Bill, I am afraid that his speech, clear though it was, did not convince me and, I hope, will not convince the Committee.

Lord Bellwin

It will not be the first time I have failed to convince the noble Lord, Lord Mishcon, and I suspect it will not be the last. I am sorry he feels there is no logical basis for my argument. To me it seemed clear enough, and still does. I omitted to answer a point made by my noble friend Lord Teviot. It is part of the whole matter. The point about NBC setting up a new coach company was mentioned. There would be no legal restriction on that, but surely in effect that would mean that NBC would be cutting off its nose to spite its face. The Government's intention is that NBC should remain committed to National Express through the retention of a significant shareholding. Well—

Lord Mishcon

I hesitate to interrupt the noble Lord the Minister, and I am most grateful to him for allowing me to do so. In a matter so important as this will he please not leave hanging in the air vague terms such as "significant"? What does he mean by "significant"? Is it significant from the point of view of control, or of voting power, or is it significant for some other reason?

Lord Bellwin

If the noble Lord will allow me to say so, I would point that, as he rightly said, Amendment No. 2 takes up the whole matter of the percentages of shareholding, and I should prefer to deal with the question at that time. He asks, "What is significant"? It depends on different circumstances and different situations. In certain circumstances 1 per cent. can be very significant but the noble Lord knows, as others know, that in this instance that is not so. I do not want to go into detail at this stage. I am sorry if I do not satisfy the noble Lord on the point, but we shall be talking about it in a moment, and I should prefer to discuss it under Amendment No. 2. I am sorry that I cannot add much more. Clearly the noble Lord, Lord Underhill, knows that the Government are not in a position to accept the amendment, and I fear that I cannot go further than that.

Lord Teviot

Before the noble Lord, Lord Underhill, winds up, I should like to refer to one point which perhaps has not been mentioned. My noble friend has mentioned that NBC will have 51 per cent. Well, that is fine, but it should be stated that at the moment very good arrangements are working between NBC and private companies. For instance, Eastern National and Eastern Counties have an arrangement with, I believe, George Ewer (Grey Green), and with the West Midlands and three other companies. They all work very well at the moment. Perhaps one is not thinking as widely as one might, but one cannot yet see the point of what is proposed. I shall not vote against the Government, but I shall not be able to vote with them if the matter goes to a Division.

Lord Underhill

I am very sorry that the noble Lord the Minister has not replied to the question of my noble friend Lord Mishcon about the 51 per cent. Obviously, that is a point which is worrying the noble Lord, Lord Teviot. This is a very important question, and we shall be dealing with it in Amendment No. 2. This question will have considerable effect on what the Minister, speaking on behalf of the Government, referred to as the great opportunity that we might miss if we do not agree with the Government's proposals to transfer National Express from the National Bus Company. The Minister referred to the 1980 Act, but our most important questions regarding the Act were about the possible effect on stage carriage services. Whatever else has happened, following the 1980 Act and deregulation, to help National Express coaches, certainly there has been no improvement in terms of the great mass of private operators wishing to go into the stage carriage services. That simply has not happened. The Minister has not answered the quite clear statements that were made about the integrated nature of NBC, including the National Express coach services. I was pleased that the noble Lord, Lord Teviot, from his practical experience, was able to join in the discussion on this question, because the flexible use of coaches and crews is a vital part of the integrated nature of the National Bus Company.

I questioned what would be the assets to be sold. We should not talk about the sale of depots and maintenance and repair facilities, because the National Bus Company will still want them for the stage carriage services. Moreover, under Clause 4 the National Bus Company will be able to provide for firms such as the National Express, when it is sold off, to have facilities at the National Bus Company's own properties. Therefore, there is no question of any money coming from the sale of assets; it could come only from a commercial arrangement for the use of existing facilities.

If the Government's intention is to help the development of the National Bus Company, I submit that in fact it will not be helped because of the taking away of an integrated part of 'the NBC. I ask the question: why are the Government restricting disposal to National Express and National Holidays and their properties? The Government are not lifting one finger to help the development of the essential stage carriage services of the National Bus Company through its operating companies. That will be left to be dealt with by the transport supplementary grant through assistance from the counties.

There is no commercial consideration here—not political, but commercial. This lack of commercial consideration cannot possibly help the development of the coach services or the integrated nature of the bus company. What the Government propose will hinder and harm the present integrated nature of the National Bus Company's services. There will also be an effect, or the possibility of an effect, on the operating subsidiaries as well as on the stage carriage services. For all those reasons I must ask the Committee to divide on this important issue.

3.36 p.m.

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

Their Lordships divided: Contents, 37; Not-Contents, 94.

Ardwick, L. Lovell-Davis, L.
Bishopston, L. Melchett, L.
Blyton, L. Mishcon, L.
Boston of Faversham, L. Molloy, L.
Brockway, L. Oram, L.
Cledwyn of Penrhos, L. Peart, L.
Collison, L. Phillips, B.
Cooper of Stockton Heath, L. Ponsonby of Shulbrede, L.—[Teller.]
David, B.—[Teller.]
Denington, B. Stewart of Alvechurch, B.
Ewart-Biggs, B. Stewart of Fulham, L.
Gaitskell, B. Stone, L.
Gosford, E. Strabolgi, L.
Hall, V. Strauss, L.
Irving of Dartford, L. Taylor of Mansfield, L.
Jenkins of Putney, L. Underhill, L.
Leatherland, L. Wells-Pestell, L.
Listowel, E. Wootton of Abinger, B.
Llewelyn-Davies of Hastoe, B. Wynne-Jones, L.
Ailesbury, M. Energlyn, L.
Airedale, L. Ferrers, E.
Ampthill, L. Fortescue, E.
Avebury, L. Fraser of Kilmorack, L.
Avon, E. Gainford, L.
Aylestone, L. Gladwyn, L.
Balfour of lnchrye, L. Glasgow, E.
Banks, L. Glenarthur, L.
Barrington, V. Glenkinglas, L.
Belhaven and Stenton, L. Gormanston, V.
Bellwin, L. Gowrie, E.
Belstead, L. Gray, L.
Bessborough, E. Grey, E.
Boyd-Carpenter, L. Gridley, L.
Buckinghamshire, E. Hailsham of Saint Marylebone, L.
Burton of Coventry, B.
Byers, L. Hampton, L.
Campbell of Alloway, L. Harmar-Nicholls, L.
Campbell of Croy, L. Home of the Hirsel, L.
Clancarty, E. Hylton-Foster, B.
Cottesloe, L. Kennet, L.
Cullen of Ashbourne, L. Kilmarnock, L.
Daventry, V. Kinnaird, L.
Davidson, V. Lane-Fox, B.
Denham, L.—[Teller.] Lloyd of Kilgerran, L.
Dilhorne, V. Long, V.
Duncan-Sandys, L. Lucas of Chilworth, L.
Effingham, E. Lyell, L.
Ellenborough, L. McFadzean, L.
Elliot of Harwood, B. Mackay of Clashfern, L.
Elton, L. Macleod of Borve, B.
Mais, L. Sandys, L.—[Teller.]
Marley, L. Seear, B.
Merrivale, L. Selkirk, E.
Mersey, V. Sharples, B.
Mottistone, L. Skelmersdale, L.
Mountgarret, V. Spens, L.
Murton of Lindisfarne, L. Tanlaw, L.
Newall, L. Trefgarne, L.
Nugent of Guildford, L. Trenchard, V.
Onslow, E. Trumpington, B.
Orr-Ewing, L. Vaizey, L.
Perth, E. Vaux of Harrowden, L.
Porritt, L. Vivian, L.
Portland, D. Ward of Witley, V.
Reigate, L. Wigoder, L.
Sainsbury, L. Young, B.
St. Davids, V.

Resolved in the negative, and amendment disagreed to accordingly.

3.44 p.m.

Lord Underhill moved Amendment No. 2:

Page 2, line 9, at end insert— ("() In exercising their powers under subsection (1) above the Bus Company shall retain at least a 51 per cent. holding in any of their subsidiaries.").

The noble Lord said: In this amendment we are considering not just the position of National Express or National Holidays, but any part of the National Bus Company, because Clause l provides for the disposal of the whole or any part of any subsidiary of the company. Therefore, while this matter is of importance, particularly in relation to the regrettable decision the Committee has just reached, it affects not only the National Express but any part of any subsidiary of the company.

The National Bus Company may dispose of the whole or any part of its present business, and under Clause 3, which we shall deal with later, the National Bus Company could be directed by the Secretary of State to dispose of any part of its business. That could be the profitable part of a stage carriage operating subsidiary. The amendment seeks to ensure that on any disposal the National Bus Company shall retain a majority holding; that is, at least 51 per cent. And if all the things that we wish to safeguard are to be safeguarded—for instance, in National Express, as per our previous debate—then a majority holding is essential.

Ministers have spoken of the access to private finance, but they have not said a great deal about disposing of majority control. I would suggest that these are two completely different things. Ministers have said that the NCB will retain a substantial stake. Even during the last debate the noble Lord, Lord Bellwin, would not say what was "a substantial stake." I am certain it would have affected the decision of my noble friend Lord Mishcon and 1, in not pressing to a Division, if we had thought the bus company was going to retain a majority shareholding, so that it could have some considerable effect on the course of events.

In our view it is essential that control continues to rest with the National Bus Company. Answers by Ministers have been that if 51 per cent. is retained then it will continue as a nationalised industry. Noble Lords will recall that in debates on the previous Transport Bill we were told that even if there was a 40 per cent. holding, or even only a 30 per cent. holding, by the publicly-owned undertaking in any new undertaking, it could still be dealt with as if it was in the control of a nationalised industry because of the nature of the allocation of the shares.

Without National Bus Company control the entire nature of a subsidiary could be changed. It could be that there were no directors as such from the National Bus Company on the board of directors, because my understanding is that as a private company the company itself would decide on who it would appoint as directors. It could be that there would be no opportunity for the direct views of the NCB to be put at directors' meetings because there may be no NBC directors on the board of the new company. Yet we are talking about an important public transport undertaking which may not be just National Express, may not be just National Holidays, may not be just properties; it could be any part of a stage carriage subsidiary of the National Bus Company.

There will be unfettered rights to the private company—unfettered rights to run its own business. That, I believe, is one of the big elements of a private company. In the case of a disposal of the whole or part of a stage carriage subsidiary, we could find unprofitable routes being cut out or restrictions on some of the service routes, because obviously the purpose of a private company is to make a profit, not to run social transport, and a great deal of the operating stage carriage services must of course be in the social transport area.

In order to safeguard the future development of this transport undertaking it is essential, in our view, that a 51 per cent. holding be retained, and I hope the Minister will agree to this amendment. I beg to move.

Lord Bellwin

If an NBC subsidiary is to escape the constraints of the public sector and attract genuine risk capital, then the bus company must relinquish effective control. This was made clear during our Second Reading debate. The amendment we are considering would prevent NBC disposing of more than 49 per cent. of its interest in a subsidiary. The bus company would therefore retain effective control, and the whole purpose of the Government's policy would be defeated. None of the advantages of access to private finance would be available to the business.

We envisage NBC retaining a significant (and I shall come back to that word in a moment) minority interest in a subsidiary in which private capital is invested. This interest would provide the company with a continued source of income over and above that from the initial sale of shares. It is not possible to specify now the exact level of NCB's retained interest, and let me try to explain why. This will depend on the particular circumstances of the disposition of the shareholding and, of course, on City advice at the time of sale. Before allowing access to private finance we should, however, wish to be satisfied that effective control lay in private hands.

The noble Lord, Lord Mishcon, pressed me to give a firmer definition of "significant". If I were to give a complete answer I would need to be a lexicographer, I think, and not a politician. But the essential is, as I have tried to explain, control. The new National Express will have to be under private control if we are to accept that its finances are genuinely outside the scope of an implied public sector control. To comply with this condition, NBC shares will have to be less than 50 per cent.—and how much less, I cannot say; it will depend on the make-up of the remaining shareholding; and 49 per cent. could be a non-controlling interest if all other shares are in a single pair of hands. It could be a controlling interest if there are several other shareholders.

I hope that gives some explanation of why I am reluctant to be more categorical in trying to define "significant". It is something which moves in the context of the particular matter being discussed at the time. I am sorry to sound vague but I think it is not unreasonable to say that a "significant" shareholding depends very much on how many, in whose hands, and what is the situation applying at the time. As with the first amendment, we come back to a fundamental difference between us on whether this National Express should be within or without NBC. If there is 51 per cent. there, it would stay within; not without. It comes down to a difference between us. I am sorry I cannot be more helpful with the amendment.

Lord Mishcon

The noble Lord the Minister is quite entitled to put forward an argument that control should go into private hands and out of NBC. It is a perfectly proper and clear argument to put politically. You either hold that view or you do not. There is no point in wasting a lot of time in Committee stage debating that issue. I do not propose to weary your Lordships by conducting any such argument. There is, however, another argument which says that it may well be that control ought to go out, and therefore the Committee ought not to agree with an amendment which proposes that 51 per cent. be retained by NBC in the case of any of its subsidiaries. But on both sides of the Committee, indeed in all parts of the Committee—although I look at the Cross-Benches and find I am looking merely at benches, so that perhaps I should limit myself to speaking of both sides of the Committee—the view is that control ought to be in private hands but there ought to be residual rights always vested in NBC in order that certain situations can be controlled. If your Lordships had heard from the noble Lord the Minister a rather more cogent definition of "significant" this would not have required him to be a lexicographer at all but would merely require him (and I say this with affection) to be a frank politician, and that is all; and that is all that we ask for.

What I mean is this. The possibility of shares going into wrong hands is not something that one can control on an original transaction, because on the original transaction the shares can go into very proper hands. It is a question of what happens thereafter. Your Lordships will remember that in the Oil and Gas (Enterprise) Bill, for example, we were dealing with an important matter from the point of view of the nation; but there was always a provision written in that there should be, until the Secretary of State otherwise decided, the holding of a special share which stopped the transfer of shares in undesirable circumstances.

No such protection is given to vital transport interests that we are dealing with in this Bill. It is a matter of company law (with which I am sure your Lordships will be quite familiar) that if you manage to hold 75 per cent. of voting control you can actually put the company into liquidation and sell off vital assets; and it may well be that from a pecuniary point of view, from the material point of view, that is a very profitable thing for shareholders to do. It is not a profitable thing for the nation to do. Unless one retains more than 25 per cent. of the shares, one cannot stop a liquidation. If one controls more than 75 per cent. one could alter the whole structure of the constitution of a company, which is in its memorandum and articles of association.

The Committee is left in this position. The Minister is not prepared to say what percentage will be retained in the national interest. He uses the word "significant", and he realises that it means nothing when you say "significant" in regard to each set of circumstances. That is a reply that, if I may say so, means nothing. We are dealing now with an important Bill and an important clause of the Bill. The Minister should be prepared to say that "significant" at least means that one is going to have some sort of control. I have gone away from directors; my noble friend Lord Underhill made that point and I do not want to repeat it.

If you take the view that the nation should have no control on the question of liquidation, no control in regard to altering the articles of association, no control by having a clause inserted in the articles that at least the nation will keep such a share as will prevent other shares going into wrong hands; if you continue with that, you will vote against the amendment. If you want to retain the principle even though the amendment talks in terms of 51 per cent., then in my judgment you will vote for the amendment.

Lord Lucas of Chilworth

Can the noble Lord, Lord Mishcon, help me in this? If one accepts his amendment, one would (as the Minister explained) restrict the company from doing some of the things it wants to do. One would also go against the general philosophy outlined in this Part of the Bill. If one accepted the amendment, one would also restrict some of the opportunities that might arise for the bus company. I think it would be wrong to do that at this stage. In some of our very big cities, there are some suggestions that the social service aspect of bus operations should fall back to them. There are other suggestions from such as Sir Peter Masefield, that it should move to something of a regional set-up. If one accepts the amendment, one would not be able to do this at all. Then, I think one would negative what we are trying to do: that is, to create greater opportunities for decentralised authority so that private enterprise, private money, can come in as and where it wants—and it will not come in if it has not got control.

It would at the same time draw attention to the need for those local authorities who see a social need to make such provision as they are able to because currently, as the noble Lord, Lord Underhill, has suggested, it is the cross-subsidisation alone that keeps some of the social services operating. That subsidisation is necessary because a great number of the local authorities say, "We are not going to put our hands in our pockets; we are going to spend our money on schools or something else". This is a burden which I do not think that the bus company should necessarily carry. You will force them into carrying that burden if you insist on the amendment.

Lord Lloyd of Kilgerran

May I say that of course agree with the noble Lord, Lord Mishcon, when he says that it would be a waste of time to enter into any political debate on this matter. I should like to pursue with him, if I may, the theme that he developed that control ought to go out of the hands of NBC. He pursued that theme very fairly and frankly with his usual persuasiveness. Then he comes to the general theme. The general proposition he puts to us is that his basic reason for this amendment, and for his general attitude in supporting this amendment, is that there is a possibility of shares going into wrong hands.

I agree with him about the 25 per cent. position, about the effect if you do not retain more than 25 per cent. of the shareholding, because then certain matters follow in accordance with company law. What I find difficult to appreciate in the context of this Bill and what the Government are trying to do—and I approach this in an entirely pragmatic way—are the problems that the noble Lord, Lord Mishcon, sees. What does he mean in practice about the shares getting into wrong hands in the context of this matter? I understand that the Government are to retain a significant number of shares and I agree that the Government are unlikely to disclose the figure that they have in mind, if they have one in mind. What I feel the noble Lord fails to do in his persuasive submissions to this Committee is explain the real problem that he is trying to prevent taking place. What are the wrong hands which he anticipates may be involved if the Government do not relinquish the control of NBC as suggested?

Lord Mishcon

I have been asked a question—with the customary courtesy of the noble Lord, Lord Lloyd—and therefore I ought to answer it. It is not unknown in commercial circles—and the noble Lord has mixed in them with great advantage to those commercial circles —for a company to be acquired in order to stifle competition. I give but one example. It is not unknown that shareholders come into a company dealing with transport in the hope of making very large gains and as a result of it possibly putting prices up in a way which is not suitable for a company in which the nation holds shares. It could very well be that shareholders have the desire when getting into a company—and I mention this example—to see that its assets are sold because a quick profit could be made as a result, although that is not in the national interest. I do not think that I need go any further with examples, but I could do so.

Lord Bellwin

My Lords, the Secretary of State's consent is required to the initial disposal of shares, and to control subsequent transactions surely would be an unwarranted interference. The fact is that the Secretary of State will always have control over any further disposals by NBC. That is a safeguard. I want to be helpful in this matter. If I were pressed to say and give an indication, then clearly it would mean less than 51 per cent. It would probably—but not essentially—be more than 20 per cent. The point that the noble Lord, Lord Mishcon, makes is understood as well.

It is still right to come back to the first point, that when we talk about significance it can mean so many different things in so many different situations. I suspect that the noble Lord, Lord Mishcon, knows this as well or better than anyone in the Committee, with his great experience in working in the company field. There, as he knows, anyone who owned, say 5 per cent. of ICI would have a very substantial holding. Five per cent. of another company would not mean anything like the same holding. That is why it is so difficult to be precise.

Lord Teviot

I am afraid I am not very much up into financial affairs. I should like an assurance from my noble friend. Regarding the 51 per cent., or whatever it was—and that has rather come out in the light of debate—it is a fact that no commercial concern in the foreseeable future is going to put a lot of money into the declining industry of stage carriage. Unfortunately, this country, unlike most of Europe—apart from one or two countries still has a declining number of people using public transport. The only people who are going to put money into public transport are those who think they can make a quick "buck" on coach services.

Moving on from that, is my noble friend able to give me an assurance that we are not going to see a situation whereby control has gone from the National Bus Company and somebody is going to make quite a lot of money on coach services? The local authorities are going to get bored with subsidising routes and the poor, wretched public are going to be standing at bus stops, either in urban areas or down the lanes of rural areas, and are not going to have an adequate bus service. I wish my noble friend could give me an absolute assurance that that kind of horrible situation will not happen.

Lord Bellwin

I do not think that the two situations go hand in hand at all. The unhappy scenario that my noble friend paints for us is a situation tied up entirely with many, many other facets of this whole area of public transport: the local authorities' obligations; the extent to which there should be subsidy or not; how much the ratepayer contributes; how much the taxpayer contributes; what is the philosophy of public versus private cars, and so on? It is a problem that he rightly raises but, so far as I can see, it is not the one that we are discussing in dealing with this amendment. On that, we come back to the basic philosophy: either one agrees that there should be private control of this sector or not. The Government clearly do and noble Lords opposite clearly think otherwise.

Lord Underhill

The noble Lord, Lord Teviot, put some very pertinent points which are the most important points for supporting the amendment before the Committee. Although the Minister, as usual was very persuasive in his argument, frankly he in effect admitted the case. There is no answer to the point made by the noble Lord, Lord Teviot, once you say that the whole control of any subsidiary will pass from the public sector into a private company over which the National Bus Company will not have continued effective control at all. That will mean that nobody will put money—as has been said by the noble Lord, Lord Teviot into a private transport undertaking merely to help social transport. They will put it in because they want to get some returns. They want to get profit.

Therefore, if it is a question of continuing with unprofitable routes, we know what is going to happen. We shall come to this issue on another amendment, and if it is a question of impairing the transport for the travelling public or making a loss, we know what a private transport undertaking will do. We are not attacking private capital but in this respect we are talking common sense about the issue.

The noble Lord, Lord Lucas, said that the Government are seeking to have decentralisation. If they sell the National Express as a complete undertaking—and I come back to my question: what are they going to sell in the case of National Express? What are the assets they are going to sell?—because 1 do not know—then that is not decentralisation. I have expressed a fear, and noble Lords on this side have also expressed a fear. Although the Government have said that their present intention is to confine disposals to National Express, National Holidays and the properties, the fact is that the powers of disposal could enable this Government, or any future Government, to dispose of any of the operating subsidiaries. That could happen and it is in the Bill. If there is no control continued by the National Bus Company, then it is clear that there will be an impairment of service to the travelling public. That is why it is so essential to maintain the majority control not from political philisophy, but for the welfare of the travelling public. It is such an important principle that, even on this issue, we must also ask the Committee to make its views quite clear in a Division.

4.11 p.m.

On Question, Whether the said amendment (No. 2) shall be agreed to?

Their Lordships divided: Contents, 43; Not-Contents, 93.

Ardwick, L. Listowel, E.
Balogh, L. Llewelyn-Davies of Hastoe, B.—[Teller.]
Birk, B.
Bishopston, L. Lovell-Davis, L.
Blyton, L. Melchett, L.
Boston of Faversham, L. Mishcon, L.
Brockway, L. Molloy, L.
Cledwyn of Penrhos, L. Oram, L.
Collison, L. Peart, L.
Cooper of Stockton Heath, L. Phillips, B.
Ponsonby of Shulbrede, L.—[Teller.]
David, B.
Denington, B. Rhodes, L.
Elwyn-Jones, L. Stewart of Alvechurch, B.
Ewart-Biggs, B. Stewart of Fulham, L.
Gaitskell, B. Stone, L.
George-Brown, L. Strabolgi, L.
Gosford, E. Strauss, L.
Hall, V. Taylor of Mansfield, L.
Howie of Troon, L. Underhill, L.
Irving of Dartford, L. Wells-Pestell, L.
Jenkins of Putney, L. Wootton of Abinger, B.
Leatherland, L. Wynne-Jones, L.
Airedale, L. Howe, E.
Auckland, L. Hylton-Foster, B.
Avon, E. Kennet, L.
Aylestone, L. Kilmarnock, L.
Balfour of Inchrye, L. Kinnaird L.
Banks, L. Lane-Fox, B.
Barrington, V. Lloyd of Kilgerran, L.
Belhaven and Stenton, L. Long, V.
Bellwin, L. Lucas of Chilworth, L.
Belstead, L. Lyell, L.
Bessborough E. McFadzean, L.
Boardman L. Mackay of Clashfern, L.
Burton of Coventry, B. Marley, L.
Byers, L. Merrivale, L.
Campbell of Alloway, L. Mersey, V.
Campbell of Croy, L. Mottistone, L.
Cottesloe, L. Mountgarret, V.
Croft, L. Murton of Lindisfarne, L.
Cullen of Ashbourne, L. Newall, L.
Daventry, V. Nugent of Guildford, L.
Davidson, V. Onslow, E.
De Freyne, L. Orr-Ewing, L.
Denham, L.—[Teller.] Portland, D.
Dilhorne, V. Rankeillour, L.
Donaldson of Kingsbridge, L. Reigate, L.
Roberthall, L.
Eccles, V. Sainsbury, L.
Ellenborough, L. St. Davids, V.
Elliot of Harwood, B. Sandford, L.
Energlyn, L. Sandys, L.—[Teller.]
Ferrers, E. Seear, B.
Fortescue, E. Selkirk, E.
Fraser of Kilmorack, L. Sempill, Ly.
Gainford, L. Sharples, B
Gardner of Parkes, B. Skelmersdale, L.
Gladwyn, L. Spens, L.
Glasgow, E. Stamp, L.
Glenarthur, L. Tanlaw, L.
Glenkinglas, L. Trefgarne, L.
Gormanston, V. Trenchard, V.
Gowrie, E. Trumpington, B.
Gray, L. Vaizey, L.
Gridley, L. Vaux of Harrowden, L.
Grimston of Westbury, L. Vivian, L.
Hailsham of Saint Marylebone, L. Ward of Witley, V.
Wigoder, L.
Hampton, L. Young, B.
Home of the Hirsel, L.

Resolved in the negative, and amendment disagreed to accordingly.

4.19 p.m.

Lord Underhill moved Amendment No. 3: Page 2, line 11, leave out ("(1)(a)") and insert ("(1)").

The noble Lord said: The purpose of this amendment is to provide that all disposals made under paragraphs (a) and (b) will require the consent of the Secretary of State. Although we consider that the Bill gives far too many arbitrary powers to the Secretary of State, it must be consistent, any disposal must be able to be challenged and there must be some degree of parliamentary accountability.

Subsection (1)(a) provides that disposal of, any shares in or other securities of one of their subsidiaries", will require the consent of the Secretary of State. Subsection (1)(b) provides that disposal of, the whole or any part of the undertaking of, or any property, rights or liabilities of, any of their subsidiaries", will not require the consent of the Secretary of State. As the Government intend that the National Bus Company will not retain a majority shareholding, as has been confirmed by the Committee on our last amendment, then, presumably, if under subsection (1)(a) the company for various reasons wish to sell only a minority of shares, the Secretary of State will refuse consent. But if the National Bus Company wish to sell outright any subsidiary, without a sale of shares as such, that will come under subsection (1)(b), and the Secretary of State's consent will not be necessary. Put another way, disposal of an entire subsidiary under subsection (1)(b) does not require consent, but the sale of any shares under subsection (1)(a) does.

We must think in this matter not only of National Express, National Holidays or the properties, but of the powers to dispose of the whole or part of any subsidiary. If the National Bus Company wish to sell a bus station entirely, then, presumally, it will have a separate company and no consent will be required, even though it may not be in keeping with the wishes of the Secretary of State. It could also sell without consent an entire stage carriage subsidiary—not by selling shares but by selling the entire undertaking. There could be a situation in which disposal of shares in a subsidiary may be in mind but the National Bus Company may not like the conditions which the Secretary of State suggests he will impose. So it could decide to dispose of the whole or part, without shares, under subsection (1)(b), without consent.

It may be said that what we are suggesting is foolish and that these things could not be done, but there is provision for it in the Bill and obviously we must go only by what the Bill provides. The Under-Secretary, Mr. Clarke, said that it would be absolutely silly to require the bus company to seek consent just to dispose of a few buses. That would be silly, I agree, but that is not what we are talking about. Under subsection (1)(b) there are powers to dispose of the whole or part of any subsidiary without the consent of the Secretary of State being required. Therefore we should not reduce this just to talk of selling the odd two or three buses here and there. If that is the issue which is worrying the Government, we should readily withdraw our amendment so that the Government could come back at Report with an amendment to deal with the real issue of disposal and not with the getting rid of the odd two or three buses here and there. Under Clause 3(1) the Secretary of State is to be given power to direct the company to exercise its power of disposal under both subsection (1)(a) and subsection (1)(b)—that is, where there is a disposal of shares or a disposal of a whole undertaking—yet, if the National Bus Company proposes to use its own power of disposal under subsection (1)(b) without the Secretary of State's direction under Clause 3, it seems to us that consent is not required.

If my reading of the Bill is incorrect, I shall readily acknowledge it, but, having read the whole of the Committee stage—all 27 sessions—in the other place I know the arguments which were put forward. This seems to be an inconsistency which ought to be removed. If the Government are merely concerned with having to worry about consent for the odd items, I hope that they will suggest their own amendment so that we need not press this one I beg to move.

Lord Bellwin

This amendment seeks to extend the requirement for the Secretary of State's consent to disposals of assets under subsection (1)(b) as well as to the sale of shares under subsection (1)(a). There is a good reason for confining the consent provision to subsection (1)(a). The National Bus Company may already dispose of those parts of its subsidiaries' undertakings which are no longer required for the business—for example, old buses, or land, or buildings surplus to operational needs. Such disposals are the subject of day-to-day management decisions in which the Secretary of State is not involved. The power under which such disposals are carried out is conferred by Section 14(1)(e) of the Transport Act 1962, applied to the National Bus Company by Section 47(1)(a)(iv) of the Transport Act 1968. We do not wish to interfere in any way with the National Bus Company's existing power of disposal where parts of a subsidiary's undertaking are no longer required for the purpose of the business. But extending the power of consent as proposed in the amendment would do just that. It could give rise to an area of doubt as to whether the National Bus Company was carrying out a particular disposal by virtue of the power conferred by the 1962 Act or the power conferred by subsection (1)(b) of this Bill. The National Bus Company might well feel obliged, for the avoidance of such doubt, to ask for approval for each and every disposal. We could end up in the thoroughly unsatisfactory situation of Ministers being involved quite unnecessarily in detailed management decisions.

I do not think that the kind of situation which the noble Lord, Lord Underhill, envisages is a credible proposition. There would have to be some really exceptional circumstances for the National Bus Company board to wish to dispose of the complete undertaking—say, for example, of one of its regional operating subsidiaries—without getting any shares. I am sure that the kind of circumstances which the noble Lord has outlined to us and which concern him would be—surely this is the key to it—the subject of consultations with the Secretary of State before a final decision was taken one way or the other.

I really do not think that the concern which the noble Lord has expressed need worry him as much as it does. The undertakings of the National Bus Company are subsidiaries and, as such, they are Companies Act companies. It is not possible to sell a company without selling the shares in it, so it is difficult to see how the National Bus Company could dispose of an entire undertaking without consent. For these reasons we feel unable to accept the amendment.

Lord Mishcon

I hope I heard the noble Lord the Minister aright when he guided the Committee along the lines that if you sell all the assets of an undertaking, of necessity you sell the shares and, in such an event, will have to obtain the permission of the Secretary of State. I did not think I could have heard him aright, although the noble Lord the Minister nods his head in assent, which means that I ought now to believe that I did hear him aright. And, having believed that I did hear him aright, I find myself unable to believe the advice he has received. It is quite possible to sell the goodwill of a business as part of the undertaking. It is quite possible to sell the assets of a business without selling any shares at all, Indeed, the average alternative facing a commercial enterprise which is for disposal is that either you sell some of the assets or all of the assets, or you decide to sell the shares and somebody takes over the whole of the company. Therefore, I should be obliged if the noble Lord the Minister would, with his advisers, think again about that statement.

Lord Bellwin

I must have been nodding my head in the wrong place. Perhaps it would help if I repeated what I said in order to clarify the point which the noble Lord mentions. I said that the National Bus Company's undertakings are subsidiaries and, as such, are Companies Act companies. I said it is not possible to sell a company without selling the shares in it. So it is difficult to see how the National Bus Company could dispose of an entire undertaking without consent. But of course one can always sell assets and one can always sell parts. That, clearly, I know.

Lord Mishcon

I do not think the Committee will be very patient with me if I continue this argument for much longer. Of course it is possible to sell an undertaking, or all the assets, without selling shares. What I am saying is that if one does do that, it comes within paragraph (b) and not within paragraph (a). That proposition is either right or wrong. If it is wrong, then I will apologise to the Committee hereafter. If it is right, I expect the noble Lord, Lord Bellwin, to withdraw the statement he has made.

I will detain the Committee only very briefly because I do not want to repeat arguments that have been put forward so ably by my noble friend Lord Underhill. I would like to add only this. If the noble Lord the Minister is saying to the Committee that it is quite ridiculous—and this was the point taken in another place at Committee stage—to think in terms of the National Bus Company having to seek the permission of the Secretary of State when it was merely selling a few of its assets, which for all one knows it might be doing week by week or month by month, then I would go along with that argument. But we are dealing with a clause concerned with the whole of an undertaking or part of it, and it is a little odd that, presumably, the National Bus Company will not be able to sell one of its shares in any subsidiary—just one—without going to the Secretary of State, but yet could sell the whole of an undertaking of a subsidiary without going anywhere near the Secretary of State.

In endeavouring to borrow the inimitable language of the Minister, I will suggest to him that if he will undertake to look at an amendment between now and Report stage which deals with the whole, not just a part, or—borrowing his language—a significant part of the undertaking or assets of the subsidiary, then I would be perfectly content with his definition of "significant", which is that it varies from case to case and will have to be considered on its merits; I believe that was the way he defined "significant I would be perfectly prepared to think in terms of a material part as well as the whole, and I am sure that my noble friend will agree with me that if we have an undertaking of that kind, which gave some sort of protection with with regard to the subsidiaries, and that there is need to have the Secretary of State's permission, we would both think very differently about pressing this amendment.

Lord Bellwin

The decision to press this amendment is in the hands of the noble Lord who moved the amendment. What I will undertake to do is read carefully what has been said. I understand it clearly in my own mind and that it is as I have explained it: that the fears should not exist. However, because we are now in a field of the kind we are, I will of course take this point away and talk to advisers and colleagues about it. Should it be that the points are valid, then noble Lords know what we will do. If we do not feel the points are valid then it is always open to your Lordships to decide what to do about it at a later stage.

Lord Underhill

I am obliged to the noble Lord the Minister for agreeing to take a look at this in the light of our debate. Similarly, we on this side will take a careful look at the debate to see whether we should bring forward a differently worded amendment, if the Government themselves do not bring forward an amendment. May I deal with one other point, because the Minister agreed that there could be exceptional circumstances but in such a case there would be consultation with the Minister. But, again, we are dealing with the words in the Bill. Not necessarily this Government but another Government could be even more determined than the present Government to smash all question of public ownership.

Lord Mishcon


Lord Underhill

They could be, and therefore we may be in a position of facing "exceptional circumstances" and yet no consent of the Secretary of State is required. That is what concerns us. If there is consent by the Secretary of State for the sale of any part of the shares then we believe there ought to be consent of the Secretary of State for disposal elsewhere, although we accept the point that it is not wanted for the disposal of an odd bus here and there. Since the Minister is going to take a look at this, as we are, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4.35 p.m.

Lord Underhill moved Amendment No. 4:

Page 2, line 12, at end insert— () The Secretary of State shall not give his consent to any disposal under subsection (1) above unless he is satisfied that such action would be in the best interests of the Company and each of their subsidiaries and would not impair the integration of services available to the travelling public.").

The noble Lord said: We are not now arguing on the principle of disposal because we have discussed that on other amendments. What this amendment seeks to provide is that the Secretary of State shall not give his consent to any disposal unless he is satisfied that any such disposal would be in the best interests of the company and each of its subsidiaries, and would not impair the integration of services available to the travelling public. It may be argued that this is what a Secretary of State would do in any case. If so, let us put it in the Bill to make certain.

As I have said already, it may not be this Secretary of State but a future Secretary of State or a future Government, and we have to keep in mind that in other amendments there has been emphasis on the integrated nature of the National Bus Company and that what happens in one subsidiary could have an effect on another subsidiary. May I remind the Committee of the quotation I gave from the chairman's foreword in the bus company's 1981 report. The important part was: The National Bus Company is an integrated business and what happens to one sector must necessarily have an impact on the remainder. The disposal of any part of the bus company, with the formation of a subsidiary for that purpose, could affect the general position of the NBC and also of any of its subsidiaries, separately or collectively. This point was stressed in our debate on National Express itself.

It is essential that the Secretary of State shall have regard to the provisions set out in this amendment. If these points are not satisfied absolutely, there is no reason why a particular disposal should proceed. It has been said in the disposal issue that the Government are concerned with the public good; that is precisely what this amendment intends to lay down. If consideration should be given to the sale of the whole or part of an operating subsidiary, remember that the primary business of a subsidiary is stage bus services. A private company would obviously seek to make a profit and that is why it would seek to take over any subsidiary. As was said in previous debates, operating services could go and that would impair the services available to the public.

A private company could decide that routes shall stop at, say, city boundaries because any extension beyond might be unprofitable. That would impair the services to the public. A private company could decide to cut out Sunday services or reduce their present levels. That would impair the services to the public. A private company could cut out or resist services after certain hours. That would impair services to the public. Clause 1 enables the National Bus Company to make disposals. Clause 3 empowers the Secretary of State to give directions, if he should so wish, to the National Bus Company to make a disposal. In either case what the amendment seeks to avoid is any disposal that would be contrary to the provisos set out in this amendment.

This is not a political issue. It is endeavouring to say that if there is going to be a disposal, then OK, provided that these essential provisos are adhered to. We must keep in mind those cases where the Secretary of State has overriden a decision of an inquiry by his own inspector into an appeal against the commissioner's refusal to grant stage carriage bus licences. In some of these cases, the company which has been given a licence has carried out that service to the detriment of the public by restricting some of the services it has taken over. Therefore, there is every commonsense in the amendment we are putting forward, and I hope that the Government will feel that these safeguards are such that they ought to be inserted into this Bill.

Lord Teviot

In order to hurry up the Committee I will come in now, so that my noble friend can answer both the noble Lord, Lord Underhill, and myself. I am in sympathy with the amendment because one point has not been mentioned. We have discussed political differences between private and public, but there is a difference concerning public transport which does not concern many other things. We have debated the question of the National Health Service; we have debated whether one should pay more for National Health Service spectacles or whether there should be no such spectacles. If National Health Service spectacles were withdrawn, people would simply have to pay for them—but if a public bus service is withdrawn, one cannot pay for something that is not there.

Coming back to the freedom of the individual, which again I think is absolutely right, public transport is a need for some people, because the alternative is private transport and you cannot expect everybody to be the owner of a vehicle; he or she has to have a licence to drive it, and might not be suitable to have a licence, or might be of a nervous disposition, or too young or too old. Also, if they are not able to own their own vehicle they cannot all be expected to pay for their own chauffeur, and they cannot be expected to be dependent on a relative or another person to transport them. We are moving into a very difficult area. Although the wording of the noble Lord's amendment might not suit the draftsmen in many ways, I do agree with the principle. We have to protect people who are not able to have their own transport.

Lord Bellwin

The Government have no doubt that their policy of introducing private capital will be of benefit, both to NBC and to the travelling public. It has never been our contention that each and every one of NBC's subsidiaries, of which there are more than 35, will necessarily be better off; there are bound to be some winners and some losers within the overall improvement that the Government expect to see. We are opposed to this amendment because it could give rise to technical challenges intended to frustrate the policy approved by Parliament in this Bill. Perhaps I may remind your Lordships that, under Clause 1, it is in fact the NBC who are being given the power of disposal. They will be responsible for putting forward schemes for the introduction of private capital. It seems to me in the highest degree unlikely that they will propose a course of action which they believe to be against the interests of the company. Equally, if it came to the point where NBC were proceeding under a direction from the Secretary of State, the Secretary of State would clearly have already reached a judgment about the best interests of the company, its subsidiaries and the travelling public. So I think the amendment is in large measure unnecessary, quite apart from the fact that it has a potential for being destructive.

The noble Lord, Lord Underhill, was arguing that it was somehow the NBC's intention in running National Express to run a social service. I would have to say on that, that under both Labour and Conservative Governments NBC has been clear that National Express is to be run as a purely commercial business. The Government's plans for introducing the private shareholding would hardly be revolutionary in that respect. It is really a question of deciding what are the objectives and how far will they be achieved. For the reasons I have given, I think what this amendment is seeking to do would make very difficult in practical terms the kind of achievement that we are talking about.

Lord Mishcon

Again, with the Committee's permission, I shall try to put the issue before the Committee as I see it, especially, if I may say so, with the help of the intervention of the noble Lord, Lord Teviot, and the introduction of this amendment by my noble friend Lord Underhill. Under Clause 3 of this Bill, the Secretary of State can give directions to the National Bus Company requiring it to use its powers under the section we are now considering. Secretaries of State are very powerful people, but there is an even more powerful instrument within our Government and that is the Treasury.

It could very well be that, if we were ever faced with an even greater drive for economies, the Treasury could give instructions to the various departments that those economies were to be effected; if I may use a coarse phrase which is known in the marketplace, the cash flow of the Government had better be improved by the sale of assets and by the sale of shares. Without any safeguard in this Bill, the Secretary of State under such pressure could give such a direction without having in view at all the various considerations that were put forward, if I may say so without seeming patronising, so ably by the noble Lord, Lord Teviot. And the whole question of social travel, the whole question of the needs of individual citizens who either cannot afford their own transport or for one reason or another have not the ability to hold a licence would be very drastically and most unfortunately affected.

I repeat what my noble friend said: there is no question of politics being in this at all. We are obviously admitting the general principle of the Bill, as we have to. But is it right that in this Bill there is absolutely no safeguard, and we are going to leave it at that—that the Secretary of State, when giving such a direction, when using his powers, does not have to take into account the matters mentioned in this amendment, which are absolutely innocuous and would, I am sure, in any event command the support of all your Lordships. Is it right that we should do that?

I ought to mention this, as a matter of law, as I understand it. If the Secretary of State is in fact satisfied, then it would be extremely difficult, if not impossible, to upset any of his decisions by way of a judicial review. So there is no question, in my judgment, of his having some difficulty to face in regard to the law courts if anybody wanted to challenge the decision he had made. He has to be satisfied in his own mind that these, from the point of view of the public, vital matters are covered. I repeat, it is not a question, as the Minister has said, of the Secretary of State being in charge of transport and therefore wanting so badly to protect all the interests of transport and the public. It is a question of the Secretary of State, possibly not the strong one I am sure the noble Lord thinks we have at the moment, but a weak one hereafter, giving in to Treasury persuasion, or even something stronger than persuasion. That is what we have to safeguard against, and it is done by the amendment. I hope your Lordships will feel that it is a proper amendment to support. Or, rather, I hope the noble Lord the Minister on reconsideration of these arguments will say that he would like to consider the matter very seriously before turning this safeguard down.

Lord Bellwin

I fear that in this case I cannot agree to do that. I think what I said, although not at great length, fairly expressed the position as we see it. It looks as if this is one on which we shall have to differ.

Lord Underhill

I am sorry the Minister has taken that view on behalf of the Government. He did say that to accept this amendment would leave the way open to possible technical challenges to frustrate the will of Parliament. That is not the intention of the amendment. I am sure it must be the will of Parliament that all the points set out in this amendment shall be observed by the Secretary of State before he gives consent to any disposal. I am sure everybody agrees that this is what should be done, and surely what we ought to do is to put those safeguards in the Bill. That is all the amendment is seeking to do.

In the light of what the Minister has said, we will have a look at this. We will not seek to divide the Committee on this issue, but we may have to come back to it on Report, because, frankly, if these provisos are not to be observed in relation to any disposal, then the whole question of disposal should be up for consideration again. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 1 shall stand part of the Bill?

Lord Mishcon

I apologise for raising very briefly a technical point on which I may very well be wrong, but I do not want the clause to be passed by the Committee without its being drawn to the attention of the Committee or of the Minister to whom I have given short notice of the point. I see that the next amendment seeks to insert "Bus" before "Company" in Clause 3. I have noticed that in this clause—and I am looking at line 5 on page2—we again get "the Company", and indeed we get it again in Clause 2 at line 33. I see no reference—and here I apologise to the Committee if I have omitted to see something—to anything in the Bill which defines "the Company" as against "the Bus Company". I hope that I am not raising a false point.

Lord Bellwin

I am very grateful to the noble Lord, Lord Mishcon, who did give me an intimation that he wished to raise this point, and it enables me to try to clarify the position. Let me first say, however, that I do not think we need dwell too long on the amendment. It simply corrects an earlier slip of the drafting by changing "Company" to "Bus Company". The latter is the term used throughout the rest of Part I for the National Bus Company and is defined in Clause 7.

When the National Bus Company is first referred to in a subsection it is necessary to refer to it as "the Bus Company" in accordance with the definition in Clause 7. Subsequent references in the same subsection to "the Company" must be references to the company already mentioned; namely, "the Bus Company". That is the explanation given to me. I hope that it is satisfactory so far as the noble Lord, Lord Mishcon, is concerned. However, I assure him that, in moving the amendment—which I shall do—I shall certainly talk about the matter again. If it should be that there is uncertainty in any way then I shall certainly want to do something about it.

Lord Mishcon

Only out of sheer amusement do I refer the Committee and the Minister to Clause 3, where the amendment is due to take place. The noble Lord will see that "the Bus Company" is mentioned in that clause even through it starts off with a reference to "the Bus Company". In other words, we do not get "the Company". The explanation is at least not consistent, but I would not dream of spending any more time on it.

Clause 1 agreed to.

Clause 2 agreed to.

Clause 3 [Powers of Secretary of State to give directions]:

4.53 p.m.

Lord Bellwin: moved Amendment No. 5: Page 3, line 33, at end insert ("Bus").

The noble Lord said: I have already spoken to this amendment. I beg to move.

On Question, amendment agreed to.

Lord Underhill moved Amendment No. 6:

Page 4, line 2, at end insert— ("() No direction given under this section shall have effect unless approved by a resolution of each House of Parliament.").

The noble Lord said: I beg to move Amendment No. 6. Noble Lords will have heard references on a number of occasions to the fact that Clause 3 gives power to the Secretary of State to give directions to the National Bus Company to dispose of the whole or part of any subsidiary. The clause gives the Secretary of State very far-reaching powers, because he can also determine the purposes for using those powers of disposal and he may give directions as to the manner of the disposal, and this, of course could include the conditions to be laid down.

Admittedly, this clause is an improvement on those in the previous Transport Bills of 1980 and 1981, because it provides that the Secretary of State, before giving a direction, shall consult with the bus company and also consult the county councils where a subsidiary provides the services. Let me say in passing that the fact that there is provision that the Secretary of State shall consult county councils where a subsidiary provides services, indicates quite strongly the point that I have been making from this Dispatch Box time and time again, that the provisions in the Bill give the bus company or the Secretary of State power to dispose of any of the subsidiary operating companies of the National Bus Company, otherwise there is no point at all in the provision to consult the county councils.

That is the only place where they will come in for possible consultation. But after such consultation—which we are pleased to see—with the bus company or, as the case may be, with the county council, the Secretary of State can then still decide to do what he thinks fit. Later on we will outline how the consultation with operators on the testing of vehicles proceeded—consultation had not a considerable effect. Although the National Bus Company may consider a disposal not to be in the interests of the company or its subsidiaries, the Secretary of State can still give directions for disposal. In our debates this afternoon we must keep in mind that the Government have resisted the company retaining a 50 per cent. control in any subsidiary that is disposed of, and the Government have resisted other safeguards like those which we attempted to lay down in the previous amendment.

There must be some control over the use by the Secretary of State of these very wide arbitrary powers which are given to him in Clause 3. There is no accountability in the Bill whatever. What the amendment seeks to provide is a degree of Parliamentary accountability; that any directions which the Secretary of State may make to the National Bus Company, instructing them on a particular disposal of the whole or part of any subsidiary, should be by affirmative resolution of each House of Parliament.

The Government have said time and time again—and they have said so in their election manifesto—that they want to reduce interference with nationalised undertakings. Surely there could not be any greater interference with a nationalised undertaking than the power for a Secretary of State to instruct that undertaking to dispose of any part of it. That must be the greatest interference that one could think of.

On Second Reading the noble Earl, Lord Avon, repeated a statement which had been made on previous Bills—that it is only a reserve power. That statement was made on the 1981 Bill because we had a similar provision then. However, the power is there. There is nothing in the Bill to say that it is a reserve power. The power of instruction is clearly in the Bill, and even though it may be argued that the present Secretary of State is so reasonable that he would never use it except as a reserve power, the fact is that it is in the Bill, and if it is intended to be a reserve power, then I would hope again on this issue that the Government themselves would bring in an amendment to make that quite clear.

However, we must deal with the words in the Bill as they are at present and that has been made perfectly clear by various legal judgments. We cannot rely upon statements by any Minister, however, honourable and however much we may respect him or her. A power is in the Bill to give instructions for disposal. All we are asking in this amendment is that where such a direction is given, it should be by affirmative resolution of both Houses of Parliament. I beg to move.

Lord Bellwin

We have already made it known that we see the power of direction conferred on the Secretary of State by Clause 3 of the Bill as a reserve power. It is our object to see agreement between the Government and the National Bus Company over the introduction of private capital. All the signs are that this is possible on the basis of progress made so far. It may be that we shall have some differences with the company along the way. It would be naive of us to expect none. However, I hope that mutually acceptable solutions will be found.

As I have already said, we believe that there are positive benefits to be gained from private investment in NBC, both for the company and the travelling public. But in the last analysis the Government's policy is guided by their perception of the wider public interest. So it has been decided to include a power of direction in the Bill to carry the policy through should there be an irreconcilable difference between ourselves and the company.

The taking of a power of direction by the Secretary of State over a nationalised industry is hardly a novel departure. There are many examples of such powers in the statutes. However, what is proposed in this amendment would, indeed, be novel—certainly as far as the nationalised transport industries are concerned. It would require the Secretary of State to secure an affirmative resolution of both Houses of Parliament before any direction he might give to the bus company would come into effect. This is at odds with the principle that Ministers are entrusted with the responsibility for the nationalised industries which they sponsor. They are, of course, answerable to the House for the way in which they exercise their responsibility.

It does not seem to me to make sense to separate off one piece of this responsibility—such as a direction issued under Clause 3 of this Bill—and make it subject to a specific resolution of the House. I repeat, that there are many other ministerial powers of direction in relation to the nationalised industries, all of which may be exercised without reference back to Parliament. Therefore, I hope that the noble Lord will see the force of this argument and not press his amendment.

Lord Balfour of Inchrye

I should like to support this amendment. The Minister gave as his defence for the Government's proposal for the negative procedure for orders, that orders for nationalised industries had always been subject to the negative procedure. That is quite true. But this is the first time that there has been a new amalgam between private and nationalised industries and I would submit to the Minister that we should seriously consider the power that we are giving to Parliament by the proposal to have the negative procedure. It raises the big issue of the power of the executive against the power of Parliament--the power of the executive under circumstances which have not been cited before. This is what I term this new amalgam.

If I may have the Minister's attention, we have heard much this afternoon about the great powers which the Minister can exercise, which will have an effect on many private enterprises in which the Government are a minority partner. It is quite true that the Minister will have the requirement to consult the various bodies cited in this clause. But the fact is that, whether or not he consults—and I am sure he will if he is told to by Parliament—the final power rests with the Minister. We are virtually giving him a blank cheque on this.

Many noble Lords have been in another place, as I have, and we know full well that there is an affirmative procedure and there is a negative procedure; in ordinary slang you can say that the negative procedure is, in fact, to pass something on the nod, because when an order is questioned under the negative procedure it comes on late at night after other business, when both Members and Ministers are tired, and it is virtually a non-existent safeguard. However, the affirmative procedure is a very definite safeguard for Parliament's rights over matters which will affect the welfare of many citizens, both in employment and in their daily lives. Therefore, I very much hope that the Government will not treat this as something coming under the umbrella of previous cases of nationalised industries, but will accept that this is something new and different and. therefore, will think again as to whether they should push Parliament in the corner and do what they want by order.

Lord Mishcon

I should like to echo in this Chamber every word of the noble Lord, Lord Balfour of Inchrye. It is worse than the noble Lord thinks. I stand to be corrected, but, as I understand it, not even the negative procedure is provided for under this Bill. This is a case, not of the new amalgam, as was mentioned a moment ago by the noble Lord, but a question of the new despotism.

Lord Balfour of Inchrye

I was endeavouring to discount the value of safeguards in the negative procedure, whereas in the affirmative procedure Parliament can express its wish.

Lord Mishcon

I am saying to the Committee that not even the negative procedure is provided for under this Bill. In other words, complete power is given to the Secretary of State not to come anywhere near Parliament in the following circumstances, to which I shall briefly allude.

This power is only of use under the Bill if the National Bus Company has decided that it does not wish to use the powers under Clause 1 or Clause 2; that is, it has decided that it does not wish to dispose of an undertaking, an asset or shares. Only then, of course, from a practical point of view, does this power to the Secretary of State come into existence at all. Therefore, what the noble Lord the Minister described—and I use his language—as a matter of the wider public interest is no longer a matter for the elected representatives in another place to discuss or for your Lordships to discuss in regard to the overall responsibilities of this House. It is a question purely and simply for the Secretary of State, and by a stroke of his pen he can order the National Bus Company to disregard what it thinks to be the wider public interest and to sell its assets, undertakings, or whatever it may be.

This is a complete negation of all that I believe your Lordships understand by the simple word "democracy". In those circumstances, I hope the Minister will realise what he is doing if he in fact tries to oppose this amendment.

Lord Davies of Leek

I am very worried about this. I spent 10 to 13 years as a member of the Statutory Instruments Committee in another place, and I believe that the vital importance of a statutory instrument to democracy and to the Houses of Parliament is being overlooked. I see a gradual tendency to say "There is nothing to worry about; no Minister will do this, no Minister will do that, be he Labour, be he SDP or whatever newfangled political parties come into existence".

We have built up this kind of safeguard in statutory instruments over a century or two of trial and error, and it has proved effective. It is a safeguard for the public. The powers of Parliament are dwindling, and this is another example which has been slipped into the Bill bit by bit. I say this without any venomous or vicious political party point of view. It is highly necessary for all good people now to come to the rescue of democracy, because bit by bit we are seeing it being eaten away by the abolition of the safeguards of statutory instruments. I could make a long speech, but it would bore the Committee. I have made my point and it is crystal clear. We should vote against this, whatever the outcome may be.

Lord Mishcon

We should vote for the amendment.

Lord Davies of Leek


Lord Bellwin

If ever I have heard of a mountain being made out of a molehill, this really is it. I always delight in listening to the noble Lord, Lord Davies of Leek, if only for his rhetoric, and he knows this. But we are going off at a total tangent. Who would have thought that here was something new, to quote the noble Lord, "being slipped into the Bill"—some sinister attempt to introduce a new "amalgam", as my noble friend called it—something new. There is a mass of precedent. It is most unfair to imply that here is something that is for the first time before us, some sinister new attempt—for what was it the noble Lord, Lord Davies, said?—"All good people come to the defence of democracy". I trust he was saying the same thing when the nationalisation measures were being brought in by his administration.

The fact is that this is absolutely normal procedure in regard to the extent to which Ministers have powers of direction in relation to the nationalised industries, all of which may he exercised without reference back to Parliament. If I am asked to quote an example, then the quickest to come to mind are the British Rail Act 1981, and the present Oil and Gas Bill. There is a mass of precedent in any case. I could quote from other Acts too.

Lord Mishcon

The noble Lord the Minister will forgive me. It may be that I have made a wrong intervention and I apologise if I have done, but he is the last person who would want to mislead the Committee. Is the noble Lord saying that under the Oil and Gas Bill there was not the necessity to have a statutory instrument even by the negative procedure? I say it because I was arguing the case for the affirmative procedure. It may be that I am wrong, but my recollection is that there was a negative procedure that was required. Therefore, the noble Lord the Minister is unintentionally misleading the Committee.

Lord Bellwin

I am not aware that I am misleading the Committee. Certainly I would not do so intentionally. I would not want to do so unintentionally. But I am advised in fact that the situation which I describe is the case in the Oil and Gas Bill. If it should not be so, then of course the noble Lord knows that I will see that that assertion is corrected. The fact is that it does not alter the basic tenor of what I am saying and which so concerns my noble friend Lord Balfour. Here is nothing that is new and that is here for the first time. The amalgam to which he refers is not new at all. This is normal procedure. If we were to divide on this amendment and it were to be carried, then it has implications of massive scale. I really would ask the noble Lord to think carefully before he divides the Committee, because if he does I would have to say that we should wish to differ strongly with him on this.

Lord Mishcon

I must return to the fray, if only for one minute. The noble Lord the Minister—and I am not going back on the point about the Oil and Gas Bill, or any other precedent—is asking the Committee to consider this issue: if there is a quarrel—because it could not be anything else—or a dispute between the National Bus Company and the Secretary of State as to whether it is for the public good, the wider public interest, which the Minister mentioned, as to whether assets should be sold, or shares should be sold, the Secretary of State decides and not Parliament, and not even a reference by the negative procedure, I say to the Committee, is to be allowed. I know of no precedent for that. If there is such a precedent, I say that it is a bad one and we ought to start setting the precedent the other way round.

Lord Underhill

The Minister has said that if this was carried it would have implications of massive scale. I would ask the Committee to let us have the implications of such a massive scale. Surely the logic which my noble friend Lord Mishcon has just put forward to the Committee cannot be answered. The Minister has confirmed that this is only a reserve power. He said that he hoped there would be sweet reasonableness and hoped there would be an agreed solution, but then, as my noble friend Lord Mischon says, there could be an argument. The minister then says," I don't care what you, the National Bus Company, say, or what the county council concerned say. I am now instructing you".

Surely in those circumstances Parliament ought to be able to say, "You are doing the wrong thing", or, "You are doing the right thing". Even if the Minister would say on behalf of the Government that they would have a look at this to see whether they could make provision even for the negative procedure, that would be something, but there is not even provision for that. There is provision for quite a number of other orders by negative procedure in this Bill, but nothing at all about this.

I do not believe that, as the Minister said, we are making a mountain out of a molehill. This is an important point. We took this stand on the 1981 Bill on the sale of British Rail subsidiaries. We lost on that occasion, but I believe there has been a more effective debate on this occasion, and that the issue has been shown to be so logical and such an important constitutional one that we shall ask the Committee to divide and support this particular amendment.

5.15 p.m.

On Question, Whether the said amendment (No. 6) shall be agreed to?

Their Lordships divided: Contents, 53; Not-Contents, 82.

Airedale, L. Bishopston, L.
Ardwick, L. Blyton, L.
Aylestone, L. Boston of Faversham, L.
Birk, B. Brockway, L.
Brooks of Tremorfa, L. Listowel, E.
Bruce of Donington, L. Llewelyn-Davies of Hastoe, B.—[Teller.]
Byers, L.
Cledwyn of Penrhos, L. Longford, E.
Collison, L. Lovell-Davis, L.
Cooper of Stockton Heath, L. Melchett, L.
Mishcon, L.
Cross, V. Molloy, L.
David, B.—[Teller.] Ogmore, L.
Davies of Leek, L. Oram, L.
Denington, B. Peart, L.
Donaldson of Kingsbridge, L. Phillips, B.
Rhodes, L.
Ewart-Biggs, B. Stamp, L.
George-Brown, L. Stewart of Alvechurch, B.
Hall, V. Stewart of Fulham, L.
Hampton, L. Stone, L.
Hatch of Lusby, L. Tanlaw, L.
Houghton of Sowerby, L. Taylor of Mansfield, L.
Howie of Troon, L. Underhill, L.
Irving of Dartford, L. Wells-Pestell, L.
Jenkins of Putney, L. Wigoder, L.
Kennet, L. Wootton of Abinger, B.
Kilmarnock, L. Wynne-Jones, L.
Airey of Abingdon, B. Lane-Fox, B.
Alexander of Tunis, E. Lauderdale, E.
Ampthill, L. Lindsey and Abingdon E.
Atholl, D. Long, V.
Auckland, L. Lucas of Chilworth, L.
Avon, E. Lyell, L.
Belhaven and Stenton, L. McFadzean, L.
Bellwin, L. Mackay of Clashfern, L.
Belstead, L. Macleod of Borve, B.
Boardman, L. Mancroft, L.
Campbell of Alloway, L. Marley, L.
Coleraine, L. Merrivale, L.
Colwyn, L. Mersey, V.
Cottsloe, L. Mottistone, L.
Croft, L. Murton of Lindisfarne, L.
Cullen of Ashbourne, L. Newall, L.
Daventry, V. Nugent of Guildford, L.
Davidson, V. Orkney, E.
De Freyne, L. Orr-Ewing, L.
Denham, L.—[Teller.] Pender, L.
Dilhorne, V. Portland, D.
Eccles, V. Rankeillour, L.
Ellenborough, L. Reigate, L.
Elliot of Harwood, B. Roberthall, L.
Ferrers, E. St. Davids, V.
Fortescue, E. Sandford, L.
Fraser of Kilmorack, L. Sandys, L.—[Teller.]
Gainford, L. Sempill, Ly.
Glasgow, E. Sharples, B.
Glenarthur, L. Skelmersdale, L.
Glenkinglas, L. Spens, L.
Gormanston, V. Stodart of Leaston, L.
Gray, L. Swinfen, L.
Greenway, L. Terrington, L.
Grey of Naunton, L. Thomas of Swynnerton, L.
Gridley, L. Trefgarne, L.
Grimston of Westbury, L. Trumpington, B.
Hailsham of Saint Marylebone, L. Vaux of Harrowden, L.
Vivian, L.
Home of the Hirsel, L. Ward of Witley, V.
Hornsby-Smith, B. Young, B.
Hylton-Foster, B.

Resolved in the negative, and amendment disagreed to accordingly.

5.23 p.m.

Lord Underhill moved Amendment No. 7:

Page 4, line 3, leave out subsection (3) and insert— ("(3) No direction shall be given to the Bus Company under this section which limits or prevents the exercise by the Company of any of the duties placed on the Company by section 24(2) and (3) of the Transport Act 1968.").

The noble Lord said: On the last amendment we were discussing the powers given to the Secretary of State to give directions to the NBC to dispose of the whole or part of any subsidiary. Subsection (3) provides: It shall be the duty of the Bus Company (notwithstanding any duty imposed on them by section 24(2) or (3) of the Transport Act 1968) to give effect to any directions given under this section".

I ask noble Lords to note the word "duty", not "power"; Parliament placed these duties on the NBC when it passed the 1968 Act.

On referring to the relevant provisions of that Act—I will paraphrase—we find that subsection (2) places a duty on the company to co-operate with the transport executive for any area in making an agreement as to services to be provided by the NBC or their subsidiaries; and subsection (3) places a duty on the company or through their subsidiaries to co-operate with British Rail or London Transport in the coordination of passenger transport services. It will be clear that those duties should be retained. It surely cannot be right that the Secretary of State should have power to instruct the company to dispose of a subsidiary which may prevent them or the subsidiary from carrying out the obligation to make an agreement with an executive in relation with the provision of services. The private company which may take over from an operating subsidiary of the bus company could not be instructed to enter into such an agreement; at least, my understanding is that that could not be done without further legislation, because such an agreement could involve some loss-making services being retained.

It must also be wrong to provide that the Secretary of State can give directions to the bus company for a disposal which may inhibit the company or a subsidiary from continuing an arrangement for the co-ordination of transport services. Again, without further legislation I understand that a private company could not be compelled to take over such arrangements. And even were it possible to insist that a private company which may take over the whole or part of a subsidiary must carry out those duties placed on the NBC by the 1968 Act, surely such a company could not be compelled to run unprofitable services.

The Bill does not include any provision for accountability, yet there are sweeping powers to give directions to the National Bus Company, even though to do so might conflict with the duties —and I say "duties", not "powers"—placed on the company by the 1968 Act. The proposal in the Bill can be said to be by way of incidental legislation which would transcend the primary legislation clearly laid down by Parliament when it set up the NBC under the 1968 Act. In effect, the amendment turns round Clause 3(3). The Bill provides that the bus company must give effect to any directions, notwithstanding any duties placed on the company by the 1968 Act. The amendment seeks to turn that round to provide that no direction shall be given to the bus company which might prevent the company from excercising the duties placed on them by the 1968 Act.

Lord Beliwin

The first part of the amendment would delete from the Bill the requirement in Clause 3(3) that NBC should be under a duty to give effect to a direction from the Secretary of State. Clearly, there can be little point in enabling the Secretary of State to give a direction, without imposing a corresponding legal obligation on the recipient to comply with that direction. I cannot believe that any Government, of any political persuasion, could accept a situation where the recipient of a ministerial direction could choose whether or not to comply with it

The second part of the amendment refers to N BC's duties under Section 24 of the Transport Act 1968. The relevance of these duties to our policy of introducing private capital into NBC's coach and property interests has been much exaggerated. Section 24(2) of the 1968 Act puts NBC under a duty into agreements with passenger transport executives for the reorganisation of local bus services. Those agreements have in fact been in place for some time, and they would not be brought to an end by the Bill. Section 24(3) requires NBC to co-operate with British Rail, London Transport and the Scottish Bus Group in co-ordinating passenger transport services. In practice, the main importance of this duty has been in the provision of rail replacement bus services, and these, too, would be unaffected by the Bill.

The provision in Clause 3(3) that the bus company's duty to give effect to a direction should override its duties under Section 24 is there for the sake of legal clarity. For the reasons that I have explained, a major clash is most unlikely, but it is desirable that the Bill should make clear which duty should have precedence in the event of such a clash, if only to avoid the possibility of a spurious legal challenge. For those reasons, I regret that the Government cannot accept the amendment.

Lord Underhill

The Minister has said that the amendment would give authority to the National Bus Company to refuse a direction. I readily admit that that might be an error in the drafting; clearly, that is not what is intended. What we wish to lay down is that the Minister shall not give a direction if it is against the duties placed on the bus company under the 1968 Act. The noble Lord said that the duties, not powers—I must not use that word—laid down in the 1968 Act would not be affected by the proposals for disposal in the Bill.

We shall have to look very carefully at what the Minister has said. It would appear to me that if an operating subsidiary dealing with stage carriage services in, say, Cumberland was disposed of, there might well arise a conflict in regard to the duties imposed on the company or its subsidiaries by one of the provisions of the 1968 Act. Therefore, we shall have to consider very carefully what the Minister has said and see whether or not this is an important issue to which we ought to return. It appears to us that anything which makes the bus company set on one side the duties that are placed on it by the 1968 Act, ought to be avoided. As I say, we shall have to read Hansard in order to consider carefully what the Minister has said, and then decide whether to return to the amendment, either in this form or in a revised form, at Report stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 3, as amended, shall stand part of the Bill?

Lord Bellwin

I wonder whether I may make just one observation at this stage. When we were discussing Amendment No. 6, I think, I referred to the Oil and Gas (Enterprise) Bill and the procedure therein. I think that I ought to correct something that I said at the time. I was advised that there was no requirement placed on Parliament, even by way of the negative resolution procedure. In fact, I am now informed that there is a requirement in the Bill. I should not in any way want to mislead the Committee, and so I thought that I should take the opportunity to apologise for the misstatement, and I readily do so.

Lord Underhill

We are very grateful for the Minister's statement.

Clause 3, as amended, agreed to.

5.34 p.m.

Lord Underhill moved Amendment No. 8: After Clause 3, insert the following new clause:

("Development of the Bus Company's property.

.—(1) Nothing in this Act shall alter the power of the Bus Company to enter into financial agreements with any public authority or private company for the development of any property of the Bus Company.

(2) In this section "public authority" means a nationalised industry or local authority.").

The noble Lord said: We now pass to the question of properites of the National Bus Company, which we understand have a book value of £100 million. The Government have stated quite clearly—and this was confirmed by the Minister on Second Reading—that the disposal powers under the Bill will at present apply to National Express, National Holidays, and to the properties of the Bus Company. On Second Reading the noble Lord, Lord Bellwin, said that the provisions would enable the development potential to be unlocked. through a partnership with the private sector". However, it would appear that the Government are not proposing partnership, because the Bill provides for disposal of "the whole or any part" of any subsidiary to be set up. The Government are proposing that the National Bus Company shall have a minority holding in any such subsidiary. Therefore, if there is to be a partnership, it will be a junior partnership, not a senior partnership.

Also at Second Reading the noble Earl, Lord Avon, referred to a statement that I had made in the same debate that the National Bus Company already had powers in relation to the development of its property. At col. 755 the noble Earl said: He is of course quite correct in saying that NBC already have some powers to develop their properties, for example, in joint venture with the private sector". The noble Earl went on to say: What the company lack, however, is the power to establish and sell shares in a subsidiary for the purpose of such development".

Why should there be necessity for disposal of shares?—especially as the Government are to insist that the National Bus Company shall retain less than 51 per cent. Surely there should be joint development in accordance with existing powers without there being a sale of shares as such. I understand that a recent development has been undertaken in that way by the the National Bus Company. Disposal even with arrangements for possible leaseback would place the National Bus Company in a far less favourable position than if it retained actual ownership, with advantage of future appreciation of values. That was the view taken on this side of the Chamber when we debated British Rail property in the 1981 Bill. Sir Robert Lawrence, chairman of the BR Property Board, said on 17th April 1981, prior to the passage of the 1981 Act: But it should not be forgotten that once land is sold, its income or its potential income, is lost to the railways forever. We have sold property which in a different climate we might have retained for its growth potential". We could say that that might apply to National Bus Company property.

The amendment seeks to write in a provision that nothing in the Bill shall alter the power of the Bus Company to enter into…agreements with any public authority or private company for the development of National Bus Company property.

We are not rejecting the proposal for private investment. We are saying that the existing power to enter into development agreements must be allowed to continue, instead of relying solely upon actual disposal of the property. I beg to move.

Lord Bellwin

I think that I should be able to assure the noble Lord, Lord Underhill, that his proposed new clause is unnecessary. As he says, there is no difference between us on the end objective. Nothing in the Bill alters or limits in any way NBC's powers to develop its property in conjunction with other public authorities, be they other nationalised industries, local authorities, or other publicly-owned bus operators, such as the PTEs. Such developments are frequently a sensible way of making best use of an NBC site, and the Government wish to see them continue. Indeed, we have said so explicitly in the first words of Part 1 of the Bill, Without prejudice to any powers conferred on them by any other enactment". The point of the Bill is not to restrict what NBC already does. It is to allow it the freedom to develop new ways of unlocking the potential of its property assets. The chairman of NBC, the noble Lord, Lord Shepherd, has himself said that, passenger facilities are not always of the highest standards, and NBC would positively welcome the involvement of private capital in improving these". NBC needs the powers in the Bill in order to complete the range of options open to it for developing its property in conjunction with private sector partners; for example, by selling a controlling interest in a subsidiary established to develop a specific site. By entering into arrangements of this kind, NBC will be able to widen the sources of capital for investment in bus properties at no cost to the taxpayer.

I do not think that there is a great deal between us in relation to the development of NBC property. I hope that I have persuaded the noble Lord that his amendment is already catered for in Clause 1 of the Bill, and therefore I trust that he will feel able to withdraw it.

Lord Tanlaw

I wonder whether the noble Lord can give a further reassurance, since 1 think he gave an assurance during Second Reading of the Bill. The disposal of properties in order to raise finance for both the railways and the bus companies is one matter. The other matter which I raised was that of an integrated transport system, whereby a terminal in a city or town or the metropolis is one where you can catch a train, a bus, a Tube and so on. This is one of the points which has not come out at all.

The noble Lord has given assurances that these property disposals will be made sensibly, with PTEs and so on. But what I have not heard the noble Lord say—no doubt it is due to my fault rather than his—is that it is the policy of Her Majesty's Government to have an integrated travel terminal in cities for the benefit of passengers. I am sure the noble Lord is aware that it is an incredibly inconvenient system that we have at the moment, due to historical reasons, with the bus stations put at a considerable distance from the railway stations and passengers unable to switch; and certainly so on days like today.

All I am asking, with the help of this amendment moved by the noble Lord, Lord Underhill, is whether it is Government policy to have these travel centres of an integrated kind in our cities, and, if that is the case, then will he give an assurance that this Bill, as well as the Railways Bill, will be used to see that these properties actually emerge through the disposals of both the railways and the Bus Company?

Lord Bellwin

I do not quarrel at all with the basic tenet of what the noble Lord, Lord Tanlaw, says. I would not have thought that what we are talking about on this amendment, in this part of the Bill, was relevant to his point, other than that it would bring us to a state in which the Bus Company could then do the things that it wants to do with regard to its properties; and I say again that nothing in the Bill in any way changes or detracts from its present powers. It is to bring an additional new scene (if you like) into the whole area of this kind of possibility.

Other than to comment in general on what one might like to see in the way of an integrated situation, which clearly would be a good thing to have, although I want to say something to persuade the noble Lord that he need have no fears so far as this proposal is concerned I think I would have to say that I do not think that this particular measure will contribute a great deal towards it. I think that is something which will have to develop as part of the whole philosophy that we arc trying to see—and what is that? We are looking for (and I use the word again, if I may) scenario, where we have a greater scope for the National Bus Company to work in conjunction with the private sector to (if you like) make the most of its resources.

That may be, in some cases, by selling the property and taking the funds and applying them to some other developments which they may feel are in the interests of what they are seeking to do. That would be one situation. There may be others as well, which I can think of, and I am sure the noble Lord himself can think of many more, in that he has expressed his concern that there should be greater integration.

But what this amendment does, I think, is to, express a concern which I think may not be there, because the clause really takes care of it. I am sure the noble Lord, Lord Underhill, will want to consider that again carefully, but that would be my response to him on the amendment.

Lord Underhill

I am grateful to the Minister for that assurance, and we shall read very carefully what he has said. It should be borne in mind that we are not opposed to the development of proper schemes. In fact, I believe a press notice was issued only recently, a few days ago, which said that the Bus Company had entered into an agreement with its own pension fund for the development of a particular property without requiring any instructions at all, either from Parliament or from the Secretary of State.

The point raised by the noble Lord, Lord Tanlaw, is a very valid one, and this could be the sort of issue on which there could be conflict between the Bus Company and the Secretary of State on a disposal and which might require the type of affirmative decision that this Committee unfortunately rejected on a previous amendment. But I will take careful note of what the Minister has said, and I beg leave to withdraw the amendment at this stage.

Amendment, by leave, withdrawn.

Clause 4 [Provision of services for related companies]:

On Question, Whether Clause 4 shall stand part of the Bill?

5.45 p.m.

Lord Underhill

May I ask the Minister just a few points on this? Clause 4 is the one which deals with the provision of services for related companies, whereby the Bus Company can, I understand, enter into any commercial agreement with a related company—that is, one to which it has disposed of property—to provide maintenance services, and so on, to the related company. May I ask: If the services are to be permitted to a related company, could there not also be powers to the National Bus Company to give similar services on a commercial basis to any other body, provided, of course, it is not a competitor of the National Bus Company, which they would not wish to do?

Furthermore, Clause 4 provides that "related company" means a company in which the Bus Company has at any time had an interest of not less than 20 per cent. With the passage of time, it could be many years previously that the Bus Company had had an interest in this related company, and that would be more important to the point that I have raised. If such a facility is to be given to the National Bus Company to make such an agreement on a commercial basis, is there any reason why this facility should not be extended to enable the National Bus Company, in its wisdom, to give a similar service to another undertaking, bearing in mind that the related company might be one in which the Bus Company had a 20 per cent. interest many years previously?

Lord Bellwin

This clause in fact serves two purposes. It defines "related company" for the purposes of this clause and for Clause 5, and it confirms that the NBC may provide for any related company services which they have power to provide for any of their subsidiaries. It would be unreasonable to give NBC an unfettered power to provide management-type services for any company in which they had ever held an interest, no matter how small. The distinction therefore strikes a balance by allowing NBC to provide services to any company in which they hold or have held at least 20 per cent. of the ordinary issued share capital, either directly or through nominees or subsidiaries.

The essential point is that NBC will be able to continue to provide services to a previously wholly-owned subsidiary transferred to private onwership. The clause will ensure that NBC's regional operating companies can continue to provide shared facilities for the coaching businesses when they are in private ownership. The decision whether to offer services to a related company, and the terms and conditions, will be a matter for NBC's commercial judgment. Whether to buy the services will be a matter for the related company to decide. I hope the noble Lord will perhaps find the extra clarification helpful.

Clause 4 agreed to.

Clause 5 [Pensions for employees of related companies]:

Lord Underhill moved Amendment No. 9:

Page 4, line 30, at end insert— ("Where the Secretary of State is requested to do so by the trustees of a pension scheme of the National Bus Company or a trade union or trade unions with negotiating rights for members who are covered by the pension scheme, he shall use his power under subsection (I) above to make an order requiring that the terms and conditions of the pension scheme which shall be offered by the employer to whom the subsidiary of the National Bus Company is transferred shall not be less favourable than those which were provided for those employees by the National Bus Company of which they were members.").

The noble Lord said: This clause relates to the question of pensions, and I am certain that all noble Lords will agree that this, in particular, is a matter on which there should be no party arguments whatever. The transfer of employees from one undertaking to another always creates problems, particularly in relation to pensions, and more so where an employee is compulsorily transferred. Various amendments were put forward at the Committee stage in another place, during which the Minister said that pensioners' existing accrued rights cannot be terminated. But, of course, what the individual is seeking is to carry his pension expectation through into the company to which he is transferred, and I would ask what rights there would be for the employee so transferred without some statutory provision.

The Under-Secretary, Mrs. Chalker, on 18th March, during the Committee stage in the other place, said at column 328: Clause 5 will allow the Secretary of State to make orders applying to a privatised subsidiary—in the terms of subsection (1) a 'related company'—during such a transitional period as I said that the Inland Revenue would allow before the details of the privatised subsidiary pensions arrangements became clear". The Minister continued: For example, an order might be made ensuring that the related company continued to make adequate payments to the NBC pension fund for…interim period". And the Minister stated also that the Secretary of State was debarred from making an order which might worsen the pension entitlement of employees, quoting Section 74(6) of the Transport Act 1962, the terms of which I have before me. Mrs. Chalker also stated (in col. 331). But if the Secretary of State was required to make an order, virtually dictating to the purchaser what should happen, it would present an unnecessary statutory straitjacket, which is not required by virtue of section 74 of the 1962 Act". She stressed that pension arrangements will be a matter for negotiation between the new employer and the workforce so there could be conflict between not worsening the employees' pension rights under the 1962 Act and not worsening the position of the new related company as provided in this clause. This was clearly explained by the Under-Secretary of State, Mrs. Chalker, at the Committee stage on 18th March in another place at column 353, which I should like to quote: If an order makes the position worse, there is a requirement under section 74(6) of the 1962 Act to put the matter right, because the order would be invalid. If the amending order put right the worsenment of the related company, but worsened the position of its employees, it would again be invalid by virtue of section 74(6) of the 1962 Act. Therefore, the Secretary of State would be required to try again. He must not worsen the position of the employees by putting right the worsenment of the company. He must put both matters right". Mrs. Chalker was then asked how the position of the employees would be safeguarded. The Minister replied that if necessary the Secretary of State would make an order. When the Minister was pressed to write such an assurance into the Bill, it was said that by the Report stage in the other place she hoped she would see if it was possible to find a form of words; but the Minister added that the Bill can affect expectations but cannot affect established rights. At the Report stage, on 20th May, the Minister proposed an amendment and this appears in the present Bill before the Committee as subsection (2) of Clause 5: In exercising with respect to any pension scheme the powers conferred by this section, the Secretary of State shall take into account any representations made by the persons administering the scheme". That clearly did not clarify the position that had been raised at Committee stage. The Minister stated this in putting forward that amendment, in column 754: We were also pressed in Committee to amend the Bill to oblige the Secretary of State to use his order-making power in certain circumstances. We have, as I promised, given due consideration to that proposition, but we concluded that the clause should remain discretionary in line with the principal order-making power in section 74 of the Transport Act 1962". That clearly does not put the position right as discussed in the Committee stage of another place. The present amendment seeks to ensure the statutory protection of those compelled to leave employment with NBC in consequence of any disposal under the provisions of the Bill and provides that, should the trustees of the pension fund or the appropriate trade union consider it necessary, the Secretary of State shall make an order to protect the pension position under any scheme offered by a new company to provide that such a pension scheme shall not be less favourable than that with the National Bus Company. A difference would appear to be with the Government: first, the Bill provides for disposal; employees may be compulsorily transferred to a private company and their pension must be protected, we argue. The Government say this must not place the prospective purchaser in any straitjacket but says that any order-making power to deal with the situation shall be discretionary. What the amendment is seeking is that it shall be the duty of the Secretary of State to make an order in the circumstances I have outlined.

Lord Bellwin

One might put it a different way by saying that the proposed amendment would enable the trustees of an NBC pension fund or trade unions representing members of such funds to dictate, through the agency of the Secretary of State, the terms of the pension scheme to be offered to employees of an NBC subsidiary transferred to private ownership. He could be required to make a pension order to ensure that employees would enjoy the same pension expectations as if they had remained NBC employees.

The Government are not willing to see this kind of statutory interference in private occupational pension arrangements. The sole purpose of Clause 5 is to provide the Secretary of State with a means of ironing out any technical difficulties over pension arrangements for employees of a subsidiary to be transferred to private ownership. It is there to enable a smooth transition to be made from the public to the private sector.

As was explained during our Second Reading debate, the responsibility for establishing new pension arrangements will, in the first instance, rest with NBC. Subsection (2) of Clause 5 already enables trustees of a pension fund to make representations to the Secretary of State about the need for or terms of pension orders. Doubtless, NBC, as part of the process of establishing a new scheme, will consult trade union representatives through the normal negotiating machinery. That is how it should he. It is in everybody's interest that any new scheme is acceptable to the employees.

I should make it clear—and I welcome the opportunity to say this, and I must say that so did the noble Lord, Lord Underhill, in what he was putting forward—that nothing in this Bill could conceivably affect pensions which are already in payment to former NBC employees. Nor could it affect any employee's accrued rights for past service. The only issue is who should determine future pension arrangements once a subsidiary is in the private sector. The Government believe that the right course is to leave pensions matters to be determined in negotiation between company and workforce within the existing statutory framework—without interference from Westminster or Whitehall. For that reason, we are opposed to the amendment.

5.59 p.m.

Lord Byers

May I intervene in this? I took some interest in the debate which occurred in another place. Over the last 10 years, as some noble Lords may know, I have been chairman of the Company Pensions Information Centre and we have had a good deal of experience. Our experience indicates that, while this is a laudable amendment, in practice the Government are right and I should like to detain the Committee for two or three minutes to say why.

The amendment seeks to ensure that the employees of NBC are no worse off in pension terms after denationalisation than they are now. On the face of it, that is a laudable aim which most of us would say at once was a good idea. The fact is that, far from protecting the former employees of NBC, I believe we will seriously mislead them and, what is worse, if these amendments are included in the Bill, we may be creating conditions in which the new private sector companies cannot avoid bankruptcy because of the burden that this Bill is imposing on them. This is the aspect on which I want to speak.

I give three reasons for this. First, even where an undertaking remains nationalised and where pension provisions are laid down in an Act of Parliament, there is no guarantee that the benefits provided in the future will never be less favourable than the benefits provided today, because no Government can bind their successor, and what appears reasonable at one stage may not be reasonable at a later date. We have a very good example of this. We have seen such changes made to the biggest pension fund of all, the state fund. The 1975 Social Security Pensions Act provided that the basic state pension would rise in line with earnings or prices, whichever increased faster. The link to earnings has already been removed by the Government by later legislation, and the link now is to prices only. There is no guarantee for the future whatever you write into statutes.

My second reason for saying that guarantees which appear attractive could in fact be unrealistic is that Governments can raise money by taxation, but private sector employers have no such avenues open to them. A private sector employer cannot prudently make pension promises over and above those which the profit from selling his goods or services will support. I believe that to do anything other than that is to raise false expectations on the part of the pensioners.

My third reason is that private sector employers, just as much as Governments, must have regard not only to what they can pay now, but to what they may be able to pay in the future. That is why the great majority of pension schemes, the best pension schemes, contain in their formal documents a provision to the effect that it is hoped to carry on the scheme indefinitely but because future business conditions cannot be foreseen, the management must have the right to amend or discontinue the scheme at any time, subject to satisfactory safeguards being applied to the benefits already accrued, which was the point made by the noble Lord, Lord Bellwin.

In arguing against this amendment, which seeks to impose an open-ended guarantee, I am not seeking to penalise the members of the pension schemes in question. I am asking the proposers of the amendment to face up to the risks inherent in running a business. The best way to protect the interests of employees is to ensure that the promises which they receive from their employers are confined to those which the employer can afford and not to those which could lead to his goods and services being priced out of the market.

In very simple terms, I believe that the future of a pensions scheme under a change of management must be left to negotiation between those who represent the workers and the employers themselves, advised by their accountants and in the light of what they feel is going to be the future. Their accrued rights up to that point will be guaranteed. There is no question about that; that is a matter of law. I honestly believe that although this amendment looks very good indeed on paper, it should be resisted.

Lord Teviot

That was a most interesting intervention by the noble Lord, Lord Byers. But before one gets on to the business about the merits of this amendment on pensions being safeguarded, I should like to ask my noble friend this question. He may prefer to write to tell me what pension arrangements there are for the non-clerical staff of the National Bus Company. I suspect that there are very few unless the situation has changed very much in the past 15 years.

The situation was most appalling. There was no contributory or non-contributory pension scheme. They had difficulties in getting staff and I blame the trades union as well as the company for not getting together on this matter and seeing that there was a proper pension scheme. People who worked for as much as 40 or 50 years—I remember it happening—retired, and on their very last day they were ushered upstairs into the presence of the great man, the managing director, or the chief general manager, and they were shaken warmly by the hand and were given a cheque which was £1 per year of service ex gratia payment. I should like to know, in talking about pensions, what pensions schemes there are.

Lord Bellwin

Clearly, I cannot off-hand give a list of what the pensions arrangements are. I shall gladly write to my noble friend about that. I should be very astonished if the situation that he describes still pertains today. I shall gladly write to him about that matter.

Lord Mishcon

Naturally, one listens with the greatest patience and appreciation when the noble Lord, Lord Byers, with his great experience, talks about a matter of this kind. Therefore I hope that he will realise that I have that respect when I make the following observations: if one were facing a situation where one was taking a firm indulging in private enterprise merging with or being taken over by another firm, the arguments about negotiations, about the fairness of the position where there are those who can negotiate on behalf of the employees with the employers, is a very sensible argument to make. The question of being able to afford these arrangements is also a very sensible argument to put forward.

At this moment, I must confess that I have a nostalgic feeling—I hope the Minister has it as well. I can remember the noble Lord handling his very first Bill in this House with a capability which I looked upon then with the utmost foreboding, because on that Bill he dealt with me and my noble friend Lord Underhill on the matter of pensions. I hope that one or other of us by the end of the debate knew what we were talking about. I am not going to suggest which one it might have been.

I next remember the noble Lord the Minister dealing with local government legislation. My noble friends and I pleaded for something to go in a Bill which dealt with consultation with various authorities. The Minister brushed the arguments aside and said how foolish to put in a Bill that people would consult! What did it mean? Of course they would consult as a matter of courtesy. What was the point of having it in legislation? Well, I notice that he is now faced with a subsection, which has been put in most generously by his Government, which talks in just those terms of consultation and nothing more. The employees are not very much protected on the Minister's own arguments on other Bills by the mere process of consultation.

I shall tell the Committee what is in my mind, and I hope I shall be concise about it. I am thinking of the older employee, not the younger one. In order to differentiate this from the type of case that I first talked about in regard to private enterprise, I am thinking of the choice which has been made by many employees as to whether they will go into private enterprise with all the risks both ways. There is the chance that businesses can fail and that the job is not secure. On the other harm, with private enterprise there is the possibility of ascending in the scale of employment which may be very much greater and the rewards may be greater.

There is the thought, too, that if one goes into public enterprise there is the security of position and security of pension.

Lord Byers

Did the noble Lord say, "All the security attached to nationalised industry", after all the redundancies that we have seen in British Steel?

Lord Mishcon

I was not talking about the result. I was talking about the poor employee who usually goes into nationalised industry or a public appointment and feels that he is going into something secure. The fact that economic conditions belie all his hopes and dreams is a matter to be deplored, but not used as an argument.

So what I was saying was this: I was thinking of the older employee and the thought that he had in the good old days, if one can use that term, when indeed it was a choice between the security of the Civil Service or public employment or private enterprise. He has devoted a number of years of his life to the transpors industry in its public aspect. All of a sudden he is faced, towards the end of his years of employment, with this transfer over to privatisation, if I may use that horrible word. Is it right that he should have his pension rights at hazard as to whether they are what he was assured—although there may be no written guarantee—that they would be if he stayed? We should want to protect that person. Of course, his rights up to the date of any such transfer are secured—they are a matter of contract—and no Act of Parliament could alter that situation.

But thinking in terms of people's futures, is it not just that one says that, before the transfer takes place, any order that is made shall ensure that those old employees shall not be left with less favourable pension rights than they would have had if they had seen out their years of service with the nationalised company? If your Lordships look at it in that way, I believe you will want to be very sympathetic to this amendment.

If the noble Lord the Minister can give an assurance that, when any transfers of subsidiaries of the National Bus Company take place—and we are dealing with related companies where there has been, or is at the date, a 20 per cent. interest in the other companies, so far as the National Bus Company is concerned—there will undoubtedly be in the Minister's mind an intention to secure that employees who are older in terms of service will not be worse off than they would have been if they had finished their terms of service, with the loyalty which they have obviously shown up till then, my noble friends and I will at least be able to consider what he says and will not press this amendment today. But I believe that your Lordships will want some assurance about the type of employee that I have mentioned.

Lord Mottistone

Should not the noble Lord pay rather more attention to the words of the noble Lord, Lord Byers, based on his experience, and to his comment? I am sure that noble Lords opposite were not prepared for that and, therefore, they went on with their arguments. But the facts of the matter are first, that the private company has to pay its way and, secondly and sadly, redundancies come from all over. At the moment, I am involved in trying to improve the pensions of people in the Distributive Industry Training Board, which I have had the honour to serve for some years, who, for all sorts of reasons, are not getting the pension that they expected, because they took a choice, assuming that their training board would go on until they retired. For different reasons it has not done so, and they are now in the position that they chose the wrong sort of pension, whereas if the board had gone on they would have chosen the right sort of pension. So they are in difficulty, and I am afraid that that applies to us all.

The noble Lord, Lord Mishcon, carries us away with his sad stories about people who thought that they were in the public service and safe forever, but the world is not like that. The trouble is that the public service itself has, in many respects, not done as well as everybody hoped it would. That is why we are having to try to introduce an element of private enterprise to make it more successful. The fact is that noble Lords opposite should think much more carefully about the contribution of the noble Lord, Lord Byers, which absolutely epitomised the argument.

Lord Bellwin

In responding to my noble friend Lord Teviot, may I first confirm what I said I suspected? Most weekly-paid staff are members of the Bus Employees' Superannuation Trust which has some 32,000 members, is fully funded and provides index-linked benefits. But, of course, I will write to my noble friend with further details in that. I was grateful to the noble Lord, Lord Byers, for what he said. He was clearly speaking from much experience. He simply called a spade a spade and that is something which one often tries to avoid doing. But he spelled it out, and that is what the reality of life is all about.

Having said that, I should like to come back to the point which the noble Lord, Lord Mishcon, made. He slightly made my case for me—unintentionally, I am sure, and uncharacteristically—when he expressed his major concern, when there is a transfer to a private business, for the old long-serving employees. Surely, if they are old and long-serving, the chances are that they will be getting closer to an age when they will become pensionable and, therefore, they will have accumulated a very large amount of their entitlement. Although the noble Lord was right to express concern about them, I think that, in practice, they would have less cause for concern than some of the younger people. In any case, I should remind your Lordships that the term of a contracted-out scheme would be subject to the approval of the Occupational Pensions Board. That is probably as far as I can go.

In this day and age in the private sector, as everywhere, the whole matter of pensions is a major factor in negotiations about working conditions and so on, just as much as is the rate of pay. Clearly, there will be proper negotiation—I will not say tough negotiation—to reach a proper level. But, at the end of the day, it will still come down to the ability of the company to pay and there one hopes that only rarely will it prove in the long term unable to do so. Seemingly, guarantees for life exist only in the public sector. One can have a philosophical view about that, but that is the reality. I repeat that there is no problem about people up to the time when a transfer is made. The older people have least cause for concern. I do not feel that the younger people even need be concerned at the time when the transaction is struck. It is only potentially in the longer term that we have the concern, and the point which the noble Lord, Lord Byers, so properly made.

Lord Underhill

I am certain that the Committee is grateful for the comments of the Minister, as well as for the points made by the noble Lord, Lord Byers, which I assure him we will take into very serious consideration. What one must have regard to—and this deals with the point of the noble Lord, Lord Mottistone—is that we are not dealing with persons who are made redundant, because of economic problems, or with men who, by choice, have decided to go somewhere else. We are dealing with employees who are affected by a decision of Parliament, which has said that a certain property or subsidiary may be disposed of. The workers have to follow a decision about disposal, because their subsidiary has been transferred to the private sector. That is the problem which we have to consider.

We shall look very carefully at the report of what has been said. This is a human problem which opens up the whole question of whether disposal ought to take place at all, because employees are being transferred from a settled occupation into a doubtful one. It opens up the whole question of whether, when the Secretary of State is considering a transfer, he ought to consider the future of the workers. So it opens up lots of fields. We shall read very carefully the report of what has been said, and decide whether or not we should come back on Report. But I am grateful for the intervention of the noble Lord, Lord Byers, with his experience in this matter. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6.19 p.m.

Lord Underhill moved Amendment No. 10:

Page 4, line 38, at end insert— ("() A liability to maintain the benefits conferred by the ex-gratia pension schemes of the Bus Company shall be imposed by the Secretary of State by an order made under subsection (1) of this section on any related company to which the employees of the Bus Company subsidiary, who are members of these schemes, are transferred; and any order made for this purpose shall not be regarded as placing a related company in a worse position.").

The noble Lord said: May I formally move this amendment, in order to ask the Minister whether he will confirm that there is no statutory provision in the 1962 Act for the Secretary of State to make an order of this kind? The same points are covered as in the argument on the previous clause. Therefore, I formally move the amendment in order that the Minister can give me an answer on the point. I beg to move.

Lord Bellwin

As the noble Lord is considering this aspect, it might be helpful if I said that the majority of National Bus Company employees are members of one of the company's main pension schemes: the Bus Employees' Superannuation Trust or the National Bus Pension Fund. Employees have been given every encouragement to become members of one of these modern schemes. Some have chosen to remain in old pension schemes which do not provide the same level of benefits. However, it has become the National Bus Company's customary practice to provide some additional benefits under the old schemes by means of ex gratia payments. Similarly, the company have also made some ex gratia payments in respect of periods of non-pensionable service. These payments are made entirely at the discretion of the National Bus Company.

It is possible that a limited number of employees in a National Bus Company subsidiary which is to be transferred to private ownership may be receiving these ex gratia payments. If so, their pensions position would fall to be considered along with those of employees who are members of the modern schemes. I am sure that the National Bus Company would wish to insure that they received equitable treatment, as would trade union representatives. But the Government are not prepared to see a solution imposed by a pension order compelling the related company to maintain payments which are now entirely discretionary, as proposed in the amendment. That might interfere with the pension arrangements considered most appropriate for a subsidiary to be transferred to the private sector and in our own view would certainly be an unjustified interference by the Secretary of State in the affairs of a private company.

To come specifically to the point raised by the noble Lord, the National Bus Company could convert the ex gratia payments into legal obligations before privatisation. Then they would be covered by the order-making power. That is what the noble Lord wanted to ascertain, and I hope that what I have said is helpful.

Lord Underhill

I am grateful to the Minister for his explanation. As the other points which he has made were covered in the debate which we had on Amendment No. 9, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 agreed to.

Clauses 6 and 7 agreed to.

Clause 8 [Private-sector vehicle testing]:

6.23 p.m.

Lord Underhill moved Amendment No. 11: Page 6, line 34, leave out ("any pesson") and insert ("a single non-profit-making organisation").

The noble Lord said: We turn now to Part II of the Bill, which deals with the testing arrangements for heavy goods vehicles and passenger service vehicles and their transfer to the private sector. Although it is the transfer to the private sector which is involved, may I emphasise that on this side of the Committee we are not making this a party issue? In view of the importance of the matter, it is necessary to explain very carefully the issue and its history, in the hope that we might influence some of the many noble Lords who are listening in order to be influenced.

A brief history of the matter was given at Second Reading, and it is very important. In December 1979 the Minister announced the Government's intention to transfer the testing of heavy goods vehicles and passenger service vehicles to the private sector. In August 1980 the Government issued a policy statement. There was immediate opposition from all the operators organisations: the Road Haulage Association, the Freight Transport Association and the Confederation of British Road Passenger Transport. They want the present scheme to continue and say that they have complete faith in the scheme. They believe in its impartiality; they believe in its independence from commercial pressure; and they believe that its testing standards are reasonably uniform throughout the country.

Because of the widespread objections and fears of the operators, the House of Commons Select Committee on Transport decided to undertake an inquiry, which commenced in March 1981. Its report was published in July 1981 and set out the present testing position. There are 91 heavy goods vehicle testing stations, of which some 24 are in rather remote areas. The large figure of 900,000 tests are carried out annually. The position is that most hauliers do not have to travel more than 25 to 30 miles to a station for a test. Some 850 staff are involved—all civil servants—and there are a further 450 staff whose duties include the testing of passenger service vehicles, some 77,000 tests being carried out each year.

The evidence given on behalf of the department and the Government to the Select Committee was that the Government's intention is to split up the 91 heavy goods vehicle stations into chains, that these should be offered on long leases to private sector testing companies and that, where the passenger service vehicles are still tested at the operators' premises—where there are adequate facilities laid down under the 1980 Act—they must arrange to receive the vehicles of other operators, though the actual testing will be carried out by the staff of the private sector company which will take this over.

Rather surprisingly, the witnesses from the Department of Transport told the Select Committee that when they were developing their proposals they had not investigated the arrangements in other countries. Details of some of the arrangements in other countries are given in Appendix 14 to the Select Committee's report. There is only one European country with a number of private testing organisations listed, and that is Belguim. Sweden has an independent, non-profit making body, with the Government having 52 per cent, of the shares. In France, there are Government staff at Government stations. In West Germany, there is an independent, non-profit making body. In Holland there are Government test centres. In Luxembourg, there is an independent body in which the Government have 75 per cent. of the shares. In Italy and Denmark, all tests are carried out through Government agencies.

Both the documents submitted, which are given in the Select Committee's report as appendices, and the evidence submitted are very impressive in showing the unanimous opposition of the operators and others to the Government's proposals. In addition to the three main operators' organisations which I have mentioned, the opposing bodies also included the Institution of Professional Civil Servants, the Royal Society for the Prevention of Accidents, the Association of Chief Police Officers, the Society of Motor Manufacturers, the Chartered Institute of Transport and the Association of Metropolitan Authorities—a formidable list to add to the three operators' organisations.

I would refer to the conclusions to be found in paragraphs 79, 80 and 81 of the Select Committee's report. In paragraph 79, we find that the Select Committee concluded: We do not consider that the Government has yet justified its contention that private operators, still to be identified, would carry out the annual testing of commercial vehicles better than the current Department of Transport testing stations. Conclusion 80 reads: Until the department bring forward evidence to substantiate their contentions, we believe that the existing system of heavy goods vehicle testing stations should be retained. Meanwhile the evidence leads us to recommend that within the existing system additional services to vehicle operators can and should be provided". Their final conclusion reads: We accept the views of the operators' associations that if the transfer to the private sector does take place it would be preferable for the system to be transferred as a complete unit rather than as a number of chains. We therefore recommend that the Department of Transport continues to explore the possibility of the testing station network being taken over by either Lloyd's Register or by some other organisation of significant standing. The reference to Lloyd's Register comes under paragraph 75, where the committee says: We were particularly interested to hear of the Confederation of British Road Passenger Transport's proposals that the testing role might be transferred to Lloyd's Register. This is an independent, non-profit making society which provides inspection and technical services primarily for ships but increasingly for engineering projects of all kinds". The response of the Secretary of State was to the effect, "On the question of the benefits of privatisation I think we should have to differ, but he did say that he noted the strong preference in the industry, endorsed by the Select Committee, for the testing network to remain as a single operating unit and he would look into the recommendation of a possible arrangement with Lloyd's Register. As the Secretary of State's response also appeared to indicate that the operators 'organisations had changed their views, the Select Committee was reconvened and once more heard witnesses from the operators' organisations. Without exception, the operators made it clear that they had not changed their views and that they did not want to change from the present testing arrangements, but if the Government were not prepared to move they had to discuss possibilities in the interests of their members. Again we find three important conclusions in the review of that Select Committee. In Recommendation No.18: Our conclusion from the evidence we have now received is unequivocable. Although the Road Haulage Association, Freight Transport Association and Confederation of Passenger Transport all properly accept in their members' interests the need to be realistic and to co-operate in the implementation of the Government's policy decisions, none of these organisations has received any information from the Government or been persuaded by any arguments from the Government which has led them to change their fundamental opposition to the privatisation of HGV and PSV testing. In Conclusion No. 19, we find: On the basis of the more recent evidence we therefore reiterate our view that the existing arrangements for vehicle testing should continue. In their final conclusion, No. 21, we find—and I will quote just the last few lines: On the basis of this most recent evidence, we have concluded that the transfer of the vehicle testing system to a single organisation or consortium is the only solution acceptable to industry, and we believe that the Government's proposal should be amended so as to preclude any alternative solution. The Select Committee is an all-party committee and there are its recommendations, which endorse what was said by the Select Committee in its first report. Conclusion No. 21, which I have read, is what is proposed in the amendment; that there should be one organisation—a non-profit making organisation.

I wish to stress that the position of Lloyd's has not, I understand, been finalised. We must ensure that, whatever is done, the Bill covers the possibility of other arrangements. The Bill as it stands, and Clause 8 as it stands, would enable the Government to dispose of the testing arrangements to a number of chains if the Government so desired. The industry does not want that. The industry wants a single organisation and preferably a single, non-profit making organisation. That is what the amendment puts down: it is exactly what the operators want and, as the Government are inclined towards an arrangement with Lloyd's, I can see no reason why the Government should not accept this amendment. It is in line with what the Government are trying to do. And, if Lloyd's should fall through, the Government would then be able to work on the basis of one single, non-profit making organisation. I beg to move.

6.33 p.m.

Lord Lucas of Chilworth

I imagine that we are going to speak to and have a general debate on the whole clause when discussing the amendment of the noble Lord, Lord Underhill.

Lord Bellwin

I wonder if my noble friend would allow me to clarify the situation. Am I to understand from the noble Lord, Lord Underhill—who made such an explicit and detailed speech when opposing the amendment—that he too is covering the points made in Amendments Nos. 13 and 14, which I believe is what my noble friend is saying?

Lord Underhill

It was my intention to deal with the matter in the way that I have, in order not to confine myself to the narrow path of the amendment but to deal with the whole question of whether Clause 9 shall stand part of the Bill.

Lord Lucas of Chilworth

I am grateful to the noble Lord, Lord Underhill, for that because I think it will be a lot easier in that we particularly want to hear from my noble friend the Minister just what is proposed by the Government. May I start by thanking my noble friend for his very long letter of 23rd June in which he covered a number of points, including that of vehicle testing.

As I said at Second Reading I do not dissent from the historical resume which the noble Lord, Lord Underhill, gave then and to which he has added this evening. Nor can I dispute with the noble Lord some of the figures he has given. The industry has been represented by a number of associations and bodies, although I noted that the noble Lord, Lord Underhill, excluded the Institute of Transport Administration. No doubt he did so purposely so that I could advise your Lordships of my interest in this particular clause, in that I am the president of that institute. That institute also was totally opposed to the removal of testing from the Government side. They made their own survey and came to the conclusion, having made a number of visits—particularly to West Germany—that the West German system was probably the best. It is of some concern that the department can make proposals without having examined the whole range of options.

We are now faced with the proposal that Lloyd's Register Vehicle Testing Association should be the body that will undertake this testing—but as I understand it, the association has not yet been formed and it is in a very embryonic stage. As I understand it, only the most preliminary of discussions have taken place between the Government and this organisation. Where I differ from the noble Lord, Lord Underhill, is that he wants to ensure that the testing organisation is non-profit-making. I do not mind very much if it makes a profit but certainly I do not want it to make a loss. If the Government come along and say that one of the reasons why they want to place the testing with the private sector is that it is a burden on the taxpayer and a job which could be better done elsewhere, then I would say of the former that that is their fault because they are not a very commercial organisation in terms of hours worked and that the fees chargeable are not of a very commercial nature.

I cannot understand why it is suggested in the Explanatory and Financial Memorandum to the Bill, under Financial Effects, that The sale price"— of these stations and equipment, and the cost of transfer— would also take account of any loans made under the powers of Clause 12". I wondered who was going to buy them, anyway. The noble Lord, Lord Underhill, suggested that originally, when all the 90-odd stations were going to be put into groups, long leases would be offered to potential operators. I never believed that they were going to be sold. As I said, I do not know who is going to buy them. If we are trying to get an amount of money into Government funds—£30 million, I think it is—by the sale, I fail to see how that can be achieved by leasing all or some of these stations to one single organisation—particularly if it has to be of a non-profit-making nature.

I will also ask my noble friend if he can tell us any- thing more about the number by which those people working in the department will be reduced. The Explanatory and Financial Memorandum suggests that something like 900 posts might be saved. I cannot quite understand that because we must still have inspectors to inspect the new testers, and so on. So, on balance, I find myself a little bit worried because one knows nothing about the system that is to be employed, or the arrangements to be made with the people who, as I understand it, may or may not undertake this work.

The Bill provides only that when the Minister has made up his mind he comes before Parliament with his proposals, which have to be accepted by both Houses of Parliament. I suggest that by the time all that has happened it is probably going to be too late to make objections. So at this particular moment of time I think we are deserving of hearing in far greater detail just precisely what is envisaged and just how far down the road to that objective the Government have so far gone.

Lord Tanlaw

I think we on these Benches would like to have just the same assurances as have been asked for by the noble Lord, Lord Underhill, and the noble Lord, Lord Lucas. I think this is a very important amendment if assurances cannot be given in more precise terms than those used so far. I think the industry itself has clearly shown that it is worried and somewhat depressed by this aspect of Government thinking, but it is prepared to accept it unwillingly if the safeguards are there for the system to operate efficiently and effectively and fairly.

I think the point made by the noble Lord, Lord Underhill, is an important one. If the Lloyd's Register of Shipping, which I am quite conviced is capable of undertaking this work efficiently and fairly, is unable to do this—and the Government have left it in the air—and it is open to an individual organisation or to a number of organisations to do this, this is a very serious matter indeed.

I hope that when the noble Lord, Lord Bellwin, replies we shall not find, as we did in dealing with a similar Bill, the Oil and Gas Bill, that once the doctrine has been peeled away and the principles have been dealt with there is nothing much underneath so far as the thinking and practice has gone, because the Government are breaking new ground with both these Bills. We want some reassurance on this side of the Committee that the Government have thought this matter through. The industry has clearly thought it through and is worried. It has expressed its worry to the Government and to us on these Benches and Members on other Benches. The Government appear not to have responded that they have thought this matter through in depth.

When the noble Lord replies can he also mention the point about the saving on personnel? It may be that 900 could be replaced but we would like some numbers on the inspectorate. Bearing in mind that there will be working at weekends as well, this may mean a doubling up of staff, because you cannot ask people to work seven days a week. I would wonder what the net saving will be if the inspectorate is taken into consideration.

Lord Davies of Leek

If I may intervene briefly, I have listened to the debate, and I also heard some of the Second Reading debate. I would have thought that the paramount problem was safety, and I am sure that that is agreed on both sides of the Committee. When we use the phrase, "approved testing stations" we want to know whether it is private or public or how it may be formed: that it is not a ragamuffins' paradise—that the people within those testing stations are qualified and know their job and have been properly trained in that job. Consequently, whatever argument we are having across the Floor at the present moment, the vital thing is safety, because of the growing importance of transport to civilisation and because of the increasing number of deaths on the roads, which we want to keep down.

I do not want to reiterate everything that has been said, but I think we must keep in mind not just the cost or profit but the safety of the individual, the type of vehicles and the type of people who approve in the testing stations. If I said any more I would be boring the Committee, because the argument is well known on both sides.

Lord Bellwin

It will be clear from the discussion we have had so far that this clause is the most important one in Pal t II of the Bill. It provides for the authorisation of a private sector authority and private sector inspectors to carry out testing. This provides the framework within which we hope to see an improved service for the road transport industry which will maintain the highest standards of safety and impartiality.

Let me at once endorse precisely what the noble Lord, Lord Davies of Leek, has just said: that safety is the first, the foremost, one might say the sole aim of the testing system. Safety has been our first consideration in drawing up proposals for the future of the testing network and in developing the legal framework for the new system. The 18 clauses which make up Part II of the Bill contain a great deal of detailed material which is designed to ensure that a private sector testing system will operate with the consistency, the smoothness and the high standards which are rightly valued in the present testing system. These are the aims which we have in mind and the aims which I know are shared on all sides, as we have just heard.

Moreover, in our choice of the body to take on the testing, I think that we have done all that my noble friend Lord Lucas would wish. Certainly that, I gather, is the opinion of those who have already spoken about the new Lloyd's Register Vehicle Testing Authority; and it will indeed have no connection with the manufacture, sale or repair of commercial vehicles.

However, my noble friend and I gather that those who have spoken in the debate wish us to go further. The amendments we are discussing—and I include Amendments Nos. 13 and 14—seek to write into the legislation a total and permanent ban on any connection between the body appointed to carry out the testing and the motor trade. I do not want there to be any misunderstanding between us on this. Let me again make it quite clear. The Government are every bit as determined as are my noble friend, the noble Lord, Lord Underhill, the noble Lord, Lord Davies, and the noble Lord, Lord Tanlaw—indeed, everyone who has spoken and who might well have spoken—that there shall be no commercial pressures on testing. We must have safeguards to make sure that the decisions of testing staff are entirely impartial and are based on safety considerations alone.

Those safeguards already exist within the Bill. If I may remind your Lordships again about these very important provisions, there is the provision in Clause 8 which requires the approval of Parliament, no less, for our choice of approved testing authority. If it is the view of Parliament that the approved testing authority must be a body having no commercial interests that view can be enforced. If, on the other hand, Parliament were to accept that some commercial interest could safely be allowed, there are further powers in Clause 8 to impose conditions which would control the way in which the testing business was managed. It would, for example, be within the Secretary of State's power to enforce a complete separation of management and control between the testing business and any other interests which the approved testing authority might have. We have made it quite clear that we are not contemplating the authorisation of any organisation with commercial interests.

The fact is, however, that the Bill was specifically designed to provide a structure within which commercial interests could be safely controlled. The Government believed, and still believe, that it is perfectly possible to have commercial involvement in testing without incurring the dangers which I know my noble friend and noble Lords opposite are, quite rightly, anxious to avoid. We have, it is true, decided that on balance the best course is to transfer testing to the new Lloyd's Register Vehicle Testing Authority and that is our firm intention. But in taking that decision we are not saying that this is the only good or possible option for the organisation of a private sector testing system. If we amend the Bill in the way being proposed, we should be ruling out for ever and a day any possibility of the involvement of any body with commercial interests. I just do not believe that that is prudent or sensible law-making.

Surely what we need is a legal structure which leaves us and future Governments with the freedom to take sensible decisions in the light of the facts, with appropriate safeguards to ensure that these decisions will not run contrary to our central—and I say it yet again—aim of maintaining safety standards and providing the best possible service to the road transport industry. I believe that we have these safeguards in the Bill, as I have already explained. We accept that the impartiality of testing is vital and our choice of Lloyd's Register Vehicle Testing Authority to take over the testing system is proof of that.

In answer to the point about the negotiations with Lloyds and what happens should they break down, let me say that the position is that there is agreement in principle. The details are being discussed. There is no reason to believe that the matter will not be successfully concluded. I should also say that, if it should prove to be impossible to reach a final agreement, unlikely thought that is—but the noble Lord, Lord Underhill, is quite right in saying that an agreement is not there, it has not been signed, sealed and delivered—then of course the Government will need to review the options afresh. I say again that it is a very unlikely contingency and I cannot say what conclusion will be reached. However, the point to which I again draw your Lordships' attention is that, whatever scheme we propose—and surely this is the key point—must be approved by Parliament. Earlier on we were saving how important it is that Parliament should have the last word. Perhaps I may now pray in aid your Lordships' own observations, and I do so by saying: there you have it: you have an indication of the importance that the Government attach to this. In no way am I seeking to skate over or to belittle a point which my noble friend made and the greatly detailed way in which the noble Lord, Lord Underhill, took the trouble to spell out why he was concerned about it. At the end of the day Parliament will have the say as to whether or not anybody other than Lloyds —if that should be the case, although I gather that there is no disapproval of them—would finally be appointed.

We have talked about what would be the proceeds of sale and the numbers of people who would be involved and various other factors. I shall not go into the detail now. I have information here and I can give views on those matters and talk about the 900 people and the point raised by the noble Lord, Lord Tanlaw, about whether there would be a real saving, allowing for the fact that certain overtime and other hours would have to be worked. My information is that that would not be the problem. But, as in all these matters, it is a question of judgment. That is what we are talking about now.

In conclusion, I would say that, if your Lordships will accept from me the Government's absolute commitment to the fact that safety is the first, second, third and last point that concerns us, and if my noble friend, who I know feels very deeply about this matter—because we have talked to him and he has expressed his views with great fervour during Second Reading and I know his background in this industry and must listen to what he says—will feel that what we are trying to do and the way in which we have set it out at present will cover his points, then I should be very pleased indeed if he did not press the amendment.

Lord Mottistone

Perhaps I may put in one word. Would my noble friend the Minister not agree that, if there is a commercial operation, it will tend to make the operating more flexible, which at the moment, I am told by industry, is rather lacking, and that this would be a tremendous advantage, coupled with the various safeguards about which my noble friend has told us?

Lord Bellwin

A qualified, yes, because I have been at great pains to stress that the flexibility here has to be less than one would normally wish to see in something of this kind. Flexibility to the extent that it be not the only single company—certainly I think we must go beyond that. I am anxious here not to stress the flexibility point. I am more anxious to stress the safety factor all the time. It is the ultimate point in this matter. Although there may be the kind of ability to manoeuvre that my noble friend indicated, nevertheless I would want to stress again that it is the safety factor that is all-important here and that it is Parliament that has the say at the end of the day.

Lord Underhill

I am delighted that the Minister has emphasised the safety consideration, because that is what the operators' organisations have been concerned about throughout the whole of their discussions on this particular issue.

There is, of course, another factor involved in addition to safety; namely, the availability of the testing facilities, because obviously, if a public service vehicle has to go some distance taking both the crew to look after it and also taking it off—I almost used a fire service expression—the "run", it will obviously interfere with the PSV service operations. So there is also that factor about how it is to be done.

The Minister made it clear that, although there is agreement, nothing has yet been signed or delivered with Lloyd's Vehicle Testing Authority. That is important because it is why we wanted to get this provision into the Bill—to ensure that if the Lloyd's insurance scheme fell through, the Government would not go running around to a number of different persons who might take over different testing stations, but confine themselves to one organisation, preferably a non-profit making organisation, as do most countries on the Continent, or alternatively to the single body proposed in Amendment No. 12.

Lloyd's is not in the Bill. I am going now by the evidence given by the witnesses of the Department of Transport to the Select Committee and I presume that they were talking on behalf of the Government. The Bill was drafted with a possible view to a chain of testing authorities, not just one. There could be a number of testing authorities. That is what the operators do not want. They do not want a chain of different operators. That is why we were rather concerned that there should be something in the Bill to make it quite clear.

Reference was made by the Minister to the fact that any scheme has to come before Parliament—and we are delighted that that is so—for an affirmative resolution. That, I gather, is for each separate authority. In other words, if the Government decided that they had to have agreements with 12 different testing authorities, a scheme for each one would have to come forward—not a proposal to divide the thing into 12 separate authorities. That is an important consideration. We want to get that issue determined in advance. That is one reason why we have moved this particular Motion. Incidentally, one ought to say that the Under-Secretary of State, Mrs. Chalker, did say in Committee that the plan is not simply one of privatisation but to achieve something important—that is, to reduce the number of Civil Service posts. I say in all sincerity to the Minister that I hope we shall look at this scheme from the standpoint of safety and not as regards the question of the reduction of Civil Service posts. That would be a wrong thing to do and yet that was made clear by the Minister in the other place.

I think that the best thing to do—particularly at this stage when noble Lords may possibly have other matters that they want to deal with—is not to divide the Committee on this issue. There is a big principle involved. I should like to read what the Minister has said and to read what other noble Lords have said before deciding what we shall do at the Report stage. There is a great principle involved. We would not wish the Bill to go through in a form which, if the Lloyd's scheme fell down, would allow the Government to feel themselves able to go ahead with all sorts of proposals for a chain of testing stations. But, under the present circumstances, I beg leave to withdraw the amendment while we look at the matter.

Amendment, by leave, withdrawn.

[Amendment No. 12 not moved.]

Lord Sandys

At this stage I think that it may be convenient—

Lord Lucas of Chilworth

I wonder whether the noble Lord the Deputy Chief Whip would agree to take Amendments Nos. 13 and 14 before we adjourn for dinner? I can promise him that they will not take very long.

Lord Sandys

If the noble Lord can do so, I think that it would be for the convenience of the Committee to take them immediately.

7 p.m.

Lord Lucas of Chilworth had given notice of his intention to move Amendment No. 13: Page 6, line 36, leave out ("of or includes") and insert ("solely of").

The noble Lord said: As I promised, I shall not keep the Committee very long. There are one or two areas in my noble friend's answer which have left gaps in my knowledge. I am particularly concerned that if we leave Clause 8 as it stands, there is an inference in line 36 that vehicle testing may be a part of some other operation. It was for that reason that this amendment was tabled.

Secondly, notwithstanding the assurances, which I am happy to accept, I find that where the Bill provides for the exclusion of holders of goods vehicle operators' licences and holders of PSV operators' licences—and I can understand why; it is this competitive and secondary interest element, as well as it being put in in another place—I would want to ensure that the motor industry is also excluded. Quite briefly, when I look back to the 1956 and 1958 debates on vehicle testing in principle, this was the greatest worry that my noble kinsman and others had. That the system has worked reasonably well, I do not doubt, but it is not in the best interests and I would not like the Government, for whatever reason—and there is many a slip twix cup and lip in these matters—to be put in a position of having to go back to a commercial grouping which might include some people in that sector. I believe that it is far better that we get it that much nearer being right now than wait for the regulations to come before Parliament, which, as my noble friend says, has the last word.

There are still a number of questions in my mind, and I thank my noble friend for his generosity in his earlier letter to me. The question of assurances with regard to the number of stations, and the kind of charges that another organisation might make, have yet to be spelt out, or at least the Government's intentions with regard to this have to be spelt out. Therefore, I think it is better that I make these points to my noble friends on the Front Bench now.

However, accepting, what the noble Lord, Lord Underhill, has said, that we have had a good debate on the principle of moving the testing stations, I would not want to press a Division now. But I must say to my noble friend, on Amendment No. 14 that I would want a lot of persuading not to ask the House at Report stage, as distinct from this Committee stage, to have a look at that. I have merely spoken to Amendment No. 13. At the same time, bearing in mind the earlier remarks, I shall not move Amendment No. 14 at this stage.

[Amendment No. 13 not moved.]

[Amendment No. 14 not moved.]

Lord Sandys

I think that it may be for the convenience of the Committee if we take the dinner break now and return for further consideration of the Committee stage of this Bill no earlier than 2000 hours With that in mind, I beg to move that the House do now resume.

Moved accordingly and, on Question, Motion agreed to.

House resumed.

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