HL Deb 28 March 1983 vol 440 cc1358-66

3.56 p.m.

The Parliamentary Under-Secretary of State, Department of Energy (The Earl of Avon)

My Lords, with the leave of the House, I shall repeat a Statement being made by my right honourable friend the Secretary of State for Energy in another place. The Statement reads as follows:

"With permission, Mr. Speaker, I wish to make a Statement about the Chairmanship of the National Coal Board.

"When I appointed Mr. Norman Siddall as chairman last year, he made it clear to me that, regrettably, his health would not permit him more than a one-year term. Strictly speaking, that year comes to an end on 3rd July, but Mr. Siddall has kindly agreed to stay on until the end of August. He has already proved to be an outstanding chairman of the Coal Board, as I am sure is widely recognised on all sides of the House.

"As his successor, I have appointed Mr. Ian MacGregor, currently chairman of the British Steel Corporation.

"Mr. MacGregor is a Scotsman who was sent to Washington by the Government during the war to deal with certain aspects of the purchase of arms from the United States. After the war he decided to make his business career there, which he did with conspicuous success, notably with the Amax Corporation.

"His first act on becoming Chairman of Amax in 1969 was to take it into the coal-mining business: by the time he retired from the chairmanship of Amax in 1977 he had built it up into the third largest coal-mining company in the United States.

Mr. MacGregor's qualities were recognised by the previous Government when they appointed him a Deputy Chairman of British Leyland in 1977, but he did not return to Britain on a full-time basis until 1980, when my right honourable friend the Member for Leeds North-East appointed him chairman of the British Steel Corporation for a three-year term.

"Since then he has led BSC with vigour and determination through a period of intense difficulty for the steel industry both at home and abroad. Last year, for the first time ever, BSC's productivity came close to the best levels of its European competitors.

"Mr. MacGregor's experience in building up and running a successful coal-mining business and the outstanding leadership he has provided at BSC have demonstrated that he is admirably equipped to become full-time chairman of the Coal Board. He has agreed to accept a three-year appointment starting on 1st September.

"Mr. MacGregor has obligations to his partners in the New York based investment bank of Lazard Frères, from which he was released for three years in order to become Chairman of BSC. I have agreed similar arrangements in order to enable him to take on the Chairmanship of the National Coal Board for a further three years. Accordingly, a fee of £1½ million will be paid to Lazard Frères in compensation for the loss of Mr. MacGregor's services. Two-thirds of that fee will be refundable on a pro rata basis if Mr. MacGregor does not complete his full three-year term.

"As with the BSC arrangements, Mr. MacGregor will remain a non-active limited partner in Lazards while serving as chairman of the Coal Board. But this will not entitle him to receive any share in the so-called transfer fee. He will be paid £59,325 a year—the same salary as Mr. Siddall.

"£1½ million, although less than the maximum compensation payable under the BSC arrangements, is a substantial sum. Indeed, it is what the Coal Board loses every day. But I am confident that, in securing the services of Mr. MacGregor as chairman of the National Coal Board, it will prove excellent value for money for the taxpayer, the industry and the nation.

"In making these arrangements, Mr. Speaker, my concern has been to find the best possible leadership for the Coal Board at this critical time. The industry and those who work in it deserve nothing less. The coal industry in this country faces fundamental problems of over-production and uncompetitive costs. If it can tackle these problems, it can secure for itself an excellent future and transform itself into the successful modern industry we need.

"Mr. MacGregor's objectives will therefore be to continue the task started by Mr. Siddall and to focus the Board's efforts on the earliest practicable return to profitability, on competing successfully in the marketplace and developing new markets for British coal, and on securing the highest possible efficiency and control of costs.

"I am satisfied that Mr. MacGregor is the best man for the job. This is an appointment which everyone with a genuine interest in the success of this great industry will welcome."

My Lords, that concludes the Statement.

4.1 p.m.

Lord Strabolgi

My Lords, on this side of the House we should like to thank the noble Earl, Lord Avon, the Minister, for repeating this Statement. We also sympathise with Mr. Norman Siddall that his health does not permit him to serve longer than the end of August, and we should like to pay a tribute to him for his first-class services, particularly as he followed the outstanding chairmanship of the noble Lord, Lord Ezra. We wish Mr. Ian MacGregor well—I think that that is probably the least that we can do—in his new appointment to head this important industry on which so much of the nation's future prosperity depends. But, my Lords, we are bound to ask some questions.

Is the appointment acceptable to all sides of the industry? Had the National Union of Mineworkers and senior management been consulted before it was made, or has it been imposed from outside? Do not the Government think that it would have been better to have chosen a younger man, who could have served longer? Do they envisage Mr. MacGregor continuing another term after he has reached the age of 73? If not, do they not think that a three-year term of office is rather a short period, especially at this important period in the coal industry? Do the Government think that this appointment shows much confidence in the able younger men of Britain's top management? After all, they will have to find another chairman fairly soon to replace the septuagenarian Mr. MacGregor. Will Mr. MacGregor continue as chairman of BSC as well, or is he going to relinquish his present post?

The Government say in the Statement that the £1½ million transfer fee, as they described it, is to be paid to Lazard Frères in New York as compensation for the loss of Mr. MacGregor's services. Is this very large sum in addition to the even larger sum already paid to Lazard Frères when Mr. MacGregor was appointed to the BSC? If so, what is the total cost to the Treasury for these two engagements? If Mr. MacGregor continues in office for a further three years will yet another £1½ million, a third tranche, have to be paid to Lazard Frères in New York, making about £4½ million to £5 million in all? Do not the Government think that this is rather a large sum for the hard-pressed British taxpayer to have to find, especially in these days of austerity and the curtailment—and the ruthless curtailment—of our social services?

Lord Tanlaw

My Lords, we from these Benches also wish to thank the noble Earl the Minister for repeating the Statement made in another place. I should also like to add our tribute to Mr. Norman Siddall for the work he has done, as well as to my noble friend Lord Ezra. We also must congratulate Mr. MacGregor for taking on what is clearly going to be a difficult and onerous task bearing in mind his age, which is that of an old-age pensioner. I must say that we from these Benches also believe in flexible retirement; that people have different abilities at different ages. I do not think that old-age pensioners on £57 a week will grudge Mr. MacGregor his £59,325, or his £1½ million compensation given to a merchant bank. What they and we would like to know is, will the earnings rule apply to Mr. MacGregor as it does to other old-age pensioners?

What is his tax status? Is he resident but not ordinarily resident in this country, or is he non-resident for tax purposes? In which case, what is the net income he will receive from his £59,325 after tax in this country? I think that every old-age pensioner wants to know this, while admiring his ability in being able to hold down this job compared to their difficulty often in hanging on to take that little bit of extra to keep them going.

Finally, I should like to ask the noble Earl, after the three-year term what method of selection do Her Majesty's Government envisage for future chairmen of nationalised industries and the coal board? We, from these Benches, favour a panel independent of Government, and so do the Bow Group. The question is whether the Conservative Government wish to follow the Bow Group and the Liberal SDP alliance in recommending an independent selection panel for these onerous and responsible jobs.

The Earl of Avon

My Lords, I shall try to cope with some of the questions which have been asked. The noble Lord, Lord Strabolgi, asked whether Mr. MacGregor would be appointed again after three years. I think that this is something we would have to wait for, to see what sort of job he has done, and where we are. I am delighted that both the noble Lord, Lord Tanlaw, and the noble Lord, Lord Strabolgi, realised that it would be this side of the House which would be deciding this. The noble Lord, Lord Strabolgi, asked me about the £1½ million. The payment for the British Steel Corporation is £1,825,000, two-thirds of which is being retained until 1984, when it will be adjudged whether he has earned the full fee or not. So far as the fee for the Coal Board is concerned, it is an additional £1½ million; £1 million of which will be retained in trust until the end of his term.

The noble Lord, Lord Tanlaw, asked about tax. My understanding is that Mr. MacGregor is taxed in the normal way, and there is no special concession. As to whether he is a non-resident or not, of course he is not because he is working here as a full-time chairman. Some idea was suggested that he might be too old. Those who know the energy, drive and determination he has applied to BSC could not possibly agree with that. His vigorous performance there has underlined how fit he is at the young age, certainly in this House, of 71.

I was asked specifically about United Kingdom managers. There are, of course, many excellent British managers but they are usually fully committed to other important jobs and organisations. We are indeed very impressed by the standard of the National Coal Board. But I have yet to be convinced that anybody from there would succeed in the place of Mr. MacGregor. I am sure that the good sense of those who work in the industry, as indicated during the recent NUM ballot, will persuade them that it is the qualities of the man leading the industry which matter, and I am confident that the industry itself will respond to the leadership of the new chairman.

Lord Blyton

My Lords, is the Minister aware—

Lord Taylor of Gryfe

My Lords,—

Lord Blyton

—that the miners will regard this appointment as an act of provocation, and that to pay a salary like this—with the brilliant mining engineers and the men we have in this country—is a disgrace? All the conciliations of the recent ballots will go by the board, because, even if this man has murdered steel, the miners will never allow him to murder the mining industry.

The Earl of Avon

My Lords, I should like to make two points to the noble Lord. First, it is not an act of provocation. What we are looking for is the best man for the job. Secondly, what we are looking for is a man for the job at the moment. One of the points about the coal industry is that there is plenty of coal, and one of the aspects that we appreciate about Mr. MacGregor is that he is a marketing man, as well as a metallurgist. We believe that the combination of these two factors is very important at the present time.

Lord Taylor of Gryfe

My Lords—

The Earl of Lauderdale

My Lords, as an old age pensioner—

Lord Denham

My Lords, I think that the noble Lord, Lord Taylor, was trying to get up. Perhaps we could hear him first and then my noble friend afterwards.

Lord Taylor of Gryfe

My Lords, we on these Benches should like to thank the Minister for the Statement he has made and to join in the congratulations to Mr. Norman Siddall for a year of very distinguished service, despite the fact that he was not very well during that period and took these responsibilities with some reluctance. We should also like to pay tribute to Mr. MacGregor's outstanding ability and to wish him well in his new post. At the same time, we should like to ask the Government whether this is a departure from the normal practice of the Government, in so far as Government appointments, including quangos, as a rule, are limited to a period when the person concerned reaches 70 years of age.

I should like to ask the Government, too, whether the difficulty in filling this position arises from the facts outlined in the recent book of the retired chairman of British Leyland, to the effect that he found it extremely difficult to work with Governments who interfered with management; and whether Mr. MacGregor will be given an assurance that he will have little interference in the management of the coal industry in the short period of his appointment. Would the Government confirm that in view of the vote of confidence which has just been given by this appointment, the £1.8 million will automatically be paid to Lazards, making a total transfer fee of £3 million covering both of these appointments? Also, would the Minister confirm that it might be sensible to test the market on occasion, when major appointments of this character are about to be made? That might enable British management to feel satisfied that they are not being overlooked by friends of the Government.

The Earl of Avon

My Lords, the noble Lord has asked a number of questions. I was expecting that Mr. MacGregor would he acceptable to the SDP, as I saw that he went to Hillhead Grammar School. So far as the figure of £1,825,000 is concerned for the BSC job, my understanding is that that will not be paid until 1984. The noble Lord asked about testing the market and talked about friends of the Government. The point here is that there has been quite a lot of rumour that Mr. MacGregor might be appointed to this job, but throughout all that period of rumour I have heard nobody else canvassed for the job, except—and I am sorry that he is not here today—the noble Lord, Lord Gormley, but I think that he was caught in Spain at the time. So that nobody else has come forward for this job. I am not trying, in any way, to denigrate Mr. MacGregor about this, but it is very difficult to find the right person for these jobs, and, when you have such an outstanding character as this, it would be a great shame not to take the opportunity.

The noble Lord asked about interference. Of course, the Government do not interfere with the nationalised industries, except in giving them their objectives and their limits. Mr. MacGregor has already had experience with Goverment over the last three years and I am sure, when he says that he is willing to continue, that he is perfectly aware we shall not be interfering with him.

The Earl of Lauderdale

My Lords, would my noble friend agree that, as this House has many old age pensioners in it, including myself, some of whom are very vigorous indeed, it is hardly a place where we should criticise the appointment of an OAP? But can my noble friend just tell us this, while the subject is current? Does he have a figure for the annual cost to the taxpayer of the Coal Board's running at a considerable deficit? Would he not agree that, when the world is awash with coal and oil, marketing is the critical requirement at this stage?

The Earl of Avon

My Lords, I think I said earlier on in my remarks that marketing is one of the factors which made up our minds in regard to this decision. So far as the loss of the Coal Board is concerned, that is running at about £500 million at the moment which, as was said in the Statement, means that the payment of £1½ million is one day's loss.

Lord Taylor of Mansfield

My Lords, can the noble Earl say whether any consultation took place with the leaders in the industry, the Coal Board itself and the three important unions representing the workers, because their co-operation is absolutely necessary, so far as the appointment is concerned?

The Earl of Avon

My Lords, I do not know the level of consultations. We have, of course, had the recent ballot which the noble Lord, Lord Blyton, mentioned. So far as the board is concerned, I gather that it approved.

Lord Sefton of Garston

My Lords, would the noble Earl agree that there is a point of view in existence in this country in very responsible circles that perhaps this appointment will be viewed as a very severe reflection upon the quality and type of management contained in the CBI and the Institute of Directors in this country?

The Earl of Avon

My Lords, I hope that it will not be construed in that way. As I said in an earlier reply, both United Kingdom management and the National Coal Board have a lot of extremely good people. It is a question of having people available who have covered both fields—metallurgy and coal mining as well as the field of marketing. They are the people we are looking for.

Lord Nugent of Guildford

My Lords, as there seems to be a difference of opinion between the two sides of the House, is my noble friend aware that on this side the wish to see the coal industry built up into a highly productive and efficient industry, as a major part of the economy of this country, is at least as strong as in noble Lords opposite, and that the new leader, whoever he may be, is a man of critical importance, especially in the field of marketing, if this is to be achieved? Is my noble friend aware that the transfer fee, heavy though it is—and, of course, to many of us undesirable, though apparently unavoidable—is small money compared with the huge subsidy which our taxpayers are, at present, bearing of £500 million a year to keep the coal industry going? So if this man has the qualifications of leadership, which we recognise, and which noble Lords opposite recognised in 1977 when they appointed him deputy chairman of British Leyland, he may very well be able to give the lead in the reconstruction which is needed in this industry, to bring about the very great contribution which it can make towards our whole economy.

The Earl of Avon

My Lords, I am grateful for the support of my noble friend and agree with him throughout. I believe that one of the reasons why we have to pay this sum to Lazard Frères is the very qualities of the man, which puts him at such a high price.

Lord Beswick

My Lords, are we to understand that the £1,500,000 is to be paid to Lazard Frères, irrespective of performance? If there are to be criteria, would the noble Earl the Minister be good enough to say what those criteria are, and whether they will be applied to the chairmen of other public sector corporations? Finally, may I ask the noble Earl whether he happens to know if there is any retiring age for the directors of Lazard Frères?

The Earl of Avon

My Lords, if I may answer the last question first, I am afraid that I do not know. So far as refundability is concerned, as in the case of the BSC, two-thirds of the compensation is refundable on a pro rata basis. If Mr. MacGregor does not complete his term—that is to say, if he resigns or, unfortunately, should be ill or anything like that during the term—that two-thirds will be kept in trust until the end of the term. The noble Lord asked another question which, I am afraid, I have not answered.

Lord Beswick

My Lords, I asked whether there are any criteria which will be applied, as to whether the £1,500,000 is to be paid irrespective of what happens to the industry in the next three years.

The Earl of Avon

My Lords, two-thirds are kept in trust until the end of the term and if Mr. MacGregor happens to resign, becomes ill or fails to keep the appointment then, on a pro rata basis, the compensation is payable.

Lord Beswick

My Lords, remembering what my noble friend Lord Taylor of Mansfield has said, supposing that there is a confrontation in the coal field, and supposing that there is a complete upset as a result of this appointment, is that £1.5 million payable, irrespective of what happens?

The Earl of Avon

My Lords, the noble Lord paints a scenario which I find hard to follow, in my brief, as it were. So far as I know, if Mr. MacGregor continues to be chairman he will continue to get paid. If he is no longer chairman, then he will not be paid. I am not sure from the scenario which the noble Lord paints, where he would be.

Lord Bruce of Donington

My Lords, can the noble Earl clarify one point? Is it to be the case that Mr. MacGregor will continue to be the chairman of British Steel Corporation, until the day he takes up his duties with the coal industry? Is there going to be any period of overlap at all? Perhaps the Minister will care to clarify that point.

Is the noble Earl aware that, so far as one can judge, there was no advertisement put forward for taking on this particular task? Is he not aware that the Prime Minister herself made it quite clear from the beginning that this "super guy", as she called him, was to have the post? Would he not agree that very few Members of the party opposite, including some in the Cabinet, have the courage to tell the Prime Minister that she was wrong? Is it not quite clear that this is a purely personal appointment?

The Earl of Avon

My Lords, so far as the first part of the noble Lord's supplementary question is concerned, the chairmanship of BSC will be decided by my right honourable friend the Minister responsible for the industry, and he will be making an announcement in due course. So far as the noble Lord's latter point is concerned. I do not know from where the noble Lord gets his knowledge but, according to my knowledge, this is an appointment made by the Cabinet with the full approval of all members.

The Earl of Lauderdale

My Lords, can my noble friend say whether there is any requirement in any of the nationalisation Acts that the Government should consult with, and get the approval of, the unions before making such appointments and whether, in its particular case, Sir Peter Parker was vetted and approved by the NUR before his appointment?

The Earl of Avon

My Lords, I believe there is no such thing in the Act. However, I hesitate to use the word "vetted".

Baroness Wootton of Abinger

My Lords, I do not think that the noble Earl answered the question put by the noble Lord, Lord Bruce of Donington, as to whether there would be any overlap during which Mr. MacGregor would be holding both posts.

The Earl of Avon

My Lords, the noble Baroness is quite correct. I do not know at the moment. It is up to my right honourable friend to make the appointment of the new chairman of BSC.

Lord Ezra

My Lords, the noble Earl referred to the amount of public funds payable to the National Coal Board. Would be agree that, on a per tonne basis, the National Coal Board is in receipt of substantially less from Government funds than is the case in any other West European coal-producing country? Secondly, would he also agree that a large amount of these borrowings and these funds is due to the fact that the Coal Board under the 1974 Plan for Coal is building up a new industry to replace the old mines which inevitably had to go out of existence and that the amount of public money being paid into the Coal Board at the present time will represent a future investment far the country?

The Earl of Avon

My Lords, as this is the first time that I have had the pleasure to talk to the noble Lord, Lord Ezra, across the Floor of the House, may I say how much I welcome him here and how much we appreciate his term as chairman of the National Coal Board. Regarding his figures, of course I would not argue with him. As I understand it, there were quite a lot of things agreed in the 1974 Plan for Coal, most of which have been carried out. One of the things that has been carried out is the investment by Government. That investment at the moment, so far as the present Government are concerned, is in the neighbourhood of £800 million. What we should like to see—in the market which I know is not what the Plan for Coal anticipated, in that there is not the market that they thought there would be—is that, equally, the productivity side of the agreement is carried out so that we may have a prosperous and healthy coal industry.