HL Deb 29 April 1986 vol 474 cc169-97

5.20 p.m.

House again in Committee on Clause 1.

Lord Diamond moved Amendment No. 7:

Page 2, line 1, after ("appointment") insert ("or reappointment").

The noble Lord said: I hope that it will be for the convenience of the Committee if I also speak to Amendment No. 12, which is a consequential amendment. It may save a little time if we discuss the two amendments together. The amendment refers to subsection (2) which appears at the very top of page 2 of the Bill and says: An appointment of a person to hold office as the Director shall not be for a term exceeding five years". However, it goes on to say: but previous appointment to that office shall not affect eligibility for reappointment". Therefore, the Bill contemplates reappointment in certain circumstances, but nowhere does it define what the period of reappointment shall be. The first line of the subsection talks about: An appointment of a person to hold office", and defines that as being not for a term exceeding five years. We shall discuss later whether that is an appropriate period.

The simple point which I am making is this. Do the words "An appointment" in the first line of the subsection cover the question of reappointment, or is it not also necessary to refer to reappointment so that there will not be a situation whereby a person is appointed in the first place for an acceptable period and is then reappointed for a far too lengthy period—for example, because there is nothing in the Bill to prevent it? That is the point upon which I wish to receive clarification. I beg to move.

Lord Brabazon of Tara

I hope that I can briefly give the noble Lord the reassurance which he seeks. I assure him that these amendments are not necessary. I am advised that there can be no doubt that the Bill as drafted will apply to the director equally on reappointment or on initial appointment. Thus, under Clause 1(2) any appointment of the director is limited to a maximum of five years, and under subsection (4) any appointment of the director is subject to the terms of appointment under subsections (2) and (3) of the clause.

I quite agree with the noble Lord that it would be entirely undesirable if, having served his original appointment, he could then go on to serve an unlimited further appointment. However, I assure the noble Lord that the Bill as drafted takes account of that point.

Lord Diamond

I am grateful to the noble Lord. If he is so sure about it, I naturally accept his assurance and seek the Committee's leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Viscount Hanworth moved Amendment No. 8:

Page 2, line 2, leave out ("five") and insert ("four").

The noble Viscount said: Amendment No. 8 is a simple probing amendment. The director is appointed for up to five years, and one wonders why the period should be five years. A period of that length will cover more than one government and, as the director can be reappointed, there seems no point in having as long a period as five years. I beg to move.

Lord Williams of Elvel

There is one further point which perhaps the noble Viscount has not made. If you take, consequentially, periods of five years, after a long period of time you will reach 25 years, which I understand is the period of the authorisation. I hope that the Minister will agree that it is undesirable for the appointment of any director to be coterminous with the end of an authorisation and that he has to straddle a reauthorisation. That is why we ask the Minister either to clarify that that will not be the case or to accept the amendment.

Lord Gray of Contin

The Committee may not be aware that five years is a standard period for public appointments of this kind. The Director General of Fair Trading and the Director-General of Oftel both have five years as the statutory maximum length of their terms of appointment, as do nationalised industry board members and members of similar bodies. There is no obligation that an appointment be for the full five years, but the period is designed to enable the post-holder to build up expertise in the subject and to provide a level of continuity. A shorter term would be destabilising both for the industry and the staff of Ofgas.

Viscount Hanworth

I am not entirely convinced by the Minister's arguments, but nevertheless I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Diamond moved Amendment No. 9.

Page 2, line 6, after ("by") insert ("six months").

The noble Lord said: On behalf of my noble friend Lady Seear, with whom I have discussed the matter, I rise to move Amendment No. 9. The first two lines of subsection (3) read: The Director may at any time resign his office as the Director by notice in writing". It is as simple as that. The amendment proposes that the notice shall be six months' notice in writing. It seems to us quite impracticable that a new director of adequate qualifications, skill and experience could be found in the market and engaged within a period of less than six months.

As we all know, it takes a great deal of time and nearly always the person most suitable for the job is already in important employment and would most probably have to give three months' notice. Therefore, by the time you have found him and he has given three months' notice, I do not see how you can possibly expect to find a suitable replacement in under six months.

If that is the case, it would be embarrassing—indeed, it would be more than embarrassing, it would leave the consumer unprotected—if there were to be acceptance of notice without any period attached to it, which is what the Bill provides, because in those circumstances, presumably one week's notice would be adequate, or whatever he chose to give. Therefore, it is important that the matter should be clarified and that a minimum of six months' notice should be included in the Bill. I beg to move.

Lord Gray of Contin

I fully appreciate the intention behind the tabling of this amendment; namely, that sufficient notice should be given by an outgoing director to enable a new one to be found and for continuity of his office to be assured. That is a perfectly reasonable aspiration and one which we share.

However, Clause 1 already provides that the director must give notice if he resigns his office. We envisage that the period of notice to be given will be spelled out in the director's terms of appointment. We fully accept the need for continuity in the directorship, which will be important for the stability of Ofgas itself, and we believe that there is no difference of principle between us on this issue. I hope that in the light of that assurance the noble Lord may be prepared to withdraw the amendment.

Lord Diamond

I do not want to press the amendment unduly, but I have difficulty in understanding what the Minister said by way of explanation. After all, the subsection says: The Director may at any time resign his office". It does not say that he may resign his office in accordance with the terms of his employment under subsection (1). It says: The Director may at any time resign his office", and we can all understand the reason for that. It is no use trying to force a person to work who does not want to work any longer. If that is the case, at the moment I cannot see that the anxiety, which I am delighted to find is shared by the Government and by myself, is dispersed by having nothing in the Bill to indicate that one expects a reasonable period of notice. Perhaps the noble Lord the Minister has something further to say on that point.

Lord Bruce of Donington

Is it not the case that what is happening here is that parliamentary counsel simply does not want the clause altered? It is as simple as that. The clause having been written, it is now sacrosanct and must not be amended on any account. Surely the amendment to insert "six months" is perfectly reasonable.

If the noble Lord says they intend to incorporate six months within the terms of the service contract, whatever it may be, what is the objection to putting it into the Bill? It seems to be quite proper. It is not an extraordinary provision to have in an Act. Why should the noble Lord hide behind the excuse that there is really no need for it and that it will all be in the terms of the service contract? If we are all of the same mind, why not enshrine it in the statute? There is no harm in it.

5.30 p.m.

Lord Gray of Contin

I think we are all of the same mind, but we take the view that the terms on which the director is appointed should deal with this matter. I suggest to the noble Lord that it would be a mistake to write this into the legislation, because there could be many different reasons for resignation. It would be a pity completely to tie the hands of everybody for ever more by enshrining it in legislation.

The director, for example, might want to resign for reasons of health. There could be other reasons. There could be domestic problems; there could be all sorts of things. It would be a mistake rigidly to enshrine this in the Bill. I am sure that there is nothing of principle between us in this matter. It just is that we take the view that it would be more appropriate to have this included in the terms under which the director is appointed.

We should preserve the flexibility that we have at present. There could be circumstances when the Secretary of State would want to waive a period of six months if there was a good candidate already available and able to follow on. That is just another reason for not enshrining it in the legislation. I think we should make a mistake by doing that.

Lord Donaldson of Kingsbridge

Would the noble Lord accept the word "reasonable" in front of "notice"? That might meet both sides, who agree so completely.

Lord Gray of Contin

The noble Lord has made a constructive suggestion, but, with respect, I still think it would be better to have this included in the terms of appointment of the director rather than have it referred to in the legislation.

Lord Diamond

We are all concerned with having clear legislation. This subsection is as clear as a bell. It says: The Director may at any time resign his office as the Director by notice in writing addressed to the Secretary of State". It fixes no period for that at all. I am bound to ask the Minister whether he would be good enough to say that in view of these representations he will take further advice?

We are all after the same thing. We are not trying to press the noble Lord to do anything that he does not want to do, or that he says the Bill does not want to do. We are all trying to do the same thing. Let us have a good, clear Bill. If he would be good enough to look at that at his leisure and say that he is prepared to do that, then we would withdraw the amendment.

Lord Boyd-Carpenter

I hope that my noble friend will not give that assurance. This amendment is a little more serious than has been suggested. If we make it a statutory condition that the notice must be for six months, then, as I am sure the Committee will appreciate, that means that, even if there is very good reason for the director to go—he may have a disagreement of policy with the Government; he may have the offer of some major appointment elsewhere; he may be becoming unfit because a statutory condition cannot be waived, to be legal notice under the Act, as it will then be, it would have to be six months' notice. On the other hand, as my noble friend said, if it is in the director's contract, then the Minister can waive that in appropriate circumstances. There is a little more in this amendment than had been suggested, and what there is I think is rather bad.

Lord Diamond

The noble Lord has misunderstood me out of his zeal to support the Government. I am not suggesting necessarily these words at all. If the Government prefer the words suggested by my noble friend, "reasonable notice", that is all right too. It is not the case that the Secretary of State cannot get rid of an undesirable director. The next few lines in the Bill provide for that. It says: and the Secretary of State may remove any person", etc. It is not the case that, if you have somebody ready and waiting, it is difficult to arrange for the holder of the office to withdraw even within his period of six months and for the newcomer to be taken on, or preferably for there to be an overlap of a month, as is most regularly done, which helps continuity of organisation and efficiency.

All this is suggested in order to provide for clarity and greater efficiency. I would still hope that, notwithstanding the not very constructive advice from his noble friend, the Minister will say that he will make sure that what he said is right, and that there is no need whatever to alter the wording; and that it provides not what it seems to provide, but what he thinks it provides.

Lord Stoddart of Swindon

I hope that the noble Lord, Lord Gray, will listen to what has been said. This clause is very wide. It says: The Director may at any time". It is not "may resign his office as director", but it is "may at any time". They are the offending words. It has been made clear already by the noble Lord, Lord Diamond, that he could give a minute's notice according to this Bill, and clearly that cannot be satisfactory for an office of such importance as this.

As I understand it the noble Lord, Lord Diamond, is trying to be helpful. He is saying that it should not be expressed in such wide terms in a statute. He is asking the noble Lord, Lord Gray, to come up with some sort of words that would be acceptable. All he is doing is asking the noble Lord to look at it—not reject it out of hand, but look at it before the next stage of the Bill to see whether we can reach an accommodation. Surely we are good natured enough towards each other to accept that simple proposition?

Lord Gray of Contin

I am most grateful to my noble friend Lord Boyd-Carpenter for illustrating much better than I have been able to do the fact that this amendment is really not necessary. All the points that have been made can just as easily be incorporated into the terms on which the director is appointed. I have no doubt about that at all. But I am always reasonable, and the noble Lord has asked me in a reasonable way whether I would look at this again. I am prepared to do that without any commitment whatever. I am almost 100 per cent. sure that I shall come back of the same mind as I am now, but I shall certainly look at it again as the noble Lord suggests.

Lord Diamond

The noble Lord is as courteous as usual, and if he does that he will give us the necessary reassurance. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Diamond moved Amendment No. 10: Page 2, line 7, after second ("State") insert ("after consultation with the appropriate Committee of each House of Parliament"). The noble Lord said: On page 2, line 7, we find: the Secretary of State may remove any person from that office on the ground of incapacity or misbehaviour.

We shall discuss "incapacity or misbehaviour" later. What I am concerned about at the moment is the protection that I think would be appropriate. If we accepted the amendment, the clause would read: and the Secretary of State after consultation with the appropriate Committee of each House of Parliament may remove any person from that office on the ground", stated in the subsection. The reason for this is obvious.

One wants a director to feel a maximum of independence in carrying out his duty. Nobody wants him to be a stooge of the Secretary of State. Nobody wants him to be unduly afraid of the Secretary of State. On the other hand, the Secretary of State has a responsibility to Parliament and he must act responsibly before removing any person, for the reasons stated.

Throughout when we have referred to provisions of this kind we have been anxious to ensure that the director has greater status, greater security and greater self-reliance than he has at the moment. As the Bill is drawn, he is rather a lone person, subject, I might almost say, to the whim of the Secretary of State as to his removal. It is a serious matter to remove a person merely on the ground that he was doing his job thoroughly but being a bit awkward and therefore causing pressure; he would be moved from British Gas, as it will then be, on the grounds possibly and only that the regulation was being surprisingly effective.

Some strengthening of the position of the director in that way would be sensible. It is not a great deal. It is nothing more than consultation. It is not determination by the appropriate committee of each House. If he were wise the Secretary of State would no doubt take account of the consultation and of the views of each committee, but he is not bound by them. He is not bound to disclose confidences if he does not want to do so. If it is within his knowledge, and if as a responsible Secretary of State he feels that there is something he cannot disclose in the national interest, he would say so and refuse to disclose it. People would judge accordingly.

The first point I want to make is that we need to strengthen and add to the confidence of the director. This is one way of doing it: to ensure that he is not sacked merely because he is not doing exactly what the Secretary of State would like him to do.

My second point is that in this case I have suggested the words the appropriate Committee of each House of Parliament". If the Minister were to say that he prefers some other form of words or type of consultation, I should be glad to listen to that. It is not the essential point, but in this case it is wiser that there should be consultation with each House of Parliament.

I have no need to deal with the question of the "appropriate Committee" because we discussed that previously. It was decided that the phrase was suitable to cover whatever committee might be in existence at the time. It is better that the director should have the protection of being able to put his case, if necessary, to each House of Parliament rather than to one. The reason for not suggesting only the House of Lords but bringing in the other place as well is that another place is full of Members who are continually being refreshed in their knowledge by constituency contacts and may have a great deal to offer in coming to a wise judgment as to how the consultation should emerge. It is for those reasons that I am making the suggestion. I beg to move.

5.45 p.m.

Lord Bruce of Donington

I hope the noble Lord, Lord Gray of Contin, will see fit to accept this amendment. Ministers are human and are therefore fragile individuals. There are few of us, even in this place in an atmosphere of philosophical serenity, who do not occasionally acquire either justifiably or unjustifiably strong personal irritations and dislikes.

Indeed in one case which has been before your Lordships' House in comparatively recent months we had intense ministerial irritation with Mr. Ken Livingstone, which prompted the Prime Minister, in a fit of intense anger prior to the publication of the 1983 election manifesto, to decide to abolish the GLC as a means of ridding herself of him. This is perhaps an extreme example. I agree that the circumstances were exceptional, but then so is the Prime Minister's temperament! I shall assume that members of the Government are normal individuals, not given to sudden gusts of emotion either of hate or love, but nevertheless human.

Let us say that we have a Minister of State or a Secretary of State who has a director general of this body of Ofgas. Let us say that in his normal social contacts, which are entirely proper, where he mixes from time to time with directors of City institutions and other large investors he hears complaints about Ofgas being much too restrictive and how the City does not see that it will receive its dividends unless the director general has a slightly lighter rein. The Minister ponders these things, he sees the director general and he taxes him with trying to institute too strict a regime. Let us say that the director general, being a robust individual, replies that he completely disagrees with the Minister and all that he is trying to do as director general is to carry out the will of Parliament.

Let us say that a degree of personal tension develops. This might ultimately culminate in the position where a director general might, properly and in the public interest, wish to make certain public remarks about the inadequacy or otherwise of the mandate entrusted to him. Such things happen and have happened many times within my memory of parliamentary life, inside or outside this place, which now goes back some 40 years.

Within that context what does a Minister regard as "incapacity" or "misbehaviour"? Incapacity may cover physical incapacity, mental incapacity or temperamental incapacity or it may be anything else that the Minister chooses to make it. What about misbehaviour? I can understand the word "misdemeanour" because that has a legal connotation. It is a misdemeanour, for example, if one is caught exceeding the speed limit. I believe that that is a misdemeanour. I am not sure, strictly speaking, whether getting a parking ticket is a misdemeanour. But "misbehaviour" may be rather loosely interpreted, bearing in mind the arguments that we have heard so far, particularly applied to the original appointment of the director. We have been assured by the Minister that the greatest possible care will be taken in the selection of what the noble Lord, Lord Gray, or the noble Lord, Lord Belstead, described before as a very high powered individual. It depends on what capacities will be available in the country for this purpose.

The Committee will recall that when the Government were seeking to appoint a new managing director or executive chairman for British Steel, Sir Keith Joseph had to scour the boardrooms of Britain and he could not find one until it was pointed out that Mr. MacGregor was already sitting on the board of British Leyland at the time. There was enormous difficulty in getting one. Surely if there is enormous difficulty in getting one, this will put the Minister very much on his guard. If we are to believe what we see in the programme "Yes, Minister", he will get the advice of the good and the great, the mandarins of Whitehall, who have lists of individuals whom, in certain circumstances, they are doubtless prepared to recommend, and the Minister will exercise his judgment. How can a person selected by the Minister, with the advice of the good and the great and the mandarins, ever be guilty of incapacity or misbehaviour within the broad general terms that are put down here?

In those circumstances I think that the amendment moved by the noble Lord, Lord Diamond, is excellent. All of us in our executive lives, whether we are in business or anywhere else, occasionally like to talk to somebody about a problem. It need not necessarily be with one's own colleague in one's own business or, dare I say it, one's own colleague in the Cabinet; that is, assuming that members of the Cabinet talk to one another, which is sometimes doubtful. It is nice to be able to talk to a responsible body when nobody can reproach you for having consulted it. Who could possibly reproach the Minister for consulting a committee of either House of Parliament? This seems to be a very sensible precaution indeed and I hope the Minister will see the reasonableness of the argument of the noble Lord, Lord Diamond, which I have endeavoured to reinforce. I sincerely hope that the Minister will bend on this particular point, even though he may in these circumstances—I note the look on the face of the noble Lord, Lord Boyd-Carpenter—be urged by his noble friend to do exactly the opposite.

Lord Boyd-Carpenter

The noble Lord, Lord Bruce of Donington, was almost engaging in the art of prophesy. Indeed, there were moments in the course of his speech which were actually relevant to the amendment, though in common fairness I must say there were not very many.

First of all, I should like to ask a question of the noble Lord, Lord Diamond. His amendment refers to an "appropriate committee". what committee of this House has he in mind? I perfectly accept that in another place probably the Select Committee on Energy would be appropriate; but in this House what is the appropriate committee to be empowered to be consulted in this way? The phrase "appropriate committee" has been used several times in opposition amendments on this Bill. I have been puzzled, and now I have the opportunity to ask, as to which committee of this House is deemed appropriate.

Secondly, I should like to ask the noble Lord, Lord Diamond, what happens if the misbehaviour or incapacity arises during the long recess? Are the public to be deprived of the protection of an effective director general because Parliament are not sitting and they may not be sitting for some months? Plainly, even if the incapacity and misbehaviour arise during the Parliamentary Session there will be a certain amount of delay, since parliamentary committees cannot always be assembled straight away. I wonder what the noble Lord suggests on that.

Thirdly, surely there is really nothing in this point at all. If a Secretary of State takes the drastic action of removing, on grounds of incapacity and misbehaviour, a very senior functionary of this sort, the Secretary of State will certainly have to answer for that both in this House and, unless another place has changed very much since I left it, in another place. Therefore, what the noble Lord is really trying to achieve is that this important functionary shall not be removed without Parliament being able to consider the matter.

Lord Stoddart of Swindon

Would the noble Lord give way?

Lord Boyd-Carpenter

Of course.

Lord Stoddart of Swindon

I have been listening very carefully to the noble Lord. Of course, he is quite right that in the removal of a person from office the Secretary of State would have to answer to Parliament. Undoubtedly this matter would be raised. I remember the case of Lord Hall who was dismissed. Parliament certainly had the opportunity to question the Minister, but the gentleman who was sacked never had the opportunity of himself answering to Parliament; he did not have the opportunity of putting his point of view. Lord Diamond's amendment would in fact cover exactly that.

Lord Boyd-Carpenter

I think the noble Lord is over-simplifying the matter. If a public functionary of that sort is sacked it is unlikely that he will remain completely silent. It is unlikely that the press and the media will not ask him for his views and for his justification. It is even unlikely that he may not have friends in one House or another who will be very happy to listen to his case. Therefore, with respect, is he not better placed to argue his case in public in the media or through the aid of friends in this House than in the relative quiet of a Select Committee?

Lord Bruce of Donington

I am grateful to the noble Lord for having given way. Is he saying that the director general who is dismissed because of the provisions of the Bill as they stand at present should have an opportunity only after the event? Why should he not have an opportunity before the event?

Lord Boyd-Carpenter

One reason is that if he has an opportunity before the event there is delay in perhaps an urgent and difficult situation in respect of a functionary, the importance of whom for the protection of the public noble Lords opposite have spent two days arguing in Committee. Now they are apparently prepared to argue for a period in which the person who is guilty of misbehaviour or incapacity is obviously unable to act because he is awaiting a hearing by a Select Committee. As no one knows better than the noble Lord, Lord Bruce of Donington, the practical reality is this: a Secretary of State who makes a bloomer and removes a man who is doing a good job in an important office puts his own office on the line. No one knows better than the noble Lord, Lord Bruce of Donington, that that is so. Therefore, the great safeguard is not only the fact that the Secretary of State will have to answer to Parliament after the event, but also before the event, and before taking a decision, the Secretary of State has to satisfy himself that what he is doing is right, sensible and something he can get away with in Parliament.

Lord Somers

I thought this was a Bill to make the gas industry independent. If that is so, why does it have to go through all the rigmarole of consulting both Houses of Parliament before it does any of its private business? The noble Lord, Lord Bruce of Donington, has persuaded us, in his usual gentle and persuasive manner, that some members may sometimes make mistakes. I do not deny that. One of them made a colossal mistake in introducing this Bill. However, we have it, and therefore we must make the best of it; but if the gas industry is to be independent I cannot see why it should thereafter be bound to all the rigmaroles of parliamentary discussion.

Lord Diamond

Courtesy requires that I should answer the three questions which the noble Lord has put to me; but perhaps I may precede that by answering the points that the noble Lord, Lord Somers, has just made.

The noble Lord, Lord Somers, said—I could not agree with him more—that one of the greatest mistakes made was to introduce this Bill at all. That will find considerable support in many parts of this Chamber. He then asked: why are we taking all this trouble when the theory is that the whole of this body should be independent, and the director should be independent? That is not the case. This is an appointment by the Secretary of State; it is a quasi government department. In fact, I might also leave out the word "quasi" and say it is a government department without a government Minister at the head of it. So there is no question of independence but, as the noble Lord knows—

6 p.m.

Lord Stoddart of Swindon

I think what the noble Lord, Lord Somers, said was that the gas industry should be free. Of course, we are not talking about the gas industry, we are talking about a regulator here. I think the noble Lord would agree and I hope the noble Lord, Lord Somers, would agree, that it is a different matter. The gas industry will be controlled by a board which would be quite separate from the regulatory body.

Lord Diamond

I understand that. I had thought that I had heard the noble Lord, Lord Somers, correctly; but I may well not have done so. But I am sure that I heard the noble Lord, Lord Boyd-Carpenter, correctly. He put to me three questions. He asked me, first of all, which committee was involved when we were talking about "appropriate committee". I am sorry that he has asked me that because he made clear that he was here for the whole of our first day's proceedings, when, of course, I went over this matter, not at great length but at sufficient length, I thought, to explain it.

I explained it by referring to—in the case of the other place—the Energy Committee, which has already considered these matters and made a report—an unhelpful report as far as the Government are concerned because it was a critical report. The Energy Committee is very well equipped to deal with matters of this kind. Therefore, I imagine—but one does not want to limit it in that way; for one wants to leave it to the good sense of the other place—that they would decide to interpret "appropriate committee" in their case as the Select Committee on Energy.

I went on to add that we have two committees which might be satisfactory and might be regarded as appropriate but that it was better to say "appropriate" because, of course, one does not know whether these two committees will continue for all time, they being sessional committees, as I believe. One such committee is the Energy, Transport, Technology and Research Sub-Committee, Sub-Committee L of the European Communities Committee. I explained that that was one committee which this House might regard as being appropriate because it dealt with energy and was well equipped to do so and a number of most distinguished Members of your Lordships' House serve on Sub-committee L.

Lord Boyd-Carpenter

Before the noble Lord leaves that, is he aware that his amendment does not provide for this to go to a sub-committee but to a committee of this House?

Lord Diamond

I am sure that the noble Lord does not want to hold us up on little details of that kind. We are anxious to get on with the Bill. If the noble Lord at a later stage wants to introduce an amendment saying, "For 'committee' read 'or sub-committee' ", we should welcome that. It would be easily disposed of.

There is another committee which I mentioned on a previous occasion, but courtesy requires that I repeat the point. It is the House of Lords Offices Committee, which is well equipped to deal, and does deal, with matters of staff appointments. It is a very large committee; many noble Lords present probably serve on it and it is very well equipped to do that particular job. But I thought, again, that it would be better to leave it to the good sense of your Lordships' House to decide which of those two committees, if they are in existence at the relevant time, should be asked to carry out that function. That is the answer to one of the three questions that the noble Lord asked me.

The second question that he asked me was whether it was not the case that the Minister appoints and, therefore, the Minister has to answer to the other place, as indeed does a Minister in this place too. Of course it is the case that he has to answer; but, as has already been pointed out, the crucial point is that he has to answer after the event. It is of no earthly good when this chap has been sacked for no good reason to be able to get the satisfaction of embarrassing a Minister. What we want is the protection of the consumer and not the embarrassment of a Minister. Therefore, that is no protection whatever because it comes after the event. One wants to have some method of dealing with it before the event.

Then the noble Lord puts forward a very helpful and constructive point. He says, "What if this happens during the Recess?" The purpose of putting down amendments at Committee stage—as nobody knows better than the noble Lord, because he was instrumental in a Bill not very long ago, a mere 40 years, in putting down one or two amendments himself, if I recollect correctly—is to cover the ground, to trawl, to find out which amendments are acceptable to the Government and which are not. The aim is to find out the Government's position and, at a later stage—and in this House, we have two later stages, which is a great advantage for doing a good job in amending a Bill—to put down an amendment which might be accepted by the Government in the light of what they have said at an earlier stage.

So, at a later stage, if the noble Lord cares to come forward or if the Government says, "We are not prepared to accept this amendment without the addition of some protection, such as, 'except such an event occurring during a parliamentary Recess, when the Secretary of State shall have the sole power'", it will be perfectly easy to frame an amendment which will deal with the matter and of course it is a very helpful suggestion that the noble Lord has made. If the Government do not put forward the amendment, I hope that the noble Lord himself will do so.

Those are the answers to the noble Lord's questions and, if I may, I will add just one point about the possibility of difficulties arising. One illustration has been given in the case of the GLC. However, an illustration which comes very much to my mind and which is more easily recollected by all the Members of your Lordships' House, is of course the Westland affair, where the chairman of an aircraft manufacturing company had an interview with the Secretary of State about which there was considerable confusion, to put it at its least. The Secretary of State was extremely wrathful and if he had been dealing with a director instead of a the chairman of another company he would have given him the sack then and there. But he did not. And matters developed and the person who got the sack was not the chairman but the Secretary of State.

It would be unfortunate, would it not? if the Secretary of State lost his temper over something when dealing with the director and gave the director the sack, when a little spare time would have made it clear to the relevant committee of either House that the person who should be sacked was the Secretary of State and not the director. We do not want that history to repeat itself. I am not imagining; I am merely reminding your Lordships of very recent history. It is in those circumstances that I hope that the Minister will be good enough to speak favourably with regard to this amendment.

Lord Sandys

The noble Lord, Lord Diamond, has demonstrated an endearing solicitude for the director general and has taken us into a number of situations which may or may not have endeared themselves to your Lordships. But I suggest that we may look at this situation in a totally different light if we regard it in a field which is a long way from this type of appointment. I suggest that ecclesiastical law may be a parallel, not perhaps a very good parallel but it is a parallel where a bishop, through a committee, appoints a person. He may, if he appoints that person to a freehold, remove him only on the grounds, as stated in the Bill, of incapacity or misbehaviour. The bishop, if he wishes to dismiss that particular incumbent, has regard to the situation and he will do so only on those very grave grounds.

Both the noble Lord, Lord Diamond, and the noble Lord, Lord Bruce, have suggested that the Minister would do so on grounds of personal animosity. There may well be circumstances which have arisen in the past which could be chosen as parallels, but I think that the Committee in examining the Bill may agree with me that grounds of incapacity or misbehaviour are quite clearly stated and quite clearly identified. Therefore I agree wholeheartedly with my noble friend Lord Boyd-Carpenter that this amendment is misguided and inappropriate for the Bill.

Lord Whaddon

On the other hand, I find the case made by my noble friend Lord Diamond sound and convincing. We should be aware that the world we are entering with the new company is something completely new. There is no close parallel at all in British industry up to now. We are handing over to a private company a gigantic monopoly which will have the most dramatic powers over the lives of 16 million (is it?) consumers. We should therefore be extremely careful about the defences we erect for the protection of the public interest.

In an earlier debate I referred to my fear that the industry could come to be like Dracula, digging its fangs into the public's jugular. We are trying to erect a fragile defence and, heaven knows, the director and his staff are in all conscience a fragile defence; a very thin line of garlic flowers that we are putting in the way of this Dracula! But we must be careful to make sure that the Minister, in a fit of pique, is not able to rip away this line of defence. Therefore I would say that there is no direct parallel and we are handing over to a private company an industry which will have potentially devastating effects on millions of ordinary families. We must take every precaution and the greatest care in protecting the public interest. I must say that the case made by my noble friend is utterly convincing, and I feel that this amendment is one which the noble Lord, Lord Gray of Contin, could with dignity accept.

Lord Gray of Contin

I think perhaps I made a mistake on the previous amendment by agreeing to take it back. That seems to have given noble Lords on the opposite Benches the idea that they have an easy pushover here and that—

Noble Lords

No, No!

Lord Gray of Contin

—and that I am going to weaken on issues which are very much more clearly defined. I think I should put them out of pain right at the start by telling them that I have no intention of accepting the amendment. Nevertheless, I realise this is a subject which was debated at considerable length in another place, and I welcome the opportunity of putting on record the Government's position. I know the noble Lord, Lord Diamond, in his persuasive way, gave the Committee the option of going for a number of possibilities when he explained what his amendment seeks to do; but I do not think that he has come up with anything that I would be persuaded by, and I shall now try to set out our position.

The Committee will know that the procedure we have set out in the Bill for the removal of the Director General of Gas Supply follows a well established precedent. Both the Director General of Fair Trading and the Director of Oftel may be removed only by the Secretary of State. It would be entirely unnecessary and inappropriate to single out the removal of the director for consultation with committees from either House of Parliament. We have provided that the Secretary of State has responsibility for the director. As well as being able to remove the director, he receives an annual report from him on his activities. That is laid before Parliament and it ensures that the director is accountable through him to the whole of Parliament.

6.15 p.m.

The noble Lord, Lord Diamond, in his suggestions, made one or two points which I think I should deal with specifically. Perhaps the most important one I want to put right is that the Secretary of State should not be able to remove the director on frivolous grounds. I doubt very much whether any Secretary of State would want to do such a thing anyway, but I take the point. However, I believe we have already provided for this by using in subsection (3) the words "incapacity or misbehaviour". These place stringent and narrow limits on the grounds on which the Secretary of State may remove the director.

Furthermore, the director can, if he disagrees with the Secretary of State's decision (as my noble friend Lord Boyd-Carpenter pointed out very clearly), raise the matter with those who are in a position to have it raised in Parliament. That could, and probably would, happen very quickly indeed. In addition, he has the facility to take the matter to court if he feels sufficiently strongly, and the court will then decide what the circumstances of the case amount to and whether incapacity or misbehaviour can be proved. I submit, therefore, that the director already has the protection in the legislation and that that is the protection the noble Lord seeks to give him; in other words, it is already there.

The arguments which were deployed by the noble Lord, and also by the noble Lord, Lord Bruce of Donington, did nothing to reinforce the position. I had some sympathy with the noble Lord, Lord Somers, when he asked what was the point of carrying out a privatisation scheme and giving British Gas liberty for the future if you are going to introduce an amendment of this sort. I think he probably finds, as many of us do, that some of these arguments tend to be a little repetitive. He probably shares my view that they could perhaps be dealt with a little more hastily, and we could then make progress and move on.

The noble Lord, Lord Sandys, rightly pointed out the weaknesses which he saw in the amendment. Despite the support which was given by the noble Lord, Lord Whaddon, I am afraid that these arguments have done nothing to convince me. On the previous amendment I could see the point that the noble Lord was seeking to make and I agreed to look at it again. The noble Lord emphasised on that amendment that this was not a political matter and that we were acting in the best interests of the public. I tend to feel that in this amendment we have crept back into the political arena a little bit and that the philosophy of noble Lords opposite is becoming more pronounced once again. I cannot be persuaded by this amendment, and if the noble Lord seeks to press it, I must ask my noble friends to vote against it.

Lord Ezra

Would the noble Lord in his definition of "incapacity or misbehaviour" specifically exclude differences of opinion?

Lord Gray of Contin

I think we have to take the definition of those words in the dictionary and work from there. I think that difference of opinion is something quite different, and I would not care to comment further than that.

Lord Stoddart of Swindon

Before the noble Lord sits down, he referred to the philosophy of this side of the Committee. Does he not accept that the philosophy that we are expressing from this side is of greater involvement of Parliament? Does he not agree with that?

Lord Gray of Contin

I am always in favour of the involvement of Parliament, but there is no point in involving Parliament where Parliament has no need to be involved. I see no advantage whatsoever in involving Parliament in this amendment, any more than I did in involving Parliament through the committees suggested by the noble Lord, Lord Diamond, in the amendments we discussed last week.

Lord Bruce of Donington

Before the noble Lord the Minister sits down, I have a technical question. I am most anxious that the noble Lord should not have committed himself, in what he said previously, beyond where he wanted to go. If the Committee's recollection agrees with mine, he said that in the event of the director general being dismissed on grounds of incapacity or misbehaviour he would have a legal remedy in the courts against the Minister. Will the noble Lord confirm that he said that and that that is the case? Will he also say what grounds the director general would have for bringing such a case before the courts?

Lord Gray of Contin

I confirm that it is correct that the director general could have recourse to the courts. The grounds would be a matter for his judgment if he disagreed with the reasons given for his dismissal by the Secretary of State.

Lord Diamond

I want to make clear that I am not talking about incapacity or misbehaviour as they are the subject of two later amendments when we shall be seeking proper clarification and will discuss the matter fully. It is unfortunate that the noble Lord the Minister thought it necessary to bring that point into the argument, because he will then accuse us of repeating it when we come to deal with it again later. On that same tack may I, on behalf of the noble Lords, Lord Sandys and Lord Boyd-Carpenter, reject completely his allegation that they were speaking in order to hold up the business? It is far from that. Both noble Lords had constructive speeches to make. I do not necessarily agree with them but I hope that the noble Lord the Minister will not say that the purpose of a Committee stage is to prevent any Member on his side of the Chamber speaking, just as he cannot prevent us from speaking.

Lord Boyd-Carpenter

Will the noble Lord forgive me?

Lord Diamond

I hope that the noble Lord notices the clock.

Lord Boyd-Carpenter

I am deeply moved by the tribute that the noble Lord has paid me, because after all no one could speak with greater authority on the subject of holding up business.

Lord Diamond

If the noble Lord wants to attribute that title to himself, he must be free to do so.

I wanted to deal with what the Minister called the well-established precedent. He said that the Government were following a well-established precedent. The precedents are the Office of Fair Trading and Oftel. Those are the only cases he has mentioned when he keeps on talking about well-established precedents. There are in fact two, and only two. The Bill is modelled on those two.

The first has a totally different purpose. I am afraid that every time the noble Lord brings in the Office of Fair Trading as a parallel for privatising gas I shall have to remind him of the fact that they have two totally different purposes. It may save time in the drafting of a Bill and save the Government from the necessity of thinking about it when they are rushing through a Bill, merely to take clauses from a previous Bill and slap them in this Bill without any change. Although it may save their energy it is not a great tribute to their sense of responsibility and it does not help us. That example is no precedent whatever.

There is one precedent of a similar character and one only; and that is Oftel. We say time and time again that that precedent is being shown, as we sit here, not to have worked well in the consumers' interests, which is what we are talking about. We are talking about protecting the consumer against this monopoly. That is the Government's line as to what they are trying to do in the Bill.

I am bound to say that there is no satisfactory precedent for the terms of the Bill, as they are put down. I had hoped to receive a much more satisfactory reply. I do not want to hold up the business by suggesting that we should divide. If the noble Lord, Lord Belstead, wants us to divide, we shall accede to that readily. I was proposing not to delay the business and not to seek a Division. After having made clear that this is an important matter to which we shall have to come back, after having carefully read what the noble Lord the Minister has had to say, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Diamond moved Amendment No. 10A: Page 2, line 8, after ("incapacity") insert (", other than incapacity likely to be of a temporary nature,"). The noble Lord said: I hope that it will save time and be for the convenience of the Committee if, with this amendment, we discuss also Amendment No. 10B. The effect of the two amendments is to make clear that although the Secretary of State at present, acting alone and without any consultation, may remove any person from that office on the grounds of incapacity or misbehaviour, we seek to suggest that it is better to insert that the incapacity should not merely be of a temporary nature and that the misbehaviour should be gross misbehaviour.

I am in the difficulty that I can find nowhere a definition of the words "incapacity" or "misbehaviour". The Bill relies on those two words and yet so far as I can see they are defined nowhere in the Bill. It is left to common sense and Webster's for us to try to find out what they mean. That is not a satisfactory way to legislate. The first questions that I want to ask the noble Lord the Minister are whether there are, first, any definitions, secondly, any precedents. Has the matter been heard in court and defined so that we have some legal precedent on which to go and to tell us where we are? If not, this is slapdash legislation and we do not want such legislation to issue from this Chamber.

I shall refer first to incapacity likely to be of a temporary nature. It would obviously be unfair for a director general to be removed from office merely on the grounds of incapacity which for one reason or another was going to dissipate or disappear in the course of a week or two or a very short period. There would surely be others who could look after the business until he was sufficiently recovered, supposing that the illness was temporary. The clause says merely "incapacity". Nowhere does it say "temporary incapacity". It is therefore open to a Secretary of State who is waiting for an opportunity, for good or bad reasons, to get rid of a regulator, to say, "Ah, he has the 'flu. He has a temperature of 104. He is incapacitated. I will drop him a line terminating his appointment." I do not know what "incapacity" means. It could mean all sort of things. Temporary illness could clearly be included.

I wish to ask the noble Lord the Minister various questions: first, as to legal precedent; secondly, as to definition; and, thirdly, as to whether, as it stands, the clause does not cover temporary incapacity, which would be wholly unjust and therefore should not remain in the Bill.

I now wish to refer to misbehaviour, with which I shall deal shortly because how we act afterwards depends on the reply of the noble Lord the Minister. Again, "misbehaviour" is not construed or defined. I know of no definition in the Bill. I am not aware of any legal precedent, of any case having gone to the courts for a decision as to whether a certain action was misbehaviour. It is therefore sloppy legislation of the kind that, as I have said, we do not want to issue from this Chamber.

6.30 p.m.

So would he please be quite clear as to the meaning of "misbehaviour", and does it include what one would normally regard as gross misbehaviour? Gross misbehaviour is very well understood; but, for all I know, misbehaviour might be all sorts of things. It might be wearing the wrong clothes to go to the office. I do not know what it means, but it may refer to all sorts of trivialities which are wholly inappropriate to exercising power to remove a man from office. Of course, it would give rise to compensation, but that is not the issue. The issue is whether this individual who is charged with this enormous responsibility can feel he has reasonably safe tenure of office, so that he can do his job properly without this sword of Damocles hanging over his head in the word "misbehaviour".

It is no answer to say that if a misjudgment were made by the Secretary of State, the individual could have recourse to the courts. That means that after two years or so he will get some money out of the Government—that is, out of the taxpayer—and in the meantime he has been got rid of and there is no likelihood of him coming back to do the job. So references to appealing to the courts give me no satisfaction whatsoever.

The wise man is the man who arranges his affairs so that he never has to appeal to the courts, and the wise government is the government that arranges its affairs so that it does not have to answer questions in court. If the matter is clear beyond doubt, you do not have to ask a judge to tell you what the legislation means. It is clear on the face of it. I am sure that I have made clear the essential reason for my amendments, and I beg to move the first one.

Lord Belstead

In moving this amendment, the noble Lord, Lord Diamond, has asked whether there is any precedent for the drafting of subsection (3) of Clause 1 which is the subsection that we are discussing at the moment. The answer to that question is that the wording of this subsection is identical to Section 1(3) of the Fair Trading Act. Removal on the grounds of incapacity or misbehaviour is widespread and commonplace for officers in such positions and for board members of nationalised industries. Indeed, I have no doubt that on many occasions when nationalised industries were being set up some 30 years ago governments, of which the noble Lord was a leading member, probably approved this kind of wording for the legislation concerned.

The two words to which the noble Lord is seeking to add qualifying words—namely, "incapacity" and "misbehaviour"—are objective criteria and dismissal on either ground could be challenged in the courts. It is for that reason that there is not a definition. It will be for the courts to decide whether the grounds given by the Secretary of State for dismissal constitute incapacity or misbehaviour.

The noble Lord has had his fun asking me whether I can give a precedent and produce a definition. Let me now throw the ball back to the noble Lord and ask him a little about his amendment. For instance, what is meant by "temporary"? When the Committee stage of this Bill began on Thursday of last week, I was under the impression that it was a stage of the Bill which was temporary. I must say that doubts are beginning to crowd in on me as to whether I was right in that assumption. As to what "gross" may mean, again I am not entirely sure; but what I am certain of is that it would so fetter my right honourable friend the Secretary of State that I think it would render that leg of the grounds on which the Secretary of State could part company with the director almost useless.

I say quite seriously that this part of subsection (3) is genuinely designed to provide the director, when he or she comes to be appointed, with security of tenure during the period of office and thereby to give sufficient independent status to resist interference in the manner in which the director discharges his or her functions. In other words, it was felt that putting in this wording, which is to be found in other legislation, would give the director a free hand, provided that the director was comporting himself or herself properly.

I recognise that these are two amendments which, in a sense, demonstrate the kindness of heart of the noble Lord, Lord Diamond, in that he wants to make the grounds on which the director may be given notice less easy to fulfil. But I really think that they are amendments which are unclear and they would fetter the Secretary of State's power in a way which would not be acceptable to the Government.

Lord Diamond

I find that answer most disappointing and not all that straighforward. I asked specifically for a legal precedent and the noble Lord has not answered that question at all. He quoted two statutory precedents. I spent considerable time explaining to the noble Lord why those so-called statutory precedents were not precedents. Does the noble Lord really want me to go over all that ground again? I explained exactly why, in our view, they were not proper precedents and asked for a legal precedent. It is noble Lord—who holds an important position in the Government—who is bringing forward this legislation. It is his responsibility to explain it and to answer reasonable questions. The reasonable question is about clarity, yet all he does is to ask me: what is "temporary"? It is for the Minister to find out what is temporary. He has the staff. I have none. I have no staff, I have a quarter of an office and yet I am expected to know what is the meaning of "temporary".

The purpose of this stage of the Bill's proceedings is to probe and to find out whether we can improve it. I think we can improve it by making clear the kind of incapacity to which I have referred. For example, a temporary illness strikes me as incapacity. If a man cannot get out of bed for a week and do his job, I would regard him as being incapacitated. Yet I do not regard that as at all a justifiable reason for sacking a man, who in other respects is doing a perfectly good job but has temporarily fallen foul of the Secretary of State.

The noble Lord has not answered the question at all. He has merely referred us to two statutory precedents which for the reasons I have given we do not at all accept as precedents. I do not propose to seek the leave of the Committee to withdraw this amendment, as an example of the unsatisfactory way in which the Government are attempting to avoid their responsibilities in dealing with the Committee constructively and courteously.

Lord Belstead

I think I ought to say that the statutory precedent which I mentioned is on all-fours with the precedent which is in the Bill. The task of the Director General of Fair Trading is the regulation of economic activities, in exactly the same way as the Director General of Ofgas will be regulating the affairs of the gas industry. I do not think I can add to that. It is true that I have not crawled through legal precedents, but I did not realise that I was to have the pleasure of hearing the noble Lord, Lord Diamond, putting the case for the amendment in the way that he has. However, I think I have given a reasonable answer, and certainly I have given a good enough answer to vote against the noble Lord.

6.39 p.m.

On Question, Whether the said Amendment (No. 10A) shall be agreed to?

Their Lordships divided: Contents, 87; Not-Contents, 109.

Airedale, L. Davies of Penrhys, L.
Ardwick, L. Dean of Beswick, L.
Aylestone, L. Denington, B.
Barnett, L. Diamond, L.
Birk, B. Elwyn-Jones, L.
Blyton, L. Ennals, L.
Bruce of Donington, L. Ezra, L.
Carmichael of Kelvingrove, L. Falkender, B.
Chitnis, L. Falkland, V.
Cledwyn of Penrhos, L. Fisher of Rednal, B.
Crawshaw of Aintree, L. Foot, L.
David, B. [Teller.] Gallacher, L.
Galpern, L. Nicol, B.
Gladwyn, L. Northfield, L.
Glenamara, L. Ogmore, L.
Gregson, L. Oram, L.
Grey, E. Perry of Walton, L.
Hampton, L. Phillips, B.
Hanworth, V. Pitt of Hampstead, L.
Harris of Greenwich, L. Ponsonby of Shulbrede, L.
Hatch of Lusby, L. Prys-Davies, L.
Heycock, L. Rea, L.
Houghton of Sowerby, L. Rochester, L.
Irving of Dartford, L. Serota, B.
Jacques, L. Shepherd, L.
Jeger, B. Stedman, B. [Teller.]
Jenkins of Putney, L, Stewart of Fulham, L.
John-Mackie, L. Stoddart of Swindon, L.
Kagan, L. Taylor of Blackburn, L.
Kaldor, L. Taylor of Gryfe, L.
Kennet, L. Taylor of Mansfield, L.
Kilbracken, L. Tordoff, L.
Kilmarnock, L. Turner of Camden, B.
Kirkhill, L. Underhill, L.
Lawrence, L. Wallace of Coslany, L.
Llewelyn-Davies of Hastoe, B. Wedderburn of Charlton, L.
Lloyd of Kilgerran, L. Wells-Pestell, L.
Lovell-Davis, L. Whaddon, L.
McCarthy, L. White, B.
McGregor of Durris, L. Wilson of Rievaulx, L.
McNair, L. Winchilsea and Nottingham, E.
Mais, L.
Morton of Shuna, L. Winterbottom, L.
Mulley, L. Ypres, E.
Alexander of Tunis, E. Halsbury, E.
Allerton, L. Harmar-Nicholls, L.
Alport, L. Harris of High Cross, L.
Ashbourne, L. Hooper, B.
Beaverbrook, L. Hylton-Foster, B.
Belstead, L. Kaberry of Adel, L.
Bessborough, E. Kemsley, V.
Birdwood, L. Killearn, L.
Blake, L. Kimball, L.
Boyd-Carpenter, L. Kinnoull, E.
Brabazon of Tara, L. Kintore, E.
Braye, L. Lane-Fox, B.
Brougham and Vaux, L. Lauderdale, E.
Broxbourne, L. Layton, L.
Buckinghamshire, E. Lindsey and Abingdon, E.
Butterworth, L. Long, V.
Caccia, L. Mackintosh of Halifax, V.
Caithness, E. Macleod of Borve, B.
Cameron of Lochbroom, L. Mancroft, L.
Campbell of Alloway, L. Margadale, L.
Campbell of Croy, L. Marley, L.
Carnegy of Lour, B. Marshall of Leeds, L.
Cathcart, E. Merrivale, L.
Chelwood, L. Middleton, L.
Coleraine, L. Milverton, L.
Colwyn, L. Monk Bretton, L.
Cork and Orrery, E. Morris, L.
Craigavon, V. Mottistone, L.
Craigmyle, L. Mowbray and Stourton, L.
Davidson, V. Murton of Lindisfarne, L.
Denham, L. Onslow, E.
Dilhorne, V. Orr-Ewing, L.
Drumalbyn, L. Pender, L.
Dundee, E. Peyton of Yeovil, L.
Elliot of Harwood, B. Platt of Writtle, B.
Elton, L. Portland, D.
Fortescue, E. Rankeillour, L.
Geddes, L. Rodney, L.
Gibson-Watt, L. Rugby, L.
Granville of Eye, L. St. Aldwyn, E.
Gray of Contin, L. St. John of Bletso, L.
Greenway, L. Salisbury, M.
Gridley, L. Sanderson of Bowden, L.
Grimston of Westbury, L. Sandys, L.
Hailsham of Saint Marylebone, L. Sharples, B.
Skelmersdale, L. [Teller.]
Stanley of Alderley, L. Trumpington, B.
Stodart of Leaston, L. Ullswater, V.
Strathclyde, L. Vaux of Harrowden, L.
Strathcona and Mount Royal, L. Vickers, B.
Vinson, L.
Swinfen, L. Vivian, L.
Swinton, E. [Teller.] Whitelaw, V.
Thomas of Swynnerton, L. Windlesham, L.
Torrington, V. Young of Graffham, L.
Trefgarne, L.

Resolved in the negative, and amendment disagreed to accordingly.

[Amendment No. 10B not moved.]

6.48 p.m.

Lord Diamond moved Amendment No. 11:

Page 2, line 8, at end insert ("such removal being subject to appeal to an industrial tribunal established under section 128 of the Employment Protection (Consolidation) Act 1978.").

The noble Lord said: In this amendment we are discussing again the power of the Secretary of State to, remove any person from that office on the ground of incapacity or misbehaviour". We tried to get those terms defined and clarified but we have not been able to do so. What this amendment seeks to do is to say that such removal should be subject to appeal to an industrial tribunal.

I know that the Government have stated that an aggrieved sacked director may appeal to the courts. For the reasons I have explained, that is of no real satisfaction. One wants to avoid the necessity of going to court. It is a lengthy and immensely expensive process and it is wholly inappropriate where you are talking about service contracts. Therefore we have established machinery under the Employment Protection (Consolidation) Act which provides for an industrial tribunal to hear cases of unfair dismissal and the like.

If the director in question holds himself to have been unfairly dismissed, he should have the right to go to an industrial tribunal. That is so obviously the case that it is the law of the land, so far as I understand it, that he can go to an industrial tribunal except where his employment is terminated within the first two years of his being appointed. I may be wrong on that. The Minister, I hope, will have been advised about this and will be able to help the Committee. If the Government still take the view that it is their duty to help the Committee in understanding a Bill, they will be able to assist the Committee by saying whether it is true that everyone aggrieved under this subsection could go to an industrial tribunal to have his case considered if he has been engaged for a longer period than two years but not if he has not been engaged for that period. That is the short point. I hope I have made it clear and that the Minister will be able to give us a full answer. I beg to move.

Lord Gray of Contin

The director general of supply is a statutory office created by Clause 1 of the Bill. The person who is for the time being appointed to that office by the Secretary of State is given considerable independence in the discharge of his functions under the Bill. The main terms of his appointment are laid down by the Bill itself and the only grounds on which such a person can be removed from that office are those specified in Clause 1 of the Bill—incapacity or misbehaviour.

Just as with other appointments to such public offices—the Director General of Fair Trading, the Director General of Telecommunications, the chairman and members of nationalised industries, to name but a few—the Secretary of State has to answer to Parliament for his decision to remove the director, and to the courts if an application is made to them in respect of the director's removal from office. In our view, that is the proper method of review and the noble Lord's amendment would introduce what we see as an unnecessary and inappropriate appeal which cannot be justified on earlier precedent or principle.

I hope I have made the Government's position quite clear. I have listened very carefully to the noble Lord, Lord Diamond, but I am not persuaded that what he suggests would be an improvement on what we have decided upon. Therefore, I ask the noble Lord, on reflection, to withdraw his amendment because I am afraid I cannot accept it.

Lord Bruce of Donington

The noble Lord rejected the amendments that were put forward by the noble Lord, Lord Diamond, in his unsuccessful attempts to get some clarity on the phrase "incapacity or misbehaviour". Indeed, he sought further explanations when he tried further to clarify what the Government themselves meant by "incapacity or misbehaviour".

The noble Lord, for reasons he has described and which I shall not repeat—I do not wish to enter into any further argument about them—declined to accept the position put forward by the noble Lord, Lord Diamond. It occurs to me that if the noble Lord the Minister were prepared to accept this amendment it might help to allay the fears that are genuinely held that this office will not carry the clout that it ought to carry. The examples of nationalised industries which the noble Lord quoted as a precedent—but not a precedent within the strict terms referred to by the noble Lord, Lord Diamond; that related of course to precedents established by case law and case decision—are entirely different to those applicable to this particular office. This office is going to be held by a person who is bound to find himself in the centre of conflict. By the very creation of a privatised industry by this Bill, the very act of bringing it forward automatically creates a conflict between the public and the private interests; otherwise there is no necessity for the office at all.

If the new company, run as a private enterprise responsible only to its shareholders, functioned automatically in the public interest then by its very existence as a private industry this entire provision for its regulation would be unnecessary. It is precisely because there is a conflict of interest between the private and public interests that the whole office of director general, and the paraphernalia surrounding it, are created.

That is not the case with the other "precedents"—I use the word in quotes—that have been brought in by the Minister. He said that there is a precedent in the sense that Oftel occupies very much the same position. I prefer to use not "precedent" but "analogous" to the position obtaining of Oftel. But quite clearly there is a conflict. Secretaries of State have their own temperaments. Some of them, incidentally, can express themselves fairly pungently and show their temper fairly pungently. They are not all as rational as people would like to think they are and as their own press makes them out to be. Some of them occasionally go round the bend in expressing their prejudices, their hates and their dislikes. It has not been unknown for them to do that and if the noble Lord wishes I could most certainly, without any fear of offence in this Committee, give examples.

If the noble Lord opposite accepts this amendment it would at least give this particular official the security of going before an industrial tribunal. An industrial tribunal is composed not only of lawyers but people with a certain amount of commonsense who can give a rather more commonsense interpretation, and are likely to give a more commonsense interpretation of "incapacity or misbehaviour" than is possibly the case with the courts. It is not so expensive, it is easier and it does not create public furore. I should have thought that if the noble Lord wished to reassure the Committee and to reassure any appointee to what must be, inevitably, a hot seat, this is the very amendment that the noble Lord should accept, and we should all be very happy about it.

Lord Diamond

I feel very unhappy indeed with the reply from the noble Lord the Minister. Perhaps I may stretch the meaning of an English word to use it in regard to what he said. I prefer to call his reply a statement. He read out his brief. That is fine. Of course we are interested in hearing what his brief said, but I asked him two specific questions to which we had no answer whatever. Those questions are absolutely crucial to the action we must take on this amendment. Is it or is it not the right of every man and woman who is employed to go to an industrial trubunal if they want to argue that they have been unfairly dismissed?

I am not a lawyer and I do not have any of the resources that the Government have. Therefore, I hope we are not going to receive the same answer that we had on the last occasion: "I cannot answer your question because I did not expect you to ask it". I do not know what is the purpose of having unseen, unknown, distinguished and knowledgeable individuals seated in a certain place in the Chamber unless it is to enable noble Lords, on referring to their memory, to find answers to the questions being asked. It applies in this Chamber and in the other place. Therefore, I hope we do not receive that answer again.

My first question was: is it not the right of every individual to appeal to a tribunal, as defined here, if he feels himself to have been unfairly dismissed? I should have thought that by now it was an established freedom of every individual. But the noble Lord has not referred to it at all. He referred to appealing to the courts, which takes much longer, means much more delay, and is much more expensive. It is because on both sides of the Chamber we wanted to rid the courts of the responsibility and the cost of trying cases of this kind that Parliament appointed tribunals to do the job. That is the first question to which we have had no answer whatever.

The second question, which I am bound to repeat because the noble Lord did not pay one iota of attention to it, is this: is it not the case that that machinery is available only if a person has been employed for a continuous period of more than two years? That is a simple question. I shall continue talking, if the noble Lord finds it convenient, until his recollection enables him to find the answer. That is the second question that I have asked.

If that is the case, and if it is the right of every man and woman in this country to appeal to such a tribunal when he or she feels aggrieved about the way his or her appointment has been terminated, and if it is also the case that this measure does not apply in the first two sears of the appointment, surely it is up to Parliament to provide for it. If a person is appointed perhaps for only two years—for not more than five years, but perhaps only for two years—is it not right that he should have the same protection provided by statute? I hope that by now the recollection of the noble Lord the Minister has worked and he is able to tell us the answers to those questions.

7 p.m.

Lord Gray of Contin

I shall certainly try to answer the questions of the noble Lord. I did not really require his sarcastic comments to bring me to my feet to do that. He has been a Minister himself and no doubt has had to refer to his "Box" on many occasions in his life. I have read of some of his performances as Chief Secretary to the Treasury and I can tell him that I certainly would not have been happy with his answers on occasion. Nevertheless I shall do him the courtesy which his seniority merits and I shall certainly try to answer the points that he has raised with me.

The noble Lord will recall that the legislation to which the amendment refers was passed by a government of the party opposite in 1978. It did not seek to apply the machinery of industrial tribunals generally to such Crown appointments as the director of Ofgas, and we are simply following that precedent. I am really quite surprised to hear the noble Lord argue for such a change when the legislation that was introduced by a government of which he was a supporter, and indeed I think a member, has been found to work reasonably well.

Let me just remind him, because he may have forgotten some of that legislation, about the purpose of industrial tribunals. The Donovan Royal Commission on trade unions and employers' associations described the purpose of industrial tribunals as being to provide for workers and employers an easily accessible, speedy, informal and inexpensive procedure for the settlement of their disputes.

So far as concerns the question of unfair dismissal, Section 54 of that same Act of 1978 states: In every employment to which this section applies every employee shall have the right not to be unfairly dismissed by his employer". In Section 138 of that Act the right is applied to "Crown employment", which is defined in subsection (2) as meaning:

Employment under or for the purposes of a government department or any officer or body exercising on behalf of the Crown functions conferred by any enactment". This will have the effect of applying the right to the staff of the director, but the director himself does not come within that definition since he is not employed but is the holder of an office established by statute. We have followed the precedent of the 1978 Act, which I am quite sure has the full support of the noble Lord, and we see no reason to make changes such as the noble Lord suggests. He may not agree with what I have said, but I hope that he will at least agree that I have tried to explain and be helpful to the Committee, as is the duty of a Minister.

Lord Bruce of Donington

Before the noble Lord sits down will he just clarify one point? He says that the director general will not be an employee for the purposes of the particular Act that he cited. Will he inform the Committee under which schedule for income tax purposes his emoluments will be assessed?—because Schedule E concerns emoluments from employment. Will the person be employed or not? If he is employed and his salary is assessed under Schedule E, that surely makes him an employee and therefore brings him within the Act.

Lord Gray of Contin

I should imagine that the noble Lord, as a chartered accountant, has probably much more idea of the answer to that question than I have at this moment. I cannot possibly supply him with the answer. It has nothing whatever to do with this amendment. There will be amendments a little later—probably much later at the rate we are going—which will deal with this subject and we can have that matter clarified at that time. The "troops" will have to be very quick; indeed, they have been jolly quick, and so I can say that different rules apply for tax purposes than for employment law. I shall try to elucidate a little further on that reply in due course, but I suggest that this is what the "Box" normally calls a "holding answer".

Lord Diamond

I should like first of all to thank the noble Lord the Minister for his customary courtesy in giving us a full and very helpful answer. I am only sorry that he did not give it in the first place because then I should not have needed to ask him the question again. Indeed, it is plain to the Committee that had I not stood up a second time, we would not have obtained this most valuable information. I am very grateful to him for it. It makes clear the value of what the Committee is presently engaged in, which is digging into the meaning of an Act to find out whether we are acting justly. Clearly we are not.

We are providing that the staff of the director can appeal on the grounds that the noble Lord made clear—because it is much quicker, cheaper and more certain of natural justice. They will have what is regarded as an essential liberty of the employee who feels himself aggrieved at the way his office has been terminated. Although every such person can appeal under the Employment Protection (Consolidation) Act to an industrial tribunal, the director himself cannot do so. I did not think that that was the case. I thought that he could appeal. I thought his office would be regarded as that of an employee and assessed under Schedule E—and I take the point of the noble Lord. I thought that the director would be regarded as an employee and therefore would be subject to this Act which was passed for the benefit of employees of all kinds. I thought that he would be covered by the Act except for the first two years and that as we were contemplating a case where two years might even be the totality we had to extend the provision.

It is much worse than that. He is not covered by this measure at all. He can be sacked but does not have the right that is granted to every other employee of appealing to an industrial tribunal. It is a right that he should have and, as we discovered through our joint energies, one that he does not possess. It is a right that we ought to incorporate in the Bill.

Lord Stoddart of Swindon

I am much obliged to the noble Lord for giving way. I wonder whether he has considered this point in relation to the status of the director general. We heard earlier this afternoon that his appointment is subject to the Civil Service commissioners. Would that not make him an employee? I wonder whether the noble Lord can help me.

Lord Diamond

I am most grateful. That is the case. It was only discovered, as the noble Lord will recollect, as a result of our deep investigation. The Committee did not know that until it was revealed by question and answer. It has now been clarified. We are aware therefore that there is this importance attached to his appointment. As an ordinary layman, I regard it as employment and the man himself as being an employee. Of course, I do. It never occurred to me when I put down the amendment that the director was not an employee and therefore not entitled to have this right and this freedom that is given to every citizen who is an employee. I am bound to say that this is a right that we should unquestionably insist upon.

Lord Marshall of Leeds

I wonder whether the noble Lord, Lord Diamond, has considered the inhibitions that attend anyone proceeding under the Employment Protection (Consolidation) Act 1978 for what are in effect damages for breach of contract. If he examines those matters carefully, he will find that if one really wants true damages for breach of contract for unfair dismissal, one would be most unwise to limit oneself to the powers and discretions accorded to industrial tribunals. One would have no option but to go to a court, as we know it. I am bound to say in answer to the noble Lord, Lord Bruce of Donington, that the fact that someone may be taxed under Schedule E from the profits of his office or his employment does not automatically, in my view, bring him within the word "employment" for the purposes of the Employment Protection (Consolidation) Act 1978.

Lord Diamond

I always listen with great care and sympathy to what the noble Lord, Lord Marshall of Leeds, says if only for the fact that he comes from Leeds and must therefore be right. Wild horses would not drag out of me the name of my birthplace. What the noble Lord says is very relevant. I am not suggesting in this amendment that he should only have this right. Under the Bill, as it stands, he has the right to appeal to the courts. It does not say so. One does not have to say it either in the Bill or in the amendment. So if the circumstances envisaged by the noble Lord, Lord Marshall, which the Government hope will never arise, did arise, and the Government exercised their power of dismissing a director in such circumstances that considerable damages were likely to arise, and the Secretary of State was therefore guilty of at least a considerable lack of judgment, then the individual in question, the director, could decide whether he wanted to go to the industrial tribunal, with the inhibitions rightly mentioned by the noble Lord, or whether he wanted to exercise his rights and go to the courts. He could do either.

I am not suggesting that the protection of the courts should be removed from the man. Far from it! I am suggesting that in all the circumstances that are likely—namely, that the Secretary of State would not undertake a wholly misconceived act and dispose of the director general in that way but would do something that was perhaps a matter of opinion—the aggrieved director general would feel that he was entitled to go to the industrial tribunal and get the matter quickly put right there, possibly with the right of re-employment, although that is a separate issue. It would be dealt with quickly and inexpensively. Everything that has been said by the Minister and by the noble Lord, Lord Marshall, gives me further encouragement to invite the Committee to incorporate this amendment in the legislation.

Lord Marshall of Leeds

The noble Lord, Lord Diamond, will not have forgotten that "incapacity" or "misbehaviour" are well known words used in regard to contracts of employment. The Committee will, I believe, be aware that "incapacity" means that someone is no longer in possession of his full mental faculties among other things. Maybe he is not in full possession of his physical faculties, rendering him incapable of continuing to perform his duties. "Misbehaviour" is, again, a pretty formal word, well recognised in employment law.

One example is the commission of a criminal offence. These matters are very clear cut. They are not grey, but black and white matters from which dismissal from office flows in accordance with the terms of the contract under which the person in question was originally engaged. There is not much room for argument unless of course the allegation is mischievous. But if the allegation is true, because the man is in a lunatic asylum—to use the old-fashioned word—or because he has misbehaved through being convicted of a criminal offence, those are matters of fact over which there is no argument. In those circumstances, the position is clear cut, in my view, and dismissal has to be expected in those events in every sort of contract of employment that I have ever seen.

Lord Diamond

The noble Lord is right. If the man commits a crime, he will be properly sacked. And if he is put in a lunatic asylum for the obvious reason, he will be regarded as totally unfit to do his job and his employment will be terminated. Of course that is the case. But there are other cases that are not so clear. I have asked for a legal precedent. I have not been given a single one. The noble Lord, Lord Marshall, says that this is all clear and well-trodden ground. I do not know that it is well-trodden ground. I know only that I have asked the Government for a single legal precedent and they have not given one.

I know what the word "incapacity" may mean to the layman. I do not know what it means in law, because I have not been helped by the Government in providing a legal precedent. To the layman, incapacity may be long term or short term. A man rendered incapable for a short time would, I believe, feel aggrieved and want to go to the industrial tribunal and explain that he was incapacitated for the time being, that he was unable to work for a week or two weeks and that he thinks it totally unfair that he should have been dismissed. I believe therefore that this amendment is absolutely essential to protect the employee and the liberty of the subject.

7.18 p.m.

On Question, Whether the said amendment (No. 11) shall be agreed to?

Their Lordships divided: Contents, 71; Not-Contents, 92.

Airedale, L. Lloyd of Kilgerran, L. [Teller.]
Ardwick, L.
Birk, B. Lovell-Davis, L.
Bruce of Donington, L. McCarthy, L.
Carmichael of Kelvingrove, L. McGregor of Durris, L.
Cledwyn of Penrhos, L. McIntosh of Haringey, L.
Crawshaw of Aintree, L. McNair, L.
David, B. Morton of Shuna, L.
Dean of Beswick, L. Mulley, L.
Diamond, L. Nicol, B.
Elwyn-Jones, L. Northfield, L.
Ennals, L. Perry of Walton, L.
Ezra, L. Pitt of Hampstead, L.
Falkender, B. Ponsonby of Shulbrede, L.
Falkland, V. Prys-Davies, L.
Fisher of Rednal, B. Rea, L.
Gallacher, L. Rhodes, L.
Galpern, L. Rochester, L.
Gladwyn, L. Seear, B.
Glenamara, L. Shepherd, L.
Grey, E. Stedman, B. [Teller.]
Hampton, L. Stewart of Fulham, L.
Hanworth, V. Stoddart of Swindon, L.
Harris of Greenwich, L. Taylor of Blackburn, L.
Hatch of Lusby, L. Taylor of Gryfe, L.
Heycock, L. Tordoff, L.
Houghton of Sowerby, L. Turner of Camden, B.
Irving of Dartford, L. Underhill, L.
Jeger, B. Wedderburn of Charlton, L.
Jenkins of Putney, L. Wells-Pestell, L.
John-Mackie, L. Whaddon, L.
Kagan, L. White, B.
Kaldor, L. Williams of Elvel, L.
Kilbracken, L. Wilson of Rievaulx, L.
Kilmarnock, L. Winchilsea and Nottingham, E.
Kirkhill, L.
Allerton, L. Brougham and Vaux, L.
Alport, L. Broxbourne, L.
Beaverbrook, L. Buckinghamshire, E.
Belstead, L. Butterworth, L.
Birdwood, L. Caccia, L.
Blake, L. Caithness, E.
Boyd-Carpenter, L. Cameron of Lochbroom, L.
Brabazon of Tara, L. Campbell of Croy, L.
Broadbridge, L. Carnegy of Lour, B.
Cathcart, E. Merrivale, L.
Coleraine, L. Middleton, L.
Colwyn, L. Monk Bretton, L.
Cork and Orrery, E. Morris, L.
Craigavon, V. Mottistone, L.
Craigmyle, L. Mowbray and Stourton, L.
Davidson, V. Murton of Lindisfarne, L.
De La Warr, E. Napier and Ettrick, L.
Denham, L. [Teller.] Onslow, E.
Drumalbyn, L. Orr-Ewing, L.
Dundee, E. Pender, L.
Elliot of Harwood, B. Platt of Writtle, B.
Elton, L. Rankeillour, L.
Gibson-Watt, L. Rodney, L.
Glenarthur, L. St. Aldwyn, E.
Gray of Contin, L. Salisbury, M.
Gridley, L. Sanderson of Bowden, L
Grimston of Westbury, L. Sandys, L.
Harmar-Nicholls, L. Sharples, B.
Harris of High Cross, L. Skelmersdale, L.
Hood, V. Stanley of Alderley, L.
Hooper, B. Stodart of Leaston, L.
Hylton-Foster, B. Strathclyde, L.
Kimball, L. Swinfen, L.
Kintore, E. Swinton, E. [Teller.]
Lane-Fox, B. Thomas of Swynnerton, L.
Lauderdale, E. Torrington, V.
Layton, L. Trefgarne, L.
Lindsey and Abingdon, E. Trumpington, B.
Long, V. Ullswater, V.
Mackintosh of Halifax, V. Vaux of Harrowden, L.
Macleod of Borve, B. Vickers, B.
Margadale, L. Whitelaw, V.
Marley, L. Windlesham, L.
Marshall of Leeds, L. Yarborough, E.
Maude of Stratford-upon-Avon, L. Young of Graffham, L.
Ypres, E.
Melville, V.

Resolved in the negative, and amendment disagreed to accordingly.

7.26 p.m.

Lord Brabazon of Tara

My Lords, in moving that the House do now resume, I suggest that we do not return to consideration in Committee on the Gas Bill until 8.25 p.m.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.