§ 5.5 p.m.
§ Consideration of amendments on Third Reading resumed.
§ [Amendments Nos. 6 and 7 not moved.]
§ Clause 41 Annual reports]:
§ [Amendment No. 8 not moved. ]
§ Clause 48 [Interpretation of Part I and savings]:
§ Lord Belstead
moved Amendment No. 9:Page 48, line 45, leave out (" (a) and (c) ") and insert ("(a), (aa) and (c) ")
§ The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 2, when I also spoke to Amendment No. 3. I beg to move.
§ On Question, amendment agreed to.
§ Clause 51 [Initial Government holding in the successor company]:
Lord Diamond moved Amendment No.10:
Page 51, line 26, at end insert ("and without first consulting a committee appointed by him for the purpose of offering advice on the exercise of such powers and the disposal of such securities, and consisting of the holders for the time being of the offices of Governor of the Bank of England, Chairman of the London Stock Exchange, Comptroller and Auditor General, and Public Trustee.")
The noble Lord said: My Lords, this amendment deals with the clause under which the successor
company is appointed. To put the amendment in context, subsection (5) says:
The Secretary of State shall not exercise any power conferred on him by this section, or dispose of any securities issued or of any rights to securities…without the consent of the Treasury"—
and the amendment goes on to say:
and without first consulting a committee appointed by him for the purpose of offering advice on the exercise of such powers and the disposal of such securities, and consisting of the holders for the time being of the offices of Governor of the Bank of England, Chairman of the London Stock Exchange, Comptroller and Auditor General, and Public Trustee.
§ Perhaps I may deal with the amendment shortly by reminding your Lordships of a fact of which I am sure you are all aware; namely, that in France at present the Right-wing Government are conducting a large measure of privatisation. The privatisation is proceeding on the basis that the evaluation of the various undertakings to be privatised and the determination of the offer price for those undertakings are not fixed by the Government at all, but are fixed by a committee of "Seven Wise Men" (as they are called) appointed for the purpose. They are doing that for the very good reason that it is thought best that a body at arm's-length from the government should have the responsibility of making this very important judgment.
§ We think that the same should apply here, particu-larly as we all know that the Chancellor and the Government, but particularly the Chancellor, is under great financial pressure to realise cash for the purposes for which he himself indicated he needs the cash. Therefore, the people best in a position to make an objective evaluation of the gas undertaking which is to be privatised is a body of people who could act as trustees and who would have between them all the information that could possibly be required bearing in mind that they are the Governor of the Bank of England, the Chairman of the Stock Exchange, the Comptroller and Auditor General and the Public Trustee. One cannot imagine a better informed or better equipped committee.
§ We brought forward an amendment at an earlier stage of the Bill arguing that that course should be taken. However, the Government were unwilling to accept that view. We have to accept, in turn, what the Government decided. I am now bringing forward as a final attempt an amendment which seeks not to take away from the Government the power of valuation and the power to determine the share price, and so on, in connection with the privatisation of gas, but which seeks to impose an obligation to consult a committee appointed by the Secretary of State for the purposes set out in the amendment (which are taken from the Bill itself) and that consultation shall be carried out by these most eminent, able and experienced office holders.
§ It is a simple amendment. It interposes between the Government and the company to be privatised not a separate body of action but a separate body of consultation. That is all, my Lords, pure consultation. The Government can consult and reject the advice or reject the views, or adopt them, as they think fit. They are perfectly free to do so. When I say "the Government" I refer to the Secretary of State.1044
§ In this clause the Secretary of State is the person given all these relevant and important powers, and all this amendment suggests is that he should strengthen his own judgment, clear his own lines, and put himself in a position to answer any criticism that may subsequently be levelled against him by the simple process of consulting a committee of this eminence. I beg to move.
§ Lord Belstead
My Lords, in this amendment the noble Lord, Lord Diamond, is seeking to establish a committee drawn from the Bank of England, the Stock Exchange and the offices of the Comptroller and Auditor General and the Public Trustee to advise the Government on the disposal of shares for the successor company. As the noble Lord has rightly said, this is largely a re-run of a series of amendments that the noble Lord tabled at Report stage but withdrew.
I am sorry that the noble Lord has so little confidence in the Government to handle these matters, in which after all there is now a considerable fund of expertise. The Secretary of State is the guardian of the existing nationalised gas industry and it is right that he should have the power, with the Treasury, to issue securities and to determine the value of shares in the nationalised industry's successor company.
But of course the Government agree with the noble Lord that the Secretary of State has to be properly advised. That is a matter of the national interest. Pursuant to that my right honourable friend has appointed city advisers to assist him in these matters and it will be open to him to seek advice from appropriate institutions, including those mentioned in the noble Lord's amendment. Indeed, it is the Government's firm intention to consult the Bank of England on these matters, and of course the Stock Exchange will have to be satisfied with the arrangements for the sale of shares.
I am afraid that I am saying the same as my noble friend Lord Brabazon said at the previous stage of the Bill but this is in essence the same amendment, and I cannot accept that the Government do not have the competence to handle the disposal of shares and the matters which flow from that. I think this amendment overlooks the fact that my right honourable friend is being properly advised, and that it will be open to him—and it is his firm intention—to consult the Bank of England and of course the Stock Exchange in the run up to the flotation. It is on those grounds that I must resist this amendment.
§ Lord Diamond
My Lords, I am grateful to the Minister for some slight and distant encouragement; namely, that the Government will of course consult the Bank of England, as they always do. What the noble Lord is telling us is not quite the same as is put forward in this proposal. It is only a proposal for consultation and therefore differs totally from previous amendments. However, the Minister has gone as far as he can go, and all I can do is repeat my gratitude and beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.1045
§ 5.15 p.m.
Lord Bruce of Donington moved Amendment No. 11:
Page 51, line 26, at end insert ("and no provision in the successor company's Articles of Association giving the special shareholder the right to redeem the Special Share by giving notice to the Company and delivering to it the relevant share certificate shall be effective until the expiration of 5 years from the transfer date as defined in section 49(1) of this Act.").
§ The noble Lord said: My Lords, I beg to move the amendment standing in my name and that of my noble friend Lord Stoddart on the Marshalled List. Your Lordships will recall that on Report stage on 9th July, having by that time obtained a copy of the proposed articles of association of the new company, which up to that time had been in short supply, I lighted an Article 10 of the proposed articles, and in particular paragraph 5, which, among other things, dealt with the rights attaching to the special shareholder.
§ Your Lordships will recall that at various stages of the Bill it has been pointed out that the security of the national interest could, in the last resort, always be protected by the fact that under the terms of the transfer of the undertaking to the newly-privatised company the Government would hold a special share which had certain specific rights attaching to it. Believing the Government on such matters, we naturally assumed that that would be so. We also assumed that the special share provided for in the articles of association reflected the Government's concept of the importance of the Government's interest in these matters being maintained.
So when I went through Article 10 of the proposed articles of association and came to paragraph 5 I drew your Lordships' attention to the fact that it said:
The Special Shareholder may, after consulting the Company and subject to the provisions of the Act, require the Company to redeem the Special Share at par at any time by giving notice to the Company and delivering to it the relevant share certificate".
I fell to thinking about why, if this special share was of this considerable importance, the Government should ever contemplate surrendering it? Indeed, those noble Lords who were present at Report stage will recall that I put the specific question to the Government, and was replied to by the noble Lord, Lord Brabazon of Tara, at col. 426 of the Hansard report of that day. The noble Lord said:
the special share would be redeemable at any time at the option of the holder—that is, the government—after consulting British Gas. Thus, at any time the Government could remove the entrenched status of the limitation on shareholdings provision. But they would obviously do so only if they were satisfied that this would be in the national interests".
I should make it clear that although it is difficult to foresee all the eventualities, we do not at present envisage that the Government will wish to redeem the special share within the foreseeable future—perhaps I should not say the 'foreseeable' future, as that would be making a commitment beyond that which I can go; but certainly in the near future".
§ I did not pursue the matter at that stage bearing in mind the lateness of the hour and the fact that I and my colleagues had not been able to study in full the implications of that, but I would ask the Government under what circumstances, after landing the rights and safeguards of the special share, would they consider it right to relinquish it. It is a little difficult to see. After 1046 all, by the very terms of the special share, which is or £1 only, a redeemable share at that, it has no extra rights as to capital and has no extra rights as to dividend or anything of that kind. Its purpose is purely that of a safeguard for what I presume the Government would say would be the national interest Why, therefore, make a provision to relinquish it? What are the circumstances in which it would be considered proper that the matters covered by the special share should not be dealt with?
§ If your Lordships will refer to the articles, you will note that among the things that the special shareholder can do—and, for this purpose, one has to refer in detail to Article 40 of the same articles of association—is prevent a shareholding of over 15 per cent. if one so wished. Indeed, the point was originally made in the very early proceedings on the Bill that this was one of the ways in which what might be considered as undesirable overseas investors could be prevented from getting a controlling interest in British Gas. This is part of the noble Lord's protection of the national interest.
§ If noble Lords will look at Article 40 of the proposed articles of association—and I should warn your Lordships that it is a very long and complicated article, occupying four and a half A.4 pages—they will note the provisions there to accomplish that purpose. In what circumstances would Her Majesty's Government wish to abandon their previous safeguard that enabled them, if they wished, to prevent anybody, or any body of persons, from owning more than 15 per cent. of the company's share capital? Your Lordships will also be aware that Article 40 deals with the variation of shareholders' rights. The shareholders' rights, in due course, will be promulgated in the prospectus and on their faith in the prospectus investors will make an investment. True enough, they will be in the main institutional shareholders; they will not be individual shareholders; although, as in all cases where things of this kind are involved, there are the widows and orphans and small shareholders whom the Government will emphasise as being the forerunners of the property-owning democracy. But we all know that the bulk of them will be institutional shareholders. Why, therefore, with all these considerations in mind—the right to secure a variation in shareholder rights; the right to require holdings to be limited to 15 per cent., which is set out in the very elaborate procedures of Article 40—should the Government wish to relinquish their hold? Why?
§ In order to find that out, among other things, this amendment has been put down. It provides that for at any rate five years the Government shall not dispose of their special share, shall not divest themselves of the powers that attach to it. Five years is a figure that I willingly concede is out of the hat—it coincides, of course, with the length of time during which the price formula operates—but it is as good a period of time as any.
§ I straight away admit that the noble Lord, Lord Brabazon of Tara, was not apprised of the question in advance and therefore had no detailed opportunity to obtain advice on the subject. So I do not blame him for the absence of information in his reply in the course of the debate. But I am bound to say that, being a politician, I had certain speculations in the matter. I 1047 said to myself, "What would happen in the run-up to the general election, which may be in May or June of next year; or it may be later; if the Government suddenly apprehended that they were not going to win the election but, at the same time, having put all this dexterous work into the privatisation of British industry, or certain sections of it, at any rate, they decided to make it even more difficult for an incoming government to be able to rectify the colossal and squalid error that they had made?" I said to myself, "One of the ways in which they could make it difficult for an incoming government would be to divest themselves, before the election, of this particular power"—because in those circumstances, with the Government's very obvious support from the City of London, it is quite easy to see that once this particular provision was out of the way, and the Government have surrendered the whole thing, including the national interest, to those controlling the new company, they would be quite at liberty to make what arrangements they liked in order to place the shareholdings offshore.
§ I do not like to put ideas into the noble Lord's head, and I would say in advance that one has already taken certain precautions against such an eventuality. I do not want to tempt them into action if so far it has not arisen in their minds. But this is a possibility. What, then, in those circumstances could happen?
§ Your Lordships will recall that in the course of recent inquiries in regard to Westland we tried to find out where were the shareholders who had the crucial 20 per cent. which finally swung the issue in favour of Sikorsky. Eventually the noble Lord, Lord Lucas of Chilworth, replied on the part of the Government that these had gone to Actraint No. 34 Property Ltd. Australia, Marc A. Odermatt, of Palma de Mallorca, Guillermo Schiess, of Uruguay, Mauricio de Castro, of Los Angeles, and Lynx Marketing of Panama. Somewhat incautiously, and with a slip that was psychologically very interesting, the noble Lord, Lord Lucas, referred to these as "nominees". Being courteous, I referred to the "psychological slip" and he corrected it to describe them as the "beneficial owners".
§ Do we really want a situation in which it is possible for large sections of an important industry to go to the tune of nearly 5 per cent. in each case to bodies in Panama, Los Angeles, Uruguay and Palma de Mallorca? 1 am not sure. If the outgoing government apprehended that this would make it more difficult for the incoming government then, quite frankly, and without any reflection on the noble Lord himself, to whom I am sure the possibility has not even occurred, I am bound to say that this situation would make it possible for it to happen.
§ It is not a thing that we would like. If the noble Lord could get up and say that this subsection 5 of Article 10 is quite inadvertent and that, so far as the Government are concerned, they are quite prepared to scrap it anyway and that they have no intention of withdrawing the ownership of the special share, then I would withdraw the entire proposal. But in the absence of such an assurance or of a far more detailed explanation than we have had so far—not the responsibility, as I say, of the noble Lord, Lord Brabazon of Tara, who after all had it slung at him at 1048 very short notice without opportunity for consultation —we shall have to take a very strong line about it. I beg to move.
§ 5.30 p.m.
§ Lord Belstead
My Lords, I always enjoy listening to the noble Lord, Lord Bruce of Donington, who until now had not taken part in our debates this afternoon. It occurred to me that any of your Lordships who might have come in during the noble Lord's speech and heard him referring to offshore holdings, the Westland Company and the prospects for the next general election might not readily have realised that he was in fact picking up a point which he raised at the last stage of the Bill, about the circumstances in which it might be proposed to redeem the special share under this particular Bill.
As my noble friend Lord Brabazon made clear when the noble Lord raised this point at the previous stage, the special share would be redeemable at any time, at the option of the holder (in other words the Government) but after consulting British Gas. Thus at any time the Government could remove the entrenched status of the limitation on shareholdings provision, but obviously they would do so only if they were satisfied that this would be in the national interest. Once the special share had been redeemed, it is the case that the limitation on shareholdings could be removed from the articles by special resolution of the ordinary shareholders, but it would involve a 75 per cent. majority, and although it is difficult to foresee all eventualities, we do not at present envisage that the Government would wish to redeem the special share.
The noble Lord says to me, "That's all very well, but what would be the circumstances in which the Government would wish to do this?" I would say two things to the noble Lord on this. First, the Government would take such a step, as I have already sought to explain, only after taking the very greatest care. There would have to be consultation with the public gas supplier, and the Government, as they always have to do, would consider what was in the national interest.
The second point I put to the noble Lord, Lord Bruce, is perhaps a little foreign to his particular philosophy. The ability of the Secretary of State to redeem the special share will put the new gas company in a similar position to that of other private sector companies which are subject to normal commercial pressures, including the ultimate threat of takeover if the company does not perform well. We believe that the new gas company ought to have all the advantages but also all the responsibilities of being in the private sector. Preventing the redemption of the special share in any circumstances for a period of time would, I have to put it to the noble Lord, weaken that ultimate possibility and, hence, the commercial pressures on the company.
The noble Lord, Lord Bruce, may say that that does not wash with him, but what I hope may wash with your Lordships who are listening to this part of this last stage of the Bill's passage is that the provision in this Bill is exactly in line with what was done in regard to the special share in BritishTelecom. We believed then and we believe now that it is right to have the protection of the special share. However, we believe it 1049 is not right that it should be entrenched, without any further thought being given to it, for all time to come. It is for that reason that I resist this amendment.
Lord Bruce of Donington
My Lords, I am sorry that the noble Lord has resisted the amendment. Of course it does not try to extend the prohibition for all time; it proposes five years. Are we to assume that after all the benefits which are alleged to flow from privatisation, a company such as the new company is likely to be in such a position and to be so uncompetitive commercially, and all the rest of it, as to want to be rid of the Government's special share right? It simply does not wash, and the noble Lord reinforces my suspicion.
I shall immediately give way to the noble Lord and undertake to withdraw the amendment if he gives me the assurance here and now that this provision will not be exercised before the general election. After all, there can be no substantial developments between now and what at the most is approximately two years' time—or what might even be shortened to one year from now. The company will not be transferred until October. I shall give way to the noble Lord if he will give an undertaking on behalf of the Government that they will not in any circumstances relinquish this right prior to the next general election.
§ Lord Belstead
My Lords, I unhesitatingly give the noble Lord, Lord Bruce, an assurance that the Government have no present intention of redeeming the special share this side of the next general election.
Lord Bruce of Donington
My Lords, coming from the noble Lord—and he is a very honourable man—I would accept that. But the fact that the Government have no present intention makes me think immediately that the present is now and what the Government may think in about a week's time may be entirely different and something for which the noble Lord would not himself be responsible. However, in the light of the very frank way in which the noble Lord has dealt with the question, I am satisfied with his word. I am quite sure he will understand when I say, on behalf of my colleagues and myself, that we will most certainly hold the Government to it. With that, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
Lord Ezra moved Amendment No. 12:
After Clause 63 insert the following new clause:
("Right of vendor of gas not to supply certain information.
§ The noble Lord said: My Lords, I beg to move Amendment No. 12, and I can be very brief about it. This is an amendment which was moved in Committee on 1lth June and, after some discussion, the noble Lord, Lord Belstead, undertook to give this suggestion careful consideration. It is to give us. the opportunity of knowing the results of his careful consideration that I now move the amendment at this Third Reading.
§ The purpose of the amendment is to supplement Clause 63, which provides certain safeguards for the vendors of gas to the private gas supplier where the information concerned could be commercially prejudicial. The proposal in the new clause is to enable an independent assessor to receive all necessary information in order to substantiate the offer for sale of gas without putting such information in the hands of the purchaser, the purchaser himself also being likely to be searching for gas in neighbouring areas and so such information could be used to his commercial advantage and to the commercial disadvantage of the vendors.
§ This is a very simple proposal. It is an additional safeguard and one which the vendors of this gas would very much like to see introduced into the Bill. I hope very much, allowing for the interval since the proposal was first made that the noble Lord will be able to tell us that he is prepared either to accept this amendment or to introduce changes which would go some way in this direction. I beg to move.
§ Lord Belstead
My Lords, I most certainly recognise that the noble Lord is on to an important point here and it is something which has concerned people. That is why Clause 63 has been put into the Bill. The point the noble Lord, Lord Ezra, is on to is the fact that an oil company might give the public gas supplier confidential geological information about a gas field that it wished to sell, and that this information would then be used as an unfair advantage by the public gas supplier. As I say, we have put Clause 63 into the Bill precisely in order to try to deal with this. The clause, if the Bill is agreed to by the House, will enable the Secretary of State to give a direction to a public gas supplier to ensure that no unfair commercial advantage is gained from information acquired in the course of gas purchase negotiations. The intention of the Government is to give a direction to British Gas which will require the company not to pass geological and geophysical data obtained during gas purchase negotiations to people in the company, or any associate company, who are involved in obtaining licences or interests in licences. The direction will apply to all negotiations for gas purchases. That means that it will not be possible for British Gas to permit sensitive information to be seen by their own exploration and production people. The very real sanction preventing that is the threat of civil damages.
The noble Lord is putting forward a new clause for reasons which he explained at the previous stage of the Bill and has explained again briefly this afternoon The 1051 clause would add to the arrangements in Clause 63 a right for companies to choose not to make information available to British Gas at all. Of course, there is nothing in the Bill, or indeed in the law as it at present stands, which requires companies to give information to British Gas against their will. The Government are aware, indeed, that some companies have their own in-house rules about the types of information which they are not prepared to reveal.
But I think we must recognise—and it is here that I begin to come to where I find that there is a real difficulty with the amendment—that it is of genuine importance for British Gas that it should be what I would call an informed buyer. After all, the contracts which it concludes with gas producers typically require it to buy all the gas which can be produced from the field in question.
It is therefore of the first importance that it should be satisfied about the quantity of gas likely to be produced from a field, and also that the field will be able to produce at the annual levels which have been forecast and at the swing promised by the producing company. It would not be in the interests of 16 million customers of British Gas if the public gas supplier's purchasing people were handicapped by a lack of information about the fields from which it intends to buy gas.
I realise that the noble Lord's new clause provides that, if a company chooses not to provide information, it has to provide British Gas instead with the conclusions to be derived from the information verified by an independent expert. There may be circumstances in which an expert, acting as a go-between, has a valuable part to play. I do not deny that. But as I sought to say to your Lordships at the previous stage of the Bill, in general I am not sure that many of us in our own lives would regard a procedure of this sort as an adequate basis upon which to make important decisions.
Experts do not always reach the right answers, and very often the answers that they give depend upon the precise questions that they are asked. Confidence in their judgments is bound to be diminished where there is no opportunity, as there would not be here, to test and question their judgments against the raw data upon which the judgments are based.
I believe that the approach which we have adopted in Clause 63, and in the direction which the Government intend to give under Clause 63, is preferable to, and ought not to be supplemented by, the provisions in this new clause. It is enormously important that British Gas should not obtain unfair advantage from information acquired in gas purchase negotiations, and that is what Clause 63 aims to do. But it is not in the public interest that British Gas should be denied the raw information that it needs to make informed purchasing decisions on behalf of 16 million people who are its customers and who depend upon it. It is there that I think there are dangers in this amendment.
§ 5.45 p.m.
§ Lord Ezra
My Lords, I thank the noble Lord for the answer that he has given on this issue. However, I am somewhat saddened that, after the month in which he 1052 has had time to reflect on it, he still feels that it is not possible in any way to take on board what is proposed. He said that no vendor needs to pass over any information which it does not wish to pass over, but the vendor's objective in negotiating with British Gas at the present time is obviously to sell the gas and it cannot sell the gas without providing the information which justifies the offer of the gas. So clearly it could be frustrated in the sale if it withheld essential and necessary information.
Equally, I can agree that the private gas supplier will need to be an informed purchaser. Of course, it must know that what it is purchasing will actually be there over the period of the purchase and in the quantities and qualities indicated. There is not the slightest doubt about that. However, the trouble in the new situation is that the private gas supplier will itself be in the private sector, with all the greater freedom that that implies compared with the present position of British Gas being in the public sector. Therefore, if British Gas in the public sector were to misuse this information, there are all sorts of ways in which a vendor, if it felt itself to be harmed, could take action.
In fact, no such situation has arisen, so far as I am aware, but there is a very strong feeling of concern among the potential vendors that the privatisation of this effectively unique buyer alters the situation and they require real safeguards. This is a very sensitive area. It could cause a lot of trouble and I am very sorry that the Government are not prepared to strengthen the provision of Clause 63. Nevertheless, we have heard what the Government have said, and the noble Lord accepts that this is an important issue. I very much hope that the sort of conflict of interest that I have mentioned will not arise. In the circumstances, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 13 not moved.]
§ Schedule 8 [Transitional provisions and savings]:
Lord Belstead moved Amendment No. 14:
Page 104, line 45, leave out ("six") and insert ("three").
§ The noble Lord said: My Lords, at the Report stage, my noble friend Lord Brabazon of Tara accepted two amendments moved by the noble Lord, Lord Stoddart of Swindon, which had the effect of reducing from six months to three months the minimum period after which interest is payable on security deposits required by a public gas supplier. This requires a further consequential amendment in order to make the matter certain. I hope that the noble Lord, Lord Stoddart, will feel that this is right. I beg to move.
§ Lord Stoddart of Swindon
Yes, my Lords. I am most obliged. That is obviously one that I missed. It got away and I am most obliged to the noble Lord for picking it up. I thank him for this amendment, which I shall certainly support.
§ On Question amendment agreed to.
Lord Stoddart of Swindon moved Amendment No. 15:
Page 107, line 11, after ("that") insert—
(" ( ) the Transfer of Undertakings (Protection of Employment) Regulations 1981 apply; and").
§ The noble Lord said: My Lords, I beg to move Amendment No. 15 standing in my own name and in the names of my noble friend Lord Gallacher and the noble Lord, Lord Diamond. It may be for the convenience of the House to take with this amendment Amendment No. 16, which is a rather long one. I do not propose to read it to the House, because I feel sure that it has already been read.
§ The fact is that we were alerted to the provisions of TUPE '81—that is the short title for the Transfer of Undertakings (Protection of Employment) Regulations—by the noble and learned Lord, Lord Denning, who successfully moved last Thursday an amendment to the Dockyard Services Bill, writing into that Bill similar provisions to those we are seeking to write into this Bill tonight by these amendments.
§ We are so often obliged to the noble and learned Lord, Lord Denning, with his acute mind. It is quite clear that he has picked up here a defect or a possible defect in the Bill itself. Indeed, in speaking to his amendment on the Dockyard Services Bill, the noble and learned Lord, Lord Denning, made his case with his usual clarity. Although it would be tedious if I quoted the whole of his speech, I can assure the noble Lord opposite and other noble Lords that his speech would be well worth repeating. I shall therefore just summarise it. Any noble Lord who wishes to read what he said can do so in cols. 523 and 524 of the Hansard report of the Dockyard Services Bill.
§ Basically, the noble and learned Lord, Lord Denning, said that it was the duty of a person transfer-ring an undertaking to keep the workforce informed; that the transferor should consult the workforce and have regard to all their objections; that the Government had to give full information as to what they were going to do and who the transferee would be—the person to whom the undertaking is to be transferred; that the Government would have to inform the trade unions of the legal, economic and social implications of the transfer and that the TUPE '81 regulations provide that the Government have to go to the transferee and obtain information as to how many men would be made redundant and what alternative work would be obtained for them.
§ The noble and learned Lord, Lord Denning, also said in relation to the trade unions that they had real powers of challenge available to them under the regulations. Finally, the noble and learned Lord, Lord Denning, made it clear that in his view there was a right of appeal not only to an industrial tribunal but also to the High Court. In fact his amendment to the Dockyard Services Bill was a very important and significant one not only for that Bill but, I believe, for this one.
§ At the Committee stage we tried to deal with some of these issues. The noble Lord will recall that. For example, my Amendment No. 68A attempted to ensure that proper arrangements existed following privatisation for establishing proper negotiating arrangements and means of consultation of the workforce. But the noble Lord, Lord Belstead, rejected that amendment as being unnecessary and he success-fully resisted its inclusion in the Bill. But clearly the amendment was necessary and may very well have 1054 persuaded the trade unions that they had no need to resort to TUPE '81. There were other amendments too, dealing with foreign influence (which was also referred to in the speech of the noble and learned Lord. Lord Denning, last Thursday night) and the need to ensure the financial viability of the successful company. Those amendments were moved but they were similarly rejected by the noble Lord, Lord Belstead.
§ The Government may reply that they have embarked upon consultation with the British Gas unions. That is very doubtful. While it may very well be true that there has been a plethora of information from British Gas, this does not of itself constitute proper consultation within the meaning of TUPE '81. There was certainly an airy statement from the Government that nothing would change; but the Government cannot guarantee that. Indeed, how can they when throughout the Bill they have been contending that British Gas plc must be allowed complete freedom to manage their business as free as possible from government or statutory restraint. That has been their line all the way along. Indeed, the noble Lord has just repeated it in replying to amendments this afternoon.
§ The Government want privatised British Gas to be absolutely free from Government interference or involvement or statutory restraint. But in any event the British Gas Corporation workforce is entitled to consider what has happened in British Telecom. It cannot be encouraged by what has happened there. I shall not go into what has happened in relation to the workforce in British Telecom but it certainly gives no encouragement to the trade unions in British Gas. But as I have said, the Government have resisted all attempts to write into the Bill proper protection for the 93,000 employees of British Gas. Indeed it is only in this part of the Bill that there is any reference at all to the workforce, and the requirements of TUPE '81 are not spelled out in that reference.
§ The TUPE regulations say that legal, economic and social implications for affected employees have to be spelled out. As I understand it, the unions have already pointed out the real dangers of setting a rigid price formula. There have been no consultations on that. The best was a statement by a junior Minister. Mr. Alick Buchanan-Smith, that he would be willing to meet the unions on this matter; but to date no invitation has been forthcoming. It may well be that in those consultations the Government would have rejected the unions' reasoning on the price formula; but, again, in accordance with TUPE '81, they would have to give reasons for rejection rather than the airy brush-off they have been given in Parliament and elsewhere.
§ The regulations go further in that they require the social implications to be spelled out. There is an obscure part of the draft licence that defines the gas business. That definition cuts adrift a substantial part of the workforce in appliance retailing, warehousing, installation and contracting. We tried to put that back into the document but we were unsuccessful. The current nationalised industry management intends to retain this part of the business. But what of the privatised company? We do not know. At least in Schedule 1 of the Oil and Gas (Enterprise) Act if a 1055 British Gas Corporation employee was hived off there were rights finally of appeal to the Secretary of State on important matters such as continuity of employment rights. But in Part II of Schedule 9 of this Bill the Government are repealing that part of the Act when they take BGC over. Therefore rights that already exist are to be swept away under the Bill. But there have been no consultations on this.
§ The Government also have never really given reasons, or adequate ones, as to why the transfer should take place at all. It cannot be enough simply to say "We want to do it and we have the majority to do it". They have not shown that it would make British Gas more efficient, more profitable or more effective. Indeed, it would be hard to do this, as we have pointed out repeatedly during the various stages of this Bill. They have simply said that there is too much government interference in British Gas. That would have been easy to remedy without privatising the industry. The Government merely had to stop interfering; in fact, we believe that they have interfered too much in British Gas, particularly in relation to pricing.
§ From the point of view of employees it seems to us that the most equitable thing to do is to put this amendment into the Bill. I understand—and I do not know how correct my information is—that the Government are prepared to accept, if not entirely at least substantially, the amendment of the noble and learned Lord, Lord Denning, to the Dockyard Services Bill. If that is so, in equity and decency the Government should surely be prepared to accept these amendments.
§ As I have said, there is nothing, except in relation to this particular schedule, about employees in the Bill. It may be that that is because the transfer of employees is covered by TUPE '81 without express mention. When the noble Lord comes to reply, he will no doubt make it clear beyond question whether it is his view that TUPE '81 is involved. Clearly, there is inadequate provision within the Bill to protect employees. It seems to us that the right thing to do, in order to give them such protection, is to agree to the amendments. I hope that the noble Lord, will accept them. I beg to move.
§ 6 p.m.
§ Lord Sanderson of Bowden
My Lords, it seems strange that such a very important amendment, produced by the Opposition Front Bench, should be coming before your Lordships at this particular stage of the Bill. I do not quibble with that, but I should like to refer to the start of the amendment, to insert that:the Transfer of Undertakings (Protection of Employment) Regulations 1981 apply".My understanding is that, so far as concerns British Gas, it has complied with that particular regulation most meticulously. I understand also that there is only one respect in which it has not complied, and that concerns data transfer. As we have heard constantly during various stages of this Bill, data transfer is something that cannot be decided until the Bill has become law. I can well understand the reason why that particular information, which no doubt has yet to be decided, has not been divulged to the workforce.
1056 I am, however, absolutely amazed that the question of information, or lack of it, should be coming before your Lordships at this stage. I do not know about other noble Lords, but I have been bombarded with material from British Gas about the information that they are passing to employees regarding what will happen to the privatised company. Surely that was the subject of the first part of the noble Lord's speech, when he spoke about full information being available, etc.
We are dealing with a matter of principle, as to whether this House believes that privatisation of British Gas will be good or bad for the gas industry. We have been over that ground very many times. I am encouraged by what I read of Mr. Howard Greenfield, chairman of North-West Gas, when he addressed his employees. He said:What is clear, however, is that it is up to us to get on with the job of running the business so that it continues in good shape and this means providing a good service to all our customers".That is what is going to make the business go, and no amount of filibustering at this stage of the Bill with such an amendment will change the fact that the customer will be all-important.
I believe that there is a secure future for the employees of that great industry—all 9,000 of them. I am even more secure in my belief when I refer to what Sir Denis Rooke has said in the past. He has been quoted many times and I make no apology for quoting him again. He stated:I believe that continued heavy pressure and arm-twisting of Ministers and civil servants over the years has not been good for the nationalised industries nor for business, and particularly for my own business".I rest the case, and I feel that by moving the industry into private hands, and with suitable information and suitable safeguards for the employees of that industry, we can rest assured that the employees will get a fair deal from a very well-run business. It is well known that British Gas is well run, and there is no reason at all to suppose that after privatisation it will not be just as well run. In fact, it will probably be better run because British Gas will have more freedom to manoeuvre, to run a business in the private sector.
§ Lord Belstead
My Lords, the case that the noble Lord, Lord Stoddart, has made for the last two amendments on the Marshalled List rests very particularly on comparability, as the noble Lord saw it, with the Dockyard Services Bill. In just a moment I should like to draw your Lordships' attention to the considerable differences that there are between the Bill that we are discussing now and the Dockyard Services Bill. Before I do so, I shall briefly make one or two other points.
First, the noble Lord asked whether the Transfer of Undertakings (Protection of Employment) Regulations 1981 affects British Gas. The answer to that question, which I shall give perfectly openly, is yes, indeed they do. The responsibility for complying with those regulations falls in this case to British Gas. However, British Gas has taken great care, as it always does, to make sure that it does everything within its power to fulfil all its obligations to its employees. Indeed, such are relations between the employees and management of British Gas that it is clear that it goes much further than merely fulfilling obligations.
1057 British Gas's legal advice is that the regulations do apply to the transfer of its staff from the corporation to the private sector company. On that basis, British Gas has done all it can to comply with all the requirements of the regulations set out in the amendment, to inform and consult the trade unions—that is, with the exception of one matter. That one matter is that management has not yet told the unions what will be the date of transfer from the corporation to the public limited company. That is because this Bill is still before your Lordships' House and has to complete its statutory processes before it becomes law. However, once the Government are able to announce the timetable leading to privatisation and the sale of shares, then British Gas will complete the last link in the chain of consultation and information and immediately inform the unions about the transfer date.
What the amendment would therefore do in essence would be to legislate for what has already taken place and which British Gas has been very careful to ensure complies with the regulations. We have on some occasions during the passage of this Bill considered amendments that I have ventured to describe as being belt and braces amendments. With respect to the noble Lord opposite, this amendment is a belt and braces amendment for a non-existent pair of trousers.
There is with this amendment a technical difficulty. It is a rather large one, and I must just mention it before I come to deal with the dockyard point. The technical difficulty that I must mention in passing is that the amendment extends not only to British Gas but also to the National Gas Consumers' Council. We are on Third Reading and I have to say, first, that none of the staff of the councils that exist at the moment is being compulsorily transferred. We are setting up a new gas consumers' council and employing staff on that basis. As a technicality, I would add that the regulations apply only to commercial undertakings.
§ Lord Stoddart of Swindon
My Lords, is it not true that the director of the National Gas Consumers' Council has already been made redundant?
§ Lord Belstead
My Lords, the arrangements that there have been either for taking on or not taking on existing staff of the councils are a matter for the new gas consumers' council. However, as I have said, it is not a transfer. The old councils are being wound up and a new council is being established. I will simply add that as a matter of fact and not just as a technicality the regulations on page 4 of the Marshalled List cannot extend to the National Gas Consumers' Council because such councils are not commercial undertakings.
I now come to the real point. The noble Lord says that whatever the arguments may be, there is a direct similarity between the situation that we are now discussing, with British Gas changing from a nationalised industry into a public limited company, and the Dockyard Services Bill that was debated in your Lordships' House and into which a similar amendment was put the other day. While I make no comment on the situation in the case of the naval dockyards, I must stress to your Lordships that the Bill 1058 now before the House is a very different kind of measure, being taken in very different circumstances.
First, we have made clear from the outset that the Government's intention has been to privatise British Gas as a whole. My right honourable friend the Secretary of State made clear in his statement to Parliament on 12th June that he intends that the present board of British Gas should continue to be the board of the successor company. From the point of view of employees there is, in fact, an essential continuity. They are going to continue in their current jobs with the same contracts of employment under the same management but with the considerable additional benefit, to which the Government attach great importance, that for the first time since 1948 employees will be able to take a direct stake in the success of their industry through employee shares.
I am grateful to my noble friend Lord Sanderson of Bowden, who said that he could not understand the reference which I believe the noble Lord, Lord Stoddart, made about people not receiving enough information. Enormous pains have been taken to inform and consult employees in British Gas——
§ Lord Belstead
My Lords, not only British Gas itself but also, picking up the point the noble Lord opposite made, my right honourable friend has met the trade unions as recently as the middle of May on gas subjects. I simply remind your Lordships that all this has happened with a welcome from the employees. I understand that of the 90,000 employees of British Gas literally only a few dozen have, when asked, told the management that they do not wish to be informed about the share offers which are to be made to them. I believe that they welcome the change which is to be made.
Noble Lords opposite may say that nonetheless, and for the avoidance of doubt, should not this provision be included in the Bill? I believe that the inclusion of the words in Amendment No.16 would not achieve the avoidance of doubt but would create it. At a drafting level, the amendment is very heavily defective. For some reason which nobody has explained to me, it leaves out completely a very important sub-paragraph which is to be found in the original regulation. It states that if there are any special circumstances which render it not reasonably practicable for an employer to perform a duty imposed on him by the regulations then the employer shall take all such steps towards performing that duty as are reasonably practicable in the circumstances. That is an important and reasonable protection which all employers enjoy under the regulations but which for some reasons Amendment No. 16 does not extend to British Gas.
For some reason there is also a reference in paragraph (iv) of the amendment—and let us remember, we are at Third Reading and there is no other stage of the Bill—to "Regulation 5 above". I cannot find it. I do not know whether any other noble Lord can find "Regulation 5 above". I do not think it is there. There is also no provision for enforcement. Moreover, as I have said, and most difficult of all, the 1059 amendment seeks to apply to the gas consumers' council, and that it simply cannot do.
I am not trying in any way to sweep out of the way the case which the noble Lord makes for the regulations applying to British Gas. Indeed, they do apply to British Gas. However, what I am saying is that, first, British Gas has proved that it has done everything in its power to comply with both the spirit and the terms of the regulations as they exist; but if we include this amendment in the Bill we would, at the very last moments of the detailed stages of this Bill, be putting into it an amendment which is very highly defective.
§ 6.15 p.m.
§ Lord Graham of Edmonton
My Lords, I am sure I share the disappointment of my colleague on the Front Bench at the Minister's not understanding why the amendment has been moved. I listened very carefully to the Minister's case on why it is not needed, and he may very well have a point.
The noble Lord, Lord Sanderson, quite fairly wondered why at this very late stage a matter which we believe is so important is now introduced in such a hurry. It is because last week, on Thursday night, this House listened—I believe for the very first time—to the true import of what TUPE '81 really means. To my shame, I confess to having handled from our Front Bench the Bill relating to the Royal Ordnance factories, and when we moved amendments in respect of redundancies, pensions and terms to hearing the Minister, time after time, telling me that there was no need to worry, that they were covered by TUPE '81.I believe that the trade unions themselves have some responsibility, having listened to that.
Last week, the noble and learned Lord, Lord Denning, because of his deep interest in the Dockyard Services Bill and, more importantly, his deep interest in the welfare of the workers in the dockyards, got his teeth into the matter and examined the regulation. He came up with a series of questions. Having listened to the arguments, the House decided to take the noble and learned Lord's advice, which was to write on the face of the Bill that which the Minister, as he is perfectly entitled to say, felt there was no need to do. Why did the House do that?
If the Minister is entitled to quote, as he is, a paragraph from TUPE '81—and that is the part which he read out concerning special circumstances—then I am entitled to read out an amendment that appeared on the Marshalled List last week but was not pressed because of a technical deficiency. This illustrates, in my view, why today's amendment is valid.
The amendment appeared on the Marshalled List of amendments to be moved on the Third Reading of the Dockyard Services Bill. It states:If the Secretary of State fails to inform or consult a representative of a trade union in accordance with the provisions … above then that union may present a complaint to the High Court of Justice or to an Industrial Tribunal, and if the High Court or an Industrial Tribunal finds the complaint well-founded, it shall make a declara-tion to that effect.".The whole genesis of the argument then and now is not that the Minister, the Government or TUPE '81 are fair or otherwise; it is this: what does the trade union 1060 do if it believes that in its application the Minister and the officials have not acted reasonably or fairly?
The noble and learned Lord, Lord Denning, said that in those circumstances one should have proper redress. When we looked at TUPE '81 we found that the redress is to an industrial tribunal. In the view of the noble and learned Lord, Lord Denning, and this House, that was not good enough. The noble and learned Lord said we should look at TUPE '81 and the limit of the award that can be given to a disgruntled employee. It is two weeks' pay. Noble Lords opposite may feel that TUPE '81 is fair and reasonable—that if one is aggrieved and follows the procedures one finishes with two weeks' pay. But we are talking about the livelihood, and the life, not only of a man and a woman but of a community.
Let me say to the Minister that I do not doubt for a moment that he has been making available as much information as possible. But my noble friend did not quibble about the quantity of information; he argued about the quality of consultation. Noble Lords opposite may feel that there is no difference—if you supply the paper, that is consultation. With respect, the trade unions do not take that view. They want to be meaningfully involved. So as far as I am concerned, this is not a delaying tactic; it is simply to reassure the trade unions, or the employees in the business, that they have access to greater powers than those at present in TUPE '81.
The noble Lord the Minister is privy, as I am, to the fact that the Government are taking very seriously the implications of the decision taken last week. Of course, discussions are going on. The noble Lord is right. While that applied last week to the dockyards it could—I say, "could"—equally apply to other methods of privatisation: the transfer of employees from one set of employers to another. It is a serious matter.
I have listened carefully to what my noble friend told me he intended to do about this, but I am bound to say that I heard the Minister earlier talking about the fallability of experts and the fact that experts are not always right. The noble and learned Lord, Lord Denning, last week stirred up what was, from my point of view with my concern for the dockyards, a good thing, and what we say to the Minister tonight is that, in the spirit of the dockyards amendment, he should write on the face of the Bill things which may well not be necessary but which, if employees believed them, should help them to get to grips with the consequences of this Bill on their lives and their livelihood. In my view the House ought to accept the good sense of this amendment moved by my noble friend Lord Stoddart.
§ Lord Stoddart of Swindon
My Lords, this has been a very statisfactory discussion so far as I am concerned, and I should like to thank my noble friend, Lord Graham of Edmonton, for his support and for the information he gave the House, because he was involved with the noble and learned Lord, Lord Denning, in that important amendment which was carried to the Dockyard Services Bill. I am most obliged for his assistance and support.
The noble Lord, Lord Sanderson of Bowden, believes that the British Gas Corporation have complied with TUPE '81, but it is not for him to say 1061 whether or not they have complied. It is for the law to say whether or not they have complied, and that is what we are talking about. We are talking about regulations of TUPE '81 as they apply or might apply to employees in the British Gas Corporation. I would suggest to the noble Lord, Lord Sanderson of Bowden, that he reads the regulations thoroughly and, together with them, the speech of the noble and learned Lord, Lord Denning, which was made to this House last Thursday. I think that if he does that, he may well reach a different conclusion. I have to say to him that Mr. Greenfield's speech which he quoted was quite irrelevant to this debate.
The noble Lord, Lord Belstead, was in fact very helpful. He said—and there could be no shadow of doubt about it—that TUPE '81 does apply. It applies in relation to employees of the British Gas Corporation. I am prepared to accept that assurance, and I accept that he has put it on record that that does apply.
Of course I accept that these amendments are defective, and the noble Lord will be glad to know that I do not intend to press them. However, even if they are defective and the House agreed to accept them, I feel sure that he would extend to me the same courtesy that was extended to the noble and learned Lord, Lord Denning, and to my noble friend Lord Graham of Edmonton in discussing the amendments and how they could be improved before they were considered by another place. However, that is not going to happen because we will not be pressing the amendments. The assurance of the noble Lord, Lord Belstead, is one of the most helpful comments he has made during the course of discussion on this Bill.
The noble Lord, Lord Belstead, stated that British Gas had taken legal advice and that that advice was that not only does TUPE '81 apply, but that they believe that the regulations have been complied with. With respect to the noble Lord, it is not simply for the British Gas Corporation and its legal advisers to say whether these regulations have been complied with. This is a matter of opinion, and that opinion may be different from the opinion of the trade unions. If there is a difference and they have not been consulted in the way they should have been under the regulations, and if other parts of the regultions have not been applied, it would be perfectly in order and would be reasonable for the trade unions to take their case before an industrial tribunal. As the noble and learned Lord, Lord Denning, said, they might take their case eventually to the High Court. That is the position which we wish to establish.
I did not deny that there has been information made available, and I said in my opening speech that there has been a plethora of information from British Gas. However, this does not constitute proper consultation. There is a difference between information and consultation. It is possible to inform someone about something, and that is then the end of the matter; but consultation is a two-way process. Consultation means one person talking to another on the basis of equality. We do not believe that that has happened. The trade unions do not believe that that has happened, and that is why it is important that we have the Minister's assurances on the record that the Transfer of 1062 Undertakings (Protection of Employment) Regulations 1981 apply in this case. There is no doubt that if they need to be tested, they will be tested, and from our point of view that is important. It defends the interests of employees who, against their will (no matter what the noble Lord says) and probably against their best interests, are going to be transferred from British Gas, which is a successful and profitable undertaking under public control, to a private monopoly, which may very well be against their best interests and the best interests of the country. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 16 not moved.]
§ Lord Belstead
My Lords, I beg to move (hat this Bill do now pass.
Before we part company with the Bill may I say a word on behalf of my noble friends on this Bench who have been working on it with me. I refer to my noble friends Lord Gray of Contin and Lord Brabazon of Tara. I should also like to thank all noble Lords who have taken part in the proceedings on the Bill. The Second Reading took place on 10th April and since then a very considerable amount of work has been done. The Bill was drafted after very careful scrutiny of the gas industry, in both Great Britain and other countries around the world, and I like to think that for that reason it is possible to claim that we have not inflicted Government amendments on your Lordships' House except in response to points made by your Lordships, or in one or two cases of drafting. Nonetheless, 630 amendments have been put down to the Bill during all the various stages.
Perhaps I may pay brief tribute to my two noble friends Lady Macleod of Borve and Lady Gardner of Parkes, who I think shaped the consumer represent-ation arrangements in the early part of the Bill so that we now have it clear in the Bill that there will be regional representation on the Gas Consumers' Council and that voluntary representatives can be appointed at local level to help in dealing with customer complaints. I also wish to mention the noble Lord, Lord Bruce of Donington, and the noble Lord, Lord Diamond, who together persuaded the Government that the interests of the small businesses needed to be written into the consumer representation arrangements. That went into the same part of the Bill.
Your Lordships once again safeguarded the interests of the elderly and the disabled, and I would pay tribute to my noble friend Lady Macleod, who started the ball rolling on this, and also to the noble Lord. Lord Campbell of Alloway, and the noble Lord. Lord Henderson of Brompton. I mention also the noble Lord opposite, Lord Stoddart, who spoke at every stage. Due to this move in your Lordships' House we now have not only a duty on the Secretary of State and the director to have regard to the special needs of the elderly and the disabled but also enforcement powers for a code of practice which must be approved by the Secretary of State. This code, incidentally, includes the point made by the noble Lord, Lord Stoddart. that elderly and disabled customers who are living alone will continue to receive safety checks on their gas appliances and other fittings free of charge.
1063 My noble friend Lord Boyd-Carpenter was good enough to take an interest every day that we have debated this Bill. I am grateful to him also. I remember very well when, over three months ago, he made his Second Reading speech that he said that this was an important Bill which would bring great advantage to customers, new shareholders, and to the industry itself. We may not all agree with everything in this Bill; I know that we do not; but I hope that we can agree that, as a result of all the work which has been done in this House, we are sending back to another place a better Bill improved in a number of respects as a consequence of our debates over three months. It is a Bill which I certainly believe will provide a firm basis for the gas industry for the future. I beg to move.
§ Moved, That the Bill do now pass.—(Lord Belstead.)
§ 6.30 p.m.
§ Lord Stoddart of Swindon
My Lords, I am afraid that I shall not take quite so short a time for my remarks on this Bill as has the noble Lord. I agree with him that the Bill is slightly better now than it was when it first reached this House. It leaves this House a better Bill than when it came. However, as the noble Lord, Lord Belstead, has said, the Bill is now near the end of its passage through this House and although, in accordance with convention, we shall not seek to divide on the Motion, we remain as opposed to the Bill now as we were on Second Reading.
Indeed, the more we examined the Bill in Committee and on Report the deeper became our conviction that the measure is against the interests of gas consumers, against the interests of employees, against the interests of energy conservation and energy planning, and, above all, against the national interest. In our view it is a Bill conceived in cynicism and enacted for the basest of motives, in that it seeks not the best interests of the gas industry but the means of survival of the Tory Party at the next election. For that reason it is the most odious of Bills and I believe that history will judge it accordingly.
The proceedings on the Bill were undoubtedly extended. Many records were broken during the passage of the Bill through Committee and Report stages. That was only to be expected, given the use of the guillotine in the House of Commons. I hope that the Government have learned that restricting debate in the other place is neither the democratic nor sensible thing to do, bearing in mind your Lordships' keen sense of their duty to ensure that measures placed before them receive proper consideration and scrutiny. Accordingly, the House has endured its longest all-night sitting since 1945 and our other sittings into the early hours undoubtedly have caused inconvenience (for which we are sorry), not least to the Government who failed on a number of occasions to retain a quorum and on other occasions were able to do so only with the good will and co-operation of the Opposition.
The Chief Whip was almost driven to distraction, but, like all good Chief Whips, the noble Lord, Lord Denham, has a thick skin and the ability to bounce back, which he has demonstrated this week. On a number of occasions the noble Viscount the Leader of 1064 the House has had his reputation for serenity, good humour and diplomacy put severely to the test. I feel sure we all agree that he passed the test with flying colours and we are obliged to him for his assistance.
What has been remarkable is the tenacity and stamina of those who have been engaged in examining this Bill. That applies to noble Lords on all sides of the House. The noble Lord, Lord Belstead, showed infinite patience, even kindness if I may so, during the passage of the Bill and we are grateful for his attitude and attempts to help which in some instances, of course, have been successful. The noble Lord, Lord Gray, too, displayed his natural resilience and there were only one or two occasions when his Scots temperament threatened to break out and wreak havoc on the Opposition Benches; but he contained himself and held on to his reputation as the best stone-waller in the game. Then of course there is the noble Lord, Lord Brabazon, who is sitting in his place, fresh-faced, innocent of expression and certain to disarm if not to convince. He, too, played his part in obtaining this Bill for the Government and I hope that he will get his reward sometime.
But if the Government had their difficulties, so did the Opposition parties. They had to get to grips with this complicated Bill, understand its provisions and implications, frame amendments and prepare cogent and persuasive arguments in their support. That they were able to do so with meagre resources compared with those available to the Government redounds, I think, to their credit. I am particuarly grateful to my noble friends Lord Bruce, Lord Williams and Lord Gallacher, without whose assistance and commitment I should have been in great difficulty. The expertise of the noble Lord, Lord Ezra, has been particularly valuable and the marathon performance of the noble Lord, Lord Diamond, with its attention to minute detail, constituted a veritable tour de force which will be remembered in your Lordships' House for a very long time to come.
There were other noble Lords too numerous to mention from all parts of the House who played their part. There was the noble Lord, Lord Sanderson of Bowden, who made some very sensible contributions to our debates—in spite of the fact of his commitment to the Tory Party, he still made sensible contributions; the noble Lord, Lord Boyd-Carpenter; and of course the noble Baroness, Lady Macleod, who also gave us great assistance in the' Committee. As I say, noble Lords from all sides of the House played their part in the examination of this Bill. I am personally grateful to them, and I feel sure that their efforts will have been appreciated by all your Lordships.
Yet at the end of it all, with all our efforts and long sittings, the Government have their Bill more or less intact, and though we are obliged for the concessions made by the Government, they in no sense meet the requirements of this side of the House nor do they render the Bill any the less odious in relation to its central purpose—I have to say that. A well-run public monopoly making profits for the taxpayers as a whole will be converted into a private monopoly making profits for the select few. The regulatory regime has not been strengthened in the way that was likely to provide proper protection for the consumer and the national interest.
1065 Both in Committee and at Report stage we sought to strengthen Ofgas by tabling amendments to set up a commission or appoint assistant directors to assist and strengthen the position of the director himself. The Government were offered several options by the noble Lords, Lord Ezra, Lord Diamond and myself, but all the options were rejected out of hand, not because they were intrinsically undesirable or unworkable but because they were in conflict with the policy of the Secretary of State and Sir Denis Rooke that privatised British Gas should be on a light regulatory rein.
Our attempts to give more power to the National Consumers' Council and to retain regional councils were similarly rejected, though there has been a little movement to ensure some local and regional input into the national council and for the director and the national council to have some influence over the codes of practice for the elderly and the disabled.
In the context of this Bill the authorisation is an important document—indeed, it is a vital document—but since it does not form part of the Bill itself, it lacks proper statutory force. It can be amended without reference to Parliament, and for that reason we thought it safer to have the authorisation in the Bill. However, our attempts to do so failed, as did our attempts generally to inject a measure of parliamentary control into the new regime.
We attempted also to write into the Bill a pricing system to give proper protection to consumers and to extend price control beyond a period of five years. However, again that found no favour with the Government, and as a result the director will have only limited control over 50 per cent. of the elements which make up the delivered gas price. The price ofgas itself will not be subject to proper control, and that spells danger for the gas consumer.
One would have imagined that this Government, who pretend concern for British industry, would have been amenable to writing into the Bill some protection for British manufacturers; but our amendments dealing with that issue were resisted by the Government on the most spurious of grounds. So much for the idea that the Tory Party and business are synonymous. They certainly are not.
We also hoped that noble Lords opposite would be moved by our pleas that British Gas would not go to flotation at a time when that might be against the national interest—at a time of low oil prices, for example—but again our hopes were dashed. In dashing those hopes, the Government confirmed the universally held belief that this Bill is only about financing a tax-cutting Budget for next year as a means of staving off a Conservative defeat at the next general election.
Bearing in mind that this is Energy Efficiency Year, this side of the House tried to ensure that the Bill contained adequate provisions for energy conservation and the proper management ofgas supplies. Certainly the Government moved some way towards us in that regard but not to a significant extent. The stark and depressing fact is that the management ofgas supplies, which are a national resource, and depletion policy will be handed over to private individuals and the exigencies of the market. In our view that is a highly 1066 irresponsible policy for which the consumer and the country will pay dearly in the long term if not in the short run.
So far I have mentioned some of the issues that we raised from this side of the House on Part I of the Bill; and, as I have indicated, we had little comfort or movement from the Government. But when we reached Part II of the Bill our difficulties were compounded, for we were faced with the fact that the Government had already announced with a great flourish the arrangements for the flotation—who was to get what, who would do what and details of the expensive advertising campaign to flog off shares at any price.
But the fact that the Government jumped the gun, and in my view thumbed their noses at your Lordships when you were still considering the Bill, did not deter us from trying to prevent a British Telecom-type scandal being repeated with British Gas. Nobody, we thought, not even the Government, would want a repeat of the British Telecom flotation, when huge fortunes were made overnight by well-heeled city slickers and foreign speculators at the expense of the British taxpayer. However, we were mistaken and the Government again resisted our attempts—as they did this afternoon—to ensure that the British Telecom scandal was not repeated by rejecting our amendments which were designed to protect the public and the taxpayer from being ripped off yet again.
Similarly, our attempts to prevent a foreign takeover of British Gas were thwarted, and the failure of the Government to agree that the protection of the golden share should be written into the Bill rather than merely constituting a clause in the articles of association has heightened our suspicions that at a time that suits them—not before the general election; the noble Lord gave us that assurance this afternoon, and we are obliged to him—this Government will liquidate the golden share and leave the way wide open for a foreign takeover.
I believe that we on this side of the House have done our duty in trying to improve the Bill, to safeguard the public interest and to warn of the real purposes behind it and the dangers which it presents. Our endeavours have met with only very limited success and the Bill is virtually intact at this final stage.
However, it is right that before the Bill leaves this House, I should make it quite clear on behalf of the Labour Party that when we return to government we shall reverse the privatisation of British Gas. As some of my right honourable and honourable friends in another place said, that commitment will take some time to realise. We hope, however, that it will come quite clearly within the lifetime of the first Parliament of the Labour Government's taking office.
In the intervening period between arriving in power and taking British Gas back into social control there will be a need to strengthen the control exercised by Ofgas over the monopoly activities of British Gas. As noble Lords will be aware, we have tried to concentrate on that in our debates on the Bill and neither the Government nor future shareholders in British Gas should lightly put aside the points that we have made and the alternative methods of control that we have put forward.
1067 When we come to take British Gas back under social control, as we shall, it will be in a manner that will encourage long-term investment from the private sector in the company and discourage those who bought shares on flotation purely for speculative reasons. We believe that in doing that a fair balance should be struck to allow the community to exercise proper control in British Gas and at the same time to provide a reasonable return to those who are prepared to make a long-term commitment to invest in the company.
Let me say in conclusion that we cannot wish the Bill well. It is a bad Bill, brought forward for the worst and most disreputable of reasons. We believe that it is a Bill which reflects badly on the Conservative Party and is not in accordance with its traditions. Nor does it have the support and blessing of those Conservatives who hold dear the reputation and standing of the Tory Party and who wish to retain the party as one of Britain's respected institutions. But we cannot stop the Bill and it remains for me only to repeat my thanks to the noble Lord, Lord Belstead, and all other noble Lords for their courtesy and kindness throughout the discussion of this odious measure.
§ 6.45 p.m.
§ Lord Boyd-Carpenter
My Lords, I am rather sorry that the noble Lord, Lord Stoddart, in the course of his otherwise good humoured speech, cast reflections on the Government's motives in respect of the Bill. On reflection, he may feel that that comment was unworthy of him and of his high standards of debate in the House. In any event, I must ask him to accept, just as I accept that he is against the Bill for genuine reasons of conviction, that there are noble Lords on this side of the House, as there are honourable Members in another place, who for reasons of equally honest conviction favour it. I do not think that we help the discussion of these matters by imputing motives of one kind or another.
As it happens, I was in another place when the Bill to nationalise gas was taken. But neither I nor any of my colleagues ever cast imputations on the motives of the late Mr. Gaitskell, who was the Minister in charge and who conducted the Bill with great skill. We simply opposed it because we believed—and we feel that in the event we have been justified—that such a measure was not in the interests either of the industry or of the country.
I shall take up only one other point from the noble Lord's speech, and it is this. He referred in a rather airy way to the fact that the outcome of denationalisation—which is the word that I prefer to "privatisation"—should be profits for the select few. He does not seem to have appreciated that in this case, as in the case of British Telecom, it is the intention to give every opportunity to those who work in the industry to become shareholders in it.
Your Lordships know that in the case of British Telecom large numbers of workers in that industry are shareholders in it. They share in its profits, which look like being excellent. I have very little doubt that the workers in the gas industry, being equally sensible, will take the good opportunities that they will be offered, and take up shares in the industry.
1068 It is obscuring counsel to talk about profits for the select few, when the noble Lord knows, as your Lordships know, that among those who will receive and enjoy profits from the industry are the people who contribute to those profits by working in it. That is a point which is of some general relevance to the outcome of this change.
Unlike the noble Lord, I welcome the Bill. I should like to wish those who work in the industry at all levels good fortune in the new situation in which they will be. I am fortified in the belief that it will be good fortune by observing the enormous improvement that has taken place in the other industries which have been denationalised in recent years: for example, British Aerospace, Amersham International, and others. They have all greatly improved their position. That has not been because of the virtues of the individuals. Excellent individuals worked in those industries as they worked in gas under nationalisation; but the greater freedom and responsibility and freedom of access to the market which go with privatisation help to stimulate, develop and make industries successful.
I hope and believe that that will be the case with gas. I am sure that all your Lordships would want to wish the industry and all those who work in it the greatest good fortune.
During the very long proceedings on this Bill, my noble friend Lord Belstead has conducted the case for the Government not only with skill but with extraor-dinary good taste and patience, regardless of the fact that gas would seem to many of us to be a long way from agriculture, which I understand is his official function and in respect of which he receives his modest remuneration. My noble friend has conducted the Bill magnificently. He seems never to have lost his temper. His patience has been wonderful. In that connection, I should like to quote what a learned judge said in another context: "Patience stakes Lord Belstead first; Job second".
§ Lord Monson
My Lords, although I have taken practically no part in our debates on the Bill, there is one question that I should like to put to the Government before the Bill passes which arises from the closing remarks made by the noble Lord, Lord Stoddart of Swindon. The disgraceful U-turn made by the Conservatives away from their former passionate and principled opposition to Mr. Anthony Wedgwood Benn's so-called compensation terms for the warship shipbuilders—confiscation terms may be more accurate—came home to roost in Strasbourg only nine days ago. As The Times wrote on 9th July, the treatment of those warship companies:leaves a stain on this governmentMany other national and leading provincial newspapers echoed those sentiments.
The Times went on to point out that the Strasbourg judgment,will cast a shadow over all privatization issues between now and the next general election.It went on to emphasise:it underlines the ability of a future Labour government to do virtually anything it likes to unpick the privatization programme.I should like to ask the noble Lord, Lord Belstead, what guarantee the Government can give to prospec- 1069 tive purchasers of shares in British Gas that their shareholdings will not be compulsorily purchased in a few years' time for between one-fifth and one-sixth of the net issue value, as happened to the unfortunate shareholders (of whom I was never one, I should stress) in the warship shipbuilders.
§ Lord Diamond
My Lords, I am as anxious as all your Lordships are to make as much progress as we can before we rise. No doubt those in charge of business will take account of that. It is my pleasure, first, to echo the appreciation which has been expressed on all sides of the House to Ministers, who have carried out their duties with unusual charm and patience. A tremendous load is carried by Ministers in your Lordships' House which is not appreciated outside. It is not appreciated that our Ministers hold several portfolios and that often, as has been the case with nearly every Minister who has participated in the Gas Bill, their main responsibilities—the matters about which they have the most natural knowledge and on which they do not have to brush up with help from the Box behind them and by carefully reading briefs—are not the ones in which they have been participating in the Gas Bill.
That is both a tribute to the Ministers and a criticism of the way in which we conduct our affairs in your Lordships' House. Your Lordships' House is continually becoming busier. There is more and more work to be done. No one objects to that. It is a proper and essential function of your Lordships' House. It increasingly demonstrates the need for a second Chamber.
It should be appreciated outside this Chamber that an enormous load is carried by Ministers and those who contribute to the discussions. They have to work as best they can with the most extraordinary lack of convenience with regard to assistance, space and all the other amenities which are available to a third-rate clerk in an ordinary office.
We on these Benches are more opposed to the Bill as a result of our examination of it than we were at the start. The Bill does not serve any of its alleged or any other worthwhile purposes. It is likely to do damage. It is not likely to be of any benefit. We are wholly opposed to it. We are equally constitutionally conventional in that we recognise that it is the Government's responsibility to have their way. The Government must not therefore be defeated on Third Reading or on the Question, That the Bill do now pass. We therefore shall not be voting at this point.
The Bill has not achieved anything. We have an industry which is thoroughly efficient. I do not see how it will achieve that increase in efficiency. It will be the same industry, covering the same area with the same board, the same chairman, the same staff, the same workforce and the same plant; it will be carrying out the same functions. From where will the new greater efficiency come? I cannot see it at all.
The theory always was that if one privatised—one never privatises without having competition—then competition added the spur and people would therefore work even better, harder and more efficiently. As we know, there is no competition here whatsoever. I do not want to go over the ground again.
1070 It is the first time in this country's history that a Conservative Government have attempted privatisation without any competition. That was never the case with the public utilities before 1948. It is not the case with those which continue. As we know, it is not the case with those in the United States—the home country of private enterprise where every utility of this kind is controlled in terms of profit and by the public utility commission. We tried to introduce something of that kind. It does not apply in this country. We tried to introduce some measure, not necessarily of competition but of comparison. We tried to introduce a measure of franchising. We thought that at all events it would be possible to take one small area and franchise there, to license someone to carry out the work previously carried out by British Gas, and see if this produced a better result. The Government would not listen.
They believe that we are alone in making such suggestions. That is far from the case. The latest issue of the Economist contains this advice:The Tories ought also to think more about franchising as a half-way house between state and private ownership for enterprises with an element of natural monopoly".The writer must have been reading our speeches. We have been saying that this is a natural monopoly. We have been saying that the Government should search for a half-way house. The Government have heard today the result of their refusal to have anything that approaches a half-way house. We have heard today officially what the Labour Party has decided upon for the time when it has a measure of government. The present Government cannot possibly think that, however much they try, they will be able to maintain power for all time. So their unwillingness to go half way will result in the dreadful swing of the pendulum—nationalise, privatise, nationalise, privatise—causing upset and no benefit to anyone. That is one of our major objections to the Bill, and to the way that the Government have handled it
There is no drive to efficiency at all in the contents of the Bill. There is a silly attempt in the price control to introduce an efficiency factor that is totally meaningless. Why do I call it silly—because it provides that the price shall not increase overall by something more than probably 1 per cent. One per cent, efficiency overall is deducted from the inflation index that is involved in the price. That compares with 3 per cent. for British Telecom. British Telecom has to meet a target of 3 per cent. Here, British Gas has to meet a target of 1 per cent. This is, I repeat, really silly. It is like saying to an athlete training for the high jump that he must go out every day, put on his shorts and try to jump 18 inches. A lot of use that will be to him when he is seeking to jump seven feet plus! That is what happens with the 1 per cent. It is a meaningless use of words. It will not increase efficiency in any way whatever.
We have lost, as a result of this Bill, the fair balance between the interests of the consumer and the interests of the nation as a shareholder. The drive will be wholeheartedly in favour of more and more maximization of profits. Instead of talking to Government Ministers who have concern for the national interest, the chairman and the board will be talking to the managers of the institutional investors 1071 whose sole consideration will be annual profits. It is the short view as against the long view. That is what will happen. There is nothing in the Bill that will right that balance.
Most of what I wanted to say has been said by the noble Lord, Lord Stoddart. I want to underline my agreement with all that. I want particularly to point out that, so far as amendments are concerned, there is little about this Bill that is different from what it was to begin with. Any change relates only to amendments introduced by two Members on the Government side. There is very little else—very little at all. The efforts that we have made have been without avail. While understanding that, we believe it is most unfortunate that a government should use their powers in this high-handed fashion. This is not a Bill that an objective government would introduce if they were really concerned to increase the. efficiency of a huge organisation which, as already stated, serves 16 million tariff customers alone. This is a Bill to satisfy the feelings of the present chairman of British Gas, who has control of the situation and has drawn up with the Government a measure that provides for privatisation along lines that he sees as right and proper. It is nothing more than the re-creation of Rookery Nook.
The real reason is only too evident. We have tried to think of other possible reasons. They are non-existent. The reason why all this is being done is only too evident. It has been stated by the Government themselves. It is for cash—and pretty quickly. The delay over British Airways and the gap caused by the cancellation of the privatisation of the ROFs all add urgency to the Government's desire to lay their hands on the cash that they need for the purposes that they have disclosed. All attempts that we have made to introduce objectivity into the pricing and mechanism have been rejected. The Government are determined to go ahead irrespective of market conditions, irrespective of depressed oil prices, irrespective of depressed share prices and, as recently pointed out, irrespective of the depression caused by the judgment at the Court of Human Rights which will now support, so far as domestic buyers are concerned, the kind of renationalisation or socialisation measures that the Labour Party has been describing.
The answer is, I am afraid, very clear—and it is not only my own feeling. Again, I refer to the Economist which says:The way that the Government has done its privatising seems designed to convince consumers that their interest comes well behind that of raising billions for the Treasury".That is the truth. It comes well behind. That is why we have the greatest objection to the Bill. I can only see in all this the continuation of the drive that the Government have started, and now continue in increasing measure, to sell the family silver, not to pay for the groceries but, this time, to buy votes at the next general election.
§ Baroness Macleod of Borve
My Lords, as the noble Lord, Lord Stoddart, and my noble friend Lord Belstead have mentioned my name—and I am grateful to both—I should like to intervene briefly. First, I wish the Bill well. I have had the advantage (I call it that) of working not only with the gas consumers' council for 1072 five years but also, through that, with British Gas. I enjoyed those years. I have an enormous affection for both bodies. I am certain that they will make an outstanding contribution to industry in this country. I should like to say how much I have admired the way in which my noble friend Lord Belstead has conducted the whole of this Bill. His tolerance, understanding (as I know very well) and patience have been absolutely second to none.
However, I finish by saying this. A week is a long time in politics, but the past three months have seemed like an eternity.
§ Baroness Burton of Coventry
My Lords, I shall be very brief. I regret the passing of this Bill. I should like to say why. I should also like to express the appreciation of all of us to the noble Lord, Lord Belstead, and his noble friends on the Government Front Bench, who have shown patience through some very tedious and lengthy proceedings. I should like today to thank the noble Lord, Lord Belstead, who I think has tried to meet our objections in so far as it was at all possible for him to do so.
However, I feel with this measure, as I did with the Airports Bill, that it is not that I would oppose privatisation as such but that I object to the transition of a public monopoly into a private one. That is what I think has happened here. I have noted that Government Ministers in both Houses have stated that the original and primary purpose of privatisation was to bring greater efficiency to state enterprises so that all concerned—managers, workers and consumers— would feel that they were getting a better deal. The Airports Bill had nothing to do with getting better management in the civil aviation industry or with the British Airports Authority. The authority was modern, efficient and profitable.
The gas industry is also modern, efficient and profitable. In common with many in both Houses of Parliament and outside Parliament, and in all political parties, the great majority of people have not approved the Gas Bill. I have tried hard but I have not found one good reason for this privatisation. I do not think we have gained anything. The concessions that the noble Lord, Lord Belstead, has been able to give were no advance on what we had before this measure entered Parliament.
I think that the Bill we are now about to pass into law contains proposals that provide British Gas with maximum monopoly power combined with minimum constraints on the use of that power. I went into the Library the other day and had a look at the Conservative election manifesto of 1983. Speaking of the gas and electricity industries, that manifesto said:In the next Parliament, we shall seek other means of increasing competition in, and attracting private capital into, the gas and electricity industries.Merely to replace state monopolies by private ones would be to waste an historic opportunity. So we will take steps to ensure that these new firms do not exploit their powerful position to the detriment of consumers or their competitors".Bearing in mind those words, I think that this Gas Bill is a waste of an historic opportunity.
I looked up a quotation in a leader in the Sunday Times on 1 st December. This is what it said at the end:If privatisation is to change the face of British industry for good then the consumer must come first, and the government's first 1073 priority is to make sure that is where the bulk of the benefits go—even if that means the Treasury has to make do with less.I am afraid that the Treasury has won. I do not believe that this Bill does anything at all for consumers. I would share the views of the Financial Times, which in a relatively recent article said that in the years to come we might well ask ourselves why all this time had been spent on such a useless piece of work.
§ 7.15 p.m.
§ Lord Bruce-Gardyne
My Lords, I, too, want to speak very briefly before we leave this Bill. I must confess that I thought when it first came to us that it was, in the words quoted by the noble Baroness, Lady Burton, a waste of an historical opportunity. I am bound to admit that I have not changed that view.
I join with others who warmly congratulated my noble friends on the splendid example of patience, skill and courtesy which they have displayed in carrying these long proceedings through to a successful conclusion. We do not have the competition which I believe we could have had, and we shall have to hope that regulation makes an adequate substitute.
I want to express one word of anxiety. I am not so sure that this flotation will be all that easy. It looks as though the stock market may be well off the bloom by the time British Gas is ready to be floated. Clearly, the energy background is not what we might have wished. It is hard to believe that energy stocks will command a premium of admiration in the financial markets in November. I must say I wonder how easy it will be to convince potential investors that Sir Denis Rooke is the appropriate haven for their savings in view of some of the things he has had to say about private shareholders in the past.
What concerns me is this. It seems to me quite clear that at the time of the flotation of British Telecom conscious action was taken to push interest rates down in advance of that flotation regardless of domestic monetary conditions in order to make sure that the flotation went off successfully—as indeed it did. Of course, the flotation of British Gas will be a very much bigger morsel. It worries me that there could be a temptation similarly to push down interest rates steeply in advance of the November flotation regardless of domestic monetary conditions. When we did that in the case of British Telecom we were soon confronted by a pretty hefty run on sterling which had to be reversed with a dramatic reversal in interest rates. I think that we could have a very similar situation if we were tempted to follow the same path this autumn.
I appeal strongly to my noble friends in the Government to see that that mistake is not repeated, whatever the temptation to indulge in it may be, in order to try to ensure that the flotation goes off success-fully.
§ Lord Belstead
My Lords, the noble Lord, Lord Monson, asked me one direct question about the consequences of the European Court decision. I have on many occasions heard threats of renationalisation from the party opposite. I am confident that when everyone sees the great success that will be made of privatisation of British Gas no future government 1074 would be able to reach the conclusion that renationalisation would be in the national interest. I believe that that should be our guide for the future, and that is my answer to the noble Lord. Lord Monson.
It only remains for me, on behalf of my noble friends who have been dealing with this Bill, to thank your Lordships, wherever you sit, for the kind personal remarks which have been made. Once again, I beg to move that this Bill do now pass.
§ On Question, Bill passed, and returned to the Commons with amendments.