Dockyard Services Bill

HL Deb 27 June 1986 vol 477 cc534-73

11.27 a.m.

Report received.

Clause 1 [Transfer of persons engaged in dockyard services]:

The Lord Chancellor (Lord Hailsham of Saint Marylebone)

My Lords, I think I must say to the House that I am advised that if Amendment No. 1 is agreed to, Amendment No. 2 cannot be called.

The Minister of State for Defence Procurement (Lord Trefgarne) moved Amendment No. 1:

Page 2, leave out lines 3 to 12 and insert ("make arrangements—

1. (a) for a company to provide designated dockyard services at the dockyard under contract with him, and
2. (b) for that or another company—
1. (i) to become the employer of such of the qualified dockyard service employees at the dockyard as are employees to whom the arrangements apply, and
2. (ii) to acquire from him rights in or over the dockyard or any part of it and any property used for the purposes of the dockyard undertaking,

with a view to their services and that property being made available for the provision of the designated dockyard services at the dockyard,").

The noble Lord said: My Lords, I rise to move Amendment No. 1, and I should like at the same time to speak to Amendments Nos. 7, 9, 10 and 13.

Your Lordships will recall that in Committee we discussed, in the context of amendments tabled by the noble and learned Lord, Lord Denning, the question of the company structure of the two dockyards from April 1987. As your Lordships know, the Bill as presently drafted would allow my right honourable friend the Secretary of State to decide whether there should be one company at each dockyard both contracting and employing, or two companies, one contracting and one employing, or a government-owned plc. The noble and learned Lord accepted that for reasons of national security the physical assets—that is, the dockyard land, buildings and plant—should remain in government ownership but was concerned that under the proposed two-company option one company would have the licence to use the assets while the other did nothing more than employ the workforce.

As some of your Lordships may recall, I undertook to consider what the noble and learned Lord said, to discuss further with him the one-company and two-company concepts and, as necessary, to introduce amendments at Report stage. I am most grateful to the noble and learned Lord, Lord Denning, and to my noble friends Lady Vickers, Lord Ashbourne and Lord Beloff for discussing this with me earlier this week.

As I explained in some detail at that meeting, we foresaw significant difficulties in a one-company structure at the end of a term contract. We need to separate the liabilities which should properly fall to the first contractor from the dockyard company itself which would be taken over by the next contractor. Your Lordships will I hope agree that the Government must do whatever we can to avoid accepting liabilities which should properly fall elsewhere. I do not say that the one company structure would be unworkable and I believe that the Bill should not rule out the possibility which I know a number of your Lordships favour, but the difficulties are very real.

While I do not, as he knows, share the worries of the noble and learned Lord, Lord Denning, on the two-company structure, I was most grateful to him for explaining his reservations to me, and I have carefully considered his views and those expressed by other noble Lords in Committee. The amendments which I have introduced provide for an alternative corporate structure which is acceptable to the Government, and I hope to the noble and learned Lord and his friends.

In essence, if the two-company structure is introduced at each dockyard the amendments will mean that the dockyard company would have in it not only the dockyard workforce but also the licence to use the dockyards' assets for the period of the term licence. The terms of that licence would of course have to be negotiated in advance with the managing company, selected by competition but when, on vesting day the Ministry of Defence places the term contract for the provision of services with the managing company we would place a licence to use dockyard land and assets with the dockyard company containing the workforce. The dockyard company would pass into the ownership of the managing company for the duration of the term contract.

I understand the strength of feeling that existed on this issue in your Lordships' Chamber when we met in Committee. I believe that the amendments which I have tabled go much, if not all, of the way to meeting concerns which were expressed. I beg to move.

Lord Denning

My Lords, I am grateful to the noble Lord, Lord Trefgarne, for the amendments which he has put forward. Your Lordships may remember that I took legal objection to the Bill as it was originally framed because it was proposing a company structure by which one company would take a licence to have the assets of the dockyards and another company would employ the workforce. In my judgment, in point of law that separation was legally impossible.

I drew the analogy of bees and a hive. You can transfer them both together but you cannot transfer the bees separately from the hive. Now, as a result of that legal objection—and I appreciate that it has taken quite a long time with all the advisers of the Ministry—I am glad to say that by these amendments they have succeeded in ensuring that if a company takes over the management and control of the dockyard, one company—I do not say which it is at the moment—will have both the licence to use the assets and will also employ the workforce. I am most grateful to the Minister for overcoming my legal objections.

Before we get on to the other amendments, I shall say rather more because this concerns the Bill itself and its drafting. I complained at Second Reading how obscure it was and how difficult it was to understand. I could not myself understand it until I had gone through the stacks of papers which were lodged in the Library of Your Lordships' House. After much study I understood the Bill. But is that the right way to legislate? I have often said both outside the House and in it that when a Bill is presented to Parliament it should be presented in such a form that it is clearly understandable by all the Members of your Lordships' House and of the other place so that they can really understand what they are passing into law. I regard that as a fundamental principle of legislation. If I may do so, I shall add a word to it. It should be clearly understandable not only by the Members of both Houses of Parliament, but also by the judges of England if they have to consider it. How often I as a judge have complained, "How obscure this section is… can't understand it"! I have often been tempted to ignore a section of an Act of Parliament which is meaningless on that ground.

Those are my fundamental principles regarding legislation. The words of the Bill should be clearly understandable by the Members of both Houses and indeed by the judges if they have to come to consider it. Does this Bill satisfy those conditions? Did it when brought before the House? I could not understand it until I had studied in the Library all the words. I did not understand the amendments until they were explained at the valuable meeting between the Minister and some of the rest of us. Now I think I begin to understand; and my understanding has been added to by the explanation today of my noble friend the Minister.

I have to say this, though: if this Bill or the Act when it is passed ever comes before the judges of England, they will not have any access to the papers which were in the Library; they will not have any access to the meetings between the Minister and the rest of us; they will not be able to have any access to Hansard, although I have suggested from time to time as Master of the Rolls that the courts should have access to Hansard in order to see what assurance a Minister gave or what explanation a Minister gave. The House of Lords ruled completely that the judges of England are not allowed to have any access to what is said in your Lordships' House or in the other place. So if this Bill ever becomes before the judges of England to consider they will not have any access to all those sources of information. They will have to go by the Bill as it stands. I can hear their complaints coming forward: "Gracious, are we expected to understand this? I will not go through some of these sections; they are too complicated". We have often made fun of it. It is difficult to understand these section unless you are a trained lawyer and even then it would be very difficult indeed.

So I cannot do it. I cannot give a preamble to the Act in the same way as the European legislators will do. They have a valuable way of legislating over in Europe. They start off—and you will see it in the directives—with a series of recitals which explain to everyone what mischief is being aimed at and what remedy is proposed. So for the instruction of your Lordships and for the guidance of the rest of the amendments which will go forward, I have framed my own series of recitals so as to tell your Lordships what we are about.

If I were permitted to draft a recital this is how it would run: Whereas the present system of running the Royal Dockyard at Devonport has led to waste of money and inefficiency in operation, and it is necessary for the system to be changed; And whereas it is desirable that this should be effected by putting the dockyard under commercial management to be run on commercial lines by a company formed under the Companies Act 1985; And whereas it is a cardinal principle that, having regard to the essential security interests of the United Kingdom and Northern Ireland, such company shall be and at all times remain under United Kingdom control; And whereas the workforce cannot be transferred without their consent from the service of the Crown to the service of any such company unless by Act of Parliament. Now it is hereby enacted as follows:". If that was set out as a recital to the Bill, I believe it would be intelligible. One would be able to see exactly what was being aimed at. One sees the mischief. The mischief is that the dockyard is most wasteful and inefficient at the moment. One sees that that must be changed. One sees that change must be effected, and that one must make a good and sensible proposal for change that will be acceptable. I have taken those very words from one of the documents in the case. Essential national security demands that the dockyards should be completely under United Kingdom control. It is essential for the national security and in the interests of the fleet that the dockyards should be maintained and safeguarded.

I shall not say more on this amendment, except that I wish we could have had a recital of the kind I have suggested, which could have led the way in. As it is, I am most grateful that we have the amendments as they are. But if there were to be a recital such as I have suggested, I believe that the Bill would be intelligible. However, I do not oppose the amendments in the least.

Baroness Vickers

My Lords, I wish to express my thanks to my noble friend the Minister for all the trouble that he has taken and for the many meetings he has held with the noble and learned Lord, Lord Denning, and myself. However, I remain concerned that the Government have still not decided whether or not to press ahead with their agency management plans or to opt for my preference for a government-owned public limited company.

I understand that a decision will be taken during evaluation of the bids, and perhaps the Minister will tell the House how many companies have now entered bids, and how many remain; because we know that some companies put in bids but pulled out when it came time to apply. Unless I am mistaken, I understand that the evaluation of bids will take place in August and September, and I hope that the Government will then give consideration to the strategic benefits of the scheme, which command a great deal of support both inside and outside this House.

I also welcome the Government's amendments, which are a result of the many meetings that the Minister kindly held with the noble and learned Lord and myself. I hope that they will help to allay the fears that have developed as to the legality of the scheme. Now that the noble and learned Lord has spoken again, I hope that the Minister will be able to put his fears at rest. I feel sure that the House would like to support me in thanking the noble and learned Lord, Lord Denning, who has done very hard work. He even paid a visit to the dockyards himself, and I hope that his work on the legal issue will help in the success of this scheme for the Government.

Lord Mayhew

My Lords, the statement made by the noble and learned Lord, Lord Denning, that he could not understand the Bill, that he had to spend long hours in the Library, and that even after doing that he still could not understand the Bill, is balm to the souls of those of us who are not lawyers, distinguished judges or experts. As I read the Bill, I found it to be further confirmation of the impact of age on my intellectual abilities.

I now find that the Minister has put down an amendment that is very much clearer in its language than other parts of the Bill. He had cleared it with his noble friends and with the noble and learned Lord, Lord Denning, but he has not really explained its practical implications to the House. I wish that the Minister would unbend a little and adjust his intellectual level to those of us who have not attended the meetings and briefings that have been mentioned, and who have not received legal advice. I myself do not understand the practical implications of the Minister's amendment. I shall study it, and on Third Reading I will make an eloquent speech for or against it. From time to time, the noble Lord the Minister must help those of us who have been struggling with great difficulty with this extremely obscure and incomprehensible Bill.

11.45 a.m.

Lord Graham of Edmonton

My Lords, I take up the point made by those who have been privy to the many meetings that the noble Baroness said have taken place, but which have clearly excluded people like myself who speak for the Labour Opposition. Apparently consultations have taken place with a selected group of individuals, perhaps representing a selected group of views on this Bill. I make no complaint about that, because from time to time we are all excluded for one purpose or another. No doubt the Minister will reply to that point.

Those who have been privy to those discussions, such as the noble and learned Lord, Lord Denning, and the noble Baroness, Lady Vickers, are satisfied that the Minister has done his best. The wording is not perfect but is better than it was. If the noble and learned Lord, Lord Denning, is satisfied, then that goes a long way, because at least I can say on behalf of the workforce that they are indeed grateful for the interest that the noble and learned Lord has taken in their welfare. Not only is that so in respect of getting the Bill right, and of national security, but the workforce has also appreciated the purport.

I remind the Minister that all this started from the basis of the welfare and interests of the employees. According to the arrangement in Clause 1(4), The Transfer of Undertakings"— that is, the TUPE '81 regulations— shall apply to the transfer of the dockyard undertaking or any part of it whether or not, apart from this provision, the undertaking would be treated as an undertaking", etc. The problem facing the noble and learned Lord was that the transfer of the employees could not be done as part of a package deal. There had to be another form of words.

I share the view of the noble Lord, Lord Mayhew, that the Minister has produced a form of words that is apparently satisfactory. However, I have no knowledge that the Minister has consulted the employees or the trade unions. Of course national security and the future of the dockyards is involved, but I am talking about people's jobs and their professional future. There is a great deal of concern, which I shall describe when we reach later amendments. Therefore, the Minister ought not to feel too satisfied that he has done his best. He may have done his best so far as the Bill is concerned and so far as the national interest is concerned, and I would not dispute that. He has certainly done what he undertook to do at the last meeting, which was to find a better solution. But the Minister has certainly not consulted as widely as the House may have been led to believe.

The noble and learned Lord, Lord Denning, pointed out the difficulties of the Bill as orginally, and even now, drafted. Imagine employees and councillors in Rosyth and Plymouth trying to understand the Bill without the background. The noble and learned Lord said that he wants to see Bills made much clearer in the future. I am sure that would put a great many lawyers out of business, because the greatest beneficiaries in this growth industry are those who sell their services for the better clarification of that which any government have done in a Bill of this kind.

I am not in a position to do other than accept that, according to those who understand these matters better than we do, this a better form or words. However, as the noble Lord, Lord Mayhew, has said, there is still yet another stage of the Bill. I shall listen very carefully, not only the Minister's comments in the next few minutes but also to people outside this House, who can tell us whether this amendment represents any improvement on the previous drafting.

The noble Baroness, Lady Vickers, was moved to ask questions on precisely what is the raison d'être of the Bill in the context of the Government's intentions. How do the Government intend to proceed? That is one of the great mysteries. Personally, I can well understand the uncertainty of the Government on how to proceed, but it was absolutely clear and beyond question how they were going to proceed to privatise the Royal Ordnance factories. There was no dispute. They knew exactly what they were going to do. There are the same provisions in this Bill in respect of TUPE—that is, the transfer and protection of employment. Those provisions were there.

I can tell the noble Lord that in my local newspaper in Enfield this morning—the Enfield Advertiser, which covers the area of the Enfield small arms factory—there is great dismay, loss of morale and uncertainty as to the future of the workers there. While many of them might have said "Three cheers for privatisation" they now realise, having been told by the Minister that there is no question but that the Government will keep the unity of the small arms factories (the ordnance factories) and that they will not be sold piecemeal, that one of the options the Government have not ruled out is the piecemeal sale of factories that have an honourable record, such as the Royal Ordnance factory at Enfield.

I simply say to all those involved, including the employees at Plymouth and Rosyth, that they must take with a pinch of salt what this Government say about their intentions as to the future, and also the integrity of undertakings which the Government give in this House or the other place. In the event—

Lord Trefgarne

My Lords, I hope the House will allow me to ask the noble Lord which undertaking he is referring to.

Lord Graham of Edmonton

My Lords, I refer to the undertaking that was given that the Royal Ordnance factories would not be sold off piecemeal.

Lord Trefgarne

My Lords, I gave no such undertaking.

Lord Graham of Edmonton

My Lords, the Minister may be right, and I shall stand corrected. Amendments were moved on the Bill dealing with the Royal Ordnance factories to ensure that the factories would be kept as a unit—not the 13 sold off together but that there would be groups. The Minister wags his finger, but I believe the record will show that he wags it in admission of what I have said. However, I shall check my facts.

Lord Trefgarne

My Lords, the noble Lord should check his facts beforehand.

Lord Graham of Edmonton

My Lords, I simply say that this Minister and the Government gave certain undertakings in respect of how they intended to dispose of the assets of the Royal Ordnance factories. In the event, based upon those indications many people made their arrangements. They have been thwarted. We know why they were thwarted in respect of the ordnance factories. It was because the Government attempted to ensure that when the factories came to be sold off they would be in a better position; that is, that they had a better future with a better order book than they would have had without the Government's intervention.

People whom the Government normally listen to have told them that if that is what is going to happen they will not sell and get money into the coffers. The Government have had to pause. All I say to the Minister is that, based on that experience, the people who are vitally affected by how the Government intend to proceed are entitled to take with a pinch of salt what the Government say from the Dispatch Box today about what they intend to do. Events override and overrule what the Government say they intend to do. So the Government change course. They are a political government. They take heed of the political and financial realities outside this House.

I listen carefully to what the Minister says but I listen even more carefully to those whose jobs and future are at stake.

Lord Mulley

My Lords, I apologise for not being here at the beginning of this discussion. As I understand it, both the noble Baroness, Lady Vickers, and the noble and learned Lord, Lord Denning, attach great importance to there being one company. As I understand the Minister and his amendment—no doubt he will correct me if I am wrong—it will be possible to have an unlimited number of companies because the amendment refers to "a company" under paragraph (a) and "for that or another company" under paragraph (b). Can we have some idea of what is intended? Is it to be one company or several companies? The noble and learned Lord, Lord Denning, attaches great importance to there being one company.

Secondly, on the point that my noble friend Lord Graham of Edmonton raised in relation to the Royal Ordnance factories, I do not want to get involved in the actual text but I clearly understood that there was an undertaking—I think it is in the statute—that they would not be chopped up into several companies and those several companies put up for sale. We now understand that the Government are going to evade certainly the spirit if not the letter of the law by actually flogging the companies privately and not putting them up for public sale in the normal way which I understood the privatisation programme would do in order to encourage workers in the industry and small shareholders to acquire an interest. I understand that in order to get round the provisions of the Act the Government are going to flog the whole outfit, probably in a private deal, for a specific sum of money. If I have that wrong, I shall be glad to be corrected.

Lord Trefgarne

My Lords, the Bill before your Lordships is of course in connection with the Royal Dockyards and not the Royal Ordnance factories. I hope that your Lordships will therefore forgive me if I do not go along the line suggested by the noble Lords, Lord Graham and Lord Mulley, save only to say that there is no question of departing from any undertakings, as the noble Lord, Lord Graham, suggested. The noble Lord should check his facts before making allegations of that kind. If the noble Lord will allow me, I shall write to him shortly pointing out that fact to him and I shall expect him to come before your Lordships and correct any accusation that he has made.

When Ministers inadvertently make mistakes of that kind, noble Lords opposite are very quick to call for a personal statement or something of that nature. Indeed, on more than one occasion I have been obliged to do that myself and was very glad to do so when the occasion demanded it. I hope that the noble Lord, Lord Graham, will be no less willing to come forward in similar circumstances.

My noble friend Lady Vickers, in broadly welcoming what is proposed, as I understand her—though I recognise that she has some reservations—asked about the companies that remain anxious to tender for the various contracts that we are now proposing. As regards Devonport, there are two consortia from whom we expect to receive tenders. They are Devonport Dockyard Limited, which as my noble friend will know is a management company, and a consortium consisting of Foster Wheeler, Vickers and A.& P. Appledore. As for Rosyth, there are three possibilities. Babcock Power and Thorn EMI have formed a consortium for this purpose; so have Balfour Beatty and the Weir Group. We are also expecting a third tender from the Press Offshore Group.

However, as I have made clear to your Lordships on more than one occasion, we reserve the right to accept, if need be, none of those tenders; in which case we would be proceeding along the lines of a government-owned plc. I recognise that that is my noble friend's preferred solution. It is not the Government's preferred solution but it is one which we will follow if none of the tenders we receive is considered acceptable.

As I have explained, two meetings at least have taken place between myself, the noble and learned Lord, Lord Denning, and certain other noble Lords and my noble friend Lady Vickers. It was never my intention to exclude any noble Lords from such a meeting. Those invited were those thought to have an interest in the matter. I may add that on two occasions I have written at some length to the noble and learned Lord, Lord Denning, on these matters. If the noble and learned Lord is agreeable, I shall be happy to place copies of those letters in the Library.

Lord Denning

Certainly, my Lords.

Lord Trefgarne

My Lords, the noble and learned Lord has indicated that he is agreeable to that course and I shall therefore be happy to do that. I am grateful to the noble and learned Lord for his constructive approach to the proposals. I am also grateful for what I understand to be his acceptance of what I now propose. I beg to move.

Lord Graham of Edmonton

My Lords, before the noble Lord the Minister sits down, he invites me after checking my facts to come before the House in a suitable manner and indicate that the allegation I made was wrong. Of course I unreservedly say that that is what I will do. Equally, if the Minister finds that what I have said is correct—that is, that undertakings were given that the 13 or 14 factories would not be sold off piecemeal—I assume the Minister will do likewise in the same spirit in which I raised the matter, because errors that occur across the Table can be made not precisely on fact but on recollection. Then of course we can both treat each other with the respect that we deserve.

On Question, amendment agreed to.

The Deputy Speaker (Lord Ampthill)

My Lords, Amendment No. 2 cannot be called.

12 Noon

Lord Denning moved Amendment No. 3: Page 2, line 14, at end insert—

(" ( ) It is hereby declared and enacted that the qualified dockyard service employees cannot lawfully be transferred from the service of the Crown into the service of any other employer except with their own consent or by Act of Parliament or regulations made thereunder. ")

The noble and learned Lord said: My Lords, we come now to a series of practical amendments. In this first amendment I have tried to frame an unexceptionable principle of law which I fear that those who drafted this legislation may not have had in mind. I hope that at all events my own drafting is intelligible. Let me read it out: It is hereby declared and enacted that the qualified dockyard service employees cannot lawfully be transferred from the service of the Crown into the service of any other employer except with their own consent or by Act of Parliament or regulations made thereunder".

In view of the line on which discussion has taken place and the great need to make this Bill intelligible, I should like to see that principle enacted by Parliament. I should like to repeat some words that were spoken by one of our great judges, Lord Atkin, in the case of Nokes v. Doncaster Amalgamated Collieries (1940 Appeal Cases). That was a case where an order was made by the Chancery court amalgam-ating two companies into one. It was contended that the workforce was automatically transferred to the new amalgamated company without their consent. Lord Atkin said— his words are very expressive: My Lords, I confess it appears to me astonishing that apart from overriding questions of public welfare power should be given to a court or anyone else to transfer a man without his knowledge and possibly against his will from the service of one person to the service of another. I had fancied that ingrained in the personal status of a citizen under our laws was the right to choose for himself whom he would serve: and that his right of choice constituted the main difference between a servant and a serf. But if Parliament has so enacted the result must be accepted".

So my simple proposition on this amendment is for this House to state the law accurately, as Lord Atkin stated it. Let there be no doubt about it: if I have stated the matter correctly it will help those who have to interpret this statute in the future. I beg to move.

Baroness Vickers

My Lords, I should first like to reiterate that I did take part in the debates on the Royal Ordnance factories and I attended meetings. I also moved amendments but, unfortunately, did not receive any support at all. I think that I was the only one on this side who did move amendments. I know the difficulties that are faced by the noble Lord, Lord Graham of Edmonton.

I should like to support my noble and learned friend. Perhaps I should also mention that we had meetings with the group of the noble Lord, Lord Graham of Edmonton, and with trades unionists, not just with the Minister. However, being on the Government side we really want to get down to the developments in the future. The contact that I have had over the last 33 years with the dockyard employees naturally makes me very concerned for the future. I have had meetings—and so has the noble Lord, but I think that I have had many more—with the management and workforce throughout the consultations on this Bill, and I know that these meetings will continue to be helpful.

I should like to pay a personal tribute to the workforce and management of Devonport Dockyard. The result of the "no-strike" agreement which was negotiated will ensure that HMY "Britannia" will be refitted at Devonport. It is a shining example of co-operation towards a common aim which is the normal working practice of Devonport.

Only by chance I heard yesterday that the Industrial Society had paid a rare tribute to the dockyard when the manager accepted an award for the best employee report. Perhaps I may read it: The Devonport Dockyard 1984/85 Annual Report was voted the 'most effective company annual report for employees' in this year's competition, sponsored jointly by the Industrial Society and Accountancy Age magazine. Devonport's entry was chosen out of over 60 entries from companies such as Peugeot Talbot, Boots, British Gas and British Aerospace, last year's winner of the award". I should like to say how pleased I am about this award and I congratulate the dockyard, which received the trophy yesterday. I hope they keep up the good work.

For these reasons I believe that full consultations should continue with the dockyards. It is essential that the workforce are content with the employer to whom their services will be transferred under this Bill. Therefore, throughout the remaining stages of this Bill, and when the Government are evaluating future plans for the dockyards in August and September, I shall remain convinced that through regular and proper consultation, agreement will be reached as to the best possible future for the dockyards, the Royal Navy which is so important, and the dockyard employees.

It is not true to suggest that employees have only their own interests at heart. Their service to the nation is unquestionable. Their commitment and dedication to the maintenance of a fighting fleet have been proved on many occasions, and most recently of course in the Falkland's crisis. Their history is one of generations of devotion to the Royal Navy, and they will continue to work in this way provided that they continue to be properly consulted as to their future. I hope that the Government will accept this amendment in recognition of the service of the Royal Dockyard employees and ensure their rights to be consulted when transferred to another employer.

Lord Trefgarne

My Lords, let me say right away that I do not disagree with the thought contained in the amendment of the noble and learned Lord, Lord Denning, but I must say with the greatest respect that there is absolutely no need for such a provision in this Bill. I think that the noble and learned Lord will well know what I am about to say, but I shall say it for the benefit of the rest of your Lordships and those who may read our Official Report.

This amendment is a statement of the doctrine of parliamentary sovereignty. At common law a man cannot have his contract of employment transferred to a new employer except with his consent. As your Lordships will know, the common law can only be overridden by statute law. The supremacy of Parliament is accepted as the keystone of the British constitution. I suggest that it is therefore quite unnecessary for this or any Bill to state, as this amendment does, that what is unlawful at common law cannot be made lawful except by an Act of Parliament. Therefore I hope that the noble and learned Lord will accept that this amendment should not be pressed.

Lord Denning

My Lords, in view of what my noble friend the Minister has said, I shall not press this issue. I am glad to have his agreement that this is the law of England.

Amendment, by leave, withdrawn.

Lord Denning moved Amendment No. 4:

Page 2, line 14 at end insert— (" ( ) It is hereby declared and enacted that the transfer of Undertakings (Protection of Employee) Regulations 1981 of themselves do not give any authority by which the Secretary of State can transfer the qualified service employees without their consent from the service of the Crown to the service of any other employer.")

The noble and learned Lord said: My Lords, this amendment is somewhat different. We are dealing with the mechanics by which Parliament can transfer a man without his consent to the service of someone else. When this Bill was introduced in the first draft it was thought by the advisers that it could be done by the simple process of applying the 1981 regulations dealing with transfer of employment. That is how the Bill was first drafted. But if one looks at those regulations, one can see quite clearly that they cannot be applied in that manner because those 1981 regulations do not apply to an undertaking which is not in the nature of a commercial venture. Those are the very words of the 1981 regulations.

They do not apply to the dockyard undertaking run by the Crown in Devonport. That is certainly not a commercial venture. Like the army or the navy, it is run on a Vote by Parliament out of those moneys, and does not concern profit, loss or running risk. It is not in the nature of a commercial venture, and so the 1981 regulations do not apply to it. That is why the Government have had to put forward one or two amendments.

They put down amendments first at the Committee stage. I wondered whether your Lordships would understand the provisions. I am sure that you would not; I did not at first. There were phrases such as the services of the qualified dockyard service employees without more".

Some of them were virtually unintelligible.

The Government have amended the provision substantially, but I still think that it is very difficult to follow. That is why I suggest that the provision should be left out and instead there should be inserted the subsection which I suggested originally at the Committee stage. It reads: The provision of European Community Law contained in Council Directive 77/187 shall apply to the transfer of the dockyard undertaking to another company; and shall take precedence over any regulation or enactment which fails to implement the Directive correctly".

I hope that that is intelligible. I am more in favour of that than the provision in Clause 1(4) which the Government suggest because of the difficulty of understanding it.

If there is any inconsistency between the two. no doubt Community law will prevail. Community law was upheld in the case of the retirement of women at the age of 60 and men at 65 which went to the European Court. It was the case of Mrs. Marshall and Southampton. It was held that our law was inconsis-tent with the directive and that the directive had priority. That is the reason why I should prefer my original provision to remain as it is. The other may give rise to difficulties.

Whichever we adopt, the 1981 regulations modified or my suggestion, both have this important provision. We shall come to this later. It states that before the transfer is effected the workforce has to be told the legal, social and other implications of the transfer. They must be told of the measures proposed to be adopted and be consulted a long time before so that they have the chance to reply. Their replies should be considered with a view to getting agreement. Whichever is adopted, there is the important provision that before the transfer is effected, the legal, social and other implications are to be told to the men. they should be given the opportunity to reply and agreement should be sought.

I do not much mind whether we have my provision in Clause 1(5) or the Government's. What I ask is that my first amendment, No. 4, be accepted. I think that it corrects a misapprehension by those who originally drafted the Bill. I should like the Government to acknowledge that to be correct. I do not much mind whether we have my subsection (5) about the Community law or the Government's provision, which is much more complicated. It might be sufficient if I move Amendment No. 4. The regulations by themselves do not give any authority for transfer. I beg to move.

12.15 p.m.

Lord Trefgarne

My Lords, Amendments Nos. 4 and 6 concern the Transfer of Undertakings (Protection of Employee) Regulations 1981 which we debated in Committee. Since there is a later government amendment, No. 8, to page 2, line 29, which seeks the removal of Clause 1(5), which is related, it might be for your Lordships' convenience if I were to cover that amendment as well. I shall formally move my amendment in due course.

Your Lordships will recall that in Committee there was a discussion of the regulations and whether the dockyard undertaking was one to which the regulations would apply. The Government's view has always been that there is in law an undertaking at each dockyard within the meaning of the regulations but that there was legal doubt as to whether a transfer of the services of the employees alone would be a transfer of a part of that undertaking attracting the application of the 1981 regulations. That particular doubt was removed by Clause 1(4) of the Bill as it was originally drafted.

The noble and learned Lord had, however, suggested that, because there was no undertaking in the nature of a commercial venture at the dockyards, the regulations would not apply. The Government, the Opposition and I believe the trade unions representing the workforce are as one in wanting to ensure that the 1981 regulations apply. The debate was not therefore about whether the regulations should apply but rather whether the wording of the Bill ensured that they would apply.

Notwithstanding our satisfaction on that point, in Committee I introduced an amendment to Clause 1(4) to put the matter beyond legal argument. In Committee the noble and learned Lord said that he did not object to the principle underlying the amendment but he thought that the subsection might have to be amended further because of the references to the services of the qualified dockyard service employees without more". As your Lordships know, I have already moved an amendment to delete the reference to "without more", and to provide that the dockyard company would have within it not only the workforce but also the licence from the Secretary of State to use the dockyard assets. I hope that the noble and learned Lord and other noble Lords will accept that the further amendment to Clause 1(4) which I have introduced today and about which I have written at length to him removes any concerns which he previously had on the question of the 1981 regulations.

As I hope he will accept, there is no need for Clause 1(5) to remain in the Bill. In Committee he said that the wording simply stated the law of the land. If that were so, there would be no reason to include such a provision in the Bill. However, the directive to which subsection (5) refers is not directly applicable and it required implementation in domestic law through the 1981 regulations. In any event, I hope that the noble and learned Lord will accept—I believe that he will—that Clause 1 (5) is inconsistent with the first part of Clause 1(4) to which your Lordships have now agreed, because the words, shall take precedence over any regulation or enactment would have the effect of subverting the words in Clause 1(4).

I believe that Clause 1(4) makes our intentions clear and that Clause 1(5) should no longer remain in the Bill. I shall move my amendment at the appropriate moment, but in the light of what I have just said and our very full discussion I invite the noble and learned Lord not to press his amendment.

Lord Graham of Edmonton

My Lords, may I ask for some clarification? I listened to what the Minister said. He pleaded in aid the unanimity which exists that the Transfer of Undertakings (Protection of Employment) Regulations should apply. He said that the trade unions wished that to be the case. Will the Minister put on record, in the light of what has transpired which caused the Government to reflect and delete Clause 1(5), that there have been recent conversations with the trade unions, and that he is fully satisfied that what the Government propose meets with the trade unions' approval?

These matters are watched very carefully by those who are directly affected and whose professional future and lives are at stake. The Minister will be aware that the professional, manual and non-manual unions took a deep interest in the matter when we discussed the future of the Royal Ordnance factories. My recollec-tion is that at the end of the day they were not satisfied by the manner in which their interests were protected. I should be grateful if the Minister will tell us whether he is in possession of any up-to-date information about the reaction of the trade unions to what we are going to do about the amendment moved by the noble and learned Lord, Lord Denning, and the deletion of Clause 1(5).

Lord Trefgarne

My Lords, if I have your Lordships' permission to speak again (because we are of course on Report) so far as I am aware the trade unions are content about the way we are now proceeding. I shall check that we have received a recent communication from them, and if I am mistaken I shall write to the noble Lord.

Lord Denning

My Lords, in view of our discussions I do not press Amendment No. 4. I shall accept Clause 1(4) and leave out Clause 1(5); in other words, deal with the three matters comprehensively.

Amendment, by leave, withdrawn.

Lord Denning moved Amendment No. 5:

Page 2, line 14, at end insert— ("( ) The Secretary of State may by order transfer qualified dockyard service employees from the service of the Crown to the service of any such company without their consent, provided that before such transfer is effected he shall take sufficient steps to ensure, to their reasonable satisfaction, that on such transfer taking place—

1. (a) the parent companies, the holding company and the subsidiary company at the date of the transfer, are and will at all times thereafter remain during the continuance of the contract under United Kingdom control and not under the control or influence of any foreign body or person;
2. (b) the qualified dockyard service employees will be given security of tenure (including redundancy and pension provision) equivalent to those which they had in the service of the Crown; and
3. (c) the qualified dockyard service employees will be granted a reasonable proportion of shares or equivalent participation in the profits expected to be made by the company which aims to make profit by the use of their services.").

The noble and learned Lord said: My Lords, Amendment No. 5 is of almost paramount importance because if the scheme is to go through it must have the co-operation of the workforce. The workforce wll not give its consent. If it is completely opposed to the new management scheme, the workforce can disrupt it entirely. It can delay the refitting of ships. It will not deal with the fleet as it should. It may even go on strike, even in the Royal dockyards where it is so essential in the national interest that it should work voluntarily and well.

That is the real objective of paragraph 10(3) of the 1981 regulations to which I referred a little while ago. It provides that long before a relevant transfer is made the employer should inform the representatives of the unions that the transfer is going to take place, and of the reasons for it. It includes the important point that the workforce must be informed of the legal, economic and social implications of the transfer on the affected employees.

The legal implications now are different from those that applied when the Bill was introduced. The workforce must be told of the economic and social implications. The whole objective is that it can make observations during the consultations and object if it pleased and receive replies to those objections. If one is going to override the consent of the workforce everything possible must be done to see that what is proposed is reasonable. The workforce should be persuaded to consent.

That is why, as a supplement to the regulations, and to achieve the co-operation of the workforce, I have proposed the amendment. It contains the points about which I understand the workforce is most concerned. If we are to obtain the co-operation of the workforce, or at least its acquiescence, the amendment should become part of the Bill. I hope that I am making this all clear: The amendment says: The Secretary of State may by order transfer qualified dockyard service employees from the service of the Crown to the service of any such company without their consent, provided that before such transfer is effected he shall take sufficient steps to ensure, to their reasonable satisfaction".

The employees do not have a veto; they must be reasonably satisfied. that on such transfer taking place".

There then follows three important matters about which I gather the workforce is concerned. The first is: the parent companies, the holding company and the subsidiary company at the date of the transfer, are and will at all times thereafter remain during the continuance of the contract under United Kingdom control and not under the control or influence of any foreign body or person

How important that is to the workforce. It has been employed in the Royal Dockyards until now serving the Crown and the country. Is it to be put against its will under the control of a company which is whole or in part or to any degree is under foreign control? Surely the workforce has a right to say that it works in the Royal Dockyards and that if it is to be transferred to a company it must be a British company, with no foreigners. That is my first point.

The second is: the qualified dockyard service employees will be given security of tenure (including redundancy and pension provision) equivalent to those which they had in the service of the Crown.

Is not that right? If the employees are to be transferred against their will, surely they should be no worse off on compulsory transfer.

Surely the next provision is reasonable: the qualified dockyard service employees will be granted a reasonable proportion of shares or equivalent participation in the profits expected to be made by the company which aims to make profits by the use of their services.

That is an important principle. The employees are working now for the country, but they will be working for a company. The company will be making profits out of their services. Surely the modern concept demands that those who do the work by which the company makes a profit should have a share or participate in that profit. That is the theory behind workers' shares. Let us give employees an incentive and a stake in the company to ensure that they work well.

Those are the three concerns that I suggest should be written into the Bill to protect the workforce and, more than anything else, to obtain its co-operation for the future. I beg to move.

12.30 p.m.

Lord Mulley

My Lords, I wish to support the noble and learned Lord, Lord Denning, who has, within the amendment, included three matters of great importance. My noble friend Lord Graham of Edmonton has down as amendments new clauses that cover a number of the points; foreign ownership, redundancy and so on. I am sure that the noble and learned Lord, Lord Denning, would not take offence if the Minister said that he accepted the points but preferred the new clauses.

Lord Graham of Edmonton

My Lords, can I assure my noble friend that if the Minister were to say that the sense of what is contained in the proposal now before us is acceptable, I would certainly expedite the business of the House by not moving the subsequent new clauses.

Lord Mulley

My Lords, as always, my noble friend Lord Graham shows himself to be at the service of the House and seeks expedition of its business. There will be widespread disappointment, I believe, in all quarters of the House, if the Minister does not accept the amendment, for three simple reasons. I do not wish to become involved in controversy about the accuracy of one's recollection. I recall, however, that, at the Committee stage, the Minister expressed a great deal of sympathy with the concept of worker shares in any company that might come into being. I accept at once that the noble Lord was not able to, and did not, give any commitment that he would bring forward such a proposal. I imagine, however, that a man of his sensibility would not have lost his sympathy in the short time that has elapsed between the Committee and the Report stages. The fact that this is a Friday should not make any significant difference to his attitude in respect of the way that the Bill should be tackled.

I would have thought certainly that paragraph (c) could be accepted. It seems that several companies will be involved in this complicated and most unsatisfactory arrangement in the Royal Dockyards. Should it happen that we have the fallback position of a Government-owned plc, we would like an absolute assurance that all these points will be met. I would have thought that no one in the House, no matter what their views, would dissent from the contention of the noble and learned Lord, Lord Denning, that it would be a disaster if the companies running the Royal Dockyards were under the control or influence of foreign bodies or persons.

With respect, I would correct or, rather, modify, something that the noble and learned Lord, Lord Denning, said. I do not think it is sufficient that the company should be registered as a British company. We know only too well that a number of companies registered in this country are actually owned and controlled by people outside. We want an assurance in some form in the Bill—we have made the point in other cases—that there would be absolute control. This is important in a number of other Bills with which your Lordships have been concerned. In this case, it is an overriding matter that the Royal Dockyards should not fall into the hands of whatever foreign body might possibly be tempted to acquire shares in rather nebulous companies, of which we know little, that the Government are proposing to set up to do the work.

It may be that the terms of pay and working conditions will be different under the new arrange-ment. One difficulty is that dockyard employees have been rather badly paid over the years. There may be a need for them to be brought more into line with industrial pay rather than the pay of Civil Service manual workers that applies in many cases. This has been a source, no doubt, of some of the problems. Certainly, security of tenure and redundancy and pension provisions should be fully taken care of. It would be totally wrong if a person who has worked for 30 years in the Royal Dockyards and who is then transferred to a company for a few years before he retires, were made redundant or retired on pension only to find that his previous service was not counted fully in the calculation of the redundancy payment or the pension provision to which he is entitled. It seems to me that the principles that the noble and learned Lord, Lord Denning, has set out so clearly and has explained so well should be accepted without any qualification by the Government. I suggest that we put these matters into the Bill now. If the Government then feel that it is necessary to amend them in respect of drafting, we can deal with that matter on Third Reading.

Lord Ashbourne

My Lords, I wish also to support the noble and learned Lord, Lord Denning, but in so doing to examine the problem from a completely different angle. As we get buried further in the minutiae of this, I almost said incomprehensible Bill—it is clearly a Bill that some of your Lordships, including myself, find pretty difficult to understand—it is easy to lose touch with the overriding requirement transcending all other considerations, namely, that the dockyards should give the best possible service to the fleet. I believe that paragraphs (a), (b) and (c) greatly help from this point of view. The purpose of paragraph (a) is perfectly obvious to every straightforward, clear-thinking person. Paragraphs (b) and (c) concern the motivation of the workforce. Obviously, if one has not got the workforce on one's side, or even the acquiescence of the workforce, one is in a very difficult and, I would go so far as to say, dangerous position. For this reason, and looking at the problem from the point of view of the fleet, I strongly urge the Government to accept the amendment.

Lord Mayhew

My Lords, I should like to add my voice to those in all parts of the House urging the Government to accept the amendment of the noble and learned Lord. The amendment gives the noble Lord, Lord Trefgarne, the opportunity of spelling out a little more the names of those expected to apply for the contracts. One of the names that I heard was Foster Wheeler as one of the members of a consortium about to bid for Devonport. That is, of course, a foreign firm. I was unable to catch the other names of members of the consortium. I should like to be assured as to their British basis and to know the Government's mind as to how much foreign participation in the consortium is acceptable to them. What is a consortium? I am not clear. Will the noble Lord define a consortium? When he says that Foster Wheeler—a foreign firm—is a member of a consortium, what does that mean in terms of Foster Wheeler's control of the other members of the consortium? Does it mean an equal partnership, equal holding of shares and equal control? I am astonished that there is nothing in the Bill that ties down the Government on this matter.

It seems extraordinary that Parliament should be asked to pass a Bill about the future of dockyard services that says nothing about British control. The amendment covers the point. As the noble Lord, Lord Ashbourne, has said, it also covers points essential to the effective operation of the navy. It is absolutely essential, in my view, that these things should be in the Bill and that the Government should be required to take these steps before making an order under the Bill. I should like very much to hear the noble Lord reassure us on these points.

All of us, I believe, appreciated the offer of the noble Lord, Lord Graham, who has a number of lengthy proposals under new clauses. The noble Lord has offered, should the Government make a positive reply to the amendment of the noble and learned Lord, Lord Denning, to withdraw his amendments. It is an offer that the Government might well take seriously to the benefit of all sides of the House.

Lord Graham of Edmonton

My Lords, I fear that it may be an offer that the Minister will be tempted to refuse. But if he is tempted simply to tell us that he has every sympathy with this, that discussions are going on, that understandings are abroad and that there is no need to write this into the face of the Bill, we are faced with this dilemma. Far too often we are told that some other words in the Bill mean exactly what we wish to write in. We are simple men and women. We want to see in writing what we want the Bill to mean. When it comes to foreign ownership I am sure that the Minister will tell us about the golden share, and about the inability of anyone to aggregate sufficient financial power to outweigh that held by the Government. There is nothing wrong with writing into the Bill the words of this clause. The Minister says, "From our point of view there is no need for this." However, we are not talking about the Government's point of view. We are talking about the point of view of the ordinary man and woman in the street, the employee, and so on.

The details of the amendment in the name of the noble and learned Lord are in very general terms. Paragraph (b) refers to security of tenure (including redundancy and pension provision) equivalent to those which they had in the service of the Crown". If the Minister says that it is not within his gift to give those assurances because new relationships will have to be forged between the new employers and employees, we say that the Government are very prone to make conditions which set a precedent over a range of matters. We are saying, "Tell the new gaffers—the new bosses of the workers—that we insist that these are part of the arrangements." The Minister will give the game away if he says, "We cannot tell those people what to do. They may not bid. They may not buy. They may not be interested in what they can do". We are more concerned with the interests of those who have served the nation well, not only over the past few years but for centuries. They are telling us that they would like to have better guarantees. If the Minister says that there is no need for such guarantees, we see every reason for them.

I am sure that the noble and learned Lord, Lord Denning, will agree when I say to the Minister that if he is prepared to accept the intention that we want words written into the Bill in respect of the new clauses, I shall not move them. Each time I come to them I shall simply reiterate the assurance that I hope the Minister will give us now. I am not procrastinating today. I say "today". The Minister smiles because he realises that there have been other occasions when that might have been my tack, but it is not so today. There is an important Bill to follow and I am anxious to respect the limitations of a Friday. I am sure that the Minister realises that we want not merely words or intentions but assurances. If they are not assurances that he accepts this amendment now, they are to be assurances that we shall have better provisions put forward at Third Reading.

12.45 p.m.

Baroness Vickers

My Lords, I had intended to speak to the amendments of the noble Lord, Lord Graham, but I shall speak now, as he too has done.

The issue of foreign control of the dockyards concerns everyone. I am sure that everyone in this House must be concerned about it. I firmly believe that no foreign company or person should have any powers over decisions regarding the Royal Navy. I am supported in that by the noble Lord, Lord Ashbourne.

I wish to emphasise at this point that I am not anti-American. I am anti any foreigners coming in on this Bill, because I do not see many reasons why they need to do so. We managed these dockyards well for nearly 300 years. They have been managed very effectively. I say to the noble Lord—I heard his whisper—that they have been very effectively run and saved us in two World Wars and lately the Falklands. They have done extremely well.

While I do not accept that the agency management offers the best future for the nation, I am convinced that with a foreign company running the dockyards the profits will not even remain in this country. I know that other amendments today deal with this question, as I mentioned just now, but even the smallest foreign interest in running the dockyards will have an effect on the decisions and security of the realm.

There have been mentioned those who are putting their names forward. We had the Trafalgar company who quite legitimately pulled out because they said they would have to get rid of 7,000 employees. They thought that they could not start off like that. We now have Foster Wheeler, Vickers (nothing to do with me) and Appledore. Appledore is a very poor little organisation in Falmouth, I regret to say, who put its name forward with Trafalgar and pulled out at the same time. Now I have had it confirmed that it is making a mess with an organisation in Gibraltar which it took over. It does not, therefore, seem to me that it is very active.

The other consortium mentioned by the noble Lord is 10 of the people who are at present working in the dockyard. They have formed a consortium. They have full knowledge of all the work and I shall not therefore repeat it.

The second point which I wish to mention is my concern for the protection of the dockyard employees' conditions of service. Again I agree with the noble and learned Lord, Lord Denning, when he stated how important it is that these matters are written into the statute.

I am very concerned that the workers of the dockyard should not suffer anything detrimental to their working conditions. When one thinks that they have probably had great-great-grandfathers working over the years in the dockyards, they naturally want to continue to have some such security as they have had over these many years. It is one thing to make the dockyards ever more efficient; it is another to take away the hard-earned rights of a devoted workforce. I am not complaining about redundancies. From time to time these are necessary and 2,000 have already been agreed. I am concerned that the redundancy provisions should not deteriorate under this scheme. Equally, it will be no surprise to noble Lords to hear that I would wish to see the Government's assurances on pension rights and apprentice training in the future.

To conclude my few words on this point, I should like to appeal to the Government to accept into the drafting of the Bill conditions to ensure that the employees are offered shares in the future. I am sure that most people would agree that this would be an excellent incentive to the workforce to ensure that the excellent relationship already established at Devonport Dockyard is continued under these new arrangements.

The Earl of Dundee

My Lords, I to should like to support this amendment and the remarks of the noble and learned Lord, Lord Denning. At Committe stage he referred to four different options for transfer of the workforce to a new organisation. He demonstrated very convincingly why the best option is to have one company to take over the dockyard undertaking.

The noble Lord, Lord Mulley, referred to the assurance given at Committee by my noble friend the Minister, that if the single company structure were to be adopted the Government would see to it that the dockyard employees had a proper share in the enterprise. While this point is covered in paragraph (c) of the present amendment, all three subsections appear to be aimed at gaining the co-operation and support of the workforce. At the same time they do not conflict with the purpose of the Bill which is to try to reduce red tape and to encurage enterprise and development in the dockyards. Apart from that, it is clearly desirable that during their contracts the companies concerned should be seen by dockyard workers as well as everyone else to be under United Kingdom control.

Lord Trefgarne

My Lords, the noble and learned Lord, Lord Denning, seeks to provide many things in this one amendment. He wishes the dockyard companies on vesting day and thereafter not to be under the control of any foreign body or person. The Government not only wish to ensure that the dockyards are not run by foreign companies but intend to take steps to ensure that, quite apart from control, even a small foreign interest will not be tolerated if it would prejudice our security interests.

The noble and learned Lord wishes to ensure that conditions of service, including redundancy and pension provisions, will transfer with the workforce when they leave the service of the Crown. The Government not only wish to ensure that redundancy procedures and levels of compensation will transfer and that pension schemes are set out as closely as possible to resemble those of the Civil Service, but, as my noble friend Lord Glenarthur made clear in Committee, we have made sure that redundancy procedures and levels of compensation transfer under the 1981 regulations. As regards pensions, we have made it clear that the pension funds which are set up for those transferring from the Civil Service will have benefits as near as possible to those of the principal Civil Service Pension Fund.

Finally, the noble and learned Lord, Lord Denning, wishes to ensure that the dockyard workforce should have an interest in their company. I entirely agree with the thought that the commitment of the workforce to the company is important, but, as the noble and learned Lord implies in his amendment, some sort of profit-sharing or perhaps incentive scheme might be more appropriate, particularly since the dockyard assets will be remaining in Government ownership.

As the noble and learned Lord knows, I am with him in spirit, and I hope that he will be reassured to hear that. However, I have to say to him that on several grounds I cannot agree that this amendment should be accepted. With your Lordships' permission, I shall say as briefly as possible why I take this view.

The amendment refers to an order, but the Bill does not say how such an order would be exercised or what parliamentary scrutiny of it there would be, and so on. The amendment refers to the need for "reasonable satisfaction" of the workforce to be obtained before they are transferred. What would be reasonable satisfaction? The noble and learned Lord has referred to the fact that the transfer would not be with the consent of the workforce. The noble and learned Lord agrees that it does not make sense that the workforce should remain in the Civil Service but would, I think, prefer the Government-owned plc. However, even under that option the workforce would have to be transferred from the Civil Service. The workforce have made it clear that they will do all in their power to remain in the Civil Service. What chance would there be of getting the trade union to say that they were reasonably satisfied if, by saying so, they would leave the Civil Service? In short, if this amendment were accepted, we would see no change in the dockyards for another decade.

The amendment refers to the requirement for the dockyard companies to remain under the United Kingdom control. There is no definition of "control". That is not a requirement for this Bill because, under the Government's proposals, although there will be a trigger point at 30 per cent. foreign shareholding, the contract could be terminated at any point below that if we felt that essential security interests would otherwise be prejudiced. However, under this amendment, by using the word "control", it would be held that a 49 per cent. foreign holding, even by the Soviet Union, was acceptable, provided that 51 per cent. was in United Kingdom hands. It would be equally bad to provide in the Bill for a reasonable proportion of shares for the workforce or equivalent participation in the profits. Reasonable to whom? Equivalent to what?

In conclusion, although I believe that it is unnecessary to include in the Bill provisions along the lines proposed, I believe that what the Government propose—to ensure that security interests are paramount, that conditions of service transfer, and that companies are encouraged to come forward with positive proposals for worker participation—meet the very reasonable desires of the noble and learned Lord in these respects.

I have spoken at a little length on the individual provisions of this amendment. As your Lordships will know, there are other detailed amendments on several of the aspects covered, but in the light of what I have said, both in terms of the content of this amendment and in the light of the undertakings that the Government have given, I invite the noble and learned Lord to withdraw his amendment.

Lord Denning

My Lords, I am afraid I cannot withdraw this amendment. If the Government are to have the co-operation of the workforce, then this amendment is essential. Comment was made about an order. My noble friend Lord Mayhew has tabled an amendment on that. If there is to be an order, let it be approved by both Houses. That deals with that point.

I am not troubled about the details of each one of these paragraphs; they can be worked out between the workforce and the Government. Before any of this goes through, before they lay all their plans, a long time in advance they have to tell the workforce about the legal, economic and social implications of the transfer for the affected employees. It is no good telling us and obtaining our consent. The Government have to get the consent of the employees; they must tell them the details, how these companies will be formed, and whether they will be British. It is the employees who have to be told and whose co-operation should be sought.

On each of these points, what good are assurances or undertakings given to your Lordships' House? As I have said, the courts take no notice at all of any undertakings or assurances given to your Lordships' House. I would simply say that if the workforce is to be protected and if our national security is to be protected we must not have any foreigners. I have seen the clause in the contract about foreign control and I think nothing of it. I do not hink it affords sufficient protection, because nominees and the like can be put in.

If this clause is accepted, the legal and social implications must be told to the workforce. That is why I stress this and why I tabled my first amendment concerning our national security. I do not mind about the details—those can be worked out later. I do not mind about the details concerning the security aspect or the point about equal participation in shares. The details will have to be discussed with the employees. I care about the principle, which I have tried to set out in this amendment, of security for the workforce. The details can be worked out later.

This is a matter of principle. I deliberately included the phrase "to their reasonable satisfaction". Surely that is right. They cannot have an unreasonable veto. They can consider whether or not there is sufficient British control when they get the details. Therefore, I have said that they are to be consulted. If they are unreasonable that is another matter. However, if the situation is to their reasonable satisfaction, surely it is right to say, "This is what Parliament has enacted; you should really go by what Parliament has enacted". Therefore, I would ask your Lordships and the Government to accept the amendment, and I propose to test the opinion of the House.

12.59 p.m.

On Question, Whether the said amendment (No. 5) shall be agreed to?

Their Lordships divided: Contents, 35; Not-Contents, 66.

DIVISION NO.1
CONTENTS
Amherst, E.	Lawrence, L.
Attlee. E.	McNair, L.
Broadbridge. L.	Mayhew, L. [Teller.]
Brockway, L.	Mulley, L.
Brookes, L.	Parry, L.
Carmichael of Kelvingrove, L.	Phillips, B.
Cullen of Ashbourne, L.	Ponsonby of Shulbrede, L.
Denning, L.	Rea, L.
Elwyn-Jones, L.	Sainsbury, L.
Ennals, L.	Seear, B.
Fitt, L.	Stallard, L.
Graham of Edmonton, L	Stoddart of Swindon, L.
[Teller.]	Strabolgi, L.
Hanworth, V.	Tordoff, L.
Hatch of Lusby, L.	Underhill, L.
Ingleby, V.	Wigoder, L.
Jeger, B.	Williams of Elvel, L.
John-Mackie, L.	Ypres, E.

NOT-CONTENTS
Ampthill, L.	Fanshawe of Richmond, L.
Auckland, L.	Fraser of Kilmorack, L.
Belhaven and Stenton, L.	Gainford, L.
Beloff, L.	Gisborough, L.
Belstead, L.	Glanusk, L.
Bessborough, E.	Glenarthur, L.
Boyd-Carpenter, L.	Hailsham of Saint Marylebone,
Brabazon of Tara, L.	L.
Brougham and Vaux, L.	Halsbury, E.
Caccia, L.	Henley, L.
Caithness, E.	Home of the Hirsel, L.
Cameron of Lochbroom, L.	Hooper, B.
Campbell of Alloway, L.	Ironside, L.
Carnock, L.	Kinnaird, L.
Cathcart, E.	Kinnoull, E.
Coleraine, L.	Lane-Fox, B.
Craigmyle, L.	Lauderdale, E.
Davidson, V.	Lindsey and Abingdon, E.
Denham, L. [Teller.]	Long, V.
Eccles, V.	Lyell, L.
Effingham, E.	McFadzean, L.
Elton, L.	Macleod of Borve, B.

Mancroft, L.	Shannon, E.
Merrivale, L.	Skelmersdale, L.
Morris, L.	Swinfen, L.
Napier and Ettrick, L.	Swinton, E. [Teller.]
Orkney, E.	Teviot, L.
Portland, D.	Teynham, L.
Saint Brides, L.	Trefgarne, L.
St. Davids, V.	Trumpington, B.
Saint Levan, L.	Vaux of Harrowden. L.
Saltoun of Abernethy, Ly.	Vivian, L.
Selsdon, L.	Whitelaw, V.
Sempill, Ly.

Resolved in the negative, and amendment disagreed to accordingly.

[Amendment No. 6 not moved. ]

1.7 p.m.

Lord Trefgarne moved Amendment No. 7: Page 2, line 25, leave out ("without more") and insert ("together with the rights in or over the dockyard and property used for the purposes of the undertaking").

The noble Lord said: My Lords, this is consequential upon an earlier amendment. 1 beg to move.

On Question, amendment agreed to.

Lord Trefgarne moved Amendment No. 8: Page 2, line 29, leave out subsection (5).

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

On Question, amendment agreed to.

Lord Trefgarne moved Amendments Nos. 9 and 10:

Page 2, line 35, leave out ("(a)") and insert ("(b)"). Page 2, line 40, leave out ("(a)") and insert ("(b)").

The noble Lord said: My Lords, Amendments Nos. 9 and 10 are both consequential on Amendment No. 1, which I moved earlier. I beg to move Amendments Nos. 9 and 10 together.

On Question, amendments agreed to.

Lord Mayhew moved Amendment No. 11:

Page 3, line 3, leave out from beginning to third ("of) in line 5 and insert ("(8) No order shall be made under subsection (1) above unless a draft of the order has been laid before and approved by resolution of each House").

The noble Lord said: My Lords, this amendment would make any order under subsection (1) subject to an affirmative order of both Houses. The proceedings on Report so far have increasingly convinced me of the importance of this amendment. Over and over again we have been asked simply to trust the Government, and we have had nothing written into the Bill about the rights of the employees or about the question of foreign control. The noble Lord, Lord Trefgarne, said that they were "going to do this, and that", and that we could rely on the Government to do "such and such", and nothing was to be written into the Bill.

It gives the Government wide powers. We do not know whether it is going to be a single company. We do not know what the single company will be like. We do not now anything about the contracts. We are disposing of £770 million worth of public assets, and it seems to me that by the time an order is made Parliament will be—and should be—much better informed than we are now about the Government's intentions. We do not even know anything about the costs, on the Government's estimated savings, or dissavings, as a result of all this. We have been told during the debates on the Bill that as time goes by and when the tenders come in, the Government will be able to make better estimates about costs. As it is, we are in the dark. We have been kept in the dark by the Government about matters which we really need to know before we pass this Bill.

At the Committee stage the noble Lord, Lord Trefgarne, explained what the order will consist of when it comes. He argued that it would simply designate Devonport and Rosyth as the designated dockyards, that it would list the services and would define qualified dockyard service employees. Therefore, he argued, as we knew all this, surely there is no need to make the order subject to an affirmative resolution.

However, by the time the order is made we shall at least, I hope, know (or we may be told) who the contractors are and the estimated cost to the Government of undertaking the scheme. Therefore, there is in my view a very strong case for requiring the Government to come again before Parliament before they take final action. We have had some talk about the Royal Ordnance factories—and here I must tread delicately in view of the exchanges between the noble Lord, Lord Trefgarne, and the noble Lord, Lord Graham. But I recall all kinds of assurances about parliamentary monitoring of the ROF scheme which has not taken place, so the ROF scheme has got into trouble.

This is all the more reason for Parliament to have a right to debate what is going on. I recall that in May last year the then Defence Procurement Minister, Mr. Pattie, said about the ROFs: We will at a later date put forward detailed proposals on privatisation in the light of the circumstances at the time. There will no doubt be an opportunity to discuss them should the House so wish at the time".

That has not happened. There has been no opportunity. I am afraid of the same thing happening in the case of this Bill.

I urge the Government not to try to bypass Parliament, not to try to push this Bill through. We all agree that it is difficult to understand, not only in itself but because it is very difficult to estimate the practical consequences of what we are doing. I urge the Government not to try to bypass Parliament, not to try to push us into passing a Bill without the information we need. I beg to move.

Lord Mulley

My Lords, I should like to support this amendment moved with great clarity by the noble Lord, Lord Mayhew, who himself was a Navy Minister some years ago and has personal knowledge of the problems of the dockyards. All of us who were in defence had to wrestle with them from time to time.

I gather that on the point about costs, no informa-tion has been given. The noble Lord the Minister seems to find this an extremely amusing situation. I should have thought that the likely consequence of this legislation that he is gaily letting through is going to be disastrous for the defence of this nation and for the Royal Navy. That is my conviction. As to the cost, the Select Committee, I think, put forward the thought that the initial setting-up costs could be as much as £400 million and that the annual extra costs above current expenditure on the dockyards could amount to £50 million.

I understand that the Minister or his colleagues have said that these figures are exaggerated. They may be. But if they are exaggerated, what are their figures? We have not been given any figures. I would not myself suggest that the purpose of having an order is that we would want to have a vote on it. I know that one of the difficulties about parliamentary instruments is that they cannot be amended; but at least it means that if you have an affirmative order a place must be found for it in the timetable of both this House and another place. It is virtually impossible these days in another place to get the negative resolution procedure, and I do not think that it is too easy to get it here. I shall gladly give way if the Minister wants to correct me on these matters.

Lord Trefgarne

My Lords, I shall be happy to explain the position to the noble Lord when I come to reply in a moment.

1.15 p.m.

Lord Mulley

My Lords, I thought that the practice of Ministers trying to explain matters sotto voce on the Bench was not the practice in this House, but I am a relatively new Member and perhaps it is the custom. Certainly the great merit of an affirmative resolutions is that it has to be debated and all the relevant considerations surrounding the order can be put by noble Lords.

In this House, we have a great number of Members such as, for example, the noble Baroness, Lady Vickers, who has had close association with the dockyards over very many years as a parliamentary Member and who is a very loyal and devoted supporter of the Royal Navy; the noble Lord, Lord Ashbourne, with his naval background; and, when they come, we have several ex-First Sea Lords or Chiefs of Naval Staff or Chiefs of Defence Staff. Perhaps one of these days, on an order such as that, we could get them to come and give us their views. Certainly I think it would be an act of faith on the part of the Government in the intelligence and validity of the scheme if they were prepared to accept this amendment so that they could, if need be, defend it to your Lordships.

Lord Denning

My Lords, may I add a word in support of the amendment? I have to remind your Lordships of the principle with which we started off today. You are going to overrule the workers and compel them to be transferred without their consent to a company. That is agreed to be a principle of law that has got to be authorised by Act of Parliament. Surely in those circumstances and from what we have heard already, there is a lot more to be done before they can be transferred. They have got to be told the legal, economic and social implications of the transfer and its effect on them. That still has to be gone through under the regulations.

Suppose that they reasonably object to the government proposals and the Secretary of State says, "I don't mind your objections. I'm going to push it through. I'm going to make the order". Surely Parliament itself by an affirmative order should approve the Minister's doing it in that way. At the moment, if you entrust him with it without the negative order. Parliament never has a voice in it again and has no opportunity to see whether or not these men are lawfully or rightly being compelled against their will to go to another company. Surely a simple protection for the men is a constitutional principle and it ought to be only by an affirmative order that they are compulsorily transferred from the Crown to a company.

Baroness Vickers

My Lords, I, too, should like to support this amendment. The noble Lord, Lord Mayhew, has great experience. I was going to support the noble Lord, Lord Graham, if he had his amendment going, and now we have heard from the noble Lord, Lord Mulley. He must know how many Ministers of State there have been in recent years. They all seem to have had different ideas. This is what worries me about Ministers of State for Defence. Therefore, we should have some power given to Parliament to discuss the matter and to object to it if necessary. Furthermore, perhaps (I do not like to mention this) there may be a change of government and therefore there may be a quite different attitude towards this matter.

Lord Graham of Edmonton

My Lords, there will be!

Baroness Vickers

Well, my Lords, there you are. Noble Lords are laughing now, but sometime they may have to laugh on the other side of their face. I must be fair to both the Liberal and the Labour parties. They both have a chance.

I consider that this amendment should be supported. I do not mind whether it is agency management or the setting up of private companies. We should have real knowledge. After all, these dockyards have been under government for generations and we have no idea what is going to happen in the future, especially in view of the way things have gone in the debate today. Therefore I should very much like to support this amendment. I am not particularly keen to vote upon it today and perhaps if we leave it until Third Reading we might have more backing.

Lord Trefgarne

My Lords, Lord Mayhew's amendment seeks to provide that any order made under Clause 1(1) of the Bill should be subject to an affirmative resolution of each House of Parliament. In the context of two similar amendments at Committee stage, I set out what we intend that such an order will contain and why therefore I thought that those amendments were unnecessary. Nothing has happened since then to give me any reason to change my view that such an amendment is unnecessary, but it may be helpful to the House if I briefly set out once more our intentions in respect of orders made under Clause 1(1).

We intend that orders—one in respect of each dockyard—will, subject to the Bill receiving Royal Assent, be laid before Parliament in the autumn. These orders will designate the dockyards to which the arrangements for which this Bill provides will apply. The orders will also designate the services for or in connection with ships or vessels or related establish-ments in the service of the Crown provided at the dockyards. These are the services which we intend will be provided by a company under contract with the Secretary of State and I explained at Committee stage the sort of services these would be.

The designation of dockyard services in this way will, by implication, also provide a definition of the "qualified dockyard service employees", to which Clause 1(1) also refers: they are those employed in or in connection with the provision by the Crown of designated dockyard services at the dockyard on a particular day, which will be Vesting Day, in April 1987.

Under the usual arrangements, the House will have an opportunity to consider such orders. In view of this, and in view of the fact that the orders will contain very little information of which your Lordships are not already aware, it would make little sense to provide in the Bill that the orders must be subject to an affimative resolution of both Houses of Parliament.

If I could elaborate a little in response to the remarks of the noble Lord, Lord Mulley, earlier, I dare say it is true that it is difficult for honourable Members of another place to find time in that House to debate a negative resolution on an order. However, these orders will be subject to negative resolution by either House; and even if it is difficult to do that in the other place, it is very much easier to do that in your Lordships' House. Indeed, I think there are certain procedures by which it can be put on the Order Paper more or less on the day selected by the noble Lord in question, although no doubt the usual channels will have something to say as well. But certainly there is much less difficulty about debating such orders in your Lordships' House. Indeed, I recall myself, when I sat on the Benches opposite, having moved such resolutions on previous occasions and I recall that there was no great difficulty, even though I dare say my order was unwelcome to the Government of the day, in finding an occasion on which they could be dealt with.

I hope I have persuaded your Lordships that there really is adequate parliamentary scrutiny of these arrangements and that accordingly the noble Lord will not wish to press the amendment.

Lord Graham of Edmonton

My Lords, is the Minister in a position to tell us what would happen to the negative order procedure in the event of a dissolution of Parliament and a general election? Am I right in assuming that in such circumstances—I appreciate the Minister may not be able to give me a precise answer now—certain powers will be in the hands of the Government, in which case they can proceed—so even the limited opportunity to which the Minister has drawn attention can be denied us in some circumstances.

Lord Trefgarne

My Lords, I am speaking without advice on this matter but I think I am right in saying that the order has to be before Parliament for 40 parliamentary days, and those days do not run of course while Parliament is prorogued, for example, or while a general election is in progress. So the noble Lord would have a further opportunity to look at the matter again when Parliament resumed.

Lord Graham of Edmonton

Or in fact, my Lords, if Parliament resumed with a different Government, which would take an entirely different attitude from the previous government? I am grateful to the noble Lord.

Lord Trefgarne

My Lords, I dare say in those circumstances that if the new government wanted to put a spanner in the works they could support the order.

Lord Mayhew

My Lords, the noble Lord, Lord Trefgarne, repeated again, as at the Committee stage, the content of the order that will be placed, and he argued that since it was so restricted and already familiar to us, there would be no point in debating it again. That was the argument, as I understood it, and I suspect we shall have the same argument again when we reach the Third Reading.

May I ask the noble Lord this question? It concerns the reasons why Parliament should pass the order. One of the major reasons why I am asking for an affirmative order to be required is that the Government then have not to explain what the order is but to give their reasons why Parliament should accept the order. Later on we shall know better the costing of this exercise: we shall know how much it is going to cost the Exchequer—because in the end I believe it is going to cost the Exchequer money—and we shall know what undertakings the Government have given to the contractors. We shall know by then who the contractors are and whether they are foreign controlled, since nothing in the Bill can prevent that. We shall know things which are really important to us in deciding whether we approve the order. That is why we want an affirmative order. We know what the order is going to be: that is not the point. The point is that we do not have the information on which to judge whether that order is in the national interest.

Baroness Vickers

My Lords, I should like to support the noble Lord, Lord Mayhew. He has very good experience: much better than I have. I should like to know whether these contracts—

Viscount Long

My Lords, may I intervene to remind my noble friend that we are on the Report stage and we are not really supposed to speak twice.

Baroness Vickers

I only wanted to ask one question of the Minister—

A noble Lord

By leave of the House.

Baroness Vickers

My Lords, I wanted to ask this question. When are these firms going to be interviewed? Will it be during the Recess or do we have to wait until Parliament is sitting again?

Lord Mulley

My Lords, I am sure the House will give leave for the noble Minister to reply.

Lord Trefgarne

My Lords, if I have your Lordships' permission to speak again—and I think I have now risen at least three times in the course of this discussion—the answer to my noble friend is that we will be proceeding with the discussions and the negotiations in accordance with the timetable that I have already indicated to my noble friend and to which I referred at an earlier stage.

Lord Mayhew

My Lords, I make no undertaking not to return to this on Third Reading; but in the meantime I beg leave to withdraw the amendment.

Lord Trefgarne

No.

On Question, amendment negatived.

Lord Trefgarne moved Amendment No. 12: Page 3, line 19, after ("provides") insert ("services which are").

The noble Lord said: My Lords, this amendment concerns the definition of "dockyard contractor" in Clause 1(9). It is in the nature of a drafting amendment and I should be very happy to describe it in more detail if your Lordships wish me to do so. In the meantime, I beg to move.

On Question, amendment agreed to.

Lord Trefgarne moved Amendment No. 13: Page 3, line 21, leave out from ("by") to ("enables") in line 22 and insert ("making the services of employees or property available.").

The noble Lord said: My Lords, this amendment is consequential upon Amendment No. 1. I beg to move.

On Question, amendment agreed to.

Clause 2 [Provisions as regards premises used for transferred services]:

Lord Trefgarne moved Amendment No. 14: Page 4, line 3, leave out ("by the Secretary of State").

The noble Lord said: My Lords, earlier today we discussed the amendments which I introduced to provide that under a two-company structure at each dockyard the licence to use the dockyard land and assets would be placed with the company employing the workforce. This amendment is consequential upon those earlier amendments, and I beg to move.

On Question, amendment agreed to.

[Amendment No. 15 not moved.]

1.30 p.m.

Lord Graham of Edmonton moved Amendment No. 16: After Clause 2, insert the following new clause:

("Negotiating machinery.

.—The company formed under section 2 above shall have a duty to consult and agree with the recognised trade unions as to the setting up and maintenance of suitable machinery for negotiating and resolving terms and conditions of employment, to provide reference to arbitration in default of settlement and to discuss other matters of mutual interest to the company and their employees.").

The noble Lord said: My Lords, I was very dismayed at the Minister's insistence that the amendment moved by the noble Lord, Lord Mayhew, could not be withdrawn, because the noble Lord was raising very important issues and he will wish to reflect before Third Reading on what the Minister said. I simply say to the Minister that all he is inviting Members on this side to do, when they wish to withdraw amendments for tactical reasons and he does not allow them to do so, is to force us to have a series of votes which we do not want. I hope he will understand how we wish to proceed.

Amendment No. 16 relates to negotiating machinery. We have had a great deal of experience since the Royal Ordnance Factories were privatised. Although the Minister appears to believe that the TUPE 81 regulations are the be-all and end-all of what the trade unions should accept as a satisfactory basis on which to proceed in the future, I am very sorry to say that that is not the experience of the trade unions. They have told me that the application of TUPE '81, in the case of the Royal Ordnance Factories, does not appear to cover the change in the structure of organisations when they lose a national identity and assume a local bargaining unit type structure. I have already spoken about how the privatisation of the Royal Ordnance Factories will proceed. All this modest amendment will do is to insist that, before this Bill gets Royal Assent, everyone is satisfied that arrangements have been set up to maintain machinery for negotiating and resolving terms of employment.

The noble and learned Lord, Lord Denning, has insisted more than once that no future arrangement for the management of the dockyards will be successful unless there is reasonable satisfaction. I am not talking about someone having a veto or about trade unions being obstructionist. Certainly, I, as a trade unionist all my life, recognise the reality of the sovereignty of Parliament. But, once the trade unions see that there is to be a change, they will want to get the best arrangements for their members and they will not be unreasonable.

What we are saying in this amendment is that it is crucial to have negotiating machinery through which grievances can be resolved. The structure of the machinery to resolve a grievance is sometimes more important than the actual grievance itself. The fact that there is a proper, fair and democratically equal way of resolving a grievance will, in itself, very often make the parties to a potential dispute reach an agreement without even having to use the machinery. But if there is dissatisfaction about how disputes are to be resolved, that, in itself, may create friction which will cause a dispute.

So I hope that the Minister will not tell us that there is no need for this amendment. What we are saying is that this is what the trade unions want, in order to assist them perhaps in achieving a more positive attitude towards resolving matters in the future. I beg to move.

Lord Trefgarne

My Lords, it is the Government's intention that the TUPE regulations, as they are called, should apply to this transfer. While I know that many noble Lords are conversant with the provisions of these regulations, let me emphasise in particular that they provide for the transfer of both the recognition of independent trade unions by the new employer, and the transfer to that employer of collective agreements made with the previous employer. So on vesting day the new employer—the dockyard company—will employ the workforce at the dockyard on the basis of the collective agreements and the recognised trade unions in the Civil Service immediately before the transfer.

Among those collective agreements are those pertaining to the consultative machinery which operates in the Civil Service and thus in the dockyards. As my noble friend Lord Glenarthur pointed out at the Committee stage some days ago, this machinery is highly centralised: it devolves upon London-based Civil Service committees, one chaired by the Permanent Under-Secretary of State, another by my honourable friend the Under-Secretary of State for Defence Procurement. Currently, terms and conditions, pay and allowances are agreed by the central negotiating machinery operated under the auspices of the Treasury. If there is at the local level a disagreement which cannot be resolved locally, then that must be referred to headquarters in London.

Clearly, in the situation of an independent commercial company, these links will no longer be appropriate: the determination of, and negotiation about, terms and conditions cannot take place in London with the Treasury. So some adaptation will be needed from the very outset, since the machinery will need to encompass functions it has not dealt with before. I hope that in the light of those broad considerations the noble Lord will not wish to pursue this amendment.

Lord Graham of Edmonton

My Lords, I do not intend to pursue the amendment, but the Minister fails completely to meet the legitimate concern of the unions, because, as in the case of the ordnance factories, we are talking about the removal of employees from the Civil Service and, therefore, their withdrawal from the existing machinery. The Minister may be satisfied that the other arrangements will work out, but what the trade unions are saying is that before the Bill proceeds the arrangements for the negotiating machinery should be made and understood.

The Minister must understand that the trade unions are not reading the book; they have been through the action. Over the last two years, they have had experience of trying to make new arrangements with a new organisation. They have experienced severe problems in getting an acceptable negotiating structure and to this day such a mechanism does not exist. If two years after the privatisation of the ordnance factories a satisfactory negotiating procedure does not exist, how long will it take in this case? All the Minister is doing is storing up trouble, because if these matters are not resolved there will be a canker.

I think the noble and learned Lord, Lord Denning, talked about the dreadful possibility of strikes and industrial action. At the end of the day, trade unionists have only the withdrawal of labour as the ultimate weapon. They are not talking about using it, but they are being pressed very hard to consider what else they can do to get sense and sanity into their relationships with their employers. I do not wish to press the amendment, but I cannot say that it will not be raised in some other form at a later stage of the Bill. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Graham of Edmonton moved Amendment No. 17: After Clause 2, insert the following new clause:

(" Redundancy fund: payment for dockyard workers.

. In pursuance of the arrangements made hereunder the Secretary of State shall ensure that the redundancy provisions applicable to all employees of any dockyard company shall be equivalent to those presently embodied in the Principal Civil Service Pension Scheme and will set up out of monies provided by Parliament a redundancy fund for the benefit of all qualified dockyard employees declared redundant after the transfer of the dockyard undertaking.").

The noble Lord said: My Lords, I certainly do not intend to press this matter today, but the Minister must understand the present anxiety. Again, we need to look at the experience in the ordnance factories which I raised earlier with the Minister. The same assurances, the same indications of satisfaction by the Government were given then as are being given now. Let me tell the Minister, without remotely running the risk of getting into trouble, what has happened. When the ordnance factories were privatised, Government Ministers gave assurances that the arrangements for redundancies would be satisfactory. But because of the present order book position, the Royal Ordnance Factory plc is declaring redundancies and the money allocated by the Government is exhausted. I am sure the Minister did not anticipate either the change in the order books or the consequences, but he does not have to live with the reality. The reality is that the proper payment of redundancy is now a matter for consideration. What happens if there is insufficient money in the funds? One result is that people are not made redundant, because you cannot make someone redundant if you are not able to meet the redundancy payments.

The Minister can perhaps take on board that point in what is a severely unhappy situation. I am not talking about employees who either want to stay or who want redundancy. I am talking about the background of the redundancy part of the package, which in 1986 is very much part of a severance or termination package. What are the redundancy arrangements? We are asking that they should be equivalent to those presently embodied in the principal Civil Service pension scheme. If the Minister believes that the Government are in the driving seat and they can make the terms, then they can say precisely what they want to see happen to their existing employees once they are under future arrangements. If people who are going to buy something out of which they think they will make a profit say, "We do not like it", the Government should say, "Well, lump it, because we have the interests of our employees at heart". I beg to move.

Baroness Seear: My Lords, when privatisation takes place as in this case, it is a dramatic change in the terms and conditions of employment of people many of whom may have been for years in the employment of the Government. It would certainly be good practice in good private enterprise to see that, so far as possible when a sale of this kind is made, those conditions are not grossly less favourable than the conditions they have had while they have been serving with the original employer. What is the Government's policy in relation to people whose conditions of employment are changed in this way? We have no guarantee apparently that they will not be changed greatly to their disadvantage.

Lord Trefgarne

Well, my Lords, we go to very considerable lengths to secure the interests of the workforce in these circumstances. Perhaps the first and foremost protection is what are called the TUPE regulations themselves. I have referred also to the arrangements about pensions where we are setting up new pension schemes which mirror just as closely as we possibly can the arrangements that exist in the present principal Civil Service pension scheme; to which most, if not all, of the present dockyard employees belong. What we cannot do is ensure that these identical arrangements are perpetuated for ever and a day. That would negate many of the arguments in favour of the privatisation process as a whole.

That in essence is the reply to this amendment, but perhaps I could add that this is not the first time that we have dealt with the redundancy arrangements in the new companies. Under the TUPE regulations the Civil Service redundancy procedures and levels of compensation transfer to the new employer. It is quite inappropriate, however, to seek, as this amendment does, statutorily to perpetuate the redundancy arrangements and to deny the possibility of any adjustment whatsoever, just as it would be for the Government to set aside moneys effectively to underwrite decisions which are properly for the management of the company. I hope that the noble Lord will not wish to pursue this matter.

Lord Graham of Edmonton

My Lords, in another place on 8th April the Minister then involved with the Bill, Mr. Norman Lamont, said this: But the overall intention will be to set up a scheme paying redundancy benefits either exactly the same or of equivalent value, and reckonable service accrued under the Crown will not be lost".—[Official Report, Commons, 8/4/86; col. 106.] That is the intention. The reality is that the Ministry of Defence has given evidence to the Public Accounts Committee which suggests a further reduction in the number of dockyard employees after privatisation. Secondly, the whole ethos of the future of the dockyards is risk capital. We are inviting people to invest their money with the prospect that they could make a loss. That is not the hope or the intention, but if we are talking about a commercial undertaking the possibility of a loss arises. In the light of the Government's legislation on redundancy, what do employers do if they make a loss? They adjust the terms of redundancy. This goes on all the time. The Government themselves are changing payments under the Redundancy Payments Act from at one time more than 50 per cent. down to 40 per cent., down to 30 per cent., down to nothing at all in some cases.

One can understand the position of employees who hitherto have enjoyed a valuable package—I simply say a reasonable package—part of which was the redundancy terms. They are very worried indeed that, despite the best intentions of the Government, what I have just said can still happen. What we have sought to do is to get the Government to put their money where their mouth is in respect of redundancy payments; but the employees will not be surprised that the Government have failed to do that on this occasion as on others. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

1.45 p.m.

Lord Graham of Edmonton moved Amendment No. 18: After Clause 2, insert the following new clause:

("Equality of pension rights.

. Where in pursuance of the arrangements referred to in section 1 (2) a qualified dockyard service employee ceases to be employed in the Civil Service of the Crown and becomes employed by a company all pension arrangements made by such company shall be equivalent in all respects to such pension arrangements as applied in the Civil Service of the Crown and shall be applicable to all dockyard company employees.")

The noble Lord said: My Lords, once again I want the Minister to address himself to why—and the noble Baroness, Lady Seear, again echoes this puzzlement—the Government do not recognise the sensitive nature of what is happening to individuals who may not be losing their jobs but are changing their employers. Goodness gracious me, I am not saying that the Government are a good employer but the Government—the Government of the land—are a good employer to these employees and there has been a good relationship. In this amendment we ask that the pension arrangements that were applied in the Civil Service shall be applicable to all dockyard employees. I very much hope that the Minister can be helpful on this occasion. 1 beg to move.

Lord Mayhew

My Lords, noble Lords will recall that at every part of the Committee stage my noble friends and I supported these amendments which try to urge the Government to guarantee the rights of the employees. Here again we have an instance. I should like to take up with the Minister a point he made on the previous amendment which I think applies to all these questions of employees' rights. He said that he could not guarantee them, for ever and a day". That seems to me to be a rather misleading expression. First of all, no matter what is in the contract, the Government cannot guarantee anything at the end of the contract's term. When a new contractor is offered the contract there is absolutely no undertaking to the employees, as I understand it. But worse than that, the Government cannot guarantee the continued financial standing of the contractor. They cannot therefore in theory guarantee anything more than a minimum period of time of the running of the contract. So when the Minister says that he can make no guarantees, for ever and a day", I am not sure that that is accurate. I am not clear what guarantees he can offer and does offer for any period of time. Perhaps when he comes to reply he will clear that up.

Lord Trefgarne

My Lords, the Government have taken considerable care in addressing the question of future pension arrangements for the new companies. We intend to have set up pension funds with benefits which follow as closely as possible the provisions of the principal Civil Service pension scheme. There will be two schemes for transferred employees, one at each dockyard, which transferring civil servants will join on vesting day. For those who choose to transfer their past service into the schemes, the Government will make a transfer payment from the PCSPS. That initial funding will be added to in the form of contributions set at a level that will enable the fund to meet its future liabilities.

Therefore, the pension schemes for transferred employees will start on a secure financial basis with benefits as close as possible to the present Civil Service scheme, and that includes index linking. Like other private sector funds, they will be managed by trustees who will be independent of the commercial manager and who will make the normal range of decisions about the funds, their investment policies and their benefits. It is our intention that the trustees should include nominees from the contractor, the Government and of course members.

Those trustees will have a range of very real responsibilities to the fund and its members. It is very important that they should be allowed to carry out their duties with the ability to exercise those responsibilities. With the proposed new clause, the noble Lord seeks to set aside a whole section of those responsibilities. The benefits of the scheme would have to remain, in perpetuity, exactly the same as the Civil Service pension scheme. That would not be appropriate. It is for the trustees to manage the scheme in the best interests of the members on whose behalf they hold their trusteeships.

Once again the noble Lord is seeking to protect the interests of the workers; but once more the real effect of his proposal would be to re-impose on the dockyards a constraining influence of the Civil Service, which this Bill is designed to lift. The Government are sure that the future of the dockyards lies in their being run as independent commercial companies. The new clause would restrict that independence and the responsibilities that must accompany it. I hope that your Lordships will reject the amendment.

Lord Graham of Edmonton

My Lords, the Minister has failed to satisfy me and, I believe, other fair-minded Members of your Lordships' House. He has done nothing to allay the genuine worries of the workforce. I give no undertaking that I shall not return to this matter in some other form on Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Graham of Edmonton moved Amendment No. 19:

After Clause 2, insert the following new clause:

("Report to Parliament.

. The Secretary of State shall set out and itemise in a report to be laid before each House of Parliament prior to the acceptance of tenders for the management of the Royal Dockyards and subsequently on an annual basis all the costs either actual or estimated in excess of £ 100 incurred by and owing to the Exchequer from any arrangements made in consequence thereof for the provisions of designated dockyard services by any company or companies.").

The noble Lord said: My Lords, this amendment very much overlaps that moved earlier by the noble Lord, Lord Mayhew, which sought to ensure that major matters would come before your Lordships' House or another place for approval, to provide what is called parliamentary scrutiny. We are here dealing with the costs that will be incurred by the Exchequer from any of the arrangements, made in consequence… for the provisions of designated dockyard services by any company or companies".

One of the sprigs of the argument made by this Government for taking any action is that such action will save public money and reduce costs. It has never been denied that one of the reasons why the Government wish to change the present arrangements is their dissatisfaction with the efficiency and productivity of the dockyards. They also wish to reduce what they see as a burden upon the Exchequer.

However, over the past year or two it has been revealed that, far from reducing costs, the proposal is likely to increase costs. There is likely to be a net on-cost to the Exchequer as a result of the new arrangements. I shall indicate to the House our understanding of the situation, having read very carefully what has been said in many places. The private pension scheme that needs to be arranged will cost an estimated £200 million. That is from figures provided by the MoD. Redundancy payments will be an estimated £40 million. That figure was provided by Dr. Michael Harte at the MoD planning team on 4th April. Payments to private consultants will cost an estimated £30 million. That information was supplied to the trade unions within the MoD. There is a sum of £46 million estimated for the new supply and store organisation. That information is given in the report of the dockyard planning working team. A sum of £3.5 million will be needed for the expansion of the fleet maintenance base. Some £95 million will be required for the management, financial ledger and accounting package. They all amount to more than £400 million.

In addition, for year-on-year costs, there are the contractors' profits, the new monitoring organisation, the additional VAT contributions (still to be costed) to the European Community, staff costs for running the fleet maintenance base, and staff costs for the Ministry of Defence store organisation and accountancy divisions. They add up to a total additional yearly running cost of £52 million.

The Minister cannot be sanguine if the figures I have read out are correct. The Minister may argue that they are not correct. He may say they are an overestimate or are exaggerated. However, as my noble friend Lord Mulley said, if those figures are exaggerated or overestimated, then why not do the noble thing and come clean? Why not give this House and the country the true figures? It is no use resting on the argument that our figures are either untrue or incorrect. What we want are the real figures. This amendment seeks to provide both Houses of Parliament with the true facts before we proceed with this Bill. It is a very poor substitute for the Government to say, "We have the figures and your figures are not correct", or, as we suspect they might say, "We do not have the real figures, but anyway they would not be anything like the figures you have given". Such would be a very poor substitute for open and honest government in this particular respect. I beg to move.

Lord Mayhew

My Lords, I hope that the noble Lord the Minister will take this opportunity to give the House a clear statement as to how the Government see the finances of this scheme. We have received some official estimates from the Government on the savings. The amount has gone down. At one time it was estimated at £28 million a year but now it is £21 million a year, unless it has further decreased since earlier proceedings on this Bill. That is a specific point on which the Minister could reassure the House.

This whole Bill has had a very hard battering from the workforce, from the noble and learned Lord, Lord Denning, and from noble Lords on all sides of the House. The heaviest blow to the Bill came with the 21st Report of the Public Accounts Committee. It is an all-party committee whose recommendations were unanimous, and I have seldom read a more withering destruction of a Bill, from the financial point of view, than that which appears in its report. It is time that the Government tried to answer. I will read from one paragraph of the report: We note MOD's assurance that their costings are as reliable as they can possibly make them but they are still based on many assumptions, there are still considerable uncertainties and they are almost certain to be revised again before contracts are placed for commercial management; we therefore wish to be supplied with further costings as they are revised". The Minister now has an opportunity to give your Lordships' House the latest costings. A little later in that report there is this statement: While agreeing in principle with the establishment of a customer supplier organisation, we are surprised at the envisaged size and cost of the proposed Directorate General of Ship Refitting, and trust that every effort will be made to keep the extra costs of the new organisation within strict limits". It is an absolute model of how to construct a new bureaucracy. Here is something that is not needed now but which the Government scheme will make necessary. It will employ a staff of 800 and will cost £11 million a year. It really is scandalous. Those points have been made before and I shall not repeat them, but I beg the Minister to seize this last opportunity, at this stage of the Bill, to make clear how much money the Government really think they will save and to dispute the view held by many noble Lords that, overall, the Government will lose money with this wretched Bill.

Lord Trefgarne

My Lords, I am happy to reassure your Lordships that no such thing is going to happen. We estimate that annual savings will be of the order of £28 million a year. The noble Lord said we had reduced it to £21 million. That is not correct. What will happen is that over the early years of the new arrangements—say, the first 10 years—savings will be slightly less because during that time we shall be amortising the setting up costs which we estimate at £70 million. I think my arithmetic is right when I say that £70 million amortised over 10 years is £7 million a year, and if you deduct £7 million from £28 million you get £21 million.

Lord Graham of Edmonton

My Lords, is the Minister seriously saying that those figures from the sources I have produced are wholly fallacious? I am certainly prepared to give the Minister, outside this debate, at least the basis upon which I have been supplied with that information. The figures total more than £400 million in order to start. If the Minister is saying that there is a wide discrepancy between the £400 million and the £70 million, then an explanation is needed not just to myself but, more importantly, to those outside the House.

Lord Trefgarne

My Lords, if I have your Lordships' permission to speak again, may I say that I dare say we are not comparing like with like. I have not seen the noble Lord's figures, but naturally I shall look at anything he cares to give me. I assume the figures he gives include large sums of money which would have been spent anyway.

Lord Mayhew

My Lords, I feel sure that the noble Lord, Lord Trefgarne, would not wish to end the proceedings with a mathematical howler. I stated that the estimated savings by the Government were £21 million a year. By savings of course I mean net savings. The Minister then says, "No, it is £28 million a year because we are going to have to amortise £70 million worth of starting expenditure". But that does not work out. The net savings are not £28 million; they are £21 million.

Lord Trefgarne

My Lords, of course I accept the noble Lord's arithmetic.

Lord Graham of Edmonton

My Lords, with the leave of the House, the Minister said that perhaps the figures I gave are separate, and that we are not comparing like with like. He said that in any event many of the expenses would be incurred anyway. I refer to the private pension scheme arrangements. They would not normally be undertaken. That is a new commitment. I am told that the redundancy payments could amount to £40 million. The Minister says that, overall, the figure is £70 million for all sorts of costs. Therefore, I shall certainly be very happy to give the Minister the information I have which, I repeat, is from the Public Accounts Committee; the Ministry of Defence; information given by Mr. John Lee; information supplied to the dockyard planning team and from other factors in the Bill. I will certainly give that information to the Minister.

Again, as on a previous exchange between us, if the Minister needs to say anything to correct what he has said, no doubt he will come forward. Equally, I will be happy to do the same. It has been an interesting discussion, and again I am not prepared to indicate that I shall not come back at a later stage. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.