Sitting of 18 October 1976

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
ORAL ANSWERS TO QUESTIONS
  TRADE

    Civil Aviation (Bermuda Agreement)
    Mr. Arnoldasked the Secretary of State for Trade what progress has been made in the renegotiation of the Bermuda Agreement; and if he will make a statement.
    Mr. Tebbitasked the Secretary of State for Trade if he has yet resolved the issues raised by his decision to renegotiate the Bermuda Agreement.
    Mr. McCrindleasked the Secretary of State for Trade what is the present position on discussions with the United States authorities on revising the Bermuda Agreement on civil aviation.
    Mr. Adleyasked the Secretary of State for Trade what progress has been made in the renegotiation of the Bermuda Air Services Agreement.
    The Secretary of State for Trade (Mr. Edmund Dell): The first round of negotiations with the United States for a new air services agreement was held in London on 9th and 10th September. A programme of further meetings was agreed, designed to lead up to a new agreement before our notice of termination of the Bermuda Agreement comes into effect on 22nd June 1977.
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    Our principal reason for serving notice of termination of the Bermuda Agreement is that a substantial revision of the rights covered by that agreement is needed to achieve a more equitable balance of benefits overall.
    The most direct means of achieving this is to bring the routes which both sides can operate into better balance. The other principal change we are seeking is to establish an effective means of regulating capacity on an equitable basis between the airlines on both sides.
    A second round of talks begins in Washington today.
    Mr. Arnold: Why is the Secretary of State's concept of British interests one which appears to militate strongly against increasing competition? What, for example, is the attitude of the Government towards the recent recommendation by the Civil Aeronautics Board that two more airlines, Delta and North West, should be allowed to fly passengers across the Atlantic?
    Mr. Dell: What I am doing is not inconsistent with the concept of British interests across the North Atlantic. Under our service agreement, this competition takes place within a framework agreed between Governments on both sides of the Atlantic. I do not see that it is a valuable form of competition to have aircraft crossing the Atlantic half or two-thirds empty with the wasteful consumption of fuel that is involved. That is what we are trying to restrain. The CAB proposals are matters which will be considered within the context of the renegotiation.
    Mr. Ioan Evans: Will my right hon. Friend take note of the fact that there is already a great deal of international competition and there is, therefore, no need to have internal national competition? Will he also have regard to protecting the consumer in this area?
    Mr. Dell: My hon. Friend knows that single designation is the Government's policy, confirmed by this House in a debate earlier this year. I believe that the consumer will certainly benefit if wasteful fuel consumption is cut down by controls on capacity agreed in advance, as we succeeded in doing in a significant way in the recent agreement concerning

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    Miami and Chicago, to be effective during the coming winter.
    Mr. McCrindle: While endorsing the desirable objective of having a larger proportion of transatlantic traffic coming the way of British Airways, may I ask whether the right hon. Gentleman is convinced that that objective could not have been achieved by the exercise of that aggressive commercialism which we have come to associate with British Airways rather than by upsetting the treaty arrangements in the way proposed? Is the right hon. Gentleman absolutely sure that the negotiations will not have any effect on the likelihood of Concorde entering into service to New York?
    Mr. Dell: The aggressive commercialism of British Airways is something which I greatly welcome. I welcome, too, their improved performance on the North Atlantic route. I am certain that the only way of improving the situation of British air companies operating on the North Atlantic route and in other parts of the world is by renegotiating the Bermuda Agreement. We must have clear rights regarding capacity determination, fares and other matters which are doubtful in the Bermuda Agreement at the moment. There are a number of respects in which we believe that the Bermuda Agreement is currently being ignored by the United States Government. This, again, makes it right that we should have an agreement very much clearer in form than the current one.
    I see no reason why Concorde's entry into New York should be held up by this renegotiation. The existing Bermuda Agreement does not expire until 22nd June next. This is the relevant agreement at the moment, and under that agreement I believe that Concorde should be allowed into New York.
    Mr. Adley: Is the right hon. Gentleman aware that, as there has to be some legal relationship between the two Governments, many people will welcome the Government's determination in principle to renegotiate something which is 30 years out of date? Will the Secretary of State be a little more forthcoming on the question asked by my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) and give a categoric assurance that Her Majesty's Government will
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    not tolerate the Americans in any way dragging Concorde into these negotiations as a bargaining factor?
    Mr. Dell: I am pleased to have the hon. Gentleman's welcome for what we are doing. As for Concorde, one of the worries about the current agreement has been that we have had so much difficulty in respect of that aircraft. It will be my objective to ensure that we have rights to fly Concorde into the United States.
    Mr. Tebbit: Is the right hon. Gentleman still convinced that this was the right time to start negotiations, shortly before an American presidential election? Does he not agree that it is clear that no substantive commitment can be made by the United States Government before the outcome of the election in November and that this leaves perilously little time before the embarrassing situation which could arise in June with no Bermuda Agreement and no agreement to put in its place?
    Mr. Dell: Yes, I am absolutely sure that this was the right time to start this renegotiation. There are always reasons for putting off unpleasant decisions, even decisions which happen to be very much in the interests of this country. There is always an American election of some sort, but I do not think that that should be a conditioning factor in determining the date on which this renegotiation is commenced. I hope that the Conservative Opposition still welcome the renegotiation and that they see that British interests are clearly involved. I more airlines, Delta and North West, indicated earlier, will be available. A great deal of useful preparatory work is being done.

    Imports
    Mrs. Wiseasked the Secretary of State for Trade what is his policy on imports.
    Mr. Dell: The Government's policy on imports remains as described by my right hon. Friend the Chancellor of the Exchequer in his Budget Statement on 6th April.
    Mrs. Wise: I think that in view of that answer from my right hon. Friend I ought to have asked "what is his policy on imports, if any". I submit to him that the situation in which we wring our hands—[Interruption.]
    Mr. Speaker: Order. I think that the House was trying to help me. The hon. Lady must ask a question.
    Mrs. Wise: Is my right hon. Friend aware that one should have asked "what is his policy on imports, if any"? Is he aware that we must do more than wring our hands in a situation in which the volume of imports increased in the last quarter by 9½ per cent.? This House is constantly being told that we cannot afford things. Will my right hon. Friend accept that we can no longer afford a totally unplanned attitude to trade?
    Mr. Dell: I think that my hon. Friend was referring to the September trade figures and not to those for the last quarter. We control imports in a number of cases where they are causing disruption to particular industries. I must remind my hon. Friend that this country depends on the export of manufactured goods and that we export far more manufactured goods than we import. It would be the height of absurdity to put such exports, upon which a great deal of employment is based, at peril by unreasonable action.
    Mr. Higgins: Is the Secretary of State aware that the Prime Minister's response on this subject last week was dangerously ambiguous and that there is fear that the Government will be pushed into protectionism with all the consequences that that would entail by retaliation, with the prospect of going back to a situation like that of the 1930s? Does he accept that the crucial distinction is between fair and unfair competition from imports and that this question was fudged in the TUC-CBI paper on the subject? If that is so, will he accept that there is no case for restricting fair competiiton from imports? It is absolutely essential to take more urgent and faster action than the right hon. Gentleman is doing concerning dumping on the United Kingdom market, particularly in regard to COMECON countries.
    Mr. Dell: The Prime Minister's response was not ambiguous. The Government have repeatedly made it clear that they are against general import controls. We assess the unfairness of particular competition within the framework of the dumping legislation. When the hon. Gentleman says that we need to take faster
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    action in respect of dumping, I take it that he is not expecting us to return to the action which was characteristic under his Government. We are taking very much faster and more effective action in that field, but protection against dumping is only part of the action that one needs to take. There are cases, and many examples could be given, in which we have felt it right to take certain restrictive action, but it would be most unwise to take restrictive action in a form which would bring about retaliation against our exports.
    Mr. Powell: Is the right hon. Gentleman aware that Britain's trade deficit is merely a concomitant of her surplus on capital account? As long as the Governent are committed to borrowing enormous sums of money, whatever the rest of the country does, there is bound to be a deficit on trade.
    Mr. Dell: The right hon. Gentleman will be aware that there are some difficulties about ensuring the capital inflow. It is important to get our trade balance into better balance.
    Mr. John Garrett: Is my right hon. Friend aware that footwear is the hardest hit industry with regard to unfair prices, dumping and subsidised imports? No less than 40 per cent. of the £100 million worth of foreign footwear has been shown to be dumped or subsidised, and the measures taken by my right hon. Friend's Department to provide protection are wholly inadequate to cope with the continuing decline of this industry in the face of such imports.
    Mr. Dell: My hon. Friend will be aware that there are restrictions on the imports of footwear into this country. Anti-dumping action has been taken and further dumping action is being considered. We are also considering the specific problem of sandals and we are doing a great deal to assist the footwear industry at this time. I have been in discussion with the industry more than once, and I shall take whatever action I can within the law to help it.
    Mr. Forman: Does the Secretary of State accept that we on this side of the House would regard the introduction of fully-fledged import controls as an action of despair? Nevertheless, there is a strong case in certain industries for much tighter voluntary agreements in respect

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    of some of the low-cost products being dumped in this country, particularly in the case of electronics and electronic components. Will the Minister give an undertaking to take early action on this point?
    Mr. Dell: As the hon. Gentleman knows, a wide range of voluntary agreements have been negotiated by us or by industries with the particular suppliers. The vast majority of what I would describe as low-cost imports are now subject to controls of one kind or another. We have been in close consultation with the electronics industry over the last few weeks. I hope that there will now be inter-industry discussions on this point. Meanwhile, we have established an agreement in respect of 1976 and also, in the case of Taiwan, we have an agreement covering not only the remainder of 1976 but 1977 as well.
    Mr. Heffer: Will my right hon. Friend explain why this Government are not as bold as the previous Labour Government when import deposits were applied up to 50 per cent.? That would reduce the Government's borrowing requirement. Why are the Government acting like King Canute in the face of an overwhelming case that some form of import controls must be brought in at the earliest moment?
    Mr. Dell: I would say to my hon. Friend that it might be possible to protect the home market. What is impossible, if we invite retaliation, is to protect our exports. A great deal of employment in this country is dependent on those exports, and the industries concerned are our most efficient and rapidly expanding industries. In regard to import deposits, my hon. Friend will have noticed in respect of the scheme for 1968–70 that the trade effect was very small. If import deposits have any effect at all, it is of a financial character which leads to foreigners helping to finance our balance of payments deficit and it has certain internal monetary effects. That being the case, I suggest that my hon. Friend puts his question to the Chancellor of the Exchequer.

    Anti-dumping Measures
    Mr. Tim Rentonasked the Secretary of State for Trade what progress he has
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    made in preparing for the EEC to become responsible for anti-dumping regulations and enforcement.
    Mr. Dell: I have discussed with Sir Christopher Soames the major problems likely to arise. In particular we agreed that the anti-dumping unit of the Department of Trade should remain in being after 30th June 1977 to advise United Kingdom industry and to assist the Commission in handling cases. We are currently considering in detail with the Commission the best means of ensuring a smooth hand-over and close future cooperation. In the meantime the Commission has made a helpful statement in reply to a Question put in the European Parliament by the hon. Member for Cheadle (Mr. Normanton). With permission, I will circulate this in the Official Report.
    Mr. Renton: Can the Secretary of State advise us whether the Government believe that a more rapid enforcement of anti-dumping procedure, either now or under the control of the EEC, is possible? Can he further advise us, following the supplementary question by the hon. Member for Liverpool, Walton (Mr. Heller), that the Government are not thinking in terms of import deposits, bearing in mind that this could be only a temporary palliative which would help the extensive public sector borrowing requirement but would do nothing to aid the fundamental imbalance of British trade at the moment?
    Mr. Dell: I have already said that as regards the import deficits this is not a trade measure but a financial measure. For obvious reasons the more rapid enforcement of anti-dumping measures could be no more than a temporary palliative. It is certainly possible in many cases to take more rapid action, especially if industry co-operates more rapidly. It must be understood that anti-dumping action is co-operative action and depends to some extent on the co-operation of industry. I could point to cases in which there have been considerable delays in providing information which it has been agreed should be provided. I am strengthening the anti-dumping unit in my Department and I hope that that will have the effect of speeding up yet further our anti-dumping action.
    Mr. Jay: Is it not a serious matter that we are proposing to surrender these

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    crucial powers to the EEC Commission? If we do so, will it be possible for the EEC to approve anti-dumping duties for the United Kingdom alone, or will it have to apply them to the whole of the EEC or not at all?
    Mr. Dell: On considering this matter further, I think my right hon. Friend will find that there can be advantages in having the full commercial power of the European Community involved, provided we ensure that it acts as rapidly as we do. It is for that reason that I have been in consultation with it. Detailed discussions are continuing. One of the matters that I discussed with Sir Christopher Soames was whether anti-dumping can apply to the United Kingdom as a whole. My right hon. Friend will find references to that in the answer to the hon. Member for Cheadle. The Commission has special powers to act in respect of a part of the Community and not only all the Community. That point is taken care of.
    Mr. Fletcher-Cooke: Are the French handing over their effective anti-dumping machinery to the EEC? If so, when may we expect to take advantage of that in future?
    Mr. Dell: Anti-dumping has for some time been operated by the Commission on behalf of the original Six.
    Mr. Hoyle: When my right hon. Friend is making proposals to the Commission, will he bear in mind that we should alter the rules and put the onus of proving whether there is dumping on the importer rather than on industries in this country? That would be a means of speeding up the process and getting the information that is required a great deal sooner than at present.
    Mr. Dell: That is a proposal that has been made in the course of the current TUC-CBI memorandum. Such an arrangement would be contrary to British law and, consequently, to the international agreement to which we have subscribed. It would be contrary to the position now operated by the European Community. That is also bound by the anti-dumping code. I can only say to my hon. Friend that at the moment what he suggests is not possible.
    Mr. Hal Miller: Will the right hon. Gentleman assure the House that, in the
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    event of exports being concentrated on the United Kingdom rather than on our partners in the Community, our partners will dismantle the effective non-tariff barriers that they have so that the imports may be dispersed throughout the EEC?
    Mr. Dell: The whole object of the European Community is to eliminate non-tariff barriers that may operate within it.
    Following are the question and answer:
    Subject: Dumped imports
    At present the United Kingdom Government continues to deal with cases of dumped imports originating in countries outside the Community under its national legislation.
    In accordance with the provisions of Article 133 of the Treaty of Accession, such cases will be dealt with under Community legislation from 1st July 1977.
    Will the Commission state what steps have been taken or are envisaged to ensure that the protection available to British industry from dumped imports will not be lessened as a result of the transfer of responsibility in this field in the following types of case:

    1. Where anti-dumping duties have been imposed under British law and are still in force on 1st July 1977.

    2. Where an investigation is in progress under British law on 1st July 1977.

    3. In cases which arise after 1st July 1977.

    1. The Commission is of the opinion that there will be no reduction in the protection available to British industry as a result of the transfer of power in the anti-dumping field at the end of the transition period, i.e. 30th June 1977 since the Community's antidumping policy is very similar to the traditional British policy. Both British legislation and Community law, under the transitional provisions of which the United Kingdom has operated since accession, are based on the GATT anti-dumping code. Moreover, the time scale within which complaints are dealt with by the Commission is approximately the same as that which applies in the United Kingdom which itself is relatively short.
    2. The following are replies to the specific questions asked by the hon. Member:

    1. Anti-dumping duties which have been imposed by the British authorities and are still in force on 30th June 1977 will not expire ipso facto on 1st July 1977 although they may, at an appropriate time, be examined in accordance with Community legislation.

    2. As regards cases where an investigation is in progress in the United Kingdom, first contacts have already been held between the Commission and the United Kingdom Government which has indicated that it will endeavour to finalise as many cases as possible before 30th June 1977. There will be continuing close co-operation between the Commission's services and the United Kingdom authorities to ensure that those cases

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    which are still under investigation at 30th June 1977 can be taken over smoothly by the Commission. The results of the investigations carried out by the British authorities will not, of course, be fruitless but will form the basis of the Commission's investigation and will help considerably to speed up the procedure.

    3. In cases arising after 1st July 1977, the normal Community anti-dumping procedures will apply. These provide that the Commission shall examine complaints in coordination with Member States. The co-ordination would, of course, be particularly close with a Member State whose industry was directly affected. The handing over of powers in dumping matters did not cause any problems in the original Member States and it is not expected that in the United Kingdom any insuperable problem will arise.

    3. More specifically, the procedure laid down by Article 6 et seq. of the Community antidumping Regulation is as follows.
    4. Industries which are suffering injury as a result of dumping have the option of either approaching Member States directly or making their problems known to the Commission in the first place. In either case the industry will be given all possible advice and assistance. The Commission has, indeed, prepared a questionnaire to assist industry in formulating complaints but this does not, of course, in any way, rule out the possibility of discussion with the appropriate authorities, which the Commission welcomes. In the introduction of the complaint the industry is again free to choose between lodging it with the Commission or with the Government of a Member State. If the latter course is chosen, the authorities concerned shall, in accordance with the Regulation, inform the Commission immediately. In either event the result will be an investigation by the Commission in co-operation with the Member States, of both the dumping and the injury to the industry.
    5. In this context it should be noted that both the GATT anti-dumping code and the Community Regulation provide for anti-dumping measures to be taken if there is injury to a Community industry which is defined as being either the entire industry or a major proportion thereof. Both expressly recognise, however, that, in certain circumstances, it may be necessary to act in defence of the industry in a region of the Community. Existing Community legislation should, therefore, prove sufficiently flexible to deal with all major problems.
    6. Finally it should be stressed that all Commission decisions on dumping cases are taken after consultation with the Member States. For example, an investigation is opened after discussion in the Anti-dumping Committee; the investigation is carried out by the Commission in co-operation with Member States' authorities, whose assistance it may request in such matters as customs checks and verification of injury to firms; an anti-dumping duty may be imposed provisionally by the Commission or definitively by the Council and, in either case, the situation in the Member States
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    most directly concerned would be taken very much into account; the Commission may only terminate a procedure with the agreement of the Member States.

    Civil Aviation Policy Guidance
    Mr. Neubertasked the Secretary of State for Trade when he next expects to meet the Chairman of British Airways to discuss "Civil Aviation. Policy Guidance".
    The Under-Secretary of State for Trade (Mr. Clinton Davis): My right hon. Friend has no immediate plans for such a discussion.
    Mr. Neubert: Will the hon. Gentleman point out to the Chairman of British Airways at the earliest opportunity that the surplus of £71,000 on package holiday sales of £30 million is a profit on turnover of less than one-quarter of 1 per cent.? Following a year in which inflation reached 26·9 per cent., that represents a substantial loss in real terms. To emulate Clarksons by seeking to achieve expansion by accepting sales at a loss is not likely in the long run to be in the best interests of the British taxpayer or holidaymaker.
    Mr. Davis: The hon. Gentleman adopts an ambivalent attitude on these matters. I recall that during the Consolidated Fund Bill debate on 4th August he was calling for a restriction upon the commercial aggressiveness, to use the description given by his hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle), of British Airways' activities. He was calling for a restriction rather than an enhancement of the commercial aggressiveness of British Airways. I do not accept his conclusions.
    Mr. Wells: Will the hon. Gentleman arrange to discuss at an early opportunity the problems of aviation relating to crop spraying, about which there is considerable difficulty at present?
    Mr. Davis: That is also a matter which the Chairman of the Civil Aviation Authority has under review.

    Import Quotas (EFTA Countries)
    Mr. Ovendenasked the Secretary of State for Trade if he will make a statement on the outcome of negotiations over duty-free import quotas with the United Kingdom's former EFTA partners.
    Mr. Moateasked the Secretary of State for Trade if he will make a statement on the outcome of negotiations over duty-free imports with the United Kingdom's former European Free Trade Area partners.
    The Under-Secretary of State for Trade (Mr. Michael Meacher): Discussions on the arrangements for the duty-free quotas have taken place with the main EFTA supplying countries. These have not led to any agreement on changes acceptable to both the EFTA countries and ourselves.
    Mr. Ovenden: Is my hon. Friend aware that there is concern in many areas such as the one I represent, which is dependent upon the paper industry, that there will be a successful outcome to the negotiations? Does he accept that the overgenerous treatment that we have afforded to Scandinavian paper imports in the past has been a major factor in the decline of the British paper industry and the loss of 17,000 jobs? Will my hon. Friend renew his effort to secure an agreement that ties the imports from Scandinavia more closely to demand in the home market? Will he confirm that we shall go back and negotiate again with that objective in mind?
    Mr. Meacher: I am well aware of the feeling that exists on this issue in the paper industry. In response to the third part of my hon. Friend's question, the proposal for a downward revision of quotas at times of recession has been our primary objective. However, it is necessary under the exchange of letters that the Conservative Government undertook shortly before we entered the EEC that any changes which are made have to be made with the agreement of both sides. I am not optimistic about whether it is possible to secure agreement on this issue in a way which is satisfactory also to the EFTA countries.
    Mr. Moate: Will the hon. Gentleman clarify his earlier answer? Did he say that the negotiations have been concluded and that he has failed, or that he is still hopeful of a more successful outcome? Bearing in mind that United Kingdom imports of paper and board now account for nearly half the total consumption compared with about 28 per cent. 10 years ago, and that that has been caused
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    substantially because we have allowed most imports to come in duty-free under the quota arrangement, the EEC being protected by a 10 per cent. tariff, will the hon. Gentleman take that point on board?
    Mr. Meacher: I hope I made it clear that the review has been completed. We are now considering the results and we shall shortly be giving our conclusions to the EFTA countries. No final decision has been taken on our position. I am aware of the difference between the position for the United Kingdom industry and that for the rest of the EEC. As the hon. Gentleman well knows, the other side of the coin is that under the exchange of letters we retain the right for our industry to have free trade access to the Scandinavian countries. In the first eight months of this year the value of that market to our industry was £1·1 billion. That is a considerable quid pro quo. However, I am well aware of the need to provide for the paper industry all the protection that is consistent with that objective.

    Balance of Payments (European Community Countries)
    Mr. Martenasked the Secretary of State for Trade what is now the visible trade deficit with the EEC on a balance of payments basis for the last 12 months.
    Mr. Dell: In the 12 months ended June 1976, the latest period for which such information is available, the deficit was £2,237 million.
    Mr. Marten: I agree that exports to the Common Market have risen, as they have risen to almost all areas of the world, especially Australia, New Zealand and South Africa, but is it not true that the deficit is greater than our deficit with all the rest of the world? Is that what was meant by the "benefits of a wider home market"?
    Mr. Dell: As the hon. Gentleman has said, our exports to the European Community have risen, as have our exports to all other parts of the world. It is also true that the deficit is greater than with the rest of the world. A large part of the deficit consists of imports of food and fuel. The hon. Gentleman will be pleased to hear that our balance of payments with the European Community has been on an improving trend for some

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    time. I agree that I should like to see it improved faster, but it is on an improving trend. I am sure the hon. Gentleman will accept that the test of competitiveness is whether we can compete in Europe. If we can compete in Europe, we can compete anywhere in the world.
    Mr. Ronald Atkins: Does my right hon. Friend recall that the majority of right hon. and hon. Members on both Front Benches forecast that if we joined the Common Market our financial and trade problems would disappear? What went wrong?
    Mr. Dell: There are always disagreements during discussions of this sort about exactly what right hon. and hon. Members had forecast. The truth is that in manufactured goods our deficit with the European Community is far smaller than the total figures that are bandied around. The total figures contain for the most part imports of food and fuels. Our exports to the European Community show that we can increasingly compete in manufactured goods, and that is a matter of great importance.
    Mr. Ronald Bell: Will the Secretary of State say whether this is what was meant by the phrase used at the time of our entry into the EEC "We have got to get in to get on"?
    Mr. Dell: I wait for the hon. and learned Gentleman to welcome the fact that we are getting on with our exports within the European Community. He may find that very satisfactory.

    COMECON Countries
    Mr. Peter Morrisonasked the Secretary of State for Trade whether he has any plans to visit the USSR to discuss the balance of trade between Great Britain and the COMECON countries.
    Mr. Meacher: My right hon. Friend has no present plans to visit the Soviet Union before the meeting of the British-Soviet Joint Commission in Moscow next spring, though I myself visited the Soviet Union a fortnight ago.
    Mr. Morrison: Will the Minister explain how the Government can continue to provide favoured trading conditions for the COMECON countries, particularly as long as British industrialists are forced to pay more than 15 per cent.
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    for new investment? Is he satisfied that those countries are not dumping in this country?
    Mr. Meacher: First, in view of the phraseology of the Question, I assure the hon. Gentleman that, whilst the Eastern European countries are not exactly politically independent of the Soviet Union, Ministers do not go to Moscow to discuss trade with the Eastern European countries. The surplus of our trade with the COMECON countries, excluding the Soviet Union, was £100 million in 1975. The trend this year is slightly less but it is still considerable. That is a good reason for continuing to trade with them. We already have a large series of import restraints, whether by quotas or voluntary action. As my right hon. Friend has said, we also have a number of antidumping applications which we are urgently considering.
    Mr. Ford: Will my hon. Friend tell me when he might come to a determination on the anti-dumping application lodged by the Clothing Manufacturers Federation in April this year to which a reply is urgently needed? Will he note that my constituency is seriously affected by unfairly subsidised imports of electric motors from the State trading countries, the price of which cannot in any way be related to the cost of production?
    Mr. Meacher: My hon. Friend will know that we accepted for full investigation the application by the Clothing Manufacturers Federation with regard to Eastern European suits. We made an announcement last month. I cannot tell my hon. Friend precisely when that investigation will be completed, but I assure him that we are undertaking it with the fullest urgency and I hope that we shall shortly come up with an answer. Any application made by the relevant manufacturers of electric motors will receive the urgent attention which we give to all these matters.
    Mr. Jopling: Before the hon. Gentleman embarks on any talks, will he take immediate action to deal with the dumping of footwear from COMECON countries which is causing a great deal of short-time working and factory closures throughout the country? Is he aware, for example, that a successful and well-known footwear firm in my constituency

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    has discovered that shoes coming from Czechoslovakia, which are a stitch-for-stitch copy of those made by the firm, are retailing at £3·82 a pair, whereas the cost of the materials alone is £4·60? Does not the Minister agree that that is intolerable and that further action must be taken to stop the closure of firms in this country?
    Mr. Meacher: The Question is about Eastern Europe, and we already have restraints on men's leather footwear from Czechoslovakia, Romania and Poland which were continued in 1976 at the 1975 level, which was 5 to 10 per cent. below the 1974 import level. That restraint was extended last year also to women's and children's leather footwear, and it has been continued this year at last year's level. Sandals were excluded in both cases. We have now accepted for investigation the question of the alleged dumping of sandals, although the number of workers and the number of businesses concerned in the manufacture of sandals in this country is very small. Nevertheless, we have undertaken to do that and we shall also take any further action that is necessary.
    Mrs. Renée Short: What help is my hon. Friend's Department giving to firms that wish to export to COMECON countries, particularly the Soviet Union, which has the largest purchasing potential?
    Mr. Meacher: As my hon. Friend knows, my right hon. Friend the former Prime Minister on his visit to Moscow in February last year agreed on a line of credit of nearly £1 billion to facilitate trade between this country and the Soviet Union in line with the fact that our competitors had hitherto had a much bigger slice of that market and we are determined to get an equal or larger portion of it.
    Mr. Higgins: Did the Minister go to Moscow without realising that our trade policy with COMECON countries is becoming more and more lunatic on both exports and imports? On exports, industry in the USSR can obtain finance for capital goods on far better terms than can anyone who is producing them in this country. On imports, I back up what my hon. Friend the Member for City of Chester (Mr. Morrison) said. If goods are being landed in this country by COMECON countries at less than the
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    price at which our producers can buy the raw materials, is that dumping or is it not?
    Mr. Meacher: On the question of the Soviet Union being able to obtain goods on a better rate of credit than is obtainable by domestic producers, we are talking about exports and there is no direct analogy with domestic producers. All we have offered to the Soviet Union is a rate of interest that is, so far as we can judge, competitive with that provided by other Western European countries and the United States. We can do no less if we are to get a share of that market. I shall not discuss the precise terms because that would be against the interests of the firms which I hope will be increasing their trade with the Soviet Union.
    On imports, as I made clear, we undertake to ensure that the COMECON countries do not have an unfair advantage in this country inasmuch as under the 1969 Act we have to draw a parallel with the market economy countries. That is not always an easy exercise but it is one which has to be legally defensible in the courts. We try to reach the fairest analogy we can and act on that.
    Mr. Speaker: Order. We are getting far away from Question Time in arguing and debating.

    Motor Vehicles (European Community Countries)
    Mr. Hal Millerasked the Secretary of State for Trade what discussions his Department, alone or in conjunction with the British motor industry manufacturers, has held with the EEC about limiting the volume of exports of motor vehicles from other member countries to the United Kingdom; and what understandings resulted.
    Mr. Meacher: None, Sir.
    Mr. Miller: Is the Minister aware that such a meeting is due to take place on Friday this week and that the import figure for cars from our European partners has now reached 28 per cent.? What investigations are possible into the dumping of cars by our Common Market partners in this country under the arrangement whereby the EEC is responsible for anti-dumping measures?
    Mr. Meacher: As my right hon. Friend has said, the Commission is able to undertake to examine whether one member of the EEC is dumping its, products in the country of another. There are instances where the Commission has acted on that basis. Quota controls raise questions in respect of the EEC, EFTA countries and North America which go far beyond the scope of the Question. The Government are examining the strengthening or consolidation of selective import controls and are also concerned about the possible strengthening in various ways of anti-dumping measures.
    Mr. Hardy: Will my hon. Friend confirm that agreements have been made with motor car producers outside the EEC? Is it not rather pointless to have an agreement with Japan or any other non-EEC producer if the gap which is created is then filled by Japan and other non-EEC producers?
    Mr. Meacher: I appreciate the significance of my hon. Friend's point and of the argument raised about imports of Japanese cars. It raises political and economic issues which go wider than the question of imports of cars. At present the Government are looking at selective import controls and how these can perhaps be strengthened in various ways in line with the current policy to limit the application of selective import controls in respect of Japan, Eastern European and the developing countries.

    Motor Vehicles (Japan)
    Mr. Rookerasked the Secretary of State for Trade if he will make a statement on motor car imports from Japan during 1976.
    Mr. William Hamiltonasked the Secretary of State for Trade what response he has had from the Japanese Government to his request for reductions in the numbers of cars imported from that country.
    Mr. Dell: I have made clear to the Japanese authorities our concern about levels of car imports into this country. The Japanese industry told our industry in July that it did not foresee any conspicuous change this year in its share of the British market. I shall continue to keep a close watch on the figures.
    Mr. Rooker: My right hon. Friend has made clear to the Japanese authorities, as his predecessor did a year ago, the Government's and industry's view, and yet Japanese imports are still increasing.
    Mr. Speaker: Order. The hon. Gentleman is making a case. Will he please ask a question?
    Mr. Rooker: Has my right hon. Friend given a commitment, as the present Secretary of State for the Environment gave to the Japanese almost exactly a year ago? Is my right hon. Friend satisfied that we should go on chatting to the Japanese, asking them not to import too much into this country and saying that otherwise we will take action when no action has ever been taken?
    Mr. Dell: My hon. Friend is quite wrong in saying that no action has ever been taken. To begin with, exports of Japanese motor cars to this country are governed by an understanding reached with the British industry in July that there would be no conspicuous change in their share of the market. The trouble is that British industry has not been able to take advantage of what has been left in the market because of its own inability to supply, and the market has been taken up by European suppliers. The problem is one of making British industry more competitive so that it can take advantage of the opportunity created by the agreement with the Japanese industry.
    Mr. Sims: Is the Minister aware of the Japanese Government's claim that if invisible trade is taken into account the balance of trade is more favourable to the United Kingdom than to them? Will he clarify the position to clear up the misunderstanding and discuss the matter with members of the Japanese delegation which is now in this country?
    Mr. Dell: I am aware of the claims made by the Japanese authorities about this country's invisible earnings with Japan. We have examined the figures and find that they grossly exaggerate the position. It is true that our invisible income makes some contribution to cover the deficit in our visible trade, but it does not eliminate it and it probably does not reduce it by more than half.
    Mr. Skinner: Does not my right hon. Friend agree that the question goes a

    935
    little wider than blaming British manufacturers and partcularly British workers in the car factories? Are not the Japanese more shrewd than our people in that they adopt techniques and tests which prevent British cars from passing a hurdle which amounts to a tariff? Could we not act in a similar fashion in this country?
    Mr. Dell: It is true that the operation of Japanese tests regarding pollution controls operate as a non-tariff barrier. We have been discussing this with the Japanese authorities and we would like to see a relaxation of foreign imports into Japan to improve the opportunities for foreign car exports to Japan. But the main problem in our relations with the Japanese is that they should import more manufactured goods from this country and from the rest of the world. This is a matter which we are discussing with the Japanese Government, and I took the opportunity this morning to impress that point at a meeting with Japanese industrialists. I think they are taking the point on board, but we shall have to watch the situation.
    Mr. Shersby: Is not the best way of tackling Japanese penetration of the market an increase in efficient production in this country, particularly by British Leyland, and the elimination of non-tariff barriers? Does the Minister agree that the ambiguous statement made by his hon. Friend the Under-Secretary of State about import controls is likely to lead to further speculation against the pound?
    Mr. Dell: I do not think that my hon. Friend made an ambiguous statement. The Government's position is clear. Of course we need to improve the competitiveness and efficiency of the British industry, and the Government are giving considerable help to British Leyland and Chrysler to that end. We want to see British industry taking advantage of the situation created by the agreement with Japan.

    Company Law (Bullock Report)
    Mr. Shersbyasked the Secretary of State for Trade when he expects to receive the report of the Bullock Committee on company law and if it is the Government's intention to legislate in the light of its recommendations in the next Session of Parliament.
    Mr. Clinton Davis: My right hon. Friend expects to receive the committee's report by the end of this year, after which it will be the Government's intention to place legislation before Parliament as soon as possible.
    Mr. Shersby: Does the Minister accept that there is considerable interest about this report in the business community? Will he undertake to introduce a separate Bill dealing with the company law aspects of the committee's report?
    Mr. Davis: There is considerable interest throughout the community on both sides of industry about the matter, but we should await the result of the report before defining the legislative process that we are able to undertake.
    Mrs. Dunwoody: Will my hon. Friend resist any attempts by the EEC Commission to change our company law in a way that would actually lower the safeguards that we have? Does he agree that we have a heavy responsibility in this sector? I hope that he will safeguard it.
    Mr. Davis: I hope we shall be able to do that. We are keeping the proposals made by the EEC under close surveillance, and, of course, there is a considerable input of British thinking into the views that it is currently canvassing.
    Mr. Lawrence: Will the Government introduce a Green Paper so that this matter can be fully considered by all the parties affected? Does he agree that the Government should not rush into ill-considered and hasty consideration of such matters?
    Mr. Davis: There is no question of that. The Bullock Committee is carefully considering the full range of problems. We will have to await the outcome of the committee's considerations before we determine our next course in the legislative process.

    Press (Royal Commission's Report)
    Mr. Aitkenasked the Secretary of State for Trade if he will make a statement on the Government's proposals for implementing the interim report of the Royal Commission on the Press.
    Mr. Dell: The initiative for implementing the report is with the industry. Managements and unions are working

    937
    together at top level in the Joint Standing Committee for the National Newspaper Industry. The committee announced on 12th October that it had reached agreed recommendations on a range of matters which are central to the Royal Commission's findings. If the committee's recommendations are adopted by the organisations represented on it, discussions will he carried forward at house as well as industry level.
    Mr. Aitken: Does not the right hon. Gentleman realise that large parts of the report depend upon the Government taking some initiative? In particular, does he realise that since the production of the report, highlighting the industry's acute problems, the problems have worsened dramatically? The report was based on the assumption that sterling would remain at a rate of $2·4 but there has been a deterioration of that position. Does not the right hon. Gentleman agree that all the figures in the report, which were then serious, are now desperate? When will he come off the fence?
    Mr. Dell: There is no question of being, on the fence. The previous Secretary of State for Trade made a statement in the House in March about the interim report. He indicated a timetable for the industry and for house agreements regarding the introduction of new technology. That timetable has not been met. We have only just had the announcement of 12th October regarding the industry's conclusions, and we now have to see how the house negotiations proceed.
    If the circumstances of the industry are so desperate, I suggest that it should get on with its house negotiations in the light of the statement of 12th Otcober with a view to introducing the new technology to the work. The whole essence of the interim report was that the new technology could be financed out of the savings made in most cases.
    Mr. Rathbone: Would it be right to interpret the right hon. Gentleman's answer as a mean approach by the Government to the very great strides that both managements and unions have made in coming to new manning agreements so that new technology can be introduced? Does it not show too little appreciation of the fact that the future vitality of one
    938
    leading independent daily and one leading independent Sunday paper is at stake because of the lack of action by the Government?
    Mr. Dell: The hon. Gentleman says that the Government's approach is mean. It is not characteristic of the Opposition to urge the Government to spend public money on industry in general or newspapers in particular. Objection used to be taken to the idea on the ground that it would imperil the independence of newspapers. As soon as it can be arranged—the delay is not on my side—I propose to hold further meetings with the joint chairmen of the joint standing committee, but again I impress on the industry the importance of getting on with house agreements. The industry has lost the time schedule proposed by my predecessor in March. Let those house agreements now be made rapidly.
    Mr. Skinner: Whatever my right hon. Friend does, may I ask him not to take advice from those young blades who advised Slater Walker in the run-up period to the wonderful success story which has ended in disaster?
    Mr. Dell: I am always careful about any advice I am offered. Indeed, I sometimes do not take advice from my hon. Friend the Member for Bolsover (Mr. Skinner).

    Aircraft Noise (Heathrow)
    Mr. Jesselasked the Secretary of State for Trade what action he intends to take to reduce aircraft noise around Heathrow in 1977.
    Mr. Clinton Davis: Throughout 1977, as in previous years, we shall continue our policy of taking all practicable steps to reduce noise disturbance in the vicinity of Heathrow through the continued application of the various noise abatement measures already applied there. As the hon. Member knows, we keep these measures under constant review and will take advantage of any opportunity of improving on them.
    Mr. Jessel: Is the hon. Gentleman aware that his decision not to allow British Airways any increase in the number of night flights will be warmly welcomed in my constituency? What progress has been made with the introduction of quieter aircraft engines, and, in

    939
    particular, what improvements can be expected from the current figure of 18 per cent. for noise certificated aircraft for 1977 and thereafter?
    Mr. Davis: I am grateful to the hon. Gentleman for his observation about night flights. The restrictions are not limited to British Airways. On our present estimates, the current proportion of noise certificated air transport movements for quieter aircraft represents about 18 per cent. at Heathrow, and this will rise to about 30 per cent. by about 1980 and 55 per cent. by 1985. We estimate that by 1990 virtually all traffic movements will be by noise certificated aircraft. Considerable progress is being made. This is evidenced by the purchase of substantial numbers of the larger, quieter-engined aircraft.
    Mr. Hugh Jenkins: is my hon. Friend aware that there is considerable disquiet in the constituencies around Heathrow not only at the current extensions of Heathrow but at the fact that even further extensions are being contemplated? Is he further aware that Heathrow is peculiarly unfortunately situated in that, for two-thirds of the time, all aircraft arriving fly over heavily populated areas? In view of the safety factor, quite apart from anything else, if there are to be any further extensions of London airports, they should be made at airports other than Heathrow.
    Mr. Davis: I hope that my hon. Friend who represents a constituency close to Heathrow, will engage in the process of consultation about the future rôle not only of Heathrow but of other airports in the country which is already being undertaken.
    Mr. Ronald Bell: What stage has this process of consultation, which the hon. Gentleman initiated this summer, now reached? When is the next stage, which I believe is consultation with hon. Members concerned, likely to take place?
    Mr. Davis: We have already had a number of meetings between my hon. Friend the Under-Secretary of State for the Environment and myself and various bodies, and we hope that these will be continued. I hope that we shall have an intensified process of consultation in the next few weeks and months. We
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    hope that hon. Members will communicate with the Department either as groups representing different areas of the country or as individuals to engage in the process of consultation, but so far as I am aware no such approach has yet been made.
    Mr. Molloy: is my hon. Friend aware that those of us with constituencies near Heathrow, which on occasions suffer abominably from the noise of aircraft, are appreciative of the efforts he has made over the past 12 months in trying to reduce the noise? Will he now concentrate on the fact that during the inclement weather there is a change of route, when aircraft fly very low indeed, particularly over the London borough of Ealing? Notwithstanding my hon. Friend's efforts, I have received very many complaints, and—
    Mr. Speaker: Order. I am sure that the hon. Gentleman has received complaints. I feel like making some myself. Will he now come to the point?
    Mr. Molloy: Is my hon. Friend aware that this is disturbing particularly to shift workers and to police officers, for example, who are on various duties? My list of complaints is rising, and I ask my hon. Friend to take these factors into account.
    Mr. Davis: I appreciate my hon. Friend's compliment, as, indeed, I appreciate compliments from anyone. The Civil Aviation Authority has been asked to look into the factors involved in reducing the proportion of easterly landings and take-offs, and if a change should prove practicable there will be full consultation with the representatives of all those living around the airport.

    Holiday Tour Operators
    Mr. Whiteheadasked the Secretary of State for Trade if he will resume from the CAA powers over the scrutiny of holiday tour operators who are not members of ABTA, following the bankruptcy of Pearl Islands Tours Ltd.
    Mr. Clinton Davis: My Department has never exercised such powers, and I consider it more appropriate that the Civil Aviation Authoriy should continue its present functions.
    Mr. Whitehead: Is my hon. Friend aware that this firm apparently traded

    941
    without an ATOL licence this year although it quoted one? Is he further aware that as a result a great deal of money was lost by many people who thought they were covered by the Air Travel Reserve Fund Act 1975 when they were not covered? Can he further say what effective form of policing the Civil Aviation Authority was able to bring about in this case? What form of compensation will there be for people who lost money and holidays when this firm collapsed?
    Mr. Davis: I do not think that it would be right for me to comment on the specific facts relating to this case, because, as I understand it, the CAA has instituted a prosecution against Pearl Islands Tours Ltd. for illegal trading during 1976. On the question of adequate surveillance, however, I must point out that, however vigilant an organisation might be that is invested with the power to police other organisations, there are, unfortunately, bound to be breaches of the law. I do not believe that the surveillance by the CAA has been proved inadequate. It was made clear during the passage of the Air Travel Reserve Fund Act that it related to licensed air travel organisers, and this company was not licensed.
    Mr. Tebbit: After all that wordy waffle, will the hon. Gentleman tell us how he expects the CAA to do its job properly when, as it points out on rage 10 of its annual report, its effective functioning is in jeopardy and responsibility for this state of affairs lies wholly with the Government, who have been warned, both formally and informally, on a number of occasions? What is the hon. Gentleman going to do about that?
    Mr. Davis: There is the very closest liaison between the Government and the Civil Aviation Authority. I do not accept the indictment coming from the lips of the hon. Gentleman or that he has placed a correct interpretation on the facts.

THE "OBSERVER" (ALLEGATIONS)
Mr. Skinner: On a point of order, Mr. Speaker. I wonder whether you will be making a statement, or whether you are able to inform the House that a statement will be made, on the report in the Observer yesterday concerning alleged
942
corruption by three Members of Parliament. In that report it is suggested that Members of Parliament are above the law as it affects ordinary individuals in cases of corruption and bribery.
Would you care to comment whether it is a breach of privilege for a newspaper in these circumstances to name one Member of Parliament in the case, without mentioning the others, thereby, as a result of failing to name names, by inference pointing the finger at anybody else whom the cap might fit?
Mr. Madden: Further to that point of order, Mr. Speaker. You will know that I sought your permission earlier today to submit—
Mr. Speaker: Order. It is not customary to make reference to an application that I have turned down.
Mr. Madden: I am grateful for your advice, Mr. Speaker. It is in relation to your advice and guidance, as the guardian of the interests of Back Benchers, that I ask whether you would be willing to initiate discussions between the usual channels to enable the Government to make a statement on the matters referred to in the Observer yesterday, with particular reference to the apparent anomaly whereby Members of Parliament cannot be faced with legal proceedings for corruption and bribery? It is essential that a statement should be made today by the Government, making clear what their intentions are and what their future actions will be on this matter.
The Parliamentary Secretary to the Treasury (Mr. Michael Cocks): Further to the point of order, Mr. Speaker. This is obviously very much a matter for yourself, but the Lord President of the Council, who is indisposed today and very much regrets that he is not able to be present, has asked me to assure the House that he will study very carefully anything said in the House on this subject today.
Mr. Speaker: I have noted with great care what has been said. It has not been raised as a matter of privilege and therefore it is not a matter for me to rule upon. But I gather, from what the Government Chief Whip said, that there will be a statement of some sort. Is that correct?
Mr. Michael Cocks: No.
Mr. Speaker: In that case, of course, I take heed of what the hon. Gentlemen has said, and I will consider it.

HOUSE OF COMMONS (TELEPHONE SERVICE)
Mr. Lipton: On a point of order, Mr. Speaker. I draw attention to the fact that the telephonic communications of this House seem to have broken down completely this morning. It was quite impossible, for a reason that I cannot mention, to get through to your office this morning. Will you please have this matter investigated? The telephone system in this House is much worse now than it ever has been.
Mr. Speaker: I will have inquiries made. It is not an unmixed blessing that the hon. Gentleman was unable to get through to my office.

WRITTEN ANSWERS (EUROPEAN PARLIAMENT)
Mr. Marten: On a point of order, Mr. Speaker. This is a small point but may not be unimportant. In the answer to the Question from my hon. Friend the Member for Mid-Sussex (Mr. Renton), the Secretary of State for Trade referred to a Written Answer given to the hon. Member for Cheadle (Mr. Normanton) in the European Parliament.
I question whether it is correct to refer to Written Answers given in that place. When a Minister refers to a Written Answer in this place, we have the Answer, because it is printed in Hansard and we should have seen it. I do not think that the Official Report of the proceedings of the European Parliament is printed as quickly as our own Official Report and it is not easily available. Perhaps you would care to look at that point.
Mr. Speaker: It is quite clear that the Official Report can be referred to, but not everybody sees the answers given in the European Parliament. Since I am not responsible and no Speaker ever accepts responsibility for Ministers' replies, perhaps the Minister will note the comment that I have made.

QUESTIONS TO MINISTERS
Mr. David Price: On a point of order. Mr. Speaker. This is a separate point in relation to the rights of Members. I draw attention to the fact that today, on a Monday, without Prime Minister's Questions intervening, we have reached only Question No. 17. There was a time when on a Monday it was reasonable to expect to reach about Question No. 50. Indeed, I have had an answer to a Question No. 62 on a Monday.
Mr. Speaker: I am deeply grateful to the hon. Gentleman. Had he been present all the way through Question Time, he would have known that I have appealed time and again to hon. Members, but we have had three and four questions in one supplementary. If I may say so, the answers have matched the length of the supplementaries.

HONOURABLE MEMBERS (LAW OF PRIVILEGE)
Mr. Molloy: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the law of privilege relating to hon. Members, with specific reference to allegations of bribery and corruption connected with parliamentary duties."
The events over the weekend have caused great concern, I should have thought, to the overwhelming majority of Members of this House, as well as to the general public outside.
As I understand the position, if any hon. Member of this House is concerned or connected with any act of bribery or corruption in connection with his parliamentary duty, he is above the law. That is, apparently, the situation in which we find ourselves. I believe that no single Member of this House wants that situation and I believe that this privilege should be totally removed.
As I understand it, it originated in the Bill of Rights of 1689, and, if for no other reason than that, it ought to be overhauled. It was further examined under the Public Bodies Corrupt Practices Act 1889, and then again in 1906, in relation

945
to the Prevention of Corruption Act, but this privilege of Members of Parliament has always remained.
Last July the Royal Commission, under the chairmanship of Mr. Justice Salmon, reported, and we have not had an opportunity to discuss that report.
My hon. Friend the Member for Bolsover (Mr. Skinner) mentioned that a newspaper had carried a report. From one aspect, it could be commended for bringing attention to this situation. I do not wish in any way to impinge on the rights, freedom and liberty of the newspapers, but in enjoying that freedom and liberty they have to maintain certain standards, and I believe that it is wrong and unfair to mention one Member of this House—
Mr. Speaker: Order. May I help the hon. Gentleman and, I hope, the House at the same time? The hon. Gentleman does not have to argue his case now. He has to explain why the matter is urgent enough to take precedence over all other business.
Mr. Molloy: I believe that the reason I have submitted is pretty good on its own, because, as my hon. Friend the Member for Bolsover has said, the finger of suspicion could be pointed at every single Member of the House.
946
I believe that this loophole must be removed. I do not believe that any Member of this House wishes to have this privilege and that the necessary steps ought to be taken swiftly to remove it. Perhaps a good start would be to have a debate this afternoon on the matter.
Mr. Speaker: The hon. Member for Ealing, North (Mr. Molloy) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the law of privilege relating to hon. Members, with specific reference to allegations of bribery and corruption connected with parliamentary duties."
As the House knows, under Standing Order No. 9 I am directed to take into account the several factors set out in the Order but to give no reasons for my decision. In giving my decision, I am not ruling whether this matter ever should be debated but whether it should have precedence. I have given careful consideration to the representations the hon. Gentleman has made, but I have to rule that his submission does not fall within the provisions of the Standing Order and, therefore, I cannot submit his application to the House.

WEIGHTS AND MEASURES &c. (No. 2) BILL [LORDS]
Order for Second Reading read.
3.40 p.m.
The Minister of State, Department of Prices and Consumer Protection (Mr. John Fraser): I beg to move, That the Bill be now read a Second Time.
Mr. Speaker: I have selected the amendment in the names of the Leader of the Opposition and her right hon. and hon. Friends to leave out from "That" to the end of the Question and to add instead thereof:
this House, while recognising the necessity of an orderly change over to metrication where this is essential for commercial reasons, declines at a time of continuing high inflation and economic crisis to give a second reading to a Bill for which there has been inadequate preparation on the part of the Government and which takes powers to phase out certain imperial measures beyond the requirements of the European Community Directive No. R/3070/75.
Mr. Fraser: It will probably be for the convenience of the House to try to conclude this debate by 7 o'clock. I shall keep my speech as brief as possible and, with the leave of the House, seek to catch Mr. Speaker's eye at the end of the debate. I start with the non-metric part of the Bill.
Public comment and indeed the Opposition amendment have dwelt almost exclusively on those parts of the Bill which deal with metrication. I propose to restore the balance by saying first about those parts of the Bill which deal with other matters.
I start with Clause 3. This clause empowers the Government to make regulations authorising the use for trade of prescribed weighing or measuring equipment where the stamp indicating that it has been passed for use for trade has been obliterated or defaced. This power is needed primarily to deal with price changes on petrol pumps. At the moment, on some pumps, adjustments of the mechanism as a result of a price change require the defacement of the stamp. At the moment it is technically illegal, although practically necessary, to operate under these circumstances.
The Government propose to make such operations legal in certain conditions and for limited periods of time. This is be-
948
cause with the number of pumps involved it is impossible for inspectors to re-examine and reseal equipment such as petrol pumps instantly after a change in price.
Clauses 4 and 5 have already been the subject of two Private Members' Bills and will, I hope, have the wholehearted support of the House. They confer powers to standardise containers. At present, many important household goods can be sold only in prescribed quantities. For certain products, however, particularly those with varying densities, standardisation by weight is not necessarily the best aid to the consumer. Washing powders are an example. Standardisation by weight would result in a confusing multitude of different pack sizes which would be of little or no help to the consumer, whereas standardisation on the basis of the size of the container would be of real assistance.
In the example I have quoted, the industry has recognised this. On a voluntary basis it has adopted standard pack sizes, and I am sure that consumers have found the standard "E" sizes a real help in making effective value-for-money comparisons. The Government believe, therefore, that the power to standardise containers will be an important addition to consumer protection. In addition, Clauses 4 and 5 contain power to prohibit the false indication of the quantity in containers. For example, an opaque pack only half full could be banned.
Clause 6 fills an important gap in existing legislation. At the moment, local authorities may charge fees for work undertaken by their weights and measures inspectorate in carrying out their national responsibilities, but there are no powers to charge fees for work undertaken in connection with EEC obligations. This work will mainly concern the testing and stamping of measuring equipment constructed in accordance with requirements of EEC directives. Under Clause 6, the Government will therefore be empowered to prescribe fees to be charged by local authorities for all services, facilities and documentation provided by them in pursuance of Community obligations.
Clause 7 merely makes corresponding amendments to the legislation of Northern Ireland.
In Clause 8, the Government propose to take powers to relax or suspend certain

949
statutory provisions during times of shortage. The need for such a power became apparent during the sugar shortage of 1974. During this time, packs of sugar were specially imported to cope with the emergency situation. In many cases the sale of this sugar was technically illegal either because weights and measures law relating to quantities or weight marking was being contravened or because certain labelling requirements of the Food and Drugs Acts were not being complied with. Very large numbers of retailers were therefore technically at risk of prosecution in selling this sugar. Under the clause, the Government would be able to suspend or relax these requirements if a shortage were to arise in the future.
I return to Clauses 1 and 2 and metrication. I do not propose to burden the House with a detailed history of metrication in this country. If I did, I should start with the comments of Sir Christopher Wren and James Watt, and I think that the House should be spared that.
Both Labour and Conservative Governments have accepted time and again that we should adopt the metric system. Progress towards it is well advanced in industry, commerce and agriculture and it is frequently used in retail sales of packed goods. Teaching is overwhelmingly metric, and we have a generation of children and young adults who have learned no other system. Parliament itself has approved many Orders facilitating a change to metric. Even the Opposition recognise the need for change—although, to do them justice, they recognise it a little less in their reasoned amendment than they did when they were last in government.
The issue is no longer whether the change should be made but the pace of that change and how best we can protect and assist the consumer. The question is not what should be done, but how best we do it. The hon. Lady the Member for Gloucester (Mrs. Oppenheim) summed up the matter well in our metrication debate of 1973 when she said that, in the interests of consumers, it was more profitable for the House to discuss how and when.
Metrication began in earnest in this country with the announcement of the then President of the Board of Trade, my right hon. Friend the Member for Batter-
950
sea North (Mr. Jay), in May 1965, when he stated:
"The Government are impressed with the case which has been put to them by the representatives of industry for the wider use in British industry of the metric system of weights and measures. Countries using that system now take more than one-half of our exports; and the total proportion of world trade conducted in terms of metric units will no doubt continue to increase. Against that background the Government consider it desirable that British industries on a broadening front should adopt metric units, sector by sector, until that system can become in time the primary system of weights and measures for the country as a whole."—[Official Report, 24th May 1976, Vol. 713, c. 32.]
A Standing Joint Committee on Metrication was set up in March 1966. Its main recommendations, which were accepted by the Government, were first, that the end of 1975 should be the guideline date for the adoption of the metric system by the country as a whole. No one can accuse us of pushing this too quickly.
Secondly, it recommended that a metrication board should be established as a central planning agency for co-ordinating the programmes of change and thirdly, that there should be the necessary legislation to remove obstacles to the adoption of metric units.
The Metrication Board was set up by my right hon. Friend the Member for Bristol, South-East (Mr. Benn) in 1969. The Conservative Government White Paper of February 1972 demonstrates that the views of that Government differed little from their predecessors. At this stage I should like to quote simply one sentence from that White Paper:
"The move to metrication has been taking place over many years, but the Government believe that the time has now come when they must act to ensure the orderly completion of the process."
The tenor of that statement is repeated in the Conservative White Paper time and again.
Successive Governments have quite clearly concluded that the adoption of metric units is in the national interest and have pursued through the Metrication Board and through individual metrication orders a bipartisan and consistent approach to this subject. The principle is not in dispute. Hon. Members may disagree. This is a matter for the judgment of the House, but I am entitled

951
to my view. I have quoted from the Conservative Government's White Paper and Labour Government announcements. It is not so much the principle which is in dispute. There is a justifiable concern about how we achieve it and the pace of the change.
Sir John Langford-Holt: The Minister must not assume that, because he has quoted official statements from one side of the House or the other, this commits members of the party concerned to full support of the principle. Many hon. Members on both sides are very strongly opposed to the principle of metrication.
Mr. Fraser: I recognise that. It is not true that the principle has unanimous approval.
I turn now to the Common Market aspect of this matter. I hope that the short account I have given of the history of metrication will have dispelled one misconception. If not, then I again assert it, Metrication is not being foisted on us because of our membership of the EEC. It is our decision not theirs. Successive Governments had concluded long before our entry that it was in our own national interest to change over. Indeed, decisions of my right hon. Friends the Members for Battersea, North and Bristol, South-East would hardly be alleged to have been in anticipation of entry to EEC. It is true that under the Treaty of Accession the United Kingdom under the Conservatives accepted that the international system of metric units would in due course be the sole system of units throughout the EEC. But, as I pointed out during the debate on the Units of Measurement Directive on 7th July, this undertaking was a consequence of our own agreed national policy and not the cause of our policy.
The amending directive then being discussed has since been adopted and the various changes which I indicated to the House that I considered to be necessary, are all incorporated in the final version. This means briefly that our EEC obligations are, first, to adopt eventually the SI metric system; secondly, to authorise the use of this system; and thirdly, to phase out, or cease to authorise in legal terms, imperial units. The whole aim of
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our negotiations on this latest directive was to ensure that our EEC commitment reflected our national position and did not dictate it. In this we have succeeded.
While, therefore, I am in no way seeking to disguise the fact that the Bill which we are now considering would give the Government the necessary powers to meet these EEC obligations, I hope I have shown that these obligations are geared to our own national needs and that the EEC dimension is of secondary importance in considering this Bill, which is first and foremost a measure brought forward in the national interest. It is our decision, not theirs.
What galls me about part of the Opposition amendment is the attack on the power
"to phase out certain imperial measures beyond the requirements"
of the latest EEC Directive. As the Opposition know full well, the Treaty of Accession obligations which they undertook is to phase out all imperial units. Under their terms they were prepared to see a 1979 deadline imposed. What this Government have succeeded in doing is to ensure that the major say as to the timeing of the phasing out of the most importan imperial units will be under the control of the British Government and our own Parliament, not under the control of the EEC. The Opposition surely cannot advocate seriously that this House should not have the power to control its own destiny in this way and that the timetable should be set by Brussels.
Mr. Nigel Lawson: Will the Minister not accept that he is taking power to phase out the pint and other important imperial units sooner than under the Common Market directive? He does not have the power to phase it out later.
Mr. Fraser: That is a matter for this House. It is not a matter for Brussels.
Mr. Denis Skinner: Has my hon. Friend considered the mere possibility—and I put it no higher than that—that the Common Market did not impose its directives in the way he has suggested because it knew that as a result of certain diplomatic pressures it could induce a British Government to carry out the measures in the knowledge that they were

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doing so by themselves. All the time, of course, the people who run the Common Market were happy with the situation because they knew that they would get their own way. Has he ever considered that this is a Common Market tactic which has been deployed ever since we got into this mess?
Mr. Fraser: I have considered it, and the answer is "No".
There are certain agreed requirements about some smaller and less important measures which the latest directive requires us to phase out by the end of 1979. The Opposition amendment clearly recognises these requirements. Perhaps they would explain to the House how this obligation can be met without the powers being sought in the Bill. I must say that I find the proposition that we should be limited by a Brussels timetable incredible.
I return to the situation in our own country. First, virtually all our trade is with countries which already use or are converting to the metric system. Only five small countries in the world are not yet committed to adopting this system.
Mr. Lawson: What about America?
Mr. Fraser: America is committed to adopting it. The President of the United States has signed a Bill which authorises the change to the metric system. Virtually every country in the world is committed to making this change, as is every single Commonwealth country. Therefore, there could be a domestic argument, an EEC argument, a world argument or a Commonwealth argument for metrication, as almost all our trade is conducted in the metric system.
British industry, in order to survive, has been forced widely to adopt metric units and to work to metric standards. Much of this metrication has not directly affected the ordinary consumer—for example the agricultural steel, engineering, construction and shipbuilding industries—unless the consumer in question happens to work in one of those industries. But now increasingly metrication is directly affecting the consumer. His children are taught the metric system and little or nothing about the other system [HON. MEMBERS: "Rubbish!"] Hon. Members opposite must try to catch Mr. Speaker's eye.
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The consumer durables the consumer buys—refrigerators, freezers, washing machines, kitchen equipment—are manufactured and described in metric; the capacity of his car is described in litres without causing great difficulties; the everyday items he buys—paint, cornflakes, sugar, clothing—are probably in metric sizes; the oil for his car or for his home heating is measured in litres; his trunk telephone charge is based on kilometres; the weight of the parcel or letter he posts is measured in grammes. There are many other examples. I repeat that the question is not whether we go metric but how best and how quickly we complete the change and for how long we retain for legal purposes two different systems of measurement.
I must tell the House that the Government have no intention of imposing a short, sharp change to metric. The Bill by itself does nothing to change the system. All that it does is to confer powers to be used later and after consultation.
At the same time I must point out the disadvantages of a dual system. If British industry is required to run separate imperial and metric production lines there must be penalties of duplication of design packaging stockholding and selling.
There are other disadvantages such as the education of our children in one system and their leaving school to cope with another. Another is the confusion to the shopper of a dual range of measures in the shops, sometimes in the same product.
Some purchases can he made only in metric quantities. I gave the example of sugar. On the other hand there are other products which are sold at the moment only in imperial quantities, for example, tea. In between these two extremes there are being sold today on the shelves of the supermarkets and shops throughout the country a vast range of products which may be in either imperial or metric quantities. To take just one familiar example, some shops sell fabrics and carpet in metric units; others in imperial units. The consumer is finding it increasingly difficult to make value-for-money comparisons and this position will get even worse unless the Government do something about it.

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This country has a long history of consumer protection in the weights and measures field, and its reputation both for the quality of its weights and measures legislation and for its enforcement is second to none. It is no exaggeration to say that this fabric, so carefully constructed over many many years, could disintegrate if this situation is not brought to an end.
If anyone doubts the confusion I would urge him to visit his local supermarket and to look at the quantities in which goods are being sold today. Let him try to make value-for-money comparisons between, say, two washing up liquids, or even the same washing up liquid in different packs, one of which is sold in a 20 fluid oz—568 ml—container, and the other in a 1 litre container. Another example is that of bottles of fruit squash. Some of them will be of 25 fluid oz and others of 1 litre.
In many cases manufacturers already dual mark and give other useful information, but even where that is done it is impossible to avoid confusion in the mind of the consumer. Consumer protection disappears when the shopper needs either a degree in mathematics or a pocket calculator in order to make value for money comparisons.
It is a small wonder that the consumer organisations have been long pressing for the introduction of the Bill. It is small wonder, too, that the retail organisations, which do not stand to gain a great deal from metrication, have made it clear that the only way to avoid chaos is for the Government to step in and to ensure that the process is properly completed. The Government are persuaded, much against their inclination, that the most sensitive area of all—that directly involving the consumer—is the one area where the voluntary approach to metrication will not work and is not working. In that situation the Government have a clear responsibility to end consumer confusion. The Government can take only one logical direction, and that is toward the phasing out of the use by trade of imperial units.
Mr. Norman Lamont: The Minister said earlier that the Government had no intention of
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imposing a short, sharp change in phasing out these imperial alternatives. If that is the case, is it not so that these dual specified quantities will exist side by side for quite a number of years to come?
Mr. Fraser: Yes.
I turn now to the aims of the Bill. Put at its simplest it proposes to repeal Section 10 (10) of the Weights and Measures Act 1963 which in effect obliges the Government to maintain the use of imperial units. Let me expand on that point. I gave the example of liquid soap being sold in 20 fluid oz. packs and 1 litre packs. If the Government decided to bring forward a prescribed quantities Order for the sale of washing up liquid—
Mr. Skinner: God Almighty!
Mr. Fraser: It is all very well for my hon. Friend to say "God Almighty", but the wives of some working people have to go and buy washing up liquid, and making value-for-money comparisons can be an almost impossible task for them.
Mr. Skinner: I was simply commenting upon the jargon.
Mr. Fraser: I can assure my hon. Friend that I am using the normal terminology.
If one wanted to make a prescribed quantity Order, Section 10 (10) of the 1963 Act requires one imperial and one metric range. In this case, the very confusion which the Order is seeking to avoid gets built into the Order because it is necessary to lay down the dual range.
The Bill proposes that the Government should have more flexible powers than exist at the moment to bring forward proposals to remove or restrict the use of weights and measures for the purposes of trade. These flexible powers are necessary in order to make the sector-by-sector approach to metrication possible, and also to allow the possibility of, say, phasing out the use of imperial units at the manufacturing level in advance of, or instead of, action at the retail level, or deal with one product but not another. While the Bill removes an obstacle to the completion of the metrication process,

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it does not in itself either advance metrication or make illegal the use of imperial units. The Bill by itself changes nothing. It provides a legal framework within which the Government, in consultation with consumers and other affected interests, can plan a transition. On each and every occasion that that happens the affirmative consent of Parliament to an Order will he required.
I know that hon. Members in every part of the House and interests outside were concerned when the Bill was first introduced that the consumer should be adequately protected, and I am grateful for the helpful, constructive and cooperative spirit in which I have been able to discuss these matters with hon. Members and consumer interests outside the House.
Perhaps I may remind the House of the consequences of discussions. Some people were concerned about the need to consult consumers. They wanted consultation to be the precondition of any Order. This has been done, and Clause 2 has that assurance written in.
I was asked whether the power to require dual marking—that is, to display the equivalent of a metric or imperial quantity on the pack or elsewhere—could be universal. As a result of the consultations, whe have taken the power in Clause 2 to do that. I was asked also to make display mandatory, and I have built that into Clause 2 as well. I was asked to give an assurance that the exercise of the Bill's powers would be linked wherever possible to consumer protection measures. An example of that would be for them to be linked to prescribed quantity Orders. It will be.
In the last Bill, but not in this one, the Opposition asked for a timetable for metrication. If I am genuinely to consult consumers, and if the House is genuinely to have its voice in the matter it would be inconsistent to lay down a rigid timetable. However, I regard pre-packed goods to be early candidates for change with changes in the sale of weighed-out foods to come at the end of the change to the metric process.
Many people were concerned that metrication might lead to unjustifiable price rises. There is a good deal of evidence, for example on conflakes and
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dried vegetables, to suggest that the contrary is so. But what people believe to be true is sometimes as important as what is true. I therefore give again the assurance that the Government will not hesitate to use their powers under the Prices Act to freeze the price of essential goods during a period of transition if they judge it necessary to do so.
Mr. Stanley Newens: In the process of the decimalisation of the currency there was a considerable amount of rounding up which undoubtedly imposed considerable burdens on consumers by way of price increases. Does my hon. Friend accept that there is still a danger that a similar process will operate when we go over to metric measurement if the Bill is carried through?
Mr. Fraser: My hon. Friend and I have discussed this. I do not believe that there is much evidence to support what he suggests or to indicate that there is quite the danger that he propounds. Nevertheless, I agree that what people believe to be true is also important. Any change in a price involves rounding up or down. I am determined to ensure, however, that before and after the change to metric the powers of price fixing should be used to ensure that the consumer is protected and is seen to be protected. I am determined also to use powers which exist under the Prices Act.
A reference to the Price Commission to monitor prices during a change over has already been made. I further accept the suggestion of the National Consumer Council that there should be a metrication monitoring unit to deal with queries and complaints from customers. I am grateful for the suggestion and advice that I have received from all parts of the House, and I hope that the Bill and the changes made by it, along with the assurances I have given, are acceptable to the House.
Let me turn finally to the Opposition's so-called reasoned amendment, if that be the correct description of it. It begins by recognising the need for an orderly change over.
"where this is essential for commercial reasons".
This is one of the main arguments for the Bill, for without it no such orderly change over is possible. Perhaps the hon.

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Member for Gloucester will be able to explain to the House how the Opposition can recognise the need and deny the means at the same time.
The second argument is that the House should oppose the Bill because of the economic situation. I have already pointed out that the underlying reason why we are going metric is because of the economic benefits to the country. These economic benefits are quite clearly spelled out in the Conservative Government's White Paper of 1972. That White Paper says:
"If the UK were to retain the imperial system, while at the same time having to use metric to an increasing extent for international trade, British industry would be less efficient and less competitive and the higher costs would be cumulative. This would have repercussions on the standard of living and we would have burdened ourselves with an economic handicap".
The amendment then alleges
"inadequate preparation on the part of the Government".
I will not burden the House with a recital of the list of all those organisations whose views have been taken into account by the Government, nor with details of the extensive discussions which have taken place with the consumer organisations. This Bill is the outcome of 10 years experience and discussion. I just remain baffled by the allegation, unless it is based on a total misunderstanding, of what the Bill does.
I repeat again that the Bill does nothing in itself. It simply provides the powers to plan for an orderly change from one system to another. In other words, the Bill is a precondition for planning—not the other way about.
I have said that we shall consult widely, and that obligation is built into the Bill.
Perhaps I can give the House a further undertaking. The Department of Prices and Consumer Protection will report to Parliament each year on the progress so far made on metrication and give a provisional forecast how progress is seen for the future and how it will be linked with consumer protection, information and education. The forecast would inevitably be a tentative one, but it would set the stage for consultations, not least with consumer organisations, and would provide a background to individual orders for prescribed metric quantities and cut
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off dates and would help to put each step towards metrication in perspective.
I hope, by proceeding in that way, to demonstrate the link between the powers in the Bill and planning for change. The Bill is not some idiosyncratic whim of the Government. It has the support of every major consumer organisation: the Consumer Association, the National Consumer Council, the National Federation of Consumer Groups and countless other consumer organisations. It has the support of the CBI and, as Patrick Hutber failed to point out in his article yesterday, it also has the support of the TUC. It has the support of practically every organisation which has been concerned with the problem of metrication. I now ask for the support of this House.
4.13 p.m.
Mrs. Sally Oppenheim: I beg to move to leave out from "That" to the end of the Question and to add instead thereof:
this House, while recognising the necessity of an orderly change over to metrication where this is essential for commercial reasons, declines at a time of continuing high inflation and economic crisis to give a second reading to a Bill for which there has been inadequate preparation on the part of the Government and which takes powers to phase out certain imperial measures beyond the requirements of the European Community Directive No. R/3070/75.
With your permission, Mr. Speaker, I should point out to the House that the directive number in the amendment has been changed subsequently. The directive referred to is Directive No. 76/770.
Because this is an issue of the greatest importance to the whole country and one on which many people feel very strongly, it is imperative that the House should understand fully the implications of the measure before us, the likely effects, the background and the reasoning behind the Opposition's amendment.
Not least of all, I deal first with the Short Title of the Bill—the Weights and Measures & c. (No. 2) Bill [Lords]—which is probably the understatement of all time. This is the metrication Bill. Despite what the Minister of State said, it is the means whereby metric weights and measures will be made lawful and imperial weights and measures will be made unlawful, and this will apply not only to those goods which are currently sold in prescribed quantities but to additional goods which will be added to the list and

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go right outside the sphere of consumer goods and other areas.
Rightly or wrongly, successive Governments first initiated and then accepted the general principle of metrication for this country, not because metrication was an improvement, not because it was a sign of progress, but purely in the interests of standardisation. Because there has been a good deal of misrepresentation on the part of the Government and others, let me remind the House of the facts as they are clearly on record.
This country was committed to metrication by a Labour Government in 1965 outside the context of the Common Market and without consultation with Parliament. It was unbelievably announced in a Written Answer by the right hon. Member for Battersea, North (Mr. Jay) on 24th May in his capacity as President of the Board of Trade. In 1968, the commitment was reconfirmed by the present Secretary of State for Energy, who then set up the Metrication Board. Subsequently, a Conservative Government accepted the general principle of the previous Labour Government's commitment to metrication and started to examine ways in which there could be an orderly transition to voluntary metrication and gave the House for the first time an opportunity to debate it in 1970 and 1973.
In the first two instances, the decision was a purely arbitrary one. There was no debate and no vote on the principle. By 1970, when a Conservative Government came to power, matters had moved too far for a vote on the principle to be taken, though my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) renegotiated the commitment of the previous Labour Government and got the period by when we had to be completely metricated extended to the end of 1979 or beyond in certain cases.
To this very day, therefore, the elected representatives of the people in this House have never voted on the principle of metrication. That opportunity should have been provided in 1965 when the commitment was first made or at the very least in 1968 when the Metrication Board was set up.
Mr. Skinner: Will the hon. Lady tell the House whether on this occasion, after all these many years, the Conserva-
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tive Opposition intend to vote on the general question of principle, because it seems from the Order Paper that the reasoned amendment will allow them once again as an Opposition to opt out of the making of that decision of principle?
Mrs. Oppenheim: As usual, the hon. Member for Bolsover (Mr. Skinner) is prescient. I was about to come to that very point. The vote tonight cannot be on the principle of metrication, and that must be made clear to those of my hon. Friends who feel the same. That decision has been taken already. Tragically for the House and for the country, we are no longer in a position to vote on the principle of metrication.
Mr. Eric S. Heffer: That is a very queer argument. If the hon. Lady and her right hon. and hon. Friends wish to vote against the principle, they can vote against the Second Reading of the Bill. They cannot have it both ways. They cannot say that they have a reasoned amendment which accepts the principle, though they suggest that possibly it goes to far, when they can vote against the Second Reading of the Bill. Is she saying that the Conservative Party will not vote against the Second Reading but that they intend to vote only on the reasoned amendment?
Mrs. Oppenheim: In the first place, I tried to make it clear that, by 1970, matters had advanced to far to enable a vote on the principle to be taken. Tonight's vote will be against compulsory metrication, and Government supporters will be very welcome to join us in the Division Lobby.
Once again, under a Labour Government, we were presented earlier this year with another fait accompli. They said "Here is our Weights and Measures & c. Bill. Time is running out. We must get on with things. Give us the powers and allow us in our infinite wisdom to impose mandatory metrication as and when we please." This piece of arrogance was followed by their last-minute shamefaced withdrawal of the Bill and its reappearance in another place, this time amended.
The fact that the Government were forced to amend the Bill by the action of the Conservative Opposition has, if anything, improved it, but in the light of

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the Government's intentions, the economic situation, and the events that preceded it, the Bill is still not acceptable to us.
Given that we can no longer take a decision in the House on the principle of metrication, there are two overriding objectives that need to be met and reconciled as the essential prerequisite in any transition to metrication, whether voluntary or statutory. The first is the need to end uncertainty for business and industrial concerns. The second, and equally important, is the need, as the Minister appreciates, to protect consumers as far as possible from confusion and adverse economic effects. Both are essential and not, I believe, irreconcilable. Neither objective is fully met in the Bill.
The third consideration, to which the Minister referred only briefly, is the cost of conversion at present. In business and industry there has been a background of unresolved chaos for which the present Government and the former Minister of State, Department of Prices and Consumer Protection have been largely responsible.
During the 1973 debate the former Minister of State, no doubt consumed with metrication mania which has characterised him, had an apopletic fit about what he described then as drift and delay, yet when he came to power as Minister of State at the Department for over 28 months he did very little to prepare a comprehensive programme, to put consultations in train, to invite consumer groups to confer with him to see what ways the consumer could be safeguarded. In fact, he became a kind of metrication fugitive. The only time he spoke on the subject was when asked to do so at Question Time; and then replies were mostly on the defensive. He did not deign to initiate consultation with business and industry but merely deigned to receive representations.
By the time he left the Department the situation had degenerated into chaos and havoc. Even his replies to parliamentary Questions were contradictory, conflicting and sometimes incorrect. No wonder business and industry were distraught by the time the first Weights and Measures Bill was introduced. Everybody accepts that business and
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industry need to know about cut-off dates, and also need to know with certainty what extensions, exemptions and exceptions the Government intend to make. Some industries, particularly the weighing-scale industry, need an even longer period of pre-notification because they have special problems of their own.
I wish to clarify the position of business and industry as I see it. It is not so much the fact that overwhelmingly they all want change to metrication as that, above all, they want to see an end to uncertainty. It is true, as the Minister said, that some Orders have been laid under the existing Weights and Measures Act providing for metric alternatives, but those are purely permissive. Although they carry cut-off dates agreed after statutory consultation, they are not mandatory as long as the imperial alternative remains. I do not think the Minister when moving the Second Reading made that point very clear.
The Government's intentions as to a comprehensive and definitive programme for the transition to metrication had never been enlarged on or debated in the House by the time the first of the Weights and Measures Bill was introduced, nor are they now by any means clearly defined.
I must make it clear that it was not necessary to wait for the statutory consultations under the Act in relation to each order one at a time. The Minister's predecessor could have held less formal but constructive consultations to use as a basis for a phased timetable with details of exceptions, exemptions and consumer safeguards. We could and should have debated these matters before any Bill was introduced into the House. This would have ended the uncertainty for business and industry and would have led to a far more satisfactory outcome for the consumer.
Mr. Ioan Evans: Has the hon. Lady received a document from the CBI calling for early implementation of the Bill? I draw her attention to one point in that document, in which the CBI says:
"Little or no further progress can be made without legislation to remove the single most important obstacle to metrication, namely, Section 10(10) of the 1963 Weights and Measures Act. Industry has been urging government for

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several years to repeal the section in the Weights and Measures (No. 2) Bill."
The point is that the CBI is asking the Government to take urgent action.
Mrs. Oppenheim: I am well aware of the contents of that memorandum, although I do not agree with the point made by the CBI and I shall come to that a little later.
As I was saying on the subject of pre-consultation and debate before the Bill was introduced into the House, the inevitable result of past neglect has had to be a last-minute dash to metrication, and its consequences remain unsatisfactory. It is only fair to say that I do not attach any blame to the present Minister, who has done all possible to make up for lost time in negotiations and has conducted a more open and conciliatory consultation than did his predecessor.
For that sector of industry with which the CBI is largely concerned—and here I deal with the point made by the hon. Member for Aberdare (Mr. Evans)—which does not produce consumer goods for sale in this country, the implications of metrication are few. Many such industries have already gone metric, particularly if they are already exporting to metric countries. The main concern relates to industries producing and selling goods in prescribed quantities in this country and to measurements affecting everything beyond this category. One of the problems often advanced is that as machinery wears out, in particular packaging machinery, such industries do not know whether to replace it with metric or imperial machinery. This is a valid point that can be met by a firm commitment to dates agreed after consultation on a voluntary basis, however far ahead they may be.
However, one of the points that is frequently made by business and industry that I find most interesting and revealing is that they say that as long as metrication remains permissive there will be a reluctance to go metric where there is a competitive advantage in ignoring metrication. That says a great deal and shows how popular metrication is likely to be to the consumer.
This leads me to the second of the objectives to which I referred earlier—namely, the need to protect consumers from confusion and economic disadvan-
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tage. First and foremost, it must be clearly understood that consumers are having metrication imposed upon them against their will. This was confirmed in a poll conducted for the National Consumers Council and reported in the Daily Telegraph on 18th July this year. It showed that the number of people who thought that metrication was a bad thing for the country had more than doubled since 1973.
One of the main difficulties in consumer reaction after the experience of decimalisation is that, whether rounding up in prices takes place, there will always be a suspicion that this has happened, thus creating an atmosphere of distrust and dissatisfaction which does no service to shopkeepers and consumers.
Most of the consumer groups which favour metrication do so on the grounds that a prolonged transition overall will lead to the existence of goods marked in both imperial and metric quantities together on the shelves. This will create consumer confusion and prevent people from "thinking metric", as they are admonished to do by the Metrication Board. Despite these admonitions, I cannot think metric voluntarily or by dictation. It is not that I cannot do the arithmetical calculations but that it is very difficult for people to envisage in their own minds actual metric quantities, even when they have carried out the arithmetical conversions. Nor do I accept that this Bill, the cut-off dates in existing Orders, or Government intentions in other areas of metrication will or can achieve a quick transition and thus avoid this confusion.
The experience of statutory metrication in Australia proves this view. I have with me a number of clippings of advertisements from an Australian newspaper dated 9th April 1976. Although Australia started to go metric in 1970, in one newspaper on one day in 1976, 20 advertisements refer to imperial quantities and measurements, only two to imperial and metric and only four purely metric. I think that that proves the point that statutory metrication will not lead to dual measurements disappearing from the shelves.
It has been pointed out by the Minister and others that where metrication has already occurred in this country, such as in the case of breakfast cereals, there

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has been no great trauma. That is perfectly true. However, such items as have gone metric have been items of no great importance in family expenditure or items not usually bought or recognised by weight.
Mr. John Fraser Mr. John Fraser indicated dissent.
Mrs. Oppenheim: With due respect, most people do not normally, and did not previously, buy cereals by weight. Perhaps they should have done, but they did not do so. They have bought them by the size of packet.
There is the exception of sugar. What has been the experience with sugar? When sugar went metric this summer at a price about 22p for a 21b. bag, we were assured that as a 1 kilo bag was approximately 10 per cent. more, the price would rise by no more than 10 per cent. However, in a letter to the Daily Mail of 15 September 1976, a correspondent says,
"For months, if not years, the Metrification Board have been telling me in adverts that metrification"
—as the correspondent calls it—
"would not mean that prices would go up. For the past fortnight my wife, my brothers' wives, my sister and my neighbours' wives have all told me that the price of two pounds of sugar, with three ounces added to make the metric weight, has increased to the price of two and a half pounds of sugar. So will any of the well-paid brains of the Metrication Board now tell them, not me, who nicked the other five ounces of sugar?"
My own office has telephoned the Metrication Board about this matter but got no further explanation.
There may be a perfectly good explanation for sugar being sold at 27p, but what good will a Government metrication prices monitoring unit be in reassuring consumers when, as the Government freely admit, prices will vary from shop to shop and from one part of the country to another, so that uncertainty and distrust will remain, and no monitoring board in the world will be able to show whether the real cause is rounding up on metric quantities?
The three-month price freeze will have precisely the same effect, for exactly the same reason. The freeze will only delay the confusion and delay price rises. It will not prevent either from happening.
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The Government have—very helpfully, I think—put forward proposals for unit pricing and dual marking. There again, confusion cannot be avoided, because whereas the Order in question attempts to establish accepted rounding up or down as to quantity comparisons and to eliminate the objections of Housewife's Trust and others, it covers only a few of the examples given and the all-important 1-oz and 2-oz measures are missing. In two cases of dual transitional quantities there has been rounding down and not up. Also, perhaps above all, because we have a decimal system which includes the halfpenny, exact cost comparisons cannot be made. This is absolutely impossible, even with unit pricing, and, therefore, it undermines the principle of unit pricing in this respect.
The Government's timetable, as it exists so far in permissive Orders—and from what we have heard from the Minister of State—does not take sufficient note of the fact that one of the most important factors affecting poorer families and pensioners is that in almost every case the transition will be to a larger and more costly size. There should be a given period during which an important number of items in the family budget are not subject to metrication.
I turn to exceptions, exemptions and extensions, and how they can be reconciled with careful planning and organisation in the transition. First and foremost, because we are on the brink of another explosion in food prices, and people in this country have already been subjected to an unprecedented period of inflation, we believe that there should be a firm undertaking that metrication of pre-packed basic foodstuffs important in the family budget should be delayed until the latest possible date, that is, until after 1979, when they must be reviewed, but that firm dates must be agreed in each case following consultation and announced on a voluntary basis within six months.
We believe that weighed-out foods—fruit, vegetables, confectionery and meat—should be exempted until after 1980, but that once again a firm date should be negotiated and, following voluntary agreement, announced within six months, and that certain items should not go metric at all in the foreseeable future,

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such as road signs, land measurement and petrol.
The price of petrol is already very high. Quite apart from the cost to the industry of conversion and the difficulty that the industry is having at present, uncertainty would be ended if the Minister were to announce that petrol would be exempted. There is an added consumer confusion which would be reduced, particularly as cars are often purchased on the basis of "how many miles per gallon" they are advertised to do, and the metric equivalent will be meaningless to many people for years.
The other red herring that is often advanced—not by the Minister of State today, but advanced by his predecessor—was that we have an undertaking not to refuse to allow pre-packed foods in metric quantities to enter this country after 1977, unless there is a derogation. Again, I submit that no such derogation would be necessary. Most of the pre-packed foods imported are luxury goods and if they enter in metric packs it does not matter at all. The two exceptions are tea and butter. Most imported tea is packed in this country, as is the majority of imported butter. As the British butter market is very lucrative for those who export to this country, I cannot imagine that the small minority who export to us in pre-packed quantities would want to do something that would put them at a monetary and competitive disadvantage.
As for road signs, quite apart from the cost, those who find it a little difficult sometimes to keep within existing speed limits could be joined by thousands more who would be even more confused by limits based on kilometres per hour.
Mr. John Page: I have been reading the Bill again. Will my hon. Friend say whether the Bill, if passed, will say that the change from miles to kilometres is to be mandatory?
Mrs. Oppenheim: It gives the Government the powers, potentially, to lay Orders that are subject to the affirmative procedure, which would provide a statutory basis for this.
Mr. John Fraser: No. Perhaps I may make this clear. The mile is not used normally in terms of trade, and any changes in speed limits or road signs would, broadly, be outside the ambit of
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the Bill. Speed limits would have to be subject to separate regulations laid before the House and would not flow from the Bill at all.
Mrs. Oppenheim: When the Minister is winding up the debate, perhaps he will say under which Act the new regulations would be made.
The other and main red herring is the EEC directive. I am very sorry that the hon. Member for Bolsover is not in the Chamber at present. In the draft directive which preceded the directive, and which appears much more sensitive to consumer needs than the Government, it is specifically provided that while certain items, which are not important, to which the Minister has referred, have to go metric by 1979, other items, including all those I have mentioned,
"which the United Kingdom and Ireland are unable to abolish in the immediate future because of administrative complications (for example, alteration of road signs giving distances in miles or for psychological reasons (use of the pint, etc.) need not be reviewed again at the end of 1979."
The draft directive said,
"In this field efficiency, which dictates that a uniform system should be adopted within the Community as soon as possible, should be coupled with the need not to cause too drastic an upheaval of deep-rooted habits and not to upset the economy of the customs of certain member States."
I cannot see why the Government could not take advantage of the provisions in the draft directive, which has now become a directive, in relation to the items I have specified and, at the same time, end uncertainty in the industries concerned, which would then know that metrication of these items could not start before 1980, after which a firm date would have been fixed. I again emphasise that this date should be fixed and announced not later than early next year, following consultation and voluntary agreement.
Of course, there are scores of anecdotes about metric muddles, some amusing and some irritating, but time will not allow me to deal with them at present. I am sure that hon. Members on both sides of the House will fill that void. However, the metric foot available in "do it yourself" shops, and the continuance of aircraft engine spares in imperial units are but two examples. I also object very

971
much to having my height put in my passport as one and a half metres. I shall remain firmly in my own mind, and on my passport for as long as I am able, as 5 ft. 2 ins.
I turn now to one of the most important aspects of our objections. I refer to the overall cost of conversion, particularly in present economic circumstances. No estimate of the full cost of conversion has ever been given, although a rough estimate could have been collected industry by industry. However much preparatory conversion may have been completed in some industries, the cost will be immense and will nearly all be passed on in price.
There is never a right time for this to happen, but there never could be a worse time than now or over the next couple of years. I will give just one example in one area where we can make an estimate. My hon. Friend the Member for Harrow, West (Mr. Page) will be interested in this. In an article in the Daily Telegraph on 9th October of this year an estimate was given that the cost of changing one letter—the number "3" —on road signs and relating to one speed only—the 30 miles per hour sign—in one county, was £20 a sign, or about £40,000 per county. On that basis, the cost of altering the signs throughout the country will be astronomical.
Yet we have received no reassurances from the Government that this will be delayed or that it need never take place. On 8th July—this is from Hansard, col. 666—the former Minister of Transport indicated that it was likely that the road signs for speed limits would change with the yard and the foot, so clearly the Government do not intend to exempt them.
Then what, for example, will it cost smaller shopkeepers to convert existing scales or to buy new ones? For many of them the expense will be the last straw. Although the Government have agreed to leave this sector to the last, presumably after 1980, no firm date has been given and the weighing scale industry is in great difficulty until the Government complete their consultations with it and announce the date.
Then there is the question of packaging costs due to conversion. Where new machinery is not already in existence, this
972
will have to be purchased over a period when there is bound to be a substantial increase in packaging costs, anyway.
It is against the background of all these difficulties and others that the Government have moved the Second Reading of a Bill which gives them virtually carte blanche to move to mandatory metrication as and when they want to. It is true that the Orders that will be laid imposing mandatory metrication and which the Government are empowered to lay under the Bill will be subject to the affirmative procedure.
Mr. Graham Page: Both my hon. Friend and the Minister have said that these Orders will be subject to the affirmative procedure. I can find that nowhere in the Bill.
Mrs. Oppenheim: The Minister referred to some of the Orders being subject to the affirmative resolution, as are the prescribed quantity Orders at present. Our experience so far, even with those which are subject to the affirmative resolution, is that we have been given one and a half hours after 10 o'clock at night in which to debate them and no opportunity whatsoever to oppose them. In most cases under the Bill there will be no opportunity, because we are told that the statutory consultations under the existing Weights and Measures Act have been so protracted that any further delay or rejection would result in severe damage to the industry. So there is no doubt that there will be very little or no parliamentary control over the imposition of mandatory metrication.
I would not give this Government a blank cheque on an overdrawn account, let alone on such an important issue. Even hon. Members opposite, who may have more faith in their Government than I have, must be alarmed at the lack of parliamentary accountability and control that will ensue. Of course the Government would like to get the legislation through so that they can proceed with stealth and at night to lay their mandatory metrication Orders at a speed which suits them politically.
It is true that provision has been made, which is welcome, to consult consumer groups before the relevant Orders. There are other minor provisions for consumer protection in the Bill which are in

973
themselves unexceptionable and potentially useful, but the overwhelming impression is that these measures for consumer protection have been thrown in as ballast to divert attention from the main purpose of the Bill.
No one, not even the most fervent advocate of metrication, can say that the change-over can occur without being traumatic. Yet the Government expect us to allow them to proceed with mandatory metrication in this way without either putting it to the country or having proper parliamentary control, and then they expect us not to oppose the Bill in some way.
Of course there are problems for the industries concerned which must be resolved without delay. Of course there are the problems of a whole generation of schoolchildren emerging from schools not unaware of imperial weights and measures but perhaps more familiar with metric weights and measures. Then there are the problems of harmonisation of prescribed quantities as required by the European Community.
I do not underestimate or belittle these problems. It would be unrealistic to do so. However, the problems and the repercussions for consumers will be greater. The cost for business and industry will be very significant. We are living through a period of grave economic crisis that will no doubt be prolonged. Falling living standards, hardship, further inflation, particularly in food prices, are now inescapable. Surely it cannot be right at such a time to proceed to impose widespread metrication upon the country with the burdens and the costs that will be involved, except where this is absolutely necessary and where it has been agreed on a voluntary basis.
Above all, it cannot be right to impose on those who have suffered, and who will continue over the next year to suffer, a great fall in living standards and who do not know how they are to keep their heads above water, the extra burden of coping with the metrication of basic foodstuffs.
Metrication is far more complicated than decimalisation. There are many more variables involved. Even in good times and with the most careful preparation and the best will in the world, confusion and higher prices cannot be
974
avoided. In present circumstances they may well prove to be insupportable. People worry about these things far more than perhaps Ministers or administrators realise. They loom large in the lives of many people and cause them a great deal of anguish, particularly people living alone and the elderly. Already, tragically, we read in the Daily Mail of 8th October of the first suicide over metrication.
This should not be a political issue because, as we have said all along and have made clear, the vote tonight cannot be a vote on the principle of metrication. However, we should be failing in our duty, most of all to the poor, the elderly and the disadvantaged, if we did not say to the Government that the speed and the scale of their metrication programme, as they have so far proposed it, is unacceptable. We should be failing in our duty, further, if we did not point out that the Government have done nothing to meet the justifiable complaints of industry and to seek to remove the uncertainty.
We should also be failing in our duty if we did not say that we do not and never have supported the concept of statutory metrication and that we cannot, even at this late stage, in the present economic circumstances allow the Government, under the unacceptably sweeping powers of the Bill, to proceed on what is still a largely uncharted course, at an unknown cost, at too fast a rate, to impose mandatory metrication on a largely unwilling country.
4.49 p.m.
Mr. Ioan Evans: When the first Bill came before the House I had strong reservations, which I expressed at the time. A number of my hon. Friends and myself were concerned about some of the implications of the measure.
I greatly deplore the opportunist line which has been taken by the official Opposition. The setting-up of the Metrication Board and a move towards metrication appeared at one time to have all-party support. One realises that there can be certain difficulties with numbers in the Lobbies in the evening. We have heard what the Opposition Front Bench says, but we shall have to wait to see whether Opposition Back Benchers will follow their Front Bench on this issue or will take what seems to be a different

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line from that taken in the past. It has been said of the Tories that they
"promise, pause, prepare and postpone—
And end up leaving things alone"
All we have heard from the hon. Lady the Member for Gloucester (Mrs. Oppenheim) is that she believes in metrication.
Mrs. Sally Oppenheim: I do not.
Mr. Evans: The hon. Lady does not? But the Tory Party believes in it, does it not? Does the hon. Lady say that her party is opposed to metrication?
Mrs. Sally Oppenheim: I am sure that the hon. Member does not wish to misrepresent what I said. I said that we no longer had an opportunity to take a decision on the principle of metrication. If we had that opportunity, I should be one of those against it.
Mr. Evans: The hon. Lady did not answer the question I put to her. Is she saying that her party is opposed to metrication? Presumably, the fact that she does not reply means that she herself disapproves of metrication, which is not the position taken by her party.
Sir John Hall: The hon. Member will recall that many of us on this side, as well as Members on his own side, have from time to time protested that we have never had an opportunity to debate this issue and come to a conclusion on whether we support the principle. I am sure that many hon. Members on both sides would have been opposed to the principle at the time and would certainly have voted against it.
Mr. Evans: All I say about that is that the Tories were in power from 1970 to 1974. If they were for four years denied the opportunity to discuss a major matter of this kind, that is a matter for their own party. The fact is that they took this country into the Common Market, and there are implications in the Treaty of Accession which lead us to move forward to the metric system.
I return now to my own position, since I had strong reservations about the earlier Bill and, with some of my hon. Friends, played a part in postponing it. I consider that the version of the Bill now before the House is an improvement on the earlier version and goes some way
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to meet the assurances which those of us concerned about this matter wanted. Our concern rested primarily on the question of consumer protection, and we felt that those assurances had to be given.
I asked my right hon. Friend to give us and the House the assurances that were asked for by the National Consumer Council. My hon. Friend the Minister of State, in a Written Answer on 4th August, replied in these terms:
"First, the Government accept that there is a danger that metrication might be thought to be responsible for higher prices and that it is important that consumer confidence be established in this respect."
He said, further, that the Government would be
"prepared to use their powers under the Prices Acts to freeze prices during changeover periods. The need to use these powers can be examined during the consultation procedure which is specifically required under the…Bill before individual Orders can be brought forward."
Thus, on the question of consumer protection, that safeguard has been provided by the Government.
My hon. Friend dealt also with the suggestion that there should be a Metrication Monitoring Unit, saying that
"the Government accept that it is important that queries and complaints by consumers are properly dealt with and monitored, and, against the background of the need for restraints on public expenditure and manpower, are examining ways and means of doing this. The possible rôle of voluntary consumer groups is also being considered."
The hon. Lady said that expense was involved. I thought she was arguing that the Opposition were not opposed to metrication in principle, although they were opposed to it now. But the longer we delay these things the more expensive they will become. Both sides of the House agreed to set up the Metrication Board to introduce metrication. If we do not proceed with introducing metrication, it will cost the country £1 million or thereabouts to maintain the board while it remains in existence. Therefore, that argument put by the hon. Lady falls.
Sir John Hall: The hon. Gentleman will know that time and again we on this side have tried to get from the Government at least an estimate of the cost to the country of introducing metrication. Has he any idea of that cost?
Mr. Evans: I can give no reliable figure. There will certainly be a cost,

977
but inflation has to be taken into account, as well as the way the new system is introduced. I can give the hon. Gentleman the view of the CBI. The CBI argues that the longer we delay the introduction of metrication the more expensive it will be for the country, because if we are to export, the question of imperial or metric weights and measures must be settled, and the sooner the world can reach an international standard of measurement the better it will be. I shall come back to that later.
Another matter which concerned us was the question of the availability of small packs for pensioners. The Government gave an assurance—this also comes from the Written Answer of 4th August—in these terms:
"Thirdly, whilst metrication in itself cannot solve the problem of increasing the availability of small packs for pensioners, I can give the assurance that all metrication orders have included and will continue to include provisions which make the sale of small packs legal".
That was a matter on which we had reservations, and those reservations have been met.
Finally, the Government accepted
"that metrication will provide an ideal opportunity to extend prescribed quantity legislation to goods and products not at present subject to such legislation."—[Official Report, 4th August 1976; Vol. 916, c. 832.]
Those were the main points regarding consumer protection which gave concern to many of us on this side, and they are now met. I remind the House that there was the National Consumer Council, set up by a previous Government but unfortunately abolished by a Conservative Government. That council, under the chairmanship of Dame Elizabeth Ackroyd, said at an earlier stage:
"The Consumer Council believes that conversion to the metric system will be of advantage to consumers."
Further, the Consumers Association wrote to the Government recently to say:
"We are pleased that you are taking enabling powers in the Weights and Measures Bill, and we hope these will make rapid progress through Parliament. Each month that now goes by without these powers, the greater the possibility of utter confusion as some members of the trade change to metric measure and others do not."
Many other organisations have expressed a similar view, and my hon.
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Friend mentioned some of them. They include the National Federation of Consumer Groups, the Housewives Trust, Age Concern—which looks at these matters primarily from the point of view of elderly people—the National Council of Women of Great Britain and the Consumer Standards Advisory Committee of the British Standards Institution, as well as many local consumer groups. All have said that they support this measure. I am sure that Opposition Members as well as I have received representations recently.
The hon. Lady said that she would refer to the CBI. She did not come round to that, and I am still waiting. I referred to the CBI during her speech and to the fact that the CBI supported this measure. I shall read her speech tomorrow, but. I did not hear her reference, although I was carefully listening for it.
Mr. Norman Lamont: I shall deal with that.
Mr. Evans: I now understand that the hon. Gentleman will refer to it. I have here a letter from the CBI. Perhaps the CBI no longer corresponds with the Opposition, so I had better tell them what the CBI says. [Interruption.] I hear an hon. Member opposite ask whom the CBI represents. My understanding is that the CBI represents a large part of British industry. We know that the TUC has said that, provided there is consumer protection, it will accent the Bill.
Here is what the CBI says:
"The decision in 1965 to go metric was made in response to the trend in the world at large towards adoption of the metric system. The trend accelerated sharply in the years following our decision; most recently the United States has legislated for the change and is planning to complete it within about seven years from the date of the Act, December 1975. The United Kingdom's decision was not dictated by our membership of the European Community".
This might meet some of our reservations. We are anxious not to be pulled along by the Common Market. The CBI says that it would have been necessary to do this even if we had remained outside. That is the argument of the CBI. Whether in or out of the Common Market, we should have had to do something about metrication.

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The letter continues:
"Our trade with the rest of the world demands that we proceed with the change; our competitiveness in all markets, including the home markets, demands that we derive all the potential benefits from the simpler, more efficient metric system."
That is from the CBI. It is coming to something when we on the Labour Benches have to quote not only the TUC but the CBI. The hon. Member for Gloucester (Mrs. Oppenheim) smiles—she is even laughing. We have reached a sorry state when the Tory Party appears to be out of step with most of the organisations in Britain.
The Retail Consortium expresses reservations about this proposal. If we are to implement machinery affecting the retail trade, we have to be careful. The Retail Consortium represents the Co-operative Union, the Multiple Shops Federation, the National Chamber of Trade, the Mail Order Traders Association, the Multiple Food and Drink Retailers Association, the Retail Alliance, the Retail Distributors Association and the Scottish Retail Federation.
The consortium states:
"The Retail Consortium welcomes the Government's commitment to introduce enabling powers for metrication, particularly on behalf of those sectors which have proceeded with metrication on a voluntary basis and which are at this time meeting continuing, not abating, consumer resistance and in some cases suffering a commercial disadvantage.
The Consortium also welcomes the Government's intention not to introduce a timetable of statutory cut-off dates but rather to provide for full consultation with the sectors of the trade in order to take account of their particular problems.
Special problems face the retail food trade dealing in catch-weight measurements. Thousands of weighing machines and scales would have to be converted at enormous cost to retailers and it is clear that certain sectors of the retail food trade would not metricate without statutory compulsion to do so, and indeed are asking the Government to obtain from the EEC a derogation until 1985 in respect of catch-weight sales."
Mrs. Sally Oppenheim: Can the hon. Gentleman tell the House whether he has similar testimonials from the housewives of this country or, if not from the housewives of the country, from those in his constituency?
Mr. Evans: I do not know whether the hon. Lady is presuming to speak for the
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housewives of the country. Earlier, I gave a long list of consumer organisations, from the National Consumer Council to the National Council of Women. I do not know whether Conservative women are represented anywhere. How are we to get to know what the housewives are thinking?
Mrs. Sally Oppenheim: The hon. Member should ask his constituents.
Mr. Evans: With the introduction of metrication, we have to be sure that we do not experience difficulties similar to those which arose when decimalisation was introduced. I am sure that the Government will take that into account. I know that Tory Members are elected to accept change. I do not believe in change for its own sake. I believe in changes being made to improve things. The whole world is moving in one direction—towards an international metric system.
We know from our school days that it was difficult to learn the imperial system of weights and measures.
Mr. John Page: Oh!
Mr. Evans: The hon. Member may not have had any difficulty, but would he not admit that the metric system is easier? If he did mathematics at school, he must realise that that is so. Although I shared the reservations of those who were against decimalisation, I now find it easier to think in terms of 100p to the pound than in terms of pounds, shillings and pence.
Mr. John Page indicated dissent.
Mr. Evans: The hon. Member shakes his head. There shakes the head of a diehard Tory.
Mr. John Page: It is a fact that many people who have to deal with change find it much more difficult to deal with lots of 50p pieces and with figures like 37p and 62p than they did when there were 12 pence to the shilling and 20 shillings to the pound. There is no shadow of doubt that the introduction of decimalisation explains the high sales of pocket calculators. It is also why the Prime Minister this afternoon is calling for better teaching of the three Rs.
Mr. Evans: I do not know whether a pocket calculator has been invented to

981
work in imperial units. If the hon. Member considers inches, feet, yards, furlongs, miles and the other units that we have, I feel sure he will agree that metrication is better.
I want to quote a little from a letter I have received from the National Farmers Union. We tend to take the position of the housewife—the consumers' position—on food matters. Sometimes we are accused of not paying due regard to the farmers. In this letter the National Farmers Union says:
"The programme for the change to the use of metric units in agriculture and horticulture was to be based on the farming year 1975–76. This decision was taken in 1972 "—
mark the year—
"after extensive consultation between the then Minister of Agriculture, Mr. James Prior—
the same right hon. Member who sits in the Shadow Cabinet today—
"and the three United Kingdom Farmers Unions and the Country Landowners Association."
We do not have all that many Socialists in the Country Landowners Association.
The NFU continues:
"The changeover is now well advanced and arrangements for conversion have already been made by the suppliers of fertilisers, agrochemicals, feedingstuffs, seeds, etc.…It is expected, therefore, that the transition will be largely completed by the end of 1976."
There are those of us who had reservations about the first Bill that was introduced. We believe that the Minister and the Department have gone a long way to meet our reservations. At this time of high inflation and economic difficulty, we do not want unduly to burden retail organisations and others. The rest of the world is now going metric. We must think in terms of a tremendous export drive and we must therefore gear our machinery to produce in metric units. I hope that Tory Members will join in supporting the idea of metrication and assist the Bill on its way.
5.9 p.m.
Mr. Graham Page: I am not sure whether the hon. Member for Aberdare (Mr. Evans) wants to hasten the change or whether he takes the view that we must not rush it through. He said both one thing and the other during the course of his speech. Nevertheless, I am sure he would agree, as must be agreed
982
on all sides, that the change from weights and measures in imperial measurements to those in metric will cause a great change in our daily lives, both in our homes and at work. Therefore, on behalf of the public, Parliament should take a very close interest in, and make a very close examination of, any legislation on this subject. We must examine not only the Bill, which is merely an enabling Bill to allow the Executive to put it into practical effect, but also any Executive implementation of the Bill.
I want to call attention to the powers that the Bill seeks to put in the hands of the Secretary of State to bring the metric system into operation without effective reference to Parliament and without any genuine assurance that the exercise of those powers will be debated in Parliament. That is one further step in the process of the erosion of the function of Parliament by the Executive. Many of us were greatly impressed by the Dimbleby Lecture by Lord Hailsham a few days ago, in which the noble Lord pointed out the way in which the powers of Parliament were being overridden by the Executive. Although the Bill is perhaps one small piece of legislation I think it is another example of that.
When one looks back at the 1963 Act one sees that any order to alter lawful measurements under that Act had to be made by means of bringing a draft before this House, and by the Government seeking an affirmative resolution on that draft.
The 1963 Act made that provision about orders concerning transactions in particular goods; about orders relating to statements of quantities of goods, making the quantity known by weighing the goods, and so on. That Act even made an affirmative resolution necessary in the case of fees for testing standards, and equipment.
In the course of his opening speech the Minister said that orders which were to be made by the Secretary of State under the Bill would be subject to affirmative resolution. There are certain matters which will remain subject to affirmative resolution under the 1963 Act, but there are some substantial alterations in that Act which make orders subject only to the negative procedure, that is, subject to annulment by Prayer in this House.

983
I refer to Clause 1(1) of the Bill, which empowers the Secretary of State to amend, by order, Schedule 1 of the 1963 Act. That is to say, he can remove all the imperial measurements if he chooses. He can state what is lawful and what is not lawful and thereby create an offence for using unlawful measurements. But that order will in future be subject only to the annulment procedure in this House. Schedule 1 of the 1963 Act could not he altered by order, but it can now be altered by an order which would be subject only to annulment.
We all know the great difficulty in getting a Prayer against an order debated in this House. Time and time again when a Prayer goes down on the Order Paper it remains there, and further and further names are added to it, but never is it given time for debate. I say "never"; if one is lucky one may get a debate upstairs instead of on the Floor of this House. We have now reached the stage at which the Executive can persuade a Minister to provide in a Bill that orders can be made by the negative procedure, knowing perfectly well that that is an absolute power to legislate.
Mr. John Fraser: The right hon. Gentleman is making a rather sweeping speech. I ought to explain that Schedule 1 of the 1963 Act will in future only be a matter of record. The two schedules that are added to the Bill preserve a list of weights and measures for use, and these will be subject to all the present protections under the 1963 Act.
Mr. Page: I am not sure whether the Minister is not misleading himself. If he turns to page 2 of the Bill, he will see that a new Part VA is added to Schedule 1. The heading of that Part VA refers to
"Definitions of units which may not be used for trade".
That will be in Schedule 1, which may be altered by order, so that the Minister can add any number by an order subject only to annulment. He can alter by addition as well as by subtraction. I do not think he will ever be advised to use any other form of order. The Minister talked about the prescribed quantities order, but I do not think he will ever need to use that in future. He will
984
merely need to use an order under Clause 1. At any rate, he has got complete power to do that.
Clause 2 adds a Section 9A to the 1963 Act, and that section will not be subject to the affirmative resolution under that Act. It will be subject only to an order under this Bill. Under Section 9A
"The Secretary of State may from time to time by order amend Schedule 1A or 3 to this Act".
Schedule 1 of the Bill adds Schedule 1A to the 1963 Act which again is headed
"Units of Measurement Lawful for Use for Trade".
Here again, he can alter the units of measurement lawful for use for trade by an order subject only to the negative procedure of this House.
On page 3 a new Section 9B is added to the 1963 Act, which says that the Secretary of State may make regulations requiring or authorising a person to afford information giving equivalents, and so on. That is very important to the housewife, who will need to be informed, by advertisement, placard or poster in the shops, when she is buying her goods by the new measurements. The whole of that requirement for exhibiting that sort of information in the shops will be made by an order, which it is very doubtful will ever come before this House for debate.
The Department's draftsmen may be very fine draftsmen, but they are not always right. It is not the Parliamentary Draftsmen who draft orders; it is the Department's draftsmen, and they do not always know better than hon. Members. We are entitled to debate that sort of order.
One then passes to Clause 6, which states that the Secretary of State may by regulation prescribe the fees, again with no affirmative resolution before the House.
An extremely important clause is Clause 8, which deals with
"Shortages of food and other goods".
These are emergency orders, which will have a considerable effect on the housewife and on the public in general. They are orders which ought to come before this House for debate even if they are

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emergency orders. They are orders which the Secretary of State should make by a form of order which remains in operation for, say, only 28 days unless it receives the affirmative resolution of this House. That is the type of order that should apply to these emergencies concerned with shortages of food.
But Clause 9(4) states that
"An order under section 8 of this Act, except an order which extends to Northern Ireland only,"—
I do not know why Northern Ireland should be so exempt—
"shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament"
That is the negative procedure. It is true that Clause 9 states that the Minister must consult certain people; indeed, in his speech the Minister made a great point of the fact that there would be consultation. We know that everybody is consulted except Members of Parliament. Time and time again, Ministers come before the House and say, "We have sent out consultative documents to the town clerks, the CBI, the NFU" or whoever it may be, and an hon. Member is terribly embarrassed when someone presents a consultative document to him and asks, "What do you think about this?", when he has never seen it. It may well be that it has never been put before Members of Parliament—although everyone else has been consulted—until the order, drawn up and unamendable, has come before the House. That is treating Parliament with contempt, especially when it is dealing with matters as important as those contained in this Bill. I ask the Minister to reconsider his thinking on the Bill. It can be amended in Committee. At that stage we can provide for the right kind of orders.
When presenting the Bill the Minister argued that the principle of the change from imperial to metric has been accepted. As we have heard from interventions, that itself is contentious. For one thing, it has never been debated in the House. However, assuming that the principle is accepted, that does not give the Government any right to carry out the practical aspects of the change without proper reference to Parliament.
5.21 p.m.
Mr. Stanley Newens: We frequently hear criticism of the weight
986
of legislation that is caused by the large number of Bills passed through the House. I support most of the Bills that are attacked, but I believe that we could well do without this one.
The proposal to phase out imperial weights and measures has been argued on a number of grounds. We have been told that it is necessary to standardise our weights and measures in line with other countries. We are told that it is necessary to avoid having two legal and parallel systems of weights and measures. We are informed that our children have been educated in metric units. We are told of the ease of working out calculations in tens.
I agree that those arguments have considerable strength, but I am still unhappy about the proposed changeover. Surely there are other arguments that could be considered more seriously. The simplification that it is alleged will be brought about as a result of metrication may well be true for the younger generation, but apart from younger people metrication will make things more difficult. People will tend to think in imperial units, in some respects, for the rest of their lives. Many people never change habits of a lifetime in quite simple matters, and they will not change them in this respect.
The interests of the consumer mean that people should know what they are buying and what they are doing. Many people will spend the rest of their lives in a complete fog about what they are doing following metrication. They will be unable to detect whether they are getting full value for money.
I accept that the Bill is by no means as bad as that which was previously proposed, but it does not meet all the objections advanced by opponents such as myself. The major objection is that despite all the thought that has been given by the Consumers Association and other bodies which have expressed an oponion, the cost of the changeover will be astronomical. It is inevitable that prices will be rounded up. We cannot expect manufacturers and distributors to cut the price per unit when the change takes place. Rounding up occurred with decimalisation and I am sure that it will take place once again. When rounding up is permitted, many people will be tempted to

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put on a little extra in addition. Above all, it will be extremely difficult for the ordinary shopper to tell whether advantage has been taken of the opportunity afforded by the changeover.
Costs will be pushed up because of the need to install new equipment and new machinery. There will be the need to provide new notices. The changeover will not apply only to the replacement of scales and measures; a great variety of equipment in industry and distribution will have to be changed completely. It will not be merely a question of changing the petrol pumps; a tremendous variety of other forms of measuring will have to be changed.
Mr. John Fraser: Does my hon. Friend realise that many petrol pumps are manufactured metric and that there is the cost of converting them back to imperial?
Mr. Newens: I realise that that is a problem. However, I think that my hon. Friend knows that there will be a serious conversion problem should the price of petrol exceed £1 per gallon in due course. There will be a serious problem in that respect if we change to metrication. I cannot believe that we should countenance a considerable outlay of funds for the purpose of metrication at a time when everyone recognises that we need much more investment in new equipment for productive purposes and when many people are calling for cuts in expenditure.
The Opposition have talked about a smooth transition. Let it be remembered that following the changeover many people will still have equipment, including many items of household equipment, built in imperial measures. The replacement of parts and components will be required over a considerable period. Presumably, imperial measurements will not be available after a period if we change to metrication components. The cost will be enormous.
Mr. John Fraser indicated dissent.
Mr. Newens: I see that my hon. Friend is shaking his head. We must appreciate that many employers will say that it will
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be impossible to manufacture according to dual sets of measurements. In those circumstances, replacement units will not be available and the scrapping of large items of machinery will become unnecessary.
The Bill provides in Clause 2 that it will be an offence to use any weight or measure for trade that is not in the schedule. That would be a quite outrageous power for the House to grant. Many people will continue to use the old measurements for all purposes long after the Bill is passed and long after the whole question of metrication is finally settled. I understand that in France some measurements that were in use before the French Revolution are still in use, despite the fact that they should have been discontinued nearly 200 years ago.
It seems that the Conservative Party is seeking to have the best of both worlds. It is posing as the champion of the consumer by tabling the amendment, but the hon. Member for Gloucester (Mrs. Oppenheim) has said that she accepts the principle of metrication.
Mrs. Sally Oppenheim indicated dissent.
Mr. Newens: I hope that the hon. Lady will clarify the situation. Do the Opposition accept or reject the principle of metrication?
Mr. Ioan Evans: The amendment is quite specific. It states
"That this House, while recognising the necessity of an orderly change over to metrication".
That is an acceptance. The Opposition are accepting that metrication is to come.
Mr. Newens: I agree entirely with my hon. Friend. Clearly the Opposition are trying to have it both ways. They are accepting the principle of metrication but endeavouring to make political capital out of the stance adopted through the amendment. if they are opposed in principle to metrication, instead of introducing an amendment they should vote against the Bill's Second Reading. If the hon. Member for Gloucester is serious, she will known very well that many hon. Members sitting on the Opposition back benches would be extremely unhappy if

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the amendment were carried, or if metrication were not accepted. It is hypocritical of the Opposition to take up these two positions. They should come down one way or the other. I am totally dissatisfied with their stance.
Mr. Graham Page: Does the hon. Gentleman intend to divide the House against the Bill?
Mr. Newens: As I cannot support the Bill, it would be totally wrong for me to go into the Lobby in support of my hon. Friend. I recognise that he has tried to make the best of a bad job, but the powers granted by the Bill are unnecessary and could well be used by another Minister in a different way from that in which my hon. Friend intends that they should be used. If another Minister decided that all the road signs should be changed from miles to kilometres I understand that it would be possible for that step to be taken under the terms of the Bill. In those circumstances, I cannot support it.
At the same time, my position is different from that of the Opposition. I am not happy with the Opposition's amendment. I am opposed in principle to what is proposed, and in those circumstances I shall take the only step available to me and abstain.
5.32 p.m.
Mr. Michael Neubert: As with fluoridation of the nation's water supply, metrication will prove highly unpalatable to most people if it is thrust at full speed down their gullets. The Minister should not delude himself that the proposal has the support or backing of a great number of people, except through the lack of an escape route by any alternative.
Although I have not for long been a Member of the House, I understand that the principle of metrication has never been the subject of a vote in the House. Therefore, the verdict is unknown. No more did the British people express themselves in favour of large-scale immigration. We now have a multi-racial society, for better or for worse. Some people think that multi-racialism is a good in itself, but there was no opportunity until far too late for the British people to express an opinion one way or the other.
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If we are to have a metrical multiracial society, let Ministers beware of claiming that it is on behalf of, and at the behest of, the consumer. There is no doubt in my mind that, had the principle been put to the people 11 years ago—I declare at once that the fact that the Secretary of State for Energy was instrumental in setting up the Metrication Board is not an argument in its favour—they might have expressed themselves clearly on that subject, but that question was not put.
Nor should the Minister think that consumer organisations are an adequate substitute for public opinion at large. I sometimes think that those organisations are as representative of the people they endeavour to serve as people sometimes think Members of Parliament are of their electorate. It is a matter of debate whether their views, even following the horse-trading that has gone on behind the scenes since the previous Bill was introduced, are necessarily those of the British housewife in every respect.
Another warning I give to the Minister is to avoid going round saying "Metrication is good for you". We have been through that with decimalisation. We were told that it would be much easier for school children and people in trade and industry and every walk of life if our method of calculation were in units of 10. When we finally achieved decimal currency, it was decimal fractions combined with the vulgar fraction of a halfpenny, which made it much more difficult in some respects for retailers and others than it had been under the old system. That vulgar halfpenny remains as a simple—and permanent, one hopes—reminder of the stupidity of prevaricating politicians.
So it is with metrication. We are told that it is a vastly simpler system. It has no basis in the world around us. Whereas the foot and the inch have some relevance to the human body and people's experience, the metre has none: it is purely arbitrary. It was originally intended to be a ten-millionth part of the are of the meridian from the North Pole to the Equator. Now it is an abscure measurement based on the krypton-86 atom, which we are told may eventually be measured in terms of the speed of light. These calculations may be fine in their place but they do not have much relevance to people's everyday lives.

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Although the metric system may have some advantages, it seems to be arbitrary, in the way in which the system it supersedes is arbitrary. Let us have none of that claptrap in the argument on metrication. Although it may prove to be simpler in some respects, it has no anthropometric or natural justification. It is an arbitrary measurement. A better argument would be to say that metrication is the first step to world Government and that we were standardising measurements worldwide. That might be more acceptable to the British people than the spurious arguments that are put forward on these occasions.
It is Conservative and Labour Governments which have not challenged the principle of metrication, not the British people. We may end with a system which is forced upon us, which has come upon us gradually over 11 years and longer and which will continue, but there is no justification in the people's mind for having metrication compulsorily forced upon them by the Bill or by Government intervention.
If there were a commercial advantage in metrication, the interested parties in commerce and industry would have been able to overcome the obstacles and come together to their joint advantage, but they need the Government's help. Whether they need the help of the Bill is what we are debating. As the hon. Member for Harlow (Mr. Newens) said, we should perhaps be voting upon the principle tonight, but the point has passed at which the principle can be voted upon.
As a nation we are amongst the exclusive band of countries that are not yet committed to metrication or are about to be committed. Having heard from the Chancellor of the Exchequer only last week that we are now in the second division of the economic nations of the world, I should not like Britain to be relegated to the league containing countries like Liberia and Borneo. That would not be a suitable ending to our great Imperial past, or a suitable destiny.
I accept that we may be past the point at which we can withstand the onward development of metrication as a system of measurement, but we do not need to press the issue to the point where we have the Bill. Although the Minister disputed practically every part of the
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amendment, he was not prepared to dispute the claim that we are still suffering continuing inflation and a state of economic crisis. I was glad to hear that, because that view is not shared by his colleagues in the Department. Less than a fortnight ago the new Secretary of State in a speech on economic affairs said that "signs of success abound". If these "signs of success" are so abundant, they must be very skilfully camouflaged. If they are in such great number and so difficult to see, people must be worried about bumping into them in the dark. I share the view with millions of others that there is still a state of serious economic crisis.
The Minister had to acknowledge that, since the Labour Government came to power, there had been an increase in prices of 55·9 per cent. He may well find, after he has been in office a few months, that the price he has paid for his seat at the Cabinet table is, like all prices under a Labour Government, likely to be far too high. Likewise, the Under-Secretary of State has said that we have reached a plateau in inflation. After coming down for 11 successive months, inflation has now risen for two successive months and is likely to rise again. The Under-Secretary seems to have discovered a phenomenon previously unknown to geology—an undulating plateau.
It is fair to say that we are in a state of considerable economic danger and it is not the time to bring forward such a measure, not only because of the inevitable cost—and such costs will properly and inevitably be translated into prices, at a time when they are rising too fast by far—but also, as we saw with decimalisation, the opportunity will be taken, whether consciously or not, for the myth merchants to claim that further increases in prices are due to metrication.
I do not believe that the changeover to decimal currency was responsible for the large-scale increases in prices. Every time we find ourselves a scapegoat to explain continuing high inflation, we do ourselves a disservice; because we conceal from ourselves the real reasons for our economic plight. Metrication gives yet another opportunity for politicians to fail to see the writing on the wall, for the public to be given yet another scapegoat. We saw the Minister's extreme Left colleagues last week preparing another

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scapegoat in the shape of the relaxation of the Price Code. Metrication will be another smokescreen to cover the Government's failure to control inflation.
Already we have seen what damage can be done. The Minister has said in response to opposition to the Bill, that he will meet the transitional problems by a price freeze. It is not right for Ministers, from the Prime Minister down, to claim that industry should be allowed to put up prices in the interests of improved profitability, increased investment and jobs if they then come forward with such damaging, interventionist price-freeze policies, even for a period of six months at a time.
It is significant and depressing that the first action of the new Secretary of State was to intervene over the profits made by television rental companies. If we have reached the stage where it is distasteful, and an offence against public opinion, for a company to make a 16 per cent. return on its capital at a time when the minimum lending rate is up to 15 per cent., what hope has this nation of achieving economic prosperity again? For those reasons, I shall have no hesitation in supporting the amendment.
5.44 p.m.
Mr. Tim Sainsbury: I declare an interest as a director and substantial shareholder in a retail concern.
It is surprising that I should have the unusual opportunity of following one of my hon. Friends. It is indicative of the interest in this matter, which is of great concern to industry and agriculture and, in particular, to the consumer, that so few representatives of the minority and Government parties wish to contribute to this short but important debate.
I hope that I am not misinterpreting the tone of my hon. Friend the Member for Romford (Mr. Neubert) if I say that he sounded unkeen on the metric system. I am glad to know from the wording of the amendment and what has been said from my own Front Bench that whether a change should take place is not in dispute. That is lucky because there is no doubt that we live in a metric world. So far as I am aware, people clap in cricket when one reaches 100 runs and not when one reaches 120 or 160.
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We live in a metric world, because the vast majority of countries have always used the metric system or are rapidly going metric. We live in a metric world, as many are aware who, like me, are embarking for the fourth time on the problem encountered by children of learning tables. The ten times table is easier to learn by heart than the others. We are also a trading and a travelling nation and therefore, whatever system of measurement we decide to use, we shall still have to understand and use the metric system.
There is no question but that we should go metric. The question we must debate is how fast we should go metric, and what the rôle of the Government should be, if any, in the changeover.
There are a number of arguments which are relevant to the discussion. The education argument has been touched upon. I attach considerable importance to the fact that large numbers of children are going through our education system primarily learning metric. In my constituency, as nationally, all teaching and all examinations, with the exception of geography, have for some years been based upon the metric system. As long ago as November 1969 a report on mathematics in my constituency revealed that for some time new equipment had been purchased with metrication in mind.
We are a long way down the road in education, but we cannot reap the full benefits until we complete the changeover, because the school leaver will find himself in a partly imperial world. On the sports field one no longer talks of 100 yards. It is several years since anyone has been able to beat the 100-yards record, because the measurement is now 100 metres. When children leave school they find that imperial measures still exist, so we cannot entirely abandon the imperial system. We shall not achieve the real advantage of metrication in education until we have completed the changeover and children can be taught the simple and logical system.
The argument in favour of metrication in industry is even stronger. The CBI has made its attitude clear. It wants the changeover to be completed as rapidly as possible and points out that delays in metrication are harmful to our export performance in the present difficult and

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dangerous circumstances. The trend towards metrication is important to countries like Britain which produce manufactured goods for export—Britain exports about 72 per cent. of its manufactured goods. Details of dimensions, performance, components and fittings can be described by the purchasers of the goods in metric dimensions. That is why it is difficult to live in a dual-measure world and why any delay will be harmful to exporters.
We have correctly concentrated most of our arguments on consumers and on how metrication will affect consumers in their daily and weekly shopping. It is helpful if we can consider this in a logical rather than perhaps emotional way.
Metrication is a curiously logical system of measurement. When we look at the facts, what we find is contrary to the illusion, which continues to be put about by some hon. Members—the hon. Member for Harlow (Mr. Newens) has just repeated it—that decimalisation led to an increase in prices. Earlier this year, I asked the former Secretary of State for Prices and Consumer Protection whether she had any evidence that decimalisation had contributed to increased prices. She replied:
"The Decimal Currency Board in its Final Report—September 1971—expressed the view that the changeover had not put up prices. I have seen no evidence since that demonstrates that this conclusion was mistaken."—[Official Report, 3rd May 1976; Vol. 910, c. 274.]
Similarly, a letter by the Deputy Director of the Consumers Association to The Times on 29th March, said:
"Among the arguments used to delay metrication is the one which says that metrication will contribute to inflation because shopkeepers will round prices up whenever they can, as they did with decimalisation.
Which? carried out a survey at the time of decimalisation to find out whether or not shopkeepers were using it as an opportunity to put up prices.
We found that they were not doing so."
There is no factual evidence that decimalisation was used by shopkeepers to put up prices. There is every evidence, from the competition that exists in the high streets, that they did not do so. It is exactly the same in the case of metrication. We only contribute to the doubts the housewives might have if we continue to lend credence to the suggestion that decimalisation was a contributory factor in putting up prices.
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I say to hon. Members opposite that if retailers had cheated and put up prices on decimalisation, the great co-operative movement was part and parcel of the cheating, because its prices moved in line with other prices at the time. That might be some reassurance to hon. Members.
I believe that metrication will be a help to consumers. It is an easier system to use, and because it is easier to use many weighing and calculating machines and cash registers in use in shops and industry will be simpler when they have to concern themselves only with metrication. Perhaps the most important factor of all is that it will be much easier to compare prices.
We have heard a certain amount about price comparison, and about prescribed weights. I have no doubt that when we have completed the changeover to a logical system, and we have both decimal currency and metric weights, price comparison will be considerably easier. The move to prescribed quantities, which must be in the housewives' interest, will, if in metric measurement, make comparison of prices that much easier.
We have to decide, as we make the move, whether we are to move to prescribed quantities that are metric or to prescribed quantities that are imperial. Given that in due course we are to go metric, the logical thing is to move to prescribed quantities which are metric, which, fortunately, is what is happening. If the housewife is still looking not at metric weights but at imperial weights, she will lose the opportunity to snake that comparison of prices.
I have here an interesting comparison of the weights in which various lines of biscuit are sold in seven leading retailing groups—I think that I can say that they are leading groups, since they include a group of which I am a director. Digestive biscuits are a popular purchase, and we find that no fewer than seven standard quantities are sold by these seven major stores. Surely it is in the housewives' interest that there should be prescribed quantities for the sale of digestive biscuits, as for other commodities, so that she should be able to compare prices not only in one store but between stores. There is no doubt in my mind that the present situation is confusing, particularly to housewives and school leavers.

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If there are so many advantages, one may ask why it is necessary for there to be any Government action at all. Why should the trade not change over by itself? It is a relevant question, and there are two answers. The first of them we have already heard in the debate. As long as people go round suggesting that prices will rise because of metrication, there will be a reluctance by any retailer to be seen to be selling his goods in metric weights and quantities before everybody else changes over. It is as simple as that. There will be a fear, a misunderstanding, about the likely consequences.
Secondly, there will be some problems for consumers at the time of the changeover. We do not have to reflect very much to realise how much greater these problems will be if different stores change over on different commodities at different times. A housewife going into a store will not know whether she will encounter imperial or metric measurements. Such a situation will lead to more confusion. It is essential, therefore, that after full consultation, but as soon as possible, the Government should lay down timetables and should guide and lead the trade in making the changeover in a way that will cause the least inconvenience to the customer.
Too often we seem to be unable to bring ourselves to take the measures that will initially cause small problems but will bring about in the long term much more substantial and long-lasting benefits. An example is overmanning. There, not only among unions but sometimes among management, there is reluctance to make changes which in the long run will increase efficiency and competitiveness and enable jobs to be created and export orders to be won. That reluctance arises because a few jobs may be lost initially.
Another example is reducing Government expenditure to a level that we can afford. Government expenditure is not necessarily excessive of itself but it is excessive in relation to what we can afford. But it is the same argument. Because jobs might be lost in the short term, no action is taken and the country bleeds to death. Metrication is not such a great issue as that, but we still have to take positive action in order to obtain its long-lasting benefit.
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We must recognise that initially there will be some problems in adapting to a new but better system of measurement, but I have no doubt that we should make the change to the metric system. Such a change will benefit schoolchildren, be of great assistance to industry and in due course help the consumers. To avoid confusion and increased costs we should now complete the changeover as quickly as possible. Unless we have this Bill the changeover will not be carried out as rapidly as possible, and therefore I support it.
5.58 p.m.
Mr. Giles Shaw: I am delighted to follow my hon. Friend the Member for Hove (Mr. Sainsbury). I have a modest interest in the food industry, but it is not nearly as substantial as his, for which I am profoundly ungrateful, if that is the word.
It is obvious from the debate so far that there is a love-hate relationship in the mind probably of every hon. Member when discussing the question of metrication. It is easy for us to find the arguments against it satisfying. It is the type of issue in which the arguments against tend to be emotional and historical, dealing with the way in which consumers think and with the attitudes that we have been brought up to believe are right, and to be seen to be seeking to change those ideas, and to be doing so by legislation, is anathema to many hon. Members.
As my hon. Friend the Member for Gloucester (Mrs. Oppenheim) has said, the time has passed when the principle of metrication can be a matter for full and free debate and decision amongst us. As we are being asked to declare ourselves tonight, I say at the outset that I am among those who are in favour firmly of the principle of metrication, but the method by which the Government seek to introduce it is a legitimate question for examination.
I apologise to the Minister for missing the first few minutes of his speech, due to my train having run in a metric manner. But I confess to him that I did not feel assured by what he said concerning the timetable. As I recall the Government's commitment, it was that they would, through consultation and discussion, arrive at a point at which they could come before the House with a Bill which was not only an enabling measure

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—which has to be the case—but which would make some very important proposals as to timetable.
As my hon. Friend the Member for Hove said, industry has taken the problem of metrication, broadly speaking, on its own chin or back—depending on one's point of view—throughout the various hazards of economic fortune under Governments of both colours. Industry has now reached a point at which it is clearly desperate for some kind of lead in relation to what it should be planning to do.
In looking at the proposals before us and in listening to the Minister, it appears to me that there is still a very large void concerning exactly how the Government would seek to implement the measure. To talk, as the Minister did towards the end of his speech, of probably having pre-packed foods first on the list and "weigh out" foods towards the end of the list, seems to me a very poor answer, at a time when industry needs guidance and a certain sense of decisiveness, having gone as far as it can already in a voluntary way. I hope that the Minister, in winding up, will be a little more forthcoming on this aspect.
As my hon. Friend the Member for Hove pointed out, retailers cannot be expected to introduce metric ranges of products while at the same time others are using the imperial system. The confusion to the housewife would be greater, and the trading confusion and competitive position between one retailer and another would equally be distorted.
We know that there have to be soundings up and down if we wish to have a package marketed to the nearest metric weight; and, if this rounding up involves an increased price, there will be a false comparison made by the shopper. It is this falsification of what really goes on in shops that my hon. Friend the Member for Hove is rightly seeking to avoid.
We have legitimately drawn attention in the amendment to inadequacies within the Bill as proposed. Obviously, one has to take the argument about consumer protection extremely seriously. We welcome everything that can be done to monitor the change-over. But, like my hon. Friend the Member for Hove, I am equally aware that the loose talk about profiteering taking place when
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changes of measurement or of price are made, is anything but useful if we want to see an orderly transfer. Nobody seeks to make the first move or to implement the decision on the given day.
I hope that the Government will go a little further in organising "M" days for various groups within industry, as well as having an orderly plan, so that, for example, by a certain date the food industry will have to be metric, by a certain date the clothing industry, and so on. If it were to be introduced in a piece-meal manner, I suspect that it would have least disadvantage to the consumer, and allow various industries to proceed with their planning in an orderly manner. This applies also to the industries concerned with providing metric measurement machinery. I have in mind the weighing scales manufacturers in particular.
The question of consumer protection seems to be cardinal to the whole discussion. One of the problems in holding the debate at this time is that there is still a very large gap in the public mind as to what metrication is about, and the public are very ill-prepared for its reception. This must be a criticism of what the Metrication Board has done, but when I compare the amounts of money spent in various directions, I find that the Board has spent £1·5 million over seven years, whereas the Government have spent nearly £1 million in a six months period to prosecute the Price Check Scheme—a total waste of public money and a major piece of public abuse.
Mr. Roger Moate: Recently I had an answer from the Minister saying that the total expenditure of the Board had been in the order of £4·5 million.
Mr. Shaw: My hon. Friend the Member for Faversham (Mr. Moate) might have indicated over what period of time the £4·5 million was spent. I think that it was over the six or seven years of its life. The comparison still holds—£4·5 million over seven years and £900,000 over six months. We cannot be surprised if the public are blissfully unaware of the scheme.
It is vital that in the preparation for the change-over—if there is to be an orderly progression, as we seek in the

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amendment to ensure—the Government recognise that larger sums will need to be spent on promotion. It must be recognised that this is necessary if the public are to be made aware of how metrication will affect products with which they are familiar. I hope that the Government will show a little more courage in prosecuting their intention, even if they find the principle somewhat difficult to sell on both sides of the House.
There are some rather elliptic expressions in Clause 4, which has had substantial amendment in another place. The clause still seems to me to be starting to interfere with the way in which products can be packaged and marketed. I recognise the consumer protection aspect in relation to the impression of quantity that is given, but I hope that the Minister will recognise the great difficulty of ensuring full competition in the sale and presentation of goods without having legislation which interferes with this by discussing the contents by percentage of total capacity. That is going a little too far, in my opinion, in interfering in the marketing process.
I remind the Minister also of the problems that could arise in the Restrictive Practices Court when it comes to getting industries to discuss together the best way of metricating and packaging goods. If the Minister, through the clause, is asking people to start designing packages which are of broadly comparable appearance and content, with precisely similar amounts of product, he is verging very closely upon the territory of collusion in regard to restrictive practices.
I welcome the principle of the Bill, but I think that the amendment is a fair one to table. The ground has certainly been inadequately prepared. Inadequate effort has been devoted to the promotion of the idea of metrication.
6.7 p.m.
Mr. Roger Moate: My hon. Friend the Member for Pudsey (Mr. Shaw) concluded by commending the amendment, as I do, and it is a tribute to the skill of my hon. Friend and those who drafted the amendment that they have done it in such a way as to command the support and enthusiasm of my hon. Friend the Member for Hove (Mr. Sainsbury) and the support—which has been described as unkeen—of my hon.
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Friend the Member for Romford (Mr. Neubert).
I have no wish to delay a vote, after having waited for one for some 10 years. The sooner we arrive at a vote, the better. It seems to me, however, that whatever our views might have been in the past, whether for or against metrication as such, that is no longer the argument. The argument is now about metrication versus total and mandatory metrication—or, to put it another way, it is between the whole-hoggers and the middle-of-the-roaders. I think that the amendment should attract the support of the British people, and of both sides of the House, in indicating the middle of the road as the best way forward.
Other hon. Members have expressed dissatisfaction with the wording of the amendment, but I stress that it neither rejects nor accepts the principle of total metrication. It recognises the need for
"an orderly change over to metrication where this is essential for commercial reasons".
This is the fundamental point. Where it is "essential for commercial reasons", I suspect that the commercial organisations concerned will be able to make that change-over in the manner most suited to them.
Furthermore, the amendment declines to give a Second Reading to the Bill. That should satisfy any hon. Member who feels opposed to metrication. But apparently the hon. Member for Harlow (Mr. Newens), who spoke earlier, only felt able to abstain. In view of the fact that he complained so bitterly about the principle, I feel that that was chickenhearted to say the least.
The other important part of the amendment which I urge the House to take on board is the concluding words, which say that the Bill takes powers to phase out certain imperial measures beyond the requirement of the European Community directive. The Bill takes us further than we need to go to fulfil our Community obligations. It goes further than the obligations which we thought we had accepted, apparently, in the earlier negotiations on Common Market membership. This latest directive has changed the situation. It has allowed us a way out of a situation in which we should never have been put. This is of fundamental importance, and it allows us to follow that middle-of-the-road course in the future.

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I turn to the directive. I emphasise its importance. In Chapter D there is a schedule of units, names and symbols which are to be reviewed by 31st December 1979. But the obligation is only to review them. Thereafter, they can be make illegal only by the unanimous agreement of the Council of Ministers, and if the British Government at that time say that they wish to retain in force these imperial units they will remain the law of the land.
We have this way forward, so I do not think that the British people should be deceived about the opportunities which exist for the future. Chapter D "permits" until 1979 and thereafter, if we wish, the continued use of the inch, the foot, the mile, the acre, the pint, the quart, the gallon and the pound—a whole range of familiar units and measures which can remain lawful after 1979 if we wish—
Mr. Sainsbury: Can my hon. Friend say how many square yards there are in an acre, if these units are so familiar?
Mr. Moate: I am more familiar with the acre than with the number of square feet, but I am less familiar with metric units, so I am not sure whether my hon. Friend's point is a valid one.
The question remains, however. We have that right, Therefore, the amendment expresses quite properly that the Bill is taking more powers than are necessary, and I suggest that it deserves the support of the House.
In expressing my own dislike of metrication, although I accept that we have gone so far that it is now impossible to argue the principle of metrication, and in opposing compulsory metrication, I am as much expressing my dislike of the arrogance of the Executive over the years. In saying that, I do not mean simply the present Government, because at least we have a Bill and the opportunity for a vote. When we think back over the history of this proposition, I feel that Parliament has failed the people and that this does disservice not only to Parliament but also to those who want metrication.
If, under the last Conservative Government, a vote had been taken on the White Paper, I suspect that the Govern-
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ment would probably have got a go-ahead for metrication in principle. But they never did that. They never called for a vote. They always dodged it, as did the previous Government. Because they dodged it, the British people have always suspected what Governments have denied all the time: that metrication was being imposed on them by stealth. They resent it the more because of that, and they will resist its implementation because of that. Even when listening to the Minister tonight, no one would have believed that at last we should be coming to a decision on metrication. The hon. Gentleman was desperate to prove that this was not a metrication Bill. He said that it was an enabling Bill which gave powers and that perhaps one day we might do it.
Let us be honest and clear about the present situation. Let us be bold about it. The stealth has continued. It still continues. When we think back to the original decision to go metric being introduced by a Written Answer, of the setting up of the Metrication Board again introduced by a Written Answer, of the White Paper which was never voted upon and of another Adjournment debate on which there was no vote, even someone who believes in metrication must feel that this is a record of which we should be ashamed.
Perhaps I might quote some words of A. J. P. Taylor, whose views might not always command universal support. However, his words sum up what I believe. He wrote in the Sunday Express on 15th February:
"Metrication is yet another product of those superior people who claim to know what is good for us and that they can run our lives better than we can ourselves. We were never consulted about metrication. We were never openly informed of what was happening until it was too late. Parliament proved useless as the protector of ordinary people. It swallowed the verdict of the 'experts' without complaint."
In my view, that is a feeling which has been generated by our failure to take a clear parliamentary decision, certainly before 1970 when the then Labour Government made the decision, but even during the subsequent four years of Conservative Government when I believe that the Government would have got the verdict they wanted and subsequently would have had more support from the people.

1005
The position has been exacerbated by this process of stealth. I quote but one example. It came to us on the Joint Committee on Statutory Instruments. My right hon. Friend the Member for Crosby (Mr. Page) spoke earlier in the debate. We owe a great deal to his diligence and vigilance on that Committee in scrutinising Statutory Instruments. Heaven help us if the Bill goes through in its present form without the proper constraints on the Executive.
In January of this year, the Select Committee issued a report criticising Ministers for an unexpected use of the powers because they had amended the horse-breeding rules by making metric measurements compulsory on forms from the owners of stallions applying for licences. They change the normal method of measuring animals by hands and inches. We took the view that this conflicted with the obligations under the 1963 Weights and Measures Act to ensure that imperial measurements were not rendered unlawful. To my great surprise, in the subsequent debate on 7th July the Minister said that he would like to see certain changes in the directive. He said that he would like to see the hands for measuring horses moved from Chapter B to Chapter C, putting off the change from 1977 to 1979.
All the time we have had these Statutory Instruments creeping up and, encircling us so that, when it came to the crunch, it would be hard to make any other decision than that we should go ahead with metrication. I accept that we have gone so far and that we cannot say "No" to further metrication. But I think that we should henceforth proceed voluntarily and do without the Metrication Board.
Let commerce proceed if it wishes. Let education proceed, as it is doing. Incidentally, I think it is sheer nonsense to say that children have learned no other system. It may be that the metric system dominates their education, but it is nonsense to suggest that children are leaving school not knowing what a pint of milk is, what a mile is or what a quarter of a pound of sweets is. I suspect that children in our schools are still studying a great deal of our traditional imperial measurements. If they are not, it is a dreadful condemnation of our system of education.
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I make one further appeal. Let us have clarity. Let us give certainty to the British people. Let us say that we have no intention of abolishing the mile on our roads, of getting rid of the familiar pint and even of going metric on measured goods in the greengrocer's shop. Here I part company from my hon. Friend the Member for Gloucester (Mrs. Oppenheim). There is no need for it. It does not inhibit our efficiency. It does not prevent our trade. It preserves those traditional landmarks which are essential if we are to have proper consumer understanding of goods on sale.
The Minister said that we should be going metric in respect of all these items. We shall have metric measurements on our roads. We shall go over to kilometres. All that he has said at the moment is "Not yet". I do not think that that message has sunk through to the British people. If it had done, we should have been deluged with representations and this Chamber, instead of being pathetically empty, would have been full. The debate would perhaps have been more dramatic.
I hope that my right hon. Friend's amendment will be carried tonight with strong support on this side at least. The British people will be well served if the amendment is carried.
6.21 p.m.
Mr. John Page: I agree with only the final sentence of my hon. Friend the Member for Faversham (Mr. Moate). I am a director of a small furnishing company and I object to metrication.
Everyone in the House knows that I am a modest, quiet sort of chap, but it was because of a question which was asked by one of my constituents, a Mrs. Swinhoe-Phelan, at a meeting in Pinner during the 1970 General Election campaign that the two debates we have had in the House on metrication took place. Mrs. Swinhoe-Phelan asked me for my views on metrication, and I gave her a full and accurate statement of the state of decimalisation. I was not aware of the plans which had been devised by the right hon. Gentleman who I wish was the second Viscount Stansgate. I promised that I would raise the matter of metrication on the Adjournment of the House

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and, if necessary, force a Division. Since then, I believe that there has been a move in Harrow to plan a small memorial to Mrs. Swinhoe-Phelan and myself standing holding hands for having saved the pint and saved the mile.
I was horrified to have doubts about saving both the pint and the mile put in my mind by the Minister this afternoon. I thought that the pint of milk, the draught pint, and the mile for British roads were absolutely sacrosanct, and I am not satisfied with the undertaking that the Minister has given about the mile.
I was distressed to hear that there is even a discussion going on about changing road signs. I understood from the Sunday papers that this was being done because the "3" in "30" had a square top instead of a round top, not because the signs were being changed to kilometres.
I thought that this Bill was designed to encourage exports, but we cannot encourage exports of miles on British roads. Nor can we export, without difficulty, pints of beer drawn in the draught manner from a British pub. Even if we managed to get export orders for it, it would be likely to be spilt before we could sell it in Calais. It is these differences about life in England which are important to our tourist trade. People come here to find something different. "Vive la difference", as we say when we arrive in France. If tourists coming here have to ask for half a litre of Eurogas or some such from a British pub, they will not want to come here and the number of visitors from abroad will go down.
My hon. Friend the Member for Faversham mentioned the term "hand" in horse breeding. What is the point of altering this measurement of horses? It has a prestigious atmosphere for Britain. At the Newmarket horse sales, for example, when people talk about hands it is known that this is a British industry. Once one starts mucking about with metres and other such measurements, no one knows where we are.
Two weeks ago I ordered a drainpipe from a local ironmonger. He telephoned my wife in rather a state and told her that I had ordered 9 ft. of piping. He said that I could not have 9 ft. because
1008
the measurements were all metric. My wife took a guess at it and asked for three metres. The ironmonger then asked her if I wanted 2½-in. or 3½-in. diameter piping. That is how ridiculous it all is.
The hon. Member for Aberdare (Mr. Ioan Evans) said that it would be easier for people to understand the metric system than the imperial system. I doubt whether he would say that if he could see the difficulties which people have in measuring things like windows 10 feet above the ground—or should I say three metres—and trying to see how many millimetres there are. The metric rulers are all being marked off in feet on the other side so that people do not make mistakes.
The whole of this could have been done voluntarily by those in industry in their own self-interest. We have already had difficulty in selling engineering goods in South American markets because we are using metric measurements and those markets are still using imperial measurements. I think I should remind hon. Gentlemen opposite that it is Roman imperial and not British imperial to which we are referring so that they will not be prejudiced against it on an imperialistic basis. The change-over could and should have been voluntary.
If the Minister of State starts mucking about with our miles and our pints—and I hope he has not finally mucked about with hands—I warn him that the country will rise up against him. He can do what he likes with the minimum lending rate, but he must leave our pints and miles alone or he will have a real revolt on his hands.
6.28 p.m.
Mr. Norman Lamont: I had thought—
Mr. Eldon Griffiths: On a point of order, Mr. Deputy Speaker. It is, of course, entirely for you at your discretion to decide whom to call, but I thought that there was an informal understanding with the Chair that the Front Bench speeches would begin at 6.30 p.m.
Mr. Deputy Speaker (Sir Myer Galpern): I am not concerned with any arrangements. I called Mr. Norman Lamont.
Mr. Eric Ogden: Further to that point of order, Mr. Deputy Speaker. I have no wish to intervene in a dispute between two hon. Gentlemen opposite, but I would point out that there is a tradition that when someone on that side of the House has spoken Mr. Speaker then calls someone on this side of the House.
Mr. Deputy Speaker: I called Mr. Norman Lamont.
Mr. Lamont: I thought I might begin by observing that it is particularly characteristic that this Government should introduce a measure which abolishes the scruple. But I would like to respond initially to the Minister's comments when he emphasised that there was a certain amount in common between the two sides of the House on this subject. We accept that where there are commercial reasons which are important, this may cause some industries to wish to go metric. We also accept in principle that when the understanding of the metric system is more widespread there will be advantages of simplicity. We also accept that eventually we shall have a predominantly metric system. That much is common between us.
Having said that, and having admitted that this is a better Bill than the one which the Government brought to the House before, I should say that we have a number of very important reservations. These are made clear in the amendment, and a number of my hon. Friends have supported it. Before dealing with the objections we have to the Bill, I want to make two points of detail and one more general one.
In the Bill there is no attempt to replace the minimum weight systems with average weight systems. The Government have said that that will happen and that if it does not happen it will be a barrier to trade. When will there be some announcement about that, and what legislation will be used to bring it forward?
My second detailed point refers to Clause 6 and is perhaps more of a Committee point. It has been mentioned by the Retail Consortium. Clause 6 deals with Community obligations upon manufacturers. It says that local authorities will be able to charge firms for certain services. It is not clear what those
1010
services are. There is some worry about this point, and people feel that they may be charged for general consumer protection services.
We frequently say that we are moving over to a metric system—perhaps I have done it in my speech tonight—but, of course, we are not actually doing that. We are moving over to the SI system. But by no means all countries which are metric use that system. Nor is it correct to say that the SI system is a clear diamond of logic. It is a ragbag of tradeoffs between different interests and different professions, and it brings in a whole lot of measures such as the rood, the quire and the punnet. There is a lot of talk about standards and about how, when this universal system applies in a large part of the world, we shall enjoy the benefit of universal standards. But as long as we have other systems in addition to the SI system there will be differences and modifications will be needed in the export of scientific equipment and a number of industrial goods.
One other important point arises out of the SI system. The adoption of that system has led to some unease of the medical profession because such things as the measurement of blood pressure will have to be done differently. It will have to be measured in pascals and kilopascals instead of millimetres of mercury. A number of doctors and hospitals, including the cardiac unit at University College Hospital, have argued that this is an unnecessary change which has been forced on them too quickly and which could lead to accidents and to some additional risk.
We have explained about how we shall vote tonight. We have doubts about the timing of the Bill and about going beyond the requirements of the EEC directive. Above all, we doubt the need for compulsion.
It is extremely important that any approach to metrication should be based on common sense. We do not want to ram down people's throats something they do not want. It seems to me that common sense has been lacking from the way in which the whole metrication issue has been handled in recent years.
We have been submitted to a stream of propaganda. Much of it has been irrelevant and misleading. I do not believe

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that people's attitudes to metrication will be changed because they are told that the British Solomon Islands have set up a metrication board. I cannot see why it matters or why we need to be told that the National Dahlia Society has decided to impose metric measurements in the judging and exhibiting of dahlias. That is hardly one of our most important export industries. Nor is it important that we should be solemnly told by the Metrication Board that John Wayne has ordered a metric bed.
On top of that, we have been submitted to a lot of rhymes put forward as a mixture of Noddy language and Maoist slogans.
We are told
"The metre measures three foot three,
It's longer than a yard, you see."
As one wit suggested, an equally good rhyme, which actually scans better, is
"When goods go metric prices rise.
Surprise, surprise. Surprise, surprise."
There is a serious point here. In spite of all the propaganda, the metric system is little understood. There are many misleading impressions around. In our talks with industry we found a great deal of misunderstanding and the belief that compulsion and the abolition of Section 10(10) of the 1963 Act were necessary before we could go metric. That is not true. Many people think that somehow the move to metrication is backed by law. That is quite baseless. The move is neither compulsory nor backed by law.
With such a lot of misleading propaganda around, it is hardly surprising that there should be so much fear, resistance and misunderstanding to what is involved. It is all the more understandable in the current economic situation. The move to metrication may not mean higher prices, but a lot of people believe that it will. Perhaps the reason why they believe it is that so many people moved over from the Decimal Currency Board to the Metrication Board.
Another reason is that when there are quantity changes there will be price changes. Many of the metric alternatives are larger than the imperial equivalent. In general, an article which now costs 50p, even without inflation, will go up to 55p because of the larger quantity. Most of the metric equivalents are something like 10 per cent. greater. We know
1012
from the Price Commission's report that so many similar packs are more expensive. Therefore, I do not think that the fear that people have about price rises is quite as irrational and unjustified.
The Post Office adapted its distances for parcel and letter post to metric measurement and took the opportunity of making some hidden price rises. I do not know whether the Minister studies the columns of the New Statesman. If he does, he will know that the cost of sending that publication abroad went up by 20 per cent. when the change to metric distance was implemented.
We say, therefore, that the time for the change is not right. If the Government get the inflation rate down below 10 per cent. the time might be right, but not before that. The European Community directive has changed everything. So many of the imperial measurements could now be used for a much longer period. We do not have to review them until at least the end of the decade.
But the central issue in this debate is whether we need compulsory metrication at all. What is proposed in the Bill is totally different from what was proposed by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe). His was a permissive and voluntary approach which was based on common sense.
Of course, Labour Members have told us that the CBI, the Retail Consortium and a number of other business interests say that the Bill is necessary. That is true. They also say that metrication is in the interests of industry and is overwhelmingly in the interests of the consumer. But when they say that they give the game away. If the Bill is so overwhelmingly in the interests of consumers, industry would not be so frightened of voluntary metrication. The CBI would not need to ask for metrication. The truth is that industry does not want to carry the responsibility for going metric which it knows to be unpopular. We believe that people should have the choice and the freedom.
I saw Lady White in a television debate in metrication. When confronted with the fact that carpet sales had slumped by 30 per cent. in stores which had gone metric, she said that they could not compete with the small shops selling imperial

1013
units. Why should not shops continue to sell imperial units? Why should not industry be able to continue to compete? Why should not consumers be able to continue to exercise choice?
It is perfectly possible to advance metrication on a voluntary basis. We always hear rather sneering references in these debates to the Yemen and Brunei but not many mentions of the United States, where progress towards metrication is entirely on a voluntary basis. Congress has had the opportunity to vote on metrication and has slung it out twice. The Executive has been forced to take it back. Metrication there is now continuing on a voluntary basis, and that is how it ought to continue here.
There is no need for compulsion and there are some areas where compulsion would be positively harmful. We do not want compulsory metrication in the mail order business or for weighed-out foods. The Retail Consortium does not want that either.
Above all, we do not want unnecessary change. I support much of what my hon. Friend the Member for Harrow, West (Mr. Page) said. Land cannot be exported, so why are we to be compelled to measure it in hectares? We do not export thermometers, so why must we measure all temperatures in centigrade? Why alter road signs and speedometers on cars'? Why must we be compelled to give measurements in centimetres on our passport applications? I trust that no one will be refused a passport for not complying with that requirement.
It is no good the Minister saying that he has no intention of doing such things in the near future. We have heard that before. If there is no such intention, why do the Government have to take the powers in this Bill? We think that it is not necessary to have them.
It is said that we need metrication for our exports, but the United States, one of our largest markets, will remain an imperial measure country for at least 10 years. The use of imperial measures in this country does not stop other nations from exporting their goods here. Indeed, they seem embarrassingly good at it.
The hon. Member for Harlow (Mr. Newens) said that the education system was increasingly making schoolchildren grow up in a metric world. There are
1014
15 million children who know the metric system but 40 million people who have grown up in a world of imperial measurements. We are talking about a slight inconvenience to schoolchildren but a massive inconvenience to the rest of the population.
In a recent Gallup Poll survey, people were asked whether they knew the imperial equivalent of 400 grammes. A total of 52 per cent. said they did not know, and of the 48 per cent. who said that they did know two-thirds gave the wrong answer. One significant point about the results was that the youngest age group was even worse than the older groups. So much for the myth that young people are waiting with open hearts and clear heads for the metric world to advance upon them.
We are told that consumers will be faced with two sets of standards, but the Minister undermined any weight this argument might have when he said that he would not remove imperial alternatives for specified quantities. We shall have two-size packs for many years unless the Minister did not mean what he said at the beginning of his speech. We say that it is not necessary for the Government to take these powers of compulsion. Public opinion remains deeply sceptical.
This is not an issue to be decided by the Retail Consortium or the CBI. It has to be decided by Parliament, and by the people through their Members of Parliament. The Government are putting forward a plan which is neat and tidy but which is tyrannical. The real world is messy; it does not correspond with the world of planners, civil servants, or the sort of people who sit on boards.
Let us avoid ramming things down people's throats and, above all, give people a choice in this matter. For that reason, I urge my right hon. and hon. Friends to vote for the amendment.
6.45 p,m.
Mr. John Fraser: With the leave of the House, I shall reply to the debate.
The hon. Member for Kingston upon Thames (Mr. Lamont) made an amusing speech—
Mr. Patrick Cormack: It was a very good speech.
Mr. Fraser: It was an amusing and good speech. Now perhaps the hon. Member for Staffordshire, South-West (Mr. Cormack) will keep quiet. He has not been present for most of the debate.
The hon. Member for Kingston upon Thames fell into the same error as his hon. Friend the Member for Gloucester (Mrs. Oppenheim) in failing to act responsibly over a matter which is a problem to this country and in taking what my hon. Friend the Member for Aberdare (Mr. Evans) described as an opportunist attitude towards the change to metrication. The Opposition are in favour of metrication in principle, but wish to deny the means to achieve it.
This is irresponsible because virtually every hon. Member opposite voted for the European Communities Bill knowing that they were supporting an obligation to phase out imperial units in this country. There was just one small escape clause. Now they congratulate me on amending the directive which they undertook to observe. The Opposition are runnning away from their responsibilities when, having accepted metrication in the Treaty of Accession, they now attempt to deny the means of achieving it. I do not believe that the Opposition regarded metrication as being foisted upon them by Europe. They reached the decision on its merits and followed the lead of the previous Labour Government. They are neglecting their responsibilities and flying in the face of reality in attempting to deny the opportunity to plan for the orderly completion of the metrication process.
I can tell the hon. Member for Kingston upon Thames, who asked about the average weight system, that we shall have it when the working party set up to consider this matter reports and the Government have considered its findings. Ultimately, another Weights and Measures Bill will be necessary, but I do not think that it will be brought forward next year.
The hon. Member for Kingston upon Thames also asked about Clause 6. It is concerned with the fees incurred by traders and manufacturers who submit measuring instruments for marking as being in accordance with EEC requirements. The clause is not concerned with the routine retail checks.
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The hon. Member for Harrow, West (Mr. Page) may rest assured that for as far ahead as I can see, and probably for time immemorial, he will be able to have his pint of milk and drink his pint of draught bitter. For a long time ahead he will also be able to calculate road distances in miles. I told the House recently that I do not regard road signs or speed limits as a priority for metrication. They are not the subject of this Bill.
I believe that metrication is unavoidable. Let me give the House two quotes. The first is
"The view of most consumer organisations and interested bodies coincides almost as exactly with the views of Macbeth:
'If it were done when 'tis done, then 'twere well
It were done quickly:"
The other is:
"Metrication would provide a golden opportunity to move towards standardised or prescribed quantities which are already quite familiar to many people who have shopped in Europe."—[Official Report, 24th July 1973; Vol. 860, c. 1474–75.]
Those are not my words. They were all spoken by the hon. Member for Gloucester in a debate on metrication. On BBC radio this morning the hon. Lady said that eventually we should have to go metric.
I agree with her judgment about the inevitability of the situation. We have a common view that the principle of metrication is not in doubt. We have an agreed view that metrication should be used as far as possible to achieve standardisation of weights and products—[Interruption.]—I sometimes agree with the hon. Lady even when she does not agree with herself. I shall take it on my own shoulders and say that it is right to link metrication to the standardisation of products. I gave some examples in the speech with which I opened the debate.
The hon. Lady has accused us of moving at too great a speed. How can we be accused of that when the present level of metrication has proceeded on a voluntary basis? I do not take the arrogant view that we can assume that metrication can be rammed down people's throats. I have enough political sense to know that that is not possible and that one has to make a judgment

1017
about how quickly to proceed. I do not believe that it should be done very quickly. We have to take the general public along with us and to provide for education and information. I do not think one can have a rapid process of change.
The hon. Lady first attacked the Government by saying that we were moving too quickly. She then said that we were taking unacceptable sweeping powers. She then complained about uncertainty in industry and among retailers about the pace of change. She said that they should be given some certainty and that I should lay down a firm timetable to be achieved on a voluntary basis. She must understand the realities of this world. It is not possible in practice to lay down a voluntary timetable whether for the conversion of petrol pumps, weighing machines or anything else. It is madness to suggest such a course.
The reason we want this Bill and the reason we want these powers is to provide a framework within which these matters can be planned. I believe that our objectives are the same—namely, to prepare for change but not to ram it down people's throats. Every section of industry—and this applies to comments made by the CBI, the Food Manufacturers' Federation, and the Retail Consortium—has decided that a movement to metrication without some kind of legal framework and orderly transition from one system to the other is impossible. This Bill will give manufacturers and industry in general, after due consultation, the feeling that they can cope with the problem of the change to metrication. The power to make orders is an essential precondition and nobody who examines the matter seriously can avoid that conclusion.
The hon. Lady instanced the question of imports of prepacked goods. The Conservative Government, when signing the Treaty of Accession, committed this country to open access to metric packs—[Interruption.] The hon. Lady the Member for Gloucester keeps murmuring like a pigeon in Trafalgar Square, but she seems to have forgotten that it was her own party who took the United Kingdom into the EEC by signing the Treaty of Accession.
Mrs. Sally Oppenheim: I am sure that the Minister would not wish to misrepresent what I said. I said that the commitment to let these goods into the country in metric quantities did not matter at all.
Mr. Fraser: I am grateful for that help. I think the hon. Lady said that very few of these goods are imported. I must point out that, in 1975, 38 per cent. of butter imports were prepacked from the EEC. Most other butter imports, including those from New Zealand and other non-EEC countries, were not pre-packed. Incidentally, New Zealand also is turning to a metric system.
The right hon. Member for Crosby (Mr. Page) also spoke of sweeping powers. He asked whether many of the important powers in the Bill should be exercised by negative or affirmative order. I assure him that the important powers proposed in Clauses 1 and 2 will be subject to the affirmative procedure. If he looks at Clause 2(3)(c), at the bottom of page 4 of the Bill dealing with parliamentary control of orders, he will see that the procedure in the 1963 Act is preserved. If he feels that there is any doubt about the situation I shall examine the proposition again. The Government intend to see that important orders made under the Bill will be subject to affirmative consent of the House of Commons.
The hon. Lady the Member for Gloucester thought that the time available for orders to be debated by the House was neither convenient nor adequate. That is a sphere of influence that falls within the province of people outside the Department of Prices and Consumer Protection. However, the Government are always ready to consider allowing extra time for orders attracting special interest. I understand the hon. Lady's concern. I agree that it is important that phasing out or cut-off orders should not be debated late at night. I shall pay full regard to those matters.
Some hon. Members mentioned the subject of cost. It is impossible to give a firm estimate of the cost of going metric. The Conservatives, in their 1972 White Paper, Command 4880, said:
"There have been several unofficial estimates of the global cost of metrication never supported by any statistical evidence. No well-founded estimate exists or could exist."

1019
The White Paper continued:
"None of the countries which has changed to the metric system, or decided to do so in recent years, has made an estimate of the total cost of change…"
If we examine some of the individual costs of change we note that the nationalised industries calculate the cost of metrication to be about 0·07 per cent. of turnover per year for a period of three years.
Hon. Members: Which nationalised industry?
Mr. Fraser: That was the British Steel Corporation. Engineering firms calculated that it would involve a figure of 1 per cent. of annual turnover for a period of three years, but in the event they found that the actual cost was nearer a figure of 0·5 per cent. of annual turnover.
It is difficult to estimate the cost of the changeover. I do not deny that it is a matter of some importance to retailers, but we have also to think of the cost to this country in the long run of not going over to a metric system. I refer to cost
in terms of our children, our industry and so on.
The Government withdrew their first Bill because there was a clear need to discuss the matter further. I am grateful for what was said about the nature of those discussions and improvements to the Bill. I have spoken to almost every hon. Member in the House who has expressed a desire to talk to me over these matters. I am sorry that other hon. Members who are now critical of the situation did not take that opportunity to discuss these matters with me. I make no complaint about the requirements of outside organisations in terms of a further dialogue. We have now had that dialogue, and I believe that it has improved the Bill. I believe that we have the overwhelming support of the consumer protection movement, and I ask the House responsibly to vote for the Second Reading of the Bill and to reject the amendment.
Question put, That the amendment be made:—
The House divided: Ayes 171, Noes 194.

Division No. 325.]

AYES

[7.0 p.m.

Aitken, Jonathan

Fletcher-Cooke, Charles

Jessel, Toby

Alison, Michael

Fookes, Miss Janet

Jopling, Michael

Arnold, Tom

Forman, Nigel

Joseph, Rt Hon Sir Keith

Atkins, Rt Hon H. (Spelthorne)

Fowler, Norman (Sutton C'f'd)

Kaberry, Sir Donald

Baker, Kenneth

Fox, Marcus

Kershaw, Anthony

Beith, A. J.

Fry, Peter

King, Evelyn (South Dorset)

Berry, Hon Anthony

Gardiner, George (Reigate)

Knight, Mrs Jill

Bitten, John

Gardner, Edward (S Fylde)

Knox, David

Blaker, Peter

Glyn, Dr Alan

Lamont, Norman

Boscawen, Hon Robert

Goodhart, Philip

Lane, David

Boyson, Dr Rhodes (Brent)

Goodhew, Victor

Langford-Holt, Sir John

Braine, Sir Bernard

Goodlad, Alastair

Latham, Michael (Melton)

Brotherton, Michael

Gorst, John

Lawson, Nigel

Brown, Sir Edward (Bath)

Gow, Ian (Eastbourne)

Le Marchant, Spencer

Bryan, Sir Paul

Gower, Sir Raymond (Barry)

Lester, Jim (Beeston)

Butler, Adam (Bosworth)

Grant, Anthony (Harrow C)

Lewis, Kenneth (Rutland)

Carlisle, Mark

Gray, Hamish

Loveridge, John

Chalker, Mrs Lynda

Grist, Ian

Luce, Richard

Churchill, W. S.

Hall, Sir John

McAdden, Sir Stephen

Clark, Alan (Plymouth, Sutton)

Hall-Davis, A. G. F.

McCrindle, Robert

Clarke, Kenneth (Rushcliffe)

Hamilton, Michael (Salisbury)

Macfarlane, Neil

Clegg, Walter

Hannam, John

McNair-Wilson, M. (Newbury)

Cockcroft, John

Havers, Sir Michael

Marten, Neil

Cope, John

Hawkins, Paul

Maude, Angus

Cormack, Patrick

Hayhoe, Barney

Mawby, Ray

Corrie, John

Hicks, Robert

Maxwell-Hyslop, Robin

Costain, A. P.

Holland, Philip

Mayhew, Patrick

Crowder, F. P.

Hooson, Emlyn

Miller, Hal (Bromsgrove)

Dean, Paul (N Somerset)

Hordern, Peter

Mills, Peter

Dodsworth, Geoffrey

Howell, David (Guildford)

Miscampbell, Norman

Drayson, Burnaby

Howell, Ralph (North Norfolk)

Moate, Roger

du Cann, Rt Hon Edward

Howells, Geraint (Cardigan)

Molyneaux, James

Durant, Tony

Hunt, David (Wirral)

Montgomery, Fergus

Elliott, Sir William

Hunt, John (Bromley)

Moore, John (Croydon C)

Emery, Peter

Hurd, Douglas

More, Jasper (Ludlow)

Farr, John

Hutchison, Michael Clark

Morgan, Geraint

Fell, Anthony

Irving, Charles (Cheltenham)

Morgan-Giles, Rear-Admiral

Finsberg, Geoffrey

James, David

Morrison, Charles (Devizes)

Fletcher, Alex (Edinburgh N)

Jenkin, Rt Hon P. (Wanst'd & W'df'd)

Morrison, Hon Peter (Chester)

Mudd, David

Renton, Rt Hon Sir D. (Hunts)

Tebbit, Norman

Neave, Airey

Ridley, Hon Nicholas

Temple-Morris, Peter

Nelson, Anthony

Roberts, Michael (Cardiff NW)

Thomas, Rt Hon P. (Hendon S)

Neubert, Michael

Roberts, Wyn (Conway)

van Straubenzee, W. R.

Newton, Tony

Rossi, Hugh (Hornsey)

Vaughan, Dr Gerard

Nott, John

Rost, Peter (SE Derbyshire)

Viggers, Peter

Oppenheim, Mrs Sally

Royle, Sir Anthony

Wainwright, Richard (Colne V)

Page, John (Harrow West)

St. John-Stevas, Norman

Walters, Dennis

Page, Rt Hon R. Graham (Crosby)

Shaw, Giles (Pudsey)

Warren, Kenneth

Parkinson, Cecil

Sinclair, Sir George

Weatherill, Bernard

Pattie, Geoffrey

Skeet, T. H. H.

Wells, John

Penhaligon, David

Smith, Dudley (Warwick)

Wiggin, Jerry

Percival, Ian

Spence, John

Winterton, Nicholas

Peyton, Rt Hon John

Spicer, Jim (W Dorset)

Wood, Rt Hon Richard

Pink, R. Bonner

Spicer, Michael (S Worcester)

Young. Sir G. (Ealing, Acton)

Powell, Rt Hon J. Enoch

Stanbrook, Ivor

Pym, Rt Hon Francis

Stewart, Ian (Hitchin)

TELLERS FOR THE AYES:

Rathbone, Tim

Stradling Thomas, J

Mr. Fred Silvester and

Rawlinson, Rt Hon Sir Peter

Taylor, R. (Croydon NW)

Mr. Carol Mather.

Rees, Peter (Dover & Deal)

NOES

Abse, Leo

Garrett, John (Norwich S)

Miller, Mrs Millie (Ilford N)

Allaun, Frank

Garrett, W. E. (Wallsend)

Morris, Alfred (Wythenshawe)

Archer, Peter

George, Bruce

Morris, Charles R. (Openshaw)

Atkins, Ronald (Preston N)

Gilbert, Dr John

Mulley, Rt Hon Frederick

Atkinson, Norman

Golding, John

Noble, Mike

Burnett, Guy (Greenwich)

Gould, Bryan

Orme, Rt Hon Stanley

Bates, Alf

Grant, George (Morpeth)

Ovenden, John

Bishop, E. S.

Grant, John (Islington C)

Padley, Walter

Blenkinsop, Arthur

Grocott, Bruce

Palmer, Arthur

Boardman, H.

Hardy, Peter

Park, George

Booth, Rt Hon Albert

Harper, Joseph

Parker, John

Boothroyd, Miss Betty

Harrison, Walter (Wakefield)

Pavitt, Laurie

Bottomley, Rt Hon Arthur

Hattersley, Rt Hon Roy

Perry, Ernest

Boyden, James (Bish Auck)

Hatton, Frank

Prentice, Rt Hon Reg

Bray, Dr Jeremy

Heffer, Eric S.

Price, William (Rugby)

Brown, Hugh D. (Provan)

Hooley, Frank

Radice, Giles

Brown, Ronald (Hackney S)

Horam, John

Rees, Rt Hon Merlyn (Leeds S)

Buchan, Norman

Howell, Rt Hon Denis (B'ham, Sm H)

Richardson, Miss Jo

Buchanan, Richard

Hoyle, Doug (Nelson)

Roberts, Albert (Normanton)

Callaghan, Jim (Middleton & P)

Hughes, Rt Hon C. (Anglesey)

Rodgers, George (Chorley)

Carmichael, Neil

Hughes, Mark (Durham)

Rodgers, Rt Hon William (Stockton)

Carter-Jones, Lewis

Hughes, Robert (Aberdeen N)

Rooker, J. W.

Cartwright, John

Hunter, Adam

Rose, Paul B.

Clemitson, Ivor

Irvine, Rt Hon Sir A. (Edge Hill)

Ross, Stephen (Isle of Wight)

Cocks, Rt Hon Michael (Bristol S)

Jackson, Miss Margaret (Lincoln)

Rowlands, Ted

Conen, Stanley

Janner, Greville

Sandelson, Neville

Coleman, Donald

Jenkins, Hugh (Putney)

Sedgemore, Brian

Colquhoun, Ms Maureen

John, Brynmor

Shaw, Arnold (Ilford South)

Concannon, J. D.

Johnson, James (Hull West)

Sheldon, Robert (Ashton-u-Lyne)

Corbett, Robin

Johnson, Walter (Derby S)

Shore, Rt Hon Peter

Cox, Thomas (Tooting)

Jones, Alec (Rhondda)

Short, Mrs Renée (Wolv NE)

Craigen, J. M. (Maryhill)

Jones, Barry (East Flint)

Silkin, Rt Hon John (Deptford)

Crawshaw, Richard

Judd, Frank

Silverman, Julius

Cronin, John

Kaufman, Gerald

Skinner, Dennis

Crowther, Stan (Rotherham)

Kelley, Richard

Small, William

Cryer, Bob

Kerr, Russell

Smith, John (N Lanarkshire)

Cunningham, G. (Islington S)

Kilroy-Silk, Robert

Spearing, Nigel

Davidson, Arthur

Lamborn, Harry

Spriggs, Leslie

Davies, Bryan (Enfield N)

Lamond, James

Stallard, A. W.

Davies, Denzil (Llanelli)

Leadbitter, Ted

Steel, David (Roxburgh)

Deakins, Eric

Lestor, Miss Joan (Eton & Slough)

Stoddart, David

Dempsey, James

Lomas, Kenneth

Stott, Roger

Doig, Peter

Luard, Evan

Strang, Gavin

Dormand, J. D.

Lyon, Alexander (York)

Taylor, Mrs Ann (Bolton W)

Duffy, A. E. P.

Lyons, Edward (Bradford W)

Thomas, Jeffrey (Abertillery)

Dunwoody, Mrs Gwyneth

McCartney, Hugh

Thorpe, Rt Hon Jeremy (N Devon)

Eadie, Alex

MacFarquhar, Roderick

Tierney, Sydney

Edge, Geoff

McGuire, Michael (Ince)

Tinn, James

Edwards, Robert (Wolv SE)

MacKenzie, Gregor

Torney, Tom

English, Michael

Maclennan, Robert

Walden, Brian (B'ham, L'dyw'd)

Ennals, David

McNamara, Kevin

Walker, Harold (Doncaster)

Evans, Ioan (Aberdare)

Madden, Max

Walker, Terry (Kingswood)

Evans, John (Newton)

Magee, Bryan

Ward, Michael

Ewing, Harry (Stirling)

Mallalieu, J. P. W.

Watkins, David

Faulds, Andrew

Marquand, David

Weitzman, David

Fernyhough, Rt Hon E.

Marshall, Dr Edmund (Goole)

Wellbeloved, James

Flannery, Martin

Marshall, Jim (Leicester S)

White, Frank R. (Bury)

Forrester, John

Maynard, Miss Joan

White, James (Pollok)

Fowler, Gerald (The Wrekin)

Meacher, Michael

Whitlock, William

Fraser, John (Lambeth, N'w'd)

Mendelson, John

Williams, Alan (Swansea W)

Freeson, Reginald

Mikardo, Ian

Williams, Rt Hon Shirley (Hertford)

Freud, Clement

Miller, Dr M. S. (E Kilbride)

Williams, Sir Thomas (Warrington)

1022

1023

Wilson, Alexander (Hamilton)

Woodall, Alec

Wilson, Rt Hon Sir Harold (Huyton)

Woof, Robert

TELLERS FOR THE NOES:

Wilson, William (Coventry SE)

Wriggiesworth, Ian

Mr. Ted Graham and

Wise, Mrs Audrey

Mr. James Hamilton

Question accordingly negatived.
Main Question put forthwith, pursuant to Standing Order No. 39 (Amendment on Second or Third reading): —
The House divided: Ayes 181, Noes 21.

Division No. 326.]

AYES

[7.12 p.m.

Archer, Peter

Gilbert, Dr John

Padley, Walter

Atkins, Ronald (Preston N)

Golding, John

Palmer, Arthur

Atkinson, Norman

Gould, Bryan

Park, George

Barnett, Guy (Greenwich)

Grant, George (Morpeth)

Parker, John

Bates, Alf

Grant, John (Islington C)

Pavitt, Laurie

Bean, R. E.

Grocott, Bruce

Penhaligon, David

Bishop, E. S.

Hamilton, James (Bothwell)

Perry, Ernest

Blenkinsop, Arthur

Hardy, Peter

Prentice, Rt Hon Reg

Boardman, H.

Harper, Joseph

Price, William (Rugby)

Booth, Rt Hon Albert

Harrison, Walter (Wakefield)

Radice, Giles

Boothroyd, Miss Betty

Hattersley, Rt Hon Roy

Rees, Rt Hon Merlyn (Leeds S)

Bottomley, Rt Hon Arthur

Hatton, Frank

Richardson, Miss Jo

Boyden, James (Bish Auck)

Hooley, Frank

Roberts, Albert (Normanton)

Bray, Dr Jeremy

Horam, John

Rodgers, George (Chorley)

Brown, Hugh D. (Provan)

Howell, Rt Hon Denis (B'ham, Sm H)

Rodgers, Rt Hon William (Stockton)

Brown, Robert C. (Newcastle W)

Howells, Geraint (Cardigan)

Rose, Paul B.

Brown, Ronald (Hackney S)

Huckfield, Les

Ross, Stephen (Isle of Wight)

Buchanan, Richard

Hughes, Rt Hon C. (Anglesey)

Rowlands, Ted

Callaghan, Jim (Middleton & P)

Hughes, Mark (Durham)

Sainsbury, Tim

Carmichael, Neil

Hughes, Robert (Aberdeen N)

Sandelson, Neville

Carter-Jones, Lewis

Hunter, Adam

Scott, Nicholas

Cartwright, John

Irvine, Rt Hon Sir A. (Edge Hill)

Shaw, Arnold (Ilford South)

Clemitson, Ivor

Jackson, Miss Margaret (Lincoln)

Sheldon, Robert (Ashton-u-Lyne)

Cocks, Rt Hon Michael (Bristol S)

Janner, Greville

Shore, Rt Hon Peter

Cohen, Stanley

John, Brynmor

Short, Mrs Renée (Wolv NE)

Coleman, Donald

Johnson, James (Hull West)

Silkin, Rt Hon John (Deptford)

Concannon, J. D.

Johnson, Walter (Derby S)

Small, William

Corbett, Robin

Jones, Alec (Rhondda)

Smith, John (N Lanarkshire)

Cox, Thomas (Tooting)

Jones, Barry (East Flint)

Spearing, Nigel

Craigen, J. M. (Maryhill)

Judd, Frank

Spriggs, Leslie

Crawshaw, Richard

Kaufman, Gerald

Stoddart, David

Cronin, John

Kelley, Richard

Stott, Roger

Crowther, Stan (Rotherham)

Kilroy-Silk, Robert

Strang, Gavin

Cryer, Bob

Lamborn, Harry

Taylor, Mrs Ann (Bolton W)

Cunningham, G. (Islington S)

Leadbitter, Ted

Thomas, Jeffrey (Abertillery)

Davidson, Arthur

Lestor, Miss Joan (Eton & Slough)

Thorpe, Rt Hon Jeremy (N Devon)

Davies, Bryan (Enfield N)

Lomas, Kenneth

Tierney, Sydney

Davies, Denzil (Llanelli)

Luard, Evan

Tinn, James

Deakins, Eric

Lyon, Alexander (York)

Wainwright, Richard (Colne V)

Dempsey, James

Lyons, Edward (Bradford W)

Walden, Brian (B'ham, L'dyw'd)

Doig, Peter

McCartney, Hugh

Walker, Harold (Doncaster)

Dormand, J. D.

MacFarquhar, Roderick

Walker, Terry (Kingswood)

Duffy, A. E. P.

McGuire, Michael (Ince)

Ward, Michael

Eadie, Alex

MacKenzie, Gregor

Watkins, David

Edge, Geoff

Maclennan, Robert

Weitzman, David

Edwards, Robert (Wolv SE)

McNamara, Kevin

Wellbeloved, James

English, Michael

Magee, Bryan

White, Frank R. (Bury)

Ennals, David

Mallalieu, J. P. W.

White, James (Pollok)

Evans, loan (Aberdare)

Marquand, David

Whitlock, William

Evans, John (Newton)

Marshall, Dr Edmund (Goole)

Williams, Alan (Swansea W)

Ewing, Harry (Stirling)

Marshall, Jim (Leicester S)

Williams, Rt Hon Shirley (Hertford)

Faulds, Andrew

Meacher, Michael

Williams, Sir Thomas (Warrington)

Fernyhough, Rt Hon E.

Mikardo, Ian

Wilson, Alexander (Hamilton)

Flannery, Martin

Miller, Dr M. S. (E Kilbride)

Wilson, William (Coventry SE)

Forrester, John

Miller, Mrs Millie (Ilford N)

Woodall, Alec

Fowler, Gerald (The Wrekin)

Morris, Alfred (Wythenshawe)

Woof, Robert

Fraser, John (Lambeth, N'w'd)

Morris, Charles R. (Openshaw)

Wrigglesworth, Ian

Freeson, Reginald

Mulley, Rt Hon Frederick

Freud, Clement

Noble, Mike

TELLERS FOR THE AYES:

Garrett, John (Norwich S)

Orme, Rt Hon Stanley

Mr. A. W. Stallard and

Garrett, W. E. (Wallsend)

Ovenden, John

Mr Ted Graham.

George, Bruce

NOES

Beith, A. J.

Hutchison, Michael Clark

Maynard, Miss Joan

Brotherton, Michael

Lamond, James

Moate, Roger

Fell, Anthony

Lawson, Nigel

Molyneaux, James

Heffer, Eric S.

McAdden, Sir Stephen

Morgan, Geraint

Hooson, Emlyn

Marten, Neil

Powell, Rt Hon J. Enoch

Rodgers, George (Chorley)

Torney, Tom

TELLERS FOR THE NOES:

Rooker, J. W.

Winterton, Nicholas

Mr. Dennis Skinner and

Taylor, R. (Croydon NW)

Wise, Mrs Audrey

Mr. Max Madden.

Question accordingly agreed to.
Bill read a Second time.
Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

METHODIST CHURCH BILL [Lords] (By Order)
As amended, considered.
Mr. Deputy Speaker (Mr. Oscar Murton): I wish to inform the House that Mr. Speaker has selected the amendment in the name of the hon. Member for Berwick-upon-Tweed (Mr. Beith) and other hon. Members.

Clause 5

  AMENDMENT OF THE DEED OF UNION
  7.22 p.m.
  Mr. A. J. Beith: I beg to move, in page 8, line 9, at end insert:—
  '(3) In the event of there being any amendment made to the Deed of Union whereby the doctrinal standards as they existed at the passing of this Act are affected such amendment shall not prevent any minister, deaconess or local preacher ordained or admitted to such office in the church before the passing of this Act from preaching, expounding or otherwise maintaining the doctrinal standards as they existed at the passing of this Act'.
  The words of the amendment are a transitional conscience clause. That is what we are seeking to insert into the Bill, for reasons which I shall explain. There is no attempt on the part of those of us responsible for the amendment to block the Bill or to oppose the Bill as a whole, as will be apparent from the fact that the blocking motion which we had tabled, for procedural reasons, has not been proceeded with.
  We are dealing with a quite specific point in a Bill which has had a more contentious passage than the promoters expected. It is right that Private Bills in this House, and the procedures for dealing with them, should not be a rubber stamp for approving the wishes of the promoters of such Bills. The proce-
  1026
  dures are designed to afford some protection for the various interests and views involved in private legislation. Over the years many of the Churches have had cause to seek the help of this House in enacting legislation enshrining the terms on which their property was held, and other relevant matters. That is the position of the Methodist Church.
  There is Methodist Church legislation on the statute book now because Methodists asked for it. Now Methodists seek to amend it. There is some controversy between Methodists about how far that amendment should go, and it is for that reason that there has been some discussion. The aspect we are now looking at relates solely to the doctrinal provisions of the Bill—those provisions for changing doctrine.
  I should explain the background to this. At first sight it seems a strange proposition that Parliament should be in any way involved with the doctrines of a free Church. But Parliament never made the choice to be involved or sought to determine what Methodist doctrine was. It was called in, so to speak, as the referee. When the three main strands of Methodism united in 1929 they specifically asked Parliament to include in the Bill which they then promoted the provision that the doctrinal statement of the Methodist Church could not be altered, which meant in practice that it could not be altered unless they came to Parliament with another Bill to do so. This was a safeguard for the contracting parties which was quite specifically sought by the Methodist Church at the time. They sought from Parliament the rôle of guarantor. It is a rôle that has been exercised entirely passively by Parliament ever since.
  Most people assumed that Parliament would never again find itself considering the matter unless and until some change in doctrine was sought. But the Methodist Church leaders have taken a different view. They have now decided that they wish to remove the guarantee, although they say quite clearly, and I accept their word, that they have no intention of changing the doctrine. They simply wish to remove the safeguard

  1027
  and limitation and to have instead a purely internal procedure.
  I do not believe that Parliament can contemplate removing that safeguard without first considering the position of those affected. That is the duty which Parliament owes to all the parties who contest, or become involved in arguments about, Private Bills. We must see that the various interests involved are properly considered. I emphasise that Parliament ought to have no wish to concern itself with what Methodist doctrine is or ought to be. That has nothing to do with this place and it is not what the 1929 Act envisaged. Parliament's rôle was simply that of guarantor or referee in a settlement made between various parties.
  However, the responsibility of Parliament to look carefully at the safeguards and what replaces them remains whether we think Methodists were right or wrong to involve Parliament in this way in the first place. For my part, if I had been around in 1929 I do not think that I would have favoured the inclusion of the original provisions in the Bill. I would have been one of those who opposed the inclusion of a doctrinal statement in unalterable form in the Deed of Union to which Parliament gave its seal of approval. That is not the issue now. The issue now is that that having been the case over a long period of years, that safeguard having existed and been given to the various parties, can it be taken away without some consideration at least of the position of those who would be affected?
  Mr. Fred Evans: Does the hon. Gentleman accept that in all probability the Deed of Union, as an attempt to bring together sections of the Methodist Movement that differed widely in concept, used Parliament as a catalyst, and that Parliament has the unenviable task of possibly being called in as an arbitrator in doctrinal matters unless the situation is changed?
  Mr. Beith: I am glad to hear the hon. Member's contribution, because I know how much time he has devoted to the Bill and the great service that he rendered in Committee. I would change his analogy. I think that the contracting parties used Parliament not as a catalyst but as a guarantor. That is an important difference and an important concept in
  1028
  present ecumenical discussions, because situations will arise on other occasions when Churches and denominations, drawing together, will seek agreement and will then come to Parliament seeking to enshrine that agreement in legislation, so that the property of the various contracting Churches can be safeguarded and put on some common settlement.
  Such parties will want some assurance that Parliament will not in future wipe away such safeguards without looking carefully at what it is doing and making sure that it is being fair to all the parties. The 1929 situation could return. We would be doing a disservice in our rôle as guarantor to that extent if we gave the impression that Parliament tossed these things lightly aside. Such an impression was not left by the Committee proceedings and I do not think it will be left tonight if the House considers carefully and fairly the terms of my amendment.
  It is quite immaterial for the purposes of my argument in what direction any future doctrinal change may go. We do not know which section of the Church may consider itself adversely affected. We do not know whether—to use political terms which have a theologically different significance—the change will be in a conservative or liberal direction. We do not know who will be affected, whether a large or small minority. That is immaterial. The issue is what safeguard, if any, is required and how can it be provided?
  The specific purpose of this amendment is not to deny in future to the Methodist Conference the ability, under special procedures, to change its doctrinal statement. It is not to deny to it what its leaders are now seeking—the removal of the old safeguard and freedom to make doctrinal changes by means of an internal procedure. The Committee on which the hon. Member for Caerphilly (Mr. Evans) served made a significant amendment to the procedure and sought to ensure that discussion went down to the level of the local church. We must be grateful to the Committee for that sensible and constructive change. We do not seek to deny that power to Methodism, we seek simply to provide a transitional protection for those people, necessarily a diminishing number, who accepted an office with the expectation that the old safeguard was there.

  1029
  7.30 p.m.
  Under the amendment people who come into the Methodist Church and its ministry as preachers, whether local preaches, deaconesses or ministers, would have the safeguard in future years that, having come in before the passing of this measure, they could continue to preach the doctrinal statement which they believed would be safeguarded for all time. That would not apply to people who came into such an office after this measure was passed. They would know perfectly well that the old safeguard did not apply. Under the new provisions the doctrinal statement could be changed by the procedure that I have just mentioned. They would enter in the full knowledge of what could happen if the doctrine were eventually changed. Those whom came in prior to this date, believing that the doctrinal statement was unalterable without recourse to Parliament, would be able, by this amendment, to continue to preach the old doctrinal statement for the remainder of their working lives. The protection is confined to those coming in prior to this date and to those who preach—the ministers, deaconesses or the local preachers.
  In two out of every three cases, let us remember, it is the livelihood of people which is at stake as well as their conscience and desire to preach the doctrine which they were ordained to preach. In the case of the minister and the deaconess it is their livelihood and ability to remain in the calling. The minister has made it his employment, upon which he and his family depend for their living. In this context it is important to make something very clear to hon. Members who may not be quite so familiar with the provisions of the Bill as some of us are. The Methodist Church has rather more rigorous rules than most Churches about adhering and preaching to the doctrinal standards and the doctrinal statement. The rules of Methodism are distinctly firmer than any other free Church that I know. I know of no free Church which has provisions comparable to those included in the Bill and which reflect the provisions in this Methodist legislation.
  I refer in particular to Schedule 2, paragraph 14(3) of which contains an obligation on the managing trustees of any Methodist property, in that he
  1030
  "shall not permit any person, at any service or meeting for religious worship held at or in any part of any premises comprised in the property, so as to preach or expound God's Holy Word or perform any act as to deny or repudiate the doctrinal standards."
  We are talking about the doctrinal standards which up until this date have been totally safeguarded. The trustees have no choice. They have an obligation to prevent anyone from rising in the pulpit, or at the Sunday school superintendent's desk, or anywhere else in those premises, and preaching anything which denies or repudiates the new doctrinal standard. Their obligation in such a case would be quite clear. They would be failing in their duty if they did not take steps to prevent anyone from preaching or expounding in such a way as to repudiate the new doctrinal standard.
  Mr. Eric Ogden: Before the hon. Gentleman suggests that the Methodist Church is too authoritarian, can he give any information about the number of occasions over the past five, 10 or 20 years where the situation he described has happened in practice?
  Mr. Beith: The doctrinal standards have not been changed throughout this period. Parliament is now looking to what would happen in a quite new situation, which may well be hypothetical. It may well be that trustees in a number of places would feel able to preserve the provisions of the Bill, but Parliament must face the Bill as a whole. If one part of the Bill depends wholly on nonobservance, I really do not think this House would be right in accepting it. That is the implication of what the hon. Gentleman is saying. He tempts me to say that the Methodist Church is authoritarian. I think that in this respect it has an authoritarian aspect to it. It is in that particular light that one must judge these provisions.
  Mr. Ronald Atkins: Surely that is only a restriction. If doctrinal standards are clearly, carefully and precisely laid down—in fact, they have not been—the interpretation of Wesley's teachings and everything which came afterwards is a wide one, and therefore it is not a great restriction, even as expressed in the clauses in the Bill.
  Mr. Beith: I thank the hon. Gentleman for helping me to answer the hon. Member for Liverpool, West Derby (Mr.

  1031
  Ogden). The present doctrinal statement is a reasonably wide one, in one sense, in that it refers to Wesley's sermons and notes on the New Testament and indicates limitations and how they are to be interpreted. But that is not what we are talking about. We are talking about a situation in which a quite new doctrinal statement could be introduced—one which might be extremely precise, narrow and definite. That is the crux of what we are discussing now. What would happen under a different doctrinal standard if there were ministers who were quite happy to preach under the old doctrinal standard but were unhappy about the new one? That is the situation to which Parliament must address itself.
  Mr. Ron Lewis: Should that question arise it would be a matter for the Conference to decide. That is democracy upholding the rule of law.
  Mr. Beith: The hon. Gentleman must realise that one of the reasons why the Methodist Churches did not feel happy in 1929 to give Conference unrestricted and unfettered jurisdiction in this respect was that they feared that minorities would be deprived. They were not happy to leave the power entirely to Conference in this respect.
  I hope that those hon. Members who wish to intervene will speak in the debate, because I would much prefer to hear their arguments in that way.
  Mr. Kenneth Lomas: It seems to me that this is something of a takeover bid by the Liberal Party in respect of the Methodist Church. I am a Methodist as much as anyone, but this issue is not doctrinal. There are many Methodist churches in my constituency of Huddersfield and, indeed, in Colne Valley, which is represented by the hon. Gentleman's hon. Friend, and I hope the hon. Gentleman will not consider this matter in any doctrinal spirit. However, I am prepared to consider the amendments that have been put forward. I think the hon. Member for Berwick-upon-Tweed (Mr. Beith) is wrong, but nevertheless I am prepared to listen to him.
  Mr. Beith: I am grateful for the hon. Gentleman's guidance and for his willingness to listen. I hope that he will no
  1032
  more attribute a Liberal Party takeover of the Methodist Church to the participation of myself and my hon. Friend the Member for Colne Valley (Mr. Wainwright) in this debate, or the hon. Member for Lancaster (Mrs. Kellett-Bowman), who would not wish to be included in that description, than seek to evince some Labour takeover of the Methodist Church by the presence of the hon. Member for Goole (Dr. Marshall) in moving the Bill itself. I do not impute that and I am sure the hon. Gentleman does not wish to do so.
  There is some difference between the Methodist Church and other denominations in one respect; adherence to the doctrinal standards is enjoined in various ways. Every local preacher's meeting has on its agenda the question whether each local preacher believes and preaches the Church's doctrine and nothing contrary to it. There is a strain in Methodist tradition—an order that places the responsibility on the Church to ensure that its preachers comply with the doctrinal standards. I am not discussing whether that should or should not be the case, but we must consider the position of ministers, local preachers or deaconesses who find that they are prohibited from adhering to the doctrinal standards which were thought to be unalterable at the time they entered the ministry.
  A situation that we would all wish to avoid is one in which anyone could be threatened, or considered to be threatened, with loss of the right to preach and loss of livelihood for preaching the very doctrine that he was ordained to preach, and which he believed at the time could not be altered without further recourse to Parliament. I believe that no one in the Methodist membership has the slightest intention of bringing that situation about. I hope he would have no such intention. But Parliament cannot simply look at what those now holding office might say; it must look at what the provisions of the Bill would be, and how they might be interpreted in practice in a variety of circumstances.
  The amendment that we have put forward does not provide the only way in which this problem can be met, but it is probably one that would enjoy the widest agreement. There are alternatives. It has been suggested that the way to deal with this is to make provision for redun-

  1033
  dancy and the transferring of pensions for those who may lose their livelihood. I had a letter from one minister who said that he was perfectly happy as long as he knew that his pension rights were safeguarded if he were required to leave the Methodist ministry in these circumstances. But the bulk of the people to whom I have talked would wish to see a safeguarding of the right to continue to preach the doctrine that they were ordained to preach.
  We have been told that no change of doctrine is intended, and that there is no need to worry. I am prepared to believe that assurance, but that does not apply to everyone. Many people who have written to me believe that there are plans to change the doctrine. However, that is immaterial, as the legislation will outlive those who give the assurance.
  If no change in the doctrine is made for many years, there is no reason to resist the amendment. I am not quite sure why the promoters wish to do so. If they have no intention to change and if they see no prospect of its occurring, the terms of the amendment will not apply. The amendment will not cause them the slightest inconvenience. This measure will remain as some assurance for those who feel threatened by the position as they now see it.
  The amendment is not intended to have and would not have the effect of blocking the Bill or of denying to Methodism the power to change its doctrine in terms of new procedure. It would not involve recourse to Parliament. It is a necessary provision. The Methodist Church asked Parliament to guarantee its doctrinal statement and it is the Methodist leadership that has decided to change that situation.
  Parliament has a certain obligation in these circumstances to see that the interests of all those concerned are properly safeguarded. That is why there is a need to put in a transitional conscience clause of this sort. I believe that those who came in with an assurance that the doctrinal statement was unalterable are entitled to continue to preach that unaltered doctrine for the rest of their working and preaching lives. I hope that Parliament will feel it right to ensure that this provision is included.
  7.45 p.m.
  Dr. Edmund Marshall: I am sure that the House will be grateful to the hon. Member for Berwick-upon-Tweed (Mr. Beith) for the brief and fair way in which he presented the amendment. The difficulty about the amendment is that it deals with a completely hypothetical situation. I think that the hon. Gentleman accepts that position. Therefore, it is difficult to consider the merits or demerits of the amendment. It is difficult at this stage to foresee the possible circumstances in which it might be implemented.
  Although it is one of the purposes of the Methodist Church Bill that there should no longer be entrenchment of doctrine for the Methodist Church—namely, entrenched by Act of Parliament—there are now no defined intentions on the part of the Methodist. Conference to bring about any changes in the doctrinal standards as they are embodied in the Deed of Union of 1932.
  Let us suppose that after a period such proposals were brought forward to change the doctrinal standards. In that event, the procedure laid down within the Bill would have to be admitted. That would require, first, the Methodist Conference voting in favour of the proposed changes by a majority of not less than 75 per cent. In the course of the following two years the issues would be referred to all the lower courts of the Church—namely, all district synods at home and overseas—and all the circuit meetings. Further, as a result of the amendment which was made by the Committee, there would also have to be consideration by church meetings.
  I think that the promoters are thoroughly happy with that situation. After the period of consultation at all levels of the Church over two years, the same issue would return to the Methodist Conference. It would come into force only if the Conference again agreed by a majority of 75 per cent. It is clear that any changes such as the amendment might refer to can only come about after thorough discussion and consultation at all levels of the Methodist Church.
  The amendment is suggesting that after all that process, which I can only regard as an extremely democratic one, any dissident members of the Church who did

  1035
  not accept the changes of doctrine that had come about should still have the right to preach, expound and maintain the doctrines that now exist, such dissidents being limited to those who held office at the time of the enactment of the Bill. After all the due processes of consultation by the Methodist Church in an attempt to come to a decision about an important change in its doctrinal standards, it would seem strange to me that when the change came it could be ignored by those who did not agree with it.
  That effectively is what the amendment is asking—namely, that we play the game but that when the whistle is blown at the end, when the result is known and the decision is reached, people can still carry on as if they did not agree with it. That seems to be a total undermining of the idea of a united church.
  If the Methodist Church is to be a corporate body and to have a set standard of doctrine, surely it is in the essence of a church that it should have a common standard of doctrine accepted by all those within it who expound, preach and maintain that doctrine. It is true that within Methodism already there is a wide measure of interpretation of the doctrinal standards set out in the Deed of Union. One of the curious features of the debate is that it is not really in touch with what Methodism is like. In the circuits and in the chapels that I see as I go around conducting services, I know that there are a multitude of different views on doctrine. One of the embarrassments in the Methodist Church at times is that in circuits where they are short of preachers they have to import people from other denominations to conduct services. Some of the doctrines that are expounded from Methodist pulpits in those circumstances can be very strange.
  Anyone who thinks, as evidently the hon. Member for Berwick-upon-Tweed does, that somehow there is a rigorous police force within Methodism which ensures that standards are observed throughout the country is totally out of touch with the life of Methodism. The Church does not work like that. It is a voluntary organisation. At this time, like all the Christian Churches, it is battling against the tide. In a set of circumstances in which it is increasingly difficult to keep the life of the Church at its former
  1036
  strength, no one in it can afford to lay down the law on what should and should not be preached.
  There is wide interpretations within Methodism of the doctrinal standards set out in the Deed of Union.
  Mr. Richard Wainwright: The hon. Gentleman has painted a vivid picture—no doubt in many parts of the country an accurate one—of a state of near anarchy that exists in Methodist circuits in which the regulations that are enshrined within the Methodist Church Act are not enforced. If that be so, and if the hon. Gentleman thinks that that will continue, why is there any need to resort to legislation if there is no enforcement?
  Dr. Marshall: That is probably a true statement—namely, that there is no need to resort to legislation, and certainly not in the form of the amendment. Indeed, the amendment is totally unnecessary. The reason why entrenched doctrine should be ended is that it seems anomalous that a free church should be under parliamentary control as regards its own doctrinal standards. The amendment, if carried, would be a vestigial form of that entrenchment. It would be maintaining a form of parliamentary control over the doctrinal standards observed within the Church, at least by some members of the Church.
  Although I do not think that, whatever happens to it, the amendment would make a great deal of difference, on balance if we are to end the entrenched doctrine we should remove all question of parliamentary restriction on the standards that are observed within the Church.
  The doctrinal standards of Methodism as laid down in the Deed of Union are not, as some hon. Members might think from the debate and from the wording of the amendment, a list such as the 39 Articles—for example: "1. Thou shalt observe the truth of such and such; 2. Thou shalt not believe in the infallibility of the Pope." There is no list, and no sudden changes can come about.
  I quote from Clause 30 of the Deed of Union 1932 to give the feel of it:
  "The Methodist Church claims and cherishes its place in the Holy Catholic Church which is the Body of Christ. It rejoices in the inheritance of the Apostolic Faith and loyally accepts the fundamental principles of the historic creeds and of the Protestant Reformation. It ever remembers that in the Providence

  1037
  of God Methodism was raised up to spread Scriptural Holiness through the land by the proclamation of the Evangelical Faith and declares its unfaltering resolve to be true to its Divinely appointed mission."
  Clause 30 continues in the same vein. There is a breadth of interpretation. There is no recourse to the application of a set of rules like a catchism which everyone must repeat and observe from one Sunday to the next.
  It is completely out of touch with the whole ethos of Methodism—which is a fellowship of people of which there is one head. Christ himself—to think that we can have a legalistic bandying about of words which will safeguard the doctrinal standards of individual members. The church does not work like that.
  Mr. Nigel Spearing: That is how the Church should work, and the Methodist Church often does work as a fellowship, but we should not be having this debate on consultation and so on if it worked out in the way my hon. Friend suggests.
  Dr. Marshall: My hon. Friend may hold that view. It is a shame that so many of these issues should have been raised within the parliamentary procedure, but I recognise the right of all hon. Members and their constituents to make these points. The Methodist Church has not come particularly well out of the process of the Bill and the various considerations raised on both sides. Whatever happens with the Bill, however, the future of the Methodist Church will be very different and there will be a much fuller measure of consultation on similar matters in the future than there has been in the past.
  It will not be the end of the day if the amendment is carried. On the other hand, there is no need for it. We do not need unnecessary legislation. There is no reason for inserting this clause in the Bill, and I hope that hon. Members will agree that it is unnecessary.
  Mr. Paul Dean: I am glad to follow the hon. Member for Goole (Dr. Marshall) because I, too, rise to support the Bill and to speak against the amendment. As a member of the Church of England, it would be presumptuous of me to attempt to put detailed arguments against the amendment. In-
  1038
  deed, they have already been put forward more effectively by the hon. Gentleman.
  I should like to put to the House two general points which lead me to the conclusion that the amendment is not desirable and not in keeping with the spirit of the times. First, we are in the midst of what might be called a quiet revolution in the religious life of Britain. There are many encouraging signs. There is a growing interest in religion and the message of Christianity. The Lambeth call made 12 months ago by the Archbishop of Canterbury and supported by leaders of the other churches reverberated round the nation and received concentrated publicity which would have been undreamt of even five years previously.
  It is also encouraging that the unhappy divisions of Christendom are breaking down. Suspicion and hostility between denominations are giving way to understanding and friendship. We are doing things together and even worshipping together. That does not mean that we want one lowest common denominator type of religious observance. I hope that we continue to maintain the richness and variety which is as important in religious as in other aspects of life.
  It is encouraging that at long last we are recognising that we are all on the same side and that all worship the same God and, therefore, have the same unity of purpose. There is also the happy feature that church attendances are going up. There are signs that the long drift from the pew on Sundays has been halted.
  With all these new and encouraging circumstances of growing interest, greater unity and growing church attendance, the churches need freedom to responce. They are rightly asking themselves how best to appeal to contemporary Britain, how to get across to those who have no recent experience of regular church-going. In these circumstances, it is no accident that all churches are experimenting with revised orders of service in modern language and the like.
  Material problems hit the churches as hard as anyone else. There are the problems of inflation, the upkeep of old and extensive buildings, making the best use of a smaller number of clergy and how to pay and pension the clergy in

  1039
  modern inflationary circumstances. Therefore, the churches need the maximum freedom to respond to this new religious revolution and to the material problems which they face.
  My second point is that the whole trend in recent years has been towards responsible self-government for the churches, less interference by Parliament and more freedom for churches themselves to make decisions through their own constitued authority.
  Mr. Beith: What the hon. Gentleman says applies particularly to the Church of England and the passing of the Church of England (Worship and Doctrine) Measure. I hope the hon. Gentleman recognises that Methodism owes no debt to Parliament for its doctrines, policy or any other feature, except in so far as it has asked for it and sought its regulation to meet its own requirements of union and so on. In some senses the story is the other way round.
  8 p.m.
  Mr. Dean: I agree. I take the hon. Gentleman's point and I shall deal with it later, together with the somewhat strange situation that we are discussing a matter of this kind at all.
  I welcome the opportunity to discuss the matter and I hope that we shall continue to maintain close links between the Church and the State. We are more likely to preserve those close links if parliamentary interference is kept to a minimum. In particular, I submit that there must be strong arguments for Parliament to reject a measure sent to it by a responsible church with a particularly constituted governing body. We should be doubly cautious about matters of doctrine.
  The hon. Member for Berwick-upon-Tweed (Mr. Beith) said in his speech that we were not really dealing with matters of doctrine, and I was encouraged and reassured to hear him say that he would be strongly opposed to Parliament interfering in matters of doctrine. I submit to him, however, that we would be doing that if we accepted the amendment. The amendment would be inconsistent with the Bill and with the freedom for which the Methodist Church is asking.
  What would the amendment amount to in practice? Surely it would mean that
  1040
  in certain circumstances the Church should have no power over doctrinal standards. As the hon. Member for Goole said, in certain circumstances some individuals would be able to ignore the doctrinal standards laid down by the duly constitutional body. I submit that that would amount to direct interference in doctrinal matters by Parliament, which the hon. Gentleman said that he did not wish to see.
  It may seem strange that the Methodist Church, with its traditions and character, should be so tied down by Parliament, but we know that the explanation lies in the events leading to the union of 1932 and the 1929 Act which paved the way for the union at the request of the Methodists themselves. Surely the point today is that the Methodist Church is now asking Parliament to release her from the bonds of the 1929 Act which, she feels, are no longer appropriate. The Methodist Church has made the case, and I hope that the House will respond to it and not feel it right to impose the restrictions contained in the amendment.
  Mr. Ronald Atkins: It seems that the objectors to the Bill lack faith in their own Christian adherence as they assemble at their conference. On the other hand, it seems that they have more faith in this House, consisting as it does of Roman Catholics, Anglicans, Presbyterians, Baptists, agnostics and atheists, and that they turn to this body to safeguard their religious beliefs.
  The greatest authority for the Christian religion is Jesus Christ. He gave exactly the opposite advice. He said:
  "Render therefore unto Caesar the things which are Caesar's".
  He did not say: "Render unto Caesar the things which are not Caesar's". But that is precisely what the Methodists did in 1929. They were wrong to introduce the Bill in one respect, but it was for the sake of expediency and to join together the three separate bodies of the Methodist Church. It was a sensible way of doing things, but, although it was sensible then, it is not necessarily right nearly half a century later. It was obviously a temporary measure to unite the Methodists, so that they could see that there was no harm in the union. Few people then thought that there was no harm in it.

  1041
  The objectors seem to say that they cannot trust their fellow Christians and cannot trust their annual conference on this subject despite the fact that it recommended that it should be discussed at grass roots.
  It is sad that members of the Methodist Church have so little faith in the future of Christianity that they cannot trust decisions on future doctrine to their own members. Anyone who joins a body—whether political or religious—in which he believes—should have enough faith in that body to trust that it is likely that the group of people concerned will follow the right course. Nothing has been said to us to indicate that the Methodist Conference is hell-bent on self-destruction or on destroying Christian beliefs. Therefore, why not trust that body rather than one such as this Chamber, which is not particularly religious? It seems extraordinary not to do that.
  In one of the amendments the objectors suggest that somebody entering the Church when the doctrine was formulated and entrenched by the 1929 Act should he in a vested position, and that vested interests should be considered. That must be so, because if that person's conscience were affected he could leave the Church and find an outlet for his religious expression in another body, or by himself.
  I remember the famous Methodist preacher and orator, the Reverend Leon Atkins. As a boy I listened to him and found him a powerful speaker. He found it difficult to accept the United Methodist Church, and turned to congregationalism. He was a great gift to the Congregational movement. Hypothetically, those people who find that the conference changes the doctrine of the Church so much that they can no longer adhere to it, can express their opinions outside. But the amendment seems to imply that because they took up a position and remuneration some time ago they should be allowed, if necessary to preach doctrines that are contrary to those laid down by the Conference of the Methodist Church. That would be an intolerable situation. If hon. Members are concerned about the vested interests of these people, surely such action here is inappropriate when we are concerned with religious bodies and the state of conscience.
  1042
  When one joins an organisation, whether it be a political party or a religious denomination, surely one retains sufficient faith in one's fellow members even when that body changes its doctrine or its policies to a minor degree. I cannot envisage the Methodist Conference doing more than changing doctrine to a minor degree. In such circumstances, one surely still has enough in common with the body one has joined to stay with it. How many of us in this House have never differed with their party on something or other? Yet we believe sufficiently in the ethic of the party to stay with it. That is surely the case here.
  I think that there will be very few dissenters if the Methodist Conference should change doctrine to a minor degree. Judging by the record of the Methodists, they are most disinclined to change doctrine at all—perhaps the most disinclined of all religious denominations. I have faith that the Methodist Church will continue fundamentally to teach the doctrines of John Wesley.
  But if one is concerned with a vested interest, surely this amendment is not the way to defend it or to put things right for these people from the mercenary point of view. It is pretty unreasonable that it should be attempted. I have been in the teaching profession—perhaps "vocation" is the better word—and I know that when a teacher of religious instruction is engaged to teach religious studies it is possible that in his career the syllabus will be changed. He cannot for that reason say "I should have power to continue to teach my religious studies based on the original syllabus". That would be an unreasonable position for him to take up. The honourable position would be for a minister in the Methodist Church, to accept minor changes of doctrine or to leave the Church and find a place elsewhere for the expression of his religious beliefs.
  We do not expect all teachers, all preachers and all ministers of the Methodist Church to die on the cross—that would be asking a lot—but we can expect them to risk the possible ending of their remuneration if they decide that they can no longer teach the Christian religion as defined by the Methodist Conference.

  1043
  The Bill puts right something that was wrong in 1929, and it is particularly important to have it now because there is need for change in minor ways in every religion. We have seen changes in the Roman Catholic and other denominations without which Christianity would be harmed rather than helped. With the development of 20th century attitudes, it is possible and desirable for the Churches to adapt themselves to the genuine beliefs of some of the young people who are not satisfied with all the traditional statements of all that their Churches stand for. It is perfectly reasonable that there should be some flexibility on minor matters.
  I believe that the Methodist Conference is not bent on radical changes in doctrine. That being the case, it is a healthy sign that the Methodist Church has sponsored this Bill, which has the support of the Methodist Conference. Although the Select Committee recognised that the discussions should have been more extensive at grassroots level, that will be put right, and is embodied in the Bill. I hope that the Bill will be passed, because I think that it will help Methodism and Christianity in general.
  8.15 p.m.
  Mr. Peter Mills: I welcome this opportunity of saying a few words. It might be felt that it is impertinent for a lay reader in the Anglican Church to speak about a Methodist Bill, but I think that it is right that I should do so, not only because I am a Member of Parliament but because I have the great privilege of speaking frequently in Methodist chapels and I was at one time a Nonconformist and I have not forgotten my early upbringing.
  I support the amendment. I believe that it is of importance. Whatever people say, there is still considerable concern about these various proposals. I do not find, from my mail bag, that the fears have lessened, but I do find that many more ministers are writing to me in support of the Bill. It is interesting that in the past it was the laity who were writing to me about their concern and now it is ministers in support of the Bill who are writing to me. I leave the House to judge in that matter.
  1044
  I am not prepared to block the Bill. I think that it should go forward now, although I am still not entirely happy. I believe, however, that the amendment should be carefully considered by the House, because the House has a right to consider these matters. If the Methodist Church or the Church of England brings in a Bill, we should consider it very carefully. It should not be allowed to go through on the nod because, as some people who have written to me have suggested, it is claimed that it is none of our business and that the House is composed of Christians and non-believers. If a Bill comes before the House, it is our duty to consider it carefully and to bring in amendments that we think necessary. There is no need to be embarrassed about it or to make excuses. That is what the House is about.
  For example, as an Anglican, I think that it is a good thing that some years ago the House acted as a long-stop and prevented some changes in the Prayer Book. It is also true that many Methodist ministers regard the House as a referee, particularly on possible changes in doctrine. However, many ministers have the opposite view. It may well be that this is the last appearance of a Methodist Bill in this House, and that may be a good thing—I would not like to argue the point. But if it is the last time, because of what we did on the previous measure many years ago, there is all the more reason why we should look at the Bill carefully and consider the amendment.
  The amendment is important to the South-West of England. One may think that strange, but it is important there because in the South-West there are various patterns or forms of Methodism. It so happens that a little place called Shebbear, in my constituency, is the home of the Bible Christian Methodists—most important people. They differ from other Methodists in their views and doctrine. They hold what are to them certain crucial doctrinal standards and views. The amendment would help to protect them. They would be able to continue to hold and to preach their views. I think that is important. I am not saying for one moment that the Methodist Church as a whole would be likely to bring in any major doctrinal changes, but there are groups of people in

  1045
  Methodism who are concerned and slightly worried. For that reason I believe that it is right that I should speak about it and support the amendment.
  I do not disagree with the hon. Member for Goole (Dr. Marshall) when he talks about a united Church. We all long for this. The most terrible part about Christendom is that we are not a united Church. We want to be a united Church. Our Lord longs to see a united Church, but we are only frail and human, and, unfortunately, we have not a united Church.
  In every denomination a certain degree of latitude is found. There are always some people who think differently. I believe that this should be allowed. The amendment seeks to allow and to protect this.
  Like the Anglican Church, the Methodist Church is really a coalition of views. The members are not all agreed on any certain doctrinal basis. It is no good anyone in this House saying that they are. I believe that in many ways it is the Church of England's strength that it embraces people who are Anglo-Catholics and people who are Evangelicals. They hold different beliefs and different views within the Anglican Church. It can also be the strength of the Methodist Church that it tolerates and allows various groups within it. We want a united Church united in its aims, but surely we can worship, think, talk and discuss in different ways rather than being in a set stream. I think that this right ought to be protected.
  The hon. Member for Goole said that some strange people preach in Methodist pulpits. Perhaps I am one of them. All I can say is that I am constantly getting letters, and had another one today—
  Mr. Fred Evans: Will the hon. Gentleman please realise that in spite of the 1969 legislation on the sharing of buildings—the Model Deed of the Methodist Church—it could be argued that he is acting illegally?
  Mr. Mills: I must say sincerely that all I seek to do is to extend the Kingdom of God, and if the Methodists think that I am fit to go into one of their pulpits to take a service in an emergency—or perhaps a special one—I shall continue to do so until I am told otherwise.
  1046
  There are, then, strange people, perhaps, preaching in Methodist pulpits, but I believe that in many ways that is a good thing. There may be special preachers, or strange preachers, such as myself, but that is entirely different from the position of paid Methodist ministers or deaconesses who may be out of step with the new agreed doctrinal standards. It may be said to them "You are out of step and you may not continue to preach." I believe that the amendment is seeking to safeguard and to protect these people, so that they may be allowed to continue.
  There are people who are highly sensitive to certain doctrinal matters—particularly the Evangelicals, as compared with the Modernists. It is no good denying that in both the Anglican Church and the Methodist Church there are modernists who really are out of step with the Evangelicals. There is no question about it. We have to live with this. We do not like to say it, but it is a fact of life.
  I think that if the House were to accept the amendment it would help to maintain confidence and to allay fears. There is nothing wrong in this. Surely the promoters of the Bill can see this. Surely, if they think carefully and in a Christ-like way, they can see the fears of certain people. I see no harm whatsoever in bringing in the amendment. I believe that it would do a tremendous amount to help in the present situation. I hope that the promoters of the Bill will be sensitive to these people and that the amendment will be allowed.
  The hon. Member for Preston, North (Mr. Atkins) talked about faith. It is a very good thing for people to have faith that the Methodist Church will care and will be sensible and sensitive. Surely that is right. It is right, too, that people should have faith that the doctrines of John Wesley will continue. But I am sure that the hon. Member realises that there are trends away from these things, and that that makes it extremely difficult for those who want to hold on to the very basis of their own belief in Methodism.
  I have heard many sermons in the Methodist Church that are miles and miles away from what John Wesley preached. The same sort of thing can be said of many sermons in the Anglican

  1047
  Church. Of course, faith is important, but it is also important to have consideration for and to be sensitive to the problems and fears of others. I hope that the amendment will be accepted.
  Mr. Fred Evans: I certainly have every sympathy with the amendment and would be the first to admit the deep humanitarian motive that underlies it. I cannot, however, see my way to accepting it. I hope that I shall be able to give some fairly cogent reasons for my position.
  There are still some vestigial remnants of the older thinking of the period from 1929 to 1932. I believe that we should never have had thrust upon us, however unwillingly, the power and capacity to act as arbiters in doctrinal matters. If we are to give to the Conference of the Methodist Church the right to rule its own destiny, we must see that no vistiges at all remain.
  I speak as a non-Methodist, and I have always been struck by the great tolerance of the Methodist movement and the way in which its people incorporate so many different points of view. This augurs well for what will take place should the Bill become an Act. I suppose that the essence of it has been summed up tonight in that Methodism is really a way of living. It is the ethos of the belief that leads to this width of outlook, and this in itself will afford a reasonable protection.
  The second matter to which I draw attention is that the debate so far has been unmarked by any deep delving into doctrinal matters. I was happy to hear the hon. Member for Berwick-upon-Tweed (Mr. Beith) make this point, because it was not so in the Second Reading debate, when there was a tendency to delve into matters of a doctrinal nature.
  The plain fact is that when the Methodist Conference was the ruler of its own destiny in doctrinal matters, as it was for such a long time, we did not see very many serious disputes about doctrine, and the situation which arose leading to the period from 1929 to 1932, when investigated historically, will, I think, show multitudes of reasons for that situation, very few of them doctrinal and some of them of a trivial and very petty nature.
  We therefore find ourselves the custodians of an entrenched doctrine. But are we to argue that, however much the
  1048
  world changes, entrenched doctrine will remain entrenched doctrine? I thought that there was a hint of this in the remarks of the hon. Member for Berwick-upon-Tweed—
  Mr. Beith Mr. Beith indicated dissent.
  8.30 p.m.
  Mr. Evans: The hon. Gentleman does not agree. However, anyone who travels the country and talks about these matters to people will discover that very many of them do not even know that their doctrines in Methodism are entrenched because they had passed on to them the situation before 1932 and this has become a tradition with them.
  I do not think that safeguards can be written into legislation. Again, time will pass by. The evolutionary process will take place. As the world has altered, so our attitudes to religious faiths have altered—not the faiths themselves, but our attitudes to the forms of expression and organisation of the faiths have changed.
  In Clause 30 of the Deed of Union, for example, it was encumbent upon the priesthood of 50 years ago to say that they accepted the priesthood as their sole occupation, whereas today we have moved so far that we have worker priests and people of all kinds working in the various churches. We accept those changes, and so do the churches. Yet that provision is still there in the Deed of Union, and it is argued that it is now impossible probably for the Methodist Church to insist upon its priests being 100 per cent. involved in that sole occupation of the priesthood. We have people who teach religious instruction in schools. We have people doing various other tasks. We do not see them as incompatible—
  Mr. Beith: The hon. Gentleman must know that the very Deed of Union to which he has referred says quite clearly that the Methodist Church believes that no priesthood exists which belongs exclusively to a particular order or class of men but that, in the exercise of its corporate life and worship, special qualifications to discharge its special duties are required, and that the passage about sole occupation indicates simply that some are called and ordained to the sole occupation of being Christ's ministers in His church.
  Mr. Evans: I am no expert, but I believe that the Methodist Church is the only Church which has the organisational set-up of adherents. I see a further safeguard in the fact that the Church has vast numbers of people who are extremely busy in supporting their churches but who do not feel it incumbent upon them to become members. For one reason or another, they do not wish to be members. Nevertheless, they play a vivid and active part in the life of their churches. These people are some 900,000 strong as compared with the official membership of 500,000. I cannot see a religion which is willing to accept this concept with such breadth of vision yielding for one moment to a situation which might savour, however mildly, of witch-hunting.
  In the evidence which the Committee received, this point was dealt with by the Secretary of the Methodist Church. He was at pains to point out that while situations of disagreement did arise there was always great tolerance, a willingness to discuss and a willingness to act in a helpful way to see whether the dissent could be accommodated. In the final analysis there has been a willingness, if dissent is adamant, to try to find a denomination in which the tenets held by a person in that position would be more acceptable.
  I know of a well-known parson, unfortunately now deceased, to whom all this applied, and there was a great deal of kindliness in the whole situation which filled me with even greater admiration for the way in which Methodists conduct their affairs.
  I believe that doctrinal issues will be very rare. In the history of the Methodist Church they have been so rare, in fact, that they can almost be discounted. I believe that in future the rarity will be even more so now that the Methodist Church will be given—if the Bill passes—the right to decide its own doctrinal affairs.
  I turn now to the situation in which someone is completely adamant in his dissent. I do not wish to introduce a sense of levity, but this reminds me of a situation in which an academic body decides that the world is flat. A young Galileo comes along with different thoughts, and as time goes by the roundness of the earth is accepted by all but one or two people. These dissenters say that it was
  1050
  on the belief that the earth was flat that they entered the academic organisation, and that they will remain flat earthers. They demand the right to propagate their principle of flat-earthness in spite of all things said to the contrary and despite efforts to dissuade them. The organisation should then say that it accords them that right, that they may remain where they are and continue to preach the same beliefs that they have preached hitherto. This is the kind of argument one hears.
  We can safely entrust the Methodist Church, after the history of this exercise of trying to regain the one power which every other Church has, and which was taken from it, to look after that power.
  I end as I started by paying tribute to the very sincere and humanitarian outlook behind the introduction of the amendment, but I hope that the House will reject it.
  Mr. Richard Wainwright: In the interests of close debate, I take issue at once with the final point made by the hon. Member for Caerphilly (Mr. Evans). I believe most emphatically that we are not discussing anything remotely analogous to a flat-earther teaching a school of physical science. If we were I would not be speaking in favour of an amendment of this kind, because it would he too ridiculous.
  We are speaking about a vast and mysterious subject on which there can be no precision and, in my view, no precise or always valid dogma. If we are talking about a school of physical sciences, and if a proven physical discovery had been widely debated in the scientific journals and held to be a new truth, it would be pernicious for that school to permit the teaching of some physical scientific fact which had been wholly disproved. But that is a million light years away from the matter of the human spirit and the divine purpose and being which are central to the matter tonight.
  I am inclined to think that the House should be grateful to the hon. Member for Devon, West (Mr. Mills) for reminding us, after some rather purple passages elsewhere, that those who entangled the Methodist Church with the parliamentary process, the people who have caused these debates, are the Conference which has promoted the Bill. It is intolerable

  1051
  for it to be continually alleged, especially outside the House—and here I use a phrase which might amuse you, Mr. Deputy Speaker—that Methodism is being entangled with "a secular court", as this House is described in Methodist papers. If anyone has entangled a secular court with the affairs of Methodism, it is not the proposers of the amendment or those who objected to Second Reading but those who promoted the Bill.
  Let me be more blunt as a West Yorkshireman than some of the more polite speakers tonight. It seems peevish of those who have promoted the Bill and have asked Parliament to take action to complain when Members of Parliament, who have plenty of other things to do, feel it their bounden and conscientious duty to enter certain objections against all the odds and against the barrage of obedient ministerial letters which have been sent to us in response to an instruction from headquarters.
  Mr. Ron Lewis: Does not the hon. Member agree that it is peevish for the upholders, calling themselves the voice of Methodism, and having failed at the Methodist Conference, now to try to use the House to achieve their objectives?
  Mr. Wainwright: No. I reassert that if people promote a Bill in Parliament they inevitably expose themselves to the consequences of their action. I cannot abate one tittle of the rights and duties of Methodists who have carefully considered this matter to act as the promoters have done and take advantage in a proper manner of the parliamentary process
  I am grateful once more to the hon. Member for Goole (Dr. Marshall) for sketching most accurately and vividly, and in a thoroughly characteristic way, the whole atmosphere in which most of the Methodist Church does its work. He was at pains to point out that we are not a body devoted to precise definition. Precision is not one of the main Methodist virtues.
  The hon. Member for Goole illustrated with exemplary accuracy that Methodists are a fellowship and do not attach any great importance to precise, legalistic, medieval, theological uniformity. When he gave us that sketch, the hon. Gentleman gave us the amendment. The only
  1052
  conceivable objection to the amendment is that theory is not looked at with a totally cold eye of logic which, fortunately, the House has the sense to use only rarely.
  8.45 p.m.
  It might seem slightly illogical for the Methodist Church to arrive at a new doctrine and allow, for a limited period, certain ministers a dispensation, but the hon. Member for Goole, with perfect accuracy, pointed out that Methodists, preachers and congregations, are a fellowship and are not a body of logicians.
  Mr. A. P. Costain: Does not that situation result from having ministers ancient and modern?
  Mr. Wainwright: We cannot get away from that fact, and I regard it as an advantage and part of the wonderful variety of human tapestry in which we work.
  Dr. Edmund Marshall: In addition to being a Methodist, I am a mathematician, so perhaps I might comment of the hon. Gentleman's remarks about the logicality of the situation. If we are to accept within the Bill that doctrine should no longer be entrenched logically, the deduction from that is that there should be no remaining parliamentary direction over how the doctrinal variations within the Church should be organised.
  Mr. Wainwright: But the whole Bill is about parliamentary direction for the ordering of the Methodist Church. It does not lie in the mouth of the hon. Member for Goole, who has given great consideration to these matters, to say that Parliament is now getting rid of its responsibilities for Methodist matters. There are still enormous areas of parliamentary supervision over Methodist property and trust deeds. If Methodists want to alter trust deeds they will have to come to Parliament.
  One point has so far not been brought out. This is a rather solemn moment. Parliament is handing back to Methodism what, as the hon. Member for Preston, North, (Mr. Atkins) said, Parliament was asked to take on in 1929.
  Any trustee about to divest himself of his responsibilities has a moral, and often

  1053
  a legal, duty to look round the whole sphere of his trust and, before quitting, ask whether the beneficiaries for whom he is responsible are being properly looked after and are being handed over in a proper condition to a proper regime. That is what Parliament is being asked to do.
  I am surprised that a non-Methodist hon. Member has not asked whether ministers, who may have given half their lives or more to the Church and might now face a great crisis of conscience versus feeding the family, should not have been given proper protection by the goodhearted Methodist people themselves.
  The message of the Bill is that Methodist officials—though I am sure they regret it now—never took steps to put themselves in the position of being able to tell Parliament that they had firm and indisputable evidence that the mass of the members of the Methodist Church supported all the provisions of the Bill. Unfortunately, neither the Bill nor an abstract of its provisions was put before the circuits of the Methodist Church.
  Mr. Fred Evans: In examining the evidence, we discovered that every Methodist minister had received a copy of the Bill, that it had gone to synod level and that 8,000 copies, were distributed.
  Mr. Wainwright: I was saying that it was beyond dispute that the Bill contained matters that were never laid before the circuit meetings of Methodists. That means that consideration was limited only to certain indirectly-elected bodies mostly of committed ecclesiastics. Therefore, the answer to the hypothetical question "Do not Methodists look after their own?" is "Yes, we usually do, but on this occasion Methodists have not had a chance to consider whether there might be a problem." As so often happens, the matter is left to this House to look after what may be a small minority of extremely worthy and deserving cases.
  Let me try to meet another possible objection which has not so far been raised but which might be nut in the form of the question "Why did not the Select Committee, which spent so many hours labouring on the Bill, take this point?" Incidentally, we owe a great debt of gratitude to the Select Committee.
  1054
  It devised its own amendment on how doctrine can be changed by conference, which has driven into the official structure of the Methodist Church a most potent wedge of genuine democracy. The Select Committee has insisted that matters of doctrine must be the subject of consultation down to local church level. That has greatly eased the feelings of many of us who otherwise would have felt obliged to oppose the Bill to the end.
  On the matter we are now debating, I suggest that mainly owing to the attitude of the petitioners' counsel, who perhaps was coming to the end of a wearisome week, the Select Committee was not given an opportunity fully to explore in every detail the kind of amendment we are now proposing.
  Mr. Ronald Atkins: We asked the promoters time and again whether there was any intention to change doctrine. We always received the answer "No" and were told that it was merely a hypothesis that doctrine was to be changed. That being the case, it was not necessary to make Provision for something that was not expected to take place. No doubt if there were such a change that conference could deal with the problem when it arose.
  Mr. Wainwright: I do not believe the most enthusiastic promoters of the Bill would claim that they wanted so blatantly to have it both ways. No promoter can come to Parliament and say "We solemnly seek powers to change our doctrine, but we have not the slightest intention of doing so. Therefore, let us not bother about it."
  Mr. Ronald Atkins: The promoters were saying "We no longer wish Parliament to be the arbiter of our conscience."
  Mr. Wainwright: I do not wish to waste any more time on that matter—
  Mr. Ron Lewis rose—
  Mr. Wainwright: I am sure that the hon. Gentleman will have an opportunity to make his comments later.
  However, I ask the House to bear with me briefly while I take hon. Members over the main points of what happened in Committee when this matter, the subject of the amendment, was raised. First,

  1055
  the Secretary of the Methodist Conference, in a reply on page 38 of the minutes of the second day's evidence, said that he understood the case, but
  "it is just very difficult to see how any provision of that kind could be made."
  We believe firmly—no one has controverted it tonight—that our amendment provides one method of doing exactly what is required.
  Secondly, in discussing a change of doctrine, the answer of the Secretary of the Methodist Conference, throughout the whole of a long reply, implied that changes of doctrine would always, inevitably, be for the better. His version of a change of doctrine was a
  "deeper understanding and interpretation of truth."
  Mr. Ogden: Send for reinforcements.
  Mr. Wainwright: However, surely the possibility must be envisaged that sometimes, in the whole length of human history, there have been changes promulgated in thought and doctrine which have not been a deeper understanding and interpretation of truth but have been, in fact, regressive. That is the unfortunate possibility that we must bear in mind when other people ask Parliament for certain power.
  Then, at page 39 of the minutes of the second day's sitting of the Committee, an hon. Member serving on the Committee, no doubt unfamiliar with Methodist practice, asked the Secretary of the Conference:
  "Would you not say that this has already happened to a very substantial extent both in the Church of England and even more possibly in the Church of Rome?"
  The Secretary of the Methodist Conference answered—no doubt off the cuff, in a hasty session—
  "I think that is so, sir, yes."
  We from this side in the debate shall have failed if we have not made it clear that we are dealing with a rigorous system of church discipline. It may not often be enforced. However, we are talking here about what the law is, and not how it is applied. We are dealing with a rigorous system of church discipline which is entirely different from that of the Church of England. With respect, the suggestion in Committee that all that was happening was that things were being
  1056
  brought into line with the Church of England was simply untrue.
  Then arose the whole question as to how the conference would be likely to behave if it were confronted, after a change of doctrine, with a minister who wanted to stick with the old doctrine. Very fairly, the officials of the conference maintained that the conference was a very humane and sensitive body and that in some way or another, which was not specified, these matters would probably be resolved, but that if they were not the conference would say goodbye to the dissenting minister in the kindliest possible fashion.
  We say that the situation of a minister running the risk of having a handshake of farewell, no matter how kindly given, is not tolerable. One is bound to point out—it has not yet been pointed out in the debate—that in recent years two Methodist ministers have been expelled on the grounds of their beliefs. Going back further in history, the particular Methodist church to which I belong, an official Methodist church, was founded by the 1,000 sympathisers in Leeds of three senior Methodist ministers who were expelled from the conference in a parody of judicial proceedings, which The Times said were worse than the Star Chamber.
  9.0 p.m.
  One cannot repose faith in the comments of a particular temporary officer of the conference, no matter how sincere his words may be.
  Mr. Ron Lewis: I appreciate the point that the hon. Gentleman is making. He has given the impression that the Methodist Church has been most unkind—indeed, cruel—to members who are expelled. It should be said on behalf of the Methodist Church that it bent over backwards to try to help those two colleagues.
  Mr. Wainwright: As I have said before, I hope that the hon. Gentleman will later make his speech in his own way.
  I come now to the final point, hon. Members will be relieved to hear, about the hearings in Committee. It was suggested by the petitioners, as indeed we who propose the amendment suggest tonight, that a number of ministers and deaconesses entered the ministry of the Methodist Church with some confidence

  1057
  in the knowledge that the doctrine was virtually entrenched, because it could not be altered without all the bother and the risk of coming to the House.
  This matter was aired too briefly by counsel in Committee, and the answer of the Secretary of the Methodist Conference seemed to me to be very surprising. He said:
  "…most of our ministers never give it a thought. The vast majority of our members, until this blew up, were unaware of the fact that we were shackled in this way; in other words, they did not know anything about the history of 1929–32."
  We are talking entirely about ministers. The reference to members in Committee was irrelevent.
  We on this side dispute the suggestion that those who have been trained in Methodist colleges where church history is a compulsory subject have not at least been given the opportunity, if their ears were open, to understand the comparatively recent history of the Methodist Church.
  I can speak for only one college, now closed, which has trained hundreds of eminent Methodist ministers—the college at Headingly, Leeds. I assure Members that a number of Mehodists in Leeds were conscientious in ensuring that at the Headingley college the history of each of the different strands of Methodism, with no particular predominance to the ancient strand but with full recognition of the newer strands, was properly taught to those entering the Methodist ministry.
  It is a little hard on the staff of those colleges that the secretary of the conference should suggest that those now in the Methodist ministry are woefully ignorant of a central part of Methodist history.
  All that we are seeking is a dispensation for a strictly limited time of the working life of people already in the ministry—an arrangement, therefore, which has a limited period of validity and which is only a dispensation. The amendment does not ask that Methodists should be required to tolerate two parallel and different formulations of doctrinal standards. As the Bill goes through, Methodists will establish their own doctrinal standards, but we say that, as in literally dozens of other Acts of Parliament which bear upon flesh and blood, which bear upon people who have committed their
  1058
  careers, as in the case of many other pieces of legislation, there should be a dispensation for those who have pursued a particular line of belief for many years and whose consciences would be put into an intolerable position if the law were to prove a steamroller.
  Mr. David Hunt: I welcome the opportunity to speak on the Bill. I admit that I found these provisions most confusing at first, as they cover not only doctrine but property.
  I admit also to some misgivings, particularly when I received from constituents, whose opinions I value considerably, letters expressing great concern about what they said was a great lack of consultation about the provisions of the Bill.
  The hon. Member for Berwick-upon Tweed (Mr. Beith) mentioned a memorial passed by the Hoylake and West Kirby circuit, within my constituency, which deplored the lack of information about the Bill. I shall refer to that memorial because it governs to some extent my initial concern about the Bill.
  That memorial, passed almost unanimously within the Hoylake and West Kirby circuit, said:
  "We deplore the lack of information concerning the contents of the Methodist Church Bill. We believe that such a fundamental issue requires fuller discussion. If serious mistakes of detail are to be avoided, there must be wide publicity and debate at the grass roots of our denomination. We therefore suggest that Conference should not discuss this until 1976 after the circuits have had opportunity to voice their opinion"
  throughout the country.
  It became clear to me from the correspondence I receivved that there were some fundamental misconceptions about the content of the Bill. The first letter I received, from lifelong Methodists, said that they did not want their doctrines to be altered by the Bill. When I heard of the memorial, I was very glad to have an opportunity of discussing the Bill with the ministers in my constituency. On closer consideration, I discovered that many of the worries of the two constituents who initially contacted me were not sustained by closer scrutiny of the Bill.
  I wish, therefore, to put the record straight. Since there was that initial concern within the circuit about lack of opportunity for discussion, I put to the

  1059
  Methodist ministers in my constituency a clear request that, in order to give people every opportunity, before we had this debate they should ensure that the Bill was put on the agenda of the various Church courts which have been meeting during the past few months.
  I am glad to say that they have done so, and there has been very full discussion at the circuit courts. Indeed, the circuit preachers' meeting, at which one of the objectors was given every opportunity to air his views, by about a 75 per cent. majority said that the Bill should be supported and brought into law as soon as possible, and a resolution to that effect was sent to me at the end of September. Now, therefore, people within my constituency, not just the ministers, have had an opportunity of considering the Bill, and I should make clear that the memorial originally passed has now been rescinded by a vote within the circuit meeting.
  Although I have had the privilege of listening to what I felt was an extremely well argued, logical and well expressed speech from the hon. Member for Colne Valley (Mr. Wainwright), why am I not persuaded by his rhetoric? I think that it is because I share the concern of one of the ministers in my constituency, the Rev. Edward Sainsbury, who told me that after due consideration he felt that the matter of doctrine ought to be within the hands of the Methodist Church and not subject to Parliament. The hon. Member for Colne Valley will quickly nod in agreement with that statement. But this amendment goes wrong because, in my view, the Methodist Conference should be the trustee of its own doctrinal issues, without parliamentary chains.
  The amendment would establish a statutory right to dissent. Having given the Methodist Conference the right to decide its own doctrine there would be a parliamentary sting in the tail which would enable any preacher—and the hon. Member for Colne Valley said that it might be a very small minority—to confuse the issues of doctrine by persisting with a previous element within the doctrine when a change had taken place, approved by an overwhelming majority at conference. After due consideration
  1060
  and consultation I have reached the conclusion that it is not fitting for us as a House of Commons to sit in judgment on the doctrines of Methodism. We should pass the Bill and reject the amendment.
  Mr. Stan Thorne: I do not claim to be an expert on the Methodist Church. I make that clear at the outset. Like many other Members I have received representations from people who appear to be on both sides of this argument. In that situation we come to what is inevitable in our rôle as Members of Parliament. We must make a judgment and act accordingly. To decide my course of action I have made a number of inquiries to clarify the issue. Having done that, if the problem were a theological one I would still feel somewhat sceptical about making a contribution, because I am no expert theologian.
  It seems, however, that this Bill is about democracy within a Church and not about theology. It is on that basis that I address the House. The Methodist Conference is a body that contains 50 per cent. elected clergy and 50 per cent. Methodist churchgoers. The conference has the right to determine doctrine in the Church, and that is presumably done on the basis of a majority vote. Within the local church situation it is the local members of the church who determine the nature of its activities. It is local churchgoers in part of my constituency and the adjacent constituency of my colleague the hon. Member for Preston, North (Mr. Atkins) who have made representations suggesting that a majority in the locality seeks support for this Bill.
  I do not wish to get involved in debating doctrine, because that is a matter for collective action within the Church and not for Members of Parliament. Clearly, some people in Methodism want to change the doctrine. That seems perfectly legitimate. But they will have to do that through the normal conference mechanisms that exist. The Church Council is democratically elected, whereas I understand that the trustees are not. They tend to be a self-perpetuating oligarchy. Since I am making a contribution that arises directly from constituency representations, I believe that the House ought to support the Bill without any amendment.
  9.15 p.m.
  Mr. Spearing: I think that my hon. Friend the Member for Preston, South (Mr. Thorne) and the hon. Member for Wirral (Mr. Hunt) have perhaps asked the wrong question. I do not think that there is very much risk of the Bill being opposed tonight. That is very unlikely. What is at issue is the amendment, and both hon. Gentlemen, with respect, addressed their remarks rather more to the Bill than to the amendment.
  I am certainly one of those who would not wish the Methodist Church to have to come to the House for any doctrinal test or change. But that is not the question. The question before us tonight is on what conditions this House permits, through this measure, a change in the structure and the way in which the Methodist Church formulates its doctrine, and what safeguards the House wishes or does not wish to put in in that process.
  The Select Committee has already put in an additional and a very important safeguard. I for one am satisfied with that. That is why I am not opposing the Bill, although I did so on Second Reading. Perhaps it was a good thing that some of us did oppose the Second Reading, so that that important safeguard should go in.
  The Methodist Church is a very important body. I am not a Methodist, although one of my parents was, but I can say that the Methodist Church is rooted in the history of Britain and, indeed, the history of this place. Many illustrious personages on the Front Benches—I think the last two occupants of the Chair—have a lot for which to thank the Methodists.
  Mr. Speaker: Order. The last three occupants.
  Mr. Spearing: I apologise, Mr. Speaker, for my inaccuracy, but it underlines what has been said about the Methodist "mafia". People often say that the party of which I am proud to be a member owes more to Methodism than Marx. I happen to think that a mixture of Marx and Wesley, although rather strange, is a good one. I thus speak with a vested interest in the continued health and activity of the Methodist Church.
  I should like to put forward three tests. First, how far did the discussions within
  1062
  Methodism come up to the standards which Methodism would itself set? Secondly, what protection is there for minorities in the proposals and, thirdly, how are they translated into legislative guarantee?
  I suggest that looking at these three questions we come up with an answer that the Bill is unsatisfactory at the moment. I think it has been agreed, even by the promoters, that a little more might have been done in respect of consultation. I was speaking to a constituency colleague who is well known in the public life of my constituency and asked him: "You are a Methodist. What about this Bill?" He replied "I had not heard anything about it until I heard about it on Yesterday in Parliament'." That was a trustee of his local church who attends every Sunday. The trustees may not all have been traceable, but some could have been traced. They were not approached.
  The Select Committee itself has written into the Bill a provision for consultation at Church level which was not originally in the Bill. I should have thought that that itself is its own commentary. Therefore, on the first test of discussion within the denomination we should have to say that perhaps the promoters did not do as much as they should have done.
  On the question of protection of minorities, and at the risk of clashing with my hon. Friend the Member for Caerphilly (Mr. Evans), it is important to make some reference to doctrine. As I understand it, the evidence of at least one of the witnesses before the Committee—Dr. Becker Legge—was that there was in Methodism a distinct polarity of view, particularly on the nature of the priesthood—the high Wesleyans on the one hand and the primitive Methodists on the other—at the time of the 1933 merger. Far from the House shackling Methodism, I would have thought it would be better for Methodism to come together in a self-denying ordinance and say "We are not going to discuss this because we shall note the Deed of Union and leave it at that". This possibly is a divisive doctrinal matter and the one that I have mentioned were never to be discussed, thus it was not an issue. I would have thought that that was a sensible arrangement. It may be that the promoters of the Bill do not wish to bring that matter

  1063
  forward if, indeed, there are changes in the doctrinal standards. A letter from the Secretary of the conference to the hon. Member for Colne Valley (Mr. Wainwright) points out that
  "There is no present intention of making any changes".
  At page 16 of the Select Committee hearing, counsel for the promoters, Mr. Boydell, said:
  "I want…to give one or two examples of the difficulties which have arisen in practice."
  He gave three examples. The first was language, the second was sole occupation, on which there has been some discussion this evening, and the third was the question of "maintained". However, he did not speak about the interpretation and nature of the ministry, on which two views have been maintained within Methodism, in complete harmony and fraternity to the benefit of Methodism and, I think, to the whole of the Christian Church. Perhaps there are fears by some who hold one or other view, but we are not here to discuss what they are tonight. However, there is some fear that a change in this respect will create some internal disturbance in the Church which otherwise would not have occurred.
  On the second count—protection for the minority—there is some cause for concern. That brings us to the third test, because if there is cause for concern from a minority, what is the form and adequacy of the protection? In the Select Committee the Secretary of the Methodist Conference said that in the past when there had been difficulties with ordained men their pensions had remained intact and they had been helped to gain occupations. It seems that in a fraternal way they were helped in their future lives. However, if there were a change in the doctrine, it would not necessarily be only one change. For example, there might well be a change in an individual's whole career, and the question of the Church taking a different direction. It may not come to that, but that is what some fear.
  Unlike the United Reformed Church Bill and other Bills that have come before the House, where there has been a distinct opportunity for a division of funds or of property, the Bill does not permit division. I understand that the trustee clauses, which we are not discussing and on which we are not
  1064
  disagreed, give central control in the final analysis. Unless there is another Bill, they forbid the division that may be adovcated in such conditions. I suggest that there is a real fear and that the Bill as it stands does not meet it. I happen to think that it is a great pity that the Bill has come to us as it stands.
  I believe that Christian unity is not necessarily an organic unity. The Christian Church spends much of its time on internal discussions and doctrinal discussions. Until now the Methodist Church has not done so. Perhaps it is a good thing it has not. Perhaps it has been able to witness in the community. Certainly the world needs many things. The Methodist Church has a lot to give. It has historic concern for the prisoner, for example, and for social conditions. It would be a pity if the Bill went through in its present form and if that concern were to be blunted in any way.
  Some time ago, as a result of the call from the Archbishop of Canterbury, the British Council of Churches had a committee at Lambeth Palace on the other side of the river. I understand that it could not make any call—it was dumb. I suggest that that happened because too many of our Christian friends are concerned with internal matters and not with the world in which they have to preach the Gospel.
  I conclude by quoting an amazing passage from the Select Committee proceedings. I refer to page 7 of the report, when the Secretary of the Methodist Conference, under examination by Mr. Mortimer, was asked:
  "Has there been a groundswell for Conference to try to take this power?"
  He answered:
  "No, I am sure there has not."
  That is what we are discussing. Is it a storm in a teacup? I hope that it is. From many points of view the Christian Church has been looked upon as an army. There are the old hymns about the army of the Church. Each of the denominations is a regiment and every Christian, and perhaps non-Christian, wants to see each of the regiments as strong, vigorous, well-directed and cohesive as it can be. Whether the Bill goes through or whether it does not, and whether the amendment goes through or whether it does not, I hope that in future the Methodist Church will be a

  1065
  fine regiment. We want to see it so. That applies not only to this country but throughout the world.
  Mr. Costain: I resist the temptation to utter the cry "Onward Christian soldiers" in following the hon. Member for Newham, South (Mr. Spearing). In the Second Reading debate I explained how, as an adolescent, by a fortunate coincidence I was present at the earlier discussion between leaders of the Methodist Church.
  I was disappointed to see on the Order Paper the reference to the six months' delay, and I was delighted to hear that that was only a procedural motion. I thought that the amendment was unimportant and that it would not affect the Bill very much. Knowing the Methodist Church as you do, Mr. Speaker, you will know that it does not make decisions quickly, either on doctrine or policy. The old Section 30 shows the enormous diversity that is allowed. I understood that only one member had been expelled from the Church, but the hon. Member for Colne Valley (Mr. Wainwright) said that three had been expelled. Whether it be one or three, there would have been good reason for it, not necessarily a doctrinal reason.
  Innocent though the amendment may seem to be, if we accept it we should be saying that Parliament does not trust the Methodist Church to look after its own affairs and that we must have a saving clause. We are not here talking about a colony, where it is sometimes necessary to safeguard the minority. Surely, like every other free Church, the Methodist Church should be able to look after its own affairs. It should be able to trust its own conference, which is democratically elected.
  Even those who support the amendment suggested that it was a pity it came to Parliament in the first place. We know why it came, but let us not accept it.
  Mr. Ogden: A few minutes before my hon. Friend the Member for Newham. South (Mr. Spearing) made his powerful intervention, he told me that the 1929 Bill went through the House on the nod, with no debate. Times have changed. Whatever complaints are made, Parliament has considered the Bill and if the promoters have learnt something they did not know before they "ken the noo."
  1066
  I hope that the custom of 1929 remains the same, Mr. Speaker. In a neutral position as presiding officer of the House, if it comes to the casting vote, I hope that you will uphold the tradition and vote for the Bill without alteration.
  We are divided completely across the parties between those who are prepared to trust the Methodist Church to manage its own affairs and those who say that they trust the Methodist Church to a degree but wish to impose certain safeguards. That word "safeguards" is the key to their doubt. I am not following Dr. Kissenger's example in trying to get maximum agreement by fudging issues, but no one has told me why certain people have doubts. It is not the heirarchical system of the Methodist Church, the formation of conference. The Methodist Conference is a great deal more democratic than the Labour Party Conference ever was or probably ever will be, and it is certainly more democratic than is the Conservative Party Conference.
  I am told that people in various places, including Colne Valley, have doubts, but no one has spelt out those doubts. I wonder whether the doubts about the direction of the Church in its search for unity are based on a fear that there will be a loss in doctrinal standards and a loss of Protestant belief that would be unacceptable. No one has spelt it out.
  9.30 p.m.
  The amendment is a one-off amendment, and my complaint is that either it goes too far or not far enough. Under the amendment, if a minister, deaconess or lay preacher had contracted to preach the gospel inside the church at a particular time on the basis of a particular doctrine which was later changed by the conference, he or she would be required to change the basis on which they preached. That is unlikely to make any change in the situation in Lancashire, where we preach the gospel in our own particular way. In such a situation there may be as many who agree with the new doctrine as with the old. In Lancashire or Yorkshire, we do not want a Tridentine conflict.
  The principle is that if a person makes a contract and the terms of the contract are changed he should be allowed to keep to the conditions of his contract. A minister, finding the basis of his contract

  1067
  changed, would be allowed to preach the old gospel. But in five or 50 years' time a minister who came into the Church on the basis of the new doctrine, which was then changed a second time, would not have the rights that are being asked for now.
  The amendment goes too far. If it makes one rule, it should apply to all. Nothing in the Bill should prevent the right of people to preach the gospel in a manner that is based on the doctrinal standards of the day when they were appointed. The amendment falls between two stools. It does too much for today and not enough for tomorrow, and I would therefore prefer to leave the matter where it is.
  The promoters and the Methodist Church itself have learned a lot from the discussion. Members of the Church have been diligent. Although, there are only ourselves in the Chamber, one could say that we are surrounded by a crowd of heavenly witnesses.
  Either we have to take a calculated risk and trust the Churches to manage their own affairs or we should control them and take over ourselves. This halfway stage is no good. Surely the Churches have enough common sense to be trusted and I therefore do not support the amendment.
  Mr. Speaker: I have to tell the House that the Division bells in Norman Shaw North are out of action. Post Office engineers are trying to find and repair the fault. Meanwhile, night watchmen are telling hon. Members in that vicinity about the bells. I am saying this now in order to make it perfectly clear that if an hon. Member says later that he did not hear the bells, if there is a Division, I shall not allow a second Division.
  Mrs. Elaine Kellett-Bowman: I was puzzled about the remarks made by the hon. Member for Liverpool, West Derby (Mr. Ogden), who had the wrong end of the stick. He said that a new entrant would not have the right to dissent but would have to join on particular terms. In the past, those who joined the church joined on other terms, and it is their conscientious right and spiritual freehold that we are seeking to preserve in the amendment.
  1068
  I was extremely interested in the speech by my hon. Friend the Member for Wirral (Mr. Hunt). He was worried about this matter. He pointed out that many consultations were held in his locality and that 75 per cent. of those taking part came round to the Methodist Conference's point of view. But can we be assured that such consultation took place in all the other Methodist circuits? From the evidence given to the Select Committee, that seems to have been far from the case. That being so, although I appreciate the safeguards that have been, very wisely, written in by the Select Committee, I remain uneasy and would still like to see the right of conscience preserved by the amendment for those who seriously believe in the old terms which applied when they joined.
  Mr. Ron Lewis: Like other hon. Members, I do not intend to labour anything that I have to say. The important point at stake is that the supporters of the amendment seek to shackle the Methodist Church as no other church is shackled. All that we and the Methodist Church are asking for is that the Methodist Church should have the same freedom as other churches. That will not be the case if the amendment is carried.
  I hope that the House will not shackle the Methodist Church by accepting the amendment, which could undermine doctrinal standards. That would not be good for the Methodist Church, to which I belong. On the other hand, if the Bill goes through unamended but, with the suggestions of the Select Committee, the corporate conscience of the Methodist Church will be maintained.
  Much has been said about consultations right the way down. What the hon. Member for Wirral (Mr. Hunt) said was illuminating about the consultations in Wirral, but that happened in other parts of the country. The Bill is the voice of Methodism and the Methodist Conference and the promoters of the Bill are acting on behalf of the Methodist Conference, which has taken its decision through all its stages, although at times the consultation might have been somewhat flimsy in certain areas. The Bill expresses the corporate voice of the Methodist Conference, and I hope that

  1069
  we in our wisdom will not be foolish enough to go against the voice of the Methodist Conference.
  I make a plea to my fellow Methodists in this House, three at least of whom have signed the amendment. I ask them not to press the amendment to a Division. The subject has had a good airing and they have had a chance to put their point of view for the small minority. But the voice of Methodism is the Methodist Conference itself. I hope that, as we have had a good debate, those who have signed the amendment will withdraw it and allow the Bill to go through unamended, which is what the Methodist Church wants.
  Mr. Beith: With the leave of the House I seek, as the mover of the amendment, to reply.
  I am tempted by the hon. Member for Carlisle (Mr. Lewis), my old friend and co-warrior on so many issues—we have spent many happy Fridays together on other matters of concern to Methodists—to direct precisely the same plea at the promoters of the Bill, who through their spokesmen have been very constructive and helpful, to consider accepting the amendment. I shall turn to that later in my remarks by way of reply, which I do not intend shall occupy the whole of the remaining time.
  Let us be clear. The amendment arises not out of any desire to impose on Methodism shackles which it ought not to have but out of consideration of a proposal by the Methodist Conference to change the procedure of which the conference itself made Parliament the guarantor. The basis of the whole of this lies with the Methodist Conference. It would not be on the statute book at all but for decisions of previous Methodist Conferences. Parliament is being asked to take away a safeguard, a guarantee, and in those circumstances Parliament must look at the position of those whom guarantees of that kind are designed to protect.
  The amendment does not deny Methodists the right to determine their own doctrine or challenge the principles of the Bill. It deals solely with the preachers who came in under the old safeguard. The hon. Member for Liverpool, West Derby (Mr. Ogden) tempts me to go much further and to build in quite new protec-
  1070
  tions. I ask him, however, to look at the precise position of those who would be protected by the Bill and to deal with the amendment that is before us. He might wish to be much more radical than I, but I think he ought, on his arguments, to support our amendment.
  We have had a most constructive and helpful debate, and I am grateful to those in all parts of the House and on both sides of the argument who have taken part. Some who opposed the amendment felt that the situation might not arise, but that argument must not concern us. We must prepare, in legislation which explicitly provides for this situation, for how it will be handled. We must not simply suppose that it will never happen, otherwise there would be no need at all to pass the legislation.
  Some have thought that if anything occurs it will be of a minor nature, but it could equally be major. There is no guarantee that it will be minor. It might be major.
  It has been said that the present doctrinal statement is wide. The hon. Member for Preston, North (Mr. Atkins) said this. But a future statement, with which we are concerned in particular, might not be. It might be narrow and restrictive and it might exclude whole categories of people.
  It has been suggested that the elected conference ought to be in total control of the situation and should wholly reflect the views of Methodists, and that it should be, as the hon. Member for Carlisle said, the voice of Methodism. The conference is bound in some ways to under-represent some of the minority views which can develop in Methodism. It is an indirectly-elected body. Representatives are elected through its various stages and not directly from grass roots to conference. They are elected through church to circuit to synod to conference. Election is not directly, as in the case of the General Synod of the Church of England, which has stolen a march on us, with a considerable improvement. It has a form of direct representation which we lack.
  In that situation, and with the very large number of office-holders who are automatically members of conference, there is a risk that a sizeable minority might find itself under-represented in

  1071
  conference. The fact that it is a minority does not absolve us from the need for the amendment. It points to the need for it.
  The hon. Member for Wirral (Mr. Hunt) referred to the 25 per cent. minority in his own synod, and other hon. Members pointed out that, under the procedures that the Bill sets out, the minority would have to be 25 per cent. or less. But that size of minority is one about which Parliament ought to be concerned. Even a smaller minority, as the hon. Member for Newham, South (Mr. Spearing) argued, ought to have the attention of the House.
  There are very genuine fears felt among a lot of people. The hon. Member for Devon. West (Mr. Mills) was most eloquent in pointing to them. If anything, they are strengthened by the two hon. Members who spoke from their own deep convictions and interest in such a way as to suggest that there was a real need that the conference should change its doctrine, and should do so soon.
  There were very broad hints in what the hon. Member for Preston, North and the hon. Member for Caerphilly (Mr. Evans) said—that the wind of change ought to be blowing through the courts of Methodism and that we should be explicitly preparing for doctrinal change. I think that in saying that they went beyond the Secretary of the conference.
  9.45 p.m.
  Mr. Ronald Atkins: I am sure that the hon. Gentleman is exaggerating what I said. I said merely that the conference should be open to possible demands for minor changes. It is inevitable that over a long period these changes might have to be made.
  Mr. Beith: Yes, and, as the Bill will make quite clear, the conference will have the power. I do not intend to oppose the Bill. The conference will be able to make not just minor but major changes, and the safeguard that we are discussing is for the position of those who entered the Methodist Church on terms which required the doctrine not to be altered unless it was first brought to Parliament. It is with that necessarily dying group over the years that we should be concerned particularly.
  1072
  The hon. Member for Goole (Dr. Marshall) dealt very fairly with the amendment and said that, although he did not wish it to be in the Bill, he could not see its doing any harm. He painted a picture of Methodism in which it would not do any harm.
  Dr. Edmund Marshall: I think that I said it would not be the end of the world.
  Mr. Beith: I hope that the hon. Gentleman will hasten to the Hansard room to make sure that those words appear in his speech. He left me with the impression that he did not see that a protection of this kind would be of very much effect if his feelings were justified, and his view was that change was unlikely in any event but that, if it came about, it was likely to be dealt with in such a spirit of fellowship that there would not be those who felt that they had to cast themselves on the mercy of a protection of this kind.
  We all hope that that will be the case, but that does not absolve us from the need to make sure that the protection is there. A protection which is never used is possibly the best protection of all, but it is not one which Parliament should leave out for that reason. In my view, we should be the more ready to see that that final fall-back position is available. It is temporary. It is confined to a limited group of people who entered upon the heavy and demanding duties of preachers—I think especially of the full-time ministers and deaconesses of the Methodist Church—knowing that they could preach a doctrine which was unalterable.
  It is a small but important safeguard and benefit to confer on those people that we give them the assurance that, if the feelings expressed today are not borne out, they are protected for the remainder of their working lives. If people subsequently come into the Methodist Church, they know that the doctrine can be changed by a simple procedure. They know that, if that happens, under the procedures of the Bill itself they can be excluded, but they will have come in with that knowledge. To those who came in without that knowledge, Parliament owes a duty because Parliament passed the 1929 legislation. I ask the House not to permit those circumstances in which it could arise, and I ask it to pass this amendment.
  Question put, That the amendment be made:—
  Question accordingly negatived.
  Bill to be read the Third Time.
  The House divided: Ayes 30, Noes 134.

  Division No. 327.]

  AYES

  [9.49 p.m.

  Carter-Jones, Lewis

  Mayhew, Patrick

  Ross, Stephen (Isle of Wight)

  Clegg, Walter

  Mills, Peter

  Shepherd, Colin

  Cocks, Rt Hon Michael (Bristol S)

  Molyneaux, James

  Skinner, Dennis

  Cormack, Patrick

  Morrison, Charles (Devizes)

  Spearing, Nigel

  Fookes, Miss Janet

  Mudd, David

  Stradling Thomas, J.

  Golding, John

  Noble, Mike

  Thompson, George

  Henderson, Douglas

  Nott, John

  Winterton, Nicholas

  Howells, Geraint (Cardigan)

  Page, Rt Hon R. Graham (Crosby)

  Jessel, Toby

  Penhallgon, David

  TELLERS FOR THE AYES:

  Kellett-Bowman, Mrs Elaine

  Powell, Rt Hon J. Enoch

  Mr. A. J. Beith and

  Mawby, Ray

  Richardson, Miss Jo

  Mr. Richard Wainwright.

  Maxwell-Hyslop, Robin

  NOES

  Archer, Peter

  Glyn, Dr Alan

  Parker, John

  Atkins, Ronald (Preston N)

  Goodhew, Victor

  Perry, Ernest

  Atkinson, Norman

  Gow, Ian (Eastbourne)

  Pym, Rt Hon Francis

  Bates, Alf

  Gower, Sir Raymond (Barry)

  Rees, Rt Hon Merlyn (Leeds S)

  Bean, R. E.

  Graham, Ted

  Renton, Rt Hon Sir D. (Hunts)

  Bidwell, Sydney

  Grant, George (Morpeth)

  Roberts, Albert (Normanton)

  Bishop, E. S

  Hall-Davis, A. G. F.

  Roberts, Gwilym (Cannock)

  Blaker, Peter

  Hamilton, James (Bothwell)

  Roberts, Wyn (Conway)

  Blenkinsop, Arthur

  Hampson, Dr Keith

  Rodgers, George (Chorley)

  Boardman, H.

  Hardy, Peter

  Rossi, Hugh (Hornsey)

  Booth, Rt Hon Albert

  Harper, Joseph

  Rowlands, Ted

  Boothroyd, Miss Betty

  Harrison, Walter (Wakefield)

  Ryman, John

  Bottomley, Rt Hon Arthur

  Hatton, Frank

  Shaw, Giles (Pudsey)

  Bray, Dr Jeremy

  Hawkins, Paul

  Silvester, Fred

  Brotherton, Michael

  Hooley, Frank

  Sims, Roger

  Buchanan, Richard

  Hunt, David (Wirral)

  Sinclair, Sir George

  Butler, Adam (Bosworth)

  Hunt, John (Bromley)

  Spriggs, Leslie

  Callaghan, Jim (Middleton & P)

  Hunter, Adam

  Stallard, A. W.

  Carlisle, Mark

  Hurd, Douglas

  Stanbrook, Ivor

  Chalker, Mrs Lynda

  Johnson, James (Hull West)

  Stoddart, David

  Clarke, Kenneth (Rushcliffe)

  Knight, Mrs Jill

  Strang, Gavin

  Clemitson, Ivor

  Knox, David

  Summerskill, Hon Dr Shirley

  Coleman, Donald

  Lamond, James

  Taylor, Mrs Ann (Bolton W)

  Concannon, J. D.

  Langford-Holt, Sir John

  Thomas, Ron (Bristol NW)

  Costain, A. P.

  Latham, Michael (Melton)

  Tinn, James

  Cox, Thomas (Tooting)

  Lawrence, Ivan

  van Straubenzee, W. R.

  Crouch, David

  Lester, Jim (Beeston)

  Walker, Harold (Doncaster)

  Crowther, Stan (Rotherham)

  Lipton, Marcus

  Walker, Terry (Kingswood)

  Cryer, Bob

  Lomas, Kenneth

  Ward, Michael

  Davidson, Arthur

  Luard, Evan

  Watkins, David

  Dean, Paul (N Somerset)

  Lyon, Alexander (York)

  Weatherill, Bernard

  Dempsey, James

  McAdden, Sir Stephen

  Weetch, Ken

  Drayson, Burnaby

  McNair-Wilson, M. (Newbury)

  Wells, John

  Duffy, A. E. P.

  McNamara, Kevin

  White, Frenk R. (Bury)

  Durant, Tony

  Madden, Max

  Whitlock, William

  Eadie, Alex

  Mallalleu, J. P. W.

  Willey, Rt Hon Frederick

  Elliott, Sir William

  Miller, Hal (Bromsgrove)

  Wilson, Rt Hon Sir Harold (Huylon)

  Ellis, John (Brigg & Scun)

  Montgomery, Fergus

  Wilson, William (Coventry SE)

  Evans, Fred (Caerphilly)

  Morgan, Geraint

  Wood, Rt Hon Richard

  Evans, John (Newton)

  Morgan-Giles, Rear-Admiral

  Woodall, Alec

  Fernyhough, Rt Hon E.

  Morrison, Hon Peter (Chester)

  Woof, Robert

  Fisher, Sir Nigel

  Mulley, Rt Hon Frederick

  Wrigglesworth, Ian

  Forrester, John

  Nelson, Anthony

  Fox, Marcus

  Newton, Tony

  TELLERS FOR THE NOES:

  Freud, Clement

  Ogden, Eric

  Dr. Edmund Marshall and

  George, Bruce

  Ovenden, John

  Mr. Ron Lewis.

  BUSINESS OF THE HOUSE
  Ordered,
  That, at this day's Sitting, the Trinidad and Tobago Republic Bill [Lords] and the Resale Prices Bill [Lords] may be proceeded with, though opposed, until any hour.—[Mr. Stoddart.]

  TRINIDAD AND TOBAGO REPUBLIC BILL [Lords]
  Order for Second Reading read
  10.1 p.m.
  The Minister of State, Foreign and Commonwealth Office (Mr. Edward Rowlands): I beg to move, That the Bill be now read a Second time.
  This short Bill is a technical measure which is needed because Trinidad and Tobago became a republic on 1st August 1976. It follows the same lines as well-established precedents. I trust, therefore, that hon. Members will agree that the Bill is a non-controversial one.
  The decision to become a republic was, of course, one for the Government of Trinidad and Tobago to take and did not in any way require the concurrence of Her Majesty's Government in the United Kingdom. However, the consequence of this decision is that certain changes need to be made in the law of the United Kingdom. The Bill before the House provides that the law of the United Kingdom—and the law of the Channel Islands and the Isle of Man—as it applies to Trinidad and Tobago will not be affected by the fact that Trinidad and Tobago is now a republic.
  The Bill will not apply generally to the law of the dependent territories of the United Kingdom but only to Acts of the British Parliament and Orders in Council applying such Acts which extend to such territories. This is the common-form provision in previous such cases.
  The new constitution of Trinidad and Tobago retains provision for appeals to the Judicial Committee of the Privy Council. Hitherto, appeals from Trinidad and Tobago have lain to Her Majesty in Council, but this is no longer appropriate now that Trinidad and Tobago is no longer a part of Her Majesty's dominions. The Bill therefore makes provision to enable Her Majesty in Council to authorise the Judicial Committee of the Privy Council to exercise the jurisdiction conferred upon it by the new constitution of Trinidad and Tobago to hear appeals direct from the courts of Trinidad and Tobago.
  There is one point of detail in the Bill about which Members may wish to have some explanation. This is the provision of Clause 1 for the specification of "the appointed day" by an Order
  1076
  in Council. Hon. Members may ask why the Bill does not simply say "1st August 1976", the day on which Trinidad and Tobago became a republic. The answer is that at the time the Bill was drafted and when it was introduced and passed in another place in July we did not know that the Government of Trinidad and Tobago were going to effect the change of constitution on 1st August; they announced this only on 27th July. The present Bill was drafted in this way, therefore, in the hope that it would have been enacted before Trinidad and Tobago became a republic so that the precise date could have been specified in the Order in Council. As matters have turned out, however, we shall have to specify as the appointed day either the day on which the Order is made or a subsequent day.
  I am happy to inform hon. Members that the Government of Trinidad and Tobago have told the Commonwealth Secretary General that they wish the country to remain a member of the Commonwealth now that it is a republic, and the Secretary General so has informed the other members.
  I am sure that hon. Members will join me in wishing the Republic of Trinidad and Tobago and its people continuing peace and prosperity.
  10.3 p.m.
  Mr. Peter Blaker: I thank the Minister for giving such a clear exposition of the purposes and effect of the Bill. I agree with what he has said and I am happy, in particular, to confirm that the Bill is non-controversial.
  I understand that the Bill has no effect on the substance of our relations with Trinidad and Tobago, and it is no disrespect to that country if we are brief; it is rather a proper recognition of the fact that it has already taken the substantive decision.
  Many hon. Members and inhabitants of these islands have warm feelings towards Trinidad and Tobago because of the many long-standing links we have with that country. I had the good fortune to pay a visit there in 1974, but the bad fortune of paying it in the first two weeks of February that year. My visit was suddenly interrupted and I found myself on a plane back to this country, leaving behind the palm trees, sandy beaches and sunshine, thinking of what to put in my

  1077
  election address and being conscious of the fact that I was three days later than my colleagues in drawing it up.
  A number of countries in the developing world have become one-party States since independence, but I understand that the next election in Trinidad and Tobago is likely to be contested by 15 parties. This is hardly an example that I suggest we should follow—we already have enough parties—but it is something of which Trinidad and Tobago can be proud.
  Trinidad and Tobago has seen a number of constitutional changes since the late 1950s, when it was a member of the Federation of the West Indies. It was not owing to the initiative of Trinidad and Tobago that the federation broke up, but since the end of the federation Trinidad and Tobago has recognised the inevitable economic interdependence of neighbouring countries by being a member successively of the Caribbean Free Trade Area and CARICOM.
  Of more immediate moment to this country, Trinidad and Tobago is a signatory of the Lomè Convention between 46 African, Caribbean and Pacific countries and the EEC. I look forward to the development of that agreement because of the benefit that it will bring to both sides. I also look forward to the time when the EEC will work out a comprehensive policy towards the Caribbean area, including Trinidad and Tobago.
  There have been many changes in the Commonwealth in recent years and many countries have become republics. In 1949, when India became a republic, the then Mr. R. A. Butler said in this House that the Bill gave Britain the opportunity to indicate to India that we understood her aspirations and her desires for development. That sentiment now remains true of our feelings towards Trinidad and Tobago.
  1078
  The fact that she has decided to become a republic does not mean that her links with this country need become any weaker. Indeed, we hope that they will remain strong. We welcome the fact that Trinidad and Tobago intends to remain in the Commonwealth, which I still believe is one of the most valuable forums for the promotion of international understanding for all members, whatever their size. I am happy to wish Trinidad and Tobago success, prosperity and peace.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Committee of the whole House.—[Mr. Thomas Cox.]
  Bill immediately considered in Committee; reported, without amendment.
  Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
  Bill accordingly read the Third time and passed, without amendment.

  RESALE PRICES BILL [Lords]
  Read a Second time.
  Bill committed to a Committee of the whole House.—[Mr. Thomas Cox.]
  Bill immediately considered in Committee.
  Clauses 1 to 30 ordered to stand part of the Bill.
  Schedule 1 to 3 agreed to.
  Bill reported, without amendment.
  Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
  Bill accordingly read the Third time and passed, without amendment.

BROADMEAD, HAMPTON
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Thomas Cox.]
10.10 p.m.
Mr. Toby Jessel: I am grateful for the opportunity to raise the subject of the purchase by the Greater London Council of Broadmead, Broad Lane, Hampton, in my constituency.
Broadmead is just one site, but its future concerns far more people than its immediate neighbours. If a high density development is permitted, Broadmead could be used as a precedent for high density developments throughout the village of Hampton as and when other sites become available. Therefore, decisions on this site could trigger off a change in the face of the district by the end of the century, or sooner.
Broadmead is a large Victorian house set in a garden of 1¾ acres. Two old ladies sold it to a private developer. Of course, the image of developers is not, by and large, attractive to everyone. I read the other day a poem by Sir John Betjeman, the Poet Laureate, which begins,
"I am a young executive,
No cuffs than mine are cleaner,
I have a slimline brief case,
and I use the firm's Cortina."
He goes on to vandalise what should be cherished.
In the case of Broadmead, the developer was not like that. His scheme was good. The Victorian house was to be turned into 11 flatlets for elderly people, under the auspices of the Richmond-upon-Thames Churches Housing Trust. I strongly support this scheme. It remains the intention of the Richmond-upon-Thames Churches Housing Trust to carry this out, provided that squatters who have invaded the house can be evicted. This is due to take place tomorrow morning.
Incidentally, I believe that the law on squatting should be reformed, and quickly, although that is somewhat outside the scope of the debate tonight.
As to the rest of the site, the developer was to build 11 private houses, for which the Richmond-upon-Thames Borough Council had given planning permission.
1080
However, under the Community Land Act the GLC gave notice of its intention to buy compulsorily. The developer, who had been ready to build at once and who had, I believe, bought the land partly with borrowed money, could not afford, at current interest rates, to wait. This morning, I heard that he had agreed to sell the land to the GLC; in effect, the GLC had forced him to sell the land to it.
I suggest that the Community Land Act was not basically intended for the purchase of such a small site, and when obviously the builder was poised ready and intending to get on with building. Indeed, he could not have afforded to do otherwise. However, the Community Land Act has served in this instance only to notify the GLC of the existence of the site. After serving notice under the Act, the GLC apparently intends to proceed under other housing powers which it has long possessed.
The GLC says that it intends to build 29 units of housing instead of 11. But they would take far longer to build. The GLC's current land stock is enough for 42,000 houses and flats. That is about eight years' supply at the GLC's current building rate in London. If the GLC is affected by the current financial cuts, which are expected to involve virtually the whole of our economy, it will take it even longer to use up its land bank to build.
The high density which the GLC proposes—including old people's flatlets—of 40 dwellings in 1¾ acres, is totally out of keeping with the character of the neighbourhood and is strongly opposed not only by the Richmond-upon-Thames Borough Council but by the Hampton Residents' Association and a large number of individual constituents who have written either to myself or to Mr. George Tremlett, who is the Greater London councillor for the constituency and who has taken up this matter with vigour at County Hall.
I am the first to acknowledge that for many years there has been a shortage of housing in inner London that has amounted to a major social evil. I fully realise that the Under-Secretary, who represents an inner London constituency, will be as conscious of this as anyone, as Member

1081
for his constituency, quite apart from his ministerial duties. Indeed, my own political nursery was an inner London constituency at Peckham, which also suffered very severely from the housing shortage, so I know all about it and sympathise deeply with it.
I suggest, on the basis both of the so-called secret report of the London Housing situation published in the Sunday Times this summer, which was said to have circulated within the Department of the Environment, and of the demographic changes, the movement in population, the decline in the birth rate, and so forth, that the shortage can be expected to ease before many years elapse, if it has not begun to do so already.
It is the future for which we are building, because if we build in the late 1970s or 1980s we are building houses or flats which will last 100 years.
The Richmond-upon-Thames borough has played some part in providing housing for people from London. Its record is a good one. From 1966 to 1972, despite its own long waiting list in Richmond-upon-Thames, it offered 10 per cent. of all its vacancies to the Greater London Council. Since 1972 it has agreed to offer 550 houses over six years, which is equivalent to 15 per cent. to 20 per cent. of its vacancies and which, if emulated throughout Greater London, would be equivalent to nearly 2,000 lettings a year for the GLC, which, over a decade or so, could make a major dent in the London housing shortage.
However, the Greater London Council has not taken up these vacancies in full. For example, in the current year it has taken up only 50 out of 106 vacancies that have been offered to it by Richmond-upon-Thames Borough Council. That is an uptake of less than 50 per cent. I want to know exactly why. If the Greater London Council does not take council tenancies that are offered to it by the outer London borough of Richmond-upon-Thames, it greatly weakens the GLC's case for its rape of Broadmead.
Nearby, on the derelict Hampton nursery lands, the Richmond-upon-Thames Borough Council has a scheme for 1,450 houses. Of these, 370 would be council houses for rent, 240 would be housing association housing for rent, 120 would be council houses for sale, and 720
1082
would be private dwellings. The inquiry into this scheme is due to begin in November. I hope that the Secretary of State will decide following the inquiry without too much delay.
I should like to put four points to the Minister. First, I understand that the Greater London Council will decide on its own planning application for Broad-mead but will have to consult the Richmond Borough Council. If, when the GLC consults Richmond with its planning application, it should become difficult or impossible for the two authorities to agree, would the Secretary of State be willing to call in the application for decision by himself, taking local opinion into account, which the GLC does not seem inclined to do?
Secondly, could more information about the preservation of over 200 Broad-mead trees on which the borough has placed tree preservation orders be given, beyond the rather brief information which the right hon. Member for Deptford (Mr. Silkin) sent to me when he was Minister?
Thirdly, will the Minister ask the Greater London Council why it has failed to take up in full lettings of good quality houses which have been offered by the Richmond-upon-Thames Borough Council? I suspect that the reason has somethings to do with people in inner London not necessarily wishing to move that far out to the periphery of Greater London. In any case, this interacts with the question whether the GLC begins to have a deserving case to seize Broadmead and put upon it a high density development.
Fourthly, will the Minister ascertain what sum of money the GLC intends to pay for the purchase of Broadmead at the ratepayer's expense? I do not see how land can be valued before the density of housing upon the site is known for certain. I should be grateful if the Minister would be kind enough either to comment on these points now or to put his views to me in writing very soon.
10.20 p.m.
The Under-Secretary of State for the Environment (Mr. Guy Barnett): I am grateful to the hon. Member for Twickenham (Mr. Jessel) for raising this matter, because it gives me an opportunity to clarify some of the issues associated with the case. First, however, I should say how greatly I appreciate the concern that

1083
the hon. Member has shown on behalf of his constituents, both in what he said in his speech this evening and in his earlier letters to my right hon. Friend the then Minister for Planning and Local Government.
At the outset I should say—I think that the hon. Gentleman probably realises it already—that this debate places me in something of a difficulty. It would probably be unwise for me at this stage to attempt to assess or express any views on the merits of this case. I recognise that the hon. Member has given me news, which he kindly communicated to me earlier this evening, that it is possible that the sale of this land by the company in question to the GLC may take place voluntarily. But that has not happened yet. and it is still possible that the case could come before my right hon. Friend the Secretary of State for decision on a compulsory purchase order. Since many of the issues that the hon. Gentleman raised in the debate could be material issues in the consideration of a compulsory purchase order, it would clearly be unwise for me to comment on the merits or otherwise of the case that he so eloquently put.
I should make clear also that the matter raised is essentially one for the Greater London Council rather than for the Department of the Environment. For instance, towards the end of the hon. Gentleman's speech he asked me what sum the GLC expected to pay. Clearly, I cannot answer that question for the Department of the Environment, and it might be unwise for me to try to do so. I imagine that there would be negotiation between the company and the GLC if there were a voluntary sale, and therefore it is not at this stage something that I, or anyone else, I think, could predict.
Mr. Jessel: Would the hon. Gentleman's Department have the right to intervene in this aspect of the matter, taking into account the need to protect ratepayers against any extravagance by the GLC?
Mr. Barnett: If the hon. Gentleman is referring to the price, I should need to write to him about that to be absolutely sure of the position. In fact, the matter does not concern me personally but would be the responsibility of my right hon.
1084
Friend who is concerned with housing matters. I should not like to attempt to give an answer off the cuff. Perhaps the best course would be for me to write to the hon. Gentleman, having sought my right hon. Friend's advice, or ask my right hon. Friend to write directly to the hon. Gentleman with any advice that he may be able to give.
Although the GLC has issued a notice of intention to acquire Broadmead, the council has not, as the hon. Gentleman knows, informed the Department that it has resolved to make a compulsory purchase order anyway, and, so I gather from what the hon. Gentleman has said, it is conceivable that no CPO will be made. Nevertheless, for the reasons I have given I think that it would not be wise for me to get too involved in the merits or otherwise of the case. However, I wish to review the background of the case and try to clarify one or two issues.
As the hon. Gentleman explained, the story starts with the purchase in March 1976 of the two properties in Hampton by a private developer who wished to retain the two existing houses and use the rest of the land for residential development. This was followed by the submission of a planning application for the site by the developer, Nightingale Developments Limited, on 1st May this year.
As the hon. Member explained, under the arrangements applicable to the Community Land Act, the authorities concerned, Richmond Borough Council and the Greater London Council, had to decide whether the proposed development was relevant development—that is, significant development falling within the main scope of the Community Land Scheme—and, if it was relevant development, whether they wished to seek to acquire the land if planning permission was granted. Both councils decided that the application was for relevant development. However, while Richmond issued a notice of intention not to acquire the site provided the development was started within one year of the grant of planning permission, the GLC issued a notice of intention to acquire.
This meant that when Richmond granted outline planning permission for the development, which it has now done, that permission was suspended for a

1085
period of 12 months, to give the GLC time to seek to acquire the land, either by agreement or by making a compulsory purchase order. Within this time, it is open to the GLC to consider whether it wishes to proceed to take steps towards acquisition of the land or, notwithstanding having served a notice, to decide not to acquire the land. If it were to decide to make a compulsory purchase order there would of course be opportunities to object to the order, and the matter would probably come to the Secretary of State for decision. If it were to decide not to acquire the land, it would have a duty to notify its change of intention and the planning permission granted would cease to be suspended.
It has been suggested, I believe at one stage by the hon. Gentleman, that the Secretary of State should use his power of direction under Schedule 6 of the Community Land Act. I should like to deal with that point, because it is something over which there may have been confusion in the past. Apart from the view expressed on all sides in Committee during the passage of that Act—and I took part in the Committee stage—that the power should not be used in particular cases, I am bound to say that even if the Secretary of State were to use that power it could not affect the notice of intention to acquire which the GLC issued in June. The reason is that this power cannot be used retrospectively.
The matter is entirely one for the GLC, and I understand that its proposals are to acquire the land for its own housing purposes. I should point out that the GLC could have sought to acquire this site for its own housing long before the Community Land Scheme, which is essentially concerned with land for private development, had come into being.
What the Community Land Act has done is to bring the acquisition issues out at an earlier stage because of the procedures for suspending planning permission. Thus, as indicated in paragraph 33 of Community Land Circular 6, the assurances that have been given, particularly to builders and developers, do not constrain the powers that local authorities have long possessed to acquire land for their own or other public purposes—a fact that is perhaps not as widely appreciated as it might be.
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I am glad to take this opportunity to state that the assurances that we have given, particularly to builders and developers, remain valid within the scope of the Community Land Scheme. For instance, where developers or builders bring forward land for early or timely development, local authorities will in normal circumstances not be expected to intervene.
If the GLC were to resolve to make a compulsory purchase order it would have a choice of powers—Section 15 of the Community Land Act or Part V of the Housing Act 1957. As already stated in Circular 30/76, para 36, my right hon. Friend would have regard to the same factors in either case. In other words, he would consider any order in the light of Government housing policies. It has been made clear in various published statements that in considering the compulsory acquisition of land for public sector housing the Secretary of State requires to be satisfied not only of the authority's general housing need but of its need to acquire the order site, and the timing of its proposed development would be relevant in addition or in preference to other sites already in its ownership.
The hon. Gentleman made a number of points on this issue, but I hope he will understand the reason why I cannot comment on those points.
The wide-ranging requirements involved in satisfying the GLC's strategic housing role must also be recognised, but the council's arguments in favour of acquisition would have to be weighed against those of any objectors who may not wish to see the site redeveloped at all, or who may have alternative proposals for its redevelopment.
The hon. Gentleman raised a number of specific issues which I should at least mention in fairness to him. The main one, in regard to the allocation made to the GLC on the Hampton nursery lands, is something that may be material to the case and, therefore, it would not be right for me to say anything about it. The hon. Gentleman raised a specific issue about the possibility of a dispute that might arise in the future between the GLC and the Richmond Borough Council with regard to the shape of development that should take place on this piece of land. Under those circumstances it would be open to the Richmond Council to raise the matter with my right

1087
hon. Friend, and he would have to decide whether to intervene, and whether to attempt to mediate between these councils on this issue.
The question of a tree preservation order has also been raised. I should like to mention that the Richmond Borough Council has made it, and it includes the trees at Broadmead.
If no objections are made and sustained the order will come to the Secretary of State for confirmation and it will be treated strictly on its merits. It might, however, be relevant to point out that a tree preservation order cannot prevent any development for which planning permission has been granted.
It is now up to the GLC to decide what further action it wants to take. I expect
1088
that there will be further local discussion on this question, and I hope that a satisfactory conclusion will be reached for the benefit of the community at large, and the hon. Member's constituents in particular. I think the House will agree, however, that these matters should be left in local hands. If this matter were to come before the Secretary of State in the form of a compulsory purchase order, the House can be assured that he would take all relevant aspects into consideration in reaching a decision. If the hon. Member wishes, I shall be glad to draw the attention of the GLC to this useful and timely debate.
Question put and agreed to.
Adjourned accordingly at twenty-seven minutes to Eleven o'clock.

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Preamble
The House met at half-past two of clock: The LORD CHANCELLOR On Woolsack.
Prayers—Read by the Lord Bishop of Wakefield

THE CROWN AGENTS: FAY COMMITTEE
Baroness WARD of NORTH TYNESIDE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether the Fay Report on the Crown Agents has been published and if so what action is being taken on their recommendations.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, my right honourable friend the Minister for Overseas Development understands that the Committee expect to report in the first part of next year.
Baroness WARD of NORTH TYNE-SIDE: My Lords, I thank the noble Baroness for that interesting Answer, but would she agree with me that quite a long time before the Summer Recess answers were given by the noble Baroness and other Ministers that the report would be published at any moment? Is the noble Baroness aware that it looks as though the report has undoubtedly been specially kept from being published, which I am sure the noble Baroness will agree is unfortunate having regard to the importance of the occasion and to the fact that many people in this House are interested in the future of the Crown Agents?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I am quite sure that very few Members of this House assume for one moment that the report is being deliberately withheld, and I can assure the House that there is no question of that. I am also quite sure that nobody has ever promised that the report would be
754
ready "at any moment". I think the House knows that under the Companies Acts inquiries of this kind normally take up to three or even four years. So far the Fay Committee have taken 18 months.
Baroness WARD of NORTH TYNESIDE: My Lords, some of the Ministers said before the Summer Recess, did they not, that the report could be expected at any time?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, my recollection is that they said not before the end of this year, so early next year is not too long.

FIREARM CERTIFICATES: INCREASE OF FEES
2.38 p.m.
Lord COTTESLOE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what consultations were held with the users of firearms and with the trade before the order, which raises fees for the grant and renewal of firearms and shotgun certificates with effect from 1st October, was made.
The MINISTER of STATE, HOME OFFICE (Lord Harris of Greenwich): My Lords, advance notice was given to the Secretary of the Long Room Committee and the Director General of the National Farmers' Union on 6th August of the Government's intention to increase the fees with effect from 1st October 1976.
Lord COTTESLOE: My Lords, while thanking the Minister for his reply, may I ask him whether he is aware that the Long Room Committee, which is the official committee representing the users of firearms for purposes of recreation and sport, and also the trade, were indeed notified during the Recess of these proposals and that they called a special meeting to consider the matter but, before they had time to meet, the order was made? I do not know whether the Minister calls that satisfactory consultation.
Secondly, may I ask the Minister whether he is aware that, to take one

755
example, the charge for the straightforward renewal of a firearms certificate was increased last year from £2·50 to £4·50, that it has now been increased from £4·50 to £10, which is a fourfold increase in the course of two years, and that it has been increased by 8,000 per cent. in the last nine years? May I therefore ask the Minister how such swingeing increases can be justified? Finally, is the Minister aware that these charges will bear very harshly on many thousands of users of firearms for recreation and sport, most of them of very limited means? May I therefore ask the Minister whether he will ask his right honourable friend to have fuller consultations and perhaps consult his colleague the Minister of Sport with a view to reconsidering the whole matter?
Lord HARRIS of GREENWICH: My Lords, the noble Lord has made three points. First, on his point regarding consultation, since it is the Government's policy to fix charges at a level which ensures the recovery of the cost of administering the certificate and registration procedures, I am afraid that the fees cannot be the subject of negotiation with those who have to pay them. Secondly. on the point which the noble Lord raised about the increase last year, he is quite right; the fees were increased last year. However, the increase then was at far too low a level to cover the cost of administering the procedure. Thirdly. on the point of whether the Government can reconsider the matter, I am afraid that the Government cannot reconsider it. To introduce a subsidy element would, in our view, be quite inappropriate.
Lord MURRAY of GRAVESEND: My Lords, in view of the call by the Conservative Party for cuts in public expenditure, perhaps my noble friend would consider that he should maintain an economic price for such certificates and not allow his Department to be pressurised by pressure groups in the way that the National Rifle Association of the United States pressurise their Government?
Lord HARRIS of GREENWICH: My Lords, I have indicated that the Government could not change their decision. It is right, in our view, that the cost of administering the procedure should be
756
met by those who use firearms of this kind. Therefore, for the reason that I gave earlier we cannot change our policy.
Lord SWANSEA: My Lords, can the noble Lord say what other licence fees are calculated on a similar basis?
Lord HARRIS of GREENWICH: My Lords, it is the intention of the Government to introduce a similar policy right across the board.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, while I understand this approach, may I ask whether it is not the important public policy factor here that everybody who has a firearm should be properly certificated or licensed, as the case may be? If the licence fee goes up too high, is not there a danger that there may be evasion?
Lord HARRIS of GREENWICH: My Lords, the question of evasion is a serious matter and the noble and learned Lord is quite right in saying that. Nevertheless, I think that in the present situation it would be quite wrong to introduce a subsidy element so far as these fees are concerned.
Viscount BRIDGEMAN: My Lords, the noble Lord has just said that the matter is a serious one. Does he really think that, if it was as serious as all that it was right to send a letter out to the trade on 6th August, knowing perfectly well that most of the people who were likely to be concerned in a big way would be on their holidays?
Lord HARRIS of GREENWICH: My Lords, I have pointed out that, although the letter went out on 6th August, the increase in fees did not take effect until 1st October.
Viscount BRIDGEMAN: My Lords, I was not speaking about the date when the increase took place; I was speaking about the date when consultation was wanted.
Lord HARRIS of GREENWICH: My Lords, with great respect, I have pointed out that it is not a question of consultation. In our view it would be quite wrong to make this a negotiable matter. So far as

757
we are concerned, the position is quite clear: it is that the full cost of administering this scheme should be passed on to those who in fact want to make use of these certificates.
The Earl of ONSLOW: My Lords, how many shotgun licences are issued and, consequently, how much money is raised? Is the noble Lord seriously saying that it costs £10 to process every single shotgun licence, including renewal to those persons who already have one?
Lord HARRIS of GREENWICH: My Lords, on the first point, if the noble Earl would like to table a Question I will endeavour to answer it. On the second point, the level of the fee was decided after a representative sample of police forces had been asked to give us information on the cost of administering their procedures. It was on the basis of that response from the police forces that the Government made the decision which set the fee at the present level.
Lord SLATER: My Lords, I cannot find any comparison in regard to this matter, apart from motor vehicle taxation. But is the noble Lord aware that, when motor vehicle taxation licences were increased we did not hear noble Lords opposite shout about that, and yet more people use motor vehicles in this country than use firearms?
Lord COTTESLOE: My Lords, on the question of the time for consultation, is it not the case that while the Long Room Committee and the trade were notified of the proposals on 5th August and, as the Minister has said, the order does not come into effect until 1st October, in fact the order was made at the beginning of September and therefore the time for consultation was not two months but one, and that during the Recess?
Lord HARRIS of GREENWICH: My Lords, I am aware of that point, which has been made by a number of correspondents. I have endeavoured to point out that this is not a matter for consultation. Consultation implies that one is prepared to change one's policy in the final analysis, but that is inappropriate when one is considering a policy which is designed to ensure that the full costs of administering the scheme are passed
758
on to those who in fact use the certificate procedure.
Lord STRATHCLYDE: My Lords, is the noble Lord telling us that the cost of issuing a firearm certificate is £10?
Lord HARRIS of GREENWICH: My Lords, I was saying that the level of licence fees which has now been established is designed to cover the cost of administering the scheme.
Lord SWANSEA: My Lords, if the cost of administration is an important matter in the view of the Government, will they consider extending the period of validity of firearm certificates and shotgun certificates?
Lord HARRIS of GREENWICH: My Lords, the present period is in fact fixed by legislation.
Lord LEATHERLAND: My Lords, may I ask my noble friend whether there is any evidence to support the suggestion made from the other side of the House that the people who own shotguns and shoot grouse are people of limited means?

ROYAL DOCKYARDS POLICY BOARD
2.47 p.m.
Baroness VICKERS: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will cause the publication of an annual report on the Royal Dockyard Advisory Board.
Lord WINTERBOTTOM: My Lords, the Royal Dockyards Policy Board functions under the general policy direction of the Admiralty Board. Its role is, indeed, an advisory one, and it would be inappropriate for it to publish an annual report of its activities.
Baroness VICKERS: My Lords, while thanking the noble Lord for that Answer, may I ask him to join with me in paying a tribute to the late Lord Feather whose regrettable death prevented him from being a very helpful member of this

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Board. In these days of industrial democracy, surely it is only fair to let people working in these organisations know what is going on. Does the noble Lord realise that evey time there is a change of Government or a change of Minister there is anxiety among dockyard workers, who are often used as a political football, and that if they had some knowledge of events it might obviate that anxiety?
Lord WINTERBOTTOM: My Lords, I think the noble Baroness is confusing two issues. It is not the role of the Policy Board to advise the workforce but to advise the Board of Admiralty on the total functioning of the dockyards. Trade union machinery is established for information to be disseminated about future policy. I am certain that it is used, at least it was in my day.

JET PROJECT SITE
2.49 p.m.
The Earl of LAUDERDALE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they can now make a statement about negotiating within the European Community on the site of future research for the JET (energy by fusion) project.
Lord STRABOLGI: My Lords, the JET project, including the question of siting, has been discussed by the Communities' Council of Ministers on several occasions since December. No decision has yet been taken. The project is on the agenda for the Council of Ministers on 21st October.
The Earl of LAUDERDALE: My Lords, in thanking the noble Lord for that reply, may I ask whether he would agree that the failure to get a decision on this has meant that there is great difficulty in holding together the design team at Culham and, in the meantime, the only work that can be done on this project is on an ad hoc temporary, short-term basis, which in itself argues for strong British pressure to get a useful decision out of the meeting on 21st October.
Lord STRABOLGI: My Lords, in discussion with our Community partners in preparation for the Ministerial meeting on Thursday, we have continued to make clear our view that JET should come to Culham as it is obviously the best site on technical and scientific grounds. With regard to the point the noble Earl made about the design team, the Council of Ministers recently agreed to release 4 million units of account from the appropriation for JET to enable the design team to continue work, and place contracts for the site-independent long lead-time and prototype equipment.
The Earl of LAUDERDALE: My Lords, while I do not normally wish good fortune to the Government, I certainly do in this matter. The noble Lord will carry the support of both sides of the House for what he has just said about our approach to the meeting on the 21st. Will he bear in mind, or agree that it is the fact that, meantime, both the Americans and the Russians have been able to make extremely important advances in this sphere which the EEC should have been on to by now? Can the noble Lord say whether it is the case that there is any sign of the Italians giving way on the basis that so long as Ispra continues to be used for the JRC, they might forgo their endeavour to pre-empt the JET project for Ispra?
Lord STRABOLGI: My Lords, I am grateful to the noble Earl, Lord Lauderdale, and certainly take note of what he has said. Although the site offered for JET at Ispra is contiguous with the Joint Research Centre, the JET project would be quite separate. The new programme for the JRC currently being discussed in Brussels does not, therefore, include JET or depend on it in any way.
Lord ORR-EWING: My Lords, would the noble Lord, Lord Strabolgi, bear in mind that in a research and development project of this calibre where scientists, engineers and technologists are absolutely vital, it is very important to get an early decision? These are very much sought after characters who, if they are not given enough work to do, must seek their careers in other places. This would be to the detriment of Britain and to the development of more economical nuclear energy producers.
Lord STRABOLG1: Yes, my Lords. I fully agree with what the noble Lord, Lord Orr-Ewing, said, with his great interest in these matters.
The Earl of BESSBOROUGH: My Lords, would the noble Lord opposite not agree that it is a mistake to say that this decision should be taken regardless of the consideration of site? Would he not agree—as I think he does agree—that Culham is the best site? Would he not agree that, therefore, we should not take up the position, as I think certain people have, that a decision should be taken regardless of the site and merely in order to avoid falling behind the United States and the Russians? Would not the Government agree that there is still a good chance of it coming to us?
Lord STRABOLGI: Yes, my Lords. We continue to think that Culham is the best site, on the grounds I gave earlier. Ispra, which is the next possible site, lacks the necessary background of plasma physics and tokamak engineering. We oppose and continue to oppose, the recommendation of the Commission to site JET there.
The Earl of BESSBOROUGH: My Lords, what about Garching in Germany. and Cadarache? Are they not on the list, too? Is Garching not a second-best site? What about Cadarache?
Lord STRABOLGI: My Lords, there are two sites in Germany, there is a site in France and one in Belgium. But at the moment, I think the opposition to Culham tend to favour Ispra.
The Earl of LAUDERDALE: My Lords, I think the noble Lord, Lord Strabolgi, perhaps made a slip of the tongue when he said that Ispra was the next best site. Is he not aware that the Germany site at Garching has long since been considered the only conceivable alternative to Culham, and that Ispra is really down at the bottom of the list? Perhaps it was a slip of the tongue when the noble Lord referred to it in that way.
Lord STRABOLGI: My Lords, I did not mean to say that Ispra was the next best site. It is a site that has been considered. Of course, it has strong points, as the Siting Committee recognised. It
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has proximity to the necessary power supplies and a good social infrastructure; but all these, I think, should come second to the scientific considerations.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, quite independently of the justice of our claim to Culham, with which I fully agree, are the Government aware that there is some resentment in this country that we do not get our fair share of the research sites that are available, possibly because we were late-corners into the Common Market? Will the Government now insist that we do get our fair share, quite independently of the inherent virtues of Culham in this case?
Lord STRABOLGI: Yes, my Lords. I absolutely agree with the noble and learned Lord. Although we joined the Community in 1973, no Community project has yet been sited in this country.
Lord SLATER: My Lords, is my noble friend not aware that it seems rather strange, listening to the questions asked, in the first place by the noble Earl, Lord Lauderdale, who confirmed the statement made by my noble friend in reply to his Question that this was the best site; then, from the noble Earl came an application for the Government to use their pressure. Then the noble Lord, Lord Orr-Ewing, spoke in regard to the technologists and the scientists and so on. Is my noble friend aware that we get—
Several noble Lords: Speech!
Lord SLATER: My Lords, there is no speech about it. This is a question. This is just as important a matter as questions from that side of the House. We are just as involved in this as anyone else.
Several noble Lords: Speech!
Lord SLATER: My Lords, my noble friend the Leader of the House may not get himself embarrassed on my account. I can take my stand with any of them over there. Is he aware that so far as statements made in regard to this particular project are concerned, the Government chose efficient people within the Departments in regard to technology and other matters concerning this issue? Is he

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aware that they want no advice from the other side?
Lord STRABOLGI: My Lords, of course, this is a matter which is discussed by the Communities' Council of Ministers. I am sure they will take full note of what my noble friend has said.

EUROPEAN PARLIAMENT
The LORD PRIVY SEAL (Lord Peart): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That with effect from 20th October 1976, the Lord Murray of Gravesend be designated a Member of the European Parliament, in the place of the Lord Gordon-Walker.—(Lord Peart.)
On Question, Motion agreed to.

RENT (AGRICULTURE) BILL
Lord STRABOLGI: My Lords, on behalf of my noble friend Lady Birk, I beg to move the Motion standing in her name on the Order Paper.
Moved, That it be an Instruction to the Committee of the Whole House to whom the Rent (Agriculture) Bill has been committed that they consider the Bill in the following Order, viz.:—

Clause 1,

Schedule 2,

Clauses 2 to 8,

Schedule 3,

Clauses 9 to 11,

Schedule 4,

Clauses 12 to 16,

Schedule 5,

Clauses 17 to 32,

Schedule 6,

Clauses 33 to 35,

Schedule 7,

Clauses 36 and 37,

Schedule1,

Clauses 38 to 43,

Schedules 8 and 9.—(Lord Strabolgi.)

On Question, Motion agreed to.

AIRCRAFT AND SHIPBUILDING INDUSTRIES BILL
2.58 p.m.
The MINISTER of STATE, NORTHERN IRELAND OFFICE (Lord Melchett): My Lords, I beg to move that
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the House do again resolve itself into Committee on this Bill.
Moved, that the House do again resolve itself into Committee.—(Lord Melchett.)
On Question, Motion agreed to.
House in Committee accordingly.
[The Earl of LISTOWEL in the Chair.]
Clause 4 [Corporations to give effect to directions of Secretary of State]:
The CHAIRMAN of COMMITTEES (The Earl of Listowel): Before I call Amendment No. 68, I should point out that if this Amendment is agreed to I cannot call Amendment No. 73.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 68:
Page 7, line 9, leave out subsections (1) to (3).
The noble Lord said: This Amendment is directed towards the viability of the functions and operations of the two Corporations to be set up under the Bill, and to remove the very wide powers of the Secretary of State in relation to the operation of these Corporations. As at present advised, I cannot reconcile how the main objectives of the Corporations—and your Lordships' will remember that these relate to efficiency, profitability and job security, to quote three of the main objectives—can possibly have relation if such wide powers for interference in the management of the business are granted to the Secretary of State under Clause 4. Therefore, I should be grateful to the noble Lord the Minister if he would kindly help me by giving as full an explanation as possible of the reasons for giving the Secretary of State such wide powers. I should also be grateful if the Minister could reconsider whether these powers are really necessary in the context of the national and international commercial interests of these two Corporations.
May I briefly run through the proposed powers of interference in the business of these Corporations, as at present set out in Clause 4, in order to show how very wide they are. Subsection (1) of the clause says:
"Each Corporation shall give effect to any direction given to it under subsection (2) below".
Therefore, it is mandatory upon each Corporation to give effect to these directions as set out in subsection (2). The

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Secretary of State is not satisfied with that. The Corporation must also give effect to
"the following provisions of this Act"
wherever they are set out throughout the Bill. I come to subsection (2). I suppose one would expect this to be the definitive subsection, stating the kind of directions that should be given. What sort of directions are to be given? According to this subsection, they are to be
"of a general character".
Then they must be related to
"the exercise and performance by either Corporation of its functions".
Your Lordships will recall that the wide functions or duties given to the Corporations are particularly set out under Clause 2 of the Bill. Lastly, according to this subsection, they must be such as would appear to the Secretary of State himself
"to affect the national interest".
Your Lordships will note that the words are: "to affect the national interest" and not "national security".
Therefore, these words in subsection (2) surely give the Secretary of State powers to do almost anything. It must be remembered that each of these Corporations will have been set up in the national interests. Men of ability and experience will have been appointed to carry out the functions of each Corporation. The Corporations are to deal with most complicated industries. And yet the Secretary of State is to have these wide powers.
The management of each Corporation, in order to be successful in these competitive industries, should not, in my submission, have the Secretary of State breathing down their necks in this way. I should, of course, refer to subsection (3), but this hardly limits at all these extensive powers. It is true that under subsection (3) the Secretary of State has to consider all factors which appear to him to be relevant to the proposed direction, and then at the end of this subsection there is a short phrase which says that he "shall consult the Corporation". Perhaps a telephone consultation before lunch would be adequate for this purpose. This consultation with the Corporation seems to have been put in as something of an afterthought. Again, at present there is no machinery for dealing with the position
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if the Corporation disagrees with the Secretary of State.
That the Government were rather anxious about these wide powers, at least so far as the Shipbuilders Corporation is concerned, is clear because in subsection (4) there are guidelines given as to the form of directions to be taken into consideration with the shipbuilders. This Amendment was put in in the other place at quite a late stage in the proceedings and was not in the original Bill. There are no similar guidelines in so far the Aerospace Corporation is concerned, and I should be grateful to the Minister if he could indicate why the guidelines have been put down in the case of the Shipbuilders and there are no guidelines at all in the case of the British Aerospace Corporation.
The Minister in the other place, Mr. Kaufman, mentioned in the peroration of his speech on Third Reading on 29th July last (at col. 1024 of the Official Report, Commons), the fact that he had visited many shipyards and aircraft factories and had been, to use his words,
"dazzled and humbled by the expertise of the workers in those industries."
That is indeed a great tribute to the two industries about to be nationalised. Prima facie it seems to me that the bureaucratic control, as apparently envisaged in Clause 4, will dim that bright light characteristic of the workers of these companies which Mr. Kaufman so clearly recognised. I need not emphasise in this Committee—noble Lords have such wide experience of commerce—that the success of these Corporations will depend on overall efficiency of management and production at all levels. Efficiency will depend on a host of practical policy decisions. I have often spoken of the old-fashioned and perhaps rather snobbish approach made to management in some parts of British industry, and I recognise and I sympathise with the basic objectives and good intentions of the Government. I, therefore, in all sincerity ask the Government to reconsider the scope of subsections (1), (2) and (3) of Clause 4. It seems to me that far more commercial freedom is required if the Corporations arc to succeed. I beg to move.
3.7 p.m
Lord ORR-EWING: This follows the discussion we had on an earlier clause

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when we were considering the Secretary of State's powers, and we on this side objected that they were too far reaching. I think we even sowed some doubts in the minds of noble Lords opposite because in the subsequent Division we did very well. Certainly we had a lot of support from the Liberal Benches and the Cross-Benches and others. I think we all wanted to see a certain degree of flexibility and we acknowledged that that was necessary, but we did not see that it was necessary to give such far-reaching powers to the Secretary of State. We wanted to find some compromise solution. As I understand it, these subsections (1), (2) and (3) are fairly standard for most of the nationalised industry Bills, but this Bill goes further. I would say that there was one exception, and that was BNOC; there it was not just a general direction which was allowed but specific direction; so that went further than the general format accepted by both Houses. This one goes a little further, because Clause 4(1) says:
"Each Corporation shall give effect to any direction given to it under subsection (2) below"—
and then, this is the significant part—
"or under any of the following provisions of this Act".
That is pretty far-reaching. We shall come to discuss the following provisions later today or in the days ahead, but that provision is rather more far reaching than in any other nationalisation Act.
Whether or not we leave in subsections (1), (2) and (3), perhaps amended in some form as a result of the very obviously flexible mind of the Government—although we have not yet seen it in this Bill, I am sure they are open-minded on this—I hope they will still maintain subsections (4) and (5), particularly (5), because it is supremely important that when the Secretary of State gives a direction, under subsection (2) above, he shall lay a copy of it before each House. I think we would all wish, if such a direction is given, that it be known and open, and that both Houses can question it and even perhaps debate it. I hope that others will support us in thinking that this clause goes rather too far. Perhaps the Government would consider at Report stage whether the rather more comprehensive approach might be eradicated, either by the Liberal Amendment or some Amendment which the Government themselves
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might like to table, so as to limit the Secretary of State's powers and set at rest some of the fears expressed in all parts of the Committee earlier in these debates.
Lord ROBBINS: I should like to support the Amendment which has been moved from the Liberal Benches, and I should like to take your Lordships' minds back to the 1940s when the idea of nationalisation was still in the air. In those days it was thought to be a great institutional invention that there should be quasi independence created by the institution of corporations subject only to ministerial direction on matters of high national principle. This was thought to be a tremendous improvement on nationalisation managed entirely from Whitehall. I suppose few of us would differ from the view that it was an improvement from that point of view. But I wonder how many of us would think that, as regards the nationalised industries, things have not worked out as well as was promised at that time.
I personally would not claim to inside expert knowledge of the conversations between Whitehall and the heads of the various nationalised industries, but I must confess, having to some extent mixed among those people responsible, that it is my impression that far too large a proportion of the time spent by the heads of nationalised industries is engaged in conversations regarding demarcation disputes between their own sphere of action and that of the alleged national interest as represented by Whitehall. We have had an example in the last few weeks of one of the brightest heads of nationalised industry retiring apparently in a state of dismay and frustration at the extent to which his elbow room had been restricted in just this way.
To cut a long story short, the provisions which we are discussing now, as has just been said, go much further than anything which is standard form in these matters. It gives the Secretary of State power to interfere about anything. If such an enactment takes place, I personally should regard the conduct of nationalised industries to be even less efficient than at the present time, and that is saying quite a lot.
3.14 p.m.
Lord SHINWELL: I fully appreciate the opposition to this Bill. I can under

769
stand it, and those who oppose it in this democratic system of ours have a perfect right to express their opposition. What I cannot understand, on the assumption that this piece of legislation will eventually receive the endorsement of Parliament, in spite of the opposition expressed in your Lordships' House, is why we should object to ministerial direction on policy where it affects the national interest.
In the course of our previous debates I have ventured—perhaps little notice has been taken of my observations on the subject—views about the form, the concept, and particularly in the sphere of implementation of nationalisation. Indeed, it may be within the recollection of Members of the Committee that I expressed the view which was interpreted as that of a holding company, with general directions affecting financial accountability and other matters of national interest, leaving individual firms with considerable autonomy. I expressed that opinion because over the years, with my experience, such as it was, of nationalisation schemes—and I took a very active part not only in advocacy but also in implementation—I varied my views. If I had to deal with the situation today, with the knowledge that I seem to have gained over the years, I should have offered a different method of dealing with public ownership than that which was adopted at the time.
On the assumption that this Bill—that is to say, speaking about the fundamental purpose of the Bill—will be eventually accepted, which will mean that Corporations are established with powers to operate aerospace operations and shipbuilding operations (with, I hope, the exception of ship repairing because to that I strongly object on technical grounds apart from the political issues involved), it seems to me that there must be some form of ministerial direction. I go further than that. One of the defects in nationalisation has been the creation of corporations with complete autonomy in matters of administration. The term "administration" is susceptible of various interpretations. Members of your Lordships' Committee will recall that on frequent occasions when questions have been put to Ministers about various aspects of policy associated with nationalisation schemes, they have been referred to the National Coal Board, the Post Office,
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or what-have-you. I should like to dismiss that entirely. I should like to bring us back to the other concept to which the noble Lord, Lord Robbins, appears to have referred; namely, that Parliament should always be able to discuss and ask questions and intervene in matters affecting nationalisation schemes.
By Parliamentary control let there be no misunderstanding; I mean not ministerial control, but control by Members of Parliament, however inferior they may be regarded as, however disdainful we may be of some of them because of their apparent lack of common sense. We want Parliamentary control. I would say the same of Members of your Lordships' House, that it is within our right to ask questions about how a scheme is working under public ownership, under the control of the State, and with directions by the Secretary of State, the Minister involved.
Therefore, I cannot understand what the opposition is about, except that perhaps from the standpoint of the Liberal Opposition and the Tory Opposition I can understand that they would like to dismiss the Bill entirely. Indeed, The Times leading article this morning advocates for various reasons getting rid of this obnoxious and objectionable Bill, which is repugnant in the opinion of many Members of your Lordships' House, many Members in another place, and many people in the country. No, it seems to me that the Secretary of State must be vested with certain powers of direction. What is contained in the provisions to which the noble Lord, Lord Lloyd of Kilgerran, referred, seems quite appropriate and by no means to differ from directions which have been contained in previous nationalisation Bills. We must get back to Parliamentary control.
If the Bill is passed, a Minister must be there to direct, not the day-to-day operations and matters of administration but matters of general policy; the relationship between one Corporation and another or even between the Corporation and private interests outside. That is essential. I suggest, therefore, that we either dismiss the whole thing and be done with it and leave things as they are—
Several noble Lords: Hear, Hear!
Lord SHINWELL: I note the applause for that obesrvation; I do not agree with it entirely, although I have not been happy about the Bill from the outset. Let us not make the mistake of assuming that one can have a Corporation that can do as it likes irrespective of the national interest; unless, that is, one assumes that privately owned corporations are concerned with the national interest. I have no doubt that they take that interest into account, but that is not their essential business. I beg the Government to oppose the Amendment on the grounds I have submitted, although I have no doubt that they will have ideas for doing so very much more fundamental and more intelligent than I have offered.
3.22 p.m.
Lord DRUMALBYN: I congratulate the noble Lord, Lord Shinwell, on his birthday. I am sure he knows that we all wish him well. He has been saying that Ministers must have certain powers of direction under the Bill but that they should be subject to Parliamentary control. My questions are directed to the degree of Parliamentary control. As my noble friend Lord Orr-Ewing said, there are two different kinds of directions involved here. Clause 4(1) says:
"Each Corporation shall give effect to any direction given to it under subsection (2) …"
If we then look at subsection (2) we find that those are directions of a general character, the type of directions and the only type of directions that have been given under previous nationalisation measures, except, I am told—though I am not sure about this—in the Act relating to the BNOC.
Certainly in the past nationalisation measures have provided for giving directions only on matters of a general character. I agree that this has proved difficult to interpret in the past and it has sometimes been felt that there should be wider powers or that they should be differently formulated. That I accept, but the point here is that the Parliamentary control and safeguards are limited to powers of general direction. That is clear from subsections (4) and (5), but on the other side subsection (1) says:
"Each Corporation shall give effect to any direction given to it under subsection (2) …or under any of the following provisions of this Act …"
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No safeguards are provided for, so far as I can see, in the clause. It is to that in particular that the Government must address their answer. I do not think the noble Lord, Lord Lloyd of Kilgerran, would necessarily oppose the same degree of power as has been given in previous nationalisation measures, if we are to have one at all; that is, power to give directions of a general character, but here new powers are being given to give new kinds of directions and without any Parliamentary control.
The Minister may say—or he may have been briefed not to say—that this is designed to take account of the possibility that there will be Directives coming from Europe and that this would enable the Government to carry out those Directives. If that is the purpose, I hope the noble Lord will say whether it is the only purpose, and, if not, what other purposes are envisaged under these provisions.
The Earl of ONSLOW: The difficulty with wide-ranging powers of direction given to a Secretary of State is that the Secretary of State is under totally different pressures from those applying to a board of directors. He will be under political pressure to do things which a board of directors would probably not do because, as the noble Lord, Lord Shinwell, pointed out, they have in all honesty a narrower range of interests. If shipbuilding and aircraft nationalisation is to succeed, as Lord Shinwell informed us it is—and I will not gainsay him on his birthday—we must make sure that political interference is kept to a minimum, or, if political interference is to be allowed, then, when it comes to adding up the sums, we must be able to know the cost of that interference so that consequently we may judge it. It may be interference for perfectly justifiable reasons, but whatever the reasons we must know the cost of it as opposed to the cost of the purely business or effective balance sheet approach. We must be able to separate them.
One must agree with Lord Shinwell—if I were a quarter as lucid at 38 as he is at 92 I should be pleased indeed—that we must have Parliamentary accountability; we must be able to ask questions of the Government, whichever Party is in power. After all, we have seen the

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valiant efforts by members of the Government Front Bench in the past to answer Questions about such matters as Post Office charges and aeroplane bookings. The buck gets passed so quickly that an All Blacks threequarter line would be pleased with the rate of passing. We must make Ministers answer because that is what democracy is all about. People, through their representatives—perhaps your Lordships' House is not the most representative of Chambers in the world. but there is another place in our Constitution where the Members are much more representative—must ensure that Ministers answer questions about why and how they are giving directions, and the reasons and costs of all that to the general taxpayer.
3.28 p.m.
The Earl of LAUDERDALE: We are trying to assist the Government and we realise that there are all sorts of difficulties involved, but this question of the very wide powers of direction is surely not one that can be just brushed aside as a sort of throw-away line. I am sure that the Government spokesmen on the Bill in this Committee would not dream of doing that. Nevertheless, this is a matter of great and legitimate concern to all noble Lords in whichever part of your Lordships' House they may sit. The noble Lord, Lord Shinwell, put part of the case extremely well. Whichever Party is in power, we have seen Ministers writhing in misery on the Front Bench because their hands have been tied in giving answers relating to public services or nationalised industries. One always feels sorry for Ministers in that position, particularly if one has a sneaking affection for them or if one is busy attacking them.
Should not Ministers, in their own interests, try to make sure—and certainly they should if they hope to be in office for more than a few months longer—that Parliamentary control is so strengthened that they will be able to answer the questions put to them? 1 have never sat on the Front Bench myself and at this late stage of my life I do not expect to, but one has seen noble Lords of one's own and the opposite Parties squirming on the Front Bench when quite simple and quite serious questions of public importance were addressed to them and they were unable to answer. Surely, in their own
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interests, the Government should take another look at this. I hope very much that we shall hear in due course that they are prepared to look at this. So often in the past we have been confronted with a difficult and complicated Bill and all we have had is a sort of deadpan answer which has discouraged co-operation at an early stage of what have sometimes threatened to be rather long proceedings. Let us hope that, today, we shall start by getting a response from the Government on this matter.
This is really a question of Government power being in search of responsibility. We want to make quite sure that the Government's directions are answerable to Parliament and therefore can be defended. In that sense, we want to ensure that the Secretary of State, in giving directions, can be properly protected and, indeed, supported if the directions are right. However, one of the difficulties that I see about this part of the Bill arises under subsection (3)(a), where the Secretary of State has to consider,
"All factors relating to that Corporation …"
That seems rather a lot. It might range from the prices for which the products of the Corporation are sold. It might embrace labour relations—and, usually, the Government are very anxious to keep out of labour tangles between the nationalised industries and the organised labour force.
There might be questions of using a lot of public money. I shall not say of wasting public money. There might be questions of regional development. There might be pressures from different parts of the country—of course, these would hardly come from Scotland, but they might well do so from Wales—to get some extra development of the Corporation in question in their part of the country. For instance, the Bristol Channel is very much in our minds throughout the Bill and it could well be that the Government would be forced to consider such pressures. There might even be questions of the way in which employees who were not embraced in a trade union were properly consulted. There are endless questions which could he comprised and, indeed, would be liable to be comprised under "all factors". Supposing that the Secretary of State was obliged to consider all factors but tripped up

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because he had not been sufficiently briefed on the sanitary arrangements at a particular plant: is that a factor or is it not? I am only trying to suggest in the nicest possible way and in a constructive fashion that the phrasing of this passage is not satisfactory as it stands and that Government Ministers are really tying a noose around their necks. However, it may be that they well know that they will not be there very much longer anyhow.
Lord BALFOUR of INCHRYE: I should like to add my plea to the Government to think again about the wide powers they are asking for in this Bill. I have had the experience on the Board of a nationalised industry of that Board being subjected to pressure by the Government of the day. Granted, it was a Conservative Government, but I should like to tell the history of what happened in a few words. The occasion was when British European Airways wished to order a particular type of aircraft. The pressure was upon us to order another type from a manufacturer in the Coventry area because at that time Coventry was suffering from very severe unemployment.
Having examined our technical experts' views, the Board wished to order from de Havilland the highly successful Trident. The Board had a majority of part-time members at that time. That was a safety provision against political pressure, because I well remember that all the part-time members and, indeed, some of the executive members—whose livelihood depended on the workings of the Corporation—said, "The Minister must give us a direction and then we shall resign as a body." The Government gave in and the Trident was born and it was a highly successful aircraft. I do not know what is to be the structure of the Boards of this new organisation but I will hazard a guess that there will not be a majority of part-time members. Therefore, the safety valve against political pressure will be non-existent unless the Government look once more at the wide powers they are asking for.
3.36 p.m.
The MINISTER of STATE, SCOTTISH OFFICE (Lord Kirkhill): I am grateful to the noble Lord, Lord Lloyd of Kil-
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gerran, for suggesting at the outset that, at the very least (though I believe that the Government would use rather more than the word "least"), the Government have good intentions in many parts of the Bill, not least that which is before your Lordships at the present time. The Amendment seeks to achieve two effects which we regard as quite unacceptable. It deprives the Secretary of State of the power of general direction over both British Aerospace and British Shipbuilders. It also transforms what are presently factors that the Secretary of State must take into account in giving a general direction into factors that British Shipbuilders must take into account.
We cannot agree to the removal of the Secretary of State's power of general direction. As my noble friend Lord Shinwell said, this power is a standard provision under Governments of both Labour and Conservative persuasions in nationalised industry legislation. The noble Lords, Lord Orr-Ewing and Lord Robbins, will be interested to know that I am advised that it has rarely been used because the subject of any such direction must be general, not specific, and the legal interpretation of "general" is such that the power can rarely be used. In view of this, noble Lords might indeed wonder why we retain it. But the power, like so many others in the Bill, is essentially a reserve power. It is part of the well established framework which the Bill sets for the operations of the Corporations and the Government. Although rarely used, the existence of the power is important in colouring the relationship between the Secretary of State and the Corporation. An example would be when the Secretary of State felt that, in the national interest, he might have to lean on the Corporation to edge it in a certain direction.
The other major effect of this Amendment we also regard as quite unacceptable. If the Amendment were carried, British Shipbuilders would be expected to have full regard to a number of factors which we agree it is right the Secretary of State should take into account before giving a general direction hut which are not the proper province of British Shipbuilders.
The Earl of ONSLOW: Before the noble Lord goes any further, I wonder whether he can give examples of directions

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that have been given under similar clauses—for example, to British Rail, the British Steel Corporation or British Airways? It would be very helpful to the Committee if the noble Lord could do so, so that noble Lords could know what is in the Government's mind.
Lord KIRKHILL: I speak from memory. I believe that there have been only three occasions when a direction has been given.
As to the specific occasions, I could not say at this time but I might be able to have an informal conversation with the noble Earl. I cannot myself exactly recall the three specifics, but certainly as I recall there have been only three occasions when direction has been given. I will single out one as an illustration. This, of course, does not refer to the point that the noble Earl has just made. It refers to my earlier point about factors to which we must have regard as we discuss this Bill. I would ask noble Lords whether it is appropriate that British Shipbuilders should have to ensure that they are able to compete in world markets on equal terms with competitors in other countries. Surely the sort of factors that this requirement was intended to cover are matters primarily for the Government, not for the Corporation? This is a view which I would seek to sustain before your Lordships.
The noble Lord, Lord Lloyd of Kilgerran, posed two major questions to me. In particular he made reference to, as he saw it, interference that could be occassioned in commercial matters. I am advised that this provision is standard in nationalisation Statutes. They are general. They could not be interpreted on commercial matters, because any such matters would be regarded by the lawyers as specific, not general. Indeed, although this power has been in all previous Statutes it has almost never been used because of the legal interpretation. This is the point that I was trying to make earlier to the noble Earl, Lord Onslow. On only three occasions, I think, have these powers been invoked.
I would, if I may, finish on the second point which the noble Lord, Lord Lloyd of Kilgerran, put to me, that as he understood it the guidelines in Clause 4 applied
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to shipbuilding but not to the aerospace industry. I am to say that in the Government's view there is no need to cover aerospace in the Bill. These guidelines were put down following an assurance given in Committee in another place to Mr. Willey, and I am assured that these were supported by the Opposition at the time.
3.42 p.m.
Viscount SIMON: The noble Lord explained that these clauses concerned only the general directions. This is a point which I did not quite follow because, as the noble Lord, Lord Orr-Ewing, pointed out, the first subsection refers to directions under subsection (2) or under any other provision. Subsection (2) does indeed refer to directions of a general character. Would the noble Lord consider putting in the words "or general directions under any of the following provisions", to make it clear that the second half of subsection (1) also refers only to general directions and not to specific directions?
Lord KIRKHILL: Of course, I am always willing to consider a constructive suggestion. I could not give the noble Viscount, Lord Simon, an unequivocal assurance that the Government would accept the point he makes to me. These are complicated legal matters at this particular stage, but no doubt I can at least consider his suggestion.
I confirm that my noble friend Lord Shinwell was quite right when he emphasised that Ministers are answerable to Parliament for use or non-use of the powers of general direction in the national interest. There are many other direct Parliamentary powers—for example, the crucial borrowing powers contained in Clause 11, as well as answerability of Ministers for use or non-use of their powers.
If I may turn to the very interesting point which the noble Lord, Lord Drumalbyn, put to me and to which the noble Lord, Lord Balfour of Inchrye, made reference, I can say to your Lordships' Committee that there are powers and specific directions in, for example, Clause 5, the question of organisation following on organisation review; in Clause 8, which concerns the publication of information; in Clause 18, which contains certain

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aspects of accounts and makes reference to these aspects; and I am also advised that there are a number of powers to determine, for example financial objectives, to approve new activities, to lay orders and to make regulations. For all of these, Ministers are answerable to Parliament, but only on the question of the laying of orders or the making of regulations are Ministers answerable with specific and to specific Parliamentary procedure. I hope that reply may be of some assistance to the noble Lord.
I think I have covered the points which have been put to me. I hope that what I have said will convince noble Lords that, even if rarely used, the power of general direction is essential and that the requirements which the Amendment would lay on British Shipbuilders are, in the Government's view, quite inappropriate. I hope, therefore, that the Amendment will not be pressed.
Lord ROBBINS: Before the noble Lord sits down, may I ask him to elucidate a perplexity? He has assured the House that only rarely have directions been given. Would he also be prepared to assure the House that only rarely has pressure been brought to bear?
Lord KIRKHILL: That is a valid comment which the noble Lord has made to me. It could not bring forth the type of assurance that he would obviously like to have from me.
The Earl of LAUDERDALE: Is the noble Lord quite happy about this unfortunate word "all", to which I referred, in subsection 3(a)? Do the words:
…"the Secretary of State … shall consider all factors that appear to him to be relevant…":
really mean anything that comes to mind, and so long as it comes to his mind in terms, or does "all" mean "all"? If it means "all", surely this is very extensive; and is not the Minister thereby really asking for trouble? The noble Lord said he is willing to look again at any constructive suggestion. This is intended to be constructive, although I say it with a smile on my face. I like smiling. But the word "all" seems to me to be pregnant with trouble. Perhaps he has an answer?
Lord KIRKHILL: I deliberately slowed up my latter remarks in what at the time proved to be a vain hope that I might receive some very necessary support. Left to my own limited devices, I felt slightly unable to discuss with the noble Earl the question of "all" and its relevance. I find myself still in some difficulty, because I have some problem in following the note, but I would just say to the noble Earl that I am advised that none of the examples he gave in discussing the requirement of the Secretary of State to take into account all factors would be considered under the heading of "general directions". All these matters would be regarded as specific, and, therefore, could not be the subject of a general direction. As an example, there could be the question of industrial relations; prices; sanitary arrangements—I think the noble Lord did mention it, so I mention it back, not too seriously. These are things on which in the past legal advice has prevented Ministers from giving general directions.
The Earl of LAUDERDALE: I am much obliged to the noble Lord for going to the trouble to get an answer from the Box. With the greatest respect, I am not quite sure that the Box has answered the right question. The question is not whether the directions are general or specific. The question is whether, in giving general directions, the Minister is required to take into consideration all factors that he thinks relevant. It is not whether they are specific or general. I was not raising the point as to whether prices, labour relations, sanitary arrangements or other things were general or specific but the question of whether they could be considered under the heading "all". Is the Minister quite happy? I think there are two or three more people at the Box now, and no doubt they will help.
Lord KIRKHILL: To be serious about this matter, I should say to the noble Earl that Ministers must take account of all relevant factors which pertain to the giving of a general direction. I cannot improve upon that; that is the position as I understand it. If the noble Earl disagrees with me, then we must disagree on this point. This is the interpretation, as I understand it.
The Earl of LAUDERDALE: I am sure that it is relevant. The noble Lord referred

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to all the relevant factors. All right, but the point is this: who is to say what is relevant to the Minister? Unless the Secretary of State protects himself in some way, he can be charged with neglecting a relevant issue, or he can be required to treat everything as relevant. I appreciate that the noble Lord is landed with this drafting; we are all landed with it, though we shall try to prevent some of it passing into law. All I am asking is this: would he please have another look at it? To hide behind the phrase, "all relevant" is just as bad as hiding behind a fig leaf. It is a fig leaf. It is not a very satisfactory one, and I am sure that my appeal will appeal to a gentleman of his powers of comprehension.
Lord KIRKHILL: I should have thought that only a matter of broad generality can be considered within the confine or the ambience of a power of general direction.
Lord ORR-EWING: Perhaps this matter will arise under clause stand part, and so I should like to give notice to the noble Lord, so that the Officials' Box can think on this matter. When someone queried whether the same powers should be provided in respect of the air corporations, the noble Lord said that he did not feel that that was relevant. The noble Lord, Lord Balfour of Inchrye, has already reminded the noble Lord of one instance. I should like to remind him of a more recent one in 1963, when the Government of the day, which happened to be a Tory one, forced BOAC, very much against its will, to buy the VC10 and the Super VC10, rather than the American aircraft which it wanted to buy. One cannot call that a general direction; I should have thought that it was a highly specific direction. It was one of the rare occasions on record where the politicians were right and the operators were wrong, because when one looks at the true accounts of British Airways one sees that the VC10 is the most profitable aircraft operating today. It has an 84 per cent. load factor—or used to have —on the Atlantic and is the most popular one for all Americans to travel in.
I do not think that Parliament is always right in making these judgments, but certainly on that occasion the very strong US lobby which has always existed in
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British Airways was wrong and Parliament was right. But I should have thought that that was an example where not a general direction but a specific direction was given to an air corporation. Perhaps the noble Lord will consider that example in the light of what he said and see whether we want to come back to this point at Report stage or later.
3.53 p.m.
Lord CARR of HADLEY: The noble Lord, Lord Kirkhill, said that he must advise the Committee to reject these Amendments on the grounds that they deprive the Secretary of State of power of general direction, and that they would leave with British Shipbuilders obligations and powers which I think I would agree with him ought, if they are to exist at all. properly to rest only with the Minister, not the Corporation. Before making some other comments on these Amendments, I should like to advise my noble friends that we should regard these as probing Amendments. Of course I cannot speak for the noble Lord, Lord Lloyd of Kilgerran, and his colleagues on this, but this is certainly how 1 regard them at this stage.
The debate we have had has shown how important that is. Some of us have been getting increasingly concerned about the Ministerial powers in the Bill. We have been getting concerned because although the word "general" is still used in a comforting kind of way to reassure us, we are aware that Ministers of the present Government are, even in statutory form, introducing the word "specific" as well. They are becoming much more fond of the idea of "specific" directions as well as "general" directions, and we need to assure ourselves that "general" means what it has always been intended to mean, and that more interventionist Ministers are not in future going to stretch what they mean by the term "general".
I must say to the noble Lord that lie and his colleagues on the Front Bench have still more to answer about this, particularly when it comes to those powers to which my noble friend Lord Orr-Ewing referred. In subsection (1) of the clause we are dealing not only with general powers under subsection (2), but with other powers right throughout the Bill. I shall come back to that matter at the very end

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of what I have to say which, I assure your Lordships' will not be very much.
Not only does the noble Lord, Lord Kirkhill, try to reassure us by emphasising that these are indeed only general powers of direction, but he goes on to reassure us even further that the legal meaning of the word "directions" has been held to be so narrow that the powers are scarcely usable at all or, indeed, are very rarely used. I think he was a little coy when replying to the last intervention by the noble Lord, Lord Robbins. It is pressures which are brought to bear upon nationalised Corporations which to my mind are one of the strongest reasons against nationalisation.
I have served in a Government who instinctively would not have wished to be driven to intervene more than necessary, but there are pressures which fall upon a Government, whatever their instinctive wishes, and I have seen such pressures brought to bear on nationalised industries. I cannot imagine what threat of penalty or what offer of reward would ever induce me to become the chairman of a nationalised industry—though nobody would ever be foolish enough to ask me to do such a job. But if anyone were sufficiently foolish, having seen what I have seen, I must repeat that I cannot imagine what terrible threat or what enormous reward could make me take on a job of this kind. Although this is not the subject of the debate today, I believe that it is in this area that there lies the ultimate argument against nationalisation, because nationalised industries cannot operate as Parliament keeps on insisting they should operate.
That brings me to the point raised by the noble Lord, Lord Shinwell. Although I may look at this in a different way from the noble Lord, Lord Shinwell, I think that he was really pointing out the dilemma we are in. If we are to have nationalisation—and as the noble Lord said, he recognises that I, and my noble friends would not wish to have it at all—we want it to work. Why, then, if we are to have it, do we object to Ministerial direction? I agree up to a point with the noble Lord, Lord Shinwell, that there is a great inconsistency here. But I think that the inconsistency is more in the minds of the Government even than it is in the minds
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of the Opposition. If there is to be nationalisation, then there is a very strong case indeed for running it virtually as a Government Department, having full accountability, including full accountability to both Houses of Parliament in terms of answering Questions and all the rest of it.
In this regard, I wonder whether, for example, we have done much good, either to the Post Office or to the public, in doing what a few years ago I would have supported warmly in general principle; namely, hiving the Post Office off from being a Government Department to being a nationalised Corporation. I repeat that I doubt whether it has done very much good to the Post Office or to the public or to the service which the Post Office has to try to give to the public.
Therefore, half of me goes along with the noble Lord, Lord Shinwell, in saying that if we are to have something nationalised, let us have power of Ministerial direction, but perhaps even more so, let us at least gain some Parliamentary accountability, so that it is publicly accountable in a proper sense of the word, not in some wholly bogus sense of the word. When I say that the Government are even more confused and have a greater dichotomy in their thinking than have we on the Opposition Benches, it is because they have been holding out this particular nationalisation measure to the country as something new, something different—different in two senses. First of all, for the first time we are told that here we are, at least in the aircraft industry, taking over a successful, profitable organisation. There is, therefore, no question of the nationalised Corporation merely picking up some public utility service which may be profitable but is not competitive in the normal sense of the word, or picking up some industry which is in the doldrums or worse. Here, at least so far as aircraft are concerned, we are picking up a profitable flourishing industry. That is one new departure in nationalisation.
The second departure, we are constantly told by Ministers in their general speeches to the country, is that, "Although we are going to nationalise it we assure the country that it will be quite different from all other nationalisation ventures. There will not be this incubus of central control. There will not be civil servants and Ministers crawling all over it; it will be

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highly decentralised. The shipyards will be able to run themselves and will not be interfered with. The aircraft Corporation and its constituent parts will have a high measure of autonomy". That is what they tell us. But when we look at the Bill, although the Bill pays tribute to this new principle in parts of clauses—and in some of this clause, or if not in this one then in one of the next ones we will come to specifically mentioning paying attention to the need for decentralisation —in other parts the Bill goes much further than any previous nationalisation Statute has gone in giving the Minister more and not fewer powers. That is done in the name of flexibility.
I am afraid that we are rather sceptical and perhaps even rather cynical about the use of the word "flexibility", because once the Minister has all these extra powers his civil servants—and in saying this I do not make any cheap crack about the motives or practices of civil servants—are virtually in bounden duty to crawl over these industries even more than they crawl over the existing ones.
Lord KIRKHILL: I am grateful to the noble Lord for giving way. I for my part wish to make just one brief intervention and to assure him that the word "general" is still being interpreted in the established manner. It is not being interpreted more specifically. That point should be made.
Lord CARR of HADLEY: I accept that, of course, and I accept the sincerity of the intention which the Government give to that. I still say, however, that throughout this Bill there are increasing powers for the Secretary of State compared with those which have existed in previous nationalisation Statutes, and they do not match with the other general assurances which the Government consistently give, both to Parliament and to the country, that it is their intention in these particular nationalised industries to have much less centralisation and to give much more freedom and autonomy of management to the new Corporations which this Bill seeks to set up.
I say to the noble Lord, Lord Shinwell, therefore, that I accept he is right in saying we are inconsistent here, but we want to know from the Government which way they are going. We do not
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want them to nationalise industries at all, but if they are going to nationalise and we are unable to stop them, let them be clear in their own minds which way they are going. Do not go on saying that we will have much more decentralisation, much more freedom, and then ask us to pass the Bill in a form which gives the Minister far more power in ever wider fields and with less Parliamentary control than we have had in the past.
That I believe is the real dichotomy in the Government's thinking—at least as expressed in the terms of the Bill before us—and it has been valuable to air this matter on this Amendment. I am sure the House ought to be grateful to the noble Lord, Lord Lloyd of Kilgerran, for raising the matter. I very much hope that the Government will think seriously about this; but even if, as I myself believe, we should not divide on these Amendments, I hope that enough has been said to cause the Government to think very carefully before Report stage as to whether these subsections are in the best possible form.
The noble Lord, Lord Orr-Ewing—and this is the last point I wish to make—stressed the words in the second and third lines of subsection (1) of this clause; that is to say, in lines 10 and 11 of page 7 of the Bill, which say that the Corporation shall give effect not only to directions under subsection (2) of this clause but also "under any of the following provisions of this Act". The noble Lord, Lord Kirkhill, was quite open with the House in his reply in drawing our attention voluntarily to some of the subsequent provisions in this Bill, and indeed some of the previous ones, where quite specific powers of direction are given to the Minister. The protection provided in subsection (5) applies only to the general directions given under subsection (2), and not in any way to this whole host—at least if "host" is exaggerative, then to the considerable number of other sorts of directions which the Minister can give, not under this clause but under any of the other provisions of the Bill.
I notice that the noble Viscount, Lord Simon, intervened a short while ago to ask whether the Government would seriously consider, at least before Report stage, inserting the word "general" somewhere in this first subsection of

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Clause 4. Whether that is the right place to put it in or not I do not feel competent to say definitely at this stage, but while I repeat I would not advise my noble friends to vote on these particular Amendments, I must say to my noble friends that when we come to Report stage we must not be content with the wording of the subsection as it is at the moment.
I hope that the noble Lord will undertake, with real seriousness of intent, to take account of what has been said and will, when we come to Report stage, try to meet this with some redrafting of these subsections. It would be a great help to us not only in relation to these Amendments, but because hitherto we have laboured quite hard on the Bill and there has not been much sign of flexibility or give from the Government Front Bench. They are anxious to make progress, and I can only say to them that the chances of making progress will increase quite significantly if we have sensed from them a genuine wish to deal with points of this kind which, in all honesty, they must admit are not Party political in the sense that votes to move out whole sections of the industry are. They are not Party political, they are genuine constitutional all-Party points. I hope, therefore, that we shall get that reaction of genuine desire to help this House pursue effectively what is its proper revisionist role.
4.8 p.m.
Lord MELCHETT: Before the noble Lord sits down may I make one point in response to his general comment, which went rather wider than these Amendments, on the Government considering points put to us by noble Lords opposite. There are two brief points I would put to him. The first is that I am sure he would accept that we are in great difficulty in a Bill of this sort which has been 185 hours in another place, and where a great number, if not a majority of the Amendments we have discussed, at least so far, have already been considered at great length in another place. I do not know the precise proportion, but a good number have, I know. Added to this, on two occasions I am aware of, we have undertaken to look at things and we have been criticised by the noble Lord sitting behind the noble Lord, Lord Carr
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of Hadley, for a wishy-washy reply. We have said that we are taking something away, but it has been suggested that we are quite clearly not going to take it seriously and are not going to do something about it. That has been my experience, not only on this Bill but also on other Bills, when Government have offered to take things back and look at them, but noble Lords opposite have said that this is not a serious gesture and is just a way for the Government Front Bench to try to get off the hook.
The Earl of ONSLOW: Before the noble Lord, Lord Carr of Hadley, defends himself, I am absolutely certain that the noble Lord, Lord Melchett, was directing his remarks, if not 100 per cent. against me, then at least 70 per cent. against me, and, judging by the self-satisfied grin on his face, I seem to have hit the target fairly accurately. I apologised to the noble Lord, Lord Winterbottom, for an over-cynical remark and I am perfectly happy to do it again. If it means that, because of my possible lack of judgment, noble Lords opposite will not take seriously the measures they said they would take to reconsider, perhaps my original cynical remark might not have been quite so cynical after all.
Lord CARR of HADLEY: Perhaps I may say just this to the noble Lord, Lord Melchett. Of course, my experience in your Lordships' House is still very minimal, but I will risk any disapproval from (I was going to say "quarrel with") some of my noble friends behind me and stick my neck out and repeat what I said a few moments ago; namely, to encourage Ministers to offer to reconsider. I am sure they will make that offer only in good faith. A promise to reconsider does not carry with it an automatic promise that they will find an answer, but as long as we are satisfied that it is not made cynically with an absolutely closed mind saying, "We will get rid of it today by promising to reconsider, but we are jolly well not going to do anything about it", as long as they can give us the confidence that "reconsider" does mean what it says, and as long as we make it clear that we realise that it means no more than what it says, then I believe it could help us quite considerably. May I say this on the noble Lord's first point.

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I think he said that this Bill had had 200 and something hours in another place.
Lord MELCHETT: It was 185, I understand.
Lord CARR of HADLEY: Then I have been kind to the noble Lord. It had, I think, 140 something hours in Committee, but, as I think I remember pointing out on Second Reading, although those 140 hours were spread among a record number of sittings, it was by no means a record for a major Bill; and I drew attention to the fact that, for example, the Labour Party in Opposition had over 200 hours in Committee on the Housing Finance Bill under the last Conservative Government. But I think there is another aspect which the noble Lord and his colleagues really must take into account. Although the Committee stage of this Bill was, I agree, substantial and full, the Report stage was conducted under a very severe guillotine indeed. Therefore, many of the points on which the noble Lord's colleagues in another place, Ministers, gave assurances of reconsideration when in Committee—and they were very numerous—were not able to be discussed, because of the guillotine, when the Bill came back at Report stage, and therefore the Opposition in another place was never able to test the Government on many points on which they had undertaken to give reconsideration. That, I think, is another reason why we in this Committee have to go through this Bill with a toothcomb.
Lord DRUMALBYN: Perhaps I may make one comment on what the noble Lord, Lord Kirkhill, has said in dealing with my remarks. I think it would be only fair to recognise that in one sense this clause recommends an advance on what has happened before, because, unless I am very much mistaken, one of the difficulties about directions of a general character was that your Lordships' House could well get to know about them only when the annual report was published; so that if a direction of a general character were given in, say, January 1971, the public would not necessarily get to know about it until the report for that year was published—and it generally came out in the autumn of the following year, in this case 1972, which was a very long time
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indeed after the event. So, in the sense that a direction of a general character now has to be laid before your Lordships' House and foreknowledge given of what it is, this is obviously a great advantage in accordance with what the noble Lord, Lord Shinwell, has said. But now we are inventing another thing; that is, a direction which is to be just like what the direction of a general character was previously. The same will apply: the public will get to know that such a direction has been given only within anything from 12 to 23 months after the direction is actually given.
I appreciate what the noble Lord says in the context in which we were working just now with the noble Lord, Lord Melchett, that it is late on in the day to consider a matter of this rather general character because it affects so many other pieces of legislation as well. But I think that some new method has to be devised—and this is very much along the lines of what the noble Lord, Lord Shinwell, was saying—to let Parliament and the public know much sooner what kind of directions the Government are giving. It is not really satisfactory to have to wait all that time; there should be some method for doing it earlier. Even companies are making quarterly statements nowadays: why should the Government not make quarterly statements about the directions which are being given? These are the sort of lines along which one should be thinking if one is really trying to take Parliament and the people into the confidence of the Government.
4.15 p.m.
Baroness WARD of NORTH TYNESIDE: May I make just two very brief comments. I fully support everything that my noble friend Lord Carr has said, but the point emphasised by the noble Lord answering the Amendment was that it would be on the most extraordinary occasion that the power would be used. Does the noble Lord not realise that that might be the most important occasion? This, I think, must be put on the record. If it is the most important occasion, then it requires even more opposition from those who do not agree with the powers that the Government want to take.
The other point is this. If it is a very important occasion, how long would the powers-that-be concerned with the

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matter have to wait until the decision was in fact taken? If it was so important, it might be very detrimental indeed to the interests of the nation as a whole. I am not really commenting on either my own Government or the Labour Government, but my view is that things take so long before any decisions are taken that it is very important, if possible, not to give powers which allow too long to elapse before a decision has to be taken, because it could be very detrimental to the national interests as a whole. Therefore, though I always like to take action very quickly and should like very much to vote on this Amendment as otherwise it only makes things go on longer and longer and we would have to sit longer and longer, I am fairly disciplined and so I am supporting my noble friend Lord Carr. But I should like to know, if the Ministers get the power that they want (which I hope they will not) and any very important decision has to be taken, how long they think they will take arguing on this very important decision which has been referred to in this discussion.
The Earl of ONSLOW': Just before the noble Lord, Lord Kirkhill, winds up, perhaps we could go back to the point of the three general directives which have been produced by the Government to nationalised industries—and by that I assume is meant since the war, or since nationalisation was introduced in 1946 or 1947. When we get to the Question, Whether the clause shall stand part?, I am sure the noble Lord will have been able to have been given the answer on these things, and, with the greatest respect to him—and I know he did it in the nicest possible way—I think it is probably of greater interest to the Committee as a whole than just chatting to me. So, first, can he give the Committee details of the three general directives which were given; and secondly, can he give an indication as to whether they were political or commercial. Thirdly, can he give some idea of the cost differential; that is, if the Board's view had been carried out rather than the Government's view, what would have been the extra cost to the taxpayer?
Lord HARMAR-NICHOLLS: May I add just a word to what my noble friend Lady Ward said? My noble friend Lord
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Carr intimated that he would not recommend his noble friends to divide on this Amendment. I think the case has been well made, and I think we ought to vote for this Amendment. I think effect ought to be given to the arguments which have been adduced in support of it. I should like to put a point to my noble friend, if I may. If he gets a promise from the Front Bench opposite that they will look at it again and nothing comes of that—although they could say that and mean it without in the end having to do something—and if they do not bring forward some Amendment themselves, I should like my noble friend to be specific on what he would recommend his noble friends to do on Report stage. I feel that, in order to let them see that we should like them to look seriously at doing something about this point, in the event of their not doing it, while we are letting it pass on this occasion, on Report we should like this or something like it to be voted upon so that this House can give a definite lead on what I believe is an outstandingly important trend.
Lord SHEPHERD: We have been on this Amendment for some one hour and 25 minutes. I have no doubt it is an important Amendment to an important Bill. The noble Lord, Lord Carr, indicated that his advice to his noble friends was that he would not recommend a vote in support of the Amendment; but he made a plea that my noble friend and other Ministers should look carefully at what has been said in this debate. There was some question about whether Ministers do or do not so look and whether, if they gave an undertaking, it was fair or not. My experience—and I am certain that it is the experience of the noble Lord, Lord Carr—is that in one's Department even if a Minister has not given an undertaking, what has been said in the debate is looked at with great care in case there should have been something there that is not immediately obvious either in previous debates or in another place.
I suspect that in the way we have debated this Amendment we are spoiling what good may have been done because we are beginning to labour it. My strong advice to the Committee, if I may be allowed to say so, and particularly to my noble friends, is that if they will give an

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undertaking to look carefully at what has been said and if there is any way in which they can help allay some of the fears that have been expressed, they should immediately undertake to see the noble Lord, Lord Carr, or the noble Lords who might have raised particular points. We have a large number of Amendments on the Marshalled List. There is no doubt that the Committee wish to see this Bill examined fully but we shall not be able to do so unless, frankly, we use our time to the best advantage. That certainly does not come by labouring an issue which I think has been fully gone into. If my noble friends on the Front Bench would give an undertaking to look at what has been said in this debate, I would hope that the Committee would feel that we had done enough on this Amendment and could move to the next.
Lord KIRKHILL: I am grateful for the intervention of the former Leader of the House, Lord Shepherd, but I think that I should emphasise to the Committee that when the noble Viscount, Lord Simon, put to me what I thought was a point of substance, although I did not have the expertise to define it or pronounce upon it, I said that I would take careful note of what he had said. I made my remarks in a constructive manner.
Lord CARR of HADLEY: Since my noble friend Lord Harmar-Nicholls raised this point, and it may help rather than hinder the good purposes suggested by the noble Lord, Lord Shepherd—although he must not expect me to assist him too much in his nefarious intentions for I shall be not only displeasing myself but perhaps displeasing other noble Lords—may I say to my noble friend, Lord Harmar-Nicholls, that I certainly would want to look very carefully at this clause. I cannot for the moment frame any possible Amendments in my mind but I think that I have to say this. What I shall want to do (and I am sure this applies to other noble Lords as well as to the Government) before Report stage is to try to find some words which put some limits on the almost limitless powers of the Secretary of State at the present moment.
But I do not think that we can take away altogether the powers of direction. if we must be saddled with a nationalised
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industry—which, as my noble friend knows, I should much rather not—I think we must admit that the Secretary of State, of whatever Government, must have some powers of direction. The difficulty is, I think, to find words which leave him with those necessary minimal powers of direction without taking them away altogether. I shall seek to find those words and if the Government are not prepared to go along with them or to produce something reasonable of their own, then I shall take a different attitude about dividing.
Lord LLOYD of KILGERRAN: I thank the noble Lord, Lord Kirkhill, for his courteous, and lucid, and I thought, conciliatory reply to the point I raised. I sympathise with him on his dichotomous position as indicated by the noble Lord, Lord Carr, on the important matter of the scope of the powers of the Minister. There was some comfort in his reply in that he appeared to indicate that the word "general" has such a significance in subsection (2) that these powers will be rarely used, if at all, in practice. I am also grateful to him for the sympathetic approach he has made in regard to the suggestion of my noble friend Lord Simon that the word "general" could be used more liberally throughout the Bill than it is at present.
May I briefly add my congratulations to the noble Lord, Lord Shinwell, on two grounds. First, today is his birthday and I wish him well: secondly, I do so for his most enlightening remark that if he had his time over again he would use different methods for public ownership. That was one of the main reasons that I had for raising this matter by these Amendments today.
It is all very well to talk about standard clauses for nationalised industries. My practice has been that I rarely job backwards for that is not usually very fruitful. But when one is considering the nationalisation of any industry one must be careful to consider the precise facts in relation to those particular industries. We are now dealing with industries like aerospace and shipbuilding which are of great technological interest and they have specific characteristics which are not to be found in many of the industries which have been nationalised in the past.

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We on these Benches are seeking therefore a new form of management and system for running more efficiently the nationalised industries. The object of these Amendments was to try to help the Government to reconsider the powers that at present they have taken in Clause 4 for the Minister. In view of the way in which this debate has been dealt with by the noble Lords, Lord Kirkhill and Lord Melchett, may I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.28 p.m.
Earl AMHERST Earl AMHERST moved Amendment No. 73:
Page 7, line 26, at end insert ("and
(c) shall, in the event of any disagreement between British Airways Corporation or any other British Airline registered in this country, and British Aerospace as to the specification of civil aircraft including engines and ancillary equipment to be supplied by British Aerospace invite representations from and consult with the Airline concerned.").
The noble Earl said: To avoid any confusion that this Amendment has anything to do with an Amendment I raised earlier, I must point out that the earlier one was an attempt to get freedom for the airlines to purchase equipment where and when they liked and not to have to go through this new Aerospace Corporation. The Amendment that I am now moving is to try to obtain for the airlines the right to be able to make their case direct to the Secretary of State should there be disagreement between the airlines and this new Aerospace Corporation. This Bill gives the Secretary of State the final veto on what the Corporation can develop and sell so that he will be the final court of appeal, short of arbitration, on any dispute.
If there is a dispute between the airline and the Corporation it will probably be a highly technical one and I think it desirable that they should be able to take their case direct to the Secretary of State and not have to go through either the new Aerospace Corporation or some other Government agency such as the Department of Industry. To take the matter through the Corporation would mean the the Corporation, which is the seller, would be making the case for the buyer,
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the airline, against themselves. Surely that would be an impossible and invidious situation. Alternatively, if the airlines have to go through the Department of Industry, or some other Government agency of that kind, quite apart from the delay and probably the considerable use of extra paper work, is it sensible to think that even with the best will in the world Government Departments must have better technical knowledge of the equipment that these airlines maintain and operate than the airlines themselves, and so can make a better case on behalf of the airlines? This Bill makes it a duty for the Secretary of State to consult with the new Aerospace Corporation. Cannot this duty now be extended to include consulting the airlines in the circumstances that I have pointed out? I beg to move.
4.32 p.m.
Lord WINTERBOTTOM: The noble Earl, as he told the Committee, is fighting the second round of a debate in which he won the first round. I am struck with slight confusion as to the expression he has used which is in conflict with the views of his noble friends who have just spoken to Amendment No. 68. As regards the power of the Secretary of State, the noble Lord, Lord Carr of Hadley, and his Conservative friends were clear that the power is too great and that the matter should be watched with suspicion and care. This is a view shared by the noble Lords, Lord Lloyd of Kilgerran and Lord Mackie of Benshie. But here we have two noble Earls, Lord Amherst and Lord Kimberley, who are trying to add to the powers of the Secretary of State.
Earl AMHERST: May I intervene? What I am trying to say is that the airlines should have the right to make their case direct to the Secretary of State because he, with his powers of veto, is surely the final arbiter short of arbitration. It is not a question of increasing the powers of the Secretary of State.
Lord WINTERBOTTOM: I cannot understand it any other way. The situation is that when the Bill becomes law we will have two State Corporations—British Aerospace and British Airways Corporation—which admittedly both have the same shareholders. In addition, there are other major airlines, such as British

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Caledonian and Laker Airways, for example, which have different shareholders. The general rules applying to all these airlines are the same. They must operate commercially and trade profitably. For this reason, I am certain that British Aerospace, British Airways and, indeed, the second force airlines, will be firm in their right to determine what equipment they use, what type of aircraft they will fly and how the aircraft will be fitted out.
If we agree to the noble Earl's Amendment, any disagreement between British Airways or any other British airlines and British Aerospace can be referred to the Secretary of State. This adds to the powers of the Secretary of State, which seems to be contrary to the wishes of his colleagues. Frankly, I do not see what role the Secretary of State can play in what the noble Earl has described as a highly technical situation. At the end of the day the ordering and equipping of aircraft and the negotiations which take place between private airlines and the British Aerospace Corporation must be conducted by techicians. The less the Secretary of State has to do with it, the better. It is for that reason that the Government are opposing this Amendment.
Lord TREFGARNE: I did not participate in round one of this "competition" to which the noble Lord, Lord Winter-bottom, referred. I should like to make one or two points in round two. The first difficulty with the Amendment is the reference in the second line to:
"… any other British airline registered in this country …"
This opens up the scope of these negotiations very considerably. I am not sure how the noble Earls, Lord Amherst and Lord Kimberley, would define a British airline. If it be one that holds an air operator's certificate, then the noble Earl, Lord Kimberley, should know that the Civil Aviation Authority recently promulgated proposals for making every single public transport air operator in this country hold an air operator's certificate—and quite right, too. That means that even the operator of the most humble air taxi might in future regard himself as an airline.
According to this Amendment, he may seek the intervention of the Secretary of State in a negotiation regarding the
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fitting of a new piece of equipment to his aeroplane. That, clearly, would be ludicrous. On the other hand, I have sympathy with the fundamental purposes of the Amendment—that is to say, the desirability of securing that British operators have freedom to buy their equipment from the most competitive source; but at the same time that British Aerospace ought to be given a chance to know of the requirements and to tender for those. If those tenders are competitive, if their specifications arc right and delivery dates good, by all means let the business go to them. I would be against the detail of this Amendment which creates an impossible situation both for the Secretary of State and airlines concerned.
Lord CARR of HADLEY: I agree very strongly with what my noble friend Lord Trefgarne has said about the phrase, "any other British airline". I do not believe we could consider passing an Amendment in this Committee with such an all-embracing phrase. Having said that, may I come to what I understand is the main point of this Amendment. I must say to the noble Lord, Lord Winterbottom, that he cannot get away with opposing this Amendment with the nice piece of debating footwork which he was displaying.
What we are saying here is not contradictory to what we were saying in earlier Amendments. If he were to say: "You can have your choice, we will take away most of the other powers to which you object, provided you do not want to put this power in", then I would not argue. But given the fact that we have to assume that the Secretary of State is going to have more power to direct than we would wish him to have, then if he is to have any of these powers at all there is a serious case for the power which is proposed in this Amendment. Here we are not talking about a power for the Secretary of State to interfere in the direction and management of the Corporation; we are talking much more about giving the Secretary of State power to arbitrate in a case of major conflict between two State Corporations. I say that because I have already said that I could not accept the phrase, "any other British airline".

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We ought to look back at the history of our British airline industry. Take two fine British aeroplanes. First of all, the Trident. I stand to be corrected in my understanding of the facts—perhaps my facts are not complete—and I am speaking from memory of events which are now a good many years in the past. But while the Trident has proved a highly successful plane for British Airways, and for a number of other airlines in the world, it has never captured the world market which we hoped it would.
I knew—perhaps "knew" is rather a rather vain word to use—or felt very sure, alas, that it would fail to capture the world market long before that plane ever flew. I felt that not because I had any doubt about the competence and brilliance of the de Havilland Aircraft Company, as it was then, and its designers and engineers, but because I knew that under pressure from, I suppose, British European Airways they had been forced to modify their original design concept for that plane in order to meet the particular needs of British European Airways, as they saw them at the time. If I am right, the kind of plane which de Havilland first put on the drawing board was almost exactly what Boeing eventually produced as the 727, which then proceeded to scoop the world market, because de Havilland had been forced, by a mixture of British airline and Government pressure, to build a plane to meet the perceived but narrower needs of British European Airways. A very fine plane it is within the limits imposed upon it by those original specification constraints, but there could have been a much bigger world market if that had not happened.
Of course, there is a very similar story about that other outstandingly fine British plane the VC 10. Here, again, the Vickers part of the British Aircraft Corporation originated the concept of the large British jet plane, the first version of which was called the P.2000, or something like that. That was dropped because the Government would not support it, and when the design that eventually became known as the VC 10 came on as a real project, here again the specification of that plane was distorted by pressure from the then other British airline, BOAC, to give it particular take-off characteristics at high-altitude Commonwealth airports. This character-
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istic was given to the VC 10, but only at some cost to its performance from the majority of airports, affecting its range, economy and various factors of that kind. By the time this was all done, at those airports at high altitudes including, but not only including, Commonwealth countries, the runways had been lengthened in any event so that the Boeing 707 could operate from them. So here we have another case where an outstanding British aeroplane, which, in spite of sonic of the restrictions inherent because of the design imposed on Vickers, still managed to compete extremely profitably because of its great customer attraction, could have been an absolute world beater if it had not had those design restrictions imposed upon it.
If this Bill, alas, goes through, we shall have the British Aerospace Corporation and the British airlines, but it seems to me that what we are really saying is that this kind of pressure or tension may occur again in the future between these two great State Corporations. If the Minister is to have any powers or duties, it is for very serious consideration whether one of his specific powers and duties should be to act as arbitrator if this kind of conflict between the two great Corporations—the airline operator and the aeroplane manufacturer—should arise in the future, and we must hope that he will solve such conflicts in ways wiser than his predecessors. Let me say that I mean predecessors of both Parties, because there is no Party point at all in this. So I ask the Government to think very carefully about the spirit behind the noble Earl's Amendment. I repeat that if we do a deal about the Minister's other dreadful powers, then I will not press this one. But I do not accept that this is contradictory to what we said earlier, because it is a different kind of power and I submit it is one about which the Government ought to think seriously, because it could be useful.
Lord TREFGARNE: May I say one more word following what my noble friend Lord Carr has said? I entirely agree with my noble friend that British Airways, or at least its constituent parts, BEA and BOAC, have made a number of mistakes in defining the specification of aeroplanes. But I do not think that that is necessarily an argument for taking decisions from

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them in the future. I firmly believe that British Airways must be given the power and authority to buy the aeroplanes they think are best for their requirements. If they make a mess of determining their requirements, as I believe they have in the past, then that is an argument for shooting the conductor rather than for taking the power away from them. I suggest, in parenthesis, that Hawker Siddeley and the British Aircraft Corporation have yielded too readily to the requirements of BEA and BOAC when building new aeroplanes. To take the example of the Trident, which my noble friend mentioned, Hawker Siddeley should have insisted that it was bigger and then it might have sold better. But instead BEA, in my view quite wrongly, insisted on its being a much smaller aeroplane with the result that we all know about. The example of the VC 10, which my noble friend also mentioned, is equally apposite in that connection.
Earl AMHERST: I am grateful to noble Lords who have spoken in this debate and note the difficulties which could arise from this Amendment. But I am largely reassured by the noble Lord, Lord Winterbottom, in that the airlines will be free to order the equipment they want and from where they want, and to pay for it how they want. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.47 p.m.
On Question, Whether Clause 4 shall stand part of the Bill?
Lord CAMPBELL of CROY: I should like to ask the Government about the application of the powers which we have been discussing for the Secretary of State to give general directions to the shipbuilding industry, and also, in that connection, the fact that under subsection (4), before giving any such direction to British Shipbuilders, the Secretary of State has to have full regard to the need,
"(d) to take account of any special considerations relating to parts of the United Kingdom and in particular, but without prejudice to the generality of those considerations, relating to employment."
We have heard what some of these general directions will not cover, but we are not sure what subjects they will cover, except that they will clearly be very important matters.
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There is at least one most pressing question which is facing the shipbuilding industry at present. That key question is the whole matter of rationalisation and the consequent contraction of merchant shipbuilding. We have spoken in previous debates about the comparison between the world capacity for shipbuilding and the fact that world demand for new ships in the next few years is likely to be very much less. There has been no real start yet on restructuring the shipbuilding industry. That is something which we believe could have been started some time ago and did not require nationalisation, for which the Government have been waiting.
One thing that is perfectly clear is that rationalisation will lead to redundancies. Two and a half months ago, when the Bill was in the Commons, questions were asked of the Government as to whether they could yet say where the contractions would take place and where the redundancies would occur. Those were questions which the Government were unable then to answer. I believe that they should now be in a position, over 10 weeks later, to tell us something about this urgent matter. Are they waiting, on the other hand, for the new nationalised corporation, British Shipbuilders, to be set up? Are they waiting for that body to take decisions on this? If not, are they waiting to issue a direction themselves? This is clearly going to be one of the most important questions affecting the shipbuilding industry if and when it is nationalised. The rationalisation, including increasing productivity and the contracton of the industry, is bound to come and Ministers in recent months have admitted publicly that there must be redundancies. The question is, where? Can the Government yet indicate where the reduction of work forces will occur? This will be helpful in order to give early warning to all concerned. The organising committee has been active for at least six months and it must by now have provided the Government with much of the information that is needed. Many people outside your Lordships' Committee as well as many of us here will want to know as soon as possible whether the reductions will be on Tyneside, on Teesside, on the Clyde, or whether there will be general reductions everywhere.
The other point we are asking is, who is to take this decision? It is important

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because at an earlier stage many of those who are working in the shipbuilding industry were given the false impression that nationalisation was somehow going to keep them in jobs in perpetuity and would obviate reductions and redundancies. There are signs that some still think this, despite Ministers' more recent warnings. Restructuring of the industry is left to be dealt with after nationalisation but there is still no decision and no guidance on this important matter. Is it the intention of the Government to pass this difficult series of decisions to the new Corporation, in which case subsection (4)(d) would not come into operation and the Secretary of State would not intervene? This is a real question which will pose itself to the industry.
I should like to remind your Lordships about the situation in the steel industry. Only last year, from this very Bench, I was asking questions of the noble Lord, Lord Beswick, who was then replying about the situation which has developed in that nationalised industry. The late chairman, Sir Monty Finniston, felt that there had to be closures and a large number of redundancies in order that the steel industry in Britain should be competitive. On the other hand, the Government and the Minister understandably were worried about redundancies occurring particularly in large numbers in certain places. One can see both sides of the problem. The result was that tremendous pressure was brought on the chairman of the industry.
As the noble Lord, Lord Robbins, was saying earlier, whether you call it a general direction or whether you call it pressure, it amounts to the same thing; that the Government or the Minister are pressing hard on the chairman of a nationalised industry to carry out a policy which is against his mandate for being competitive and running the business commercially one year with another. It would be helpful to the industry and to those who have to make plans for the future if the Government were in a position to tell us today something about this. If they cannot tell us today, can they at least tell us how these decisions are to be taken, whether the Government will issue a direction or whether it will be left to British Shipbuilders in due course. The sooner the information is known,
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the sooner the remedying action can be taken, for instance, to ameliorate the situation in some areas where redundancies and closures may fall heavily. Alternative employment arrangements could be started now; schemes which would mean that those redundancies will occur mainly by wastage could be worked out now; there may be retraining and all the preparations for that.
These are the sort of things which ought to be started as soon as it is known where the rationalisation is going to cause redundancies or even closures. This is not going to be an easy matter for decision. As I said, it was and still is, exceedingly difficult in the steel industry, but it is the kind of problem which British Shipbuilders will come up against when it first comes into existence unless the Government have already taken decisions and made arrangements, or are going to issue a direction.
Lord MELCHETT: As the noble Lord will realise, the position remains as it has been throughout the passage of the Bill. These are decisions which British Shipbuilders will have to take because they will be in a position to look at the industry as a whole and take rational decisions about the future. I do not think the noble Lord was being quite fair when he said that the Government had given the impression that there are no hard decisions to be taken. On the contrary my right honourable friend has made it quite clear to the people whose jobs will be affected by any changes in the pattern of the industry that there are very hard decisions to be taken and great difficulties to be faced.
Lord CAMPBELL of CROY: I am grateful to the noble Lord for giving way. He has misunderstood me, or else I unintentionally said the wrong thing. The whole purpose of what I was saying was that these will be hard and difficult decisions.
Lord MELCHETT: In that case, both sides can agree about that. It is something which I know my right honourable friend the Secretary of State for Industry has been at pains to discuss with those most closely involved, that is, those representing the people working in the shipbuilding industry. I entirely agree with the noble Lord, Lord Campbell of

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Croy, when he says that the sooner these decisions are taken the sooner any schemes or other steps which need to be taken as a result of the decisions can get under way. In my view it is an argument for getting the Bill through your Lordships' House rather quicker than we are doing at the moment.
The Earl of LAUDERDALE: I do not wish unduly to delay the passage of this Bill—we appreciate that the noble Lord is in a hurry as all young men are—but before we part with this clause there are one or two things which we must try to get clearer, perhaps when we come to the Report stage. First, there is the question of where the industry, be it aircraft or shipbuilding, is to contract. The Bill says that:
"the Secretary of State shall have full regard …"
I do not quite know the difference between "full" or "less full". It is like "all" or "not all". Anyway, the word "full" is used:
"… to … any special considerations relating to parts of the United Kingdom …"
If that is not regional development writ large, I do not know what is. This is what the Bill is about.
Just now, we heard that it is for the industry to take the decisions. Well and good. Is the nationalised industry, be it shipbuilding or aircraft, to decide on its own, irrespective of what the Government have to say, where it is going to contract? Indeed, the noble Lord's words seem rather to contradict what we are told in the Bill, that:
"the Secretary of State shall have full regard … to … any special considerations relating to parts of the United Kingdom …"
Either the industry will decide or the Government will decide, or it will be somewhere between the two. Everybody needs to know; public opinion in Scotland wants to know—
Baroness WARD of NORTH TYNESIDE: And Tyneside.
The Earl of LAUDERDALE: And Tyneside. I was about to say the North-East of England but I realise that my noble friend would say it in her own inimitable "Geordie" fashion. Whether it is Scotland or the North-East, Lancashire or Wales that wants to know, everybody, sooner or later, will want to
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know where the industry is to contract. It is not good enough to pass off this question and leave it to a future decision by Corporations which do not yet exist. To pretend that it is only the Corporations which will decide will not fool anybody. Nobody in Parliament and nobody in the country will believe that a decision by the industry will be taken independently of the Government. However, that is what the Minister led us to suppose was his intention.
Another point before we leave this clause for a little while is that of consulting the airlines. The matter was raised on the last Amendment, and I must apologise that the pangs of hunger caused me to withdraw from the battle for a short while so that I missed all the discussion. However, the question of consulting the airlines, whether or not it is spelled out in the Bill, is very serious. Noble Lords may not realise that, between them, British Airways and British Caledonian come second in the world in the pattern of international scheduled passenger transport. Within the European Community British Airways carry the greatest single proportion of passengers on scheduled flights, that is, 26 per cent. British Airways run 10 out of 12 or 8 out of 10 of the densest passenger routes in Europe. Britain, thanks to our glorious Imperial past (and that is nothing to be ashamed about) has the greatest network of civil air agreements around the globe.
These matters are very serious. When the question of the industry considering with the airlines what aircraft are to be produced is glossed over, one is up against a problem of great magnitude and complexity. It is clear that throughout the world there are too many aircraft seats chasing too few passengers. In Europe too many different kinds of aircraft are being made for too few airlines, with absurdly high unit costs. These are matters which must be discussed between British Aerospace and the airlines, and it is not satisfactory just to leave the question on one side.
I know that the Government would like to push on and so would we, because we are looking forward to our breakfast; but finally, with the very greatest respect, I must come back briefly to the point that I made earlier on subsection (3)(a), regarding all relevant factors. We did not receive a

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proper answer to that point, and I for one shall certainly come back to it with relish (and perhaps not so briefly) on Report. But I have no doubt that the Government will be anxious to assist the Committee, as, of course, they always are.
Lord ORR-EWING: On the general case, surely it must be up to the Government to shape out the size and type of industry which this country wishes to have. This cannot be a matter just for the shipbuilding Corporation. The Government have to take into consideration the industry's export potential. The size of the shipbuilding industry that we broadly want must be the result of a general direction by the Secretary of State. In forming his judgment the Secretary of State will naturally consult the shipbuilding Corporation, but what size of marine engine building facility do we want? Is it to be the recommendation of the shipbuilding industry board that there should be one main marine engine builder in this country, and that we should stop the proliferation of minor facilities in all of the shipbuilding yards? Does this make sense in the present day and age? Certainly it was a recommendation of the shipbuilding industry board—one which was largely implemented but which has never really come about. You may get two engines built in one yard, 10 at the yard of one of the marine engine builders which is to be taken over, while perhaps one engine a year is built by another yard. Is this part of the rationalisation programme which we have been told by Ministers on many occasions is to take place?
Secondly, how much is to be reserved for warship building and what will be the Minister's judgment, presumably advised by the Ministry of Defence and their sales department, regarding the export potential to South American countries which have long bought their warships from this country? How large a proportion of our facility will that take up, and how large a proportion will be reserved for the Royal Navy auxiliaries? As Royal Navy bases overseas become increasingly not available to us, one has to provide fleet support to an increasing extent. How much will that support take up of our shipbuilding facility? Wherever you look, therefore,
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the broad pattern of the size and type of the industry which the Government foresee for the next two decades must be laid down by the Government. The decision cannot be left after nationalisation to a Corporation which is to be responsible in this country, not overseas, for the administration of shipbuilding.
We were told by successive Ministers that this industry was to be nationalised, first, so that they could rationalise—and that point I have covered. Presumably the decision cannot be left to the Corporation to take the responsibility for causing unemployment in certain areas. It must be a Government decision that, broadly, shipbuilding will remain on the North-East coast, with some facility on Merseyside and perhaps in Aberdeen or Upper Clyde, while the facilities in other areas will have to be redeployed and given other engineering activities. That must be a Government decision it cannot be left to the Corporation.
Secondly, it has always been up to the Government to decide how much capital is available to nationalised industries. Their capital programme has always been part of the general shape and direction of Government responsibilities. In this case we are told that there will be greatly improved investment. Therefore I ask, first, how much money will he available and, secondly, how will the working capital be obtained? For every million pounds that you pay for improved machine tools—and they are very expensive in the heavy engineering field—you probably need £2 million of working capital for the raw materials and for the machine tooling. You need to work them on a two or even three shift basis if you are to work them economically and satisfactorily. Therefore the working capital requirement must surely be submitted by the Corporation but approved by the Government of the day.
There are, therefore, all these areas, apart from the pure management of the industry by the Corporation, which must surely come as general directions from the Secretary of State as they have in the case of all the other nationalised industries. I am sure that the Government would not wish this industry to be any exception.
5.8 p.m.
Lord KIRKHILL: When we were debating the matter earlier, the noble

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Lord, Lord Orr-Ewing, was kind enough to suggest that at "clause stand part" I might give the Government's view on the question he posed regarding the direction given in the case of the VC 10. I have to say to the noble Lord that I have been unable to check quickly whether or not this was done by general direction. What I can say is that Ministers have other powers to influence investment decisions and similar strategic planning matters through the power to approve the capital investment programmes. The noble Earl, Lord Lauderdale, returned to the attack on the question of all relevant matters.
The Earl of LAUDERDALE: Not to the attack; I was just trying to help the Committee.
Lord KIRKHILL: Having been on this matter now for about two hours, it begins to appear in a rather attacking guise, although I readily acknowledge that it was put to me in the most friendly spirit and manner. I was going to say that it is for the Minister, answerable to Parliament, to judge what is meant by "all relevant factors", and he is required to take into account the particular factors which can be determined in Clause 4(4). I do not think I can usefully add to my comments at this stage. That is as far as I have been able to go in the matter at this time.
The noble Earl, Lord Onslow, asked whether I could be more specific about the question of the three occasions on which the general direction had been given. As I said earlier, the power of general direction is normal in nationalised industry Statutes: for example, Section 7(1) of the Gas Act 1972 and Section 4(1) of the Iron and Steel Act 1949. I indicated earlier that it is of course a reserve power. It has been used once in relation to the Transport Boards and once for technical reasons in relation to the Air Corporations, and I can refer the noble Earl to the Select Committee on Nationalised Industries and to the Ministerial control of the nationalised industries, H.C. 37(1) of 1967/68, at paragraph 649. It was also used shortly after the passing of the Iron and Steel Act 1953 in relation to the Iron and Steel Corporation of Great Britain, in respect of the financial structure and management of the then publicly owned companies and the sale
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or disposal of the undertakings of securities of such companies.
Those are the three occasions; I am unable to give him any effective reply on the question as to cost differentials.
Baroness WARD of NORTH TYNESIDE: Before the noble Lord sits down may I ask him whether all that has to be done under Clause 4, which has been well put by a number of noble Lords, has been commenced? Has the Treasury been consulted? Has the Department of Health and Social Security begun consultations? I should not like to have to set out the number of Departments that will be concerned in this matter because it must be an enormous number, but I should like to know whether they have started consultations or whether they are waiting until the Bill gets on the Statute Book—if it ever does, and I hope it will not.
Lord KIRKHILL: My understanding of the position is that consultation has already started and I can confirm without any equivocation at all that the Treasury has been most active thus far.
Lord TREFGARNE: I hope the noble Lord, Lord Kirkhill, has not said his final word on this Motion because I should like to put a point to him. Like the noble Lord, Lord Campbell of Croy, I am disappointed that the Government are unable to be more specific about the distribution of the redundancies which will inevitably happen when the British Shipbuilders' Corporation comes into being. Hopefully the same will not be necessary when British Aerospace comes into being, but we shall see. There is an important point which I raised on an earlier Amendment and the noble Lord, Lord Melchett, was not then able to help me. It is the question of customers. As we have been told by the noble Lord, Lord Melchett, the British Shipbuilders' Corporation will be taking over the existing companies and will continue to be active in the export business. The noble Lord, Lord Melchett, was insistent that there would be no loss of export business as a result of this nationalisation but I should like to ask the noble Lord, Lord Kirkhill, whether he can give us a firm assurance that there will be no directives to the Corporations with regard to with whom

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they should deal. For example, are we certain that the Government will not yield to pressures, from whatever source, that the Corporations should not deal, for example, with some so-called Right-wing reactionary régime, and can we be equally certain that a Conservative Secretary of State, if he came to office, as I believe he will ere long, will not direct the Corporation (if he has the power) not to deal with some extreme Left-wing régime? I think both these possibilities are undesirable and I hope the noble Lord can reassure me.
Lord KIRKHILL: In the course of the debate on this clause, I have been attempting to emphasise that these are reserve powers. The general power of direction is a reserve power. I have also been clearly stating that I am legally advised that most issues which will come before the then Secretary of State are of a specific kind. Because they are of a specific character they therefore fall out with the remit or direction under general powers. Beyond making a statement of that kind I do not think I can comment.
Lord TREFGARNE: I thank the noble Lord. That goes some way to help me. But is it not the case that the Minister has the power to make directions in the national interest which could perhaps be of a more specific and a less general nature?
Lord KIRKHILL: Certainly the Minister must take the national interest into account and as I think I said earlier it is one of the ways in which he can covertly lean upon a nationalised industry. However, I do not think that the question of activation of our general reserve powers necessarily follows from that proposition.
The Earl of ONSLOW: Two points come to my mind as a result of this debate on the Question, Whether the Clause shall stand part of the Bill? First, I would thank the noble Lord for referring to the general directive issued to the gas, the iron and steel and the airways corporations. Can he say what those directive are?
Lord KIRKHILL: No.
The Earl of ONSLOW: No possible way.
Lord KIRKHILL: I am sure there would be a way but the Minister concerned has not got the information.
The Earl of ONSLOW: That was what I intended to say; I was not implying that he was unwilling because I can see that the noble Lord is trying desperately hard on a very sticky wicket. The noble Lord, Lord Orr-Ewing, came up with a point about marine engines. I sincerely hope that the national interest will not mean that a British built ship is going to be compelled to buy, say, Sulzer engines as opposed to an engine built in England, purely for reasons of local employment.
Thirdly, can the noble Lord also be slightly more explicit as to how many people he thinks will be declared redundant in the shipbuilding industry: will it be 1,000, 5,000, 10,000? Are there any ideas on this? Surely the Minister or some of his colleagues must have given some thought to this. Following upon that, will the Minister please direct his thoughts not to saving the jobs, as such, but finding people alternative employment as opposed to padding the industry? We have seen what has happened throughout British industry as a result of padded workforces. Orders are lost, taxpayers' money goes down the drain and we are all worse off. It is surely so much better, even though it may result in a little short-term unemployment, that people should be put into jobs where they are making money and making a contribution to the general wellbeing and doing a worthwhile job as opposed to padding out and building over-cost ships generally subsidised by the taxpayer and which nobody wants to buy.
Lord GEORGE-BROWN: Let me say that I have not always been on the side of the present Government, but having listened to Opposition Peers this afternoon I find myself supporting what the Government want to do in relation to this clause. I have never heard such nonsense as has been talked in the last hour or so by Opposition Peers. The idea that the British shipbuilding industry, when independent, has really taken care of its employees is nonsense. The idea that it has produced ships because they were called for is nonsense. The idea that they never, in the words of the noble Earl, Lord

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Onslow, padded out their contracts is also nonsense. I think the noble Baroness should be reminded—
Baroness WARD of NORTH TYNESIDE: Is that me?
Lord GEORGE-BROWN: My Lords, it does, indeed, mean that that particular noble Baroness should be reminded that her people are much more likely to be taken care of by a British shipbuilding industry which decides where to spread its contracts than it has yet done. Just to keep the record square—and there are other parts of this Bill with which I do not agree—I should make it perfectly plain that, in my view, a British Shipbuilding Corporation is needed so that we can build frigates, warships and merchant ships where we think we can build them, and maybe subsidise them, and maybe take a great risk in so doing.
I would finish my short intervention by saying that the private shipbuilding industry in fact has not done it. All this tremendous concern which noble Lords on the other side of the Committee are showing about redundancies, and "can we say how many?", and how they will be dealt with—I must say that the trade unionist has never been a great part of their business. When they have wanted to make people redundant, they have done so. For once, I am irritated by noble Lords on the Opposition Benches seeking to get from Ministers on the Labour Government Benches assurances that they themselves have never been willing to give. My own feeling is that we shall probably do better in running this industry by a national Corporation than we have so far done it by letting Swan Hunters and a variety of other individual companies run the industry by themselves.
And so, since I have been on other occasions very critical of the Government, and will be on certain parts of this Bill, I thought it fair to say that, on this particular issue, Opposition Peers are being extremely unfair, exceedingly irresponsible for their own bad powers. Speaking for myself, I go along with the Government on this particular issue, That this clause stand part.
Baroness WARD of NORTH TYNESIDE: Before the noble Lord the minister
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replies, as it has been said that the Treasury are also engaged in discussions of all these kinds of work may I ask where the Treasury is getting the money from? Is it not true that the Treasury have already said that really they have not got any money until they get something from the IMF?
If I may say so to the noble Lord, Lord George-Brown, to whom I am really devoted although he is rather odd sometimes, would he bear in mind that for a very long time all the people whom he says are very funny in supporting us have returned me to Parliament for a very long time because they like me better than the Labour Party.
Lord BOOTHBY: May I remind my noble friend Lord George-Brown, to whom I am also devoted, that not very long ago he asked me to join him in an attempt to throw out this ill-begotten and unwanted Bill on Third Reading. I agreed, and if we succeed, we are all wasting our time.
5.25 p.m.
Lord HARMAR-NICHOLS: I am also a great admirer, on many occasions, of the noble Lord, Lord George-Brown. He knows that. I have admired him in the past because he has always had his feet on the ground. He is a realist, despite all the idealism he had a few years ago. However, I have great difficulty in understanding that what he said today has to do with Clause 4. No doubt his comments would stand firm in the general context of the Bill, but they do not come under Clause 4. I am certain that if the noble Lord had been speaking on Clause 4, which is what we are talking about now, he would have said something slightly different. I do not think he would have pledged his support to getting this clause through. In point of fact, what the clause does, in the absence of some more clear explanation than we have had so far, is to allow the Government of the day, whoever they are, to interfere with the day-to-day running of a great industry where our exports, our balance of trade and our employment are involved.
While I think that this way of doing it is wrong—that is, nationalisation, central control, come what may—we are now examining in Committee the details of

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the Bill. If, despite one's general objection to nationalisation, we must have it, then I say, "Please do not have a clause like this in it". If we are to hand over to a Corporation the private enterprise organisations we do not want a Government breathing down their neck every time the Corporation wants to make a decision. Have confidence in the people appointed to the Corporation; let them make decisions where they ought, if they have to, to cut down, and where they have to make redundancies. The noble Lord, Lord Kirkhill, said that they are only taking the power on specific items. He said that although the terms are general, he could assure us it is only on the specific items that any one directive will be given from the Government to the Corporation. How can it be suggested for a minute that you can take general powers, where one must take into account the need of the whole nation—
Lord KIRKHILL: If the noble Lord, Lord Harmar-Nicholls, will allow me, what I said (at least I hope I said this) was that I am legally advised that most of these powers turn out to be specific. Because of that, the power of general direction is a reserve power and cannot be activated, which is rather different from the point being made by the noble Lord.
Lord HARMAR-NICHOLLS: That is my problem. The noble Lord has just said that most of the powers will be specific. It is not the "most" that bothers me, but those which come outside the "most"; the one or two where the Government, for over-riding ideological or policy reasons, are taking the power to do it. The noble Lord says he does not think they will, and that on most occasions it will be specific.
Lord KIRKHILL: With great respect, on an intervention of the noble Lord, Lord Carr of Hadley, I said earlier that the question of general powers is still being interpreted in the traditional manner. There is no difference in the continuing interpretation.
Lord HARMAR-NICHOLLS: I noticed when I had a little exchange with my noble friend a moment ago that his outlook on these things may be slightly different from mine. I do not see even
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that marginal merit in giving these powers that my noble friend does. I am certain that if the noble Lord, Lord George-Brown—whose opinion I value very much—had been concentrating on Clause 4 and recognising the specific dangers that will come from giving these powers, he would not have been so generous in offering the wholehearted support that he did. Having said that, I do hope that before this Bill gets its Third Reading and becomes an Act there will be some words included which will restrict the general nature of the powers and confine them to something which is more specific, rather than retain the dangers which are possible under the overall powers.
Lord GEORGE-BROWN: Since I have been mentioned so heavily, may I make this quite clear. I would not myself have this Bill pass, and if the Conservative Front Bench were not so timid as it now is I would oppose the Bill as a whole entity. What I am saying is that, since I know they are so timid, that the noble Lord, Lord Carrington, will persuade them in the end to let it through, do not pick the wrong issues to oppose. This particular clause is, in my view, the wrong clause to oppose. Everything that the private enterprise shipbuilding companies have done up till now would support this particular clause. So this is not the one to pick on. There are much wider issues why, in my view, the Bill should not go through, and I should like to speak on that when we come to that point. But at that point I am not going to be supported by those Conservative Peers who just want to save what is good for private enterprise and lose what is good for public enterprise. This leads me to the view that they have picked on the wrong clause to oppose. If they should in the end pick on the whole Bill to oppose, I will almost certainly be with them.
The Earl of LAUDERDALE: The noble Lord says "almost certainly". Can we know whether he will oppose or not? We are very glad to have his support when we can get it. When he refers to the Benches opposite we take it he is referring to the Woolsack. We are glad to have his support, but when he says he is almost certain, we should like a little more precision.
Lord GEORGE-BROWN: I can be absolutely precise. The very moment that the noble Lord, Lord Carrington, and the noble Lord, Lord Hailsham, say, "We will now resist this Bill, at the risk of having a confrontation with the other House", I will be with them. The noble Earl must ask his noble friends Lord Carrington and Lord Hailsham whether they are willing to do it.
Lord BOOTHBY: Surely the noble Lord, Lord George-Brown, must realise that we both have very good voices, and if at the critical moment we both shout, "No" loud enough we shall put the Tory Front Bench on the spot and the Committee will have to vote.
5.34 p.m.
Lord CAMPBELL of CROY: While these two distinguished noble and redoubtable Cross-Benchers are working this out, I must make it clear that in starting this debate there was no question of our opposing Clause 4, so they will have to reserve their ammunition. Indeed, it is my intention to have debates on the Question, Whether the clause shall stand part? on quite a number of other clauses as we go along. This is one of the most important clauses, and I felt that we ought to discuss it. When we were moving Amendments earlier it was with a view to the Government doing some redrafting, as my noble friend Lord Carr indicated. But I will say that I agree entirely with the noble Lord, Lord George-Brown, that he is very fair in bestowing his support to either side of your Lordships' House or Committee. It just does not happen to be our turn today.
I was not speaking about the past, as he seemed to think, when I was opening this debate. I made no reference to the past at all concerning shipbuilding. My only reference to the past was to last year in connection with the confrontation in the steel industry between the Secretary of State for Industry and the last chairman of the Steel Board. What I was asking for was information, and again I would tell the noble Lord, Lord George-Brown, that I asked for no assurances; I simply asked for information. This had been asked for two and a half months ago at the last stage in another place; the Government were not able to respond then but they gave an indication that
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they might be able to before long. Here we are two and a half months later. As they are not able to tell us about any Government decisions on this, I went further and asked whether it was the intention that the important decisions would be left to the new Corporation or whether there would be a general direction issued by the Minister. Of course, perhaps the most important policy decision of all in the field of shipbuilding is to be the rationalisation, together with the contraction that is necessary, of the merchant shipbuilding industry. That is what I was talking about, the future restructuring that is necessary and the repercussions of that. I was glad to find that my noble friend Lord Lauderdale had also been exercising his mind on the same problem and put similar questions.
We had this situation arising with the steel industry last year. There there was a slightly different situation, over-manning in comparison with our competitors, obsolete plant. As I readily admitted, there were problems, and the Government had every reason to be worried and to wish to speak to the industry before decisions were taken that might have thrown several thousand people out of work in one small community. On the other hand, the chairman of the industry would find it very difficult to run an industry when he was handicapped in taking commercial decisions, however he tried to ameliorate those decisions for social purposes.
My noble friend Lord Orr-Ewing pointed out that the Government cannot fail to be concerned about that major decision of policy when it comes. Noble Lords have said that it ought to be left to British Shipbuilders, and I agree that so far as possible they must be left with the decisions of management. But something which may mean thousands of people being put out of work in one particular place must be of concern to the Government. The question is to what extent the Government will intervene, and how, and more important when, this decision is to be taken.
I think all noble Lords who have taken part in this short debate have agreed that the sooner decisions are taken the sooner people can get started on all the work that is necessary to compensate for the loss of jobs in certain areas. Again I

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say this arises from this particular paragraph in this clause, which states that before giving any such direction to British Shipbuilders,
"the Secretary of State shall have full regard to the need … to take account of any special considerations relating to parts of the United Kingdom and … relating to employment".
Those are the factors which are going to be behind this really important decision. I am sorry the Government have not been able to tell us more today, but I think it is a matter which, rightly, will be considered again because it is so important for the country.
Clause 4 agreed to.
Clause 5 [Duties of the Corporations to review and report on management of their affairs]:
5.40 p.m.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 78:
Page 8, line 10, leave out ("or the Secretary of State so requires").
The noble Lord said: Amendment No. 78 raises perhaps a minor point in respect of the powers of the Secretary of State in relation to the British Aerospace Corporation. Amendment No. 79 raises a similar point in relation to the powers of the Secretary of State regarding the British Shipbuilders Corporation. Therefore, with the leave of the Committee, may I speak to both Amendments. Clause 5 deals with the duties of the Corporations to review and report on management of their affairs. The Corporation has to report either when the Corporation itself thinks it is appropriate, or when the Secretary of State so requires. Both these Amendments are to remove the powers of the Secretary of State to require a report.
This may appear to be a comparatively minor matter, but it raises the question as to whether it really is necessary, when the Government set up corporations of this character with responsible directors, and so forth, that the Secretary of State should have powers at any time to cause them to report. I realise that the Government are seeking high efficiency from these Corporations. It would seem to me that they could leave all these matters and duties as to reporting to the Corporations themselves. It may be that this would be
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recognised as a small step forward in progress towards improved systems of management in relation to nationalised corporations. I beg to move.
Lord REDESDALE: I should like briefly—and I am sure the noble Lord, Lord Melchett, will be delighted that it is a brief intervention—to support what the noble Lord, Lord Lloyd of Kilgerran, has said. It seems to us unnecessary for the Secretary of State to ask for such a complicated and far-ranging report—and I promise I will not raise a hare—going down to how they are getting on with industrial democracy. As I said, I will not raise that particular hare. It seems rather unnecessary to do it when he "so requires". I should have thought that in the normal course of events the normal type of report which is produced every year would be quite reasonable enough.
Lord MELCHETT: As the noble Lord, Lord Lloyd of Kilgerran, said, these Amendments would deny the Secretary of State the power to ask the corporations to undertake an organisational review, a power which we consider is essential if the Secretary of State is to be able to fulfil his responsibilities for British Aerospace and British Shipbuilders. The power is of course once again, as with the power we were discussing for some time on Clause 4, only a reserve power and not one which the Secretary of State would use in normal circumstances. But I would suggest to the noble Lord that, if the Secretary of State became concerned about the way in which these Corporations were being organised and managed, a sensible response would be to ask them to review their organisation, and if the Amendments were carried this would deprive the Secretary of State of a potentially useful means of resolving a difficult problem in the best interests of the nation as a whole and the Corporation concerned in particular.
If this is his concern, I can assure the noble Lord that the power will not be used to interfere in matters of detail. There is certainly no such intention, and I would offer, as proof of our intention that the clause should not cover organisational detail, our decision to restrict the Secretary of State's power of direction to general principles of organisation. I hope I have persuaded the noble Lord that the power

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to require organisational reviews will not be an oppressive one, but that it is one that must be in the Bill as an essential long-stop. The normal procedure—I think this replies to something the noble Lord, Lord Redesdale, mentioned in particular—in other words, what has happened with other corporations where similar duties exist, is that the Corporation itself decides to undertake a review on its own initiative when it considers one to be necessary. I am sure that this will continue to be the case. I believe that it is important to retain this long-stop in the Bill.
The Earl of LAUDERDALE: If the Secretary of State requires such reviews of organisation and so on, could the noble Lord say whether those reviews would naturally be presented to Parliament, or whether the Secretary of State would naturally report them to Parliament? I am not clear from reading the Bill whether that is so. I cannot find it anywhere, but I may not have done sufficient preparation on it. Perhaps the noble Lord could clear our minds as to whether the exercise of that power would be in some way answerable to Parliament, other than of course in answer to Questions, where he would have to tell Parliament.
Lord MELCHETT: If the Secretary of State retains his power to ask the Corporation to review its organisation, then my understanding would be that the Secretary of State would be answerable in Parliament for the use or failure to use that power to go to the Corporation. But the noble Earl asked me two questions in one. He started by asking, if such a review was undertaken, whether it would be presented to Parliament or published. My understanding, and I shall certainly let the noble Earl know if this is wrong, is that that would not necessarily be the case. Indeed, it might well disclose matters that would be commercially confidential to the Corporation. That could well be the case. So I do not think that it would be the fact that the Secretary of State would be obliged to publish a report of this sort.
The Earl of LAUDERDALE: Would the Secretary of State be obliged at any rate to tell Parliament that he has called for a review? I appreciate that the review might very well be confidential, and probably would be, but would the Secre-
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tary of State be obliged at any rate to tell Parliament that he has called for such a review?—not answer a Question that we might put to him, but volunteer the information.
Lord MELCHETT: Again I am answering off the cuff, but my understanding is that the Secretary of State would not be under any obligation to volunteer the information, to come to Parliament, to make a Statement, or lay an order, or anything of that sort.
Viscount MONCK: Would not the noble Lord agree that on Page 9 subsection (5) covers this point?
"The Secretary of State shall lay before each House of Parliament—

(a) a copy of any report under subsection (1) or (2) above, or

(b) where the Secretary of State is of the opinion that the disclosure of any part of the report is against the national interest, a copy of the report excluding that part, …"

I agree that (b) is a little questionable, but surely (a) covers what we have been talking about.
Lord MELCHETT: The noble Earl and I both missed this. As the noble Viscount got up, the information arrived from a source in the Chamber which is invariably infallible to tell me that I was quite wrong. As the noble Viscount said the subsection on Page 9 would require the report to be published.
5.48 p.m.
Lord CARR of HADLEY: This is becoming an absolutely ridiculous situation. If the Secretary of State is going to want as many powers to order the Corporation to do this, that, and the other, as we keep hearing, then he ought to be the chairman of his own Corporation. This goes back to what we were saying earlier. We do not want nationalisation at all, but if this is what is going to happen it would be much better to bring it under a Government Department and let the Secretary of State be his own chairman of the Corporation and take responsibility for running the industry, and for answering for it to Parliament.
I wish noble Lords would consider for a moment the situation we are in. We have the situation in Clause 5 where British Aerospace and British Shipbuilders shall forthwith make this funda-

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mental review. I do not complain about that. I may have some ideas about the sort of things they should review or not review, but basically I do not complain about that; they should review and report. That is fair enough when they are first set up. They are then given power to undertake to repeat such reviews in the future if they think fit; also fair enough. But are we not to trust these people at all—the chairman and his fellow board members? Are they really not to be the best judges of when further reviews should be made, or should not be made?
After all, the Secretary of State is not deaf and dumb. He can talk to the chairmen of these Corporations, and if he is not content with the way things are going on, and if he feels they ought to be making a review but are not, then the remedy for that situation is not to order that chairman and that board to make the review which they, in their judgment, do not believe is necessary. His only proper remedy is to get a new chairman and a new Corporation. If they, in their conscientious managerial and directorial judgment do not believe that a review is necessary and therefore will not initiate one themselves, there will be no confidence as between that Secretary of State and that chairman and that Board, or between that chairman and that Board and all the people whom they are supposed to be directing and managing if the Secretary of State drives, orders, them to make a comprehensive review when they do not believe in it.
Either in these major matters one trusts the chairman and the members of his Corporation or, if they do not any longer command the trust of the Secretary of State and Government of the day, it is up to them to change them; the way to deal with these problems is not to nanny them or take all these powers over them. The Government should think rather more deeply, and with more sense, of what makes industry tick or not tick than they appear to have done until now.
Lord MELCHETT: I was not aware that this would be something over which either side of the Committee would get all that heated, particularly as the noble Lord, Lord Carr of Hadley, knows this is a provision precedented in two nationalisation Acts passed by Conservative
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Governments—this particular power is precedented in those measures. It seems to me that it is going too far to say that if a Corporation does not itself believe that a review of the organisation should be undertaken, the response to that should be to sack the lot of them. It seems to me to be far more sensible to ask the Corporation to undertake a review but, as I have said, I do not think this is something that would normally happen. It is not the way it has worked in the past and it seems to me, as it seemed to previous Conservative Governments, a sensible reserve power to have in the Bill.
Lord CARR of HADLEY: I am sorry to press the noble Lord further and I do not know what experience he has had of running industries. I have had some and perhaps he has had some, too, and I certainly do not want to make any sort of cheap point about that. I assure him that nothing so upsets an organisation as a fundamental review of this kind. It causes disturbance, uncertainty and loss of morale from top to bottom. When one is starting with a new organisation like this, I accept that it is necessary and I have said that I accept that it is necessary; but once it has been set up and running, such reviews should not be undertaken unless there arise the most special circumstances, and if those special circumstances are not perceived by the chairman of the Corporation, then I must assure the noble Lord that he should not remain as chairman.
It causes an absolute upheaval to have a review of this kind, and if the chairman does not believe in its necessity he should resign; and the problem is not got over by giving the Secretary of State power to impose such an upheaval on the organisation against the will and wish of whoever is running it. I repeat in the most serious manner—I am not talking as a politician but as someone with some experience of industry—that the way to deal with this problem is not to impose something like this on the chairman of the Corporation and his team by Ministerial order. If he cannot agree on such a fundamental point as this, there is only one proper way to deal with it and that is, I hope in as friendly a manner as possible, to change the chairman and such members of the board who cannot agree.
Lord MELCHETT: I bow to the noble Lord's experience in industry and I accept that he was not trying to make a point about that. Nevertheless, it seems to me, inexperienced though I am, that to lose the chairman and possibly other senior members of the management of the industry, would be a much greater upheaval than to undertake a review of the organisation. We are not saying that the Secretary of State will direct them to change the organisational structure. I accept that reviews of this sort involve a great deal of work, particularly of senior management's time, and no doubt that is the reason why in the past they have been undertaken only at the initiative of the Corporation. If the noble Lord is saying that the alternative, which should be in the Bill, is that if for one reason or another senior management will not agree to a review they should simply all have to leave, then that seems a rather drastic step when all we are asking for is a review of the organisation.
Lord CARR of HADLEY: I am sorry to press this matter, and I promise the Committee that this will be my last intervention on the subject. I repeat that I am speaking not as a politician but as someone who has had some managerial experience. Imagining myself as the chairman of this great Corporation, if all the people down the line beneath me as chairman know that I am having to do something which, in my best judgment as chairman, ought not to be done, and if it is something so fundamental as an upsetting review of this kind, then I assure the noble Lord that the natural authority and respect that one needs to lead a great Corporation from the position of chairman will have disappeared, and I hope that the chairman in those circumstances would have the good sense to resign. If not, he should be replaced.
Lord MELCHETT: I promise the Committee that this is the last time I jump up in response to the noble Lord because I should not be doing it. This is a serious point and I accept that we are arguing about the Amendment and not going rather wider, as maybe we have done during the afternoon. I should have thought that it was quite possible to envisage, regrettable though it may be, that there will be times when the Board will be split about an issue of this sort.
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There may be a majority, possibly with those working full-time, who believe that the organisation is satisfactory. As an entirely hypothetical case, there may be a minority of outside members who take the view that the organisation should be reviewed. The Corporation in those circumstances would not of its own initiative undertake a review, and it may be that the Secretary of State feels that a review would be desirable in those very special circumstances. Possibly, say, the chief executive goes along with the minority view that the organisation should be looked at. It seems to me that in those circumstances it would be quite wrong for the Secretary of State simply to say to the chairman, "Resign", and that it would be sensible for the Secretary of State simply to say, "I think a review should be undertaken".
5.56 p.m.
Lord HARMAR-NICHOLLS: If a few moments ago I gave the impression that there was a difference of emphasis on this issue between my noble friend and myself I now withdraw that absolutely because the vehemence and strength of argument he has adduced on this matter is, in my view, well justified. I do not know whether the noble Lord, Lord Melchett, has the sort of experience to which my noble friend referred, but certainly he is a very adept debater. It is noticeable that what he took up from my noble friend was, in effect, a throw-away line; that if this did not happen, they should resign. That was using hyperbole to make a particular point and, like the skilled debater he is, Lord Melchett accepted that and it was the only point he answered as though that was the only point that my noble friend had made, when he knows very well that it was not.
The point of my noble friend's argument is that if these reserve powers are given to the Secretary of State to call for an inquiry—if he is given the over-riding power which makes him the admiral whereas the chairman of the Corporation is only the captain—he does not believe that we will get the concentration and leadership from the captain that we would have if this reserve power were not given to the Secretary of State. In terms of actually running the show—that is, if we must have it in some form as is envisaged

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in the Bill—at least let us have it run well. In terms of running the show, people must be appointed to the Corporation, and certainly to the chairmanship, in the knowledge that they have almost complete power on how it should be run and whether there should be investigations into any malpractices or mistakes that may be made in the process of running it. If Lord Melchett had concentrated on that point, instead of being so able in taking the issue up as they do in another place, and making a big argument out of something that was not intended, he would agree from practical experience that what my noble friend is arguing is sound and is in the best interests of the Bill, should it ever become an Act.
The Earl of LAUDERDALE: Before the noble Lord, Lord Melchett, replies and presents his debating skill I wish to raise a point that is not clear to me, though I am sure he will make it clear, either from his own resources, which are extensive, or from those at the Box, which are almost as extensive. The principle of decentralisation is contained in the clause. Whether there are political overtones to that in regard to certain deals that were done in another place with the Scottish National Party I would not know, but the principle of decentralisation is here, and it has much to be said for it, as also the principle which was once proposed by my Party in regard to the nationalised railways; there might be a good deal to be said for competition in terms of profit-making and pricing between different areas.
It is proposed that there should be a review in effect, to secure decentralisation. The trouble is that shipbuilding is a single industry and what is done in one place must inevitably have repercussions in another. For example, Yarrow are in Glasgow. Are we to understand from this that Yarrow will be subjected to some kind of Scottish division and that that will set pricing policy, guide investment policy and so on? If so, what will happen to, say, Vospers in Portsmouth? Will they be similarly and perhaps divergently guided and directed by an English division? We do not know and we should like to know. What we do know from this is that decentralisation is the slogan. It may be a good slogan; it may be a bad slogan; it may have political overtones; it
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may be the result of a rather shady bargain behind the scenes. We should like to know about it.
The other point is, what about naval shipbuilding? Surely that is something which is different in kind from what I choose to call ordinary, run of the mill shipbuilding. Your Lordships may say that the same also applies to military aircraft building. We know from the aircraft industry that the decision of the armed forces of any country to order a particular plane results in an indirect influence on the civil aircraft which, in effect, are derived from it. Also, it must to some extent be true that naval ship design and requirements will have their impact indirectly on merchant and passenger ship design. Is naval shipbuilding to be treated separately? Surely it is distinct in the way that military aircraft production is. Is that what is intended here? Does "decentralisation" mean not only geographical decentralisation but also decentralisation in terms of class of vessel or aircraft, and does it mean that certain kinds of ship and aircraft will be produced under the guidance of a particular division? Alternatively, will they all be lumped together? This is an obscurity. I feel that the Government probably had their heart in the right place when thinking about decentralisation but, as has happened so often, their heart is in the right place while their head is in the wrong place.
Lord LLOYD of KILGERRAN: I am disappointed with the reply of the noble Lord, Lord Melchett, and I find myself in something of a dilemma because I agree with a great deal of what the noble Lord, Lord Carr, has said in regard to the upheaval which is likely to be caused to a Corporation by this kind of review being forced upon it by the Secretary of State. I should have thought that these were matters that could have been left to the Corporation to decide when is the appropriate time to make a review of this nature.
I am always reluctant to introduce anything very contentious into debates of this kind, but the reply of the noble Lord, Lord Melchett, suggests from its general tone that perhaps he himself and the Government are unwilling to trust members of the Commission even in matters of this kind. However, the powers of the Secretary of State have been

829
very widely considered under Clause 4 and this is another aspect of the powers of the Secretary of State. Therefore, it is with considerable reluctance that I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.5 p.m.
Viscount SIMON Viscount SIMON moved Amendment No. 84:
Page 9, line 16, leave out ("consult") and insert ("seek consultation with").
The noble Viscount said: I hope that we can deal with this Amendment together with Amendments Nos. 92 and 102 which relate to the same points. I hope that we can deal with them very briefly. I put down the Amendment to try to find out the thinking of the Government in changing the wording of the Bill. When it was originally introduced in another place, the words were, "seek consultation with" but, in the course of the proceedings in another place, the wording was altered to "consult".
Looking at it with, I hope, a fairly impartial mind, I am bound to say that I believe "seek consultation with" is a much better phrase to use because, essentially, consultation involves two people. One cannot consult unless the other person consults and, therefore, if we seek to lay a duty upon one party, surely that duty cannot go beyond seeking to consult. If the other party does not respond to the invitation, it would be quite unfair to impose an absolute duty upon one of the participants to consult. If that seems rather far fetched, let me put this point to noble Lords opposite. As noble Lords know, we in the Liberal Party are not in the least anti-trade union but we have some knowledge of the facts of life. It is by no means unusual in any industry when the management put forward some proposition for the trade union officials to say, "We will not have any consultations until you have reinstated Mr. John Smith who was sacked last week" or whatever it may be. They are perfectly entitled to do that, but if that is the situation, there will be no consultation. It seems to me—and I want to hear what the noble Lord has to say on this—that the words "seek consultation with" are much more apt for this purpose. I beg to move.
Earl FERRERS: I should like to support the noble Viscount because I feel that the words which the Amendment suggests are much better. It is difficult to place an obligation on anybody to consult if those with whom he is obliged to consult do not wish to do so. Therefore, it seems better to be obliged to seek to consult. Of course, this could go one step worse if a body with whom one was obliged to consult laid down preconditions, saying, "We will only consult with you if this, that and the other conditions are first met". Under the wording as it is at the moment the Corporation would be obliged to consult. This is only a matter of drafting, but I think it would be better that the words should be, "seek to consult".
Lord WINTERBOTTOM: I have some sympathy with what the noble Viscount has said. As the headmaster of Cheltenham said to the headmistress of Cheltenham Ladies' College, "It takes two to kiss". I believe that it takes two to consult but, on the other hand, if we consider the situation, we live in a real world and what we are trying to do as a Government is to make our intentions abundantly clear. We believe that industrial democracy, which we discussed at some length in the earlier part of our debates, is a most important element in the operation that we are trying to undertake. For that reason, we want to make the Government's point of view very clear. "Seek to consult with" permits coyness. The determination to consult may overcome it. It is an attempt to state as strongly as possible the Government's views as to what should happen in this particular case.
Lord WIGODER: The noble Lord, Lord Winterbottom, must realise that he has not answered the case that was put at all. You cannot impose a duty upon somebody to consult somebody else if that other person does not want to be consulted. In those circumstances, what conceivable objection can there be to the very much more intelligible Amendment proposed by my noble friend?
Lord WINTERBOTTOM: As I see it, the instruction is not so much to the trade union movement as to the new Board. It is being instructed by the Government

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to be resolute in this matter; not to send a valentine, a bouquet, but simply to knock hard on the door. That was the reason for changing the wording from a rather permissive to a mandatory form which lies behind the change that we made in the Committee stage of the Bill in another place.
Lord HARMAR-NICHOLLS: I can understand the problem behind this Bill from what the noble Lord has said. With what he has said he is drawn either to making their intentions clear or being goad legislators. It is a good thing to have your intentions made clear and to give a general directive to someone. I can understand that; and I have a lot of sympathy with his point of view in wanting to let it be seen by the trade unions and anyone lese that that is not given grudgingly to them. That is one side of it. But we are now in Committee as part of Parliament drafting legislation and we have a duty to be good draftsmen. Where we recognise in advance that something is ambiguous, and may well be interpreted in a way that could be dangerous, we have a duty to put it right. I believe that in Committee we ought to be taking that side of our duty more seriously than we noble Lord, Lord Winterbottom, has just done. The words suggested by the noble Viscount make it clear that the intentions the noble Lord, Lord Winter-bottom, has in mind are genuine, and the Government wish them to be carried out. At the same time the words must be clear there can he no misunderstanding and there must be fairness, if at the end of the day we want consultation which is real consultation. I would suggest to the noble Lord that he get off this sort of בwo-way facing. His intentions are perfectly clear. Now let him be a good draftsman. Put words into the Bill which when it becomes an Act will minimise the sort of trouble that will flow from sloppy words.
Baroness PHILLIPS: I think the noble Lord is with me, in that he is very keen always to see very clear wording in Acts of Parliament. I think there are a number of us who rather dislike the ponderous and sometimes unintelligible English in which they are couched. If I feel ill, I do not say I am going to seek a consultation with a doctor; I say I am going to
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consult a doctor. It seems to me everyday English, which is much more intelligible than the rather lengthy and protracted was of saying, "I am going to seek consultation".
Lord WIGODER: The noble Baroness, Lady Phillips, cannot be required to consult her doctor.
Lord STRATHCONA and MOUNT ROYAL: May I follow that point up? I think that is exactly right. We have here the legal mind pointing out what could be a real difficulty. Supposing one party seeks consultation with somebody, they decline to have it and it does not take place; are they not then entitled in lay to say, "We were not consulted. The reason we were not consulted was that we refused to be consulted; therefore the act that you are proposing to perform is invalid."?
Lord AIREDALE: My noble friend is seeking to put back into the clause the words which were the Government's own first thought and which the Government took out and changed. Having heard this short debate, does the Minister not think that, as so often, the Government's first thoughts were best, and will he not accede to this Amendment?
Lord SOMERS: The noble Lord has said that the Government wished to make their intentions perfectly clear. Surely they have done so by merely saying, "The Government shall consult"—or what were the words? If we accept the Amendment, it is "seek consultation with". But the word "shall" is there; therefore the Government's intention is clear. What is the intention of the other side nobody of course can ever know until it takes place.
Lord WINTERBOTTOM: All I can say is that the Committee seem to believe that the Government's first thoughts were best, and I will certainly convey that to my right honourable friend the Secretary of State. May I make one personal point to the noble Lord, Lord Harmar-Nicholls—whom I nearly referred to as "my noble friend". If he prefers a heavier approach to these problems, I can provide it. I was not being flippant; I was just being lighthearted.
Earl FERRERS: When the noble Lord conveys these sentiments to the Secretary of State, would he remember one thing? It is a point he did not refer to. Where you have an obligation, "shall consult", it is perfectly possible that there could be preconditions made by those who are seeking to be consulted and the words, "seek consultation with" would avoid that. The point that I wish to make is that it is obviously wrong that a Corporation should apparently be at fault because they have not consulted when in fact they might have been obliged to accept preconditions.
Viscount SIMON: I am much obliged to the noble Lord, Lord Winterbottom, for saying he would take this back to his right honourable friend and consult with him—or seek to consult with him in any case. I think, in those circumstances, I would be pleased to withdraw this Amendment. Perhaps the noble Lord will let me know what luck he has with his right honourable friend.
Amendment, by leave, withdrawn.
The DEPUTY CHAIRMAN of COMMITTEES (Baroness Wootton of Abinger): The next two Amendments are wrongly numbered. We call Amendment No. 86 before Amendment No. 85.
6.17 p.m.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 86:
Page 9, line 16, at end insert ("or professional organisation.").
The noble Lord said: This Amendment to subsection (4) of this clause raises very significant matters in relation to a large number of employees of the Corporations, particularly the British Aerospace Corporation. As your Lordships will be aware, there are large numbers of engineers, designers and certainly members of management who belong to professional organisations. Many of them, for a variety of reasons, do not belong to a trade union. This clause as at present drafted relates to the review which the Secretary of State or the Corporation will have to produce. It will inevitably raise questions of a technical nature, quite apart from questions of industrial relations.
As my noble friend Lord Simon said earlier, we are in no way making any
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attack upon the trade unions. Indeed, earlier in the Committee stage of this Bill I said that of course members of the trade unions know far more about industrial relations matters than possibly engineers and certainly lawyers; but when a review so fundamental as the review contemplated under Clause 5 is to be made it will necessarily involve consultation with engineers and designers, technical men, upon whom the whole success and efficiency of this Corporation very largely depends. In those circumstances, it seems to me essential that there should be consultation not only with the relevant trade unions but also with a relevant professional organisation. Therefore this Amendment is to add the words, "or professional organisation" to the words, "trade union", so that consultation can take place at all levels, with trade unionists, engineers, designers and all the responsible people concerned and who are represented in the organisation. I beg to move.
Lord MELCHETT: As the noble Lord has explained, these Amendments seek to extend the Corporations' duty to hold consultations on the subjects covered by Clauses 5, 6 and 7 to professional organisations. At the moment, the only organisations which the Corporations are required to consult on these matters—organisations, machinery for setting terms and conditions of employment and the corporate plan—are independent and recognised trade unions; but, of course, this requirement does not prevent the Corporations' consulting any individual or organisation whom they consider may be able to make a constructive and useful contribution. I know from meetings with both organising committees that they will want to draw fully on the relevant expertise of the professional organisations since the skills they represent are vital to both these industries, as the noble Lord, Lord Lloyd of Kilgerran, said.
The Corporations can do this as appropriate under the terms of the Bill as drafted. But there would be a number of problems involved in requiring them to do so. First, there is a technical problem of definition: there would be a considerable debate about which organisations the Corporation was expected to consult, and disagreements could lead to delays and create difficulties for both parties involved, as well as actually

835
impeding the course of the consultations themselves. Moreover, Clauses 5, 6 and 7 are directed primarily at those who work in the industries. I believe that the noble Lord's Amendment could have the effect of giving equal rights to organisations of which only a small part were directly involved in the two industries themselves.
But the Government have a more serious objection of principle to these Amendments. Professional organisations are only one of many groups which in some way represent some of the interests of employees. The Bill follows the Government's general policy on collective bargaining and proper employee representation. We believe that our policy is in the best interests of all those who work in both industries. We regard this as of the greatest importance and we will therefore, I regret to say, resist the Amendments. In doing so I am absolutely satisfied, as I have already said, that there is nothing in the Bill as it is to stop those who belong to professional organisations playing their full part in the future of these industries. I am sure that they will do so, and I am sure that that is what the organising committees and everybody else will want.
Viscount SIMON: I would ask the noble Lord to elaborate on one thing he said. He was rather resisting the suggestion that the professional organisations should be consulted on the grounds that a number of their members would not be in the industry. Surely this is equally true of the relevant trade unions? There will be many members of the relevant trade unions who are not engaged in the industry.
Lord MELCHETT: My understanding is that it will be those people in the relevant trade union representing the people in the industry—in other words, the shop stewards and other full-time officials of the unions involved—who will be consulted by the two Corporations.
Viscount SIMON: I was concerned that the people in the professional organisations working in the industry could be consulted.
Lord HARMAR-NICHOLLS: I would ask the noble Lord to have another look
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at this matter. I accept at once that under the Bill it is not ruled out that these organisations can be consulted and I also accept at once that the words used in the Amendment may create a difficulty as they stand. But I think that in practical terms it would be very useful indeed to have some words to carry out the intention which the noble Lord has in mind. I say that because some of us speak from past experience and have had dealings with nationalised Corporations. I am thinking particularly of where the trade unions come into the matter. If one consults a professional organisation, for example, and as a result of those consultations advice is given which is contrary to that which the relevant trade union wants to give, then the relationship between the Corporation and the trade union can be soured by the very fact that the Corporation consulted the professional organisation at all.
Therefore, if it is written into the Bill that somebody has to be consulted, and words are used to that effect, then that absolves the Corporation at once from that type of criticism which comes from trade unions when the trade unions say, "You deliberately consulted someone whom you knew would give different advice to what we give." That situation causes a soured atmosphere and in the long run does not result in coming to an harmonious conclusion which might otherwise be reached.
While I can see that the organisations are not ruled out, and while I can see that these words may not be the right words, I nevertheless ask the noble Lord whether he will give a little consideration to protecting the Corporation when it goes to other than trade unions, so that the Corporation is not accused of doing something devious or biased in so acting. I believe that there is something in this point which the noble Lord may want to take into account, and I hope he will look at it.
Lord WIGODER: I should like to support the point put forward by the noble Lord, Lord Harmar-Nicholls, in a slightly different way, and ask the noble Lord, Lord Melchett, this question. If, as he clearly indicates, the Corporation will consult with relevant trade unions and relevant professional organisations, what

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is the point of writing subsection (4) of Clause 5 into the Bill at all?
The Earl of ONSLOW: There seems to be one oddity here. Seventy per cent. of the people who work in these two new Corporations will in effect be enfranchised by law. When your Lordships last looked at the Bill we had considerable discussion on industrial democracy. Only 30 per cent. of these people "may be" enfranchised, but they do not have to be. This seems to me to be a straightforward piece of unfairness. It may seem a rather naive way to put it, but it seems wrong that 70 per cent. of the people in the organisations have to be consulted and talked to. I am not in any way criticising that. I am criticising the fact that 30 per cent. of them only may be.
Underlying the point made by the noble Lords, Lord Harmar-Nicholls and Lord Wigoder, what happens if the Corporation discusses with one of these organisations representing 30 per cent., or some members of the 30 per cent., and some of the 70 per cent. say, "No, we don't want you to discuss it like that"? If it is written into the Bill that everybody has to be consulted, then that would seem fair, above board, right and correct. But if the provision is only for 70 per cent. and the position is one of "may be" in regard to the other 30 per cent., then that is unfair.
6.26 p.m.
The Earl of LAUDERDALE: Before we pass on from this matter, I should like to take up the opening remarks of the noble Lord when he said that of course the Corporations will, in fact, consult the professional organisations. He said that he hopes they will and he believes they will, and he thinks that in that regard there will be the very greatest help resulting. But then the noble Lord went on to say that there is an objection in principle to defining them as, so to say, worthy of consultation. Surely this is bringing us to what must now—or ought now—be becoming a quite outdated approach to industry. For years we have been told about what are known as both sides of industry, as if they are different and antagonistic instead of being closely interwoven, and as if there was not a considerable grey area of what I might call middle management who are the employees of companies but who, none the less, have an executive role to fill.
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To exclude professional organisations or staff associations—and, let us say it now, somebody will call them "sweetheart associations", which really is a red herring if ever there was one—is surely to say that some are to be more equal than others. This is the difficulty which one has throughout this matter and I cannot, in my heart, believe that this is really what the Government intend, since the noble Lord has assured us that the Corporations will want to consult staff organisations and professional associations and that they will look forward to the benefit of the advice of those bodies. Clearly, there is some mistake here. If one leaves the situation so that the Corporations are only really to take note, so far as industrial democracy is concerned, of what I might call the shop floor organisations, then a very difficult and silly situation may develop.
One has already seen in the Hospital Service cleaners and others, who are in no way competent to judge on medical matters, exerting for political purposes a policy that is in fact in the medical field. I do not think that there is a single noble Lord or noble Baroness who will deny that that has happened—and it has been a disgrace. Anyone who has visited Communist countries and knows how they work will be very familiar with the practice there, which is borrowed directly from what I might call emergent Communist countries when the revolution is going forward but has not yet quite completed itself. If we are really to make this a success we must be aware of what I choose to call mere, or only, shop floor organisations having the whip hand.
Those who provide technical and highly skilled management or provide supervisory services—and they are services; they are employees too—have a very important part to play, as the noble Lord recognised. But to exclude them, and deliberately to exclude them, smacks of the same kind of consent as happened in the hospital business which was a shame and a disgrace, and everybody in this House knows that it was a shame and a disgrace. We want to be quite sure that we do not get involved in this highly technical industry, in its reorganisation, in a sort of phoney concept of industrial democracy. Industrial democracy is not simply one lot dominating the others by sheer force

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of brawn; it is a mixture of brawn and brain serving one another to the public benefit.
In the case of the aircraft industry, I think I am right in saying that something like half the number of persons employed —if I may just have the noble Lord's attention for a moment; I would just repeat that we have plenty of time in front of us—in the aircraft industry are senior management or supervisory in one way or another. This is not an industry of blacksmiths any more than shipbuilding is. Technical management, design, supervising, the checking of quality, all these matters arc every bit as important. Indeed, they are critical and are every bit as important as what I call the brawny shopfloor working. Therefore, not to make proper provision for them is to lay the Corporations and to lay the Bill open to the charge of perpetuating this wicked concept of the "opposite sides of" industry. There are not opposite sides, there are many sides; and unless they all seek to serve one another they serve no good purpose in any event.
Lord ORR-EWING: I add myself to views already expressed and I am not sure whether to speak on this Amendment or the next one, on which my noble friend wants to speak. My instinct is to prefer slightly the official Conservative Amendment which follows on immediately. For ten years I was a member of the BBC staff Association and it is interesting to note that it was led by an ex-Parliamentary Labour candidate, so it could not have been called a Tory organisation, a tame union or a sweetheart union. I then joined the Association of Scientific Workers which was then dominated by a far more left-Wing character and has now ended up after takeover after takeover probably as the ASTMS, so I had a little experience when I was younger in these areas. But it seems to me that if we are to come to industrial democracy, then the one thing we do not want to do is to separate the hourly workers from the junior staff and middle management. That is particularly true in a science-based industry like the aircraft industry.
It is a fact that between 33 per cent. and 50 per cent. of the entire workforce of that industry are not members, under the present definition, of any relevant
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trade union. Therefore, so far as participation is concerned, which is Clauses 5 and 7, rather than wage bargaining, which is Clause 6, I would ask the Government to consider, even if they will not come with us all the way, whether they might make a differentiation that in any cases where industrial democracy and participation is the main object, as in Clauses 5 and 7, they may perhaps give way and come to some solution which can bring other people in. I have been re-reading the Third Reading debate on this Bill in another place where Mr. Varley, moving the Third Reading said:
"One of the Bill's main themes is industrial democracy …"
He went on:
"Industrial democracy is central to the Bill in a number of ways. First, we decided to introduce the Bill partly as a result of the expressed wishes of the workers in the two industries, through their representative unions."—[Official Report, Commons, 29/7/76; col. 984.]
Even then there are a great number of workers, particularly in the ship repairing industry who think exactly the opposite. They do not want to be nationalised. So only a minority was consulted.
What is more disturbing is that at col. 985 of the same speech, he went on to say that,
"the Government agree that the general legislation relating to certification of independence is unsatisfactory and needs tightening up."
It looks from this as if there is a move in the Government to make it more difficult to consult the non-TUC unions. I cannot believe that the Corporations would wish that to come about, otherwise we are going to find something which is deeply divisive, and I cannot believe that the Government wish that to come about. I hope very much, therefore, that we may find a form of words as between Clauses 5 and 7, and Clause 6 on the other hand, which can promote industrial democracy. Naturally, we want to feel our way cautiously in this area, but the one way to go is not to divide the workforce into those who work on the workbench and those who work in the testing departments, in the quality assurance departments, in the scientific departments, in the drafting departments, all of whom have a considerable part to play, particularly in an industry which is capital intensive like the Aerospace Industry.
Lord GISBOROUGH: The ship-builders themselves welcome the study started by the Secretary of State for Trade into industrial democracy. They are very anxious for a greater involvement and participation with the workforce at all levels, if that participation is sought by workers in each establishment. That, of course, may sometimes be questionable. Subsections (8) and (9) of Clause 2 resulted from the Government giving an undertaking to the Tribune Group in the Committee stage in another place to promote industrial democracy in a strong organic form to start three months after the vesting date. The definition of this was obviously so impossible that subsection (10) had to be added so that there could be no recourse to a court of law. The intention of industrial democracy is based on the fact that the trade unions rather than the workforce should have industrial democracy. But, as has been mentioned, a large number of people do not fall into the category of being members of the relevant trade unions and the numbers vary up to perhaps 50 per cent. It is only fair that if industrial democracy is to have any meaning at all, the entire workforce should be a party to the consultative process and thus this Amendment.
So far, the Government seem to have been very unsympathetic in another place and perhaps here. The Bill originally introduced talked about "independent" trade unions, but now it has been changed to the "relevant" trade unions—in other words, unions not only independent but also recognised for collective bargaining, or, alternatively, unions which are recommended for recognition by the Advisory, Conciliation and Arbitration Service. This Bill disenfranchises from the consultative process a large part of the workforce, and in the aircraft industry this would probably include many of the aero-dynamicists, the metallurgists, the designers, the test crews and many other categories. This Amendment is designed to give all that kind of people the opportunity to share in the consultation.
The members of the Staff Association surely have equal rights with the relevant trade unions and should be given them. After all, they are all human beings whether they work on the shop floor, the design office, or wherever. They are equally dependent on the success of the
842
company. They are equally dependent on the remuneration they get, whether annually, monthly or weekly. They are equally able to withdraw their labour. They can strike whether they are draughts-men on the shopfloor or whatever. They are equally needed for all the processes, because the designer can design for ever, but it is no good unless the chaps will convert the designs to parts, and the man who is making parts will not get on very well if the designer is not producing plans. They are all needed; and it is equally necessary that they all should be there for the jobs of each other.
The noble Lord has said that the associations can be consulted; but the unions might well claim that, as there is no mention of them, they should not be consulted. And my noble friend behind me has already pointed out that if advice was given by an association which was contrary to the advice by the trade unions, the unions would no doubt very quickly say that the association had no right to be consulted in the first place, which could only lead to friction. There is great interdependence between the scientists and the engineers; they work together. They must, indeed, because they all require training. The apprentice on the shop floor may have five years' training for his work on the lathe, just as the designer will. They must work together, because the safety of the aircraft that is eventually produced is essential, and there is no leeway for mistakes throughout the process.
There is another, substantial group that demands attention with consultation, and that is the spearhead of the industry, involving the sales force and the product-support departments. The sales force, particularly, are skilled right across the world, which is where they have to compete. They are a very strong group who probably have as much knowledge as any of what is required to sell, and therefore to eventually pay the wages of the workers, and they should be consulted. It is estimated that in BAC about one-third of the workforce are not members of unions, and therefore would not be consulted, or whose consultation would not be accepted, perhaps, by the trade unions. 1 think it would be very interesting to hear the extent to which consultation takes place in existing nationalised industries.

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It was interesting to see how industrial democracy had been tackled in one firm, the Bristol Channel Ship Repairers, who have circulated many papers to many people in an effort by all in that firm—managers, shop stewards, the lot—to avoid being overwhelmed by this monolithic Bill. They have one employee-director to every 50 men, and this director is elected by the employees themselves. They have a total workforce of some 380, and at the moment they have very close liaison with their board. They will be 380 out of 95,000. How much say will they have in the industry, for a start, even though they may continue to have a say within their own organisation? In the future they will have the dead hand of bureaucracy and the powerful unions throughout the country staying their hand or guiding their course, rather than being guided by their own directors, consisting of members of their own workforce, elected I to 50. The decisions will no longer be collective, by the whole firm.
Furthermore, the workers are shareholders, and very soon in excess of 50 per cent. of the shares will be owned by the workforce themselves. When they own their own shares they will surely have some feeling of ownership and pride, and a desire to get on, if for no other reason than that they wish their shares to increase in value. I am not aware that anybody who works for the Government feels that they are working for themselves, as if they own the thing. This is the nice idea that when you have a sort of communistic State you feel, "We are working for ourselves". I have yet to discover anybody who is made aware of that sort of feeling in nationalised industries, however much the idea may appeal to the theorist.
Furthermore, in this small firm they have very full financial disclosure. They produce accounts which I think are a model of accounting. I have never seen anything like them before. They are totally pictorial, and even I can understand them—and that is saying quite a lot. But, in fact, really anybody can understand them because they are colourful, pictorial and interesting to read, and at the end of it you really can see what the company looks like. They have quarterly conferences, when the shop stewards, man-
844
agers, workers and apprentices all get together and discuss future policies.
Now this is all about consultation. One wonders whether there has been consultation as to whether this firm, particularly, should be taken over, because if they were consulted at this moment there is absolutely no doubt that they would not want to be nationalised. I should like to know what nationalised industries practise the sort of consultation about which I have been talking. For example, I think I am right in saying that the coal industry and the railways have been nationalised longer than any other businesses, and I should be most interested if the noble Lord could perhaps tell us to what extent both those industries practise industrial democracy, with what success, and whether they have reached the state of circularising all their members with accounts, and so on. Because if there is an aiming mark, then one knows what it will be like when this industry is nationalised. I hope the noble Lord will be able to tell us what success has been achieved in this respect in those industries.
6.47 p.m.
Lord CARR of HADLEY: The debate recently has spilled over a little, I think, into the next Amendment, and perhaps it might have been for the convenience of the Committee if we had discussed Amendment No. 85, which is the next one, together with Amendment No. 86. But, as we have taken it in this way—and I shall want to move No. 85 in due course on behalf of my noble friends and myself—perhaps I may say something about this Amendment. Of course, while I agree with every word that my noble friend Lord Gisborough has just said, all he is wanting is not covered by this Amendment; and I am sure that the noble Lord, Lord Lloyd of Kilgerran, will be the first to realise and admit that all he is wanting is not covered by the Amendment we are discussing at the moment. The Amendment we are discussing at the moment is concerned simply with adding professional organisations to the relevant trade unions, as at present in the Bill, and may I say to the noble Lord who moved this Amendment that I am all with him in his intention.
I must confess that I had thought that the next Amendment, which is in the names of my noble friends and myself,

845
subsumed professional organisations, and therefore I had not felt that it was necessary to deal separately with professional organisations. But if he or anybody else thinks it is, then at some stage, which might be the next stage of the Bill, I would not in any way object to making it clear that the professional organisations are included. Whether the noble Lord, Lord Lloyd of Kilgerran, thinks that or not, he must make up his own mind, but if he does think that the next Amendment covers them all then perhaps it may not be necessary to press both matters. Certainly I must say to the Committee in advance that if we do not get satisfaction from the Government we shall wish to press the next Amendment, because it is only if we press the next one that we can achieve all the other results about which, for example, my noble friend Lord Gisborough has just been talking. But certainly I wish to see professional organisations having a specific right to consultation.
It is rather different when we come to Clause 6, when we come to collective bargaining, because, whatever we might want, professional organisations themselves do not wish to participate in collective bargaining. Indeed, it is something which distinguishes a professional organisation that it does not enter into trade union activities of that kind; but in terms of consultation I certainly believe that a professional organisation which has a substantial contribution to make to an industry through its members who work in that industry ought to be open to consultation, and that ought to be made clear. I did not think that this Amendment was necessary, because I thought it was covered by the following one. If the noble Lord thinks that it is necessary and wishes to press it, he will have my support and, I hope, the support of my noble friends.
May I say another thing about this Amendment? It is to refer to something that the noble Lord, Lord Melchett, said in his earlier reply. I think that what he said could be very important and I would ask him to think about it and perhaps, if need be, take further advice about it. If that means that he cannot give his considered view or if he feels that it may be necessary to modify his first reply, and would wish to wait until a later occasion, we should understand. if I remember
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correctly, in his opening speech resisting the Amendment he gave as one of the reasons for resisting it the fact that we were concerned with people who work in the organisation—and the professional organisation, of course, was apart from the organisation.
This was taken up by the noble Viscount, Lord Simon, and it was in reply to the noble Viscount, Lord Simon, that the noble Lord, Lord Melchett, said something which I feel needs clarification. He seemed to be saying—and I am not certain what exclusivity he wished to give this—that in the case of relevant trade unions the consultation would be with the shop stewards; that is, with the union organisation in the plants within the companies of Hawker-Siddeley and BAC which are going to form the Aerospace Corporation if this Bill becomes an Act.
That is a very interesting concept. Does he mean that? While there would be consultations at that sort of plant level with shop stewards, I must confess that I had imagined that the consultation centrally carried out by the Corporations was more likely to be with regional or national representatives, leaders of the relevant trade unions; I think this could be a cause of some confusion if it is not clarified. If the noble Lord was answering "off the cuff" in the points he made, of course he would wish to consult more closely with his advisers before giving a definitive answer. If he does wish for time, then I shall understand. But if what he said is a definitive answer it is important that we should know it; because it puts a totally different complexion on what people in this House and in the other place and outside hitherto have been expecting.
Lord MELCHETT: Certainly, I should like to think about it, but I did not want to give the impression that the Government—and I on behalf of the Government—were laying down who should be consulted. I think the noble Lord would know that. I was not saying that the Corporations may consult only with any one particular branch of the trade union movement. It will be a matter for the trade unions and the Corporations to decide. I think the noble Lord will agree with me that it should not be something which would be laid down by the

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Government or by me speaking "off the cuff" in response to a question asked here.
The Earl of ONSLOW: Surely what the noble Lord has said needs clarifying. He has said that he is not laying down on behalf of the Government who would he consulted or not. But the Bill actually says:
"…shall consult any relevant trade union".
That seems to me to be laying down exactly who should be consulted.
Lord MELCHETT: I was answering a specific question about who in the trade union would be consulted, whether it would be the shop stewards or the national organisation. I was addressing my answer to that question.
Lord COOPER of STOCKTON HEATH: These Amendments concern the whole question of industrial democracy. The question was asked as to the extent of industrial democracy in the present nationalised industries. The answer is that there is not very much of it, because the concept of industrial democracy is a very recent one, coming in from the EEC. We had the noble Viscount, Lord Rochdale, describing the experiment at Harland and Wolff at Belfast which is leading the way. The people who have sponsored industrial democracy are the trade unions. None of these professional bodies that have been referred to, so far as I am aware, has considered or bothered about industrial democracy. Industrial democracy is a kind of evolution where men who have for many years enjoyed political democracy now ask the question as to their rights in industry as partners. This means great changes are to come about if you follow industrial decocracy to its logical conclusion. It means different things to different people in different places.
I agree with what was said about the positive attitude of industry, the fact that we have a common interest in making a successful business. Industrial democracy can play a great part there. I know that this is a problem. Many professional bodies work under Royal Charter and at one time, because of that, they used to be prohibited from having anything to do with industrial matters. But times are
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changing and these professional bodies are changing. Some of them are taking part in negotiation. If they want to solve this problem, they can be parties to relevant trade unions which cater for those professionals.
This is the answer. If they wish to participate, then they have the solution in their own hands, because professional bodies are not trade unions; they are educational bodies, they are bodies that, very properly, set standards in industry for their members. The professions can become part of the relevant trade unions if they are so anxious to be represented.
6.57 p.m.
Lord HANKEY: I had the great advantage of going to Sweden with a Parliamentary delegation in May. We went round a considerable number of well-known Swedish companies, all of whom had a different system of industrial democracy. I have since had the advantage of being able to study the documents issued by the Swedish Trade Union Federation (LO), well known to my noble friend, which give an account of the form of industrial democracy adopted by about 100 different companies. The system which is suitable for each company depends on what the company does, what the employees consist of, how the companies are run and many other considerations.
In aerospace and shipbuilding, the technological developments are becoming increasingly important. The advent of computers has changed shipbuilding enormously and the technology of aerospace is developing constantly and rapidly—as I know from a nephew of mine who works on Concorde. Therefore I should like to say that the professional members of the staffs of these Corporations, if not the organisations to which they belong, should be brought in. They have an equal right to he consulted with the trade unions. If they belong to a trade union, all well and good. If industrial democracy means just counting heads, then the technicians on whom the efficient conduct of industry may depend may be outnumbered. I should like to see this Amendment adopted, as well as Amendment No. 85. I hope that both will he accepted by the Government.
Lord LLOYD of KILGERRAN: The noble Lord, Lord Melchett, in his reply said that the Corporations would want to consult the professional organisations. His only objection to this seemed to be that it might take a little time for consultation to take place with the relevant organisations. I think it must be recognised that now there are professional organisations which cover a very large percentage of the members of the employees of these companies.
Some of these engineers and designers to whom I referred are also members of trade unions. It seems to me that although at present technical matters will be reviewed, the Corporation having a duty to advance a view, technical matters are bound to arise quite apart from general matters in relation to industrial democracy. I quite agree with what—and I shall refer to him as—my noble friend
Lord Cooper said; namely, that perhaps in future times there may be only one trade union or a few trade unions to organise these matters or, perhaps, the professional bodies may become more respected in these general matters. I
believe that at present we should make a positive reference to the relevant professional organisations in this Bill.
The noble Lord, Lord Carr, referred to the next Amendment. That is far wider than my Amendment. In this connection I am sure that I shall have the support of the noble Baroness, Lady Phillips, in that my Amendment has three words whereas the Conservative formal Amendment has 30. However be that so, the fact is that in my Amendment there is a definite positive reference to professional organisations and there is nothing to preclude the Conservative Amendment from being added to the Amendment if the Committee is good enough to pass my Amendment. Therefore, there is no real conflict at all between us in this matter. In these circumstances, I am reluctant to withdraw this Amendment.
7.2 p.m.
On Question, Whether the said Amendment(No. 86) shall he agreed to?
Their Lordships divided: Contents, 96; Not-Contents, 40.
Resolved in the affirmative, and Amendment agreed to accordingly.
7.10 p.m.
Lord STRABOLGI: This may be a good moment to halt the Committee in order to take other business. It has been agreed, subject to the completion of other business, that the Committee should reassemble again at eight o'clock. I hope that is for the convenience of the Committee. I beg to move that the House do now resume.
House resumed.

AIRCRAFT AND SHIPBUILDING INDUSTRIES BILL
8.6 p.m.
House again in Committee.
Lord CARR of HADLEY Lord CARR of HADLEY moved Amendment No. 85:
Page 9, line 16, at end insert ("and any other person who, or organisation which, appears to it to be representative of a substantial proportion of its employees or of those of any of its wholly owned subsidiaries.").
The noble Lord said: This is another Amendment which deals with the large and difficult subject which we now call, "industrial democracy", and as I said towards the end of the discussion on the Amendment which we took immediately before our break in this business, much that was said on that Amendment really overflows into this Amendment. I should first like to pick up something said by the noble Lord, Lord Melchett, last Thursday evening when I apologised to him for not being here to hear his reply, because on that occasion I spoke just before the dinner interval and I could not be back quite as promptly as I am tonight.
I want to say this because I think it is central to the differences between us. The Amendment to which I spoke just before the dinner interval last Thursday was a probing Amendment to remove from the Bill the words "industrial democracy of a strong and organic kind". I made it clear that it was a probing Amendment to discover what the Government intended by those words, and I see that in his reply the noble Lord made the point that what form industrial democracy takes should be left to the people involved. I want to assure him that of course we agree with that very strongly. There is no difference between us on that point. The noble Lord then went on:
"In fact, when noble Lords ask us to define precisely what we mean by industrial democracy what they are either consciously or unconsciously saying is: 'You must lay down what form industrial democracy is to take in these particular industries at this particular time'."—[Official Report, 14/10/76; col. 568.]
I want to make it clear to the noble Lord that this is precisely not what we want to lay down. This is not the issue between us. Indeed looking ahead to what action the Government might take following the Report of the Bullock Committee which is expected towards the
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end of this year, my concern is lest the Government should introduce legislation which will do just that. It would fix a rigid pattern for the development of industrial democracy. What I believe is necessary is a diverse series of experiments in different industries and different companies, anyhow for some years, until we see what forms are the most suitable; but even with that experience I suspect that what is most suitable for one industry or one firm may not necessarily be what is wanted by the workers in another industry or another firm. The difference between us and the Government most certainly is not that. I repeat, we do not want to lay down precisely what form industrial democracy shall take in this or indeed any other industry.
Our concern is a very different one. It is that it should indeed be democracy. This was why, since the Government had not themselves defined it in the interpretation clause of the Bill, I went back to the dictionary and drew the attention of the noble Lord to the fact that democracy is something to do with Government by all the people, the concern of all the people in the community. My complaint against the Government was that they were not making it the concern of all the people in the community. On the contrary, they were deliberately and specifically making it the concern of only some of the people in the community. This seems to me to be seriously wrong.
Moreover, I also drew the attention of the noble Lord to the fact that among the many meanings of the word "organic" which is used in the Bill, the one which seemed to me the most apposite was that which involved some systematic organisation, some systematic connection between the different parts of the whole. So when the Government say they wish there to be the development of a strong and organic industrial democracy, they really must, if their words mean anything at all, mean a strongly organised form of democracy which not only affects but involves all the employees in these industries. Alas! this is exactly what the subsequent provisions in this Bill fail to do. Hence the reason for Amendments Nos. 50 and 51 which we dealt with last Thursday and carried. Hence the reason for this Amendment, and hence the reason for some Amendments still to come.
In considering this matter, we have to distinguish very sharply between consultation, on the one hand, and collective bargaining, on the other. I think most of us know that custom and practice in British industry is much stronger than the effect of law in British industry, but the very widespread and deeply ingrained custom and practice in British industry on the part of both management and trade unions is to make a sharp distinction between consultation and collective bargaining. Indeed, some of the consultation which goes on in British industry via works councils and so on does so satisfactorily only on the assurance that the joint consultative machinery will not overstep the boundaries in collective bargaining, and will not concern itself with those matters which are the proper concern of collective bargaining between trade unions and employers.
Here in this Clause 5 we are dealing with consultation. When we come to Clause 6 we shall be dealing with collective bargaining and there the issues are different although closely related; but here we are dealing consultation. The case I am making to the Government is this: that at least where we are dealing with consultation as opposed to collective bargaining it makes an utter mockery of the word "democracy" if the consultation is not to include all those involved in the industry. Of course, I accept that if there are 100,000, or even 10,000, or even 1,000 people involved in an industry and none of them chooses to organise themselves, it is a practical impossibility to consult with 1,000, let alone 100,000 or 200,000 separate individuals. So I accept the point that, if people want to be consulted, they have some duty of self-interest, if no other, to form themselves into organisations. Clearly if consultation is to be effective the Corporation will have to be able to pick out organisations with whom they should consult. That I accept.
However, I do not accept that everyone should be pressurised to join an organisation. I accept that if they wish to be consulted, they should normally reckon to join some organisation. What I am really saying to your Lordships is that the organisations which are consulted should not be limited in any way. It may be necessary—and we will come to this in the next clause—to limit the organisations
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with whom collective bargaining takes place. But we ought not to limit these organisations with which consultation takes place and that, I am afraid, is what this Bill does as at present drafted. It is wholly wrong, and it is grossly unfair.
I was delighted to hear one of my noble friends just before dinner, when speaking on the last Amendment, using the word "fair". The word "fair", I know, is a word which can be abused, but it is an extremely important word. It is not fair to single out those employees in those companies who may perhaps be about 70 per cent. of the total, in other words the majority of the employees, but to leave out a substantial number, probably amounting to about 30 per cent., simply because they do not belong to organisations the colour of whose eyes are acceptable to the TUC. If we "cut the cackle" this is what it is all about. At the moment the Government are saying one can only put a duty to consult on those organisations which happen to find favour with the TUC. This is a most depressing and sad situation to be in.
When I look back I think of long before I was even born or before any of your Lordships were born, of the role of the unions which now form the TUC, when some of them (others were not even formed in the days I am talking about) were fighting for the right to associate, to be consulted. They were fighting for the right to organise. And today we see those unions which have now achieved those rights selfishly trying to exercise a tyranny on those who have not yet achieved them. This is a sad day in British industrial history. There are some people, like Mr. Clive Jenkins, who like to call some of these bodies about whom we are now talking "sweetheart organisations"—I think that is the phrase. It really is insulting in the extreme because the groups of workers he now represents, had this Bill been introduced a comparatively few years ago, would have been on the wrong side of the blanket as he now defines it. I find it thoroughly objectionable that those who happen to have reached a certain point in their historical development should now try to have a monopoly in these cases.
When we come to the question of collective bargaining we have a much more difficult problem—I agree it is a very much more difficult problem—to consider. But
when we are talking about the right to consult, it is wrong, on any basis of natural justice, to exclude those organisations which at the moment are not relevant trade unions in the narrow definition of that phrase contained in the Bill. So I hope that the Minister will address himself seriously to this Amendment. I know he has told us, and I know other Ministers have told us, that of course the Corporation will talk to anyone. All right. But he must accept that there are many people who do not believe that, who fear that that will not be true, who fear that the noble Lord, Lord Beswick, has already come under pressure not to consult with certain people. In any case, even if there is no truth in those fears at all—and I certainly hope there is no truth in them—what justification is there for singling out certain organisations which must be consulted with, and leaving out the others?
The truth is that if industrial democracy is to mean anything in this country, all organisations representing any significant number of workers in industry must have the right to be consulted. Let me once again underline that when one comes to the question of collective bargaining one is in a much more difficult position. Whatever might be the perfect ideal to aim at, we probably cannot reach it because of the natural failings in human nature. At least we cannot reach it easily and quickly. But when we are only talking about consultation, there is no reason in the world why an equal right should not be given to all significant, proper, independent organisations to be consulted. That is what this Amendment asks, and I very much hope the Government will take the case very seriously, because if they do not I am afraid they will be convicted of gross hypocrisy so far as their concern for industrial democracy is concerned. I beg to move.
Lord SOMERS: I seem to remember that, during the discussion on the last Amendment, the noble Lord, Lord Melchett, said that one of the difficulties would be to decide which organisations should be consulted. Of course, the difficulty is even greater now that the list has been enlarged. But could not that be overcome by leaving the decision to the Corporations themselves, by simply
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inserting the words, "and if they so choose with any other person", et cetera?
Baroness SEEAR: Can we be told more precisely what really is the meaning of the word, "relevant" in this context? What does or does not make a trade union relevant? I can well understand that "independent" has something to do with this, but what is "relevant" in this context?
Lord GRAY: In his opening reply to the last Amendment the noble Lord, Lord Melchett, no doubt choosing his words very carefully, referred to "independent and organised trades unions", and he then went on to speak of the difficulties in identifying professional organisations. Since he cannot—and I do not imagine ever would—seriously suggest that there are not independent and organised professional organisations, nor that they have an equal right to represent their membership in any consultations, as have the trade unions, the noble Lord can only have been pinning his argument to the word, "relevant". That will not do, because the word "relevant" is in the Bill, surely, for the purposes of identifying the trades unions. If we can identify the trade unions, we can identify the other organisations which might be concerned, whether they are within the narrow confines of the last Amendment or the broader areas of the Amendment proposed by my noble friend Lord Carr. Any responsible body could well come within this.
The noble Lord, Lord Melchett, when he spoke on the last Amendment—I make no apology for referring to that because the arguments could be equally applied here—referred to the question of size, the small numbers of people who might be represented if we included other organisations. But in the Bill the words are, "any relevant trade union". There is no qualification of how many members that union should have. Not only is this whole proposition from the Government distinctly undemocratic, and singularly unsuitable, I would suggest, in a clause specifically referring to industrial democracy, but if the noble Lord is serious in his argument surely he should go back and delete that word "any" from the Bill. This undemocratic attitude as to who may or may not be consulted simply will not do.
8.25 p.m.
Lord TREFGARNE: My noble friend Lord Carr of Hadley has expressed the fears of so many of us on this side of the Committee with infinitely more precision, accuracy and force than I could hope to do; but I should like to emphasise the point that he made by reference to a matter which was raised on an earlier Amendment, and to which, to my mind, the noble Lord, Lord Melchett, gave no satisfactory reply. That was the case of the British Association of Aerospace Staffs; I think I have that name correctly. I was not personally involved with that, but the matter was originally raised by my noble friend Lord Ferrers.
It was quite clear that that association had been denied the right to make their case to the Organising Committee for the Aerospace Industry, and that that denial had been caused, it seemed to us, by pressure from other sources. All that took place last week, and I hope, therefore, that the noble Lord, Lord Melchett, will have been able to look into that particular matter with more care than he was able to do standing at the Dispatch Box and can give us a helpful answer on that point tonight.
It is, I believe, a fundamental cornerstone of our arguments and our complaints about this particular clause of the Bill that the will to consult seems so feeble and has been so inadequately written into this Bill. I hope, therefore, the noble Lord, Lord Melchett, will listen very carefully to the points we have made. I also hope that my noble friend, Lord Carr, and others on the Front Bench will not he too easily persuaded by any answer that the noble Lord and his advisers may give. I think we should stand very firm on this Amendment and divide upon it if necessary.
The Earl of ONSLOW: There was a song in the Eurovision Song Contest a few years ago called "Puppet on a String". What I am asking noble Lords opposite is whether they are acting as collective puppets on strings. I want to find out—and I am sure noble Lords opposite can give me an answer—whether the TUC or the relevant trades unions, which I am sure they can define, have made representations to Her Majesty's Government on this particular subject. If they have
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said, "We do not want anybody else being consulted by law under this Bill except us", then from the noble Lord, Lord Melchett, right up to the right honourable gentleman, James Callaghan, they are acting as puppets on strings. I think that is a very undignified position for Her Majesty's Government to find themselves in. It is very distressing to see this particular performance.
If, as is so frequently the case—I am sure Her Majesty's Government and Her Majesty's Government's spokesmen here can advise me on this—peradventure, I am wrong, and the TUC and the relevant trade unions have made no representations to Her Majesty's Government, then there is no possible argument against consulting everybody else. The only argument that there can be for not consulting the remaining 30 per cent. is that the 70 per cent. do not want it. If the 70 per cent. do not want it, then that is industrial democracy my foot! It is not; it is tyranny of the majority over the minority. I am sure that the noble Lord, Lord Melchett, would rather resign than countenance tyranny.
8.30 p.m.
Lord MELCHETT: First, may I answer the direct point put to me by the noble Baroness, Lady Seear. I understand that "relevant trade union" is defined in Clause 56. In effect, the definition is in two stages. First of all an independent trade union, and it will be certified as such under the Trade Union and Labour Relations Act, and the second leg as formally recognised by the Corporation, or a wholly owned subsidiary of one of the Corporations, for the purposes of collective bargaining, again as defined in the Employment Protection Act. I shall be mentioning the relevance of the definition to those two previous Acts in a moment.
As the noble Lord, Lord Carr, made clear, these Amendments directly parallel Amendments Nos. 50 and 51 to Clause 2, which we have already discussed at some length. They seek to achieve the same result as those Amendments, but in relation to Clauses 5, 6 and 7 instead of Clause 2.
Lord CARR of HADLEY: May I intervene to say to the noble Lord that I specifically went out of my way to say that I recognised that Clause 6 was in a

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different category. It is important to recognise that difference, because Clause 6 is to do with collective bargaining and the others to do with consultation.
Lord MELCHETT: I apologise to the noble Lord. I did not make that point, which he made quite clear. I explained on Clause 2 why the Government consider that relevant trade unions are most suited to act in the interests of all employees. I pointed out that in practical terms the Amendments would have little effect since the Corporations may he expected to recognise unions which they consider represent substantial proportions of employees. Moreover, the provisions suggested by noble Lords opposite could, as again I pointed out on the earlier Amendments, lead to damaging recognition disputes and so create very difficult industrial relations problems for the new Corporations.
Lord CARR of HADLEY: I apologise again, but with great respect I think that the noble Lord is muddled up. Recognition disputes arise over recognition for industrial relations recognition, for collective bargaining recognition. It really is a custom and practice in wide areas of British industry that consultation can be on a wider basis than collective bargaining.
Lord MELCHETT: I accept that there is some force in what the noble Lord says, but I still think it is the case that if we did not follow the existing industrial relations legislation in this Bill we would leave these two Corporations facing very difficult problems in making the decisions which I think, to reply to the point made by the noble Lord, Lord Somers, are in their hands already, as to which organisations shall represent and which organisations not represent. What we propose by linking in these industries to our general legislation on collective bargaining and proper employee representation at least has the merit of providing a means of resolving disputes between rival groups in claiming to represent employees. I pointed out on the previous Amendment the role that ACAS would play in that case.
I should also like to point out that in practical terms some organisation must be assumed to be representative,
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otherwise consultation gives rise to damaging delays. We might differ about which organisations the Corporations should be obliged to consult, and I can only repeat our view that we regard relevant trade unions as the most appropriate organisations for that particular purpose.
The Earl of ONSLOW: I specifically asked the noble Lord two questions just before he rose to speak. I know that he is a highly clever chap, and I am sure that he has not forgotten what I said. It may not have been absolutely right. But could he answer whether he has had, or Her Majesty's present advisers have had, any representations made to them by the TUC or the relevant trade unions on this particular point of the Bill?
Lord MELCHETT: I had hoped that the noble Earl would see something in what I said as an answer to that point, but I apologise for not answering it in terms. I was trying to make clear that the definitions in the Bill follow the general industrial relations legislation passed by this Government, and therefore are in line with our thinking, and it did not need representations from relevant trade unions or anybody else to convince us that this was the correct course to follow.
8.36 p.m.
Earl FERRERS: I think we are in a slight difficulty here because the noble Lord says that this Amendment would have little effect as he anticipates that the Corporations would consult these people anyhow. But he then says that if we put it into the Bill it will run counter to the Government's policy on collective bargaining and employee representation. I do not think one can have it both ways. This is obviously nothing to do with collective bargaining. What we are doing in this clause is saying that after British Aerospace or British Shipbuilders have made their report, before they take any action at all on what they propose to do as a result of making a report on what they find, they should consult with various people.
I find it difficult to consider that the people whom they should consult should be tied up with those people with whom they do their collective bargaining.

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Obviously if, as a result of this wide-ranging review which is going to be undertaken as soon as this Bill becomes law, the two Corporations are going to take some fairly drastic action, it is quite right that they should consult with those who are going to be affected. It is quite right that they should consult with the trade unions; it is quite right that they should consult with those people with whom they do their collective bargaining, but it is also quite right to consult with those people who may not be members of trade unions.
But, as my noble friend Lord Carr said, you cannot consult with everyone. If they are to be consulted, they must get together in some form of union in order to identify the various people, or the various bodies, who should be consulted. The noble Lord, Lord Cooper, said on the previous Amendment—and I can understand it; after all, his knowledge of trade union practices is widespread and is greatly respected—that there are many trade unions, and really it is reasonable to expect people to join those bodies who are already known and associated with consultation; that if they want to be involved, let them join the trade union. That is an understandable point of view, but it is equally the very one that we on this side are frightened of because there are many people who do not want to join those trade unions. There are many people who do not want specifically to join the trade union they would need to join if, under Lord Cooper's argument, they were to be consulted.
Because there is a large body of people who do not want to join any trade union, who wish to be independent, who because of this legislation find that nevertheless they are being forced into some kind of association, is where the danger lies, because they are being obliged to do that which they do not want to do, which is to join an association. The noble Lord, Lord Cooper, says, "Well, this is one step further. If you are going to join an association, then there are those already there which you should join." It is because there are so many people who do not want to do this that we feel very strongly that they ought nevertheless to be consulted in some form or shape. I would hope that this would be done. We are on the subject of industrial democracy, and it is something that is bound to
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rear its head on several occasions, because after all it is one of the fundamental parts of this Bill, and one of the fundamental parts on which the Government have laid great stress, that there should be industrial democracy.
I said the other day and I do not mind saying again that I view this with a great deal of apprehension, not because consultation should not be undertaken, because it should, but because of the idea that managements and businesses should be run not by people who are the right people to run them, people who should be expert at doing it—they may very well be people from the shop floor and plenty of people have come from the shop floor to positions of management by their own ability; that is absolutely right and I admire and respect it—but because they have been elected to do it. I believe that this is something that, not in the immediate future but in the long-term, could run us into many industrial problems.
I say that for the simple reason that those who run any business, in the same way as those who are test pilots, engineers or aero-dynamics experts, are in positions of management because they are experts, and if they are not they should not be there. I hope that those people will retain their positions of management and authority because of their ability to do so and not because they have been elected to do so.
I hope that the Government will consider this matter again. I appreciate that the noble Lord, Lord Melchett, said that it runs counter to their policy at the moment. Nevertheless, I hope he will be prepared to look at it again because, as drafted, the Bill means that many people will not be democratically consulted; either they will not be consulted or they will be forced into a collusion of people with whom they would rather not be forced to be with. I hope that even now Lord Melchett will say that he will reconsider the matter.
Lord WIGG: I hope that if my noble friend Lord Melchett is tempted to give way by the power of persuasion of the noble Earl, Lord Ferrers, he will have another look at the words which the noble Lord, Lord Carr of Hadley, and his noble friends have suggested because it seems

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that they are as nearly meaningless as any words could be. The Government may be wrong, but at least they know what they are doing; they say that the relevant trade unions shall be consulted and we all know what a trade union is for. On the other hand, Lord Carr does not want to do that. He wants the clause to read:
"… any other person or organisation which appears to it to be representative of a substantial proportion …"
A substantial number of people engaged to do what? It would be possible inside a firm to have an organisation with a substantial membership to propagate the idea that the earth is flat. On the basis of Lord Carr's Amendment, the flat earthers, representing a substantial proportion of employees, would have a right to be heard. The same would apply to a body of Jehovah's Witnesses or even a football club. The words in the Amendment are in no way associated with the noble platitudes that have been ennunciated from the Conservative Benches.
Lord CARR of HADLEY: Is the noble Lord aware that one of the main purposes of some of the relevant trade unions is to propagate Socialism? If that is not as out of date as the belief that the world is flat, what is?
Lord WIGG: I am delighted to know that trade unions are engaged in propagating Socialism, which is a noble cause. I have no doubt that the Jehovah's Witnesses and the Flat Earth Society regard their causes as noble. We are not discussing nobility, but the noble Lord's Amendment. It is obvious that the noble Lord's heart has run away with his head. I am simply saying that, even if the argument is sound, the words are wrong because they do not mention collective bargaining or trade unions.
The Earl of ONSLOW: If the wording of the Amendment is defective, I am sure that my noble friends would be happy to take it away and ask the Government to redraft it, provided the Government agree to listen to the principle that 30 per cent. of the people in the aircraft and shipbuilding industries who are not represented by relevant trade unions can in some way be consulted. That is the kernel of the argument.
Lord WIGG: I am not saying whether there are 30 per cent., 40 per cent. or 50 per cent.
Baroness WARD of NORTH TYNESIDE: Why not?
Lord WIGG: Does the noble Baroness wish to interrupt?
Baroness WARD of NORTH TYNESIDE: Not really.
Lord WIGG: In that case I wish she would not interrupt from a seated position. Whether the percentage is 30 or 60, the words of the Amendment written into the Bill would render it meaningless. I repeat that, while the Government may be wrong, at least we know what they are wrong about. The Opposition's proposed words are linked to a person or an organisation "which appears to it," which are the sort of imprecise words which should not be included in a Statute because, as has been argued, they could be the cause later on of dispute and great trouble. What we need here is clarity of thought and precision of expression. The Amendment is neither and I hope for that reason that the Government will stand firm. On the other hand, if Lord Melchett has been converted by the arguments of noble Lords opposite, I hope he will get up and say so. At the moment I am not dealing with conversion but with the lack of clarity in the wording of the Amendment.
Baroness SEEAR: I, too, hope that the noble Lord, Lord Melchett, will look at this matter again, and I ask him to do that for somewhat different reasons from those advanced by the noble Lord, Lord Wigg. From the answers Lord Melchett gave it seemed with respect as if the distinction between negotiation and consultation was not quite clear to him in the way it is put in the Amendment. It is one thing to say that one will negotiate only with certain unions. It is quite another to say that there are positive mutual advantages in consulting with a much wider range of groups, and this does not conflict with the trade unions and labour relations legislation. The advantages are two-fold.
First, from the point of view of the organisation, whether or not the Government like it, there are a number of individuals at all levels who are not going to

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join existing trade unions. They will be unable to have the contact which consultation would give them unless something of this kind is included. They will be very bitter. It cannot help these new industries if one starts with quite sizable groups of people who not only are excluded from the industrial relations and industrial negotiating process—which, whether or not one likes it, one accepts—but are also excluded from consultation. The ability to have consultation would alleviate this bitterness. Secondly, many of these people have knowledge and information and it is the purpose of consultation to get that knowledge and information across in a very complex new industry, because it will be newly organised, which will have many new problems to face. It is surely extreme folly not to tap all sources of knowledge, information and ideas that are available by extending consultation which would not cut across the negotiating procedures. There would, therefore, be this double advantage.
Lord LLOYD of HAMPSTEAD: I wish to add a brief word of support for my noble friend Lord Melchett. It seems to have been overlooked in this discussion precisely what Clause 5 aims to do, and that is to impose a statutory obligation on the Secretary of State to consult with certain bodies. For this purpose, therefore, one must have very clearly defined the precise bodies with which the Secretary of State must consult, not bodies which he would possibly and desirably consult because he can consult with anybody he likes and I have no doubts that he will consult with a wide range of people.
The EARL of ONSLOW: I interrupt the noble Lord simply to remind him that it says that the Corporation, not the Secretary of State, shall consult.
Lord LLOYD of HAMPSTEAD: I am grateful to the noble Earl; I should have been referring to the Corporation. It is the Corporation that is bound to consult and I think the point is exactly the same because the statutory obligation is there. In the case of a relevant trade union, this is a clearly defined concept. I have forgotten the provision, but we have the definition clause in the measure and that is precise. It defines precisely what is
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meant by a relevant trade union. But when you consider the situation of the Corporation, which may have a variety of employees—solicitors, accountants, architects, all sorts—does that mean that if you have some general expression such as a "relevant organisation", there is to be a statutory obligation to consult with the RIBA, or with the Law Society, or the Bar Council or whatever it is?
A noble Lord: Or the Transport and General Workers' Union.
Lord LLOYD of HAMPSTEAD: This is a clearly defined body, related to a specific group, but in the case of all the different sorts of people who may be in this organisation, they belong to professional organisations. It would be an absurdity that the Corporation should be expected to consult with every representative professional body that may in some sense or another be regarded as the representative of small groups of people within the organisation. Therefore, it seems to me that if we are to impose a statutory obligation, what we must have is a clearly defined group of organisations. These Amendments, as I understand them, do not even begin to qualify from that point of view.
Lord GISBOROUGH: I should like to refer back for a moment to what I was saying earlier about the Bristol Channel Ship Repairing Company, who set an example with their quarterly meetings at which they consult with all groups in the firm and explain what is going on. As the Bill is drafted, it seems obvious that there will be meetings between the management and the relevant unions and that consultation will take place at those meetings where all the points will be thrown to and fro. After that meeting the management would—presumably, almost in secret—have to go along to the associations and consult with them, not in the presence of the unions. This must be an extremely divisive arrangement if the results are different from what the unions were led to believe during their own meetings.
Lord REDESDALE: As regards the importance of consultation, I should like to refer back to a point on a question put by my noble friend Lord Trefgarne about British Aerospace. When I raised this point on Friday the noble Lord, Lord

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Melchett, was quite heated and asked me to withdraw. I said then that I thought that if he would refer back to Hansard the point at issue—the importance of consultation—was there. I would refer the noble Lord to column 589 of Hansard for Thursday, 14th October, where he said:
"They"—
the chairmen designate of the Corporations—
"are both perfectly willing to talk to anybody who wishes to talk to them, and I know that my noble friend Lord Beswick has met groups of people, among which have been both members of trade unions and also people who are not members of trade unions."
I merely refer to that because I was making the point that if he had talked in the past, he would presumably talk in the future. I was trying to put the situation right and I was not, as the noble Lord suggested, deliberately trying to make trouble. I should just like the noble Lord to take that point in the spirit in which it was meant.
8.53 p.m.
Lord CARR of HADLEY: I must take up your Lordships' time for a moment more because I feel that the Government ought to pay more serious attention to the points we are making. When we get on to Clause 6 which deals with collective bargaining, we shall be on much more difficult ground and I may find myself not altogether at one with some of my noble friends on that issue, because what is ideal and what is practicable in the field of collective bargaining machinery may differ quite considerably. In my view, one can only move towards the ideal by rather slow and sometimes rather painful steps.
However, when it comes to the question of consultation, there is not the same resistance or rigidity, nor ought there to be. I was very glad to hear the noble Baroness, Lady Seear, support me on the point of the difference between consultation and negotiation, because there is a difference not only in kind but also in industrial relations practice, in the custom and practice in British industry. I notice that the noble Lord, Lord Cooper, shakes his head and I must be careful because, clearly, the noble Lord, Lord Cooper, from his great experience in the past, knows more about this than I do. However, I do know something about it.
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No doubt it varies from one part of industry to another, but I know whole parts of industry where what is permissible and acceptable in terms of the consultative constituency is different and wider than the negotiating constituency.
I really believe that the noble Baroness, Lady Seear, said wise words when she asked the Government to consider the bitterness and frustration that will arise if we start these new Corporations in the situation where some 70 per cent. of the employees have a legal right to consultation and the other 30 per cent.—and we are only guessing the percentage, but I do not think that I am exaggerating, and certainly in the aircraft industry it is a full 30 per cent. and may be more—are not given that legal right. As I say, when we come to the more difficult question of collective bargaining, we shall be on more difficult ground and I accept—though not all my noble friends will do so—that we may have to be more restrictive and that it may be necessary to be more restrictive. However, when we are at the consultative stage, for goodness' sake let us consult as widely as we can!
The noble Lord, Lord Melchett, opened his rejection of this Amendment by saying that the relevant trade unions as at present defined were the most suitable for all employees. With due respect to the noble Lord, that is palpably not the case. The relevant trade unions predominantly represent the shop floor employees. That is absolutely right and necessary. They are the largest number in the industry and they and their unions must have a full right to consultation. That is absolutely agreed and we are not trying to disagree with that. But to say that the large numbers of people in the managerial and technical grades who, though they may be smaller in number, contribute equally to the welfare of these organisations and their contribution to the national interest should not be represented, is wrong. They really have an equal right to this legal right of consultation. I beg the Government to think about this more seriously because it is nonsense to say that the relevant trade unions as at present defined are the most suitable for all employees.
The noble Lord, Lord Lloyd of Hampstead, made the point that we needed to define precisely who was

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entitled. I think I should remind him that when this Bill started out the phrase in the equivalent clause to the present one referred to "independent trade unions". As, again, the noble Baroness, Lady Seear, said in her first intervention in this debate, there is some point in referring to "independent trade unions". I can see the point that one should not give a legal right of consultation to organisations which are dominated by the employer, but, where there are organisations which are independent and are certified as independent, it seems to me that they ought to be consulted. In other words, the Bill as it started might just have been acceptable, although only marginally so, but the word "relevant" means that the union must be both independent and recognised for collective bargaining purposes. By including that extra condition the Bill has now become much more restrictive than when it started life. Whatever may be necessary for good order in collective bargaining, it would be disastrous if we agreed to confine it in this way over the process of consultation.
If I may turn to the noble Lord, Lord Wigg, if the wording of this Amendment is too sloppy, I take that criticism. It is always difficult, as he knows as well as anybody, for Private Members and Oppositions to get their wording right, but of course we will willingly consider any suggestions from the Government to tighten up our wording, to be more precise in our definition, because I do not want people of the Flat Earth Society to be consulted on this matter because they are the Flat Earth Society. I am sure we could alter our Amendment with due thought to make it relevant to the purposes we have in mind. I beg the Government to think about this a little more fully. We may come to an unbridgeable divide when we get on to the collective bargaining side, but I do not believe we need to be on opposite sides of the chasm when we are talking about consultation. If the Government would only address themselves to this and not go on repeating their previous position, I think some good might come of it.
What the Government seem to be saying at the moment to some 30 per cent. of the employees in those Corporations—and I am sorry if my last words appear to be rather harsh ones—is that some
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people, some superior persons, are entitled to the legal right to be consulted and that legal right shall be solemnly enshrined in the Statute but that the remainder, the inferior people, the peasants, if you like, have no legal right which can be enshrined, although as a matter of grace, of paternalistic benevolence, they may be consulted. That is thoroughly insulting to the 30 per cent. of the employees in this industry, and I beg the Government to think again.
Lord COOPER of STOCKTON HEATH: I should just like to explain why I was shaking my head at the noble Lord when he spoke of this distinction between collective bargaining and consultation. That used to be the case. I think that the TUC reports are carefully prepared and well-documented. On the question of consultation they say—and this is in their pamphlet on industrial democracy—that the situation has become blurred. It is true that if you go back a decade there is a very clear distinction between consultation and negotiation but, as the Donovan Report brought out, there are two systems of industrial organisations in this country; that is, the shop floor and the national bodies. Very often they are at odds with each other. This is a problem for the trade union movement but, because of the power of the shop floor—power, incidentally, brought about by the development of British industry, the high concentration of industry and the situation created by industry—where a few men can stop a line, the old conception of consultation has become blurred and negotiations take place that at one time were national or regional.
So there is this situation. The very thing we are discussing illustrates a very different development from ordinary consultation, because this is talking about the Corporation preparing a review, and the only reference to consultation is that when they have prepared that review they must refer it for consultation to the relevant trade unions. I say this because, as the noble Lord, Lord Carr, has said, we do not want to get at odds with each other, I will not mention the facts, because you cannot generalise in this situation. All situations are different, but in many situations where you have consultation—this again is the attitude of the TUC; I do not say it is wrong; it is

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an attitude I support—where the relevant trade unions have made the consultative machinery, then, of course, they regard this in a sort of partially possessive way, that this is their machinery.
When the question was asked about what consultation had taken place between the unions and the Government, that was indeed a naive question to ask, because, as the noble Lord, Lord Carr, knows, the trade unions nationally will negotiate with any Government. We negotiated with the Conservative Government. I played my own part in that. We negotiate with the Labour Governments. Governments have come to the point of view that any legislation touching upon industrial relations shall be discussed, and very properly I think, with the CBI and the TUC. I thought I would say this because I agree with the noble Lord, Lord Carr, that a decade ago there was this clear distinction between consultation and negotiation. I do not think that prevails any longer.
9.5 p.m.
Lord CARR of HADLEY: I wonder whether I could be allowed to say this to the noble Lord, Lord Cooper, because clearly he speaks with more knowledge and experience of these matters than certainly anyone present in this Committee at this moment. He is at any time equal to anyone in this House. I accept that there has been a change in the last 10 years and I am also prepared to say that the change has gone further than perhaps I had realised. But, if that is so, then there really is a burden of obligation on the TUC unions also to soften their attitude as to who they bring in and who they do not. May I just draw the noble Lord's attention, and of course the Government's attention, to the sort of matters which this comprehensive review is to cover; it is to cover the decentralisation of management. Surely, if the review is to cover the decentralisation of management, then management in the Corporations really ought to be consulted about that. They are not properly represented in those trade unions which at the moment qualify as relevant trade unions in the terms of this Bill.
890
Then, if we look a bit further, we see, particularly in relation to shipbuilding, decentralisation of the management and decision-making to separate profit centres. Not only is there the need to consult with management generally but when we are talking about profit centres and, later on in another clause, about corporate planning, all the specialists in management—for example, accountants, in the widest sense of the word, cost- and work accountants, management accountants, as well as the more technical sort of accountants, all the systems analysts, all these people—really need to be consulted. This is the guts, not the whole guts but part of the guts, of the review. The relevant trade unions as at present defined simply do not, and if they are honest cannot, claim adequately to represent those grades of staff.
I submit to your Lordships' Committee that to have this comprehensive review to look at all these things and to fail to give a legal right to consultation to the people most concerned with some of the aspects I have just mentioned is not only an injustice to them but madness in terms of the future efficiency with which these Corporations are expected to operate as written into this Bill.
Again, I beg the Government not to treat this in some partisan, political manner. There really is a matter of the future efficiency of these Corporations at stake, and getting the right organisation. There is also a matter of future good will of large numbers of their staff. I am always saying in speeches that in the end democracy is about the will of the majority and, although minorities must be carefully considered and have great rights to be heard, in the end the will of the majority must prevail. In this case the will of the majority is being allowed to prevail without the minorities being given a fair crack of the whip in having their say in arriving at a collective judgment; and I believe that that will not lead to future good will and harmony and efficiency in these organisations.
9.9 p.m.
On Question, Whether the said Amendment (No. 85) shall be agreed to?
Their Lordships divided: Contents, 85; Not-Contents, 42.

CONTENTS

Airedale, L. [Teller.]

Drumalbyn, L.

Northchurch, B.

Amherst, E.

Ellenborough, L.

O'Hagan, L.

Amory, V.

Elliot of Harwood, B.

Onslow, E.

Ampthill, L.

Elton, L.

Orr-Ewing, L.

Armstrong, L.

Emmet of Amberley, B.

Penrhyn, L.

Arran, E.

Ferrers, E.

Redesdale, L.

Ashdown, L.

Gisborough, L.

Reigate, L.

Auckland, L.

Glasgow, E.

Rochdale, V.

Balerno, L.

Gowrie, E.

Ruthven of Freeland, Ly.

Balfour of Inchrye, L.

Gray, L.

St. Aldwyn, E.

Banks, L.

Greenway, L.

St. Davids, V.

Barnby, L.

Gridley, L.

Saint Oswald, L.

Barrington, V.

Grimston of Westbury, L.

Sandys, L.

Belstead, L.

Hampton, L.

Seear, B.

Berkeley, B.

Hankey, L.

Seebohm, L.

Bridgeman, V.

Harmar-Nicholls, L.

Selsdon, L.

Broadbridge, L.

Hives, L.

Sempill, Ly.

Brookeborough, V.

Hornsby-Smith, B.

Simon, V.

Brougham and Vaux, L.

Hylton-Foster, B.

Somers, L.

Byers, L.

Ilchester, E.

Stamp, L.

Campbell of Croy, L.

Kemsley, V.

Strathclyde, L.

Carr of Hadley, L.

Killearn, L.

Strathcona and Mount Royal, L.

Carrington, L.

Kimberley, E.

Swansea, L.

Clifford of Chudleigh, L.

Lauderdale, E.

Terrington, L.

Colville of Cuirass, V.

Lloyd of Kilgerran, L. [Teller.]

Teviot, L.

Cullen of Ashbourne, L.

Loudoun, C.

Trefgarne, L.

Daventry, V.

Lyell, L.

Vickers, B.

De Freyne, L.

Mancroft, L.

Ward of North Tyneside, B.

De La Warr, E.

Monck, V.

Wardington, L.

Denham, L.

Morris, L.

Wigoder, L.

Deramore, L.

Mottistone, L.

Windlesham, L.

Derwent, L.

Newall, L.

Young, B.

NOT-CONTENTS

Aylestone, L.

Henderson, L.

Phillips, B.

Blyton, L.

Jacques, L. [Teller.]

Pitt of Hampstead, L.

Brimelow, L.

Kirkhill, L.

Popplewell, L.

Brockway, L.

Llewelyn-Davies of Hastoe, B.

Sainsbury, L.

Champion, L.

Lyons of Brighton, L.

Shinwell, L.

Collison, L.

McCluskey, L.

Stedman, B. [Teller.]

Cooper of Stockton Heath, L.

Maelor, L.

Stone, L.

Davies of Penrhys, L.

Mais, L.

Strabolgi, L.

Douglass of Cleveland, L.

Melchett, L.

Taylor of Mansfield, L.

Elwyn-Jones, L. (L. Chancellor.)

Milner of Leeds, L.

Wells-Pestell, L.

Evans of Hungershall, L.

Murray of Gravesend, L.

Winterbottom, L.

Fisher of Rednal, B.

Oram, L.

Wynne-Jones, L.

Greenwood of Rossendale, L.

Pannell, L.

Hale, L.

Peart, L. (L. Privy Seal.)

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

CONTENTS

Airedale, L.

Ferrers, E.

Orr-Ewing, L.

Amherst of Hackney, L.

Gainford, L.

Penrhyn, L.

Amory, V.

Gisborough, L.

Redesdale, L.

Ashdown, L.

Gore-Booth, L.

Remnant, L.

Balerno, L.

Gray, L.

Rochdale, V.

Balfour of Inchrye, L.

Gridley, L.

Ruthven of Freeland, Ly.

Beaumont of Whitley, L.

Hacking, L.

St. Aldwyn, E.

Belstead, L.

Hampton, L.

St. Davids, V.

Berkeley, B.

Harmar-Nicholls, L.

Sandys, L. [Teller.]

Birdwood, L.

Hives, L.

Seear, B.

Bridgeman, V.

Hornsby-Smith, B.

Selsdon, L.

Brookeborough, V.

Hylton-Foster, B.

Sempill, Ly.

Brougham and Vaux, L.

Ilchester, E.

Shuttleworth, L.

Burton, L.

Inglewood, L.

Simon, V.

Byers, L.

Inverforth, L.

Stamp, L.

Campbell of Croy, L.

Kemsley, V.

Strathclyde, L.

Carr of Hadley, L.

Killearn, L.

Strathcona and Mount Royal, L.

Chelmer, L.

Kimberley, E.

Swansea, L.

Colville of Culross, V.

Lauderdale, E.

Teviot, L.

Cork and Orrery, E.

Lloyd of Kilgerran, L.

Tranmire, L.

de Clifford, L.

Lyell, L.

Trefgarne, L.

De Freyne, L.

Mancroft, L.

Vickers, B.

Denham, L. [Teller.]

Monson, L.

Ward of North Tyneside, B.

Deramore, L.

Mottistone, L.

Wardington, L.

Drumalbyn, L.

Newall, L.

Wigoder, L.

Elles, B.

Northchurch, B.

Windlesham, L.

Elliot of Harwood, B.

Nunburnholme, L.

Young, B.

Elton, L.

O'Hagan, L.

Falmouth, V.

Onslow, E.

NOT-CONTENTS

Blyton, L.

Janner, L.

Pitt of Hampstead, L.

Brimelow, L.

Kirkhill L.

Popplewell, L.

Brockway, L.

Llewelyn-Davies of Hastoe, B.

Raglan, L.

Champion, L.

Lloyd of Hampstead, L.

Sainsbury, L.

Collison, L.

Longford, E.

Segal, L.

Cooper of Stockton Heath, L.

Lyons of Brighton, L.

Stedman, B.

Davies of Leek, L.

McCluskey, L.

Strabolgi, L. [Teller.]

Davies of Penrhys, L.

Maelor, L.

Taylor of Mansfield, L.

Elwyn-Jones, L. (L. Chancellor.)

Melchett, L.

Wallace of Coslany, L.

Evans of Hungershall, L.

Morris of Kenwood, L.

Walston, L.

Greenwood of Rossendale, L.

Murray of Gravesend, L.

Wells-Pestell, L. [Teller.]

Harris of Greenwich, L.

Oram, L.

Wigg, L.

Hirshfield, L.

Pannell, L.

Winterbottom, L.

Jacques, L.

Peart, L. (L. Privy Seal)

Wynne-Jones, L.

Resolved in the affirmative, and Amendment agreed to accordingly.
9.14 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 88:
Page 9, line 23, after ("interest") insert ("or is against the commercial interests of the Corporation.").
The noble Lord said: On behalf of my noble friend, I beg to move Amendment No. 88. I should perhaps make clear at the outset that this is essentially a probing Amendment on the issue of national and commercial security, but it raises some fairly wide issues which have cropped up in this House before and I shall be referring to these in a moment.
It is no coincidence that the increase in Government involvement in industrial affairs leads to demands for more information. What we are concerned about here is essentially that this can be construed as being what one might call "snooping" powers in furtherance of interventionist legislation.
I have to confess that the last time we were talking about this issue we were dealing with a particularly interventionist Minister in talking about the Energy Bill, but nevertheless the general point remains true and the noble Lord, Lord Lovell-Davis, made a perfectly fair point, which illustrates my point also, when he said that without information it would be impossible to make any soundly based

893
decision. The principle that we are trying to get at here is conceded in an earlier clause in this very Bill that we are discussing today where it stipulates that where the Secretary of State gives the general direction to either of the two Corporations under Clause 4(2) he shall lay a copy of that direction before each House of Parliament within 28 days unless he accepts the Corporation's advice that it would be against the Corporation's commercial interests to do so.
I think it would be common ground between us that one would hope it was quite exceptional for the Secretary of State to seek to override the opinion of the management of either Corporation as to whether a particular matter is contrary to its commercial interests. Indeed, earlier on we had quite a debate about what happens when the Secretary of State is at variance with the chairman and the Board of either of these Corporations. But, of course, it is also the reality of the situation that a number of commercial agreements which are entered into in the ordinary course of business impose strict limitations on the right of a company to disclose confidential information outside those in their employment who need to know such information for the purposes of the contract. The Secretary of State cannot override any such legal restraints upon the Corporations, although clearly it is likely that, in the case of future contracts, the Corporations will have to seek to preserve the right to communicate freely with the Secretary of State. I think I should perhaps at the very outset have mentioned that I am really speaking to two virtually consequential Amendments, which are Nos. 111 and 114, so I hope it will not be said that I am speaking too wide of the particular point here.
One of the worries which inevitably create disquiet, I think, is that under this clause there is a power to demand a mass of information which could be highly sensitive and confidential, and I do not think everybody in this Committee would necessarily concede that it is always in the public interest that information should be available to Government Departments in all circumstances. In that connection, at the Committee stage of the Energy Bill I moved, and the Government accepted, an Amendment which had the effect of ensuring security of information as between the customer and the supplier—
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this was in col. 2128 of the Official Report—but the veto on the disclosure of information was given to the company which supplied that information. This Amendment, as I say, was accepted by the Government as being an essentially reasonable limitation. If the Government were extracting sensitive commercial information from a company, it seemed to us, and apparently it was accepted by the Government, that it was reasonable that, before the Government disclosed that information to any outside party, they should seek the agreement of the company which had to supply the information: and I do not think that is totally irrelevant to the issues that we are discussing here this evening.
Let me make another, purely practical point in this way. The Government and their Departments have a great capacity to process information and they employ many people who are expert at doing precisely this. There is very little constraint on a Government Department about demanding information from companies. It is very easy to ask for information, and I have no doubt that Ministers may at times say that that is certainly true of the Opposition, who can make themselves a nuisance by demanding information which appears to be totally irrelevant and unnecessary and which is time-consuming and demanding to provide. Therefore I say to them, let them remember that it is very easy for a Government to say, "Let us ask for all sorts of information from a company". It is worth bearing in mind that one would hope that most executives in companies have rather better things to do than spend their time supplying information to the Government.
I do not want to broaden this into a general argument about the malaise which affects small companies but, as has often been said, small businessmen feel that they spend half their time filling in forms for the benefit of the Government. I would say that it is worth bearing in mind that it is easier to demand than to produce. It is liable to be an onerous task they are placing on companies if they make what the companies consider to be unreasonable demands for information. Let them remember that when they ask for information, this is, at the very best, bound to be an onerous task placed on companies.
I am not sure that the Government sufficiently appreciate all the issues involved in the growing tendency to demand private information. I believe it is proper for Parliament to challenge this tendency which seems to be an inevitable concomitant of the wish to intervene and the wish to nationalise. In moving this, I am saying, first, that there is a fear that the Government could, and if they could it is possible they would, impose a number of onerous duties on companies; and, secondly, and more seriously, there is a fear that confidential information will leak via "the grapevine" into quarters in which it would be highly undesirable for it to find its way. Government by leak has been something we have become increasingly used to. I will not put a time limit on that, otherwise it will sound too deliberately Party contentious; but most people will agree that Government by leak is a technique increasingly used in recent years. It would be reasonable to say that some of the information existing in the industries we are discussing—and particularly the aircraft industry—is of a highly sensitive nature. I think that the onus lies on the Government to see that what they are demanding is necessary. This is basically the purpose of these Amendments. I beg to move Amendment No. 88.
9.28 p.m.
Viscount SIMON: I should like from these Benches to support this Amendment. I do not want to follow the noble Lord, Lord Strathcona and Mount Royal, along the path he was pursuing. I am bound to say that he seemed at intervals to be getting wide of the Amendment. My feeling about this is simple. What is essential is that there should be complete frankness between the Corporation and the Secretary of State. The Secretary of State who, whether we like it or not, is going to have a number of powers to take action on these matters, should have an absolutely clear picture from the Corporation of the situation as they see it.
It seems to me that if there is not some provision that the Secretary of State has the power to remove from any report made to him items that: may affect the commercial interests of the Corporation, the Board of the Corporation will be chary about making their reports to him. They will
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try to make little twists here and there to conceal information that they do not want him to publish. It would be better to say: let the Corporation make absolutely frank reports, after they have had this review, to the Minister and indicate to him that "paragraph x or y of our report is something which we feel should not be disclosed because it will have an effect on our commercial position". If the Secretary of State is satisfied that that is the case he should be empowered to remove it from the document as published. That is the only basis on which I rise to support this Amendment.
Viscount BROOKEBOROUGH: There is one question that I do not begin to understand and I am not sure that I can read the problem. It is that the Corporation will be involved with many other private companies, in many techniques, secrets, or whatever you like to call them, some of which are national secrets. They are easy to deal with. However, the Corporations will be involved in commercial secrets. What protection is there against a dislcosures? How will representations be made known to the Secretary of State as opposed to the Corporation because by law the Corporation is required, and the Secretary of State is not required, to talk to its partners on a question of disclosure. I do not understand that but I may have misread the problem.
Lord HARMAR-NICHOLLS: I think that these extra words should be accepted by the Government on the basis of the argument used by Government spokesmen so far on other clauses. The noble Lord, Lord Melchett, said that the general idea behind one of the other clauses was to make the Government's intentions clear. I believe that these words should be added in order to make their intentions clear that they do not want the general relationship between the Corporation, the Government and the smaller subsidiaries to which the noble Viscount, Lord Brookeborough, has just referred, to be disturbed by any uncertainty.
It may not have reached the point where it could be proved to be against the national interest, but if it is against commercial interests, that may be the first step towards reaching the point where it would be against the national interest. If, in framing what eventually will be an

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Act, it is passed, the general intention, as I said at the beginning, should be made clear; that is that they do not want anything against the commercial interests to be disclosed if, in the view of the Secretary of State, it would be injurious to that level. Something would not become detrimental to the nation's interest before, first of all, going through the phase where it would be against the commercial interests of not only the Corporation and the work it does, but of the subsidiaries which will have to work with it.
I accept absolutely the points made by the noble Viscount, Lord Simon, that unless "this intention is made clear", to use the noble Lord's own words on a previous clause, it could well be that there will be lack of frankness because when executives prepare their reports, or when executives in charge even of medium-sized organisations (much less ones as big, important and as embracing as this would be) believe that they have no protection against the interests of what will be their daily bread in terms of the Corporation's efficiency, it may well be, as the noble Viscount, Lord Simon, said, that they would deem it to be their duty not to disclose certain details which they otherwise would if this general intention was made clear by accepting these words.
I should have thought that it can only strengthen the good working of the Corporation if this safeguard is made quite clear by these words being included. At the end of it all, when people are running an organisation their first interest is in the immediate success of the organisation. In doing that, many commercial risks must be taken and many commercial decisions must be made which, perhaps, with hindsight, would not have been made. That sort of thing must be taken into account. By adding these words one is virtually instructing any future Secretary of State that, before he is impelled to do something in what is called the national interest, he must take the preliminary precaution of safeguarding also the commercial interests of the Corporation in its earlier stage. It is for that reason that I hope that these words will be accepted. They can only strengthen what I hope was the Government's intention when they first prepared the Bill.
9.35 p.m.
The Earl of LAUDERDALE: I feel
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that one ought to support the argument of the noble Viscount, Lord Simon. When my noble friend was speaking just now, I was sorry to observe the noble Lord, Lord Melchett, shaking his head in a negative sense because there are moments when one wonders whether the Government have not taken a phrase out of Lord Cudlipp's literary performances, which we enjoy at weekends, and that they have been answering with the chattiness of an uncooked clam. They have not been responding very much. The noble Viscount, Lord Simon, made the point which is a very serious and real one, particularly in the light of recent experience, that there must be total frankness between the Corporations and the Secretary of State. Let us think of some recent cases where nationalised industries—or at any rate their chairmen—have been reduced to a point where there is no frankness. What about Sir Richard Marsh, former chairman of British Rail? Some of the things which lie has had to say about the Government have suggested that frankness withered away until the chairman of British Rail and the Government were at daggers drawn. What about Sir Monty Finniston? The same thing again.
What is absolutely essential is that there should be real frankness. What has happened in the past is that State corporations have been established and then they have grown further and further apart from the Government. This is what must be avoided. The noble Viscount, Lord Simon, addressed his very astute mind exactly to the point. There is a procedure well known in Select Committee work where evidence of a confidential nature is subject to what is known as "side-lining". Surely it is proper that the Corporation should have some kind of protection, and should know they had some kind of protection, before they talk frankly with the Government. Unless they have that protection they will not talk frankly. It may be said, after things that were mentioned earlier in the debate today from this side and other parts of the Committee, notably the Cross-Benches, about Parliamentary control over what goes on, that there might be a certain contradiction here because we are now suggesting that the Secretary of State should be vested with a requirement to delete certain things from reports which

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will eventually come before Parliament. We are concerned with making sure that the system works. We want Parliamentary control to the fullest extent but within limited responsibility and understanding which is well known in this Chamber and even down the road.
We have to make sure that there is a proper balance between the information that is necessary for Parliamentary scrutiny and the legitimate, proper and serious requirements of commercial security which, if they are protected, will of course make possible frankness between the Corporations and Government. We know very well in Parliament how often a Minister has to answer on a delicate matter and says to the House, "I hope noble Lords will not press me", or to the other place, "I hope honourable Members will not press me." When that is said we never press the matter because we understand that there are matters which it would be against the national interest to bring out in public. When we plead, are concerned for and, indeed, will fight for, proper Parliamentary scrutiny, we are none the less also saying that the matter to be scrutinised must be properly protected. In this case we are saying that the Corporations must be absolutely satisfied that their own secrets revealed to the Government are not then blabbed all over the place, or leaked—to take another rather disagreeable contemporary phrase.
Reverting to the point made by the noble Viscount, Lord Simon, we believe that it is most important for the confidence between the Corporations and the Government that they should be protected in this manner. Therefore, I hope that the Government will perhaps really open up. Let them now be a "cooked clam" for a change and say something that will be to the delight and taste of us all!
Lord REDESDALE: I should like to raise a point which came up in Standing Committee D in another place. In Part I, column 719 to 721, a volume which makes War and Peace look positively thin—
Lord MELCHETT: That only goes to show how extensively the Bill was considered in another place.
Lord REDESDALE: I am so glad that the noble Lord said that. Perhaps he will, at a later date, reply to something I asked him when discussing a previous Amendment which he did not answer. I am sure that I shall receive an answer as regards that matter later.
On this great tome which, as the noble Lord says, shows how very well the matter was considered, I wish to raise one point. Mr. Warren in another place spoke about the number of agreements which apparently consist of something like 400 arrangements between BAC and Hawker Siddeley with other corporations, countries, et cetera and whether they are multilateral or whatever. They are extremely complicated, as are the star and the mesh consortia arrangements. When this was considered the point that has been raised by my noble friend was raised. On considering it Mr. Carmichael stated on Clause 18(2):
"There are further safeguards. Without commitment I am prepared to consider the matter further, perhaps with a view to seeing whether the formula of Clause 18 can be incorporated into Clause 5."
I wonder whether we might get a further instalment of that particular saga?
Lord KIRKHILL: I am sensitive to the point made by the noble Lord, Lord Strathcona and Mount Royal, who suggested that this Amendment and, I think, Amendments Nos. 111 and 114 give the Government the opportunity to explain some of their thinking behind this section of the Bill. I think that the noble Viscount, Lord Simon, as indeed did other noble Lords, bore upon this point.
When an Amendment similar to this was debated in Committee in another place my honourable friend the then Parliamentary Under-Secretary of State undertook, without commitment, to consider whether there might be grounds for amending Clause 5 on these lines. Indeed, the noble Lord, Lord Redesdale, has made mention of that point. We gave further thought to this matter. However, we remain unconvinced of the need for the Amendment. We therefore resisted a similar Amendment at Report stage in the other place.
The reports on organisation under Clause 5 will not set out detailed individual commercial dealings. I must emphasise that point. They will examine questions

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of general organisation—for example, what sort of regional function the Corporation should engage in and what type of maintenance of identity of subsidiary companies should be engaged in. Any exceptionally major and sensitive contract would be considered within the corporate plan.
Generally it is clearly in the public interest that there should be maximum disclosure of the contents of the reports which affect the livelihood of many people. In the Government's view it would be undesirable to build in too many loopholes for non-disclosure. Perhaps I should say a little more about why we do not think it appropriate to insert a provision which would enable the Secretary of State to withhold publication of the organisation report or part of it on the grounds that it is against the commercial interests of the Corporation. The Government do not foresee how the likely contents of such a report could give the Corporation's competitors any commercial advantage.
Again, I would emphasise that the kind of information which they might find useful—for example, about contracts, about the Corporations' research plans and about their marketing strategy—will not be in any report on organisation. The kind of questions covered are whether the Corporations will be organised on regional or functional lines, whether the vesting subsidiaries will retain their identity and to what extent, and so on. It follows from that that we know of no compelling commercial reasons for not disclosing what the organisation of the Corporations will be.
The noble Lord, Lord Strathcona, brought within his comprehensive statement questions on Amendments Nos. 111 and 114. Amendment No. 111 seeks to lay down in Statute that the Secretary of State may not require a Corporation to disclose something which it is not legally entitled to disclose. Amendment No. 114 seeks to prevent the Secretary of State from directing a Corporation to publish some information, if publication would be against the national interest or the commercial interests of the Corporation. This clause is precedented. I am advised that it follows Section 4 of the Railways Act 1974, and to some extent Section 6 of the Iron and Steel Act 1975. We believe that the national interest and the interests
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of the Corporations are therefore adequately safeguarded.
It is unacceptable to imply that any Secretary of State would knowingly use Clause 8 to require a Corporation to break the law, and therefore we consider that prohibition is unnecessary. As the provisions in the clause covering publication are not automatic but operate at the discretion of the Secretary of State, it must be presumed that he will act in the national interest as he conceives it. As the clause is drafted, before publication the Secretary of State must consult the Corporation. If the Corporation were to indicate that publication was against its commercial interests, it can be assumed that the Secretary of State would insist upon publication only in the unlikely event that some reason of national interest overrode the Corporation's commercial interests.
Finally, I should add that this clause dispenses with the need for provisions comparable to those in Schedule 2 to the Iron and Steel Act 1975, requiring the publication of information about diversified or ancillary activities. I know that noble Lords opposite are always anxious in the interests of fair competition, and properly so, that public corporations should publish adequate information about their activities, and Clause 8 in its present form would allow the Secretary of State to ensure that this was done in the unlikely event of any reluctance on the part of the Corporations.
The noble Lord, Lord Strathcona, posed a question as to the protection of sensitive defence information. I am advised that the Corporations, and those working in them, will be subject to the Official Secrets Acts and arrangements related to those which at present cover the vesting companies. The noble Earl, Lord Lauderdale, mentioned the national interest versus the commercial interests of a Corporation. En the Government's view, the national interest would normally subsume the commercial interests of the Corporations. Therefore, under this clause as drafted the Secretary of State could withhold such information from publication—
The Earl of LAUDERDALE: Might it not be in the general interest for that to be spelled out in the Bill? Of course I take what the noble Lord says. I

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always take what he says, and I always admire the manner in which he expresses it. But could that not be in the Bill? We have had assumptions on this Bill and on other Bills, and if this were spelled out our fears would be put at rest.
Lord KIRKHILL: Of course I cannot say that the explanation which I give could not in more legalistic terms be drafted into the Bill. But my explanation is, at the very least, on the record and the noble Earl will have to be content with that at this stage.
As he frequently does, the noble Lord, Lord Redesdale, posed a question to which I have not fully replied but which I touched upon in my opening remarks. To be fair, there is a question of judgment involved and to be equally frank in reply I would say it turns upon a matter of judgment from the Government point of view as to whether amendment might have taken place under the aegis of Clause 18(2). Although I am straying from the question immediately before us, the thinking behind that sort of clause suggests that, against the national interest to do so, the Secretary of State accepts the intention of the Corporation that it is contrary to the commercial interests of the Corporation. We have considered that fact, but upon a balanced view feel that the need to amend as outlined does—
Lord HARMAR-NICHOLLS: In his opening comments the noble Lord said that these reports, which he is suggesting should be added to would be organisational. I cannot find any guarantee that they would be organisational reports only. Is it not possible that, even inadvertently, something which would affect the commercial future of the Corporation would creep in? If these words were added, it would add some little protection and would go some way to answering my noble friend Lord Lauderdale. If it cannot be guaranteed to be purely organisational, if there is even a half a risk that there would be some commercial interest that could slip into these reports, ought we not to give the protection of these extra words to try to minimise any danger of that happening?
Lord KIRKHILL: I am advised that that which has commercial impact will
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not form part of the organisational reports. I made the point that that would form part of the corporate plan. I can give no more firm assurance than that.
Viscount SIMON: If I heard the noble Lord aright, he said that if the Corporation were to include in the report a matter which affected their commercial position, they could ask the Secretary of State to exclude it and that he would do so. Is that right?
Lord KIRKHILL: I certainly suggested that if the Corporation made that clear, the Secretary of State would give it every consideration.
Viscount SIMON: As I see it, the difficulty is that without this Amendment the Secretary of State would not have the right to do that. He would be bound to publish because he has no right to exclude matters of commercial concern. This seems to me to be the nub of the problem. Although these reports are basically organisational, I can conceive circumstances where, for instance, they might say, "We think this particular part of our undertaking had better be dealt with in this or that way because, talking quite frankly to the Secretary of State, at the moment their position is rather rocky and we want to nurse them through a difficult period". That is something which does not want to be published but is something which, to my mind, if the Corporation is to be frank with the Secretary of State, ought to be said.
Lord KIRKHILL: I re-emphasise that in the Government's view the detailed commercial dealings of the Corporation will be matters for the corporate plan. At one point one might argue that the Amendment is technically unsatisfactory because in the Government's view the Secretary of State is not the most appropriate judge of the commercial sensitivity of the Corporation.
Lord HARMAR-NICHOLLS: Is that not a very good reason why those words should be in? I think it is right that he would be a layman in this sense, but if these words were added he would be more likely to seek advice as to whether it would be in the commercial interest. Otherwise I use the word "inadvertently": he may

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inadvertently do damage because we have not given him the hook on which to hang his hat and take an extra precaution. I should have thought that the final words of the noble Lord made this wording essential.
Lord KIRKHILL: Noble Lords cannot have an assurance of the addition. Noble Lords have at least, I trust, had as full an explanation as I am capable of giving to them.
Lord STRATHCONA and MOUNT ROYAL: Before I go into the wider issue, may I ask the noble Lord to make clear one point. Here we are referring virtually to a one-off operation. When vesting takes place and British Aerospace and British Shipbuilders are set up (I speak as an ex-industrial consultant) a kind of consultancy review is to take place—what we used to call a management audit. This will result in a report and I hope I am right in thinking that it is to this report that this operation refers.
Lord KIRKHILL: Yes, I confirm that that would be my interpretation.
Lord STRATHCONA and MOUNT ROYAL: I am grateful to the noble Lord because some of us had possibly been imagining that we were talking about a continuing process: a series of reports which would go on rolling out.
Lord KIRKHILL: If one reads subsection (1) of Clause 5 one sees that the phrase "from time to time" appears; but in my view subsection (5) relates very clearly to subsection (3) and to the reference to subsections (1) and (2) which is contained in subsection (3).
9.57 p.m.
Lord STRATHCONA and MOUNT ROYAL: I am not at all sure that I am not more confused than I was at the start. The noble Lord makes his way about the Bill rather better than I do, but I do not know that it necessarily affects the general conclusion. The noble Viscount, Lord Simon, raised a very broad issue which has been frequently debated. I find myself slightly surprised to be saying that here I am talking about non-disclosure to a certain extent. In the context of the advice of civil servants to Ministers being published, endless arguments about disclosure have taken place.
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I do not want to widen this into a philosophical discussion, but I believe that this is what we are speaking about. There is no great difference that I can see between the kind of report which will be submitted to the Minister by the Corporation and the kind of advice which is submitted by civil servants to a Minister. This is precisely the point which the noble Viscount, Lord Simon, is making. If the Corporations do not feel that any particularly sensitive information will be respected by the Secretary of State, clearly this places them in a grave difficulty about submitting reports. Happily, for once I do not believe that we are on a Party matter and I find myself possibly arguing against disclosure leading to Parliamentary control. However, the fact remains that we have to keep coming back to what are the commercial interests of these Corporations, and the great concern on this side of the Committee is that, although we do not want these Corporations, if we are to have them we want to give them the best possible chance to succeed. This Amendment is a lead-in to the next Amendment where we shall return to the issue which we have already discussed once during the course of the Bill; namely, the power of the Minister to interfere.
It would be fair to say that our big worry is to make sure that the Corporations can "do their thing" without undue intrusion into their affairs. To that extent I find that it is reassuring that the Minister is able to say that the commercial security of the Corporations is adequately safeguarded. What one would be worried about would be if a report started to take the form of playing to the gallery so that one could have an exchange between the Corporation and the Minister which was not really a dialogue between the two of them but was, strictly speaking, designed for outside consumption. What we are seeking to do here is to try to get a meaningful way in which information can be exchanged between the Corporation and the Minister, while the possibly extremely sensitive information—or comment, indeed—would be totally secure and the person submitting this report would know that it would be secure. I think that is the essential point.
The Minister said, in a particularly hopeful moment, that at this stage he did

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not want to make any further comment about the matter. I thought that was a hopeful opening in that it conceivably indicated that he might be prepared to think further about the matter, although not that he will come back to us on this issue. I shall read with interest what he has said, and particularly when he referred forward to Clause 18 and to the other subsections in this particular clause.
Lord KIRKHILL: I apologise for my interruption to the noble Lord's very reasoned response. Upon reflection, I think I somewhat misled him in my earlier reference to subsections (1) and (2). Reflecting upon it afterwards, I think that my initial response was rather more correct than my subsequent qualifying remarks. I thought I should just say that for the record.
Viscount BROOKEBOROUGH: Could the noble Lord repeat what his immediate reaction was?
Lord KIRKHILL: My immediate reaction was that this is essentially a "one-off" procedure, but I do not think that that means necessarily that it may never happen after the "one-off" occasion.
Lord AIREDALE: Let us get this matter clear. I really do not think that the Minister is right. Subsections (1) and (2) lay upon each Corporation the duty (a) to undertake a review, and (b) to make a report and this is to be done "forthwith" and "from time to time". So there we have a whole series of reports going on for ever and the subsection that
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we are discussing talks about "a copy of any report". So we are discussing copies of all sorts of reports and not just one.
Lord KIRKHILL: I do not at all disagree with what the noble Lord has just said. I was merely attempting to say that the phrase "from time to time" may mean that a subsequent report—or reports—will occur. I would not personally think that that was a likely course of events, but I do not disagree and that is why I came back to the noble Lord, Lord Strathcona and Mount Royal, because I did not want to mislead him on that point.
Lord STRATHCONA and MOUNT ROYAL: I am grateful to the Minister, and I accept that he is doing his best—as I am sure he accepts that we are—to clarify what we are all agreeing or disagreeing about. If I may just go back to where I began, what essentially concerned us somewhat here is that the Government appear to be saying one thing in the previous clause; namely, Clause 4(5), where they mention the fact of it being against the Corporation's commercial interest, and yet under this clause they appear to be saying that they do not think that that is a relevant consideration. I think we have had a good discussion about this. We have got into a certain amount of complication; we have referred forward and we have referred back. I shall read what the noble Lord has said, but at this stage I beg leave to withdraw this Amendment and, if necessary, refer to it later.
Amendment, by leave, withdrawn.
10.5 p.m.
Earl FERRERS Earl FERRERS moved Amendment No. 89:
Page 9, leave out lines 25 to 31.
The noble Earl said: This Amendment also deals with the report. As Clause 5 says, immediately after vesting date and from time to time thereafter, the two Corporations have to undertake the review, which was what we were discussing in the previous Amendment. Then they make a report to the Secretary of State, saying what they find and what they propose to do and how they propose to do it. That is fine.
Then the Secretary of State lays the report before Parliament so that everyone can know what these two public bodies are going to do. That is fine. But then, in the latter part of subsection (5), the Secretary of State is given powers to tell the Corporation not only what to do, but how to do it. He can tell them—indeed, the words are that he can give them directions what to do in order to ensure the greatest efficiency in the management of those activities. The actual words that this Amendment seeks to delete—and they are important—are that the Secretary of State can
"give to the Corporation such directions as he considers appropriate for securing that the general principles upon which the activities of the Corporation and its wholly owned subsidiaries are organised are calculated to produce the greatest efficiency in the management of those activities."
Those are extremely wide powers to give to a Secretary of State. They are giving the Secretary of State powers to tell the Corporations what they are to do in order to achieve the greatest possible efficiency.
Here, we come back to what is efficient. The noble Lord, Lord Melchett, and I had a discussion about this the other day, as, indeed, did a number of other noble Lords, too. But if the Secretary of State is going to give instructions to the Corporation as to what to do in order to achieve efficiency, he must know what efficiency is. Does it mean turnover? If so, the Secretary of State can give them certain directions to that end. Or does it mean he can give them directions so as to secure increased profits, or to secure a higher return of assets? Here again, one
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has the word "efficiency" which the noble Lord, Lord Melchett, rather brushed aside saying, "We all know what efficiency is." I suggest we do not know what efficiency is.
A noble Lord: They do not!
Earl FERRERS: I daresay they do not. It will come up again in another Bill next Wednesday. The whole thing gyrates round "efficiency". It is a word that sounds very important and very impressive, but nobody actually has determined what it is; yet we are giving the Secretary of State these powers to intervene in the Corporations. They are very substantial powers, because the Secretary of State could easily say, "I am going to give you, the Corporations, instructions as to how you select your management because I do not think your management is efficient enough."
The Secretary of State could even give instructions with regard to the funding of pensions in order that that could be more efficiently done. So what happens to the trustees of the pensions fund? He could give them instructions as to how to budget their business if he thought it was not being budgeted properly. Or he could even go to a greater extent and say, "If in fact you have all your offices open-plan, they will run very much more efficiently". He could even say that members of the Corporation should not have individual secretaries, and that it would be much better if they were to dictate all their letters into a dictating machine and have a pool of secretaries. He could say this was more efficient. It may be the view of the Secretary of State, but it is quite intolerable that it should be even possible that he should have this kind of power.
Lord MELCHETT: I am trying to follow the noble Earl, Lord Ferrers, but I am not sure that I am doing so. I assume the noble Earl is still talking about the part of the Bill which says that the Secretary of State can give
"such directions as he considers appropriate for securing that the general principles upon which the activities of the Corporation.…",

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and so on. Am I right in thinking that the noble Earl is saying that the way the office is organised is one of the general principles on which the Corporation is being run?
Earl FERRERS: The noble Lord, Lord Melchett, is entirely right. I am on that point. It could well be that the Secretary of State could say, "This is the principle on which I want to see the thing run". That is a very considerable power. But if the noble Lord is worried about that, can I put the point to him in this way: that the Secretary of State could say that he believes the Harriers should not be made at Kingston but at Preston, because then the factories will be reorganised so that they will work more efficiently. I believe these to be powers which are far too great. I suggest we should ask ourselves what in fact is the true role of the Secretary of State here.
In my judgment his proper role is to monitor the country's investments in both Corporations. He should ensure that the return on the investment is adequate. If it is inadequate, then he should tell the Corporations that they are not doing what they should do and that the return is inadequate. It should not be up to him to tell them how to make it adequate. Mr. Carmichael has said perfectly clearly:
"Those who will be responsible for managing and running the two new Corporations should do so within the broad parameters set by the Bill and shape the organisation in the way that will best enable the Corporations to carry out their functions."
That is a very broad direction. I believe it is quite right. He said on another occasion:
"The Government wish both Corporations to operate on an independent and commercial basis and they wish to lay down only a broad strategic framework."
Yet here in this part of the Bill the Secretary of State is given very considerable powers of intervention in order to tell the Corporations how to run themselves efficiently. We have all seen cases of intervention by the Secretary of State in other nationalised industries which have been to the detriment of the industries working on a commercial
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basis. We have had referred to already the comments which Sir Richard Marsh made about the intervention of the Secretary of State in running British Rail. We have also referred to the fearful row that went on a short time ago when Sir Monty Finniston wished to reorganise the Steel Corporation so that it would run, in his opinion, more efficiently. He was prevented from doing so, for reasons which may be entirely understandable, by the intervention of the Secretary of State. In order to avoid similar mistakes being made over these new nationalised industries, I suggest that we ought to remove the interventionist power of the Secretary of State as it is set out in the Bill at the moment, where it refers to very considerable detail. If your Lordships look again at these words, you will see that the Secretary of State has power to intervene in the day-to-day management to a degree which is really wholly inappropriate. I beg to move.
The Earl of LAUDERDALE: Perhaps before the noble Lord, Lord Melchett, fires off his first salvo I may fire a tracer bullet or two—armour piercing, as my noble friend says. It was Lord Melbourne who among his memorable aphorisms included this one:
"Nobody ever did anything foolish except for some strong principle".
The strong principle that we are given in this case is the principle of efficiency. First, is it or is it not in the interests of the industry whose efficiency the noble Lord seeks to promote that there should be more or less Secretary of State's interference. That is the first question. Noble Lords opposite like a lot of Secretary of State intervention. Chairmen of nationalised industries like as little as possible. Two cases have been cited, very dramatic cases, during, this evening's debate. On our side the case is consistently put that the less the Secretary of State intervenes in a nationalised industry, the better. Noble Lords opposite think otherwise.
Baroness WARD of NORTH TYNESIDE: Would my noble friend allow me one minute? He was quoting Sir Richard Marsh, who said what trouble he had had

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with the then Secretary of State. But I think it is important to point out that Sir Richard Marsh had not got the courage to resign. He ought to have resigned, as some others have done. Not at all. He fiddled along with it until the railways got into a worse and worse position.
The Earl of LAUDERDALE: The noble Baroness always puts her finger on the nerve. with a gentler touch, try to avoid doing so. However, there is the issue for more or for less Secretary of State intervention. Our philosophy is that if you have to have nationalised industries at all, the less the Secretary of State intervenes the better. In this case his intervention is to be maximised in the interests of efficiency; and to the concept of efficiency I shall gladly return. I am not quite sure whether the Front Bench have any reply to that at all?
Lord MELCHETT: The noble Earl made a reference before. I was taking particular care to listen to every word he was saying, and was not having any conversation with my noble friend.
The Earl of LAUDERDALE: I do know that when the two noble Lords converse the conversation is always so seductive that it might mean that he was distracted. Lord Jacques's wit is never to be resisted. I take what the noble Lord, Lord Melchett, has been good enough to say. The first issue is for more or for less Secretary of State intervention. We are for less, and they are for more. But there are Secretaries of State and Secretaries of State. The present Secretary of State for Industry is an ambitious and meddlesome person. There are others who are less so; either less ambitious or less meddlesome. We do not know who the Secretary of State will be. It might well be a Tory one. I think it very likely will be in a matter of months if this Bill goes through, and he could be quite as meddlesome. I have criticised Secretaries of State on my own side. It is not really a Party issue here. It is really a question of whether we are to keep the meddlesome potentialities of the Secretary of State of whatever Party—it might even be a Liberal; it might be my noble friend Lord Lloyd of Kilgerrant— to a minimum.
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The trouble about this passage in the Bill is that it is an open-ended invitation to the Secretary of State of the day, of whatever Party, to meddle, and meddle, and meddle. That really means to muddle as well as to meddle. We have always taken the view—and in this the Conservative Party, inconsistent in many things, has at least been consistent—from 1945 onwards that if there has to be nationalisation, at any rate let the management manage. We have been consistent on that, and it does not lie in the mouths of noble Lords opposite to accuse us in that matter of being less than absolutely consistent for 30 years or so.
We say let the management manage, and this is what we want to ensure. If there has to be a nationalised management, let it at least manage. Let us take the past experience. What about the record of BAC or Hawker-Siddeley? Surely the evidence of their performance is that their management is good, but had it been muddled about and meddled about and interfered with by Secretaries of State, it would have been of a very different order. Probably the top chaps would have been away to America, Germany, Sweden, or whatever country would employ their talents with better reward and respect. Those are the general issues.
Then there is the question of efficiency. Apparently the Secretary of State is to have power to tell the Corporation certain things, as one of my noble friends on the Front Bench said. For the moment I forget which of my noble friends it was.
Earl FERRERS: It was I.
The Earl of LAUDERDALE: I knew it was one of my noble friends with an elegant smooth haircut when viewed from behind, and I am pleased to know exactly who it was. My noble friend said that the Secretary of State would be able to tell the Corporation not only what to do but how to do it. What indeed does efficiency mean? It could mean many different things. It is to be looked at in the national interest. Then efficiency must at least embrace efficiency from a defence point of view. Or it might be efficiency from the point of view of the moneymaking capacities of the Corporation; that might be efficiency in terms of tax avoidance. It might be that efficiency

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is to be in terms of non-overmanning. My goodness! if there is one problem that blots the scene of British industry today it is the problem of overmanning, and everybody knows it.
Might it be that efficiency in terms of manning or overmanning will be the criterion? Again, it might be fiscal efficiency; in other words, not tax avoidance from the State but the provision of tax rewards to the State. Either could be an element, indeed the guiding star, where efficiency is concerned. It might be managerial efficiency, and that could mean many things. It might mean having very few managers but that they are very dictatorial or it might mean having many managers who are very consultative. Whatever it is, managerial efficiency might be the test.
On the other hand, I feel sure that the evening will hardly pass without something being said from the Benches opposite to the effect that it might be social efficiency. One can hardly blame a Government of the mixed colour that they are, producing a Bill for nationalisation and pushing all sorts of social theories such as woolly ideas about industrial democracy at the same time. That is to be expected; we have learned to take the rough with the smooth, the Right with the Left, the Marxists with the Social Democrats and so on, but I feel sure that the term "social efficiency" might well arise. What will that mean? Will it mean providing and creating jobs? Will it mean overmanning? I was amazed when, not long ago, Mr. Kaufman gave evidence to a Select Committee of this House, of which I was chairman on that occasion, about the aircraft industry in relation to Europe. What concerned him most—I was shattered to hear him say it; it is on the record because it was published in our 52nd Report—was how many jobs would be created or preserved for the aircraft industry. Thus, I ask: is employment to be the criterion? Is that what is to be meant by social efficiency?
Having wondered whether it will be managerial efficiency, fiscal efficiency, tax avoidance efficiency, overmanning efficiency, defence efficiency and so on, and the fact that efficiency can mean absolutely anything, I return to the point I made at the outset, that some of the worst things
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are undertaken with the best motives, and I would never credit the noble Lord opposite with anything but the best motives.
Lord AIREDALE: At the heart of the sentence we are discussing are the words, "general principles calculated to produce the greatest efficiency". Any draftsman who uses the word "calculated" in a Bill is courting disaster because it can have one of two separate and distinct meanings; sometimes it means "likely" and sometimes if means "intended" and one should use one or other of those words to explain what one means. However, in this context I do not think it means either. I believe that what is intended here is general principles which "shall" produce the greatest efficiency, and perhaps we can think about that with a view to an Amendment at the next stage.
10.25 p.m.
Lord HARMAR-NICHOLLS: Perhaps it will save time if, before the noble Lord replies, I draw attention to a comment he made during my noble friend's opening remarks. When my noble friend said that this open-ended instruction could interfere with detailed day-to-day management. the noble Lord got up and said, "But it is made quite clear that it is only if it is on a general principle". He said that as though the "general principle" meant that that automatically ruled out any interference at a day-to-day level. But because it is so open "general principle" means just the opposite. That phrase can give the excuse to say anything about everything. If it were confined to the point where it said that the Secretary of State can give directions but not on matters of day-to-day interest, I believe that I could accept that. But to try to give the impression that the phrase "general principle" means that it is restricted as to what can be done is, to my mind, a complete misuse of the English language.
If the noble Lord means that he wanted to confine this to what he called "matters of general principle affecting the general efficiency", he must find words other than "general principle" standing alone. He must define what he means by that sort of general principle, and unless he is prepared to add words excluding interference on day-to-day matters, this open ended instruction can only allow what my

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noble friend called a "meddlesome" Secretary of State to intervene in a way that can do nothing but harm. This will undermine confidence and do the very opposite of increasing the general efficiency which is apparently the general principle that the noble Lord wants. I thought it right to intervene at this stage so that the noble Lord can correct the impression that he has given so far. If, in correcting it, he says that he is prepared to add words which will certainly exclude what I should call day-to-day management, I shall be happy.
Lord MOTTISTONE: Before the noble Lord rises, perhaps I may throw something into the pool to make matters more difficult for him. It seems to me that this phrase, if it is harmless, as I suspect the noble Lord will say, is a monstrous cliché. "General principles to produce greatest efficiency in management"—what on earth would any manager want to do except produce greatest efficiency? So why is it necessary to put this in the Bill? If the noble Lords opposite and the Government have arranged to provide good management, as I believe they have, they do not need a phrase in the Bill to tell that management what to do. I am sure they will say, "Of course we shall not use this; it is obviously a sort of safeguard". But, if it is just a safeguard, what is to prevent some rather less understanding Secretary of State misusing it in the future? It seems to me that we do not need to argue this: it is a nonsense; it is not necessary. Why should we have it in the Bill? It would be very much easier for everybody, including the Government, if they accepted that this was not here.
Before I sit down, 1 should like to suggest that this is one clause—and noble Lords have been arguing throughout the evening about others that are similar—which gives away the fact that it is understood by the Government that previously nationalised industries have been a failure. The Government must know that in their hearts. None has been successful as a business enterprise. There are all sorts of reasons for this and some of them are understandable hut, as business enterprises, they just do not stand up to the major free enterprise companies. That is a fact of life and I suspect that, in producing before Parliament this draft
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which is called a Bill, instead of saying to themselves that perhaps the reason they have not been successful is because, on the whole, previous Acts of Parliament have given Ministers too much power to interfere, it would have been better if they had said to themselves that the answer might perhaps be to give Ministers less power to interfere.
In fact there is a fundamental, underlying "Auntie Government", interfering sort of theme: "It's all right, old boy. We'll not use it. It's just useful to have it there". And there are all sorts of paragraphs and clauses in this Bill which really cannot stand up to being regarded as something absolutely essential for the proper control of a State enterprise, which has to look after the public money, and all that sort of thing. It really does not live up to that. I would suggest to the noble Lord that a nice thing to do—it is half-past ten—would be to say, "This is a clause which we are terribly sorry about. It slipped in, and we do not want it."
Lord BURTON: Before the Minister rises to speak, I feel we should have a clearer definition from the Government on this question of efficiency. I am very pleased that my noble friend Lord Lauderdale raised the point, because it was only on Friday that we questioned the noble Lord, Lord Jacques—I am not quite sure whether my noble friend bowled him out by his remarks or whether he had a premonition that his name was going to be mentioned—on what was "efficient performance" on the Dock Work Regulation Bill. We asked him, " Is it the same as cost effective?" He was not prepared to answer. Now we really must have an answer as to what the Government consider to be efficiency on this.
The noble Lord, Lord Kirkhill, a few minutes ago quoted as an example a regulation or an Act governing British Rail. I do not know if they consider that British Rail are either cost effective or efficient. I think we really must have something clearer on this, and I completely agree with what my noble friends on this side have said.
Lord MELCHETT: Maybe I could first of all, hopefully, put the minds of the noble Lord, Lord Harmar-Nicholls,

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and the noble Earl, Lord Ferrers, at rest by making it quite clear that the term "general" means exactly what it says in the example which the noble Earl gave, of making the Harrier at Preston rather than somewhere else. It is not a matter which would be dealt with by specific direction under Clause 5, the power of direction which we are discussing, because of the limitation to general principles. "General" is defined—and this may help the noble Lord, Lord Harmar-Nicholls—I am advised, in this phrase in the same narrow way as when it is used in the term "general directions" in the Bill, and in all Acts of Parliament. This Amendment would remove the power of the Secretary of State to give directions.
Earl FERRERS: I am sorry, but if the noble Lord is leaving that point, could he explain—I would seek his guidance on this point—why he says that the example of the Harrier being moved from one place to another could not be given under this clause? Because under this clause surely the Secretary of State has powers to give the Corporation directions which he considers would make it more efficient; and if he considered it would be more efficient for that to happen, surely he would be entitled to give them directions?
Lord MELCHETT: Because I do not think it would be a general principle. My advice is quite clear on this. It would not be a general principle which would make it more efficient. if I could be allowed to make my speech, then no doubt noble Lords will all come back at me and make any points they like, but we have had quite a long debate on this Amendment and I would be grateful for a chance to say a word at least.
The Earl of LAUDERDALE: Very well.
Lord MELCHETT: I am very grateful to the noble Earl, Lord Lauderdale, for his permission to continue. We believe the Secretary of State must have power to give,
"such directions as he considers appropriate for securing that the management of the activities of the Corporation and its wholly owned subsidiaries is organised in the most efficient manner."
The power is well precedented in the most recent nationalisation legislation on which,
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as we have already made clear on the various Amendments on the Bill, the broad theme of this legislation is based. For example, the power was included in the Iron and Steel Act 1967, the Civil Aviation Act 1971, and the Gas Act 1972, and it does not need me to remind noble Lords opposite that these were two Acts passed by noble Lords opposite when they were in power—
Lord TREFGARNE: I am much obliged to the noble Lord for giving way. I am trying to make a helpful intervention, as always. Can the noble Lord be specific about the Civil Aviation Act 1971? Which power of direction is he referring to? There are several powers in that Act.
Lord MELCHETT: It so happens that I cannot be specific because what I have in front of me is the Gas Act 1972, not the Civil Aviation Act 1971. But I will come to the Gas Act in a minute, if the noble Lord will permit me to continue my speech, and I will no doubt be able to give him the reference in a moment.
Lord TREFGARNE: I am much obliged.
Lord MELCHETT: Both these industries are of vital national importance, and it would surely be imprudent if the Secretary of State, who is responsible for them, were powerless to act in the face of an obviously unsatisfactory organisation. To be able to act in such circumstances, the Secretary of State needs this power, as has been recognised in previous Statutes. The intention is to provide the Secretary of State with a reserve power, but one which could be effectively used should circumstances require it. As I have said—and I emphasise again—it is not a power to permit interference in detail. That is why the directions may cover only "general principles", and that, as no doubt noble Lords opposite will have realised, is a change made between the first and second prints of the Bill and a departure from the precedents set in some of the earlier legislation, for example, the Gas Act—this is why I happen to have it in front of me—where in Section 4(3) more or less exactly the same wording is used, except that "general principles" is not included. So no doubt that gave the Secretary of State much

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greater power to interfere in matters of detail. We have included the words "general principles" to make it absolutely clear that the Government's intention in passing the Bill is not to give the Secretary of State unnecessary power to interfere in matters of detail, but only to allow him to give an opinion on matters of general principles to the two Corporations.
The noble Lord, Lord Carr of Hadley, said on an earlier Amendment that it was quite clear that the Government were saying one thing and doing another in the Bill. I would suggest to him that this is a good example of somewhere where we have broken away from the precedents, including those of the legislation of Governments of noble Lords opposite, by making it clearer than it ever was in the past that Secretaries of State, in these circumstances, should not interfere in the kind of detail about open plan offices and so on, which the noble Earl, Lord Ferrers, gave as an example—
Lord CARR of HADLEY: I am grateful to the noble Lord for giving way. He will recall that when we were debating Amendments to Clause 2, he specifically confirmed that under that clause the Secretary of State would have power to order the appointment of a particular person as sales director or as director of research and development, or to particular positions. I do not quite see how that is a general principle. It is all very general here, but it is all very particular somewhere else. This is one of our great troubles with the Bill.
Lord MELCHETT: Were I to return and make the same speech as I made on Clause 2, I am sure that noble Lords opposite would accuse me of filibustering, which is the last thing I should want them to accuse me of.
Lord HARMAR-NICHOLLS: I should like to raise a point before the noble Lord sits down. He has sitting beside him a Law Officer from the Scottish Office. The noble Lord has tried to suggest to me—if I have got it right—that the term "general principles" is restricting, and he tried to give the impression that in legal terms "general" meant that it was narrower than it would be if the word "general" had not been included. I wonder whether the Law Officer from
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the Scottish Office could give any legal basis for showing me where, even in legal terms, the word "general" has made the position narrower than it would have been if that word had not been included?
Lord MELCHETT: With great respect to my noble friend, I am not sure that I need his advice on this occasion, although doubtless on many occasions I will benefit very greatly from it. As I have said to the noble Lord, "general" is defined in this instance in the same way as it is in other circumstances in similar Bills and similar Acts of Parliament, and that is quite firm advice that I have.
Lord HARMAR-NICHOLLS: The only "general" I should find acceptable at the moment would be a General Election.
Lord CARR of HADLEY: We are getting into a most extraordinary position over these Amendments. On the last Amendment we discussed we had the Government refusing to add a few words which could not have been damaging and which, in the opinion of many noble Lords, would have been beneficial to protect the commercial interests of the Corporation. But, no, we could not add a few words. Now the Government are refusing to remove six lines of gobbledegook. It drives us to desperation.
I must remind the noble Lord of something I said very much earlier this afternoon, and that was that if we wanted to make progress—and presumably the noble Lord and his colleagues want to make progress—it would help us to make progress if instead of this stonewalling and sticking to everything in the Bill word for word, there was a bit of give and flexibility from the Government side. The more rigid the noble Lord is the longer the pressure will go on to try to get some concessions from the Government, and the noble Lord must not grumble if it takes a very long time, because it is nonsense that we have to argue for over an hour in order to get a refusal to add what were quite harmless words. Even if the Government did not think they were positively beneficial, they could not conceivably have done any harm. We are now having to argue for a long time because of these words of gobbledegook, and they really are

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gobbledegook—unless they are sinister, and Ministers are trying to assure us they are not sinister. I do not know.
Let us try to take stock of the position. One thing we are quite sure about—and this must be common ground on all sides of the Committee—is that after more than a quarter of a century of experience we know now that nationalisation as at present practised does not work; that it is wholly disastrous. It is disastrous economically, and disastrous in producing a proper return on scarce capital investment, and it has certainly not brought satisfaction to the employees in the nationalised industries. All the initial claims of nationalisation which the Labour Party put forward to the country and brought in from the 1945 period onwards have been proved, after 30 years, to be false. I do not believe that anybody can contest that.
We believe we should not have any more nationalisation, but still the Party opposite is determined to go on with it. After the experience of these 30 years surely we must go one way or the other. I must remind the noble Lord that it is not just noble Lords on this side of the House who are saying that, but, to take one example among noble Lords behind him, the noble Lord, Lord Shinwell, is saying: "If I could start all over again I would do it all differently". Because he is true to his Socialist belief in nationalisation, he is not saying, as we are, that he would not have any of it; but he is saying, "Believing as I do in nationalisation, with the wisdom of hindsight I would now do it quite differently".
Therefore, I say to the noble Lord that we must go one way or the other. One way to go is back to the idea that a nationalised industry is run by a Government Department, as the Post Office was, in which case the Secretary of State is his own chairman, as I said earlier. That is one way to go. There we would at least get rid of this conflict between the Secretary of State and the chairman and board of the Corporation. We would also gain Parliamentary accountability, which many noble Peers and honourable Members in another place want. That would be one way of going.
The other way to go is to set about making these nationalised Corporations,
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if we have to have them, much more independent. Surely what we have learned over the last 30 years is that we are getting the worst of both worlds. We are getting the benefit of neither one form of organisation nor the other. Our constant complaint in this Bill is that the Government, with a great flourish in their Consultative Document and in some clauses of this Bill, and in what they have said in regard to the Bill, have said, "Here is a new departure in nationalisation. There will be far more decentralisation, far more autonomy; we are really going to set a new precedent." And if they were, much as we dislike nationalisation, if we are to have it thrust upon us, most of us on this side of the Committee would welcome that if it were genuine. But when we study the details of the Bill we find it is not genuine, because for every clause or subsection of a Clause which talks about more independence, more decentralisation, more autonomy, and autonomous profit centres, and all that sort of thing, there are other clauses which give the Ministers more powers of intervention than they have had in the past. It is the fact that the Government are pulling in both directions which makes us so profoundly dissatisfied with this Bill as it is at the moment.
Of course, we should like to chuck out the whole Bill, but for the moment we are concerned to see whether we can improve it, to see whether we can reduce the chances of nationalisation ruining the industries involved in this Bill. The Government must go either one way or the other and not try to go both ways at once; because, as I have just reminded the noble Lord, he is now saying that we need not bother about this clause because it is concerned only with directions about general principles. But, as I reminded him, an earlier clause of this Bill, on his own admission, gives the Secretary of State power to make specific appointments to specific important posts in the Corporations and does not leave it to the top management to do that. It is no good his trying to reassure us about its being limited to general principles here and saying that the word "general" is by custom defined so narrowly that, as his noble friend said in another context earlier, it really means that directions can scarcely ever be given; because even if that were true of this

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clause there are other clauses where he himself has admitted that exactly the reverse applies.
What does the noble Lord mean by this phrase "general principle"? When my noble friend Lord Ferrers in moving this Amendment spoke about office management and office design, the noble Lord, perhaps not unfairly, said that that was not a general principle, and perhaps we can understand that. But he tried to say the same to my noble friend when he spoke about a decision as to where the vertical take-off aircraft, the Harrier, and its developments, should be made. Is that really not a general principle? Is it not a general principle for the Secretary of State to say, "I believe on grounds of regional policy, of employment prospects, that this great new technological development, with so much promise for the future, should be made all in the Preston area rather than all in the Kingston area because the needs of employment in this great new technology are much greater in Preston than they are in Kingston"? Is that not a general principle?
Lord MELCHETT: If the noble Lord would like me to repeat myself, my clear, legal advice is that the answer to his question is, No, it is not.
Lord CARR of HADLEY: It is very satisfying if that is so, but I think the noble Lord must realise that we must have some examples of what is a general principle, because if he cannot give us any example of what is a general principle then I come back to the fact that all these six words are just gobbledegook. They either mean something or they are gobbledegook. If they mean something the noble Lord must explain to us what it is.
Let me test the noble Lord out on another matter and ask him whether or not it is a general principle. Let me go back a moment. Here this great review has taken place—a review which the noble Lord I think agreed earlier was the equivalent of a management audit or a consultancy review. This, I think, was admitted by the noble Lord, Lord Kirkhill, when we were talking about the previous Amendment. All right; this great consultants' report comes forward, and no doubt this consultants' report contains recommendations about the basic
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structure of management—the relationship, for example, between functional services and line management. I am sure the noble Lord will know, without my going into a great lecture about managerial principles, the sort of things I have in mind.
Are those general principles? Is the Secretary of State entitled, under this provision, to say to the Corporation, its chairman and its Board members, "I have now read the results of your review, the recommendations contained in your consultants' report and all the rest of it, but I think that this is the general principle on which you must organise yourselves, I believe that these should be the powers of the functional departments and that these should be the limitations of the line management functions, and so forth; and this is the amount of decentralisation I believe in"? Is that a general principle or is it not? Because if it is, then the Secretary of State is setting himself up as the super-management expert and is telling his chairman and the chairman's colleagues on the Board how they should run their organisation; and that I do not believe to be what the Government are holding out as what they are trying to do.
If that is what the Secretary of State wants to be, the great management expert, then I go back to the earlier point and say this. Let us have this as a Government Department with the Secretary of State as his own Chairman. Let us do it that way. But do not try to go in both directions at once. If the sort of thing I am talking about is not a matter of general principle—and the noble Lord will tell us—then I come back to the thought that these six lines are gobbledegook. If they are not, I beg the noble Lord to tell us what are meant by "general principles" on which the Minister can give directions. If he cannot give positive examples, then I am afraid the whole thing is nonsense and we shall not only want to continue the debate now, and vote in the end against, but to return to it at the next stage of the Bill as well.
Lord HARMAR-NICHOLLS: The noble Lord intervened to say that the matters my noble friend was talking about were not general principles. Would he admit that they are major matters? Would he concede that much if they do not come within what he defines as general

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principles? Would he concede that they are major matters of concern to the organisation from day to day? Or does he disregard their importance altogether?
Lord MELCHETT: I am not clear whether we are still talking about matters such as the organisation of office furniture.
Lord HARMAR-NICHOLLS: We are talking of the general day-to-day matters. He said they are under matters of general principle. Are they major matters that ought to be given consideration to or are they unimportant? I should like an answer to that.
Lord MELCHETT: There is some difference between deciding where the Harrier is built and deciding where to put office furniture. They are the two examples given by the noble Earl, Lord Ferrers. There was one point which the noble Lord, Lord Carr, brushed aside when referring to these (how many?) lines of gobbledegook. It is that they clearly are drawn from previous nationalised industry Statutes passed by Conservative Governments. I gave as examples the Gas Act 1972 in Section 4(3). I now have the information asked for by Lord Trefgarne. It is the Civil Aviation Act, Sections 39(1)(a) and 39(3). The only difference between those Acts where this "gobbledegook", as Lord Carr called it, appeared and what is in this Bill is that we have inserted the words "general principles".
My legal advice is clear in saying that that means it does not refer to day-to-day matters, specific matters, such as those to which the noble Earl, Lord Ferrers, raised. We have these lines—which may or may not be gobbledegook—but noble Lords opposite happily inserted them in their legislation. We have gone further and say that in this particular instance where we are looking at the organisation, you should not have power to interfere in detailed matters but only in matters of general principle. I should have thought that that explanation ought to satisfy noble Lords.
Lord HARMAR-NICHOLLS: The noble Lord did not follow the line I wanted. Would he look at the Explanatory Memorandum in his own Bill referring
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to Clause 5. The final sentence is:
"He may then give directions to the Corporations on major matters with a view to securing their most efficient organisation."
They did not, in the Explanatory Memorandum, call them matters of general principle, they defined them as "major matters". The noble Lord is working to his brief and I have sympathy with him; but the Explanatory Memorandum of the Bill is clear that this general principle is not matter above any day-to-day running of the organisation. They call them "major matters". 1 believe that whoever prepared the Explanatory Memorandum has a better understanding of what is meant by general principles in this context than has the noble Lord's brief.
Lord CARR of HADLEY: May I press the noble Lord a little more? First let me say this about the precedent argument. All right. Something was in the 1972 Gas Act passed by a Conservative Government. I was a member of that Government and must share my collective responsibility. But I am not impressed by that argument. I think, as I said at the beginning of my remarks, that surely what we have to realise is that Governments of both Parties have tried to make nationalisation in its traditional form work and have failed. We must start from that point. That really is the truth on which many people of both Parties agree.
It is not precedents which we should be looking at. If it helps the noble Lord, I admit that 1 was wrong as a member of the Cabinet to agree that that should appear in the 1972 Gas Act, What does he say? He says that we have tried to learn from experience to a certain extent, so he has included this great phrase "general principles" but he will not tell us what he means by "general principles". He has told us that there are one or two things which are not general principles and, therefore, would not be subject to direction. When he tells me that a matter so big as where the Harriers should be manufactured is not a general principle, I am relieved, because at least he is saying that the Secretary of State will not attempt to interfere with the judgment of the chairman and his colleaeues on the matter.
What about matters such as the general structure of management, to which the

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noble Lord gave no answer? As a result of this review we have the consultancy report which no doubt will have a good deal to say about the general system and principle of management which the Corporation should adopt. Is that a matter of general principle on which the Secretary of State could give orders overruling his chairman and board if he so desired, or is it not? Until the noble Lord or one of his colleagues begins to give us some examples of what he means by "general principles", we are bound to continue in a rather tedious way bringing forward new examples and asking whether they are matters of general principle. So far, he has set our fears at rest on all those we have mentioned by saying that they are not matters of general principle. Perhaps he will tell us what is a matter of general principle. Then we may be able to make faster progress.
Lord GOODMAN: I wonder whether a new fellow might have at least one ball, not an over, to ask the Minister whether it is not possible that the insertion of the words "general principle" for which he takes credit, is the cause of all the trouble. It seems to be those two words that have rendered the clause nonsensical. Apparently, the clause requires that after considering reports which do not have to deal with general principles—and there is no indication that general principles are matters with which they are involved—directions are to be given which are solely restricted to general principles. A less effective way of dealing with the detailed report it is impossible to imagine. One arrives at the conclusion that in a desire to absolve themselves, quite virtuously, from interference in detailed matters, they have rendered the whole of this clause absolute nonsense.
The Earl of KIMBERLEY: I am a very simple-minded man and I believe that most noble Lords would agree that Lord Beswick will have all the top brass from the British aerospace industry in the Corporation, if and when it is ever formed. Surely they know more about the day-to-day management of the general principles and the major matters to secure efficiency than any Secretary of State in the past, now or in the future.
Earl FERRERS: I hoped that we would receive an answer from the noble Lord, Lord Melchett, on what general principles are.
Baroness LLEWELYN-DAVIES of HASTOE: He has answered.
The Earl of KIMBERLEY: No, in fact he has not. He has said what they are not. He specifically rose and said that he had taken legal advice on my example of where the Harriers should be made. He said that it was not a general principle. We have not received an answer to our question of what is a general principle. The situation becomes difficult because we find ourselves in the position, frankly, of almost punching a cloud. I am not suggesting that we are trying to punch the noble Lord, Lord Melchett. However, when one asks a question, one never receives an answer. He does not answer these points of particular importance.
The idea behind this Amendment is to try to ensure that if nationalisation is to come about, which is the purpose of the Bill—and we admit that we do not like it—it must be as successful as possible. The one thing that we think ought to be done is to keep the Secretary of State out of the "hair" of British Shipbuilders and British Aerospace. As we see it, this Bill, as it is drafted, permits the Secretary of State to interfere. The noble Lord, Lord Melchett, said, regarding my question about the Harrier, that if he was to say that it should not be built at Kingston but at Preston, this would not be regarded as something with which the Secretary of State should interfere.
But supposing as a result of this nationalisation, there is rationalisation—and everyone knows that that is going to happen—and the two industries will be drawn together, and therefore there will be fewer factories. Supposing it is determined that there should not be 15 factories but 10. Is not that a general principle upon which the Secretary of State should interfere? Is he not permitted to say: "There are to be only 10 factories, and these should, in my judgment, be situated here, there and there"? I should have thought that those are points on which the Secretary of State could well interfere. We have not had a—
11.2 p.m.
Viscount BROOKEBOROUGH: May I interrupt? It strikes me that in this Bill we are discussing in an odd way two particular problems. One is the nationalised industries, and the second concerns

931
the two companies, Short Brothers and Harland and Harland and Wolff, which are not going to be allowed to develop in isolation. I think "isolation" is the word to describe it. Where is the Secretary of State's power to come in, and where is he going to relate that to general principles if rationalisation is going to occur? If shipbuilding, for instance, is going to be cut by 60 per cent. or some such figure—that must be a general principle—how is this going to be related? Where do we go between the reduction of the national capacity by 60 per cent. involving the British Shipbuilders and Harland and Wolff as one and the other? This I find rather difficult to understand.
Lord HARMAR-NICHOLLS: Is the noble Lord not going to define the boundaries? He is asking this Committee to sign a contract in the sense of allowing this to go through. If it is that one is asking people to adhere to clauses within that contract, there ought to be a plan which defines the boundaries of the area covered by the clauses in the contract. The noble Lord has said what it does not cover. I think those who are interested in the full employment of these industries and general efficiency (which is supposed to be the general principle uppermost in their minds) ought to know the boundaries
of what "general principle" means as regards interference by the Secretary of State, otherwise it makes a nonsense of suggesting that this is going to be anything other than a fully politically controlled organisation, with all the dangers that can effect both our industry and our standing in the world.
Lord MELCHETT: I did not speak because I understood that the noble Earl, Lord Ferrers, was in the middle of making a speech a minute ago.
Earl FERRERS: The noble Lord is on his feet; I will by all means let him answer the question, if he would like to do so. I only say this: the noble Lord has failed to answer, in a quite demonstrative way, what the general principles are over which the Secretary of State is allowed to interfere. We asked six times and on every single occasion he refused to answer. Nothing more remains other than to say that in that case we think it is wrong that the Secretary of State should have that power, and I ask your Lordships to agree to this Amendment.
11.4 p.m.
On Question, Whether the said Amendment (No. 89) shall be agreed to?
Their Lordships divided: Contents, 94; Not-Contents, 36.

CONTENTS

Abinger, L.

Falmouth, V.

Onslow, E.

Airedale, L.

Ferrers, E.

Orr-Ewing, L.

Amherst, E.

Gainford, L.

Penrhyn, L.

Amherst of Hackney, L.

Gisborough, L.

Redesdale, L.

Amory, V.

Gladwyn, L.

Remnant, L.

Ampthill, L.

Gowrie, E.

Rochdale, V.

Ashdown, L.

Gray, L.

St. Aldwyn, E. [Teller.]

Auckland, L.

Greenway, L.

Sandys, L.

Balerno, L.

Gridley, L.

Seear, B.

Belstead, L.

Hacking, L.

Seebohm, L.

Berkeley, B.

Hailsham of Saint Marylebone, L.

Selsdon, L.

Bridgeman, V.

Hampton, L.

Sempill, Ly.

Broadbridge, L.

Harcourt, V.

Sherfield, L.

Brookeborough, V.

Harmar-Nicholls, L.

Shuttleworth, L.

Brougham and Vaux, L.

Hives, L.

Simon, V.

Burton, L.

Hornsby-Smith, B.

Strathclyde, L.

Campbell of Croy, L.

Inglewood, L.

Strathcona and Mount Royal, L.

Can of Hadley, L.

Inverforth, L.

Swansea, L.

Carrington, L.

Kemsley, V.

Tanlaw, L.

Chelmer, L.

Killearn, L.

Terrington, L.

Cork and Orrery, E.

Kimberley, E.

Teviot, L.

Cullen of Ashbourne, L.

Lauderdale, E.

Thorneycroft, L.

de Clifford, L.

Lloyd of Kilgerran, L.

Tranmire, L.

De Freyne, L.

Lyell, L.

Trefgarne, L.

Denham, L. [Teller.]

Mancroft, L.

Tweedsmuir, L.

Deramore, L.

Merrivale, L.

Vickers, B.

Drumalbyn, L.

Monson, L.

Ward of North Tyneside, B.

Dudley, E.

Mottistone, L.

Wardington, L.

Effingham, E.

Newall, L.

Wigoder, L.

Elles, B.

Norwich, V.

Windlesham, L.

Elliot of Harwood, B.

O'Hagan, L.

Young, B.

Elton, L.

NOT-CONTENTS

Brimelow, L.

Janner, L.

Pitt of Hampstead, L.

Champion, L.

Kirkhill, L.

Platt, L.

Collison, L.

Llewelyn-Davies of Hastoe, B.

Ponsonby of Shulbrede, L.

Cooper of Stockton Heath, L.

Longford, E.

Raglan, L.

Davies of Leek, L.

Lyons of Brighton, L.

Shepherd, L.

Davies of Penrhys, L.

McCluskey, L.

Stedman, B.

Elwyn-Jones, L. (L. Chancellor.)

Melchett, L.

Stewart of Alvechurch, B.

Gregson, L.

Morris of Kenwood, L.

Strabolgi, L.

Hankey, L.

Murray of Gravesend, L.

Wallace of Coslany, L.

Harris of Greenwich, L.

Noel-Buxton, L.

Wells-Pestell, L.

Hirshfield, L.

Oram, L. [Teller.]

Winterbottom, L.

Jacques, L. [Teller.]

Peart, L. [L. Privy Seal.]

Wynne-Jones, L.

On Question, Amendment agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly-
11.12 p.m.
On Question, Whether Clause 5, as amended, shall stand part of the Bill?
Lord CAMPBELL of CROY: I should like to come to a point of immediate topical application. It is a duty of British Shipbuilders to review and report on the management of its affairs and, as to the timing, subsection (2) states that "forthwith after the shipbuilding industry vesting date" the new Corporation shall produce its first report, while subsection (3) indicates that that must be withinsix months of that vesting date. In passing, I would ask the Government whether they can give us any news of their views on when the shipbuilding vesting date is to be after the enactment of this Bill, were this Bill to go through Parliament.
The next point is that this new Corporation will find it difficult to produce a review as soon as this, because subsection (2) states that it has to undertake a review of the affairs of the Corporation for the purpose.
"(i) of determining how the management of the activities of the Corporation and those subsidiaries can most efficiently be organised"—
and then—
"(ii)…of seeking the largest degree…of decentralisation of management and decision-taking to separate profit centres in the ship-building and ship-repairing areas of Great Britain, and in particular of Scotland and Wales".
At present, no decision has yet been taken as to where the headquarters of British Shipbuilders is to be, and unless the Minister can tell us that tonight it will still be a mystery. It will be difficult for this new national Corporation to produce a review in this short time, "forthwith after the…vesting date", when it still
934
is not known where it is to be, whether in Scotland, in a development area in England or Wales, or in London.
There was a report in The Times of 9th September which stated:
"Government delays over the announcement of the location of the headquarters for British Shipbuilders is jeopardizing preparatory work for the planned new state undertaking.
"Members of the organizing committee and key personnel recruited over the past few months are now seriously worried at the implications of the failure of the Government to make an announcement.
"The delay is causing considerable frustration and inconvenience, and it is clear that the new corporation could suffer unless the issue is clarified within the next few weeks."
The article went on to discuss what development area in Britain might be chosen for the headquarters, and went on—
"The organizing committee itself favours London as the most desirable location, however, and wherever the new state corporation is based, its executives expect to spend a good deal of their time in London".
That is still the position today, over a month later. I would ask the Minister whether that report in The Times is broadly correct. It is going to be exceedingly difficult for the Corporation to get started and to do this kind of review if it does not know where its headquarters will be. If it is not known today and the decision has not yet been taken, can the Minister tell us when that decision is likely to be taken? Will it be taken before vesting date?
Viscount SIMON: May I ask another question arising out of this clause? I do not want to reopen the discussion we had about commercial interests, but I think I heard the noble Lord, Lord Kirkhill, at one point saying something that sounded like an expression of opinion that what was against the commercial interests of

935
the Corporation would be against the national interests, presumably because the Corporation is a nationalised body and we do not want it to fail. It struck me that that is quite a useful line of approach if noble Lords on the other side are going to give proper thought to the long debate we had on that Amendment. I wonder if I could confirm that the noble Lord, Lord Kirkhill, or perhaps the noble Lord, Lord Melchett, when replying, will say whether I heard that correctly. It seems to me that that is a possible way of getting out of our difficulties.
Lord MELCHETT: The noble Viscount did understand my noble friend correctly. This is one of the matters we shall be considering. I am sorry to see that the noble Lord, Lord Carr, is not here, and no doubt the noble Lord, Lord Campbell of Croy—if I may do a Lauderdale on him, if I may use that expression—will convey to his noble friend Lord Carr that we have agreed, as the noble Viscount has reminded us, to consider this matter. Perhaps he would also convey to him that, of the eight substantial Amendments we have discussed this evening, six have already been discussed extensively in another place. It may be that if we were to make a little faster progress we would come on to those parts of the Bill which were not fully discussed in another place because of the guillotine procedure where my noble friend and I would be able to be rather more forthcoming on giving consideration to Amendments made by noble Lords opposite. If I may make the point, there is a little give and take in this, and if we do not make progress there are no Amendments for us to consider. If we made rather more progress and covered more ground we would come on to Amendments where there are some very good viewpoints to be put by noble Lords opposite which we can consider.
The noble Lord, Lord Campbell of Croy, asked me two points on the vesting date. My understanding is that for each Corporation the vesting date will be as soon as possible after Royal Assent, which no doubt will be in the comparatively near future. The noble Lord also referred to a report in The Times, which I confess I did not see. Naturally I place great weight on what appears in that newspaper. No doubt he will have noted what it said in
936
the leading article this morning about the House of Lords not indulging in delaying tactics by spending too long on particular sections of Bills.
Baroness SEEAR: No doubt the noble Lord will have noted from The Times how very important it was that we should do the revising job properly.
Lord MELCHETT: Yes, and somebody —either a noble Lord sitting on the Cross-Benches or one of my noble friends —has made the point that there have been occasions today when we have spent such a long time on Amendments which did not warrant it that it will be difficult to use time sensibly. I say frankly to noble Lords opposite that the only response which I and my noble friends can make if debates are, as it seems to us, very greatly extended beyond what is reasonable is simply to sit here and not say anything, and that cannot possibly help the process which both the noble Baroness and I would like to see of a proper consideration of the Bill. There comes a time during a debate which has gone on for a certain length of time when the only response that I feel I can sensibly make, without helping noble Lords to prolong matters, is to sit still. I do not like doing that because it is not a constructive way to look at a Bill and, with the noble Baroness, I hope that we can all use our time more profitably by addressing ourselves to the main issues.
The noble Lord asked me about what the report in the Sun said about the headquarters of British Shipbuilders. The noble Lord will have seen that in answering a question in another place last week my honourable friend the Minister of State said that, although a decision had not yet been made, it would be made as soon as possible and that the decision would be made public as soon as possible. The situation remains as it was last week when that question was asked.
11.22 p.m.
Lord ORR-EWING: I was interested to hear from the noble Lord that after 25 hours during which we have not had a single concession from the Government he is not persuaded by any of the arguments, points or Amendments which have been made during those 25 hours but that he says he may be persuaded by future arguments.
Lord MELCHETT: No. I said that there are other bits of the Bill which were not so extensively discussed in another place, since they had fallen under the guillotine procedure, which we have not yet reached, whereas the bits of the Bill we have discussed so far were discussed fairly fully during both the Committee and Report stages in another place. However, we have undertaken to consider various points. As the noble Earl, Lord Onslow, will remember, we were rebuked, although I accept that subsequently he withdrew the rebuke, for offering to consider one Amendment.
Lord ORR-EWING: I am grateful to the noble Lord for having clarified the position. It seemed to me that he was saying that so far he had not been persuaded about a single jot or tittle but that he might be persuaded in the future. I concede that we want to leave time for the Amendments which have not yet been discussed, but since July I have no doubt that the Government have been considering very carefully how they could improve the Bill and I hope that we have put forward certain suggestions which have helped them in that process. Here, however, we are discussing the Question, Whether Clause 5 shall stand part?
The Government Memorandum accompanying the Bill speaks of "the most efficient organisation". In my terms that means cost effectiveness; that is the only way that we have discovered in our modern society of measuring efficiency. You have the social consequences as well, and of course I accept that. However, I cannot believe that cost effectiveness means producing seven major Bills in your Lordships' House with seven weeks to go. It does not seem to me to be either efficient or cost effective, and if we are not giving to those Bills all the consideration that we should it is because we are being asked to revise in a hurry something which would normally take the whole of a Session in this House—because we are being asked to do it in seven weeks. Certainly it is totally against the spirit of democracy when there is a minority Government and a minority within that minority which is trying to provide Left-wing policies.
In his book Sir Ronald Edwards, who was closely concerned with the nationalisation of the electricity industry, said that
938
"as precise a definition as possible in the Act of the tasks and duties of a statutory body is essential to efficiency". I think that is a good point and I hope that when we discuss decentralisation, as we have been doing in this clause, we shall discuss all the ways in which it can be achieved. I hope that the organisation will be encouraged to put a lot out to contract, but I am reminded of the fact that one has to remember that there is a very strong purchasing power in the hands of the chief purchasing officers of nationalised industries. As a member of the Royal Commission on Standards of Conduct in Public Life I am mindful of the fact that in some of these nationalised industries there was some slippage from the high degree of integrity which one hopes to have in all industry, and particulary in nationalised industries. So I hope we shall have no further lack of integrity in those areas.
In this nationalised industry we are dealing with something far more complicated than we have ever dealt with before. In my 20 years in another place and five years as a candidate I have watched various nationalisation measures going through, and on the whole they were dealing with simple things, like coal or gas or electricity, more or less homogeneous units. Then we had steel, which can be made in various grades and sizes—I hope all of them metric! Then we had railways and 'buses and freight. I will not go over them all because I might be accused of "spinning it out", but every single one is now making a loss. So on cost efficiency they are not frightfully good examples of how to run a business. We are now trying to concentrate our minds on how to do better in future.
Here we have possibly the most complicated nationalisation measure because we are dealing with products which are so very different. They are not simple, as were the others. In ships we have cargo ships, warships, tankers, liquid gas carriers, container ships, all sorts of auxiliary ships, tugs—a whole host of different ships with totally different technologies. If we go to aircraft it is even more so. There is the military aircraft, with its tremendous concentration on technology and its high speed characteristics, and of course its ability to fly in the most difficult environment and

939
through nuclear clouds and through the worst of weather, and to find its way to the target and back.
We have been concentrating on decentralisation and the tasks of the Corporations. I have been looking through the Bill and it rather terrifies me because the tasks are legion. We have been told that there are to be only a very small number in the headquarters. I know the noble Lord, Lord Beswick, believes this sincerely and I am sure he will try to achieve it. But look at the tasks and remember that there will have to be the headquarters, big or small; there will have to be the regional headquarters, and presumably there will have to be local management headquarters in the various firms.
Then look at the tasks that they have to undertake. I think the whole is covered by the term "management audit". There are the management activities of the Corporations—they have to be looked into and defined in the Bill. There is the process of industrial democracy—defined in the Bill. There is the decentralisation of management. There is the decentralisation and creation of separate profit centres. There is the formulation and the implementation of an investment programme. Goodness knows! we have been told that this is a gargantuan task—the investment programme for the whole of shipbuilding, ship repairing, marine engine building, and the like. There is the manpower planning; there is the recruiting and the training of manpower, all to be done by the headquarters and the regional centres. There is the whole of industrial relations—and God knows! that is important enough and perhaps especially important in shipbuilding; and there is the financial performance.
Looking at the profit centres, I have tried to analyse the sort of profit centres there might be. There are 19 shipbuilding firms and each one of them, I would suggest, cannot have less than 10 profit centres. So that is a total of 190 profit centres to cope with. There are 12 ship-repairers. I would suggest that each one of those 12 ship repairers has at least five profit centres, making a total of 60. There are eight slow-speed diesel manufacturers, and I would suggest, again from experience, that they must have at least
940
five profit centres. So in fact there are 290 profit centres under the shipbuilding Corporation alone, and I suggest that I am under-estimating rather than over-estimating.
Now we come to where these are to be sited. I know that there will be tremendous pressures. I am delighted to hear from the Minister that the headquarters of these two Corporations will be announced relatively soon—I hope in time to discuss it in this House or in another place. Then there will be the regional centres. Where will they be? Before the Bill finally receives the Royal Assent, perhaps we may be told at least where the headquarters will be.
I wish the Corporations well, but I am mindful of the fact that we look to see through past experience that there was going to be a small headquarters in London, and what was a small headquarters becomes Hobart House, which becomes Coal House, which becomes an enormous headquarters with an immense staff and satellite headquarters round it. Every time this intention has been declared as we nationalize—and I am sure people sincerely believe this is going to be small—Parkinson's Law begins to act, and up and up builds the snowball and more and more people sit in offices trying to control it, to monitor it and prepare reports, as is laid down in the Bill. I wish them well, but would say to any Government that they will have to watch the growth of administration desperately carefully. The whole country at present is suffering because we have 1·9 administrators on the backs of a very small industrial production, and it is that which is sinking this country financially, economically, and making the pound go lower every day.
11.32 p.m.
The Earl of ONSLOW: I rise to underline what the noble Lord, Lord Orr-Ewing, has said. I am not doing this in the sense of Fabius Maximus Cunctator, but in the hope of producing a slightly different aspect of it. When the headquarters of British Shipbuilders is announced, can we not have a guarantee from the Government that there will be no increase whatsoever in office space required? In other words, it will be announced, and some other office space owned by one of the present companies to be nationalised will be released,

941
because it cannot make sense to have the offices of all the present shipbuilding companies, all the present aircraft companies, and then put yet another layer of office people on top of it. That must be wise. We cannot afford it, and we are really up against it financially. So it seems to me they should make it a simple rule that there will be no extra office space bought. Especially since the Government have stated there will be redundancies on the shop floor, it cannot be right to increase office space and decrease factory investment in actual productive workers. To do so would be dotty.
Lord MELCHETT: I certainly think the second point put forward by the noble Earl, Lord Onslow, is a very strong point. The noble Lord, Lord Beswick, has already made the point on the aerospace side that he does not see the need for new office space, and that existing facilities will be used. I will certainly put the point to my right honourable friend and honourable friends so far as the shipbuilders are concerned, but I think the noble Earl will accept that it should be a matter for the Organising Committee in the first place. No doubt they will take careful note of what he has said.
My response to the noble Lord, Lord Orr-Ewing, would be that I accept that it would be very desirable for your Lordships, before the Bill leaves your Lordships' House, to know where the headquarters will be. I will certainly convey that thought to my right honourable friend to see what we can possibly do before the Bill goes back to another place.
The Earl of LAUDERDALE: One merit about the Motion, That the Clause stand part, is that at least it is an amended clause. I rather detected in the earlier response of the noble Lord, Lord Melchett, a certain—I would not say impatience, but a certain sadness that we were not apparently moving as fast as he would like. I think he even said that if we persisted in discussing matters in the way we have done, all he could do was to sit tight and say nowt. He quoted The Times, and perhaps I may invite him to re-read the leader in The Times to which he referred. I quote:
"None of the Bills before the Lords is vital to the national interest at a time of great economic peril. Some will be positively damaging; others will be irrelevant. Many of them will help to
942
confirm the impression that is so damaging to the Government in the country and abroad; namely, that they are forced to implement a portion of Left-Wing measures that are not at all to the taste of most Ministers as the price of preserving a semblance of Party unity."
The noble Lord introduced The Times leader, and I dare say it is important for the record, but for the spiritual improvement of noble Lords opposite they should be made to drink their own medicine. The leader goes on:
"The important principle is that the legislative process must not be impaired."
I do not quite know what was the inwardness of the noble Lord's meaning when he referred to time. I am not aware of any constitutional reason why this particular Session has to be ended and the next has to he started on a particular day. It is not for the convenience of the Royal Mews. Parliament can be opened by a Royal Commission. So the whole idea that we are up against a deadline, if we are, is entirely of Ministers' choosing, and it is for them to enjoy their medicine. If they are now finding it bitter, then so be it.
There were two main matters on this clause which I was concerned with and which I do not think have been properly answered. There was the whole question of efficiency. We got no answer whatsoever. It may well be that there is no answer.
Lord MELCHETT: The answer is that I think I am right in saying that the noble Earl was not here when we had a debate on the Amendment which covered the particular point. Noble Lords opposite who were here may well say that even then we did not get an answer, but we did discuss it at length and I did not feel it right to go over that ground yet again.
The Earl of LAUDERDALE: I appreciate that the noble Lord has been working so hard that he is a little myopic and does not see even my large bulk, but I was in fact here throughout the discussion of the clause we are talking about. The short point is that the term "efficiency" has not been satisfactorily explained. It is in a passage now happily eliminated from the Bill. But what one really complains about is the lack of a proper answer.

943
Then there is the question of decentralisation. I raised the question of shipbuilding being treated as one activity. There is Vosper in Portsmouth; there is Yarrow in Glasgow. Is either to be subject to a distinct Scottish or English division, with pricing policy? And what about naval shipbuilding? That simply was not answered. That is why—since, as I say, there is no constitutional reason why we should worry about time—I return to the matter. If the noble Lord is going to go on saying "You did", "I did not", "You did", "I did not"; if that is going to be the performance, I must say to noble Lords opposite—all of whom, so far as I know them personally, I regard as Parliamentary friends and indeed personal friends—that is not good enough and it will be resisted and fought. And it will be seen by the public, to be resisted and fought, because although our proceedings are not widely reported in the ordinary generality of events, they are when things are moving to a crisis and a clash. Therefore, I beg noble Lords opposite—and particularly the noble Lord, Lord Melchett, who, if I may say so without appearing in any way to patronise, has such a future in this House; we all admire his perfomance, we like him, he has immense ability—for Heaven's sake! listen to what the Opposition say; one day he will be leading the Opposition. We are not just trying to barrack and be tiresome. There is the whole question of industrial democracy which was not properly covered. The way it is presented by the Government, industrial democracy is for the so-called relevant trade unions only.
I quoted 1984, "Some are more equal than others". One might quote another allusion to democracy; namely, that the democratic system is Government of the people, for the people, by the people—and to hell with the people! They are proposing an industrial democracy which is to hell with a certain part, perhaps 30 per cent., of the labour force. Is this to be the democracy of the cemetery, and the equality of the slaughterhouse? We did not have proper answers on that, and that is why I draw attention to these matters, and it is important for the record because these records are going to be looked at.
The fate of this Bill is not a trivial matter. It is possibly going to be of
944
constitutional importance. In the matter of industrial democracy we have had this large phrase used, and there is nothing to tell us, from what the Government have said today, whether that has any relevance to all workers being shareholders, to worker directors, to the basis on which they are elected, or to full disclosure of the company accounts to the work force. There are noble Lords opposite for whom we have the greatest respect, and it would be invidious and might damage their reputation if I were to identify them by name, but there are certain noble Lords opposite whom we trust and respect from the bottom of our hearts, but it is no good the Front Bench trying to brush this off and fail to meet the issue.
Before we pass this amended clause, I hope that as the days wear on, even if not as this night wears on, the Front Bench opposite will modify their stance a little. Perhaps an occasional resort to the bar will cheer them up and make them more willing to be open minded. There is no Government by sheer confrontation. It is what they have told us all the time, and what we must remind them of.
11.43 p.m.
Lord WYNNE-JONES: If I may refer to my noble comrade in arms who has just spoken (on so many occasions we find ourselves in agreement), on this occasion he has offered—I am not certain whether it was spirituous or spiritual consolation, but I would take it in either sense. The arguments that are used about this Bill are quite extraordinary. I listened to the noble Lord, Lord Orr-Ewing, and I wondered whether the great firm of ICI possibly existed, because it was impossible to have such a vast organisation with a whole lot of units. ICI has 11—or is it 13?—separate divisions. It deals with an enormous mass of employees, with a range of activities far greater than that of the shipbuilding industry. It deals with a total amount of profit infinitely greater than the shipbuilding industry has ever thought of; and we are told that this is impossible, and that it cannot be done.
Lord ORR-EWING: I was saying that the track record of nationalised industries over the last 30 years has shown that it cannot be done. I am hopeful that perhaps at some stage it can be done.

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There is no nationalised industry which has consistently made a profit. I have all the records here. I would not bore the Committee by giving all the profit records over the last five years, but look at the record and that is what you will find. If you could only simulate and reproduce the competitive spirit which exists in ICI! because if they do not compete with the great chemical firms in Western Europe they will be bankrupt. They are not protected. They are not a monopoly. They are very competitive, highly geared and extremely sensitive to competition.
Lord WYNNE-JONES: That is all very well, but the noble Lord quoted the number of units in the shipbuilding industry and said it was impossible to have that number brought together. I am saying that ICI has done it and I would go further and point to the mining industry.
Baroness SEEAR: Before the noble Lord does that, may I reinforce what the noble Lord, Lord Orr-Ewing, said, because I do not think he was referring to the possibility or impossibility of operating on that sort of scale? He was saying that it had not been done under nationalisation. If one looks at the figures of the return on capital published on Friday one sees that the return from 1970 to 1975 for every nationalised industry was such that if it had been ICI's return on capital, ICI could not have become the size it is today.
Lord WYNNE-JONES: It is difficult to make a coherent argument if one is constantly interrupted. I am in the middle of making a point and I have given way twice. Unless the noble Baroness thinks that nobody else should be allowed to make a point, I hope she will allow me to complete mine. The noble Lord, Lord Orr-Ewing, referred to the size of the organisation and quoted the number of units. I am saying that the number of units is no greater than the number brought together in ICI and that therefore such an argument is not relevant to what we are discussion. If it is said that it is impossible for a nationalised industry to do it, then the noble Lord is on very strange ground.
I went to the City of Newcastle in 1947 when the coal industry was brought under national control. The first thing that happened was exactly the opposite to what Lord Orr-Ewing described; instead
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of there being a completely new and large organisation created, many minor organisations were brought into one. I happened to be interested in the research side. There were in the coal industry a number of minor and highly inefficient research groups, extravagantly run, and they were brought together and made into one centralised coal research organisation at Stoke Orchard near Cheltenham. This illustrates that what happens is quite the contrary to what Lord Orr-Ewing described. He spoke of the creation of a vast organisation with the dissipation of effort. The reverse happens; there is a concentration of effort and the very people who are concentrated squeak about it, saying, "Look what nationalisation has done". Noble Lords opposite cannot have it both ways. All the time, what they are doing is to say, on the one hand, that nationalisation is extravagant and, on the other, that nationalisation takes away work and destroys the number of jobs. It does. It destroys the number of jobs for their boys. The general effect, so far from being what they are suggesting, is the exact opposite.
The Earl of ONSLOW: Would the noble Lord just define who are "their boys"?
Lord WYNNE-JONES: Your boys.
Lord HARMAR-NICHOLLS: I should like to congratulate the noble Lord on his eloquence. He clearly thinks that Clause 5 is good and ought not to be criticised. That is his point of view. It is not my view nor that of my noble friends. I should like to contest the principle that the noble Lord, Lord Melchett, has tried to maintain. What he tried to say was that because this clause had been well discussed in the other place, we ought not to discuss it at length.
Lord MELCHETT: No. I did not. I was merely, very quietly and I hope without creating too much fuss, trying to make the point that there were parts of the Bill that had been very extensively discussed both in Committee and at Report in the other place and other parts which fell under the guillotine at Report stage and which we have not yet reached. They concern compensation on the whole. I was merely making the point—and I did

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not expect very much to be made of it—that when we reached the points that had fallen under the guillotine, I would naturally expect there to be more that needed to be considered again by my noble friends and myself, more that needed to be taken back, more Amendments that needed to be accepted. That was the only point I was trying to make.
Lord HARMAR-NICHOLLS: But, if the noble Lord was not saying that we ought not to take up time on Clause 5 because he thinks that it would be better to spend that time on those clauses which came under the guillotine, what was he saying?
Lord MELCHETT: It is entirely for the Committee how it spends its time: it has nothing to do with me.
Lord HARMAR-NICHOLLS: But the noble Lord said that if we went on at that sort of length on clauses such as Clause 5 that had been discussed in the other place he would sit silent and not answer. The whole impression of what he was trying to lay down as a principle was that parts of this Bill that had been discussed at length in another place ought not to be discussed at full length in this House, whatever we felt about them, and that we ought to concentrate whatever time we decided to allocate to those parts of the Bill that came under the guillotine. I want to contest that principle and I am glad that the noble Lord has now gone to the Box to say that that is not what he meant. The reason that we and the other place have spent so much time on Clause 5 is that it seems to embody principles which we think can be terribly dangerous to an important part of the economic sector of the country.
The object of a Second Chamber—whether it be your Lordships' House as it is now constituted or any Second Chamber—is, in the light of what has gone on in the past, to emphasise that part of a Bill which both Houses deem to be important and worthy of detailed consideration. We are a revising Chamber, it is said by some who defend our position. It is our duty to try to revise the Bill and Clause 5 in some way that will make it more acceptable if we have to tolerate the danger of these industries being nationalised at all.
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It may well be that, on other parts of the Bill, the noble Lord will find that those clauses upon which they spoke at length in the other place are the very clauses upon which we shall speak at length in this House. In doing so, we shall be doing no more than our duty. I am delighted to associate myself with the personal tribute paid to the noble Lord by my noble friend Lord Onslow: I think that he shows signs of having done his homework and has shown a skill and aptitude which are much to his credit. But I believe that the good reputation that he has earned up to now will be spoilt if he does not recognise that it is that part of the Bill which excited the other place which is most likely to excite this House, too. It is our duty to revise it if we cannot kill it and it does not look as if we were going to be able to do that. If we can send it back marginally better than it came to us because we talk at greater length than they did, then we shall have done our duty.
11.55 p.m.
Baroness WARD of NORTH TYNESIDE: I am very anxious to say a word or two to the noble Lord, Lord Cooper of Stockton Heath. He complained, quite rightly, because it is very annoying for people to keep on interrupting, so I did not interrupt. I wanted to get up and have a word with the noble Lord, but my noble friend behind me was not going to let me have the chance of being polite. I thought that I was being extremely polite, but it did not pay me to be so, but perhaps it did a little bit of good. It was not that I wanted to help the noble Lord, Lord Cooper of Stockton Heath; I did not. But I thought that I would be polite. I want to say one thing about the mining industry. Was the noble Lord really saying that he went to Newcastle-on-Tyne, or to Newcastle-under-Lyme?
Lord WYNNE-JONES: Newcastle-on-Tyne.
Baroness WARD of NORTH TYNESIDE: Jolly good! It was the real one, Newcastle-on-Tyne. I do not know whether the noble Lord was concerned about his arrival in Newcastle-on-Tyne, but he spoke about what he called the advantage of nationalisation in terms of all the mines around Newcastle-on-Tyne. There are a tremendous number of mines in that area—

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I probably know more about that than he does—if one includes Durham county as well.
The noble Lord said that the great advantage was that all the mines were brought together, but he seemed to forget, or he did not know, that the Newcastle and Durham coalfields were established very early. Therefore they were not established with the kind of modern machinery which one finds in Bolsover, with which I had some connection for very many years. I know all about Bolsover and about the advantages which Bolsover had compared with Newcastleon-Tyne. In fact, what happened in Newcastle-on-Tyne was that most of the mines were worked out and so most of them had to be closed down. So if the noble Lord thought that nationalisation was the way to bring the mines together then he had a very funny idea about the situation.
I have spent a lot of time crawling on my front up to the coalface in the Ashington pits. It is true that the pits in the Ashington group were modern and they had reasonably good coal. The Ashington group has gone on very well indeed, and that was not at all due to nationalisation. It was due to the fact that those pits happened to have a lot of coal which had not been dug by the time the Government nationalised Ashington.
Although the miners would not really support me hardly at all, I am very devoted to them. They are absolutely grand people. I do not know how old the noble Lord, Lord Cooper of Stockton Heath is; perhaps that is a rather difficult question to ask. But I have lived a very long time, and I remember that in two world wars we had to stop the miners recruiting—
The Earl of ONSLOW: May I interrupt the noble Baroness? It is terribly rude of me to say this, but I must say, with the greatest respect to my favourite Lady on our side, that we are not discussing mines; we are discussing shipbuilding, and the Government are getting slightly cross with us for filibustering. I hate doing this, and I do not think we are filibustering, but please—
Baroness WARD of NORTH TYNESIDE: Would the noble Earl kindly allow
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me to make my speech? He has had a great deal to say, to which I have listened with great interest, but there is no reason at all why in this Chamber I should not answer somebody who talks about the area in which I live and which I have represented for a very long time—38 years—in the House of Commons. Therefore I know something about it, and I am not going to allow any noble Lord, whether he be on this side of the Committee or the other side, to say things about my area without getting up to say what I think. I shall continue to do that, and I say to the noble Earl and indeed to my noble friend behind me that I am just as interested in shipbuilding as most noble Lords. Wallsend-on-Tyne, which I represented, has some of the biggest shipbuilding firms in the country, and I want them to continue, although they are not so likely to continue under nationalisation. There is no reason at all why I should not speak if the noble Lord opposite is going to talk about the mining industry in support of the noble Lord, Lord Melchett, whom I think is a very nice young man. I do not think he is particularly capable. I am in a position, as an ordinary individual, to like people whatever their politics. At the same time I should like to say some of the things that I want to say and, therefore, I go back to the noble Lord, Lord Cooper.
Lord COOPER of STOCKTON HEATH: In fear and trepidation may correct the noble Baroness, to say that I am Lord Cooper and that she is directing her remarks to another noble Lord.
Baroness WARD of NORTH TYNESIDE: I asked him whether his name was Lord Cooper and lie said it was. I am not going to talk any longer, whatever he said about mining—in support of nationalisation, I gather. I am against the nationalisation of shipbuilding. I have done as much as most noble Lords to deal with it in my own part of the world. Fortunately, my own part of the world—although they do not always like what I do or say—at least kept me in power in another place for 38 years. I do know something, therefore, of what I am talking about. I am not going to allow anybody to make comments about the miners in the part of the world which I represent, without my getting up and saying what I think

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about the miners. I shall not go on talking about that but I say to this Committee that if I want to speak and I want to say what I want to say, then I shall say it.
Lord MELCHETT: I think the noble Baroness had made that quite clear. I am overwhelmed by the compliments which have been paid to me, not only by the noble Baroness but by the noble Lord, Lord Harmar-Nicholls, and the noble Earl, Lord Lauderdale. I thank them all very much. I do not know what I have done to deserve it. I dread to think what I might have done to deserve it indeed. I apologise to the noble Earl, Lord Lauderdale—to get back for a moment to Clause 5 stand part—for the fact that I did not satisfy him on the various items which he mentioned, in particular our discussion on industrial democracy. But in fairness I think he would concede that I mentioned that two questions he asked, concerning workers owning the shares or mere consultation, were two examples I gave in my own speech on that particular Amendment, which no doubt he will remember, of the range that industrial democracy could cover.
I apologise if my explanations on the particular points have not been sufficient, but I can assure him that I am doing my best. I know my noble friends are doing much better at satisfying noble Lords opposite on points they have raised. We are certainly doing our best and can assure the noble Earl that we will continue to do so. On the two substantive points which have been raised on Clause 5 stand part—the request of the noble Lord, Lord Orr-Ewing that we should have an announcement on the location for British Shipbuilders and the request of the noble Earl, Lord Onslow, that it should involve no new offices—I have given an undertaking already to take up both of those points very seriously and to take the matter to my right honourable friend. I hope that we can now get back to Clause 5 stand part.
Lord ORR-EWING: Would the noble Lord allow me? He raised the point that it would be helpful if we got on to the clauses which were not discussed in the House of Commons in the Report stage. I would remind him that Clauses 5, 6,
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7 and on to 18 were not discussed in the Report stage, so we are on a clause which was guillotined. Perhaps therefore he would be ready to give way as he suggested he might do on those clauses which had been guillotined and not discussed.
Viscount BROOKEBOROUGH: I was happy at the end about this question of decentralisation until the noble Lord, Lord Wynne-Jones, started talking about the concentration of research. I have very little experience of research in the shipbuilding industry, but I know a little about the pharmaceutical industries, and one of the things that has been proved time and time again is the great importance of having individual centres operating almost directly in competition. I would very much feel it not to be in keeping with the philosophy of decentralisation if the first thing that is to happen on this Bill, the moment nationalisation occurs, is that all research will be concentrated. I did not hear the noble Lord the Minister deny that concept which his noble friend behind raised.
Lord CAMPBELL of CROY: I think the noble Lord, Lord Melchett, deserves compliments, certainly so far as I am concerned. started this debate on the Question, Whether Clause 5 shall stand part?, by putting two or three questions to him about the immediate future so far as British Shipbuilders are concerned in relation to this clause. I am grateful to him, because he gave as much information as he apparently could. First of all, he told us that it was intended that the vesting date should be as soon as possible after Royal Assent if the Bill goes through; and, secondly, he said that we were still awaiting a decision as to what part of the country the headquarters of British Shipbuilders were to be located. This clause requires British Shipbuilders to produce their first report forthwith, as soon as possible after vesting date; and, therefore, he has presented us with the information, and confirmed, that British Shipbuilders will have a good deal of leeway to make up. Their first review and report will be required immediately after vesting date, and they still do not know even where their headquarters are going to be—and I do not mean what part of London: I mean what part of the country. The noble Lord also said that it was the intention of the Government, if possible,

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to announce where the headquarters of British Shipbuilders would be before the Bill left your Lordships' House; and, again, we naturally welcome that and are glad to know that that is the intention of the Government.
Clause 5, as amended, agreed to.
Clause 6 [Machinery for settling terms and conditions of employment etc.]:
Viscount SIMON Viscount SIMON had given Notice of his intention to move Amendment No. 92:
Page 9, line 34, leave out ("consult ") and insert ("seek consultation with").
The noble Viscount said: This Amendment is similar to Amendment No. 84. On that Amendment, the noble Lord, Lord Winterbottom, kindly said that he would refer the matter back and look into it, and I assume that his assurance covers this Amendment as well. I therefore do not propose to move it.
12.7 a.m.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 92:
Page 9, line 35, after ("union") insert ("or professional organisation").
The noble Lord said: The purpose of this Amendment is to increase the duties of each of the Corporations by making it a duty of each of them in the context of Clause 6 that the Corporation should consult not only "any relevant trade union" but also the relevant professional associations. The arguments in favour of this form of Amendment have already been canvassed at considerable length under Clause 5 in Amendment No. 86, which this Committee carried, and I therefore do not propose at this stage to talk at any greath length about the desirability of consulting professional organisations of which engineers, designers and people of that kind will be members as employees of the two Corporations.
It may also save the time of the Government if I ask leave of the Committee to speak to Amendment No. 94, which is a consequential Amendment in relation to Amendment No. 93, and also Amendment No. 103, where, again, the purpose is to increase the duties of the Corporations
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by ensuring that they consult not only the trade unions but also, again, the professional organisations. The desirability of the professional organisations being consulted under Amendment No. 103, in the context of Clause 7, is even greater than it is in the context of either Clause 5 or Clause 6, because in Clause 7 a direct reference is made to the desirability of consultation in regard to research and development, in which, of course, the engineers and the designers will be closely concerned. Therefore, with that, I hope, short introduction, I beg to move Amendment No. 93.
Lord MELCHETT: It may be to the convenience of the Committee if I made it clear that, in view of the fact that we divided on Amendment No. 86 and it was carried, I would not oppose what seem to me to be consequential Amendments on exactly the same point; that is, Amendment No. 93, which the noble Lord has now moved, and Amendments Nos. 94 and 103.
Lord CARR of HADLEY: I think there is a difference here, and I apologise to the noble Lord, Lord Lloyd of Kilgerran, if there has been any misunderstanding between us about this. In my earlier speech I drew this very sharp distinction between consultation and negotiation. Of course, here we have a clause dealing with collective bargaining.
Quite apart from what the relevant trade unions or the Government may wish, I must say to the noble Lord, Lord Lloyd of Kilgerran, that all the professional organisations that I know have, in their terms of reference, their charters, or whatever they may be, words which specifically exclude them from being able to participate in collective bargaining. I think that we should gravely embarrass the professional organisations if we write them in here—even if I thought it right; which 1 do not. I did think so in relation to consultation but not in relation to collective bargaining. I wonder whether the noble Lord, Lord Lloyd of Kilgerran, might reconsider the matter in the light of what I have said.
Lord LLOYD of KILGERRAN: I am grateful to the noble Lord, Lord Carr of Hadley, for having said that there was some misunderstanding. I deliberately

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asked him a few minutes ago whether he was in favour of and would support this Amendment. Now that he has spoken, it seems to me that, with respect, he has misunderstood the conditions of Clause 6 in relation to these matters of consultation. It specifically says in subsection (2)(c):
"the promotion and encouragement of measures affecting efficiency, in any respect, in the carrying on of their activities by the Corporation …".
May I remind the noble Lord, Lord Carr, that the duties of the Corporation are to be found in subsections (1) and (2) of Clause 2 referring to "the efficient and economical design"—efficiency in development, efficiency in production, and so on.
Therefore in respect of all those aspects, I would remind the noble Lord, Lord Carr, that it is "efficiency, in any respect" that is referred to in Clause 6 and that the "efficiency, in any respect" includes efficiency in the matters I have enumerated and will involve the engineers and designers in their activities. Therefore it is proper that professional organisations should be added to the words "trade unions" to enable consultations to take place bringing in the engineers and designers et cetera, people who may not be members of the trade union, in accordance with the argument I have already put in respect of the other clause.
Lord CARR of HADLEY: I apologise again to the noble Lord, Lord Lloyd of Kilgerran. He spoke to me and I apologise for the fact that I failed to note that this came within Clause 6. I ask him to consider the matter carefully. It is his affair; but for the reasons I have given I could not advise my noble friends to go into the Lobby with him on this occasion. Although I agree with part of what he has said, if he looks at the next Amendment in the name of my noble friends and myself he will see that there we are deliberately limiting what we want done to paragraphs (c) and (d) of subsection (2) of this clause—which are not the ones involved with collective bargaining.
It is for the noble Lord and his noble friends to decide, but if we were to be successful in getting our next Amendment accepted it could be appropriate perhaps at Report stage to move "professional
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organisations" into the new subsection (1A). We should then be limiting the professional organisations to the consultative parts of this clause and not to the collective bargaining parts.
What I am concerned about is that if we move it, as the noble Lord suggests, without qualifying it as our next Amendment would qualify it, we shall actually be bringing grave embarrassment to the professional organisations involved, many of whose charters specifically forbid them to enter into the sort of activities described in paragraphs (a) and (b). I did not spot this when speaking to the noble Lord earlier.
Lord COOPER of STOCKTON HEATH: I draw the attention of the Committee to the heading of Clause 6:
"Machinery for settling terms and conditions of employment".
Clearly that is negotiation and not consultation.
Lord LLOYD of KILGERRAN: May I remind the noble Lord that the heading of Clause 6 in my draft of the Bill says:
"Machinery for settling terms and conditions of employment etc"
Although the terms of employment are referred to in paragraph (a) of subsection (2), paragraphs (c) and (d) deal with other matters entirely. Therefore, the scope of Clause 6 is far wider than the noble Lord, Lord Cooper, indicates.
12.17 a.m.
Lord CARR of HADLEY Lord CARR of HADLEY moved Amendment No. 95:
Page 9, line 39, at end insert—
("(1A) It shall be the duty of each Corporation to seek consultation with other organisations not being relevant trade unions, as appear to it to represent substantial proportions of the persons or of any class of persons in the employment of the Corporation or any of its wholly owned subsidiaries for the purposes specified in paragraphs (c) and (d) of subsection (2) below.").
The noble Lord said: This, again, is another of our industrial democracy Amendments. We propose that a whole new range of people, in addition to those covered by the definition of "relevant trade unions" should be involved, but involved only in part of the purposes

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specified in Clause 6. I should like to reinforce the importance of the word "et cetera", to which the noble Lord, Lord Lloyd of Kilgerran, has recently drawn attention in the marginal title of this clause. If the noble Lords, and particularly the noble Lord, Lord Cooper, will read subsection (1), they will see that the first objective of this clause is that there should be consultation on a number of issues. The objects of the consultation or the desired outcomes of the consultation are then defined in subsection (2). Paragraphs (a) and (b) are undoubtedly what I would call industrial relations matters, clear and simple. There it is proper that those should be confined to relevant trade unions. I shall return to that briefly in a moment.
Unless and until some of the other organisations, about which we talk in our Amendment, succeed in becoming relevant trade unions, I do not think that they can expect to participate in paragraphs (a) and (b). However, they can expect to participate in the consultation leading to paragraphs (c) and (d):
"(c) the promotion and encouragement of measures affecting efficiency, in any respect, in the carrying on of their activities by the Corporation and its wholly owned subsidiaries, and
"(d) the discussion of other matters of mutual interest to the parties to the agreements."
Organisations representing a great bulk of the 30 per cent. of the labour force at all levels in these Corporations that are not covered by the relevant trade unions really should be party to this. Let us take the basic terms and conditions point. Of course I accept that in many companies where the closed shop does not exist, but where there is union recognition and collective bargaining, the terms settled by collective bargaining for the union members are then subsumed into the individual contract of employment of relevant grades of those members of the labour force who are not unionised. That is very well-established custom and practice in British industry.
On consultations, those who will not have the chance at present to participate directly in collective bargaining should at least be able to participate in the consultation, as is suggested here. Secondly,
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paragraph (c), if we are to consult about the:
"promotion and encouragement of measures affecting efficiency, in any respect…"
it is absolute nonsense to have consultations about the right sort of structure for collective bargaining and not to listen at least to the views of such vital portions of the work force in these Corporations that are not at present covered by this phrase "relevant trade unions".
Many of the organisations involved have felt great satisfaction that my noble friends, I and others have put down, supported and carried Amendments to bring them into the consultative process; but they have expressed grave disappointment to me—I received a letter this morning—that we are not doing the same in bringing them into the collective bargaining process. I said to them privately, and I must say again to the Committee, that I am afraid I cannot support that because one must confine the actual collective bargaining process to relevant trade unions. They have a proper course, proper machinery, for seeking to become recognised. In order to be relevant, they have first of all to be independent and to satisfy everybody that they are genuinely independent. Having done that, they have to seek recognition. Machinery is laid down whereby they can seek recognition. I doubt whether we would or could do anything to help them other than advise them to take that course.
We should involve them in the consultation. It is right to exclude them from the actual joint consultation unless or until they become recognised. They say, I imagine, to that: "This might be all right if we had any reasonable confidence that our claim for recognition would be judged with equity and impartiality". They are sceptical about that. I must, I am afraid, say to them: "You may be sceptical; but you must first of all put the agreed procedures to the test, because I do not think that it is right for us to assume that you will not get a fair hearing and a fair judgment by the machinery laid down until you have tried it". If they try it and there is a general feeling that they are not fairly and properly considered, Parliament at some stage will have to do something about it. At this stage they must first become independent

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and then try the machinery laid down to enable them to become recognised. Until they have done that, I do not think that it is right for us to try to push them into the negotiating machinery.
I wish to move the Amendment, making it quite clear that it is a deliberate act, for the reasons that I have explained now and earlier, to give them only limited inclusion under this clause. On that basis, I hope that the Government this time will consider the need, if we are going to have a good spirit from the beginning in these Corporations, to allow the consultative process to go right across the field and not be limited to relevant trade unions who, whatever their mertis, do not—and they know in their hearts cannot—claim to represent adequately large and important sections of the labour force in these Corporations. I beg to move.
12.23 a.m.
Lord MELCHETT: Again as the noble Lord, Lord Carr of Hadley, has made clear, it seems that the Amendment covers the same ground upon which the Committee divided on Amendment No. 85, and I daresay the same thing will apply to Amendment No. 104 which is in exactly the same terms. I do not think it right for me to seek to divide the Committee again on what is substantially the same point. As the noble Lord knows, and as my noble friend Lord Cooper made clear, we would not draw the same sharp distinction as the noble Lord has drawn between consultation and collective bargaining. Since this Amendment strikes exactly the same points, I think it would be sensible to allow it to go through on the basis of the Division on Amendment No. 85.
Lord ORR-EWING: Clause 6 is another of the clauses which was not discussed or debated at all in the House of Commons at Report stage. Also, in the Explanatory Memorandum it specifically says under Clause 6
"the discussion of matters of mutual interest…"
That was clearly the intention when the Bill started. It may have fallen by the wayside during the Committee stage.
I should also like to draw attention to the fact that the CBI submitted a serious memorandum, some 20 pages long, to
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the Bullock Committee. It emphasised the need for all working people to have a chance to participate in discussions about the objectives and financial positions of firms and in everything which affected the future. Therefore, I think it is important that all be included rather than separating one section from another. I hope that the Minister will make these representations. We do not, presumably, want a confrontation between the CBI's recommendation and the TUC's views. We are trying to see a modus vivendi for this new organisation. We hope that the Government will give way on this matter.
Baroness SEEAR: In an attempt to clarify the situation, I wish to probe whether the Government can give us some help. It seems to me that the real difficulty arises in that the Government are, in many ways rightly, trying to extend the area over which there shall be joint regulation, covering efficiency and all the other matters that have been mentioned. I think that a great many of us would support this. However, while doing this the Government, in the view of many of us at any rate, appear to be narrowing the range of people who can take part in these extended consultations. If the Government could encourage us to believe that there was a possibility that this opportunity for wider consultation and wider joint regulation would be extended to all independent unions, and if we could be told as regards the widely felt and genuine fear that this will be allowed only to those who are affiliated, that it would be for all independent unions approved by the certification officer, it would make a great deal of difference to the way that a large number of people feel about these proposals. Will the Government at least say that they will reconsider and clarify the position?
12.27 a.m.
Lord MELCHETT: I made it clear that I felt I must rest on what I said on the previous Amendment, where exactly the same point was discussed and on which your Lordships' Committee divided. I do not think that I could sensibly, a few Amendments later, start going back very very substantially on that course. This is a matter which has been discussed many times by your Lordships' House. I tried to make clear that the reason why, in these

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circumstances, we were applying the same tests as those mentioned in the Statutes as we have in previous legislation, was that we did not accept that there was a sharp distinction to be drawn between consultation and collective bargaining. I explained to the noble Baroness on the previous Amendment what the terms of the Bill meant.
I should like to correct one thing that I think the noble Baroness said, no doubt inadvertently. If I heard her aright— wrote it down—she said that the Government were trying to restrict the range of people who can take part in these discussions about the various issues that she rightly said were put very widely in the Bill. That is not the case. The Government merely said that it is the independent trade unions, the recognised trade unions, whom the Corporation must consult. They do not say that the Corporations are precluded from consulting other people. I hope I made that point clear when we were discussing the previous Amendment on the same matter.
Lord CARR of HADLEY: I do not ask the noble Lord to comment on this now, but I ask him to reflect upon it before we reach the next Amendment or even before the Report stage. He must know—I do not want to labour it unduly—that certain, at least, of the relevant trade unions are making it clear to the Corporation and to the management of existing companies prior to their merging with the Corporation, that they would, to put it mildly, take grave umbrage if the new Corporation even consults some of the people whom we are talking about now. Therefore, to say that they can is really rather meaningless if in fact the Corporation is to be threatened by some of the relevant trade unions, but if it does there will be industrial trouble.
Lord GISBOROUGH: Will the noble Lord say how he visualises this consultation will take place? Does he visualise that there will be a meeting where the unions would meet the management and consult? If so, would that meeting also be attended by other than relevant unions, for example, the non-unionised people or rather the associations, or would there be a separate meeting after or before the meeting with the unions? This is an extremely important matter.
Lord MELCHETT: I agree with the noble Lord, Lord Gisborough, that it is important, but I would say very strongly that it must be a matter for the Corporations themselves—those people they are consulting, whoever they might be—to decide on these matters, and it certainly should not be for a Government Minister in your Lordships' House to lay down how a meeting should take place and what its form should be. In response to the noble Lord, Lord Carr, I certainly accept what he says and I know that there are real difficulties. There is no disguising that fact, and I hope that at no stage in the passage of the Bill have I attempted to disguise it. Furthermore, my noble friend Lord Beswick and the chairmen of the organising committees are well aware of the difficulties.
These difficulties have arisen as a result of general industrial relations legislation. I think the noble Lord will agree that the difficulty is particularly acute in the case of British Aerospace, because of the large number of people. Again, I accept that point and have never denied it in our discussions. The point I would make to the noble Lord, Lord Carr—maybe we can both take these points away and think about them—is this. In view of the fact that this is a general problem and is not specific to either of these industries, although it may be more acute for one industry than for some others, would it he right to pass legislation in this Bill which would, I suggest, put the organising committees in a very difficult position? They would be out of line with the general industrial relations legislation which we have passed. We should be placing on them a duty in a Statute which might be very difficult. As the noble Lord knows, legislating on industrial relations matters is not necessarily the best way of proceeding. I do not say this in any partisan way, and it is a genuine point, but it would not necessarily be the most sensible thing to do to place upon these organising committees these very general problems that would be particularised in this Statute.
Lord CARR of HADLEY: I take the point which the noble Lord is making. One of the troubles arises because the Government are trying to particularise their industrial relations legislation in these industries. They are in advance

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of the Bullock Committee's report, and general legislation on industrial democracy. They are making these two industries a test bed, as it were, and it is because they are doing that, that other organisations are so particularly concerned. With respect, the Government are not treating this as a general problem—and I agree that it is a general problem in large fields of industry—because they are deliberately picking out these two industries and saying that they are special industries in which there will he new experiments in industrial democracy which will be written into the Bill. It is because of that that the anxieties of the people about whom we are talking are greatly multiplied. They feel that, if they miss out in this first great experiment in this year of industrial democracy, they will miss out altogether, and I hope that the Government will realise that this feeling has greatly intensified, because they are experimenting in the case of these two new Corporations.
Lord GISBOROUGH: The noble Lord, Lord Melchett, said that it is not for the Minister to decide what the Corporations should do about the question of who attends meetings. But surely he is putting them into an impossible position, because if they allow the staff associations to attend with the unions there will be total dissatisfaction, and if there are two separate meetings there will still be total dissatisfaction. I do not see how he is giving the Corporations a chance.
Viscount SIMON Viscount SIMON had given Notice of his intention to move Amendment No. 96:
Page 9, line 43, at end insert ("incorporated in the United Kingdom.").
The noble Viscount said: This is the same point that was raised on Amendment No. 47 and the noble Lord, Lord Winterbottom, gave me an undertaking that he would take the matter back and look at it. I am sure that that undertaking also applies to this Amendment, in which case I shall not move it.
12.34 a.m.
Baroness SEEAR Baroness SEEAR moved Amendment No. 97:
Page 9, line 43, at end insert ("who are members of the trade union engaged in such negotiations").
The noble Baroness said: This Amendment is very much in line with that moved by the noble Lord, Lord Carr, and it deals with the same kind of problem; that is, the rights of persons who are not represented by recognised trade unions. The purpose of this Amendment is to ensure that the machinery which is to be set up by negotiation with trade unions does not lay down what should be done about persons who are not members of trade unions. It may not be the Government's intention that negotiations should be carried on for persons who are not members of trade unions, but the Amendment is put down to find out whether it is. If it is, we want to safeguard against it by inserting this Amendment into the clause. I beg to move.
Lord KIRKHILL: The provisions in Clause 6 of the Bill as drafted are designed to ensure a fair system whereby the industries can be ensured of stable collective bargaining procedures. It is based on the premise that any company, whether in the private or public sector, must be in a position to recognise certain unions and through them negotiate the conditions of employment of all its employees. We regard this as essential for a rational industrial relations policy. As Clause 6 stands, the Corporation are obliged to consult relevant trade unions about the establishment and maintenance of machinery for the negotiation of the terms and conditions of employment of its and its wholly-owned subsidiaries' employees.
The effect of this Amendment would be that an independent trade union, recognised for negotiation in respect of the terms and conditions of employment of a certain grade of the workforce, would not be able to negotiate with respect to all members of that grade but only with respect to its own members within that grade. On the one hand, this could mean that non-union members need not receive any of the benefits of those negotiations, yet on the other hand the Corporation concerned might feel it necessary also to negotiate with the nonunion members of a particular grade, either through an unrecognised association or perhaps even individually. Noble Lords might feel on reflection that their Amendment might not lead to the most stable collective bargaining arrangements.

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Different groups within the same grade would all be negotiating separately but concurrently with the Corporations. I hope that noble Lords might accept that there is no way that a Corporation could agree differing conditions of employment within a particular grade without ensuring considerable disruption of industrial relations.
The clause as it stands leaves the actual development of machinery for the Corporation to agree with relevant trade unions. There is nothing to stop there being different machinery for different grades and unions; similarly there is nothing to prevent the Corporations from not agreeing to particular machinery if the Corporation concerned considers that it would lead to undesirable consequences. For example, if the Corporation considered it undesirable there is nothing to make it agree to machinery which would give a particular relevant trade union the right to participate in negotiations over the conditions of employment of employees, none of whom were its members. I think I have explained as fully as I can the Government's reasoning behind this subsection and I ask your Lordships to resist the Amendment.
Baroness SEEAR: Perhaps I did not make myself quite clear. It may be that the Amendment is not particularly well drafted, but of course it was not our intention to suggest that within one grade non-members should not be negotiated for by trade unions. This is always done and it would be ridiculous that if there were non-union members in that grade they should be excluded from the results of the negotiation. This was not our intention. In putting forward this Amendment we were thinking about different grades that were not covered: that machinery should be laid down for the negotiation of terms and conditions for a grade other than the grade carrying out the negotiation. But there are categories of employees outside the negotiating unit whose method of negotiation would be determined by the trade unions mentioned—not the first set of circumstances which, I entirely agree, would be quite nonsensical.
Lord KIRKHILL: I hope I said in the course of my remarks—and it might be worth repeating that particular section of
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them—that there is nothing to stop there being different machinery for different grades and unions. I have said that, and it may in part meet the point.
Baroness SEEAR: I think in the circumstances of the Minister's reply we prefer to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 6, as amended, agreed to.
Clause 7 [Formulation of the Corporations' policies and plans and conduct of their operations]:
12.41 a.m.
Lord CARR of HADLEY Lord CARR of HADLEY moved Amendment No. 100A:
Page 10, line 13, at beginning insert—
("Except in so far as it is satisfied that adequate consultation has already taken place having regard to the particular subject matter for inclusion in the plan.").
The noble Lord said: Here in Clause 7 we have come to the clause which lays upon each Corporation the duty to prepare annually a corporate plan. Let me say straight away that this is a duty which I fully support. It is absolutely right that the Corporations each year should prepare a corporate plan. But I do not know how many of your Lordships have had any experience of preparing corporate plans. I am glad to say that I have had no experience in actually working on the preparation of them but I have had experience as a director of a number of companies in considering them and trying to assess them. I can assure the Committee—and I am sure your Lordships will all feel this yourselves—that the preparation of a corporate plan for even quite a modest sized company is a substantial piece of work, if it is to have any validity to it at all, and for Corporations as large as the two Corporations we are discussing now it really is a mammoth task.
One of the difficulties about it is that if the corporate plan is to have any reality it ought to be based on assumptions which are as up to date as possible, and even in quite a small company—small at least in comparison with these large corporations—it is very difficult to prepare a corporate plan on assumptions which are made much less than six months before the beginning

967
of the financial year to which the detailed plan will apply. Normally—and I imagine this is what the Government have in mind here—the corporate plan will be a long-term document which will try to show in considerable detail the parameters and performances expected in the immediate first year ahead and will try to set out in less finer detail the objectives and performances which are expected in years two, three, four and five. But if one is to have any real accuracy—and therefore force in helping management—in the corporate plan for the immediate year, where it attempts to set out in some detail the targets for the company, then it is important that it should not be prepared too long before the beginning of the financial year in question. I repeat that even with a moderate sized company this has to be done on assumptions which can be as much as six months before the beginning of that year. This clause lays this duty upon the Corporations and also lays upon them the duty to consult any relevant trade union.
I hope I have made it clear that I am very much in favour of consultation, but what seriously concerns me here is that if the management of these Corporations have got to prepare their corporate plans, but can only do so after consultation with any relevant trade unions, then they really will have to start the preparation of the plan and base the assumptions of the plan on data a very long time ahead of the financial year to which that plan is going to apply in detail. I believe that the Government must—I was going to say rub their noses in the reality of the difficulty. It is not any lack of wishing to consult, but the danger is that if we make the preparation of these corporate plans every year so enormously time-consuming by excessive consultation with everyone beforehand, then, indeed, we are going to run the risk that the corporate plans in the end will not be worth the paper they are written on. They will be self-defeating from every point of view, from that of Parliamentary control, management control, and indeed, from the point of view of creating that feeling in an organisation which comes from a feeling of success. Set your targets for a year and achieve them. If you set them too far ahead before you have the realities of the situation in your mind,
968
you are liable to set false targets and you are lible not to succeed in meeting them.
Therefore, we are in some difficulty. Your Lordships will notice that my noble friends and I have two Amendments on the Order Paper, Nos. 100A and 101. Amendment No. 101 which was the first one which I and my noble friends put down, was proposing to leave out, for the reasons I have been describing, the whole idea of consulting any relevant trade union. But on reflection I had second thoughts, because if I can I want to try to reach a sensible compromise with the Government in this field. I understand the importance which they and the trade unions attach to consultation about all matters, including the preparation of a corporazte plan. I certainly fully accept the importance of getting the trade unions, as much as everybody else, committed to the corporate plan once it is made, so consultation is highly desirable.
The compromise I eventually thought out after much discussion with people in the industry and with my noble friends is expressed as well as we can express it in Amendment No. 100A. What we are really saying there is, "Yes, let there be consultation, but let us bear in mind all the other parts of the Bill where we have already written in consultation". I think this is what happens if you have consultation on everything. When the management come to prepare their corporate plan and the whole consultative process is going on in the Corporations as a network running through their whole management style and practice, in fact most of the things which go into the corporate plan will already have been the subject of consultation in some other context. Therefore, it would be unnecessary to go into another formal process of consultation all over again. That is why in Amendment No. 100A we are trying to limit the amount of consultation and perhaps therefore limit the amount of time taken for the preparation of the corporate plan every year.
So we say that, except in so far as it is satisfied that adequate consultation has already taken place, having regard to the particular subject matter for inclusion in the plan I think it makes it clear to your Lordships that with this Amendment we are trying to preserve the principle of consultation, but at the same time to

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seek the other great benefit; namely, that the preparation of the corporate plan should be as quick as possible and should not have to be started so far ahead of the beginning of the financial year to which it is going to refer as to make that plan less realistic and therefore less likely to be a good management tool, and less likely to set targets which the Corporation can succeed in meeting.
I should like to repeat that in moving Amendment No. 100A we are genuinely trying to reach a compromise which will preserve the important principle of consultation by making it somewhat more practical to achieve, without doing damage to the whole idea of corporate planning, which we think the Bill does as at present drafted. May I say in conclusion that I hope the Government will remember that this again is a clause which could not be debated at all on Report stage in the Commons because of the guillotine, and therefore is one of those which everybody agrees must be particularly carefully debated in this House. I beg to move.
Lord MELCHETT: I have at least two versions of the response to make to the noble Lord having heard his explanation. As a preliminary point, no doubt I will be advised that the Amendment is not adequately drafted for inclusion. But having heard his explanation, I think there is very little between us. I certainly agree—and I am sure that both the Corporations and the trade unions involved will agree—that it is important that the corporate plan be as up-to-date as possible; that it should be prepared without delay; that there should not be a whole new round of consultations on subjects already under discussion.
My doubt about the Amendment is that it puts the whole onus on the Corporation for deciding whether or not there has been adequate consultation; in other words, it is for them to be satisfied or otherwise, and there is no scope for the relevant trade unions to say that there may be some aspect of the corporate plan in regard to which they are not satisfied there has been adequate consultation. It seems to me that, as the noble Lord put it, in rubbing our noses in the reality of it, what the noble Lord wants to happen will be exactly what will happen under the
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Bill as drafted. The Corporations and the trade unions will be consulting regularly on a large number of matters, both those covered in the Bill and those which would normally be consulted about anyhow. The corporate plan will not involve a great new set of meetings with possibly different people on matters which are consulted about as part of a continuing process. Both sides will be anxious not to duplicate the work they are doing. The realities of the situation under the Bill as drafted will be exactly what the noble Lord and I seek to achieve.
Lord ORR-EWING: Supposing this corporate plan was being drawn up in the early months of next year, what are they going to put in for expenditure? How will they allow for what will happen in Phase 3? There are many highly paid people, 95,000, I think, in one of the Corporations. The parameters are very difficult to set. It says, first, capital investment; it presumably means what you are able to generate internally from profit after tax. Secondly, research and development. There again, it is what you can make in profit, or at any rate it is strongly influenced by that. Capital expenditure in the public sector has to be sanctioned by the Government to make sure it is within the target set by the Government for the public sector. Wages would presumably come under the present incomes policy, Phase 3, since that starts in July. I think we are being unrealistic in asking them to draw up these things and discuss them with the unions before they start wage bargaining at all. Will they not give away what they have allowed for and what conditions they have set. Is it not weakening the hand of those who negotiate these very important matters?
12.55 a.m.
Lord MELCHETT: I do not think that to enter into consultations on things covered in the corporate plan would have the effect the noble Lord suggested. It would in fact strengthen the process we all want to see of the sharing of information and the increase in responsibility shown by both sides of industry when they mutually discuss the difficult problems which both Corporations will have to face. I would entirely agree with Lord Carr's welcome for the concept of corporate plans. It already takes place with nationalised industries as a matter of routine; the

971
modern relationship between the Secretaries of State and the nationalised industries for which they are responsible. The innovation of the Bill is that we are putting into statutory form something which is standard practice with most of the nationalised industries. It will be difficult for these Corporations when they start up. There will he a process of getting things going, and it may well be that for the first few years or longer things will take time to settle down, but that does not detract from the usefulness of the process in which management, and unions, and Government will all be involved.
Lord REDESDALE: We were most heartened by the noble Lord's answer to my noble friend Lord Carr at the start. I felt that he was almost about to accept the Amendment as it stood. But after that he seemed to slide away from it. However, he paid tribute to my noble friend and they seemed to have a lot of mutual ground over the planning. Therefore, I wonder whether the noble Lord would consider this point in the way we have worded it, just to think about it at this stage, and perhaps give us an opportunity not to move it. I would be grateful if the noble Lord would think about this.
Lord MELCHETT: I attempted to make clear to the noble Lord, Lord Carr, that I thought that under the Bill as drafted what the noble Lord and I both wanted and expected to happen would actually happen, and the difficulty I saw in the Amendment, besides the fact that I am advised that it does not do what it says it does, is this concept of simply giving the Corporations the power to decide whether or not adequate consultations have taken place. Neither the noble Lord, Lord Redesdale, nor as yet the noble Lord, Lord Carr, have come back on that. I do not know whether they also would accept that this is the difficulty with the Amendment, and indeed whether they would accept that the Bill, as drafted, would provide the position which we both want to see. I am doing this simply because I do not want to say that I will take away and consider something when I have not a clue of the response on those two points.
Lord CARR of HADLEY: Perhaps I can see whether I can move forward to get some mutual aid going in this matter. The opening words of my Amendment, which appear to be the ones which disturb the noble Lord because they seem to put the responsibility for deciding on the Corporation, were in fact chosen because I thought they would please the Government since they are the same words as the Government have written into the beginning of Clause 6:
"Except in so far as it"—
that is the Corporation—
"is satisfied that adequate machinery exists…".
I am doing no more than the Government were doing in the previous clause, so I thought I had a good precedent. That is why those words were chosen.
What I wonder whether the noble Lord would consider is this. I have to say to him that we are not happy with the wording as it stands at the moment. We wish to insert something along these lines, but I am not tied to these precise words and, as the noble Lord's preliminary view seems to be that he does not see anything objectionable in what we are seeking to do by the Amendment, I would ask him, without commitment of the outcome, to look at these words to see whether, with the aid of his advisers, he is able to return to us on Report with some different words which would overcome the main difficulty he has in mind.
If the noble Lord feels that he can do that, then no doubt he will wish to consider the rightness of the Government's own words, which are exactly the same words, at the beginning of the previous clause, and if necessary I am sure that both could be amended amicably on Report. If he would give that undertaking, we would spend the time between now and Report looking at the words to see if we could come up with any ideas, taking account of the difficulties to which the noble Lord has drawn attention. If we could reach agreement on that basis, I think that my noble friends would be prepared not to press the Amendment at this stage but to leave it there and return to the subject on Report when, with luck, we might have reached an agreed solution.
Lord MELCHETT: I am willing to go along with what the noble Lord suggests. I am not sure that the context at the

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beginning of Clause 6 is exactly the same and I see real difficulties in moving away from what is in the Bill, given that I think the Bill will provide the practical effect of what we both want to see, but I am willing to consider the matter between now and Report.
Lord CARR of HADLEY: With that assurance, and remembering that we may wish to return to the matter on Report, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
The PRINCIPAL DEPUTY CHAIRMAN of COMMITTEES (Baroness Tweedsmuir of Belhelvie): I should point out, in calling Amendment No. 101, that if it is agreed to I shall not be able to call Amendments Nos. 102, 103 and 104. I gather that Amendment No. 101 is not moved.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 102:
Page 10, line 13, leave out ("consulting") and insert ("seeking consultationg with").
The noble Lord said: The wording of this Amendment was fully discussed in relation to Amendment No. 84, on which there was a Division. No doubt, in those circumstances, the Amendment will be acceptable to the Committee.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 103:
Page 10, line 14, after ("union") insert ("or professional organisation").
The noble Lord said: I spoke about the insertion of the words "or professional organisation" when we discussed a previous Amendment. I beg to move.
Lord CARR of HADLEY: This is the Amendment which I thought we were talking about earlier when I assured the noble Lord, Lord Lloyd of Kilgerran, of my support. We are now back in the area of consultation and out of the area of collective bargaining. I apologise that when we were talking earlier I overlooked the Amendment; however, I assure the noble Lord of my support on this one.
1.5 a.m.
Lord CARR of HADLEY Lord CARR of HADLEY moved Amendment No. 104:
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Page 10, line 14, after ("union") insert ("and any other person who, or organisation which, appears to it to be representative of a substantial proportion of its employees or of those of any of its wholly owned subsidiaries.").
The noble Lord said: Here again, we are in the realm of consultation pure and simple and therefore we wish to move that we should insert the same words that we have inserted in other consultation clauses about the other bodies that ought to be consulted. I have explained this point before and there is no need to do so again. I beg to move.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 105:
Page 10, line 32, leave out from ("relate") to ("the") in line 34.
The noble Lord said: I think that it will be for the convenience of your Lordships if Amendment No. 106, which is on the same point, is discussed at the same time. The clause imposes wider obligations on the Corporation in respect of its corporate plan than have previously been imposed by Statute in the case of other nationalised bodies. Previous Statutes have normally required Ministerial approval of capital outlays but not of all the other matters set out in subsection (1). The provisions of the subsection are reasonable in themselves so long as the clause affects only the formulation of the plan and the period to which it is to relate. The requirement that the Corporation should in addition act on lines settled from time to time with the approval of the Secretary of State in the general conduct of its operations seems to give yet further and unnecessary sweeping powers to the Secretary of State. Here again, the Government seem to be going further than necessary and further than Governments have gone in the past.
I remind your Lordships that, at the Committee stage in the other place, the Minister, who was replying on an Amendment similar to the present Amendment, rejected it on some unusual grounds: these were that, without the words which the Amendment sought to delete, the Corporations might draw up corporate plans, agree them with the Secretary of State, but then do something entirely different. This seems an unusual thing for a nationalised Corporation to do and it did not seem a very real point. However, in order to restore any lost confidence

975
that there may be in that context, Amendment No. 106 has been proposed. The Government's objectives in requiring agreed corporate plans would thereby be directly safeguarded without giving the Secretary of State the power to intervene in day-to-day management. So we think that the combination of the two Amendments would mean that the Secretary of State would not have unnecessary powers under Amendment No. 105, and that the unusual doubt that has been expressed by the Minister in another place is looked after by Amendment No. 106. I beg to move.
Lord MELCHETT: I confess that I am not entirely clear. Perhaps I can do a "Lauderdale" on the noble Lord, Lord Campbell of Croy, if I can have his attention for a moment.
Lord CAMPBELL of CROY: I am very good at listening, I can assure the noble Lord. As he must find himself, in Parliament one often has to do two things at the same time, and sometimes even three or four. I heard everything the noble Lord was saying.
Lord MELCHETT: I personally find that that is quite possible, but it does not stop noble Lords opposite criticising me as soon as I start listening to anybody who talks to me when they are addressing me. I do not think that it does any harm to have a bash back occasionally if one is the subject of criticism oneself.
I am not entirely clear in what respect the noble Lord feels that Amendment No. 106 would allow freedom to the Corporation to stick to the corporate plan or not. If it does not allow the Corporation any chance to deviate from the plan, I am not quite clear what is the point of having it in at all.
1.10 a.m.
Lord CAMPBELL of CROY: To answer that point, I should say that the Amendment was simply to meet the criticism made by the Minister of State in dealing with a similar Amendment at the Committee stage in another place. I have his actual words. He said that the Corporations might draw up corporate plans, agree them with the Secretary of State, but then do "something else entirely". Amendment No. 106 was
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therefore intended to reassure the Government on that particular point. But if the noble Lord does not think that Amendment No. 106 gives that reassurance, or that it is necessary, then Amendment No. 106 is not of great importance or significance. The Amendment that matters is Amendment No. 105, and I hope therefore that the noble Lord will be able to accept Amendment No. 105 for the reasons I gave.
Lord MELCHETT: Not entirely, and so far as I can see the questions raised by my honourable friend in another place remain valid. The general objection is that if a corporate plan is drawn up and is agreed it is important—and I think that the noble Lord would agree with this—that all that work is not wasted by the Corporation immediately going off and doing something else. That is the basis of the fear raised by my honourable friend and it would remain in my mind, having listened very carefully to the noble Lord. But the important thing would be that once the corporate plan is drawn up it should, by and large, be stuck to. It would be a considerable waste of time if everyone puts a lot of work into drawing up the plan and agreeing it, if immediately after that the Corporation can go off and is not obliged to take any account of it. I am still not quite clear whether Amendment No. 106 precludes that possibility in the view of the noble Lord. It would be extremely important if it did, and my advice is that it does not.
The Earl of ONSLOW: Perhaps the noble Lord could give us some evidence of this fear. It seems most extraordinary that a lot of time and trouble should be taken to produce a plan after which no account whatsoever is taken of it. Has the noble Lord any evidence that this is ever likely to happen, or that it has happened under previous nationalisation Statutes?
Lord MELCHETT: No, because as I said a moment ago, while drawing up a corporate plan in conjunction with the Secretary of State is now standard procedure, this is the first time that it has been put into Statute. Here we are putting into Statute what, as I said on a previous Amendment, is the modern way of conducting the business between the sponsoring Department and the nationalised industry.
Lord CAMPBELL of CROY: I have said what is the intention of Amendment No. 106, the second Amendment. If the noble Lord, Lord Melchett, is doubtful about the actual drafting of it and about whether it is effective in doing what it sets out to do, I certainly will not press this Amendment. As I have said, it was drafted in order to reassure the Government after the Minister's doubts expressed in another place. But we attach importance to Amendment No. 105. This is a change which will improve the Bill, and I hope that the Government will be able to accept it.
Lord MELCHETT: I should not feel happy about accepting Amendment No. 105, for this reason: As I say, what we are trying to do in incorporating these provisions in the Statute is to incorporate, on a statutory basis, the arrangements for forward planning in nationalised industries which have in practice obtained for some time; and part of that practice is for the general plan to be drawn up and the general conduct of the operations to be settled from time to time with the Secretary of State. As I see it, the effect of Amendment No. 105 would not make what is now standard procedure occur under the Bill. I still have my doubts about Amendment No. 106, but if the noble Lord is not intending to press that Amendment, perhaps I will not pursue those doubts at this stage.
The Earl of ONSLOW: Would it be
possible for the noble Lord to accept Amendment No. 105 in principle and then to come back with his own Amendment to make sure that the fears that he and his colleagues have expressed, that the whole bureaucracy of this particular nationalised industry should waste hours and hours of its time making plans which it has no intention of keeping? Surely it would be possible, along the lines of Amendment No. 106, to put down something which would stop that happening.
Lord CAMPBELL of CROY: The noble Lord, Lord Melchett, has spoken as if there were a precedent for this, but as I said at the outset, the precedent in the past has been for capital outlays but not for all the other matters that are in subsection (1). The Statute which I know has similar wording is the Civil Aviation (Declaratory Provisions) Act 1971; but that relates to capital outlay and hiring of equipment. It is a very different matter when the same obligation is made, as this seeks to do, concerning the general conduct by the Corporation of its affairs; and that is something we feel would be a definite improvement to the Bill.
1.17 a.m.
On Question, Whether the said Amendment (No. 105) shall be agreed to?
Their Lordships divided: Contents, 67; Not-Contents, 29.

CONTENTS

Abinger, L.

Elliot of Harwood, B.

O'Hagan, L.

Airedale, L.

Elton, L.

Onslow, E.

Amherst of Hackney, L.

Falmouth, V.

Orr-Ewing, L.

Ampthill, L.

Ferrers, E.

Penrhyn, L.

Auckland, L.

Gainford, L.

Redesdale, L.

Barrington, V.

Gisborough, L.

Rochdale, V.

Beaumont of Whitley, L.

Gowrie, E.

Saint Oswald, L.

Belstead, L.

Gray, L.

Seear, B.

Berkeley, B.

Gridley, L.

Seebohm, L.

Brookeborough, V.

Hankey, L.

Selsdon, L.

Burton, L.

Hives, L.

Sempill, Ly.

Campbell of Croy, L.

Hornsby-Smith, B.

Strathcona and Mount Royal, L

Carr of Hadley, L.

Kemsley, V.

Swansea, L.

Carrington, L.

Killearn, L.

Tanlaw, L.

Cork and Orrery, E.

Kimberley, E.

Teviot, L.

de Clifford, L.

Lauderdale, E.

Thorneycroft, L.

De Freyne, L.

Lloyd of Kilgerran, L.

Trefgarne, L.

Denham, L. [Teller.]

Monson, L.

Tweedsmuir, L.

Deramore, L.

Morris, L.

Vickers, B.

Dormer, L.

Mottistone, L.

Ward of North Tyneside, B.

Dudley, E.

Mowbray and Stourton, L. [Teller.]

Wardington, L.

Effingham, E.

Wigoder, L.

Elles, B.

Newall, L.

NOT-CONTENTS

Brimelow, L.

Lyons of Brighton, L.

Shackleton, L.

Champion, L.

McCluskey, L.

Shepherd, L.

Collison, L.

Melchett, L.

Stedman, B. [Teller.]

Cooper of Stockton Heath, L.

Morris of Kenwood, L.

Stewart of Alvechurch, B.

Davies of Leek, L.

Murray of Gravesend, L.

Strabolgi, L. [Teller.]

Delacourt-Smith of Alteryn, B.

Oram, L.

Wallace of Coslany, L.

Elwyn-Jones, L. (L. Chancellor.)

Peart, L. (L. Privy Seal.)

Wells-Pestell, L.

Harris of Greenwich, L.

Pitt of Hampstead, L.

Winterbottom, L.

Kirkhill, L.

Ponsonby of Shulbrede, L.

Wynne-Jones, L.

Llewelyn-Davies of Hastoe, B.

Raglan, L.

On Question, Amendment agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.
1.24 a.m.
Lord CARRINGTON: I understand that my noble friend is not going to move Amendment No. 106, but perhaps I may say this to noble Lords opposite. It is the obligation of the Government to see that their business gets through, and, if there is a Division, the quorum in a Division is 30. It is no task of the Opposition to see that the Government's business gets through. If noble Lords opposite cannot muster 30 of their own Members to support their own legislation, of which we on this side most strongly disapprove, there is no reason whatever why we should sit all night to listen to them. I must tell noble Lords opposite that if, on the next Division, they have not got 30 Members in their Division Lobby, I shall move that the House be resumed.
Baroness LLEWELYN-DAVIES of HASTOE: I have listened, as always, with great respect to the noble Lord, Lord Carrington. On the whole, I think it fair to say that this side of the Committee is listening to the other side, rather than the other way round. Leaving that aside, we take the noble Lord's point and understand it, and if he moves that the House be resumed we shall debate that Motion.
On Question, Whether Clause 7, as amended, shall stand part of the Bill?
Lord CAMPBELL of CROY: There is one point that I should like to raise on this clause. One of the important matters listed there is research and development under subsection (1)(b) and it is clear that the Government intention is that the two Corporations should have programmes for research and development. On the shipbuilding side, can the Government tell us what will happen to the British Ship
980
Research Association which is at present the main instrument for research and development where shipbuilding is concerned? I understand that there is considerable uncertainty as to what is to happen to that Association. If this is not a matter to which the Minister can reply now I shall understand; but it is related to how much is to be done by the new nationalised Corporation, British Shipbuilders, and what relationship the present British Ship Research Association will have with it.
Lord MELCHETT: I am grateful to the noble Lord for allowing me a "let out" by saying that if it is not something to which I can respond straight away I can take advice and write to him. I undertake to do that before reaching the next stage of the Bill.
Clause 7, as amended, agreed to.
Clause 8 [Furnishing and publication of information by the Corporations]:
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 111:
Page 11, line 18, at end insert ("and which the Corporation is legally entitled to disclose").
The noble Lord said: We spoke to this Amendment with Amendment No. 88. I beg to move.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 114:
Page 11, line 34, at end insert ("and he shall refrain from giving any direction if the publication would be against the national interest or the commercial interest of the Corporation").
The noble Lord said: This comes into the same category as did the last Amendment. I beg to move.
On Question, Whether Clause 8, as amended, shall stand part of the Bill?
1.28 a.m.
Lord CAMPBELL of CROY: On the question of whether this clause shall stand part of the Bill, there arises the matter of the furnishing and publication of information by the Corporations and the provision of information to the Secretary of State. This raises the general question of accountability to Parliament and to what extent the Minister will be responsible for answering questions or dealing with general matters raised by either House of Parliament. Under the Addison Rules if—as we know is so in one case and may be so perhaps in the future—chairmen of Corporations are Members of this House they themselves cannot speak or take part in the debate. We have the examples of British Rail and the Post Office since it became a Corporation where we know that Ministers have been in some difficulty because, clearly, they cannot answer for the day-to-day affairs of the industrialised industries. On the other hand, when major problems and issues arise the Government must be involved and answer to Parliament, although in many cases they can only say that they will pass requests, appeals or any other representations on to the nationalised industries concerned. Can the Minister tell us today what the relationship will be and whether, having been furnished with information by the Corporations under this clause, he in this House and Ministers in another place will expect to answer questions and be accountable to Parliament? If so, can he give us a general idea of what area that accountability will cover?
1.31 a.m.
Lord MELCHETT: I certainly agree that the area of Ministers' accountability to Parliament for nationalised industries is one of great difficulty. Like one of the Ministers referred to, I have had to come to the Dispatch Box in your Lordships' House to answer specific Questions about particular operations of nationalised industries, and have found them difficult to answer. It may have been the noble Earl, Lord Lauderdale, who said that noble Lords all felt sorry for Ministers in that position. I find the problem particularly acute because I am aware of the problems from two sides of the country in some respects and I know how annoying it is for nationalised industries and those running them when very minor matters, which may well not even be the concern
982
of the chairman or the chief executive of a nationalised industry, are questioned and raised in Parliament and Ministers have to give answers for them although the Ministers have no responsibility for the running of the industry in that detail.
On the other hand, it is very frustrating for those in Parliament not to be able to question Ministers on the activities of corporations in which they have a great interest. That possibly applies more acutely to a corporation such as the Post Office than to more industrial spheres, such as the steel industry and now these two new nationalised industries. However, the annual reports of these two industries in particular will be laid before Parliament, on which Parliament may question Ministers. As I have made clear on the various occasions when Amendments have raised this or when we have discussed it, Ministers will be answerable in Parliament to the use or non-use—and the latter is just as important, if not more so—of the particular powers that they have under the Bill. In general, the relationship will be as it is with other nationalised industries.
I acknowledge that that relationship is not entirely satisfactory from any party's point of view. I think that those running the nationalised industries and the Ministers concerned will agree—certainly I have felt this on occasions—that the relationship is not all that satisfactory, and it is not always entirely satisfactory to those in Parliament. A great deal of serious thought has been given to this by those involved and I hope that some improvement will be forthcoming. In other respects these industries will be treated as existing nationalised industries. Ministers will answer Parliamentary Questions and debates in Parliament in the same way as they do on other nationalised industries.
The Earl of ONSLOW: It is also fair to say that the public frequently believe—or perhaps it is reflected in the Press now—that it is extremely difficult to get replies out of nationalised industries. The noble Lord, Lord Melchett, has indicated that he does not think that the situation is totally satisfactory. Perhaps I could proffer a personal suggestion. Is this not the time, possibly, to look even at the Addison Rules and to say that it might be reasonable for all chairmen of nationalised

983
industries, for instance, to be present in your Lordships' House? They could answer questions or queries which are raised about their industries. I am speaking totally personally on this issue. Whether or not it is worth while discussing, I do not know.
1.35 a.m.
Lord ORR-EWING: I hope that these annual reports, which form the only survey that one has an opportunity of discussing, should progressively be more punctually printed and delivered to the House. They become much less interesting if they are presented five, six or seven months after the end of the accounting period, the financial year or calendar year. One would hope that the Minister will, without interfering in day-to-day affairs, be able to say, "If we are to have Parliamentary control, it is important that we should be as up-to-date as possible with the rendering of these reports. They will be as informative as possible, as is laid down in the Companies Act". I am not pretending that the private sector is good in this respect. Too many people are too late in the rendering of their reports and accounts. I hope that the nationalised industries will be as punctual as is conceivably possible, so that both Houses will have good, up-to-date information which they can use for discussions and debates.
Lord MELCHETT: I agree with the noble Lord about that. One of the problems of the nationalised industries is that the accounts, which have to be audited before they can be presented in the annual report, are often extremely complicated and inevitably, a certain amount of time must be taken up with that. Too much time is taken up with the auditing of the accounts. That is often one of the things which will delay the presentation of the annual report. That is something which the chairmen of both Organising Committees will bear in mind. As to the suggestion by the noble Earl, Lord Onslow, with respect, it goes slightly wider than the remit which "Clause 8 stand part" gives us. Interesting though it might be to discuss the proposition, it might better be left for another time.
Clause 8, as amended, agreed to.
Clause 9 [Control by Corporations of wholly owned subsidiaries]:
On Question, Whether Clause 9 shall stand part of the Bill?
1.38 p.m.
Lord CAMPBELL of CROY: Clause 9 is entitled "Control by Corporations of wholly owned subsidiaries"; but it is a prohibition upon the Corporations from disposing of any subsidiaries or allowing any subsidiaries to carry on activities without the consent of the Secretary of State. It forbids the Corporations to dispose of any interests without the agreement of the Secretary of State. Is it not right that some of the companies to be taken over under the Bill have interests which are not connected with shipbuilding or aerospace which they have developed as a matter of commercial policy? What are the Government's intentions toward these? Will it be the policy of the Government to give permission for the Corporations to dispose of such interests, or will it be the policy of the Government to retain these interests even if they are not connected with aerospace or shipbuilding? Alternatively, are the Government thinking at present of considering each case on its merits? It would be helpful if the Minister could give us an indication of the Government's thinking on this important clause.
1.40 a.m.
Lord MELCHETT: Certainly I shall be happy to give the noble Lord an indication of our thinking on the clause, but I do not know whether it will answer the question that he has asked which I confess I did not entirely follow. Perhaps I can give him a general view of the clause, and if his particular question is not answered we can return to it. As the noble Lord knows, this is a very technical clause. It relates to the position of the wholly owned subsidiaries. It is quite possible that one or both of the Corporations will permanently operate largely or wholly through wholly owned subsidiaries or wholly owned Companies Act companies. Of course initially on vesting the Corporations will operate entirely in that way.
These wholly owned Companies Act companies will retain their separate legal identity from that of the Corporation which owns their shares, so that limitations

985
placed on the Corporations do not automatically limit their wholly owned subsidiaries, since it is in some senses coincidental that a Corporation may decide to operate through subsidiaries rather than owning the assets and conducting the business direct in its own name.
We do not think that fundamentally different limitations should apply in the two cases—in other words, whether the Corporation operates through wholly owned subsidiaries or in its own name, conducting its business in its own name, owning the assets itself. That is why the clause requires the Corporations, exercising their powers as 100 per cent. shareholders, to ensure that the wholly owned subsidiaries extend their activities, take shares in companies and so on, and dispose of interest only with the same consents as would be needed if the Corporations were acting directly. The provisions are thus symmetrical with those in Clause 3(2).
As I explained previously, the Bill consistently applies to the Corporations and the wholly owned subsidiaries. We have not placed restrictions on the Corporations in respect of other subsidiaries and interests to avoid prejudicing the interests of shareholders other than those of the Corporations. Of course, the Corporations' investments and lendings to these other subsidiaries and interests will be subject to the overall financial provisions of the Bill.
Lord ORR-EWING: Unless I misread it at this rather early hour in the morning, I do not quite understand what is the general policy. If these wholly owned subsidiaries are not in any way connected with either the aerospace industry or with shipbuilding, ship repairing or marine engine building, is it the general policy to get rid of them and return them to private enterprise?
Lord MELCHETT: Yes. I have read my note on the clause. The noble Lord has been kind enough to repeat the point made by Lord Campbell of Croy which I did not answer fully. The answer is that the disposals will be considered on their merits, as I think the noble Lord, Lord Campbell of Croy, suggested they might be. The ancillary activities were presumably developed for commercial
986
reasons. However, if the new Corporations wanted to dispose of any we would certainly consider that sympathetically.
Lord CAMPBELL of CROY: It was not, in fact, a suggestion of mine. It was one of three possibilities which occurred to me. I am grateful to the noble Lord for having indicated the Government's present intention on this matter, which is clearly to consider individual applications by the Corporations for disposing of interests through wholly owned subsidiaries, and to consider these individually on their merits. I am grateful to the noble Lord for that answer.
Clause 9 agreed to.
Clause 10 [Financial duties of the Corporations]:
1.44 p.m.
Lord SELSDON Lord SELSDON moved Amendment No. 114A:
Page 12, line 35, leave out from ("in") to end of line 36 and insert ("a net profit by the Corporation and its subsidiaries after taking into account all costs of financing.")
The noble Lord said: This is the second time that I have intervened in this Committee stage, and I warn your Lordships that I shall do so fairly frequently from now on. To some extent we have passed the question of the principles. We have reached the question of costs. As, to some extent, this is part of my own profession, it seems right that I should raise those points of concern that I would raise if I were dealing with clients and others in the private sector. I tend to feel that as the Government move on this nationalisation course they look too much one way. I would remind noble Lords opposite of the phrases which one finds in Tom Brown's Schooldays—for example,
"He never wants anything but what is right and fair. Only when you come to settle what is right and fair it is everything he wants and nothing that you want, and that is his idea of compromise."
I therefore propose to give back to the Government what they have given to us.
My bible is not legislation but a Code of Practice. It is known in the City of London as the "Yellow Book". It consists of rules that are written by the Stock Exchange, rules that people tend to follow, not because of law, but because they believe that they are right. I begin

987
by treating the Government as I would any other corporation that wished to make a major acquisition. I start by drawing the Government's attention to transactions which come under Acquisitions. There are various types in the Code and I would regard this as a Class 1 acquisition; that is:
"Those which are to be considered sufficiently material, either individually or in aggregate, to call not only for an announcement to be made to the department"—
meaning the Stock Exchange—
"and the Press, but for a circular to be sent to shareholders."
I go on, and what concerns me most, if I could turn it the other way round, is the effect of a bid on the offeror, who in this case is the Government.
What is the effect that this bid or acquisition will have on the Government? I must read this, because these arguments are so often one-sided:
"Where a listed company"—
in this case, the Government—
"makes an offer involving the exchange of securities for securities of another listed company, the offer document and any circular relating thereto which is sent to shareholders of the offeror company"—
the Government—
"must include a statement as to the effect of the bid upon the offeror company. Such a statement should set out the effect upon the assets, profits and trading position of the offeror company and the effect upon other aspects of the offeror's business, which may be significant for a proper appraisal of the offer."
I am not sure whether the Government, in this case—we are all shareholders of the Government, and, speaking as a banker, one should point out that one holds rather large amounts of Government stock at the present time and is therefore entitled to speak as a shareholder—have given us enough information to decide whether or not this acquisition is desirable from a financial point of view. We have had the arguments from the commercial point of view. Rationalisation and all forms of other arguments have been put forward earlier. But, from a purely financial point of view, I should like to give your Lordships some of the background to the Government's current position.
If the Government are willing to stand up now and say that British Aerospace
988
and British Shipbuilders will pay their way and will not be a further drain on the taxpayer—that is, they will not cost the nation anything at any time and there will be no increased liability in any way—then I will think further. But I am concerned about certain elements which I would call as background. First, there is a general concern about the increase in Government spending and borrowing. This is something that we have all noticed and, as your Lordships know, we have seen Government spending increase by 20 per cent. since this Government came to power, whereas output or production has gone up by only 2 per cent.; that is, a ratio of 10 to 1. At the moment, we know that Government spending in this country is something over 60 per cent. of GDP. We also know that last year the public sector borrowing requirement was £10·4 billion and that the Chancellor, pointing out the need to reduce that requirement, said that it would come down to £9 billion, one of the reasons given by him being that there would be increased output.
If it is being said that British Aerospace and British Shipbuilders will increase output for the nation, that is one thing. But there is concern that Government borrowing at the moment is about half the total taxes collected. Thus we can argue that Government borrowing is too much, or that taxation is not high enough; and the right ratio, if we look at informed, developed countries, is probably something like a 33 per cent. increase in taxation in order to get the balance right. We know, too, that at the moment the Government are borrowing roughly £400 per working person per year, and if we consider those people who are not paid by the State it is perhaps approaching £600. It is quite a lot for one man to carry.
There is another scene that is just as dangerous: what we might describe as public sector borrowing in foreign currency. Last year the public sector borrowed 1·3 billion dollars in foreign currency. This makes a total of about 5 billion dollars in foreign currency since this Government came to power, and the pound now stands at 1·65 dollars. It is not so much the interest cost; people borrow abroad because it is cheaper. But when it comes to repayments you are not repaying in devalued pounds; you are paying more and more interest and the

989
burden of debt starts to become intolerable. The debt interest of this nation under PSBR was 2·1 billion in 1970 and 4·4 billion in 1975, and one would forecast it conservatively at 6·5 billion in 1976. Thus, over 40 per cent. of public sector borrowing is going in interest. This is roughly 10 per cent. of all Government expenditure.
We have spoken about Government cuts. Cutting Government expenditure is one matter, but if we are to be faced not only with a debt interest of this enormity but also with the repayment problem which will be incurred by the 5 billion of foreign currency (the total is 6·5 billion but it is 5 billion since this Government came into office) the situation will be quite serious. Against that argument the Government say, "Well, we are going to control inflation", but the mere act of controlling and reducing inflation increases the burden of one's indebtedness. If one is borrowing a lot of money, it is desirable to create the maximum level of inflation because the burden of one's debt is to some extent minimised.
My question to the Government, if I were to look at their balance sheet, is that perhaps they are too heavily geared up at present to take on any further commitments. The Government may be able to demonstrate that they can finance these further commitments in a manner which is acceptable not only to all the basic codes of practice but also to our foreign lenders, particularly foreign banks and, in due course, the IMF. But we are faced with two solutions: a major cut in expenditure or a sharp increase in taxation.
In a few words I have tried to set the scene of the financial position of the would-be buyer of businesses, some of which are perhaps more profitable and successful than Government organisations; but when we come to the basic elements of this proposition, from the financial point of view first of all we must look at the economic background of the government of the nation and the commercial advantages (and it may well be that the commercial advantages outweigh the financial cost) and then we must look at the cost. I thought that it was a relatively simple matter to determine what this would cost. I thought, too, that in their comments on public expenditure
990
earlier this year the Government said that they would be prepared in due course to make a statement and that they would do this after the Bill was passed. According to the normal code of practice when dealing with private sector businesses you have to say to your shareholders what it will cost before you do it, not after. You have to consult your shareholders in some way, and one of the best ways of consulting them so far as this nation, which is still democratic, is concerned must be through Parliament.
Then I thought: what is it going to cost? Perhaps we may look at the way that these costs are broken down. As a banker, one would ask what is the cost of acquisition and it would be one's duty to advise whoever was trying to buy a business to acquire it as cheaply as possible. The Government having decided that it will acquire these businesses, it must be their intention and the intention of their advisers to find a way to acquire them as cheaply as possible within what might be constituted as fair practice.
The story does not stop there because of the other commitments: the additional working capital needed to keep the businesses alive and the new capital needed to ensure that they are commercially viable and competitive on world terms. It is fair to comment that one of the major problems which our nationalised industries have faced is that historically they have been under-capitalised. This is a terrible burden on management, but in trying to work out what it will cost one is faced with an interesting problem. If you ask a company, "What do you think your business is worth and what do you think the Government will pay you under Clause 35 onward to Clause 38?" in many cases it cannot tell you, because they cannot disclose to you information which they would not disclose to their shareholders, because that could have an effect upon the valuation of their shares. Also they are concerned, as any negotiating company would be, that they should not give the buyer any information which would assist him to acquire their businesses more cheaply. That is common practice and it is right and proper.
Thus if you ask the companies concerned it becomes difficult and they will not tell you. I have asked them. I have

991
a shrewd idea from the conversations I have had with many of them what it would cost, but many of them, although they are not quoted companies, do provide information in their annual reports and provide information which their brokers issue in circulars. The private sector in general has a pretty shrewd idea about the operations of many of these companies, and if, as I did, one made inquiries through the financial sector and also among people who were in the neighbourhood where these companies existed, one arrived at a basic figure of how much one believed that the Government would have to pay for that business.
This is, first, the cost of acquiring 100 percent. of the shares of the companies to be nationalised. The cost of acquiring these shares, which would be acquired by Government stock, could be assessed at around £400 million. But dependent upon the type of paper which the Government issues and the coupon which it carries, and the capital transfer problems, the Government paper might well go to a discount, so of course the price would come down to the recipient company, although not having any effect upon the Government themselves.
We start therefore with the belief that there is a need for an acquisition which would cost in paper terms £400 million. My first question to the Government is: Is this a reasonable figure? If we look at Clause 38 as it currently stands and as related to some of the other clauses which affect compensation, this would probably be on the low side, but one must accept that it is the duty of the Government to acquire this business as cheaply as possible, and if it were the private sector of course it would be on this basis, and of course the Government will be fair and will be seen to be fair.
When we come to the next stage of the equation it is, how much more working capital is it necessary to pump into the business to keep it going? In the private sector we all know of the word "blight". If a company is under threat that something will happen it is often prevented, for a number of reasons, from taking action which it would otherwise have taken, meaning that no company would willingly have made a major capital investment. It would have been looking
992
towards vesting day and to divestment, and we can assume that many of the companies, having made no further capital investment, could be in substantial difficulties in the future. We can also assume that others, having kept going, in many cases in order to be nationalised, may be very short of money.
The trouble is that one cannot generalise. During the course of the Second Reading debate and the Committee stage we have all heard that there are good companies and bad companies in both sectors. This is quite normal in any acquisition involving lots of subsidiary, affiliated or associated companies: there are some you want and some you do not want; there are some that are good and profitable and continue to exist successfully with no new money and may even have a high liquidity ratio, and there are others which are over-geared and in substantial difficulties. This applies to shipbuilding more than anything. Throughout the shipbuilding industry there are various phases: those in difficulties and run down, threatened by international competition, unable to compete, short of orders, over-geared, and those at the other end who, because they have had good management—often not enough money but good management—have managed to be profitable and viable.
That is the spectrum, but from an analysis of the accounts of many of the subsidiary operating companies and information which is available, particularly of the weaker sector—and I should explain that once upon a time I was a director of a management consultant firm and did a lot of work in shipbuilding, and was often commissioned by the Government—it is reasonable to assess that the level of working capital that would need to be injected in the immediate period would be in the order of £200 million. This makes a total so far of £600 million. If the noble Lord would like me to finish, I would prefer that he answered at the end because we have a lot of confusion.
Lord MELCHETT: I do not want to interrupt the noble Lord, particularly if he is going to come to the Amendment which we are discussing. But it seemed to me that that Amendment deals specifically with the rate of return which the Corporations should be under a duty

993
to achieve. We are coming to a large section of the Bill which deals with compensation and other matters. Interesting as the noble Lord is being, I do not know whether he is dealing strictly with the Amendment under discussion.
Lord SELSDON: If the noble Lord, Lord Melchett, would please tell me under line 35 what is the capital employed by the Corporations and subsidiaries, we could then get down to it. I am trying to determine the amount of money which will represent capital. If the noble Lord will give the answer now, I should be happy to continue, if he would like me to do so.
Lord MELCHETT: It is up to the noble Lord to move his Amendment in his own way. I simply make the point.
Lord SELSDON: Perhaps the noble Lord will allow me to get on with it. This is important, and we should not forget the fact that the Government have flatly refused to give any information on finance. Since I as a private sector man am trying to give them that information, perhaps they will give me an answer if they do not wish to listen. We are entitled to that. No one can dispute that this is the first basic rule of financing a business. It would he less or more, but £600 million is not a particularly high amount of money for the industry's working capital. But that is really only the start. Your Lordships will know better than I the background with which shipbuilding is faced at present—unfair competition we may describe it as, but heavily subsidised competition from South-East Asia.
We therefore come to the question that if we are to continue in this business there must be Government support. When the Government have nationalised these businesses, support, capital, money, aid and loans will he all the same thing; it will be in one way or another Government or borrowed money. When we come to the way in which it is financed, it is a different matter but for the moment it is still money. In order to look at this development we could assume that the capital required should take a look at about a five-year period. This is normal financial practice; you might say a three-year period. From the Public Expenditure figures, and I take the Government's
994
figures first, under industrial innovation and general support for industry—these are at 1975 prices—there are a number of interesting projections. We have a total, over a three-year period for aerospace and shipbuilding of £233 million at 1975 prices. Allowing for inflation and so on, it is reasonable to raise this figure to around £350 million, and in a five-year period it is reasonable to say £450 million. These are the Government's own figures in Public Expenditure.
In Public Expenditure they comment on other aspects. They say at the moment that no provision is included for capital expenditure by British Aerospace or British Shipbuilders. If we go on to page 50, there are certain forecasts which should not really be regarded as forecasts, but they are reasonable estimates of some information needed, but this does not take into account everything. They have given a figure of £380 million over a three-year period at 1975 prices (we can give the noble Lord figures later if he wishes) which, with inflation, may take the figure up to £450 million. Starting at £400 million for acquiring the shares and £200 million for the working capital, this is really only the start if we look at what these things actually cost. I do not want to go into capital expenditure of other industries except to draw comparisons. We know aerospace costs money —Concorde, Boeing, Lockheed, every manufacturer in the world has proved that in order to be viable, you need money and investment. In many cases we know that investment has been feeble over here. Anyone will tell you in the aerospace industry that the development of a new aircraft, even a modest one, is likely to cost a minimum of £500 million. At least one of these is required to be on the stocks for the British Aerospace, and perhaps more. One also knows that in shipbuilding, although it is not always a question of capital but more often management, we are faced with the historic practice of good money in terms of capital going after had to shore up the weaker industries. Unless the Government can give us some idea of what rationalisation is likely to take place, we must assume that the businesses are all to continue. The figures I have been given are fairly reasonable according to international standards, bearing in mind the value of the pound.

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It is estimated that in order to keep these businesses going, having got the working capital sorted out initially, there needs to be an expenditure of around £1,500 million over a three-year period. This need not be expended at £500 million a year; it can be additional capital at the beginning. People will tell you at the moment that shipbuilding industries should not be heavily geared; they should not be over-borrowed, and they should have adequate working capital to run their businesses from the start, with a chance of making a profit. If we look at the investment figures given for capital investment for British Steel, National Coal Board and the electricity people, we find a projection over a five-year period from 1975 to 1980, at 1975 prices, of an average of about £450 million each. I give those only as comparative figures. Your Lordships realise that these things, aeroplanes, ships, are not cheap. All I am concerned about is not the Government's argument about the transfer of assets, but the transfer of liabilities that go with it, because 100 per cent. of those liabilities will fall on the Government.
With those figures one comes to a reasonable conclusion that the total level of cost—I am not saying additional cost, but the cost to the nation—over a three-year period is going to be of the order of £2,100 million. If I am wrong in these assumptions and in the research work I have tried to do, then perhaps the Government would tell us how much. We must not differentiate at this point between what the amount of money required is and how it will be financed. I will take from the noble Lord, Lord Melchett, some of the points he made at Second Reading on the transfer of assets. One is faced with the problem of, how do the Government finance £2,100 million expenditure over a three-year period at current prices—no allowance for inflation —and afford to do it?
The Government argue, quite reasonably, as they would, that this does not cost anything. This is such a classic argument that every board puts to its shareholders, "All we are doing is issuing new stock; it does not cost anyone anything; it is just a piece of paper changing hands, and there is no dilution, no effect upon anything." The noble Lord, Lord
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Melchett, has pointed out that this does not affect public sector borrowing requirement. This, in a way, is true. But public sector borrowing requirement is the difference between the Government's revenue from taxes, nationalised industries profits and the like, and its total expenditure, including lending.
To issue gilts or Government stock for an acquisition like this is wise, because these industries need long-term finance and a gilt is good long-term finance. We have to look at the fact that it will probably have to carry under current terms a coupon at 16·2 per cent. rather than 16·1; otherwise it would go to a 4 per cent. discount. But issuing gilts is in fact deflationary because you are taking money out of the system, and they are not an immediate burden upon public sector borrowing requirement. But what they do do is to have an effect upon money supply, direct or indirect.
The noble Lord has commented, quite rightly, that his right honourable friend the Chancellor of the Exchequer has power to control money supply. Had he this power, or had he adequate power, I would ask why he has not controlled it satisfactorily to date. Suppose we issue £1 billion of gilts in the early stage. The effect is that the public sector, whether we like it or not, is incurring an additional liability in order to purchase the assets from the private sector, and while the immediate effect on the money supply is nil, because the increase in the liabilities of the public sector is offset by the net acquisition of public sector debt by the non-bank private sector, the liabilities are still there. We will face the fact that this issue of Government stock, while having no immediate effect on the money supply, does one thing. The Government are claiming they are going to reduce public sector borrowing requirement by increased productivity and output and go on and on about investment. If we do see an upturn in world trade and an upturn in demand and we pull out of recession—and, frankly, the signs of the world coming out of recession are not as encouraging as they were even a few weeks ago—there would immediately be a demand for money and for investment, and that, coupled with the Government taking more money out of the market through gilts, would have a very substantial effect on M3 and also on DCE, which is the one thing the IME worry about.

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I am not arguing very strongly on this because there are ways of financing it, but the level of indebtedness and the level of increased liability which the Government would incur to finance £2·1 billion is so substantial that it is something that would cause any economist, any banker, or anyone else apoplexy unless the Government put forward a reasonable reason as to how they are going to do it. I am not arguing about a reasonable return upon capital at this point. I do not believe that an adequate return upon capital is possible without clearly defining "adequate". All I am concerned about is that the liabilities which the Government will take on in doing this are not so great that they could be a major contributing factor towards further bankrupting the nation. I beg to move.
2.11 a.m.
Lord GOODMAN: I am grateful to the noble Lord who has just sat down, first because he woke me up by the breezy nature of his speech and kept me awake by the figures flashing about in the air, which almost gave me vertigo, and gave me a valid and respectable opportunity to say what I want to say now instead of having to wait some further hours until Clause 35, because he made the valid point in relation to his Amendment that one needs to know what these companies are going to cost.
The provisions of Clause 35 render it nearly impossible to decide at this stage, or indeed until very much later after the operation, what the cost is going to be, and the delay involved and the nature of the procedures under Clause 35 have in them so inherent an injustice as to make it proper to appeal to the Government to reconsider the whole basis of compensation, not merely because they cannot know the cost but also because of the unfairness involved. It is right to put this in the most moderate terms. Nobody knows whether Clause 35 will work well or ill for any particular company; nobody knows whether we will, in the event, produce an injustice in terms of someone who had his shares acquired at too low a rate, or whether some other individual will have his shares acquired at an excessive rate. What we know is that built into the whole operation, into the whole computation, is a complete roulette
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element which is quite inappropriate for a situation of this kind.
There are two bases of valuation under Clause 35. First, there is the basis for shares which are quoted. Unhappily, or perhaps happily, of the number of companies involved, which I think is 40 odd, only one has a share quotation, so that the highly speculative and notional operation relates to the great majority of the shares concerned. In relation to the one which has a share quotation, the method is manifestly unfair because I have never heard of a takeover of a company at precisely the Stock Exchange price. This is a total novelty to me, and I think to anyone with any acquaintance of city and financial matters.
The operation of the Stock Exchange is in relation to relatively small holdings of shares processed at a Stock Exchange price. When seeking to acquire the entire shareholding of a company it is not merely unusual but inevitable that you will add some premium to the Stock Exchange price, for the reason that you are not acquiring a minority interest which has, by definition, a lesser value than the total interest; you are acquiring the total interest which calls for a different price. There is only one company affected by this. In relation to the other companies it appears to me that the financial arrangements have been devised by the late Lewis Carroll. I did not know he had engaged in financial operations until I read this Bill, but they make Alice in Wonderland a work of the most sober and realistic character.
What is to happen, apparently, is that a notional Stock Exchange price is acquired from the 43 companies. I have never heard of a notional Stock Exchange price and I do not have the slightest idea—and I shall be delighted to hear from some pundit on the Government Benches how one can contrive such a situation—how such a change in price can be plucked out of the air. It derives from the fact that there is a starting point at which permission to deal is obtained. That permission to deal is obtained from an advertisement or out of a detailed document setting out a great number of matters relating to the company's affairs. Those matters are, in particular, what number of shares are being placed on the market, who the directors are and what

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luminaries are being added to the board; an innumerable number of factors that cannot be introduced into the question of a notional price.
There is no way of doing this, except on the basis that we are to have an arbitration procedure. I invite the Government to consider whether, if they are going to have an arbitration procedure—and I do not want to delay the Committee for more than a few moments at this hour of the morning—it would not be much more sensible to follow the usual principles and allow the arbitration to relate to the value of the assets being acquired, let the vendor make his case to the tribunal, let the Government make their case and let the arbitrator decide what the price is to be. To introduce as a supervening consideration a total financial novelty, amounting in my view to a total impossibility in the way of a notional Stock Exchange price, would produce not only obvious injustices, not necessarily excessive or inadequate prices, but would create an amount of work and argument that could last for ever and could leave the Government for years without any idea of what had to be paid.
I have, I hope, presented my views in as moderate a fashion as possible. They could have been presented in more violent language having regard to the absurdity of the notions that are involved in the Bill, but between now—I will not say between now and the Committee's arrival at its consideration of Clause 35 because I hope not to be here by the time Clause 35 comes up for consideration, as exhaustion will carry me back to my home—and Report I invite the Government—
Lord SHACKLETON: May I interrupt the noble Lord, to ask him to what he is relating his remarks so far as this Amendment is concerned? I would say that the noble Lord is taking undue advantage of your Lordships' tolerance. His remarks relate primarily to Clause 35 and he is tagging them on to the Amendment simply so that he can go home early.
Lord GOODMAN: Nothing would have induced me to tag my remarks on to the Amendment in order to go home, great though is the temptation to go
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home. What induced me to tag my remarks on to the Amendment was the fact that the Amendment makes it entirely appropriate and relevant that we should consider what sum of money is involved in the acquisition of these companies. The Amendment having been introduced, it would have been inflicting great .hardship and cruelty upon myself if I had not taken advantage of a perfectly legitimate situation. Having said that, I think I have completely answered what I am sure was a kindly intervention by the noble Lord, Lord Shackleton. I would only add that these financial proposals are an absurdity. They are unworthy of the Government; they should be withdrawn and, having been presented with the opportunity of making this point at this time of night when I am still capable of some sort of organised thought—though that is for the Committee to judge—I am grateful to your Lordships for your attention.
Lord WARDINGTON: I am a stockbroker and we have heard a lot about prices. What are these companies going to cost? It is said that the purchase price given by the Government will be based on a Stock Exchange price. The Stock Exchange does not purport to represent in any way a fraction of a whole in arriving at the price, nor do the prices of shares represent anything other than the whole based on a balance of earnings and assets. This is very well illustrated in the bid situation of Teachers, which appeared last week. The price of the shares on the Stock Exchange in the ordinary way and looked at as an investment was 190p. After the bid it rose to 380p and it is now over 400p.
I should like to try to explain why I think that the price in the Stock Exchange should be altered to assets. Most people view a Stock Exchange price basically as a totality of the company concerned. It is based on earnings and capital and the relationship of one with the other. However, in a bid situation, there appears a much more important factor and a new one, in that the assets become of paramount importance and the value of those assets is what is looked at. The bidder not only has to look at the company as a whole but has to break it down into various components. While one bidder may attach great importance to one part

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of the company, another may attach a very much greater price to a different part or component.
The point that concerns me is that I fear that, in concentrating on Stock Exchange prices, the Government—and I am sure that they are totally unaware of it—are laying themselves open to comparison with some of the activities of the so-called financiers and with some people in what the Press call the City. In this connection, I should like to emphasise that most of the people who have been hitting the headlines lately have not been established in the City for very long. They are forgetting about the assets or manipulating them. The undesirable financial activity of these people was of two kinds: the first and perhaps the less open to criticism was a conglomerate company with great growth potential which was able to issue ordinary shares to take over other companies and acquire earnings. They were able to issue ordinary shares on a very low base and acquire earnings.
Another method was to issue unsecured loan stock with a high rate of interest so that they would command a price of par in the market and satisfy the purchase of a new company without giving up any of the equity themselves. The ordinary shares of the company being bid for would respond to this bid, but the response was related solely to the market or Stock Exchange price, with little relevance to the underlying value of the assets. Many of these conglomerates and financial leaders have run into trouble today through issuing high coupon unsecured loan stock without due care for the future, and this is exactly what the Government are proposing to do. I am sure that they are not aware of it, but they are intending to issue a high coupon Government stock to buy a company's assets based on share prices and prices related thereto, and not related to the value of the assets. I really think that this is very important.
2.25 a.m.
Lord HANKEY: I hope that due weight will he given to the most important intervention of my noble friend Lord Goodman, who has enormous experience, in this field, and to what the noble Lord, Lord Wardington, has just said, because
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these are very important issues. I hope that when we come to Clause 35, to which they are rather more relevant—and I say that with all respect—they will be able to repeat those observations to your Lordships in order that these issues may be very scientifically considered.
I want to back up what was said by the noble Lord, Lord Selsdon. Here we have our country in a state of being grossly over-borrowed, in a state of permanent deficit of thousands of millions every year, and yet at this stage of our affairs, with the pound facing the real crunch, the Government have the nerve to bring forward a Bill—in the middle of the night, incidentally—which will cause a borrowing requirement. I do not know whether the noble Lord, Lord Selsdon, is right, but it may be in the region of another £1,500 million, and I should certainly calculate it at not less than £500 million. This is to be done with money raised at a time when the Government are at their wits end to raise money to meet the ordinary deficit.
How would one suppose that one is going to add to the public deficit financing in a responsible and sensible way when one brings forward this totally irrelevant Bill which bears no resemblance to the needs of the industries concerned, and which will add to the problems of our country at this time? It is really most irresponsible. I speak now not only as an ex-diplomat with economic experience, but as a person who is now in business. When one settles down to raise a lot of money one says to oneself, "I am going to use this money in such a way that I shall make more money than I pay for raising it."
If one raises money at a coupon of 15 or 16 per cent. one has to have a jolly good prospect of making large profits. What are the prospects of making large profits out of shipbuilding? One may make something out of aerospace if one can run it sufficiently well, as the present private corporations do; but I very much doubt whether, on the performance of the nationalised industries, the Government will be able to do that. But on shipbuilding it is unquestionable. The Government are going to let the country get into the position of losing an enormous amount of money on the money they are to borrow. They are going to add to the

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borrowing, requirement; they are going to make it harder to raise the money they need to run our country, and they are going to get themselves into further trouble with the IMF. The whole thing is utterly ridiculous.
Lord MELCHETT: In the view of the Government Amendment No. 114A, like the new clause of the noble Lord, Lord Selsdon, which no doubt we shall come to shortly, would actually weaken the financial disciplines imposed upon the Corporations by the Bill as it now stands, and for that reason I regret to say that Amendment No. 114A would be unacceptable to the Government and, I hope, to the Committee. As noble Lords know, the Corporation's capital will consist of a number of elements, of which the main ones will be two: first, long-term debt, whether to the National Loans Fund or to certain other persons from whom the Corporations may borrow; and, secondly, what may loosely be called the "equity stake"—that is to say, public dividend capital and reserves, ploughed back profits, and so on.
It is clearly desirable that a good return should be earned on the entire capital employed by the Corporations, and I imagine that that sentiment is shared on all sides of the Committee. The interest paid on long-term debt represents a return on the debt element. Merely to make a small "net profit" after paying interest, and after making allocations for depreciation, and so on—and that is the minimum requirement laid down, I understand, by the noble Lord's Amendment—could represent a very small return indeed (say 1 or 2 per cent.) on the equity stake, on the PDC element. In the Government's view that is quite clearly inadequate. The formulation at present in the Bill requires at least an "adequate return" on the entire capital employed, and that must be at least the payment of interest and an adequate return on the PDC and reserves element. I do not pretend that "adequate" is a precise term, but I can assure your Lordships that my advice is quite clear, it goes beyond the mere "net profit" which the noble Lord, Lord Selsdon, is suggesting.
There is one qualification which I should make to my exposition of the Bill going a great deal further than the noble
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Lord's Amendment would require. We do not believe it would be realistic to require in the Bill a net profit to be made in every single year. In a cyclical business, it is quite possible that there will be an adequate return over a run of years representing the business cycle in that industry, but very low returns—possibly even a loss—in particular years. I believe the noble Lord's Amendment would tend to conflict with that business reality—the cyclical nature of the business these two Corporations are involved in and the necessity to recognise the realities of that and that they may not be able to make an adequate return in some years and indeed might well make a loss. For those reasons—but principally because the Amendment would introduce a less stringent financial regime for the two Corporations than is now in the Bill—I hope the noble Lord will withdraw his Amendment.
2.32 a.m.
Lord THORNEYCROFT: Might I just say a few words on this Amendment because it seems to me to touch the heart of the Bill. As I understand it, this clause is concerned with the financial duties that we impose upon the Corporations and I propose to restrict my remarks to that and to the Amendment. I realise that the capital is relevant but it will be debated in more detail later so I will not follow in any detail what my noble friend Lord Goodman said.
We are concerned with the financial duties, and I take it that what we are talking about is something which precedes Clause 7. That is to say, I imagine that a corporate plan is not drawn up until someone has said what the financial duty of the Corporation is. If I am wrong in that I have no doubt I can be corrected, but it certainly seems to me to be difficult to imagine anybody drawing up a corporate plan, whether in consultation or not in consultation with the relevant trade unions, which dealt with capital investment, research and development, the employment of persons, the forecasts of income and expenditure on profit, without knowing what it was trying to do.
As to the nature of the instructions, it appears that they will not be given, or may not be given, until 12 months after the relevant vesting date. I only make this

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point as an inquiry since I am not clear how these procedures will be worked out, because first of all you have to decide whether they are to make an adequate return on capital or whether they are to make a profit in the terms of the Amendment of my noble friend, and thereafter a great deal of very complicated corporate planning has to take place. Perhaps the noble Lord, Lord Melchett, would explain to the Committee the order in which these events are supposed to take place. My own judgment is that whether one accepts the Amendment of my noble friend, or accepts the terms of the clause as drafted, if anybody is to get on with any very useful work, there will be a certain urgency in someone deciding what the objective of these Corporations really is. As we all want to make a success of anything that is done, I would ask the noble Lord to try to think about that and let me know.
The noble Lord, Lord Selsdon, made the point that, in addition to assets being taken over, there are liabilities that are taken over, and with those liabilities it is of course necessary to place certain obligations on the Government. The noble Lord, Lord Kirkhill, when he was dealing with these matters the other day at Question Time, sought to argue that this was just a transfer of assets; and, as the noble Lord, Lord Selsdon, said, this is an argument which we have all heard before. We have heard it in the case of private companies as well as public companies. It may be that the noble Lord can say that he is buying these companies cheap; it may be that he can say they are being acquired by the printing of Government paper. But the hard fact remains that, one way or another, as you nationalise one industry after another the obligations that fall upon the State to raise the money to run these industries increases every time, and I think your Lordships' Committee is entitled to ask: Where is the money coming from? However technical one can be, there comes a point at which everybody is going to say, "These industries may be very great industries but they are very costly industries to run, and where is the money coming from?" When one has thought about that, then one comes to a conclusion: What sort of obligation, in those circumstances and against that background, ought we to put on the Corporation?
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The noble Lord, Lord Kirkhill, with his usual courtesy, very kindly said that he was not ready with the immediate answer to some of the questions I asked him the other day, which are directly relevant, I think he would agree, to this debate, but that he would let me know. He most kindly sent me a letter, in which he said that I had asked who was responsible for the new capital formation when the aircraft and shipbuilding companies scheduled for nationalisation were acquired. Indeed I did. Of course, the question of new capital formation is the sort of question which seems to be omitted, very largely, from public debate. I do not know whether or not the obligations are as high as the noble Lord, Lord Selsdon, said, but I have a feeling that the noble Lord, Lord Melchett, does have an idea about this, because I do not believe for one moment that the Government have put forward this immensely important and far-reaching proposal without having calculated in some detail at least the parameters of this problem, and have some idea as to what is involved. Even if they had been moved to do so, I cannot believe that the Treasury would have allowed them to do so without the closest cross-examination of Government Ministers as to what was in fact involved on the money supply, on the public borrowing requirements and the rest.
The noble Lord, Lord Kirkhill, told me:
"The new Corporation will have a commencing capital to be determined retrospectively on the basis of the compensation which is paid to vesting companies when this has been settled".
That was not an extremely illuminating answer. It rather reminds me of the allegorical account of the Minister in your Lordships' House who, when answering a Question, read on from what the civil servants had written:
"This answer may seem a bit thin, but it will probably serve for their Lordships' House".
It will no doubt have to serve for me; and, to tell the truth, to be fair to the noble Lord, Lord Kirkhill, it is just about as illuminating as Clause 15, when we come to it, which does not tell us very much more.
The noble Lord goes on, as to the money—and this is the point I really want to make:

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"The capital requirements of the new Corporations after vesting will be met from four principal sources: funds generated internally by them…"
Again, I have a feeling that noble Lords opposite know what funds are being generated by them, and no doubt, like everybody else who takes over a company, they have plans for rationalisation, for redundancies and other matters which may be painful. It may involve unemployment. No doubt they have such plans; but they must have an idea whether they are going to generate more funds or less funds when these industries are taken into public ownership. I think that some discussion of those thoughts by the noble Lord would be at least rewarding in this Part of the Bill.
Secondly, funds from the Government, which I might leave for the moment. It is a large question. "What funds from the Government?" and "What funds have the Government got?" are questions that can be asked. Nobody imagines that they have £500 million. I do not think the noble Lord, Lord Melchett, would actually say that they had got £500 million. They are living on borrowed time and borrowed money already. The introduction of Bills which assume that they can produce money of that order is a little wide of the mark.
Then, overseas borrowing. I should like to ask the noble Lord what his plans are and what his ideas are about overseas borrowings. There are not many private firms at the moment who would borrow overseas to finance themselves. The risks would be very substantial. Every year they would have to write into their accounts very substantial provision against losses on the overseas loan. Will the Corporations include in their accounts provisions for losses on overseas loans? I think that this is an extremely relevant question.
I was puzzled to learn the other day—I will not embark on the electricity industry —that, in the midst of this major crisis, the Electricity Generating Board had borrowed £300 million. I wondered what they were up to. It seemed to me a most extraordinary thing to do. I realise that it has a short-term benefit for the Treasury on the balance of payments side; but I am puzzled as to why they should rely
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very heavily, or at all, on overseas borrowings. I should like an answer to those questions from the noble Lord.
It says, "where appropriate". When the Government say, "where appropriate", they must have got—and the noble Lord, Lord Kirkhill, must have had—some clear idea of what is deemed to be appropriate or not. I do not ask for an immense amount of detail, but what kind of situation would the noble Lords consider to be "appropriate"? If they could give the sort of background to their thinking about financing the losses or deficit on the purchase and capital formation of these companies from overseas borrowings "where appropriate", I should very much like to know.
Finally, there are bank overdrafts which, I can tell the noble Lord, cost quite a lot these days. They go on then to detail the other ways in which the Government might make up their funds. I see that this is going to be a costly business. I think that the noble Lords see it, too. And the question then arising is this. What obligation do you place upon the Corporations facing this situation? The noble Lord says that the words of my noble friend, "making a net profit" would be a weaker provision than his. His provision is:
"The Secretary of State shall not make, and the Treasury shall not approve, a determination under subsection (1) above, unless satisfied that the duties to be imposed on the Corporation concerned by the determination are likely, taken together, to result in an adequate return on the capital employed by the Corporation and its subsidiaries."
I think that my noble friend wants it to make a profit. I must say that I should have thought that this was a laudable ambition. I hope that the Government want it to make a profit. If the noble Lord does not like the precise words of my noble friend, I have no doubt that he can suggest others. But I say to him that to embark upon this exercise, with all the horrors of getting into a negative cash flow position, with all the possibilities of having to borrow heavily either at home or, worse still, overseas, to find ourselves running in this industry, which potentially is one of the most dangerous they have ever nationalised, into the kind of loss position that we have seen in other nationalised industries, is a very great step indeed.

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Therefore, I ask the noble Lord, whether he likes these words or not, first, to answer some of my questions about the financing arrangements upon which he proposes to embark but, above all, to indicate to the Committee that this is supposed to be a profitable concern, that it will not lean on all these devices, perfectly properly referred to by the noble Lord, Lord Kirkhill, and that it is not the intention to embark upon the massive flow of Government funds, overseas borrowing and the rest. I hope that the intention is to ensure that this is a profitable industry. We should certainly like the Minister to find words that would embrace that within the compass of the Bill.
2.47 a.m.
Lord MELCHETT: Yes, I can assure the noble Lord that the intention is that it should be a profitable industry. As I tried to make clear in my brief intervention, my advice, quite clearly, is that the words in the Bill at present put a more stringent duty on the two Corporations than those suggested by the noble Lord's Amendment. It may be that when one takes a superficial look at them the words do not give the noble Lord that impression, but I went into some detail in explaining why my advice was quite strong. That is the case and the Bill as it stands will place a more stringent duty, which I gather from what the noble Lord said he and I both wish to see, on the Corporations than the words suggested in the Amendment. That is why I suggested to the noble Lord, Lord Selsdon, that it might be better to leave the words in the Bill and not to press the Amendment, unless he actually wants to reduce the financial disciplines being placed on the two Corporations, which I do not think any of us want to do. Of course, I should be happy to listen to any argument which suggests that my advice is wrong and that the noble Lord's Amendment would actually place the Corporations under more stringent financial duties than those in the Bill as it stands. However, my understanding is that that would not be the case and, therefore, I would advise your Lordships to leave the Bill as it stands.
Lord CARR of HADLEY: On a point of information, can the noble Lord
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confirm that in his calculations of an adequate return he will take full account of my noble friend's reference to "all costs of financing"?
Lord MELCHETT: I am not quite sure which noble friend and where the reference to "all costs of financing" came. Is it in the Amendment?
Lord CARR of HADLEY: Yes.
Lord MELCHETT: I have not looked at the Amendment for some time. As the noble Lord will appreciate, we have ranged rather wide. My understanding is that the duty that is placed on the Corporations in the Bill will take into account the capital employed by the Corporations, which I think is what the noble Lord has in mind.
The noble Lord, Lord Thorneycroft, asked about foreign borrowing, which I believe is dealt with under Clause 11, not Clause 10. However, I am happy to answer his question at this stage if the noble Lord would like me to. Whether and when Corporations borrow foreign currency will, of course, depend on the commercial judgments of the Corporations. I accept from the noble Lord, if that is the case, that it might not be wise for them to borrow abroad at this moment, but we are, of course, enacting a measure that will last for some time. It is right that the Bill should bestow on the Corporations the power to borrow abroad should they need to in the light of commercial situations ruling at any particular time.
The Earl of ONSLOW: Would the noble Lord please answer the most important question to which he has not yet given an answer? It is this: How much is this going to cost? Everybody wants to know this. If we cannot find out, it is to a certain extent a waste of time discussing all the financial provisions. It is like discussing something in a complete vacuum. We want to know how much it is going to cost and what interest the country is going to have to pay for it. If the profit is going to be less than the interest, it is exactly the same as going to your bank, getting an overdraft and putting that money on deposit: it is stark, staring, raving mad.
Lord MELCHETT: With respect, this again goes rather wider than the precise terms of the Amendment. If noble Lords wish to press me on it, and with with the leave of the Committee, I can go rather wider than the Amendment that we are discussing. I am happy to do so. The noble Lord, Lord Selsdon, and others, asked for an estimate of the cost of compensation. As the noble Lord acknowledged, the Government have said all along that the request to give a figure could not be complied with because it would inevitably prejudice the negotiations and pre-empt the arbitration that would follow the negotiations if we stick to the system for arriving at compensation at present in the Bill.
When we discuss compensation, I gathered from the noble Lord, Lord Selsdon, that he would like to see the method of arriving at compensation completely changed from that outlined in the Bill. If that were done, it might be possible to arrive at an estimate of the figure. I think it would pre-empt the discussions. Indeed, as I think the noble Lord, Lord Selsdon, pointed out, if the Government were to give a figure it would either hopelessly prejudice our position in any negotiations or, alternatively, I should have to give your Lordships a misleadingly low figure to ensure that I did not prejudice the Government's hands in such negotiations. That has been the position all the way through the discussion of the Bill, and remains so.
Then there are the working capital requirements. The need for external sources of new capital, in other words, new borrowing and new PDC, but not including ploughed back profits, is covered by the limits in Clause 11. That is something we shall no doubt get to when we have dealt with Amendment No. 114A. We expect the limits in Clause 11 to last, roughly, five years.
There is one other source of working capital which is provided for under Clause 45. That, as noble Lords will know, is offset by the end of the launching aid for civil aviation projects. It will not be extra expenditure but it will be a different way of providing the same money that is provided at the moment under the launching aid requirements. The noble Lord, Lord Selsdon, gave the figure of,
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I think, £1,500 million over three years for the two Corporations. So far as I know, this has no basis in the likely requirements of the two Corporations. I have mentioned already the figures for external borrowings in Clause 11. A broad indication of the capital investment, which excludes research and development in the aircraft industry, was set out in the public expenditure White Paper early in the year and was less than one-tenth of the figure of £1,500 million which the noble Lord gave. The figure which I think he mentioned—although it was a long time ago—of from between £500 million and £1,000 million for a new aircraft is the kind of cost that we would expect from a really major aircraft project pursued entirely on our own.
As the noble Lord will know from earlier debates on the Committee stage and the Second Reading of the Bill, and many debates recently about the aircraft industry, it is clear to everyone that future civil aviation projects are going to be collaborative efforts between several countries, and therefore just because of the major cost of launching, such projects the cost will be spread between at least two, if not more, countries participating in the project.
2.55 a.m.
Lord WIGODER: I should like to ask Lord Melchett a question which may have already been asked in the course of this wide-ranging debate; but if that be so, I missed it. The Amendment requires the Corporation to seek to make a net profit after taking into account all costs of financing. This is a figure, is it not, that can be ascertained mathematically and precisely by accountants who can say whether or not the duty has been fulfilled? Under the terms of the Bill the Corporation is required to see whether it can obtain an adequate return on the capital employed. Who decides what is the adequate return? What criteria are used?
Baroness WARD of NORTH TYNESIDE: I should like some clarification. In the estimate that the noble Lord has made about the basic cost, has he already been in touch with all the shipbuilding companies that are to be taken over and the ship repairing yards—I shall not deal with the air side because I do not know anything about it—to find out what their

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assets, et cetera would be; or is he just making an estimate out of the blue?
Lord MELCHETT: I did not make an estimate on the value of the securities to vest in the two Corporations for almost the very reason that the noble Baroness has given; namely, that were we to name the figure in advance, it would disclose the Government's hand in the negotiations and arbitration that will take place. Throughout the passage of the Bill I think it has been accepted that that would be difficult.
The noble Lord, Lord Wigoder, asked me about the precise terms of the Amendment which I attempted to cover in my original reply, but as it was some time ago and the noble Lord said that we had ranged widely, it might be helpful if I repeated it. The Corporation's capital will consist of two elements: the long term debt, and what I loosely call the equity stake. They are two separate elements.
We agree that good returns should be earned on the entire capital, both the debt and equity stake. The return on the debt side will be the payment of a fixed rate of interest on that debt. My objection to the Amendment of the noble Lord, Lord Selsdon, is that the requirement that it lays down could represent a very small return indeed, say, 1 or 2 per cent. on the equity stake. That would be a net profit, but it would be a very small return. I accepted immediately that the term "adequate" was not precise. However, my advice quite clearly is that it will mean more than the net profit—the 1 or 2 per cent. or less—that would need to be earned on the equity stake under the noble Lord's Amendment.
Lord THORNEYCROFT: I should like to thank the noble Lord for what he said about overseas borrowing. It is rather an important statement because it seemed to be a reversal of what has been happening in recent weeks. There are recent instances of very heavy borrowing by publicly owned companies, and it struck me as most important that he should have said—and I agree with him—that in present circumstances it would be singularly unwise for a public corporation to be borrowing overseas. I think we should take note of that.
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However, the question which he did not answer was: When will these decisions be taken? I told him that it would be so difficult to do a corporate plan before someone had said what sort of return on capital you were trying to get. Whether it is adequate or net profit, I do not mind for this purpose, but when will it be decided? I do not follow—the noble Lord has not answered this point—how you can wait 12 months with that sort of decision in limbo and your corporate plan sitting around doing nothing very much. I should have thought that you must make a decision, not necessarily tonight, but very soon. Will he explain the sequence of events?
Finally, I do not want to press the noble Lord on what precisely he means by "adequate". However, does he mean, for example, taking the aircraft industry, that at least they should not earn less on capital employed than they are earning at present? If he could answer that it would be of some assistance to the Committee.
Lord MELCHETT: Yes, I certainly hope that the aircraft industry will do better than it is doing at the present time, particularly as the world economic recession recedes. I would not say that that would be the precise formula adopted; indeed, it would be a very imprecise and difficult formula to adopt. But, certainly, the broad intention is that the aircraft industry under British Aerospace should be profitable and we have maintained that belief throughout.
Maybe I can help the noble Lord a little on the sequence of events, which I agree will not be clear in the early stages. We dealt with this when we discussed the corporate plan on the previous Amendment, when I acknowledged that the corporate planning would take some time to get going. In the first few years, the plans might be rather less detailed and less precise than would be the case when they were rolled forward on a regular annual basis. I think the procedure would be that very soon after vesting—I could not possibly be tied to a precise number of days or weeks, or to the date; it would obviously depend upon several factors—an initial financial objective should be set for both Corporations. But it would be the initial objective, quite deliberately, to enable the corporate plan to go

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forward, so that after a period when the corporate plan was available for discussion with the Secretary of State a more permanent financial objective could be set. So that is the quite sensible way in which we would go about it.
Lord ORR-EWING: I wonder whether I heard the noble Lord correctly. The Minister in another place estimated that the assets could be bought for £300 million and my noble friend said £400 million, so we are not wildly apart there; although later on it was said that this method of valuing companies is neither fair nor equitable, but that is for the future. Then the difference seems to arise on the working capital. Whereas my noble friend said that £200 million of working capital would need to be injected immediately, and I would think that a reasonable figure, the noble Lord said that he expected that the borrowing powers, which are £300 million and £250 million plus £50 million making £300 million, would last for five years. So those are rather different figures—about half as much as my noble friend calculated.
Lastly, I come to the capital investment, and there is a very wide difference of opinion on the injection necessary. I think the noble Lord gave a figure of £150 million, but I believe he had taken that from the Blue Paper on public expenditure, whereas my noble friend said £1,500 million over three years. Am I not right in thinking that the £150 million figure in the Blue Paper on public expenditure had a caveat against it, and said that it did not allow for certain other figures? I think what we are saying in summary is that, whether you are taking the working capital or the capital investment necessary, the figures are very large indeed and one wonders whether the Government would not be well to think of ways in which they could reduce them. We come back to the fair and equitable treatment of those who are being taken over under this nationalisation Act.
Lord MELCHETT: There is one point raised by the noble Lord, Lord Orr-Ewing, to which I should like to respond straight away. I gather that the figure of £300 million—I am acting entirely on advice—was used by way of illustration by my
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right honourable friend the Chief Secretary to the Treasury on television and not in another place, though I stand to be corrected. It was used very loosely by way of illustration, and I understand that no one has subsequently tried to give the impression—and I would certainly not want your Lordships to have the impression—that that was in any way a fixed figure. As I have said, the consistent line of Government spokesmen in another place, and, I regret to say, of Government spokesmen here, is that it would not be right for the Government to give a figure in advance of the negotiations and arbitration that will take place.
Lord CARR of HADLEY: May I ask one question, which arises out of something the noble Lord said earlier, when he made the point, I think quite fairly, that these industries—and I believe he meant both, although I think he had particularly in mind the shipbuilding industry—are cyclical ones, and therefore it would be foolish to say that they would make a profit every year, and one would have to use the old phrase, which does not have very happy antecedents, that taking one year with another there would be a profit. I wonder whether the noble Lord can tell us what is the basic thinking when it comes to determining financial duties. Will this then be expressed in a number of years which cover the normal period of the cycle of these industries? As I say, I have particularly in mind the shipbuilding industry.
Lord MELCHETT: Yes, I imagine that it would. The financial duty may well be expressed in the terms which the noble Lord has mentioned of taking one year with another, stating that such-and-such a rate of return should be earned. However, that reply is subject to my being able to correct it if my off-the-cuff reaction is not entirely right.
Earl FERRERS: When the noble Lord was asked what it is going to cost, quite understandably he said that he and his right honourable friend did not want to say what it was going to cost because it would tie their hands in negotiations. My noble friends want to obtain an approximate figure. To me it is sinister that whole chunks of the Bill consist of a very detailed method of compensation and valuation and yet the noble Lord has

1017
insinuated by his answer that he and his right honourable friend and his advisers will then get locked into consultation with those who are to be taken over and that it will be a matter of horse trading: that they will argue between each other and the one who argues best will come out with the best result. That seems to me to be hardly a dignified way of carrying on a compensation exercise when it is apparently written into the Bill that the negotiations are to be conducted in a certain manner. Why is there this reticence on the part of the Government to say approximately what the compensation is likely to cost? Of course we cannot get down to the last £1 million, £2 million or even £50 million, but for the Government to say, "We cannot give any figure because we would be bound when we began the negotiations" seems to me to be somewhat sinister.
Lord MELCHETT: We shall be dealing with the compensation clauses no doubt later on this morning, but I thought I had made it clear that it would entirely prejudge any arbitration that is to take place on the compensation terms if the Government were to lay down a figure in advance. The noble Earl says, "Give us a rough idea", but, as I think the noble Lord, Lord Orr-Ewing, illustrated, when my right honourable friend the Chief Secretary gave a very rough figure which he had not intended to be anything more than an illustration we were immediately told that this was what it was going to cost. I know that the noble Lord, Lord Orr-Ewing, did not put it in quite those terms, but as soon as the Government give any figure, whatever it is and however rough we say it is, there is a danger that people will say, "That is how much it is going to cost and therefore the security must be worth so much". Therefore it would be wrong for the Government to do that.
We shall discuss shortly the way that the compensation is to be worked out, but it would he wrong entirely to prejudge any appeal to arbitration or whatever if the Government said, "This is what we are going to pay and that is an end to it".
Lord SELSDON: I think I give up in despair. Almost everybody in your Lordships' Committee is agreed that it is right that Parliament should know what kind of financial commitment the Government
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are to enter into. In the past we have been provided with figures. The Government started to give something; they said that subject to the passage of the legislation the Government would be concerned with the finance required for the new nationalised industry to carry on its business.
I want to know not how much it will cost in terms of paper transactions and the transfer of assets, but how much it will cost to finance it. The noble Lord, Lord Melchett, is quite right in raising the point that at this stage one cannot indicate what the Government intend to pay for a company when negotiations are entered into. We know about the mistake which the Chief Secretary to the Treasury made on television, perhaps without prior thought, but mistakes such as that can have an effect upon earnings or attitudes in stock markets, and we have to be extremely careful. But if one really comes down to it, I cannot for the life of me see why the Government cannot give a clearer indication of the level of financial commitment that will have to be made to these industries to keep them going and in order to up-date them and to make them competitive in the world.
One is often required to make estimates and calculations when one cannot meet face to face with a particular company. In this case one has made those calculations out of discussion, and I have estimated that the cost of acquiring the shares—which is, I suppose, in a way the initial capital—would be £400 million. It does not matter whether it is £400 or £500 or £600 or £800 million, in the context of the total commitment necessary the actual acquiring of the companies is almost minimal or insignificant if in fact one is using Government paper.
I am saying that there is a need for additional working capital. All right, the Government cannot say what that will be, but a figure of £200 million is very realistic at current prices; and when the noble Lord, Lord Melchett, says that aircraft do not cost money and European co-operation or international co-operation does not cost money, look at the cost of Concorde. All right; that is but one aspect. Look at the cost of the European airbus—another one. I think the Government should ask the aerospace industry how much it costs to develop an aircraft, either on your own or in co-operation;

1019
and co-operating internationally does not halve the cost, because of language complications and innumerable problems in dealing with other nations.
It is for me the most encouraging moment of my life that for the first time I have heard the Government declare that they believe they are capable of making a nationalised industry far more profitable than I would hope. I am worried about the liabilities on the nation; that is all. When the noble Lord, Lord Melchett, spoke about aerospace he said that the Government will make it more profitable and more successful. I think that is extremely difficult. I always take this document, Talking Points on Britain's Economy—things which we talk to people abroad about, and how much we borrow, but there is usually something good in it. This month we have good news—record aerospace exports: "Net exports of aircraft and engines from the British aerospace industry in 1975 were valued at a record £600 million". It continues: "On shipping exports, Austin & Pickersgill, general cargo ships, the S.D.14, now total £100 million, for 77 ships". I do not think there is anything wrong with some of the companies, aerospace particularly.
What I come back to at the moment is, please, will the noble Lord, Lord Melchett, bear in mind in this House and in another place there are people who, while they may disagree or agree with the Government's intentions, would like to know the level of finance involved; and that I take, as I have said, as a figure for working capital and equity of £600 million, and an input needed in one form or another of borrowings or new capital of a further £500 million a year over three years. Three years is a reasonable cycle for these industries; five is perhaps too long. They have cash flow problems at one end of the cycle and they have considerable liquidity problems at the other.
The purpose of my Amendment was really to solicit additional information, and also to draw attention to the point of adequate return on capital. The other day my noble friend Lord Redesdale asked the Government whether they could give figures of percentage returns on capital and the noble Lord, Lord Jacques, answered. He said that unfortunately the tables show rates of
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return on net assets calculated before interest and after historic cost appreciation taken or derived from the annual reports and accounts of the industries concerned. It shows nil for steel and 14 for the Post Office—an enormous jump, almost treble over one year; but it does not come hack to the basic point that our nationalised industries in general have been historically under-capitalised, have been short of money and have not been given freedom of management.
If this Bill is to go through and these two industries are to be nationalised, then surely the Government must make up their minds as soon as possible how much money they need to inject, or how much it would take to acquire the industries. There are many people around who would willingly give some sort of help or support or advice.
I will not press this Amendment because it is not satisfactorily worded, but I would ask the Government to return to the Code of Practice. In the City we talk about very substantial acquisitions or reverse takeovers. The Code says this:
"Where a listed company proposes to acquire another business, company or companies, all or some of which are not listed, and the transaction would be one where the relevant figures on the basis set out in paragraph 5 would he 100 per cent. or more, or which will result in a change of control through the introduction of a majority holder or group of holders, that transaction will be deemed to be a reverse takeover "—
which this is. The Council of the Stock Exchange will normally require that the transaction be subject to the approval of shareholders and that the listing of the company security be suspended. This suspension will usually last at least from the time when the acquisition or acquisitions are announced until the shareholders' approval has been obtained and all relevant information made available. This is a sort of twilight period that we are in at present. It is normal practice. This must include an accountant's report on the business, or unlisted company or companies to be acquired, and a pro forma balance sheet of the group as reorganised.
These are reasonable things to ask for. It does not take much for the Government to start and draw some "ball park" figures not on acquisition but on the level of investment needed. The industries know that there has to be investment,

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know that it costs money and that they have to compete on a worldwide basis.
Many arguments have been advanced on the question of compensation, which we will come to later. We come to the nub of the matter, which is: can the nation afford to take on a commitment which at present it is said is open-ended and which I have said is about £2·1 billion at this time. It may generate sufficient profits to reduce the funding requirement for the industries. I have never known any single group of companies or individual companies which upon acquisition by a third party has produced a higher level of profit immediately. It is not on. It has never happened anywhere in the world with any acquisition of any size. If this can be done, and if we can have, as many of us believe, both a viable shipbuilding and aerospace industry, I say good luck to management and the Government. But at present they are going about it in such an unprofessional manner that it is right that it should cause us all concern. I am not happy. I shall go on seeking information throughout this Committee stage, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Earl FERRERS Earl FERRERS moved Amendment No. 115:
Page 12, line 37, at end insert—
(" ( ) shall be consistent with any duties imposed on the Corporation by, or by virtue of any other provision of, this Act; and ").
The noble Earl said: I cannot help feeling a great deal of sympathy for the noble Lord, Lord Melchett, because he has had some difficult Amendments to answer, and if I may say so, he has stood up to the battle extraordinarily well. This will not be a difficult Amendment, I can assure him, if it is he who will answer it.
Clause 10 allows the financial duties of the two Corporations to be determined by the Secretary of State with the approval of the Treasury. This gives the Treasury considerable powers. What I should like to know is what are the kind of financial duties which the Treasury are going to impose upon the Corporations. Will they be targets of profit or targets of output? What kind of targets will they be given? What are the Corporations supposed to do
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in fact? Indeed, do these similar financial duties apply to existing nationalised industries? Did these similar provisions appear in other Acts which refer to nationalising other industries? It could be that the Treasury would request a level of profit, for instance to be imposed on each ship or on each aircraft that was produced. As I understand it, this is what the Bill could allow.
The difficulty is that Clause 2 states perfectly clearly what are to be the objectives of the two Corporations. One sees, in the case of British Aerospace, that they have to undertake
"the efficient and economical design, development, production, sale, repair and maintenance of civil and military aircraft and guided weapons;".
Clause 10(1) gives very considerable powers to the Treasury which could make the Corporations unable to fulfil the duties which Clause 2 imposes upon them. This modest Amendment merely makes any financial obligations which the Treasury may impose not conflict with the duties of the Corporations under Clause 2. It seems a reasonable request. If the noble Lord could give us some indication of the type of financial duties which the Corporations are going to be obliged to stick to, we should be grateful. I beg to move.
3.21 a.m.
Lord MELCHETT: It might be helpful if I say something about what will happen when the Secretary of State makes the determination as to the factors to be taken into account. First, he will have to act in the context of the provisions of the Bill as a whole, which would include the duties set out in Clause 2. It would not be possible, unless the Act specifically said so, which it does not, for a determination made under Clause 10 to override any duty imposed by the Bill. Secondly, there need be no fear of a determination being made which imposes an unduly low financial objective.
The financial duties must, taken together, be likely in the Secretary of State's view to produce an adequate overall return. There is the need to pay interest on borrowed capital and pay a dividend on public dividend capital. The Secretary of State would have to take account of those factors as well as things like depreciation. In short, the Secretary of State will be bound to take account of all the

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other duties of the Corporations, not merely because that is the legal construction of the Bill but because the Secretary of State wants the Corporations to earn a proper rate of return.
The noble Earl also asked about the form the financial duties might take. This might well be a percentage return over a period of years. But the Bill is deliberately flexible on the point. For example, before the commencing capital is determined, which may not be the case at the start, indeed I imagine will not be the case, the financial duties could not sensibly be expressed as a percentage rate of return on the commencing capital. In those circumstances it might well be sensible to set for the first year—or perhaps longer, but probably for a year at a time—a net profit figure to be earned by the two Corporations. That is one of the advantages of the flexibility allowed for in the Bill as it stands.
Earl FERRERS: I am grateful to the noble Lord for that answer. I think inadvertently he did not answer the question whether this is unique to this Bill, or are the financial duties incorporated in other nationalisation Acts? I ask because quite clearly other nationalised industries which have not made profits have not measured up to such financial duties as were imposed, if they were. Therefore, one might ask what is the point of imposing a duty if they cannot measure up to it. As I understand it, these financial duties are going to be quite simple in operation; they are merely going to be something like, "The Corporation will be expected to pay interest on its money and be expected to achieve a return on the capital involved". Is it as simple as that, and that it will not involve any greater detail?
Lord MELCHETT: I hesitate to give that assurance. Once it has been through legal advisers and other sources the noble Earl will know it always comes out in an extremely complicated form, and it may well be necessary to set different financial objectives for different Corporations, besides splitting up the two Corporations as separate entities and deciding what would be right in the different circumstances of those two Corporations. I do not think it would be quite as simple as the noble Earl suggested, and I should not
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like him to get the impression that I would agree with that. I would hope that it would not be so complicated that nobody could understand it, and it will need to be understood clearly by the Corporations. On the other question, my understanding is that the provisions in the Bill are broadly similar to previous nationalised industries' Statutes, and particularly modelled on the Industry Act 1975, but there are some differences in detail.
Earl FERRERS: I am grateful to the noble Lord for having cleared up that point too, and clearing up the point of how deep the financial duties will go. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 10 agreed to.
3.27 a.m.
Lord SELSDON Lord SELSDON moved Amendment No. 115A:
After Clause 10, insert the following new clause:
Balancing of Revenue account and surplus revenue
.—(1) It shall be the duty of each Corporation so to exercise and perform its functions as to secure that its revenues are not less than sufficient to meet all sums properly chargeable to its revenue account taking one year with another.
(2) Any excess of the revenues of each Corporation for any financial year thereof over the sums properly chargeable to its revenue account for that year (including as aforesaid) shall be applied by the Corporation for such purposes as it may determine with the approval of the Secretary of State given with the consent of the Treasury.
The noble Lord said: This Amendment follows on logically from my previous Amendment. The previous Amendment was to ask the Government to ensure that the new nationalised industries made a profit. This Amendment is to ask the Government to ensure that they do not make a loss. I have here taken a precedent from one of the existing Government corporations, the Commonwealth Development Corporation. I said to myself that there must surely be one Government corporation which is charged by law not to make a loss. There is one. Clause 16 of the Overseas Resources Development Act 1959 requires that the Commonwealth Development Corporation should not make a loss.
This precedent is a simple one. I only came across this when it was raised by one of the directors at an international conference at Stockholm recently. It was one of the most impressive things that the British delegation said there. They wanted to believe that there was a British nationalised company that was required not to make a loss, and nobody could believe that that British company had actually performed its function satisfactorily and had not made a loss. Two of the directors of the Commonwealth Development Corporation sit on the Benches opposite.
Would it be wrong to include something like this in the Bill? What I am thinking about is some of the general concern expressed abroad in international financial political and economic circles about the level of our indebtedness and about the likely run-away train, as some people call it, that could start off on Government borrowing, particularly on nationalised industries. If we embody in nationalised industries new clauses which require greater public accountability, or demand that there should be no loss, we could gain a little confidence. It was put in with a slight smile on my face because I never thought that the noble Lord, Lord Melchett, would say that the Government ought to make more profit than I thought it likely that it should. I am sure that when the noble Lord replies he will say, "Don't worry. It is going to make a profit because we have done all our homework, our sums and our planning and none of you need worry"—but when we find that it does not make the right profit we shall never know because we shall never know what an adequate return on capital should have been. I hope that the noble Lord will comment on this because if it applies to CDC, why can it not apply to others?
Lord MELCHETT: As the noble Lord, Lord Selsdon, rather foreshadowed, though not for exactly the reasons he foreshadowed, I hope to be able to persuade him that the new clause is unnecessary and that, because it conflicts with the provisions in other similar nationalised industry legislation, it would cause confusion to include it in this Bill. Historically, the position is this. The earlier nationalisation Statutes provided for the Corporations concerned to be financed by long-term borrowing from the Exchequer,
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what is now called the National Loans Fund. There was no provision for public dividend capital. In those earlier Statutes —and it applies still in the case of those industries without PDC—there was an obligation which this new clause seeks to impose on British Aerospace and British Shipbuilders—to break even on revenue account, taking one year with another, after meeting all charges including proper allocations to depreciations, reserves, and so on.
During the 1960s, public dividend capital was introduced into BOAC and the British Steel Corporation, and subsequently into NEB and others. In these cases, there was substituted for the "breaking even, taking one year with another" formula an obligation on the sponsoring Minister to prescribe a financial objective for the Corporation concerned. The reason, I think, is plain. If a Corporation gets all its external finance in the form of fixed interest loans, then if it breaks even after paying interest it is actually earning a considerable return on its capital. If, on the other hand, a substantial part of its external finance is in the form of PDC, then merely to break even will represent a rather low return on its capital. Plainly, therefore, something more rigorous is required, which takes us back, as I said it would, to the noble Lord's Amendment No. 114A. That is why the Secretary of State is required in this Bill, as in other legislation governing Corporations with PDC, to set a financial duty or duties so that a good return can be required on all the Corporation's capital. In fact, the requirement in Clause 10 is, in effect, to earn an "adequate" return and, as I told the noble Lord earlier, I am advised that this must as a minimum mean a positive return; so the new clause would be watering down, in the way Amendment 114A would have done, a good deal of the financial disciplines already in the Bill.
But the noble Lord's new clause has another effect which the Government consider is undesirable; it leaves a clear implication that surpluses should normally be retained in the business. We do not accept that as a requirement, though it will often be the case to a large extent. The concept of public dividend capital, as has been frequently stated, is that over a number of years, covering the business

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cycle of the industry in question, the Government should receive in dividend on PDC at least as much as they would have received in interest had the capital been provided in the form of long-term fixed-interest loans. PDC is intended, among other things, to provide a capital structure analogous to that of a competing private company, here or abroad; and competing private companies normally have to pay dividends on their equity. That would be the usual expectation. What is left after paying these dividends will, without any need for this provision, remain in the business and thereby reduce the amount of new capital requirements that have to be raised outside the business. For these reasons, I hope that noble Lords will agree that the new clause would, if anything—though I agree that it is marginal—detract from the rigorous financial regime under which the Corporations are required to operate and that therefore it would be preferable to leave the Bill as it stands.
3.36 a.m.
Lord SELSDON: I agree with the noble Lord. It is odd to be trying to be more moderate on this side, but I am concerned because I do not believe that in the current climate, with interest rates as heavy as they are at the moment, an adequate return on capital can be obtained. Perhaps I should describe that adequate return. In the current climate, an adequate return on capital must be more than the cost of borrowings and it is generally considered in most industries—and I believe that aerospace would be one—that companies making new investments would expect to obtain a return on capital of not less than 20 to 25 per cent. In the shipbuilding industry, while there are some companies that can do extremely well because of good management and good labour relations, one would not seek such a high return. However, one is talking on that sort of level of return in the current climate.
The arguments that I have advanced before have been that the cost of financing, whichever way one looks at it, will be high. We know that the Corporation will borrow and that it will borrow abroad. We know that, at the current rate, if it borrowed in Eurodollars, it would be 6 per cent. plus, say, 7¼/7½. If it borrowed
1028
sterling, it would be 15 plus 1 over 16¼. These are fairly hefty charges to incur and it would be right and proper that those charges should fall upon the Government or the industry. But I should prefer the industry to have the right level of capital to get it off the ground. I shall come back to that, but I do not believe that the other industries have had this. That has been the case with steel and right the way through in the past. If we have a new situation, for goodness' sake let us give them the right amount of money to work with from the word "go"!
To come to the second part of the new clause, the concern we have is that we know that both these industries are industries of the present, the past and the future, and that they will require continuing inputs of money. The purpose of inserting this second provision was to try to make sure that the Corporation could utilise its own profits for further investment and, therefore, reduce the liability from the demands which it might place upon the Government and to stop the cyclical problem that can develop with these industries. Suppose you have the classic three-year cycle: there will be cash flow problems and a need for money at the start of the first year. At the end of the third year, when everything has been sold, the developments have been finished and the orders are starting to come in, there is a surplus. That surplus could be taken away by the Government, which might be full of good intentions, and utilised in other areas. Immediately, the new cycle would start again. The money would be taken away just before the company would need it for the next cyclical development.
We know that aerospace is a risky business. We know that shipbuilding is a risky business. Both are high risk businesses which require entrepreneurs, but I believe that one of the riskiest businesses of the lot is the Commonwealth Development Corporation. I do not know whether your Lordships know the terms of that, but the Commonwealth Development Corporation essentially takes equity participation in developing countries. Formerly this was in the Commonwealth, but it has since been extended to Zaire and, I think some of the Francophone countries—places where no-one in their right mind would go and take a high level of risk. The Commonwealth

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Development Corporation puts in money: it takes equity participation in agricultural projects and agro-industries. It involves high risk, and because of its Statutes to some extent and its good management, it always fails to make a loss.
This has been a splendid effort by the CDC. There is much that one can say on the need for public accountability and for some form of control rather than open ended and general statements. I do not believe that general statements, such as "adequate return on capital" have any meaning in a Bill unless they are defined subsequently, and I hope that the noble Lord will agree that this is one of the matters which his own Party will press. As soon as we know what it is, it does not matter how high or how low it is, we are faced with the fact that there are nationalised industries. Let us define what it is and judge people by that definition.
Before I withdraw the Amendment, I should be glad if the noble Lord could comment a little further about what he would regard as an adequate return. If he feels that he cannot, will he give some assurance that this is something which will be raised during the passage of the Bill or as soon as possible immediately afterwards, and that we will not be faced with the establishment of these two industries without some clear guidance as to what the Government regard as an adequate return. The noble Lord need not do it now, but I hope he will bear it in mind as something for which we all ought to press, because otherwise we stand in danger of just going slowly down the plug.
Lord MELCHETT: Yes; I entirely agree with the noble Lord. I do not intend to do it now, and I think I judge from the noble Lord that he did not really expect me to do so. In response to an earlier Amendment—I think it was in response to the noble Lord, Lord Thorneycroft, speaking on Amendment No. 114A—I said that what would probably happen initially would be that the Government would set an initial target for the first year, which would be in the form of a net profit, which I know has attractions for the noble Lord, Lord Selsdon. At that stage it might well not be possible to know what was the capital
1030
on which the two Corporations were working because the negotiations and decisions on the compensation had not been fully worked out.
So I think that we are together on agreeing that there ought to be an initial target set as quickly as possible, and that it would probably be sensible to do that, although I would not say that that would be the only way of doing so. But one way of doing it would be to fix a net profit for the first year and possibly even for the second year until things had got into the swing of it. But I entirely agree with the noble Lord that it will be important to fix something definite as soon as possible.
Lord SELSDON: In the light of that and, as the noble Lord will appreciate, because of the unfortunate association of my name by one of his former right honourable friends in another place with the failure and the lame ducks of the shipbuilding industry, I am naturally sensitive to put this right and to ensure that in due course they do get on to profitable ground. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 11 [Borrowing powers of the Corporations and their wholly owned subsidiaries.]:
3.42 a.m.
Lord HIVES Lord HIVES moved Amendment No. 116:
Page 13, line 7, leave out ("and") and insert ("given with").
The noble Lord said: With the leave of the Committee I should like to take Amendments Nos. 117, 118, 119 and 121 together. Most provisions of the Bill make it clear that it is a responsibility of the Secretary of State to satisfy himself that he has Treasury approval where necessary. This can be seen, for example, at Clause 12, page 15, lines 4 and 13, and at Clause 15, page 17, lines 17, 20, 30 and 35. In the cases noted in my Amendment, however, the wording of the Bill is ambiguous and appears to place upon the Corporation concerned the onus of obtaining Treasury approval in addition to the approval of the Secretary of State.
I believe that this question of responsibility should not remain ambiguous, and my proposed wording defines the responsibility in the way in which I believe it is intended. I beg to move.
Lord WINTERBOTTOM: I am grateful to the noble Lord for grouping these five Amendments together. I cannot share his concern that the wording as it now stands will cause unnecessary delay. The phrase
"the consent of the Secretary of State and the approval of the Treasury"
is a common form provision appearing in all the public corporation Statutes. It is not dreamt up for this particular Bill. In practice it does not mean that a Corporation has to make separate application to two separate authorities, with the time-consuming procedures which the noble Lord fears. On the contrary, the issue of such consents is handled quickly and jointly by the sponsoring Department and the Treasury, on the basis of a single application to the sponsor Department. The Department and the Treasury, in the normal way of consultation, reach a common view on the matter, and the sponsor Department in conveying the consent of the Secretary of State at the same time also conveys the Treasury's approval.
Therefore, the practice accords with the intention of the noble Lord in moving his Amendment. But the Government, although sympathetic, do not feel able to accept the Amendments because to do so would create an inconsistency—for what we believe is no compelling reason—with other public corporation legislation; and it is for this reason that I hope the noble Lord will agree to withdraw his Amendments.
Lord REDESDALE: If the noble Lord feels—as I rather gathered from what lie was saying—that this is a slightly better system than the one that exists, perhaps this would be the moment to create a precedent which could be used in future legislation.
Lord WINTERBOTTOM: Either it is the late hour or my rather croaky voice, but I do not think I said it was better. I said that the noble Lord feared certain limitations on the present wording and
1032
therefore was attempting to improve them by better wording, but I did not agree with him.
Lord HIVES: I thank the noble Lord for his reply and. in view of his explanations, I will withdraw the Amendment.
Amendment, by leave, withdrawn.
3.48 a.m.
Lord SELSDON Lord SELSDON moved Amendment No. 117A:
Page 13, line 27, leave out subsection (4).
The noble Lord said: I am afraid that once again, either on this Amendment or on the Question, Whether the clause shall stand part? I shall have to raise this question of borrowing in order to seek more information from the noble Lord, but I start with an Amendment which is based on an element of concern. I should like to delete the subsection:
"Each Corporation may borrow from any of its wholly owned subsidiaries, without any consent, approval or other authority."
I know that this is common practice in the other nationalised industries, but at this particular point and in connection with these particular industries to be acquired under this Bill there are some anomalies which we must take into account and some very real reasons for concern.
As I mentioned earlier, there is a tremendous difference between the good company at one end of the spectrum and the one in difficulties at the other. There are also tremendous differences in the regional location of the companies and it is not by chance that the good ones are scattered around. In general we know that some have been fortunate enough to have good management, receive good orders, be on the right design track, and they have produced good products, earned good money, had positive cash flows and have a relatively high degree of liquidity at the present time. This degree of liquidity and success has a great deal to do with morale among labour forces and others working in the shipbuilding industry. I think particularly of shipbuilding.
Those of your Lordships who have been privileged to go to launchings, or have become involved in the shipbuilding industry in one way or another, will know how important is the feeling of

1033
Co-operation and the mood of success in the development of a profitable business in those fields. Each yard in general—and even different yards within individual companies—has a pretty shrewd idea of how things are going. Most of the activity is visible. They can see what is going on. They know when things are busy and when a company is doing well. They also know from history that if a company does well it is likely there will be new orders, new jobs, new investment, and if a company does badly their livelihoods are at stake.
What I am concerned about is that, among the good companies—and it is as important to the Government to give encouragement to the good companies as it is to support the bad ones—if it becomes apparent that the Government can at a whim transfer money from one company which is making money to another which is losing money, then a lot of the incentive of those particular companies or yards will disappear, and with it will come the general feeling of apathy which exists in so many sectors of the nation that it does not matter how hard you work or how well you do, you are never going to get anything out of it. This is a point on which I should like the noble Lord to comment. If he can give some reassurance that immediately after nationalisation the nationalised companies will not start transferring funds from one subsidiary to another, so much the better; but this is a difficult assurance for him to give because to some extent it prejudices the Government's own negotiating position.
But what causes me added concern is that we are so confused with large groups already, despite the very high standard of accounting practice in this country, and inter-company loans, and if these intercompany loans arc permitted without full disclosure, and further disclosure than is in fact normal in the case of those that are in big groups, your Lordships will never know which companies are doing well and which are doing badly. I think the way this is treated from an accounting point of view is fairly important. We know already that there are .these very good companies, and they should be praised for what they have done. It is important, too, that the goodwill which they have generated, which has a capital value and also a tremendous export sales value, is not dissipated by the knowledge
1034
that they could suddenly be short of money or that the money they are generating is being diverted, for political or other purposes, to high unemployment areas or to weak industries. Considerable pressure could be exerted by the Government upon the management of the new companies, and if the noble Lord could give us some reassurance on that, or at least accept that it is a point which needs consideration, I should be most grateful. I beg to move.
3.53 a.m.
Lord WINTERBOTTOM: To introduce my reply to the noble Lord, may I just read what the Bill in fact says? It says:
"Each Corporation may borrow from any of its wholly owned subsidiaries, without any consent, approval or other authority".
May I clear up the first point? It is not the Government which would switch funds: it would be the Corporation. The noble Lord said that it was a common practice of nationalised industries for this to be done. It is also, of course, common practice in private enterprise that there should he central banking of a group of companies, and that funds should be switched from one operation to another in order to optimise the use of the companies' funds.
Lord SELSDON: I said that the inclusion of such a clause as this was common practice in a nationalised industry Bill; and I said, too, that inter-company loans were common practice in the private sector. I feel that in this particular instance, because the nationalised Corporation is a Government sector, it will not have the same freedom of action as it would have had if it were in the private sector.
Lord WINTERBOTTOM: Having said what 1 have, I have a great deal of sympathy with what the noble Lord is saying because, having operated central banking, I know it is very often disappointing for a very successful company to have to underpin a less successful one for a time. This is one of the facts of life. I wholly agree with the noble Lord that, particularly at the beginning of this enterprise, the maintenance of morale in all units within the two Corporations is of very great importance. I am certain that since the men concerned with running

1035
these two new Corporations are experienced, they will in fact watch with care the impact of any policies that they may follow in this particular field; and what the noble Lord has said is, I think, a useful warning to people who are studying the problem by reading the progress of this Bill through your Lordships' House.
I cannot give any assurance that the new Corporations—not the Government but the new Corporations—will not rapidly switch funds about after vesting day and the time when they take over control of this group of companies. Nevertheless, I should have thought it rational and sensible for them to hasten slowly and to study the position of each company within the group—which is making a profit, which needs help and which can give help. For this reason, I believe that the noble Lord's fears (although based on experience similar to my own) must also be known to the men responsible for these groups. I am certain that they will exercise their powers with common sense and moderation.
Lord WARDINGTON: It is common practice among companies and their subsidiaries in one given industry to support each other, but it is not common practice for two companies which are totally separate and not subsidiaries or parents to support each other within one industry. This is what one is worried about. Here you are going to have companies in their own rights within one of the two Corporations and subsidiaries of other parent companies which, in themselves, in many instances are the biggest entities that will be forming these Corporations. One should not necessarily support another. This would not happen in private industry. You cannot imagine that BAC, for instance, is going to support Hawker Siddeley. It would not happen. To suggest that this might happen under the new Corporations set up might be terribly damaging to employees of either BAC or Hawker Siddeley; or—which is still a danger, as this seems to be all under this one Bill—you might get BAC under the noble Lord's suggestion perhaps supporting Vickers Shipbuilders.
Lord WINTERBOTTOM: The last supposition is not correct. Vickers Shipbuilders would be in one Corporation,
1036
in the shipbuilding operation. It would not have to be called upon to support any unit within the aircraft Corporation. I think the noble Lord will agree that we are placing financial limits on the operations of these two Corporations. It would be stupid to let funds build up in one particular company within the group and be forced to borrow to support or develop another. In order to optimise the use of funds available to the two Corporations, I believe that central banking and the power to transfer funds if necessary is one that we should give these new Corporations. I agree with the noble Lord that, in fact, this is a power to be used carefully because morale would be destroyed if a good company is milked to support a bad one.
Lord CARR of HADLEY: The sort of thing that the noble Lord is saying may be true in private enterprise groups. Indeed, it is true. But I think that he is leaving out of his considerations one of the factors which cause great concern to many of us and to many people, particularly in some parts of the shipbuilding industry. The noble Lord is comparing what is proposed here with what I agree is normal central banking practice in a private group. But in a private group it is normal, if that group is to succeed, that severe loss-making activities are eliminated. While there is a certain amount of transfer and, therefore, no doubt a certain degree of cross subsidy—there may be a decision to prop up for a year or two from one part of the group the perhaps shaky operation of another part of the same group—it is done because of the well-judged belief that the shaky activity nevertheless has a long-term future. What we are concerned about in the shipbuilding side is that certain of the companies which are going into British Shipbuilders are in a very heavy loss-making position indeed and have been in such a position for some years past.
In the current state of the shipbuilding market worldwide, it is very difficult to see how these companies will be floated off the rocks on which they have virtually wrecked themselves. This is one of the things that worried us the other day when we discussed the question of separating the naval shipbuilders from the British Shipbuilders Corporation as a whole. I remember expressing the fear, perhaps in

1037
the form of a question: was not there a danger that instead of the profits of these highly profitable companies continuing to fructify their own business and so, therefore, building on success to the benefit not only of those companies but of our balance of trade and our general economic wellbeing, they would be creamed off to try to sustain hopeless rescue operations on other members of the Corporation which, in a private company, would undoubtedly, however sadly, have to be eliminated as hopeless, loss-making situations?
That is the sort of thing that worries us about a nationalised corporation—that this sort of cross-subsidy on a scale which simply would not be possible in a normal private enterprise group will be indulged in. If it is indulged in, and if we are not very careful, we may find, as I think I said in my Second Reading speech, that nationalisation results in a vain attempt to prop up failure at the cost of not sustaining success. The final state will be much worse than the state we are in now, because our successful companies—and although I have mentioned only the naval shipbuilders, I am glad to say, as the Committee knows, that there are successful companies in the merchant shipbuilding area as well—will not build on their success and the money drained from them will not be sufficient to float the ones in real trouble off the rocks on which they are at present impaled.
Therefore, it is extremely important that, somehow or another, the Government should give us some assurance about this, bearing in mind that when discussing Clause 10 we spoke about the adequate profits, and the noble Lord, Lord Melchett, assured my noble friend Lord Selsdon that "adequate return" meant more than his net profit and all that sort of thing. Some of us, looking at the shipbuilding side in particular, wonder how this can be so.
I do not say that a Government should not in their overall view, both of the social needs as well as the economic situation of the country, decide to prop up a shipbuilding company which is in a hopeless economic position, at least temporarily until alternative employment can be found in that area. I am in no position to say that because I was a Member of a Government that did just that. That Government were criticised outside Parliament and by some of their own supporters for
1038
doing it. What one does for social reasons in order to gain time so that economic change can be conducted in a decent, humanitarian manner is one thing; but it is quite another thing if it is done within the context of a Corporation which is being charged to make an adequate return on its capital.
That is why I do not see the shipbuilding side of the Bill working out. I am sorry to say that it is my judgment that so many members of that Corporation will be it such severe financial trouble that I do not understand how a viable net return can be made on the whole. My great fear is that in an attempt to do so we shall milk the money from those which are a success and which, if they are allowed to keep the money, would go from strength to strength, and still fail to succour the ones in trouble.
The Government must take this seriously. While I am not suggesting that we should press this Amendment to a Division, I think that my noble friend, in moving this Amendment, has raised a very important point. I hope that at some time before we finish all stages of the Bill the Government will find some opportunity to let us know at least their thinking on the problem that I have put forward. The thinking I have put forward is probably not susceptible at the moment to be met by specific Amendments. Parliament ought to know what the Government's thinking is on the problem that I have raised. I do not want to be a Jeremiah and forecast failure for too many companies, but when I look at their present state and the state of the world shipbuilding market, I cannot help thinking that it is going to be very difficult indeed to risk some of these companies. It would be terrible to destroy the ones which are successful and which, if they could keep their money, would go on from strength to strength.
4.6 a.m.
Baroness WARD of NORTH TYNESIDE: The noble Lord, Lord Winter-bottom, said that he understood a company could become very bitter if its profits were taken to subsidise another company which was losing money. In the few words I want to say, perhaps I have a friend on the Front Bench. I fully support what was said by my noble friend

1039
Lord Carr. What arc the Government proposing on Tyneside or Humberside?—both are really in the area in which I move about from time to time. On Tyneside we have had a great deal of unemployment, but at the same time our shipyards have done very well indeed. Am I to understand that perhaps a shipyard losing money on the Clyde might have money transferred from Tyneside? If that is really what the Government are thinking, they must be mad. I am not saying that I want to be recognised as being English against Scottish or Welsh, but sometimes quite a good feeling of competition exists between one area and another.
If it is the idea of the Government that they are going to take money from one area which really has struggled very hard to obtain full employment and a profitable shipbuilding industry, and transfer it to another, then the feelings between Wales, Scotland and England would he understandable. The English are proud to he English: the same as the Scots are proud to be Scots, and the Welsh are proud to be Welsh. If you start trying to move money about from one area to another, perhaps making a profitable company on Tyneside lose money because of some other difficulty and to transfer the money to Scotland, my goodness, I can understand their feelings. I live on the right side of the Border and I do not think I need say any more because the noble Lord, Lord Winterbottom, realises the situation. It is tremendously important to know whether this is in the Government's mind. I think it would be absolutely "dotty".
I shall say no more than that. As my noble friend Lord Carr said, one can understand that sometimes when a yard has to be closed, time is given so that those who will lose their jobs can be retrained. However, if one has lived in an area like mine, one knows that one cannot retrain people in, for example, engineering—we are short of skilled engineers—in a very short time. It takes a long time to retrain for a highly skilled industry, and all that time we should be using money which belonged to a shipyard which had made a profit and which we had had, for some reason or other, to transfer to Scotland or Wales.
I am not discussing capitalists who have shares in profitable shipbuilding com
1040
panies. I am saying that the population would not understand. People are finding it very difficult to understand what the Government are doing at present. If the noble Lord opposite realises that, as I think he does, he will not want the English, the Scots and the Welsh to fight hard against each other without being able to arrive at a satisfactory solution themselves. I like people to understand even if there are difficulties in making them understand.
I am always trying to explain difficult matters to the people in my area. They do not always agree with me, but if you speak the truth, they know. I should not like to explain on Tyneside that money was being sent up to Scotland or to Wales because they would think that I had gone mad. I should not like them to think that I had gone mad: I would rather like them to think that the Government have gone mad!
Lord WARDINGTON: I agree with the noble Baroness, and should like to cross a "t" and dot an "i" as regards what the noble Lord, Lord Carr, said. Being reasonably young, although not feeling it at present, I should like to go West from the noble Baroness, to Barrow. Barrow is the home of Vickers Shipbuilding, which is particularly proud of the fact that it produces superb work. It is the only shipbuilding company that has never made a loss. In fact, it is the shipbuilding division of Vickers.
Barrow is dependent upon Vickers. If you start to take money away from Vickers Shipbuilding you will hurt Barrow. You will hurt an area which is entirely dependent upon shipbuilding. When I spoke earlier, I was talking about the aircraft industry and wondering whether shipbuilding could go to the aircraft industry, or vice-versa. The noble Lord very kindly said, no, that was not possible. However, it concerns me that an area such as Barrow, which provides the shipbuilding company that has never made a loss, might have its pride hurt by having its profitability distributed elsewhere.
The Earl of KIMBERLEY: I should like to ask the noble Lord a question which follows on from what the noble Lord, Lord Wardington, said. Do I understand that if one of the shipbuilding

1041
companies in the Corporation requires help—for example, a company that manufactures slow marine diesels—it could be bailed out by a ship repairing company or a shipbuilding company?—or will it only be bailed out by another engine company?
Lord WINTERBOTTOM: May I first answer the noble Earl? What the clause says is:
"Each Corporation may borrow from any of its wholly owned subsidiaries, without any consent, approval or other authority."
That means to say that the necessary funds can be transferred within the Corporation, from a ship repairing company to a diesel engine company, without any consent. Although that answer may not satisfy the noble Earl, that is the situation. The noble Lord, Lord Selsdon, and I had an agreeable theoretical discussion about the transfer of funds. Then the noble Lord, Lord Carr, made a valuable contribution when he took the discussion from the theoretical to the strictly practical. Like myself, he is optimistic about the medium-term future of the aircraft industry in this country, but one would have to be very blind indeed not to see that the shipbuilding industry must face severe problems during that same period. The problems are not all of their own making.
The noble Lord said that they had run themselves on to a rock. In point of fact, some of them may have done that, but others were swept away by the turbulence that came out of the Middle East. For this reason, we must realise that if we are to have and retain a major shipbuilding industry in this country, which is something we all wish to see, we have to take steps during the coming difficult few years to protect those shipbuilding companies which have been hit through no fault of their own. I think of Swan Hunter's unhappy experience over their contract with the Israeli firm, Maritime Fruit. That is the kind of situation where, for social reasons, it may be necessary to help certain shipyards.
As I said, I believe that the people who will be managing the Corporation will be experienced, and will not go out to damage the morale of the successful shipbuilding companies by milking them to prop up companies in difficulties. I can say with fair certainty that if a situation like that arose, a subsidiary's needs would
1042
be met by borrowing externally using the powers that we are giving to the Corporation. As the noble Baroness and others have said, it would be folly to destroy morale in a successful company in order to prop up one that was struggling. The noble Lord has himself admitted that, for very good social reasons, it may be necessary to support struggling companies until they are once more able to stand on their own feet, and I believe that the money for those purposes will come not from milking successful companies but from external borrowing.
Members of both Houses will be able to see what is happening, because individual companies will have to lay their accounts at Companies House, under the Companies Acts, just like any other, and this is one field where those noble Lords and Members of another place who are interested in this problem will be able to control the actions of the Corporation. I personally express the hope that the Corporation itself will give very full indications in its annual reports of what it is doing in this field. The noble Lord asked whether we could give some indication of Government policy on this matter. I will bring his views to the attention of my noble friend who is in control of this Bill, and Third Reading might be a suitable point to indicate the Government's present thinking.
4.19 a.m.
Viscount BROOKEBOROUGH: Listening to the noble Lord, Lord Winterbottom, I thought that the Government must somewhere have an estimate of the reduction in the capacity of shipbuilding in this country that must be made, and therefore what social problems will arise as a result. If they have not got that down at this moment it is very surprising, because I am sure that somewhere in the files of the Government this estimate has been made. Yet we seem to be pussyfooting along without meeting what is going to be a very serious social problem. It has been said that 60 per cent. will have to come out before British Shipbuilding can be made profitable. It seems to me that we are talking in unrealistic terms. Could the noble Lord say what reduction in the capacity of British Shipbuilding has to be made in the next five years, taking the European and the world concept into account?
Lord WINTERBOTTOM: No, I could not do that. However, as I said in answer to the noble Lord, Lord Carr of Hadley, I will ask my noble friend to give the Government's present thinking on this problem at, say, Third Reading.
Lord TANLAW: The noble Lord has expressed some concern about the morality of the possible skimming of profits from a profitable to an unprofitable company. Can the noble Lord say whether the Corporation will have any policy about retentions in profitable companies? It would give considerable reassurance to a number of the hoards of such companies to know that all their profits will not be taken and that they will be allowed to keep, say, 40 per cent. of their profits. It is good overall policy, as practised in the private sector, that the subsidiaries of, say, a multinational company should be fully aware that their profits may be used to assist other companies while at the same time there is retention of profits. Do the Corporation have such a policy and would the noble Lord support it, in view of what he has said about the possible damage to morale if there is a sudden movement of profits from a profitable to an unprofitable company?
Lord WINTERBOTTOM: It is much too early to say. At the moment we have an organising committee which will become the Corporation. All that I think I can say is that the organising committee must be studying the reports of this debate in your Lordships' Committee and will doubtless have noted what the noble Lord has said.
Lord SELSDON: Obviously the noble Lord, Lord Winterbottom, understands this problem from his own personal experience. However, some of the noble Lord's right honourable friends and honourable friends in another place have the ability not to understand the practical and psychological problems, so may I ask the noble Lord to bring the matter firmly to their attention? The noble Lord has pointed out that there would have to be substantial support for the ailing side of the shipbuilding industry, something which we on this side of the Committee and others have pointed out continually. My object in the earlier Amendment to Clause 10 was to drag out
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this fact and to point out that the Government will have to provide large sums of money for the ailing industries.
I should like to ask the noble Lord whether it is possible in any way to prevent the profits or the accrued revenues of the good companies from appearing to be a straight hand-out to the bad ones? The Government face the problem that they have to win the loyalty of the management and operators in successful businesses; they have been loyal to somebody else. This is one of the classic problems of any takeover acquisition. It is much easier to win over those who have worked in unsuccessful businesses because they will often blame the management and everybody around them, maybe, for their own failure to work hard enough. This is a real problem and I hope that the Government will bear it in mind. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 11 shall stand part of the Bill?
4.24 a.m.
Lord SELSDON: I wonder whether it is possible for me to elicit a little more information on the Question, Whether Clause 11 shall stand part of the Bill? My business is borrowing and lending, and there are certain areas of concern in connection with the borrowing powers of the Corporation in relation to wholly owned subsidiaries upon which I should like the noble Lord to comment. These mostly relate not so much to the overall borrowing limits that are imposed but to the limits that are imposed upon other corporations. I have reason to believe that the limits of many public corporations may soon have to be increased. This may be a normal inflationary exercise, it may be that they have further expenditure that they have not budgeted for; but can the noble Lord give some assurance that there will not be a sudden all-round increase in the borrowing powers of other nationalised corporations, or the limits that the Government set, because that obviously can have an effect as well? That is the first point.
The second point is the question of foreign currency borrowing by the public sector. As the noble Lord said earlier, much of the financing of these two

1045
industries will have to be carried out by borrowing, first in sterling and secondly by foreign currency borrowings—or alternatively. We know that sterling is extremely expensive at the moment and we know that Eurocurrency is relatively cheap. Of course, there is the exchange risk. We also know that in borrowings of this sort presumably—and the noble Lord will confirm this—both these industries could only borrow with a Treasury guarantee, and presumably if they were borrowing Eurocurrency they would in fact have to join the normal queue that the Treasury operates. Therefore in joining that queue they would take a very low priority because there are many other nationalised industries and the queue system is probably known to your Lordships: nationalised industries wishing to borrow apply to the Treasury and the Bank of England are very good with their controls office and there is a tendency to give priority—subject to different criteria—on a first come, first served, basis.
One of my concerns is that if immediately, as is apparent, the Government should have the intention that these two Corporations should borrow, the possibility of borrowing Eurocurrency, because of the fact that the Corporations would be at the bottom of the queue. would be considerably reduced and there would be a need to borrow larger amounts in sterling. We have seen this tremendous growth in foreign currency borrowing by the public sector. It is referred to in the Bank of England report and accounts, which I have here, that in the year to the end of February 1976 (these are figures I quoted before but I should like to raise them again under this clause) public sector bodies borrowed £1·3 million under the scheme, making a total of £6·5 million since the current scheme was introduced in March 1973.
The rate of growth of foreign currency borrowing by the public sector provides cause for concern if the basic economic ills are not put right. If they are put right it may not be quite so serious. Sterling may improve. We all believe that there are many things that can be done; we just have to believe that the right people are not in the right place doing the right thing at the present time. Perhaps the noble Lord could comment on those two aspects: the aspect of the
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Treasury guarantee and the queue, and secondly the whole question of public corporations' limits of borrowing powers being increased.
4.29 a.m.
Lord WINTERBOTTOM: Taking the second point first, I hope the noble Lord will forgive me if I do not comment on it, because I simply do not know. We are talking about the shipbuilding and aircraft industries; what the problem of the other nationalised industries is I cannot say, although one feels that with inflation being as it is and money being less valuable, more of it must be found to do the same amount of work. That is all I can say on that matter.
I agree that the problem of foreign borrowing must concern us at a time when the pound is dropping in value. The question of foreign currency has already been discussed earlier in this debate, and my noble friend Lord Melchett said that the matter would be for the commercial judgment of the Corporation. I believe we have to assume that they will have proper commercial judgment and will weigh the advantages and the risks of borrowing abroad.
A lot of the borrowing, of course, will have to be approved by way of Statutory Instrument. These Instruments will have to be issued to cover the borrowing listed in subsections (6) or (7). This is a situation change which would enable your Lordships to keep an eye on the policy being followed by the Corporation in order to see whether, in the judgment of your Lordships, the commercial judgment of the Corporation was correct. It would be an opportunity to comment on it and to draw the attention of the Government to any failings which may be noticed.
A note has been passed to me, to the effect that other Corporations' borrowings are increased with Parliamentary approval as and when required. I am not able to answer comprehensively, as I have said, but no doubt, if asked, the responsible Minister or the Treasury could give a more comprehensive answer. That is something on which the noble Lord may care to put down a Question.
4.31 a.m.
Viscount BROOKEBOROUGH: I should like to bring the Committee down from the high-flown areas of the total

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Corporations to the lower level dealing with part of Northern Ireland. My noble friend Lord Rochdale and I have an Amendment down to Schedule 2 which, if passed, would include Harland and Wolff and Short Brothers and Harland in the nationalised industries. Since this clause involves the financing of the companies in this Bill, I feel, with the permission of the Committee, I am entitled to raise this matter on this clause. The question of Harland and Wolff is not a minor matter. They represent 20 per cent. of the total capacity for the United Kingdom. I feel that if I can clarify a few of the points here it would help the Committee to decide whether it is right and proper to include Harland and Wolff and Shorts in the nationalised industries.
I should like to repeat what my noble friend Lord Rochdale and I both said, that we are trying to ensure that Harland and Wolff and Short Brothers and Harland have an equal chance, as do all the other companies listed in the Schedules. This means that somehow or other, in spite of being outside the Bill at the present moment—and we have an Amendment down to put them in the Bill—they have got to be guaranteed a free flow of information on research and development, and real access to the markets and continual interchange of ideas. But none of this is any use at all unless they have an equal opportunity of availability of finance.
The importance of Harland and Wolff to the Northern Ireland economy has been stressed in this Committee and recognised by this Committee, right across the Floor. It is a question not only of the economy, but also its stability in the present situation of violence. The Government have made it perfectly clear that they do not expect either Harlands or Short Brothers and Harland to develop in isolation from the two large nationalised industries. This is nothing new, because in years gone by, in the 'sixties, Whitehall decided, when Harlands were in trouble and the development of the supertankers was involved, that Harland and Wolff should become one of the mammoth tanker builders of the United Kingdom. This was a Whitehall decision and the Treasury provided the money. During
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Second Reading I asked the noble Lord, Lord Melchett, how much of the vast amount of money which has been provided for Harlands is in fact invested in the fixed assets. I should be interested to hear the answer.
But that is not the real issue at present, because about two years ago Harland and Wolff were again in trouble and there was an urgent need of more money. A great deal of money—£60 million—was provided, but an entirely new principle was invoked by the Government; £37 million of that came from the services in the Northern Ireland budget, and at the end of the day the Minister of State at that time said that not one penny more would go to Harland and Wolff from Government sources. That is a very serious thing to say, when we are now debating the financing of the shipbuilding industry of the United Kingdom.
Up till then what I would describe as job promotion throughout the United Kingdom had always been dealt with on a United Kingdom basis. So far as Northern Ireland and my own personal experience is concerned, the Northern Ireland Government and Her Majesty's Government had always negotiated about individual projects when they were as massive as this; because this is not just another 100 jobs or another 1,000 jobs; it is a massive refinancing. If there was justification for financing on that scale, then this was dealt with as a Treasury matter; the money was in fact coming forward from the Treasury.
Northern Ireland is unfortunate in one way, in that its finance is totally identifiable as going to Northern Ireland, and our services are run on what is called a parity basis; that is, the services, water, sewage, roads, hospitals, schools and the like, are generally considered to be on a parity basis. In some cases we in Northern Ireland think that a lot of that money has been rather better spent than it has been here. There are probably one or two cases where it has not; the noble Lord, Lord Melchett, will be able to see for himself and maybe rectify it. But it is, broadly speaking, a parity basis. Quite suddenly, we had £37 million taken out of the parity of services, with a further assurance from the Minister of State that no more money from the public purse would go to a firm which comprises

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20 per cent. of the United Kingdom capacity for shipbuilding. This was a completely new precedent in the field of job promotion. As a result of it, I could name the hospitals that have been delayed, the university projects which have been delayed, and the roads which have been abandoned. When the noble Lord, Lord Melchett, travels down to County Fermanagh, as he passes down what is called the "murder triangle" from Dungannon to my home, he will regret very much that this has happened, because that road has been abandoned as a result of this particular decision.
This was an iniquitous thing, to punish an area for a United Kingdom decision to make Harland and Wolff into one of the tanker building shipyards in the United Kingdom. It is a question of setting town against country. I think there is much to be said for making areas feel the result of nationalisation and to realise, if there is a failure and the Government decide to nationalise something, that this is going to mean less of something else. The question I ask is what is going to happen when an enormous "dollop" of money goes to Govan Shipbuilders? Are we going to have a line drawn round Glasgow? Are we going to find hospitals and roads abandoned in order to pay for that, or is Northern Ireland and Harland and Wolff the only part of the United Kingdom to suffer thus? If that is so, when we come to the Schedules I feel that my noble friend and I will have to think very seriously about asking for the support of this Committee in putting Harland and Wolff into the normal financing.
Apart from that, the question which must arise is this: when we get a shipyard which is not making money, and there is a decision to supply money from whatever source, for social reasons, and if the social problems are due to the failure of the shipyard, is the money in fact going to have to go through the shipyard sources or will there be discretion to be able to use that money as the area may need, if the 60 per cent. reduction, which I believe to be the figure, is going to happen in the capacity of shipbuilding in this country?
Lord BURTON: I understood the noble Lord to say that borrowing for these Corporations would be a matter for the
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commercial judgment of the Corporations. Clause 10(1) says:
"The financial duties of each Corporation shall be such as may from time to time he determined by the Secretary of State with the approval of the Treasury…"
Can the noble Lord tell me which it is? Is it for the financial judgment of the Corporations or for the Secretary of State to decide who shall do the borrowing?
Lord WINTERBOTTOM: I think both noble Lords were a hit off target. The noble Viscount, Lord Brookeborough, has given us a preview of the points he is going to raise on Amendment No. 213, and at the moment I am afraid I am not intellectually suitably prepared to continue the argument. Harland and Wolff has been kept separate from the creation of the Shipbuilding Corporation of this country because Northern Ireland still has a somewhat different political structure to this country. I believe that the future relationship between a future Northern Irish Administration and Harland and Wolff is something we wish to preserve. I think the noble Lord, Lord Burton, was talking about Clause 10 when we are discussing whether Clause 11 should stand part.
Lord BURTON: I wondered which was right. Was Clause 10 right, or what the noble Lord just said, that the Corporation would be responsible for its own borrowing? Clause 10 says otherwise.
4.43 a.m.
Lord SELSDON: The noble Lord did not answer the questions I asked; he said they were slightly difficult to answer. If it were possible for him to write separately to me about this, my concern is what procedures must the company go through in its foreign currency borrowings. I asked on the overall level of foreign currency borrowings, but particularly in this case on the question of a Treasury guarantee and the problems of the queue. Until such time as we can get the Government to say how they are going to capitalise the business, this particular element of borrowing, and foreign currency borrowing in particular, is important. As one knows from subsection (8):
"No part of the commencing capital of the Corporations specified under section 15(1) below shall be taken into account under subsection (6) or (7) above."

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This means that loans under the borrowing powers are not included as capital.
In the light of borrowing powers having been clearly defined, or a limit having been set on them, and in the light of the normal requirement that in this sector you should not have a business too highly geared, then it would be reasonable to assume that an undue equity/debt ratio would not be desirable. If the noble Lord could give us some indications as to what sort of equity to debt ratio he would consider worth while for these Corporations, what the Government's policy would be, that would give us something to work on even if he could not apply the total figures. My concern all along is on the gearing of the two businesses. If they are over-geared, they go bust.
Lord WINTERBOTTOM: This is something that the Corporation will have to think through when it has all the facts at its disposal, but I will write to the noble Lord and give him the present state of thinking on the subject.
Lord SELSDON: Without knowing, it is wrong to fix borrowing powers and it would be better to remove the figures and say that the Corporation will borrow whatever it is necessary to borrow as decreed by somebody who knows something about it. To lay down figures clearly there must be a base for providing them. My concern is about the relationship between equity and debt, which is a common principle of financing. I am sorry to press the noble Lord, but it is outrageous for the Government to push something forward really without us knowing what it is we are approving.
4.45 a.m.
Lord CARR of HADLEY: I must press the Minister on this. It is astonishing that on Clause 10 we had to form a judgment about the return on capital without having any of the information which a private company would be bound to give for a takeover bid in relation to the capital costs involved, and now, on this clause, we have this question of borrowing. I was about to raise this matter with the Minister had my noble friend not raised it. How do these borrowing powers granted in subsection (6) to British Aerospace and in subsection (7)
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to British Shipbuilders compare with the borrowing powers of the companies involved at the moment? What is the debt/equity ratio, at any rate in total if not company by company? Now that we are going to lump them all together I suppose it would be satisfactory to look at them in total for each industry. What is the existing gearing and what are the Government's views about future gearing? This is vital to Parliament forming a judgment about the financial viability of the proposals that the Government are putting forward.
I do not know what the Minister can do about this now. If he is not briefed on the subject now, at nearly five in the morning, he probably cannot get briefed at all. I hope that he and his colleagues will reflect on the utter irresponsibility in financial terms of coming to Parliament with an enormous scheme of this kind without having got this basic and elementary point about the financing of the industry ready to put before us. No wonder that many of us, regardless of our political affiliations, shiver in our shoes for the good of the country when another industry is sought to be nationalised. Who are the loudest in their criticisms of a private enterprise undertaking which goes bust because it has been careless over matters like this? It is hard to be louder over that than members of the Party opposite. Yet when they and their Ministers want to nationalise something, they behave more irresponsibly than any private company they condemn. This is an extraordinary way for the Government to behave, remembering that it is not their money. We are talking about our money, the public's money, not theirs.
I am afraid that all Governments have gone on in this way in the past, and as I become older the succession of failures among nationalised industries drives this home to me in an increasingly vivid manner. It is time to pull ourselves up because until we get some financial discipline in these matters we will never give these Corporations a chance to operate. We cannot expect them to operate properly unless we start off by giving them a reasonably sound financial structure, not only reasonably capitalised but with a reasonable provision of capital including a proper ratio between equity and debt. I hope that if the Minister is

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unable to deal with the subject now, at nearly five in the morning, he will give an undertaking to return to it later, and I had better give an undertaking that I and my noble friends will draft an Amendment for Report, which will at least be an occasion for the Government to give a reply.
Lord WINTERBOTTOM: I cannot accept the charge of irresponsibility. What the clause says is that borrowing up to the figures in subsections (6) and (7) —that is,£175 million extensible to£250 million in the case of aerospace, and£200 million extensible to£300 million in the case of shipbuilding—is permitted. But it also lays down that a draft Statutory Instrument must be laid and approved by the House of Commons before these extensions take place. I can now give the noble Lord, Lord Selsdon, and the Committee a rather better answer than I was able to give earlier. It has been a general principle that the ratio of the whole public dividend capital of a nationalised industry should correspond broadly to a similar industry in the private sector. If we compare the Corporations or, presumably, their integral parts with similar companies in the private sector, the indications are at present that the equity/debt ratio will be in the region of 60:40. That is the best figure I can give the Committee this evening.
Lord SELSDON: That is extraordinary. I should like to help the noble Lord because I think my noble friend Lord Carr was unduly critical of him and his right honourable friend. It has never really been the role of Governments to manage businesses. It has been the role of Governments to govern. I think we often make the mistake of assuming that the Government are not governing properly and I am sure that the noble Lord is determined to make sure that his right honourable friends start to govern properly.
As to the equity/debt ratio, the criticism that I would make of the whole of this Bill when we come to finance is that there has not been enough consultation with people outside in the private sector who know and who have the experience, and who would be willing to pass on that experience to any Government, whatever their political belief.
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The question of debt and general gearing is terribly important for these two industries. If I can hammer it home I will do it again and again. If we over-gear them we shall jeopardise the future not just of individual companies but of the whole industry. A reasonable gearing for an aerospace operation of this sort could be 2:1—two equity to one debt. In shipbuilding, there would preferably be a nil gearing in the initial stages until it was sorted out.
One welcomes the relatively low level that the Government have put on the borrowing powers in the hope that the capital injection and the capital structure of the businesses will be sufficient for them to operate profitably and efficiently from the word "go". If this does not happen and the Corporations are undercapitalised for reasons of expediency or because there is pressure upon the Government in the general spending of money, that could be disastrous. I know that the noble Lord will bear that in mind. A ratio of 60:40 is reasonable for private sector companies, but it is not a figure that one can draw across the board in these industries, because they are both dangerous industries if not well managed. I believe that the gearing aspect is an important one. I hope that the noble Lord will forgive me for having raised this point here, because it was not a point that one could put down on an Amendment. It was just something to make the Government realise that one of the basic elements of running a successful business is to get the gearing right.
Clause 11 agreed to.
Clause 12 [Loans by the Secretary of State to the Corporations]:
4.54 a.m.
On Question, Whether Clause 12 shall stand part of the Bill?
Lord CARR of HADLEY: I notice that in subsection (2) it is said that,
"Any loans made in pursuance of subsection (1) above shall be repaid to the Secretary of State at such times and by such methods, and interest on the loans shall be paid to him at such times and at such rates, as he may, with the approval of the Treasury, from time to time direct."
Can the noble Lord give us some idea about what will govern the rates of

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interest that will be paid by the Corporations?
Lord WINTERBOTTOM: I am afraid that I cannot answer that immediately. I can inform your Lordships at a later stage, possibly when we get round to discussing the whole mechanics of borrowing compensation. Presumably the loan interest rates must vary with the climate of the time, and surely what we decide today may not determine what we do in five years' time.
Lord CARR of HADLEY: Of course I should be very worried if that were not the case, but I was wondering whether they would be related on some formula basis to some base rate such as minimum lending rate, or whatever it may be. Clearly I should hope that they would vary, as the noble Lord says, according to the climate of the times. But at some stage we should like to know whether these Corporations will have to borrow at the same going rate that other industries, alas! have to pay.
Lord TREFGARNE: It might be helpful if the noble Lord could ascertain the answer to a hypothetical question; namely, what would be the rate of interest on a loan made to the Corporation if it were to exist today? The Government are having to pay no less than 16 per cent. for money that they are borrowing in the market place. Are they going to charge at least that rate to the Corporations?
Lord WINTERBOTTOM: The noble Lord is right; of course there is a relationship. In fact I have just learned that the relationship is governed by the National Loans Fund Act in which the rate of interest on loans must reflect the rates at which the Treasury itself can borrow.
Lord SELSDON: I am sorry to intervene again, but there is here something which I raised relating to the last Amendment and it causes me concern, but it is a simple calculation. If we talk of equity/debt ratios of 60/40 and the borrowing powers are totally utilised, as the Government said they would be over a five-year period, then the minimum cost is£1·4 billion on a 60/40 ratio, if one takes the total borrowing figure and apply it on that. I hope that the noble Lord will
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forgive me making that point, because I warned him and his noble friends earlier that throughout this financial sector I shall be doing what I think is right to solicit further information from the Government.
Lord TREFGARNE: I too am sorry to speak again, and I hope that the noble Lord and the Committee will forgive me. We have dwelt continuously upon the rate of interest of these loans. Can the noble Lord indicate what repayment terms are normally required? I can see nothing of that in the clause, but it would be helpful to the Committee, or at least to me, to know on what terms the loans are repayable. The noble Lord has told us that the borrowing capacity of the Corporations will be taken up over a period of five years, but surely by the end of that five years they will have begun to repay some of the loans that they might have had at the beginning of the period?
Lord SELSDON: If the noble Lord would like to resort to the private sector, there are noble Lords on this side of the Committee who could tell him at what rate the Government would borrow and for how long the loans would be because they are based upon market conditions, of which many of us are aware at the present time.
Lord WINTERBOTTOM: Obviously, the repayment must arise from negotiations between the Corporation and the Treasury, but the terms of repayment are by convention related to the average asset lives of the borrowing arranged. What that really means in five years from now I cannot say, because we may be very prosperous, we may be in greater difficulties. But, obviously, the repayment of loans must be a matter of negotiation between the future Corporation and the Treasury on the period under discussion.
Lord WARDINGTON: I hope that noble Lords will realise that at the present rate of interest of 16 per cent., and if it is a five-year loan, it is in effect doubling the amount of money that is required over that five-year period, because a gross rate at this time doubles the principal amount.
Lord SELSDON: I should like to interrupt if I may because I believe that

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there is a point here in what the noble Lord has said. We are facing a situation where the Government's ability to borrow is continually being questioned. I happen to believe that one of the ways in which we can improve our credit rating abroad is by being more forthright about Government spending. That is one reason for asking on this.
At the moment the Government could borrow for five to seven years. This industry requires long-term money. Therefore those in charge of it would be well advised to seek the longest term money that they can possibly obtain. That is not, in terms of long-term sterling, very long at the moment. In terms of dollars, if it were a private placement in America it could have an average life of, say, ten years. It is important for the noble Lord to understand that the more he can disclose, which will reassure people that the Government have not gone haywire and are failing to observe the basic rules of finance, the better this will be for our credit rating abroad. We should not have any scaremongering here. Everybody knows the level of borrowing that there is at the present time, but any information that is forthcoming can only help to reassure people.
Lord TREFGARNE: I apologise for speaking yet again, but we have, accidentally perhaps, alighted on an important point. I am returning to this question of the period of the loans that the Secretary of State may make to these Corporations. According to the noble Lord—and we do not dispute this—the money will come from a loan that the Treasury make or stock that the Treasury issue for this and other purposes. I hope the noble Lord can assure me, in my financial simplicity, that the Government will not borrow short and lend long, because I have always been told that that is a short-cut to disaster. Disaster, I must say, always seems to loom just around the corner so far as this Government are concerned and that may be one of the causes. I hope that the noble Lord can assure me that, in addition to the asset life that he referred to a moment ago, which I suppose means that loans made for the purpose of acquiring specific assets will be repayable over the life of that asset, loans made for more general purposes, like working capital and so on, which
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could not be tied to specific assets, will be made in some way equivalent to the life of the source of the money.
Lord WINTERBOTTOM: All I can say is that I am certain that the future Corporations will follow a conservative financing policy—using the word "conservative" in the best sense. They have a difficult road to follow and I am certain that they are not going to try to solve the problems of these two industries by gimmicky finance.
Clause 12 agreed to.
Clause 13 [Treasury guarantees]:
5.3 a.m.
On Question, Whether Clause 13 shall stand part of the Bill?
Lord CARR of HADLEY: I do not think we should let Clause 13 pass without drawing attention to the fact that this clause is the one in which the Treasury is given the power to provide guarantees to the Corporations when they seek loans from a person other than the Secretary of State. Such a loan, of course, can be either in sterling or in currency other than sterling, and so this clause brings us straight back to the important matter of overseas borrowing which my noble friend Lord Selsdon has already raised and given such importance to.
There is just one other general point that needs to be made in passing, and that is this. When Government spokesmen are inclined to say that all this operation is nothing but a book transfer and costs them nothing, what do they say about this guarantee? The moment the Treasury gives a guarantee, it is effectively undertaking a commitment in certain circumstances to increase public spending. Indeed, we have seen over recent years where certain public corporations have borrowed from abroad under Treasury guarantee that the Treasury has incurred substantial extra expenditure in order to fulfil that guarantee because of the fall in the value of sterling. In other words, this clause potentially commits the Government to substantial extra expenditure and we ought to know a little about what the current policy of the Government is.

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We were encouraged earlier when in answer to points made by my noble friend Lord Thorneycroft, the noble Lord, Lord Melchett, seemed to indicate that no sensible corporation would at the moment think of borrowing overseas. I only hope that the thoughts of the noble Lord, Lord Melchett were right.
Lord SELSDON: I rather agree with my noble friend Lord Carr on this, but I think my major concern is to ask the question: Will these Corporations be allowed to borrow without a Treasury guarantee? The normal requirement for nationalised industries which are borrowing abroad—and that is our main area of concern at the moment—is that they cannot do this without a Treasury guarantee. I asked this question before, and I will ask it again here. A Treasury guarantee is, in a way, some form of control, but if a Corporation is not allowed to borrow without it then it cannot get over-geared in the wrong way and at the wrong time. I think that if my noble friend could pursue this, I would be grateful.
Also, we have to look at the question: If a company such as this is allowed to borrow without a Treasury guarantee, on what does it borrow? The companies in the industry at the moment borrow, like others, on their balance sheets, and some have very high borrowing powers because of their past track record and degree of liquidity, and can borrow at reasonably fine rates. Others have not got a balance sheet worth speaking about, and therefore cannot borrow at the moment, so they have to resort to the Government. I think the whole question of Treasury guarantees needs looking at on a much wider basis in view of the ever-increasing commitment or engagement of the public sector or overseas borrowing. I think one would like to see the rule that the Corporations cannot borrow overseas without a Treasury guarantee, and cannot borrow at all without a Treasury guarantee, because the mere intervention of a Treasury guarantee does imply some element of control; and, as I have suggested before, I think these businesses under nationalistaion will be slightly more risky than they are even at the present time.
Lord WINTERBOTTOM: I think we are getting two things slightly muddled. We have still to discuss the economic significance of the compensation payments that will be made after the negotiations between the stockholders' representative and the Department have been completed. That is one thing. The other thing is the money necessary to run the businesses, which is really to what this particular clause relates. It is in fact a standard provision which appears in all public corporation Statutes. It allows the Treasury to guarantee borrowings by the Corporations from sources other than the Secretary of State. It is normal practice for the nationalised industries' bank overdrafts to be guaranteed in this way; and, indeed, any foreign currency borrowing is also eligible for guarantee. But if it is guaranteed, the Treasury is required by the clause to lay before Parliament a statement of any guarantee given immediately after it is given. But apparently they can borrow without guarantee. For instance, normal overdraft facilities for all companies which are already in being and trading would obviously continue or be permitted. For this reason, I think the answer to the noble Lord is that what we are talking about is the normal borrowing required either to re-capitalise industries or to provide them with working capital or additional working capital. It is a problem separate from the effects of compensation, which I expect we are going to discuss at some length and which arises on Clauses 25 to 31.
Clause 13 agreed to.
Clause 14 agreed to.
Clause 15 [The commencing capital of each Corporation]:
On Question, Whether Clause 15 shall stand part of the Bill?
5.10 a.m.
Lord SELSDON: This is a question I could resist very easily because I feel like breakfast, but again we come to the commencing capital of each Corporation. My brief notes here led me to believe that if, as I say, the Government's estimate of equity debt ratios was 60:40, then the minimum commencing capital of the Corporation would be somewhere around £800 million.

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This is getting nearer the billion figure that I gave earlier. It is, if my calculations are right,£825 million. The clause says:
"As soon as possible after the passing of this Act, the Secretary of State shall by notice in writing given to each Corporation specify as the commencing capital of the Corporation such amount as he may with the approval of the Treasury determine …"
We know that these are standard clauses but in this particular case, again and again, one comes back to commencing capital. We know that the commencing capital is not made up by borrowing as this was already raised in Clause 12; but we know that commencing capital can be made up of a number of things, bits of paper in one form or another. Can the Government even at this late hour give us an assurance that the commencing capital of the Corporations will not give an equity-to-debt ratio of worse than 60:40 within a five-year period and that we will always keep the equity level up?
Lord WINTERBOTTOM: Obviously, when negotiations have not yet begun, it would be impossible for me to give any undertaking at all. This House contains a wealth of expertise; its discussions will be read and we will have an opportunity perhaps to talk about it on the Third Reading, as I suggested earlier. I think that the noble Lord, Lord Selsdon, asked what was the Government thinking on this particular point and I said that I would try to satisfy him at a later stage of the Bill. I cannot give an assurance on the particular ratio for the actual commencing capital, but I can give an assurance that it will be of the order that we have already discussed; namely, 60:40.
Lord SELSDON: I am grateful to the noble Lord. He knows the points I am trying to make. I think that Third Reading could be too late. If it is possible to encourage his right honourable friend and honourable friends in another place to stop arguing so much with the Opposition about principles and to get down to brass tacks about how the business is to be run, we should all be grateful. I believe that the cost of setting up and running the business is one that this country cannot afford at the present time.
Lord TREFGARNE: At the risk of embarrassing my noble friend Lord
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Selsdon with my financial simplicity, could I ask one question about subsection (2)(a) where the amount determined by the Secretary of State (this is the commencing capital) is to include provisions for the liabilities incurred under Clause 35, which is the clause providing for compensatory stock? I may have this wrong, but does this not mean that the Corporation is assuming liability for the cost of its own shares? Is that not a novel arrangement?
Lord WINTERBOTTOM: If the Committee will bear with me I will read a rather long analysis of the exact meaning of Clause 15. The clause provides for the Secretary of State to specify the commencing capital of each Corporation. The securities of the vesting companies which will be transferred to the new Corporations will represent their inheritance. The Government will pay fair compensation to the shareholders for the securities. The commencing capital of the Corporations will reflect the amount of compensation so paid, together with the notional amount of compensation which would have been paid for the securities of those companies which are already Government owned. In addition, then commencing capital will be adjusted to reflect the value of those Government loans in respect of which the Secretary of State's rights and obligations are transferred to the Corporations under Clause 14.
The loans referred to are those made to the vesting companies under private ownership and remain outstanding at vesting day. In some cases these may have been given some time ago and their value to the companies may now be less, in terms of the use to which they have been put, than their face value. To account for this possible discrepancy, and so as not to burden the new Corporations with an unrealistically high capital structure, it is provided that the commencing capital shall not exceed the sum of the various elements. The commencing capital does not contribute to the financing limits in Clause 11. The Secretary of State is also empowered to specify, with the approval of the Treasury, a proportion of the commencing capital as public dividend capital, and that is what we have been talking about.
The rest will be in the form of debt. The purpose of the distinction is to ensure

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that the new Corporations have a capital structure similar to that of their international competitors. Although no decisions on gearing have been taken, we intend that the public dividend capital should be broadly similar to the equity capital of private companies—that has already been said—and the corporations will be expected to pay dividends on their PDC in the same way as private companies pay dividends on their share capital. The proportion of PDC in the commencing capital will be such as to ensure that the Corporations are not disadvantaged in competition with other major manufacturers' worldwide. It is hoped that the basic capital structure established under this clause will ensure that they will have a sound financial base on which to compete in the markets of the world.
Lord SELSDON: The expression of those words is absolutely splendid. That is exactly what we are asking the Government to do; in other words, to ensure that they have the right level of capital. One knows that they are sensible. However, it is dangerous to use the phrase "capital" in line with our international competitors. At present in shipbuilding, in particular, there is not the normal Western competition. It is the South East Asian and Asian competition whose capital structure is often so amazing that it is impossible for one to believe that businesses there can survive, but they do because of a very peculiar backdoor relationship with Government. If talking about competitors I should be very careful about using that phrase as it is very difficult to determine which of our competitors have which capital structure because of the continual to-ing and fro-ing down the corridors of power with large cheque books and bundles of gold. I hope that the noble Lord will not treat that too seriously because I believe that we should decide what is best for our industry and do it successfully as we have very often in the past, rather than try to imitate others.
Clause 15 agreed to.
Clause 16 agreed to.
Clause 17 [Accounts and audit]:
5.17 a.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 120:
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Page 20, line 22, after ("by") insert ("the Corporation with the consent of").
The noble Lord said: This clause as at present drafted departs from the normal practice in the appointment of auditors. The choice and appointment of the Corporations' auditors ought to rest with the Corporation concerned, though subject to consultation with the Secretary of State. This would then be similar to the normal procedure within any company and the correct relationship between the auditors and the Corporation would be established.
This appears to be yet another case where the Secretary of State assumes the role of a possessive auntie and treats the Corporations as though they were small children. There appears to be no reason why the clause has been drafted in this way. I hope that the Government, having noted that it departs from normal procedure, can tell us that they intend either to accept this Amendment or to make some other change.
5.20 a.m.
Lord KIRKHILL: The Government believe that it is right in principle that the auditors of each Corporation should be appointed by the Secretary of State. The provisions in the Bill follow the precedent of earlier nationalised industry Statutes and are analogous to the provisions of Section 159(1) of the Companies Act 1948, which provides that the auditors of a company are chosen by the shareholders in annual general meeting. The Corporations are responsible to the Secretary of State, who in turn is responsible to Parliament. The auditing of accounts is an important safeguard built into the commercial process. It is wrong in principle for the directors—or in this case the Board—actually to appoint the auditors, even if no one seriously anticipates collusion or dishonesty. It is only right in principle that appointments should be made by the Secretary of State to whom the Corporations will be responsible.
Lord SELSDON: I have a lot of sympathy with the Government on this. They are quite right in saying that it is the shareholders who not only can hire but can fire auditors. But that is the shareholders. In this case, are the Government continuing to play the role of shareholder in the companies? If they are

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going to use the rules that applied to shareholders, will they undertake to use them in all other aspects? We are concerned in this House—and others will be concerned in another place—that the accounts that are presented show a true and fair view. We know that even in current circumstances often, unless you are good at reading balance sheets and understanding the market place, a true and fair view does not necessarily tell you everything you might wish to know about a Corporation.
We also know that Government accounts are published rather late. Nationalised industries always produce data rather too retrospectively. There could be a case for asking for quarterly reporting of nationalised industries, particularly in the current climate. I would never suggest that there could be any collusion between one single shareholder, the Secretary of State, and a group of auditors. What causes some concern is that too much power is given to a Secretary of State who may be under other political pressures because of his job and under the pressures which no normal shareholder could be under, could perhaps bias on occasions his opinion or judgment. I support this Amendment because of my concern about giving too much power to the Secretary of State, who is not necessarily a permanent "animal".
Lord WARDINGTON: I should like to support my noble friend. Theoretically he is correct that the Government, especially the Minister of State, is the shareholder and thereby has the right to appoint the auditors. In an ordinary private company in practically every case the chairman and directors are shareholders. I cannot think of any case where the chairman would appoint the auditors and not leave that appointment to the general body of shareholders at the annual general meeting. Therefore, whether one person should be allowed to retain this appointment needs to be considered very carefully.
Lord SELSDON: If one follows this argument in a slightly philosophical way, the Secretary of State is not the shareholder; he is only a representative of other people, meaning that in his case in nationalised industries either Parliament is a shareholder, the taxpayer or somebody
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else. It is only a minor point to make, but there is a real danger in the Government trying to equate the position of the Secretary of State with that of shareholders in the private sector. It is using my analogy of Tom Brown's Schooldays. It is not quite right.
Lord KIRKHILL: I intervene to point out that in practice, of course, the Secretary of State would be greatly influenced by the chairman and by the Board.
Lord SELSDON: The previous Secretaries of State, according to previous chairmen of nationalised industries, have not been influenced at all by them or the Board. Maybe the position will change, but the noble Lord must understand that this is a point that I must make.
Lord KIRKHILL: I understand the noble Lord's anxieties, but it has been emphasised throughout these last hours that there is an attempt, at least on this occasion—it is no more than an attempt— to make these Corporations accountable. Moreover, there is an attempt, in a variety of different directions—I need not go into them at this stage—to have new thinking and new emphasis on the nationalised role. Let us at least be optimistic at this stage.
Earl FERRERS: Is the noble Lord saying that the chairmen of the Corporations will, in fact, tell the Secretary of State who they recommend to be the auditors and then the Secretary of State will appoint such auditors as he thinks fit?
Lord KIRKHILL: I think that it is a fair point to put on the record.
Earl FERRERS: Yes, but that is not the answer to the question.
Lord KIRKHILL: I frankly could not give you an opinion as regards that matter. I truthfully do not really know how these things work.
Earl FERRERS: There might be something to be said, might there not, in following up what my noble friend Lord Selsdon said. There is not really a true correlation between the Secretary of State and the shareholders at an annual general meeting, because clearly the shareholders are a quantity of people who are joined together, and the recommendation is for an auditor which is usually made by the

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Board and then it is the subject of ratification by the shareholders. To equate one individual as being the same as a number of shareholders corporately at a meeting I should have thought was an extension of the facts.
I should have thought, for what it is worth, that where you have a Corporation, such as these two which are being set up, it is reasonable that they should choose their auditors, as the Amendment says, in consultation with the Secretary of State. If the Secretary of State says: "I think that you have chosen the wrong one" then, of course, they must choose another one. However, to say that the Secretary of State alone should choose who should be the auditor, would seem to be putting a great deal of power in the hands of the Secretary of State which really is not reasonable.
Lord KIRKHILL: I can only reiterate that I am advised that in practice the Secretary of State will consult with the chairman and with the Board. I do not know whether I exactly correlated these two points in my earlier comments. I think that I was drawing an analogy rather than making a correlation. However, I do not mean to split hairs. I accept that from your point of view I am perhaps extending somewhat, but from my point of view I thought that it was a reasonable situation to offer to the House.
Baroness WARD of NORTH TYNE-SIDE: I want to ask about the situation of the Secretary of State if there is not a Board.
Lord KIRKHILL: I am sorry, I do not understand.
Baroness WARD of NORTH TYNE-SIDE: The noble Lord argued that the Secretary of State will be advised by the Board. I presume the noble Lord to be saying that this is the usual system. However, there must be some industries where the Secretary of State does not have a board to make recommendations. I was wondering, as regards the nationalised industries, what power the Secretary of State has to provide the auditors. I do not think that I agree with such a power.
Lord KIRKHILL: I can respond only within the terms of the Bill. There is an
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Organising Committee and there is to be a Board, on the supposition that the Bill eventually becomes an Act, and within that framework my comments are relevant. Outside that framework and referring to other nationalised industries, I could not offer an opinion.
Lord CAMPBELL of CROY: I am grateful to my noble friend Lord Selsdon, and to my other noble friends, at this early hour in the morning for helping to point out the special relationships between the Secretary of State and this Corporation, and for showing that the position is not as straightforward as the Government appear to think. I hope that the Government will give further thought to the question of how the auditors should be appointed, but, in the meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 17 shall stand part of the Bill?
5.30 a.m.
Lord TREFGARNE: I want to ask the noble Lord about the form of accounts which the boards may have to prepare. The accounts that are produced from time to time by nationalised bodies have been criticised, in some cases for their late arrival. But I should like to ask about the form of accounts; in particular, in relation to the new skill, so-called, of inflation accounting. The noble Lord will be aware that the Civil Aviation Authority, which is the best analogy that I can take, recently produced accounts which included what I call "laundered" figures, which purported to show that the Authority's performance was nothing like so bad as the figures showed, or would not have been had it not been for inflation, which is, I suppose, a fair enough assertion. But is it the expectation of the Government that the accounts of the boards will be prepared in that way, or will they be conventional accounts?
Lord KIRKHILL: I have not been advised thus far on the point which the noble Lord, Lord Tregfarne, raised as to whether the accounts will be in the form of inflation accounting or in laundered form. I will certainly make inquiries and let him know.
Lord SELSDON: I am sorry to rise again. This question of accounts is very important, because they are often the only possible manifestation to outside potential lenders, existing lenders, taxpayers and others, of the performance of a company. We should bear in mind the occasional criticisms of the way in which nationalised industry accounts are prepared. There is the possibility of draft directives being moved internationally, but throughout the country, and certainly in the developed world, there is a cry for greater disclosure, and the question of disclosure right the way through the public sector and Government is fairly critical.
In these two industries, one might ask more than in any other that disclosure is more instant than it has been in the past, and that information is slightly more wide-ranging. When the noble Lord advises his right honourable friend the Secretary of State on the appointment of auditors, could he please instruct the Corporations to start to produce as much information as possible? It is unusual to have anyone crying from these Benches for more information, but because of the doubt that one has expressed already one must ask that the Government will undertake to disclose far more than they have done before on the operations of nationalised industries. If we are having all these arguments on finance, could not the Government start to consult the Institute of Chartered Accountants or some auditors now, and seek some advice from the private sector, because they would get a lot of advice and that would solve a lot of problems.
Lord KIRKHILL: I have received a note, and I am advised that the initiative lies with the Corporation, which is an innovation compared with other Acts. The Government want to avoid interference if they possibly can, but they expect the highest standards and the best practice of, for example, inflation accounting and hope that these new standards will be followed by all nationalised industries. That is, of course, a general comment.
Lord CARR of HADLEY: What the noble Lord has said makes me almost despair. What we want the Government to do is to lay down sound basic standards
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and then not interfere, but they seem to do it exactly the other way round. They refrain from laying down sound basic standards, but then do interfere. It passes my comprehension that we should have so many powers in the Bill for interference by the Secretary of State, but when it comes to vital matters such as accounts we are told: "The Secretary of State does not want to lay down basic standards here. He is going to leave it to the Corporation". This is absolutely standing things on their head. Let us set down certain basic standards and then, within those standards and guidelines, leave the Corporations with the maximum freedom from interference.
Lord TREFGARNE: Will the noble Lord allow me to put one more specific point to him which I hope he will be able to answer. The noble Lord, Lord Winterbottom, explained earlier that companies within the Corporations would be able to pass funds from one to the other. In other words, if one company was doing badly it could be supported temporarily by a company which was doing better. Will these kinds of transfers be recorded in the accounts and shall we be able to see quite clearly from the accounts how one company is doing compared with another?
Lord KIRKHILL: It would be injudicious of me to give an off-the-cuff reply to that question. I do not suggest, however, that it is anything other than a question of substance, and it is certainly a matter to which I shall give consideration.
Clause 17 agreed to.
Clause 18 [Annual report]:
The PRINCIPAL DEPUTY CHAIRMAN of COMMITTEES: Amendment No. 122A.
Lord CARR of HADLEY: I think that there has been a misprint in the Marshalled List. If the Committee examine Amendment No. 122A more closely they will see that it applies to Clause 19. I am afraid that I noticed the misprint only a short time ago.
The PRINCIPAL DEPUTY CHAIRMAN of COMMITTEES: I thank the noble Lord very much. I regret the error.
5.37 a.m.
On Question, Whether Clause 18 shall stand part of the Bill?
Lord CARR of HADLEY: I want to say something briefly about Clause 18, because it disappoints me. I had hoped that we might now have reached the point where the reporting of nationalised industries might come up to the standard which is expected of the private sector. I am disappointed by Clause 18 in two ways. First, so far as I can see no provision is made for half-yearly accounts. I should have thought that by now public corporations could have provided short half-yearly statements in the same way as private companies are required to provide them. The annual report is a full report but nowadays the half-yearly statement is also an essential part of reporting. Indeed, as I think I heard mentioned in an earlier part of our debate, some companies (I think it is an increasing number) now provide their shareholders with quarterly reports. I am not asking for quarterly reports but I think that we should now expect half-yearly reports.
The other point which troubles me is that on the whole nationalised industries have a very bad record regarding the time that they take to produce their annual reports. I had hoped that in this clause we might have seen at least the latest date by which the nationalised Corporations must present their annual reports. I do not believe that that would be unreasonable, even if that latest date were generous by private sector standards. I cannot understand why public corporations should continue to be so slow compared with the best of the private sector and why they should still be able to get away with producing just one annual report without short half-yearly statements to supplement it.
The Earl of ONSLOW: I think that secrecy has been called the disease of British Government, although I am not sure whether I have the quotation exactly right. That has to be taken into consideration together with the fact that there is fairly widespread disquiet and distrust concerning the way that nationalised industries are run. These two factors, taken together, seem to me to call for even greater clarity and more information in
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the reports of these two public Corporations so that not only will the public have more knowledge of what is going on but also it will make the supervision of the Secretary of State in using his powers easier for Parliament to carry out. I beg the noble Lord to understand what I am trying to say. Perhaps one is not making oneself absolutely as clear as one would have done eight hours ago. I apologise for that, but what I am asking for is the greatest clarity and the greatest amount of information in these reports, and preferably half-yearly reports. I have seen very clear reports which even I could understand, and I should like everybody to be able to understand these reports, easily and clearly.
5.41 a.m.
Baroness WARD of NORTH TYNESIDE: Before the noble Lord replies I should like to say that I agree with this idea. After all, nationalisation of an industry, if I put it under what I call the Socialist arrangement, means that the people of the country own the industry. Of course that means millions of people, and whereas in a private company it is the shareholders who can decide about their auditors, and so on, and of course the shareholders will be interested in the particular company with which they are concerned, when it comes to millions of people they would be very unrealistic if they did not realise that they had a right to look at the audit; and if there are going to be millions of people the audit should be as simple as possible and be produced more often, so that we shall be giving to the ordinary people of the country what we talk about such a lot— communications. It is quite true that the nationalised industries take a very long time because they seem to have forgotten that it is the people of the country who are concerned, and so far as this Amendment is concerned we are representing the people of the country.
Lord MELCHETT: As noble Lords will remember, we had a discussion on the production of accounts when the noble Lord, Lord Orr-Ewing, raised it earlier in the Committee stage, and I think today rather than yesterday. I am not at all clear whether the noble Lord, Lord Carr, is referring to accounts under Clause 17 or reports under Clause 18. It is of

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course true that several private sector companies produce half-yearly accounts, and indeed, as the noble Lord knows, the nationalised industries also publish half-yearly statements. I agreed with the noble Lord, Lord Orr-Ewing, when he raised this matter, that it would be a good thing if the annual report and accounts were published together rather sooner, at the end of the financial year, and we went in some detail into the length of time it takes auditors to audit the figures. I would not wish to repeat that detail at this hour; we have been though it once. But I agreed with the noble Lord, Lord Orr-Ewing, when he raised the point, and certainly as to the half-yearly accounts. It is the practice of many nationalised industries to publish these, and certainly I will draw this to the attention of the chairmen of the two Organising Committees.
Lord CARR of HADLEY: I am grateful to the noble Lord. At this hour of the morning I may perhaps have been getting confused as to whether I meant accounts or reports, and I shall be grateful to the noble Lord if he will do what he says. I should perhaps warn him, although I do not say it as a matter of definite decision, but it may well be that if it is half-yearly accounts that we really ought to want, we might think of moving an Amendment to make that obligatory when we get to Report stage, because I do not see any basic reason why it should not be as obligatory on a nationalised industry to do this as on a private sector company. Nevertheless, I do not say that in an ungrateful spirit, and I appreciate what the noble Lord has said.
Unless I am getting remarkably unreceptive at this hour of the morning, I do not think that he said anything about the possibility of giving these Corporations the latest dates for which they must produce their annual reports. I really think that it is important that the annual report and accounts should come out within a few months of the end of the financial year. Certainly this is a matter about which many private companies are not as good as they ought to be. This is another area where, if nationalisation means anything, perhaps the nationalised Corporations should set a good example to the other companies rather than too often setting a bad one.
Clause 18 agreed to.
Clause 19 [Vesting in British Aerospace or British Shipbuilders of securities of Scheduled companies.]:
5.46 a.m.
Lord CARR of HADLEY Lord CARR of HADLEY moved Amendment No. 122A:
Page 21, line 30, after ("date") insert ("which shall not be before the date of the first meeting of the next Parliament").
The noble Lord said: I beg to move Amendment No. 122A. As perhaps may be appropriate at this time of the morning, one might say this is where we came in. We have now come back to where we started, because no doubt if your Lordships cast your minds back to a week ago yesterday, namely, Monday, 11th October, on the very first Amendment on this Bill moved by a noble Peer on the Liberal Benches, there was a suggestion to remove the aircraft industry altogether from the Bill. Nevertheless, your Lordships will remember that I said in reply that, so far as we on the Conservative Benches were concerned, much though we hated all nationalisation, much though we believed that the nationalisation of the aircraft industry would do great damage to the national interest and bring no satisfaction to those who worked in it, we felt that, with great reluctance, we could not support this Amendment for the reason that, with equal reluctance, we had decided on Second Reading that we ought to abide by the established convention of this House that it does not refuse a Second Reading to a Bill which formed a major item in the elected Government's Election programme. I went on to say that it was a matter of judgment how much one could excise from a Bill in Committee without its being equivalent to a vote on Second Reading. We reluctantly came to the conclusion that we really could not excise the aircraft industry like that without going back on the decision of principle, taken on Second Reading, to abide by your Lordships' normal convention in these matters.
I went on to say that although we could not agree to the sort of vote recommended at that stage by the Liberal Party, we believed there was another way in which this matter could as effectively and more responsibly be achieved. When I say

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"more responsibly" I mean more responsibly in relation to the accepted role of this House, which is essentially a revising and a delaying role. Now we have come to that point. The way I had in mind, as I made clear at the time, was that we should follow a precedent set in this House 25 or 26 years ago when the vesting date, I think, for steel, was postponed in a way rather similar—I forget whether it was precisely the same way—to that we are proposing this morning. It seems to me that we are putting this forward because we believe it is in the vital interests of the country that the aircraft industry should not be nationalised.
If I may recap, very briefly why we think that is so, we have here a highly successful industry, as my noble friend Lord Selsdon pointed out in an earlier debate some two or three hours ago. The speaking notes provided by the Treasury for British businessmen and others going overseas and speaking at meetings overseas start nowadays by quoting the performance of the aircraft industry as bullpoint No. 1 in favour of Britain. It really is, on the whole, a rather golden rule in industry and in other walks of life not to upset something which is going well. So the first objection we have is that to pull up by the roots something which is successful is in itself a mad thing to do.
We ought to realise that all experience shows that whenever any merger or take-over takes place, however willing the parties, there is an initial setback. When you put two great organisations together, even though it may be right in the long run, there is inevitably an initial setback. It causes distraction; different people have to learn to work together; all the old management and working structures are temporarily upset. Even though they may eventually meld together into something better, can we afford at this moment to cause even a temporary setback in an industry which serves this country as superbly well as the aircraft industry does at the moment. If it is indeed advantageous for the two great corporations, BAC and Hawker Siddeley Aviation, to merge, there is no reason why the Government, using their preponderant power as a customer, could not wield the necessary persuasive force to bring this about.
Then we have the fact—this is a very important reason in favour of this Amendment—of the economic crisis through which we are passing at the moment, and the need to limit public expenditure and commitments to public expenditure to an absolute minimum. It seems to us to be extremely odd, to put it mildly, when there is no compelling reason to do so, to increase public commitment in order to nationalise this highly successful industry which needs no help from the public, while at the same time having to cut public expenditure on such vital things as people's homes and equipment of hospitals and things of that kind.
The advantage of this Amendment over the course originally proposed by the Liberal Party is that it does not break the traditional convention of your Lordships' House. Therefore, it does not in any way compel Members of the Party opposite to surrender the basic principle. But it does enable them to bow to what is a very widespread feeling in this House and outside, and not only among their political opponents, that this is not an opportune moment for doing this. The opposition to nationalising this industry is twofold: those of us—and, of course, we are in this category—who think it should never be nationalised, but also there are those who believe in nationalisation but admit that this is a singularly inappropriate moment at which to do it.
So we are trying to get some sort of modus vivendi by saying that this should be delayed until after the next General Election. This would have the advantage of not putting any immediate financial burden on an already greatly overburdened public borrowing facility. It would have the advantage of increasing confidence overseas. Whatever may be the position in theoretical terms inside this country, there is no doubt at all that in practical terms outside this country seeing the Government postponing one of their nationalisation measures would undoubtedly be a boost to confidence in sterling; it would show the world that the Government was establishing a proper sense of priorities and putting on one side things which, however deeply they believe in them, cannot by any stretch of the imagination be presented as being essential to the solution of our immediate crisis.
The third thing this would do is to give the electorate another chance. We believe that given another chance the electorate would not support a Manifesto which included a nationalisation measure such as this. That is our opinion. If our opinion is wrong, that would settle the matter. But we believe there is overwhelming evidence to suggest that the public do not want any more nationalisation, and that this feeling is felt by the majority of people regardless of Party. From such public opinion polling as one can do, while making full allowance that that sort of evidence is inaccurate by a number of percentage points one way or the other, the figures seem so overwhelming that it is fairly clear that even a great majority of Labour voters want more nationalisation almost as little as almost 100 per cent. of Liberal and Conservative voters.
So we believe it would be right to give the electorate another say, particularly bearing in mind—and I am sorry to labour this, but I am glad to see that the noble Lord, Lord Murray, is not here, because I shall not enrage him at this hour of the morning—that really the Government have no mandate for this. They only talked about public ownership. Public ownership can take many different forms from this sort of nationalised State monopoly, which the Labour Government seem to love. Apart from the fact that the word "nationalisation" was no doubt deliberately omitted from the Labour Manifesto, the fact remains that only 28 per cent. of the electorate supported this Government, or 38 or 39 per cent. of those who actually voted. There really is no strong mandate for carrying out this highly controversial and much unwanted Bill. On those grounds, many people think we would be justified in throwing out the Bill altogether. I explained why regretfully we do not feel that, but we feel that this is the only remaining course.
Finally to those who believe that this continued uncertainty would be a decisive argument against the course I propose, let me say that I accept that this would be the case if we were dealing with the shipbuilding industry. Although we have believed, and still believe, that what needs to be done for the shipbuilding industry could be done at least as well or, we think, better and certainly more quickly by methods other than nationalisation—there
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are other powers available to the Government—nevertheless something must be done as a matter of urgency about the shipbuilding industry. One could not leave the shipbuilding industry in a state of suspense even for a few months.
The case of the aircraft industry is different. There are two great Corporations, and only two, and that makes the position much easier. They are highly prosperous in the short run, and their medium future is at least assured. There is no reason at all, if the merger is thought to be desirable, why the merger proceedings could not go on even pending this further decision of the electorate. Although I accept that in the best of all possible worlds delay of any kind is undesirable, the potential benefits to be gained from delay greatly outweigh the possible disadvantages from it, which would be unbearable in the case of the shipbuilding industry but quite easily bearable in relation to the aircraft industry, and would bring great and lasting benefits in their train to the national interest and to the health of this industry in the future. I beg to move.
6 a.m.
The Earl of KIMBERLEY: We on these Benches are in complete agreement with the noble Lord, Lord Carr of Hadley, but I should like to admit, as I was largely responsible for the first Amendment last Monday week, that I think we were wrong in doing it in the way we did it, although the end product has been right. Having listened to I do not know how many hours of reasons—or, rather, nonreasons—why aerospace should be nationalised, I feel, like noble Lords on both sides, that we have not been convinced by any of the Government's arguments that this industry should be nationalised. As Lord Carr said, this is an inappropriate time, for a variety of reasons, to take this step. As I said and as Lord Carr said, if we were to stop and put a brake on this part of the Bill, the confidence it would give to overseas investors in this country and supporters of sterling abroad would be enormous.
I said earlier, and Lord Carr said tonight, that there is no reason why the merger of BAC and Hawker Siddeley should not go ahead while we have this time pending the next Election, whenever that might be. I do not want to repeat

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what I said last Monday week. Having re-read my speech in Hansard, I see no reason to retract what I said; if anything, I feel even more convinced that what I said was right, and I assure Lord Carr that we on these Benches will support him if he decides to divide the Committee on this Amendment.
Lord ORR-EWING: I suggest that the time has come to have a look at the so-called Salisbury-Addison agreement. It was made 30 years ago and, from research in the Library, it seems that it was never recorded. It was made in totally different circumstances. There was a vast majority—of over 150 seats, I think—in the post-war Labour Government of Mr. Attlee, totally different from the situation today, when we have a minority Government who have a minority within them deciding their policy. Under present-day conditions, I do not think that the Salisbury-Addison agreement is relevant, remembering that it was made 30 years ago in totally different circumstances. I hope that the powers-that-be will consider the future of that agreement, at least until such time as the House of Lords is reformed.
I suggest that aerospace should be an exception, with its fantastic results of £3,300 million in exports in the last 10 years. That has been an outstanding achievement. I have been looking at the last Parliamentary Answer on the subject. Compare that with £306 million lost by the Post Office; £258 million lost by electricity, and goodness knows! our bills are high enough; £158 million lost by British Rail; £44 million lost by British Gas. I could go on, but I will not bore noble Lords at six o'clock in the morning. We all know the sorry story. Since this Bill was introduced things have become even worse because the Government are committed to £1,400 million for British Leyland, of which Leyland have had only a part so far, in addition to which NVT has had £40 million, Ferranti £15 million, and the list goes on, though that was done not under nationalisation but under the Industry Act 1972.
For all sorts of reasons the Government's proposals in the Bill should be postponed because our outgoings by way of public expenditure are creating lack of
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confidence in the pound overseas. indeed, I cannot think of a single gesture that would encourage people holding sterling and continuing to lend us money than postponing the nationalisation of this extremely successful sector of our industrial economy. I therefore hope that my noble friend will divide the Committee on this issue.
Viscount ROCHDALE: I, too, should like to support my noble friend's Amendment. The more I read it, the more I like it. I was particularly glad to hear his remarks at the end when he strengthened the case for the aerospace industry by drawing attention to the difference from the shipbuilding industry, which is referred to in the identical subsection (2). Had my noble friend introduced an Amendment on shipbuilding, I should have had some serious doubts for the reasons that he gave; namely, that it would create a further period of doubt when we all know that some of the companies that are to be nationalised are either in or are likely to be in serious cash flow difficulties. Unless something is done for them quickly, they will be in serious difficulty and may not be able to continue.
However, in the case of the highly successful aircraft industry, the position is entirely different and, as other noble Lords have said, to keep it out of the Bill for the time being will only create enthusiasm for them and confidence outside in the world at large. I very much hope that my noble friend will, if the Government are not prepared to accept the Amendment—which I doubt—press it to a Division.
Lord WARDINGTON: I should like to point out one practical difficulty. I think I am right in saying that my noble friend Lord Thorneycroft asked the noble Lord, Lord Melchett, to outline the progression of the measures that he was going to bring forward. That made me think of the discussions that we had on Clause 5, when my noble friend Lord Orr-Ewing described the major centres that had to be set up and the noble Lord, Lord Wynne-Jones, used as an illustration of his point of view the fact that ICI had similar subsidiaries and divisions which it managed very satisfactorily.
It is inconceivable to me that any major company could, without a building,

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immediately set up an on-going management situation which must produce a successful Corporation. We agree that the Corporation must be successful. To conceive that a major company could set up a new management organisation within a couple of years is impossible. If they were setting it up today, they would spend 18 months getting everything correct and in the right place. So I believe that there will be a very big difficulty when the new Corporation is setting up its headquarters in the timescale that the Committee has been led by the noble Lord, Lord Melchett, to believe is a possibility.
The Earl of ONSLOW: If the argument against the Amendment is that it would create confusion, is it not the case that confusion is initially created by the agitation to nationalise and then by the commitment to nationalise? That is my first point. My second point I believe needs underlining so strongly that, though it has been made several times before, it must be emphasised again. It relates to what my noble friend Lord Carr has said about money.
Let us assume for the sake of argument that nationalisation is a good thing and, further, that to nationalise the aircraft industry is also a good thing. Surely to do so now is so extravagant. It is exactly the same as a situation I have in mind which involves a tramp—and do not let us delude ourselves. In Great Britain at the moment our finances are very similar to those of a tramp. We cannot feed ourselves, we cannot clothe ourselves, we cannot do anything, without begging money from all over the world. It is exactly the same as a tramp deciding to go on a round-the-world cruise first class on the "Queen Mary".
This proposal will increase public expenditure of money which the Government have not got. That is rake's progress. When one looks at the Government Front Bench one sees that no one could look less like a rake than the noble and learned Lord, Lord Elwyn-Jones, or the noble Lord, Lord Melchett, but perhaps appearances are deceptive. Perhaps we in this Chamber should try to save Her Majesty's Government from themselves and allow people to express a view on this subject. This is not a question of Peers versus the People, but of Peers and the People versus Transport House.
Baroness WARD of NORTH TYNE-SIDE: I should like to support the Amendment moved by my noble friend Lord Carr of Hadley, particularly as it relates to the aircraft industry. Unfortunately I had not heard of the original proposal moved by the Liberal Party. But I am very pleased about this Amendment and I should like to tell your Lordships why. I have not been in your Lordships' House very long, and I sometimes think that the country must be puzzled when very severe criticisms emerge from this side and then the Committee does not divide. This is a very difficult matter, and I sometimes feel quite annoyed about it. I think that those who are in this very important and very successful aircraft industry may themselves be wondering why the Opposition do not divide against nationalising it, because the industry does not want it to be nationalised. I agree exactly with what was said by my noble friend Lord Carr of Hadley and by the noble Viscount, Lord Rochdale—that the country does not want more nationalisation; certainly in my part of the world the people do not want it. Therefore this seems to be a very good opportunity to accept the Amendment of my noble friend Lord Carr of Hadley.
I should like to make one other observation before I sit down and, I hope, vote for the Amendment. I have listened to what has been said and I quite realise the problem which the Government face and the fact that it does not seem to please their supporters when they keep on saying that public expenditure will have to be reduced more and more. Meanwhile, all the local authorities are wanting all kinds of things, many things which I want to support. Yet this Government do not seem to realise that they could help the country if they were to cut their expenditure by not introducing a Bill of this kind which nobody in the country really wants. Therefore I have the greatest possible pleasure, from my own point of view, from the national point of view, and from the point of view of the aircraft industry, in supporting the Amendment which has been moved, and I hope that we have a large Division in support of it.
6.14 a.m.
Lord TREFGARNE: There are three aerospace companies to be nationalised under the Bill: BAC, Hawker Siddeley

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and Scottish Aviation Limited. It may be argued that the problems of delay which would beset the shipbuilding industry if we were to remove it from the Bill, also to some extent apply to Scottish Aviation Limited, which is infinitely smaller than the other two companies. But I must tell your Lordships that it has been represented to me that Scottish Aviation Limited would be in some medium-term difficulties anyway if their nationalisation were to be inordinately delayed. I would put it to the noble Lord that that is no argument for nationalising them. I have never been able to accept the assertion that nationalisation is the answer to all financial ills. I do not think it is the answer to any financial ills. In the case of Scottish Aviation Limited, if it be that they need some support in the medium term pending the outcome of the next General Election, I put it to the noble Lord, Lord Melchett, that they could be supported by the provisions of the 1972 Industry Act which the noble Lord's right honourable friends have already used in some other cases.
Lord MELCHETT: I must say that the noble Baroness and I have been on very friendly terms throughout the night and I think we will continue on friendly terms. I share her confusion about some of the tactics employed by her noble friends, particularly on the ship repairing Amendments which we were told were going to be pressed and the noble Baroness and I expected, unfortunately, to be voting against each other on those and have not yet had the chance. But I am afraid the noble Baroness will be yet more confused.
Baroness WARD of NORTH TYNE-SIDE: I am not confused at all.
Lord MELCHETT: The noble Baroness is going to be when I have told her and noble Lords opposite exactly what the effect of this Amendment which noble Lords are so keen to press, would be.
First, as the noble Lord, Lord Carr of Hadley, said, he was kind enough to give us warning about this Amendment when we discussed Amendment No. 1 so many hours ago. As the noble Lord will know, it is wholly unacceptable to the Government. It is, quite simply, a wrecking
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Amendment. The Government are completely opposed to it for two quite distinct reasons. First, the constitutional reason: noble Lords opposite are seeking to go beyond the Parliament Act and to impose a requirement that a particular measure should be endorsed not merely at one General Election but at two and in fact in this case it will be at three General Elections.
Lord ORR-EWING: Does the noble Lord think 28 per cent. is an endorsement? That was the situation at the last Election —28 per cent. of the electorate voted for this policy, even if they knew what it was.
Lord MELCHETT: The second reason is an industrial one. The industrial consequences of further delay would be wholly mischievous and, of course, the delay would be a long one. No responsible observer could be in favour of the aircraft industry remaining adrift without leadership, cohesion or direction but under the shadow of a change at some undefined time in the future. The great majority of people in the industry at all levels, including top management, believe, whatever their view on nationalisation itself—and I accept that many may well be opposed to it—that a decision must now be reached once and for all and put into effect immediately one way or the other. How could the companies play an effective part in international collaborative discussions in the situation proposed by noble Lords opposite—an Act nationalising their industry but a delay on its implementation until some uncertain point in the future?
I assume that the two arguments I have so far adduced against the Amendment have little effect on noble Lords opposite, or indeed they would not have tabled the Amendment at all. But there are two other reasons which I believe would convince any one, noble Lords opposite or noble Lords on this side of the House, that there were very good reasons for not pressing the Amendment. First of all, the Amendment would have a very strange effect. Although this Amendment would delay vesting day it would not prevent the establishment of British Aerospace; that would occur on Royal Assent. I cannot believe that that is the recipe of noble Lords opposite for

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the success of the British aircraft industry. A Corporation called "British Aerospace" and obliged to carry out all the duties laid on it under the Act, yet with no subsidiaries or any powers, apart, incidentally, from the power to get information, over the companies named in the Bill. I have heard of "power without responsibility" but this would be "responsibility without power". Who would participate in the international discussions on collaboration? What would foreign buyers and potential collaborators think of an aircraft industry which was condemned to spend a continued, and, I can assure noble Lords, long period of confusion and uncertainty, drifting about with no direction at all?
There is another practical reason why I do not think this Amendment should appeal to noble Lords opposite. Because of the way the Amendment is drafted, there is still nothing to stop the Secretary of State of an outgoing Administration from making the vesting order for a specific date which is likely to be after the date of the first meeting of the next Parliament. If the incoming Administration were a Conservative one and it wished to prevent vesting, it would be forced to pass legislation, conceivably with only one or two days in which to do it, to that effect, as the vesting order would not be revocable. In other words, it would be quite possible, when the date of the next General Election is decided, for the outgoing Secretary of State, despite the amendment which noble Lords opposite wish to make to the Bill, to make an order vesting the companies in the Corporation, and quite clearly that would not give time for the incoming Administration, whatever the General Election had decided, to have any effect on the vesting. So even the effect which noble Lords opposite seek to achieve with their Amendment will not be achieved by it. The Amendment, frankly, is a nonsense. I would suggest to noble Lords opposite with great respect that it goes beyond opposition into obstruction, and nonsensical obstruction at that.
Lord BURTON: If the noble Lord's last observation that it will have no effect is correct, why does he consider it to be a wrecking Amendment? Furthermore, if he considers it is a wrecking Amendment, as he said it was, does he assume that there is no chance of his Party coming back
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into power? Has lie thrown in the sponge on their behalf already?
Lord MELCHETT: It is a wrecking Amendment because it will wreck the prospects of the British aircraft industry up to the time of the next Election. It is a nonsensical Amendment because it will not achieve the result which noble Lords opposite want it to achieve.
The Earl of ONSLOW: Who has created the confusion? The confusion has been created by the Labour Party's agitation for nationalisation. If they had not started all this, there would not be all this confusion, we would not be up till this time in the morning and they would not be spending all this non-existent Government money.
Lord TREFGARNE: One point the noble Lord raised was that we were trying to get round the Parliament Act in some way. How on earth is that? Why should the Parliament Act not be used on this Bill if this Amendment were agreed?
Lord MELCHETT: There is nothing to stop the Parliament Act from being used, but I am suggesting that the Amendment is a device to get round the Parliament Act. My understanding is that the Parliament Act would delay the implementation of the Bill until the next Session of Parliament; this Amendment would delay it for considerably longer than that.
The Earl of LAUDERDALE: It seems an awful pity that one should let the matter go like this. It is some while since I was in the Chamber. I came back to find the noble Baroness, Lady Ward of North Tyneside, on her feet, and now we have the noble Lord, Lord Melchett. He appears to be worried that the verdict on this should be put to the electorate. I do not know, but I thought that noble Lords opposite professed to be democratic.
Earl FERRERS: The noble Lord, Lord Melchett, was extremely persuasive. We did not exactly think that this Amendment would meet with his approval, but I am bound to say that he did shove his hand right to the bottom of the bran tub and pull out every single little trinket he could find. But the one thing he did not address himself to is the fact that if this Bill goes

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through it is going to involve the Government and the country in a colossal expenditure of money. My noble friend Lord Selsdon totted it up to £2,000 million. That is a lot of money. When the noble Lord, Lord Melchett, was asked, he said he did not know. If he does know and he did not say, that is infinitely worse. But when he was asked, he specifically said, "I cannot say what it is and it would not be right to say how much the Government are going to be involved with because that would prejudice any negotiations".
It is quite obvious that there is a certain difference of view between the two sides of this Committee, and that is not exactly
Resolved in the affirmative, and Amendment agreed to accordingly.
On Question, Whether Clause 18, as amended, shall stand part of the Bill?
6.33 a.m.
Lord CARR of HADLEY: I wonder at the beginning of this debate whether it might be an appropriate moment to ask
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surprising. All that we would say is that, of all times, this is the worst possible time, from a public expenditure point of view, to engage in this kind of exercise. If this Amendment is passed it will have at least the great merit of enabling another place to reconsider the whole point in view of the serious financial situation in which we presently exist. That, in itself, I would suggest, is an excellent reason for passing it.
6.25 a.m.
On Question, Whether the said Amendment (No. 122A) shall be agreed to?
Their Lordships divided: Contents, 60; Not-Contents, 32.

CONTENTS

Abinger, L.

Elliot of Harwood, B.

O'Hagan, L.

Airedale, L.

Elton, L.

Onslow, E.

Amherst of Hackney, L.

Falmouth, V.

Orr-Ewing, L.

Armstrong, L.

Ferrers, E.

Penrhyn, L.

Barrington, V.

Gainford, L.

Redesdale, L.

Belstead, L.

Gisborough, L.

Rochdale, V.

Berkeley, B.

Gowrie, E.

Sandys, L.

Birdwood, L.

Gray, L.

Seear, B.

Brookeborough, V.

Gridley, L.

Selsdon, L.

Burton, L.

Hives, L.

Sempill, Ly.

Campbell of Croy, L.

Hornsby-Smith, B.

Strathcona and Mount Royal, L.

Carr of Hadley, L.

Kemsley, V.

Swansea, L.

Carrington, L.

Kimberley, E.

Tanlaw, L.

Cork and Orrery, E.

Lauderdale, E.

Teviot, L.

de Clifford, L.

Lyell, L.

Trefgarne, L.

Denham, L. [Teller.]

Monson, L.

Vickers, B.

Deramore, L.

Morris, L.

Ward of North Tyneside, B.

Dormer, L.

Mottistone, L.

Wardington, L.

Dudley, E.

Mowbray and Stourton, L. [Teller.]

Wigoder, L.

Effingham, E.

Elles, B.

Newall, L.

NOT-CONTENTS

Brimelow, L.

Lyons of Brighton, L.

Shepherd, L.

Champion, L.

McCluskey, L.

Stedman, B.

Collison, L.

Melchett, L.

Stewart of Alvechurch, B.

Cooper of Stockton Heath, L.

Milner of Leeds, L.

Stone, L.

Davies of Leek, L.

Morris of Kenwood, L.

Strabolgi, L.

Delacourt-Smith of Alteryn, B.

Murray of Gravesend, L.

Wallace of Coslany, L.

Elwyn-Jones, L. (L. Chancellor.)

Oram, L.

Wells-Pestell, L. [Teller.]

Harris of Greenwich, L.

Peart, L. (L. Privy Seal.)

White, B.

Jacques, L.

Pitt of Hampstead, L.

Winterbottom, L.

Kirkhill, L.

Ponsonby of Shulbrede, L.

Wynne-Jones, L.

Llewelyn-Davies of Hastoe, B. [Teller.]

Shackleton, L.

the Government, the Leader of the House or the Minister in charge of the Bill, or whoever is appropriate, what they feel about plans still ahead of us, because the time has come when we should like to know and exchange views about this matter.
Lord MELCHETT: We are making such satisfactory progress that I hope we can keep going for a little while.
Several noble Lords: No!
Lord MELCHETT: Possibly until eight o'clock if noble Lords opposite are not feeling too tired.
Baroness LLEWELYN-DAVIES of HASTOE: The noble Lord, Lord Carrington and I, I thought, had come to an agreement that we would go on until eight o'clock.
Lord CARRINGTON: I thought that it would be nice if somebody told your Lordships that we had decided that perhaps we might last until eight o'clock without having a row, and the object was to extract from the Government the proposal that we were going on until eight o'clock, at which we would then have said we were prepared to do so. But since the noble Baroness has completely ruined that bit of politeness, we will now say that we will go on until eight o'clock.
Baroness LLEWELYN-DAVIES of HASTOE: I will attempt to frustrate the knavish tricks of the noble Lord whenever I can.
Lord CAMPBELL of CROY: The Question was put that Clause 18, as amended, should stand part of the Bill but, owing to a misprint, we are in fact on Clause 19 because the Marshalled List was printed incorrectly.
On Question, Whether Clause 19, as amended, shall stand part of the Bill?
Lord CAMPBELL of CROY: I should like to draw attention to the fact that we are now moving on to this series of clauses numbered 19 to 34, which cover no fewer than 28 pages of the Bill, pages 21 to 48, and they indicate the burden of onerous exercises which nationalisation causes. In Clause 19 and the following clauses there are set out various courses and procedures for all the various circumstances of the companies and their subsidiaries. They involve the arbitration tribunal, which itself is to be established later by Clause 42, and we do not even reach the main compensation clauses, Clauses 35 to 41. But we are dealing with the question of vesting in Clause 19, and then with payments of dividends and interest, avoidance of certain transactions and prohibition of transfer of certain works.
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This is an example of the complicated matters which have to be dealt with, because of this process of nationalisation.
Then, again, another clause deals with dissipation of assets by transactions involving holders of securities; another one deals with onerous transactions, disclaimer and recovery of losses and, later, there are supplementary provisions relating to dissipation of assets. No doubt most, or all, of these procedures and courses are necessary, in order to cover all possible circumstances arising from the transfer of ownership which nationalisation implies. But what a waste of time and energy! A lot of people will have to pick their way through Clause 19 and the following clauses, to pick their way through a forest of details, instead of helping to restructure their industries and, in the case of shipbuilding, to get on with the business of shipbuilding.
The Government are setting up a tortuous obstacle race for those concerned, and this even before the main provisions on compensation are reached on Clause 35, which I would describe as a giant game of snakes and ladders, mostly consisting of snakes. This is the burden with which a great many people will be faced, if and when the Bill is enacted, and I draw attention to these 28 pages on which we are now starting.
Clause 19, as amended, agreed to.
Clause 20 [Vesting in acquired company of certain assets of privately-owned companies in same group]:
6.39 a.m.
Lord REDESDALE Lord REDESDALE moved Amendment No. 123:
Page 23, line 36, after second ("company") insert—
(""holding company" means in relation to an acquired company a company which is deemed to be its holding company for the purposes of the Companies Act 1948;").
The noble Lord said: I beg to move Amendment No. 123 and hope that the noble Lord can give us some guidance on this clause which is concerned with the "holding company". Although the "subsidiary" and "wholly owned subsidiary" are defined in Clause 56(1)—it is by reference to the Companies Act 1948—the "holding company" is not defined anywhere else in the Bill. This term appears

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to be used only in Clause 20. It seems that we have a definition of an "associated privately owned company" and of a "privately-owned company", and this further definition should be included at Report stage.
The Companies Act 1948 contains a definition in Section 154(4) which states:
"A company shall be deemed to be another's holding company if, but only if, that other is its subsidiary"—
and "subsidiary" includes a company which is only 51 per cent. owned and is not limited to a wholly owned subsidiary. I wonder whether the noble Lord could give us some help on this point?
6.40 a.m.
Lord MELCHETT: We have now got past the brouhaha of Amendment No. 122A, and as I know how anxious noble Lords opposite are to make substantial progress before we adjourn for breakfast, I think it might help matters if I start on the next leg of the Bill by saying to the noble Lord that I agree entirely with the Amendment that he has moved. I am afraid, however, that I do not quite accept the position in which he has placed it in the Bill. It would be more appropriate for the definition to be included in Clause 56, the definition clause. If the noble Lord would like me to do so, I shall be happy to move an Amendment to Clause 56 at the Report stage, the sense of which will be the same as the noble Lord's Amendment.
Lord REDESDALE: I am most grateful to the noble Lord for his constructive and helpful attitude. We are delighted to withdraw our Amendment and we look forward to seeing the noble Lord's Amendment at the Report stage.
Lord STRATHCONA and MOUNT ROYAL: Why wait until the Report stage? We are not going to reach Clause 56 for some time.
Lord MELCHETT: I would not be that pessimistic! We are making such good progress now that we might reach it at any time.
Lord STRATHCONA and MOUNT ROYAL: It is only a matter of drafting: whether or not it would be more convenient to have the definition here because
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the term appears only in this clause. One could make a case for saying that it is best to have the definition here rather than to group it with the other definitions, but this is a matter which perhaps the noble Lord could discuss with the Parliamentary draftsmen.
Lord MELCHETT: My advice is that the term "holding company" appears in other places in the Bill, although I must confess that I could not give the noble Lord at this moment any instances of it.
Amendment, by leave, withdrawn.
Clause 20 agreed to.
Clause 21 [Certain loans from associated persons to be treated as securities]:
6.42 a.m.
Earl FERRERS Earl FERRERS moved Amendment No. 124:
Page 24, line 10, after ("securities") insert ("as defined in section 56(1) below and").
The noble Earl said: After that exciting start my tongue is hanging out in anticipation that the noble Lord, Lord Melchett, will be able to accede to this Amendment also! One of the curious things about the Bill is that the data upon which the value of businesses is compiled is wrong. It is compiled on the basis that all the companies are quoted on the Stock Exchange, whereas only one of the companies is quoted on the Stock Exchange. Therefore one starts off with all the data being wrong. The Bill virtually says, "Let us assume that they are all quoted", which they are not, "and then find out what the price would have been had they been quoted", which, of course, you cannot do.
Many of these companies are subsidiaries. It is not impossible that a subsidiary company may have only £100 of share capital and that it could borrow from its parent company any sum of money—possibly £20 million. That would be perfectly normal. Now the Bill says that that is not borrowing in the true sense; that is long-term capital. Clause 21(1)(b) says that that sum of money should be considered in the same manner as a borrowing which, had it not been from a parent company, would have been the type of borrowing which

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would have had to be secured by assets for the lender. The clause as drafted refers to the lender in the singular and apparently ignores the increasingly common practice of consortium loans which are loans from a group of banks where the individual contribution and, therefore, the risk to each is reduced. Consequently, the terms and conditions are likely to be less onerous to the borrower. Therefore the value of the securities is likely to be greater than if all the risk were on one lender.
The introduction of the possibility of securities being valued on the basis of a consortium loan would, I suggest, have two effects. First, it would be more realistic in the light of current banking practice, for this is what usually happens. Secondly, it would enable the companies to argue for more value to be paid on the securities which are deemed to exist, although they do not exist, by virtue of Clause 4. Of course the value of the security will depend on the terms and conditions which the Secretary of State or the arbitrators determine would have been required by the lender had the loan been obtained in the open market.
If one may take an example, a company could have borrowed £20 million: in fact under this clause that would not be regarded as a loan and therefore repaid. It would be considered as capital and the arbitrator would have to determine what that value would be if the redemption were immediate, and if the loan were to have come from a single lender it may well be that, say, the loan might have been regarded as £50 million, but if it had come from a consortium it might have been put at a higher value. The point of this Amendment is really to bring into line what is normal practice, which is to assume that borrowings come not from a single person but from a consortium. I beg to move.
Lord KIRKHILL: This Amendment seeks to point to the fact that there may be more than one person involved in a particular loan. While this may well be the case in certain instances, I am advised that no Amendment is necessary to cover the point. Under the Interpretation Act of 1889, unless the Act in question specifies otherwise the singular in an Act of Parliament subsumes the plural. Thus the
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reference to "person" and "lender" in Clause 21 can equally mean "persons" and "lenders", and the provisions may be applied accordingly.
Lord SELSDON: I am not quite with the noble Lord on this point. He is saying that in an Act of Parliament if something in singular it can be deemed to be plural. Is that right? I should explain that I am speaking from a banking point of view and as a lender. It is a very interesting Act and I have not come across it before in drafting loan agreements, and it may be that the noble Lord has found something that the banking community might be pleased to have a look at. I should be grateful if he could expand on it, because I was going to support my noble friend on this Amendment but in the light of what the noble Lord has said I am out of my depth.
Lord KIRKHILL: I am in the hands of my legal advisers on this point. I do not think I can expand usefully on what I have already said. If it is of help to the noble Lord, Lord Selsdon, I can reiterate that under the Interpretation Act of 1889 unless the Act in question specifies otherwise, the singular in an Act of Parliament subsumes the plural, and then I went to on say that that, of course, would cover "person" and "lender" in Clause 21, and can equally mean "persons" or "lenders".
Lord SELSDON: Is the noble Lord saying that therefore the Amendment is unnecessary?
Lord KIRKHILL: I am indeed saying that.
Lord AIREDALE: I think that perhaps this should be looked at again. If we apply the Interpretation Act, which says that the singular includes the plural, we get from the words in the clause, "a person who was not an associated person", and you would get, "persons who were not associated persons". But the Amendment does not say that: the Amendment says: "persons, none of whom was an associated person". I am not satisfied that the Interpretation Act covers the subtle difference in those two wordings. It may well be so, but I think it should be looked at again.
Lord KIRKHILL: I have been handed a copy of the Interpretation Act 1889 and if I may read Section 1(1), it says:
"In this Act and in every Act passed after the year 1850 whether before or after the commencement of this Act unless the contrary intention appears

(a) words importing the masculine gender shall include females:

(b) the words in the singular shall include the plural and the words in the plural shall include the singular."

I cannot honestly add more to that than I have just mentioned.
Lord SELSDON: If the noble Lord, Lord Kirkhill, had only raised that Act before, a lot of legislation passing through this House might not have been necessary. But I think he understands from the intervention of my noble friend the point we are making now. I cannot comment on person or persons unknown, but I hope the noble Lord will have in mind the point raised on the question of loans. Many loans are done direct; one borrower and one lender. More and more now as my noble friend has mentioned, the practice is for the management of consortium loans, where you have a single loan agreement which is fairly critical to the whole banking structure. What he says has an effect on the content of loan agreements as such, and is fairly significant. Maybe the Amendment on the wording is wrong, but if he will consider the point raised on this, it is an important one from a banking point of view. Perhaps he will give some assurance that they will look at it. I am not good at singular and plurals, or feminines and masculines, but I think it is a splendid Bill the noble Lord has produced. It is something I shall look at when we are faced with the problem of different genders, which is growing on the domestic front.
Lord KIRKHILL: I do not wish to appear to be inflexible when flexibility is the commonsense approach to the matter, but I am legally advised that this Amendment and, indeed, the one that follows it, is not necessary. In matters of this kind I must accept what is considered to be sound legal advice offered to me.
Earl FERRERS: I do not think there is anything between us. The point is that the aspect of the Bill I was worried about is covered, according to the noble Lord, Lord Kirkhill, and therefore the
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oretically, there should be no cause for worry, but, in view of what has been expressed, I would be grateful if the noble Lord would be kind enough just to have a look at this again and make quite certain there can be no flaw, because there is nothing between us. What we were worried about is covered. But the point is one of substance where consortia are a very common method of providing funds. The noble Lord referred to the Interpretation Act. I was slightly amused when he did. He said that the singular included the plural, and I remembered well the occasion when I had to answer a question, and I was told by my advisers that the masculine gender included the feminine. I was told that the short answer was that the male embraced the female. I am grateful to the noble Lord for having answered that. I should have indicated that my remarks referred to Amendment No. 125 as well, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.54 a.m.
Earl FERRERS Earl FERRERS moved Amendment No. 126:
Page 24, line 6, after ("not") insert ("or persons none of whom was"].
The noble Earl said: This is really a drafting Amendment. The problem is a technical one in the context of the very complex provisions of Clause 21, and the Amendment is designed to assist the clarity and not to change the intent of the clause. Clause 19(5) does not define "securities". The primary definition of "securities" is in Clause 56. Clause 19(5) merely lists what in the context of that section are not to be regarded as securities. Clause 21(1) refers back to Clause 19(5), but the use of the words within the meaning of Clause 19(5) tends to obscure the fact that Clause 19(5) merely modifies the primary definition contained in Clause 56. The Amendment is designed to make sure that when the Secretary of State serves his notice under Clause 21, he cannot give effect to the notice if the security would have been one of those listed as exclusions from the definition in Clause 19(5). I beg to move.
Lord KIRKHILL: Amendment No. 126 seeks to clarify the meaning of "securities" in relation to Clause 21. I hope to persuade noble Lords that the Amendment is

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not necessary. Clause 56(1) includes a definition of "securities" for the purposes of the Bill as a whole. However, in relation to the vesting of securities in the new Corporations a more restricted definition is necessary and this is achieved by means of Clause 19(5). As I am advised, it is not necessary for the limitation of the definition of "securities" contained in Clause 19(5) to make reference to the wider definition contained in Clause 56(1). It is exactly the same point in relation to Clause 21. In this provision we are identifying certain inter-company debts which will be treated as securities and hence vest in the new Corporations. Therefore, the same limited definition of "securities" must apply in relation to Clause 21 as applies in relation to Clause 19, and for this reason a cross-reference to Clause 19(5) is included in Clause 21(1). But in the same way as it not necessary to refer to Clause 56(1) in Clause 19(5), it is unnecessary, I am advised, to make a similar reference in Clause 21. I apologise to your Lordships for what appears to be a somewhat legalistic convolution towards the end of my remarks, but this is my firm legal advice on this point.
Earl FERRERS: The contents of my head are now spinning round like a catherine wheel. It is not the noble Lord's fault at all, because I realise that that was a very carefully considered answer, and the object of this Amendment was to make the matter clearer. I will study what the noble Lord has said.
Lord KIRKHILL: These are difficult matters. I think the key is that it is not necessary for the limitation of the definition of "securities" in Clause 19(5) to make a reference to the wider definition in Clause 56(1).
Earl FERRERS: That I quite see. I think the point I had in mind was that the reference referred to something left out as opposed to something put in. The noble Lord gave a carefully considered reply, and I will therefore study that when I see it in print. Meanwhile, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.59 a.m.
Earl FERRERS Earl FERRERS moved Amendment No. 127:
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Page 24, line 43, at end insert ("and the person to whom the debt is owed shall he entitled to claim from the relevant Corporation such compensation as the arbitration tribunal shall determine in respect of the loss suffered by him by reason of the application of the said subsection (2).").
The noble Earl said: Under the provisions of Clause 21 the Secretary of State can serve a notice on a parent company in respect of a loan to a subsidiary requiring that loan to be treated as a security for the purposes of Clause 21. Once the notice is issued any obligation to repay the debt is therefore suspended. It is possible that the Secretary of State will in some cases not be able to persuade the Arbitration Tribunal that he was justified in serving a notice in respect of that debt. But it may be that after a considerable period of time the notice will be revoked and the loan will once again become repayable according to its terms.
The purpose of the Amendment is to ensure that where a loss is caused by the freezing of a loan due to a Clause 21 notice which is subsequently revoked, that that loss should be compensated. The extent of the loss could, for example, be the cost of borrowing money elsewhere during the interim period. Could I give the noble Lord an example. If the Secretary of State said a loan, possibly for £2 million, is a long-term borrowing, and would therefore be less on immediate redemption, if he were to go to arbitration, the arbitrator may say, "The Secretary of State is wrong. This is not a long-term loan, and as such would not be worth the full value of £2 million. It is a borrowing, and therefore would not be worth the full value of £2 million." Meanwhile, that is frozen and the company concerned has to borrow the money elsewhere.
It may be some time before the arbitrator comes to a decision, and having come to it he has virtually said, "Secretary of State, you are wrong". The suggestion in this Amendment is that where the Secretary of State was proved to be wrong by the arbitrator, and where that wrong decison by the Secretary of State inevitably made the company concerned borrow the extra money, the cost of doing that, in other words the interest on that extra money, should be compensated by the Secretary of State for his erroneous judgment. I beg to move.
7.2 a.m.
Lord KIRKHILL: Clause 21 provides for certain inter-company debts which have the nature of securities to be treated as securities for the purposes of vesting and compensation. The clause provides for the Secretary of State to serve a notice in relation to any debt in existence at the date of transfer, stating that it will be treated as a security, and such a debt will, if the notice is confirmed, be valued in the same manner as all other securities which vest under the Bill. I accept that a fair example has been placed before me by the noble Earl. I am unable to accept the Amendment for two main reasons. That may not necessarily be my position on certain following Amendments. First, the Secretary of State will not use his powers indiscriminately under Clause 21. If he decides to serve a notice with regard to a particular inter-company debt, it will be only after very careful consideration of all the factors affecting that debt, and in such circumstances that there will be little doubt that the debt should be treated as a security.
Secondly, it is the Government's intention that there should be the minimum of delay in settling any question as to whether a debt should be treated as a security. Given the Secretary of State's intended use of the provision, it is not likely that any significant loss would fall to the creditor. If, however, the Bill were to provide for the payment of compensation in respect of rights to repayment temporarily taken away but subsequently restored, then there is the possibility of a positive incentive on creditors to delay settlement so as to maximise their claim for compensation. It is principally on that latter point that I would have to resist the Amendment.
Earl FERRERS: That was not a convincing reply. This is a case where the Secretary of State may have considered all the company's borrowings and said, "I believe this is not a short-term but a long-term borrowing and must be treated as such". Of course, if it is treated as a long-term borrowing a different figure is paid as compensation, because a long-term borrowing may be for 20 years and obviously if it is valued for immediate redemption it will be valued at a lesser figure than if the borrowing had finished within 20 years' time; that is one of the
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facts of financial life. I accept that the Secretary will take great care and will go into all this. The noble Lord said that he would go into it with such care that there would be little doubt that he was right, but that is not an adequate answer because that is the whole purpose of the arbitration tribunal; so that people can take the matter to the tribunal and say, "We do not think the Secretary of State is right". It is not a just argument for the noble Lord to say that such people will be told, "If you do take it to the tribunal and I am proved wrong, you must still suffer the financial loss of my wrong judgment". If the Secretary of State is wrong, and if that has resulted in the company concerned being put at a financial disadvantage, it seems only fair and just that the Secretary of State should compensate for that wrong judgment. I accept that it is the noble Lord's view that there may be very little time for the arbitrator to come to that conclusion, but I am not sure that that will be so; it might well be quite a long time.
Lord KIRKHILL: While the noble Earl, Lord Ferrers, was speaking I received some further advice which may be helpful. If the right to repayment is suspended by a notice served by the Secretary of State, the lender will still earn money on the money lent within the term of the loan. Therefore, in the unlikely event of a notice being revoked, it is hard to see how the lender could suffer a loss; he will continue to receive interest on his loan.
Earl FERRERS: I understood that where that was the case, the loan was frozen and the company concerned would then have to borrow the equivalent sum of money elsewhere because it could not use the money which was under arbitration. If the company has to borrow that money, it is obliged to pay the interest. Am I right in believing that what the noble Lord said was that the money which belonged to the company and which was thereafter frozen would have interest attached to it and would accrue to the company?
Lord KIRKHILL: I appreciate that it is difficult to grasp some of these points at this stage and it might be helpful if I were to repeat what I said; namely, that if the right to repayment is suspended—the noble Lord said, "frozen" and I said,

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"suspended"—by a notice served by the Secretary of State, the lender will still earn interest on the money lent within the term of the loan.
7.10 a.m.
Lord SELSDON: I had intended to launch into a long discussion on the whole question of inter-company loans and the way debts are treated. My concern is that at this stage of the night we may, if we are not careful, confuse the whole compensation issue to which the Amendment relates indirectly. What I would advise the noble Lord is that the way in which companies treat inter-company lending varies from one company to another. The rate of interest charged by a parent to a subsidiary varies. The terms of loans vary. The terms often tend to be shorter between parent and subsidiary because the parent controls the subsidiary and therefore the long-term borrowing of the subsidiary is not an important consideration. Further, as the noble Lord will know, it is normal practice that subsidiary companies within groups borrow from parents and do not borrow direct, and that it is the parent company that incurs the long-term debts and provides the appropriate funds for the subsidiary.
Lord KIRKHILL: I hesitate to intervene, but I should have thought that the points to which the noble Lord wishes to direct my attention would probably come under Amendment No. 128. That is the next Amendment and it appears to cover the points that have been raised so far.
Lord SELSDON: But the question is that the lender can suffer a loss. It depends entirely on the term and the rate charged for a specific loan. The term is perhaps the most critical factor of all because, having got rid of or lost one of its subsidiaries and having funds tied up in it, while it will continue to receive the interest that is due to it under the original agreement between the lending company and the borrowing company, one must take into account the continual shifts and changes in market conditions. We all know that there are considerable shifts and variations in interest rates. My concern with this Amendment is that, when we take vesting day—which will be
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coming up next year—at the moment we have a situation in which there is a very high degree of liquidity in the banking system. It is relatively easy to borrow money and, despite the high levels here, international rates are still relatively low. There is a very real concern that, where companies have lent to subsidiaries, the lender could suffer some form of financial loss. We ask the noble Lord to recognise this. I appreciate that he would be reluctant to accept the Amendment. Exactly how one quantifies this is difficult, but it is a factor and, believing as I do that there could be substantial changes in market conditions in the next six months, it could become much more significant than it is at present.
Lord KIRKHILL: I certainly give the noble Lord the assurance that I shall read with care the remarks he has made this morning. I do not feel that I can give more of an assurance than that.
Lord WARDINGTON: Can the noble Lord also look at the question of inter-company borrowing as between one subsidiary and another? Also, in this case, it might possibly be borrowing by the parent from the subsidiary on certain occasions. There are so many subsidiaries in these industries that are being nationalised and they, in many instances, form the profitable side of the parent. I believe that it might be worth while to look at both sides of the position; that is, the position where the lender is the parent and where the lender is one of the subsidiaries lending to another or even back to the parent.
Lord KIRKHILL: These are not matters about which I have any particular expertise. I recognise that there are among your Lordships those who have considerable knowledge of these matters. I shall certainly direct some attention to the point which the noble Lord has just made.
Lord SELSDON: I should like to raise another point here and I promise that I will raise it again later, so I will not be lengthy at the moment. What the noble Lord may appreciate we are getting at as well is the effect that the capitalisation of debt or the conversion of debt into equity can have on the fairness of compensation under Clause 38. I hope that the noble Lord will acknowledge that we will return

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to this matter at a later date, because I would prefer that we dealt with the compensation issues when we get under compensation rather than have this continual cross-reference backwards and forwards. But he should acknowledge that what is proposed by the Government has an affect upon compensation. It is not normal practice, and anything that is not normal practice—he will agree—needs to be looked at; but it is better that we look at it later rather than earlier. If we get into these cross-arguments at this time of the morning we may fail to put across the right points.
Earl FERRERS: We are grateful to the noble Lord, Lord Kirkhill, and we certainly appreciate the difficulty in which he finds himself. He need feel no embarrassment over that, because he is not alone. These are extremely complicated and extremely technical matters, but I hope the noble Lord will realise, as I am sure he does, that nevertheless they are extremely important. it is difficult to have a dialogue about such complex matters across the Floor, but I know that he will look at these points again. I wonder whether it would be possible for him to consider what has been said and whether he will be kind enough to write to me with the conclusions he has arrived at having taken advice? If he would do that on a number of these very complicated points, that would help us to consider, not only at this Committee stage but possibly at a later stage in the Bill, whether or not we ought to return to any of these points. I should be very grateful if he would do this.
Lord KIRKHILL: I shall certainly write to the noble Earl.
Earl FERRERS: I am very grateful to the noble Lord and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
7.18 a.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 128:
Page 25, line 32, at end insert ("unless a security forming part of the loan capital of the company and issued on the terms agreed or determined pursuant to paragraph (a) above would have been excluded from the operation of section 19 above by virtue of subsection (5) of that section as not being a security within the meaning of that subsection").
The noble Lord said: I am afraid that we have have a little more of this rather indigestible gruel that we are trying to get outside before we can break for breakfast. This is another of these technical Amendments, but I think that possibly it may be acceptable to the Government. The problem is this. As paragraph (b) of Clause 21(7) is at present worded, the right to the repayment of a debt, as it says under paragraph (a), is to be
"treated for the purposes of—
(i) section 19 above…".
as being a security. It goes on to say that it is automatically to vest in the relevant Corporation in the operative date of the notice as defined in subsection (6). But, so far as we can see, this conflicts with the provision of Clause 19(5), which we have already passed, that certain actual securities issued on specified terms are not "securities" for the purpose of Clause 19 and consequently will not vest.
The purpose of the Amendment is to put right the fact that it cannot be the intention in the mind of the Government that a right which is deemed to be a security by virtue of Clause 21 should vest if an identical actual security would not have vested. The proposed Amendment is intended to put the deemed security on the same footing in this respect as an actual security issued on the terms attributed to the deemed security. I at one time understood this Amendment but I am not absolutely certain that I do, having laboured through it again. I beg to move.
Lord KIRKHILL: There is a mutual fatheadedness around at this stage and I am very anxious to come to the good parts of the Amendments which are still around—good, that is, from the Opposition point of view. I am advised that Amendment No. 128 is unnecessary. It merely repeats a provision which is already contained in Clause 21(1)(b) of the Bill which is linked through to Clause 19 at subsection (5). The capital structure of many of the companies to be nationalised will be complex. The capital of subsidiaries may be provided by unsecured loans from parent, or associated companies, as we have just said.
Clause 21 provides for such inter-company debts which are of the nature of long-term capital but which are not

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covered by formal loan agreements, to be compensated for as though they were formal securities of the acquired company. By contrast, debts of a short-term nature, redeemable either without notice or upon not more than one year's notice or upon not more than one year's notice—for example bank overdrafts—under Clause 21(1), are specifically excluded from the provision. The effect of this Amendment would also be to ensure that short-term debts as defined in Clause 19(5) were excluded from the provisions of Clause 21. It is for those two reasons that I am advised that the Amendment is not necessary.
Lord STRATHCONA and MOUNT ROYAL: Could I ask the noble Lord one question? He says that Amendment is unnecessary. That is fair enough. Is he saying that it is actually harmful and should therefore be rejected? Because it is a slightly different question if he is going as far as that.
Lord KIRKHILL: No, I did not say at any time that I was of the opinion or that I had been advised that the Amendment was harmful. I am advised by my legal adviser that it was unnecessary. As I speak I received a note.
The LORD CHANCELLOR: Confirming that view, I have no doubt.
Lord KIRKHILL: It is confirming the view, but perhaps I could have another look at it.
Lord STRATHCONA and MOUNT ROYAL: I am most grateful to the noble Lord, because it is quite obvious that we are both having to refer to those who understand these things rather better than we do. Under the circumstances, the obvious answer is to withdraw the Amendment now and have another look to see where we have got. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
7.24 a.m.
Earl FERRERS Earl FERRERS moved Amendment No. 129:
Page 25, line 36, at end insert ("except that if the terms agreed or determined under this subsection to be contained in a security include any charge on assets of the acquired company subsection (5) of section 38 below shall not apply for the purpose of determining the base value of that security.").
The noble Earl said: This is another nice little point to which the noble Lord, Lord Kirkhill, might care to address himself. It is an Amendment which seeks to clarify a point of uncertainty on the valuation which will be given to loans which are treated as securities under Clause 21. The problem is that Clause 38(5) requires that the base value of securities is to be determined as if the assets of the company were not subject to any charge on any of the relevant days. That principle, of course, is quite correct since Clause 53(5) provides that all charges on securities are released on vesting day so that the securities vest free from encumbrances and therefore the valuation should be on the same basis.
But what may happen when a loan is deemed to be a security as opposed to a loan under Clause 21, however, is that the value of that deemed security may be dependent to a large extent on the charges on assets which form part of that security. If the security is valued as if there were no charges on the assets of the company, it would be worth very little.
The Amendment provides that where a loan is deemed to be a security under Clause 21, the charges on assets subject to which the security is deemed to have been issued should be taken into account in valuing that security, since it is upon those charges that the value will depend. If I could give the noble Lord, Lord Kirkhill, a simple example—and I take some figures relatively at random—if a loan of £100,000 is taken out with the freehold of a factory as a security, the interest may be, say, 15 per cent.; but if there is no security the interest may well be higher. It may even be 20 or 25 per cent. The point is that the value on redemption of that security is higher when it is secured against assets than when it is totally unsecured.
In other words, if you borrow £100,000 and you have to pay it back in 15 years, the chances of you doing so are slim, so the interest rate is higher; but if you borrow £100,000 and you secure it against the asset of your house, the security is much better and therefore the chances are more reasonable. Because these are subsidiary companies, the companies have very little equity and a great deal of borrowing, and if they were independent companies much of the borrowing would be in equity or in longer-term securities.

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It is therefore essential to get the value of the borrowings right in order to get a proper value on them for immediate repayment. I beg to move.
7.27 a.m.
Lord KIRKHILL: I find myself virtually in the same position on this Amendment as I was on the previous Amendment, in that, while I appreciate that noble Lords opposite may have put down this Amendment, in this case certainly, in an attempt to provide greater fairness to parent companies, I am advised that the Amendment is an unnecessary one. Clause 21 is concerned only with inter-company debts, which are of the nature of long-term capital but not covered by a formal security. Such debts may be treated as if they were securities for vesting and compensation purposes. Amendment No. 129 would have the effect of disapplying one of these compensation provisions—that is, Clause 38(5), to which reference has been made by the noble Earl—which ensures that, as assets will be acquired free of all charges, the compensation will be determined on the assumption that those assets were free of charges at the period at which they are valued.
Amendment No. 129, I am advised, is unnecessary, first, because in the situation covered by the provisions of Clause 21, since there is no arm's length relationship between the debtor and the creditor it is highly unlikely that any of the intercompany debts will be secured by means of either a fixed or a floating charge. Clause 38(5) would therefore not apply, I am advised. Secondly, inter-company debts treated as securities under Clause 21 are likely to be equivalent to equity. They provide an alternative means of company capitalisation to the more usual equity finance. Under the compensation provisions of the Bill, they are valued in terms of the securities to which they are equivalent. Equity share capital is not subject to charges, and it is therefore most unlikely that the question of charges on assets in relation to inter-company debts treated as equity would arise. Again, this is a somewhat complicated reply which perhaps deserves to be read, but I have spoken, I hope, at a speed at which it was possible to follow at least some of the points in it.
7.30 a.m.
Lord SELSDON: I do not follow the noble Lord. I cannot see why he says that this Amendment is unnecessary. What we are getting into now are the realms of what might be described as notional argument. In almost every one of these Amendments we are going to have a notional price or a notional something raised. Those who are of Wykehamical origin such as myself will know that a notion is a practice or word which has Wykehamical origin which only a Wykehamist can understand. If you take this case, the question of a charge—and in Clause 38 it is proposed to remove a charge—but it is all a notional situation to be dealt with in Clause 38. But the relationship between that and Clause 21 is essentially this. If you do not keep a charge on a debenture, that debenture falls in value perhaps by as much as 15 per cent. meaning that the holder of that debenture, instead of being a secured creditor becomes an unsecured creditor. An unsecured creditor is treated rather lowly in the field and while one may say that these are transactions between what was the parent company and its subsidiaries, one must look at the effect, however marginal, that this could have on the way in which people regard the parent company's balance sheet in that it is lending unsecured or, if lending secured, it becomes an unsecured loan. I think that this is an important factor.
It raises the basic principle of secured loans and unsecured loans. These have very different values both in terms of capitalisation if they are capitalised and in terms of the effect on the lending of the company concerned. I do not feel that this Amendment is unnecessary. It is unnecessarily complicated because of the complicated way in which compensation is being treated. It is one of the fringe aspects of the whole compensation argument which has come too soon in the Bill and therefore we are arguing in theoretical notions in a way that we cannot fully understand.
But the basic principles come back to the difference between secured and unsecured loans. I would suggest that we keep the question of a charge here, in Clause 21. I will not have made myself clear to noble Lords. But it is one of the principles which I believe need to be

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raised and brought in. If, in the light of what I have tried to say, the noble Lord can assure me that it is unnecessary, I will accept his view on this; for this is a legal matter and something that I am not fully versed in. I approach it from the commercial banking point of view.
Lord KIRKHILL: I am further advised that the point is that it is very unlikely that any charges will exist in relation to the type of debts we will be dealing with. Therefore, the effect of the cancellation of a charge—and I accept that the cancellation could reduce the value—could not apply. The problem raised is hypothetical in some ways.
Lord SELSDON: In banking and in loan agreements, however unlikely it is, it is in fact likely. Thus one cannot accept the principle of allowing something to go through where there is an element of risk. The whole banking principles are based on removing that risk. While we know that it is unlikely, circumstances could arise where it becomes more likely; or if it did happen, it could be serious. There are many hypothetical arguments on this, but it is not impossible; it is unlikely. I would not accept the noble Lord's suggestion that this Amendment is unnecessary. It is likely that it would be unnecessary but equally it is not unlikely that it would be necessary.
Lord KIRKHILL: The Amendment has not been unnecessary, in that it has allowed the noble Lord to explain succinctly at this stage what he considers to be a fair point from his position. We have been arguing somewhat hypothetically; but we must deal with this particular clause as we come to it in the Bill.
Earl FERRERS: I think the real problem is that the noble Lord's advice and my advice are different. That is not always unsurprising. The noble Lord's advice is that this is unlikely and my advice is that it is possible. As my noble friend Lord Selsdon said, if it is possible that this could happen, then the effects could be substantial. If a loan is made unsecured, that is going to be very much cheaper in value than if it were secured. If that happened, the companies, when they came to be compensated, would be compensated unfairly. The noble Lord has been kind enough to say he will look
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at the other Amendments, and I hope he will also look at this one, which is a real point which we have put forward this morning. If he would write to me with his considered view, I would find this very helpful indeed.
Lord KIRKHILL: I accept that these are complicated matters. Undoubtedly we are dealing with them at the wrong stage. I will look again at what the noble Earl has said. If I can expand or explain further, I will communicate with him.
Earl FERRERS: I am much obliged to the noble Lord. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
7.36 a.m.
On Question, Whether Clause 21 shall stand part of the Bill?
Lord STRATHCONA and MOUNT ROYAL: Before we leave this clause, may I first say how much we on this side appreciate the noble Lord's efforts. We are all swimming in deep waters fairly seriously out of depth. It may be useful if we can try to send out a couple of general markers in slightly more intelligible terms, because the issues which arise under this clause have an effect later when we come to the vexed issue of compensation which, believe it or not, may take even longer than we are taking over this issue.
There is in this clause a certain amount of objectionable materiat which some companies think is potentially onerous. Of course, the clause is complicated, but what we are really talking about is parent companies who have been financing subsidiaries by way of loans. They may find themselves on nationalisation not having those loans repaid in full when they are due. Instead, they may be treated as securities which are worth less than par for which they may hope to be compensated at some later date. Very often parent company financing is more convenient and often the only way to finance subsidiaries in the kind of circumstances of blight in which they have been working in recent times. Because of the threat of the Clause 21 provisions, quite a lot of companies have not expanded as they might have done. They get no compensation for growth and they are severely inhibited in their activities by the

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provisions which perhaps the Government see as safeguarding provisions in clauses of this kind. The effect is that they run the risk of losing some of the money which they have lent to their subsidiaries for the purpose of expanding their activities.
The Government intend to run these industries in the national interest. But for the past few years they have virtually been put in the position of having to do nothing to secure long-term benefit because ordinary commercial management has been made impossible. The point we are trying to make is that, if the parent companies had not been deliberately risking the potentially onerous provisions of Clause 21, many of the subsidiary companies would have been unable to receive any finance at all during the period of blight which had been hovering over them because of the threat of nationalisation.
I am trying not to say this in a contentious manner, and am merely pointing out the underlying worries which affect the companies and, therefore, some of the representations that we have been receiving, which have led to these very complicated Amendments that we have been discussing. As I said, this is an issue to which we shall be coming back when we deal with compensation.
Earl FERRERS: I would only add this, that one of the problems from which we are suffering as regards valuation and compensation is that everything is being based on uncertain, unknown and, indeed, erroneous data. When the companies have to be valued in accordance with what the Stock Exchange shares would be if they were quoted, which they are not, that immediately starts one off on the wrong foot. Then, again, there are loans which are being treated as if they were not loans but were securities instead, and as if they were long-term borrowings when, in fact, they will be repaid short-term.
I am quite sure that it is the Government's intention to be as fair as possible. do not think for one moment that they want, because of the complexity of the valuation arrangements, deliberately to "do down" any company, or to "do" a company unduly well. The important point is that whatever compensation is
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paid should be as nearly right and just as possible. I hope that the noble Lord will look again at these matters, because what we are anxious to do, complicated though they are, is to get them as fair as possible from the companies' and the taxpayers' point of view.
Lord KIRKHILL: I did not intend to say anything on clause stand part, because I accept that noble Lords opposite have thus far attempted to be constructive on this Part of the Bill, and I hope they feel that I have tried to be as helpful as possible. I felt that perhaps we had strayed a little, in some of the remarks on clause stand part, into perfectly proper expressions of political view and that it might be better for me just to soak that up, as it were. However, I am advised that we have given clear assurances to companies, both general and particular, that money loaned by parents to vesting companies after the reference period, which is 28th February 1974, will not be treated as securities under Clause 21. This has avoided any question of blight from the possible effect of Clause 21, so perhaps I should just place that on the Record.
Clause 21 agreed to.
Clause 22 agreed to.
Clause 23 [Control of dividends and interest]:
7.44 a.m.
Earl FERRERS Earl FERRERS moved Amendment No. 130:
Page 27, line 2, leave out ("prior ").
The noble Earl said: This subject is not easy to understand and I hope that the noble Lord, Lord Kirkhill, will accept this Amendment. The safeguarding provisions relating to the Bill were revealed in another place on 17th March 1975. They provided that dividends would not be permitted in excess of the stated formula, without the prior approval of the Secretary of State. When the Bill was first published later that year, it spelled out the details in which it was provided, first, that dividends would be effectively limited from February 1974—in other words, the date of the General Election—to March 1975, when the safeguarding provisions were announced, with the threat of deduction of any excess from the compensation; secondly. that directors would possibly be liable to

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repay excessive dividends paid after 15th March.
Dividends are therefore limited to the permitted formula for a period of over a year prior to the publication of the safeguarding provisions and the directors are personally liable for any excess paid over 18 months prior to the expected date of Royal Assent. The Secretary of State, though, gives himself the power to approve the payment of dividends in excess of the formula, provided such approval is obtained prior to the payment of the dividend. It is quite apparent that the companies which are to be acquired may have been paying dividends which could well turn out to be excessive in terms of the permitted formula before they were even aware of the safeguarding provisions and that the directors may further have exposed themselves to the risk of personal liability before that risk was made known to them in the Bill.
The calculation of permitted levels is complicated. The possibility of an accidental excess cannot be ruled out, but the inclusion of the word "prior" in Clause 23 prohibits the Secretary of State, even in a manifestly reasonable case, from approving retrospectively an excessive payment of dividends, even if he should want to do so. He may therefore be forced into the position of having to deduct a sum of money from compensation or to impose personal liabilities on directors, whatever the merits may be of their arguments against that course of action and despite the fact that during part of that period nothing was known of the need for prior approval.
Therefore the Amendment seeks to remove the word "prior" in order to enable the Secretary of State to give retrospective approval to excessive dividend payments if he feels that a good case has been made. The Amendment does not place any obligations on the Secretary of State but it goes some way towards mitigating the extraordinarily punitive consequences of the retrospective legislation in Clauses 23 and 29. I hope that the noble Lord will think that this Amendment is acceptable. I beg to move.
7.48 a.m.
Lord MELCHETT: As the noble Earl has said, Amendment No. 130 is concerned with the control of dividend payments in the period before vesting date.
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It would delete the requirement for companies to seek prior approval of dividend payments in excess of the permitted levels. On the particular point which the noble Earl raised in the Amendment, as I understand it there is no way that directors can be made liable for any dividend payments which were made before they were given detailed waiving. The liabilities of directors arise only after the detailed statement of 17th March 1975. I do not know whether that satisfies the noble Earl immediately regarding the point of his Amendment.
The Amendment would go on to have a very undesirable effect on the directors of the companies involved. As I think the noble Earl appreciates, the requirement for the prior approval of the Secretary of State, although it is unprecedented in that it imposes a requirement for prior approval, is made simply to protect directors so that they do not do something without the approval of the Secretary of State for which they can subsequently be made personally liable. Therefore to remove the provision, as the Amendment would do, could place directors in a very difficult position which I do not think the noble Earl, from what he has said, would wish to do. Certainly the Government would not wish to do so. I do not think that the particular fear which the noble Earl raised as the purport of putting down the Amendment can arise.
Lord SELSDON: I have some sympathy with the noble Lord, Lord Melchett, but what we are talking about is retrospective legislation—on a hypothetical basis to some extent, whatever that means. By removing "prior" we are giving to the Secretary of State the power to declare that a dividend is reasonable. We are not trying to overprotect the directors of the companies concerned because all directors have certain responsibilities which are clearly defined in the Companies Act and in other places.
The noble Lord is saying that "prior" is necessary and I am saying it is retrospective. It is definitely retrospective. Therefore, are we saying that retrospective legislation in this Bill is necessary? If the noble Lord says it is not retrospective, then maybe at this time of the morning I have got it wrong, but certainly it was retrospective when I went through

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my brief and did my homework on this and when we tabled the Amendment originally, because one of the fears that one had was not just the effect but also the principle.
Lord MELCHETT: Perhaps it would help the noble Lord if I were to go into a little more detail. This is the danger that we see in the Amendment rather than the danger which the noble Earl, Lord Ferrers, raised as being the reason why he tabled the Amendment. For example, if the company has a large number of shareholders and pays a dividend in excess of the permitted levels, without obtaining the prior approval of the Secretary of State, and that approval is subsequently withheld, directors could be placed in a very difficult position, as I said. To avoid being subject to a personal liability for excess payment the directors would have to seek repayment from all the shareholders, all the payment in excess of the permitted levels. As the noble Lord will appreciate this might not be possible for practical reasons. It might not be possible to trace all the shareholders who received the dividend but who are no longer shareholders—who have sold their shares, if it is a publicly quoted company. Indeed, some shareholders might simply refuse to repay the dividend which they have been paid. By requiring the directors to seek prior approval of the Secretary of State, it seems to us that the directors are protected against the unfortunate consequences which I have outlined in this hypothetical position. That is why the thing is necessary: not because it is retrospective but simply because it protects directors from the very unfortunate consequences of making a dividend payment which is subsequently not sanctioned by the Secretary of State and being faced with the appalling difficulties of trying to retrieve the dividend which has been paid in excess. It may be that noble Lords had not realised that the effect of removing the word, "prior" would be to place directors in this very difficult position. In view of the explanation I have given, possibly noble Lords would like to take this away to look at it when we have all had a chance to sleep, I will not say in the cold light of day.
Lord SELSDON: I think one would like to take this away, but since the
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directors who were consulted and who would ultimately have the responsibility did not appear to be overtly concerned about the point now raised by the noble Lord, because of the responsibilities which they accepted, then I think it is something that one should take away and discuss. I still come back to the point that I think it is retrospective, but I withdraw my objections.
Earl FERRERS: I will certainly take this away and have a look at it, but I think we are slightly at cross-purposes, and this is probably through my own lack of adequate explanation. If I might take one example, the thing I am concerned about is that these safeguarding provisions were announced in March 1975 and the Government took the view that, as the companies knew that they were going to be nationalised as from the date of the General Election, therefore anything paid between February 1974 and March 1975 should be at the level which the formula stated. But, of course, if any dividends were paid during that period the directors could not have had the prior approval of the Secretary of State because they did not know then what the formula was going to be. That is the reason why, if the Secretary of State were to say, "No, we have got to make this deduction because you did not get my prior approval", the directors might well have said, "Yes, but we could not get your prior approval because we did not know what the formula was going to be".
Lord MELCHETT: I thought I had met the point which the noble Earl is making when I first replied, and I am now quite sure that I did. As I said, the directors will not be made liable for payments made before 17th March 1975. If there would have been excess, the directors would not be liable for that.
Earl FERRERS: I think over that period it is a question of the deductions being made. The directors become liable for any payments made after the Royal Assent. But I take the point and I will have a look at what the noble Lord has said. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 23 agreed to.
Lord STRABOLGI: I think it will be the general agreement of the Committee that we should halt this extremely long Committee stage at this point. I beg to move that this House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

ELECTRICITY (FINANCIAL PROVISIONS) (SCOTLAND) BILL
Brought from the Commons; read 1a, and to be printed.
SEXUAL OFFENCES (AMENDMENT) BILL
Brought from the Commons; read 1a, and to be printed.
SEXUAL OFFENCES (SCOTLAND) BILL [H.L.]
Considered on Report.

SUPPLEMENTARY BENEFIT (AMENDMENT) BILL
7.11 p.m.
Lord WELLS-PESTELL: My Lords, I beg to move that the Bill be now read a
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second time. I think I can say that this Bill is a simple one with just two objects. The first is to increase the amount that a lone parent can earn without affecting the amount of his or her supplementary benefit. The second is to remove a small anomaly on the treatment of certain aspects of widows' pensions and allowances for the purposes of supplementary benefit.
Before dealing with the first aspect—the part which relates to the lone parent—perhaps I ought first to say something about the place of disregards in the supplementary benefit scheme. In looking at the disregards, one must always bear in mind that the object of the scheme is to bring a person's existing income up to the level of his requirements. If he already has a sufficient income, from whatever source, to meet those requirements then it could be argued that no supplementary benefit is necessary. On that basis, a person whose requirements are £20 a week and who already has an income of £20 a week would not qualify for supplementary benefit. It has, however, always been recognised that to take every penny of earnings into account would be much too harsh and that it is reasonable to disregard a certain amount of earnings in order to enable people who have to depend in the main on supplementary benefit nevertheless to make some additional provision for themselves. At the same time, it must be acknowledged that to allow too high a disregard would make nonsense of a means-related scheme, if, as a result, people were to be paid benefit whose income far exceeded the supplementary benefit level. It is against this background that increases in disregards must be considered.
The present position is that single parents, like most other supplementary benefit claimants, can earn up to £4 a

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week without their benefit being affected. Claimants required to register for work, that is, broadly speaking, the unemployed, can have up to £2 of earnings disregarded. If there is any excess of earnings over the disregard limit, the benefit is reduced by the amount of that excess. In a two-parent family on supplementary benefit, the mother can earn up to £4 and the father—assuming he is unemployed—can earn £2. That is a total of £6 without the family's benefit being affected. A one-parent family is therefore somewhat at a disadvantage because, as there is only one wage-earner, the total earnings disregarded (apart from those of children which are always totally ignored) cannot be more than £4. But there are other reasons why a higher disregard is appropriate for single parents. As the Finer Report said, the disregard:
"helps parents who can do the occasional or small job while spending most of their time looking after their family and who may thereby obtain sonic personal satisfaction and increased social contacts as well as a little extra income".
From every point of view it is desirable to encourage the mother who has had to give up work while her children are at school to get back into the employment field and begin to equip herself for an active and full life in her middle years. It is unfortunate if lone parents become so accustomed to life on supplementary benefit that even when they could go back to work and earn a good living they feel it is not worth taking the touble and therefore become permanently dependent on supplementary benefit.
At present the number of single parents taking advantage of the disregard is low. Only 11 per cent. of those on supplementary benefit are known to have any earnings, though there may, of course, be more who, from time to time, earn amounts not exceeding £4 a week which they are not required to report. Our hope is that a 50 per cent. increase in the amount of earnings that can be disregarded will result in an increase in the number of single parents who may choose to undertake part-time work, particularly as the employment situation improves.
We carefully considered whether we should increase the disregard even further. One limiting factor here would be the cost. We estimate that the proposed increase in disregard from £4 to £6 per week will cost about £1¼ million in increased benefit
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paid in a full year to those whose earnings exceed the present disregard of £4. There is also likely to be some unquantifiable extra cost through additional people being attracted to claim benefit. But, quite apart from the cost, it would not be equitable to allow the disregard for single parents to go too far ahead of the earnings disregard for other recipients of supplementary benefit. I have in mind pensioners, disabled people and their wives.
Before moving on to the second part of the Bill, I should like to mention a particular point which arose at the Report stage of the Bill in another place. This related to the position of a single parent who, while not actually living in the same household as his or her child, nevertheless has the day-to-day care of the child who may, for example, on account of accommodation difficulties be living with the claimant's mother. An undertaking was given that in these somewhat rare circumstances the claimant would not lose the benefit of the additional earnings disregard simply because the child was technically in another household. I can now confirm that the instructions issued to the supplementary benefits commission staff for operation after this Bill has been passed ensure that in such cases as this the parent's earnings will attract a higher disregard just as they would if the parent and the child were in the same household.
My Lords, I now come to the second part of the Bill which provides for the discontinuance of certain small disregards attached to the children's portion of widow's pensions and allowances. The pensions and allowances involved are National Insurance widowed mothers' allowance, industrial death benefit and war widows' and similar pensions. I must say first something about how these disregards originally came to be included in the scheme. In 1964, in the days of National Assistance, on increase was being made in the children's allowances attached to widow's pensions at a time when no other benefit changes were taking place. In order to avoid a situation where those widows receiving National Assistance would not benefit from the increase, it was decided that the amount of the increase, 7s. 6d. for each of the first two children and 5s. 6d. for each subsequent child, should be disregarded in calculating National Assistance. The disregards have continued since then and

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on decimalisation became 38p each for the first two children and 28p for each subsequent child.
However justifiable the introduction of the disregards may have been at the time, they have remained an anomaly ever since. This is because the general principle, both of National Assistance and supplementary benefit, is that the main National Insurance benefits—which are intended as the principal support of those who, for one reason or another, are unable to work—should be taken into account in full when assessing the extent to which they should be supplemented by what is now supplementary benefit. To do otherwise is really to provide twice over from public funds for the same purpose.
When introducing the supplementary benefit scheme in 1966 the Government did not think it practicable to abolish these small disregards that had so recently been introduced and they were allowed to remain. However, we think that the time has come to end this anomaly which is also an unnecessary complication of the supplementary benefit scheme. It seems right to the Government to make this legislative change in conjunction with the increase in the earnings disregard which will be of potential benefit to all one-parent families. We propose therefore to discontinue these disregards for future supplementary benefit claimants who have children's allowances attached to widows' pensions.
I would strongly emphasise that the existing claimants who already have the benefit of the disregard will not lose it. The Bill provides the disregards to be retained for all those who have what are to be known as "preserved 1976 rights". All those claimants who now have the disregards will continue to have them for as long as they continue to receive supplementary benefit in conjunction with the widows' pension or benefit involved. If supplementary benefit ceases because a widow enters hospital, that gap in entitlement will not affect her preserved rights. Neither will other gaps in entitlement, due, for example, to spells of employment, if they are not longer than three months.
The provision of these preserved rights will mean that it will take some time for the disregards to work fully out of the
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system and it is not until they do that the Exchequer will benefit by a mere £ ½ million which it estimated will be saved eventually. The Government recognise that this Bill is a modest measure but I nevertheless commend it to your Lordships as a worthwhile one. Not only will it tidy up the anomaly I have mentioned, but it will bring immediate benefit to those lone parents receiving supplementary benefit who are already earning more than £4 a week. We maintain that it will also help future lone parents who receive supplementary benefit by making it more worthwhile for them also to take up part-time employment. We believe that this is a right measure. I commend it to your Lordships.
Moved, That the Bill he now read 2a.—(Lord Wells-Pestell.)
7.25 p.m.
Baroness YOUNG: My Lords, I should like to begin by thanking the noble Lord, Lord Wells-Pestell, for introducing this short but important Bill this evening and for his very clear explanation of it. As I understand the Bill, it does two things. First, it enables single parents working part time to earn up to £6 a week before their supplementary benefit is affected in any way. Only those working part time are entitled to supplementary benefit. It is thought that the Bill might apply to about 15,000 single parents. They will gain this benefit after 15th November. Secondly, Clause 1, subsection (2), takes away from the widows' pension certain disregards for children which are included in the pension when calculating a widow's entitlement to supplementary benefit. I was very glad to hear from the noble Lord that no widow who at present has this right will lose it. As I understand it, over a period of time this will gradually work its way out of the system so that everybody will be treated in a similar manner.
We on this side of the House will not quarrel with the principle behind the Bill. Indeed, we shall wish it a speedy and smooth passage through your Lordships' House. This Bill is therefore in marked contrast to a great deal of the other legislation that is going through the House. This is so because we support very much the reasons that the noble Lord, Lord Wells-Pestell, has given us for the Government's introducing the Bill in the first place. It is

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obviously very valuable to an individual, especially to a single parent bringing up a family, and a young mother, to have the advantage of going out to work part time, getting used to working, meeting other people, leading a more normal life and so preparing herself for the day when she can do a full time job.
Furthermore, we believe very strongly that it is important that those who can earn should be encouraged to do so and should not find themselves caught once again in the poverty trap by discovering that the more they earn the more they lose by way of benefit and there is a positive discouragement to work and to earn and it is to their advantage to stay at home and be supported entirely by the State. I was disappointed to hear that at present only 11 per cent. of those on supplementary benefit earn anything at all and that they would be the kind of people who would be likely to take advantage of this. I hope that the noble Lord's predictions come true and that a much higher percentage will seek work as a result of the passage of the Bill.
My Lords, I should like to make a number of general observations about the Bill. The first is about the Bill itself and it is to question the complexity of a short Bill such as this one. It consists, after all, of only two clauses with a short Schedule, yet the whole Bill works by reference. In order to do my homework as adequately as I felt I should, I tried to find the Act referred to in Clause 1, subsection (1), called the Supplementary Benefit Act 1966. All that the Printed Paper Office could find for me was a Bill entitled the Ministry of Social Security Act 1966. It so happens—I hope I have the correct reference—that this is a Bill which in fact established the Ministry of Social Security and the principles of supplementary benefit. It appears to me that in fact the references in the Bill worked perfectly well in the one that I have in my hand. Nevertheless, it seemed strange that the name was not the same, and I wondered whether there was another Act that I should have got hold of, or whether I was working from the correct one. That indicates how very complicated the whole matter has become. Surely there was a simpler way of raising by £2 the entitlement to benefit for the single-parent family on supplementary benefit who wishes to earn. That is what we are talking about, and I am bound to
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say that this is a very complicated way of going about it.
I have long believed, as a matter of principle, that social workers and others who will be responsible for administering this type of legislation should understand the Acts of Parliament under which they work, and which they are administering for the benefit of others. I am bound to say that this little Bill adds to the complications. I do not know whether the noble Lord found it as difficult to read as I did, but no doubt he had many people to brief him. However, I am bound to say that I found the two clauses very heavy going. That is my first general point, and I hope that in the not too distant future we may see some kind of consolidating legislation which sets out all these things very clearly.
My second point is that it is much to be hoped that the House will have an opportunity of debating the Finer Committee Report on One-Parent Families, published very nearly two and a half years ago. I have noticed that the noble and learned Lord, Lord Simon of Glaisdale, has indicated his intention to introduce such a debate and notice of it has been on the Order Paper for some time. I hope very much that we shall have it in the near future, possibly in the New Year. In the meantime, this Bill gives us an opportunity to say something, albeit briefly, about one-parent families, for the fact is that their number is growing.
I understand that after the pensioners and those who are unemployed, single-parent families make up the largest group in society still on supplementary benefit. As I have already indicated, the system of giving benefits has become increasingly complicated and, as Professor Donnison has indicated in his recent report on the whole supplementary benefits system, the system needs to be overhauled and simplified. I think further that it is disgraceful that the new child interim benefit which begins in April is so complicated that a voluntary organisation has had to write a guide to it. Otherwise, some single parents might not have appreciated that they would be worse off after claiming that benefit than if they had not claimed it at all.
The Government have done nothing for one-parent families; they have rejected the guaranteed maintenance allowance

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which was proposed by the Finer Committee; they have not done anything about reforming the law as proposed by Finer; and, so far as I know, they have not gone any further on the subject of family courts. It therefore seems to me that, in the present very difficult economic circumstances and, as we all hope, when the economic circumstances get better, the right answer to the type of problem which this Bill is designed to meet and which faces one-parent families must be to reduce dependence on supplementary benefit and restore the incentive to work. Certainly, when supplementary benefit was introduced, or, indeed, when National Assistance was first introduced, it was not expected to benefit more than a very small number of people. It is therefore very disturbing that the numbers on supplementary benefit should have increased year by year in a way that was never intended—certainly not when the Beveridge principles were first introduced.
It seems to me that it would be right for the Government to introduce a proper child benefit scheme in April 1977, and not, as they at present propose, some time in 1979/80. Such an introduction would not cost more money and would be of immediate help to mothers. By abolishing child allowances, such a scheme would, I appreciate, have the effect of transferring the money from father's pay packet to mother's handbag. Nevertheless, it would not be costly and would, I believe, be of particular benefit to one-parent families. I think, too, that the Government ought to consider introducing some form of tax credit scheme under which the one-parent family would receive the married credit. Certainly, this was one of the recommendations of the Finer Committee Report and would, I believe, be of great value to the one-parent family.
I appreciate that the Government have provided an additional personal allowance for the single parent which is equivalent to the difference between the single and married tax allowances. However, it will be evident that there are two drawbacks to the scheme. The first is that it is obviously of no help at all to those whose income falls below the tax threshold; and, secondly, the advantage of a married tax credit scheme is that it gives a positive tax gain to those below the tax threshold. Therefore, what the Government should
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do is to raise tax allowances and reduce the rate of income tax so that the incentive to work is stronger.
It is quite clear, in our present economic difficulties, that this can be done only after public expenditure has been reined back. But the position in which we find ourselves, and to which the Government have contributed, is that the Government have been moving in precisely the opposite direction; that is to say, they have raised the rate of income tax from 30 to 35 per cent. and, at the same time, there has been a dramatic fall in the real value of tax allowances. It is a conjunction of all these events which produces the circumstances in which, in so many cases, it is better not to work than to work, and which produces the circumstances in which those who are least well off in society are not being helped as adequately as they should be.
Before concluding, I should just like to comment on two further points. First, I was very glad to hear from the noble Lord, Lord Wells-Pestell, that the point raised on Report stage in another place by my honourable friend Mrs. Chalker, as to the circumstances of a family in which the child is living with a grandparent and the mother is going out to work, is covered by this Bill, because these seem to me to be circumstances which must be very common in a number of families. I was very glad to have that point confirmed by the noble Lord. The second point is on paragraph (c), at the top of page 2, which makes it quite clear that the cohabiting rules are still to apply as before. It seems to me that this is a matter which has been discussed so many times, and which creates so many difficulties about trying to prove precisely when people are cohabiting and when they are not. I am sorry to see that it appears yet again.
This Bill provides us with an opportunity to consider, albeit briefly, some of these wider issues. I make no apology for raising them this evening, because they are all of very great importance. As the economic situation worsens, it is always the weakest and most vulnerable members of society who are the most affected and we should do anything we can to help them. It is for that reason that I, and my colleagues on this side of the House, support the principle of the Bill, but we

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see it in conjunction with a firm Government policy on inflation, because that is eating away at the money which anybody receives; it is eating away at savings and earnings of any kind and, of course, it is most damaging to those least able to support themselves. The Bill does no more than alleviate one situation. It does not go to the root of the matter and attempt to put it right. Nevertheless, because it is a step in the right direction, we on this side of the House will support it.
7.39 p.m.
Lord BANKS: My Lords, the noble Lord, Lord Wells-Pestell, has explained the provisions of this Bill with his usual lucidity, and I join the noble Baroness, Lady Young, in thanking him for that. The Bill is welcome so far as it goes but, as the noble Lord made clear, it does not go very far. The increase in the earnings disregard for one-parent families from £4 to £6 makes the disregard the same as could be obtained in certain circumstances by a two-parent family, as the noble Lord pointed out. But it will touch only the fringe of the problem of one-parent families. As the noble Baroness said, I believe that some 15,000 out of a total 65,000 one-parent families claiming supplementary benefit will be affected. I understand that 43 per cent. of single parent families are on supplementary benefit and are one of the largest single group of claimants. It follows that of the 280,000 single parents claiming supplementary benefit only 15,000 will benefit from this Bill. I do not say that in order to decry the increase in the disregard for single parent families, although in view of the inflation in recent years I feel that if the increase is to be a worth while one in real terms the disregard should be larger. The proposed increase is a very small measure to help a few, and wider measures are necessary.
The Bill implements Recommendation No. 121 of the Finer Report but there are two further recommendations in that Report with regard to supplementary benefit which I wish were in the Bill. The first recommendation was that there should be a short waiting period for long-term benefit rates to take effect, that the waiting period should be reduced from two years to one. The second was that there should be an additional supple
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mentary benefit allowance for one-parent families which at present prices would be £2·50 per week and would cost £35 million. The Finer Committee were convinced that by and large one-parent families have more than proportionate costs when compared with two-parent families, and that this required special measures of alleviation.
As the noble Baroness has pointed out, the main Finer recommendation was a guaranteed maintenance allowance which, among other things, when combined with the rather limited tax credit scheme envisaged in the Green Paper by the Conservative Government, the Committee estimated would have taken most one-parent families off supplementary benefit. Such allowance could no doubt do the same if combined with child benefit, although it would need to be much larger than child benefit, since this, at least initially is very small being £1·50 for a single-parent family under the interim benefit now being paid and which rate will continue in 1977.
The objection on the part of the Government to implementing such a scheme will be one of cost and administration. During the Second Reading debate in another place, it was stated that it would cost between £250 million and £400 million and involve 8,000 extra staff. It is difficult not to sympathise with the Government when faced with those figures in our present economic situation, but if we must wait for help on that scale, though not necessarily in the precise form advocated by Finer, that makes the case for the additional supplementary benefit allowance that much stronger.
Objection has been made to the fact that the guaranteed maintenance allowance as proposed by Finer would be means tested in respect of the adult portion although not of the child's portion. I am convinced that the proper answer is a tax credit scheme in which there would be a one-parent family credit. The important condition is that the total credits available to the one-parent family under such a scheme must exceed the general supplementary benefit level so that the vast majority are removed from supplementary benefit altogether.
Turning to the other aspect of the Bill, the proposal to eliminate for new claimants the disregard to tax for National Insurance widows benefit seems to be logical and I have no objection to it. In conclusion, I

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would say that this is a small Bill of limited application, acceptable and even welcome so far as it goes, but in no way making a major contribution to solving the financial problems of one-parent families.
7.45 p.m.
Baroness ELLIOT of HARWOOD: My Lords, as my noble friend said, we hope that this Bill will prove a useful contribution towards solving a very difficult problem. It seems to me that we are all in the awkward position that while we would like people to have as much as possible, inflation is all the time present and money goes down in value; and to raise allowances only makes the situation more difficult and the problem almost insoluble. Nevertheless, this Bill is a step in the right direction and I would congratulate the noble Lord, Lord Wells-Pestell, on having brought it forward. I hope that it will have some effect.
The fact that only 11 per cent. of people who are eligible for this kind of benefit ask for it or get it is a criticism. It is a criticism of the complications involved. Many people do not understand how to go to the Social Service office and ask for this, that or the other supplementary benefit to which they might be entitled; so they do not claim. I have found that to be so with allowances which old people could claim. People do not claim them, partly because they do not know how to do it. I think that probably applies in this instance because these schemes are complicated for the ordinary person to understand. I hope very much that the Bill will be put before the recipients of this allowance in as simple a way as possible so that they will understand it. I am sure that it is the wish of the Government that it should be so.
I agree with my noble friend Lady Young that a consolidating Bill bringing together all these different allowances and without the very difficult references back to Bills passed many years ago, would be a great help to those people who are eligible and would like to claim these allowances. Ever since the Finer Report was brought out social workers in the country have talked about it. I cannot enumerate how many conferences I have
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been to where the question of one-parent families has been discussed and reference made to the Finer Committee, yet nothing has been done about it. We on this side did nothing about it, but as the report had only just come out when we were in Office perhaps we can claim that as an excuse. The fact remains that nobody has tackled the one-parent family problem.
There are 66,000 one-parent families, but under the Bill only 15,000 will claim the disregard allowance of £6. That shows what a long way away we are from getting at the root of the problem. I take it that the disregard allowance will be made available to men, as well as to women, if they are bringing up a family because their spouse has died or has run away. Perhaps the noble Lord can reassure us about that point and also give us an assurance that it will be possible for this information to be spread widely throughout the social services departments of the local authorities which administer the different varieties of allowances, so that what this Bill really means, what it stands for and what help it will give will be clearly understood.
I agree with my noble friend Lady Young that so much of the legislation is by reference that it is not very simple to understand. The fact that the Bill says that £6 shall be disregarded is simple. If it can be put in that way so that people understand it, I hope very much that it will lead to many more people being able to claim the allowance. I hope also that many more people will do so. In the meantime, I should like to encourage the noble Lord to consider the question of consolidating the legislation, possibly in the next Session of Parliament. All of us ought also to try to work towards implementing some of the Finer Committee recommendations. Undoubtedly this is a big blot upon the social services of this country which are widespread and in the main very successful. However, like other noble Lords I wish the Bill success.
7.53 p.m.
Lord WELLS-PESTELL: My Lords, I am very grateful to the noble Baroness, Lady Young, to the noble Lord, Lord Banks, and to the noble Baroness, Lady Elliot of Harwood, for the limited approval that they have given to the Bill. A

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number of points have arisen in the debate. I do not want to quarrel over figures; it does not matter whether 16,000 or 15,000 lone parents will benefit. What one must bear in mind is that something like 41,000 children will he involved. Although I acknowledge that it is a very limited increase, it is worth while in the sense that at least it will help to keep pace with the present position.
The question of consolidation was raised by the noble Baroness, Lady Young, and the noble Baroness, Lady Elliot of Harwood. I have sympathy with the need for consolidation. I know the problem that professional social workers face. When I present something to your Lordships I try always to get behind the problem and look at the various previous Acts. It is true that from time to time I have considerable difficulty but I have the benefit of a large number of experts to help me. Consequently, it is not quite so difficult for me as it is for other Members of your Lordships' House.
The title of the Ministry of Social Security was changed in the National Insurance Act 1974. This was because the benefit was known as supplementary benefit and the Ministry of Social Security no longer existed. The Government accept that the legislation on supplementary benefit should be consolidated and they hope very much that the Supplementary Benefit Bill 1976 will be passed this Session. As noble Lords will know, this is a complete consolidation.
Lord SIMON of GLAISDALE: My Lords, will the noble Lord allow me to say a word about that? It is quite true that the Consolidation Committee has agreed to try to consolidate the present Bill with the preceding legislation which we have already handled, but it would be idle to pretend that the result will be comprehensible to ordinary people. I do not believe that Schedule 1 can be made comprehensible to ordinary social workers, much less to the recipients of supplementary benefit unless there is a substantial rewriting. In other words, pure re-enactment is not enough. What we ought to have had was an amending Bill.
Lord WELLS-PESTELL: My Lords, I am most grateful to the noble and learned Lord. I wanted to say almost precisely
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what the noble and learned Lord has said: that this matter is in the hands of the Joint Consolidation Committee and that I believe they will be considering it on Wednesday week. It may well be that once the legislation has been consolidated some guide, as is so often the case, whether it is social legislation or otherwise, will be prepared in order to provide some kind of easy "read" on the whole subject. This has been the position in the past and it may well be necessary again to provide such a guide.
Baroness YOUNG: My Lords, I am sorry to interrupt the noble Lord, because he has done his best to answer my question about the title of the Act to which this Bill refers. It might well be that somebody who is engaged in the profession will go to an organisation where he will expect to collect the relevant Act of Parliament and that he will be told that this is the only Act of 1966. Will this be a fault of their record-keeping, or is it a fact that as the Act was not passed in 1966, because the amending legislation came later, one should therefore look for it in a different year?
Lord WELLS-PESTELL: My Lords, without an example I just cannot answer that question. I am aware of these difficulties but, as the noble Baroness will know only too well, in the field of social work so often it is necessary after a number of Acts have been passed for somebody to reduce them to an understandable form in some kind of booklet. I believe that every professional social worker in this country works on a series of booklets which explain what the various Acts say, what they empower people to do and what the benefits accruing from them are. It may well be that a similar booklet will have to follow the consolidation of the various Acts to which the noble Baroness has referred.
The noble Baroness, Lady Young, and the noble Lord, Lord Banks, referred to the guaranteed maintenance allowance. Perhaps the noble Lord, Lord Banks, answered the question when he said that the Government have rejected this allowance, first, because it would be means tested and, secondly, because it would be expensive in manpower. I am informed that it would require something like 8,000 more civil servants to administer

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and that the cost would be between £250 million and £400 million a year which, in the light of the present situation, I do not believe any Government could face up to. It does not mean that one ought not to be looking at the whole picture. As Professor Donnison said quite recently, the time has come when we must look very closely and deeply at all the benefits that we are giving to see whether or not something can be done to co-ordinate them.
Lord BANKS: My Lords, I am most grateful to the Minister for allowing me to put this question to him. I wonder whether he would agree that it would be desirable, if we cannot—and I accept his arguments—have this wider guaranteed maintenance allowance, if we could have instead as a minor step, and something towards alleviating the position, the introduction of the special supplementary benefit allowance recommended by the Finer Committee for one-parent families, which would cost very much less.
Lord WELLS-PESTELL: My Lords, at this stage I do not think I could possibly commit the Government to taking any specific step in any specific direction. The only thing I can say is that on 15th September the Secretary of State for Social Services announced—as I am sure the noble Lord, Lord Banks, knows—a review of the supplementary benefits scheme. One of the purposes of this review is to see to what extent it is possible to simplify what we recognise has become a very complex scheme. In the course of this review, the team will no doubt take into account the comments that have been made, not only tonight but also the comments that have been made in another place and by other people outside both Houses of Parliament; because obviously a review of the supplementary benefits scheme is necessary and this we have undertaken to do in the foreseeable future.
I do not know whether I can usefully add anything more at this stage. I think I have dealt with most of the questions. The noble Lord, Lord Banks, suggested that the disregard should be larger; as I think I said earlier this evening we
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considered this, but we felt this was as far as we could go in the present economic climate. There is probably a case to be made out for a much higher disregard, but we must take into account that it is not only a £6 disregard which will take place in the future. At present over and above the present £4 the amount of fares is disregarded. If the lone parent has to pay out money each week for the child to be looked after or attended in some way, that is another disregard. There will be other disregards which in themselves can be quite substantial, particularly where it is necessary for the child to be looked after during the time when the one parent is at work. I think we must take all these things into account, because when they are all added together they form a substantial amount.
I do not know whether I can say more than perhaps noble Lords have read about cohabitation. Any benefit designed to help single parents in particular must, in our view, involve distinguishing those parents who are single. That is the whole purpose of the exercise. The Finer Committee recognised this and was quite explicit about it. If such a distinction were not made, it would not be possible to ensure that the lone parent benefited by the increase in the disregard. I know that a number of Members of your Lordships' House feel very strongly about the question of cohabitation, but I think we must recognise that it is important to the lone parent that two people are not living as man and wife. If they are, the circumstances change completely and the lone parent is no longer a lone parent. I know that this is unacceptable to a number of your Lordships, but I do not see what one could put in its place at the present moment if we want to consider the ultimate benefit of the lone parent.
The only other question I have not answered is that put by the noble Baroness, Lady Elliot of Harwood, who wanted to know whether the disregard applied when the lone parent was a man. The answer is, Yes, treated in precisely the same way. Having said that, I hope noble Lords will feel that I have met the points which were raised and I hope the Bill will now be read a second time.
On Question, Bill read 2a and committed to a Committee of the Whole House.

  INCOME TAX: RELIEFS AND ALLOWANCES
  INCOME TAX: RELIEFS AND ALLOWANCES
  RHODESIA
  RHODESIA
  TEMPORARY EMPLOYMENT SUBSIDY
  TEMPORARY EMPLOYMENT SUBSIDY
  CYPRUS "BUFFER ZONE"
  CYPRUS "BUFFER ZONE"
  NATIONAL HEALTH SERVICE CHARGES
  NATIONAL HEALTH SERVICE CHARGES