HC Deb 07 August 1975 vol 897 cc516-8W
Mr. Goodhew

asked the Secretary of State for Industry why the Aircraft and Shipbuilding Industries Bill makes no provisions for the setting up of the organising committee referred to in the Secretary of State's Consultative Document on the nationalisation of the aircraft industry.

Mr. Gregor Mackenzie

As with previous nationalisations, the job of the organising committee is to make preparations, while the legislation is going through Parliament, for the corporation which will be established when the Bill receives Royal Assent.

Mrs. Hayman

asked the Secretary of State for Industry whether he proposes to amend Clause 31 of the Aircraft and Shipbuilding Industries Bill.

Mr. Varley

It has been the clearly stated intention, from the outset, that the safeguarding provisions should not inhibit normal commercial transactions or investment. Representations have been made by parties in both industries that Clause 31 could apply to normal transactions in the ordinary course of business which turn out badly. In order to reflect more clearly the intention that such transactions should not be affected without in any way limiting the effect of the clause in a case of real and deliberate dissipation, the Government intend to make the following changes to the clause in the Bill when it is re-introduced at the start of next Session:

Clause 31(1), page 41: Delete whole subsection and insert:

31.—(1) Subject to subsection (2) below, the provisions of this section apply in any case where, on or after the appropriate date and before the date of transfer, a company which comes into public ownership has entered into a transaction which, in the opinion of the relevant Corporation, was of such a nature as, and at the time it was entered into could reasonably have been foreseen by the company to be likely, to cause a loss to, or impose a liability on, the company substantially greater than any benefit accruing to it and which, in the opinion of the relevant Corporation, either—

  1. (a) was both an unusual transaction for the company to enter into, having regard to the activities in which the company was engaged at the time of the transaction, and not reasonably necessary for the purposes of those activities, having regard to the circumstances at that time; or
  2. (b) was a transaction made otherwise than in the ordinary course of the company's business and on such terms or with such a party as to indicate an unreasonable lack of prudence on the part of the company, having regard to the circumstances at the time of the transaction;
and for the purposes of this subsection "the appropriate date" means, in relation to a transaction consisting of the making or variation of an agreement or lease, the initial date and, in the case of any other transaction, 17th March 1975; and a transaction falling within this subsection is in the following provisions of the section referred to as an "onerous transaction'.

Clause 31(7), page 42. Delete whole subsection and insert:

(7) If, on an application order subsection (3) or a reference under subsection (6) above, the arbitration tribunal are themselves satisfied, having regard to all relevant factors, that the transaction concerned was of such a nature as is referred to in subsection (1) above and falls within either paragraph (a) or paragraph (b) of that subsection, the tribunal shall—

  1. (a) in the case of an application under subsection (3) above, determine the extent 518 of the net loss resulting to the Corporation from the transaction, and
  2. (b) in the case of a reference under subsection (6) above, confirm the notice of disclaimer,
unless (in either case) the tribunal are satisfied that the transaction was not entered into with a view to defeating the object of any provision made by this Act or (if the transaction was entered into before the passing of this Act) with a view to defeating any such provision which might reasonably have been anticipated to be likely to be contained in this Act.

Clause 31(8), page 42, line 44: Delete "(7)(i)", insert "(7)(a)".

Clause 31(9), page 43: Delete whole subsection and insert: (9) If, on a reference under subsection (6) above, the arbitration tribunal do not confirm the notice of disclaimer under subsection (7)(b) above, they shall revoke it.