IRON AND STEEL BILL

§ LORD GIFFORD

My Lords, I rise to support this Amendment standing in the name of the noble Lord, Lord Wolverton, Lord Davidson and myself. It seems to me that it produces a happy compromise. It was suggested in Committee that statutory provision should be made in the Bill itself for the appointment of members of the Corporation, but I think the noble Lord, Lord Morrison, pointed out that this made it rather too rigid. The suggestion in this Amendment is that the appointment of members of the Corporation should be made by regulation of the Minister, and it seems to me that that is the right way to do it. The third method is by the letter of appointment, but I do not think that that is right. Moreover, it seems to be rather a backhanded compliment to the person concerned to send him a letter of appointment as a member of the Corporation and tell him in the same letter what will happen if he misbehaves, and how you are going to get rid of him. Surely it is better to put it into a regulation, so that everybody knows exactly what are the terms of the appointment. There have been discussions since the Committee stage, I understand, but they have not reached any finality, and I think that this Amendment forms the best compromise.

§ LORD RENNELL

My Lords, I should like to add one or two words in support of this Amendment. Your Lordships will remember that there was a good deal of talk in Committee about the form of the letter of appointment which was suggested by the noble Lord, Lord Morrison. I am not concerned with the term or period of the appointment, which I admit has a bearing on this particular issue, but I think it must be agreed by the Government that a letter of appointment cannot properly contain the sort of 5 thing that we discussed during the Committee stage. However, if the appointment is made only by a letter of appointment, irrespective of the term for which it is made, the letter must contain, unless there are other provisions, the conditions upon which the appointment is tenable, The restrictive conditions upon which the appointment of any directorship is tenable are stated in the Companies Act. If a regulation were issued by the Minister it could simply refer to the Companies Act so far as the general provisions are concerned. It seems to me much more appropriate to do it in the form proposed in this Amendment rather than by trying to incorporate in the letter of appointment the provisions of the Companies Act. I speak without firsthand knowledge, only from what I have heard. For instance, when directors have been appointed to the Civil Aviation Corporations, the letters of appointment have not referred to the pains and penalties that might be incurred or the reasons why a man must resign or be "sacked" for misbehaviour—in other words, they are just plain letters of appointment. That would not satisfy the public generally. The public would require to know a little more than that, and that little more could be made public in the regulations, rather than be elaborated in detail in the peculiar circumstances which might arise in any particular letter of appointment, which is private between the Corporation and the recipient. Without reference to things like salaries, for instance, the public have a right to know the general conditions upon which these kinds of appointment are tenable. It would be easier to do that in the form of a regulation than in a letter of appointment, and therefore I am in favour of the insertion of something of this nature in the Bill.

§ LORD LUCAS OF CHILWORTH

My Lords, His Majesty's Government have given careful consideration to all the points which were raised during the Committee stage upon the Amendments to which the noble Lord, Lord Wolverton, has drawn attention. I cannot add much to the full answers which were then given by my noble friend Lord Morrison. After this consideration, His Majesty's Government have come to the decision that they cannot accept this Amendment. The noble Lord, Lord Gifford, said that it 6 was rather a "back-handed compliment" to put in a letter something giving a particular member of the Board all the reasons why he could be dismissed. In our experience in appointing members of the Transport Commission by letter, we have not found that any of them have thought that they had received a "backhanded compliment."

§ LORD HAWKE

My Lords, did the noble Lord really put in his letters to the Transport Commission all the misdemeanours for which they could be dismissed? Does he really mean to say that?

§ LORD LUCAS OF CHILWORTH

I will come to that point in a moment. The noble Lord, Lord Rennell, said that all these terms could not properly be included in a letter of appointment, and then he cited the Companies Act. The Companies Act, and the regulations regarding directors in the Companies Act, are there to protect the shareholders against misdemeanour by the directors. The Companies Act has nothing to do with the Iron and Steel Corporation. That is not set up by the shareholders; it is set up by His Majesty's Government. It is an entirely different conception. I cannot add anything useful to what my noble friend Lord Morrison said in short we feel that the required degree of flexibility could not possibly be introduced into a set of regulations. A letter of appointment will contain all the major points which have been raised by noble Lords opposite during the Committee stage. All that is proper to be included in that letter will be included, but the terms may vary as between different members of the Board. I will just cite one case by way of example. It may be that one very desirable member would not give up his present occupation unless he had a substantial period guaranteed, whereas it may be that another very desirable man would perhaps be so advanced in years that he would consent to serve only for a short period.

On behalf of His Majesty's Government, I am prepared to give this firm undertaking: that normally the appointments to the Corporation would not be for periods exceeding five years. Retiring members would be eligible for reappointment and the Minister would make such arrangements as were appropriate to the circumstances of particular 7 appointments to secure suitable staggering of retirements. I am prepared to give that undertaking on behalf of His Majesty's Government, but for the reasons that have been so well put all through the Committee stage, and which I have now reiterated, I regret that I cannot accept this Amendment.

§ LORD HAWKE

My Lords, I was not going to speak on this Amendment, but the noble Lord told us something about the letters of appointment to the members of the Transport Commission containing a list of the things they must not do, failing which they would be removed. I asked him if he could confirm that, and he has not confirmed it. Later on in his speech, he went on to say that different terms might be applicable to different members. Are we to understand that certain members of the Transport Commission hold office so long as they attend 50 per cent. of the board meetings, and another 25 per cent. so long as they remain of sound mind? Possibly, for great intellects, there is not the same discretion. The noble Lord has definitely told us that. I think he should be more specific as the general public are interested in this matter.

§ LORD LUCAS OF CHILWORTH

My Lords, may I, by leave of the House, speak again? I thought I said that all the points raised by noble Lords opposite which were proper to be put in a letter of appointment would be so put. They have ranged from insanity to insolvency.

§ LORD RENNELL

Put into all the letters?

§ LORD LUCAS OF CHILWORTH

Put into all the letters, where it is applicable.

§ LORD HAWKE

They have been in the case of the Transport Commission?

§ LORD LUCAS OF CHILWORTH

They have been in the case of the Transport Commission, and they will be carried on with that degree of flexibility which in the Minister's discretion is applicable to the individual cases.

§ VISCOUNT BRIDGEMAN

My Lords, I can see the point which the noble Lord, Lord Lucas, has made about tenure of appointments of members of the Transport Commission, although I still agree with my noble friend behind me that that 8 could perfectly well be put into regulations. But I submit that nothing which the noble Lord, Lord Lucas, has said really affects that part of the case for this Amendment which rested on the Amendment which I myself moved during Committee stage of the Bill—namely, the Amendment which dealt with the compulsory retirement of the members of the Transport Commission when they become insolvent or become of unsound mind and so forth. The noble Lord opposite has made a plea for flexibility. Flexibility is something which we on this side all want in proper cases, but I would ask whether the noble Lord or His Majesty's Government really want flexibility in the following matters which were the subject of my Amendment on the Committee stage—namely, that a member should retire compulsorily if he took another job when he was a whole-time member; became bankrupt; made personal profit out of a contract; dealt with other interests which he had not disclosed; and so on and so forth. Those are matters on which there ought to be no flexibility at all, and my Amendment on the Committee stage was designed to make sure that there could be no flexibility there, any more than there was under the Companies Act.

With regard to the question which the noble Lord raised as to whether the Companies Act applied, of course he is perfectly right in saying that where there is only one shareholder there is no need for the Companies Act to apply, and that a public corporation is not a company under the Companies Act. So far, so good. But my point is not quite covered by that answer, because a public corporation ought, surely, to have the same standards in its conduct of business as any company, public or private, constituted under the Companies Act. My original Amendment was designed to make sure, and to write into the Bill, that the standards regarding members of the Corporation would be the same high standards as Parliament rightly expects in public or private companies. Therefore, though I can see the point of wanting enough flexibility to make special conditions for the tenure of office, retirement by rotation and that sort of subject which would be dealt with by regulations, I am still absolutely unconvinced that the point which I originally made cannot be written into the Bill. 9 If His Majesty's Government require flexibility to appoint lunatic directors, or to allow directors to take another job at the same time, or to make money out of a contract, then I for one am entirely against it.

§ THE EARL OF DUDLEY

My Lords, I hope that the Government will give serious consideration to this matter before the next stage of the Bill. Although I made rather a flippant speech on this matter in Committee, I do feel that it is considerably more dignified to make regulations in regard to all these basic matters—from insanity to insolvency, I think the noble Lord said—which affect all members of the Corporation, rather than to embody them in a letter. Because it is done in that way in regard to transport it does not mean that it is the right way to do it. I believe that that is the only nationalisation Bill which has adopted that form of procedure. The noble Lord talked about flexibility. I cannot see that the more flexible way of dealing with the matter is to put all these things in the form of a letter. It must be a very long letter and, if I may say so, rather a stupid letter—and certainly a very undignified letter. Surely the right way to do it is to embody it in regulations. I hope the noble and learned Viscount, the Lord Chancellor, will lend his ear and his weight to the matter of this rather important procedure, although I have no doubt it is not important enough for noble Lords to press to a Division. But if this is to be a dignified business, as I think noble Lords hope it will be, it is important that the Government should deal with this matter in the proper, sensible and dignified way, rather than in the stupid way in which it is to be done.

§ LORD TEYNHAM

My Lords, we feel that the Government's answer in not accepting this Amendment moved by my noble friend is not satisfactory. Surely it is desirable that certain basic standards should be applied uniformly to all members of the Corporation; and surely the best way of doing that is by way of regulation. The noble Lord, Lord Rennell, said that plain letters of appointment would be insufficient, and I think his point is true. The public have the right to know the general content of appointments, and regulations must be the best way of conveying that information to the public. It is not a matter that we feel 10 should be pressed to a Division, but I hope the noble Lord, Lard Lucas, will be able to give us an assurance that letters of appointment will embody a uniform series of disqualifications; otherwise such letters may lead to variations in the terms of appointment as between different members of the Corporation. I am sure that with this assurance my noble friend would be willing to withdraw the Amendment.

§ THE LORD PRIVY SEAL (VISCOUNT ADDISON)

On behalf of my noble friend, may I say that I hope noble Lords will realise that the Minister will exercise his powers with ordinary good sense and with due judgment. I think we are entitled to assume that, otherwise he ought not to be a Minister. I do not think it will be possible to, give a uniform letter in view of the variety of persons, with varying experience and so forth, whom it may be desirable to appoint. I think noble Lords are pressing the case too hardly, and it really is not practical.

§ LORD WOLVERTON

My Lords, I must say that I have not been very impressed. Although I am sure we all agree that the present Minister would write a good letter, Ministers come and go, and if this measure reaches the Statute Book it will last for a long time. I cannot see why, since it has been adopted in two Acts—the Electricity anti the Gas Acts—His Majesty's Government cannot accept this Amendment. I hope they will give further consideration to the matter between this stage and the next stage of the Bill. If they can do that, I am willing to withdraw the Amendment.

§ THE LORD CHANCELLOR

My Lords, I have been asked to reply on this matter. I confess that I think the noble Lord would be very ill-advised to press this Amendment for it would have exactly the effect which he does not want to achieve. As subsection (6) of this Clause is drawn, your Lordships will see that it provides an obligation for disclosure by a member "after the relevant circumstances have come to his knowledge." The subsection goes on to state that: the disclosure shall be recorded in the minutes of the Corporation, and the member shall not take any part after the disclosure in any deliberation or decision of the Corporation with respect to that contract. Now suppose that a man is dishonest and does not disclose. He thereby commits one offence under that subsection and not two. He has not disclosed the relevant circumstances, but in that the second limb of the subsection deals with what is to happen after the disclosure, and there has been no disclosure, then consequently the second limb never comes into play. In our view it is very important that it should not come into play. What we want to ensure is that third persons who are dealing with the Corporation in perfectly good faith are in no sense prejudiced. There is a provision under Section 180 of the Companies Act, which provides The acts of a director or manager shall be valid notwithstanding any defect that may afterwards he discovered in his appointment or qualification. If we took these two Amendments—I think the noble Lord was probably acting for the convenience of the Committee in discussing the two together—I am afraid that we should get into considerable trouble. The second of the Amendments deals with any defect that may afterwards be discovered in the appointment or qualification of a member of the Corporation. There can, I think, be no question of a defect in his qualification unless he is a Member of Parliament, because, for 13 the rest, his qualification depends on the opinion of the Minister and so on—it is not objective, it is subjective to the Minister. It is hardly conceivable that the Minister would appoint a Member of Parliament—that would be much too obvious a breach. The real difficulty conies from the Amendment that was made to the First Schedule. If your Lordships will turn to page 67 of the Bill you will find that paragraph 3 of the First Schedule contains these words: The quorum of the Corporation shall be such number, not being less than three, as the Corporation may from time to time determine, and where any member is disqualified from taking part in any deliberation or decision of the Corporation with respect to any matter he shall be disregarded for the purpose of constituting a quorum of the Corporation for deliberating on or deciding that matter… Observe what would be the effect of the Amendments with regard to a quorum. As we have it at the present time, there is no question of disqualification, because the obligation is disclosure and after disclosure disqualification. If you eliminate the word "disclosure" and put in some such words as "the relevant circumstances" and so on, you might bring about disqualification. That might have an adverse effect on the words in paragraph 3 of the First Schedule, and mean that some innocent third person might find himself in a difficult position because, owing to the disqualification which these Amendments would bring about, there would no longer be a quorum. Consequently, if I may suggest it to the noble Lord—I know that he wants the same thing as I do—I think it would be unfortunate from the point of view of innocent third persons that such Amendments should be put in.

As to the director who ought to have disclosed and who does not disclose, he conies under the full wrath of the Minister, because he has already prejudiced his position in not disclosing, and he can he dealt with or dismissed or whatever it may be, for that. To go further than that would, I think, bring about a result exactly the opposite of that which the noble Lord wishes to achieve. I can give the noble Lord the assurance that under the Bill as it is drafted the proceedings of the Corporation will not be invalidated under subsection (6) of Clause 1, to the prejudice of third parties. Under the subsection as 14 drafted, disqualification arises only where an interest has been disclosed. If you altered the Bill in the way which the noble Lord has suggested you might bring it about that disqualification resulted because there had not been disclosure when there ought to have been and, consequently, you would find all sorts of results arising with regard to the quorum. If I may suggest it, the noble Lord would be well advised, in his own interests and in order to achieve the result which he wants, not to press these Amendments.

§ LORD HAWKE

My Lords, the noble and learned Viscount, the Lord Chancellor, has dealt very effectively with the more obvious points of these Amendments, but there is one point—actually it may not be a point at all—which is still obscure to me. That relates to the question whether the acts of a member of the Corporation are covered—I refer to acts committed by him out of board meeting. If he is an executive of the Corporation and has delegated powers to decide contracts and so on, it seem; to me, as the Bill is now drafted, he can decide contracts to which he might happen to be an interested party and then be not bound to declare his interest until the next fleeting of the Corporation. That is so far as the disclosure of interest by the man is concerned. As regards the third party would they be covered too? In such circumstances, does the Bill validate any acts that a man may have done, notwithstanding that at the tine he was an interested party?

§ LORD RENNELL

My Lords, if I follow what the noble Lord, Lord Hawke, has said, I think the instance which he has in mind would be something like this—perhaps it may serve to clarify the matter if I put it in this way. A person being a member of the Board is delegated by the board to negotiate a particular contract. After that board meeting he disqualifies himself by some act such as is provided for in subsection (6). I think the noble Lord is inquiring whether at that point a third party might not be injured by reason of the delegated powers having been invalidated by an action committed by the person between the time of the delegatior of power and the time he committed the Corporation by his signature of the contract.

§ LORD HAWKE

That is the second point.

§ THE LORD CHANCELLOR

My Lords, I speak again only by leave of the House. We are dealing here only with the proceedings of the Corporation, and not with those of individuals. If an individual is authorised by the Corporation to make a contract, if it is within the scope of his authority, the Corporation are bound. If outside the scope, they are not bound. If he acts fraudulently towards the Corporation, possibly by entering into a contract with a third party, then he is responsible to the Corporation. This clause deals only with the proceedings of the Corporation.

§ LORD LLOYD

My Lords, after what the noble and learned Viscount has said, this is not an Amendment I would desire to press. I hope your Lordships will not feel that time has been wasted; I felt it worth while to clear up this matter. I am still not absolutely certain about my noble friend's point being covered or not, but in the circumstances I beg leave to withdraw my Amendment.

§ THE EARL OF DUDLEY

My Lords, I beg to support the Amendment moved by my noble friend Lord Clydesmuir. It is really only consequential upon the Amendment which was carried by your Lordships in Committee. It is clear that as the Corporation will not have a monopoly over the whole field of steel production they cannot possibly secure all the necessary products for the whole field of consumers (I see that the noble Lord, Lord Lucas, nods his assent); therefore, while they can promote a total production, they cannot secure it. For that reason this Amendment is necessary. As my noble friend Lord Clydesmuir pointed out, it also gives effect to the decentralisation policy to which noble Lords opposite agreed. I hope it t will be brought into effect because the 17 Corporation, as the Corporation, cannot secure the necessary products from the publicly-owned companies and the publicly-owned companies themselves must be responsible for providing the necessary products to satisfy consuming interests. For that reason, also, the Corporation can only promote; they cannot secure. This seems a very common-sense Amendment, and I hope the Government will accept it.

§ LORD LUCAS OF CHILWORTH

My Lords, may I preface my remarks on this Amendment by offering to the noble Lord opposite my complete and total sympathy? As he said, at eleven o'clock, much against his own better judgment, he was pushed ink) the Division Lobby to support an Amendment which was entirely nonsensical and could not work, though no persuasive powers of mine could persuade the noble Viscount, Lord Swinton, that such was the case. That is as I understand it, and I had hoped that the noble Lord, Lord Clydesmuir, was going to be helpful to-day. With your Lordships' permission, I suggest that we consider four Amendments together—namely, those on page 5, line 27; page 5, line 32; page 5, line:33; and page 5, line 37. In manufacturing these four Amendments, the noble Lord tried to make two lifeboats in which he hoped to row to the shore from the torpedoed wreck in which he had left himself by the previous Amendment. There are two alternatives here. I have puzzled these out as best as I can. The first alternative is a combination of the three Amendments on page 5, at lines 27, 32 and 37.

§ VISCOUNT SWINTON

The Amendments to page 5, lines 27 and 33, go together.

§ LORD LUCAS OF CHILWORTH

The Amendments to lines 27 and 33 together form the second alternative. If we add them all together, we get even less sense than from the original Amendment. If noble Lords will bear with me, I will read the first alternative. I will not ask your Lordships to puzzle it out for yourselves; that would take too long. The first alternative reads: (a) To promote the efficient and economical supply of the products or the principal activities of the Corporation and of the publicly-owned companies and the availability of those products in such quantities, types, qualities and sizes, and at such prices as may 18 seem to the. Corporation best calculated to satisfy the reasonable demands of consumers of those products desiring to purchase them from the Corporation or from a publicly-owned company and to further the public interest in all respects; and (b) To secure that neither the Corporation nor any publicly-owned company shall show undue preference to, or exercise unfair discrimination against, any such consumers or any class thereof in the supply and price of those products… and so on, to the end of the paragraph.

The second alternative says something entirely different—namely, (a) To promote the efficient and economical supply of the products or the principal activities of the Corporation and of the publicly-owned companies, and the availability of those products in such quantities, types, qualities and sizes and at Arch prices as may seem to the Corporation best calculated to satisfy the reasonable demands of the persons who use those products for manufacturing purposes and desire to purchase those products from the Corporation or from a publicly-owned Company, and to further the public interest in all respects… The first alternative brings back our old friend, the stockist, as the noble Earl, Lord Dudley, said, because it mentions the word "consumers." The second alternative leaves out the stockist and reverts to the person who is a manufacturer. Frankly, I do net know what the noble Lord wants to di

§ VISCOUNT SWINTON

The second alternative is the stockist.

§ LORD LUCAS OF CHILWORTH

No. It is the first alternative, because in that you bring in the consumer, and in the definition of "consumer" in the Interpretation Clause is the merchant, whether he be stocking Dr otherwise. In the second alternative you entirely ignore the stockist.

§ LORD CLYDESMUIR

Just to clear this up, I would like to have the alternatives clearly. I have not yet moved the Amendment that brings in the word "consumers."

§ LORD LUCAS OF CHILWORTH

I am sorry, but we cannot deal with these Amendments except at a group. In one alternative the noble Lord wants to bring in the reasonable requirements of the consumer—that means the stocking merchant—which we argued previously, and an Amendment was then somewhat reluctantly withdrawn. We could not take into consideration the requirements of 19 the stockist, because they are sometimes duplicated. I argued last time, and I argue again, that the only effective demand comes from the manufacturer. Noble Lords opposite accepted that argument with some reluctance. The first alternative brings in the stockist, and the second alternative leaves him out.

§ LORD CLYDESMUIR

Would the noble Lord repeat the alternatives as he has put them? It is the second Amendment of the group that mentions "consumers."

§ LORD LUCAS OF CHILWORTH

The Amendments to page 5, at lines 27, 32 and 37 hang together; it does not make sense unless they do. There is then the second alternative of the Amendments at page 5, lines 27 and 33, which go together. I would say this to the noble Lord. If he will treat either group as consequential, he can have which he likes. I cannot anticipate, but it was mentioned that this Bill will go to another place. All I can hope is that they will not only throw out this Amendment but that they will throw out the first Amendment; that is the only way in which the noble Lord will be rescued from the impossible situation in which he has landed himself through not taking my advice in the first place. But if the noble Lord accepts the first Amendment, I must reserve the Government's position securely upon this question of the consumers. Therefore, as it is a consequential Amendment, I now leave the noble Lord to "pay his money and take his choice."

§ VISCOUNT SWINTON

My Lords, we have had a very entertaining, if not very enlightening, discourse from the noble Lord. I do not know what is the difference between a Government maintaining their position and a Government maintaining their position securely. No doubt this Government appreciate that rather fine metaphysical—or, indeed, physical—distinction, and have to safeguard it. I would like to say a word about the main Amendment to which this Amendment is consequential. Of course, nobody was hustled into the Amendment by a mistake. We had every intention of moving the Amendment and, if the Committee did not accept it, every intention of dividing upon it. It was an 20 extremely sensible Amendment. What did it do? The Bill as drafted gave the Corporation and their subsidiaries the power to manufacture what are called Second Schedule products—broadly, what ordinary people have understood as iron and steel manufacture. It then proceeded to take in a number of other things, which for convenience are called the principal activities, embracing an enormous range of engineering works, from bridge building to ping pong balls.

§ LORD LUCAS OF CHILWORTH

And babies' bottles.

§ VISCOUNT SWINTON

And babies' bottles, as the noble Lord says. From the cradle to the grave, this industry is to be taken over—and I am afraid there is likely to be more grave than cradle about it. The Corporation then put upon themselves an obligation to be efficient and to supply the requirements of their customers as regards their Second Schedule activities—iron and steel in the ordinary sense—but they impose no obligation upon themselves vis-à-vis their customers for all the other activities they take over. The very fact—and this is an elementary rule of construction in Acts of Parliament—that you include one thing with a special obligation and exclude another means that you impose upon yourself an obligation as regards the first duty from which you exclude yourself with regard to the second. Therefore, if the Bill had stood in the brilliant way in which the Government presented it to us, they would have had an obligation to be efficient and serve the interests of consumers with regard to iron and steel but no obligation whatever to be efficient or to serve the interests of the consumers with regard to the other principal activities.

That was too much for your Lordships to swallow. Therefore, we decided—quite rightly, if I may respectfully say so—that if the obligation was to be put upon the Corporation and the subsidiaries at all in the terms of the Act, obviously that obligation should extend both to Second Schedule products and to the principal activities. And we stand by that. If it came to the issue as to which proposition is right, I do not think any impartial observer, or indeed any reasonable draftsman, would have the least hesitation in saying what ought to be done. The only defence which the 21 noble Lord can raise for his incontinent rejection of this proposal is that in the words of the Bill as drafted—for which he was responsible—it would not read very well, because it would impose on the Corporation, as regards products in which they had a monopoly, an obligation which was not strictly applicable in its wording to those principal activities in which they had not a monopoly.

I think the noble Lord was only partially right over iron and steel—the Second Schedule products—because actually the Corporation are not taking over the whole of the Second Schedule activities. We had all this out on the Second Reading. In some cases they take over 99 per cent., in other cases 60 per cent., and in another case only 40 per cent. Therefore the glib assurance with which the noble Lord commended this to us before contained a good many loopholes. If he wishes to be logical he will have to re-cast his obligation to vary it with the variation of monopoly which he is applying. We agreed that it was reasonable, if we placed upon the Corporation the new obligation to promote efficiency as regards the other activities—which certainly ought to be there—that we should try to help him to make it not only a better Bill but a better drafted Bill, and include a provision which would best fit both those products in which the Corporation had a monopoly and those in which they had only a subsidised competing interest.

Our proposal, I think, achieves that end. I would say that the first Amendment, at page 5, line 27, and the third, at page 5, line 33, undoubtedly have that result. The others are only partly alternatives. It is true that to be 100 per cent. embracing, and to include a special obligation as regards the stockists, then some special words are required; and I agree that the words about the consumers of those products would probably have to come in. If I may suggest it, I think the need would he sufficiently met if the first alternative were taken and the Amendments at lines 27 and 33 were added. We have a further stage in the Bill and we can look at them to make sure they are right. As regards the Amendments themselves, of course they are consequential upon the main Amendment which the Committee have already made. I do not in the least anticipate what will happen, but obviously if that Amendment is 22 retained Oren the two consequential Amendments will be retained, but if that Amendment should go—I hope it will not—then these Amendments would follow.

§ VISCOUNT ADDISON

My Lords, on behalf of my noble friend I would like to say that we concur with what the noble Viscount has said with regard to these Amendments being consequential—rather distantly consequential, it seems to me—on what your Lordships did before. So far as we on this side of the House are concerned, we shall not resist them. With all respect to the noble Viscount's reflections upon other aspects of the Bill, he quite properly and discreetly steered clear of the Amendment which was passed in Committee. It is just rubbish and it will not work. However, so far as we are concerned we leave it to noble Lords opposite to choose which alternative they like. We consider they are both absurd.

§ LORD CLYDESMUIR

My Lords, the noble Viscount has had an opportunity of a very pleasant opening to the debate. The alternative of taking the first Amendment—which, indeed is the only one before the House—and the third Amendment in this group, is the one that we would select. That will secure that the Amendment which was made on the Committee stage is in every sense workable. We can only hop; that the other place will leave it so and thereby improve this Bill, if that is possible.

§ LORD LUCAS OF CHILWORTH

My Lords, I thought I made it abundantly clear in Committee that the merchants, whether they are stockists or whether they are not stockists, are included in the definition of "consumer" in Clause 60. It says: 'consumer,' in relation to any products, means a person who uses those products for manufacturing purposes or is engaged in the merchanting of those products. That covers a merchant, whether he carries stocks of steel or whether he does not—if he is just one of those ordinary intermediaries between the producer and the consumer. I explained that during the Committee stage. If I did not make it clear then, I trust I have now. Both types of merchant are included in the definition "consumer" in the definition clause and, therefore, are included in the representation upon the Consumers' Council.

§ THE EARL OF DUDLEY

My Lords, that does not answer the question. The stockholding merchants are a special tribe. They cannot be included as consumers and be represented as consumers on the Consumers' Council. We want to know definitely whether there will be at least one representative of stockholders on the Consumers' Council. This is a matter upon which the National Association of Iron and Steel Stockholders feel very strongly. They want an assurance that: a stockholder will definitely be included amongst the fifteen to thirty persons constituting the Consumers' Council to be set up under Clause 6. I am quoting from a letter from the National Association of Iron and Steel Stockholders. Whatever the Minister may say in defining stockholding merchants, they supply a very significant proportion—in some cases over 10 per cent.—of consumers' requirements, and they are entitled to representation on the Consumers' Council. Their function is a most important one. As I said on the Committee stage of the Bill, a Committee of the Federation has been set up for some years now, which means that these stockholding merchants study their requirements in every possible way. That state of affairs should be continued by giving 24 them representation on the Consumers' Council. I hope we shall get a definite answer from the noble Lord about whether they will be represented as an association of stockholding merchants on the Consumers' Council to be set up under this Bill.

§ LORD LUCAS OF CHILWORTH

My Lords, by the leave of the House I would reply to this one point. I will try to make it crystal clear. Will the noble Earl refer to Clause 7 (2) (b), where it says that the Council shall consist of not less than fifteen nor more than thirty other persons appointed by the Minister, after consultation with such bodies (which may include organisations representing workers) as he thinks fit, to represent the interests of persons (hereafter in this section referred to as 'the consumers') who are consumers of the products of any of the principal activities of the Corporation and the publicly-owned companies… In the definition clause, "consumers" includes those engaged in merchanting, so I would suggest to the noble Earl that the common-sense interpretation of paragraph (b) of Clause 7 is that the Minister will consult with the authorities representing merchanting interests when he comes to select the people to fill this Council of "not less than fifteen nor more than thirty." I would suggest to the noble Earl that it is perfectly well covered. The interests are going to be consulted with a view to nominating representatives to represent those interests on the Consumers' Council.

§ VISCOUNT BRIDGEMAN

My Lords, the noble Lord opposite has come very near to giving the assurances that we want, but he has not done exactly what my noble friend hoped he would do, and that is to assure us that the Minister would include the Iron and Steel 'Stockholders' Association as one of the bodies which he thought fit to consult. If that assurance can be given we shall get very near to agreement.

§ VISCOUNT ADDISON

We acquiesce; we do not accept.

§ LORD CLYDESMUIR

My Lords, the effect of this Amendment will be to make paragraph (b) of this clause into a subsection no longer governed by the opening words of the clause, and this will lay upon the publicly-owned companies themselves the duty not to show undue preference or exercise unfair discrimination. Your Lordships will recollect that the Government accepted an Amendment in Committee providing that this paragraph should apply to preference or discrimination on the part of publicly-owned companies as well as the Corporation. It was a matter upon which we divided. The Government saw good reason for acceptance of this Amendment, and my Amendment now is intended to improve what has already been done. As the paragraph stands, it is left to the Corporation to secure that companies under the Corporation do not show undue preference or exercise unfair discrimination. It is inconsistent with the principle of decentralisation to which the Government and the Opposition alike are committed that the Corporation should have to secure this. It seems right that the companies should stand on their own feet and should be responsible for seeing that discrimination or undue preference is not exercised. The point is a very clear one and need not be elaborated. If the Government accept this Amendment there will require to be an amendment of the marginal note in the Bill. I beg to move.

§ LORD LUCAS OF CHILWORTH

My Lords, it is a pity that in the middle of the very good-humoured conversation which we have been having on four Amendments there should be inserted this Amendment which has nothing to do with 26 the others. This is a very serious point. I must, I am afraid, join issue with the noble Lord when he said that we did not object to the original Amendment; it was forced upon us in this House at eleven o'clock at night It brings up once again a vital principle to which we cannot agree: it is putting a statutory obligation not only upon the Corporation—which we accept fully—but upon the publicly-owned companies. The effect of the Amendment would be to split the clause into two distinct sections, and it would place an absolute obligation not only on the Corporation but on the publicly-owned companies not to show undue preference; and the placing of an obligation of this character directly by Statute on the publicly-owned companies does not fit in at all with the conception of this Bill. The conception of the Bill is that the publicly-owned companies shall operate as independent units under the Statute under which all public companies have to operate, and hat is the Companies Act. We say that to impose a statutory obligation of his nature over and above anything in the Companies Acts is something which cannot be done. We suggest that a statutory obligation of this character is a matter—if I may so put it—of moral policy. You cannot put that obligation upon the publicly-owned companies. You can put it on the Corporation, and it will be for the Corporation to see that all their subsidiaries conform to it. We maintain that the duty imposed by Clause 4 must rest on the Corporation, who exercise the duty through control of the companies; it cannot rest on the companies themselves. For that simple reason I must say I cannot accept the Amendment, and I hope the noble Lord will not press it.

§ VISCOUNT SWINTON

My Lords, I must say this Bill gets queerer and queerer as the debate goes on, and the ideas of what are the duties of the Corporation and the independence of the companies become more involved. What the noble Lord has just said has a bearing upon the more important series of Amendments which will follow presently and upon which I shall have something to say. I would ask the Government this question: Do you or do you not intend that these companies shall show undue preference? The answer must surely be "No." I should have thought that at any rate there should have been an 27 answer to that, because it may be that if there is not a perfectly clear answer we shall have to divide upon it. Who is going to show undue preference? It is not the Corporation, because they are not going to be entering into any contracts. The people who might show undue preference are the people who sell the commodities; and the one body who are not going to sell the commodities are the Corporation. Every selling transaction will be entered into by one of these publicly-owned companies. Therefore, the people who are to be prevented from showing undue preference—and I hope it is common ground between us that undue preference is not to be shown—must be the companies. It seems to me beside the point to say that because we do not find in the Companies Act, which deals with other things, provision concerning undue preference, we ought not in this Act to impose a duty in respect of undue preference upon the individual companies. It has nothing to do with the Companies Act. The Companies Act is the code to which all companies registered in this country, public and private, are subject; and it would be entirely inappropriate to put into the Companies Act anything about undue preference.

How does undue preference arise? Parliament has always said that where something in the nature of a monopoly is created—such as the railways—an obligation should be imposed that those companies (and there were in the old days a large number of railway companies) which are given a special franchise and monopoly by Parliament shall so exercise it that, broadly speaking, they treat all their customers alike. Therefore, the obligation was put upon the railway companies. In the General Act of Parliament which deals with undue preference with regard to the railway companies, you will find that the obligation is imposed upon all railway companies. Therefore, it is quite irrelevant to say that because it is not in the Companies Act it ought not to be imposed upon the individual companies.

It is agreed that there shall be an obligation to ensure that the companies do not grant an undue preference. Very well. And then the noble Lord says, "But it is for the Corporation to see to that, and I am so keen on decen- 28 tralisation that I will not allow Parliament"—which, after all, was the body which had something to say as to how this industry was to be run—"to lay down in an Act of Parliament that no company shall give an undue preference. I will insist on having it done in this way: that the obligation is put upon the Corporation and then the Corporation must go to every one of these companies to give them their overriding orders and see that they do not give any undue preference." I should have thought that that was the antithesis of decentralisation. I should have thought that that was putting a wholly unnecessary duty upon the Corporation to go and interfere with every one of these companies, and that the natural thing would be that Parliament, which says, "There shall not be undue preference," should lay the obligation upon the people concerned, and that that principle should be followed also in the case of the subsidiaries. If what we all want to do is to put an obligation upon the companies that they shall not be guilty of undue preference, it would be a more commonsense method to put in the Act of Parliament, "Neither the Corporation nor the companies shall…"

§ VISCOUNT SWINTON

My Lords, all your Lordships will be grateful to my noble friend Lord Layton for putting down this Amendment and for continuing the important discussion we had on an Amendment of mine in Committee. I believe that the whole House felt then that something had to be done. We were not happy to leave the Bill as it stood; nor were we altogether happy with any of the suggestions put forward on that occasion. Since then we have had an opportunity to reflect and to have a good deal of discussion, and these three Amendments do three things to give effect to the policy of decentralisation. First, they lay down a cardinal principle in the Bill; secondly, they provide that the Corporation, when they have made their plan as to how they are to decentralise, shall inform the Minister, and the Minister Parliament; and thirdly, there is the provision about security of tenure for the directors.

32 Let me first say a word about the last point, because, frankly, I attach much less importance to that one than I do to the first two. The first two I regard as essential. I think the Government would be well advised to accept the third Amendment because it would give a feeling of confidence to all the boards of these companies. The Government may say that when the Corporation becomes the sole shareholder in these companies, it could, upon twenty-eight days' notice, get rid of every board of directors from the companies—it could sack the lot; and I agree that in those circumstances it is not much use inserting into this Bill a provision to the effect that with regard to the rotation in the appointments of directors the Articles of Association shall not he changed when, by this overriding arbitrary power the Corporation can do everything they please with any board. Therefore, while I feel that it would be a sensible thing to do, I do not attach overwhelming importance to it.

Having said that, however, I think it makes the first two of the Amendments all the more essential. It is agreed even, I think, by the Government—that decentralisation is desirable. If so, and if it is to be (as Lord Lucas told us to-day) the cardinal principle on which the Act is based and the method on which the Act is worked, I should have thought that the cardinal article of faith and conduct would find its place even in the shortest of short catechisms—and much more in the long catechism which contains all the faith. The noble Lord, Lord Lucas, told us on June 28, when dealing with the particular Amendment in regard to decentralisation: I can tell the noble Lord frankly that we accept it in principle, but there is no necessity for it because the principle is there now. The very set-up of this system by which we keep in existence the identity of the individual firms shows that we require decentralisation as much as possible. But in that argument the noble Lord forgot that one wholly new factor has come into consideration. The set-up is not the old set-up of ninety-six competing companies; the set-up now is that of a Corporation which will become the sole shareholder and controller of every one of those companies. As Lord Layton said, one learns from experience that the whole tendency, the inevitable tendency, of these nationalised monopolies is towards centralisation and uniformity.

33 When we said that on the first of the nationalisation Bills we were told that we were talking theory. To-day, we are not talking theory; we are talking in the light of experience. Look at the experience we have had! As an example may I take coal, which to-day is centralised to a very large degree? There is great complaint, both among the miners and among the managers, about this excessive centralisation. Even the Government admit it, and yet they said on the Bill we discussed the other day, "We know we shall have to alter all this, but the time is not yet ripe." I thought the time was ripe when one had found the mistake. But having fallen into that error in coal, let us guard against it in the much more diverse and difficult conglomeration of industries with which we are dealing here. It is not only so in the case of coal; in the case of transport it is even worse. In the coal industry there are regional boards with some independent power. In the transport industry, regional boards have been set up on a pattern which makes any individuality quite impossible. The members of these regional boards are really projections of the people on the board at the centre. Each member of the regional boards is responsible to his opposite number at the centre, and, as we all know, a completely centralised policy is carried out.

We put a great many duties upon the Corporation by this Bill. It is made the duty of the Corporation to see to efficiency and all the rest of it. The noble Lord emphasised just now that it is for the Corporation to see that there is no undue preference. Of course, the Corporation will have to give broad directives on policy. It may well be that they will sometimes have to get down to a certain amount of detail. Suppose, as I said during our previous discussions, there was a slump and the production of steel had to be curtailed. It may well be that plans which have been made and which the Government said were inadequate will, in a normal world, be rather more than adequate. If steel production has to be cut down, clearly the Corporation must say how much steel is to be produced; they must say how production is to be cut and where it is to he cut. The difficulty is not in regard to giving broad directives on policy but with respect to the method 34 of execution. That, of course, is the field of the managements, and we say that it is essential that these firms should be free to carry out their own ideas.

I cannot say how much I agree with Lord Layton as to the value of diversity in this matter, as against uniformity. You have to consider not only steel making in the broadest sense but particular engineering enterprises the names of which have become household words because of the particular way these individual firms do theft jobs, whether it is in producing structural steel, in bridge-building or whatever it may be. What is right for firm A is not necessarily in the least right for firm B. Surely the wise thing to do is to say in the Bill that a diversity of practice is required. If we do not do that we shall certainly get uniformity. A duty is imposed on the Corporation to see that each of these firms is most efficient, and that the most efficient practice is followed. I have heard it said that one of the things the Government will do—I thought it was going to be the Corporation but now I hear it said by a Government spokesman that it is going to be the Government—will be to make less efficient firms more efficient, presumably by applying to the less efficient firms the standards of other firms. I can visualise the Corporation saying: "We have that duty. It is our duty to compare, it may be, Dorman Long's with Guest, Keen's, and see which, in our view, gives the better results. Then it may be that to carry out our duty of seeing that the industry is efficiently conducted, we shall have to say to Dorman Long's: 'You shall work in the way Guest, Keen's work if we think it the better way.'"

Even if on occasion the Corporation were right and they succeeded in improving the efficiency of one firm by making; it carry out the practice of another, in the long run it appears to us to be certain that tendencies to centralisation and uniformity will destroy all the initiative of competing practice and will land us in a far less competent, because far less practical, practice in steel and engineering than we have at present. Companies must retain their initiative; and not only that, but they must have confidence that they will retain it. And the Corporation, on their side, must know, by the direction given by Parliament in the Bill, that hat is the inten- 35 tion of Parliament and that that is the policy which they have to carry out. Therefore I think it is essential that we should lay down that decentralisation shall be a principle under which the Bill is to work. It is no mere question of administration. So I think the first Amendment is absolutely essential. And I am bound to say that I think the second Amendment is hardly less necessary. After all, what are the Corporation going to do when they get started? Presumably the first job of the Corporation during the nine months' period of gestation before the companies are absorbed—that metaphor may not be quite the right one; the Corporation no doubt will proliferate too; indeed it will do both—will be to decide how they are to run their business. They are given no direction in the Bill or by the Minister. In fact, I beg leave to say that I do not believe the Minister has the faintest idea how the Corporation are going to do their job. Therefore, what they have to do, in consultation with the companies, which they will not by then have taken over, will be to work out how this principle of decentralisation is to be applied. Why should we not know? It is not going to be easy.

I was reading recently—and I am sure the noble Lord, Lord Lucas, who reads the best books has read it also—T. S. Eliot's Definition of Culture, and I came upon this sentence in it. Decentralisation under central direction would be a contradiction. The noble Lord, Lord Lucas, is much more cultured than I am, but I am bound to say that that is a contradiction which the Government have not yet attempted to overcome. And I do not think they have the least idea how they are going to overcome it in the operation of this Bill. Surely it is reasonable that Parliament should know how they are going to do it. That is all we are asking here. We do not ask for it to be laid down in regulations or in any orders to be brought forward. We ask that the Corporation, when they have made up their minds how decentralisation is to work, should inform the Minister. Presumably they will do that because he has the responsibility. And when the Minister is told by the Corporation how they are going to work why should not Parliament be informed? After all, it is with us in Parliament that responsibility lies. The Minister is respon- 36 sible to Parliament. Why should he not come to Parliament and say: "This is the way in which the Corporation will do it"?

Perhaps the noble Lord will tell us to-day exactly how they are going to work, but I shall be surprised if he does. If he is honest with the House—and I know that he will be—I am sure he will say to the House in effect: "I have not the least idea how this is going to work." I am sure that if he has been instructed correctly—and he must have been instructed as to what he is to say—the Minister will say: "I do not know how they are going to work. I am not going to give the Corporation any direction. If the Bill goes through I, or my successor, will form a Corporation." And then what? If he is asked: "Do you know what the Corporation are going to do?" he will reply: "Of course I do not. I shall not know until the Corporation are appointed. The Corporation, when they have been appointed, will not know until they have directed their minds to it and engaged in contemplation and"—I hope—" in consultation as well. Then they will make up their minds as to how they are going to do it and I shall know."

If that is the position, why on earth should not Parliament know? We have had far too much—I do not want to use an offensive word; I was going to say "evasion"—may I say, "avoidance" in these matters. The Minister may say, "I am not concerned with details. It is not for me to answer to Parliament for that. This is an administrative detail, because it is the responsibility of the Corporation." If the Bill is left as it is, the Minister would be constitutionally able to say that to Parliament. But your Lordships will agree that that is not good enough for us. This is a most hazardous experiment. No one knows how it is going to be carried out. No one knows, and many of us are anxious or suspicious, how it is going to succeed or fail. At least we have the right to be informed about how things go. That is all the Amendment asks. It says that when the Corporation have made up their minds about how they are going to carry out this process of decentralisation, they shall inform the Minister and the Minister shall inform Parliament. Parliament has a clear right to that information. Ordinarily, when we have Bills brought before us, we are told how they are going 37 to work. But this Bill does not tell us. Never has such a Bill been presented to Parliament in the history of the country. At least Parliament is entitled to say, "If you do not know now, when you do know, come and give Parliament the information."

§ LORD RENNELL

My Lords, since this group of three Amendments also stands in my name, and since it has been agreed that the general principles underlying them should be debated now, I should like to turn to one aspect which seems to me to be of outstanding importance. The question of decentralisation is now accepted, I hope. The status of the Corporation as a holding company and the question of decentralisation have been the subject of many debates, and I do not propose to continue on those lines; but there is one aspect which I do not think has been fully emphasised in the course of any of the debates that have so far taken place on the Bill. I would go back to what the noble Lord, Lord Lucas of Chilworth, said this afternoon in connection with the Amendment to page 5, line 34, where the Amendment sought to place statutory obligation on one of the publicly-owned companies. The noble Lord said that the whole scheme behind this Bill was that statutory obligations should be imposed on the Corporation but not on the publicly-owned companies—the publicly-owned companies being governed in their existence by the Companies Act—and that the obligations which were not contained in the Companies Act but which were contained in this Bill should be placed on the Corporation and not on the publicly-owned companies. That was the gist of his argument—the noble Lord will correct me if I am wrong.

The fact remains, however, that while these publicly-owned companies continue to exist and have their being under the Companies Acts under which they were founded, and under the last Companies Act, so far as it governs their activities this Bill alters their status to a remarkable degree. In the first place, the Ninth Schedule alters the rules and regulations which govern them under the present Companies Act. Not to put too fine a point on it, what this Bill does is to create an entirely new relationship for the companies which have their 38 existence under the various Companies Acts. The relationship which they will have with the Corporation hereafter will be something quite new. The main method by which the Corporation will impose their wishes on these companies, however much decentralised they are, is ultimately through getting rid of the directors; that is the sanction. The status of directors will be profoundly modified by the provisions of the Ninth Schedule. Therefore, having modified that position, it is essential to consider what the status of the directors and boards will be after that modification has been effected.

Under the present provision which governs companies and commercial relations generally, no one can give an order to a board, yet this Bill requires that the Corporation shall in fact give orders to boards. That is an essential difference. The whole theory behind the governing of companies up to date has been that the directors of a company take certain actions, and ex post facto they are held responsible to and by the shareholders for all they have done—but after the event, not before. No shareholder to-day can in law go to a board of directors and say he wishes them to do this; no man can go to any director and say he wishes him to do that. Yet this Bill, as is manifest throughout, requires that the Corporation shall in certain circumstances go to these boards and tell them that the Corporation wish them to do this or that. That imports an entirely new relationship and, broadly speaking, it is with that new relationship which these three Amendments deal, especially the second.

If this Bill had had a little more thought given to it before it was drafted and presented to Parliament, a Committee or a body of people would have been summoned to consider what might be the relationship between the Corporation and these separate companies. There are all sorts of administrative questions that must leap to the mind upon even a superficial consideration of this matter. Do the board or the Corporation, through their chairman or collectively, send for the chairmen of the companies they are taking over under the Third Schedule and tell them what their programme is to he for the next week or the next month? If properly decentralised, the answer is 39 "No, they do not. They wait until after the event." Throughout the Bill, nevertheless, the Corporation are required to do some things which involve anticipation of the event and not approval or disapproval after the event. How then is that direction, those orders, those programmes, to be conveyed? Does the chairman, through the secretary or the machinery of the Corporation, say to every individual company, "I want you not to draw wire, but to make rods," or, "We want sections of this size and not of that size for the next two months." Or do the directors of those companies still, in their wisdom, as they do to-day, roll the sections