HL Deb 01 November 1976 vol 376 cc879-963

2.50 p.m.


My Lords, I beg to move that this Report be now received.

Moved, That the Report be now received.—(Lord Melchett.)


My Lords, before we move on to Report stage formally, there is a submission that 1 should like to make to your Lordships and particularly to the noble Lord the Leader of the House and to the noble and learned Lord the Lord Chancellor. I think it may be more to the satisfaction of the rules of this House and of Parliament generally if the point I wish to submit is taken into consideration now. It relates to the alleged hybridity of the ship repairing section of the Bill which it is now suggested should be considered at Report stage. The rules under which we work are well known to your Lordships—and if there is a part of Parliament which ought to adhere strictly to the rules it is your Lordships' House. It is the final court of appeal, and it is our well-known n impartiality and objectivity by way of adherence to the rules that causes people, even those outside the boundaries of this country, to accept judgments which come from your Lordships' House.

I submit that on the ship repairing section of the Bill, which it is now suggested should be considered at Report stage there is the necessary doubt which our rules insist should be there before a Bill is deemed to be a hybrid Bill and, as a consequence, special consideration is given to it. Your Lordships will be aware that the ruling on this is very firm and is clearly understood. It is that if any Public Bill is submitted with the idea of its eventually becoming legislation and it can be shown that, as it is framed, there is a possibility that one section of the community or one person may be discriminated for or against, then they can ask that the Bill be looked at by Examiners with a view to its being deemed to being hybrid so that they will not be robbed of the procedures which we have laid down under our rules to see that their interests are properly and fairly looked at. I believe that, so far as this Bill is concerned, such a doubt unquestionably exists in so far as it affects the ship repairing industry.

The reason I am making this submission in these terms now, before we go on to Report stage, is this. Eventually, it would be your Lordships, by their voice and their vote, who would have to decide whether the doubt exists and whether this Bill should be treated as a hybrid Bill—and I think that would be rather sad. I repeat, my Lords, that the rules are there and we have an obligation to adhere to them; and if it is that the rules are being infringed it would be infinitely better if, instead of your Lordships making the decision by debate and vote—perhaps I could have the attention of the noble Lord the Leader of the House, because it is particularly to him that I am submitting this point—it were dealt with now. I submit it would be healthier and better, as well as being more satisfactory from every point of view, supposing it can be shown that the doubt does exist, if the Government were to take the lead in saying that they would withdraw it in its present form and send it to the Examiners. That would be better than trying to decide what is an intricate matter by formal debate and, eventually, an overall vote in your Lordships' House. So if I can impress upon the noble Lord the Leader of the House, with perhaps the concurrence of the noble and learned Lord the Lord Chancellor, that such a doubt exists, it may well be that even at this stage he would prefer to move that this section of the Bill he sent to the Examiners.

Perhaps I can substantiate the main point. Is it necessary to show only that there is a doubt? The Record of 10th December 1962 shows clearly what was said by the then Clerk of Public Bills to the Select Committee on Hybrid Bills, 1948. On page 52 of the evidence he was asked: Is the principle, then, that when there is any doubt at all the bill must go to the Examiners? The answer given was: I should say so, yes."—[Official Report, Commons, 10/12/62; col. 37.] According to that evidence, which was accepted, any doubt, however small, means that there is a doubt. Later on that same day, the 10th December, Mr. Speaker ruled on that—and these are Mr. Speaker's words: I do not think that I need quarrel at all about definitions with the honourable and learned Member. I accept the true position to be this, that if it be possible for the view to be taken that this Bill is a Hybrid Bill it ought to go to the examiners. There must not be a doubt about it."—(col. 45.) That is clearly the basis upon which the rule is framed; and the question I quoted was put by a learned Member of the Labour Party, who was obviously speaking officially for that Party at the time he put that question. Mr. Speaker's reply, in confirming that any doubt, however small, means that it is to be treated as a hybrid Bill, makes it very clear where our duty lies.

Now if it is established that any doubt, however small, is sufficient for it to be sent to the Examiners, we then have to ask: Are there doubts? I have in my hand a suggested Petition prepared by the Bristol Channel Shiprepairers Limited, paragraph 4 of which says: Your Petitioners submit that the Bill is a hybrid and, if it is passed into law as it low stands, your Petitioners will be prejudicially and unfairly affected and that the Standing Orders of your Right Honourable House, framed for the protection of private interests, are applicable to those provisions of the Bill relevant to shiprepairing companies". My Lords, there is someone who feels that a discrimination to their detriment is included in this Bill. They claim that the doubt which is necessary to show it as a hybrid Bill exists, and they are ready to submit a Petition. At this stage t hey have not done so, and there will be no need for them to do it if the Government, as I hope they will, face up to the paint that the doubt is there and that evidence of that doubt exists.

It may well be that the noble Lord the Leader of the House will say that the view that a doubt exists, expressed by 3omeone who claims that they would be discriminated against, is perhaps a biased view; that they have an interest which quite naturally has reflected itself in their preparation of that Petition. I could therefore well understand the Government and their advisers thinking that that claim by people affected would not in itself be sufficient. But, my Lords, there is infinitely stronger evidence as to there being more than a casual doubt. My noble friend Lord Colville of Culross submitted a whole series of questions to the Government which reflected the fact that, on soundly-based legal grounds which he clearly set out in detail, he had very grave doubts indeed.

Those questions were submitted to the Government, and they were answered on the 14th October. A record of that exists in the Official Report of this House. When I raised this question in a general way at an earlier stage of this Bill I was told that all the evidence in the possession of the Government was contained in the answers that they gave. We therefore have to decide this. Did the answers giver to my noble friend Lord Colville of Culross remove the doubts? I submit to your Lordships and to the noble Lord the Leader of the House that, far from removing the doubts, the words which they used, which clearly set out the r case, added to them.

I say that because the Petitioners to whom I have referred passed the replies and the original Question on to learned counsel. I think that no one would deny that, as distinct from the Petitioners themselves thinking they are being discriminated against, if an objective and impartial counsel's Opinion is submitted and that establishes a doubt, then that clearly removes any thought that the suggestion that there is a doubt which brings it within the rule which would send this Bill to the Examiners is a frivolous one. I quote from counsel's Opinion. May I say to the noble Lord the Leader of the House that I shall be happy to hand him counsel's Opinion. I repeat to the noble Lord the Leader of the House—


I hope that the noble Lord who is a good friend of mine will not assume that I am behaving disrespectfully. I am listening very carefully and taking notes.


My Lords, of course, the respect which the noble Lord the Leader of the House and I have for each other is real and deep. There is no question that he would deliberately not pay attention to an important point; but I feel that I have a duty to make certain that this part of my submission is heard by the noble Lord. He may possibly have missed a vital point and I do not want any vital points missed at this stage.

I quote from counsel's Opinion on the reply given by the Government, which is their case to try to show that a doubt does not exist. In paragraph 31 counsel says: The proposition set out in para. 1(c) of the Written Answer is, therefore, one from which I dissent. In some circumstances it may be correct. In others it is not. In the particular case of the Cammell Laird company it provides the answer which it is intended to provide; and in my considered opinion that is the wrong answer. Later on in his Opinion, he says: In my opinion the conditions in Schedule 2 Part II paras.3(1)(a) and (b) were satisfied in the case of B.P. Tanker Co. Ltd., and its exclusion from the list of companies in Schedule 2 Part I is therefore a mistake which can therefore be explained only by oversight or by defective formulation of the policy and principles embodied in the Bill. I break off to say that I suggested at an earlier stage of this Bill that this mistake was an inadvertent one. No one is suggesting that the Government have deliberately framed this Bill in a way which brings it within the rules I am now trying to argue are the correct ones. Then counsel says: It would appear to be a straightforward and obviously correct proposition that, until the end of March 1973 Clyde Wharf, and from the end of March 1973 Sugar Line, was engaged in the same business of repairing … ships'". I do not find it possible to disagree with that obviously correct proposition. The Government's dissent from it is, as I think, illogical and wrong. He then went on in paragraph 39 to say: I can deal shortly with paragraph 8 of the Written Answer. The Government is satisfied that a company is not engaged in the business of … maintaining ships if the only ships which it maintains are its own. The Government is mistaken. Then, in paragraph 44: My considered opinion is, therefore, that the Government's policy and intention are not expressed in the Bill; and that, as the Bill is now drawn, the Government's expressed views about its interpretation—and application to the matters discussed in the Written Answer—are unsound and wrong. At the very least the fact that my views differ so markedly from those expressed in the Written Answer indicate that there is grave doubt about the correctness of the Government's views and room for further investigation and enquiry before the Government's views on these important questions are accepted and acted upon. I do not think that anyone who reads the ruling given by the Clerk to the Select Committee and confirmed by Mr. Speaker in 1962, that all you have to do is to show that there is a doubt however small, will fail to accept that as a basis of the way we have to proceed. Furthermore, we must recognise the Petition drawn up by this company who truly feel that they are being discriminated against and, added to that, this impartial and objective counsel's Opinion upon what was the Government's defence as to there being a doubt existing. If all those things are taken together, I am convinced that your Lordships will have to come to the view that, however accidentally it may have been done, however inadvertent was the inclusion of this clause in the Bill, it has put us in a position where we must of necessity insist upon the rules being observed.

I submit that if we allow it to pass on this occasion where the case is clearly on record and should be understood, then the power of this rule, which was inserted for the protection of private individuals, will atrophy, and it will be a convention that this protection for the individual no longer applies. And we will be doing this at a time when so much legislation is being put on to the Statute Book which is likely to affect individuals in a discriminatory way. I believe we have a special responsibility to adhere to the rules. Rather than have to cajole the Government into adhering to the rules, I am arguing that it would be better if at this stage the Government recognise the existence of a doubt and themselves suggest that this clause of the Bill be referred to the Examiners.

May I say to my noble friends that this in no way affects the principle involved. I make my position clear. If it goes to the Examiners and if the Examiners give it a clean bill of health, I would still oppose this on the grounds of principle. The principles are strong apart from adhering to the rules. This in no way overlaps or should give us a conscience for pursuing our defence of what we think is right on a matter of principle apart from the rule. That being my position, if it has to be brought into effect by my voice or vote after it has been to the Examiners, I am now standing firmly and solely upon the proposition that if ever there was an Assembly in the world which had a special responsibility and a special duty to keep to the rules when private freedoms and private discrimination is involved, this is the Assembly which must do it. It ought not to have to be done by using the Whip or by using any sort of argument. It ought to be done by the Government of the day, in the protection of its own power and standing, recognising that a doubt exists, that the rule is being infringed and that they recommend the matter be sent to the Examiners for their impartial decision to be in front of your Lordships when they get to the point of arguing the principle.

3.9 p.m.


My Lords, I am rather surprised that the noble Lord, who was a colleague of mine, did not do me the courtesy of letting me know about this. It is an important legal matter. I do not pretend that I know the law. I do not think he knows it either. My short link with the law was at an Inn before I went into the Army. That was all the connection I have had with the law. I do not pretend to be a legal man. All that I would say is that we have down a Question by the noble Viscount, Lord Colville of Culross, which will be answered today, and I am prepared to see that he has the text of this. The noble Viscount, Lord Colville of Culross, raised this matter some time ago and a reply was made in my name.

This question of hybridity is a very difficult one. If anybody is dogmatic about it, then he must be a strange person. I am not and I do not think that anyone should be dogmatic. From all the evidence and all the legal advice that we have had, we are in no doubt that what we are doing is right. The noble Lord is entitled to raise this matter in debate. There is an argument about whether ship repairing is going to be deleted from the Bill. In view of the fact that the noble Viscount, Lord Colville of Culross, has put down a Question which will be answered, the text of which I will see is available to everyone, we should proceed with the Bill now. I think this is right.


My Lords, if the noble Lord feels I have been remiss in not giving him details, I apologise; but I did not have all the evidence, myself until this morning and I did not have a lot of time to do that. In terms of being remiss, I apologise. But I should like an undertaking from the noble Lord the Leader of the House that he will give a clear and unambiguous ruling (a) whether in the light of the evidence I have produced a doubt is raised, and (b) whether or not with that doubt existing he would be prepared to recommend that this matter should go to the Examiners. If not, perhaps he will tell us why he will not adhere to the ruling.


My Lords, I will certainly look at what the noble Lord has said. There is no question about that.


My Lords, will the noble Lord agree—as I am sure ho will—to receive and study a copy of this Opinion, which is by a distinguished and experienced Queen's Counsel, and consult with his colleagues—perhaps in particular the noble and learned Lord the Lord Chancellor and his advisers—with a view to seeing if any further steps are necessary?


My Lords, of course. That is right and proper on an important matter like this. I accept this, especially where legal opinion is necessary.


My Lords, perhaps it might help if I say a word as we see the situation from the Opposition Front Bench and the conduct of this Bill. We have been holding off—if that is the right phrase—any action on this point while waiting to see the matter pursued on the basis of the information which we gave on the Second Reading of this Bill which has been followed up by questions by my noble friend Lord Colville. We are awaiting an answer to the latest of his questions. I am glad to know that that will be available today. Our object in doing this has been to establish in our own minds whether we believe that there is a degree of uncertainty which would qualify as a doubt. That would then place upon the House a duty of submitting the whole matter to the Examiners. I am sure the Government will agree that all through we have been making available to them, and also making public, the knowledge we had in order that this whole question could be pursued openly and not in any way sprung as a surprise on anybody at an inconvenient moment. We have not been making it a matter of political tactics but have been trying to deal with the issue in a responsible way.

On industrial grounds we believe that ship repairing ought not to be included in the Bill. We shall be arguing that on industrial grounds which have nothing to do with hybridity. If we were to convince the House on industrial grounds that ship repairing ought not to be included, then by the removal of ship repairing from the Bill all doubt about hybridity would also be removed. I thought it might be helpful to the House if I made that brief explanation.

On Question, Report received.

3.15 p.m.

Clause 1 [British Aerospace and British Shipbuilders]:

Viscount SIMON moved Amendment No. 1: Page 1, leave out line 10.

The noble Viscount said: My Lords, I beg to move Amendment No. 1, the effect of which is to remove the aircraft industry from the scope of this Bill. There are a large number of consequential Amendments and I will not waste the time of the House in reading them out unless I am asked to do so. The consequential Amendments are easily identified because they are in the names of myself and my noble friends Lord Kimberley and Lord Amherst. We have been careful not to put down any other Amendments except those which are consequenital to Amendment No. 1. I moved this Amendment in Committee and we had an interesting discussion. At the end I withdrew the Amendment partly because the noble Lord, Lord Carr of Hadley, pointed out that if we were to press it successfully, it would have shut the door on a number of discussions regarding the aircraft industry which the Committee might have wished to have.

I do not want to make a long speech again or the same speech again, but I must explain what lies behind this Amendment. So far as the aircraft industry is concerned, our belief is that the objects which the Government are seeking to achieve by nationalisation can be achieved without nationalisation. The noble Lord, Lord Kirkhill, explained very clearly on Second Reading what the industrial case for nationalisation was; namely, what was required was a structural reorganisation involving a merger of the two big groups, BAC and Hawker Siddeley. I am not entirely clear where Scottish Aviation comes in, but I assume if the Government could be persuaded to accept the Amendment, that question would not arise.

It is an undisputed fact that the merger of the two groups has been considered for some time but it has failed to come about. In making that statement the noble Lord. Lord Kirkhill, was perfectly fair. I do not think that he was so fair when he went on to say that there was no sign that it ever would be achieved. The noble Lord, Lord Melchett, later, during the Committee stage, asked us to say why private enterprise had not succeeded in achieving this result. I suggested that perhaps under the shadow of nationalisation it was not easy to achieve it. The noble Lord, Lord Carr of Hadley, gave me great help by reminding the Committee that there had been in the early 1960s a number of amalgamations and it would have been foolish to have attempted a merger of these two big groups a few years after that. Amalgamations must be given time to get settled.

In the early 1970s there was a revival of interest in the merger between the two big groups. That went on until they were politely asked to drop it because of the advent of nationalisation. My noble friend Lord Kimberley knows more about that than I do, and he will be able to tell us more when he speaks. Whatever difficulties there have been in the past, we are now assured, thanks to the noble Lord, Lord Melchett, that the two groups are working together in real co-operation under the aegis of the noble Lord, Lord Beswick. This is good and encouraging news. Not having been a classical scholar, I am not sure what an aegis is. If I might express it in terms more familiar to me, the noble Lord, Lord Beswick, has been an excellent catalyst.

In this industry the Government will always be deeply involved, not only because they have to provide very large sums of money but also because they are purchasers through various agencies in a large scale. I would have thought that if a merger could be achieved—as we believe it can in the near future—that it would be very reasonable for the Government, in the light of having provided all the finance in the past—and probably they will be asked to provide finance in the future—to have directors on the board.

In fact if one thinks of mergers between two very lively and go-ahead companies like the BAC and Hawker Siddeley, one can imagine that there might perhaps be a little personal difficulty at the top, and it might well be that one of the Government directors should be chairman of the company. Personally I think that would he an excellent idea. It would enable the chairman to have contact with the Secretary of State without having the Secretary of State sitting on top of the company with statutory rights and duties.

We were reminded that at the present time important discussions and negotiations are going on with our friends in Europe, and I hope I am right in assuming that all the parties concerned—and two groups, the Organising Committee and the Government—are fully informed of what is in the wind. I do not see that there is great practical difficulty in whatever is being done now being carried forward without a hitch. I think I am right—and I am sure I shall be corrected if I am wrong—in saying that the Organising Committee is a non-statutory body and while negotiations are going on the Organising Committee could continue its role until the merger is completed.

There is one other matter to which the Government attach considerable importance; that is the attitude of the workforce. The noble Lord, Lord Kirkhill, said again on Second Reading that they were moved by the belief that people will find greater satisfaction in working for industries which belong to them and which contribute to the wealth of the nation. I wonder whether the noble Lord has correctly analysed the factors which go to make up job satisfaction. I should have thought it was just as likely that job satisfaction comes from being in a happy work place, having good industrial relations and, above all, being in a work place which was producing satisfactory results and, particularly in the case of the aircraft industry, making an enormous contribution to British exports. I should have thought that in that way the work people could be proud of the fact that they were contributing to the wealth of the nation. I think the noble Lord, Lord Melchett, agreed with me that while it is right to take the views of the workforce into consideration, they cannot be paramount.

I should like to say one other thing on this aspect. We are told—and I know it to be true—that the work people, through their trade unions, have expressed a wish for nationalisation. Would I be stretching my imagination too far if I suggested that the impetus for this came originally from the Labour Party through the trade unions, that it came from the trade unions to the shop floor and was faithfully reflected on the shop floor? I find it difficult to believe that this suggestion for nationalisation started at the work bench. Naturally, I have no evidence and I am only expressing a view in the light of the way people think, but I cannot believe that the average workman thinks about that sort of thing at all.

My Lords, there is an important passage in the Bill, to which I know the Government pay great attention, and that is in regard to industrial democracy. I have already expressed my dislike of the phrase but we can come back to that later. We on these Benches are fully in agreement with what is suggested there and with the proposal of writing into the Bill the need for industrial democracy to be developed in this industry, but I do not see any reason why it should not be developed just as successfully in the private sector as in the public sector. I do not think experience in the past suggests that the public sector is ahead of the private sector in this field.

On those grounds we feel that the situation would not be worsened if this industry was taken out of the Bill and if the projected merger was allowed to go ahead. But it would not be just the same. There are two great advantages: one is that the industry would be free from interference by the Secretary of State. In Committee we limited the interference by the Secretary of State but it is still there, and who knows what may happen to the Amendments which we have sent to another place! Above all, it would be free from the necessity to pay compensation. At an early stage we were blinded with science and told that it would not cost any money at all, that it arose through a transfer of resources; but I think many of us found it very difficult to understand that, because if stock which is redeemable is issued it may be that the debt is postponed but it certainly has to be paid.

I have a feeling that the Government have moved slightly away from that view, because I observed that during discussion on the compensation terms first the noble Lord, Lord Winterbottom, on 25th October in regard to some proposition that the compensation might be increased, said: … it is the taxpayers' money that is being shifted to compensate the individual or the company."—[Official Report, 25/10/76; col. 126.]; and a little later on, in the early hours of the next morning, at column 210 the noble Lord, Lord Melchett, referred to some propositions put forward from this side of the House as— Heads the shareholder wins, tails the taxpayer loses. Therefore it would seem to me that the Government have given up the idea that it does not cost money to nationalise this industry.

That brings me to my last point. Our reason for moving this Amendment, which I think is well justified in itself, is largely to enable the Government to think again on this question when the Amendment goes back to another place. As I said before, I know that the Government in this House cannot possibly agree—and I do not expect them to—but if the Amendment goes back to another place the Government will have an opportunity of considering whether they could not make this admittedly painful gesture of giving up something which I know they are very keen about. By abandoning this proposal they would show the country, whom they are urging to stand behind them in the difficult times ahead of us, and our foreign creditors, that at this moment an amount of money—I have heard £300 or £400 million quoted—could be saved without any loss to the country. I do not want anybody—and I include the Government—to feel that they were being forced to do this. I would simply give them the opportunity of their own free will to go to the country and to our foreign friends—they are still friends, thank goodness!—and say that to meet this difficult situation they are prepared to give up this thing which they treasure very greatly. I beg to move.

3.30 p.m.


My Lords, considering the enormity of the subject, the noble Viscount, Lord Simon, has moved this Amendment in as gentle and as courteous a way as he could. I am bound to say that I have a great deal of sympathy for the views he has expressed. That is simply because we have come to the stage where, by this Bill, we are nationalising this huge industry and we have not yet heard any reason why it is alleged such a process will enable the country to be better off, or the industry to be better off or will enable the industry to serve the country any better at all. Indeed, I think it would be right to say that, having gone through the Committee stage, we are even more depressed because we then sought to introduce a number of Amendments and to find out the Government's view on a number of points. We sought to introduce Amendments which contained a number of constructive ideas. But the extraordinary part is that so often we were unable to elicit the information that not only we wish to know but other people in the country would like to know; nor did we succeed in getting any reasonable Amendments of substance accepted.

I understand the first difficulty, in so far as noble Lords opposite are in the difficult predicament, of speaking for Departments with which they are not intimately involved. We accept the difficulty that that can produce and we acknowledge they have struggled manfully with the problem. We are grateful to them for what they have done; but, on the other hand, in the Committee stage we had a vast quantity of Amendments put forward and only those of the most modest size have been accepted. For example, I can think of one in which the words "in relation to" were replaced by the words "in respect of". I am glad to say that was an Amendment moved from this side of the House, but it did not of course alter the nature or the substance of the Bill.

When the noble Viscount, Lord Simon, says he has heard sums of £300 million and £400 million being put forward as the cost of this nationalisation and that he cannot see how that will benefit the industry, I am bound to say I agree with him entirely. Even if, on the merits of the case, there were justification for nationalising this particular industry, I should have thought that the particular timing of it would cancel out any argument for so doing. The noble Viscount, Lord Simon, referred to the expression "transfer of assets". Of course, it is infinitely more than that. If the Government are going to have to pay out £400 million and to service the loan of £400 million, that is direct expenditure which I would venture to suggest is not in any way a mere transfer of assets.

At this time, when the country is in such an economic mess, one really wonders how one can justify the expenditure of such a sum of money—and for what? It is not that the industry is going to be any better or is going to make aeroplanes cheaper or more efficiently; it is not going to compete any better or help to improve the balance of payments. There is not one argument we have heard which in effect says: "If we can do this the industry really will be more profitable in the future." Indeed, it is very difficult for it to be more profitable when it happens already to be extremely successful and when it produces exports of £800 million a year. It is difficult, as I say, to see how that will be improved upon; but the real danger, I would suggest, is that when this industry is nationalised, however much Government Ministers may say that they want to let the industry run itself and to let British Aerospace run itself under aegis of the noble Lord, Lord Beswick, it will be the civil servants who will badger the thing to death. It will be the inevitable prying into and involvement of civil servants that will do all the harm—I say that not in an offensive individualistic way but in a collective sense. It is the involvement of the civil servants and all the paraphernalia that brings which will remove the cutting edge of this industry. That is the real danger, as I see it, and I would only say that one wonders whether one dare risk it.

If the Bill goes forward as the Government wish, that is a risk we shall be taking. I personally think it is a risk that the country as a whole cannot afford to take and indeed should not take. I would see the effect of this legislation as a removal of the huge incentive and the sharp cutting-edge which at the moment is so evident in the British aircraft industry. I have a great admiration for that industry, which I think all your Lordships in this Chamber would share. If this Bill were to go through as it is, I should like to think there would be the possibility of an improvement in the aircraft industry, but I just do not believe it.


My Lords, I should like to support the views put forward by my noble friend from the Front Bench. I do so on two scores. First, I believe the aircraft industry has proven itself and I shall seek to show that by the results in the civil and military fields. Secondly, the cost, at a time when our pound is so desperately weak, and the lack of confidence this action will implant in our creditors overseas will be further detrimental to our ability to pay our way and for the pound to sustain its value. The Minister of State, speaking in a Commons Standing Committee, gave the facts away when he said: What we want from the Bill is an extension of Socialism. It is an extension. There are in fact in the Society of British Aerospace Companies some 300 companies and this Bill seeks to nationalise four of them: two Hawker Siddeley companies, one BAC company and Scottish Aviation. No doubt under another clause we shall be discussing a point I have always worried about, in other words, the other 300 members, because they naturally feel they may be swallowed up and drawn into the vortex of this huge nationalised concern. I hope that we may be able to have some assurances about that during this stage of the Bill.

So far, if I remember rightly, we have spent eight hours in deliberating on the first Committee day, eight hours on the second Committee day and 12 hours on the third Committee day, which makes 28 hours. We shall be spending eight hours today and five hours on Wednesday. We also intend to have another five hours on Friday, or something of that nature, and I hope that at least we may receive some understanding from the Government Front Bench that we have been trying to put a case which is constructive in many ways. We have not had that so far, which I think must be a disappointment to everyone sitting on the Cross-Benches, the Liberal Benches, on this side and to many on the other side. That is why I, and many others, are concerned. I do not know whether we shall or shall not wish to divide the House, but I hope we shall have something which is a little more forthcoming than hitherto, because although we have argued our case and on a number of occasions the Government have said "Yes, we concede there is something there", we have a horrible feeling that written across every brief in respect of Amendments put from the Opposition Front Bench is, "Resist", "Resist", "Resist". That is not democracy, and I hope that in the hours that remain for discussion of this Bill we shall sec, "Agree", "Agree", "Agree".

I say it is not democracy because it is a minority policy with a minority Government imposing it upon this House. Also, many objective critics from overseas, when looking at the sad position of British industry—and this is something which has been said also by the Prime Minister—believe that the serious nature of our problems is brought about by the fact that 60 per cent. of the gross domestic product is already in the hands of the Government and only 40 per cent. in the private sector. This will swing the balance even further; so we shall have a diminishing private sector trying to support an immense and unprofitable public sector.

Looking at the figures, in 10 years BAC and Hawker Siddeley have provided to the public purse more tax from their pockets than all the nationalised industries put together: I repeat, all of them. That is not a bad performance; so on performance one would not wish to see this great aerospace industry nationalised. Looking at the recent results, in 1975 BAC's profit before tax was £27 million out of a sales turnover of £300 million. That is a 9 per cent. return before tax—not very great, but adequate. Hawker Siddeley, with two companies, had £20 million profits from £220 million sales; that is, equally, 9 per cent.

If you compare those results with the nationalised industries, you get the most stark results. In the 18 years to 1975, the net return on assets in the nationalised industries varied between 2 per cent. and 6 per cent., while in the private sector it was 19 per cent. In BAC in 1973 it was 26 per cent., and in Hawker Siddeley in the same year it was 30.8 per cent. What a marked difference! This is not unique. The nationalised industries of this country are in no way unique. If you look at the results of Western Europe, the picture is very much the same. If you take Aerospatiale, which is the most successful of the European aircraft firms, that lost £40 million last year. So you have only to nationalise and you turn profits into losses.

One of the arguments—and I am not going to deal with the participation argument—is that this Bill is needed to restructure. I personally do not believe that it is necessary. I have said before that the 1972 Industry Act would allow one to restructure. We know what has already been done under that Act, including £1,400 million promised, but not yet given, to British Leyland, which, of itself, is an immense sum of money. If the Government can do that under the 1972 Act, why can they not proceed under that same Act without this piece of legislation, if they have to?

When I came back from the Royal Air Force in 1945, there were 12 British airframe companies, and by 1959, under Harold Macmillan's Government, we had come down to BAC and two Hawker Siddeley, with much smaller ones not in the top league. By 1973, Michael Heseltine, who was then the Minister responsible, had agreed with Hawker Siddeley, and with GEC and Vickers, who were the shareholders of BAC, that there should be a voluntary coming together of those companies. Here, again, that was possible without nationalisation, just as the restructuring up to that stage had been perfectly possible, without antagonising people working in it at any level; they were very happy to do so. I mention the managers in particular, because if this goes ahead, and the Government are convinced that they must carry out this minority policy, then I am afraid that they will lose some of the most able and dedicated managers who do not wish to work in a large and amorphous body, and who wish to retain their individuality and the loyalty of the company which they have served.

Why have these mergers come about? It is because the increasing cost of developing, launching and building aircraft has gone up and up. I saw the latest estimate for the Hawker Siddeley 146, which is a short-range airliner, and if it goes ahead it is estimated that it will cost £200 million, which will obviously take 10 or more years to recover. Very few private companies can afford that. That happens not only in this country but all over the world, so that Governments throughout the free world have helped private industry cover this risk by loans which they regain from royalties paid. The market is tremendous. I saw that even the Labour Party and the TUC acknowledged this, when they said that by the 1980s the value of civil and military aircraft was likely to exceed £6,000 million. So that the market is there.

I now come to the cost, and this must be very much in everyone's mind at present. It is estimated that it will cost between £300 million and £400 million for the take-over. I believe that when the Tribunal has finished its work)it will be more. It is estimated that we shall have to provide borrowing powers for each of the Corporations of £300 million. It is also estimated that they will need working capital amounting to £1,200 million over three years; and, of course, there is the renewal of machine tools and the restructuring of the companies which will need still further money. So that on every score the taxpayer—and I am glad it is now acknowledged that it is the taxpayer, and that this will not be just a transfer of resources—will he clobbered.

If the Government allow this Amendment to go forward, it will not only encourage the taxpayers, because they will know that they are not going to have to meet these tremendous demands in the future, but it will certainly encourage the IMF who will shortly be arriving on our shores, and, if what we read is correct, will ask us for some rather punishing measures to be taken, belatedly. It will certainly encourage our creditors who continue to lend us money as the borrowing goes round and round; and last, and perhaps most important of all at this juncture, it will help sustain confidence in Britain and in the pound sterling, which is more necessary than anything else. So I urge the Government, even at this late stage, to think again to see whether they can use other methods of achieving their object, such as the 1972 Act and a lot of voluntary restructuring, and not use this desperately blunt and inefficient weapon to achieve it


My Lords. before the noble Lord sits down, may I say that I know him not to be unfair or unjust, and indeed to be compassionate. But would he not agree that it is unfortunate to use the words, "unprofitable public expenditure"? Were I still teaching small children, or were I a fireman, a police-man, a doctor or a nurse in the service of the community, the costs of which are met from public expenditure, I would not think my labour was unprofitable. I would think it was yielding a very real profit which is quite comparable to anything yielded by the private sector. It is very unfortunate that it will go on the record on this day, when we are to have these visitors who will bring us money to borrow, that we are considered to have unprofitable public expenditure.


My Lords, if I said that, I can only say that I did not intend to do so. What I was saying was that these nationalised structures—and I do not count the educational services—are services which can be maintained in our country only if we have a large enough private sector to earn the profits to make them possible, and we shall not have an educational service, a welfare service or anything else if we make the private sector smaller and smaller. That is why I joined the Conservative Party rather than the Labour Party when I was at Oxford, and that is why I now sincerely believe that the best way of achieving what is wanted is through private enterprise and not through nationalised industries. That is why I am pleading the case.

3.47 p.m.


My Lords, I do not want to detain the House for very long, but since we sat through the Committee stage I think it has been suggested that each of us should study the other's arguments, and I have paid some attention to the arguments that were used by the noble Lord, Lord Melchett, when he answered the debate on this Amendment in Committee. He was then fresh, and I hope he is fresh now for a further fairly long session. He looks fresh, and we certainly do not want to make him unduly weary. Because we have been looking as carefully as we can, and with what objectivity we can still muster, at the arguments, I myself should like to express great sympathy with this Amendment, but we shall listen with great interest to the reply and consider whether or not we want to divide.

I was very interested in one remark made by the noble Lord, Lord Melchett, in Committee. He said: Under the aegis of my noble friend Lord Beswick and the Organising Committee, the British Aircraft industry is working in real co-operation and speaking with a single authoritative voice."—[Official Report, 11/10/76; col. 34.] Perhaps he can tell me straight away—and I will gladly give way to him—whether he was referring to the airframe manufacturers only, or to the airframe manufacturers and the engine manufacturers. I draw attention to that, because he had been saying how necessary it was to have, as it were, a single voice in the industry, so that the British aircraft industry could talk to foreigners, and he mentioned that the French had announced the partnership with McDonnell Douglas, the Italians were talking with Boeing, and so on.

The simple fact is that so far as the aircraft engine manufactures—which really means Rolls-Royce—are concerned, we do not have to do anything more to Rolls-Royce to enable them to talk with Boeing, with Douglas or with anyone else. Here is one of the major aero-engine manufacturers in the whole world, of unparalleled quality and skill, and, as has been made clear many times in many places, they are quite capable of taking care of themselves where it is a matter of standing up to foreign competition or negotiating with others.

So there appears to be a slight ambiguity in what the noble Lord has said and perhaps he can clear it up when he replies. Certainly the case that may be made by the airframe manufacturers will be very different from that made by the aero-engine manufacturers. It is a great pity not to refer now to an old phrase: I do not mind lying but I hate inaccuracy". I am sure that the noble Lord will agree with me about that and will make the record quite clear.

While answering for the Government on this Amendment the noble Lord said at col. 31 that, Workers expressing their views through their unions have made it clear that they wish the industry to be taken into public ownership."—[Official Report, 11/10/76; col. 32.] No doubt they have done so, but the noble Lord is equating the trade union members with the industry as a whole. Surely that cannot be strictly correct.


My Lords, like the noble Earl, I dislike inaccuracy. I think that the noble Earl is referring to something that I said in col. 32 rather than in col. 31.


My Lords, I beg the noble Lord's pardon. I am very happy to be corrected at any time and I will take correction with a smile, just as the noble Lord, Lord Melchett, always takes it with a smile, too. The suggestion here is that the voice of the industry is determined or determinable by the voice of the trade unions. Nobody is going to say that the trade unions are unimportant. Equally, it is untrue to say that they represent the whole of the industry. The noble Lord has said that, Workers expressing their views through their unions have made it clear that they wish the industry to be taken into public ownership Are the people who belong to trade unions the only workers in the industry? Surely the noble Lord would not claim that. If he does, we would challenge him because the workers in an industry are all those who labour whether by hand or by brain, whether on the shop floor, whether in supervisory grades, whether in management—indeed, whether they are shareholders. All of them are participators in the industry. It seems to me that the noble Lord's reply, which tripped off the tongue very readily when he made it, was not at the time a quite satisfactory answer to the Amendment to which he was replying.

The noble Lord did not answer a point which was put by my noble friend Lord Ferrers, who asked: Is it or is it not the case that the fusion of the several companies concerned will involve a reduction in jobs? The noble Lord, Lord Melchett, is very agile and we have learned increasingly to respect his agility, but he ducked that question very quickly indeed. The fact is that either the rationalisation which the noble Lord speaks about will lead to lower unit and labour costs, which can only mean a reduction of the labour force, or it will not. I say quite frankly that this will kill so many hundred or a thousand jobs. Let us not hide the matter. Indeed, the noble Lord will be interested to hear that when the Government gave evidence to a Select Committee of this House on the future of the aircraft industry in Europe, a Committee over which I presided only a matter of months ago. the Minister made it absolutely clear that what mattered to the Government in the aircraft industry was the jobs that it provided. We did not think that it was a very worthy approach to the strategic problems in the industry but that was the line which the Minister took. Here we are being promised a fusion for the sake of rationalisation which, if it means anything at all, can mean only a reduction in jobs, contrary to the Government's stated policy elsewhere.

Then we read that the great means for obtaining accountability at what is known as the strategic and corporate level is again by nationalisation. In the old days we used to say, "Tell it to the marines", but I say tell it to Sir Richard Marsh, to Sir Monty Finniston, to any of the unhappy people who have presided over nationalised industries in the past 25 years. We know very well that account-ability means a lot of niggling interference from civil servants. Sir Richard Marsh's comments on the way he has been treated by successive Governments—by our Government just as much as by thz! Government of the other side—speaks for itself. My goodness! accountability is simply exposure to interference from people who do not always know very much about the industry to start with.

Then there is the question of cost which has been alluded to by the noble Viscount, Lord Simon. Is this the week in our history when we want to speak casually about another £400 million of public money being spent? All I can say is that this Bill is singularly relevant to a radical Government in that a radical is a man with both feet planted firmly in the air.


My Lords, I wonder whether I could make three points. I cannot understand the mania for massive nationalization. When I first came into the civil aircraft industry there were three Corporations: British South-American Airways, the British Overseas Airways Corporation and British European Airways. Now we have one Corporation. Is that Corporation any better? Is it providing any more jobs? Is it making more revenue? No, I do not think so. The mania for massive expansion does not help.

The noble Earl, Lord Ferrers, mentioned the influence of civil servants on nationalised industries. My experience has been that as a manager one is much quicker off the mark in the private sector than one is in a nationalised industry, as the noble Earl, Lord Lauderdale, has instanced in the case of Sir Richard Marsh and Sir Monty Finniston. You are much more agile as a manager when you are running a show under private enterprise. When one turns to international business, noble Lords may not know that under the present system every Boeing 747, 737 and 727 has its inboard flap actuators made in this country by private enterprise. If that is not good industrial relations in getting export business I do not know what is.

3.58 p.m.


My Lords, I confess that one thing which the noble Earl, Lord Ferrers, said slightly upset me. He said that he simply had not heard put the industrial case for public ownership of the aircraft industry. I had felt that I had at least made an attempt to put the case for public ownership of the aircraft industry several times in your Lordships' House: at Second Reading, and possibly several times during the Committee stage. I hope that the noble Earl will accept that while he may not have been satisfied by what he heard, and that is a matter entirely for him, at least those of us on this side of the House who have had to answer the many points which have been raised have done our best to do so. I accept, of course, that our answers may not have been entirely satisfactory. However, we believe that there is an economic and industrial case for public ownership. As I say, I believe that that case has been made many times both here and in another place and I will, of course, make it again this afternoon.

The need for structural reform of the aircraft industry has, I believe, long been recognised. Over 10 years ago the Plowden Committee of Inquiry concluded that the benefits from competition between the two main airframe manufacturers did not bring sufficient benefits to be worth preserving. Indeed, the honourable Member for Henley, Mr. Heseltine, when he was Minister for Aerospace tried to effect a merger between the two companies. The noble Lord, Lord Orr-Ewing, said that he had tried to achieve that merger but that he did not succeed in the period when he was there.

As I understand it, noble Lords opposite have attempted to argue that while they accept the need for structural changes these could be brought about without public ownership. In support of that contention they point, as the noble Lord, Lord Orr-Ewing, did during the Committee stage, and again today, to the reorganisation that resulted in the creation of BAC. If they are right, how can they explain the fact that over a period of ten years there was a growing consensus that there should be only one major airframe manufacturing company and yet there are still two companies left in private ownership? With this record I believe there is some justification, to put it no higher, for our believing that the changes will not be made so long as the companies remain in private hands.

The noble Earl, Lord Lauderdale, and I, a moment ago discussed briefly column 31 or 32 of an earlier debate during the Committee stage. The noble Earl knows that I was talking about the airframe manufacturers in the context in which he quoted me, but if I heard him aright he went on to say that Rolls-Royce can already speak with a single voice. Of course he is right. In 1965 the Plowden Committee recommended that there was a case for combining the two main engine firms into one group, namely Bristol and Rolls-Royce, and at the same time the Plowden Committee recommended that the two main airframe firms should be combined. The Bristol/Rolls-Royce merger took place voluntarily, which was something I am sure we all welcomed; the airframe merger did not take place, and hence the argument that is still going on between them.


My Lords, I am grateful to the noble Lord for giving way. I only want to make it clear that when he is speaking about standing up to negotiations with companies in other countries, Rolls-Royce as engine manufacturers can stand up to any other firm in the world and negotiate with them on equal terms, which may or may not be true of the airframe manufacturers. That was the point I was trying to make, but when the noble Lord said in his answer during the Committee stage that the industry was speaking with a single voice, do I now understand that he was really referring to the airframe manufacturers?


Yes, my Lords, I think in the context in which the noble Earl saw the word, without having had a chance to refer to it because I was most anxious to listen to what he said, as I know he is apt to criticise me if my attention even appears to wander while he is speaking; so I have not spent a long time reading the report of the Committee stage again, but I think that would be my answer.

It is now more important than ever that we should have a strong and united industry if we are to compete successfully in world markets. The scale of investment in projects has been such that for many years it has been too great for the resources of a single company. It is now growing beyond the resources of a single country. At the present moment, as I have told noble Lords, the British companies through the Organising Committee for British Aerospace are deeply engaged in discussions on future projects with manufacturers, both in Europe and in the United States of America. As I said during the Committee stage debates (and at least two noble Lords have repeated it this afternoon) under the aegis of my noble friend Lord Beswick, the British aircraft industry is for the first time working in real co-operation and speaking with a single authoritative voice. This should help to ensure that this country will be able to play its full and proper part in a world aircraft industry where there is increasingly little scope for competing companies from the same country.

Noble Lords opposite have also suggested that the fine record of the industry is itself an argument against public ownership. I do not accept that argument. The aircraft industry is in many ways a successful industry. It earns a good return, though not without a secure and profitable home base in defence procurement and a degree of support on the civil side. It makes big exports—though the figures claimed by the SBAC are sometimes misrepresented. The level this year and last has in fact fallen in real terms as the official statistics, when adjusted for inflation, show.

I do not make these comments in any destructive way but I think the record of the aircraft industry has been misrepresented as part of an argument that change could only disrupt what is working perfectly. I do not believe that it is working perfectly. There has been no major new project started for many years, with or without Government launching aid. The industry has in effect reached the end, or nearly the end, of its civil projects. It needs to make commitments very soon indeed which will shape the industry's workload for two decades ahead, in a world industry and a market increasingly dominated by giants. The United Kingdom industry cannot—and I think this is now generally acknowledged—do that effectively and successfully as two separate and competing groups which vie, as in the past, for Government support. While we may differ about the method of restructuring—and I do not expect that difference to be healed this afternoon, or indeed possibly for some time in the future—I do not believe that the objective is in serious doubt between either side of your Lordships' House.

In any case, the Government reject wholly the argument that public ownership should be restricted to industries with a poor record in private ownership. This is a point I have made at many stages during the debates on the Bill. What matters is whether the record can be maintained in divided private ownership or whether, instead, it can he improved in public ownership, as we believe. We believe that public ownership will help to release the energies and enthusiasm of those working in the industry, and thus improve its performance. It will allow the public accountability essential to an industry so dependent on public purchasing and financial support to be carried out more effectively and less onerously at the Corporation instead of the detailed factory-floor level.

We have never claimed that the Government's role as principal customer and provider of launching aid is in itself a sufficient argument for public ownership. But it reinforces and consolidates the case which is made out on the other grounds I have described. All in all, we believe that the case—a pragmatic one related to the needs and realities of this industry and this market—is overwhelming. As I said when I started, and to the noble Earl, Lord Ferrers, in particular, noble Lords have heard all these arguments before, but I assumed that in tabling this Amendment noble Lords on the Liberal Benches at least wanted to hear them again I do not imagine that I have convinced them, but I hope that at least they will accept, as the noble Earl, Lord Ferrers, obviously had not accepted, that we have a strong case to make for including these companies in the Bill.

The Earl of ONSLOW

My Lords, there are three points I should like to make on this Amendment. First, the most successful aircraft companies in the world are in private enterprise hands. I think that goes without saying. Secondly, the public opinion polls and all objective data that has been produced shows that nationalisation is unpopular in this country and it is really the last refuge of idealogues. Those are just two comments.

Now I come to my two questions. As a result of the nationalisation of the aircraft industry will productivity per man—or production per man—go up? If it goes down, not only is it a waste of money at a time when we cannot afford it—a futile waste of money because we shall have spent some money; or, to use that marvellous term "transference of resources"; I wish I could transfer somebody else's resources into my pocket—but this transference of resources will have made the industry less efficient unless the Government can show without doubt that the productivity per man will increase. Above all, how much is it going to cost? Figures have been bandied about, but we have never had a Government statement. How much is it going to cost in transference—oh, how I love that expression!—of resources from one pocket to another? How much will the taxpayer have to pay?

4.9 p.m.


My Lords, when my noble friends Lord Simon, Lord Amherst and I tabled this Amendment, we wanted to make ourselves completely clear as to the reason why, and quite honestly I think there is little that I can add to what noble Lords on this side of the House have already said this afternoon in explanation of this Amendment. If anything, the noble Lord, Lord Melchett, has helped our case. He has done his best to present his case, but to my way of thinking much of the material he used for building the edifice is not very sound.

My Lords, your Lordships have been accused of wrecking Bills which have been approved in another place. We all know in our hearts that most of those accusations invariably have been put forward by a minority group, either in another place or in certain rather militant unions. It makes no difference what they are called: it does not matter whether they are the Tribune Group, Marxists, or whatever else they may be.

Secondly, if we go into it very carefully, the case put forward for public ownership, or nationalisation—whatever word you want to use—was that it was included in the Labour Party Manifesto. Let us face the fact that this was put in to satisfy the Left-Wing element. Let us not forget that, in the so-called democracy which we have in another place, it is not in fact a true democracy, but a minority. We have had the statistics. Only 39 per cent. of the total electorate voted Labour. That leaves 61 per cent. of the people who did not vote Labour; who are against nationalisation. If you take again the figure of 39 per cent., you will find, I am sure, that a not inconsiderable amount of those voters today do not want nationalisation. They voted Labour out of loyalty to their Party—some may say misguided loyalty. But when the figures come out for the by-elections on Thursday, I would bet any money you like that my arguments will be all the more forceful.

My Lords, for many years the aerospace industry has suffered untold Government interference. It really is a miracle that it has survived, and is still remarkably healthy and well. We must remember that two big companies do not want to he nationalised, and who could blame them? If one looks around and sees the disasters that have befallen other nationalised industries, it is not surprising. The other day, the chairman of one of the big companies said to me, "It would be all right if only there was just one example of how a nationalised industry was a success". I do not wish to have Rolls-Royce thrown up at me, because that is a completely and utterly different story. These two companies want to be left alone to go about their business, which they, more than anyone else, know how to run successfully. Should they want or deem it necessary to make some form of merger in the interests of aerospace and of Britain, I would have a very large bet that they will do this. If the worst should come to the worst, as the noble Lord, Lord Orr-Ewing, said, the Government could always use the 1972 Act, but I do not think that this will be necessary.

Perhaps the noble Lord, Lord Melchett, will ask me why these two companies have not got together before. I think he knows the reasons only too well. They tried very hard, and, in racing parlance, they were warned off, or so I have been given to understand.


My Lords, that is fascinating information. Could the noble Earl, Lord Kimberley, tell us who warned whom off what?


My Lords, I was given to understand that when nationalisation appeared imminent and that it was going to be in the Manifesto, they were told that they could stop their negotiations with each other.


My Lords, I thought the noble Earl was talking about the period when the Conservative Government were in power. That was when a great effort was made by Mr. Heseltine to get the two companies together. I was not aware that that Government were going to nationalise them.


My Lords, that was in December 1973 or January 1974. However, that is what I was given to understand, and if I am wrong I apologise to your Lordships.

My Lords, the cost to the taxpayer will he minimal at £400 million as has been stated earlier, which, give or take a little, is the money that the four civil aerospace projects that we need to build would cost us right now in conjunction with Europe. I refuse to believe that wise men, men of integrity and business acumen, will not do what is right for the industry, provided they are left alone. When we first tabled this Amendment on the Committee stage, I will admit, as I said the other day, that it was probably the wrong time to table it. But having listened to I do not know how many hours of so-called reasons as to why the aircraft industry should be nationalised, I am still not convinced and I have not heard one good, solid or logical argument put forward by the Government. I am sure that most noble Lords will agree with me.

I do not want to go into all the details—we have been over them again and again. Suffice it to say that the Concorde project, which is virtually the nationalised part of the industry, is no criterion. The track record of the Concorde management board is appalling. The noble Lord, Lord Beswick, may say that under the British Aerospace Corporation he will not tolerate interference and he will run it. But I do not think any man alive today is capable of running a nationalised industry without being hogged down by the Secretary of State, the Civil Service and red tape.

My Lords, one of the elder statesmen of the Labour Party, J. B. Priestley, summed up the situation very aptly. He wrote: While public ownership begins to look like elaborate imbecility it is proposed we should have more of it. Sixty years ago, when I was a young Socialist, I used to bring the Post Office into my arguments. I do not know wham common sense left the Post Office for ever, but it has certainly vanished never, I feel, to return in my time". He goes on: When authority is guided by common sense touched with compassion, it takes trouble to discover what people in general want or do not want. This is real democracy. What is false democracy comes from ideology, the fanatical worship of a theory and a system far more important than people. With common sense disregarded we are, at the present time, the constant victims of ideology, busy imposing a stamping process on us, without regard to our thoughts and feelings. We have Ministers who are going to do us good even while we run screaming. We can discover them day after day without a glimmer of common sense between them. Sometimes I feel we are already half way to Moscow". Mr. Priestley finishes by saying: We are commanded to depend more and more on a Government that has offered us no example of common sense in all its operations and transactions". Here is wisdom, and look from whom it cometh. Can any of your Lordships think of a better way to help stop the pound from sinking than to scrap the nationalisation of the aircraft industry? Just think of the different attitudes that foreign investors immediately would adopt towards Britain. Just imagine how confidence in Britain would be restored, and imagine the confidence restored in our visitors from the IMF in two days' time. Let us begin by putting our country before ideological and nonsensical Party politics. I appeal to your Lordships this afternoon, on all sides of the House, to see reason. If we divide which, alas! I feel will come to pass, I hope that your Lordships will consult your consciences to the full and very deeply before deciding where you should go. I beg to move.


My Lords, I was very relieved indeed that the noble Earl, Lord Kimberley, said he had not remembered an occasion where a clear explanation had been given by the noble Lord, Lord Melchett, or anyone else, as to why this is being done. I thought perhaps I had been rather slow on the uptake when, with such confidence, the noble Lord, Lord Melchett, said that he had already explained it in detail on Committee and was merely repeating it. What the noble Lord did was to state two things which I think had truth; that is, that this particular industry has now reached the stage where it is very difficult for small units to operate it in a way that will be successful. One accepts that. Because of the expense, because of the intricacy of the research that has to be done, it has to be bigger units. The noble Lord states those things as a fact and then immediately tags on to that, "Therefore we nationalise; therefore we have to have public control." I think it was the poet Blake who said: A truth that's told with bad intent Beats all the lies you can invent". I am not suggesting that the noble Lord, Lord Melchett, has told the truth with bad intent, but he has certainly told the truth with wrong intent. If he is going to say "Therefore, we have got to nationalise, because we need big units", he is coming to a conclusion for which he has no support at all in terms of hard clear evidence.

I was very impressed with what my noble friend Lord Thomas said: when you nationalise or take under central control, of necessity you are bringing in an element of Civil Service control. It is not a civil servant's duty to be quick; it is not his duty to take risks. A civil servant, representing what is virtually a monopoly, has to be ultra-careful that he is being fair, that he is taking everything into account and that he is not risking something that does not belong to him. Civil servants have to go into that sort of detail. But if you can leave an element of private enterprise ownership you have various strands to take these various risks; they can be quicker because they have not got on their shoulders the burden of the whole industry, or the whole weight of an idea that may be involved in any move they take. So I suppose the first thing we have to do is to try to alter the outlook of noble Lords who speak for the Government, and indeed all Socialists who hold authoritative positions. They have been able to point out weakness in the present system. But they have not yet been able to establish that to replace the present system by a nationalised method is likely to be better.

There is ample evidence, as my noble friend pointed out, that where you have nationalised you have interfered with efficiency and interfered with the results. The thing that bothers me more than anything else is the absolute honesty of the noble Lord, Lord Melchett; he really thinks he has given an explanation, he truly believes he has given a good explanation. The truth of the matter is that he is undermining any chance this country has of regaining the world confidence which is essential. Even if the noble Lord could establish that his form of central control, nationalisation, was going to be marginally more efficient, he could not overcome the fact that nobody outside this country has any faith in it at all, and I would say a good half of the people within the country have got no faith in it at all.

So while we are not going to turn the world around by voting on this particular Amendment, I do hope that we can at some time impress our argument upon the noble Lord, Lord Melchett. He is a young man, he is going to be here for a long time and his influence is going to spread over a good many years. By all means have regard to the weaknesses that he sees in the present system, by all means try and find an alternative which will give greater efficiency and better results for this country, but please let him make up his mind on all the evidence in front of him that nationalisation and more centralised control is not the way. If, by voting on this Amendment, we can hammer that home and go some way towards achieving a transformation of thinking, it may be a vote well worth casting. It is in hope for the future rather than for any immediate gain that if it is put to a vote I shall go into the Lobby and support it.

4.25 p.m.


My Lords, if the noble Lord who is going to wind up will allow me, may I just say what staggers me about the whole approach to this issue. We approach it ideologically each way. We use the word "nationalisation" in the loosest and to me the most non-understandable way. You do riot, you never have, nationalised an industry. You change the names on the share certificates; that is all you do. The fellows who run an industry are the managers and the managed. I want to ask the noble Lord, Lord Melchett, who is the third or fourth generation of a family that began as managers, why, if you change the name on the certificate, do you suddenly get a better lot of managers or a better relationship between the managers and the managed? I knew his grandfather. He knew how to manage. I do not think it mattered much whose name was on the share certificates. Courtaulds can go wrong and be privately owned; the Coal Board can go wrong and be publically owned. What I should like to hear is an argument as to why it matters, why we commit vast sums of public money just to change the names on the certificates. Why does that matter and how does it change how the job is done?

The answer is, it does not at all. This is the total irrelevance of what the noble Lord, Lord Harmar-Nicholls, calls nationalisation. It is totally irrelevant to what goes on in the industry. No miner now believes that the coal mining industry is run more in his concern, or that he has more to do with the way in which it is run since Lord Shinwell put up that beautiful flag which meant it is now run in the name of the people. No miner believes it; no gasworker believes it; no electrician believes it. And nobody will believe it, if I may say so to the noble Lord, Lord Melchett, if you just change the names on the share certificates in the aerospace industry. It is totally irrelevant. It adds to our borrowing requirement. It complicates all our finances. But it does absolutely nothing whatever for the running of the industry.

The reason I shall vote for the Amendment, which I hope will be pressed, is that. It is not really for the reasons that the noble and reverend Lord, Lord Beaumont, gave. I think he got ideologically involved, too. It is not a matter of ideology. I want industries to be run between those who manage them and those who are managed in them because they care about them. I think you can do it without bothering your head very much about who has his name on the shares. It costs oodles of millions now to invest in plant and machinery. If you are lucky you start to get a return in three years. If you arc very lucky you get 5 per cent. return after five years. You have to be very lucky to do that. In the meantime you are paying 18 per cent. for the money to do the job. That is the issue in British industry, not the name which is upon the share certificate. With great respect to the grandson and great-grandson of the fellow I I new, that is what managers should be about. In my view that is what trade union leaders and Socialist leaders should be about.

How do we make it easier to run an industry and to invest in it? How do we make it easier for the fellows who work on the floor to co-operate with the fellows who are in the offices and the drawing offices trying to work out what happens next year? I repeat, my Lords, this is not an ideological Bill calling for rejection; it is just ideologically and in every other way irrelevant. As I come towards the end of a long career as a representative of the managed and now myself a manager, I simply say that this has nothing whatever to do with it.

Perhaps I might remind the noble Lord, Lord Melchett—who is a rather later Socialist that I am—of something that we older Socialists always knew: If anybody ever makes more than he should out of the industrial effort, then that is what we have the Treasury and the Chancellor of the Exchequer for, that is, to tax it back from him. What you do not do is to deny him the opportunity to do it. Let us get it done. This is the most irrelevant Bill and—I forget who actually said this but the noble Lord, Lord Shinwell, will remember—it should have its throat cut.

A noble Lord: Winston said it.


Winston, was it? I think he actually said if should have its throat slit before we sent it upstairs. I ask the noble Lord, Lord Melchett, to remember that his grand-father and his whole family knew that it is the running of a business that natters; it is making it effective and efficient; it is making people think it is their show and enabling them to work together; and, I repeat, the name which is on the share certificate has little to do with that. I hope the Amendment will be pressed and certainly I will vote for it.

4.34 p.m.


My Lords, on the Amendment on nationalisation which is before the House on this particular occasion, I have listened to the speeches of the two noble Lords, Lord Harmar-Nicholls, who came from the other place, and the noble Lord, Lord George-Brown, who held high office in the other place, and to the upbraiding, more or less, of the noble Lord who is in charge of the Bill at this juncture, my noble friend Lord Melchett, as to how he ought to reply to the debate. Unfortunately for: he two noble Lords who have spoken, neither of them has worked within a nationalised industry. They have never experienced it. They do not know anything about it.


Oh come off it!


Never mind about the come off it". The noble Lord has had his say. He has very often had his say and is very often wrong. He has never worked within the mining industry and never worked in a nationalised industry. He is supposed to be attached to the Transport and General Workers' Union, but I never knew that he had a PSV licence whereby he could drive the buses around London if they were to be nationalised.

One could go on and on drawing examples of what has come out of nationalisation. The men working in the mining industry at this moment are better off than we ever were. I went down the mines at the age of 14 on leaving school and I was down there for 30 years. I know something of what we had to put up with under private enterprise, the punishment that we had to endure, the conditions that prevailed and how the prices were arrived at. But when nationalisation took place and a new form of conciliation machinery was drafted between the two parties, the National Coal Board and the National Union of Mineworkers, great benefits came to our people. We even got holidays with pay. They have now got so many days time off within the year, and their holidays have extended beyond what they were. One could go on to elaborate on the conditions that now prevail which never prevailed before and which have been of great benefit and of great service to those inside the industry.

One thing I took particular notice of was that neither of the two noble Lords who spoke made any reference whatever to the conciliation machinery about which both of them know something and ought to know something as ex-Ministers; that was the machinery which operates on behalf of the Civil Service inside Her Majesty's Government—the Whitley machinery. In my opinion you have a machinery set up which ought to have been redrafted and brought into line with the conciliation machinery that operates within nationalised industries today. If such were to be done, then you would not have the upheaval and the distrust in the Civil Service, whose members are not able to speak for themselves on the Floor of the House. Only those who have had experience of them, and have had to depend upon them for advice and for assistance when faced with problems in regard to policies which the Party in power was prepared to lay down, are prepared to speak on their behalf.

My noble friend Lord Melchett, therefore, has nothing to apologise for in regard to the Amendment that is before the House for consideration. Never for one moment believe what these two noble Lords have had to say in regard to nationalisation. Nationalisation has done tremendous good for this nation. Noble Lords will remember that on one occasion 1 spoke of one noble Lord—who is not here now but has been followed by a successor, his son or his grandson—the noble Marquess, Lord Londonderry, who said that the best thing that ever happened to the mining industry was when we took them over. Nationalisation was able to put money into their pockets that they would never have been able to achieve if they had had to work the industry under private enterprise for any longer. They did not have the capital to inject into the industry to buy new machinery to bring it up to standard. It was left to Her Majesty's Government to nationalise the mining industry. I, for one, benefited while I worked within the industry from that nationalisation that took place. We were proud of the flag that was on every pithead when at the end of every week we were able to break the production target that had been set for us. Every miner who worked at the coal face accepted his individual responsibility, as he still accepts it, in seeking to produce from Mother Nature.

In closing, I want to say one thing: when you talk about nationalisation and you look at the mining industry, remember that every time a miner goes down the pit he is engaged in a battle with Mother Nature, just like the soldier on the battlefield. He has to look after his own safety. Nobody can look after it for him. Things can happen down a mine; the miner can deal with this only by experience, beginning with the form of apprenticeship that he starts off with when he goes down in the first place up to the time when he finishes at the age of 65, when he comes to retire. May the day soon come when the retiring age for a miner and those working in other forms of industry is lowered from 65. Why should not the same case be presented on their behalf as is presented on behalf of the police, the nursing profession and other professions? The door ought not to be closed. Therefore, I hope and trust that my noble friend Lord Melchett will stand his ground, irrespective of what has been said and of the appeals that have been put forward by the other side.

4.41 p.m.


My Lords, I do not want to get involved with the noble Lord, Lord Slater, in an argument about the nationalisation of coal mines at this juncture. Of course it was right and absolutely necessary that improvements should be made in the working conditions in the mines and, indeed, in many other industries, but I really do not think that an examination of industry as a whole indicates that it was necessary to have nationalisation in order to get, for instance, holidays with pay, better welfare provisions, shorter working hours and the like. When the noble Lord sings the praises of the nationalisation of the mines, he must not forget the really lamentable industrial relations record in the mines in approximately the first decade after nationalisation. If he will refresh his mind about the really appalling record of unofficial strikes under the nationalised Coal Board for about the first decade—it may have been a little more, it may have been a little less—it is far from obvious that nationalisation brought that peace and satisfaction which the noble Lord claims as its fruits.

Turning to the remarks of the noble Lord, Lord George-Brown, I agree with a great deal of what he said and I hope that we can argue this and similar matters on a practical, realistic basis, and not just on an ideological basis. However, though I agreed with much of what he said, I did not agree with all of it because I am afraid that experience has shown me—though, of course, everything looks different to each one of us—that nationalisation is rather worse than irrelevant. When one changes the name on the share certificate and alters it to "the State", experience shows that it becomes more difficult for managers to manage, not less difficult or even the same as before. One of the reasons for that is that even if in some industries prior to nationalisation there was too much detailed interference by the State for the good of management and the success of the industry, it is true that the record proves that that interference becomes far worse after nationalisation. The number of people who crawl over an industry after nationalisation is far greater than those who crawl over it prior to nationalisation, and they crawl more frequently.

I want to return to what seems to be my particular job in this debate. As I sense that the discussion on this Amendment is moving to an end, I have to express some view about the merits of the Amendment as seen by the Conservative Front Bench and to give some advice to my noble friends as to what they should do if the Amendment is pressed to a Division. In order to do so, I must go back to what the noble Lord, Lord Melchett, was saying, because he began by suggesting that the Government have been constantly accused of not having argued the industrial case for the nationalisation of the aircraft industry. I am afraid, however, that I must say to him with respect that, once again, he has not really argued the case today because he has once again made a number of assertions. For instance, he has repeated his assertion that a merger between the two great corporations was necessary and that only nationalisation could bring it about. I think that a case has to be made for the merger. On balance, personally, I am prepared to accept that now that case is probably made, but it is by no means an open and shut case and I have not really heard the Government argue at any stage the case for and against the merger, nor draw up a proper balance between the arguments. However, as I say, I am inclined to accept that, at the present moment in time there is probably, on balance, an argument in favour of the merger.

However, if there is such an argument and if it were to be accepted, the case still has to be made as to why it is necessary to nationalise in order to bring about this merger. I really do not believe that that case has been made at all. It is true that the merger had not taken place by February 1974, and it is obvious that it would not have taken place since then simply because the Government had this commitment to nationalise tied round their neck.


My Lords, has the noble Lord no regard for the amount of public money that is being poured into these two companies?


My Lords, I have spoken of that before and I was about to come to it again. I believe that, although the merger had not been brought about by February 1974, there is no reason to suppose that a Government which really believed that it should take place could not have persuaded the companies to bring it about. The Government could have acted in their double capacity as the most powerful and demanding customer of the industry and as wielder of the powers, the persuasions and the help that the Industry Act and other legislation give them. So I do not believe that a case has been made, first, for the merger, or, secondly, given that case, that nationalisation was necessary to achieve it.

It is true that, if the Government put in a lot of public money, they must exercise strict control in the interests of the public. It is also true that, if that money becomes risk-money, the Government should look to get some return for the taxpayer in any success that accrues to the industry as a result of being fructified by the taxpayers' money. I shall come to that in a moment. Before I come to that, however, I must tell the noble Lord, Lord Melchett, that he has not attempted to argue the case that I have put forward on a number of occasions and which has been made by many other people in this House and outside—that is, what is the proper relationship between a dominant customer and his monopoly supplier? There are many people—not just Tory Peers—who believe that there are dangers in the major customer owning the monopoly supplier. There are very substantial arguments here, and on no single occasion, to my knowledge, in another place and certainly in this House, have the Government attempted to deal with that argument.

Again, the case is not an open and shut one. I have called this an incestuous relationship and it is one which I strongly feel, and have felt for many years, is against the public interest. I recognise that there are people who take a different point of view. However, there really is an argument here and, once again, the Government have at no stage attempted to meet the criticism that it is against the public interest for the dominant customer to own the monopoly supplier. Therefore, I must repeat to the Government that they have still not answered these first two points of industrial strategy, and in a moment, after I have given way to the noble Lord, I will come to the third point.


My Lords, I thank the noble Lord for giving way. I should like to ask the noble Lord whether he remembered that argument when he supported European Ferries taking over the Felixstowe Dock, European Ferries being the major user of the Felixstowe Dock?


My Lords, I certainly took that argument into account. As I said, all the arguments in the case have to be taken into account, and I agree that that was one argument. Another was that one had to balance against that, in the case of Felixstowe, the other loss of competition which would have occurred had the port fallen into the same ownership as the 19 other ports—I think it is 19—owned by the British Transport Docks Board. On balance, since I am a believer in competition as an economic motivator, as a protector of the public and as a way of achieving the best possible economic services for the public, and indeed services other than purely economic ones for the public, I believe that on the whole competition is better served by keeping that dock as a private enterprise dock. But I quite agree; the noble Lord has made a fair point. It is a factor which ought to be taken into account and I can assure him that I did take it into account.

As I have just said, the argument is not an open and closed one to which there is an absolute right answer and an absolute wrong answer. It is a substantial argument, but the Government at no stage have addressed themselves to it at all, and have given no reasons why they believe that the argument in this case is answered as they are answering it in the Bill. It is to make the dominant customer the owner of the monopoly and indeed sole supplier in this country—


My Lords, I thank the noble Lord for giving way. Of course that point about the relationship between the dominant customer and the supplier is a very powerful argument, but exactly that situation prevailed in the case of Rolls-Royce, and the noble Lord's own Government nationalised Rolls-Royce.

4.53 p.m.


But there was a difference there, my Lords, if I may point it out to the noble Lord. I was a member of the Cabinet that had to deal with that matter. I know that the way we dealt with it is itself open to argument. No doubt the longer we look back on it and the more wisdom we have from hindsight, the more the matter can be questioned; but the question which we had to face, as it presented itself to the Cabinet at that time, was that within about 48 hours or not much longer we had to decide either to nationalise Rolls-Royce—the aero engine part of it—or allow it to go out of existence.

This is not the case here. I am glad to say that the British Aircraft Corporation and the aviation part of Hawker Siddeley are both flourishing, are both doing extremely well. There is no force majeure decision of the kind which the Cabinet, of which I was a member at that time, felt was thrust upon it with only two or three days for it to make up its mind. As we saw it, there really was not the choice on the information we had before us at the time. I can assure the noble Lord that had we felt that there had been a real choice we would have taken it.

The third point I want to come to in this industrial argument is that neither the noble Lord, Lord Melchett, today, nor other Ministers at any other time, have taken on board the arguments of the Plowden Committee. This happens to be an industry which has had a high-powered inquiry set up actually by a Labour Government under the chairmanship of the noble Lord, Lord Plowden. If 1 remember correctly the Plowden Committee must have reported about 10 years ago, and it specifically did not recommend nationalisation. The Plowden Committee recommended, or a majority of it recommended, some shareholding by the Government, but that is very different from nationalisation. The Committee took the view—and I think that this is fairly summarising chapter 37 of the Committee's Report—that, on the one hand, the Government have power in the industry through major strategic decisions but have no responsibility for the consequences, and, on the other hand, the industry has full responsibility for the business including the effect on industrial relations of the changes in defence policy which were going on at that time, but lacks much of the decision-making authority.

The Committee therefore wanted to achieve a solution that would, first, lift the heavy weight of detailed financial and technical control exercised by the Government as a result of their dominant role in the industry which was preventing efficient and dynamic management and which caused in many cases a duplication of effort; a solution which would, secondly, permit the Government to make financial contributions without interfering in the day-to-day management; a solution which would, thirdly, retain the advantages of private enterprise while recognising the Government's dominant position as customer and financier; and a solution which would, fourthly, involve the Government in the management of the economic consequences to the industry of the decision they inevitably have to take in connection with major projects in the industry.

That was the kind of solution which the Plowden Committee was looking at. But it specifically rejected nationalisation because it felt that it would divert senior managements from the material business of the industry, would provoke controversy and uncertainty that would harm the industry, and would make it more difficult to devise the best solutions of the immediate problems of the industry. The Committee also felt that nationalisation would remove the valuable contribution of private investment as an incentive to and a measure of efficiency and profitability. So the only substantial report the country has, after an investigation of the industrial strategy in this industry, while coming down in favour of some public share-holding, specifically came down against the solution recommended by the Government in the Bill. When we say to the Government that they have never tried to deal with the industrial case for nationalisation, that is what we mean. They are specifically denying the findings of the Committee which a previous Labour Government themselves set up, and giving not a single reason for doing so.

We on this side might have grave doubts—indeed, a minority of the Plowden Committee did have grave doubts—about the wisdom even of public State ownership, of the State having some shareholding. But the Committee as a whole, all the Committee, were in no doubt that nationalisation, as proposed in this Bill, was not the right answer for this industry, for the reasons which have been given. Those were not ideological reasons. Those were hardheaded, common-sense reasons argued in that Report. I do not believe that anybody could have accused the Plowden Committee of arguing from an ideological point of view, least of all an ideological point of view which was prejudiced on the side of the sentiments which we on this side of your Lordships' House take on these matters.

So I am afraid that I have to say to your Lordships that this case has not been proved on industrial grounds, and I am afraid that I go on to say to your Lordships that the case runs absolutely at odds with the recommendations of the only substantial study that has ever been made of this problem. When on top of that one looks at the record of other nationalised industries, one is bound to ask, why pick up by the roots one of the few industries in this country which at the moment is being as highly successful as it is? The noble Lord, Lord Melchett, said that some of the figures they gave were rather misleading in their favour. I was rather surprised to hear him say that, because I remember my noble friend Lord Selsdon producing to your Lordships last week, or the week before, the notes produced, I think, by the Treasury for the benefit of speakers when they speak in other countries abroad, and "bullpoint number one" on the notes, he told us, was what a wonderfully successful aircraft industry we have and how wonderfully it was doing.

It is one of the first laws of common sense that one does not pull up by the roots something that is working as successfully as this industry is. I could add to that by drawing attention to the cost; I have done it myself, and many noble Lords have done it again this afternoon. I could add to it the argument which has also been raised this afternoon: at a time when foreign confidence is of greater importance to this country than it has ever been before, why persist in something which even the Government must know is a weakening factor in foreign confidence? I must ask the Government: Why persist in doing something which there is absolutely no evidence to suggest is wanted by the majority of people who work in this industry?

So, my Lords, I think I have made clear, and I hope not just for partisan reasons or reasons of prejudice, that this Amendment is one which in my view should be accepted by the Government. But they have made clear that they are not going to accept it, so I have to address myself to what advice I should give to my noble friends about voting on it. On the Second Reading of this Bill I said on behalf of my Party that, with very great reluctance, we had come to the conclusion that we ought not to break the established convention of your Lordships' House that we do not vote out lock, stock and barrel a major proposition which was contained in the Election programme of the Party holding the elected majority in the other place. When we came to this Amendment on Committee stage I said that I felt that to remove half of this Bill—it is, after all, the Aircraft and Shipbuilding Industries Bill—was really tantamount to a Second Reading vote and that, therefore, with great very reluctance, I had to continue to advise my noble friends not to vote against it. That, I am afraid, is the advice I must maintain today.

I know, of course, as the noble Viscount, Lord Simon, said in moving this Amendment, that in voting it out we should not in fact he thwarting the will of the people; we should be giving the Government an opportunity to reconsider. It is a pity that the Prime Minister and some of his colleagues do not admit this, too. Of course the majority in the other place can have their will whenever they like and with only the minimum of delay, and it is doing no good to unity in this country or to serious consideration of the issues in this country for the Prime Minister and other Ministers to suggest that we in this House can thwart the will and the authority of the elected Chamber, because we have not got the powers to do it. The only powers we have are those given to us by a previous Labour Government in an Act passed when the late Lord Attlee was Prime Minister.

However, although I agree with the noble Viscount, Lord Simon, that that is the fact of the matter, all of us have to face the fact that in the neurotic state in which the present Government of this country exist they would not reconsider the matter. They would explode a huge emotional volcano and hope that, in all the dust and cloud, the real issues would be obscured from the public; and most of all would they do that if they could run their favourite line that this crisis had been brought about by the inbuilt Tory majority in your Lordships' House—something I have noticed them talking about quite a bit in recent days, wholly forgetting the fact that, so far as I know, certainly every important Amendment dealt with at Committee stage of this Bill was supported by noble Lords on the Cross-Benches and by noble Lords on the Liberal Benches as well. So it is nothing to do with the inbuilt Tory majority. All that is noticeable is the lack of Labour Peers to support their own measure, even to the extent, sometimes, of keeping the minimum number required to allow the House to continue and to carry the Bill through.


My Lords, that is grossly unfair. The number of Labour Lords who could attend this House is very much smaller than that on the Conservative side, and I challenge you to contradict—


Not "you"—"the noble Lord"!


—that there is a higher proportion of Labour Peers who can attend who in fact attend and vote than there is on the Conservative side.


My Lords, I am not going into that sort of statistical argument with the noble Lord at this stage, but I think he fails to take account of a number of things. First, he fails to take account, for example, of the number of hereditary Peers (who are all said to be Tories, although I am not sure that this should necessarily he taken for granted) who have leave of absence from this House and who therefore never attend it. I think that is one very big matter which ought to be taken into account. I think the noble Lord ought also to look at the position of those of us who, like himself and myself, are Life Peers. I think he ought to look at the number of Life Peers who have been appointed on to the Benches of his Party, and consider what proportion of them attend as compared with the proportion of other Life Peers who attend. After all, his Party is the Government. This, we are told, is their major measure of this Session, and yet they appear unable sometimes even to have the thirty here that are required as the minimum quorum to get this first-priority Bill, so we are told, through this House. So I do not think the Labour Peers, or their friends in the other place, are in any position to say the sort of things they are saying.

My Lords, it is just because they are behaving like this, and because I fear they are wishing, as I say, to blow up this great emotional volcano and, in the dust and fog that that would create, to obscure the real issue, that I do not want to advise my noble friends to vote on this Amendment. I want the Government to be forced to consider some of the many other Amendments which we have produced to the substance of this Bill, which are very important and which certainly do not begin to raise any confrontation over the major political purposes of this Bill; and I do not want to give the Government the opportunity to get away from that consideration by creating this volcanic smokescreen which I believe they would do if I advised my noble friends to support this Amendment in the Lobby. I can, of course, only advise my noble friends what I think it is wise to do. That is why, with even greater reluctance than on previous occasions, I advise my noble friends not to vote on this Amendment but to concentrate on our own Amendment, which is to postpone the vesting date for the aircraft industry until after the electorate of this country has had another chance to express its view upon it—and I have no doubt what that view will be.

5.7 pm.


My Lords, noble Lords will all want to congratulate the noble Lord, Lord Carr of Hadley, on just running a brilliant race. It is a great pity that he collapsed shortly before reaching the tape. He put the case perfectly clearly in favour of this Amendment, and then ventured to put forward grounds, which I would suggest do not stand up to examination, for advising his noble friends on the Conservative Benches not to support it. Indeed, when the noble Lord, Lord Carr of Hadley, comes later in the Report stage of this Bill to move an Amendment to remove ship repairing from the Bill and no doubt to advise his noble friends on the Conservative Benches to support him, I venture to hope that nobody will then quote back at him the words he has just used. Because there is no difference in principle between removing the aircraft industry and removing the ship repairing industry from this Bill: there is a difference in degree, but there is no difference in principle.

My Lords, I do not want to go over again the grounds as to the merits of this Amendment and as to the demerits of the Government's proposals to nationalise the aircraft industry. At a time when no doubt almost all noble Lords express their faith in the mixed economy, at a time when it is recognised that some 60 per cent. of the country's resources are already tied up in the public sector, it is no doubt generally agreed that any move by the Government to extend the field of nationalisation is one where the case has to be proved by them up to the hilt. It has been clear—and we have all listened with the greatest care to the noble Lord, Lord Melchett, doing his best at the various stages of this Bill—that no overwhelming case has been made out to suggest that the efficiency of the aircraft industry can be increased by its being taken over by the State. In those circumstances, I say nothing more about the merits of the Amendment which is moved from the Liberal Benches.

I want to address myself to one other matter which is of great importance in the light of what the noble Lord, Lord Carr of Hadley, has just said; that is as to whether there is a case at this stage for voting the way we believe; whether there is a case for inviting the other place to reconsider the decision that they took on 29th July—and this will, indeed, be the very last opportunity that your Lordships' House will have to invite such reconsideration.

Might I suggest that there were two facts on 29th July that we ought not to forget. The first is that on that date sterling was worth 1.79 dollars; today it is worth 1.59 dollars. That means a totally different economic and financial situation against which this Bill must come to be considered. That means that those in the IMF and elsewhere who are seeking to be generous towards us might find themselves encouraged if the strain on the public resources which would be occasioned by this Bill were now to be gracefully abandoned by the Government. At the very least, that is a matter that the other place should be asked to reconsider in the light of quite different circumstances that exist today.

The other fact about the 29th July is simply this: on Third Reading in another place, the Government had a majority of three. There are three by-elections pending this Thursday. One of those is in a seat where the retiring Member was unable, for various reasons, to vote on the 29th July; the other two were Government seats. No one knows what will happen on Thursday, but if by any chance the Government lose either or both or all three of the seats on Thursday, it may well be that when this Amendment is reconsidered in the other place it will be reconsidered with a totally different result from the result that obtained last time and the result might be more in keeping with the up-to-date wishes of the electorate than prevailed last time.

I hope it is not an exaggeration to venture to suggest to noble Lords who sit on the Conservative Benches that if they follow the advice given them by the noble Lord, Lord Carr, this afternoon and abstain from voting, their sitting in their places might well be misinterpreted by members of the public as indicating that they themselves have no confidence in their Party's electoral prospects on Thursday of this week.

Finally, I want to make it clear that the Liberals do not by this Amendment seek any confrontation with another place. All that we are seeking to do is to exercise the powers which were repeatedly given to us—repeatedly once again given to us by a Labour Government in 1949—of saying to the other place, "Have another look at this proposal in the light of the changed circumstances since it was last

considered. "It is our view that in the situation that exists today there is every reason for inviting the other place to do so and that we can do that with complete constitutional propriety.

5.13 p.m.

On Question, Whether the said Amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 62; Not-Contents, 65.

Airedale, L. Foot, L. Norwich, V.
Aldenham, L. Gainford, L. Platt, L.
Amherst, E. George-Brown, L. Robbins, L.
Ampthill, L. Gladwyn, L. Romney, E.
Amulree, L. Gore-Booth, L. Ruthven of Freeland, Ly.
Avebury, L. Granville of Eye, L. Sackville, L.
Banks, L. Gridley, L. St. Davids, V.
Barrington, V. Grimston of Westbury, L. Saint Oswald, L.
Beaumont of Whitley, L. Hampton, L. Simon, V.
Belhaven and Stenton, L. Harmar-Nicholls, L. Slim, V.
Bethell, L. Hylton-Foster, B. Stamp, L.
Bledisloe, V. Ilchester, E. Strathcarron, L.
Boothby, L. Inchyra, L. Strathclyde, L.
Byers, L. Kimberley, E. [Teller.] Strathspey, L.
Clifford of Chudleigh, L. Lloyd of Kilgerran, L. Swaythling, L.
Clwyd, L. Merrivale, L. Tanlaw, L.
Cottesloe, L. Mersey, V. Vickers, B.
Cullen of Ashbourne, L. Meston, L. Wade, L. [Teller.]
De Freyne, L. Monson, L. Ward of North Tyneside, B
Emmet of Amberley, B. Mottistone, L. Wigoder, L.
Erskine of Rerrick, L. Northchurch, B.
Allen of Abbeydale, L. Fulton, L. Pannell, L.
Ardwick, L. Gordon-Walker, L. Pargiter, L.
Aylestone, L. Greenwood of Rossendale, L. Peart, L. (L. Privy Seal)
Birk, B. Hale, L. Philips, B.
Blyton, L. Harris of Greenwich, L. Popplewell, L.
Brockway, L. Henderson, L. Shinwell, L.
Bruce of Donington, L. Jacques, L. [Teller.] Slater, L.
Buckinghamshire, E, Kirkhill, L. Snow, L.
Castle, L. Leatherland, L. Soper, L.
Champion, L. Llewelyn-Davies of Hastoe, B. Stedman, B. [Teller.]
Chorley, L. Lloyd of Hampstead, L. Stewart of Alvechurch, B.
Collison, L. Longford, E. Stone, L.
Cooper of Stockton Heath, L. Lovell-Davis, L. Stow Hill, L.
Davies of Leek, L. McCluskey, L. Strabolgi, L.
Davies of Penrhys, L. Maelor, L. Taylor of Mansfield, L.
Delacourt-Smith of Alteryn, B. Maybray-King, L. Wallace of Coslany, L.
Donaldson of Kingsbridge, L. Melchett, L. Wells-Pestell, L.
Douglas of Barloch, L. Morris of Grasmere, L. Wigg, L.
Douglass of Cleveland, L. Murray of Gravesend, L. Winterbottom, L.
Elwyn-Jones, L. (L. Chancellor.) Noel-Buxton, L. Wootton of Abinger, B
Evans of Hungershall, L. Northfield, L. Wynne-Jones, L.
Fisher of Rednal, B. Oram, L.
Resolved in the negative, and Amendment disagreed to accordingly.

5.21 p.m.

Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 3: Page 2, line 2, at end insert ("from among persons who appear to the Secretary of State to have wide experience of, and to have shown capacity in, the activities specified in section 2(1) or (3) below or in industry, technology, commercial or financial matters, administration or to the organisation of workers.").

The noble Lord said: My Lords, on behalf of my noble friend, I move Amendment No. 3. This is an Amendment which we discussed at the Committee stage. We are seeking in a number of these similar Amendments to take the line that if we have to have these Corporations, we want to ensure they get on and do their job as well as possible, although I accept that we may not always agree about the best way of achieving that.

At the Committee stage, I suggested that this was a common sense Amendment which referred back to many previous Statutes. We are simply saying here that those who are appointed to the boards of these Corporations ought to have some relevant experience. The noble Lord, Lord Kirkhill, gave us a rather strange reply. I thought it worth exploring whether, possibly in the light of further consideration, the Government may have seen the light. We know that unfortunately the noble Lord, Lord Kirkhill, has lost his voice so we understand that the Government are speaking through another medium now; I am sure it is equally authoritative.

The noble Lord said that all the appointments that had been made so far had been of people with the kind of experience that we suggest is relevant in this Amendment. But he did not say why he did not think that the Amendment was a good one. The noble Lord however said that the Amendment was so widely drafted that it gave complete discretion to the Secretary of State. Of course that has been said fairly frequently, and usually the Government mean that since it gives complete discretion to the Secretary of State, this is a good policy.

What we have been seeking to do is merely to confine slightly the Secretary of State's discretion. Our complaint has been—and I hope that this is not going to be another long night—that the Ministers find themselves confined by rather a narrow brief while claiming on the one hand that they need flexibility for some of what we regard as the potentially meddlesome powers the Minister gets. Yet, when we invite them to show some flexibility by accepting what they admit is in line with practice, unfortunately they find themselves confined by a narrow brief because it is not in their department. So I can fairly claim here that I am inviting the Government to show some flexibility in responding to this Amendment.

There are a number of perfectly good reasons why it makes sense, as the noble Lord conceded, that people should have the relevant experience before joining the Corporations. But it goes farther than that. We have read in the newspapers about the power of patronage of Governments, and Prime Ministers in particular. It is surely generally being conceded now that public corporations should not be used as pastures on which they can pension out their old political war horses. Having said that, I must be careful not to mention any names, but one can think of a number of Corporations to which this argument could be applied. In some cases I am making an oblique reference to Members of this House. We have seen the staffing of the British National Oil Corporation, which is not beyond criticism, and we have seen the staffing of Cable and Wireless, which is not beyond criticism, on rather the same lines as we are seeking to avoid in this Amendment. So I invite the Government to reconsider what I hope they will agree is a sensible Amendment which merely codifies what they agree they are doing and they intend to do.

My Lords, it has been called to my attention that there is a misprint in the Amendment. It should read: "Line 3" and not "Line 2". Having corrected that, I beg to move the Amendment.

5.27 p.m.


My Lords, we spent a lot of time on the first Amendment and so one does not want to spin out discussion on the third Amendment. But it is because there have been complaints of unwarranted delays by your Lordships' House that one must refute some of them before launching on this Amendment. The whole point is that we have deployed arguments and we have had some very bad answers. Those answers have not been to the credit of the Government, let alone to the credit of a Parliament. Indeed, they have been rich in their irrelevancy. Lest anyone should think that I am talking just to delay, I have looked back at the answers given on the Committee stage to this Amendment. If we are going now to have the same replies again then one can picture this stage dragging on and even the Third Reading being a very slow affair with still more Amendments.

The noble Lord, Lord Kirkhill, began very promisingly, as he always does, when he said on patronage, and Government patronage (and this is at col. 54 of Hansard of 11th October) that the overall level of political patronage is one to which any Government, no matter what their political complexion, must have considerable and careful regard. That is an unexceptionable sentiment. We thought that this was in the right direction. The noble Lord went on to say that it did not matter in that case because the people who had been appointed for service in the Aerospace Organising Committee were very desirable. But, my Lords, that argument, which really has no bearing on the first one, was set out at col. 55.

Then the noble Lord, Lord Kirkhill, said that in the future any Government must have regard to this matter. Indeed, in column 56 he said: This is a question which it falls to the Government of the day to assess for themselves. So first of all it matters, and then it does not matter because he has done all right, and then it may be a matter in the future for other people. If I may say so, that is somewhat below the standard of logic which we have come to expect, and also to enjoy, from the noble Lord. I can understand that he was not feeling very comfortable with the argument, but it was the best he could do with the brief before him.

Then we were told in column 57, when the noble Lord went on to a further argument: The central point of the Government's position here is that the members of these boards will have to declare their interest in exactly the same way as, for example, a Member of Parliament. That has nothing whatever to do with the argument. We are proposing that members should be appointed only when they have the right qualifications. The answer to that proposal seems to be, "Well, you see, they have to declare an interest." But that certainly does not mean to say that they have the right qualifications. I should also like to point out that the interests which it is now normal and proper for an MP to disclose are in no sense related to the kinds of professional qualifications which would be relevant to appointments of this kind. It is simply a non sequitur, and non sequiturs are not what we have come to expect, prior to this Bill, from the noble Lord, Lord Kirkhill.

The noble Lord said: "We have done all right: we have appointed very good people and their qualifications are excellent." But what about what may happen tomorrow? We all agree that all Governments are bad—at least I think they are, and I should like to see them abolished. I am sometimes called an anarchist because I should like to do away with Governments of either Party. All Governments are bad, all Governments are corrupt: they are corrupted by their power, and all Governments get more and more corrupted by more and more power. That applies to all Governments, irrespective of Party. Some of these people will die: we are not all immortal. They may even die premature deaths—and I should not be at all surprised—but when they come to be replaced at a time when perhaps another Government may be in office, whatever their colour, that Government will want to ensure that the people appointed are suited to the job they have to do.

The difficulty one faces now is that although the Government are preening themselves on a wide selection of people, they are not really above suspicion, because it is within very recent memory that the Government made a most appalling hash-up in another nationalised industry—and I understand that in our discussions on this Bill we can talk about mining or anything else that relates to nationalisation. What about the BNOC? We pleaded all through that weary Committee stage that oil men should be appointed to the Board and we pleaded for an oil man to be chairman. Did they find one? No. We appealed for an oil man to be managing director. Did they find one? No. They had not got any oil men. They did not appoint a single oil man. The nearest they got to it was to appoint a man who was county clerk of the Shetland Islands County Council. He was considered to be "an oil man" because he never saw one oil company alone but always saw them two at a time and therefore was never tripped up.

The example of British National Oil Corporation is so terrifying because it shows what this Government, who are behaving quite well in their current appointments, can do when they are in a corner or lose their heads or when they are guided by the noble Lord, Lord Balogh, who is a friend of mine. So to insert into this Bill a requirement that suitably qualified persons should be appointed is not really a very harsh requirement. We are not asking the Government for any great level of goodness but merely for ordinary prudence. The case was put very well by the noble Lord, Lord Somers, who is not in his place at the moment, towards the end of the debate during the Committee stage when he said these words: Can the noble Lord tell me one thing? … The Government have introduced this Bill, which is apparently very close to their hearts. Why is it that they seem so unwilling to have it really well done? That question was never answered. All right: it is superfluous to put in this qualification at this time for these appointments, but surely it is prudent for the future—for the Government's own performance in other respects underlines the objection, that, as I have said, they have not answered that very simple question put by the noble Lord, Lord Somers. In other words, if they want this Bill so much, why not make it as good as possible instead of as bad as possible?


My Lords, what is surprising is that these words, as put down in the Amendment, have not been accepted previously. I would not have thought they were very controversial. Indeed, in all previous nationalisation Bills they have been there. So one must ask oneself why have they been left out of this Bill. I wonder whether it is because this board of governors, if I may use that term, is there to undertake a hatchet job". The Secretary of State said in another place that there would have to be considerable reductions in personnel. It can be argued that if you appointed people who know the industry, have a feeling for it and have grown up with it, they may be greatly affected and unable to do the kind of "hatchet job" that the Government want done. Perhaps the bluntest axe of all was the Geddes axe; but when I look back on it I must say one understands that once one starts discriminating about which part should or should not be closed down one gets into such difficulties with politics, economics and pressure groups that perhaps it is better in the end just to take 10 per cent. across the board. And you are more likely to get that result if people are used who know nothing about the industry and feel no affiliation to any of the firms concerned. Of course, it may be because one wants ex-politicians in there, and one must confess that some of the recent appointments have been somewhat surprising.

I shall not mention anyone from this House: my noble friend has just referred to one beloved debater from the other side who unfortunately is not seen here so much now that he is deputy chairman of BNOC. But the more recent case of Mr. Edward Short was a rather surprising one, because Cable and Wireless is a fairly technical and international undertaking, and it was rather surprising when Mr. Short left another place at very short notice to become chairman of that outfit. One remembers also a number of questions raised in another place by, I think, Philip Holland and David Price, drawing attention to the fact that some 188 powers of appointment are held by the Prime Minister of the day. He has those at his beck and call. That power of appointment is getting so large that I would have preferred to see some criteria set down in this Bill which would at least make sure that those who were appointed knew something about the tasks they had to undertake, which are highly technical, particularly in the aerospace field, and which are highly sophisticated, involving a lot of electronics, avionics and the like. I should prefer to see criteria written down for such appointments, and particularly in this case, because this is probably the most highly sophisticated industry of all of those which have been proposed for legislation.

I am rather tempted to follow the non sequitur referred to my noble friend about the Royal Commission, because I wanted to be a member of the Royal Commission which considered members' interests very thoroughly. I see the noble Lord, Lord Allen, sitting in his place and as I believe we are going to discuss the registration of members' interests—I refer to members of public bodies and of everything else—at the beginning of December, I shall not seek to take up more time by referring to that subject now. The registration of public interests is very thoroughly dealt with, together with the question of who is to be concerned in local authorities, nationalised industries and the like. I think the matter is probably better dealt with there than in any other public document I have seen.

I hope the noble Lord will not shut his mind to accepting what is after all a very reasonable Amendment, which tries to ensure that people who have a knowledge of the business and of industry, and particularly of aerospace, shipbuilding, and, if possible, of marine engine building, should bring that knowledge to the administration of these very important Corporations.


My Lords, like my noble friend Lord Lauderdale I am worried about what will happen when the present appointments come up for renewal. I am quite prepared to accept that those who have been appointed so far are splendid people. The appointment of the noble Lord, Lord Beswick, was criticised in some quarters, though not by me. I think he was quite the best person among the Labour Party who could be found for the job. But when these people retire they will have to be replaced, and there will be no other aircraft industry in the country from which they can be recruited. They will have to be either people from within the industry, the nationalised Corporation itself, or people from outside, who must perforce have no experience of the industry for which they are being recruited. This is one of the serious problems that apply to all monopolistic industries, not only nationalised monopolies but other monopolies as well. For that reason I think that the Amendment put forward by my noble friend will serve to concentrate the mind of the Secretary of State when he comes to make these appointments and will be very helpful.

Viscount SIMON

My Lords, I support this Amendment. I particularly noted what the noble Earl, Lord Lauderdale, said that as this is common form in nationalisation Bills; it is rather distinctive if it is left out. People want to ask why it is left out. I hope that when the noble Lord comes to reply, if he cannot give the Amendment to the noble Lord, Lord Strathcona, he will give us some help and guidance on that. May I ask Lord Strathcona when he replies to the debate if he will tell us what the word "to" in the last line means. It looks to me as if it ought to be "in".


My Lords, on this occasion the Government are said by the noble Lord, Lord Strathcona and Mount Royal, to be speaking through a different medium and I hope t,) make a spirited reply—but that word has rather spiritualist overtones. May I turn to the points that have been made. Of course it is conceded that there are arguments both ways in relation to this matter but it is wrong to say, as the noble Lord, Lord Orr-Ewing, said, that these words which are suggested to be put in here have been contained in all previous nationalisation Bills. They are not to be found in other Statutes which are a precedent here, for example, the Civil Aviation Act 1971, the Post Office Act 1969 or the Industry Act 1975, so there are precedents both ways.

If one looks at the Amendment one finds that the criteria there set out are so widely drafted that it would be virtually impossible to appoint somebody who did not fulfil one or other of the qualifications. I tried to think who would be excluded and I came to the conclusion that it might just be lawyers at whom this Amendment was aimed, but he would be a poor lawyer indeed who had no experience in commercial or financial matters so I assumed that it must he clergymen. I cannot imagine that that is the real purpose of the Amendment. The Government's point is that rather than accept these criteria, which are absolutely wide and would allow anyone to be appointed, it is better to be honest and to leave the clause in its present terms.

There is no disagreement here as to the proper purpose. It is desirable and necessary to get the best man for the job, and we would submit that noble Lords opposite are deceiving themselves if they consider that the proposed Amendment would help to ensure the appointment of better men. It has been suggested that this Amendment does not take matters very far and that it would be possible for the Government to accept it. May I remind noble Lords that when the Industry Act was being debated last year there was endless debate about qualifications and criteria, and in the end it was decided that the best way out was to remove them altogether. I do not think it makes for good legislation to lurch first one way, then another, according to the vagaries of debate on successive Bills. I hope therefore that noble Lords will not think me perverse or obstinate in resisting this Amendment. The reason for doing so is an honest and non-Party one and I hope that noble Lords will not support this Amendment.


My Lords, as the noble and learned Lord promised, he has indeed made a very spirited reply. At least we are in agreement with what we are trying to do. I am disappointed that he does not feel able to say, "Yes, we see what you are trying to do, though we think you are being rather verbose in your attempts to do it "—I hope not in the moving of it. Incidentally, following the remarks of the noble Viscount, Lord Simon, I would be inclined to agree that the changing of one word in the drafting of our Amendment would have improved it. However, since we are not about to insist on this Amendment we can safely leave to those who are more interested in the niceties than we are, the question of whether "in" or "to" in the last line would be better. I still believe that there would be a case for saying that we should accept some degree of restriction on the kind of people we appoint. The noble Lord did not in any way attempt to deal with the problem of patronage. It may well be that this is not the moment to deal with it.

The only thing I should like to say on that point is that throughout this Bill we have gone rather further than in previous cases in the way in which a nationalised corporation can be administered from the centre. When we find that here we are resisting any degree of restriction on the kind of people who are going to be asked to carry out these onerous tasks inevitably one feels troubled. I think the noble Lord himself agreed that there was a case to answer. If I may say so, he answered in the sort of way that I would have expected it to be answered by someone who had taken the trouble to think about it. I remain unconvinced, and I feel that this is true of most noble Lords behind me, but the fact remains that we have a long way to go tonight and perhaps the proper thing to do is to consider what the noble Lord has said, to thank him for his reply and, whether or not it is properly phrased, to beg leave to withdraw this Amendment.

Amendment, by leave, withdrawn.

5.50 p.m.

Earl FERRERS moved Amendment No. 12:

Page 3, line 11, leave out subsection (9) and insert— ("(9) Each Corporation shall maintain a register of interests disclosed pursuant to regulations made under subsection (3) (a) above.").

The noble Earl said: My Lords, we went through this Amendment at the Committee stage and we wish to put it down again because I still do not feel entirely happy with the situation. I am also in some confusion over the reply which the noble Lord, Lord Kirkhill, gave me. The object of this Amendment is to remove from the Bill the provisions which require members of the Corporation to disclose their interests in the same way as do Members of another place. May I say at the outset that I think it is wholly right that there should be disclosure of interests. It is quite right that people should know of the interests of folk who serve on public bodies, in the same way as people who serve on private companies have to disclose their interests, and records of them are kept by the companies. Everyone can inspect those records on application, or they can go to Companies House and inspect them there on application. My view is that the same degree of disclosure should apply to people serving on these Corporations.

What I do not see, first, is the reason why the Secretary of State should be required to keep a register of interests, and why it should be he who has to see that the interests concerned are published in the annual report. I should have thought the right course was for a Corporation to keep a register of the interests. It is entirely right that the Secretary of State should be seized of the information, that he should have access to it, and that lie should know of the interests of people whom he proposes to select for membership of a Corporation. But I do not believe it is right that he should keep the register. Nor do I believe it is right that these interests should be published, because it may well be that a member of a Corporation has directorships in four companies, he may be the managing director of a fifth and chairman of a sixth. I do not see why it is necessary to publish that information, provided that it is available. One of the drawbacks of publishing it may be that potential candidates for membership of a Corporation will be reluctant to come along. I should like to emphasise, again, that, in my view, this is not a curtailment of the disclosure of interests, but a curtailment of the publication of interests, because I believe that such publication would be wrong.

Secondly, I do not see why the interests which it is suggested should be published should be synonymous with those interests which Members of the House of Commons are required to produce. I cannot see the correlation between them. Disclosure of interests of any type should be tailored to the people concerned, and the influence of Members of the House of Commons, and their involvement in public affairs of all kinds, call for a totally different requirement from that of a person in a nationalised Corporation. As my noble friend Lord Hawke asked at the Committee stage: What happens when, in 30 or 40 years' time, the rules of the House of Commons as regards the disclosure of interests are altered? Why should the fact that the House of Commons alters its requirement about disclosing interests automatically affect the members of the British Aerospace Corporation or of British Shipbuilders? I hope that the noble Lord will feel it is reasonable that there should be disclosure of interests, but not in quite the way suggested in the Bill.

I would draw your Lordships' attention to the fact that under subsection (3)(a) the Secretary of State may by regulations, … make provision with respect to the disclosure by members of the Corporation of any interest … in contracts which a member may have. It is wholly right that members of a Corporation who have interests in other companies should disclose them when contracts are made, but I hope that the noble Lord will feel kindly towards this Amendment.

Unfortunately, I have not given the noble Lord, Lord McCluskey, advance warning, but 1 should be grateful if he could clarify—and I realise that he may not be able to do so—the answer which the noble Lord, Lord Kirkhill, gave me because the more I read the report of what he recently said, the more complicated it becomes. What he said in relation to a similar Amendment—


My Lords, if the noble Earl is going to read from Hansard, can he tell us the column number?


It is in col. 133 of Monday, 11th October. At the top of that column, the noble Lord said: This Amendment could create practical difficulties because, as the noble Earl, Lord Ferrers, said, Clause 18"— which is now Clause 19— requires it to be annexed to the annual report. It might, for instance, be possible to discover from the information disclosed under the suggested provisions in the annual report, both the nature of projects considered by the Corporation as well as the names of companies which had failed to land contracts with the Corporation. I do not believe that noble Lords opposite would really support a system which could, unintentionally, reveal (or at least hint at) decisions which would normally be commercially confidential and where disclosure could be damaging to the interests involved."—[Official Report.] If that is the effect of these Amendments, I can assure the noble Lord that it is not my desire to expand the nature of the disclosure, and I entirely accept that there are items which have to be, and are, commercially confidential and which should not be disclosed. But I do not see that it is necessary for the requirements of the House of Commons, in regard to the disclosure of interests, to be the same as those for members of these two Corporations. Nor do I see that it is necessary for the interests in other companies to be detailed in the annual report, although it is quite right that records of them should be held by the Corporations. My Lords, I beg to move.

5.57 p.m.


My Lords, there appear to me to be three combined types of interest set out in the Bill in subsections (3)(a) and (9). First, there is the ordinary interest in contracts. That is a perfectly simple matter and is covered at a board meeting by a person saying "I have an interest. I am not going to vote on this", and that is recorded in the minutes. Paragraph (a) of subsection (3) goes on to say that there should be disclosure of: … any other matter whatsoever which falls to be considered by the Corporation". Those words are extremely difficult to interpret in practice, because I imagine that a Corporation will have a memorandum of association which is very wide, just like an ordinary company, and will be allowed to do almost everything. It looks to me as if the members of a Corporation will have to disclose almost everything they can conceivably think of.

On the other hand, if it is desired that members shall make a full disclosure of all their financial interests, as in subsection (9), I cannot see that the rules of the House of Commons in future years are particularly relevant. If it is desired that they should conform to those rules today, then think that subsection (9) should say so; in other words, "if they were Members of the Commons in 1976", or words to that effect. I should have thought that subsection (9) was entirely unnecessary, and that the whole situation was covered by the two types of interest set out in paragraph (a) of subsection (3), though I admit that the second part of that paragraph will make it extraordinarily difficult for any man to conform.

The Earl of ONSLOW

My Lords, we must be extremely careful here, in that we on this side of the House must not appear to be advocating any form of cover-up. I am absolutely convinced that we are not. The reason that I say this is that there are now instances of corruption which would have been totally and completely undreamed of 10 years ago. I think I am right in saying that then certain people in the National Coal Board bought shares in a company which had had a big contract awarded to it. That cannot be right. There has been widespread corruption in local government and in planning offices and there have been hints of corruption in, of all places, the Bank of England. Today we hear that there is a case of corruption in British Leyland. There have even been hints of corruption in another place. When I was growing up I just did not believe that these were the kind of' things which happened in England. This may have been a very naive or just a plain ignorant view, but—

Baroness SEEAR

My Lords, is it not true that these are only allegations of corruption, not corruptions which have been established?

The Earl of ONSLOW

My Lords, I am very happy to be corrected by the noble Baroness. If I have given the wrong impression I will certainly withdraw what I have said and insert the word, "allegations". I stand corrected.


My Lords, may I also remind the noble Earl that it is not proper for him to mention the other place.

Baroness SEEAR

Why not?

The Earl of ONSLOW

Why not, my Lords? These allegations have been made. We all know that 15 or 20 years ago this kind of thing was totally undreamed of in this country.


My Lords, surely one of the troubles is that the noble Earl is rather young. Has the noble Earl forgotten the Marconi scandal?

The Earl of ONSLOW

My Lords, if I may be so bold as to say so, that came from the Liberal Party, as did the "flogging" of Peerages, and it is a slightly different kind of argument. However, there have been allegations of corruption and we must be very careful not to give any hint of a cover-up. The point I am trying to make is that the Parliamentary way is not the right way to do it. One can certainly say that the demands on the honesty of those who run nationalised corporations should, if anything, be higher than the demands on the people who run private enterprise. That is because the people who run nationalised corporations are servants of the State. Noble Lords should not think that in this Amendment we are arguing for any form of cover-up. All we are saying is that the method of doing it is wrong.


My Lords, I am afraid that I have to mention the House of Commons and I must ask the noble Lord, Lord Strabolgi, why he thinks that it is wrong to mention it. The Bill says that members of the Corporations are to register their interests, just as they would if they were in the House of Commons. I cannot see how we can even discuss this matter if we are not to mention the House of Commons. Can the noble Lord explain that point to us?


My Lords, the Standing Order says that it is undesirable that any Member of the House of Commons should be mentioned by name or otherwise identified for the purpose of criticism of a personal nature. I realise that the noble Earl did not mention anybody by name but 1 think I am right in saying that it is usually undesirable that criticism of this kind should be levelled at another place. If, however, I went farther than the Standing Order, then I apologise to the noble Earl.


My Lords, is there a Standing Order that the Members of the other place, who seem constantly to be calling us rather harsh names, should not do so?


My Lords, the noble Baroness does very well to draw attention to the fact that it is a one-way, not a two-way movement at present! I have in my hand a copy of the register of Members' interests in the House of Commons. In view of what has been said, I will not refer to any particular Member but I wonder whether the criterion of "as mentioned in the House of Commons register of Members' interests" is a good one, because there will be changes. This was the first cockshy. It may be that it is too general, or it may be that it is too detailed. Without mentioning the name, it says that from 10th to 14th May, 1976, this Member visited Los Angeles as a guest of British Airways. I do not know whether that will get one very far. It may be that it is too detailed. It says that he is the chairman and managing director of a company bearing his name. That is another interest. I should not have thought that a register of interests is a good criterion.

My second point is that it should be done for the individual companies. Under Schedule 2, 39 individual companies will be nationalised. It seems to me that, as with other companies, you declare your other directorships. This declaration is then put into the company reports and is registered at Companies House, and anybody who wishes to go there can see it for himself. Therefore I do not quite see why the Secretary of State should have a separate list for himself, nor do I see why he should publish it; it can always be reached by those who have doubts about it. That is why I wonder, with other of my noble friends, whether we have the right formula now and whether we ought not to amend it along the lines which we have suggested.


My Lords, I will not keep the House for more than a moment, nor will I enter into the merits of the Amendment. When I interrupted the noble Earl, Lord Onslow, to mention the Marconi case, it was not in my mind to make a political point. I have been in public life for half a century and 1 do not believe that standards today are any worse than they were at that time. Things have always happened and will continue to happen in the kind of world in which we live. However, the organs of publicity here are much more inquiring. Perhaps they have different standards. However, if one looks at the political life of all Parties in this country, I do not believe that many people whose life work starts in the House of Commons and which even brings them to this place get very rich out of it. At a time when it is a hobby—perhaps a hobby which is being overplayed by the Party opposite—to denigrate everything in our national life in the hope of scoring a few political points, I do not want to play that particular game.

6.7 p.m.


My Lords, we can all see the general purpose that the Government have in mind in this part of the Bill. The language is puzzling at points, but the general purpose is clear enough to us all. There is to be a body which will be controlling and purchasing at the same time and it is very proper that all members of the Board who might have an interest in any of the transactions should dispose of it. Nobody would challenge that. We are for maximum rather than minimum disclosure, particularly when it comes to contracts. However, what is obscure is that we have not had an answer to the question why the disclosure should be analogous in any way to the disclosures made by Members of Parliament whose disclosures serve a particular purpose in a particular context. It seems to me that this is irrelevant.

Perhaps I may refer to the answer of the noble Lord, Lord Kirkhill, at the bottom of col. 132 on 11th October, for it was curiously obtuse. I do not expect the noble Lord, Lord Kirkhill, to be obtuse, any more than I expect the noble Lord, Lord McCluskey, to be obtuse. However, now that the text is before the noble Lord, Lord Melchett, I will draw his attention to the penultimate paragraph of col. 132 where the noble Lord, Lord Kirkhill, said: The classifications under which they may be expected to notify their interests will be broadly the same as for the Members of another place—particularly share holdings if these exceed 1 per cent. of the issued share capital, directorships, paid overseas trips, payments from abroad or details of land or property held. The Amendment"— this was the same Amendment as we are discussing now and I am afraid we may discuss it again at Third Reading if we do not get a better reply tonight— would reduce the range of financial interests which would have to be disclosed by members of the Corporations solely to those which might be considered directly or indirectly related to the work of the Corporations".—[Official Report, 11/10/76; col. 132.] What is the matter with that?

If we are really to have a list of all possible interests one would get the most extraordinary and irrelevant interests. I know that there is no danger of I myself ever being appointed to the Aerospace Board, but supposing I were, I should be obliged to disclose (among other things) the following interests: I am a director of a firm of developers; I am the director—indeed the chairman—of a firm that wants to promote a private hospital; I am a director of a firm concerned with the development of natural resources in the Highlands of Scotland; I am the director of a firm involved in the sale of motor cars; I am the director of a firm concerned with underwater structures for the oil industry; I am the director of one or two charities and I am the director of a company that sells linen goods. What relevance could those possibly have to the British Aerospace Corporation? Yet if a member of the Aerospace Corporation is to disclose the same sort of interests as a Member of Parliament he would have to disclose such haphazard interests as those.

It is not that anyone does not wish to declare them; I have declared them now—in fact I have missed out one; I am the chairman of a company interested in developing some land opposite Felixstowe Docks, an interest which I declared before the vote the other day—but such interests would not be in the slightest degree relevant to the operations of the Corporation. Somebody's appointment might be proposed and his interests might be as diverse as my own. For all those interests to he declared publicly in the annual report is just sheer nonsense. It would be taking up space in the annual report. Anyone taking up a directorship lists the directorships he already holds and that is on record at Companies House so that there can never be any doubt as to any conflict of interest should one arise. That is one thing, but to list all this irrelevant nonsense in the annual report for the benefit of the public does not make any sense.

We are not saying that matters which are relevant should not be disclosed. On the contrary, we are saying that relevant matters should be disclosed and we are also saying that we should get the best people we can for the Corporation. This kind of thing could very well discourage them. I do not think there is a matter of high principle here. As noble Lords know very well, we are trying to make this a better Bill, if we cannot kill it, and it is in the interests of trying to make it a better Bill that I stress this point.


My Lords, I have listened to all the arguments as to how this subsection should be put into the Bill and, although I do not really mind how it is done, I have been interested to note that not a single speaker has said that the disclosure of interest may in fact be a protection to individual members, whether they are Members of another place or of your Lordships' House. The noble Lord, Lord Wigg, said how long he had been in public life but in fact he has not been in public life quite as long as I have, and when one is in public life naturally some people like you and some dislike you and a great many things are said which are quite untrue. I think it is important that members of whatever Party should have a protection of this sort because of the kind of things that can be said about what individuals own or do not own or the companies with which they are connected.

Viscount SIMON

My Lords, like my noble friends I feel generally in sympathy with the Government in regard to the retention of subsection (9) and in resisting this Amendment. I believe that the members of public boards of this kind should have a higher degree of interest to declare than people who are on the ordinary boards of companies. I have had the opportunity of looking at the register of interests of Members of another place and, as the noble Earl, Lord Lauderdale, said, it is very interesting and rather long, but my real objection to using it is that if we put it in the Statute that the interests declared shall be in accordance with the Resolutions of the House of Commons—which is what we say here—then surely we are legislating in such a way that the legislation can be amended by the action of one House without it coming to the other House at all, and I question whether that is a constitutional provision. I should have thought the case would be met by spelling out what it is that Members of the House of Commons are required to declare, and then if the other place decides to amend its Resolution it might be just a question of having a brief amendment to the Act if it was thought necessary.

Turning to the Amendment, I cannot help feeling that it has somehow gone a little astray. It refers to the Corporation maintaining a register of interests disclosed pursuant to subsection (3): those are the interests to be declared at a board meeting when a member of the board says, "I declare my interest in this contract that we are discussing", and those are just the interests which certainly ought not to be published. So what is the point of the Corporation maintaining a register. The facts should be recorded in the minute book and that is the end of it. I do not see much point in maintaining a register which in any case nobody can see. If anybody on the board wants to see the interests concerned they can look back through the minutes, so with great respect to noble Lords on my left it seems to me that in any case the Amendment is misconceived.


My Lords, first I should like to say that I am grateful for the support which the noble Viscount, Lord Simon, has just given me. That is entirely appropriate as this clause was inserted in response to a suggest, on made by the Liberal Party in another place. I am also indebted to the noble Baroness, Lady Ward of North Tyneside for the helpful comment that she made, because we want to get this clause right. I am grateful, too, to the noble Earl, Lord Ferrers, because at least we are all agreed that there should be some disclosure.

Dealing with the particular points which have been raised, the first one of substance is, why should one make the comparison with Members of Parliament? We all believe that it is fair and reasonable that particulars of relevant financial interests (whatever that may mean) should be available for the public record. I do not think that for public servants it is an undue invasion of privacy to require this to be done. So the question remains: Is it right to look at the requirements laid down for Members of another place? We accept, of course, that the character of the work may be different, and to some extent the interests may be different, but the essence of the matter is that the public concern is the same.

If one looks at the publication which contains the requirements of the register in another place (and the noble Lord, Lord Orr-Ewing, was the first speaker to refer to this) one will see the contents and on page iii paragraph 4—this is a general point which would apply to these Corporations as well—it says: But the member that is, the Member of the House of Commons— is also a private individual and entitled to a proper degree of privacy. For that reason, the House placed limits on the extent of disclosure required. The Member has to disclose the source of any remuneration or benefits he may receive, but not the amount. So far as land and property is concerned, it is the general nature of the interest rather than a detailed list of holdings that is required", and so on. The point made here, which I would repeat, is that a provision of this kind requires a Member in another place, or a member of the board, to declare his general interest rather than his particular interest. I will come back to that in a moment when I deal with the point raised by the noble Earl, Lord Ferrers, in relation to the difficulty spoken of by the noble Lord, Lord Kirkhill, on Committee stage.

I invite noble Lords opposite to look at paragraph 8 of this same document, where they will find that the matters required to be disclosed are matters it is perfectly proper should be disclosed—remunerated directorships of companies, remunerated terms of office, remunerated trades, professions or vocations, the names of clients where the interest referred to included personal contacts by the Member, financial sponsorships as a Parliamentary candidate, overseas visits where the cost of any such visit has not been wholly borne by the Member, and so on. These are all matters which are regarded by the public as benefits conferred on the member of the Board, and public concern about corruption requires to be met.

I turn, then, from that matter to the next question, which is the role of the Secretary of State. In my submission it is right that the Secretary of State should know of an interest immediately it is acquired. As the noble Earl, Lord Ferrers, will appreciate, if the Secretary of State does not know of it immediately it is acquired, he will not discover it necessarily until the publication of the annual report. There could be quite a long gap, and that gap could give rise to concern. The most effective way of ensuring this is to specify that the Secretary of State himself should maintain the register.

The noble Earl also referred to col. 133 of the Official Report, where my noble friend Lord Kirkhill explained the difficulty that could arise if one accepted the Amendment now before the House. The Amendment would create this difficulty, if I could try to explain it in my own words. Under Clause 19(5) it is required to be annexed to the annual report. It might be possible to discover from the information disclosed in the annual report under the suggested provisions both the nature of the projects considered by the corporation and the names of the companies which had failed to land contracts with the Corporation, or who might still be negotiating with them. Let me put it this way. If one takes the Amendment which is proposed and a member of the Board is required to register an interest which he has in a contract or in a matter in which the Corporation is interested, he may have an interest in company A and the Corporation is negotiating with companies A, B, C and D. By looking at the register and finding that between the last annual report and the present one he has disclosed an interest in company A, one can determine that the Corporation is in fact negotiating with company A. That may be a matter which is confidential.

Your Lordships may think that in fact the spirit of that Amendment, therefore, and the result of it, are not really consistent with the spirit of the Amendment we are coming to later, No. 58, to Clause 6(5). I would draw this distinction—that the requirement contained in the Amendment requires persons to be quite specific about their interests, whereas the clause as it now stands requires a general disclosure, and therefore does not give rise to this particular difficulty.

The noble Viscount, Lord Simon, made one criticism, that the requirement can be altered by the other House without any control by this House. But 1 think that it is hardly unconstitutional to put into a Statute some later possible alteration in the law by delegated legislation or some other form of delegation. I ask your Lordships not to consider that point as one that is decisive, and in the circumstances I invite noble Lords to withdraw the Amendment.

6.27 p.m.


My Lords, I am grateful to the noble and learned Lord, Lord McCluskey, for having explained his reservations over this Amendment, in particular for having explained the part about which I was worried after the explanation of the noble Lord, Lord Kirkhill. On hearing him, I think that our Amendment is probably deficient in this respect in so far as it might enable people to disclose things which properly should he kept as of a confidential nature. But I am hound to say that I did not find it convincing that the general interests of members of the Corporation nevertheless should have to be disclosed in the annual report. Here, there is nothing between us over the general items of disclosing interests. Of course they should be disclosed. It is merely a question of whether they should be published.

The description of my noble friend Lord Lauderdale of his own particular directorships—and one can imagine all the others of other potential members of the Corporation—was fairly graphic of the kind of material that would "gum up" an annual report. I should have thought it was not necessarily appropriate. Nor am I still convinced that it is appropriate to subject members of the Corporation to the same type of disclosure as Members of another place, because, after all, they have different responsibilities. It is rather like saying that cheese requires to be mellowed for six months; therefore, so also does butter. The only common denominator is the fact that they are both of milk.


My Lords, if the noble Earl, Lord Ferrers, will allow me to intervene, owing to my inexperience I failed to draw the attention of noble Lords to the final three words of Clause 1(9)—"with appropriate modifications". So it is not exactly the same information which may be required from a member of the Board as may be required from a Member of the other place.


My Lords, if I may say so, that merely serves to complicate the issue even further. Because what we have here is the fact that it is the requirement of the Members of the House of Commons—and then we come back to the point referred to by my noble friend, Lord Carr of Hadley, that the Secretary of State has huge powers. Apparently he has now powers to alter not only what the House of Commons says is for their Members, but he can alter it from the point of view of the two Corporations. What the Members of the House of Commons elect to do about this disclosure of interest is what I might describe as an in-House arrangement. They have decided what to do about their own membership.

The point raised by the noble Viscount, Lord Simon, who regrettably has just vanished, was a very valid one that here we arc passing a Bill saying what interests should be disclosed. If in fact another place alters their arrangements in the next 10, 20 or 30 years that alteration will come about with the approval of only one House, not two. The noble and learned Lord, Lord McCluskey, says, "Let's not worry too much about that", but 1 think we ought to worry about that. What is more worrying is that he then says, "Oh yes, we can have what the House of Commons say they require, but then, of course, the Secretary of State can alter that on his own just by regulation". I ask the noble and learned Lord to be kind enough to think about this; further, because there really is not what one might call partisan feeling over this at all. It is merely to try to get the correct thing put into an Act of Parliament. I cannot believe that it is right to put into an Act of Parliament that people should disclose interests which the House of Commons happen to disclose and which can be altered by the House of Commons altering their own in-House arrangements, and still less that it should be able to be altered by the Secretary of State without the approval of both Houses.


My Lords, may I respond to that. This has been looked at very carefully. It has been decided hitherto that it is not intended to change the matter. Perhaps I may be allowed to make this reply.


My Lords, I invited the noble and learned Lord to break the rules and I am sorry for having done so. He has made it crystal clear that he has no intention of thinking about this again. I do not think it is correct that we should divide on this, and so I beg leave to withdraw the Amendment.


My Lords, this is not a matter of realness, but I should have thought that for sheer neatness' sake one ought to know what "appropriate modifications" means. It is not common sense to expect people to move in the dark. But there is more than neatness in this. The House of Commons do not know what their requirement is. This is "appropriate modifications" of something that is already very hazy. Even in relation to the declaration of interests in the House of Commons certain people are not adhereing to it, and they do not know whetter they are wrong, whether they are infringing rules, or what happens. The whole thing is hazy.

What makes this very important is that we are living in a time when people's reputations and standing are judged by newspaper headlines, by all sorts of comment mixed up with corruption. People must know where they stand, otherwise you are going to drive from public life people who ought to be contributing to the way these things are done. To leave it as hazy as this is not fair; innocent people, inadvertently, because of sloppy language, are put in a position where they can be pilloried and have headlines made about them in two or three years' time because they did not adhere to some declaration, some register. I believe that this has to be spelled out in terms so that people can understand what they are committing themselves to; otherwise this country will be denuded of the talents of people who ought to be taking part in the general debate that goes on over what is supposed to be the new way of life. I hope that this will be looked at from the wider point of view and not just the narrow one of what three or four actual words mean.


My Lords, I apologise to your Lordships in that I have not heard the whole of the debate on this Amendment. I have, however, heard quite enough to know that the Amendment we have put down is not apt in itself; I fully agree with my noble friend, Lord Ferrers about that. I would hope, however, that the Government will give this some thought. I think that disclosure is of the greatest importance; I have felt so for a long time, and so have most people. In the atmosphere in which we are living at the moment, when, unfortunately, increasing suspicion is resting on people in public life—and I think those who work for nationalised corporations nowadays come into that category—full disclosure is of great importance.

I hope that the Government will realise that there is no difference between us about the need for full disclosure in these matters, but there really is a doubt in our minds, and I do not think it is an unreasonable doubt. This describes what is needed in terms of what happens at the moment in the House of Commons, which, as my noble friend Lord Harmar-Nicholls said, is not really understood properly by the Members of the other place. I must confirm, as a fairly recent Member of the other place, that I was far from sure what it was I should put in the register; I had to seek advice about it and hope that I got it right in the end.

I think it is unsatisfactory to write into this Statute a reference to a Resolution of the other place which was designed for Members of the other place rather than for members of a nationalised corporation, and which can be changed by Members of the other place at any time merely by Resolution. What is designed, and quite properly designed, to meet their needs and requirements as Members of Parliament may not be appropriate for members of a corporation.

In pressing this point, as we have, on Report stage as well as Committee stage, I repeat that it is not because we are trying to have less disclosure; it is because we genuinely think that defining disclosure by reference to this rather indeterminate Resolution of the other place is not the right way to do it. T know that it is late in the progress of the Bill, but I believe that if Ministers turned their minds to it they could still introduce other yardsticks which would achieve the purpose which I again assure Ministers we all want to see, but do it in a way more appropriate to an Act of Parliament.


My Lords, the noble Lord, Lord Harmar-Nicholls, raised the point about Members of the other place not understanding what disclosure is about. I feel sure that he, like me, must have listened this afternoon to some of the debate in the other place. Certainly one Member—I suppose we must not mention names—was very clear in his mind; he thought it was in order that you could have only one job to one person. Listening to the noble Earl's recitation of his activities, I should not have thought that anybody with that amount of activity had the time to be a member of a corporation. Certainly if they came before me, as an employer, I would say, "You have enough to do and you cannot be expected to give your attention to it". We have heard about corruption, but this is another angle which I do not think has been brought in. I take the point that it is difficult to know what to disclose, but if in doubt put it all in and let the kernel be taken out of that.


My Lords, I am inclined to support the view which has been expressed by the Opposition. It seems to me that the position of a member of one of the corporations is quite different from the position of a Member of the House of Commons. A Member of the House of Commons is responsible not only to the House itself and to the country but to his constituents, whereas in the case of a member of a corporation it is quite adequate in my opinion if he discloses his interests; that is to say, how many shares he possesses, whether he has had shares and disposed of them, whether he is associated with some subsidiary corporation, and so on. There is quite a substantial difference. I would advise my noble friends on the Front Bench to give the matter consideration. This is a matter which can be dealt with before we come to Third Reading.


My Lords, this was something which we considered very carefully after the Committee stage. Either I or one of my noble friends said then in response to the noble Lord, Lord Carr, that we agreed that this might not be an ideal thing to put in this particular Bill, but it seemed to us very difficult to come up with any alternative. I said that I would certainly give it some thought; I have done that, and my advisers have, and we have not been able to think of anything better. Judging from the Amendment put down by noble Lords opposite, I assume that they have found it just as difficult as we have when it comes to thinking of alternatives.

The noble Earl, Lord Ferrers, and the noble Lord, Lord Harmar-Nicholls, mentioned particularly subsection (9), which, of course, relates the register of interests of members of the corporations to that of Members of another place, yet allows for "appropriate modifications". The noble Earl said that this was even more worrying. He was worried about it before, but this was even worse. I understand that the effect is not quite so disastrous as he may have feared and that if a resolution in another place put any new obligation on its Members and it was plainly irrelevant to membership of the Corporations, the Secretary of State could remove this obligation from members of the Corporations as it would be inappropriate. During the Committee state the noble Lord, Lord Carr of Hadley, gave some examples of a position which he feared. I cannot remember exactly, but he gave some examples of terrible nonsense arising, and that would be avoided by these particular words in subsection (9).

I should say in response to the fears expressed by the noble Earl that appropriate modification refers only to making exceptions of irrelevancies are not to modifying, in the sense of reducing, the obligation. We think that with this qualification the cross-reference to resolutions in another place is acceptable. We have all given a good deal of thought to this matter and would certainly be happy to consider any further suggestions which noble Lords cared to make, though I could not honestly say we would be likely to come up with anything ourselves at this late stage.

Amendment, by leave, withdrawn.

Clause 2 [General duties of the Corporations]:

6.42 p.m.

Earl FERRERS moved Amendment No. 16: Page 3, line 30, leave out ("economical") and insert ("profitable").

The noble Earl said: My Lords, we come here to the duties put upon British Aerospace and British Shipbuilders where they are obliged to "promote and secure the promotion" of the "efficient and economical design, development, production, sale, repair and maintenance", and at the Committee stage we had a slight discussion about exactly what those words mean. I was particularly worried' at that juncture as to what the word "efficient" meant because it seemed to be rather vague. I now suggest—and this is meant to he helpful—that possibly the word "economical" is too vague.

When we discussed the word "efficient", I asked the noble Lord, Lord Melchett, exactly what was meant by it. In reply he said that I had gone into a long string of things which I said "efficient" could mean and severa' other things which I said it could mean but which "for the life of me", said the noble Lord, Lord Melchett, "I cannot see how it could possibly mean" and various other things which he did not think it would mean. He then went on to say: efficient' means all the good things that he said it means and I hope that is an efficient explanation of it. Quite frankly I do not think it was. It still left the word, "efficient" very uncertain. Equally, this word, "economical" leaves a great deal of uncertainty. That is why we have suggested in this Amendment that the word, "economical" should be replaced by the word, "profitable" and then everyone will know what it means.

If one uses the word "economical", it could mean that the Corporations should be run with a view to economy, with a view to cheapness, or possibly with a view to parsimony. I do not know whether that is the intention; I doubt that it is. But I am not quite certain what it means if it does not mean that they should be run profitably, because if they are run profitably they are presumably run economically. Therefore the object of this Amendment is to find out whether the Government would agree to the word, "profitable" being put in place of the word, "economical"; if they do not agree to that, if they are not the same thing, would the noble Lord be kind enough to say what the difference is. I beg to move.


My Lords, it appears to me that whoever was responsible for drafting this piece of legislation must have had a remarkable vocabulary at his disposal. I cannot understand why we should be so tautological. Obviously we have the word, "efficient" here and I should suppose—though I am open to correction by any intellectual who happens to be present and there are quite a number present—that the term, "efficient" would embrace the term, "economical" and "profitable", also. I would suggest that the Amendment should be withdrawn but that the Government should agree in turn to effect a compromise by withdrawing the word, "economical" and contenting ourselves with the word, "efficient".


My Lords, I must take issue with the noble Lord, Lord Shinwell, in what he has just said. I can think of all sorts of aeroplanes and guided weapons which may be efficient but are not economical or profitable. I suppose no one would dispute the efficiency of the Concorde, that marvellous piece of technology, yet there seems to have been a good deal of public debate—and I do not take sides in this matter, not being an expert—as regards its profitability or indeed the economic wisdom of its undertaking.

On the other hand, I must appeal to the Opposition Front Bench by saying that the term "profitable" surely is unduly narrowing the operations of the Corporations. It might well be public policy that particular instruments of one kind or another should be produced under sub sidy, in which case they could not be said to be profitable and yet at the same time it would be completely conformable to the dictates of public policy that they should continue to be produced. On balance, I certainly regard the word "economical" as being preferable to the word "profitable", but I certainly would not eliminate "economical" and "profitable" in favour of the suggestion made by the noble Lord, Lord Shinwell.


My Lords, just before we part with this matter, may I ask whether it is not a pity that we do not take this opportunity to hail, salute and honour the word "profit"? We know that profit is sometimes a rather embarrassing concept to noble Lords and honourable Members on the other side, because it is thought to be a dirty word. I understand that the Marxist word for profit is "rentability".

Surely we are in a state of development where we have all learnt a certain amount about nationalisation. On the whole the lessons have been unpleasant ones, but we have been learning as we have gone along. There was a time when this Party opposed all nationalisation willy-nilly. Now it is not so. We accept that there is a need for a mixed economy and that it may have its place. But what shall be the purpose? When you use a term like "efficient, "it is capable of many different meanings according to the nuances of a person's political position." Efficient "may mean merely socially efficient or it may mean merely what carries out the policies of the Goverment of the day efficiently, well, without at the same time being commercially satisfactory.

The reason we could come back to the word "profit" is that the Minister of State as far back as 22nd January gave it his blessing, and surely nothing can be better than that. On the 22nd January a Back-Bench Member of the Party opposite criticised the term "efficiently" as being straightforward capitalist economics. Perhaps that is a very good thing, but he thought it was bad. The Minister of State replied—and this is well worth noble Lords opposite taking on board— … they could only justify their socialist advance in terms of its efficiency and its profitability. The reference is to Hansard for 22nd January, column 353. So the case for using "profit" or "profitable" has sound Socialist endorsement. It has the imprimatur, the nihil obstat from the other side, so it is surely worth considering on those grounds. What we really have to be quite sure of is that "efficiency" means "economic efficiency", that it means "commercial efficiency", and that if means "profitability" and, because of that, means "to the general advantage", not merely "social efficiency".


My Lords, at the Committee stage, as the noble Earl said, we debated a somewhat similar Amendment to delete the words "efficient and". I believe that this was moved by the noble Lord, Lord Carr, and I got into some trouble with noble Lords opposite for taking the matter seriously and answering as if they had really intended to delete "efficiency", which they told me they did not. I can assure them that I have looked at the Amendment very carefully and seriously and I accept that, as the noble Earl, Lord Ferrers, has said, the Amendment is moved in a genuinely helpful spirit.

I do not believe there is any issue of substance between us on this Amendment. It boils down, I think, to two points: First, that the phrase "efficient and economical" is, in the context of nationalised industries' duties, very thoroughly precedented and well understood, and I do not think we should change these standard phrases without careful thought and very compelling reason.

My noble friend Lord Shinwell said some polite or, depending upon how one views it, impolite things about the person who drafted the Bill. Unfortunately, I have not had time to check, but I am fairly sure that this is well precedented in that the words appeared in the Coal Industry Nationalisation Act. They certainly appeared in the Gas Act. As I say, they are well precedented and it may be that the draftsman was not drawing on any great skills of his or her own but was simply following precedents in previous legislation.

A second point arises on the Amendment. It is that though "profitable" has an air of precision, it is not in fact precise. There are many ways in which profit figures can be altered up or down by varying accounting treatment. For example, if a corporation is financed—as many are—entirely by interest-bearing loans, it could be making a good return yet still not show a profit because much of the return would be in the form of interest payments. However, if that corporation had a substantial element of public dividend capital, instead of some of its interest bearing capital and the same return on capital employed, it would be showing a considerable profit. There are of course other ways in which profitability can be affected by simply altering the book-keeping, if that is not an impolite way of putting it. An example would be the revaluation of assets.

For those reasons, I do not feel that "profitable" is necessarily any more helpful than the words in the Bill at the moment. I accept that this is simply a matter of exhortation. There is no particularly precise meaning attached to these words, or, rather, there are several meanings which different people might attach to them. It seems reasonable, however, as there are very clear difficulties in putting in other words, and as these words are very well precedented in previous legislation—though of course I have hesitated to mention any Conservative legislation in case I was thought to be jibbing at noble Lords opposite "which I should not want to do—that we should leave the words in the Bill as they are.


My Lords, the noble Lord is so kind that we could not possibly take offence if he said that the worst thing any Conservative Government had done was to put in the words "efficient and economical" into a Bill. I am bound to say that I was glad that the noble Lord, Lord Shinwell, agreed with us that this was not a very appropriate expression to insert. If the noble Lord's argument is that these words are well precedented and well understood in terms of the nationalised industries, I find that rather frightening because most people would think that the last thing the nationalised industries were was either efficient or economical. Yet this is the obligation that we are intending to put on these two new Corporations.

In a more serious vein—and I do not mean by that that I was being flippant before—I think it undesirable to put into the Bills which will, after all, become Statutes which will be challengeable in the courts, words that are imprecise and as to whose meaning nobody really knows anything other than that they have already been used before and that their having been used before has resulted in their meaning being totally reversed and in their not being carried out. We would have hoped that the noble Lord, Lord Melchett, would have been able to explain the difference between "economical" and "profitable". I quite see that using "profitable" could result in somebody altering the books and revaluing assets and so on hut, as a general direction to a corporation, I should have preferred to see something considerably more specific. However, this is apparently to be used only as a form of exhortation rather than as a legal obligation and, if that is so, I should not wish to press the Amendment. I therefore beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.


My Lords, this may be a convenient moment to adjourn the Report stage until a quarter to eight in order to take other business. Subject to that other business being completed by then, I beg to move that further consideration on Report be now adjourned.

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