Clause 13. — (Provision of Production Facilities to Be Subject to Minister's Consent in Certain Cases.)

Bill Presented – in the House of Commons at 12:00 am on 23rd January 1967.

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Photo of Mr John Peyton Mr John Peyton , Yeovil

I am not moving that Amendment, Mr. Speaker.

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

We come to Amendment No. 69. Mr. Edward M. Taylor.

Mr. Edward M. Taylor:

I understand that we are considering this Amendment with Amendment No. 68?

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

Yes, with Amendment No. 69 we are taking Amendment No. 68. The hon. Member may move whichever he likes.

Photo of Mr John Peyton Mr John Peyton , Yeovil

No. 69 is in my name. I am not sure whether you wanted my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) or myself to move it. I would be glad to give way to my hon. Friend.

Mr. Edward M. Taylor:

I am the signatory to Amendment No. 68 and I hoped to amplify and support the points made by my hon. Friend the Member for Yeovil (Mr. Peyton).

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

After this exchange of compliments, may I just say that I looked for the hon. Member for Yeovil (Mr. Peyton). He did not rise. Mr. John Peyton.

Photo of Mr John Peyton Mr John Peyton , Yeovil

I am so sorry, Mr. Speaker. I thought you called Amendment No. 68. That is why I did not rise to my feet.

I beg to move Amendment No. 69, in page 14, line 33, after 'substantially', to insert 'and adversely'.

This Amendment can be moved shortly. Its purpose is to insert the adverb "adversely" after the word "substantially.". It seems to me that there is no reason for the Minister's action unless the effect upon the industry is adverse. The mere fact that it may be affected substantially does not affect the matter.

Mr. Edward M. Taylor:

I should like to say a few words in principle about Amendment No. 68, in page 14, line 33, after 'affect', insert 'or seriously to prejudice' which you said could be considered at the same time, Mr. Speaker. I hope my hon. Friend the Member for Yeovil will not think that I in any way consider his Amendment to be inadequate. Indeed, I put my name to his Amendment. However, I thought that there was one point of detail which should be clarified and I took the liberty of putting down a separate Amendment.

My hon. Friend did not mention the question of semantics. It would be foolish of the Minister to issue a notice to stop something happening which would, in fact, act to the advantage of the steel industry as a whole.

The other point that I am endeavouring to cover in Amendment No. 68 is to try to ensure that the circumstances in which the Minister would intervene would be circumstances as would be likely seriously to prejudice the efficient and economic development of production facilities in Great Britain". Interference in the private sector in this way is in principle a bad thing. While I appreciate that the Government will want to reserve some power to do so, I think that the circumstances in which they act should be limited, and I have tried to limit them by proposing the insertion of the words "or seriously to prejudice". The Government should be able to present a good case when such a notice is issued.

If we simply have the words substantially and adversely to affect all the arguments can be on the Government side. The Government will not have to produce a large weight of evidence. When such a notice is issued, the Government should have a substantial weight of evidence on their side and that is why I suggest the insertion of these words.

In Committee the Government made it clear that they considered that their obligation to the private sector would be fulfilled if they allowed the private sector to grow at round about the same rate of percentage increase as the public sector. This would allow very little scope indeed for the private sector to grow. If there were just a 10 per cent. growth in the public sector over two or three years, clearly the private sector, operating on a narrower field and with a smaller scope, would not be in a position to grow even according to the simple rates of economic growth which the circumstances in their case might make inevitable.

1.15 a.m.

As far as I can see, two points arise. One is that there could be an increase in production facilities in the private sector, not through the spending of money on more machines and factories, but through increased efficiency. This is something which inevitably could increase substantially the facilities available in the private sector. In such circumstances, if the Government are committed to allow only the same rate of increase for the private sector as in the public sector, would a notice be issued? If my Amendment were to be accepted it would be difficult for the Government to justify this.

The second point which must be accepted by the Government is that in the smaller scale operation of the private sector one or two private firms might be put in the position that they must grow or go out of existence. This kind of problem does not arise in the case of a public corporation with substantial resources—at least, it would not arise nearly so often—but in the case of a small firm, the decision either to grow or to go out of existence can be the only choice. My fear is that unless we put in words which I have suggested, then in such circumstances the Government could issue a notice to stop that development.

The whole point of issuing these notices is an admission of failure in the future on the part of the public sector. It is quite clear that the Government are scared stiff that this small private sector, without the great resources of the State behind it, and without the abilities of the State to get capital on the cheap, will be able to knock spots off the public sector. This is a strange position for the Government to be in, bearing in mind the argument they have put forward about how efficient will be the operation of this large-scale corporation.

In these circumstances, if the Government had faith in their own ideology, if they had faith in the principles of nationalisation, they would see no need for any notice to be given.

What should be done is to limit the scope within which these notices can be given. I suggest the reference to "prejudice", to amplify and define the point made by my hon. Friend, because the Government should be under an obligation to prove that damage will be caused to the public sector. That is the sole reason why I have put down this Amendment. If the Government have faith in their own policies and in the efficiency of nationalisation, they will accept it.

Photo of Mr Reginald Freeson Mr Reginald Freeson , Willesden East

May I deal, firstly, with Amendment No. 69 moved by the hon. Member for Yeovil (Mr. Peyton). To accept this Amendment would turn the whole process of consideration of schemes by the Minister as it were, upside down. It would require the adverse projects to be defined in advance. It would go without saying that the Minister, in examining the substantial effect which certain projects would have on the situation, would withhold his consent were there to be any adverse effect indicated by them. But it seems to us that there can be no real merit in accepting the Amendment for the reasons which I have briefly stated.

Amendment No. 68 is very closely connected, the words "seriously to prejudice" which the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) wishes to insert are, I believe, taken from Section 6(3) of the 1953 Act which provide that the existing Board should not refuse consent to a development project unless it appears to them … that the proposal will seriously prejudice the efficient and economic development of production facilities in Great Britain. But I understand that, in practice, the Board has found the exercise of its control under this condition to be unduly limiting. It has been obliged to give consent to a certain number of projects which, had its powers been stronger, it would not have approved. I understand that, in the 13 years of its existence, the Board has been obliged to give consent to practically all the projects submitted to it, and this has at least partially been due to the restrictive words, "seriously to prejudice", governing its position.

For the reasons which I have briefly given, although we understand the motives behind them, we find the Amendments unacceptable and I ask the House to reject them.

Photo of Mr Anthony Barber Mr Anthony Barber , Altrincham and Sale

I can deal with the matter most conveniently by taking Amendment No. 69. The implication of the hon. Gentleman's rejection of the words "and adversely" is to say that the consent of the Minister is required in cases where the provision of additional production facilities would substantially and beneficially affect the efficient and economic development of production facilities in Great Britain. This must be the consequence of what he said. It cannot be in the general interest that that should be so.

Photo of Mr Reginald Freeson Mr Reginald Freeson , Willesden East

I think that the right hon. Gentleman has misunderstood the position. It is in order that the Minister may be in a position to judge the relative merits, not to imply beforehand what the merits may be. This is precisely the point I was seeking to make with regard to the rather restrictive words at present governing the Iron and Steel Board's functions.

Amendment negatived.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

I beg to move Amendment No. 136, in page 14, line 44, at the end to insert: Provided that before the person seeking the consent appears before the person appointed by the Minister, the Minister shall furnish both persons with a written statement setting out the potential difficulties in the applicant's case, together with the Minister's observations there-on. The Parliamentary Secretary was not present in Committee when we moved a series of Amendments to Clause 13 to try to invoke, following some of the principles established some years in various forms—by pamphlets, by administrative Government action, and so on—the rule of law where the Government have retained discretionary powers over the private citizen. These Amendments were not accepted, with one minor exception, that exception being covered by Government Amendment No. 70, to which we shall come in a few minutes.

At one point, however, the Minister said that he accepted the idea behind our Amendment but felt unable to accept the words we had suggested, and he even said that he thought that it would be desirable not to have anything actually put in the statute. This is the point of the Amendment now before us. The procedure for controlling the investment projects of the private sector is that the Minister issues a notice, whereupon those who want to invest in new plant and capacity in the terms covered by the notice must give advance warning of their plans to the Minister. The Minister will then consider them and, if he is satisfied that they ought not to go ahead, he can withhold his consent.

Here is a case in which the rights of the private citizen are liable to be overridden by Government discretion. In the circumstances, the very least that the Government can offer is an opportunity for the private citizen to put his case and to meet the arguments which might influence the Minister's mind in determining whether or not to give consent.

The Clause already provides that the Minister must appoint a person to hear the case for the applicant, and that that person must subsequently report to the Minister. I do not want to anticipate the next Amendment, Amendment No. 70, but the position is that the Minister must then make that report available to the applicant. The applicant really wants to know the case he must meet before he puts his own case to the person appointed by the Minister. In other words, the Minister, if he is minded to withhold consent, or at any rate feels that he would like to know more of the facts and circumstances surrounding the application, should at that stage make known to the applicant the factors which are likely to influence his mind, and which may indeed already be influencing his mind.

The applicant has a right to know the case he must meet. The Minister said on this point in Committee: On the other hand, I think it is fair and sensible that the applicant should know what the potential difficulties are in advance of the hearing and so I would give a categorical assurance that applicants would have a written statement of these difficulties, which is a rather different thing from sending them a statutory document."—[OFFICIAL REPORT, Standing Committee D, 30th November, 1966; c. 1543.] The form in which our Amendment was then drawn was perhaps rather too formal, and perhaps the Minister was justified in suggesting that setting out the nature of the objections in a formal document might go some way to prejudice the applicant's case and would not necessarily, therefore, be to his advantage.

We have therefore tabled a new Amendment to provide for a written statement in precisely the terms of the Minister's categorical assurance that that statement would be forthcoming. We did so because we believe that it is more desirable that an obligation of this form should be written into the Statute, and not rest on the Minister's statement in Committee. I entirely accept that nobody believes that a Ministerial statement, particularly when preceded by the words "categorical assurance", is any the less binding merely because it was given in Standing Committee. But some small firms may not have the resources to refer to somewhat abstruse documents, and should be able to point straight away to something in the Act, rather than in the Standing Committee HANSARD, giving them the right to a statement of the case they will have to meet when they appear before the person appointed by the Minister.

The Amendment is reasonable, and the Minister has clearly indicated that he has sympathy with the idea lying behind it. I hope that the Parliamentary Secretary will be able to agree that it is not unreasonable that this requirement should be placed in the Act, and not merely rest on a Ministerial assurance given in Committee.

Photo of Mr Reginald Freeson Mr Reginald Freeson , Willesden East

I do not think that there is any basic difference between the Government and the Opposition on this point, and the assurance given in Committee is very largely dealt with in the next Amendment, Amendment No. 70, which I shall move.

It therefore rests with me to repeat that the Minister is anxious to ensure in this respect, and all other respects, that the procedure laid down in Clause 13 is entirely fair. It is for that reason that, in response to the debate in Standing Committee, Amendment No. 70 has been tabled. It provides that a copy of the report of the person who holds the hearing shall be made available to the person seeking consent, but that is distinct in detail from the point sought in this Amendment.

1.30 a.m.

We are seeking to give a reassurance on this point. The reason we are proceeding by means of an assurance rather by accepting this Amendment—which is largely in line with what was proposed in Committee—is that we still feel that the Amendment might prejudice the position of the applicant. For example, as drafted, it would require the Minister to furnish a written statement … setting out the potential difficulties in the applicant's case, together with the Minister's observations thereon. This would mean that the Minister would be under statutory obligation to make observations of a type on which he should reserve his position until after the hearing, and that, in our view, is an important point.

Inevitably, an element of prejudice would be imported if the Minister were to present a statement as required by the Amendment, and we believe that similar difficulties would arise to those which, I understand, we pointed out during debate on a similar Amendment in Standing Committee.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

Is not the hon. Gentleman trying to have it both ways? Is he not, on the one hand, saying that this is not a judicial tribunal with a power to decide but is merely a person appointed by the Minister to hear the case? Is it not unreasonable, therefore, to go on to say, on the other hand, that it would prejudice the applicant's position if the Minister set out how his mind was moving—and this is what we are trying to get at—before that hearing, as it were, took place? Is not the word "hearing" a misnomer in that it is something that is not a judicial function but an administrative procedure?

Photo of Mr Reginald Freeson Mr Reginald Freeson , Willesden East

That is a fair point. I hope that I am not going too far or drawing too close a parallel when I point out that this kind of situation occurs with a number of Government or semi-Governmental activities where a Minister has to act, in a sense, in a semi-judicial capacity. One can think of similar examples with regard to the work of the Ministry of Housing and Local Government, where it would be most improper to introduce a procedure whereby the Minister had to express such observations at so early a stage and where he has accordingly to reserve his position. I am not trying to draw too close a parallel, but it is in such circumstances that we must consider the Amendment and the next one.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

In Standing Committee, the Minister said: … the applicant should know what potential difficulties there are in advance of the hearing.…"—[OFFICIAL REPORT, Standing Committee D, 30th November, 1966; c. 1543.] The next Amendment, which the hon. Gentleman says will largely meet the case, only provides that the Minister shall furnish the applicant with a written statement after he has considered the report of the person appointed to hear the application.

Photo of Mr Reginald Freeson Mr Reginald Freeson , Willesden East

I do not want now to go too far into the details of the next Amendment but it will be seen that it refers, and the Minister's undertaking was in relation, to the furnishing of the report of the person appointed to hear the application.

Photo of Mr Reginald Freeson Mr Reginald Freeson , Willesden East

Perhaps we can deal with this point when we reach the next Amendment. I have tried to go over the ground as best I can, not having been a member of the Standing Committee. The views expressed by my right hon. Friend then are still, in general, the views held by the Government. We are seeking to meet the point as best we can by the next Amendment. It is still our view that it would prejudice the position of the applicant were the Minister to intervene, as it were, at a stage when the hearing was not completed.

The fact that a hearing has been arranged will carry some implication that the Minister sees some difficulties with an application and it is only fair to the applicant that he should know those difficulties in advance of the hearing. But that does not necessarily mean that we should accept the procedure suggested in the Amendment. We can—and I repeat this on behalf of the Minister—give a categorical assurance that it will be the invariable practice to let applicants have a written statement of the difficulties which have prompted the hearing, and of any other points which are considered desirable to be explored at the hearing.

An administrative procedure on this basis should safeguard the interests of applicants without prejudicing their position in any way. We are seeking in a sense, if I can put it in this way, to have it both ways, with a view to trying to help applicants rather than to be difficult in a bureaucratic sense.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

I do not want to waste a lot of time, but with the leave of the House I would ask the Parliamentary Secretary and his advisers to look at this point again, particularly in the light of some of the arguments he has adduced this morning and in relation to points made by the Minister in the Standing Committee.

The precise analogy was made by my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) that we should have a procedure similar to the planning appeal procedure. The Minister of Power has specifically rejected that as a viable analogy and said that the position was quite different. I will not read his remarks, but they appear in Column 1548. The Parliamentary Secretary has now sought to justify his refusal to give the applicant advance notice of the case he will have to meet by saying that the Minister is in the same position here as in a planning appeal. Really the two arguments do not stand together.

This matter is crucial to the survival of the private sector of the industry. If they cannot expand capacity they are probably driven out, and therefore to have a watertight procedure on this is absolutely essential if the Minister's desire to maintain a profitable and viable private sector is to be attained.

I do not think their request to have a statutory right to know the case they have to meet is unreasonable. How this is to be worded to attain these things is something to which I believe the Parliamentary Secretary could give some attention between now and when the Bill comes before another place, and if he could give us an undertaking to do that I think we could move ahead very rapidly.

Photo of Mr Reginald Freeson Mr Reginald Freeson , Willesden East

I do not think there is any difference of objective here. I certainly accept the spirit of the Amendment, or the objective which the hon. Gentleman is getting at. We must always do our best to seek to protect the person involved in administrative procedures of this kind. While I think the hon. Gentleman has repeated the explanation I gave a little earlier on too narrow a front when he referred to my comparison with the Minister of Housing—because I said it was not a close parallel but somewhat similar—I can say that we will have a look at this again, although without commitment.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

On that assurance, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Photo of Mr Reginald Freeson Mr Reginald Freeson , Willesden East

I beg to move, Amendment No. 70, in page 14, line 44 at the end to insert: '() Where a person seeking the consent under subsection (2) of this section of the Minister avails himself of the right conferred by the last foregoing subsection to appear before a person appointed by the Minister, the Minister shall furnish him with a copy of the report of the person so appointed and a statement of the Minister's reasons for giving or refusing his consent'. This Amendment follows the same point as the previous Amendment. The Bill as now drafted gives an applicant for the Minister's approval of a private sector development project under Clause 13 the right to put his case personally before a person appointed by the Minister, as set out in Clause 13(5).

This Amendment gives the applicant the right to see that person's report, as I previously indicated, and to have a statement of the Minister's reasons for giving or refusing his consent.

In Committee the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) moved an Amendment, as we have already discussed, providing for the applicant to see the report of the person who hears his case. At that time my right hon. Friend accepted the Amendment in principle, and added that he would want to go further: not only might the applicant be furnished with a copy of the report; he should also be given the Minister's reasons for accepting or rejecting the report. It is on that basis that this Amendment is before the House.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

We recognise that this Amendment is moved in pursuance of the undertaking given by the Minister in Committee. It is perhaps the least important of the series of Amendments which we moved in Committee. Nevertheless, it represents a small advance on what was in the Bill when first printed. For that we are grateful. Once a private company has had its application turned down and realises that there is no future for it, at any rate it will know that, and I suppose that that is something to be thankful for.

Amendment agreed to.