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Prevention of Unfair Competition

Orders of the Day — SCOTTISH DEVELOPMENT AGENCY (No. 2) BILL [Lords] – in the House of Commons at 12:00 am on 21st October 1975.

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'The Agency shall take all reasonable steps to ensure that it does not engage in any of its activities, in uneconomic or subsidised competition with private industry, and in the event of any complaint being made to the Agency of such unfair competition, the Agency shall refer the complaint to the Secretary of State who shall, unless he determines the complaint to be trivial or inaccurate, appoint suitably qualified persons to investigate and report on the complaint to him; and a record of such complaints and the action taken on them shall be available for inspection by the public at the Agency's office'.—[Mr. Buchanan-Smith.]

Brought up, and read the First time.

Photo of Mr Alick Buchanan-Smith Mr Alick Buchanan-Smith , Angus North and Mearns

I beg to move, That the clause be read a Second time.

This clause is of fundamental importance. I ask the Minister of State not to deal with it in the same way as he has tried to deal with other arguments and amendments tabled by Conservative Members concerning politically motivated actions of the Agency. I am not thinking simply in terms of objecting to the Agency taking part in industrial matters or having shares in industrial concerns in Scotland, although the Minister realises that Conservative Members are not happy about that. I ask him to consider the clause in the much broader context of the intervention of the Government generally in industrial and commercial matters. I have in mind not simply investment and intervention by the Agency or the Government in commercial ventures which are already profitable but the intervention of the Agency or the Government in spheres of commerce and industry which Conservative Members would agree are necessary.

There are powers under the previous Industry Act under which the Government or the Agency will intervene in the commercial affairs of a company where for one reason or another that is desirable. I have in mind an industry or firm that needs help over a difficult period—perhaps a short-term intervention, which we would support—or an industry or firm which is of particular importance to the economy in terms either of employment or of the technological developments taking place in it. In those instances intervention by the State or the Agency can be thoroughly justified and supported.

There is a broad measure of support across all political parties for a certain amount of State intervention. This is reflected in the fact that we have a mixed economy. Occasionally we overlook the effect that that intervention has on other firms and undertakings within the industry. Although a certain amount of good may be achieved by intervention, we must not overlook some of the effects it may have on others within the industry.

I give three examples of how this may arise. It has arisen in the policies of successive Governments towards the shipbuilding industry. The previous Conservative Government played their part in supporting the shipbuilding industry of Upper Clyde. I do not wish to make party political points. In that situation, however, because of certain overriding factors that cause Government intervention and substantial investment in an industry, we overlook the effect that it has on shipbuilding elsewhere—for example, on Lower Clyde.

Competition is subsidised by taxpayers' money against a firm which is in receipt of Government funds from other sources. Although we hope that this has not led to a contraction of the shipbuilding industry elsewhere in Scotland, it is a factor that must be considered by the shipbuilding industry in, for example, Lower Clyde. Some would argue that it has had an inhibiting effect on the development of the shipbuilding industry elsewhere in Scotland.

6.30 p.m.

Another example has occurred more recently in the motor industry. It is perhaps slightly far-fetched, but I use it because it illustrates the repercussions of Government intervention. British Leyland, in which the Government now have a very large stake, has undergone considerable rationalisation. There are now plans to rationalise the company even further in the hope that it will become more profitable, and the Government are pushing it to do that. This will have repercussions for Albion Motors, which when it was swallowed by British Leyland was a profitable concern. It was a small commercial vehicle company operating successfully in Glasgow. We are led to believe that further rationalisation may take place at its premises as a consequence of the much wider rationalisation throughout the British Leyland company.

I am the first to admit that that is not a direct consequence of the Government's stake in British Leyland; it is a consequence of a multiplicity of factors. I use that example only to show that when the Government become involved in an industry it has repercussions throughout the industry. Albion Motors was originally outwith the section of the industry in which the Government were interested but it is now at the receiving end of what the Government are doing.

The third example, the newspaper industry, has already been mentioned. There have been certain repercussions throughout the newspaper industry in Scotland as a direct result of Government intervention. There is no doubt that the fact that the Scottish Daily News got off the ground has had and is having an effect on other sections of the newspaper industry in Scotland. When the Beaverbrook Press contracted in Scotland, the hon. Member for Clackmannan and East Stirlingshire (Mr. Reid), with his knowledge of the newspaper industry, questioned whether it was possible, given the population base in Scotland and the potential circulation, for another independent newspaper to operate in Scotland. The Scottish Daily News is an example of State intervention causing the continuation of a firm or even the introduction of another firm within an industry which is bound to have an impact on the other firms in it.

I hope that by giving those three examples I have demonstrated that we are not dealing with a wholly hypothetical situation.

Photo of Mr Iain MacCormick Mr Iain MacCormick , Argyll

I am a seeker after truth and, therefore, I should like to pose another analogy. Take the example which we debated just before the recess, Western Ferries and Caledonian-MacBrayne. That was a case in which a Government-subsidised operation was in competition with an operation which was not subsidised. No hon. Gentleman said that the operation should be confined to the private enterprise company. That is why I am worried by the hon. Gentleman's argument.

Photo of Mr Alick Buchanan-Smith Mr Alick Buchanan-Smith , Angus North and Mearns

What the hon. Gentleman has said highlights my point. Earlier my hon. Friend the Member for Glasgow, Cathcart (Mr. Taylor) said that we should know the economics and commercial basis on which State companies operated and the extent to which competition was taking place so that we would be better able to form an opinion. That is only one leg of my argument. I do not think that the hon. Member for Argyll (Mr. MacCormick) supported what my hon. Friend proposed. The new clause takes the argument one stage further and asks the Government to put an obligation on the Agency to ensure that when it operates in competition, as inevitably it will do, with existing firms, there will be proper recognition of the effect that that may have on those firms.

Uneconomic or subsidised competition with private industry could have two basic effects. The first relates to the profitability of other firms within an industry. Let us suppose that there is over-capacity in an industry. Plainly it is undesirable that there should be over-capacity of, for instance, newspaper production in Scotland. If the Agency were to maintain a firm in that industry instead of allowing orderly contraction or rationalisation to take place, it would have a serious effect on the profitability of other firms within the industry, which if that firm was not propped up and helped but went out of existence would enjoy a more profitable and perhaps a more viable position.

If the Agency is used to prop up firms which should be allowed to disappear, diversify or rationalise and to preserve capacity in an industry when it would not be desirable economically in the long term, it will do a disservice not only to those firms, which may eventually go to the wall, but to other firms in the industry by making it more difficult for them to operate economically and profitably.

I come to the fundamental connection between profitability and jobs. If a firm is not profitable, it will not be able to continue in operation. If it is not able to continue in operation, it will not be able to offer security of employment. That has been the dilemma of successive Governments when faced with the question of what to do about a firm in difficulties. The long-term economic situation of the industry might not justify the process which I have outlined. As a result of the element of competition or over-capacity, we may put at risk the jobs of those working in other firms in the same industry. That is why I put forward the new clause.

A problem must be faced by the Scottish Development Agency. It has faced Governments of all parties in the past. It concerns the position of firms in the industry when State intervention occurs. Therefore, we specify in the new clause that where the Agency becomes involved in uneconomic or subsidised competition with private industry, and where other firms in that industrial sector are aggrieved and feel that it affects their viability, they can make a complaint to the Secretary of State, who can ask for that complaint to be investigated in the way we suggest. We also suggest that a record of this should be made at the office of the Agency.

The Minister said that the Agency will engage in its activities in a commercial manner and will have an obligation to pay its way. I am glad to hear those assurances. However, that does not solve the problem, which is not confined to the Agency, where the Government become involved in an industry such as shipbuilding or the motor industry, not because they regard it as a commercial and profitable occupation but because there is a reason for helping an industry or firm which is in difficulties during a transitional phase. For a short period there might be a degree of competition which some might regard as unfair. I am concerned that the Agency may engage in activities which might affect the longer-term viability of other firms in the same industry and put further jobs at risk.

I do not question the need for the Agency to become involved in that type of operation. In some circumstances there may be a need for the Agency to become involved in that way. However, where the Agency becomes involved, proper cognisance should be taken of the effect that the Agency's activities have on other firms in the industry to make sure that they are not discriminated against unfairly. If there is unfair discrimina- tion, profitability will suffer and the jobs of those working in other firms will be put at risk. It would be a dangerous policy if for the sake of propping up an individual firm we put at risk many jobs throughout the industry.

In that spirit I put forward the new clause. It is constructive in that it will help industry throughout Scotland and the work of the Agency. It may help the Agency better to understand its functions and to receive acceptance by Scottish industry when it becomes engaged in the activities envisaged in the Bill.

6.45 p.m.

Photo of Mr Russell Fairgrieve Mr Russell Fairgrieve , Aberdeenshire West

Like my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith), I am worried about uneconomic or subsidised competition. There are dangers whenever Governments become involved in industry. We have learned that Governments, of whatever political party, are not the best institutions to run industry.

I should like to give some examples illustrating the dangers we may encounter if the clause is not accepted. We have the example of the nationalised industries, some of which have been running for the past 25 years. For example, instead of merely producing gas, the gas industry has entered into competition by selling fitments and installing pipes in houses. In many cases, we know that its activities are uneconomic. The same happens with the electricity industry, where the electricity boards quote figures for installations which are subsidised and totally uneconomic. Another example is to be found in the direct labour departments of local authorities, which do not even ask for competitive tenders. We know how costly are such works.

I cite the Petroleum and Submarine Pipe-Lines Bill, which provides another example of what happens when the Government become involved in an industry. That Bill aims to set up the British National Oil Corporation. The Minister, a new fireball of energy when transferred from his previous Department, presented us with what he thought was a new concept of nationalised industries, which was different from the Morrison concept. The Corporation was to be a commercial proposition and would enter into competition.

I should like to quote the first three decisions taken by the Corporation to see whether they were commercial or political. First, the BNOC is to be relieved of petroleum revenue tax, which will put it in a highly competitive position. The next decision was the location of the headquarters. I thought that the oil was situated off the North-East Coast of Scotland. Were the headquarters situated in Aberdeen? No, they were established in Glasgow. Was that a commercial or a political decision? There was a long search to find a chairman. Was an expert appointed who knew the oil industry backwards? No, a retired Socialist supporter from the textile industry was appointed. The first three decisions of the Corporation were not commercial decisions. They were political decisions. That is the danger when a Government intervene in industry. That is why I support the new clause.

I recently returned from a short trip to Norway. Many Norwegians told me that Statoil is a Norwegian national disaster. I do not wish to see similar bodies set up in this country.

Photo of Mr William Small Mr William Small , Glasgow Garscadden

I should explain that Sir William Gray, the Chairman of the Scottish National Development Agency, and I are friends.

I understood the reference to Albion Motors, but I shall not go into the list of failures of State enterprises which the Opposition enumerated. However, I note the many failures of private enterprises.

Under the new clause it is a priori the first task of the Agency and its chairman to take all reasonable steps to ensure that its activities are not unfair to private enterprise. That is a criterion on which to operate, stimulate and reinvigorate Scottish industry. The provision of £200 million will not stimulate unfair competition. This sum is provided to stimulate new enterprises.

It would be peculiar for a complaint made to the Scottish Development Agency to be referred to the Secretary of State and for the Secretary of State to appoint "suitably qualified persons" to consider it. What are the criteria for the appointment of suitably qualified persons to determine whether there is competition between public and private enterprise? I challenge any hon. Member to think of even one such neutral man who could be appointed. To that extent the clause is nonsense, and in introducing it the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) is acting like a demented woman.

Photo of Mr Bruce Millan Mr Bruce Millan , Glasgow Craigton

I agree with a good deal of what the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) said, although I cannot recommend the House to adopt the clause, for reasons which I shall explain.

As I have said on numerous occasions, the Scottish Development Agency will be expected to act in its industrial role competitively and commercially. That is the answer to the clause. There is an assumption in the clause that the SDA will not act in that way but will act in a non-commercial manner so that it is necessary to set up a watchdog to observe its activities. From that point of view the clause is fundamentally misconceived.

The hon. Gentleman put forward several valid arguments. When the Government get involved in a selective way in assisting one firm but not every firm, that is discriminatory and by definition it introduces an element of unfair competition. That will not be done by the SDA. That is done by selective assistance under the Industry Act 1972. Although I have stressed this argument on several occasions, it is not yet fully appreciated—certainly in Scottish industry—that if one is looking for Government intervention which is discriminatory between one firm and another, thereby giving unfair advantage to one firm as against another, one should look at the selective assistance given under the 1972 Act, which is by definition discriminatory, and not to the activities of the SDA, which in its industrial function has to act on a competitive and commercial basis.

Scottish industry has sensibly been taking advantage of selective financial provisions since the Industry Act 1972 was passed. During those three years about 450 firms have received selective assistance. In each case, that selective assistance was a Government intervention in the free play of market forces and was by definition discriminatory in favour of the firm that was helped and discriminatory against firms in the same line of activity which were not helped. There is no way of operating selective assistance except on that basis.

Far from the Government having tried to disguise that position, when my right hon. Friend the Member for Bristol, South-East (Mr. Benn) became Secretary of State for Industry it was decided that information on the selective assistance that was given should be made publicly available on a quarterly basis. There may be a de minimis rule, but a list of firms which are helped is now published. That was not provided for by the 1972 Act. During the passage of the 1972 Bill the Labour Opposition wanted more openness, but it was resisted by Conservative Ministers. We wanted openness to see what the Government were doing, but selective assistance is discriminatory by definition whether it is given to Upper Clyde Shipbuilders as against the Lower Clyde Shipbuilders, to the car industry or to any other industry.

If we wish to insert into an Act of Parliament a provision to enable industry to complain about discriminatory Government intervention, that provision should go into the Industry Act 1972 and should be directed against Section 7 and Section 8 assistance. It should not go into the Scottish Development Agency (No. 2) Bill, where it would be irrelevant.

Even if the clause were relevant, it does not explain what action will be taken if it is proved that selective intervention is discriminatory against existing elements of private industry. The only action that can be taken to remove unfair competition is to remove the selective assistance. The provisions of the 1972 Act for selective assistance would therefore be rendered completely nugatory if on a complaint one had to take the only sensible and reasonable action available, which is to remove altogether the selective assistance. Only by doing that should we be able to put all the firms in a particular industry on absolutely level terms.

The hon. Gentleman put his finger on the important consideration concerning selective assistance that it is discriminatory and that by helping one firm one might damage another firm. I agree with that, but the answer is not to put into the Bill a clause which is not relevant to the Bill but is perhaps relevant to another situation. If we were to try to deal with that consideration in this legislation, the clause would have to be drafted in more precise terms.

I sympathise with a good deal of what (he hon. Gentleman said and appreciate that this is a genuine difficulty of any Government, but for the reasons that I have outlined I cannot recommend acceptance of the clause.

Photo of Mr Teddy Taylor Mr Teddy Taylor , Glasgow Cathcart

The Minister has given a disappointing reply which contains no valid reason for not pressing ahead with the clause. His first argument for rejecting it is that there is other discrimination, for example in Section 7 assistance. If that argues anything, it argues the need for an appeal procedure for Section 7 assistance also. That is not a comparable situation. Under the Bill the SDA will be able to engage in commercial activities, setting up new firms and so on, but Section 7 assistance is primarily designed to cope with an emergency or a rescue operation.

Photo of Mr Bruce Millan Mr Bruce Millan , Glasgow Craigton

With respect, there have not been 450 emergencies and rescue operations in Scotland in the past three years. Only a small proportion of the Industry Act cases come under the heading of rescue or emergency. We have more than 300 applications for assistance currently active under the supervision of the Scottish Economic Planning Department, only a small fraction of which are emergency and rescue operations.

Photo of Mr Teddy Taylor Mr Teddy Taylor , Glasgow Cathcart

The Minister is referring to Industry Act assistance whereas I am referring to Section 7 assistance. If there are 300 applications for Section 7 assistance and if a large number are successful, the fears of my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith), who expressed concern about the Industry Act 1972, become even more valid. If that is so, Section 7 goes much further than it was designed to go when the Conservative Government brought forward the Industry Bill of 1972. If that justifies anything it is the need for something comparable to be introduced in respect of the Industry Act.

7.0 p.m.

The Minister has failed to give us any indication of how the introduction of the clause would cause damage or unfairness to anyone. Will it cause delay? Of course not. Will it cause unfairness? It will not do so in any way. Will it cost a great deal of money? It obviously will not cost very much.

The Minister must be aware that the main concern of Scottish industry in expressing concern about the Bill is the fear of unfair, subsidised and uneconomic competition. All that we are asking in the clause is that the Agency shall take all reasonable steps—these are words we have had many a time despite what the hon. Member for Glasgow, Garscadden (Mr. Small) has said—to ensure that it does not engage in uneconomic or subsidised competition with private industry. That does not mean that in every endeavour it must ensure that there is total parity. It merely seeks to ensure that private firms will not be unfairly treated and will not be forced to engage in competition on an uneconomic or subsidised basis.

Photo of Mr Iain MacCormick Mr Iain MacCormick , Argyll

I agree with many of the things that the hon. Gentleman has said. For example, the Highlands Development Board has before it a case from the Isle of Mull in which an incoming business has been helped with Government funds, when an established firm doing exactly the same thing will probably be forced out of business. Is that what the hon. Gentleman is pointing out?

Photo of Mr Teddy Taylor Mr Teddy Taylor , Glasgow Cathcart

That is exactly the kind of situation of which I am thinking. I am afraid that many Labour Members have failed to recognise that by giving subsidies, and spending a great deal of money in an attempt to save jobs, the result can be exactly that which the hon. Member for Argyll (Mr. MacCormick) has suggested—namely, the destruction of existing jobs. That has happened already in some industries. If the Minister of State looks at the figures given to me last Wednesday by the Secretary of State for Industry about aid to the shipbuilding industry, he will notice that the lion's share will go to one small sector of the industry which is State-owned. Unfair competition of that nature can destroy jobs as well as save them in the short term.

We are suggesting not a total overhaul of Government policy but the establishment of an appeal mechanism to deal with any cases of unfairness. Such a mechanism would provide for the example cited by the hon. Member for Argyll. If someone were to say "My firm is being ruined. I am in danger of having to dismiss my employees because State subsidies have resulted in unfair competition", there would be somewhere for the representatives of the complainant firm to go to register their complaint. We are not saying that there should be a judge who should make determinations, but people should be appointed who would have the task of investigating allegations of unfair competition.

The second argument advanced by the Minister was that there will be no unfair competition. I do not believe that. I accept that the Minister intends that to be the position. I am sure that in the beginning the SDA will hope that the competition will be fair and that the Agency will engage in its activities in a commercial and economic manner, but all our experience of the history of State participation in industry shows that that does not happen in practice. If State firms have access to cheap money and unlimited subsidies, or limited subsidies, there can never be fair or reasonable competition.

Apart from that argument, I hoped that some Labour Members might support the clause for different reasons. The hon. Member for Central Ayrshire (Mr. Lambie) is always arguing that State intervention is good, that State firms are efficient and that public participation is a splendid thing. If that is so, and if State firms are being unfairly attacked by the private sector, I must observe that I have heard the hon. Gentleman attacking an organisation which fairly stands up for private enterprise—namely, Aims of Industry. I have heard the hon. Gentleman saying unkind things about that organisation because from time to time it attacks State firms and State intervention. If the attacks are unfair, what is wrong with their being investigated? I refer to a case which is not comparable but which is relevant. I receive many complaints—doubtless this is the experience of the hon. Member for Garscadden—about people living in council houses as a result of unfair allocations. When I receive such complaints I always contact the housing manager, pointing out that a complaint has been made that someone has a house which should not have been allocated to him. I make it clear that it is suggested that there has been a "fiddle" or bribery or that someone has been given a house because he is black, white or green. I have always received a full explanation, which I pass on to the people making the complaint. I can say that in 49 out of every 50 cases of that nature, the explanations I have received have been satisfactory, and that action has been taken in the remaining cases because the authorities had not been fully aware of the position.

Surely we can proceed in the same way as regards State industry. If State industries are unfairly attacked, there should be some mechanism whereby their activities can be fully investigated. What is unfair in that? If the Minister were to say that the mechanism which we suggest is unnecessary and unfair, and that a private firm believing it was being subjected to unfair competition which was threatening to put it out of business could write to the relevant Member of Parliament or to Sir William Gray, I would suggest that it would be more effective to provide proper machinery whereby such matters could be investigated by people who did not have an axe to grind. It is important not only that we should investigate complaints but that they should be investigated by someone who is reasonably independent.

I would not argue that the wording of the clause is exactly right. We have said that the Secretary of State should appoint suitably qualified persons to investigate and report on the complaint to him;". We thought that if the Government supported the principle of the clause they could suggest the best people to be appointed. I think that those appointed should not be directly involved as employees of the Government in any other way. We suggest that a record of complaints and the action taken on them should be available. The Minister asked what would be the point of investigating if nothing was done about it afterwards. If there were an independent inquiry which could say that there had been grossly unfair competition which was doing damage to a private firm, the mere reporting of the matter and the subsequent investigation would undoubtedly force action on the part of the Government or the SDA.

Photo of Mr Gordon Wilson Mr Gordon Wilson , Dundee East

I direct the hon. Gentleman's attention to the phrase uneconomic or subsidised competition". The substance of the phrase might extend far beyond what he and his colleagues have in mind. The phrase might involve projects which the Agency has started up as new undertakings. As we all know, whether an industry starts with the help of State support or with the help of private capital, it probably takes about three years before it reaches the breakeven point. In the meantime, the operation of such a company might be construed as being uneconomic or subsidised competition as against another firm. Obviously, capital would be used for a supportive purpose during the first few months or years of the operation of such a firm.

Photo of Mr Teddy Taylor Mr Teddy Taylor , Glasgow Cathcart

That is quite true. I am not in any way wanting to say that a firm which will lose money for the first few years should be regarded as uneconomic competition. A private firm setting up a new enterprise involves much capital expenditure for the first few years. However, I want to ensure that there should not be cheap capital for State firms and dear capital for private firms, and thereby fewer jobs in the private sector. If there were any doubt about this, it would be dealt with by the words Take all reasonable steps to ensure". That enables the Agency to have a certain degree of flexibility. Although I do not think that the wording I have proposed would have the effect which is suggested, I hope it will be agreed that we can express an opinion as to the kind of situation we want to achieve. If the wording is not perfect something can be done to improve it.

If we put this new clause into the Bill and a State firm receives a degree of support by way of interest rates lower than those which can be obtained in the private sector, action can be taken. If the hon. Gentleman has good grounds for saying that "uneconomic" is the right word and that suitably qualified persons should look at the complaint, the only basis on which they could report on a complaint of uneconomic competition would be if the finance had been made available to the State concern at a rate which was unfair to the private sector and which might result in a loss of jobs for the private sector.

Photo of Mr Gordon Wilson Mr Gordon Wilson , Dundee East

The hon. Gentleman has mentioned something which troubled me, namely that a cheap loan could be regarded as subsidised competition. If cheaper loans than those available on the market can be supplied, so be it. Does not the hon. Gentleman's real complaint about uneconomic and subsidised competition relate to continued cash subsidies or cash investment on a revenue basis rather than a subsidised capital basis?

Photo of Mr Teddy Taylor Mr Teddy Taylor , Glasgow Cathcart

That is my main complaint. I am anxious to avoid the situation that a firm is subsidised by the State and is losing, say, £500,000 a year but is paying wages which a private firm trying to make a profit cannot afford. I am seeking to achieve reasonable parity and justice. I want to make sure that State firms do not have an unfair advantage simply because they have access to public funds.

This is a real fear which has shown itself on many occasions in British industry ever since State participation began. We want an appeals machinery to which a private industrialist may turn if he feels that he is suffering from unfair State competition. There must be someone who can investigate the complaint fairly and reasonably and then publish his report and the action he has taken. We of the Opposition do not always get our

drafting right but we are near to it here. Our intention is clear. It is fair to the public and private sectors for a complaint of subsidised competition to be investigated and for the facts to be known. It is fair to the private sector and it is also fair to the public sector. Some public sector firms believe themselves to be unfairly affected.

Photo of Mr William Small Mr William Small , Glasgow Garscadden

The practicality of the hon. Gentleman's suggestion is that he would give suitable persons the powers of a Royal Commission. They would be able to send for persons and papers relating to any company and would be able to make such papers public. That would be the result of the bad drafting of the new clause.

Photo of Mr Teddy Taylor Mr Teddy Taylor , Glasgow Cathcart

I do not accept that the drafting is bad. It may be open to certain interpretations. It is a good deal better than some of the Government's drafting. The hon. Gentleman is going too far in talking about Royal Commissions. All I am saying is that there should be power to appoint a suitable person to investigate and to report. Would the hon. Gentleman think it fair if a private employer in his constituency was put out of business as a result of subsidised, uneconomic competition? At present nothing can be done about such a situation. An independent inquiry should be available.

This is a desperately important point. If the Minister is to remove the fears which private industry has about the Bill, he should support the principle of the new clause. He has not done so. For that reason, I hope that hon. Members will vote for the new clause so that we may have reasonable protection against unfair or subsidised competition.

Question put, That the clause be read a Second time:—

The House divided: Ayes 207, Noes 229.

Division No. 346.]AYES[7.15 p.m.
Adley, RobertBody, RichardClarke, Kenneth (Rushcliffe)
Aitken, JonathanBoscawen, Hon RobertCockcroft, John
Alison, MichaelBottomley, PeterCooke, Robert (Bristol W)
Arnold, TomBowden, A. (Brighton, Kemptown)Cope, John
Atkins, Rt Hon H. (Spelthorne)Brittan, LeonCordle, John H.
Awdry, DanielBrotherton, MichaelCostain, A. P.
Bain, Mrs MargaretBuchanan-Smith, AlickCrawford, Douglas
Baker, KennethBulmer, EsmondCrouch, David
Banks, RobertCarlisle, MarkCrowder, F. P.
Beith, A. J.Carr, Rt Hon RobertDavies, Rt Hon J. (Knutstord)
Bell, RonaldChurchill, W. S.Dean, Paul (N Somerset)
Bitten, JohnClark, Alan (Plymouth, Sutton)Dodsworth, Geoffrey
Biggs-Davison, JohnClark, William (Croydon S)Douglas-Hamilton, Lord James
Drayson, BurnabyJohnson Smith, G. (E Grinstead)Rawlinson, Rt Hon Sir Peter
du Cann, Rt Hon EdwardJones, Arthur (Daventry)Rees, Peter (Dover & Deal)
Durant, TonyJopling, MichaelReid, George
Eden, Rt Hon Sir JohnJoseph, Rt Hon Sir KeithRenton, Rt Hon Sir D. (Hunts)
Edwards, Nicholas (Pembroke)Kershaw, AnthonyRifkind Malcolm
Elliott, Sir WilliamKimball, MarcusRippon, Rt Hon Geoffrey
Eyre, ReginaldKing, Tom (Bridgwater)Roberts, Michael (Cardiff NW)
Fairgrieve, RussellKitson, Sir TimothyRossi, Hugh (Hornsey)
Farr, JohnKnox, DavidRoyle, Sir Anthony
Fell, AnthonyLamont, NormanSainsbury, Tim
Finsberg, GeoffreyLatham, Michael (Melton)St. John-Stevas, Norman
Fisher, Sir NigelLawrence, IvanScott, Nicholas
Fletcher-Cooke, CharlesLawson, NigelShaw, Giles (Pudsey)
Fookes, Miss JanetLester Jim (Beeston)Shelton, William (Streatham)
Fox, MarcusLoveridge, JohnShepherd, Colin
Fraser, Rt Hon H. (Stafford & St)MacCormick, IainShersby, Michael
Fry, PeterMacfarlane, NeilSilvester, Fred
Galbraith, Hon. T. G. D.MacGregor, JohnSims, Roger
Gardiner, George (Reigate)Macmillan, Rt Hon M. (Farnham)Sinclair, Sir George
Gardner, Edward (S Fylde)McNair-Wilson, M. (Newbury)Skeet, T. H. H.
Gilmour, Rt Hon. Ian (Chesham)McNair-Wilson, P. (New Forest)Smith, Dudley (Warwick)
Gilmour, Sir John (East Fife)Madel, DavidSpeed, Keith
Glyn, Dr AlanMarshall, Michael (Arundel)Spicer, Michael (S Worcester)
Godber, Rt Hon JosephMarten, NeilSproat, Iain
Goodhew, VictorMates, MichaelStainton, Keith
Goodlad, AlastairMather, CarolStanbrook, Ivor
Gorst, JohnMaude, AngusSteen, Anthony (Wavertree)
Gow, Ian (Eastbourne)Mawby, RayStewart, Ian (Hitchin)
Gower, Sir Raymond (Barry)Maxwell-Hyslop, RobinStokes, John
Gray, HamishMayhew, PatrickStradling Thomas, J.
Grieve, PercyMeyer, Sir AnthonyTaylor, R. (Croydon NW)
Grimond, Rt Hon J.Mills, PeterTaylor, Teddy (Cathcart)
Gray, HamishMayhew, PatrickTemple-Morris, Peter
Hall-Davis, A. G. F.Mitchell, David (Basingstoke)Thomas, Rt Hon P. (Hendon S)
Hamilton, Michael (Salisbury)Moate, RogerThompson, George
Hampson, Dr KeithMontgomery, FergusThorpe, Rt Hon Jeremy (N Devon)
Hannam, JohnMoore, John (Croydon C)Townsend, Cyril D.
Harvie Anderson, Rt Hon MissMore, Jasper (Ludlow)Trotter, Neville
Hastings, StephenMorgan-Giles, Rear-AdmiralVan Straubenzee, W. A.
Havers, Sir MichaelMorris, Michael (Northampton S)Vaughan, Dr Gerard
Hawkins, PaulMorrison, Hon Peter (Chester)Viggers, Peter
Hayhoe, BarneyMudd, DavidWainwright, Richard (Colne V)
Henderson, DouglasNeave, AireyWakeham, John
Heseltine, MichaelNelson, AnthonyWalder, David (Clitheroe)
Hicks, RobertNeubert, MichaelWall, Patrick
Higgins, Terence L.Newton, TonyWatt, Hamish
Hordern, PeterNott, JohnWells, John
Howe, Rt Hon Sir GeoffreyOppenheim, Mrs SallyWelsh, Andrew
Howell, David (Guildford)Page, Rt Hon R. Graham (Crosby)Wiggin, Jerry
Howells, Geraint (Cardigan)Parkinson, CecilWilson, Gordon (Dundee E)
Hunt, JohnPattie, GeoffreyWood, Rt Hon Richard
Hurd, DouglasPenhaligon, DavidYoung, Sir G. (Ealing, Acton)
Hutchison, Michael ClarkPeyton, Rt Hon JohnYounger, Hon George
Irving, Charles (Cheltenham)Pink, R. Bonner
James, DavidPrice, David (Eastleigh)TELLERS FOR THE AYES
Jenkin, Rt Hon P. (Wanst'd & W'df'd)Pym, Rt Hon FrancisMr. Anthony Berry and
Jessel, TobyRaison, TimothyMr. Adam Butler.
NOES
Abse, LeoCarter-Jones, LewisDouglas-Mann, Bruce
Allaun, FrankCartwright, JohnDunn, James A.
Anderson, DonaldClemitson, IvorDunnett, Jack
Armstrong. ErnestCocks, Michael (Bristol S)Dunwoody, Mrs Gwyneth
Ashley, JackCohen, StanleyEdelman, Maurice
Atkins, Ronald (Preston N)Coleman, DonaldEdge, Geoff
Atkinson, NormanColquhoun, Mrs MaureenEdwards, Robert (Wolv SE)
Barnett, Rt Hon Joel (Heywood) Conlan, BernardEnglish, Michael
Bean, R. E.Cook, Robin F. (Erin C)Evans, Fred (Caerphilly)
Bennett, Andrew (Stockport N)Corbett, RobinEvans, Gwynfor (Carmarthen)
Bidwell, SydneyCox, Thomas (Tooting)Evans, Ioan (Aberdare)
Bishop, E. S.Craigen, J. M. (Maryhill)Ewing, Harry (Stirling)
Blenkinsop, ArthurCrawshaw, RichardFernyhough Rt Hon E.
Boardman, H.Crosland, Rt Hon AnthonyFitch, Alan (Wigan)
Booth, AlbertCryer, BobFlannery, Martin
Boyden, James (Bish Auck)Cunningham, G. (Islington S)Fletcher, Ted (Darlington)
Bray, Dr JeremyDavidson, ArthurFoot, Rt Hon Michael
Brown, Hugh D. (Provan)Davies, Bryan (Enfield N)Forrester, John
Brown, Robert C. (Newcastle W)Davies, Denzil (Llanelli)Fowler, Gerald (The Wrekin)
Buchanan, RichardDavies, Denzil (Llanelli)Fraser, John (Lambeth, N'w'd)
Butler, Mrs Joyce (Wood Green)Deakins, EricFreeson, Reginald
Campbell, IanDean, Joseph (Leeds West)Garrett, W. E. (Wallsend)
Canavan, DennisDelargy, HughGeorge, Bruce
Cant, R. B.Dempsey, JamesGilbert, Dr John
Carter, RayDoig, PeterGinsburg, David
Gould, BryanMadden, MaxShort, Rt Hon E. (Newcastle C)
Gourlay, HarryMagee, BryanSilkin, Rt Hon John (Deptford)
Graham, TedMallalieu, J. P. W.Silkin, Rt Hon S. C. (Dulwich)
Grant, George (Morpeth)Marquand, DavidSillars, James
Grocott, BruceMarshall, Dr. Edmund (Goole)Silverman, Julius
Hamilton, James (Bothwell)Marshall, Jim (Leicester S)Skinner, Dennis
Harrison, Walter (Wakefield)Maynard, Miss JoanSmall, William
Hart, Rt Hon JudithMeacher, MichaelSnape, Peter
Hatton, FrankMellish, Rt Hon RobertSpearing, Nigel
Hayman, Mrs HeleneMikardo, IanSpriggs, Leslie
Heifer, Eric S.Millan, BruceStallard, A. W.
Horam, JohnMiller, Dr M. S. (E. Kilbride)Stoddart, David
Howell, Denis (B'ham, Sm H)Miller, Mrs Millie (Ilford N)Stott, Roger
Hoyle, Doug (Nelson)Molloy, WilliamStrang, Gavin
Hughes, Rt Hon C. (Anglesey)Moonman, EricStrauss, Rt Hon G. R.
Hughes, Robert (Aberdeen, N)Morris Alfred(Wythenshawe)Summerskill, Hon Dr Shirley
Hughes, Roy (Newport)Morris, Charles R. (Openshaw)Swain, Thomas
Hunter, AdamMorris, Rt Hon J. (Aberavon)Taylor, Mrs Ann (Bolton W)
Irvine, Rt Hon Sir A. (Edge Hill)Mulley, Rt Hon FrederickThomas, Dafydd (Merioneth)
Irving, Rt Hon S. (Dartford)Murray, Rt Hon Ronald KingThomas, Ron (Bristol NW)
Jackson, Miss Margaret (Lincoln)Newens, StanleyThorne, Stan (Preston South)
Janner, GrevilleNoble, MikeTierney, Sydney
Jay, Rt Hon DouglasOakes, GordonTinn, James
Jeger, Mrs LenaOgden, EricTomlinson, John
Jenkins, Hugh (Putney)O'Malley, Rt Hon BrianTomney, Frank
Jenkins, Rt Hon Roy (Stechford)Orbach, MauriceTorney, Tom
John, BrynmorOvenden, JohnVarley, Rt Hon Eric G.
Johnson, James (Hull West)Padley, WalterWainwright, Edwin (Dearne V)
Johnson, Walter (Derby S)Park, GeorgeWalden, Brian (B'ham, L'dyw'd)
Jones, Alec (Rhondda)Parker, JohnWalker, Terry (Kingswood)
Jones, Barry (East Flint)Parry, RobertWalker, Terry (Kingswood)
Jones, Dan (Burnley)Pavitt, LaurieWard, Michael
Kaufman, GeraldPeart, Rt Hon FredWatkins, David
Kilroy-Silk, RobertPerry, ErnestWatkinson, John
Kinnock, NeilPhipps, Dr ColinWeetch, Ken
Lambie, DavidPrice, C. (Lewisham W)Weitzman, David
Lamborn, HarryPrice, William (Rugby)Wellbeloved, James
Lamond, JamesRadice, GilesWhite, James (Pollok)
Lestor, Miss Joan (Eton & Slough)Rees, Rt Hon Merlyn (Leeds S)Whitehead, Phillip
Lewis, Ron (Carlisle)Richardson, Miss JoWhitlock, William
Lipton, MarcusRoberts, Albert (Normanton)Wigley, Dafydd
Litterick, TomRoberts, Gwilym (Cannock)Willey, Rt Hon Frederick
Lomas, KennethRobertson, John (Paisley)Williams, Alan Lee (Hornch'ch)
Loyden, EddieRoderick, CaerwynWilson, Alexander (Hamilton)
Luard, EvanRodgers, George (Chorley)Wise, Mrs. Audrey
Lyons, Edward (Bradford W)Rodgers, William (Stockton)Woof, Robert
McCartney, HughRooker, J. W.Wrigglesworth, Ian
McElhone, FrankRose, Paul B.Young, David (Bolton E)
MacFarquhar, RoderickRoss, Rt Hon W. (Kilmarnock)
McGuire, Michael (Ince)Sandelson, NevilleTELLERS FOR THE NOES:
Maclennan, RobertSedgemore, BrianMr. J. D. Dormand and
McMillan, Tom (Glasgow C)Shaw, Arnold (Ilford South)Mr. Joseph Harper.
McNamara, KevinSheldon, Robert (Ashton-u-Lyne)

Question accordingly negatived.