Public Bodies (Abolition of the Aircraft and Shipbuilding Industries Arbitration Tribunal) Order 2013

Tuesday 8th January 2013 Grand Committee

Considered in Grand Committee

15:36

Moved By

[Lord Gardiner of Kimble]

That the Grand Committee do report to the House that it has considered the Public Bodies (Abolition of the Aircraft and Shipbuilding Industries Arbitration Tribunal) Order 2013.

Relevant documents: 14th Report from the Secondary Legislation Scrutiny Committee, 11th Report from the Joint Committee on Statutory Instruments.

[Lord Gardiner of Kimble]

My Lords, the Aircraft and Shipbuilding Industries Arbitration Tribunal was established by the Aircraft and Shipbuilding Industries Act 1977. It was created to determine any question or dispute which was expressly required by the Act to be subject to arbitration or any matter in respect of which jurisdiction was specifically given to the tribunal by the Act. In practice this meant considering disputed valuations of assets at the point of nationalisation.

The Aircraft and Shipbuilding Industries Act 1977 nationalised three aircraft companies and most of the major shipbuilding companies that were based in England and Scotland. The Act created British Aerospace and British Shipbuilders as public corporations. The tribunal was established in 1978 and considered two applications, one from stockbrokers in respect of Cammell Laird and the other on behalf of Vickers auditors. The tribunal completed its determination of both cases by 1981 and has not met since. British Shipbuilders subsequently sold its shipyards and British Aerospace was privatised.

The Department for Business, Innovation and Skills launched a public consultation on the abolition of the tribunal in February 2012. This was a six-week rather than a 12-week consultation as the tribunal had been defunct for such a long time. The department sent copies of the consultation to the relevant trade body and to the companies that had been part of the public corporations and continue to operate following privatisation. The department received two responses to the consultation, both of which supported the proposal to abolish the tribunal. An impact assessment has not been produced because abolition of the tribunal will not generate any savings. It is a tidying-up matter.

The Aircraft and Shipbuilding Industries Arbitration Tribunal was considered as part of the Government’s public bodies reform programme and the Government’s commitment to reduce the number of quangos. The tribunal has been defunct for 30 years and does not have any further cases to consider. The Government therefore put forward a proposal to abolish the tribunal using the powers of the Public Bodies Act. The Government are in the process of seeking consent for this order from the Northern Ireland Assembly, and I understand that the Assembly will consider this order over the coming weeks. The Government have consulted Scottish Ministers as required by the Public Bodies Act and, although it is not required under the law, have consulted Ministers in Wales. For these reasons, I beg to move that that the Committee consider this order.

[Lord Jones]

My Lords, I thank the Minister for his considered and courteous introduction. I rise to support not to oppose what he proposes. I note that both orders carry the date of 1977 as a start point. In an attempt to give brief context to these orders, I point out to the Minister that the Aircraft and Shipbuilding Industries Act was hugely controversial at the time of its enactment. I was present in the other place as a Member of the then Administration, and I would be the first to say that 35 years is a very long time. It is just possible that the Minister, with his expertise and his group of able advisers, will also remember when the legislation was enacted but, if not, perhaps a few brief remarks on whence the orders have sprung may not be amiss.

The legislation engendered massive confrontation in the Chamber of the other place. It was hugely controversial. As the legislation made its way in the Committee corridor, it was often almost impossible to enter the Committee Room because of the huge number of interested parties—in shorthand you might say they were lobbyists, of the most honourable kind—from the industries concerned. Also there were trade unionists who knew that they had a problem concerning their long-term employment. In the Chamber itself, on the fateful night, the nature of the legislation was challenged. Was it a hybrid Bill or was it not? The consideration of such proposals by the then Administration was hugely controversial. In the vote of that night, there was a tie, and it was for Mr Speaker Thomas, as he was then known, later Lord Tonypandy, to make the decision. In terms of tradition, he cast his vote where the Government’s proposals lay—a time-honoured practice. At that time, the then Secretary of State for Industry was Mr Eric Varley, who subsequently entered your Lordships’ House, having had a distinguished political career. Mr George Thomas, as he then was, came under huge pressure on that night and in the months leading up to that fateful vote, because his decision in the end on advice from his clerks would be crucial. I thought that your Lordships would need to know the content of this set of orders.

It was historic because, in the early 1970s, the Upper Clyde shipyard was occupied, and the occupation, which was very controversial and huge in Scotland, was led by a legendary trade unionist, Mr Jimmy Reid. He enunciated a famous principle in the thick of the fight, saying that a rat race was for rats. I pass hurriedly by on that. Following the occupation came the astounding requirement to nationalise the iconic Rolls-Royce factories.

15:45

By my mentioning those two industrial developments, you can understand the nature of the challenges that Britain was then facing. That Act was an attempt to shore up Britain’s manufacturing base—there were other measures. Shipbuilding then was a huge industry; aerospace was a huge industry; coal was a huge industry; and steel was a huge industry. In relatively few years, those industries virtually disappeared and with them came colossal redundancies and major unemployment which ran on into the 1980s. The vote that evening proved that the then Administration’s hold on power was tenuous and, by 1979, another, most famous, Premier took the reins of power.

Today, no airliner is manufactured in Great Britain. There is the magnificent making of wings in north-east Wales by Airbus, but there are no airliners of standard size made now in this nation. We would be very hard- pressed to find a truly significant shipbuilding industry outside one or two sites in the north.

Additional to Upper Clyde and Rolls-Royce there was during the Heath Administration the OPEC nations’ decision in November 1973 to increase the price of oil by four times. The consequence of that was massive inflation and subsequent unemployment. The 1977 Act and consequential subsidiary legislation were attempts to cope with world-shaking eventualities.

The noble Lord, Lord Healey, who was at that time the Chancellor of the Exchequer, had to face up also to the suggestions of the International Monetary Fund. The then Prime Minister, Mr James Callaghan, needed to get majorities for his legislation in that Parliament. Although he did not form a coalition, he seemed to reach some form of understanding with the then leader of the Liberal Party, who is now a Member of your Lordships’ House.

I perceive that legislation as being part of a nation’s attempt to hold on to its manufacturing base. It does not appear to have been very successful, in so far as manufacturing now accounts for perhaps 12% or a little less of GDP. We now face massive challenges from the east. I was grateful for the Minister’s considered introduction and I hope that my remarks will enable him and his very able advisers to have a better context thereafter.

[Lord Young of Norwood Green]

My Lords, I, too, support the order. As usual, I am grateful to my noble friend Lord Jones for a tour d’horizon and history lesson. Some of it I remembered well, and some not so well—so I was exceedingly grateful. I hesitate to correct him on one matter, and he can tell me whether I have got it wrong, but I thought that, in relation to the Upper Clyde, it was not just an occupation but a work-in that Jimmy Reid organised, which was unusual at the time.

[Lord Jones]

Amendment accepted.

[Lord Young of Norwood Green]

I know that because it was not so long ago that there was a programme on Radio 4 relating to it. However, the noble Lord, Lord Jones, was right to give us that historical context and to set the scene.

I have read the report from the committee. There was some concern about the consultation, but I think that in the end it was prepared to accept that it was sufficient, so I have no further comments to make.

[Lord Gardiner of Kimble]

My Lords, I thank the noble Lords, Lord Jones and Lord Young of Norwood Green. I particularly thank the noble Lord, Lord Jones, because he put into a fine historical context some of the dilemmas of that part of our industrial history. I took on board the point about manufacturing. One of the challenges that we have had in this country is that we have not thought as much as we should have about how we ensure that there is a British manufacturing base. I particularly took on board the noble Lord’s point about aircraft.

There is good news on motor vehicles, where we are now beginning to see some very good statistics on the production of vehicles. In fact, if my memory serves me right from a briefing a few months ago, we are now manufacturing more cars than we are importing. It is a great accolade to the management and the workforce for working so well together that we have these successes.

However, returning to the job in hand in regard to the Aircraft and Shipbuilding Industries Arbitration Tribunal, as I have said, it has been defunct for more than 30 years and has no assets, employees or further cases to consider. After consideration against the conditions set out in the Public Bodies Act the Government have rightly concluded—and noble Lords on all sides of the Committee have agreed—that the tribunal no longer needs to exist and that abolishing it would tidy up the regulatory landscape. It is for those reasons that I commend the order to the Committee.

Motion agreed.